Reynolds Consumer Products Inc (REYN) 2024 Q3 法說會逐字稿

Greetings and welcome to the Reynolds Consumer Products, Inc. third quarter 2024 earnings call.

This time, all participants are in listen-only mode.

A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

Now my pleasure to introduce your host, Mark Swartzberg, Vice President of Investor Relations.

You, sir, you may begin.

Thank you, operator.

Good morning and thank you for joining us are Reynolds Consumer Products' Third Quarter Earnings Conference Call.

Please note that this call is being webcast on the Investor Relations section of our corporate site at Reynolds Consumer Products.com.

Our earnings press release and presentation slides are also available.

We've been in the call today are Lance Mitchell, our President and Chief Executive Officer, Scott Perkins, our Chief Financial Officer, and Nate Tetlow, Senior Vice President and Head of Financial Planning and Analysis.

Following prepared remarks, we will open the call for a brief question and answer session.

Before we begin, I would like to remind you that this morning's discussion will contain forward looking statements, which are subject to risks, uncertainties and changes in circumstances that could cause actual results and outcomes to differ materially from those described today.

Please refer to the Risk Factors section in our SEC filings.

The Company does not intend to update or alter these forward-looking statements at all.

During today's call, we will refer to certain non-GAAP or adjusted financial measures.

Reconciliations of GAAP to non-GAAP financial measures are available in our earnings press release, investor presentation deck and Form10 Q, which can be found on the Investor Relations section of our site.

Now I'd like to turn the call over to Lance.

Thank you, Mark, and good morning, everyone.

Our business is performing well, and we are investing in new products, new business wins and new cost savings opportunities to drive sustained long-term profitable growth.

Turning to the quarter, demand in our categories improved modestly by comparison to first half performance.

Our retail volume was unchanged and in line with our categories after adjusting for product portfolio optimization and shipment timing.

As we covered on the Q2 call, we commercialized innovation across our categories, expanded our innovation pipeline and drove increased awareness among younger consumers.

We identified and delivered further revolution cost savings, and we demonstrated the value of our diversified business and product portfolio, delivering revenue and earnings in line with our expectations while continuing the work to drive improved revenues and profitability.

Finally at our total business before reviewing each of our businesses, I want to remind you of some of the factors positioning our CP. versus staying at an attractive long-term growth.

Our products are all know affordable and convenient.

We are effectively leveraging our business model development business in partnership with our retail customers.

We are successfully introducing new products to drive share and as I mentioned in our pipeline is only getting stronger, including an expanding range of affordable sustainable solutions.

We are commercializing scientific advances and consumer insights acquired through sustained investment in R&D, including last year's purchase of Omnicom of manufacturing.

And we are reducing operational costs and identifying significant additional resolution costs entities providing additional resources for earnings growth.

Our tableware business unit is a focus for many of you as it is for us, so I will speak to that.

First, retaining more business unit reporting volume and earnings declined, primarily driven by lower phone plate volume and increased promotional spending.

These decreases were largely driven by recent legislative changes and so states consumer shifting towards more sustained more offerings and a reduction of retailer's phone played inventories volume.

For the rest of our today, where business was up modestly, and continued outperformance categories further demonstrated in the effectiveness of the price pack architecture and promotional strategies that we initiated at the beginning of the year.

We expect phone lines to remain a headwind over the near term and have a record of successfully responding to volume declines within our tableware business. as we reviewed earlier this year at our Investor Day to be fully offset a double-digit loan volume decline between 2019 and 2023 with growth under disposable tableware products over that period.

A number of factors underlying our confidence in our ability to continue building upon our current business for growth. we offer a wide range of branded in Storebrand sustainable solutions, not only employees from across disposable tableware and we have been expanding our new product pipeline, emphasizing not only sustainability, including the leveraging of technology acquired in the U.S. Atacama acquisition, but also other drivers, including function, fun at affordability and then commercializing scientific advancements and consumer insights through investments in R&D.

Our third quarter results highlight for us to capture a portion of our team were portfolio for this business as at some potential as we've demonstrated by effectively managing product life cycles and our new product pipeline and capabilities are strong.

So, levels, Cooking & Baking business delivered another solid quarter and outlook remains strong.

Reynolds Wrap gaining additional share and household for rentals.

Kitchens.

Parchment continues to grow, reflecting a strong innovation and significant distribution gains.

We recently received new findings on several years have increased and targeted work to build brand equity with younger consumers.

And I'm pleased to report that unaided awareness of rentals out for oil and rentals, kitchens, parchment among millennials and Gen V has grown strong double digits since 2021.

Our baseline period of measure and in the area of operations, we are building on operational reliability and consistency and implementing new programs to achieve increased production efficiencies.

Turning to have been leased and storage and Presto.

Our recent storage business continued to perform well in the quarter and the outlook for these businesses strong recent waste bags.

Churn trends can be difficult to interpret due to our competitors cyber incident last year, but the data is clear.

Hefty share of waste bags is that have these and storage business unit.

We delivered record quarterly revenue in the third quarter in food bags where we have built a majority share position in Storebrand food bags.

Some volume from the store brands grew 2% in the quarter and in the area of product participation at the value.

Also, leasebacks achieved $200 million in annual sales in the quarter.

Setting the stage for rollout of SAP.

Fabulous, a water nine, which is tested well with younger consumers and launching nationally early next year has depressed and closed three banks continue to build awareness and loyalty as a more affordable branded food bag and is also rolling out nationally in partnership with major retailers next year and waste and food bag category, they continue to benefit from our expanding range of sustainable solutions.

Before turning the call over to Scott, I want to know the devastation that settlement minutes-of-use are experiencing from hurricane Milton and only Reynolds Consumer Products continues to support relief efforts by donating FT trash bags and tableware products to the American Red Cross to distribute these products families for culinary from these hurricanes and other disasters, please join us and supporting the American Red Cross online at nine cross data work.

As I said in my opening remarks, our business is performing well overall, and we're investing in our categories, product innovation, new business wins and significant incremental revolution cost savings to drive sustained and attractive long-term growth.

Scott, over to you.

Thank you, Lance, and good morning, everyone.

We delivered on the financial priorities we set at the start of 2024, again in the third quarter, driving our categories, earnings and cash flow, while also reducing leverage and increasing financial flexibility.

Our Q2 results were in line with our expectations coming into Kelvin is which exceeded our expectations by approximately $10 billion.

As a reminder, we estimated $15 million of revenues were pulled forward into Q2 from Q3 as contemplated in our guide total revenues of $910 million in the third quarter from the upper end of our guidance and consistent at $856 million and retail revenues and $54 million of non-retail resonance.

Third quarter.

Adjusted EBITDA increased $6 million to $171 million, driven by lower operational and SG&A costs, partially offset by lower revenues, earnings per share or $0.41, up 11% from the third quarter of 2023. % and EBITDA growth and lower interest expense from paying down debt.

Cash conversion remained strong with free cash flow of $93 million for the quarter.

As a result of our strong profitability and balance sheet discipline, we continued to reduce net debt leverage now at 2.3 times trailing 12 months adjusted EBITDA as of Q3, and we made an additional $50 million voluntary principal payments subsequent to quarter end, which makes that's our heritage prepayment of the year totaling $150 million year to date.

Before turning to our year-to-date results and guide, I want to provide you with additional detail on tableware.

As Lance said, tableware third quarter revenues were driven by lower phone plate volume and lower pricing resulting from increased promotion.

However, the volume of other disposable tableware categories continued to respond well to our price pack architecture initiatives increasing modestly and outperforming its categories.

By nearly one point.

Tableware profits declined by an amount similar to the revenue decline, driven by lower revenue and increases in operational costs.

We expect phone plate volumes to remain an increased headwind for a period of time due to legislative and consumption changed.

Since also pointed out, this business has great potential as we have a clear record of successfully repositioning and tableware for growth.

And we are doing the work to build out our success in offsetting declines a portion of our portfolio.

For the year-to-date Q3 results, retail revenues were $2,544 million, while low margin non-retail revenues decreased to $131 million.

Adjusted EBITDA of $465 million increased $67 million from the year-ago period, driven by higher manufacturing output and lower operational costs, partially offset by lower net revenues and increased advertising investments.

Earnings per share were $1.10, up 43% from $0.77 in the same period of 2023, driven by higher adjusted EBITDA and lower interest expense.

As a reminder, we had a nonrecurring tax benefit in the second quarter of $0.05 per share.

Now turning to our guidance to reflect the stronger than expected third quarter non-retail revenues, we are slightly increasing our full year 2024, our net revenue outlook to a range of $3,620 million to $3,660 million compared to revenue of $3,776 million in 2023.

As part of this guide, we continue to expect a one-point reduction from pricing, which includes certain contractual pass throughs.

We expect a minus half a point to a plus five-point impact from retail volume, which is unchanged at the midpoint in line with or better than our categories.

This tightness arranged by 100 basis points compared with our prior guide, we now expect a combined two-point headwind station retail product portfolio, slightly stronger than our prior outlook.

We plan to continue the in our categories and perform at or better than our categories.

We are updating our full year adjusted EBITDA guidance range to $673 million to $683 million, representing a 7% increase over $636 million in 2023.

And we anticipate our full year 2020 for earnings per share to be within the range of $8.66 to $8.70 per share.

Other considerations incorporated into our full year 2024 forecast are as follows increased rates for certain commodities, which in the case of aluminum and key resins are now priced 10% to 15% above January 2024 levels.

SG&A is expected to remain materially unchanged compared to SG&A in 2023.

Our depreciation and amortization assumption is approximately $125 million.

Interest expense continues to be estimated at approximately $100 million, and our estimated full year effective tax rate remains just over 22%, which includes the one-time tax benefit of $0.05 per share in the second quarter.

Turning to the fourth quarter, we expect Q4 net revenue in the range of $945 to $985 million versus $1.7 million in the fourth quarter of 2023.

The assumptions and click a two point reduction due to pricing, a one point reduction to a three point increase from retail volume, reflecting sequentially improving retail volume and a three point reduction attributed to non-retail volume and the optimization of the retail product portfolio for adjusted EBITDA in our range of $208 to $218 million, net income to be in the range of $117 million to $125 million and earnings per share in a range of $0.56 to $0.6.

As we said, we'll be reporting first and second quarter results.

We expect the quarterly contribution of EBITDA to return to historical averages in 2024.

As a reminder, we anticipate approximately $10 million increase in combined costs to negatively impact our fourth quarter results reflected that flow through of aluminum purchased during the second quarter and premiums paid for cooking bags as we transition to in-sourcing this product offering.

In terms of capital allocation, our priorities are unchanged, and we continue to drive cash flow and plan to invest in strategic opportunities.

As you may have seen, we extended and upsized our revolving credit facility earlier this month to better align with companies that have similarly strong credit characteristics.

We replaced an undrawn $250 million revolving credit facility with an undrawn $700 million revolving credit facility maturing in October 2029.

Our term loan facility under the credit agreement continues to mature in February 2027, and we are actively monitoring market conditions for potential refinancing and debt facility on the basis of our strong cash flow profile and improved credit metrics.

Our program of debt reduction translates into further declines and quarterly interest expense, assuming no change to interest rates, also increasing our ability to invest in attractive organic and inorganic opportunities to drive earnings growth and returns on invested capital.

In closing, as Lance mentioned, our business model remains a competitive advantage.

Our product portfolio and business are diversified, and we are doing the work to build on our history of successfully repositioning tableware for growth and invest in expanding range of new products.

We are adding new programs to our strong pipeline of Revolution cost savings, and we are driving cash flow and such printed in our balance sheet, providing us with additional resources and flexibility to drive attractive long-term growth and value creation.

With that, I will turn the call back over to Lance.

Thank you, Scott.

I'm pleased to announce the next stop is in the history of leadership of our CP.

As you can see from this morning's press release, Scott will succeed me as President and Chief Executive Officer of Reynolds Consumer Products and the low currently Head of Financial Planning and Analysis will sort of see Scott as Chief Financial Officer for changes are effective January 1st of next year, and I will continue in an advisory role until the planned transition of responsibilities to Scott and David is complete.

I'm extremely proud of all that we have achieved since my joining Reynolds Consumer Products as President and CTO 14 years ago when we formed our CP. through a combination of acquisitions from both accomplished a lot over this period, successfully making safety our number one priority, developing and implementing our business model of category leadership by providing new brands and Storebrand's, which has proven to be a competitive advantage, expanding our new product pipeline, meeting our category store owner, while also driving share consistently delivery revolution cost efficiencies, while also identifying and unlocking significant additional savings opportunities, and most importantly, building a culture of collaboration through diversity, listening and teamwork that is creative, hard-working and committed to winning every day in close partnership with our retail customers.

As I said, this announcement is part of a planned transition and now is the right time for its implementation.

Our business is strong and performing its second-best year earnings since going public, I period, including 2020, which was exceptionally strong because of the pandemic.

Succession planning is on the areas of strength for our CP. and Scott Nielson are highly qualified for these rules.

I'm pleased with so many of you have gotten to know side since he's joining RCP And as you've interacted with Nielsen in the days leading up to that since our listing of as a publicly traded company, I look forward to working with each of you in the coming months, and I'm confident and seamless transitions.

This will be my last quarterly earnings call as President and CEO of RCP.

It's been a pleasure working with so many of you since our IPO in 2020.

A sincere thank you to the 6,000 RCP. employees that have made the last 14 years rewarding both professionally and personally, thank you to all of our retail partners.

I have challenged us each day to make better stronger supplier to new and consumers.

And thank you for all of the call into these quarterly earnings releases.

As you know, we take timing here preparing for these needs and we appreciate you taking the time we will soon.

And for your interest in our CP.

Since the leadership changes are scheduled to take effect January 1st of next year.

We would ask you direct your questions, Scott, and during this call operators already precautions.

Thank you.

We'll now be conducting a question-and-answer session.

If you like to ask a question, please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue.

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one moment, please while we poll for questions.

Thank you.

Thank you.

And our first question will be coming from the line of Nik Modi with RBC Capital Markets.

Please proceed with your questions.

Yes.

Thank you.

Good morning, everyone.

And on plan, Scott, on it and congratulations on this plane have doubled the average tenure of the CDOs.

Now, congratulations on really enjoyed working with you on to my question on if you think about the kind of overall environment, I'd love to understand kind of how you guys are thinking about the holiday season, which is obviously very important Palm period for the Company.

And was just kind of that interplay between what is happening broadly in the economy and this kind of out of home into home migration.

Would love to kind of get your perspective on those dynamics now from afar quarter.

Thank you.

Thank you, Nick, and thank you for that complement.

I am well aware the fact that they've extended the tenure of U.S. average CEO., and I'm ready to retire some hopes that the state of the consumer remains challenged flow.

As we talked about the Q2 earnings call, we have seen implants and promotions and new product innovations in place for us for a strong holiday season.

We're very confident in our guide that we just announced and from our retail partners and their confidence in the holiday season.

And so, what we're seen so far is very positive and still early, but it's yes, we do get early reads on with the holiday season.

Looks like is it some it's positive for 2024, right.

I'll pass it off.

Our next question is from the line of Andrea Teixeira with JPMorgan.

Please proceed with your questions.

Thank you, operator and land sale were a pleasure of interacting with you and thank you for educating us on that on Tuesday appeal on.

And we found a great new chapter in your life and also congratulations, Scott Mason.

And now my question is on down trade that we have been seeing in our channel.

No, I think it's probably you are channel at play here, which obviously you have on your arm private label offering and you also have price points on that then allow for that.

So, I was wondering if you can help us kind of parse out that in addition on movements that you see our shoe into 2025, we are mostly done on lap into that price point situation and similarly for table, when you've been very upfront history, I feel about the phone on issue, right?

So, in general, some of the municipalities have been switching out.

I was wondering if you also can give us time to time on from Mike a bit of a timeframe and now how much your table where there is dependent upon that form on and if that's the case, how you're planning to continue to get ahead of it before having that impact and potentially a lot of promos related to that form.

Thank you so much.

Now I'll start and I'll let Scott to elaborate on our first regarding the down-trading private label private label category shares are back to 2019 levels on a year-over-year basis.

Private label share is often some categories and down and some others and would influence in responding to these changes very effectively.

As we talked about over the years to fully exploit our business model is a competitive advantage by doing both premiums and store brands.

And secondly, these categories are highly penetrated buying private label already.

So, we don't see significant shifts occurring year-over-year between brands and private labels on table where the phone trend is, one that we have been seeing since 2019.

As we indicated in the prepared remarks, and we have very specific plans in product development and to work across the portfolio to ensure growth of the overall tableware business.

Scott.

I would just add to that high interest in terms of the phone topics to taking our products to the talent to portfolios, resourcing and focus on costs in our execution at category, we make sense.

On the other hand, we have a lot of innovation growth and outperformance of the comparative categories.

Away-from-home again, imperative.

There will be a resource and invest for that growth.

How much?

And that's how for how much do you still have?

Has that sort of on a phone within your table?

We don't share steel level details to you might imagine, given the competitive sensitivity of an uncertain bancassurance, the minority of the portfolio.

But that's about as far as I think we can come.

Okay, that's fair.

Thank you.

Both.

Our next question comes from the line of Mark Astrachan with Stifel.

Please proceed with your question.

Yes, thanks and good morning, everybody.

I guess if you're still pretty early on from or 25 planning standpoints, but that maybe you're trying to approach the question that you're not going to answer a different way.

And how do we think about or how are you thinking about just consumer demand kind of as we sit here today?

You talked encouragingly about holiday retail volumes to accelerate through 24.

So, I guess you kind of puts and takes there in terms of just broad strokes, how you're thinking about the consumers we had in the 25.

And then the other question relates more to commodities.

Aluminum is really moved up here more than many had expected.

How do you think about that for the year, including if it stays here, do you have to take more pricing?

Can you offset that and other ways off from a cost pressure prospective?

Thank you.

I'd say to category and consumer question, I'll turn the commodity question.

Scott, we are seeing a bit of improvement in Canterbury volumes in Q3 were some first half, and then that included do and the added pressure from place to be spent tons accounting reprice.

The volume has come in and better balance at the start of the year.

And the shift to at-home consumption continues to be a modest tailwind for our categories.

Our Q funds on improvement from where we've seen two three, and we've seen retail adjusted volume for ship on time and portfolio optimization improve compared to the first half performance.

So overall sequentially quarter to quarter, and we're seeing modest improvement line across most of our categories.

good morning and offer a couple of comments and thoughts on commodities.

The first would be on aluminum noted that you've seen escalation.

We don't see a fundamental supply and demand imbalance.

So we'll see this as transitory, or it sticks for a period of time.

Thoughts on how to manage the commodities are a few. one is aluminum hedges and traded exchanges.

So we look at periodically execute caps or collars and these sorts of hedging tools or cost control tools.

Number two.

We also work with our vendors.

And I tend to have, for example, semiannual price structures rather than months to settlements that may not change the cost per se, but it allows us from our quality control of those costs over a period of time and certainly always be our ongoing focus on resolution to continue to drive costs out of our business.

And of course, the last lever is pricing, recognizing it pricing or sometimes missed imperative and making sure we're thinking about price gaps elasticity.

So I think that's the lineup and against potential volatility in commodities.

Got it.

Helpful.

And then just on the credit facility from the upsizing, their end thoughts on what typically happens, both the sort of related to leverage on continuing to fall here.

So your balance sheets problem that our position and it's been in and they're really, really long time, would that potentially change the combination that have to look at our transformative M&A?

You happy with your categories of presence on any update there?

I think you're asking about the size of their polymer.

If I heard, you right

book that and the fact that the leverage on the balance sheet as it stands today, much lower than it's been.

Yes.

Okay.

Until the default on the revolver, we looked pretty carefully across the marketplace for similarly situated companies, medium size and profitability in the kind of conclusion is up 10 of a one times EBITDA thresholds for revolver size is quite consistent benefit.

That was the main demand I thought behind in and of course, extending that maturity for five years.

On the leverage print, again, we're pleased that the cash flow profile the Company is performing very much as we outlined at Investor Day.

we've consistently said all year long north of $300 million of free cash flow, which have experienced 50% free cash flow flowing through again, much like we talked about.

So it at 2.3 times that we keep going back to the same frameworks.

And we talked about, which is capital allocation, has histories, Ladbrokes internal or organic and investment back into the Company, emphasis on both productivity investments, an emphasis on innovative investments, number two points would be inorganic or M&A opportunities outside the company.

then third would be returns of capital to shareholders and I think the key points there is we believe that their capital on a returns basis so that that takes place apparent at Fremont continues.

Great.

Thank you very much.

Our next questions are from the line of Jim Abbott with Barclays.

Please proceed with your questions.

Hey, good morning.

I wanted to touch on maybe keeping up with the theme of commodities and input costs back in late August.

We have news on U.S. Canadian tariffs on Chinese aluminum.

I think your current business is quite small but wondering what maybe the competitive impact of that would be more generally, should tariffs become more prevalent ahead of for after the election next week.

How might that impact the competitive environment more broadly in the U.S. banks?

Hey, Jim, on first of all, the Canadian tariff itself on aluminum has a de minimums impact to Reynolds Consumer Products.

But all of us have a lot to learn about the tariff environment as it develops in the coming months.

We're staying very close to it, and we'll see, you know, develops, but we have had experienced in managing through share of challenges successfully over the last several years.

Got it.

Thank you and then just one other quick question, if I can.

So, legislation you're talking about in some place, can you expand on what exactly that is?

And if you know, legislation risks, potential header has potential to other categories.

some states and localities.

So, beyond the sale of phone, primarily in the Midwest and Northeast.

Those are areas that are the lower false news for most of the phone is used in the middle that I read in place without legislation.

Thank you.

As a reminder, if you'd like to ask a question today, press star, one on your telephone keypad.

Our next question from the line of Robert Ottenstein with Evercore.

Your questions.

Great.

Thank you.

And Lance, you'll be sorely miss.

Scott Davidson.

Congratulations.

Tom, I'd like to focus on the waste bag business.

I know that theses' a lot of noise in the scanner data, and you mentioned I easy comps for your competitor.

But yes, at least kind of based on the most recent scanner, it does look like just in the data that we see that you may be losing a little bit of market share again based on the numbers and that your competitor may be increasing promos.

So love to get your thoughts if there's been any kind of change in the competitive environment there?

Or is this just kind of statistical noise here?

And then somewhat related to that, you mentioned higher resin prices.

Can you talk a little bit about when that will hit the P&L and how you're thinking about offsetting them?

Thank you.

Thanks, Robert.

Thank you for that complement IT of.

I'll take the first part of the question, which is the waste bag business and turnover, the resin pricing to Scott from a commodity cost standpoint, our waste bag business is doing well.

I mentioned in the prepared remarks, you know, the Hefty Waste & Storage business unit achieved record quarterly revenue in the third quarter in our share is above 2022 levels.

So, at this point, we'd really the statistical anomaly is occurring right now because of the key comparison period.

We believe these factors contributed to our gains over the years, the brand equity or strategy and pricing, our product strength and reliability, and most importantly, our innovation will continue to drive the brand.

It's also worth to note, as I talked about in our Q2 earnings call that our total points of distribution also increased for hefty waste bags.

So, we're very confident in the trends that we've had from the last eight years.

Have you expense will continue on right now?

We're we've got some comparison points in the numbers and statistics that are making very difficult to read.

Good morning.

On the commodity question.

I think you asked about resin and slow through the P&L.

I'd say typically would see changes in those underlying price of cigarettes and slim to the P & LC. and three to four months when we assessed our Q4 guide.

Of course, pleased to be contemplated that in terms of the tools, as I mentioned in a previous question and really the short term, it's revolution savings since our target focus to offset those headwinds.

I think that our remain the case.

Great.

Thank you very much.

Thank you. you can ask a question, press star one on the next questions come from the line of Peter from with UBS.

Please proceed with your question.

Thanks, operator.

Good morning, everyone.

Lanschot making congratulations to you our comp.

I just wanted to ask a question on kind of category trends.

And I know there were a lot of moving pieces this quarter, shipment timing of when you think about the retail volume performance in the quarter or maybe just touch on where things came in better, it, maybe we're thinking more challenged.

And then as a follow-up, that maybe asking that question earlier, but just a bit differently, just as we think about the 4Q guidance is still pretty wide range as it relates to retail volumes.

Maybe can you just help frame the assumptions that would put you at the higher end versus the lower end in the fourth quarter here?

Well, as I as I talked about, some of the other two and our category growth rates have been sequentially improving.

They do vary depending on the specific category with a range of growth rates and are really on very comparable to the other household categories and stable.

So, we were seeing in the months of the same trends that have a lot of other products in our Orbital IOR also seek household is very interesting point sequential improvement quarter to quarter, despite pressure on consumers.

For the second part of the question.

I think you're asking about just sort of the pacing range of guidance in place to start is just a reminder, the month debt underlying retail volumes about flat for the full year, net of the effect from that point of our product portfolio optimization, I think we've said all along.

We see in a slight improvement sequentially quarter by quarter.

So the center cut as a guide for Q4 would be, again a bit of a sequential pickup to plus one.

And that's how we've been thinking about it.

All units generally developed about like.

Got it.

Thanks so much.

I'll pass it on.

Our next question is from the line of Brian McNamara with Canaccord Genuity.

Please ask your question.

Hey, good morning.

Thanks for taking our questions on with weaker restaurant traffic and more meals consumed at home.

Given the macro environment, I guess, were a bit surprised that retail lines are in a little bit better and rentals, Cooking & Baking specifically, I understand you expect further category improvement in Q4, but are there any dynamic they're worth pointing out, whether it be timing or something else?

Let me start lands need may add on a good question.

I think one of the things that's affecting what we saw in the Q three trend was the estimated $15 million of retail volumes pulled forward from Q2 to Q3 setting.

And that's really probably the biggest explanatory variable on-prem we do.

That's mentioned in his prepared remarks that we are seeing a modest increase from our own consumption.

And I talked a little bit about what we're seeing from a holiday standpoint, which will also contribute to the

understood and that out at Investor Day back in March, I think the Company express a belief that it's categories will return to kind of low single-digit volume growth next year with the Company expects to outperform.

That remain the expectation here given the management changes and things like that; I think we should be aware of.

I think the commentary that Debbie heads off or is that the long-term algorithm would be low single digit growth.

I think here in October of 24, we're not we're not prepared to speak specifically to 2025 that you're correct in what we think this is the underlying category growth for the upfront.

Understood.

Thank you.

Thank you.

At this time, we've reached the end of our question-and-answer session.

I'll turn the floor back to Lance Mitchell for closing remarks.

I'll just close by saying thank you and everybody is a sedative earlier.

We take a lot of time preparing their prepared remarks as well as preparing for Q&A.

We really appreciate the time that you take to listen and ask some questions.

And I will tell you is this being my last earnings call.

It's bittersweet to say thank you for your interest in our CP. and thank you for listening in today.

This will conclude today's conference.

Thank you for your participation.

You may now disconnect your lines at this time.