Rentokil Initial PLC (RTO) 2022 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you all for joining us today. I should say if you're here for the speed awareness course, you're in the wrong room. If you want to stay, you'll probably have more fun, so stick with us. In a few moments, Stuart will provide you with details of our first half results for 2022, where we've again delivered a strong financial and operational performance. I'll then come back and provide an update on our operating model and the performance of our businesses before finishing off with a brief update on the excellent progress we're making towards the acquisition of Terminix. We'll then take any questions. And if you're joining us online today, questions can be submitted through the portal as usual. So to set the scene, let me just say a few words covering the highlights of a strong first half.

Revenue from ongoing operations increased by 12%, including double-digit growth in our North America, Europe and Asia and MENAT regions. This, of course, excludes revenues from disinfection services, which have now reduced in line with our guidance to GBP 13.6 million in the first half. That's a reduction of around GBP 82 million versus the first half of last year. Organic growth was strong in the half at 7.3% with 5.6% organic growth in Pest Control and an excellent 10% organic growth in Hygiene and Well-being.

As you can see on the right of the screen, ongoing operating profit grew by 9.6% on a constant basis and by 11.5% at actual exchange rates to GBP 232.5 million, reflecting good performances across our regions. Group net operating margins increased by 60 basis points to 14.9% at our highest first half margin in more than a decade and with good progress in North America and Europe, in particular, as we continue to drive greater scale and density, harness technology and leverage M&A.

Cash management has continued to remain strong with free cash flow of GBP 136.3 million and a cash conversion rate of 88%, once again, broadly in line with our medium-term target of around 90%. During the half, as Stuart will cover in a moment, we fully offset input cost inflation with strong price progression. And while notwithstanding those price increases, we've at the same time, delivered enhanced customer satisfaction with our NPS score up by 2.2 points and increased customer retention, which was up by 110 basis points to 85.4%.

Turning to M&A. Excluding Terminix, of course, during the half, we've delivered an uplift in deal flow with 31 deals completed, bringing annualized revenues of GBP 68.4 million to the group, building city-based density and strengthening our market positions in several higher-growth cities of the future. Total consideration of GBP 159.6 million was spent in the first half, keeping us firmly on track towards our full year guidance for consideration of GBP 250 million with most of these being smaller bolt-on acquisitions.

Our M&A pipeline around the world remains excellent. Of course, during the half, we've also been working through the necessary legal, financial accounting, regulatory steps to bring together our Pest Control operations with those of Terminix. We are making great progress. We remain on track to complete the deal in the second half with our target completion date remaining at or around the end of the third quarter, subject to the next steps that you can see there on the screen.

These include completing the reviews and approvals of the documentation by the FCA and the SEC, publishing the circular and prospectus to shareholders who will then vote and subject to their approval, we'll close the deal and list our ADSs on the New York Stock Exchange. So a strong financial and operational performance in the first half with the excellent Terminix acquisition proceeding absolutely to plan. With that, let me hand over to Stuart, who will take you through the group financials and the regional performances in more detail.

Thank you Andy, and good morning, everyone. I'll run through the financial highlights of what has been a strong first half of the year. I'll start with the group level numbers, move through the regions and then look at the balance sheet. Finally, I'll give an update on our technical guidance. Unless I state to the contrary, all numbers are at constant rates of exchange. The core business, that is excluding disinfection, delivered a strong top line performance in the first half. Ongoing revenue was up 12% to GBP 1.521 billion.

This translates to ongoing operating profit of more than GBP 228 million, a year-on-year increase of close to 10%. The strong profit conversion from the higher revenues has resulted in improved group margin of 14.9%, a year-on-year 60 basis point improvement. This reflects margin improvement across most of our regions, including notably in our North American and European businesses and has not been materially benefited by COVID-related bad debt or credit note releases. Free cash flow in the half was GBP 136 million. This represents 88% cash conversion, excluding the impact of one-off cash flows mostly related to the Terminix transaction. Free cash flow results from a strong profit performance, offset by an increase in inventory to ensure product availability given challenged supply chains. These factors, combined with the continued success of our bolt-on M&A program and the dividend payment, resulted in a net debt-to-EBITDA ratio at 30th of June of 2.2x.

Based on a strong performance in H1 and our confidence of further progress in the remainder of the year, the Board has approved an interim dividend of 2.4p, a 15% rise year-on-year and in line with our progressive dividend policy. So looking now at our performance by region, starting with North America. Our core North American business grew by 12.5% in the year, of which 6.4% was organic. Pest Control organic growth was 5.5%. There was a modest headwind in the period from unseasonably cold weather in certain parts of the country, which delayed the start of the pest season.

Our North American distribution business delivered good growth in the first half despite ongoing supply chain challenges, which we've taken steps to effectively mitigate by managing inventory levels to maintain supply to customers. We had good pricing across all channels in the region. This successfully offset the expected inflationary pressures. And despite the strong anticipated reduction of disinfection business, we were able to deliver ongoing operating profit growth of nearly 5%. And Net operating margins in North America were up to 16%. That's a 40 basis point improvement year-on-year.

We've also had another good period for bolt-on M&A in North America, acquiring 6 businesses with combined annualized revenues of around GBP 13 million in the year prior to purchase. I'd like to take a moment to update on progress towards a business of scale and margin in North America. We met our objective of a $1.5 billion business in 2020. Our journey towards 18% net operating margin has been driven by growth, both organic and acquisitive, creating increased density and leveraging the implementation of our best-of-breed operating platform, which we substantially completed at the beginning of the year.

Our organic growth target is being exceeded. Our bolt-on program continues apace, and the merger with Terminix provides a once-in-a-generation transformational opportunity to scale the margin. H1 margin of 16% is nearly 400 basis points higher than H1 2019, the last comparable period unimpacted by the pandemic. Where we've spoken about our IT re-platforming in the past, we've talked about how it facilitates the deployment of group innovations for either delivering a better customer experience or reducing our cost to serve. This chart demonstrates how we are rapidly moving to leverage the opportunity and the strengthening of margins in H1 underpins our confidence for delivering 18% net operating margins by the end of 2022.

Turning now to the European region. -- a really good performance across the board here, driven by both pricing and volume, ongoing revenue, excluding disinfection, rose by 13.6%. Organic growth was 9.6%. All 3 business categories in Europe posted strong numbers. Pest Control ongoing revenue was up 14.4%, Hygiene and Well-beings, up 11.6%, while France Workwear recorded growth of 16%. Hygiene and Well-being is back to providing full contractual service terms in most of its markets in the region.

France Workwear overall is now back to pre-COVID levels. Although total revenues in Germany fell by 4.1%. This was due to the reduction in disinfection revenue with underlying core revenue improving by 6.2%. Ongoing operating profit rose by 16.3%. We've been successful at protecting margins with price offsetting cost inflation in all categories, and that provided a stable basis for the delivery of a 120 basis point improvement in net operating margins to 19.3% through business growth and improved density.

While labor markets throughout the region remain tight, we've been very effective at managing the pressure. Colleague retention rates remain very high across the region in the mid-90% range. The region completed 7 business acquisitions in the first half of the year with annualized revenues of GBP 41.5 million in the year prior to purchase. This included deals which took us to market leadership in Pest Control in both Spain and Poland.

Turning to the U.K. and Sub-Saharan Africa. The region delivered a resilient trading performance against strong COVID-related comparators in 2021, particularly in the medical waste business. Ongoing revenue for the region increased by 5.6%. Pest Control was up 4.5%. That category performance came despite softer U.K. domestic property services, where growth had slowed in recent months in line with the housing market. Hygiene and Well-being was up 8.4%, and our Ambius business delivered an improving performance, reflecting ongoing easing restrictions in hospitality, travel and office sectors.

Regional ongoing operating profit decreased by 0.5% to GBP 46.4 million in H1 with the prior year supported by COVID-related bad debt provision releases of about GBP 5 million. Net operating margins were 25.6%. It's worth noting that regional cash performance has been strong in H1 with debtor days at pre-pandemic levels and with no significant escalation to date in bad debts or customer insolvencies.

Inflationary pressures have been significant in the first half of the year, but our pricing systems have delivered a price performance that has fully mitigated cost inflation. As a result, cost inflation in H1 has not been margin dilutive. Despite price increases, customer retention at 86.5% is now actually above pre-pandemic levels. We've also sustained our investment in colleagues and services. This has led to further improvement in colleague retention to pre-pandemic levels. Looking now at Asia and MENAT. The first half of the year generally saw improved performance.

We did experience strict new COVID lockdowns in places like China and Hong Kong, where operations were severely curtailed. But in most countries, sectors hardest hit from the pandemic, such as hospitality retail and offices have been resuming operations. This has led to a quick recovery in demand for core service provision in both Pest Control and Hygiene. Regional ongoing revenue, excluding disinfection rose by 15.5% in the first half of which 8.3% was organic.

We have made good progress on price increases in a region where we have been historically less capable with notably strong execution in Indonesia serving as a model for other countries. Demand recovery for core services and pricing have helped deliver 17.2% growth in ongoing operating profit. Net operating margin for the Asia and MENAT region was up 40 basis points to 14%. This has been accompanied by year-on-year improved colleague retention in both sales and service.

And finally, turning to the Pacific region, another good trading performance here. Regional ongoing revenue increased by 9.8% of which 5.3% was organic. Pest Control was up over 5%, with good demand in both residential and commercial. Hygiene and Well-being was up over 11%. We have good demand for our Hygiene solutions, which were launched in Australia and New Zealand in the second half of last year. The performance has been supported by strong overall customer retention for the region. Regional Ongoing Operating profit was up 15.8% with an increase in net operating margin of 120 basis points.

In the region, we acquired 4 Pest Control businesses in the period, one in New Zealand and 3 in Australia. So that's a rundown of our regions, which as you can see, have performed strongly overall in the first half despite some disruption to the trading environment. Across our geographies, we've seen inflationary cost pressure, most notably wage inflation but also in fuel. We've been very successful in mitigating increases through pricing. I think it's briefly worth reiterating our approach. You will have seen this slide before. It offers a good overview of what we do to manage pricing effectively.

Firstly, the majority of our contract customers are on evergreen rolling contracts. We process price increases in the anniversary month of the inception of that particular contract. So in general, we have no single pricing event in a year when we have to make big decisions about expected inflation. We're making those decisions daily, weekly and monthly based on the evidence we see at the time. We have strengthened our governance in this area as well as group with regional and local committees. Our work is data-driven with KPIs tracked in monthly performance reviews and pricing committees locally.

As I've just discussed, there are a few markets, in particular in Asia and South America, where it's inherently more difficult to implement price increases. But we've taken some targeted actions that are yielding promising early results due to the improved pricing capability in these markets. And so far, the focus on price has not resulted in any deterioration in group customer retention. To the contrary, customer retention has actually improved by 110 basis points on the prior year. The next slide talks to our ability to effectively manage cost inflation and drive margin improvement.

Continued execution on strategy, which has driven business growth and improved density resulted in an improvement of 60 basis points in group net operating margin. I can give you a little more insight into the impact of inflation on our P&L by looking at 2 cost lines. People-based costs are our single largest cost accounting for more than 50% of revenue, whilst clearly, fuel for vehicles is the most volatile line item and which has been subject to most inflation in the period.

You can see from the chart, the effectiveness of our price management means that although fuel has increased by 65 basis points as a percentage of revenue, people cost inflation has been controlled, such that it effectively offset the fuel inflation impact. As a consequence, at this point, we remain confident that we can continue to pass on input cost inflation to our customer base whilst clearly keeping this under very close review.

Let me say a few words now on cash flow and debt. Operating cash flow of GBP 187 million was driven by an increase in adjusted operating profit, offset by working a capital outflow, some one-off items, much of which was related to the Terminix merger and higher CapEx. It's also set against an elevated prior year performance of 150% cash conversion rate, which had a strong clear down of receivables as the disinfection revenues unwound.

The increase in working capital in the first half resulted from a GBP 22 million increase in investment in inventory to ensure we retained our ability to supply customers amidst the broader supply chain constraints in the market. Capital expenditure of just under GBP 80 million reflects a more normal pattern of spend as we exit pandemic conditions.

On the second cash flow slide, we see that continuing free cash flow was about GBP 136 million. Cash tax payments of just over GBP 32 million reflect higher group profit. Net cash spend on M&A was GBP 127 million, dividend payment of GBP 79.6 million, a GBP 13 million expense for new share issuance related to the Terminix acquisition and cash inflows of GBP 1.6 billion related to the recent financing activity, leased to an increase in cash and cash equivalents of over GBP 1.5 billion. Let's take a look at the balance sheet, and I'll touch on those debt-related cash flows. Away from ongoing operations, you'll know we have been active in the debt market in the first half to finance the Terminix acquisition.

We've been successful in issuing 3 bonds, converting our short-term bridge facility into longer-term debt. At the end of June, we priced a 5-year EUR 850 million bond at 3.875%, an 8-year EUR 600 million bond at 4.375% and a 10-year GBP 400 million bond at 5%. These bonds fully cover the $1.3 billion cash element of the transaction consideration. The balance of the bonds alongside the GBP 700 million 3-year loan facility will cover the refinancing of Terminix debt and transaction cost. Of course, there's no change to net debt from this acquisition financing as the cash remains on our balance sheet until completion.

The material movement seen on the slide is for FX translation of GBP 77.7 million. This is primarily due to the strengthening of the dollar against sterling. We closed the period with net debt of GBP 1.45 billion. That's a pro forma net debt-to-EBITDA ratio of 2.2x within our target range of 2-2.5x, and S&P has reaffirmed our BBB credit rating with a stable outlook.

Now to technical guidance. On this slide, we update some technical guidance to help you with your models in relation to the full year 2022. I'll let you read this in your own time. I would draw your attention to the point at the bottom of the chart, which states that these items, both P&L and cash obviously exclude any impact of our transaction with term mix. Therefore, neither P&L nor cash include the interest cost of the new bonds taken to finance the acquisition.

As soon as the Terminix deal completes, we will update you on the anticipated revenues, profits and funding costs so that you can fully update your 2022 models at that time. Before I hand over to Andy, I'll leave you with some points on our key achievements in the first half. Core business revenue and profit reflect a period of strong delivery of our strategy. We've seen good demand for these services and being able to implement effective pricing to manage cost inflation and secure ongoing margin improvement. Operating profit and margin growth has been achieved despite the anticipated significant reduction in disinfection business.

The cash flow performance has been on target with working capital managed to meet challenges in the macro environment. And we've continued with a very active ongoing M&A program, not to mention the significant progress made towards closing of the Terminix transaction. The group has a proven and resilient business model despite the likelihood of continued volatility in the macro environment, the inherently defensive traits of the model give us confidence that we can continue to deliver further good progress in the second half. I'll close there and pass to Andy.

Thanks Stuart. All right, let me start as I always do with our proven operating model. Today, we're operating in 89 countries. But as I always say, Rentokil Initial was not so much a multi-national as a multi-local organization. We're operating in more than 1,000 local branches around the world. And it's that localness of our business that gives us its core strength and its resilience. So we're deploying globally consistent systems, processes, KPIs, innovations, digital tools and services but it's our local management teams that are recruiting locally, training locally, obviously, servicing our customers locally and using local relationships to build that pipeline of city-based acquisitions.

During the first half, we've maintained our critical focus on safety as the first item on every agenda, not just because it's the right thing to do for our people, but also because it's the right thing to do for the business. Our lost time accident rate remained in line with 2021, which was our best ever performance and working days lost continues to improve, now 11% lower than in 2021. Labor markets around the world continue to be tight in many cities, whilst there is some anecdotal evidence to suggest that some of these markets are now beginning to plateau, we continue to work very hard with our market-leading recruitment and retention practices, and they're continuing to deliver extremely good results.

Today, more people than ever are applying to join Rentokil Initial with record traffic to our careers portal. Colleagues have shared open vacancies on social media, 90,000 times and they've been viewed over 0.25 million times. And we were recently again, placed in the top 25 of employers for apprenticeships in the Department of Education Annual Rankings. Colleague retention remains high. It's in the mid-80s. It's down just 1% on last year. And with career development, very important to colleagues, we've developed a program for the second half to help them build long-term careers with us, including our first training and development festival with around 150 courses for colleagues to choose from. So good progress on employer of choice but in addition, we've also now begun working with our colleagues in Rentokil Initial and our future colleagues in Terminix to identify a new and a shared cultural framework for our combined organization.

The new vision for the company is to become the most loved and the most respected services business on the planet, always delivering in the right way. We've added to our mission of protecting people and enhancing lives a critically important third limb of preserving our planet. Our core values of service, relationships and teamwork in the future will include a fourth critical value that of responsibility. And these will be reinforced from the closing of the Terminix deal as we build on each other's strengths to create a great place to work, that's customer-focused that's driven to succeed, that's diverse, down to earth and highly innovative.

So preserving our planet is critically important to everyone at Rentokil Initial, but we know that we've got a long, long way to go before we reach our net 0 target. Actions are underway throughout the organization, including as you can see, continuing to introduce ultra-low emission vehicles just as fast as the availability of vehicles with sufficient range and adequate charging networks will allow us. We've also added a new aim, and that is that over 90% of all paper products that we provide to our customers globally across our Hygiene and Well-being business will hold an appropriate environmental certification by the end of this year.

Turning to the S in ESG, colleagues remain highly motivated by our ongoing support for good causes through our Rentokil Initial Cares program, which matches unclaimed shareholder dividends to funds raised by our colleagues as well as supporting larger group-led initiatives such as Cool Earth, which protects rain forests and that's vital in storing carbon from the atmosphere, the Queen's Green Canopy, which resulted in over 1 million trees being planted in the U.K. as part of the Platinum Jubilee celebrations. And UNICEF, which continues to deliver health and medical supplies for children and families impacted by the Ukraine crisis.

So from safety to recruitment and from the environment to crisis aid, hopefully, this helps to underline our values, our culture as a responsible organization. So let me now cover our categories. I'll then cover M&A, and finally, Terminix before moving on to questions. I'll start, of course, with the world's greatest Pest Control business. Ongoing revenues increased by 12.1%, taking Pest Control revenues in the first half to over GBP 1 billion for the first time with organic growth of 5.6%. Our Pest Control growth markets increased revenues by 11%, whilst their emerging markets grew by almost 20%. There were good regional performances in North America, Europe, Pacific and in Asia and MENAT.

Ongoing Operating Profits increased by 14.8% to GBP 189.8 million, with net margins increasing by 40 basis points to 18.1% and by 1.6% over the last 3 years. So turning now to Pest Control, innovation and technology. As Stuart mentioned, for an innovation project to be supported in Rentokil Initial today, that project has either lower our costs to deliver our existing services and/or provide customers with a better innovative service. In addition, every single project must have a proven sustainability claim, and it must target one or more key customer sector. So I'll give you just 3 quick examples.

Lumnia, that's our proprietary range of products for controlling flying insects in areas such as food preparation. We've sold over 100,000 units in the last 12 months and with each reducing energy usage and emissions by up to 62%. So it's not surprising that energy reduction feature is proving very popular with our customers in today's environment. Bird Alert is an intelligent digital service that recognizes the cause of different bird types and then automatically chooses the appropriate call of another species to scare them away, removing the need for netting for metal spikes and for chemicals. Flexi Armour is one of our latest innovations.

A mouse can get through a very, very small hole about the diameter of a pencil. So gaps in walls make easy access points. But with a new range of proofing products, we can create a barrier that will keep them on the outside of customers' premises. Now of course, if a rodent does get inside the customer premise, then PestConnect is the next line of defense. I'm not going to go into detail today on PestConnect, but the success of our digital service here continues with more than 262,000 units.

Now in operation in customer premises, and that's up by around 1/3 over the last 12 months, notwithstanding ongoing challenges in supply of computer chips. In the next few years, we've got an ambitious target to get to 25% of commercial customers connected. And we're now starting to see some of our lead markets like the Netherlands at or very close to that 25% target.

I briefly mentioned at the last results, our brand-new pilot with Vodafone and Google, and that's into the use of digital cameras in the field and the use of AI analytics. The initial work looks very promising with clear photographic evidence of rodent activity coming through. Today, we've got pilots underway at 18 customer sites. We've already received 4,500 digital photos and images, and we've undertaken 34,000 hours of digital remote monitoring. We've got over 100 live technology projects, we're pleased to know.

I'm not going to go through them all, but I will pick just one to share with you today. We've recently launched our first self-service portal for residential Pest Control customers in North America. And we're providing those customers with 24/7 access to their service visit schedules to view their documents, to pay their bills online. We've only just launched this in the last few months. And to date, we've had 20,000 customers sign up. We've had more than 12,500 invoices paid. And we've saved probably in the region of 2,000, 2,500 call center hours just in the last few months alone. So really, really good progress here in our Pest Control business.

Let me turn now to Hygiene and Well-being. Very pleased with the performance of our Hygiene and Well-being category in the first half with ongoing revenue growth of 10.8%, 11% in core Hygiene, that's inside the washroom and growth of 10.5% in premises Hygiene, that's outside of the washroom. As I highlighted last year, given the generally perceived increase in the importance of good Hygiene, we anticipate that from this year, the medium-term organic growth potential in our Hygiene and Well-being business will be very similar to Pest Control.

So around 4%-6% on an ongoing basis. So organic revenue growth in the first half of 10% really was an excellent performance. Now we offer 3 ranges of Hygiene products with options for use both inside and outside of the washroom and each with no touch options. Reflection, that's our contemporary range of premium stainless steel products. Signature is our main suite of Hygiene products, delivering high standards and featuring attractive designs. And Signature Color as it suggests, adds a range of color products to reflect the customer's own brand and design requirements.

And just like Pest Control, we offer customers 24/7 online access to contract and service information via the customer portal, my initial. In the first half, we installed around 150,000 signature units. That's an increase of 11.6% on the prior year, and we passed the milestone of 100,000 registered users of my initial. We also launched new products, including the Signature Mini. That's a no-touch sanitary bin for smaller cubicles, an innovative period dignity dispenser for businesses which want to offer employees or customers free period products and exclusively for schools and nurseries the signature little ones range, which promotes good hand Hygiene amongst children.

So turning now to air care. Currently, we offer a range of fully serviced air fresheners, air deodorizers, air scenting and more recently, 2 ranges of air purification devices, InspireAir and VIRUSKILLER. These are best-in-class products. They've got recognized accreditations and scientifically proven claims. Over the last 12 months, we've installed 11,000 air purification units, and that's growth in the first half of around 35% on last year. Later this year, we'll be adding a third product to the range with the launch of Aeramax, and that's a wall-mounted unit featuring multi-filter technology for really high levels of effectiveness.

And this new product provides our sales teams a mid-tier option between the entry-level InspireAir and the premium end VIRUSKILLER. Now clearly, given changing attitudes to Hygiene, there is great potential in air hygiene, and our next steps are to extend our expertise into other areas, including air quality monitoring, data analysis and benchmarking and moisture and mold control. Our first pilots are underway in Asia, and we're continuing to explore new third-party partnerships as well as acquisition opportunities.

Moving briefly to Workwear. In our French Workwear operations, ongoing revenues increased by 16% in the first half as the business returned overall to pre-COVID levels. The important Paris region is still operating below 2019 volume levels in the important HORECA sector, but this has been balanced by good growth outside of the capital. State of service remains very high in Workwear at 99.1% and the business continues to drive operational efficiency.

A good example of that. So far this year, the business has reduced the average time it takes to onboard a new Workwear customer from 21 weeks and is now down to 16 weeks. The Workwear business is also making great strides in sustainability with its fabric recycling, up by 7.5% to over 300 tonnes. Pleasingly, our business in France has become the first in our group to receive a gold award for ESG by EcoVardis.

So turning now to M&A, and it's been an excellent 6 months. We've accelerated our program with 31 deals completed in the first half, demonstrating the continued strength of the pipeline. 26 of those deals were completed in Pest Control, 5 in Hygiene and Well-being. 7 of the acquisitions were made across Europe, acquiring GBP 21.2 million of annualized revenues with deals taking us into the #1 position for Pest Control in 2 very important markets, being Spain and Poland.

We did 7 acquisitions in Asia and MENAT, including one that doubled the size of our business in the Philippines, where Manila is one of our key 'cities of the future'. 6 deals were closed in each of North America and Latin America, including the acquisition of Ecotech in Argentina and Brazil, where we can now offer an end-to-end fumigation service for exported grain being shipped globally by food producers. And with total consideration of GBP 159.6 million, we're making good progress towards our full year target spend of around GBP 250 million. So very strong performance in M&A. And again, based on our most recent midyear analysis, the M&A program continues to perform at or above our required hurdle rates.

So turning now to Terminix, and we're incredibly excited by the value-creating opportunities of the acquisition of Terminix, which as you know, it increases our scale and density in Pest Control. It offers significant synergy benefits. It creates an even more attractive and resilient financial profile for the group as we continue to execute our medium-term growth plans. I'll let you read this slide in your own time, but just to reiterate why the North American Pest Control market is so important. It represents around 50% of the global Pest Control market. And with this range of structural growth drivers, including population growth, a warming climate, regulatory standards increasing, rising intolerance to pests.

These are all fueling long-term growth in this outstanding region and this outstanding industry. Here's a quick update on the progress chart that we shared at the prelims. And as you can see, we are in great shape, and we are virtually ready to go. The transaction remains on track to close in the second half of the year and our target completion at or around the end of the third quarter, subject to those next steps I mentioned earlier.

We've got a very good governance structure in place with the support of a range of third-party consultants, supplementing the work of the Rentokil Initial and the Terminix teams. We're operating across 14 major work streams, and each major work stream has a series of sub-working groups and projects. So for example, the IT work stream has got 22 individual projects sitting within it. Each of those 14 work streams has got detailed synergy targets, phasing of those targets, cost to deliver them, and they're all now set out in great detail.

The top 7 work streams include operations, procurement, HR, IT and finance are responsible for over 80% of the total synergy delivery. Clearly, local operational integration of those branches is at the heart of the overall plan. As we take the 2 businesses in North America with over 600 combined branches and over a 36-month period, we create a single optimized, highly-dense branch network. And we'll build that combined network carefully, and we'll do it in 3 phases: first, branch co-location, then we move to branch integration, and we finally finish with route integration. We announced the deal at the end of last year, and I said to both of our teams, we are now in the incredibly exciting third trimester and we're preparing now for the big day.

So in summary, in the first 6 months, we've delivered a strong overall performance with an excellent contribution for both organic growth and M&A. Cash management continued to be strong, and we've maintained a very good pricing discipline. As I've just mentioned, the Terminix deal is right on track. It will be significantly value creating. And finally, in view of our performance in the first half and our confidence for the second, the Board is declaring an interim dividend payment of 2.4p per share, a 15% increase on the first half of '21. So with that, Stuart and I will now be very happy to take any questions. We're going to start with questions in the room, and then we are done with then, we will move to any questions online. Thank you.

Sylvia Barker from JPMorgan. A few on pest-control, please. Product sales, I presume with chemical prices being up, maybe that strength in product sales would have been helpful to the margins as well. Could you maybe talk about the impact of that on the North American margin? And then commercial versus resi, a couple of your peers have printed quite good commercial growth in North America. Could you maybe discuss the commercial versus resi outcome? And then just how does pricing work for you in residential versus commercial, especially in North America? And then finally, wage increases, I mean, very impressive on the net impact of labor inflation. But I think the recall that in July and August, you might have more wage increases maybe than you've had in the first half. So could you maybe just update us on that time line for wage increases?

So for sure, we've enjoyed enhanced margin in the distribution business, but that's pretty much in line with North America in general. So we've done a nice job of passing on price in our products business in North America. So I don't think there's anything material that shifts the mix towards products away from our underlying service business. On sure I'll take pricing, while I'm talking on commercial versus resi. I mean we look at it very similarly, honestly. So there isn't a lot of difference between a small SME business operationally and a residential property.

So we've pretty much passed on the same order of magnitude of pricing across those 2 segments because the dynamics are the same. Wage inflation and fuel is impacting both similarly because the operational structure of that is very much the same. So we don't see a big difference. I think what we are doing is getting more success in key accounts and national accounts.

For a long period of years, really, they've been a really tough environment to get price increases. We've been signing 2 or 3-years, 0 price increase contract for a long time. And we're moving away from that. And that and what we are seeing, again, because those businesses are experiencing it themselves. That's not a sustainable model. And so we'd be pretty happy with our ability to get pricing in that upper level as well. So that's been a positive, frankly, out of the inflation that we're seeing. And then if I just take wages, yes, we'll see slightly elevated wages in H2. But I think we've got a number of online questions about this. We're hearing a lot about CPR and RPI and our dear friends PWC and those sorts of numbers. We're not seeing wage increase pressure in that order of magnitude.

The real wages being offered in the businesses that we operate is simply not at that scale. And so whilst it will be slightly elevated for sure, we think that's within a manageable range. And of course, we've been pricing for that already. So we see it coming. And the way we price, as I said in my presentation, we price annually. So we have to look forward to 12 months. And so that price builds over time so that it flows through at the right level that we're forecasting for cost inflation in the business. So we think that's manageable. It's not of the order of magnitude of some of the big headlines that you've seen. Andy?

Yes. No, I guess I'll be repeating. The thing with inflation is we know what we're going to pay for wage increases for the second half. We don't know what fuel is going to be, but we know what we're going to pay. So in terms of as we look to price as Stuart said, on a monthly basis, we pretty much know. Therefore, we really should be able to cover that in the second half. As we've said, it won't be a surprise to us.

We are doing most of our wage increases on the 1st of July, but we've actually done a fair number of them where we've got union agreements or we've got collective bargaining agreements. We've got local practices that we've already done them in the first half of the year. So I would guess we've probably done 1/3 and we've got 2/3 to go. But it's well understood and in our numbers, so we'll be fine in the second half.

This is Anvesh from Morgan Stanley. 2 questions. Just saying that resi versus commercial question further, is there any difference in sort of the price elasticity of the pass-through between resi and commercial? I mean, I noticed in one of Rollins presentation, there's the retention rates on resi probably lower than commercial. So just wondering how that work in a downturn in an inflationary environment versus commercial? And just second, on the bolt-on M&A, clearly, pretty, pretty strong first half. But given the scale you're going to get from Terminix going forward, will we see a shift of the bolt-on I mean out of the U.S. or the strategic value to continue to do bolt-on M&A in the U.S.?

All right. Thanks. Yes. On the first question, the broader question, as you'd imagine, we've looked. I mean, I've been here long enough so I could remember, but we have looked to how does the business perform in stressed economic conditions. So we went back to 2008, 2009, the global financial crisis. Obviously, we've only just lived through the COVID crisis. How does the pest business generally perform in an economic downturn? I mean it's not immune, but it is very defensive. And we always make the trite comment that the rats don't read the financial times.

But if you're in the commercial side, you're right. By law, you've got to maintain Pest Control. So you can't say old economy is a bit poor, so I'm going to turn that off. Residential, again, for most people, if you've got a mouse running around the kitchen, you've got to get it dealt with immediately. So you don't put that off. But there's no doubt where do we see the economic impact in the Pest Control industry in a downturn. The first thing you see is on the commercial side. SME failure rate goes up. So small businesses, closure rate goes up, getting your price increases through is a bit more challenging if the economy is struggling.

On the residential, as you said correctly said, that retention rates for residential Pest Control are already lower than they are for commercial, really for the reason, given commercial, you've got to have it residential, it's a choice. So you would see the renewal rate on resi drop a little bit, but not profound, not earth shattering. So you would expect to see them turn down a bit if the economy really hits the buffers. On the other hand though, don't forget for our business and Stuart's already said, more than 50% of our costs are people. And what's the other thing that happens in an economic downturn, people don't move their jobs.

They stay put because they've got a good employer. The pressure on wages flattens, unemployment goes up. So on the big, big cost driver in our business, we get more benign economic environment, whereas on the revenue, it's a bit more challenging. But back to pricing though and pricing in all market conditions, our philosophy is really quite important point. We are not, never have done, obviously never will. We're not trying to price to gain an advantage on the customer. So our pricing philosophy has always been, we deliver the customer great service, and we work very hard to keep our costs under control. But when our costs go up, we say to our customers, I'm sorry, but we have to put your prices up.

Back to recessionary environments, while in those circumstances, some of our costs go down as well. So we don't need to get as much price from customers. But we've looked back and our experience is even an economic downturn, we can get price, provided we're still delivering great service and we're not looking to gain an advantage. And that's quite an important philosophy and not necessarily one that everyone follows. On the M&A point, look, I think I've said it already, for the next couple of years post-closing, we're going to be really, really, very, very busy in the United States. What we will therefore do is we will turn the wick down a bit on acquisitions in the U.S.

We're not going to just sit it out and let our competitors pick up deals that we would otherwise want to, but we will be much more selective. So I think we will go after and get the businesses that we really want. Well, they will be the ones that fit into our footprint. So where density even with Terminix isn't where we want it to be, we'll go for those. Where we've already consolidated the branches with Terminix, well, we're free to go again where we've got a big consolidation coming up, well, we'll probably stand off that for a little bit.

What it does mean, and again, it's in your question, we will work even harder to do deals outside of the United States but also inside the United States in Hygiene as well. So I don't think you're going to see a big change in philosophy, but all of the other businesses in the group have been put on notice we will be doing fewer deals in the States, which means we will be doing more deals in your regions. So we'll get on with it.

James Beard from Numis. A couple of questions. Firstly, just a quick one on the $700 million 3-year loan facility. Is that fixed floating interest rate? And what's the cost of debt on that facility?

Bente on the GBP 700 million fixed? (inaudible) The fixed margin, but floating at level, right?

What's the margin?

Have we disclose that. (inaudible) Yes. So we haven't disclosed that at this point.

Okay, fine. And then second question was just on colleague retention. You noted sort of 1 percentage point drop year-on-year in college retention in particular. It sounds as though slightly more pronounced on the service side of the business rather than sales side. What are the drivers that you've noted behind that slight drop?

I'm going to be pressed to say that 1% is not statistically relevant in a 45,000 people business. I don't think there's any big trends that I could pick and say that's what we're seeing. You're right that we're seeing more on the service. It would normally be the other way around. Normally, salespeople tend to move jobs much more frequently and sales retention is up. I can't really point to any great single drivers, and it's different across the regions.

So I don't think there's a theme here. But as I sort of alluded to in my remarks, what we are beginning to see is some of the markets which have been really hot beginning to plateau. We can begin to say actually, that's improving. So let's see in 6 months' time where it is. But I think it's just the trend that we've seen globally around the world. Post-pandemic, people didn't move during the pandemic and the pent-up demand to move jobs, better opportunities, people want a different change. I don't think there's anything structural and certainly nothing structural to the pest industry. But retention rates well into the 80s, most companies would be very happy to have those certainly in service. So no big themes that I can call out there, James.

Dominic Edridge from Deutsche Bank. Just 3 for myself. Firstly, have you given any consideration to fuel hedging in the future, particularly obviously once post the Terminix will, obviously, your scale will be quite a lot bigger. And obviously, it is a cost which seems to be the most volatile one that you have. Secondly, just in terms of the IT in North America and the program there.

Can you just say when you have gone through this process you're nearly at the end of it now, what sort of operational KPIs are you see moving on the back of this? And what things are you expecting to see move in terms of those and then obviously, feeding into the financial KPIs as well? And then lastly, obviously, you discussed higher customer retention. Can you just say how easy is it at the moment to actually win new customers? Because I suppose 1% higher retention rate maybe you'd expect a slightly higher revenue growth. Are you finding it tougher to actually get new customers in at the moment as well?

I'll take the third. Stu, do you want to take the first 2?

Yes. So fuel hedging, and we do some limited hedging, mostly around power in our French Workwear business where it's much more of a flow through. It's a significant part of the P&L. Philosophically, we're not fans of fuel hedging. A couple of reasons. 50% of the time, you're right and 50% of the time, you're wrong and you pay a margin in between. But also, again, if you reference our current experience around inflation it's relatively straightforward to go and see a customer and point to the pump price. If you've hedged in an operational manager hasn't got that pressure, going and talking in 12 months' time about the same dynamics is a very different conversation.

So from our perspective, we prefer to be in the moment, it's 2% of our revenue in the end. So it's a relatively modest part of the P&L. It's important and it's volatile, but I'd rather deal with that volatility in the moment and go and talk to our customers about what we're experiencing, then defer it for 12 months and have a very different conversation. In North America, our IT, I mean, the great thing is that the operational and financial KPIs really are exactly the same as we see around the group.

And that's one of the points about the replatforming is we can apply the innovations, both in terms of the management of our own people and the way we interact with customers to our North American business in a much more holistic way. So those operational metrics are state of service. Are we on the equivalent of services on time, in full? What's our percentage of electronic payments, our volume of complaints or CVC, our NPS scores? So actually, those operational financial metrics are really identical to what we'd see anywhere else in our business. Sorry, yes?

I mean have you seen a changes…

Apologies. I think the impacts of what we've talked about, which is we've maintained colleague retention through this period, which has not been a straightforward role, straightforward task. Customer retention is pretty stable as well. So those output measures are actually, again, in this environment are pretty important. We're selling pretty strongly, I think in the first half. So those new business sales that Andy will talk to in a moment. So those are what's driving that 40 basis point improvement of those sort of normal operational financial metrics in true.

Yes, I mean it's quite difficult to generalize when you're talking across so many business countries rather and multiple business lines. If we look at our data for the first 6 months, we have 2 types of customer side, if you like. We have contracted customers, which we call gross sales, and then we have jobbing, which is onetime, not repeat. We always love it when contract sales go up. That feeds into what we call net gain, jobbing, we take it, we like it because it's higher margin. The main feature of the first half in actual fact is our contract sales are up, but our jobbing sales are down, which is quite curious.

If you get asked us the bet at the beginning of the year and looking out, we would have said, well, it's going to be a tougher year with contract sales. And when it's tough back to an earlier question about a recession, what we sometimes see is customers who might otherwise have bought a contract decide to buy a onetime job. We've seen the inverse of that so far this year. Our contract sales are up. They're above budget. Jobbing sales are not where we want them to be.

So I can't have it all. If I had to choose between one of my favorite children there, I would take gross sales contracts as every time because it's the lifetime value of the contract. No real reason for that, and again, it's a little bit of the margins. It has been a slow start to the season a bit in North America. It was a Chile wet spring. So that slowed things down. It was a relatively slow start here in Europe weather-wise. So no big trends, but I'd say contract sales are actually up, jobbing sales are a bit off from where we'd want to be. We'll see what the peak of the season now looks like over the next 3 or 4 months.

Sam Dindol here from Stifel. A couple from me on Hygiene and Well-being. Firstly, do you have any sense of how the rollout to 20 new countries has gone? Does that give you a taste to do more countries in the future? And then secondly, I know an awful lot going on in North America over the next few years, but do you have an early sense of how easy it is to cross-sell Well-being products to Pest Control customers and potential opportunity over the next sort of 3-5 years?

Yes, Sam. Let's see. Right. So you will remember. I'm sure you all remember, when we talked about Hygiene and Well-being, we said there's really 3 buckets where we're going to find growth. Market #1 is selling more services to existing customers. Bucket number 2 is selling services to customers outside of our heartland and washrooms air in particular. And the third is the new market. And I said if we throw 6 sixes, if we hit the ball out of the park on all 3 buckets, then we'll end up with very good growth above the 4%-6%, but rarely due to 6 sixes is in business.

So we're getting a reasonable performance across those 3 buckets and certainly in the half, it's given us that 10%. On the new markets, I'd say it's a bit patchy. We're doing reasonably well in new and some of them, the re-entry markets, reasonably well in Germany. We're doing okay in Holland and Belgium. Doing okay in the States but off a very, very low base. So if I was doing a half-term report card, I'd probably say 6 out of 10 on the new market. So plenty more to go for.

Cross-sell, I always say in business services, if someone tells you the answer to the problem is cross-sell, and you should really doubt whether they're telling you the truth because cross-sell is incredibly difficult, really, really difficult. We've not put any great synergy in our Terminix model for cross-sell. But we know there is an opportunity that we just haven't quantified it. We've got so many other things to be getting on with on the Terminix deal. I do think the cross-sell will be something we'll get to in years 2 and 3 on the Terminix deal, not in the first couple of years.

There's so much to do on the cost side. There's so much to do on the re-engineering the process side. But there will be an opportunity. There will be cross-sell opportunity within pest. So they're big in termite, we are not. So we think we can sell termite services to our resi customers. We've got a bunch of things that we sell in our commercial business that we think we can introduce that's more of an upsell than a cross-sell to Terminix customers, then we think there will be some on the Hygiene side, but the prices on all the other things that are available to us will dwarf the cross-selling price, but we will get to cross-selling down the road.

Suhasini from Goldman Sachs. Just one from me, please. It seems clear that you haven't seen any signs of slowdown, but just wanted to get some color on what you've seen in June and July, especially in Europe because that's when the macro concerns have probably accelerated.

We wouldn't normally talk about in July when we barely given June. I mean it's just almost want more of your people, but we're on doing that with a smile on my face. So I mean, we've barely just seen July, I don't think we can see any discernible change in trend in July and June would be the same. So too early to pick it. Well, how would I answer that I don't think we're that different to many, many companies. We're not seeing evidence of an economic downturn, but everyone is worried about it. So I talked to the operators, without exception, they all read the newspaper.

They'll watch TV. They'll get their Twitter feeds, all the rest of it. Everyone is worried. But can you actually point to it? No, we haven't seen it. So I can't say that we won't see it, that would be madness. But I think we're on high alert and the guys are very, very actively looking at it and as we're putting our budgets together for next year, I mean everyone wants to give you the life story as always, but that's no different to how it's been for the last 15 years. So we're not seeing it. We're hearing it, but I am off for that a little bit. But current trading, no discernible change at all.

Wonderful, we'll move now to some online questions. I've got 3 questions from Simona Sarli of Bank of America. 2 to deal with margin and one about cash conversion. So I'll take those first while Andy is reading the questions. First 2 on margin, can you provide more color on building blocks of the margin increase in H1, especially considering that last year, you benefited from GBP 11 million of bad debt provision releases? And how should we think about margin progression in H2? Is it feasible to achieve a further improvement on a year-on-year basis given further wage increases likely to come through in H2 and also considering that last year, the benefit from the provision release was mostly in H2, GBP 22 million?

So I'll take those together. As I tried to express in my presentation, our improvement in margin was firstly underpinned by managing the inflation threats and neutralizing those and we've been, as you've heard successful in that. And then secondly, it's about the execution of our strategy. And you an improvement in margins because there are lots of moving parts. We've still got to manage inflation as it comes through. We're still going to deal with markets where the macros are quite uncertain, as you can see it was really across pretty much all regions, except for the U.K., where they had that delta on bad debt provisions in H1 that we've delivered that.

So really, it's the execution of our ongoing strategy around leveraging our performance into density that's driven that in H1. And I think I'd make the same comment about H2. So Simona rightly points out, we did take some releases, but I said at the prelims at the time that in the order of magnitude of the hits we took around COVID lockdowns in H2 2021. We're at the same order of magnitude as the provision releases and therefore, the quality of the underlying margin that you could rely on. And I think our performance in H1 fares that out.

So I'd make the same observation about H2. I'm not forecasting in an improvement in margins because there are lots of moving parts. We've still got to manage inflation as it comes through. We've still got to deal with the markets where the macros are quite uncertain. But nevertheless, I do think we've neutralized those onetime benefits that we saw in 2021. Simona's third question, is about PestConnect. And how should we think about cash conversion and CapEx in the midterm, considering you're increasing your efforts in PestConnect and air care technologies? Is 90% cash conversion still feasible?

So we're still working through the model. We're trialing different approaches in different markets. But actually, as we see it today, the connected pest service propositions in terms of financial dynamics are not dissimilar from Hygiene. So a higher upfront capital injection, but again, still single digit to low double digit. It's that order of magnitude. And in Hygiene, we deliver a cash conversion rate at least as good as that we do in pest today. So once it normalizes, and I think honestly, the incremental impact will be hard to discern in any trading period. I don't see any ongoing challenge around that 90% cash conversion rate as the model in pest shifts to more connected solutions. Andy, do you want to…

Yes. Thanks, Stu. I'll take Michael Hoffman's question from Stifel. I'll just read them out and you can have a look at the remaining questions, I'll pick up one in the middle as well. So Michael's questions are, did North American pest pace of activity improve each month in the second quarter following the slow start in April? I mean broadly, the answer is yes. I don't have it in my head as to whether June was better than May, but May and June were certainly better than April. So the point that Michael was making is that is the one I made earlier, which was there was a slow start to the season, weather-wise, particularly in the states. So yes, it's broadly the answer to the question.

Second question, Michael, raises is the SEC review process. Has it sort comments? Yes. And if so, do you expect to satisfy its questions within the original schedule of a shareholder vote late September, early October? My answer is yes. I can't speak for the SEC, but they raised questions. We've responded with answers to all of those questions. We've sent back an amended F4, which is the standard approach here, and now we await the response to the SEC. So I can't obviously speak for what the SEC's thoughts are, but I think we're in a good place. And the broad answer to the question to Michael, are we broadly in line with the same original schedule? Yes. Yes, we are. As I've said, it will be on and around the end of September into early October, would be our best guess, but it is best guest territory.

The next question that Michael raises is, are there regional differences to address inflation with price and across the lines, different lines of business, so different regions, different lines of business and specifically, did the North American Pest Control market? By which I guess, you mean that our customers take a price increase to sufficiently offset fuel and fleet costs. And let's deal with that one. Yes, the North American pest customers for Rentokil took price increases sufficient to offset fuel and fleet. Are there regional differences? I think the broad regional differences we would call out, the ones we typically call out.

We have 2 regions very big regions they are as well. Asia and LatAm, where historically, we found it much more challenging to get price increases. Both regions have had record price increases, the best they have ever achieved in our ownership. But I would say Asia is still shy of recovering all of its input costs. LatAm's quite close. I think not doing it. But we've more than covered it in other markets, and those are our 2 smallest regions, 2 of the small regions. So we don't take a different approach. We're just not as good as the execution in Asia and LatAm, but we're much, much better than we have ever been in the past.

So I'll take one other question, Stu, because it sort of relates a little bit to that question as well. And from Alan, can you comment on the pricing impact on organic growth? How does this differ across business lines and geographies. And in the case of North America pest 5.5% organic growth remains below that of peers like Rollins, can you comment on any reasons for difference here? So on the first part, can you comment on pricing on impact on organic growth and how it differs across business lines and geographies? It's not a huge difference across business lines and geographies, I would say. It's broadly the same. In this half, I would say, last year. You would say 60-40, Stu?

Yes. It is a little bit different market by market, but it's between 50-50 and 2/3, 1/3 is the range. Some of our competitors have big homogenous databases of millions of small clients where they can measure the difference in the value of a job order and attribute that to inflation because we're across 87 countries, and we don't have that homogeneity and we have shifts in mix around some of our business lines and also the scale of customers if we sell a big key or national account, that can shift that average job order significantly. So we can't do the simple maths, but other that our competitors can do. But we can sort of do a little bit of judgment, a little bit of data analysis, and it's in that sort of 50-50 to 2/3, 1/3 range, just about everywhere actually.

Thanks, Stu. The second part of a comment, can we comment on organic growth for our business versus peers like Rollins, I suspect the question means Rollins. It's not really for me to talk about the competition and their strategies. I would say the first point, we had very strong comps last year and look back and see, but year-on-year comps is always an interesting game. But I think we're in very, very strong comps. We're pretty happy with what we delivered. But I guess we're very happy with the shape in which we delivered it. We're happy with the margin progression. We're happy with what we achieved on price.

And in a slow-ish start to the quarter as some other questions have revealed that will have had an impact as well. How Rollins responded or peers like Rollins responded commercially and is clearly up to them. Their comment about what they've done for advertising or digital advertising is a strategy that they pursued. That's entirely up to them isn't necessarily the strategy we've pursued. So I'd say, look, we're pretty happy with what we've posted, but we're very happy with the shape of what we've delivered is really for competitors to explain their strategies and what they've done versus our side. I wouldn't read too much into it, but we do have very strong comps from the same period last year is, I guess, what I would say. Stuart, do you want to take the next one…

A couple of questions from me, one from Alan, and one from Kartikey both related to debt and the Terminix deal. You've guided for GBP 11 million finance cost savings on the Terminix deal with the recent refinancing done. Can you provide an update here given rising rate environment? Can you also comment on the plan for refinancing of the Terminix debt? I mean, as a general statement, I'd ask you all to be patient because we will give a detailed update shortly after completion.

So we'll share with you all the dynamics that we're seeing as that deal evolves. And also Clearly, we're in a statutory process. We've made submissions to the SEC. So I can't say anything more than is already publicly available. So I'll make those 2 statements. Clearly, though, rating environments have shifted since we first made public the deal back in December. So clearly, that GBP 11 million finance saving will shift.

And the refinancing of the remaining term debt, that will happen shortly after completion because of the subordinated nature of that debt that we've got to refinance it, and that's what the broadly the term loan is for. And then a related question from Kartikey at Aegon. Would it be possible to give us some indication of the portfolio, pro forma leverage following the completion of the Terminix transaction? How quickly do you think you could bring back leverage back to the target range? I don't think we publicized the pro forma leverage, but what we have said is we will bring back the leverage to our target range of 2-2.5x within 24, 2 full years, I think we said, of the closure of the transaction. So we'll be back to a sustainable BBB leverage by the end of the full second year.

That completes the questions online. So one more time with feeling, if anyone has got any questions in the room, we'll take a last one. If not, well, thank you all for coming today. Super. Thank you very much, everyone. Appreciate it.