Molson Coors Beverage Co (TAP) 2017 Q2 法說會逐字稿

Welcome to the Molson Coors Brewing Company Second Quarter 2017 Earnings Conference Call.

Before we begin, I will paraphrase the company's safe harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from what the company projects today, so please refer to its most recent 10-K and 10-Q filings for the more complete description of factors that could affect these projections.

The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made.

Regarding any non-U. S. GAAP measures that may be discussed during the call and from time to time by the company's executives in discussing the company's performance, please visit the company's website, www.molsoncoors.com, and click on the Financial Reporting tab of the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results. Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars, and the consolidated and U.S. segment results are presented versus pro forma results a year ago, which reflect the acquisition of MillerCoors as is it and related financial -- financing had occurred on January 1, 2016. Following the prepared remarks this morning, management will take your questions. (Operator Instructions) Now I would like to turn the call over to Mark Hunter, President and CEO of Molson Coors.

Thank you, Laura, and hello and welcome, everybody, to the Molson Coors earnings call. And thanks for joining us today. With me on the call this morning from Molson Coors, we have Tracey Joubert, our Global CFO; Gavin Hattersley, the CEO of our U.S. business; Fred Landtmeters, our Canada CEO; Simon Cox, the CEO of Europe; Stewart Glendinning, our International CEO; Sam Walker, our Global Chief Legal and Corporate Affairs officer; Brian Tabolt, our Global Controller; and Dave Dunnewald, our VP of Investor Relations.

On the call today, Tracey and I will take you through highlights of our second quarter 2017 results for Molson Coors Brewing Company, along with some perspective regarding the balance of 2017. On this call, along with our remarks, we're also offering slides to show both reported and constant currency results. And you can view and follow along with these slides on the Investor Relations page of our website.

In the second quarter, we continued to drive our First Choice for consumer and customer agenda with laser focus on strengthening our core brands, premiumizing our portfolio, accelerating our international footprint, enhancing our customer partnerships and driving the integration of MillerCoors and the Miller brands globally to unlock synergies and other cost savings. As a sign of progress against this agenda, our team delivered solid growth in constant currency net sales, global brand volume, underlying EBITDA, net income, earnings per share and free cash flow. Additionally, we exceeded our goals for cash generation and debt reduction in the first half of this year and have maintained our investment-grade debt ratings.

Our second quarter performance was in line with our expectations, and we remain on track to deliver our 2017 business and financial plans, cost-saving targets and cash flow goals.

Now I'll turn over to Tracey to give second quarter financial highlights. Tracey?

Thank you, Mark, and hello, everybody. Following are consolidated financial headlines for the second quarter versus pro forma results a year ago, except for cash flow, which is reported on an actual basis. Global net sales per hectoliter grew 1.7% in constant currency, driven by the U.S., Canada and Europe. Worldwide total brand volume increased 2.3% due to strong growth in Europe and international, partially as a result of adding the Miller global brands business, but also from growth in some of our core brands. Our global priority brands grew 4.6%. U.S. GAAP net income increased 4%, and underlying non-GAAP net income increased 2.9%, driven by increased brand volume, higher net pricing, positive sales mix, cost savings and lower marketing spending, partially offset by a higher underlying effective tax rate.

This non-GAAP results was up nearly 50% on a reported basis, which demonstrates the substantial earnings accretion on the MillerCoors transaction. In the second quarter, we reported nearly $794 million of underlying EBITDA, a 4.2% increase from the pro forma results a year ago. In constant currency, underlying EBITDA was up 5.7%. Year-to-date underlying free cash flow was $586.7 million, which more than tripled versus $176.9 million in the first half of 2016. This significant increase was driven by the addition of the other 58% of MillerCoors cash flow as well as lower cash paid for taxes, which were partially offset by higher cash paid for interest. With this strong free cash flow, we reduced our net debt by more than $522 million in the second quarter.

Now I'd like to share some regional highlights for the second quarter. In the U.S., we grew net sales and underlying EBITDA on a pro forma basis, with 7.9% earnings growth driven by lower MG&A expenses, higher net pricing, positive sales mix and cost savings. U.S. domestic net sales per hectoliter, which excludes contract brewing and company-owned distributor sales grew 1% for the quarter as a result of higher net pricing and positive sales mix, partially offset by cycling a multiyear adjustment in federal excise tax expense last year. Cycling this adjustment in federal excise tax reduced our NSR per hectoliter by 40 basis points this quarter. Overall, U.S. STR declined 1.9%, but against the backdrop of a weak industry, we achieved our best first half market share trend in more than 3 years. STRs were particularly soft late in the second quarter, which drove moderately higher percent inventories for our distributors at the end of the quarter, but also lower out-of-stocks around the Fourth of July holiday. We expect the majority of this additional inventory to be sold through by the end of the third quarter. We grew our share of the Premium Light segment with Coors Light achieving its ninth consecutive quarter of increased segment share and Miller Lite reaching 11 consecutive quarters of increased segment share. Overall, our Premium Lite segment volumes were down low single digits. Coors Banquet grew volume at a mid-single-digit rate and also increased segment share.

Our total Above Premium segment returned to growth at low single digits, driven by both our regional and national craft brands. Blue Moon Belgian White, Leinenkugel and Peroni grew strongly, while Redd's and Henry's posted lower volume. Zima, which returned to the U.S. market for a limited period was Nielsen's #5 growth brand for the 4 weeks ending July 1. Our Below Premium brands were down low single digits for the second consecutive quarter, a significant trend improvement from the past several years.

Our Canada underlying EBITDA declined 9.7% on a reported basis, primarily due to the impact of lower volume, input cost inflation and negative foreign currency movements. Underlying EBITDA in constant currency was 7.2% lower. Overall Canada brand volume declined 1.3% as a result of lower domestic volumes, partially driven by soft industry volume. Including the return of the Miller brands to our portfolio, we increased overall market share for the second consecutive quarter. Coors Light and Molson Canadian volumes declined in the quarter. Nonetheless, we continue to drive our First Choice agenda, including revenue management strategies to bring momentum back to the top line. As a result, net sales per hectoliter in local currency increased 2.3%, driven by positive pricing and brand mix, primarily due to higher import brand volume. We continue to premiumize our portfolio through volume and market share gain by import brands, led by Coors Banquet, Above Premium craft brands, including Belgian Moon and Granville Island and the addition of the Miller brands.

Europe grew underlying EBITDA 13.8%, which equates to 21.3% growth in constant currency driven by higher volume, positive sales mix, the [concrete] timing of marketing investments, increased net pension benefit and the later timing of the Easter holiday this year. These positive factors were partially offset by unfavorable foreign currency movements. Brand volume increased 11.5% in the second quarter, primarily driven by the transfer of royalty and export brand volume across Europe from our International business and the addition of the Miller brands, along with the timing of Easter and strong growth from our core and Above Premium brands. Net sales per hectoliter increased 3.7% in local currency due to positive mix and net pricing.

Underlying EBITDA for our International business was a loss of $0.9 million, which improved from a loss of $1.7 million a year ago. Brand volume increased more than 40% in the second quarter to 1.2 million hectoliters. Our second quarter net sales grew more than 65% due to higher volume, along with positive pricing, while net sales per hectoliter declined 5.5% due to sales mix changes. This increase was driven by the transfer of our Puerto Rico business from MillerCoors, the addition of the Miller global brands and Coors Light growth in Latin America, partially offset by the transfer of Europe royalty and export business to the Europe segment. In Latin America, excluding the addition of Puerto Rico, we grew Coors Light volume at a high single-digit rate. The Miller brands integration process is continuing to progress as expected, and we have successfully exited almost all of our transitional service agreement during the second quarter. In each of these instances, we have established routes to market that give us a strong platform for growth. Please see the earnings release we distributed earlier this morning for the detailed review of our business unit financial results in the second quarter as well as our latest (inaudible) and guidance target.

This quarter, we have made the following adjustments to our guidance metrics. We now expect cost of goods sold per hectoliter for the full year 2017 in our International business to decrease at a mid-single-digit rate versus a double-digit decrease previously. With the dynamic tax environment in the U.S. right now, we are not changing our tax rate range of 24% to 28%, but our current view is that our full year underlying tax rate will be in the top half of this range. We now expect cash pension contributions in the range of $300 million to $320 million to defined benefit plans in 2017. This range is $200 million higher than our previous target, as we plan to make an additional discretionary contribution of $200 million to our U.S. plan in the third quarter as part of our deleveraging goals. Rating agencies treat pension underfunded state as the same debt, so this pension contribution will also benefit our investment-grade debt ratings. Note that all of these anticipated pension contributions are included in our 2017 underlying free cash flow target of $1.2 billion, plus or minus 10%. This discretionary contribution is a strong indication of the progress we are making in achieving our financial plans and quickly paying down debt. We remain committed to reducing our leverage ratio to about 4x on a rating agency basis by the end of 2018.

Looking forward, we are focused on 3 primary financial targets. First, cash generation. We made great progress in this area in the second quarter, and we are confident that we will achieve our cash goals this year. Second, deleverage. We reduced our net debt by more than $520 million in the second quarter. And third, we continue to expect our underlying EBITDA margin growth to average between 30 and 60 basis points for the next 3 to 4 years, while we remain focused on growing our top line as well. At this point, I'll turn it back over to Mark for the business outlook, wrap-up and the Q&A. Mark?

Thanks, Tracey. In 2017, we continue to focus on both top and bottom line performance, driven by our First Choice consumer and customer agenda and the integration of MillerCoors and the Miller brands globally. My priorities remain unchanged, as we shape the new Molson Coors to drive total shareholder returns over the medium to long term. I'm leading for a powerful and integrated First Choice culture, the successful integration of our businesses, including the associated synergy and cost-savings plans, a step change in our global commercial capabilities to support top line growth, accelerated performance in our international markets, further global productivity improvements through world-class supply chain 2.0, our North American supply chain approach and global procurement, with all of this enabled by a more efficient enterprise approach across global shared services.

We're also investing ahead of the curve for growth in key brands and markets. And as part of this, in the third quarter, we plan to invest incrementally on enterprise level in our brands. With this approach, we're driving for measured and sustainable performance in both the top and bottom line. Through the balance of 2017, our business unit priorities are clear and consistent. Our U.S. goal of flat volume in 2018 and growth in 2019 remains unchanged. We remain committed to Coors Light and Miller Lite, accelerating the segment share gains alongside the strong volume performance of Coors Banquet and to further improving the volume trajectory of our Economy portfolio. In addition, we took key steps to strengthen and further premiumize our portfolio, including the addition of Sol, as we signed a 10-year agreement with Heineken commencing in October of this year for us to import, market and distribute the high-potential Mexican beer brand. In addition, we recently announced a partnership with Hornell Brewing Company, part of AriZona Beverages to market and distribute a new beverage called Arnold Palmer Spiked Half & Half, which takes us into the alcohol tea market in a distinctive way. Along with a resurge in Blue Moon Belgian White, we'll continue to integrate and expand the geographic reach of our recent craft acquisitions, which are growing strongly. Encouragingly, MillerCoors shared the top spot of the 2017 Tamarron distributor survey as the best malt beverage acquirer. This marks the second consecutive year that our distributors have rated us as their best brewer across a wide range of metrics and has a strong First Choice confidence from our distributors. They believe in our imperative of getting to volume growth by 2019.

In Canada, we continue to drive our First Choice agenda to bring momentum back to the top line, including our relentless focus in our 2 largest brands, Coors Light and Molson Canadian. While still under volume pressure, these brands improved their segment share trajectory in the second quarter. In Above Premium, we're driving for further growth in the import craft and cider segments with Coors Banquet, MGD, Creemore, Granville, Belgian Moon and the Heineken brand family. In addition, we're beginning to leverage Miller Lite alongside Coors Light and introduce Miller High Life to simplify our Economy portfolio in Canada. In order to further transform our cost base, the construction of our new British Columbia brewery is progressing well. And we recently announced plans to build a more efficient, more flexible brewery in the Greater Montréal area in the next few years. We expect both of these brewery initiatives will unlock material savings in the medium to long term and deliver a highly efficient fit for future brewery network.

In Europe, we're strengthening our national mainstream brands. We will continue to premiumize our portfolio with the focus on our craft portfolio, Staropramen, Coors Light and cider brands, along with the addition of the Miller brands and the royalty and export business in the region. Our craft investments have consistently delivered strong returns. And we're continuing to build a craft portfolio, including Sharp's, Franciscan Well, accelerated expansion of Blue Moon in the region and the addition of the #1 craft beer in Spain, La Sagra. In July, we also completed the purchase of Birradamare, a small Italian craft brewery based just outside of Rome, which gives us an opportunity to develop its special brands in Italy and select export markets. Finally, Staropramen is growing very strongly across the European markets and we've now unified the brand visual identity across the Czech Republic and all international markets.

Our International business will continue to leverage strong global brands, partnerships and commercial capabilities around the world to grow in particular Coors, Miller and Blue Moon. One action we are taking is to lift and shift, the original all white can packaging for Miller Lite to all markets globally in the second half of this year. The scaled-up International business requires upfront investments to grow our brands, and our MG&A will be higher this year funded by a 2017 step change in gross profit, as we lay the foundation for accelerating top and bottom line growth from 2018 onwards.

In summary, in the second quarter, we continue to drive our First Choice for consumer and customer agenda in each of our businesses to deliver top and bottom line performance. As a sign of progress against this agenda, our team has delivered solid growth across all key financial measures. We exceeded our goals for cash generation and debt reduction in the first half of this year, and we've maintained our investment-grade debt ratings. Second quarter performance was in line with our expectations, and we remain on track to deliver our 2017 business and financial plans, cost-savings targets and cash flow goals. Equally important, we continue to make progress in our First Choice for consumer and customer agenda in each of our businesses. And we will remain resolute on PACC as a key business decision framework using our cash to reward investors and critically ensure a healthy balance sheet, reducing cost to provide top line investment firepower and making smart investments to deliver brand-led growth and shareholder value.

Now before we start the Q&A portion of the call, just a quick comment. As usual, our prepared remarks will be on our website for your reference within a couple of hours this afternoon. Although we will not host a follow-up investor relations conference call later today, Dave Dunnewald and Kevin Kim will be available by telephone or email to assist with any additional questions you may have regarding our quarterly results. Additionally, we hope to see many of you at the Barclays Global Consumer Staples Conference in Boston in early September or at one of our other investor outreach events in the months ahead. At this point, Laura, I would like to open up for questions.

(Operator Instructions) And our first question today will come from Andrea Teixeira of JP Morgan.

Just wanted to follow up a bit with the STRs and STWs into the quarter. And related to that, do you think that marketing spend, as you cut it, if you can elaborate? And I think also you -- at the same time you said you're going to be investing more in marketing. So I wanted to relay the message in the U.S., in particular.

Andrea, Gavin, do you want to pick up on the STR, STW question, specifically?

Sure, Mark, thanks. Good morning, Andrea. Look, in June, we filled the orders that our distributors placed. And when you couple that with lower than expected industry-wide sales, it did increase our distributor inventory at the end of the quarter by a couple of days. On the positive side, the high level of inventory really helped us to increase our service levels coming into the Fourth of July holiday and that worked well for us, as we had a 22% reduction in distributor out-of-stocks, compared to the last year. On a full year basis, Andrea, our year-to-date STRs are down 2% and our STWs are down 2.1%. So they are converging. And we do estimate that our Q3 distributor inventory levels will be in line with the prior year. So that implies a pullback in inventory, as Mark said in his prepared remarks. And for the year in inventory levels, we'll continue to evaluate that, but our current expectation is to ship to consumption within the year.

Thanks, Gavin. And Andrea, just on the other part of your question with regard to our marketing investment for the year, I mean, clearly, quarter-to-quarter, there's always some fluctuations depending on the timing of activity. We expect our marketing investment on an enterprise-level to be slightly higher in the third quarter, compared to last year. But right across our business, the #1 priority with our marketing spend is to drive higher effectiveness and productivity. You've seen that with the use of the return on marketing investment model or ROMI in the U.S. We've now rolled that into the Canada business and is starting to really unlock some significant efficiency savings and we'll be taking that into the U.K. later this year and into 2018. So we'll continue to retain the flexibility on our discretionary line items on our P&L to ensure that we deliver our bottom line, but we will also balance that with ensuring that we're investing at the right level to drive our brand performance. And I think you've seen that with our share performance virtually across all of our markets.

So would you say -- that's very helpful. Would you say that the marketing spend decline was mostly nonworking spending decline? Or how -- just to help us bridge that -- the improvement in margin if that is recurrent.

Some of it was timing. Some of it was nonworking. And you're starting to see the benefit of us really now looking at an aggregated approach in terms of our marketing spend, our agency partners and our procurement impact, as we drive our global procurement agenda. So some of that is starting to play through in terms of unlocking value, which we can either drop to the bottom line or invest back in the business. That's good news as the integration proceeds positively.

And our next question comes from Laurent Grandet of Crédit Suisse.

I've got a question on contract brewing. It has been declining by about 16% in the quarter. What was the driver? I mean, is it structural? Or is it kind of the running rate of, I mean, the manufacturers you're selling to? Or how should we think about these going forward, as it does impact your top line gross revenue per hectoliter and bottom line?

Yes, Laurent, thanks for the question. So I mean, really contract brewing is something, which is an arm’s length relationship that we have. It's included within our financial volume, but it's not a focus for the leadership team in the business or the majority of people in our organization we have to deliver on. The demand comes through from the third parties that we have that contract brewing relationship with. So to be honest, the contract brewing volumes will fluctuate based on the success of those third-party brands in the marketplace. And we can't really influence that. And I would just remind you it's relatively low-margin business, clearly gives us overhead recovery. So it's not a big driver of our overall financial performance.

So therefore, should we think about you thinking about moving away from this business? And how we should think about the pub business you are manufacturing in the U.S.?

Well, I think the pub situations are relatively well-publicized situations. Clearly, we're in a litigation process at the moment. And that will hopefully come to a conclusion as we get into 2018, so I really don't want to comment any further on that at this stage.

And the next question will come from Vivian Azer of Cowen.

Before I ask my question, I just wanted to say that the new press release format was super helpful. So thank you for that. It was a much easier earnings update this morning. So on the Above Premium, so nice to see that that's back into growth. Gavin, perhaps could you comment on how that benefited your price mix realization in the quarter?

Okay. Gavin, you want to...

Sure, Mark. Thanks. Look, I mean, if you break out our pricing recovery, Vivien, we've got 80 basis points of net pricing growth that obviously excludes the 40 basis points impact of the FET drawbacks. And our sales mix added about 60 basis points, and it was attributed really to the improvement we saw across the board in our Above Premium portfolio, driven by the performance of the new craft companies, the Leinenkugel's Shandy brands. I mean, we are on track to have a record summer with Shandy. Blue Moon Belgian White and, of course, the limited time release of Zima. And we also saw in the second quarter Henry's trends improve relative to Q1 when the brand was cycling in the first quarter in the market from 2016. So I would say those are the high spots in the Above Premium, Vivien.

As well, staying on the U.S. business, please, could you elaborate on your comment on the softening at the end of the quarter? What do you think that's attributed to? And as part 2 to that question, could you also comment on the provisional activity that you've been seeing for the category as a whole.

Okay. Gavin, straight back at you.

Thanks, Mark. Look, I mean, Vivien, you're right it’s no secret that the industry in June was soft according to Nielsen, and we did see some growth in wine and spirits accelerating in June, and particularly, in the low end with some promotional activity, particularly with vodka. From a beer industry point of view, we always need to take wine and spirits seriously as an industry. And as I mentioned at the BI Conference in July, we need to be pro-beer first and try to differentiate our category from wine and spirits, and we need to do that together. And at MillerCoors, we're committed to investing in our brands and transforming our portfolio to bring incremental drinkers into the category. You'll see us continue to make bold moves like we have with Economy strategy. We've got the 4 craft partners, and we’ve recently signed those agreements with Sol and with Arnold Palmer Spiked. So June was a rough month from an industry point of view, but that's all it was. It was 1 month, and I'm optimistic about what's ahead for MillerCoors in the industry. I'm confident the industry is going to come together and focus on what's really important for us, which is the quality of our beers and the consumers that enjoy them. From a second part of your question, we're not raising a fundamental deceleration of pricing overall in the U.S. There's always some level of promotional activity in -- during summer, and 2017 is no different. If you look at it over a longer time frame, our full year 2016 net pricing growth is actually slightly higher than our full year 2015. So no real fundamental deceleration.

Thanks, Gavin and Vivien, thanks for your feedback as well on the financial release, that's much appreciated.

The next question will come from Judy Hong of Goldman Sachs.

I also echo Vivien's comment about the release. It's much cleaner here, so thank you for that. So Tracey, I guess, I just wanted to clarify your free cash flow guidance. So it's obviously unchanged, but there is additional $200 million of pension contribution. You talked about the first half coming in better than you expected from a cash generation standpoint. So can you just talk about what's driving that and sort of are these improvements kind of sustainable as we go into '18 and '19?

Judy, so just a couple of things. As I've said before, my priority is to generate free cash flow as quickly as possible so that we can deleverage. And we've made that commitment to the rating agencies to be around 4x by the end of 2018. So you're right -- I mean, we are generating stronger free cash flow. And that has allowed us to make this incremental contribution to our U.S. pension plan. So it is the U.S. pension plan, I do want to remind you that pension contributions are deductible for tax, so that $200 million is gross. You would need to tax effect that to get the net number. And then the other part that goes into our free cash flow is, obviously, our working capital. And timing of working capital does play into the guidance that we've given of the $1.2 billion plus or minus 10%. In terms of looking forward to 2018, we're not ready to give guidance yet for 2018. We will do that early in 2018 to help with that.

Okay. And Tracey, can you maybe just update on kind of the improvement or steps that you've seen on the cost-savings funds. You talked about the $175 million plus for the full year. Can you at least tell us if you've gotten about halfway of this already? And as you've kind of implemented some of the plans, what have you been seeing in terms of, perhaps, further opportunities to unlock some of the cost savings going forward?

Yes. So Judy, look we -- our cost savings and synergies stands on track. So we are pleased that we are delivering the cost savings. We have, as you rightly mentioned, we said that for 2017, it is going to be more than the $175 million. However, we're not breaking that out quarter-by-quarter because that number does fluctuate. But for the full year, it will be more than $175 million. And we are very pleased with our plan so far to deliver the $550 million over the 3 years.

Judy, it's Mark. Just to give you a little bit more color on that. I mean, if you look at the constituent part of the cost-savings program, so really solid progress on global procurement, that's integrating and as we push into that. Clearly, some things we're looking to try and accelerate. We're pushing harder into some of the scale opportunities that we didn't have the visibility to, as we went through due diligence ahead of the deal closing. North American supply chain, we've now started to move some volume and also moving some volume from the U.S. up into Canada. And our global shared service initiative is very much on track. Leadership team is in place. Our shared service center in Romania is up and running and performing strongly. And I feel very good about how that is developing, and we'll really start to, I think, deliver ongoing savings as we get to the end of 2018 and into 2019. IT integration is performing strongly. And our global commercial group is really coming together powerfully as well. So luckily, 6 to 9 months post-closing, I would say very, very solid progress on all fronts.

Our next question will come from Steve Powers of UBS.

Just a quick follow-up on free cash flow and pension for Tracey, and then may be a broader question, Mark, for you. First, Tracey, I think you had previously indicated that we should expect another $100 million plus being contributed against the pension next year in 2018 as well. So in that context, is this higher 2017 contribution a pull forward that would eliminate that need? Or should we still expect an incremental $100 million, $120 million as a use of cash in '18? And then Mark, broader question. I think it's fair to say that there was a good deal of consternation coming out of the June Analyst Day, specifically around the 30 to 60 basis points of annualized EBITDA margin expansion that you expect going forward. And I guess, I’d just like to get your reaction to the concerns that arose, many of which I'm sure you've heard, whether or not you think they were rooted in any kind of misunderstandings that you might be able to clarify? From my perspective, I think many investors have been hoping that while the rate of EBITDA margin expansion that you guided to was below street expectations that, perhaps, your EBITDA dollar expectations were more in line under the assumption that you've embedded more optimistic top line assumptions into your outlook. And I still would like to get a sense if you think that's fair if you thought about providing further clarity, maybe in the form of dollar-based EBITDA outlook, more color around the top line assumptions or anything else. In the end, I'm just trying to get a sense for how you reacted to the market's interpretation of your June messaging and whether it's impacted your thinking at all about how you may communicate going forward?

Thanks, Steve. There was a lot in that. I think the first question on free cash flow and pension and whether that's pulled forward, do you want to pick that up, Tracey?

Yes. So the additional contributions that we made is to the U.S. plan. So it is pulling forward next year's contributions. We had an opportunity to do that. However, the U.S. isn't the only pension plan. So I don't want to say that there won't be any contributions to pension plans. But this one is a pull forward for the U.S. plans. Having said that, there's a number of things that go into our decisions as to the amount to contribute to our pension plans, and one of those is market performance so -- against our assets. So depending on how the assets perform will also tell us how much we need to contribute. And then just going forward, we're not going to give any contribution guidance at this stage, but we will do that again early next year depending again as how our assets and our plans performs.

Okay. Thanks, Tracey. And then Steve, just to your perspective coming out of the Analyst Day in June, I think the messaging back to us was loud and clear, and clearly, we've had further discussions with our board based on some of that feedback. I think we feel good about the guidance that we've offered. I think if there was any miss or disconnect that relates to the fact that our aspirations for our business is to improve the trajectory of our top line and that top line plus our EBITDA margin expansion, which I believe is measured and balanced over the medium term allows us to drive our bottom line EBITDA performance in a sustainable way. And I think a number of conversations I've had with investors have clarified that. Clearly, I'll retain flexibility on the P&L if we believe that the top line isn't coming through because markets are softer or there's other factors. We'll retain the flexibility to protect our absolute profit performance. And that's what we've agreed with our board. So I think if there's any message, maybe a lack of belief in our ability to get our top line moving, but I think you've seen certainly in our current quarter results that we are making that happen in many parts of our business. We're driving initiatives that are going to further premiumize our portfolio, and there's 2 been announced already in the U.S. We continue to work on others. And we're seeing very, very strong volume growth, which has an impact on our total level and our International business, and I believe there's a lot more to come there as well. So our belief is that we'll deliver absolute profit growth. And we'll do that with a balance of an improved top line delivery on our cost and synergy targets but with flexibility retained on our P&L to protect that bottom line performance.

Our next question will come from Mark Swartzberg of Stifel, Nicolaus.

And it's actually a natural progression to your -- to the question you just answered, Mark. And it pertains specifically to Canada and your comments about premiumization surely apply there. And yet if we look at establishing revenue momentum in Canada, it seems like it's a rather -- it's been a rather elusive outcome. So my question is simply number one, how impactful do you think having these Miller brands is to your capacity to achieve the momentum that really hasn't evidenced itself? And then number two, if you think about spending, if you think about execution you think about incremental additions to your portfolio what you currently lack in the high end, what's still necessary to achieve in a structural sense the momentum that hasn't quite materialized in Canada?

Okay. Thanks, Mark. Let me offer a few headlines. If I miss anything, Fred, then let me know. Clearly, the addition of the Miller brands back into the portfolio in Canada is meaningful. And you've seen share growth now in Q1 and in Q2, which is very encouraging, including the addition of those brands. And I believe there's more potential to come because certainly over the course of the last 12 to 18 months, the brands weren't particularly well supported or focused on by the previous owners. But we've seen shared growth come through and we've seen consistent solid pricing growth come through in the first and second quarter. Unfortunately, in the second quarter, industry was very soft in the month of May. So excluding May, we've actually been pretty much on track for our plan for this year. Premiumization of the portfolio is working very positively. You do have to remember clearly a large part of that premiumization effort is in partner brands. And all of the full margin flows through on our P&L. But clearly, the biggest kind of driver of overall profit improvement will be improved performance on both Coors Light and Molson Canadian. They're such a large part of our portfolio. It’s priority 1, 2 and 3 for Fred and the team, we've seen sequential improvements in our share performance. But clearly, we're still not satisfied with absolute volume numbers, and we're seeing some very encouraging pockets of improvement, particularly in the west, national accounts, LCBO, et cetera, but we still got more work to do there. So I'm encouraged with the inputs still not satisfied with the outputs is probably how I would -- I mark ourselves at this stage, Mark.

That's great and helpful. And if I could follow up with you or Fred, what I'm hearing, Mark, is that you don't consider it primarily a question of increasing spending on the brands at a faster rate than inflation. So for example, that it's not primarily a spending problem, although spending obviously has its place. But is that a fair characterization? And then when you think about priorities other than 1, 2 and 3, namely the amount of products you have in the high end, do you think you need to be more aggressive buying craft brewers or doing other things to partner with other import entities, something to allow you to participate even more fully in the import and high-end segments of Canada.

Actually, there was a lot of constituent parts to the question. I think if you look at the shape of our portfolio and Above Premium, I think we've got a very broad and deep portfolio. There's maybe 1 or 2 geographical gaps that Fred and the team are currently looking at, at the moment. I think it's very much about just further improvement of momentum there on premiumization of the total portfolio. I mean, Fred, do you want to offer any color around that?

Yes. Actually -- thanks, Mark. Just maybe one thing to add, and I agree with the topics you raised. One thing to add to Mark's question is probably the performance we're recording in the western part of the country. I think I am indeed very encouraged by the share growth we are enjoying. I am encouraged by the premiumization of the portfolio that's translated into strong NSR per hectoliter growth. In the western part of the country, there's a number of provinces where the momentum has already translated in absolute volume growth in Q2 and on a year-to-date basis. And that's what is actually encouraging me to think that we can win the top line battle going forward, and we're keeping our focus on it. From a spending perspective, I'm confident that we have the right amount of spend in place. I think it was mentioned before that we're trying to increase the effectiveness of our spend so that's definitely high on our agenda. But I think the -- we're putting the right levers in my view. And ultimately, I'm confident that, that is going to pay off.

Great. Very helpful.

Mark, just to add maybe 2 more comments on that front because I think this is important. There's no expectation that we need to step up our spend in Canada. If anything, we want to drive further effectiveness on our spend. And we've taken the return on marketing investment model from the U.S. into Canada, and that's starting to draw up some very interesting opportunities for us to drive further efficiency. We've got major initiatives now up and running with a new resource in Québec in particular around our trade promotional investment. And again, that's starting to really, I think, pay dividends. We've taken building with beer from the U.S. and have launched that in Canada as well, which drives executional effectiveness at the front end of the business. And I think I mentioned last year that Sergei Yeskov, who was our GM and President for our business in Croatia and Bosnia is now leading the whole of our sales force. And I'm delighted with the progress Sergei is making, again driving much enhanced sales execution at the front end of the business. So it’s still early days but very encouraged by the combination of both front-end execution and the way that Fred's leading the business around prioritization and spend effectiveness.

And our next question comes from Bryan Spillane of Bank of America.

I have a question related to the plans to build a new brewery in Montréal. And I guess 2 -- a couple of questions related to it. First, I think in the press, there was like a $500 million number that was being reported on in terms of the investment. I'm not sure if you've actually said yet how much you think it would cost. So some perspective on that whether or not the buildout will be included in sort of normal CapEx or if it will end up with an elevated CapEx level related to it. And then finally in terms of the cost savings related to that brewery, is that inside the $550 million or would that be above and beyond the current $550 million savings plan?

So let me pick that up as specifically, Bryan. So firstly, the cost savings number is not in the $550 million because the brewery buildout is beyond the guidance we've given around 2017 to 2019. So that will be included in our next 3-year cost savings cycle. So more to come on that. Our assumption is it's included within our current free cash flow and CapEx guidance going forward. So we'll manage that within our existing envelope. And the way to think about the Montréal brewery buildout and clearly this is something we looked at in a lot of detail, we have 2 options. One was to develop a brownfield site on our existing site. And I'm not going to give you specific numbers, but let's just say that was hundreds of millions of dollars, or building a greenfield site, which again is hundreds of millions of dollars. The greenfield site drives significantly enhanced productivity and cost savings numbers versus trying to build out a greenfield so far. A relatively small incremental investment, we get a significant return. It pays back very quickly because of the ongoing cost savings. So certainly from a PACC perspective, it's very -- makes an awful lot of sense for us. And I think once we're into further conversations and communication with our employees and confirmation of the exact site, we can give you a little bit more detail. But hopefully, that deals with the 3 parts of your question.

That's very helpful. And just in terms of the existing property that you own today, will it be similar to Vancouver where you could potentially sell it to fund? Or have you made plans yet with that property?

It will be similar in terms of selling to contribute. Unfortunately, the real estate market in Québec isn't quite as hot as the real estate market (inaudible) Vancouver. So I wish it was. But clearly, that site will help offset some of the cost. And the intention is to retain a heritage and brew pub vehicle or presence on that site as well just to underpin our legacy in Montréal and Québec.

And next, we have a question from Rob Ottenstein of Evercore.

Nice quarter and very, very helpful conference call so far. I was wondering if you could give us -- you touched on a little bit in the beginning, but a little bit more detail on how Coors Light is doing outside of the U.S. in aggregate. I think you gave us a Latin America number, but how is it doing in general? And also Miller Lite, that brand I think you had alluded to had not gotten perhaps as much support a couple of years -- over the last couple of years, how that is starting to come long and how that -- a little bit more detail on the transition to your system and partners.

Okay. So thanks, Robert. Thanks for your comments. Let me ask both Simon and Stewart to comment. And if so, obviously, Coors Light in the U.K. and Ireland is a big brand. Simon, do you want to just offer a couple of headlines around Coors Light performance and MC. And then Stewart, do you want to pick up on Coors and Miller transition for MCI?

Yeah. Thank you, Mark. So as Mark stated, the Coors Light brand in Europe is really predominantly a U.K. and Ireland brand. And frankly, it continues to perform very well. We're investing behind, as you know, premiumizing our portfolio. And that's working very well. Coors Light is a big part of it. And once again, Coors Light shows double-digit growth in the U.K. and Ireland. So a brand with real momentum that we're very pleased with. We're going to continue to invest behind. And those investments are really paying off for us.

And I think in scale term, Simon, will be roughly what kind of size for Coors Light?

Yes. MC would be something like 1.3 million per hectoliter now, Mark, and obviously continuing to grow strongly. So very positive.

Okay. Thanks, Simon. Stewart, do you want to pick up on progress in international markets?

Yes. So Robert, thanks for the question. So first of all, your question relative to the transitions, as Mark mentioned in the call there, they've been going very well. We're off almost all of the TSAs now. And having the brands both, well, Miller in our own hands is going to allow us to drive the brands much more aggressively. We're certainly seeing improvement on Miller where we have taken over the brands. There are a number of markets as we mentioned which we think didn't receive the attention, but they're getting our full attention now. And we think we've got an excellent platform. One thing to note is that both on MGD and Miller Lite, we will see new global campaigns coming out on those brands. And specific to Miller Lite, we'll be rolling out the white cans globally. And I think that's going to make a big impact on the brand. With respect to Coors Light, the brand's been growing partly, including in Puerto Rico even though the market is struggling as an industry, we grew share in the market. Broadly across Latin America, we were up high single digits. And I think most importantly actually is that Miller itself has opened up a number of markets where Coors Light is not currently being sold. And that will give us the opportunity to expand Coors Light even faster.

And then as a follow-up just kind of going back to Europe, looked like you did very well there. But the results were a little bit confusing because there's a lot of moving parts. Could you talk about kind of the -- if you will, the organic growth in Europe as much as you can in terms of on an apples-to-apples basis?

Yes. So the confusion comes from my desire to ensure that we've got kind of a Pan-European approach. So bear with us as we go through this year, Robert. But Simon, do you want to kind of deconstruct that as best you can to give a better sense of the underlying strength of the business?

Yes, I guess the concern with the results could be that some -- is it all coming from the things that we’ve transferred in. So Miller brands, Coors and the (inaudible) MCI, and that of course does play a positive role in the numbers. But to give you some real reassurance, if you split that away, we would still have good volume growth on the underlying core business through both our core brands and growth in our premium brands. We would still have positive pricing, and we'd still have positive mix. So the underlying business has pulled a hat trick this quarter with volume pricing and mix. And I think any quarter that we do that in Europe will be a very strong quarter. I think particularly pleasing is where we're putting our marketing investments, particularly behind premiumizing the portfolio on the existing business that's working. So Staropramen has great momentum, frankly more or else across every country that we're putting it into Europe. And we've unified the visual identity of Staropramen in the Czech Republic and internationally, which helps us really market that brand efficiently and consistently. We talked about Coors Light, which continues to be a star for us. Blue Moon, we're really starting to see that accelerate particularly in the U.K. and Ireland. And our craft volumes continue to perform well. So just to give you some reassurance, if you strip away some of the tailwinds that we get through the acquisition and the transfer (inaudible), we still had a very solid performance underlying, and all those inputs sort of lets you, if you strip away currency, a 21% increase in EBITDA. So overall, I would say a very, very strong performance in Europe, both supported by some of those transfers in but more importantly, a very strong performance in the underlying business also.

So organic growth low single-digit, mid-single-digit, can you give us a sense please?

Yes, I don't want to disaggregate too much, but we'd be in between those 2 numbers, something like that.

Our next question will come from Brett Cooper of Consumer Edge Research.

Couple of questions. This quarter, we saw 2 license agreements in the U.S. you alluded to. Just wondering, is this somehow a broader strategy to broaden your portfolio? I assume these will end up being lower margins since they’re licensed. And then kind of a follow-up to a comment you made in terms of having higher distributor inventories leading to meaningful reductions in out of stocks. I guess, the question is why not keep those higher along peak periods assume that the returns are pretty positive, given lost sales from out of stocks? So if you could answer those, I'd appreciate it.

Gavin, do you want to think about the second question, and I'll answer the first questions? So on the first in terms of license agreements, to be fair, Brett, if you look at our business, we've got a long history of partnering to ensure that we've got a broad and deep portfolio. And whether that's with companies like Heineken or Carlsberg or some independent companies, we've attempted to ensure that in the markets that we compete in that we're offering the right portfolio from a consumer and a customer perspective. I've called out and as a leadership team, we're leading for further premiumization of our portfolio. And we think about that across 3 fronts we describe it as build, buy or borrow. So building would be creating something new. Probably a great example of that would be Redd’s in our portfolio, which didn't exist 3 or 4 years ago and is a big brand. Buying is a number of the acquisitions that we've made, craft acquisitions, and/or setting up license arrangements and things like Sol and AriZona into that grouping. And then the third area is around borrowings. So I mentioned in my script, for example, we'll be taking Miller High Life into Canada from the U.S., and we've got other examples as we move their brands around the world. So that's how we think about building out our portfolio. We are pretty flexible. Clearly when we do, say, a license agreement or a partnership, we do have to share the margin. But I'd rather share the margin and add to a margin as opposed to not competing in some parts of the industry and I think that's working effectively for us, and we're working hard at building out the portfolio in all of our markets. And hopefully, there'll be other initiatives at talk to you and the investors about in due course. So more to come on that front, but I think good progress so far. And then Gavin, do you want to talk about distributor inventories and the impact on our stock?

Sure, Mark. Thanks. And Brett, yes, you're absolutely right and we are doing that. So if you look at the fact that we came into this year with higher distributor inventories at the end of December, that was to make sure we improved our performance in the sort of January time frame which has traditionally been a bit of a difficult month for us because of our startup of the breweries coming out of the seasonal festivities. And that worked well for us and out of stocks reduced meaningfully there. And we do it when we head into Memorial Day. This one obviously had an impact because it crossed over a quarter with the timing of July 4. We've also introduced safety stocks of some of our faster moving SKUs. And overall, I think you will see and there has been a meaningful improvement in our service levels to our distributors.

Our next question comes from Chris Pitcher of Redburn.

Couple of further questions on Europe. I know you said specifically that the underlying business had a strong quarter. But looking at the developments in revenue per hectoliter, it does look like there was a good sequential improvement Q2 into Q1. I was wondering if it's possible to talk a bit more in detail about that, any particular markets where you're seeing pricing improving? And then secondly you mentioned timing of marketing spend. Can I confirm that was a shift from Q2 into Q1? Or should we expect a further pickup in marketing for the balance of the year in Europe?

So Simon, hopefully you managed to get both those questions. Do you want to take both of them?

Yes. I'm having a good day. Yes. So in terms of pricing and mix, so as you've seen in our release, our NSR per hectoliter was up 3.7%. That was more driven by mix and by pricing. So pricing was about 0.3% and mix was 3.4%. And what we're trying to do in Europe, and this is obviously not unique, we're trying to make sure that we have a good balance between our volume growth, our pricing growth and our mix, and we're trying to make sure those 3 levers are in fairly good calibration. And if we can get all 3 moving at the same time, then we would really regard as a very positive quarter. I'd like a little bit more on pricing, but the environment isn't always allowing us to do that. And therefore, I think our volume result being as it is and our mix result being as it is gives us actually very strong underlying revenue growth story. And it's premiumization that's really helping us do that. So without wanting to be too repetitive, it's really the investments that we're putting behind Staropramen, which has a premiumizing effect on our revenue. It's Coors Light in the U.K. and then it's our Blue Moon and craft portfolio and then some other investments that we're putting behind our Central European premiumization program. So that's the main drivers of that. In terms of marketing spend, if you look at our long-term history, we're increasing marketing spend year-on-year since we made the StarBev acquisition in 2012, and that's what's been driving a lot of our positive results. Quarter-by-quarter, we're always going to get a little bit of volatility. So I don't want to give you too much of a steer on that quarter-by-quarter because I just don't think that's necessarily helpful. We did spend more in Q1, and we did spend a little less in Q2. That's not necessarily anything systemic, we want to invest where it's most effective. And our view this year is that we just needed to move some of those programs around and particularly get off to a good start by investing more in Q1. But generally speaking, it's the same answer you've got from (inaudible) in America. The timings may vary from quarter-to-quarter. But overall, we're just trying to make sure that we're efficient in terms of our investments. I think if you look at our outputs, again volume, price and mix, then our marketing investments are working very well for us, but you will see a little bit of variability quarter-to-quarter, and I wouldn't read too much into it.

So I'm not wanting to hog the call, but -- and forgive me if you've gone through this in detail before. But in terms of the punch transaction that's pending, have you given heavily the percentage of your volume which goes through the Punch A state previously?

No, we haven't. And we wouldn't intend to disclose it either. I mean just to give you some context, there's over 100,000 licensed outlets in the U.K. entrée of which Punch A represents less than 2%. So we wouldn't be overly concerned about that. The other thing to notice is that obviously a large majority of that state is the least intensive states where the ultimate decision-makers and what gets put on the bar are the tenants and the licensees. And whilst we would expect some of that to be influenced by Heineken's purchase, it's not the same as having to manage our stakes and our brands compete very, very effectively in that section of the marketplace. So I'm not factoring that in significantly to our U.K. performance, which continues to be very strong.

Our next question will come from Pablo Zuanic of SIG.

A couple of questions for Tracey and then for Gavin. So Tracey, obviously, EBIT margins for MillerCoors for the first 6 months up about 80 bps. Company in total EBIT margins flat -- EBITDA margins flat. Miller Coors, very good 80 bps. So the question is when you gave that guidance of 30 to 60 bps medium term total consolidated EBITDA margin expansion, was the assumption that there would be headwinds at somewhere divisional level? I mean, obviously, there's a jump in corporate overhead this year but I suppose that by year 2, year 3 corporate overhead as a percentage of sales is stable I'm assuming that Europe and MCI should contribute to margin expansion in Canada should not be a headwind. But I'm just trying to understand if you can give us some color in terms of that algorithm because obviously MillerCoors is running at a faster pace than that. And the second question for you, Tracey. If my numbers are right, your EBITDA margin comps in the second half of MillerCoors are a lot easier, if I can use that word, than in the first half. So you should be able to run significantly better than the 80 bps expansion that you've shown in the first. So that's for you. And in the meantime, I'll just ask Gavin my questions also. So Gavin...

Pablo, it's Mark. Let's just pause there so that we can deal with these one at a time.

Okay. That's fine.

On the first, Gavin, do you want to just talk to the EBITDA margin progress in the U.S.? And I think if you can maybe just reference the progress that we made coming out of 2016 and the progress we've made in 2017. And then I'll come back and ask Tracey just then to give a broader perspective on enterprise level and what we're trying to do from an EBITDA margin perspective. So Gavin, do you want to just talk about the progress that the U.S. team has been making on EBITDA margin expansion?

Sure. I mean, we actually came out of last year in Q4 quite strongly. So I'm not totally sure I agree with you, Pablo, on the comps are going to be easier. Q4 was actually quite tough. And of course, the focus that we're placing on Above Premium and shifting our portfolio and accelerating the Above Premium is obviously having a benefit as you saw in our mix benefits in the second quarter, Pablo. And of course, we continue to focus on cost of goods sold, which is low single digits in the quarter and from a guidance point of view. And Mark talked quite extensively about the work that we're doing on marketing spending and ROMI and more effectively spending our money and the benefits of becoming part of a global procurement organization as to how we leverage the synergies and the agency costs. So that's what I would say on the margin, Mark.

Okay. And I think as we've talked about in the past, Pablo, I mean we know exactly where the opportunities are in the U.S. We're chasing those down. We saw very good EBITDA margin expansion last year, and that's continued into this year. But Tracey, do you want to just give a broader perspective as we think of this from an enterprise perspective?

Yes. So a couple of things maybe just to keep in mind. So Gavin did mention the fourth quarter of last year for the U.S. Just to give a number around that, we're tackling in Q4 for MillerCoors a pretax income increase of 42%. So that's a big headwind for us in Q4. And the other thing just to mention is we -- in Q3, we're cycling one more quarter of the Canada brand amortization, if you recall, in Q4 of last year, we reclassified some of our brands to definite-live. So we got one more quarter of batches cycle in Q3. And then the other thing just to mention from a Canada point of view is the COGS per hectoliter last year in Q4 was actually a reduction. And so we're cycling very positive performance in Q4 of last year. And then another headwind just to consider is we do have the higher corporate cost as you mentioned. We are investing, for example, behind our global business services that we opened in May in Romania. And we're investing behind the shared service center that we will be keeping in Milwaukee. So there is a couple of costs to consider for this year that we will be investing and also cycling some performance. And then again just to remind you, the 30 to 60 basis points, we do look at that over a longer term, so 3 to 4 years.

I think the only thing I would add, Pablo, is just connect that to my earlier comments that we've tried to I think deliver what we believe will be a measured and sustainable improvement in our overall EBITDA margins and connect that with our aspiration and our plan to get our top line moving. So those 2 things have got to work in tandem. So hopefully, that's given you some color around your first question. I think you had a second question.

Yes, understood. Sorry about the follow-up. So it's more for Gavin, I guess, 2 questions. For 2 quarters in a row, your STRs have been 2 to 3 points better than what the scanner data implied. And in the past you had been the opposite 1 to 2 points worse. So I assume that it means that you are doing better in relative terms in liquor stores, independents and on-premise. So if you can comment on that. And the second question just more in general, if you can give us an update in terms of what's happening in the mass retail channels, supermarkets in particular, in terms of space allocation? Has the beer space been reduced in absolute terms? Or and/or is the space being managed in a different way by the retailers in terms of what they give to craft? If you can give us an update on that, that would be useful.

Thanks, Pablo. Gavin, over to you for both of those.

Look, yes, hard for me to give you an answer as to why there's a difference between what you're seeing in Nielsen and the other industry guys and what we're coming up with. What I can say to you is that on-premise volume trends continue to underperform relative to off-premise. And there's obviously a number of factors that are driving that lower foot traffic due to the economic impact and the economic environment. And frankly, the on-premise business has lost a relatively greater share to wine and hard liquors. From a MillerCoors perspective, in recent quarters, we've narrowed that gap with our on-premise volume transactionally improving. And a big part of that is boding with beer, which is being well received by the retailers. And we're also taking that into C-stores, liquor stores and groceries. So that's what I would say on that. As far as shelf space is concerned, obviously, premium economy segments are facing lots of challenges from a category headwinds point of view and from a shelf spaces as well. But consumer interest in those segments remains really high and it still represent 60% of the beer sold in the United States. So from a retailer perspective, premium in economy price light lagers do remain the fastest moving brands in the industry, and they've proven to be profitable. So reallocating shelf space to brands that have lower velocities like Mexican imports doesn't really make a whole lot of business sense. And we believe that all 3 price segments play an important role for the category just as they do for wine and spirits. And we participate in all 3 of those segments. So taking away shelf space from premium and economy segments not going to help grow the category because as we saw with the economy drinker, when you ignore them, they just end going to wine and spirits. So I hope that answers your question.

I think the only thing I would add to what Gavin said so spot on is as we've seen in the craft segment slow down and many retailers actually focused on simplifying the craft space within the context of the total beer space. And we've seen that already. And I think you'll see more of that to come over the course of the next 12 to 24 months. So Pablo, thanks for your questions. I think, Laura, that's where we wrap on questions. Is that correct?

That is correct. I was just going to turn it back over to you, Mr. Hunter.

Okay. So Laura, thank you, and thanks to everybody for your interest in the Molson Coors Brewing Company. Also many thanks for the feedback on our quarterly reporting. Hopefully, you recognize that you've been heard and we've made some improvements. Please keep the feedback coming. It's invaluable, and we'll continue to try and drive for real clarity and transparency as we continue to dialogue. So thanks again, and we look forward to seeing many of you in Boston next month. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.