Molson Coors Beverage Co (TAP) 2017 Q4 法說會逐字稿

Good day, and welcome to the Molson Coors Brewing Company Fourth 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 a 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 only speak 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 at 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 a] consolidated and U.S. segment results are presented versus pro forma results a year ago, which reflect the acquisition of MillerCoors as if it and the related financing had occurred on January 1, 2016.

Following the prepared remarks this morning, management will take your questions. (Operator Instructions) Now, I'd like to turn the call over to Mark Hunter, President and CEO of Molson Coors.

Thank you, Phil, and hello and welcome, everybody, to the Molson Coors earnings call and many 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 COO of our U.S. business; Fred Landtmeters, our Canada CEO; Simon Cox, the CEO of our Europe business; Sergey Yeskov, our new international CEO who earlier this year moved over from leading our commercial teams in Canada; Lee Reichert, our incoming Chief Legal and Corporate Affairs Officer; Brian Tabolt, our Global Controller; and Dave Dunnewald, the Global VP of Investor Relations.

Now before diving into results, I wanted to take a moment to publicly recognize a couple of people. Firstly, Sam Walker, who has led our legal and corporate affairs and had been on our executive team for almost 13 years. Sam is retiring from our business at the end of this month to pursue an exciting opportunity in the public service sector in Colorado. For me personally, through enormous change, Sam has been a trusted adviser, good friend and a constant champion for our company and everything it stands and strives for. These are big shoes to fill, and we're delighted to have Lee Reichert ready to step into this important role next month. Secondly, I want to recognize Dave Dunnewald, our Investors Relations VP who's announced he'll retire in the first half of this year. Dave celebrates 35 years service this year and started when our beers were only sold in 18 Western states. For the last 26 years, Dave led our IR efforts. He's led 113 quarters of earnings calls and has seen our enterprise value grow from less than $1 billion to almost $30 billion. Well done, Dave, and thank you. And best wishes to you as you step into your next chapter.

So back to business. And today, Tracey and I will take you through our plans to drive long-term total shareholder returns, highlighting fourth quarter and full year 2017 results and discuss our outlook for the business. We're also offering slides that show results on the Investors Relations page of our website.

2017 marked the first full year of the bigger, stronger Molson Coors, and our full year results demonstrated balance and progress against both our bottom line and top line goals. Integration, synergies and cost savings were all delivered on or ahead of plan by engaged employees around the world who are aligned behind our First Choice for consumer and ambition. Our primary focus remained on driving margin expansion and bottom line growth with an emphasis on productivity and cost savings, efficient commercial investments and deleverage to maintain our investment-grade debt ratings. Secondly, we remain focused on delivering an improved top line through our commercial excellence approach, which provides a more sustainable source of profit growth over the medium to long term. Capital allocation within our business continues to be guided by our Profit After Capital Charge or PACC approach as we seek to deliver total shareholder returns.

For the full year versus pro forma results a year ago, we overdelivered on cost savings and free cash flow and optimized commercial spending, delivering a very strong net income growth, underlying EBITDA margin expansion of 77 basis points and underlying EBITDA growth of 3.7%. We also strengthened our balance sheet by more than $900 million through debt paydown and pension contributions as part of our deleveraging strategy. This is complemented by an improving top line with global brand volume growth of 1% and net sales per hectoliter growth of 2.6%, driven by enhanced revenue management and portfolio premiumization. We also grew market share in Canada and Europe for the year and delivered positive underlying EBITDA in our International business.

Across our business, we continue to focus on portfolio premiumization. Above Premium brand volumes increased 6% in the quarter and 21% for the year, with the full year benefiting from the added Miller international volumes. This Above Premium performance also benefited from strong growth across our global craft portfolio. With this strong growth, Above Premium now represents 20% of our total annual brand volumes.

Importantly, we also delivered more than $1.4 billion of underlying free cash flow, as all parts of the business drove cash, execution and efficiency throughout the year.

So if we take a step back from the quarter and the year, our track record over the last few years reflects consistency and earning more, using less and investing wisely. Our enterprise and regional teams have earned more by energizing our core Above Premium and craft portfolios through existing brands as well as successful bolt-on acquisitions, with Aspall Cyder in the U.K. being the most recent addition to our portfolio. We're using less by overdelivering on cost savings and at a lower cost to achieve, which is in part driven by closing 2 breweries in Europe and 1 in the U.S. And we've continued to invest wisely with strong free cash flow generation and deleverage focus.

Later this year, we plan to update you regarding how we expect our approach to capital allocation to evolve as we approach our deleverage targets.

I personally am very proud of our achievements in 2017 against the backdrop of complex structural and brand portfolio integration. Highly engaged teams across geographies and functions have executed with brilliance and stayed focused on our First Choice ambition and financial goals. Our integration work streams delivered foundational work to drive future productivity and savings, and our commercial teams strengthened their brand portfolio and our customer relationships, which will be key to our success as we play to win every day. And now let me turn the call over to Tracey to give you financial highlights. Tracey?

Thank you, Mark, and hello, everyone. Let's review our consolidated financial headlines for the fourth quarter versus pro forma results a year ago, except for cash flow, which is reported on a full year actual basis. Also, keep in mind that in the fourth quarter of 2017, we changed our method of calculating pension plan assets used to determine our net periodic pension cost, which favorably impacted our Canada, Europe and consolidated results.

Net sales increased 4.5% due to positive global pricing, royalty revenue, favorable foreign currency movements, and cycling a $50 million indirect tax provision from a year ago, partially offset by lower financial volumes. Net sales in constant currency grew 2.4%. Net sales per hectoliter increased 5.8% and 3.7% in constant currency. Worldwide brand volume decreased 1.1% due to lower volume in the U.S. and international, partially offset by growth in Europe and Canada. Global priority brand volumes decreased 1.9%, and financial volumes decreased 1.2%, driven by the U.S.

Our U.S. GAAP net income increased from a loss last year to income of $588 million this year. This improvement was primarily due to a discrete tax benefit related to the revaluation of our deferred tax balances, which resulted from the recent U.S. tax reform along with favorable underlying performance and cycling an impairment charge for the Molson brands in Canada and indirect tax provision in Europe reported a year ago.

Underlying EBITDA increased 17% on a reported basis and increased 14.3% on a constant currency basis. This strong underlying performance was driven by positive pricing, cost savings and MG&A efficiencies, partially offset by the impacts of lower volume, inflation and investments behind our global business capabilities.

Results also benefited from cycling the indirect tax provision a year ago and higher net pension benefit. Underlying EBITDA margins improved 198 basis points during the quarter.

Looking at the full year, net debt of $10.9 billion was more than $600 million lower than at the beginning of the year despite $280 million of unfavorable foreign currency movements. We also made more than $300 million of contributions to our defined benefit pension plans as part of our overall pension derisking strategy and deleveraging goals. Underlying free cash flow of $1.4 billion was up 68% from actual results last year. The upside to prior guidance was driven by benefits from timing of working capital at the end of the year as well as capital expenditure reductions.

In the past several years, we had made substantial progress in improving the efficiency of our balance sheet to help generate cash and drive higher cash returns on our assets. As seen on this slide, we have a consistent track record of improving working capital as a percentage of sales in each of the past 6 years, and we have more progress to make in the years ahead.

For the full year, we improved underlying EBITDA by 4.3% in constant currency with underlying EBITDA margin expansion of 77 basis points for the year. Our top line for the year also benefited from strong net sales per hectoliter growth and total worldwide brand volume up 1%.

Now I'd like to share some regional highlights.

In the U.S., we grew underlying EBITDA 4.9% in the fourth quarter versus pro forma results last year, driven by higher net pricing, cost savings and lower MG&A expenses, partially offset by COGS inflation and lower shipment volume.

Overall, U.S. STRs declined 3% for the quarter, and domestic sales to wholesalers declined 1.5%. This quarter marked the 13th consecutive quarter of increased segment share for Miller Lite, elevating the brand to the #3 beer in America according to Nielsen. Coors Light remains the #2 beer and completed its 11th consecutive quarter of increased segment share. Our Below Premium brand portfolio was down low-single digits and achieved its best quarterly trend since the third quarter of 2009. We also gained share of segment and industry with our Below Premium brands in the quarter per Nielsen, led by the Keystone family.

Our full year U.S. underlying EBITDA increased 2.7% versus pro forma results last year, driven by a 1% increase in domestic net sales per hectoliter, cost savings and lower MG&A expenses, partially offset by COGs inflation and a 2.9% decrease in domestic STR volumes. For the year, we gained market share within the Premium Light and Premium Regular segments as Coors Banquet completed its 11th consecutive year of growth. And in the Above Premium, Blue Moon Belgian White grew during each quarter and continued to acquire incremental tap handles. Leinenkugel's was up low-single digits for the year, propelled by Summer Shandy's best volume year in the brand's history.

For the year, we also held share within the Below Premium segment, which was one of our 2017 goals. Our Canada underlying EBITDA declined 4.2% in the fourth quarter on a reported basis and 8.4% on a constant currency basis, driven by inflation and higher distribution costs, partially offset by positive pricing, lower MG&A expenses and favorable foreign currencies. Our brand volumes increased 0.8%, and market share during the quarter was consistent with the prior year with share gains in the Above Premium segment. We also drove the top line with 1% net sales per hectoliter growth in constant currency during the quarter.

One meaningful portfolio highlight in the premium segment was flat volume on an absolute basis during the quarter. While this benefited from incremental Miller Lite volume, our 2 biggest brands reflected sequential improvements compared to earlier in the year.

Full year results benefited from improving trends in the fourth quarter, however, full year brand volumes declined 0.5%, and underlying EBITDA declined 11.6% in constant currency. Full year net sales per hectoliter grew 2.2% in local currency, reflecting positive net pricing and mix. Our Europe team continues to grow both its bottom and top lines. Fourth quarter underlying EBITDA grew 239.5% in constant currency, driven by higher volumes, positive sales mix and increased net pension benefit as well as the benefit of cycling indirect tax provision a year ago. Brand volume increased 10.4% in the quarter, primarily due to the addition of the Miller brands and the transfer of royalty and export brand volumes across Europe from our International business. But even without this incremental volume, we continue to achieve growth from our core and Above Premium brands, which helped drive net sales per hectoliter growth.

For the full year, underlying EBITDA grew strongly, driven by volume growth, positive sales mix and higher net pension benefits, along with cycling the indirect tax provision was booked in the fourth quarter of 2016 and reversed in the first quarter of 2017. We also grew net sales per hectoliter as well as our market share as brand volumes increased 10.3% in Europe.

For our International business, underlying EBITDA was at $0.4 million in the quarter, a $1 million decrease from a year ago, driven by the loss of the Modelo contract in Japan, the transfer of royalty and export brand volume to Europe and high MG&A from addition of the Miller International business. This is partially offset by the addition of Puerto Rico and volume growth across several Latin American markets.

While we were able to grow organic volumes in existing markets, total brand volume decreased 15.1% in the quarter. Reported net sales per hectoliter increased 6.1% due to the favorable sales mix and positive pricing.

International full year 2017 underlying EBITDA of $3.5 million represented a $7 million improvement from a loss a year ago. Underlying gross profit increased more than 50% to $87.1 million, which exceeded prior guidance as our Caribbean team was able to mitigate some of the anticipated hurricane impacts. International brand volumes were up 28.9%, and reported net sales per hectoliter increased 0.8%.

While our earnings release provides more detail, I want to spend a moment to share the following financial highlights for 2018. Underlying free cash flow of $1.5 billion, plus or minus 10%, which excludes the recently disclosed $330 million cash receipt related to resolving a purchase price adjustment. As I mentioned earlier, 2018 free cash flow will be cycling some timing of working capital benefits in 2017.

Cost savings guidance of $210 million in 2018 is part of our newly increased 3-year savings target of $600 million, up from our previous target of $550 million for 2017 to 2019. This represents an acceleration of deal related cost savings into years 1 and 2 of the 3-year program. We now also estimate that our costs to capture synergies for the program will be $250 million, down from $350 million previously due to efficiencies in both capital spending and noncore operating expenses.

Delivering on these savings commitments will be particularly important this year, given recent increases in input costs such as aluminum and fuel. We currently anticipate an inflation headwind across our company in 2018 that is more than $50 million larger than in 2017, driven by aluminum, diesel fuel and other factors.

Please see our earning release this morning for specific cost of goods related guidance by business unit for 2018. Now cost savings remains a way of life at Molson Coors. And as we have previously committed, we will deliver on the current 3-year cost savings program for 2017 through 2019, which we have just increased to $600 million. We are in the process of developing our next 3-year savings program which would be for 2020 to 2022, and we plan to offer details in the first half of 2019.

Following the enactment of U.S. tax reform, we anticipate approximately $200 million of transaction-related cash tax benefits in 2018 and substantial benefits in the 13 years after this year as seen in this slide. Beyond this, we expect additional cash tax benefits from tax reform, primarily related to lower corporate income tax rate and accelerated depreciation of qualified assets for tax. Additionally, following the enactment of U.S. tax reform, we expect an underlying effective tax rate in the range of 18% to 22% in 2018. This rate is 6 to 8 percentage points lower than prior to tax reform and reflects a substantial benefit to after taxed underlying income and earnings per share for our shareholders. We currently expect a long-term effective tax rate in the range of 20% to 24%. Please keep in mind additional definitive guidance from the U.S. government regarding implementation of the recently passed tax reform legislation could impact this outlook.

It is also important to highlight that our 2018 results will be impacted by $850 million of underlying depreciation and amortization, which represents an approximate $50 million increase from 2017. This increase is driven primarily by information system investments in the U.S., including in our order systems, which will make it easier for our customers to do business with us.

Additionally, 2018 results will be impacted by the adoption of the new revenue recognition standard and pension and OPEB accounting guidance as well as changes to segment reporting related to pension and other post-retirement benefit costs. With these changes in pension accounting, we expect $46 million of Europe pension income in 2017 to move to our corporate results. The new revenue recognition accounting standard became effective for us at the beginning of 2018 and prior period results will not be [restated]. Along with some timing change, we currently anticipate that this change will reduce both net sales and MG&A expenses by approximately $70 million to $90 million during 2018, primarily within our Canada segment, with no significant impact on net income.

The impacts of these accounting changes are discussed in further detail with Input Note 2 of our 2017 Form 10-K.

Consistent with last year, our focus in 2018 will be ensuring that our business generates strong cash flow as we strengthen our balance sheet and deliver cost savings while increasing our EBITDA margins over the next 3 to 4 years. As Mark mentioned, we plan to revisit our 3 buckets of capital allocation priorities later this year, which include returning cash to shareholders, strengthening our balance sheet and growth opportunities, such as M&A and brand investments. But in the near term, we will focus further on strengthening our balance sheet while maintaining our annual dividend. At this point, I'll turn it back over to Mark.

Thanks, Tracey. I began the call today by outlining our plans to drive total shareholder returns. Going forward, we believe our ambition to be First Choice for our consumers and customers will be central to our bottom and top line success.

Our regional business priorities are clear and consistent.

In the U.S, while 2017 industry dynamics were challenging, our teams continue to be disciplined, decisive and accountable as we continue to deliver long-term profit growth. We've grown underlying EBITDA in the U.S. substantially since 2009 including in difficult trading conditions. And this year exemplified that ability as we grew underlying EBITDA 4.9% in the quarter from 2.7% for the full year. We know we have the brands, the plans and the teams to achieve our goals, which includes our growth agenda. Our objective of flat volumes by 2018 and growth by 2019 remains our strategic imperative. But we're not driving for growth at any cost. We will strengthen and expand our portfolio, drive investment efficiency through ROMI, or return on marketing investment, and also through global procurement and the use of PACC, and we'll continue to earn category captainships underpinned by tools such as Building with Beer, as these are all steps to help us and our partners to sell more beer more profitably.

Within our brand portfolio, we'll continue to gain segment share in Premium, grow in Above Premium and continue to stabilize our Below Premium brand volume. We'll refresh Coors Light packaging and release new creative [ones] over the next couple of months, while continuing to build momentum behind Miller Lite, the original light beer. Within Above Premium, we'll accelerate our performance by building on solid growth in 2017 from our 2 national craft brands, Blue Moon Belgian White and Leinenkugel's Summer Shandy as well as the strong growth of our regional brands including Terrapin, Hop Valley, Revolver, Saint Archer and Colorado Native.

Additionally, excitement from our distributor and chain partners for our 2018 innovation lineup is also apparent with tens of thousands of incremental placements already committed. The Sol brand will be relaunched in April with redesigned packaging supported by an integrated marketing campaign. Alongside Peroni, which is also accelerating, we will have a strong one-two punch in the import segment. Additionally, in just the past few weeks we've brought to retail Arnold Palmer Spiked Half & Half designed to take share in the valuable hard tea segment, and Two Hats positioned to new legal age drinkers into beer.

In Canada, our teams are building on improved 2017 momentum. Our consumer excellence teams will continue to focus on gaining segment share in premium, accelerating our growth in Above Premium and craft and stabilizing our Below Premium brand share. Our #1 priority for our brands remains on improving the performance of Coors Light and Molson Canadian by refocused marketing, improved customer promotion and stronger commercial execution. Above Premium performance will be driven by Coors Banquet, MGD, Belgian Moon and the Heineken portfolio. In addition to listing and shifting Miller High Life to Canada, we will introduce 2 further brands from our U.S. portfolio to broaden and deepen our Canadian portfolio later this year. And we're also going after incremental drinking occasions by launching some great-tasting innovation in non-alcohol segment in 2018, with more details to follow in due course. In the customer excellence front, we'll continue to roll out proven best practice tools, such as Building with Beer. Alongside this commercial excellence continues to focus on sales productivity, customer 360 initiatives and joint business planning resulting in strong end market impacts. Supply chain teams in Canada continue with brewery optimization efforts and productivity improvements as we are just over a year from opening our new British Columbia brewery and the new Montréal brewery is expected to begin production in 2021.

In Europe, where the environment remains competitive, we'll continue to use a balanced portfolio approach, drive disciplined retail execution and optimize our brewery network. In 2018, there were a few headwinds that are important to remember when modeling the results for our Europe business. In the first quarter, we will be cycling the $50 million indirect tax provision benefit from 2017. In addition, throughout 2018, we will increase investment behind our brands and commercial priorities to further strengthen our First Choice agenda. And lastly, as Tracey highlighted, as a result of the changes in pension accounting, we expect $46 million of Europe pension income in 2017 to move to corporate results. Our commercial teams will build on our positive momentum this year by strengthening our national mainstream brands, including Carling, our largest brand in Europe, which further strengthened its overall #1 position in the U.K. beer market in 2017. For our Above Premium portfolio, 2017's double-digit sales growth reflects the fact that ice cold Rocky Mountain refreshment is resonating powerfully with Coors Light consumers in the U.K. and Ireland. Above Premium Staropramen, outside of its domestic market, has grown at double-digit rates, and we continue to push the brand into new markets where the Czech providence and quality can deliver growth in the Above Premium segments. To accelerate our growth in craft, led by Sharp's and Franciscan Well, we've added La Sagra and [Ville-Marie] brands to our portfolio. And with cider we're building on strong growth by Carling Cider and Rekorderlig with the 2018 acquisition of Aspall, a growing cider brand founded in 1720 with a distinct face, place and story that supports our premiumization strategy. Our balanced portfolio approach also relies on continuing commitment to deliver against our focus to become the first choice for customers. We maintained our #1 supplier ranking in the U.K.'s Advantage retail survey for the multiple grocer off-premise channel and also recently achieved the #1 ranking in the multiple on-premise channel for the first time.

With the integration of that Miller International business largely complete and with nearly 4.4 million hectoliters of total brand volume in 2017, our International business has increased substantially over the past year and is now more than half as big as our Canada business from a volume perspective. We'll continue to utilize an asset-light model in select markets and our efforts will focus on global priority brands, Coors Light, the Miller trademark and Blue Moon. Coors Light maintained strong growth in Latin America last year and Mexico passed 1 million hectoliters of brand volume, making it the fourth largest Coors Light market globally. We're currently launching the Miller Lite original white can packaging to more than 20 markets globally. And while still early days, results [for this] authentic packaging were very positive.

Across Molson Coors, against a backdrop of integration and challenging market conditions during 2017, we delivered financial and commercial results that demonstrate our balanced priorities for bottom and top line growth are working. In 2018, our First Choice focus across regions will continue to strengthen and premiumize our brand portfolio while also deepening our customer relationships. We'll also continue to retain flexibility in our P&L, deliver on our cost savings and remain laser focused in delivering against our cash targets and strengthening our balance sheet.

Now before we start the Q&A portion of the call, a quick comment. As usual our prepared remarks and slides will be on our website for your reference within a couple of hours this afternoon. Dave Dunnewald and Kevin Kim will be available via telephone or email to assist with any additional questions you may have regarding our quarterly results. At this point, Phil, I would like to open up for questions please.

(Operator Instructions) The first question comes from Andrea Teixeira with JPMorgan.

I wanted to just cycle back to the synergies and the reinvestment. You had an amazing quarter in terms of flow-through, and it was above what you had initially indicated at the Analyst Day. I was just hoping to see how we should be seeing the cadence for 2018 and if this margin was just a catch-up because, obviously, the first 9 months you had a more challenging environment and you had to defend it. So for the full year, you still had it like within that guidance. So is there anything that has changed that may make -- I mean, obviously, you had $80 million more than you originally anticipated, but how should we be thinking about the range that you gave us at the Analyst Day in terms of reinvestment? And how we would layer that to your initial thought about stabilizing volumes in the U.S. in 2018? How we should be thinking of that goal going forward as you have more visibility.

There was quite a lot in there so let me try and look back. If you look at our overall cost savings and synergies, we laid out very clearly our 3-year aspiration, and that aspiration was one that had increased following the initial synergy assumption. So we increased synergies, and we accelerated those synergies to give us the $550 million over 3 years. We've now increased that number from $550 million to $600 million. And we made very good progress in year 1. We actually managed to accelerate some of the savings from years 3 and 2 into year 1, which was very encouraging. That was important because as we came through 2017, some of the inflation assumptions were actually more negative than we'd anticipated, particularly around aluminum and fuel. So it was important that we overdelivered. And there's no real change to the way that we that we think about allocation of savings within our business. Clearly, we're not going to give a formula because it's important that we retain flexibility to use those cost savings as we see appropriate. But obviously, they offset inflation, which was driven principally through commodities, any volume deleverage we're seeing. We're also using some of those cost savings to focus on our global growth and efficiency initiatives. So we set up the next cycle of cost savings in our business with things like global shared services and supply chain infrastructure changes are taking place in Canada as a couple of examples, and then a proportion flows through to the bottom line. So that's the way that we tend to look at our cost savings. And alongside those, obviously, as we've intimated, we continued to retain flexibility in terms of our overall MG&A to ensure that we deliver EBITDA margin expansion and the bottom line improvements. I think the second part of your question, related to the U.S. and I think Gavin and I have been very clear that stabilizing our volume in the U.S. is a strategic imperative ahead of moving into absolute growth, that the business and volume terms have declined for the best part of 10 years. Our intent is still to deliver this on 2018. If industry volumes are softer than anticipated, it may take a lot longer to get there but it doesn't change the strategic imperative. And we'll make sure we do that in a manner that allows us to grow EBITDA margins and overall EBITDA. In other words, we're not chasing stabilization and growth at any cost, but growth in a measured and balanced way, and I think the team demonstrated our ability to do that if you look at our EBITDA performance for the U.S. in the fourth quarter and on a full year basis.

So the margins that we saw in the fourth quarter there, you see as real, a real improvement over time in the cadence of the synergies? You saw more synergies heading into the fourth quarter? Or they were pretty much balanced throughout the quarters?

They were reasonably balanced. And I think what we've said is we're not going to update on a quarterly basis on cost savings and synergies. We'll do that on a full year basis, and we've now given you an updated guidance and expanded our cost savings aspiration. The thing to bear in mind is, I think, in 2017, inflation came in probably about $60 million to $65 million ahead of what we'd anticipated, and we think inflation will grow by about another $50 million as we go into 2018.

And that's on a global basis, I'm assuming, that number?

That's on a global basis, that's correct. And we also mentioned as well in our guidance that we'll be cycling the benefit of the indirect tax provision reversal in 2017 of -- Q1 of 2017. So there's a few puts and takes as you think about 2018. But the improvement and solid financial performance of our business is very real for sure.

The next question comes from Steve Powers with Deutsche Bank.

So maybe to build on Andrea's question a little bit, I think we're all impressed with the strong profit and cash performance exiting '17, the raised cost savings objective, the better-than-expected free cash flow for '18. But I guess my first question is a bit more detail on where you are sourcing that cast productivity upside from. It sounds like working capital timing played a role. But I'd love also some more color on what drove the decision to spend a bit less than expected on CapEx. And any more color on marketing, promotional investment trends that you may be able to offer, that'll be great.

You covered most lines of the P&L and balance sheet there, Steve. Tracey, do you want to pick up some perspectives on Steve's question?

Yes. So if we look at the free cash flow, which I think is the CapEx falls into that as well. So the free cash flow remains a focus as we look to meet our deleverage commitments to the rating agencies. So when we look at the $1.5 billion, plus or minus 10%, guidance that we're giving for 2018, I think a couple of things to consider. So firstly, I'll touch on the CapEx. So we actually started speaking about this towards the back half of last year was, as we were going through our cost savings and synergies, we found ways to actually spend less behind those initiatives but still continue to deliver the cost savings and synergies, and that spending lift came primarily from the CapEx side. So we were able to reduce our CapEx guidance in 2017. And as well in 2018, we'll continue to deliver some CapEx reduction previously thought to be needed around synergies and cost savings through efficiencies and elimination of some projects so that would not -- that's not timing. That's real efficiencies. And then as we look at some of the other big drivers of the free cash flow, just to think about as you're modeling, the cash taxes will be a bit of a headwind in 2018. So just a reminder, last year, we strengthened our balance sheet through making additional pension contributions of over $300 million. Our pension contribution that we're guiding to in 2018 is $10 million. That's -- because of that contribution last year, we actually received a tax refund. This year, we will be paying cash taxes. So that's a swing that will be a bit of a headwind as well. And then the timing of the working capital, we also just mentioned this in Q3, I believe. What is difficult to really accurately forecast is mainly in our European business unit. We -- cash collections at year-end's timing is difficult because we have thousands of customers in different countries. And in 2017, at the end of 2017, we actually -- we had really strong cash collections at year-end so that's a little bit of a timing, also to consider as you look at our free cash flow, both 2017 and 2018. So I hope that helps.

And Steve, I think the other thing you mentioned was really around our MG&A spend, particularly the fourth quarter. I think again we've been very consistent. We'll retain flexibility around our commercial investments, and we're working very hard across our business to drive commercial investment, productivity, principally through the ROMI model which just becomes a stronger and stronger tool for us in the U.S., and that rolled into Canada and it's rolled into the U.K. as well. So really making sure we're driving higher returns out of every existing dollar. And that's allowed us on the back of some of the procurement work we've done as well to get -- give us more flexibility in some of that marketing spend, and we're utilizing that in real time quarter-by-quarter.

The next question comes from Vivien Azer with Cowen.

I wanted to circle back to the U.S. and get your assessment of some of the strategic moves that you made in 2017 and, in particular, some of the price investments that you made at the low end of the portfolio. Would love kind of a postmortem on how that played out relative to your expectations, in particular as it relates to brand interaction across kind of value or economy and Premium Lights.

Thanks, Vivien. Gavin, do you want to pick that up specifically and -- remind everybody of the portfolio strategy across the 3 major segments and what was delivered in 2017?

Sure. Thanks, Mark, and good morning, everybody. Vivien, the first thing that I would say is from a pricing point of view, actually, our pricing was pretty similar. Actually it was slightly up in Q4 versus Q3, notwithstanding the success we've had with our economy strategy. And as Mark said, when we came to our flat by '18, growth by '19 mantra 2 years ago, we had 3 building blocks which we were focusing on, and economy was just one of them. We wanted to halve the decline rates in economy. We wanted to hold share. And as we headed out of the fourth quarter, actually, we've done better on both of those dimensions. We more than halved the decline and we actually grew share in the fourth quarter. Keystone played a big part of it and so did Hamm's. Premium Lights was the second building block. And there, we needed to gain share and, obviously, our job in 2018 is to accelerate share. As Tracey said, we gained share of segment for both Miller Lite and Coors Light in the fourth quarter for the 13th and 11th time, respectively. And then importantly, our Above Premium, and as you talk about strategic building blocks, this is where we laid a strong foundation in '17 for action and execution in 2018, particularly around Sol, which we're launching on the 1st of April and Arnold Palmer, which we -- spiked half-and-half, which we launched a couple of weeks ago and then building on the growth of the 4 craft companies. And then we also launched Crispin Rosé a couple of weeks ago, and that's off to a really solid start. And at the same time, we turned around both Blue Moon and Leinenkugel's, which had a difficult 2016s, and both of them grew strongly in 2017 as Mark or Tracey said. Does that cover it for you, Mark?

Yes, Gavin, that's clear. Vivien, the only thing I would add and I think it was behind your question, was are there any unintended consequences on our focus on Below Premium, and that is something we are monitoring very carefully. We don't believe that the work we've done on Below Premium is having an impact on other parts of our portfolio. The economy drinker is -- our Below Premium drinkers in the U.S. are very, very loyal. And our job is to ensure that we compete effectively in that segment for those loyal drinkers. And as we come into this year, we're also looking to ensure that LDA to 24 drinkers join the beer category through the introduction of our Two Hats brands. So we're being very careful about the interaction between the segments and our pricing relativities. And I think we feel pretty good about the strategy and the effectiveness of that strategy through 2017.

The next question comes from Judy Hong with Goldman Sachs.

So a question about the revenue per barrel performance in the U.S. So in the quarter, up 1.4%. If you could break down rate versus mix. And then as we think about 2018, you obviously called out some of the inflationary pressure you're seeing on the cost structure. So should we see a year where your revenue per unit is going to be below your COGS per unit? Or is there sort of an attempt to get more pricing in the marketplace as the inflation is creeping up?

Okay. So Gavin, do you want to pick up on just the construct of revenue per barrel in the U.S.? And then, Tracey, do want to pick up on 2018 inflation, avoiding any guidance as per Judy's question? Gavin, over to you.

Sure. Thanks, Mark. Look, Judy, as you say, we generated 1.4% the fourth quarter, which was about 20 basis points higher than in the third quarter. If you break it out between sort of a net pricing, that was about 180 basis points, and mix was negative 40 basis points. And that negative mix was entirely associated with the package mix as it relates to some of our packaging strategies, primarily in Keystone Light. From an overall pricing point of view, I would just point out that 2017 pricing was actually slightly up over 2016 full year pricing, about 10 basis points. As for as 2018 outlook is concerned, Judy, as Mark said, we don't guide there.

Yes. And then, Judy, just in terms of the COGS per hectoliter guidance for the U.S., so our guidance is to be up low single-digits for 2018. As Mark also mentioned, the inflation that we are expecting in 2018, now this across Molson Coors, that will be more than $50 million higher than we what we saw in 2017.

The next question comes from Robert Ottenstein from Evercore ISI.

Wondered if you could help us out, there's been a lot of kind of weird industry data that's come out that's making it a little bit hard to -- for us to discern what's going on. The Beer Institute, STWs down high-single digit in December. And then there's the IRI data is very positive for January. Nielsen, not so positive. Can you give us any -- and I think it has to do with just kind of timing issues on the scanner data. But can you give us any sense either in terms of your own business or the industry in terms of what happened with the December shipments and what's going on in January, please?

Yes. Again, assuming your question is specific to the U.S., I'll ask Gavin to talk through the detail. Just one thing to remember, something from our performance perspective is that our underlying strategy is to ship to consumption. Clearly within our business, there's some pretty significant change initiatives still rolling through. So what we call our [VPNs] or our combined ordering system, which has been going live and golden successfully over the course of the last couple of weeks. And there will be further initiatives on the VPNs initiative as we roll through 2018 and into Q1 2019. But Gavin, can you try and join the dots, just on some of the differences across the different sources of industry data for December? Is that possible to do?

That's really tough, Mark. So I'm trying to draw a line between all of these different industry sources is quite difficult, Robert. I can tell you about us. As Mark said, we said on the third quarter call that we were going to take shipments up a little bit or inventories up a little bit in the fourth quarter. So we did that. We took our inventories up by about a day, which is in line with what we said. And that would've positively impacted shipment volumes by about 120 basis points. So that explains most of the difference between the 3 and the 1.5. I mean, I really can't comment on why industry shipments were down in December. That's probably a question you should direct at our competitors. From a Nielsen and other market sources, our share remains pretty consistent with all of those sources. And I think we discontinued giving guidance on January some time ago so I'm not going to give any input into that.

The only thing I would add, Gavin and Robert, again if you take a step back, the U.S. industry, beer industry, continues to be the largest global profit pool, and the margin pool continues to expand because the -- even with volumes under a little bit of pressure continues to premiumize so it continues to be a great place to compete. And it's probably not something that we get too concerned about in terms of some of the short-term trends and volatility that we see in the volume line.

The next question comes from Laurent Grandet with Crédit Suisse.

It has been a while since the stock has been that much up, I mean, during a quarter so congrats on the good quarter. So I'd like to dig a bit more in term of the tax benefit and the cash redeployment. So the press release provides no information on how the company intends to reinvest tax savings. Could you please tell us how you're planning to redeploy the cash coming from a better tax rate. And if you think you see an opportunity to invest behind your core light brands, specifically Coors Light, and also the new brands like Sol, Arnold Palmer and Two Hats.

Let me take the second part of your question first, and Tracey can talk on just the tax benefit and cash uses in our business. I mean, if you look across our organization, our total marketing spend is close to -- yes, marketing spend is close to $1.5 billion. We spent close to $1 billion in the U.S. behind our brands. The view is that we have the flexibility to support the development of our portfolio. So as we bring new brands in, we continue to drive productivity and efficiency in our commercial spend, and we'll invest a rate that we believe will drive the maximum return. And that's true in the U.S., Canada and our European business, and I think we've demonstrated our ability to continue to make that happen. So don't expect any kind of material increase or ballooning of commercial investments as we go into 2018. We'll be working our existing dollars very, very hard to drive further productivity and efficiency and impact improvements. Tracey, do you want to talk to tax benefit and cash deployment?

Yes. So it's -- I look at the guidance that we've given our transaction-related cash tax benefit. So we're guiding to approximately $200 million of cash tax benefits. Now that is down from what we had previously given before tax reform, and that's really driven by the reduction in the corporate tax rate. But overall, we are a net beneficiary of the tax reform. I'm not going to, at this stage, give you exactly what those details are, but you can see just from the underlying tax rate that we're now guiding to for 2018, which will be between 18% and 22%. That is significantly lower and will provide a net benefit for us. Just in terms of the uses of the tax benefits, as Mark said, our focus is really on deleveraging our business and strengthening our balance sheet. So we will continue to generate free cash flow to pay down our debt and maintain our investment grade rating. And then as we said earlier, towards the back half of the year as we get closer to that deleverage target, we will talk about capital allocations.

The next question comes from Amit Sharma with BMO Capital Markets.

Mark, 2 questions, both on U.S. Understand your reluctance to talk about price/mix outlook for '18, but can you talk about industry price environment? If everybody is facing inflation, is there appetite within the industry to take adequate pricing? And then second, just on U.S. volumes, really good to see the discipline on investment and yet be able to grow EBITDA margins. Now if industry or let's say Premium Light volumes stay weak for the industry for the category, do we still have enough confidence that you can continue to grow EBITDA margins with that weaker volume environment?

Okay. So Gavin, if you're just going to tune in here and if I miss anything, please share it. Certainly, on the price/mix piece. And I'm not going to comment on industry level. We'll play our game, we'll drive our portfolio and we'll continue to work very hard to ensure that we offer great value to consumers that's appropriate to our brand equity while premiumizing our overall portfolio. And that's consistent for the U.S., Canada and our European business, that's very central to our business. But I mean, I think overall, on the U.S. volumes and your question around EBITDA margins, we are very clear about what our #1 priority is in our business, which is to deliver on our EBITDA margin development, as per our guidance, improve our bottom line and generate strong free cash flow and then secondly, certainly, over the medium to long term, really start to see improvements in our top line through strengthening and broadening our portfolio and strengthening our customer relationships. I think specifically within the U.S., if you look at our EBITDA margins, they've improved sequentially and consistently over the last few years, and we believe now with the MillerCoors part of the bigger Molson Coors, there's further opportunities to enhance our EBITDA margins as North American supply chain, shared services and a global procurement, which have all got off to a great start in 2017 continue to pick up pace through 2018 into 2019. So even against a tough industry environment, driving productivity in the business, and securing some of the benefits of being fully integrated as part of Molson Coors still gives us headroom to continue to expand our EBITDA margins. Gavin, I don't know whether I missed anything there or if any builds on that?

No, that was a very comprehensive, Mark. I have nothing to add.

The next question comes from Pablo Zuanic from SIG.

I want to ask a 2-part question on the synergies in 2017 and the outlook for 2018. And then maybe Mark and Tracey, you can show me if I'm doing the right thing in terms of evaluating the performance. The way I see it, your EBITDA for the year consolidated grew $100 million, right? On the synergies of $255 million, that looks good. But U.S. EBITDA, up $50 million. Canada, down $24 million, is down $60 million in 2 years. Corporate expenses, up $85 million. So to some extent, the numbers look good because of this big jump in Europe of about $170 million EBITDA for the year, which to me seems to be a one-off for everything accounting related. So if we strip out Europe, EBITDA for the year was down and a little [fluid]. So what I'm saying when I look at the numbers for 2017, what jumps out as a positive to me is the jump of $50 million in EBITDA in the U.S. But on synergies of $255 million, that's still only 20% realization. Canada seems to be a problem. I don't know if Fred can comment on that. Margins are down there for 2 years in a row. And Europe, the big jump seems to be one-off so I don't think I can count on Europe growing EBITDA margin next year. Corporate expenses based on your guidance seem to be flat. So if you can comment on that, and then if I can allow a second question for Gavin in terms of our STRs, this kind of data -- when I look at your STRs, down 3% for the quarter, it would be nice if you can break that down between the growth in Above Premium in the U.S., what I call mainstream and then value. And the reason I ask that is that you are -- the data seems to show that mainstream was down about 3%, whereas value was up about 3%, but mainstream is like 2.5x the size of value. So if you can comment on that, if there are any channel differences between those 3 products groups that maybe make this kind of data being distorted. We can start with the cost question first.

Thanks, Pablo. As usual, you've used your one-two trick on questions so we'll try and cover all of the bases here. On the first 1, I don't think your analysis on EBITDA is accurate, I mean, our European business has delivered very, very solid top to bottom line performance, volume growth, pricing growth, good cost management and strong EBITDA performance, that clearly was enhanced by the one-off tax provision. But if you strip that out, then we're still seeing very solid performance. And my perspective is that our Europe business is kind of a poster child for what we're going to deliver across all of Molson Coors, which is really solid improvement on our bottom line and a very balanced approach from a top line perspective across volume, premiumization and pricing. So I do think you do us a little bit of discredit from a European perspective. I think in the U.S., despite a tough backdrop, we are in the process of turning around our overall volume and refining and reshaping the portfolio. And Gavin and his team did a super job of improving overall EBITDA performance. And as I mentioned in my previous question, I believe there's still further runway to expand our EBITDA margins as MillerCoors is now part of our global organization. Canada, your comments are fair. I mean it's -- we're in the process of turning that business around, and I was very pleased with the performance as we came through the second half of 2017. I think we've given you some indications as to the strengthening of our top line. Our volume was solid. We're back into share growth. We've seen pricing improvements. And what we're trying to do is balance delivering for today, while at the same time setting up the productivity improvements, as we look to our 2020 to 2022 cost savings programs as well. So we're taking some of the cost savings and synergies, used them to offset inflation that was higher than anticipated, and we have been investing for the medium to long term in shared services, world-class supply chain, our commercial excellence capabilities. So my job is to get the balance between delivering for today, which I think we've done very successfully in 2017, while at the same time setting the business up for the medium to long term. So I'm not sure I would agree -- actually, I am sure, I wouldn't agree with your analysis on our EBITDA performance. On the STRs, Gavin, do you want to comment on just the relative performance of each of the kind of major segments within the U.S.?

Right. Sure, Mark. Without getting into specific detail by segment from a performance point of view, in Above Premium, which is where we're putting a lot of emphasis, we grew Blue Moon Belgian White, and we grew our 4 craft partners and we grew Peroni very strongly. And as I said earlier on, we've got a nice platform coming into 2018 with Sol and Arnold Palmer Spiked and the ones I just mentioned. Our economy portfolio, Pablo, had our best performance in 8 years, primarily driven by the success of Keystone Light. And Mark correctly said that we do extensive analysis on the performance of Keystone Light, and it's having a no material impact on our mainstream brands. It under-indexes in terms of drawing from those 2 brands, and in some markets actually provides a halo. So we're very pleased with our economy portfolio. And in Premium Light, as you said, has been challenged in 2017. And Miller Lite's performance actually the fourth quarter was slightly better than in the third quarter, and Coors Light remains a challenge for us and we're putting a lot of effort behind that to revitalize it, mostly around "the world's most refreshing beer." We know that it works, it has worked before. It provides a meaningful product benefit for us. It's shown significant growth in equity, and we probably moved a little bit too far away from it. So you'll see us dialing up "the world's most refreshing beer" in a meaningful way as we head into 2018. Beyond that, Mark, I don't think I should give any more specifics.

Okay. Thanks, Gavin.

The next question comes from Bryan Spillane with Bank of America.

I had -- well, first, I wanted to say congratulations, Dave. You spent a lot of time and patience handling our questions over the years, and I just want to thank you for that and wish you the best as you go off into retirement.

Thanks, Bryan. It's been my pleasure.

I guess I have one clarification and one question. Tracey, when you talked about the $50 million of COGS inflation for 2018, is that net of any impact from the step up in-amortization and in D&A? And then also the change in pension accounting, I think, geographically might take some the $27 million of pension income out of COGS and move it below the operating profit line. So just wanted to understand if that's a net number? And then the question I had was for -- I guess for Mark and Gavin. You know you've seen some more, I guess, investment or you're going to see more activity in, I guess, the fitness beer category for lack of a better way to put it with Corona Premier coming in and you've got Amstel bringing a product into the market. So just kind of your thoughts on that segment as you get more sort of investment behind it, how it interacts with the Premium Light beers and just thoughts around that and how that's evolving would be helpful. Thanks.

Thanks, Bryan. Tracey, do you want to pick up clarification on just -- to Bryan's first part?

Yes. So the incremental $50 million inflation that I quoted, incremental above 2017 inflation that we saw is not just COGS. It's actually COGS and MG&A, and it's across all of our business units. But it is primarily driven by commodity inflation so aluminum and diesel fuel would be the main drivers, but it's across all BUs and across MG&A and COGS. Then in terms of the pension changes so what I maybe refer you to is our 10-K, is actually up on our website now. We've got quite a detailed layout in tables and explanations. If you want to refer to footnote 1 and footnote 21 in our 10-K, that details the change in methodology. And then footnote 2 actually details the changes around the [fair view] accounting standards. So Bryan, if you want to have a look at that and maybe come back to us after the call, and we can break that down a little bit further for you.

Okay. Thanks, Tracey. And Bryan, just on your second question on this new segment that you invented called the fitness beer category, I think I know what you refer to. The good news is if you use that descriptor, we have the original fitness beer, it's called Miller Lite. And that's what we're doubling down on. We continue to believe that continuing to focus on both Miller Lite and its very clear functional benefits and Coors Light and its very clear lifestyle benefits is the best way for us to respond to the interest in what you've described as fitness beer. The other thing that's of interest as well is there's quite a significant crossover between some of the alcoholic seltzers that have come into the marketplace, and fitness or light, light beer and it's important that we offer breadth across our portfolio. So across Miller Lite and Coors Light, we'll continue to strengthen their equities. We'll compete more assertively with Henry's Hard Sparkling, and we'll have the right packs for 2018. And then, obviously, some of the Mexican imports kind of play into that space as well, and the introduction of Sol becomes very important to us. So we believe that there's more than enough on our plate and we've got to be choiceful about ensuring that we deliver real focus behind our portfolio. And against the 2 big light brands, Henry's Hard Sparkling and Sol, we believe we've got the right portfolio to compete effectively in that space if I'm defining it correctly.

The next question comes from Lauren Lieberman with Barclays.

I wanted to [resolve] 2 things. First is just commentary around commercial effectiveness and efficiency in the fourth quarter, just how much of that is sort of -- if you could, one, you talk a little bit about any sort of distinctive efforts there? And two, things that were planned versus real more sort of real-time adjustments in the second half of the year as you saw that the industry volume was soft, that was one area of question. And the second was just the mention of the incremental placement and visibility you have from your distributors. So was that primarily on Sol and the Arnold Palmer? Or was that also incremental distribution or new placements for some of, what I'll call, like the legacy in the existing portfolio? Thanks.

Okay. So to second part of your question, Gavin, do you just want to pick up on the success of the placements that the team have been driving as we come into 2018?

Yes, sure, thanks, Mark. We've got tens of thousands of placements for -- or actually hundreds of thousands of placements for our innovation brands. You're rightly called them out as Sol and Arnold Palmer Spiked Half & Half. Easy -- not easy tea -- Two Hats, which is our entry into the tea category and to try and recruit new drinkers into our economy portfolio, 21 to 24-year-olds, which have primarily walked away from beer. Two Hats is designed to do that. And we got tens of thousands of new placements for that. And yes, we did get more placements for brands like Blue Moon, Coors Light and so on.

I think you invented a new brand there, Gavin.

I got caught up between Arnold Palmer and Two Hats. Two Hats is not a tea. Arnold Palmer is the tea and Two Hats is a lightly flavored light beer to recruit new drinkers.

They're not sharing placements either. They'll have discrete placements, but I think...

Correct.

On the first part of your question, Lauren, on just commercial effectiveness, I mean, clearly, as we've come through this year, we've worked very hard from a procurement perspective, we had a global media RFP, which was a very successful, which has allowed us drive efficiency and productivity on some of our marketing dollars. And the simplest way to think about this is, we come into the year with an assumption around investment per hectoliter. When I was business unit CEO in Europe in this role, what we attempt to do is if we see there is softness from a volume perspective because maybe the segment is underperforming overall, and we try and maintain our investment on a per hectoliter basis but that means in totality, that investment may fall. So we still drive the same kind of productivity and impact per hectoliter. Though it's a combination of maintaining that spend per hec while at the same time also driving productivity through our ROMI model. So that gives us flexibility in a real-time basis to respond to segment changes or brand momentum within our business. And hopefully that gives you a little bit of a flavor.

The final question comes from Mark Swartzberg with Stifel Financial.

Dave, really been a pleasure working with you. So thank you, and Sam, too, thank you. My question, Tracey or Mark, is on the $330 million return of purchase price on the Miller International business, which I think was assigned a value of $700 million. So in its face, it seems like just proportionally you're getting less EBITDA, but it might mean that you simply thought you were getting a level of working capital that you didn't get. So I'm just trying to understand what was the basis for the return of the $330 million? Is it more working capital, is it in fact a lower amount of EBITDA? Looking for some more detail there.

Okay. So let me try and deal with that and try and keep it uncomplicated. The simplest way to think about this is the $330 million that we negotiated with ABI is really a true-up on the overall acquisition price, so the $12 billion drops by $330 million. When we made the agreement to acquire the Miller brand internationally, we were very clear that there was a high-level assumption on the EBITDA. That was quite opaque because the Miller brands were embedded across the SAB business, and it wasn't a discrete business. So we started with an assumption and then said we would -- based on the trailing 12-month EBITDA at close then get into a purchase price adjustment. We kicked off that process and moved into a negotiation with ABI, and we feel that the true-up on overall acquisition price makes sense for us if you then look at the overall multiple we paid with the EBITDA stream. The good news is that the Miller brands are now fully adopted and integrated within our business and performing well with, I think, significant runway ahead of them in Canada and in Europe. And with the International business, they're growing very, very strongly. So if you also recall, Mark, one of the things that we pointed out was based on the assumption of the trailing 12-month EBITDA, our business model, particularly for the International business, would be different because we would be sharing that margin with our partners and our distributors. So it was never going to be apples for apples. But in headline terms, just look at this as a true-up on acquisition cost. It's now dropped to less than $11.7 billion. And if you look at the overall multiple we paid for the EBITDA we acquired then we feel very good about the outcome of that negotiation.

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Hunter for any closing remarks.

Yes, Phil, many thanks for facilitating things today. Many thanks for your interest in the Molson Coors Brewing Company. We look forward to catching up with you on our next call and then obviously, at our Investor and Analyst Meeting we'll be having in New York in June of this year. So thanks for your interest in the company and look forward to speaking with you soon. Bye, everybody.

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