Earnings Call Transcript - NOMD Q2 2021

Taposh Bari, Head of Investor Relations

Hello, and welcome to the Nomad Foods Second Quarter 2021 Earnings Call. I'm Taposh Bari, Head of Investor Relations, and I'm joined on the call by Stefan Descheemaeker, our CEO, and Samy Zekhout, our CFO. Today, we will review our financial results for the quarter and conclude with a question-and-answer session. Before we begin, I want to highlight the disclaimer on Slide 2 of our presentation. This conference call may include forward-looking statements based on our current views regarding the company's potential, expectations, and intentions, especially concerning the impacts of COVID-19. Actual results could vary due to risks and uncertainties discussed in our press release, SEC filings, and this slide in our investor presentation, which contains cautionary language. We will also address non-IFRS financial measures during today's call. These non-IFRS measures should not replace IFRS results and should be read alongside them. Users can find reconciliations from IFRS to non-IFRS in our earnings release and in the appendices at the end of the slide presentation available on our website. Please note that certain financial information in this presentation reflects adjusted figures for 2020 and 2021. All adjusted figures account for exceptional items, acquisition-related share-based payments and related expenses, as well as noncash foreign exchange gains or losses. All comments from this point will refer to these adjusted numbers. Now, I will hand the call over to Stefan.

Stefan Descheemaeker, CEO

Thank you, Taposh, and thank you all for joining us on the call today. Earlier today, we reported our second quarter 2021 results, which marked the highest second quarter adjusted EPS in our company's history despite the anniversary for most difficult comparison of the year. The power and resilience of our value creation model was evident during the quarter as contribution from M&A, share repurchases and margin expansion more than offset an expected organic revenue decline. Based on our year-to-date performance in our plans for the second half, we remain confident in achieving our 2021 full year guidance, which calls for another year of organic revenue growth and double-digit adjusted EPS growth. Further, with the pending acquisition of Fortenova's Frozen Business, we expect the 2021 adjusted EPS base of over $2 per share on a combined and annualized basis. This will create a higher new baseline from which we expect to grow in the coming years. With that, let's jump into the details of Q2, beginning with the highlights on Slide 3. Total revenues were down slightly as an expected decline in organic revenue was offset by contribution from the acquisition of Findus Switzerland and favorable Forex translation. On a 2-year basis compared to 2019, total revenues grew at a CAGR of 5% and organic revenues grew at a CAGR of 4%. Adjusted gross margins expanded 50 basis points or 90 basis points on a like-for-like basis when excluding the effect of Findus Switzerland whose initial gross margins are below those of our base business. We are pleased with these results as we continue to navigate a dynamic inflationary backdrop. Adjusted EBITDA grew to EUR 123 million, representing 4% growth versus last year and an 11% CAGR versus 2019. And finally, adjusted EPS was EUR 0.40 per share, representing 18% growth versus the second quarter of 2020 and a 2-year CAGR of 22%. Shifting now to the details of the quarter. We achieved strong performance despite the easing of restrictions across Europe and the anniversary of the COVID-related demand a year ago. Growth in the frozen food category remained elevated on a 2-year basis, but did normalize versus the first quarter when most of Europe was under lockdown. Against this backdrop, we experienced sequentially improving market share trends during the second quarter, with market share in May and June both increasing versus the prior year period. Our market share improvement has been enabled by better supply and service levels, which after dipping to the low 90% range earlier this year have returned to the high 90% since May. We are encouraged to see a positive market share inflection and expect this momentum to be throughout the rest of the year. Confidence in our growth expectations for 2021 is supported by strong underlying fundamentals within our core portfolio. Improved capacity is leading to more normal promotion activity, and in turn, particularly strong market share performance in our core categories such as fish fingers, coated fish, peas, spinach and Green Cuisine. Green Cuisine continues to be a key driver of both absolute growth and share gains as we build distribution, grow penetration and drive trial across our European footprint. Our chickenless range has performed exceptionally well since being introduced late last year, and early signals of our recent fishless launch in Germany are very encouraging. Further with the Tokyo 2020 Olympic games underway, we are thrilled to have Green Cuisine to be the official plant-based sponsor of Team GB in the U.K. as we democratize the meat-free category. One of our incredible athletes, Max Whitlock, has already won a gold medal at the Tokyo games. Congratulations, Max. We have several 360-degree activations underway and are excited to bring them to life with the help of Max and our other sponsored athletes. In 2 short years, Green Cuisine has become one of the leading meat-free brands within Europe and now has nearly 14% share of the frozen meat-free category across Western Europe. Consumers love our products, and we continue to believe we have every right to win in this exciting white space growth opportunity. Our second quarter performance was also helped by strength in foodservice, which grew over 40% versus the prior year period. While this business is still down double digits versus pre-COVID levels, it is recovering nicely. And given the strong rate of growth, it's providing a meaningful contribution to the overall performance of the business. We expect this to be a recurring theme for at least the next 3 quarters. I'd like to shift now to the topic of inflation. Since presenting at CAGNY 5 months ago, we stated that we expect to manage inflation in the low single-digit percentage range this year despite rising commodity costs. Between the actions taken by our procurement team, the length of our covered positions, favorable Forex tailwinds and the nature of our COGS basket, we've seen limited inflationary pressure on our P&L for most of this year and have not yet had a need for significant price increases. As a result, our gross margin guidance for the year remains unchanged, and we are pleased to be in a position to reiterate our 2021 earnings guidance. I'd like to applaud the efforts of our organization for their exceptional work. And that said, similar to many other food companies in the market, we are experiencing a real uptick in raw material inflation, noticeably in all packaging, freight and logistics. As we have in the past, we will deploy our entire suite of levers, including productivity and price to protect our margins and ensure that we can continue to deliver against our steady growth algorithm for years to come. Lastly, we prepared for the acquisition of Fortenova with the refinancing of our last portion of our debt. As a result of this transaction, we were able to: one, significantly reduce our like-for-like interest rates; two, extend our maturities; and three, generate EUR 400 million of incremental borrowing capacity. Taking all of these factors into consideration, we expect the net increase of our higher interest expense to be marginal despite taking on an incremental EUR 400 million in debt. We are eager to close on the Fortenova transaction at the end of Q3 and look forward to integrating the business and brands into the Nomad Foods portfolio. As a reminder, this is a transaction that we expect to be strategically and financially impactful for years to come. From a strategic perspective, Fortenova will expand our geographic reach into 8 Central and Eastern European countries new to Nomad, mainly with leading market share positions. It will also introduce us to ice cream, a new and high-margin category, which will create a nice, seasonally hedged frozen savory service business during the summer months. The business also has significant exposure to out-of-home consumption and international tourism, creating a cyclical tailwind as the world returns to life after COVID-19. Financially, we expect Fortenova to be high single-digit accretive to adjusted EPS in its first full year prior to synergies. This transaction is expected to increase our adjusted EPS to over $2 in 2021 on the combined and annualized basis. We expect this to set a new baseline for growth in 2022 and beyond as we build on momentum in our base business, realize Fortenova synergies and allocate excess capital in an accretive manner. In summary, we are pleased with our second quarter results and remain on pace to achieve our guidance for the year. We have an active commercial agenda over the coming months, which we expect to result in market share gains, growth in our international business and the recovery in foodservice. We will continue to mitigate inflation by driving productivity and raising prices where justified. We are building Green Cuisine into one of the largest and fastest-growing plant protein brands in Europe, attracting new consumers into our portfolio and driving innovation within the frozen food aisle. And finally, we expect that the pending acquisition of Fortenova will serve as a new catalyst for growth in 2022 and beyond. With that, I will turn the call over to Samy to review the financials and guidance in more detail. Samy?

Samy Zekhout, CFO

Thank you, Stefan, and thank you all for your participation on the call today. Turning to Slide 9, I will provide more detail on our key second quarter operating metrics, beginning with revenues, which declined 1% to EUR 596 million. Organic revenues declined 4.5% as we anniversary peak COVID-related demand during the prior year period. This was offset by the acquisition of Findus Switzerland and favorable currency translation, which combined to benefit revenue growth by 4 percentage points. On a 2-year compounded basis, second quarter revenue grew 5% and organic revenue grew 4%. Versus the prior year, an expected decline in our branded retail business was offset by growth in our nonbranded business with foodservice growth of over 40% and private label declining modestly. We achieved 50 basis points of gross margin expansion during the quarter or 90 basis points when excluding the dilutive effect of the Findus Switzerland acquisition whose gross margin has a lower starting point. This is a solid outcome in the context of a heightened inflationary backdrop and significantly increased promotional activity versus the prior year period. Gross margin expansion was driven by a combination of productivity and transactional effects. We are pleased to be in a position to reiterate our gross margin guidance for the year, and as Stefan mentioned, are well equipped to navigate the dynamic inflationary backdrop. Moving down to the rest of the P&L. Adjusted operating expenses declined 3% year-over-year, reflecting growth in A&P and the decline in indirect costs. Adjusted EBITDA increased 4% to EUR 123 million, and adjusted EPS increased 18% to EUR 0.04 for the quarter. Both metrics beat last year's record performance, and we are positive during the quarter despite an anticipated decline in organic revenues. Further, adjusted EPS also benefited from a 10% reduction in a weighted average share count versus the year-ago period, reflecting the significant level of share repurchase activity conducted over the past 12 months. Turning to cash flow on Slide 10. We generated EUR 103 million of adjusted free cash flow through the first 6 months of the year, equating to 66% cash conversion. Cash flow and conversion were below the prior period due to the effect of COVID, which was a significant cash flow tailwind in 2020. In the first half of 2021, we rebuilt our inventory position, which was depleted in the year-ago period, while undertaking a series of projects to support our long-term growth ambitions. This resulted in EUR 55 million of working capital outflow and an uptick in CapEx. Looking forward, we expect adjusted free cash flow conversion to remain at a similar level in Q3, given the seasonality of the business and improved significantly by year-end. While 100% productivity will be difficult to achieve in 2021, given our working capital and CapEx needs this year, we remain committed to this subject long-term. As Stefan mentioned, we refinanced our senior secured notes, a new term loan in Q2, resulting in a lower interest rate, extended maturities and incremental borrowings. This was a very successful transaction with the EUR 750 million note issuance, representing the best pricing among similarly rated European bonds in the past 5 years. Following the acquisition of Fortenova, our pro forma leverage will be in the high 3s and deleverage to the 2s range by the end of 2022. With that, let's turn to Slide 11 to review our 2021 guidance, which is based on foreign exchange rates as of August 2, 2021. We are reiterating our 2021 full year guidance based on our year-to-date performance and our plans for the second half of the year. As seen on this slide, our guidance continues to call for adjusted EPS of EUR 1.50 to EUR 1.55 per share, representing growth between 11% and 15%. Based on current FX rates, guidance equates to range between USD 1.79 and USD 1.85. Guidance is based on the continued assumption of organic revenue growth in a range of 1% to 2% and based on contribution from Findus Switzerland and translational effects, total revenue growth in a range of 3% to 5%. This assumes a continued normalization of the category growth and does not take into consideration the possibility of another series of lockdowns across Europe as a result of the Delta variant. We have a very active calendar plan for the back half of the year, which we expect to result in continued market share gains and will be enabled by an improved capacity situation. As a result, we expect our retail business to grow in the back half despite assumptions that the frozen category will decline modestly versus the prior year. In addition, we expect the contribution from our nonbranded and international businesses, neither of which is tracked within the midterm data available to the investment community. Finally, a quick word on the pending Fortenova acquisition. We recently completed debt refinancing, which, as Stefan mentioned, reduced our interest rates, extended maturities and provided EUR 400 million of incremental borrowings. The net effect is a marginal increase in our interest expense, which we expect to absorb in our existing guidance. While we will update guidance on Fortenova upon closing, it is important to note that the seasonality of the business is highly concentrated in the summer quarters, mainly Q2 and Q3. The business is tracking in line with the figures that we provided at the time of signing, and we continue to expect Fortenova to be high single-digit accretive to adjusted EPS in 2022 before taking synergies into account. However, given the seasonality consideration that I just mentioned, we do not expect a material change to our 2021 guidance upon closing of the transaction this fall. As we owned Fortenova at the start of this year, our 2021 adjusted EPS guidance would have been above USD 2 per share. And as Stefan mentioned, we expect this will set a new baseline for growth in the coming years and contribute to the 2025 target introduced at last year's Investor Day. Before concluding, I would like to announce that our Board of Directors has approved a new buyback authorization of up to $500 million. Our capital allocation strategy has not changed, and our near-term priority is to close the Fortenova acquisition this fall. Beyond Fortenova, we remain committed to M&A and have an active pipeline that we are working on. With that said, we continue to see value in our shares and this authorization provides us added flexibility to further enhance shareholder value while maintaining a reasonable leverage profile. That concludes our remarks. I will now turn the session over to Q&A. Thank you.

Operator, Operator

Our first question will come from Andrew Lazar of Barclays.

Andrew Lazar, Analyst

I want to begin by discussing our progress in market share, as this is a crucial factor in reaching our target of 1% to 2% organic growth for the full year. Organic sales decreased by about 1% in the first half, so we obviously need a significant acceleration in the second half to meet our goal. I would appreciate your insights on this and how the share inflection impacts it, particularly regarding our Must Win Battles and similar strategies. I also have a quick follow-up question.

Stefan Descheemaeker, CEO

Yes, you're right, Andrew. Obviously, market share from the start, we always said it was a fundamental pillar for our plan for growth in 2021. And yes, we knew from the start that we would be capacity constrained. You've already seen the results in May and June in terms of market share, unconstrained obviously, promoting start back, which is great. July is the same thing. So that's on its way. And to your point, above and beyond, obviously, volume and sales, what is absolutely paramount for us is market share from Must Win Battles. From the start, you may remember back in 2016, we said it's key for us. And what we've seen, which is very, very interesting is that all market share in battles has been positive throughout most of COVID, now up of 100 basis points since May. So it's obviously quite significant. And we definitely believe in terms of retail, that the market share in terms of Must Win Battle for us, it's the ultimate indicator of brand health. So we're pleased with that. And it doesn't change anything in terms of what we've said all along over the last 5, 6 years. I think it makes a lot of sense and we're making progress.

Andrew Lazar, Analyst

Okay. The second question would be, despite the healthy EBITDA upside in 2Q, at least versus sort of consensus, obviously, you kept the full year guidance the same. Would you suggest this is simply out of prudence, given the dynamic operating environment? Or is it that the second half requires maybe a significant step-up in spending for some reason or costs are looking more challenging? Just trying to get a sense of what played into your thoughts around guidance in light of the better second quarter.

Samy Zekhout, CFO

Yes. Thanks, Andrew, for the question. I'll take that one. I think the year is playing out as expected, and our full year guidance is unchanged as a result. As you can imagine, and as you highlighted, actually, the environment remains pretty dynamic on multiple fronts. Our adjusted EPS is up 30%, I mean, through the first half of the year, and we are pleased with our performance. At this stage, it is clear that for us, it's prudent to reiterate our guidance, but we will certainly update you along the way.

Operator, Operator

Our next question. Rob Dickerson, would you like to ask a question?

Rob Dickerson, Analyst

Yes, I didn't hear that I was called on. Sorry about that. So my first question is a follow-up to Andrew's inquiry regarding the share gains. Stefan, I know in previous discussions, we've mentioned that due to your exposure across the EU and differences in timing and resets per country, it seems that you didn't capture as much share during COVID because of capacity constraints. Now, since those constraints have been lifted, you're indicating that you're already seeing some share gains. It appears these share gains are not reliant on future discussions with retailers or shelf reset timings to restock products. Instead, it's more about filling the inventory in the spaces you still have, which you never lost. Is that accurate?

Stefan Descheemaeker, CEO

It's part of that phase. By definition of the retail conversation, it's a bit more complex than that. However, we are definitely in a better position to be more promotional in the right way. The same applies to advertising and promotions. Overall, I think our relationship with the trade has improved significantly. Combined with the lack of real capacity constraints, this allows us to focus on what I previously mentioned, which are our Must Win Battles that account for 70% of our business, representing the highest growth and highest margin. It's an interesting interplay between gaining market share and gross margin. Ultimately, consumers will have to appreciate what we offer, as their choices will drive the outcome.

Rob Dickerson, Analyst

Okay. I understand. It seems like you're implying that we should look at the price in Q2. I've noticed that there has been a lot of discussion about future material pricing expectations, and it seems reasonable to assume that the projections for the second half of the year to achieve your full year organic growth are primarily driven by volume. I realize this is a straightforward question, but I wanted to clarify.

Stefan Descheemaeker, CEO

We will certainly benefit from volumes, but there is an effective dynamic that we have been managing throughout the quarter to support our plans and investments. We have always aimed to clearly succeed in the marketplace by supporting our brands appropriately and considering all variables related to pricing and investments.

Rob Dickerson, Analyst

Okay. And then just quickly on Fortenova. I know last year, obviously, it was a pressured year, just given the away-from-home channel. It's a business that has a decent exposure to that channel. If you're expecting to close in Q3, if we're thinking about into next year kind of relative to how you view the longer run rate growth potential of that business, is there a possibility that that growth could, in fact, be a bit higher in '22, just kind of given the ongoing recovery of away from home relative to long term? That's it. I'll pass it on.

Stefan Descheemaeker, CEO

It's a very dynamic environment, so it's hard to predict. We can see that the business is progressing according to our plans. As you pointed out, it's heavily influenced by the tourist season, so we anticipate interesting developments in 2022. We haven't fully grasped the impact of 2021 yet, but we can only assume that tourism will improve by then. However, it's not a complete season at this point. We believe we have our strategies in place, despite the challenges posed by COVID. We'll implement our plans as intended, with various factors at play with Fortenova. If there are any positive COVID-related effects, that would be an added bonus, but we’re not relying on it.

Operator, Operator

Our next question is from Jason English, Goldman Sachs.

Jason English, Analyst

So the first 2 questions have kind of come at the organic sales outlook, at least in some way, shape or form, and I'm not yet ready to move off that because there's obviously been a tremendous amount of investor consternation around your ability to get to that 1% to 2% in light of what we've been seeing in Nielsen data. And now your guidance is implying an acceleration to 3% to 5% to get to that 1% to 2% range, which optically, I'm sure you'll appreciate, looks like a reasonably daunting task. So can you walk us through, again, the building blocks and maybe put a little more tease or quantification on some of these things? So you mentioned like nonbranded international that are outside of the scope of Nielsen. Remind us how large those are and what you're expecting. You mentioned capacity situation as a dampener that's no longer going to be a dampener. How much does that dampen your growth? And what are the other puts and takes that we should be contemplating to have confidence in your ability to get to that 3% to 5% in the back half?

Stefan Descheemaeker, CEO

Okay. Let me begin by addressing the current situation, and then Samy will follow with a forward-looking perspective. First, as you know, Nielsen data represents only a portion of our story, likely around 60% at most. All Nielsen data includes Green Cuisine, which performs better than Wall Street estimates. For foodservice, we’ve experienced a 1% decline for the past 15 months, but it's now turned into a 1% benefit. International figures are not included in Nielsen but will serve as a positive factor starting in Q3. The Nordics previously presented challenges, but it was a positive contributor in Q2 and is making progress. This highlights the significant differences between what Nielsen shows for the first two quarters and our actual results. Now, I’ll hand it over to Samy for the latest projections for the year.

Samy Zekhout, CFO

Yes. I think as you combine all the facts that Stefan has mentioned, which clearly builds on the momentum we have with our Must Win Battle and the share gains that you have seen, the recent increase in foodservice, including Green Cuisine, is noteworthy. The fact that effective foodservice is improving as we progress is significant. The international elements that are not reflected in the numbers also lead us to reaffirm our confidence in the 1% to 2% guidance. Our assumption for category growth indicates a modest decline compared to 2020, but we expect our branded retail to grow year-on-year. Additionally, it is important to remember that our second half comes with slightly easier comparisons than the first half overall.

Operator, Operator

Our next question is from Robert Moskow, Credit Suisse.

Robert Moskow, Analyst

The bad news is that the question will be similar to the last four, although perhaps with a slight variation. You mentioned that the second half relies on market share gains, but many of your competitors provide data on their market share trends. I have not seen any share data from Nomad in terms of a weighted average or portfolio percentage. Could you provide some insight on whether you gained significant market share in 2020 and 2019? Do you have that data available internally? How do you believe your market share has changed over time? And I have a follow-up question.

Stefan Descheemaeker, CEO

Overall, our market share has steadily increased in the past. This improvement is not only reflected in sales but more importantly in our margins, which are crucial. It's a combination of factors, and margins play a key role in our Must Win Battle strategy. Consequently, our market share in terms of margins, namely gross margin and gross profit, has also expanded. In 2020, our market share saw modest growth primarily due to capacity constraints, which also affected Q1. As you may recall, our service levels dropped to the low 90s during that period, leading to a decrease in market share, which was anticipated in Q2. That quarter remained flat, but we saw growth in May and June, and while July data is still incomplete, we are observing an upward trend. This is our current position, and we will work to clarify it further.

Robert Moskow, Analyst

Right. I'd appreciate it. Another follow-up. Inflation, we've heard quantification from other companies as to how much inflation they're getting. It seems to be high single digit, maybe even 10%. I haven't heard from you. But can you give us a sense of where you are right now? Is it mid-single? Is it higher than that? Is it offset by currency?

Stefan Descheemaeker, CEO

We are experiencing inflation similar to other packaged goods companies. However, our portfolio and business structure position us strongly to deal with inflation. Our focus on fish and vegetables is beneficial, as we see more modest inflation in these areas. Additionally, foreign exchange is a positive factor for us. Market inflation isn't necessarily a good indicator for our situation because we purchase at scale. For instance, we are the largest buyer of white fish globally, allowing us to leverage our scale effectively. While inflation is present, it is more manageable for us due to various factors. We also have strategies for efficiently navigating through productivity and scale. The mix of our products helps, as do the effects I've previously mentioned. We continue to implement pricing and net revenue management strategies every year.

Operator, Operator

Our next question will come from Faiza Alwy, Deutsche Bank.

Faiza Alwy, Analyst

So I also wanted to first just follow up on the top line again. I guess, are you able to talk about how much you expect this category to decline as we go into the back half in your core markets?

Samy Zekhout, CFO

I'll take on that one. Actually, the category is expected to decline low single digits as we have already mentioned. And our assumption actually is for modest growth in our branded business, for sure. And that's where we are overall.

Faiza Alwy, Analyst

Okay. And can you talk a little bit more about sort of any quarterly variation as we go through the back half? Because I know that the comp is tougher in 4Q, but I wonder if some of the initiatives that you have, whether it's international or some of the other sort of product initiatives that you might have are more catered towards the fourth quarter. So just any further color on the 2 quarters in the back half.

Samy Zekhout, CFO

Sorry, I mean there was just a point on the line, sorry for that. So I mean, we're going to get to the detail. I mean through Taposh will really walk you through the modeling. I mean the Q3 sales comp are easier. And then Q4, we invested significantly in SG&A. So that present an easier comp as well. So, I mean, as it relates to the specific modeling that you're requesting, Taposh will take you through that.

Operator, Operator

Our next question is from Jon Tanwanteng from CJS Securities.

Jon Tanwanteng, Analyst

My first one, I know you're not providing specific guidance around the Delta variant. But I was wondering, since the U.K. is your biggest market, can you just talk about the trends in July and how that's played out between the rise and fall of the COVID cases and other things like labor shortages resulting in empty shelves and empty freezers? Is that a net tailwind for you with more consumption and maybe more retailers desperate for stock? Or is it a headwind? Maybe you can't get stock...

Stefan Descheemaeker, CEO

Yes. What happened in the U.K. is interesting and has the potential for improvement. What's crucial for Nomad is that we are seeing an increase in our market share in July, even though it's typically a slower month. If we experience some positive momentum following the retailers' outcomes in the U.K., that would be beneficial. Regarding Fortenova, we expect to close the deal by the end of Q3, and we are preparing for that. This acquisition is a significant addition for us in the ice cream segment. As for the Delta variant, we have not made any changes related to it, and at this point, we do not anticipate any further lockdowns.

Jon Tanwanteng, Analyst

It's encouraging to see the share repurchase authorization. However, considering your leverage is in the high threes in the near term, how should we evaluate your willingness to allocate capital for share repurchases compared to paying down debt? Additionally, at what level of net debt leverage would you feel more comfortable actually repurchasing shares?

Samy Zekhout, CFO

Our position is unchanged. I think our old authorization was exhausted. And the Board has agreed and decided, I mean, to have the program to EUR 500 million. We clearly continue to, let's say, focus on trying to enhance shareholder value overall. Our near-term focus is on Fortenova and M&A. And now we've added another level of flexibility with this authorization.

Operator, Operator

At present, we have no further questions.

Taposh Bari, Head of Investor Relations

Okay. So if there are no further questions, why don't we go back to Stefan for his closing remarks.

Stefan Descheemaeker, CEO

Okay. Let me go to the final remark to your point, Taposh. So again, thank you for your participation today. Second quarter results demonstrate the power and resilience of our value creation model. We received record adjusted EPS performance despite the anniversary of peak COVID demand a year ago. And as you can see, we're navigating a number of dynamic macro factors this year, return to out-of-home consumption inflation. But meanwhile, we continue to deleverage our scale and balance sheet to build on the strong foundation of our brands, and we are welcome with the new acquisitions in our portfolio. In summary, we remain on pace to achieve our guidance for 2021 and are on pace to achieve our long-term financial targets. Thank you, and have a great day.