Q2 2021 Reynolds Consumer Products Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Reynolds consumer Products' second quarter 2021 of the earnings conference call.
At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer of session. If anyone should require operator assistance. Please press star zero on your telephone keypad. Please be advised that today's call's being recorded.
I would now like to hand, the conference over to your speaker today Mark Schwartzberg. Thank you Sir Please go ahead.
Thank you good afternoon, and thank you for joining us for Reynolds consumer Products' second quarter 2021 earnings conference call on the call today are Lance Mitchell, President and Chief Executive Officer, and Michael Graham Chief Financial Officer.
For our agenda today Lance will focus on market conditions are fundamental and our 2021 priorities and Michael will review our quarter and outlook.
Together, our remarks will be approximately 15 minutes then we will open it up for your question.
During the course of this call management may make forward looking statements within the meaning of the federal Securities law.
These statements are based on management's current expectations and involve risks and uncertainties that could cause actual results and outcomes to differ materially from those described in these forward looking statements.
Please refer to the Reynolds consumer products. The annual report on form 10-K, and other reports filed from time to time with the Securities and Exchange Commission and its press release issued this afternoon for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.
Please note management's remarks today will focus on non-GAAP or adjusted financial measures a reconciliation of GAAP measures. The non-GAAP financial measures is available in the earnings release.
Posted under the Investor relations heading on our website at Reynolds consumer products Dotcom.
The company has also prepared a few presentation slides and additional supplemental financial information, which are also posted on Reynolds website under the Investor Relations heading this call is being webcast and an archive of it will also be available on the website.
We would like to answer all of your questions. During the question and answer session. In the interest of time, we ask that you ask 1 question and a follow up Andrew joined the queue. If you have additional questions.
Now I'd like to turn the call over to Lance Mitchell.
Thanks Mark.
We delivered a good quarter in a challenging environment. Thanks to the resilience of the dedication of our team.
We grew revenue 6% on top of last year's record second quarter revenues and in spite of estimated 2 percentage point impact.
From shipment delays from import and other third party suppliers.
We grew both price and volume, we strengthened market share across our business and we achieved our earnings forecast in the face of continuing pressure from rising commodity costs.
Nonetheless, we are lowering our earnings guide the reflects significant increases in commodity costs. Since we spoke with you last.
Michael will walk through the drivers of this pressure of the pricing actions, we are taking the offset material cost increases on an annualized basis.
I'm committed to implementing price increases the fully offset material cost increases at a pace of MAU appropriate to the market conditions.
We will also talk about Rob illusion of cost savings.
You are tracking ahead of plan and remain another significant source of margin recovery.
Now, let's return to the top line.
We expect 4 factors to drive accelerating revenue growth from RCP over the balance of the year.
They are consumer demand.
The increases.
The innovation.
And strength of manufacturing and supply chain capabilities.
Together with our market share trends. These drivers demonstrate how our company is getting stronger.
First consumer demand.
Household use of our products remain elevated versus pre pandemic levels.
According to our latest Harris poll, which we conducted again in June.
Every day use of foil is up nearly fivefold versus pre pandemic levels.
And weekly use of waste bags food bags is up 40% versus pre pandemic levels.
In addition, the <unk>.
Overwhelming majority of respondents in the numerator polling expect to maintain or increase their foil waste bags food bags us beyond 2021.
This consumer demand sets up our categories our brands on our product portfolio for continued strong performance.
On an omnichannel basis through July 11th oriented dollar share in foil waste bags disposable cups of the dishes.
Versus year ago levels, and it is improving sequentially.
Those figures are inclusive of e-commerce and in tracked channels. It's the same trend.
Branded dollar share of oil waste bags, and disposable cups of the dishes is higher than year ago levels and improving sequentially.
The next driver of our revenue growth is price.
Our first and second rounds of pricing were successfully implemented and.
And we have announced a third round of across most of our business consistent with the timing we shared with you.
When reporting the first quarter.
We expect our third round of pricing to the in effect during the third quarter resolving the substantial improvement in profitability as we enter the fourth quarter.
Michael will speak more of the timing and results of our pricing actions at the moment.
The third driver of our strong growth is innovation.
I've shared in May that we expect increasing innovation benefits as we move through the year.
Our retailer partners of re emphasizing the innovation.
Some notable new product launches this year are.
The fabulous the lunch nationally the spring and is exceeding our expectations delivering strong velocities in the used TV games because it combines the quality with Colgate Palmolive is fabulous.
The fragrance loved by many long before its debut in waste bags.
Ah Reynolds wrap and packaging offers consumers easier to use packaging across the Reynolds wrap portfolio and is becoming a major contributor to our continued category leadership.
And Reynolds wrap Nonstick oil is also posting accelerating distribution days, providing consumers the nonstick feature they price for everyday use.
Renewable products are a priority for us to.
You've heard me talk about Reynolds route, 100% recycled foil and eco state of disposable tableware.
Each of which are growing and gaining new distribution.
Check the renewable waste bags are expanding and our having the energy back program, which helps communities to work hard to recycle plastics from landfills, just announced an expansion into the Atlanta market.
And Presto continues to be a major source of innovation based revenue.
Benefiting from store brand innovation and our other business units too.
Our fourth growth driver is strength of manufacturing and supply chain capabilities.
Our team continues to employ creativity and discipline and hard work the resolve countless pinpoints emerging since the start of the pandemic.
As a result.
Staffing is at or near target levels of most of our facilities and retailer in thoughts of improved further in the quarter.
Our company has momentum.
And our business model is getting stronger.
Of the brands the product portfolio category management team the manufacturing the supply chain capabilities, the pricing actions the cost savings and most of all of the people the position us for substantial improvement in earnings growth in the fourth quarter and over the long term.
I look forward to our future growth of success for our company and our partners.
With that but what do you Michael.
Thanks, Lance and good afternoon, everyone I'll briefly review our second quarter results, then turn to our hours.
<unk> increased 6% on top of record second quarter revenues in 2020, and this was in spite of shipment delays from important other third party suppliers, having the impact of approximately 2 percentage points.
Price and volume each contributed to the increase reflecting pricing to offset commodity cost increases and the pickup in growth or hefty waste of storage and hefty tableware is everyday usage occasions will remain strong and social gatherings increased.
The EBITDA was 148 million down 23% versus last years adjusted EBIT as price increases lag the material cost increases adjusted earnings per share from the quarter was 39 cents.
Turning to our segment results for the second quarter. There were 2 main drivers of our year on year performance, the strong demand and material cost increases outpacing pricing implementation.
And cooking and baking net revenues grew 3% driven by price increases partially offset by a volume decline of adjusted EBITDA decreased 11% driven by lower volume as pricing actions fully offset increases in material and the other costs.
The volume decline was primarily due to lapping of last year's elevated consumption also as Lance told you our brands branded pool of dollar share is up versus year ago levels and I'm happy to add that this is an all time high.
For hefty wasting of storage net revenues grew 8% driven by price increases and higher volume as at home use remains strong.
Adjusted EBITDA decreased 29% as increases in material costs outpaced our price increases for hefty tableware net revenues increased 17% driven by high higher volume as social gatherings have increased in the everyday use occasions remained strong as well as by price increases adjusted EBITDA.
<unk>, 5%, primarily driven by a higher volume, partially offset by price increases lagging material cost increases.
Finally, presto products net revenues increased 3% driven by price increases partially offset by volume decline, primarily due to the lapping of pantry loading at the onset of COVID-19 adjusted.
Adjusted EBITDA decreased 25 per cent is price increases lag the material cost increases.
Moving to our capital structure and cash returns.
As of June 30 of 2021 we had a cash balance of 49 million of total debt outstanding of $2.1 billion capital spending of 50 million in the second quarter included $25 million for the purchase of the previously leased manufacturing facility.
Paid a quarterly dividend of 23 cents per share in the second quarter and will pay another quarter of you did banana of 23 per share in the third quarter payable on August 31.2021.
Now to our outlook and guidance, which we have updated versus our previously disclosed guidance.
We still expect high single digit revenue growth for the year underpinned by pricing at home consumption increases and social gatherings innovation and retail replenishment. However, we have reduced our earnings outlook because of continued increases in commodity costs.
The material cost pressures are estimated to exceed 400 million this year, reflecting the the inflation, we anticipated when reporting our first quarter results and steady increases in resin and aluminum rates since may.
This estimate also considers market indices for key inputs in assumed resin rates peaked in July and east through year end.
The rates remained stable by comparison to the July levels through the year end.
On an annualized basis, we expect the approximate $400 million of pressure to be nearly offset by the combination of 2 rounds of successfully implemented pricing the third well, which has been announced with the majority of going into effect during the third quarter.
Therefore, we expect the pronounced improvement in margins as we entered the fourth quarter.
However, because of the the size of the commodity increases since may and the effect of timing of recently announced pricing, we expect significant margin pressure again in the third quarter and other.
Other words, we expect the overwhelming majority of the margin pressure of rising from the lag between pricing and commodity increases to be behind us as we exit the fourth quarter.
Now having said all of that I do want to repeat that on an annualized basis, we expect to offset the vast majority of incremental commodity pressures with the pricing.
We are on track for a complete recovery.
The material costs through pricing 1 of annualized basis in cooking and baking hefty tableware and presto, while the recovery in the waste in the storage segment will be dependent on the easing of commodity rates additional pricing actions or both.
I also want to expand on Lance's comments regarding Revolution Revolution remains a major source of cost savings, providing us with an additional source of margin recovery, but it's also tracking ahead of plan.
Those savings represent more than 200 basis points of EBITDA margin this year.
The source of the savings is wide, reaching and includes improvements in procurement material processing supply chain management and production automation and there remains plenty of additional opportunity beyond 2021 now.
Now, let's turn to the details of our die.
The fiscal year, 2020, 1 we now expect net revenues to grow in the high single digits. Adjusted net income to be in the range of 323 million to $344 million adjusted EBITDA to be in the range of $590 million to $620 million adjusted EPS to be in the range of $1.54 to $1.60.
For the capital spending of approximately $145 million, which includes 25 million from the recent purchase of the manufacturing facility. We previously leased.
Net debt to be approximately $1.9 billion at December 31, 2021.
For the third quarter, we expect net revenues to grow in the high single digits, reflecting to successfully implement it rounds of pricing and a modest benefit from our third round of pricing implementation during the quarter as well as similar volume to Q3.2020 levels yes.
Adjusted net income to be in the range of 63 million to $70 million adjusted EBIT to be in the range of $125 million to $135 million down year on year, primarily as a result of price increases lagging cost increases.
Adjusted EPS to be in the range of 30 to 33 sites.
Now before I turn the call over to Mark and for your questions I'd like to leave you with the following as Lance reviewed our business is getting stronger demand for our products is up our market shares are increasing and our manufacturing and supply chain capabilities are getting stronger too.
Instead of this year's profit pressure as temporary and expect the significant rebound in profitability in the fourth quarter, we have a track record and the tools to fully offset cost increases we have a history of complete profit recovery in prior commodity cycles attributable to a number of factors, including the strength of our brands the breath of our.
Portfolio.
Of our category management team and our focus on surface.
Our focus on short term profitability is balanced by decisions that district, and our business for the long term.
And we remain committed to strong cash generation and disciplined capital allocation.
With that I will hand, the call back over to Mark.
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Thanks, Michael as I turn it over to the operator for the question, but I'd like to remind you that we ask that you ask 1 question and a follow up and then rejoin the queue. If you have additional questions operator.
Thank you well now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star 1 on your telephone keypad of confirmation tone will indicate your wireless in the question queue. Once here that star 1 to be placed in the question. Hugh We ask you. Please ask 1 question and 1 follow up the returns of the queue.
Our first question today is coming from Rabat and the steam from Evercore. Your line is now live.
Great. Thank you very much. So I was wondering if you could give us a sense of the magnitude of the the price increases that you're putting through in Q3 with.
With the particular color on waste bags and private label.
Thanks, Robert well, we've announced and raised prices of double digit rates across our entire portfolio with these 3 price increases.
And we have we have announced increases across most of our portfolio most of the third quarter.
Price increases have already been announced.
And as Michael indicated we expect the pricing the resolved and improvement in profitability as we enter the fourth quarter and we expect the majority of the margin pressure of rising from the lag between price and commodity increases.
To be behind us as we exited the quarter.
Those price increases were across the product portfolio as I mentioned recruiting including our store brands and these were high and these were double digits of mid double digits, depending on the products and the product portfolio.
Now in waste bags in late June we announced the second round of increases of waste bags.
That increase goes into effect on August 30th.
We are evaluating the opportunity for a third of increase this year.
As Michael said the recovery in waste from storage will be dependent upon the easing of commodity rates additional pricing or both.
And there are numerous factors that inform our pricing decisions.
Include consumer demand.
The strength of the category retail price points.
<unk> gas consultation with our retail partners and the competitive environment.
Just to clarify what you said in terms of double digit rates across the entire portfolio with the 3 increases so the double digit is a cumulative amount of the 3 increases yes.
Yes that includes all 3 of the increases and as Michael indicated in 3 of our 4 segments that covers the current outlook for the commodity costs.
And what what have you seen in terms of retailers.
You know their own pricing that they've been putting in the end consumers' reaction to price increases.
The the retailers have been increasing prices. Some of these increases are not yet reflective of retail that's a retailer by retailer decision.
As we've indicated in our opening remarks consumer demand and share remains strong.
Terrific. Thank you very much.
Thank you. The next question today is coming from the Bill Chappell from true of Securities. Your line is now live.
Hey, Jim This is Steve of mind go on for Bill Chappell.
I guess as we head into 'twenty 2 of you guys comfortable with 4 of your 3 acute pricing actions played out given cost me the tire.
Like what should our expectations be for margins in 'twenty 2.
Is there a potential return to 19 levels of possible expansion given your history of profit recovery. Thank you.
Yeah. So let me let me start with the the latter part of that question. So you know.
I don't want to get ahead of myself started talking about 2022. So we're still evaluating this this environment has been incredibly incredibly dynamic hard to predict what's going to happen and so we need a little bit more information of a little bit more time, though we'll be prepared to talk about debt as we talk about our Q4.
Our results I mean, the Q3 results as well as start talking about our 2021 Guy.
Yeah.
Was there did I missed part of your question I'm sorry.
Yeah, just talking about the comparability to where you're from the acute pricing actions are playing out given like the the.
The heightened cost increases.
I think we I think we answered that both of the prepared earlier opening remarks as well as of my last answer we have based on the current index as of we use IHS and CDI for RASM and we use the al Ami in the Midwest premium for aluminum.
And based on those forward curves and the pricing actions we've taken.
We have in 3 of our 4 business segments achieved pricing to offset those commodity costs with these 3 price increases.
Okay. Thank you.
Thank you. The next question today is coming from the boiler Lieberman Lauren Lieberman from Barclays. Your line is that was great.
Great. Thanks.
Hey, everyone I know I'm also in the the a press release today that you had mentioned.
The challenges from supply chain import delays third party per case curious so I was hoping you could just elaborate a bit more on that and has things opened up the debt you know kind of out of your thought process on how that may or may not.
Hinder your ability to have product on shelf you have gone into the second half of the year. Thanks.
Yeah. So.
Some of the challenges have as I stated have been the import delays those import delays were kind of really isolated to a few core products. You know some of the ones that have been impacted have been low count sliders plastic wrapped Reynolds R wrapped pre cut sheets.
And phone dishes.
So those of the primary ones that have been impacted and impacted at 2% challenge that.
That impacted our overall results.
And Michael is that is that easing now or is that still of dynamic. Yes. It is abating now it will slowly go away. So we feel comfortable of that things that caught up got to understand what it's related to this as you know.
You know many people are experiencing the ability to get orders out of the docs and as that improves we improve with it.
And that was already been baked into our overall guide.
Okay, Great and then it was also the the sentence in that at least the aforementioned third party manufacturing. So I didn't know if that was domestic.
And if so if there's any thought process on kind of I know, we're in a certainly unprecedented time, but.
Qualifying other producers who are you know if there's anything in terms of just the thats something that should be part of the thought process.
In terms of planning and risk mitigation the hat.
Yeah, Lauren I think it's important to note that the vast majority of our products, we have the control of our producing ourselves.
The imports in the third parties are not necessarily core to our total business, but they do represent part of the how we go to market.
Summer import summer domestics and in all cases, we are evaluating other parties to ensure we have a surety of supply both of us in the near term and the long term.
Alright, great. Thanks, I appreciate it.
The next question today is coming from Andrea to share of from J P. Morgan. Your line is now of life.
Andre Your line is lot of maybe on mute.
Yeah.
Please re queue.
Our next question today is coming from Nik Modi from RBC. Your line is now live.
Yes, good morning, everyone I'm sorry, good afternoon.
So I guess the question of it.
Kind of twofold ramp maybe you could just talk a little bit about the.
Your line of social gatherings in the impact of on demand and then I guess the secondary question is you know given the dynamic nature of the Covid situation.
The things really start to ramp and we start seeing more at home behavior. Do you think the supply chain is prepared for another surge in demand.
On the first question on on the social mobility and gatherings that actually does have a positive impact and a lot of aspects of our business now if you think about our tableware business, particularly that's the that's the 1.
And we saw the growth of that in the second quarter from the social mobility, but also in everyday occasions like drilling with family and friends with Reynolds wrap in cooking and baking as groups and as we head into the holiday season, and having more normalized holiday occasions.
We see the benefit of social gatherings, but we're also seeing every day used occasionally also EBITDA positive.
The ones on consumer demand.
The worldwide.
From a supply chain standpoint, we talked throughout last year that we were adding capacity without adding roofs, and that's largely completed so.
So we have the capacity in place to be able to be continued strong consumer demand. Some of that was because we took some non commission lines and recommissioned them.
And although there are certain pockets of locations, where we face the staffing challenges.
On the go on.
On balance and across most of our plants and our locations.
We have been able to effectively staff are our plants be able to hit the high utilization rates and have continued to improve our retailers in the stocks and most of our product lines.
Excellent. Thank you.
Thank you. Our next question today is coming from Mark Austria Fun from Stifel. Your line is now live.
Hey, guys. This is Chris arms on for Mark.
I just wanted to start off with if you could talk about if you kind of seen any volume impact from from the multiple rounds of pricing.
Any change to cause that Alaska city function relative to the history I know I know you guys kind of talk to that on the the last call as well.
We've been raising prices in a broadly inflationary consumer environment and as we indicated we continue to see strong consumer demand in these categories as well as our market shares are doing extremely well in fact Reynolds wrap is at an all time high.
So there are some of these price increases are still to be reflected at retail will continue to watch the.
The momentum going forward and adjust accordingly, if necessary, but to this point we're very.
I'm pleased with what we're seeing from of continued consumer demand.
In an inflationary environment.
Got it that's helpful. If I could follow up and maybe if you could just give US. The reminder of how to think about kind of the price increases kind of the the year. After you take them is it.
How do you guys think of it are you mainly giving them back are you going to reinvest or does it kind of flow through it it's the inputs come back down.
Probably the best way to.
Characterize this as the have you reflect upon what we experienced back in 2017, where we experienced some pretty significant commodity increases and how we manage through that.
During that period of time, we recovered all of the commodity costs through pricing.
And that offset other and also the offset of other inflationary pressures by leveraging our revolution of initiatives I think that's a good indicator of what we would expect moving forward here and we're we're pretty confident that we're really good at this right and we've demonstrated that our curve.
And taken pricing and we've demonstrated in the past the ability to <unk>.
Benefit from that pricing in subsequent years.
Thanks Scott.
Thank you. Your next question today is coming from Peter Grom from UBS. Your line is now live.
Hey, guys. Good afternoon. So I just wanted to understand the top line guidance for Q3 to a degree you know could you maybe help us understand what are the embedded from a pricing versus volume perspective, I mean, do you expect volume growth.
I know you know the comp gets much tougher there and then maybe more of a housekeeping and following up on Lauren's question do you anticipate the 200 basis points negative impact from shipping delays and suppliers to reverse in Q3, and then sorry.
Sorry, just lastly on the top line like how much more room is there from a retailer replenishment perspective. Thanks.
Well, let me just start with the the last part of your question, we do expect that that.
That's the impact of the shipping delays.
To some degree will abate right, but that's been baked into our overall guide.
As it relates to the.
Alright, so as it relates to the the pricing increases and you know how we will fare moving forward on that I mean, I think that we've kind of communicated that clearly we feel pretty confident about those and that debt our ability to recover of that has been proven in the past so I feel pretty good about our ability to.
Continue to manage through this.
And regarding your last question on retailer replenishment and has made significant progress in Q2. There is some of the go in in Q3, and that's baked into our guide as well, but the the.
Not making a lot of volume growth assumptions in Q3 based on <unk>.
Both of volume we had a good strong year last year of consumer demand remains strong, but the revenue guide for Q3 is primarily price.
Okay Super helpful and then.
I just wanted to go back to comments you made in Q4, and then again in Q1 around changes in category growth rates and I know you mentioned in your prepared remarks, you know the Harris on Humira in a polling around stronger category of growth versus pre COVID-19 levels, but I would love to get your perspective of perspective on if anything has changed in your view.
Sequentially right now as consumer behaviors change and then is there any way you can help us quantify what you expect that new blending category growth rates look like post Covid I think it was around 2% free COVID-19. So it was the long term expectation now 2 and a half 3.
3% just anything there would be really helpful.
Yeah, we haven't seen any fundamental shifts in consumer behavior I talked a lot about not all of you aren't prepared remarks said.
Consumers in both of the bar Harris pulls in our numerator polling indicates continued elevated use of our products across our categories. So no fundamental shift from all of those previous 7 poles that we've done throughout the Covid.
As far as the category growth of course, that's a bit difficult to predict but what we said pre COVID-19 was these categories were growing at 2% to 3% and we expect after COVID-19 for the usage to be higher as people are cooking baking and spending more time at home.
Very helpful. Thank you so much.
Thank you. The next question today is coming from Ondrej, it's the share of from J P. Morgan. Your line is now live.
Thank you. So my question is regarding basically the phasing of your guidance. So when you when we look at them how you like the new guidance for the third quarter and not the new but how the third quarter and the fourth quarter, we shape and then the way you were saying about the timing of the price increases.
How should we be thinking because I'm, assuming like to getting to a guy you're still looking at high single on the top line and in the fourth quarter of so much easier comparison.
And to your point, that's where we've been of get all of the benefits of the 3 price increases. So I'm just surprised that the decline in guidance has actually also impacting the fourth quarter. So much.
And on that like I was curious because you did say the reticence of your expectation that the residence will have peaked in July is that what you're baking into guidance or you are basically saying, that's what we expect but we for us just to be prudent.
We are assuming spot prices for everything else, whereas the remaining off the year.
Well, let me take the last part of that question first which is what are we baking in the guide relative to the resin prices of what we're baking in is what the curves are that I referred to from IHS the CDI.
Which haven't peaking in the July time frame and easing through the balance of the year for RASM and aluminum stabilizing at the current rate so from a from a standpoint, what's changed from the last commodity increases that's the $100 million of higher commodities across those.
3 of those 3 the 2 resins in the aluminum.
Versus what we had when we talked to you in May.
So 2 things happened 1 to continue to go up very rapidly and then to the forecast for the curves came down much slower much more gradual.
And that's the that is the difference between both Q3 and Q4 as of May guide versus our current guidance.
Mhm, no I understand that but then probably what's happening and you are assuming the phasing of it because by the time it hits your P&L it might not like the decline may not be effective fast enough. So you're not we're not going to see the.
The alleviation of those costs is that the way, we shouldn't be thinking of.
Yeah, It's you know it because it got pushed out further on the curve.
It pushes it out on the P&L, it's it's fundamentally time all time, so as the curves.
The continued to go up and then they come down more gradually the recovery time, just because the pushed out on an annualized basis of as I mentioned, a moment ago in 3 of our 4 business segments. We've got enough pricing now in the covers those curves.
On an annualized basis, but the timing lag is the challenge with Q3, primarily and then some of Q4 versus the prior guide.
Yeah.
Okay. Thank you and then the top line just as.
As we go into I understand like most of your high single digits pretty much your price is the right. There we got the 2 price increases.
More about that call it 6% and no volume, but then when we get into the fourth quarter.
Then, we probably gonna get of double digit growth, because then you're going to get the volume and the price increase out of higher magnitude of decided the way to think as we back out your guide.
Yeah, I think that exactly the way to think about it. In addition to that I would say that some of the things that we're benefiting from as well as the our innovation pipeline. So we still are seeing 20% of all of our revenue coming from new products and within those new products like of non stack and the 100% recycled Boyle.
<unk> seen richer margins as a result of that so I think I think it's a combination of what you said as well as the benefit we're getting from innovative products coming on stream.
And Michael that's Super helpful. And then the 200 basis points improvement team in the resolution. So that is that's baked.
Basically is that going to impact mostly the fourth quarter is that the weight of the thing.
Or that's not what the.
Gradual.
That's the Europe gradualist spread out throughout the over of over the course of the year and you know I mean and revolution, we've been quite pleased with it it's tracking well ahead of what we'd expect it and but you know thats. The continuous process is not as choppy as 1 might think about.
Okay. Thank you I'll pass it on.
Thank you. We appreciate of our question and answer session I'd like to turn the floor back over to management of putting further of closing comments.
Well. Thank you everybody for your questions and we sincerely appreciate your time. This afternoon. Our revenue is growing and we expect accelerating revenue growth over the balance of the year.
It's driven by consumer demand pricing innovation, and our strength in manufacturing of supply chain capabilities.
So 1 of them, particularly thank all of our employees for continuing to follow prevention measures and putting safety first as we grow our business in a very exceptional time.
Stay safe stay well thank you.
Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.
Yeah.