Q1 2022 Gildan Activewear Inc Earnings Call
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Good day and thank you for standing by welcome to Q1, 2022 you Gilda and action for our earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question. During this session you will need to press star one on your telephone please.
Today's conference is being recorded if you require any further assistance. Please press star Zero I would now like turn the conference over to your first speaker today.
MS Sophie <unk>, Vice President Investor Relations. Please go ahead.
Christine Good afternoon, everyone and thank you for joining US earlier, we issued our press release announcing our earnings results for the first quarter of 2022. We also issued our interim shareholder report containing management's discussion and analysis and consolidated financial statements. These documents will be filed with the Canadian secured.
<unk> and regulatory authorities in the U S Securities Commission and are available on the Companys corporate website I'm joined here today by Glenn <unk>, Our President and Chief Executive Officer, and Rod Harries, Our executive Vice President and Chief financial and administrative officer in a moment, Rob will take you through the results for the quarter and a Q&A session.
I will follow.
<unk>. We begin please take note that certain statements included in this conference call May constitute forward looking statements such forward looking statements involve unknown and known risks uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward looking statements.
We refer you to the company's filings with the U S Securities and Exchange Commission and the Canadian Securities regulatory authorities. During this call. We will also discuss certain non-GAAP financial measures reconciliations to the most directly comparable <unk> financial measures are provided in today's earnings release and in our MD&A and with that I'll turn the.
All over to Rod.
Thank you Sophie and good afternoon, all and thank you for joining us today.
Let me begin by saying we're off to a strong start to 2022 as we delivered record net sales up 31% and record adjusted EPS up 58% over last year for the first quarter great results as we shift to our gilden sustainable growth strategy, which is focused on driving growth and margin performance as we.
First in and fully leverage our world class large scale vertically integrated manufacturing platform.
This platform together with an efficient product portfolio and go to market approach is providing us with strong capability to service our customers in an environment, where many apparel companies are facing supply challenges.
Further because of our industry, leading ability to produce at low cost we have been in a strong position to be able to price to offset inflationary pressures and to deliver margin performance.
Beyond our strong operating results. We were also pleased about our ability to execute on our capital allocation priorities during the quarter, including repurchasing $5 1 million shares or 3% of our float and returning more than $200 million of capital to shareholders, while maintaining a strong balance sheet.
Turning to the details of our results for the quarter.
Net sales of $775 million, reflecting an increase of $185 million or 31% over the first quarter last year.
Largely driven by volume growth and net selling price increases with some favorable impact from product mix.
Activewear sales of 667 million were up 38% and hosiery and underwear sales of $108 million were up 3%.
Volume growth in Activewear was driven by strong demand in North America, particularly in the distributor channel with strong sell through driven by the continued recovery of large events travel and other end use markets.
Volume growth was distributors was also driven by our ability to better service seasonal inventory requirements and to support growth given our improved production levels this year versus last year.
Also contributing to the activewear sales growth was higher net selling prices, which reflected the impact of base price increases that were implemented starting in the fourth quarter of last year as well as the impact of lower year over year promotional discounting.
We were also pleased to see that ring spun and fleece products were key contributors to our strong sales performance in the quarter driving favorable product mix.
Finally, the 3% increase in the hosiery and underwear category was primarily driven by higher selling prices, which drove strong results when compared to industry sales for these category. According to NPD data.
So overall strong topline delivery for the quarter.
Moving on to our strong margin performance adjusted gross margin of 39% was down slightly year over year by 20 basis points you.
You may recall last year, we received a onetime cotton subsidy, which benefited gross margins in the quarter by 300 basis points.
Excluding this benefit adjusted gross margin expanded by 280 basis points in the quarter the.
The improvement was largely due to higher net selling prices and favorable product mix, which more than offset the impact of higher cotton costs and inflation across our manufacturing expenses.
Turning to SG&A expenses for the first quarter of $81 million were up approximately $8 million compared to last year.
The year over year increase was primarily due to higher volume driven distribution expenses and the impact of inflation on overall costs.
SG&A expenses as a percentage of net sales improved two percentage points to 10, 4% compared to 12, 4% last year as the benefit of volume leverage and our continued focus on cost management more than offset inflationary cost pressures.
Bringing it altogether, our strong sales and gross margin performance combined with SG&A leverage translated to adjusted operating margin of 24% for the quarter, which compared to 18, 7% last year was up 170 basis points, and which led to record adjusted EPS for the quarter.
Of 76.
50, 858% above the prior year quarter.
Moving onto cash flow and balance sheet items, we consumed $86 million of free cash flow during the first quarter, which included working capital investments to support growth and seasonal requirements as well as $34 million of capital expenditures related to capacity expansion.
As mentioned earlier from a capital allocation perspective, we were also active on our share repurchase program during the quarter and combined with the share repurchases. We have done in April we have now completed more than 60% of our current and CIB program.
Our net debt position at the end of the quarter increased to $829 million and our net debt leverage ratio of one times was at the low end of our 1% to two times target range.
On the debt side I would also highlight that as we focus on ESG is a key pillar of our strategy and reinforcing our commitment towards our ESG targets. During the first quarter, we amended the terms of our existing $1 billion revolving credit facility to incorporate sustainability linked terms.
In this regard were proud that <unk> is the first Canadian apparel manufacturing company, so tight financing costs to the achievement of important ESG targets.
Let me now give you a quick update on our <unk> sustainable growth or <unk> strategy.
As part of our capacity driven growth initiatives. We are pleased with the progress we are making on our overall expansion plans in Central America, and Bangladesh, which all remain on track.
Further as part of our efforts to strengthen our vertical model model. We're also making good progress with the integration of frontier yarn, as we increasingly internalize and optimize production.
Finally on the ESG side beyond the sustainability linked loan, which I mentioned, we were also pleased to launch the gilden respects marketing campaign during the quarter.
Now before concluding with my remarks, let me share some commentary and what we're seeing in the current environment.
As I mentioned earlier throughout the first quarter, we saw strong demand for activewear products in North America.
More recently, while we have seen some deceleration in Pos over the last few weeks overall demand for activewear remains healthy.
Similarly, we are also starting to see some slowing in sell through for certain hosiery and underwear category products that could be related to broader economic factors, including the impact of the nonrecurring of stimulus and other support payments, which consumers receive last year.
However, although it's difficult to predict how macro concerns will play out we believe the favorable industry dynamics, which we discussed at our Investor day will remain a tailwind to demand.
This combined with the continued recovery in areas impacted by the pandemic, including tourism travel and the progressive comeback of large events.
Together with inventory levels in the distributor channel, which remain below pre pandemic levels is expected to provide support for demand going forward.
Further on the cost side, our vertically integrated model and a disciplined pricing strategy. We have followed so far puts us in a strong competitive position and.
And provides us with good flexibility to navigate inflationary headwinds and deliver against our profitability goals.
Consequently, we are pleased with the start to the year and the progress that can be made in 2022 towards our three year objectives as we execute on our <unk> strategy driving strong organic growth and margin performance by focusing on capacity expansion innovation and ESG to create long.
Term value for our shareholders.
This concludes my formal remarks, and with that I will turn it back over to Sophie.
Thank you Rod.
Before moving to the Q&A session I ask that you limit the number of questions to two and we'll circle back for a second round of questions. If time permits I'll now turn the call over back to the operator for the question and answer session go.
Go ahead.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please.
Please standby, while we compile the.
Kenny roster.
Your first question comes from the line of Mark Petrie of CIBC. Your line is open.
Hey, good afternoon.
With regards to the outlook and the slowdown in Pos.
POS trends that you were calling out in recent weeks can you just give us some more color on the products, where you are observing this and in your discussions with your customers given their low inventory levels are these slower Pos.
Trends translate into slower order flow or is there some replenishment underway.
Well I would say that too.
POS is somewhat pretty much consistently across the board. There's no one area that has slowed more than another.
But let's put in context slow I mean, we still have a pretty good.
No.
Of the year, we had.
Pretty good growth so.
Although it has slowed some it's still very positive for us and we're still pretty optimistic about as we move forward. So, let's just taper a little bit.
That comment, but partly it's hard for us a little bit to understand too because you know over the last four or five weeks we've had.
Huge spike in Covid across United States.
Had pretty bad weather.
And we think we're still well positioned as the as things open up and travel.
And events continue to evolve as we continue to.
Transition out of the pandemic. So we are pretty optimistic I would say.
We were gonna is blasting record sales.
But it's still it's still pretty good.
Inventory in the channels are still low.
They've gone up slightly in Q1.
Probably in the same.
Our level of our sales in other words whatever growth we had in terms of unit volume sales are somewhat the inventory that.
The increase in the channel so channels are relatively low specifically relative to pre pandemic levels.
And we haven't seen any cancellation of orders I mean in order to order flow is strong we've got a very good order book and.
I think we're poised to continue having a good year.
<unk>.
Little little cautiously optimistic in gist.
But we don't have a crystal ball. So we are we're just making sure that.
Sure.
We're managing ourselves through.
Through the environment whatever is thrown at us.
Yes, no thats very helpful context, definitely appreciate all of that.
And I guess just the second question just with regards to.
On the continued escalation in cotton.
Cotton prices I know you are generally leaning towards supporting top line growth, but can you just talk specifically.
Theres any kind of change in how youre thinking about about pricing.
Or if you've observed any changes in the competitive landscape in the last the last couple.
Couple of months.
Price was a part.
Part of a big part of our sales in Q1, I mean, we've had to take price to offset the <unk>.
But.
We're pricing off of very low cost of manufacturing and very low pricing, which we've said in the market. So.
Our pricing gap between us and our competition has allowed us to increase prices are maintained.
The equivalent operating margins I think so that's the good news.
As we move forward into the future, but we have pretty good visibility.
Cost structure as we move through this year.
And as we move into next year, if we need to continue to take more price. So we'll look at it at that point in time, nobody knows where where cotton is going to be but we have good visibility on this year has gotten.
Cotton, so far and we will take price accordingly.
I appreciate all the comments all the best.
Thank you.
Your next question comes from the line of Luke Hannan of Canaccord Genuity. Your line is open.
Thanks. Good afternoon, just following up on that line of questioning on the Cogs cost of Cogs.
Glenn I think you've mentioned in the past that should the cost of call. It and eventually fall back to more normalized levels that there won't be the same.
Will of price incentives or price decreases rather.
Won't be necessary should happen in the future like it wasn't a path to be able to spur demand.
Just curious to know what sort of exactly underlies your conviction that that's the case this time around.
Well because a large part of the price that we have attained in Q1 was just a reversal of promotional discounts that we provided to our customers. Historically so what we've done is we did take some price increases in Q4.
And a little bit in Q3, I think in certain areas.
The biggest part of the price associated with the price increases in Q1 was the reversal of discounting.
We normally have done in the market so.
Cotton comes back down.
We will just increase our discounting again, and therefore, we won't have to address pricing in the market.
Okay, and I wanted to get a better understanding of moving towards the balance sheet. The accounts receivable it jumped up.
Pretty materially quarter over quarter, and there was mention of there was some impact relating to the timing of the payout for annual rebate program. So I just I didn't quite understand that want to know what exactly that relates to them that different than what you guys would have experienced in the past.
Yes, I think that was probably the small Luke if you look at the receivables they were up but obviously the sales were up and if you look at.
What are our growth stays outstanding are there they are well in line with where they have been so I would say, we're very comfortable with.
Actively what's going on with our with our receivables and again, mostly what you're seeing is effectively just the increase related to the.
The increased level of sales that we've been seeing.
Okay I appreciate that thank you very much. Thank you.
Your next question comes from the line of Stephen Macleod of BMO capital markets. Your line is open.
Thank you good good evening guys.
All right.
Just wanted to follow up on a couple of things here.
When you think about the quarter and notwithstanding some of the some of the.
Relative slowdown that you've seen over the last couple of weeks can you talk a little bit about how some of those categories that have.
We're continuing to make up ground to pre pandemic levels like travel tourism corporate how those end markets fared in the quarter.
Well, we don't have specific data on it.
The area I think in terms of what's growing a market, but look at the overall market.
Obviously you can.
Follow what's happening in the recovery of especially from the coal business travelers back tourism is coming back events are happening I mean.
Personally believe over the last month, we saw a little bit of a slowdown was due to the.
The big wave of Covid.
But nevertheless, it's hard for us to tell but I would say that what's driving our business.
I think are really is our fashion basics and our fleece.
Sales, which are really the pillar of growth for the company and also our.
Benefiting our overall mix of a product mix, so and thats been pretty much a consistent theme probably for the last 24 months I mean, we've seen our fleece business continued to grow.
It's a growth category.
It's a lifestyle change I think which was which is people are more casualty addressing today.
And.
So we're pretty bullish on those we've through the acquisition of frontier, we've been able to obviously increase our capacity and fleece.
Substantially so that's also been a big positive to us. So we're very optimistic about our positioning in the market.
<unk>.
We'll see where the market goes.
We're cautiously optimistic as we go forward.
Okay. So that's great. Thank you.
And then and then just secondly.
If I if I look through the outlook section is it fair to assume that you would still expect at this point in time.
Two.
Generate sales growth of about 7% to 10% range for the full year.
Yeah, I think Stephen if you look at the full year I mean, I think as Glenn said, we are cautiously optimistic as far as what we see from a.
From a volume perspective.
We have seen some slowing down in Pos, but I would say again more broadly we are we are fairly optimistic. So if you look at.
The volume that we would expect it would be.
Actively reflective of that and then if you look at the price that we would expect for the full year.
Last quarter I called out price being mid to high single digit I think probably you're probably when all said and done now, which we see how things are playing out and what's going on with promotions.
The higher end I would say than the lower end and so the combination of the higher end of the pricing and the volume would give you full year sales I would say that would be higher on the higher end of the range that we've given so we're not giving guidance, but I would say that 7% to 10% is a three year CAGR.
And I would say that's why we feel we're off to a good start against that target in 2022.
Okay. That's great. Thank you.
Your next question comes from the line of.
So of UBS Your line is open.
Great. Thank you so much maybe can we dive into the gross margin a little bit because.
Almost 31% well above I think.
Consensus had been forecasting obviously, well above where it was in pre.
Pre pandemic can you just talk about some of the drivers was it really all price can you talk about some of the efficiencies maybe from the back to basic strategy that has allowed you to have a higher gross margin. If you just maybe give us some some breakdown of the pieces that'd be helpful. Thank you.
Thanks, Jay so look at it.
Called it out.
It does.
The remarks, if you look at our gross margin we were very pleased with the performance we were down but again thats versus a comp that was was tough because of the cotton subsidy last year I think if you look at ultimate.
The base level, our performance is being driven by our manufacturer right. If you if you fundamentally look at the business.
If our vertical integration, it's our scale. It's the way that we are leveraging our platform is allowing us to be very very competitive.
Really.
Sure.
Manage I would say because of our very low cost base. So.
That's the starting point I think for the quarter effectively we did see price coming through we did see mix coming through.
And of course, we did have.
Inflationary costs, and we did have higher cotton costs as I called out but the combination of all of this is driving that that strong margin.
So as we go through the year, we will see how that progresses, we will have more inflation coming through but again I think we'd say, we're very pleased with the way that we are running the manufacturing we are ramping up we're doing the vertical integration of frontier and that will allow us to offset.
These some of these inflationary cost and allow us to maintain our low cost position. So there will be some gross margin pressure as we as we move through the year you would expect that but all in all we're very pleased and it all really starts with our manufacturing that's really.
What sets us apart I would say from our ability to deliver gross margin and ultimately against our operating margin targets.
Got it and maybe if I can ask one more you mentioned your group events are coming back maybe just give us a sense of where that business is right now relative to.
Before the pandemic.
The volumes there back to maybe fully 100%, where it was or maybe it's only like 50%.
Can you give us a sense of where that rebound in that business stands.
We'll look at it.
<unk>.
Hard to totally get a grasp on it today, but I mean you can.
We probably look at travel and.
Airlines and data points, but.
Contracts are pretty much in full swing.
I think we have a lot of tradeshows happening.
And back in Las Vegas is starting to pick up.
The big things are there is a lot of different elements for some summer camps Theres literally baseball.
There is a seasonal.
Seasonal travelling tourism, there is corporate and promotional.
Which is probably may be the only area that we.
We probably would see that could still be a little bit weak.
This is pressure on corporations because of higher cost, let's say for example, but.
It's hard to say, where all the puts and takes are because we don't have all those data points.
But I would say overall the market has been very robust and I think one other I think key elements for US which is also growing our revenues is don't forget is that.
People are still looking to onshore their products I mean, either screen printers large national accounts.
All of our private label customers brands that we do business with.
And some retailers. So it means people are looking to buy more product closer to December sphere.
It is also a big positive positive for us, which we're seeing.
Lots of opportunity to continue growing sales so all of these things together.
We feel we're in a very good position.
We don't know if the world is going to fall apart, but.
So far we've had a good run in Q1 and.
Were little bit more cautious as what we're seeing today, but hopefully we will continue to have the same type of results as we move through the balance of the year.
Got it okay. Thank you so much.
Your next question comes from the line of Paul luxury seating your line is open.
Hey, everyone, it's Brandon Cheatham on for Paul.
I'm, just kind of wanted to get a sense of.
I think in the past you've talked about the restocking opportunity.
Was there any part of <unk> restocking.
Do you think you'll be able to catch up on some of that in the second quarter.
Well, we think that the second quarter is still going to be relatively strong and we don't anticipate what we said earlier in the year as we don't have we didn't anticipate any restocking so.
<unk> three is what we called out I think in the beginning of the year or so.
I think we're still somewhat in that mindset.
That's I think because we've.
That's probably what we're still feeling I mean, we'll see what happens but there is.
Our inventories are in pretty lien position and I think our customer inventories are also pretty lean.
Our position today.
Which is good news.
Okay. So you wanted to say you would have any spare capacity currently or kind of expect to have excess capacity. This year based on kind of what youre seeing so far we're running full I mean, our sales were pretty robust 31% increase over the year.
Year basis, so we're running pretty hard.
Our inventories are low and our customer inventories are low so those are two positives and we're still optimistic about.
The marketplace, So we'll see those things trends.
<unk> as we go forward.
Okay, if I could just follow up on pricing how much of.
Was that fully flowed through in the first quarter or do you get an incremental benefit in the second quarter as well.
No no.
If you look at what we've done from a pricing perspective.
Fully flow through in the first.
First quarter, if you look at the way we've been adjusting prices in the back part of last year and the price increases that we took at the beginning of this year.
There were reflected in the first quarter and then we'll see where we go from here I mean, I think what's going to happen is that the.
Comps are going to get tougher obviously as we go into.
Q2, Q3, Q4, because we did start to adjust price in the back part of last year.
So there you'll see it.
The uplift from pricing.
What we saw in the first quarter together with very strong volume.
We will start to abate, but right now we're going to just what's the environment and see where it is and we'll go from there.
Jonathan Arnold turn it back thank you good luck.
Your next question comes from the line of Brian Morrison of TD Securities. Your line is open.
Yes, Thank you kind of follow up questions. Please.
Rod you talked about.
But can you give a little bit of guidance with respect to revenues at the high end of range. I'm wondering if you can just go back and talk about the parameters of your slowing growth comment with respect to sell through.
Q1, Glenn just mentioned during the 30% neighborhood, maybe just some parameters where you are in recent weeks.
Yes, I think if you look at the basic.
Basically the first quarter, I mean, I called out effectively.
The quarter was driven by it was a little bit of mix not a lot.
But if you take the mix out then effectively it was driven I would call. It 50 50 between effectively volume and price.
So if you look from a volume perspective that means that we were in North America, we were seeing particularly in our <unk> business.
Business, we were seeing double digit type Pos.
And as you as we look at where we are in April .
Has moderated back, but it's still healthy so we've effectively moved down to what I would call.
For the mid single digit range.
Could be pushing up a little bit from that depends as Glenn said, it's a little hard to read right because of weather because of.
Of Covid.
It has it has step down and we'll see where it goes from from here and obviously that to a certain extent will dictate where we go.
Yes, I would say it is still at good levels and.
Still at healthy levels.
Okay. Thank you for that and then maybe Glenn you did mentioned near shoring I'd like to follow up on that if I could you had some lockdowns in China recently, which has got to be affecting the supply chain. Even further I just wonder if youre seeing a material increase in demand from national accounts in <unk> and whether this is increasingly looking like it will be.
Permanent benefit to you.
I think it's going to be a permanent benefit to us, but I think it's not this company's planned well in advance so we have.
And working together with our customers is the plan to increase their volumes in this hemisphere, So I think thats.
A general trend that's transpiring.
And some quicker than for example, the large national account type customers that are looking to buy.
Quicker that this is a bit more responsive, but the larger brands are a little more systematic about how they approach their supply chain is global in front of us in China. They are global manufacturers, but at the end of the day. The onset. This hemisphere will continue to grow and I think we're going to be a big beneficiary of that.
That opportunity.
Relative to your current benefit can just dump over your three year horizon.
Yes, I would say that that's a realistic in minutes.
Volumes, we have.
Yeah.
Thank you very much.
Oh.
Your next question comes from the line of Jim Duffy of Stifel. Your line is open.
Thank you good afternoon.
Okay has given us.
Sure.
Thanks for taking the question.
Given trends in cotton prices and historical precedent no doubt tomorrow I'm going to get calls from clients, who argue that strength is in part from distributors pulling forward purchases to build inventories.
Further anticipated price increases how would you guys respond to that and what if anything can you do to prevent recurrence of that dynamic.
Hum.
In the current environment.
One thing you can do channel checks and obviously that will confirm that the inventories in the channel are very low I mean I think that's.
The first thing so inventories are pretty good shape.
Within the overall channels. So there is not.
Abundance of inventory, that's that's one thing.
Look at where we're managing.
Our sales were managing the levels of inventory in the channel and what I said.
Earlier was is that it was up slightly but it's based on the performance of.
The business in Q1.
And.
We will be in a position to continue to service our customers as we go forward and that's.
And we're going to make sure that we.
And then the point.
Point Youre trying to get to is that we're not going to bring.
Bring overabundance of inventory in the channel just because of the price of cotton has moved up in potential prices, but we are comfortable with our pricing where it is today.
And.
This could be potentially a.
In 2023 scenario in terms of further price increases, but who knows where cotton will be in 2023. So that's that's a risk someone I don't think anybody is going to want to take so.
Then in a day.
Our business is strong we're managing through our.
With our customer relations and making sure we're fulfilling as much as we can the requirements to keep our product in stock.
We're tight on product right now because sales have been very strong and we're going to keep to manage ourselves through as we go forward and capacity continues to come online.
Got it thanks for indulging me in that.
So glenn with distributor inventories still lean it sounds like Youre, suggesting Q1 is a normalized baseline.
There is not much to work with guidance here should historical seasonality apply that activewear business for the balance of the quarters of the year or does that sound like.
Ambitious assumption.
Well I think you would see sort of normalized seasonality, we talked about it in one of the things we were doing obviously, which was providing inventory for the seasonality Jim So I think.
It's not I wouldn't say it is a normal.
Type of.
I would say cadence that we see going forward.
Again, I would say that if you look at them at the first quarter.
Think about how that translates in the second quarter to third quarter fourth quarter, obviously, we've talked about price and whatever.
What unfolded, there and we have.
Talked about the.
What we've seen from a Pos perspective, and Glenn also highlighted how we are planning to be disciplined. So I think if again, if you sort of first quarter was very very strong and Pos is very very strong. So the demand was there.
And as we go forward, we would expect to see that that moderate as we move into the year, but still the seasons or at the same rate as lots of travel there is lots of events, there's lots going on in the summertime and that will drive demand.
Very good. Thank you guys. Good luck.
Thanks, Tim.
Your next question comes from the line of Mark Petrie of CIBC. Your line is open.
Yes. Thanks, I just wanted to come back to the topic of private label that you guys have spoken about this as an opportunity and certainly the market is moving that way and has been for a while both from a consumer and retailer perspective, but haven't really heard too much with regard to sort of new wins.
Be it contract or shelf space. So can you just update on update us on that.
Well look we don't really want to get into.
Individuals' specific programs, but I would say in general.
The business is still moving forward.
I think that the.
I said earlier is a big opportunity for US is continued growing with.
Our big brands.
We do business with that business is definitely materializing in.
And moving forward so overall.
As we move forward into the future we've been very tight on capacity.
Capacity right now so if you look at where we are currently I mean, our sales.
POS has been so strong for the last two or three quarters, we've been focusing our energy and our resources.
On our core footwear business be fairly honest with you.
Because those other pieces of business take a little bit time to.
To leverage into materialized. So I think as we go into future that's something that we'll continue to.
Help us to maintain our growth objectives.
CAGR of 7%, 10%, it's always embedded into all of our planning processes as we go through it.
The three year period that we discussed at our Investor day.
Thanks for that.
There are no further questions at this time please continue.
Okay, well. Thank you everyone before we leave you all just a quick reminder, that we will be holding our virtual annual shareholders' meeting tomorrow morning at 10 am Eastern time, so with that I'd like to thank you again for joining us today and we look forward to speaking to you very soon.
Have a good evening.
This concludes today's conference call. Thank you for participating you may now disconnect.
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