Q4 2022 General Mills Inc Earnings Call - Question And Answer Session
Great. Thanks, good morning, everybody.
Good morning, Good morning, good morning, Greg.
Great.
I think I think you've talked about over the course of this year, how the combination of <unk> and pricing and are there other levers have actually been pretty effective at protecting a lot of the at least the dollar cost of actual sort of inflation, but that supply chain costs and some other things of course of have.
Wade weighed on margins and profitability as well like it has for the group as a whole I.
I guess as you look forward to 'twenty three.
Thank you you mentioned that you anticipate.
Another sort of call it low double digit benefit from pricing that you've taken already or is already in place.
But of course, you still see another very significant 14% jump in inflation and slowly, but surely hopefully will continue to improve on the supply chain side. So I guess the question is do you think that the combination of the pricing in the <unk> and the other levers that you have got would be enough.
In fiscal 'twenty, three to sort of better protect dollar dollar profit, even including some of the supply chain issues and other things as opposed to just cost inflation and then I've just got a quick follow up thank you.
I'll take that one.
Absolutely. Thank you Andrew so as we think about our approach to the next fiscal year, we're thinking about it much much the same way, we're expecting only a modest decline in the level of supply chain disruption.
We expect.
As you mentioned our price realizations.
The combination of HSN to largely offset the dollar cost.
The 14% inflation that we've called and our expectation is that the remainder caused some disruption.
We would look out over over time to the to the extent that we.
We see the environment stabilized so the only big question remains.
When that happens I think we're expecting another Europe .
Uncertainty.
Candidly similar to that to the table was set this year.
Okay, and then obviously, it's still a very dynamic and I know there have been plenty discussions and a lot of debate of course around around pricing and cost and everything else but.
As you build your plans going into 'twenty, three and then discuss them with you know with your key retail customers and things I guess are there things that.
Have changed a little bit around going into your plans for fiscal 'twenty three in terms of your retailer conversations versus let's say a year ago, meaning.
Things around innovation or marketing plans merchandising plans I mean are you seeing customers start to think a little bit differently about those things as opposed to simply.
Rising and inflation dynamic or being naive and we're just not there yet.
John you want to take the question.
Yeah, absolutely so.
Certainly in the dynamic environment, there's no doubt about that.
Inflation and supply and or to the big topics that we've spent a lot of time with retailers on.
But I would say Andrew that things are pivoting back a bit more to go.
From a marketing standpoint from an innovation standpoint, we're having those conversations as well and also how do we provide value to consumers at a time or indeed as well. So we're talking about many things.
Honestly a year ago, it was really about supply.
So I think things are getting back to some of the conversations in the past, but it's all about how do we.
The growth businesses together.
Okay, great. Thank you.
Okay.
Yes.
Our next question comes from Bryan Spillane with Bank of America. You May proceed with your question Hi, Thank you operator, good morning, everyone.
I guess my question.
Maybe this is for your coffee if we look at the guidance the organic guidance right. So the revenue range is 4% to 5%.
And if you add back the impact of the net impact of the divestitures and acquisitions.
Operating income ranges is 1% to four so can you just kind of help us kind of think through what are the drivers that would cause you to be at the low end of that range.
Why range or the high end higher end of that Oi range again, assuming that 4% to 5% organic sales growth is the right number is it a reflection of <unk>.
Commodity volatility or just just like what are some of the pieces there.
To describe or inform that that wider range NOI.
Yeah I appreciate the question I think back to my earlier comments about sort of the backdrop for the operating environment. It still remains.
A little.
A high degree of uncertainty I think we're expecting as the backdrop that the supply chain disruptions.
To the extent they are foreseeable will in the near term not baked that much. So that is a factor that even as we went through this past year.
Was it was a headwind to margins, even as we move from quarter to quarter provided some volatility to our expectations. So the guidance range, primarily reflects that and then obviously.
Inflation.
It is our best call based on the information we have in front of us as 14%, but I would note that our our expectations moved up even as we work through the early part of this last fiscal year. We just closed so those are the two primary sources of.
The volatility in driving our expectations on the range.
Okay. Thank you for that and then maybe just.
Go ahead, Bryan I would just add one additional piece on the inflation as we are about 55% covered on our ingredients and packaging material requirements as we start the year, that's a bit higher than average, but that still leaves obviously some some.
<unk>.
Lack of coverage, especially in the back half of the year. So so currently point about uncertainty okay.
And anything in terms of I guess, you might meet you must know more about the first half of the year than the second half of the year just anything we should think about that in terms of.
Phasing just just in terms of the inflationary pressure is a little bit more front or back half loaded.
Yes.
That's a great question and one we're just.
Little bit of.
Comment so as you think about the year I would say, we would expect our first half profit growth to be.
Slightly weighted and favorable to the second half.
A lot of that obviously is in part of the weight of the comparison in Q4 that we just closed.
But as you think about inflation, which you also restaurants.
We would expect that to be highest in Q1, and then decelerate as you were sequentially through the the comps over the course of the year and price mix, we will expect a partial impact in Q1 from some recent actions and a full impact kind of in Q2.
And then the other factor that I would just call out that's worth mentioning is.
The impact of divestitures the ones that.
We've announced and the ones that we've closed will be a bit higher in the first half before.
Before we begin to lap the yogurt no divestitures, what's happened in the second half of this.
Fiscal year.
Alright, Thanks Colby.
You bet.
Our next question comes from Robert Moskow with Credit Suisse. You May proceed with your question.
Hi, I guess.
A couple of questions coffee I think in the middle of the year, you actually quantified the cost of supply chain disruptions and then I don't know.
No if you quantified it.
Do you have a number for us and and when you talk about your pricing and H M M actions offsetting cost inflation.
Does it also offset that disruption estimate or is that a separate number and then I have a quick follow up.
Yes, so we.
We did provide a number.
I think.
And in the range of 200 previously $2 50 is about where we have the mark here at the end of the year.
Think back to my earlier comments as we look at the <unk>.
All year.
Our adjusted.
Gross margins are down.
And if you kind of deconstruct that the elements will drive you to inflation being about 500 basis point roughly drag offset almost.
<unk> bye.
<unk> and H M M and that leaves the cost of the operating environment the disruptions of the deleverage.
Other intermodal transfer it's all the things that we're doing to accommodate supplying this environment is the driver of the margin decline.
Okay, and I might just not be competent and finding things, but I'm, having trouble finding the price mix for North America retail and fourth quarter.
I think I'm backing into something like 16% pricing.
So.
Okay.
So if your cost situation.
Ethane twice.
As the number organic price mix.
So I guess here's the question if your cost inflation for the year is only 14%, but youre running pricing at 16 isn't that a net positive.
Are you talking.
This fiscal year or next fiscal year.
Fiscal 'twenty three so for fiscal 'twenty, three I think youre guiding to 14% inflation.
Your price pricing in your biggest segment of the market as it is up mid teens.
I guess it seems like the pricing benefit is.
From a dollar standpoint is a net positive.
Compared to your price inflation on the cost inflation on a dollar standpoint.
Yes.
Rob I think I think <unk> got I mean.
You have to remember that will be we'll be starting to rollover some pricing as we come into fiscal 'twenty, two and certainly much more so as we get into the back half of the year.
As we had significant pricing come through in the back half of fiscal.
Fiscal 'twenty, two what will be rolling over that in fiscal 'twenty three.
Apologies.
And then I think the other piece that would be included in that would be.
All set from from volume deleverage that comes through.
We mentioned that we are expecting elasticities built.
Below historical levels, but to increase somewhat as we go through 'twenty three.
Okay that makes sense and should I think about like.
For first quarter pricing.
Is it you are lapping only a 4% price mix for North America.
Youre, taking more actions. So are those two things kind of offsetting each other do you think like you said.
Mid teens in the first quarter.
Yes, roughly.
That's a fair assumption.
Got it okay. Thank you.
You bet.
Our next question comes from Michael <unk> with Piper Sandler You May proceed with your question.
Thank you and good morning.
Okay.
Hi, good morning looking at.
Just looking at the.
Snap benefits.
Federal Covid emergency authorization is now set to run at least into October .
And that was of course supports the state of emergency elevated levels of snap benefits that have been pretty significant.
As you contemplate your topline guidance, what assumptions do you make around how that might unfold.
Yeah.
I will start.
And I'll have John <unk> follow up on those.
Michael I would start with.
Sure.
Our assumptions include people starting to eat from away from home or to a little bit at home eating and so I think as consumers become.
I'm more concerned about the economic reality of the first thing they tend to do is eat more at home and muscle away from home and we've seen restaurant traffic year over year. The last couple of months.
Hosting gone down a little bit.
Eating at home has gone up and so as we think about our assumptions for the year.
And we saw this in the last recession.
One of the great recession, we saw that consumption and away from home eating.
Down and replace by at home eating we're seeing the same kind of behavior. Starting now so that's actually the first place I start.
And then it must because when consumers want to eat out more but the cost of eating away from home more than double the cost of eating at home.
Then of course, there's value seeking behaviors and then once they get into stores like consumers try to change their habits as little as possible and still be able to get what they want.
That's how you frame I mean, that's a non answer but the snap question, but before we go deep down that whole I just wanted to.
I'll start with kind of an overarching comment on to John <unk> co can do you want to take over a little bit on the snap question.
Yes, so thanks, Jeff and I think you hit it exactly right. So snap is obviously one of the elements that will drive top line and while snap and down versus pandemic highs, it's still above pre pandemic period. So we continue to monitor snap and then plays into things, but as just mentioned some bigger factors in play as well.
<unk> shipped more than home heating and then even what's playing out in our categories. Obviously watch very closely as well in terms of how branded players are performing how private label is performing and if you look back through history.
Economic downturns, we tend to perform pretty loves our categories increased by a point or two in terms of volume performance, we've actually held our own from a share standpoint during those periods. We've seen in the second and third tier brands lose share to private.
Private label, So it's a dynamic time, where we're very close to.
And watching all actors across not just one of those.
That's really helpful color Thats great.
Follow up I know you.
Called out the elasticity as you expect to.
At least getting closer to normal levels.
Factoring in some of that volume piece on the on the pricing side.
Especially with what the consumer facing and some of the push.
Pushback, maybe even from retailers are you starting to feel like you're hitting a price ceiling in any categories or is it really still more of the same like it's been in this recent environment.
I would say I would say my up until this point, we haven't really seen any change in elasticities.
The reason for that was a couple of reasons for that one is that consumers are switched to more alcohol meeting because it's more expensive. So the reason I started talking about I would say would be a big contributor to your elasticities.
Not having changed much even over the last months and what they were two or three or four months ago.
And the consumers actually still enough, they're still in a decent place there getting nervous.
When it comes to savings rates or the employment rate and consumers are still spending quite a bit of money.
Now as I look ahead, they get nervous.
Because they see inflation.
And so forth, but right now the consumers on a decent place on any.
We haven't really seen any elasticity change I think that's because of the ship.
Way from home dialysis.
Okay really helpful. Thanks, so much.
Yes. Thank you.
Next.
Question comes from Cody Ross with UBS you May proceed with your question.
Hey, good morning folks. Thank you for taking my question.
I just wanted to dig a little into pet here because the margin continues to slide further driven by inflation and supply chain disruptions that you've called out did this catch you by surprise during the quarter and when do you anticipate the rate of margin declines to moderate and then I have a follow up.
Sure.
Yes, absolutely sorry.
Presenting we just sitting there.
So thanks for the question is I just wanted to kind of set the frame by by just acknowledging I think pet business for us is still seeing it.
Really strong demand.
<unk> grown the pet business double digits on both the top and the bottom line in the four years post acquisition.
So this is more of a function as we look at the margins specifically around <unk>.
Roughly in equal measure the first.
The impact of the acquisition.
We completed early this year this past fiscal year of the pet treats business, which as it has.
Largely driven by to some one time costs and some some modest margin dilution that comes with that business and then second the cost to serve which we're acutely higher in the quarter on the pet business.
We've sought to service that business.
Levels to meet demand.
We candidly were not able to produce to the demand we saw in the quarter and have had challenges and headwinds as we worked through the year. We're taking significant actions to your question on kind of what we're doing about it to debottleneck.
And continuing to add external supply capacity in addition.
<unk>.
We've put a $150 million of capital spending additional capital spending behind our dry dog food business, which is where we're seeing the most acute challenge.
<unk> service.
Service to get to get additional capacity online and started in F. 'twenty four so we would expect this margin pressure to come.
Modestly improve as we take the near term actions and then the real unlock to come.
As we get to get additional capacity, both external and internal online.
Got you. Thank you and I just wanted to follow up a little bit about gross margin and some of the stranded costs do you expect.
So if you combine the low double digit price mix with the ATM and savings it looks like you should fully cover the inflation youre going to endure next year you will also be lapping the supply chain challenges in the second half next year is it fair to say right now that gross margins could actually increase next year and if not is that because of stranded costs.
And if so can you just kind of give us any color as how much stranded costs you expect thank you.
What do you think this is Jonathan.
<unk> got the right drivers.
Right that HMS, plus our SRM pricing actions are intended to offset the inflation component, we just talked about a modest decline in.
And disruptions.
We will have an impact from from divestitures, and obviously, particularly the helper something solid divestiture.
Clearly a higher margin business as we disclosed in the announcement on the deal and so the divestiture of that business will have a negative mix impact on margin for the year.
Got it thank you very much I'll pass it along.
Yeah.
Our next question comes from Pamela Kaufman with Morgan Stanley You May proceed with your question.
Hi, good morning.
Good morning, good morning.
Our prepared remarks, you highlighted that portfolio reshaping is going to be an ongoing aspect of the company strategy.
As your key competitor is pursuing a more surgical approach to portfolio reshaping what are your views on pursuing a similar strategy and have you considered splitting up the company across higher and slower growth segments.
Okay.
Yes. Thanks for the thanks for that question you know what I love is that our strategy is working.
It has been working regardless of what competitors are doing our strategy has been working for the last four years.
Evidenced by our continued growth above our long term algorithm of that remaining share in the majority of our categories and so I think actually the worst thing we could do it.
Look at what somebody else is doing and try to emulate that when the strategy. We have is working on and I say that because we're executing well on our core business as evidenced by the <unk>.
Share gains over the last four years, but we've also integrated M&A quite well and whether that's seamlessly divesting the yogurt business or.
Aggressively growing blue Buffalo and.
And the pet treats business, we feel great about that the other thing I would say is it kind of goes.
People get lost and we talked to you know there are a lot of the synergies you're splitting things up and not only financial synergies, but also capability percentages. Let me give me give you a couple of examples when we bought the Blue Buffalo business. One of the things. We said was that the capabilities. We have a general mills are very similar to what is needed to blue Buffalo.
One of those is extrusion technology, which is the technology, we're using cereal and we're one of the world leaders if not the world's best at extrusion technology.
The same would be true for things like thermal processing, where the same technology that is used for wet pet food is dues in things like soup and yogurt and other things and so forth.
For a whole host of reasons, but ending with our strategy is working.
Whatever our competitors do their strategy, maybe best for them, but we really like our strategy, we like the way it's working down at the end of the day.
Is creating quite a bit of value for shareholders.
Great. Thanks.
And also you discussed how you expect consumers to seek more value given the pressures that they're facing in this environment. How are you thinking about managing price gaps versus private label and.
Branded competitors.
It seems that your price gaps have widened pretty meaningfully versus private label in your category.
What are your expectations around trade down and how are you thinking about price gaps going forward.
I'll, let John knew the answer the details I would note that our pricing. It has been as has been higher in the last few months, but at the same time, we are still growing share, which I think speaks to the strength of our brands, but John you want to you want to follow up.
Absolutely.
Jeff you touched on this before but it's not only looking at our categories, but looking at broader consumption. So it starts with our consumers eating away at restaurants or eating at home and we're seeing that shift to at home, which is important we've built and that's around capability over the last five or six years that we're really proud of and it's a.
Much more sophisticated today than it was we're able to monitor what's happening in the environment and then to take targeted actions and it might be less pricing and promotional optimization. So we're taking the actions. We believe will enable us to win in the categories that we're competing in and we are if you look at the past year, we've grown share in the majority of our categories early North American retail, but really across the <unk>.
Enterprise leveraging our sense from capability, we take private labels are seriously retailer brands.
We believe the best course is to make sure that we build our brands, we enemy and over time as you look at our performance of our categories actually hold up really well versus private label in total food and beverage private labels in the 18 share in our categories.
Again, we believe that's because we build our brands and we will continue to do that as we move forward. So we compete in North American retail alone over 25 categories. We're laser focused on looking at what's happening from a deflation standpoint, how we're going to offset that from a pricing standpoint, how we're going to build our brands and how we're going to innovate again, we feel good about our plans for the coming year, we do believe that could be.
It would compete effectively.
And grow share in a majority of our major categories again in fiscal 'twenty three.
Okay. Thank you.
Our next question comes from Chris Growe with Stifel. You May proceed with your question.
Hi, good morning.
Good morning, good morning, just.
I had a question for you to be clear on kind of the phasing of pricing through the year is it. So you have pricing actions that are already either been announced or any carryover pricing from this past year. So is that the second quarter when pricing plus your atrium cost savings would be sufficient to offset inflation is that the right way to think about that in the second.
<unk>.
Yeah.
Please go ahead.
Yeah, sorry, I jumped at it again.
Chris It's definitely right I think that's a fair expectation given the given the inflation assumption for the year and expected payment.
Okay, and then I was curious jumping over to the Pet Division.
You're bringing on new co Packers you won't have new capacity available then suddenly until fiscal 'twenty four.
Do you believe you can meet demand in fiscal 'twenty threes at the addition of co Packers in.
Perhaps some of the new capacity is going to allow you to meet demand in fiscal 'twenty three for that division.
I think it's fair to say in the near term. This will continue to be a headwind, we expect modest improvement to come in the near term primarily from from bottlenecking and.
And enrollment continued enrollment of additional external supply chain capacity, but.
I wouldn't expect it to be.
Fully fully enough to satisfy the demand we're seeing in the business in the near term.
Okay. That's all I had for you. Thank you.
Thanks, Chris.
Thank you.
Our next question comes from Ken Goldman with Jpmorgan. You May proceed with your question.
Good morning, It's Tom Palmer on for Ken.
So I wanted to ask on elasticity guidance assumes elasticity increases, but remains below historic levels I just want to make sure I understand this are you assuming elasticity returns to more normal levels at some point of the year.
At some degree of below average elasticity persists throughout the year.
And why you have that view and what do you consider to be normal elasticity.
Okay.
Well.
Chris you want to take that globally.
Yes. This is toby so.
So I think that's a fair assumption is.
For the full year our guidance is.
Predicated on elasticities.
Being higher than this past year, where as a reminder, they were where they were significantly below what our historical modeling would tell us we are not expecting.
The balance of the year to a bulk a returning to the foot levels of elasticity that the historical models.
Would indicate.
Surely.
There are a number of reasons for this and Jeff referenced a lot of them are Rob.
The at home dynamics.
Consumption patterns that we expect to see some.
From from consumers being a primary driver as a backdrop and then I think it's hard to drive by the continued challenging.
Around supply chain disruption as you think about that as a backdrop for per choice.
Choice and selection for consumers and then lastly, when you think about the bra.
Inflationary pressures and the value tradeoffs as the consumers make it's important to note that inflation is hitting away from home food.
More heavily than even at home. So I think all of those things therefore, our assumption.
Yes.
Okay. Thank you for that.
And then just on shipment timing I think.
A quarter ago, you talked about how some of that under shipment in North America would likely be a fiscal 'twenty three event at least looking at Nielsen seems to be a bit of timing benefit in the fourth quarter is there more to come as we think about 2023.
I'm going to take that.
Yeah, absolutely, we actually don't believe theres any benefit in the quarter, we think non measured channels. So it's really the difference versus what you see in Nielsen and movement versus our enough. So we don't believe that we either.
Build inventory or punished.
At our customers so as we move through the first half of fiscal 'twenty. Three we expect some of the same service issues that we experienced through fiscal 'twenty two to still be with us. So as a result, we're not taking any.
<unk>.
No real benefit from from rebuilding inventories.
Great. Thank you.
Our next question comes from Steve Powers with Deutsche Bank. You May proceed with your question.
Yes, thanks, good morning, everybody.
A relatively quick follow up on pet if I could.
I think the discussion pretty full but I guess.
The growth rate as realized in the quarter was still quite substantial despite the supply constraints. So I guess is there.
Can you give us some color on what that implies about what youre seeing in all channel consumption number one.
It looks like Youre, not youre, not delivering to that demand how youre thinking about channel inventory levels any risks that we should be that you're monitoring or we should be aware of around fulfillment rates or out of stocks I guess I'm looking at the.
The current situation of the potential opportunity as you catch up but I'm also just trying to.
Level set on the interim risk.
Yes.
Let me, let me frame it primarily through the lens of of of.
What we saw for our service and as we looked at the fourth quarter on this business.
Our service levels came in at the.
High end 60, low end of 70%.
So I think the opportunity as we go forward is to be running.
Probably closer to 80%, but we see strong demand across all the channels.
We look forward. So this is not a demand issue it.
It is ultimately going to be even modest improvements in survival allow us to unlock additional.
Additional growth.
The other factors that can be listed around retailer.
Tories are less less challenging.
The consideration as we look ahead.
Yes, I would say the risk I'm not sure there's risk beyond what we've already identified in our guidance I mean, but demand is clearly there and we have accounted for the fact that in the very near term, we're not going to catch up fully to demand, but this is not beyond the winter what we know how to do I mean. This is this is really about de bottlenecking capacity and using X gene.
All sources about building more capacity and so as you indicated.
You have to remember we did grow I think 20% in the fourth quarter. So we feel great about our pet business and we just have to make sure that we get our capacity back particular dry dog food and we're in the process of doing that.
Okay very good thank you very much.
Yeah.
Okay.
And our final question comes from David Palmer with Evercore ISI you May proceed with your question.
Thank you.
Just following up on the gross margin question. So far gross margin in the in fiscal 'twenty, 233% I think in gross margin in pre Covid fiscal 19 mid.
Mid 30 fours.
Wonder what the net impact to that gross margin has been from M&A over that time.
Basically I'm wondering how much lower gross margins were versus pre COVID-19 on a comparable basis and how that compares.
To that 200 basis points plus of supply chain friction you mentioned.
Yes.
I think.
I can give it to you in the perspective of the friction from other supply chain costs being.
The primary driver of the drag as you look beginning of that period to through the most recent quarter.
<unk>.
I think I would note that some of the biggest divestitures. We've made over that period also had probably some margin dilution already embedded in our P&L. So to the extent that we are the.
The most recent divestiture, obviously had at attractive margins, but the net of all of those is probably a small us to neutral.
From a from a margin mix perspective.
So basically the client to put a finer point on the decline versus pre Covid is really all disrupts supply chain disruptions.
Yes.
That makes sense.
Any thought on on the.
On the ability to reclaim that margin is there anything.
Aside from the timing of pricing actions versus inflation.
Do you think you can't get that get back to a business adjusted pre COVID-19 gross margin level.
Yes.
Hey, there.
The main thing I would start with is a recognition that.
The supply chain environment stabilizing and once that begins to stabilize we will be able to.
Apply our.
Pure leading H M M capability to get at these costs. Some of these costs will fall only naturally with the environment and the stabilization of our supply chain.
Some of them are required to some focused HMA, mark and all within our capacity to deliver.
If you look at our historical ability to drive H M M.
Pre COVID-19 levels had been in the 4% to 5% range. So so I think this is comfortably in the zone of what we can manage.
That's not knowable right now obviously exactly when we'll see the supply chain environment stabilized, but that is that is the way we're managing the business.
And I just had one last one.
Media advertising you said in the presentation, it's going to go up by more than the 5% CAGR that you've had.
Had over the Covid era, and so that would be I guess your guess we'd get to 20.
20% above pre COVID-19 levels and media spend.
Is sort of a fundamental change that you've started.
Before just before pre Covid, where your I guess getting bigger in digital and I think it's worth sort of addressing how different. This this has been for you how you're spending that on this but also why you feel confident that this is getting an ROI.
And then in a way that would make you different than you were in the three years before COVID-19.
Thanks.
Maybe I'll John Mclaren vulnerable.
Yes, let me clarify one point and then maybe I can shift it back to John or Jeff.
Dave in the presentation, we talked about the fact that we expect media to be up in fiscal 'twenty three but it wasn't a relation to the growth rate that was just in terms of dollars. So we've grown at a 5% compound growth rate of the last three years, we expect media to be up in fiscal 'twenty, three but that wasn't that wasn't a rate.
Guidance, so in terms of where.
Where we're spending or how we feel about it maybe I'll pass it over to John or Jeff.
Yes, I would just say, we feel great about our media and the granularity we have an understanding of return or the ability to optimize so north of 50% of all of our media spend is digital now.
Amongst that digital spend more than 50% is performance marketing and that's where we're launching our first party.
The investment to acquire partnering with our retailers and their data, which is really powerful because it really targeted putting one one personalized relationships and then testing iterating at scale, we can take 200 different ads online and optimize and really help them.
Focus on the one that has the best return and have seen significant increase in the return for US. So we believe we're getting more than.
More return from our advertisement ever before we're able to optimize the days of shooting an AD and hoping it works for a year or over where literally optimizing ads on a daily basis, and that's really good for our brands because it helps fill them in Dallas refined messages and it feels more loans than for us as well. So we feel great about EDM or continue to invest heavily to make sure we have potential.
Future.
Great. Thank you.
Okay.
Thanks, Jeff.
You can close up here.
Okay.
Yeah.
Pardon me it seems Mr. Herman <unk> disconnect.
Unfortunately, so Mr. Seemingly are good to close the call if you'd like.
No worries thanks Kelly.
I appreciate everyones continued engagement and interest in general Mills.
Certainly.
The IR team will be available today for follow ups.
But we wish you all a.
Good continued summer and look forward to catching up soon thanks, so much.
That does conclude the conference call for today. Thank you for your participation and we ask that you. Please disconnect your lines.
Okay.