Q4 2022 Yum! Brands Inc Earnings Call
As we shared at our recent Investor day, our strategy is guided by our recipe for good growth and today, we will discuss our 2022 results through the lens of that framework I will talk about two of our growth drivers, namely a relevant easy and distinctive brands or red for short and our unrivaled culture and talent.
Then I'll provide an update on our efforts to drive the good agenda across our brands and our business Chris.
Chris will then share the details of our fourth quarter financial results before discussing our bold restaurant development and unmatched operating capabilities growth driver.
I'll start by discussing our iconic red brand.
Beginning with the KFC division, which accounts for 49% of our divisional operating profit.
KFC full year 2022 system sales grew 9% driven by 7% unit growth and 4% same store sales growth Q4 system sales for KFC increased 10%, thanks to 7% unit growth and 5% same store sales growth.
Results were unfavorably impacted by Covid related challenges in China excluding.
In China, our KFC business continues to grow at an unbelievable pace with same store sales growing 9% in the quarter driven in part by our World class franchisees and continued impressive momentum in our emerging markets.
At KFC as international business, which represents 44% of our divisional operating profit Q4 system sales grew 11%.
Several markets showed stellar results in Japan for example, KFC is synonymous with the Christmas holiday family meal, and this year, Japan system sales over the Christmas period grew 16% year over year.
Africa drove double digit same store sales growth in the quarter and continues to benefit from several customer facing digital initiatives.
To build on that success, our South Africa team will continue to roll out kiosks with a goal of installing them in 95% of our stores by 2023.
Moving onto our Taco Bell Division, which represents 35% of our divisional operating profit.
On a global basis full year system sales grew 11% driven by 8% same store sales growth and 5% unit growth.
This team continues to deliver industry, leading results and coupled with the incredible array of talent in place and our strong franchisee partnerships. It should be no surprise that Taco Bell earned the top spot in entrepreneur magazine's franchise 500 ranking for the third year running.
Moving on to our fourth quarter results Taco Bell U S grew system sales, 14% underpinned by an exceptional 11% same store sales growth.
The powerful momentum from previous quarters continued with the relaunch of the cult classic Mexican pizza for which we provided early access to our loyalty members.
We ended the year with around 45 million Mexican Pizza sold an impressive number considering they were only available for four months of the year.
We also made encouraging progress in our breakfast layer building on high profile branding partnerships such as <unk> in Q1, and Devante Adams in Q3, Taco Bell broaden Pete Davidson to help drive consumer Buzz for breakfast.
This led to 9% transaction growth for the day part overall Taco Bell did a terrific job this quarter at balancing both ends of the consumer spectrum by featuring premium products that our consumers crave such as the grilled cheese burrito with sharply priced items like Nacho fries.
At Taco Bell International Q4 system sales grew 23% driven by 29% unit growth and 4% same store sales growth.
Q4 closed a truly breakthrough year for our international business, which has now crossed the 1000 unit Mark.
To put this feed into some historical context Taco Bell International has built 40% of its current state within the last two years.
It wasn't just our development engine on fire. This year many of our markets reached double digit same store sales growth in 2022, including some of our largest markets with India up, 33%, Thailand up 36% and Spain up 20%.
Next at the Pizza Hut Division, which accounts for 16% of our divisional operating profit our full year system sales grew 3% led by 4% unit growth and flat same store sales growth.
Pizza Hut international which account for 9% of our divisional operating profit achieved system sales growth of 4% driven by 6% unit growth and a 1% decline in same store sales in the fourth quarter.
<unk> were heavily impacted by the ongoing COVID-19 related challenges in China ex China, our same store sales remained healthy growing 4%.
Several market showed noticeable strength, including Japan, where same store sales grew 10% owing to a strong holiday performance and recent product launch of Tuscany pasta bowls that featured a local flavor to it.
At Pizza Hut U S, which accounts for 7% of our divisional operating profit Q4 system sales grew 5% driven by 4% same store sales growth and flat unit growth with.
The strength in the quarter was driven by a combination of factors that included new advertising to highlight both premium and value offerings growth partnerships with aggregators and the success of the new <unk> product.
Now it's over index to pre dinner timeframes and individual occasion tickets and helped to recover the lower household income base due to its strong value proposition.
Lastly, five distinct national marketing campaigns on Uber eats and door dash helped aggregator transactions growth, 30% in the quarter.
Lastly, at the habit Burger Grill. The team continues to make progress on setting up the business for long term growth.
Its burgeoning digital channel finished the year strong with digital mix ending at 35% a truly impressive level after only launching in 2020.
I am pleased to share that habit is now 18% franchise, which is up five points from last year.
With $2 million of average unit volumes and a compelling growth strategy I am confident in the long term growth of our newest brands.
And now onto our unrivaled culture and talent growth drivers.
Our whole market continues to be our people first culture, which drives retention and recruitment of amazing talent highlights in 2022 included bringing our top 250 leaders from around the world together for our global leadership summit and celebrating the important role our World class talent has played as we marked our 20 <unk> anniversary as a publicly.
As a company.
Internally, we continued to promote talent naming a president of the habit Burger grill, and a new president of KFC U S.
Externally, we attracted top talent welcoming a new global Chief brand Officer for Taco Bell, a new global Chief operating and transformation officer for Pizza Hut, and a new Chief Corporate Affairs officer for Yum.
When it comes to all the good we do we released our 2021 recipe for good report during the year detailing our strong progress around our three priority areas.
With our science based targets to decreased greenhouse gas emissions by 46% by 2030, we decreased emissions against our 2019 baseline by approximately 24% for company owned buildings and our corporate restaurants, while our franchisees decreased emissions by 20%.
Regarding better packaging, we published a new global harmonized packaging policy with a focus on eliminating unnecessary packaging shifting to more sustainable materials and supporting better recovery and recycling system.
We increased the number of women in senior leadership globally, 242%, which keeps us on track to achieve gender parity in leadership globally by 2030 and alignment with paradigm for parity.
We were pleased the arm received industry, leading rankings on the carbon disclosure project and inclusion on the 2020 to Dow Jones Sustainability Index North America for 2023, Bloomberg gender equality index and Newsweek's list for America's most responsible companies in America's greatest workplaces for diversity.
To wrap up Im three.
Thrilled with our 2022 performance, particularly given many of the unpredictable obstacles our team had to navigate our results continued to reflect a resilient diversified business and the strength of our portfolio led by our iconic brands.
I'm confident we will continue to execute with superior performance and deliver industry, leading growth all of which will help to maximize value to our shareholders.
With that Chris over to you.
Thank you David and good morning, everyone. Today, I will discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers followed by our capital strategy.
As David mentioned 2022 was a year of huge milestones for young.
The resilience and winning mindset shown by our teams around the world helped US open a record breaking 4560 gross units or 3076 net new units on a full year basis.
These development numbers put full year unit growth at 6%.
System sales for the year grew 8% driven by strong international same store sales growth for KFC and another stellar performance from Taco Bell.
Full year core operating profit grew 6%, which includes a two point headwind from the removal of Russia profit this year.
Fourth quarter system sales growth of 10% was in line with the update we shared at our Investor day, driven by 6% same store sales growth and 6% unit growth.
Core operating profit grew 22%, which includes a two point headwind from the removal of Russia profit this year.
Reported operating profit included a negative $42 million foreign currency translation impact in the fourth quarter, and a negative $118 million impact to the full year.
Ex special General and administrative expenses came in at $357 million and approximately $1 1 billion for the full year.
Taco Bell store level margins were 23% flat year over year.
Bel paid additional discretionary bonuses to its store level employees, given the strong performance for the year, which impacted quarterly margins by approximately 50 basis points.
Taco Bell's full year store level margin was 24% near the upper end of its 23% to 24% historical pre COVID-19 margin range.
Fourth quarter ex special EPS was $1 31.
A 29% increase versus the prior year.
EPS growth was positively impacted by core operating profit growth of 22% and the lower current year tax rate.
This was partially offset by the year over year impact of a current year mark to market loss on our equity investment and a franchisee in India lapping a prior year gain as well as the aforementioned negative impact of foreign currency.
The ex special tax rate in the quarter was 12%.
Due in large part to the release of a valuation allowance associated with deferred tax assets that we now believe we will be able to utilize.
Our full year ex special tax rate was 21%.
In line with our full year expectations of 21% to 23%.
Now, let me share greater detail on our fourth quarter unit growth in the context of our bold restaurant development growth driver.
This quarter, we opened 1830 gross new units, resulting in 4560 gross units opened for the full year.
The equivalent of more than one new restaurant every two hours.
Nearly 90% of new store openings in 2022 occurred outside the United States across 112 countries proof that our diversified development engine is stronger than ever.
Starting with KFC. The team opened at 997 gross new units in the fourth quarter, with China, India, and Thailand, leading the charge.
The Pizza Hut Division had incredible development results opening 571 gross new units in Q4 with five countries contributing more than 25 units.
Mainly India, Indonesia, Canada, China, and Turkey the.
Taco Bell Division opened 253 gross new units in Q4, and 496 restaurants for the full year.
In fact, Taco Bell U S opened 250 gross new units this year, the second highest annual amount ever.
For 2022, Taco Bell International set a record with 246 gross new units exceeding the prior record of 179 units.
Last year I.
Im thrilled to report we crossed the 1000 Taco Bell unit threshold internationally.
And we soon expect to have four countries that have over 100 units with China, joining Spain, India and the U K.
Lastly, habit added 33 gross new units in 2022, representing a year over year growth rate of 10%.
This level of growth, which includes a significant number of company owned units create some short term noise in company owned restaurant margins due to the inclusion of Preopening expenses and the depressed margins that are normal during the initial months of operations before new stores reach maturity.
Average margins for habits stores opened more than a year remained much stronger than our overall reported habit company store margin.
To finish with development as we head into 2023, we remain confident that we will maintain our strong momentum we.
We exited 2022 with record site registrations for new units at Taco Bell U S and we have over 80% of 2023 planned units at KFC and Pizza hut outside of China committed with well capitalized growth ready franchise partners.
Next I'll discuss our unmatched operating capabilities and the three pillars of our digital strategy easy.
Easy experiences easy operations and easy insight.
I'll start with an update on our easy experiences pillar, which focuses on delivering seamless customer experiences through proprietary technology and dedicated operational programs. In 2022, we expanded the rollout of Tic took our conversational commerce and ecommerce platform.
Across our network and finished the year with Tic took in over 3200 stores across 49 markets.
We processed millions of digital orders in 2022 with Tic took continuing to prove it can bring in incremental customers and drive digital sales.
This is evidenced by the chat ordering launch in KFC, Mexico, where more than 90% of users who transacted on the chat channel had previously not placed a digital order on other channels we.
We plan to rollout <unk> took to more than 1000, new stores in 2023, including its white label E Commerce platform, which went live in Pizza Hut, Chile, and Taco Bell, Canada in Q4 2022.
Moving on to our easy operations pillar, which centers on the team member and franchise partner experience. The rollout of Dragon tail is ramping up in Pizza Hut U S with over 450 stores on boarded by the end of 2022 and plans to reach up to 1000 stores by the end of Q1.
One.
Globally, we expect to have dragon tail and over 7000 stores by the end of 2023.
At Pizza Hut U S. We have completed the integration of two major aggregator channels into our point of sale system.
And at Taco Bell U S. We have fully integrated our delivery as a service partner into our stores technology system.
These integrations are important in helping our team members process delivery orders with new levels of these.
Lastly, I'll cover our easy insights pillar, which leverages the power of data and analytics to allow our teams to make smarter decisions I want to highlight two key initiatives that are young decision sciences team had been working on namely recommended ordering and cooked schedule.
Recommended ordering is an artificial intelligence machine learning module that predicts and recommends the quantity of product for our restaurant manager to order each week with the goal of reducing product waste and interest store transfers of inventory.
The product has been rolled out to 3000 U S stores across Taco Bell and KFC.
Schedule is a similar module that helps predict the correct amount of food and timing to cook product to accurately meet demand. The team is working primarily with KFC on this initiative with plans to pilot in an international market soon.
Finally, I'll provide an update on our balance sheet and liquidity position.
Our net leverage ratio ended the year at five times, including a small balance on our revolving credit facility that was used to support share repurchases in the fourth quarter.
We will enter 2023 with no significant maturities until 2026, and approximately 94% of our debt fixed excluding our revolving credit facility balance.
I will reiterate that our capital priorities are guided by maximizing shareholder value.
This includes investing in the business, maintaining a resilient balance sheet offering a competitive dividend and continuously evaluating the optimal use of our excess cash to <unk>.
That and I am also pleased to announce that this week our board of directors approved an increased quarterly dividend of <unk> 65.
Our capital expenditures for the quarter net of Refranchising proceeds were $99 million.
Our net capital expenditures for the year came in at $206 million.
Reflecting $73 million and Refranchising proceeds and roughly $279 million in gross capex.
With regard to our share buyback program, we repurchased four 1 million shares in the quarter at an average share price of $119 per share totaling approximately $486 million for the full year, we repurchased 10 million shares at an average price of <unk>.
$119 per share and totaling $1 2 billion.
Overall, we are extremely pleased with these results given the complexities our teams face <unk>.
Navigating such challenges with industry, leading performance affirms the confidence we have to deliver our recently raised long term growth algorithm of 5% unit growth, 7% system sales growth and at least 8% core operating profit growth.
Looking to 2023, we wanted to provide a few guardrails for modeling purposes.
First we expect to deliver on our long term growth algorithm with healthy unit growth momentum continuing into 2023.
We expect Taco Bell company operated margins to be in line with full year 2022 margins and we expect our 2023 G&A to be approximately 1.15 billion in line with the guidance provided at Investor day in terms of the shape for the year the year over year growth in.
G&A will be highest in the first half.
Largely owing to the timing of our G&A expense plan across the year base.
Based on rate expectations as of today, we expect our interest expense to be up approximately 10% year over year and for our leverage ratio to drift modestly lower in 2023.
Finally, we expect our full year tax rate to be 21% to 23%.
To close we are extremely proud of the performance of our brands over the past year and look forward with excitement to deliver another year of compelling growth and shareholder value in 2023.
With that operator, we are ready to take any questions.
Thank you of course, if you'd like to ask a question. Please press star followed by one on your telephone keypad.
Your question. Please press star followed by two when preparing to ask a question. Please ensure you're on mute locally.
Please note we will be only taking one question from each passing to ensure we get around to everybody in the queue.
Our first question comes from David Tarantino of Baird. David Your line is open. Please go ahead.
Hi, Good morning. My question is about the profit outlook for 2023, and I was wondering how youre thinking about the Hudson.
Puts and takes related to potential upside or.
Offsetting fab.
Factors and then in particular I was curious about the China business. It seems like there is potential for China to recover MD additive to your overall profit algorithm for this year.
And just curious to get your view on whether that would be an upside lever you had.
Think about potential offsets to that factor for this year.
Yes, Hey, David Thanks. Good question as we look forward to next year and beyond we're still confident in the future as we shared at Investor day with the raised algorithm.
We feel we feel confident in the trajectory of the business and nothing has changed in that outlook as we come into 2023.
As you mentioned.
The China component of our sales.
<unk> heard Yum, China talked last night about being cautiously optimistic.
So we'll continue to work with them, but in the long run we're very bullish on the China market.
As it comes out of Covid, but of course, the timing of that is uncertain as they shared on the call last night of course to the extent that we have rebound in that China sales.
Does come at a lower royalty rate.
As you factor that into the plan for the year.
The other elements I think are in line with the.
What we shared in the algorithm you heard the guidance that we shared on G&A for next year and so our focus is on driving that growth and of course every day, it's our mission to come in and over deliver on that algorithm. If we can.
Thank you.
Thank you. Our next question comes from Dennis Geiger of UBS. Dennis Your line is open. Please go ahead.
Thanks, Chris for that color on G&A for the year helpful wondering if David or Chris If you could speak just a bit more to the strength that youre seeing from a sales momentum perspective globally and the resilient truly across the brands in the current macro and how that.
<unk> sort of how youre thinking about about 2023.
If consumer pressure increases strength at Taco Bell KFC, non China International Pizza U S. Even momentum building just any additional color given the last several months momentum for how you think about 23, particularly if globally. The macro situation gets worse. Thank you.
Our strength is a good word Dennis and it really was widespread as you mentioned, we feel great about the fact that all of our brands are really on a role right. Now you saw that in the results for the quarter and the consumer environment much like my my comments last quarter, you'll remains a positive environment for us.
Generally globally.
There are pockets of challenges when you have things like Lockdowns in China last year, but that flips to be a more potentially a positive for this year.
But the consumer in the U S on the high end.
We're actually seeing more frequency from that consumer and we're seeing that.
Possibly driven by a little trade down into our brands, which is all good.
And then on the lower end as I mentioned last quarter consumers are starting there is a.
A little bit more interested in value, which our brands are perfectly positioned to deliver on you're seeing that with our menu offerings.
So bill with the cravings menu and $2 Burritos, New mills product at Pizza Hut, which is.
Screaming value KFC, just rolled out reps as you guys are probably aware of at a great value price point. So I think the environment sets up well for us from a consumer demand standpoint.
More of the same and then on the labor side, we're seeing an increase in application stores returning to their pre COVID-19 operating hours, which is great.
To staff the stores now appropriately.
So when you mix it all together and we like the environment. We're in I also saw some data about grocery inflation on December being pretty high. So I think relative to alternatives, we are still very attractive option.
Okay.
Thank you. Our next question comes from Andrew Charles of Cowen Andrew. Your line is open. Please go ahead.
Great David a little bit of a segue to my question can you talk about your philosophy or how you plan to balance pricing versus value for Taco Bell U S. In 2023, if I recall from the Investor Day, you tend to take most of the price on new menu innovation that as long as the premium I was wondering for way to perhaps get more aggressive on value. If you need it while preserving the strong margins the <unk>.
His reach and perhaps can you just remind us as well what was the level pricing talk about U S and <unk> as well.
As far as Taco Bell.
The amazing job that they do.
Segmenting their consumers and providing each consumer what they want.
What we talked about at the Investor day.
And obviously Taco Bell has some amazing value offerings that have been in their menu now for quite some time on the cravings value menu, but it doesn't it's targeted to a certain set of consumers and halos the entire business.
As the environment gets more competitive we're already in already in the value game at Taco Bell, we are already doing a great job I don't see us changing anything we're connecting and we're winning because of value. That's why you saw the great numbers that we just put up in the quarter.
But the brand with amazing margins steady year over year.
<unk> has all the tools.
Ed.
Disposal to navigate any kind of.
<unk> and deliver great margins, great top line sales growth.
Great proposition to consumers.
Thank you. Our next question comes from David Palmer of ethical David Your line is open. Please proceed.
Thanks.
Congrats on the very strong unit growth.
I wonder how youre thinking about EBIT margin over time.
In 2022, 32%, it's been near 35% before but business mix is always changing I wonder.
How you think about that margin over time do you think you could get back to 35% or so in the next few years and I'm thinking about certain flow through like China license fee recovery could be very good incremental margins.
So I'm just wondering how youre thinking about the potential fed EBIT margin. Thanks.
Yes, Thanks, David I think.
In general we focus on delivering the algorithm and the.
Profit growth that's embedded there if you think about puts and takes on <unk>.
EBIT margin, obviously from a core operating profit standpoint.
You do have to consider the royalty rate mix I mentioned earlier to the extent.
If any of our lower royalty rate markets, where to grow faster than the others you have to take that into account in the modeling.
We did talk about at Investor day, our philosophy on G&A and how we're going to have a lower G&A growth rate going into next year than we've had the last few years.
So we're going to be managing that carefully.
In 2023, and then of course when you go to reported profit reported operating profit you have to take into account FX and FX was a headwind this past year.
Pretty hard to predict nobody has the crystal ball on that I will share that right now as we look to 2023.
<unk> will continue to be a headwind for us based on our current estimates primarily in the first half.
Think on a full year basis, our best estimate is between a $30 million to $40 million headwind going into the year. We will continue to update that as things change. So it's our push to drive that.
Strong profit growth implied in the algorithm.
That's where we're focused.
Okay.
Our next question comes from Jon Tower of Citigroup. Your line is open. Please go ahead.
Great. Thanks for taking the questions just.
Two quick ones G&A came in a bit higher than I think guidance had it.
You guys have been targeting for guidance I just wanted to confirm maybe there were some one timers in there or is there something else that might have hit that line and then outside of that we heard from another number of other operators that 2023 started off on some strong footing in the U S and frankly across the globe.
I guess I'm asking if there is any reason to believe that Yum 's brands wouldn't have been participating in that strength globally.
Yes first on G&A in Q4.
Had reported G&A of $1 billion $140 million.
That included special expense, we had approximately $20 million and special expense. So we landed broadly in line with our full year plan a little bit to the high end of our planned range. There were a number of small items.
None of the major but I'll give you. One example, as we had to split out the Russia business to prepare for sale. We lost some of the fixed cost leverage in our European G&A, but again going into next year as I mentioned earlier, the philosophy that we shared at the Investor Day still holds we are focused on having a lean geo.
Hey model, while investing in the things that drive long term growth and health and we'll have a lower G&A growth rate in 2023.
In terms of how.
The 2023 is shaping up as I said earlier.
Nothing that we're seeing at the start of the year that dampens, our confidence in delivering our long term growth algorithm this year and beyond.
Thank you. Our next question comes from Sean <unk> of J P. Morgan John Your line is open. Please go ahead.
Hi, Thank you so much I was hoping for a little bit more.
Detailed color in terms of what's happening at a consumption level on some of your major markets between.
No.
Dining or in store type of traffic delivery traffic are you actually seeing consumers trade down and you are opinions to your brand or are you seeing your core customers.
Come more often is there any slippage at all on the lower income consumer just kind of a I guess a little bit more color in terms of.
I know, it's always hard talking about a big global business with.
Three and now four brands, but if theres anything that you can get really provide some more detail in terms of what's going on below what's obviously very good aggregated results. Thanks.
Yes, Thanks John .
It is hard to talk about a business, where we have 290 different brand country combinations versus 290 different stories, but in general.
We obviously saw a shift to off premise consumption. During the pandemic, we have seen some of our on premise consumption come back, but really for none of our brands is back to where we were which isn't a bad thing.
Given the efficiency of operating and off premise model, our ability with new unit development to build slightly smaller stores that are more efficient with better returns for franchisees as far as the consumer I mentioned this earlier, but.
It does depend if we're looking at the U S or other developed markets.
Yeah.
The environment is still positive.
Just very similar to what we saw last quarter. We are seeing some increase in our higher frequency customers are higher income customers coming more frequently and some of that no doubt due to trade down into our brands.
On the lower and we're not seeing the low income consumer drop out of our business.
What we're seeing is probably a little bit more focus on value and that's been a trend that's been continuing throughout 2022 into 2023.
And we're there for them with our brands with perfect offerings for them.
And then emerging markets obviously.
Earlier in the pandemic.
Challenge they've come back now in our emerging and developed markets are performing roughly similar around the world.
Operator, we have time for one more question.
Of course, thank you. Our final question of today comes from Gregory Frankfurt School of Guggenheim Gregory Your line is open. Please go ahead.
Hey, Thanks for the question I, just wanted to ask about Pizza Hut U S. Mi it seems like the business has picked up the last few quarters.
Im curious if youre seeing share gains or increase pricing or just any thoughts on what's going on there would be helpful. Thanks.
Yes.
You asked about Pizza Hut U S. We're really proud of what the team is doing and the success they had in the quarter and the momentum. They are building in the business I know the franchisees and the team are working incredibly collaboratively.
And I do believe getting share gains in the category.
And attracting new consumers theyre doing that a couple of different ways.
Number one how they're playing aggregators with.
The partnerships with Aggregators and how we've integrated into our it systems we're seeing.
Lift and our transactions with Aggregators, we started the year with about five transactions per store through Aggregators now we're up to close to 50 by the end of the year.
The progress and obviously, helping us access some consumers.
Werent using the brand, but it's also the look tone and feel of the advertising Youll notice that that's changed it's a much more modern contemporary approach, which is connecting well with consumers and then finally.
It comes down to the product the launch of melts.
Very successful for the brand attracting younger consumers to different occasions.
We traditionally use pizza hut, so that all adds up to a very positive story for the Pizza Hut U S business and thank you for the question.
I think with that we'll wrap it up.
I think the numbers speak for themselves there was another incredible quarter.
Wrapping up a great year, despite many challenges at <unk>.
We actually closed the year with over 4500 gross new units being built take the 4100, we built last year.
<unk>.
8600, gross new units that means one out of every six locations you see around the world was built in the last two years for our brands I think that shows the momentum that we've got in the business.
Our China team talked about the great returns, they're getting from their new unit development last year, coupled with the topline growth that we're seeing in existing stores and there is a lot to be excited about as we head into 2023. Thank.
Thank you for your time today.
Ladies and gentlemen, thank you for joining today's call you may now disconnect your lines.
Okay.
[music].
Okay.