Q3 2022 Avery Dennison Corp Earnings Call
Greetings. Thank you for standing by welcome to acreage Edison's earnings Conference call for the third quarter ended on October one 2022.
This call is being recorded and will be available for replay from four P. M. Eastern time today through midnight Eastern time October 29th to access. The replay. Please dial 863, 38284 or plus 140 to $97 790, 140 for international callers the conference <unk>.
As to 199 786 seven.
Now I'd like to turn the call over to John <unk>.
<unk> head of Investor Relations. Please go ahead.
Thank you Scott.
Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined qualified and reconciled from GAAP on schedules a four to eight to 10 of the financial statements accompanying today's earnings release, we remind you that we'll make certain predictive statements that reflect our current.
Current views and estimates about our future performance and financial results.
These forward looking statements are made subject to the safe Harbor statement included in today's earnings release.
As always on the call today are Mitch <unk>, Chairman and Chief Executive Officer, and Greg Lovins, Senior Vice President and Chief Financial Officer also joining us for Q&A today, as Dion Stander, President and Chief operating Officer, I will now turn the call over to Mitch.
Thanks, John and good day, everyone.
We delivered another strong quarter with revenue up 19% and EPS of $2 46 up.
Up 26% ex currency and in line with expectations.
We had strong performance across the company LTM and RBS, both delivered impressive top and Bottomline growth.
Our strong results come amidst a dynamic environment.
Inflation continues we're raising prices accordingly, and now we see signs of softening demand.
The higher inventory levels downstream from us that we called out at the start of the year have begun to finally reduce.
Despite these talent challenges and an incremental 10% currency headwind, we remain on track to deliver EPS growth of 10% for the year, 18% ex currency.
Our ability to consistently deliver impressive financial results rest both from the team's desk the ability to execute amidst compounding crises and the strategic foundations, we have laid.
As you know a key element of our strategy has been our focus on accelerating the adoption of intelligent labels.
Enterprise wide intelligent label's revenue was up 20% and as you heard us mentioned a quarter ago momentum in this business is accelerating.
We are now targeting more than 20% growth annually in the coming years.
With promising developments and logistics, which is expanding from targeted applications such as special package handling to broad based use cases and.
In food, where we are seeing promising pilots in grocery and <unk>.
And in general retail, where the technology is being expanded beyond apparel.
The benefits of our intelligent label technologies and solutions are clear the increased supply chain inventory visibility.
Lower costs and improve speed of operations reduce waste and ultimately enhance the experience of end consumers.
We believe the current macro environment will serve to further heighten the value of our tech and solutions here.
As the global leader in RFID, we have and will continue to strategically invest to not only capture intelligent label opportunities, but create them.
Our strategies continue to pay off.
Now a quick update on the quarter by business.
Label, and graphic materials posted strong top line growth driven by higher pricing and low single digit volume growth.
The supply chain constraints, we discussed last quarter eased in Europe , enabling us to normalize lead times, whereas in North America material availability challenges remained particularly in paper.
Overall volumes remained strong across RPM up 4% annually versus 2019.
L. Gm's profitability remained strong in the quarter with double digit operating income growth.
Retail branding and information solutions delivered another quarter of strong margins and revenue growth.
Robust growth in high value categories, intelligent labels external embellishments and best Com, let's.
It was partially offset by a low single digit decline in the base apparel business.
Following several strong quarters apparel volumes moderated at some brands and retailers brought down inventories that were built up previously.
While our outlook assumes further reductions will take place in the near term, we are well positioned to continue to drive profitable growth in the base.
As for our industrial and healthcare materials. The segment delivered strong sales growth in the quarter and improved margins compared to prior year and sequentially as we continued to implement pricing actions to cover inflation.
Across the company I am pleased with the continued progress we are making towards the success of all our stakeholders.
Our consistent performance reflects the strength of our markets our industry, leading positions the strategic foundations, we've laid and our agile and talented team.
We remain confident that the strategies, we formulated we will continue to enable us to generate superior value creation through a balance of GDP plus growth and top quartile returns over the long run.
And once again I want to thank our entire team for continuing to raise our game to address the unique challenges at hand and deliver value for all of our stakeholders.
Over to you Greg.
Thanks, and Hello, everybody.
As Mitch said, we delivered another strong quarter with adjusted earnings per share of $2 46.
Up 15% over prior year and up 26% excluding currency translation.
Sales were up 19% ex currency and 16% on an organic basis driven by higher prices.
Adjusted EBITDA was up 13% and 22% excluding the impact of currency.
Despite the impact of inflation, we delivered a strong adjusted EBITDA margin of 15, 6% up 20 basis points compared to prior year.
Turning to cash generation and allocation year to date, we've generated nearly $425 million of free cash flow.
With $140 million in the third quarter.
Compared to prior year due to currency.
Working capital, which we deem largely as temporary and increased capital spending.
The higher level of capital spending is in line with our expectations as we continue to invest to support our long term growth strategy, particularly in intelligent labels.
Our balance sheet remains strong with a net debt to adjusted EBITDA ratio at quarter end of two one.
We have ample capacity to continue executing our disciplined capital allocation strategy.
To invest in organic growth and acquisitions, while continuing to return cash to shareholders.
And the first nine months of the year, we returned $497 million to shareholders through a combination of share repurchases and dividends.
Up from $290 million for the same period last year.
Now turning to segment results later.
Label and graphic materials sales were up 20% on an organic basis.
Driven almost entirely by higher prices.
Label and packaging materials sales were up more than 20% on organic basis with.
With strong growth in both the high value product categories and the base business.
Graphics, and reflective sales were up mid to high single digits on an organic basis.
Looking at the segments organic sales growth in the quarter by region.
North America sales were up mid teens due to pricing on lower volume as the region continued to be hampered by material availability constraints as Mitch mentioned earlier.
Western Europe sales were up approximately 40% driven by strong volume growth and a significant impact from pricing.
This region has seen the highest amount of inflation across the cycle.
Emerging markets overall were up high teens.
The Asia Pacific region was up mid to high single digits with approximately 40% growth in India.
While China and ASEAN were roughly flat.
In Latin Latin America grew more than 25%.
L. James' profitability remained strong in the quarter with adjusted EBITDA dollars up 10% and up 19% ex currency.
And adjusted EBITDA margin of 15, 6%.
Pricing actions continue to be implemented to offset inflation.
And we anticipate inflation with more than 20% for the year with a low to mid single digit increase expected sequentially in Q4.
Primarily driven by paper and energy.
We continue to address the cost increase that through a combination of product reengineering and pricing actions.
Shifting now to retail branding and information solutions Rbis sales were up 22% ex currency and 7% on an organic basis.
As growth was strong in the high value categories with continued strength in intelligent labels and external embellishments.
While the base business was down slightly driven by a decline in the value channel.
Profitability remained strong for this segment with adjusted EBITDA dollars up 19% and up 27% ex currency and.
And adjusted EBITDA margin of 18, 9%.
Deposit benefit from higher organic volume and acquisitions more than offset growth investments and higher employee related costs.
Turning to the industrial and healthcare materials segment sales increased 5% on an organic basis driven by higher prices.
Healthcare sales were up mid teens and industrial categories were up mid to high single digits partially.
Partially offset by mid teens decline in retail.
Adjusted EBITDA dollars were up 4% and 8% ex currency and adjusted EBITDA margin of 14, 3% was up 90 basis points compared to prior year and up 60 basis points sequentially.
Now shifting to our outlook for the year, we have narrowed our guidance for adjusted earnings per share to be between $9 70.
At $9 85.
At the midpoint, our guidance reflects a roughly 10% incremental headwind from currency and an operational outlook similar to last quarter.
As Mitch mentioned this outlook reflects 10% earnings per share growth versus prior year, and 18% growth excluding currency translation.
We now anticipate roughly 16% ex currency sales growth for the full year.
<unk> five point below our previous expectation due to a slightly lower volume outlook.
As I mentioned the anticipated impact from currency translation has increased.
Now, we're roughly $77 million headwind for the full year based on current rates.
Given the dollar continued to strengthen throughout the year assuming rates remain where they currently are will have an additional headwind of roughly 50 in 2023.
We continue to anticipate investing up to $350 million on fixed capital and it projects and roughly $35 million in operating expense.
Adding capabilities and new capacity, particularly in key strategic platforms, such as intelligent labels, which is poised to grow more than 20% annually in the coming years.
Lastly, we now anticipate a roughly 5% GAAP to non-GAAP difference for the year.
<unk> from our outlook last quarter, reflecting a benefit from a gain on one of our strategic venture investments.
In summary, we delivered another strong quarter in a challenging environment.
We remain confident that the consistent execution of our strategies.
Enable us to meet our long term goals for superior value creation through a balance of profitable growth and capital discipline well.
Well now open up the call for your questions.
Yes.
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To one question and then return to the queue. If you have additional questions.
One brief follow up for the first question.
We have a question from Ghansham Panjabi with Robert W. Baird and company. Please go ahead. Your line is open.
Hey, guys good day.
So I guess my question you know maybe you touched on the supply chain inventory adjustments downstream rippling through the through the all the way up to you guys that seems to be pretty pervasive just based on other earnings reports from different companies and so on and so forth where do you think you are in that phase and is it more specific in any particular region and is there a chance.
If a more severe destocking in Rbis, given some of the excess inventory that a lot of the footwear customers have called out in recent weeks and months.
Yeah. Thanks, Ghansham, so very high level.
We don't know exactly where we are in that there's not a lot of great data about where inventory levels are outside of the large retailers in the apparel sector.
So when we entered the year, we said that we thought that we had a elevated level of inventories downstream from us. It seems like it's starting to clear out if you look within Rbis.
Rbis in apparel the value channel. So the large discounters seem to be ahead of others as far as reducing that and thats been impacting us in Q2, and Q3 and then as we look at the.
The other other large retailers in athletic performance athletic companies and so forth I think they are still in the midst of that right now so our guidance assumes that.
That continues going into Q4.
That's where LPN, where it is we think that Europe as.
They had a very strong Q3 and as the supply chain's eased up there so.
We expect our guidance has some softening of that here in Q4 and for North America, though given the supply chain constraints.
There is some inventory in the system, but it doesn't seem as much as maybe you would otherwise think.
Got it thank you.
Our next question is from Anthony Pettinari with Citigroup Global markets. Please go ahead. Your line is open.
Hi, good morning.
Just following up on Ghansham question can you talk about maybe the level of organic volume growth that you're expecting for L. G M or what level could be embedded in the view for <unk>.
And maybe some of the regional differences I think earlier in the year. There was an expectation for volume growth to kind of accelerate in the second half. So I'm just wondering.
How the cadence from <unk> to <unk> is sort of shaping up.
Hi, Anthony this is Don.
Overall sales grew 20% on an organic basis in the quarter with volumes growing in the low single digits and just as a reminder, that since pre pandemic times LTM has actually grown into a 4% CAGR, which is well ahead of GDP specifically in each region Europe saw very strong volume growth low double digit growth as we work through the.
Our backlogs with supply chain constraints, particularly in paper started to ease and in Western Europe as Greg indicated earlier on we saw high teen volume growth in North America continued paper availability challenges drove mid single volume declines on top of a very tough comps.
We expect the availability challenges to moderate in Q4 and this to improve in Asia Pacific Our volumes grew low single digits, reflecting the Covid challenge in China.
As well as strong volume in India and as a reminder, we recently opened a new Greenfield site in Noida, India that adds capacity to support this future market growth.
As Mitch has already indicated as we were starting to see order pattern slightly soften as we go through October .
And we anticipate that as inventory corrections just this will continue.
Our next question is from John Mcnulty with BMO capital markets. Please go ahead. Your line is open.
Yeah. Good afternoon. Thanks for taking my question, So had a nice kudo I guess yesterday with UBS highlighting how important.
<unk> and RFID was in helping them to hit their numbers. So good on that I guess as a follow up maybe I'd be curious you mentioned early on logistics is kind of moving to the next level for you guys can you help us to understand what's kind of in the pilot phase process and how close we may be seeing other larger players.
Kind of reached that tipping point, where it goes onto a full fledged launch as opposed to just pilots.
John This is John again.
Youre right. We originally said that what we're seeing in logistics in the early pilot stages was very much around how they would manage special packaging as an example hazards materials. What we're now seeing is an increased focus on routing optimization and the efficiency that that will bring.
And we expect that that will continue to scale from pilot to adoption.
And as more of the logistics players get involved as they see the benefits that these two boats individual identification package identification management as well as routing optimization come to bear in the market.
Yeah, and just to build as far as other large players and so forth that might be doing things.
Not going to comment on.
Given how concentrated some of the industry is where things are overall, we see this as a significant opportunity long term, we actually want to make sure. There's a good cadence of how this gets deployed across the industry. So this is a huge significant opportunity in logistics as well as the other categories, we've talked about our food.
In general retail and apparel still is driving significant growth from a very high base.
Our next question is from Jeffrey <unk> with J P. Morgan Securities. Please go ahead. Your line is open.
Thanks, very much you talked about raw materials being sequentially.
Sequentially higher.
Propylene and propylene derivatives.
<unk> coming down.
Meaningfully now and.
They're even as some energy abate.
Yeah.
In Europe .
In terms of natural gas costs.
Sure.
Do you see that you talked about having higher inflationary costs in the fourth quarter.
Is that is that the peak is it really driven by paper and to your average prices continue to go up sequentially.
Yeah. Thanks, Jeff for the question. So as I said, we saw some sequential inflation in Q2 to Q3 that included a bit of a slight deflation on the chemicals and film side. Just as you said the petrochemical inputs are starting to come down and we expect a bit more favorability on those from Q3 into Q4 so the.
He says we've been seeing here in the back half are really largely paper driven with much of that also coming in Europe .
Driven by what you've seen is just as you said energy costs are up there. They are starting to come down for now depending on how you look at those projections some expectation depending on how the winter goes that those could come back up so they've come down recently very recently not sure how that will continue to play out. So our approach has been continuing to manage that through.
Pricing and productivity. So we did have sequential price benefit Q2 to Q3, continuing to increase prices here as you move through the back quarter as well so we'd expect more price in Q3 to Q4. So overall, we continue to see generally inflationary pressure driven by paper with some some relief on the petrochemical side at the same time, we do.
See even though utility costs or energy costs have come down a little bit now still a bit of a headwind as you move into next year for suppliers as well as our own operations not a big impact for own operations, but bigger for our supply base as well as just continued inflationary pressures in areas like wages that are a bit higher than what we normally would have seen from an inflation perspective. So.
Kind of a broad set of inflationary pressure still we think and we've continued to increase prices to manage that.
Our next question is from George Staphos with Bofa Securities. Please go ahead. Your line is open.
Hi, Thanks, very much hi, guys.
Doing well thanks for the details I want to come back to the question on IL and adoption. So.
You're obviously optimistic on the outlook youre, calling for 20% or better growth more than 200% growth looking out into the future. How do you think that evolves.
Varies if we are in a bit of a downturn in next year, partly as I would imagine some of your target customers return profiles on adoption in a trial.
Come down early on if there's less traffic to track through IL, how should we expect that do you expect to see better than 20% growth next year. Thank you.
We expect better than 20% growth in.
Various economic scenarios the benefits as we said are clear and there is a very quick payback coming from multitude of areas around increased revenue lift from an enhanced consumer experiences through productivity because of automation and just increased speeds and know that we expect that in a number of a number of scenarios.
And that's there's a lot of questions around where are we in the inventory cycle and so forth and we entered the year expecting that there was some excess inventory.
Scenario plans about how to manage through these various elements. We are not fazed by that we are as confident as ever about the long term prospects of the company continued to invest we've got great growth drivers such as intelligent labels. The addition of <unk> com.
Most of the company's focus within staples categories.
So, whereas a confident are ever going to continue to lean forward here and continue to deploy our scenario plans, depending on which economic environment. We're in.
And George I would also add this is John I would also add that.
As it relates to the various sub segments.
While apparel.
That has had significant growth we continue to see great growth prospects as we move forward not least because we're going to see new customers come onboard expansion into additional categories.
This expansion of new use cases, such as loss prevention. During next year, and then if you're looking food and logistics. Both of these segments are much much larger than apparel overall, and we're just starting to see the adoption profile there.
Specifically some of the solutions, we are bringing up.
We're starting to resume as an example in grocery product. We've run has really helped to drive significant initial results.
Store labor efficiency and freshness visibility across the supply chain.
And we remain confident in the outlook and we continue to invest both in innovation capability and capacity and we believe this business will be $1 billion business in 2023.
Our next question is from Josh Spector with UBS Securities. Please go ahead. Your line is open.
Yeah, Hi, Thanks for taking my question just curious if you could comment on the backlogs and I'll I'll, Jim by the region.
The backlog existing given the growth you saw in Europe . So I'm just curious it has a link there changed and have you seen any change in pricing behavior from our competitors as they are.
Material availability improves as well thanks.
Hi, just yet as we.
<unk>, we knew that there were excess inventories in the supply chain.
And as we have worked through our backlogs, we started to see supply chains more normalized particularly in Europe less so in North America with a material availability challenges and as those lead times normalized we starting to see softening in oil demands as inventories are corrected at our customers.
As it relates to your second question, we don't we're not going to comment on competitive activity suffice to say, we still see strong.
Growth and opportunity in the market as well as managing our pricing relative to our inflation that we continue to see as we move through Q4.
We have a question from Adam Josephson with Keybanc capital markets. Please go ahead. Your line is open.
Thanks, Good morning, everyone. Just a follow up on that when you talk about softening order patterns in October can you be any more specific in terms of region segment, and then is that because converters are reducing their label stock inventories is it because of end market demand thats weakening can you give me a little better sense.
Of what you think is the reason for those slowing order patterns.
Well.
Adam as I said I think there's two elements at play one is that as supply chain constraints abate.
<unk> tended to see some of the risk disappear and our converting customers are starting to normalize their inventories that they have which is then has an impact on some of our order patterns as we've gone through October it's it's not necessarily region specific it's more pronounced initially in Europe . Because this is where we've seen the biggest moderation.
In the supply chain volatility that we had.
And we've seen more normalized order some normalized lead times as we've gone to market during October .
It's important to look at so we expect October to come in where it is coming in.
The supply chain challenges in North America.
Even a month ago knew that it would basically be end of October when that would start to ease up a little bit.
Allow us to be able to get the product out the door.
It would be quite frankly, Europe came in stronger volumes than we had than we had anticipated in Q3, and so we think that was a little bit just pull forward from Q4 as far as a temporary inventory build on top of whatever was there. So theres been a lot of matters. When you look at growth and so forth.
Just because of comps around supply chain challenge over the last couple of years timing of price increases that would cause temporary pull forwards and so forth. That's why we go back and look at what's our compound annual growth rate been since pre pandemic levels.
And that's been 4% pretty consistently throughout the year here, where in past anticipating it again being.
At three 4% here in Q4, so that's that's really the thing to focus on overall volumes remain strong.
Look at it relative to GDP and consumption.
If I could just clarify one other point I think at a company level, and which I already talked about this a little bit but the bigger inventory drawdown is most likely on the apparel side. So dion talked a little bit about El Jim where we're seeing more of that of course as we talked about already is more on the apparel piece of the business.
We have a question from Mike <unk> with true Securities. Please go ahead. Your line is open.
Thanks, very much guys congrats on the quarter.
Last quarter you can.
<unk> benefited from portfolio shifts in Rbis, you called that out with high value segments, comprising about 50% or so.
Hoping less exposure, obviously as you noted to the value channel excuse me can you talk about plans to further increase the portfolio to higher value categories to minimize your exposure to this value channel.
Sure overall, that's a base premise of our overall strategy for first.
The first pillar of our strategy is to drive outsized growth in higher value segments, and we've talked about it over time about how the portfolio has been shifting as a company and as you called out specifically within Rbis is where you've seen it play out to the greatest extent because of the growth within intelligent labels significant organic growth as well as the acquisitions, we made there.
As well as the acquisitions, we've made around our best Com and other areas have been disproportionately weighted towards high value segments. So that's a direct result of the execution of our strategy and over time that we see that putting continuing to lift the average growth rate of the company and improving the margin profile, which is what we've seen over the last number of years.
And we have a question from George Staphos with Bofa Securities. Please go ahead. Your line is open.
Hi, Thanks, guys. Thanks for taking my follow on if I could I'll put two in here real quickly first of all Greg you gave us.
The potential headwind, if we mark to market for foreign exchange into next year could you remind us on financing what your fixed versus variable is and if we did a mark to market would there be much change in your interest outlook interest expense outlook for 'twenty three relative to what we've been seeing year to date and then could you just give us a quick update on how <unk> com is doing.
What are the pleasant surprises, whereas some things to work on thanks, very much guys and good luck in the quarter.
Yeah. Thanks, George So as you said currency right now if rates stay where they are now for next year, we'd have about a 50 cent headwind if that level is kind of stayed around the level. They are now we would see probably a five to 10 cent headwind as well just from the increase in interest cost as we head into next year. So those are a couple of specifics looking at next year I think year over year.
Here, we have a number of things like we talked about <unk> continuing to grow and that you mentioned that a few minutes ago as well as a key growth driver for us of course, so a number of ins and outs as we look at next year and the uncertainty of the macro but specifically five to 10, we would think interest headwind at current debt levels.
And George as regards best come we've been extremely pleased with the acquisition and divest com team joining David Denison family.
The business continues to grow and thrive.
And particularly the talent the talented team of risk on behalf of added enormously to the broader capability that Avery Dennison they have.
In particular, we're seeing a lot of collaboration between our best Com team and our identification solutions team is there is a strong overlap on solutions broader solutions that benefit some of our end retail markets like food and logistics and apparel as well and I'd also say George is the final point that wesco brings to the RBS portfolio, a balanced as well.
<unk> as.
Is it less cyclical.
And so it makes sure that the portfolio of our Rps stable becomes more resilient as we move forward as well through cycles.
Okay.
We have a question from Chris Capps with loop capital markets. Please go ahead your line's open.
Yes. Thank you and my question is focused on the <unk> segment I realize there is limited visibility into 'twenty three.
But there is a scenario where you could see continued inflation in paper and energy and then maybe more moderation in the Petro derived raw material costs. So just wondering what your thoughts are based on experience in prior cycles about the ability to keep pricing in excess of the raw material cost inflation.
As a means to improve margins in that segment and given all the cross currents should should we expect that mix would continue to be a positive contributor to LG Chem segment margins. Thank you very much.
Yeah, Chris So a couple of things there. So of course, we have gone through a lot of.
A lot of things we mentioned in the last couple of years. One is the unprecedented inflation, but also supply chain challenges at the same time and I think our teams have proven their resilience you've been able to manage through a number of those challenges like that and feeling well prepared for any type of downturn that we may see next year.
I think when you when you back up and looked at all Jim from a margin percentage perspective, certainly in the margin percentage has been impacted just by the magnitude of pricing we've been putting in we said, it's roughly 20% here in the third quarter versus last year on top of pricing we were putting in last year. So just the math on the margins has led to a margin percentage impact there, but when you look over.
<unk>, Jim I think you heard mentioned D. On both say about a 4% compound growth rate from 2019 to this year from a volume perspective at the same time, if you look at LTM EBITDA dollars. They were up in the 9% to 10% range compound growth range. When you look over that period. So that business has done a tremendous job really driving strong EBITDA growth over the last many years.
Despite the impacts on margin percentage from the pricing math.
And we know and we've talked about before that in LTE M.
We've got strong capital efficiency, there strong margins strong growth opportunities and that business generates significant EBITDA and we expect to be able to continue delivering sitting in for D var into the future there.
We have a question from John Mcnulty with BMO capital markets. Please go ahead. Your line is open.
Sorry, just one one I guess area of clarification around the raw materials in your outlook. So if I understood right. It sounds like pet chems are starting to come down may come down more.
<unk> supply chain issues seem to be improving.
But you guys are actually guiding to raw materials up sequentially do I have all that right is that right and is there something in terms of the timing of when you might see raw material relief that it lags a bit and it drags into say <unk> because it seems like the arrows are pointing favorably and yet your your arrow is pointing pointing negatively.
Yes. So you have those pieces right John I think the the paper inflation is really most recently largely driven by Europe and a lot of that's been driven by the energy cost inflation that we've seen over the last couple of quarters. We've talked a few minutes ago, Jeff said that energy prices have come down a little bit over the last week or so not sure how that will continue or how that will play out.
They depend on how the winter goes in Europe , and how that energy prices play out. So right now we expect some sequential inflation here in Q4, how that plays out going into the beginning of next year I think it'll be determined by largely by how those energy prices evolve over the next few months.
Yeah.
And Mr. <unk> there are no further questions at this time I will now turn the call back to you for any closing remarks.
Excellent well. Thank you everybody for joining the call today, we remain confident that the consistent execution of our strategies will enable us to continue to deliver superior long term value creation for all of our stakeholders I know theres a lot of questions about what's going on in the macro we're as confident as ever if you look at the performance of the company over the last number of years with compounding.
Crises.
<unk> been laying the foundation to continue to drive superior profitable growth.
Both in the near and long term. So we look forward to talking to you all again in the coming quarter.
That concludes our call for today, we thank you for your participation and ask you. Please disconnect your lines.
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