Q4 2022 Arconic Corp (PITTSBURGH) Earnings Call
Okay.
And one of them.
Good day and welcome to the Arcana Corporation Q4, 2022 earnings Conference call. At this time, all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand the.
Conference over to your Speaker, Shane Rourke Investor Relations. Please go ahead.
Thank you Sherry good morning, and welcome to the iconic Corporation fourth quarter 2022 earnings Conference call I'm joined today by Tim Myers, Chief Executive Officer, and Eric Asleson, Executive Vice President and Chief Financial Officer.
After comments by Tim and Eric We will have a question and answer session.
For those of you who would like to follow along with the presentation slides are posted under the investors tab on our website.
I would like to remind you that today's discussion will contain forward looking statements relating to future events and expectations. You can find factors that may cause the company's actual results to differ materially from the projections presented in today's presentation and earnings press release in our most recent SEC filings. In addition, we've included some.
non-GAAP financial measures in our discussion reckon.
A reconciliation to the most directly comparable GAAP financial measures can be found in today's earnings press release and in the appendix in today's presentation.
With that I'd like to turn the call over to Tim.
Thank you Shane and good morning, everyone.
When I reflect on 2022, we accomplished a lot.
In the first half of the year, we were delivering record earnings and we were well on our way to completing our phase one ramp up.
In the second half of the year, we ran into some challenges.
Both our north American operations, and the economic conditions in Europe , but that did not stop us from continuing to improve our business in fact.
We closed the sale of our Russian operations and extracted significant cash in the midst of a very difficult situation.
We completed our reentry into the North American packaging market as we ramped up to can sheet to full production rates.
Extensive work to develop sustainability targets across key areas of our business, which I will share shortly.
And we took actions to address the operational issues that started in the middle of the year, which are now in our rearview mirror.
Additionally, we.
We did not waiver in our commitment to return capital to shareholders. As we completed our first share repurchase program and announced the second program $200 million.
In total we bought back approximately 10% of our original shares outstanding.
We remain confident in our strategy.
And going forward, we will continue to execute on high return low risk under the roof top organic investments.
However, given some of the challenges we had in the second half of last year.
The more uncertain economic environment and the announcements of additional capacity in our industry. We are re sequencing those projects to prioritize casting and recycling projects first.
We'll improve our cost profile prior to bringing any additional capacity to market.
Finally, the <unk>.
Right work, we've done since our inception.
US in position to deliver the highest free cash flow in our brief history in 2023.
Now moving to slide five I'll provide some detail on how we performed across our key markets.
So what should you take away here.
With the divestiture of our Russian operations, our exposure to packaging has decreased to 11% of sales.
That increases our relative exposure to higher margin ground transportation aerospace building and construction and industrial segments.
Next.
The aerospace packaging and building and construction markets continued to show strength with double digit year on year growth in the fourth quarter our.
Our industrial sales were adversely impacted by the operational challenges in North America and weak European market conditions, We've previously discussed.
Now, let's go down the list on the bottom right corner of the slide.
Total iconic organic revenue was up 2% over last year.
Ground transportation sales increased 1% organically from the fourth quarter of 2021 after growing 11% year on year in the third quarter in general.
Emotive demand was higher and more stable in the second half than the first as our customer supply chain stability continues to improve.
Sales in the packaging market were up 16% organically year on year as our Tennessee facility reached planned packaging production levels.
As a reminder, packaging organic revenue excludes the impact of Russian sales in both the 2021 and 2022 periods.
Following a 17% organic increase in the third quarter.
Fourth quarter building construction sales increased 12% organically year on year.
This is especially strong considering the weakness in our European building and construction sales, which make up about 30% of our sales in this segment.
Our fourth quarter sales in the industrial market declined 33% year on year. The key drivers were the production challenges in key North American facilities and weak sales in Europe down 40% year on year.
Demand and pricing in North American market remain attractive.
Finally fourth quarter aerospace sales were up 56% year on year on an organic basis.
The post pandemic ramp in aerospace continues and we expect momentum to carry through 2023.
I'll now hand, it over to Eric to discuss fourth quarter results in more detail.
Thanks, Jim I'll start on slide six with our fourth quarter financial highlights revenue was $1 9 billion up 2% organically year over year, we had a net loss in the fourth quarter of $273 million.
This included a 304 million loss related to the sale of our company's Russian operations adjust.
Adjusted EBITDA in the quarter was $154 million or $145 million adjusting for the Russia sale and this is at the center of expected range when accounting for the Russian divestiture.
On a comparable basis, adjusted EBIT was down 5% year over year and increased 18% sequentially.
For the full year of 2022, adjusted EBITDA, excluding Russian operations was $635 million.
<unk> was up 2% year over year.
Free cash flow for the quarter was $118 million.
Working capital release drove $76 million of the cash flow in the quarter and this was lower than we anticipated as lingering operation challenges drove yearend inventory the higher levels of implant.
In the fourth quarter, we repurchased two 1 million shares for $46 million under our new 200 million two year authorization that we announced in mid November .
Now, let's turn to slide seven and I will discuss our quarterly financial performance in more detail.
Revenue in the fourth quarter declined $196 million year over year, primarily due to the impact of the Russian divestiture, lower volume and mix and lower aluminum prices, partially offset by higher price realizations adjust.
Adjusted EBITDA in the quarter was $154 million.
Or $145 million, excluding Russian operations, and down 5% year over year on a comparable basis. This decline was primarily driven by cost inflation and weaker productivity, partially offset by part by better price realizations.
Our pricing actions offset inflation in the quarter, but operational challenges in North America resulted in productivity declines year over year.
We're seeing some relief in the European energy prices compared to prior expectations, but demand has been slow to recover in Europe as it works through the widespread economic uncertainty.
Turning to slide eight I will review our segment performance.
Starting with our rolled products segment.
Revenue in the fourth quarter was approximately $1 5 billion down 2% organically year over year.
Sales volume and net productivity were negatively impacted by the operational challenges in the quarter adjusted EBITDA in the quarter was $120 million down $42 million or 26% year over year.
As Tim mentioned, we have initiated a wide range of countermeasures and third party reviews to mitigate future operational risk.
Revenue in our building and construction segment in the fourth quarter was $304 million up $43 million year over year and up 18% organically adjusted EBITDA was $49 million up $16 million or 48% year over year as better price realizations continue to more than offset inflation and higher aluminum costs.
Revenue in our extrusion segment for the fourth quarter was $109 million up 31% organically year over year. Adjusted EBITA was a loss of $17 million versus a loss of $9 million last year.
<unk> actions and volume growth did not offset inflation and weak productivity facing this segment. We continue to take actions to address productivity productivity challenges and pursue pricing actions and we expect to see year over year improvement in 2023.
Now I'll turn the call back over to Tim to review our outlook by market on slide nine.
Thanks, Eric.
We continue.
We continue to expect to grow organic revenue in all five of our key markets in 2023 with aerospace leading the charge.
Ground transportation organic revenue is expected to be flat to up 5%.
North American light vehicle builds are projected to be up single digits and heavy duty truck and trailer production should be pretty flat year on year, but weakness in Europe offset some of the growth.
Inside of that our expected sales on fully electric and hybrid vehicles will grow globally to an estimated $400 million.
Up 50% year on year, following 75% growth in these applications in 2022.
Industrial organic revenue is expected to be flat to up 10%.
We're watching this market closely as north American demand will be more sensitive to recession than the other markets. We serve and we are already seeing significant impacts in Europe .
We told you about the production issues that reduced our industrial output in 2022, Dave.
They've all been resolved and Theyre behind US we are now working down the backlog that existed at year end.
Building and construction organic revenue is expected to be flat to up 5%, we have greater exposure to Europe and building construction than the company average so uncertainty there is more impactful to our 2023 outlook.
While the North American packaging market appears to be opening the year soft our organic revenue is going to grow 5% to 10% year on year.
Why.
Because its production driven.
We're getting a full year of the capacity we brought line online in Tennessee versus the ramp up we had in the first half of last year.
Finally, we continue to enjoy robust growth in the aerospace market is.
As Oems continue their post pandemic ramp up and consumer air traffic returns to pre pandemic levels. As a result, we expect another strong year with organic growth of 25% to 30%.
Let's switch gears on slide 10 for some updates on our ESG strategy.
Today, we are announcing four new 2030, ESG targets that align with our commitment to the UN sustainable development goals.
We are targeting a 30% reduction in scopes, one two and three greenhouse gas emission intensity by 2030 compared to our base year of 2021.
We've done a lot of work to ensure that this target is achievable, but the results are measurable and verifiable one.
One of the biggest levers we have to reduce emissions as continuing to increased scripts consumption, which is a major profit driver for our business and one of the primary value drivers for our phase II and phase III investments.
We aim to reduce energy consumption intensity by 10% by 2030 compared to 2021 levels.
We've identified a series of levers, we can pull to improve energy efficiency, which of course are also good for our bottom line.
When it comes to our workforce.
Targeting 35% of salaried positions to be held by women by 2030 compared to 31% in 2021.
We're very proud of our progress on driving diversity not only on gender, but in other areas such as ethnicity sexual orientation and age the diversity of thought drives better outcomes for our business and this target is one of many that helps us measure our progress on that front.
Last we aimed to have 80% of our high risk suppliers meet the requirements of our supply chain management program by 2030.
The program is designed to ensure that our suppliers that share the same values and standards of operations that we do our.
Our definition of high risk or suppliers that contributes significantly to our carbon footprint or.
Or operate in high risk countries and a relevant a relevant part of our annual by <unk>.
Collectively they represent roughly three quarters of our annual spend.
These targets are new but the mindset is not our goal. Our goal has always been to produce sustainable solutions for our customers and in partnership with our suppliers.
Now, let's move to slide 11.
Where I'll review our outlook for the rest of the year.
Looking ahead in 2023, we expect to grow adjusted EBITDA and free cash flow on a comparable basis year on year.
We continue to expect strong double digit growth in our North American earnings, which represents more than two thirds of our business.
However, we remain cautious on the economic challenges we face in Europe .
Revenue is expected to be in the range of eight to $8 5 billion.
We expect 2023 adjusted EBITDA to be in the range of $650 to $700 million. As a reminder, our 2022 results included $71 million from our Russian operations.
That had been sold or comparable adjusted EBIT result in 2022 is $635 million.
In the first quarter, we expect adjusted EBITDA, excluding Russian operations to be roughly flat sequentially due to weakness in Europe , and China offsetting improved operational performance in North America.
Our free cash flow outlook for the year is approximately $250 million.
This is a meaningful step up year on year year on year improvement is primarily driven by release releasing trapped working capital.
As we said last call we continue to evaluate the timing of growth projects to account for market conditions.
We have delayed the completion of our Lancaster Phase II project until early 2024.
We previously expected to take an outage in early 2023 and have the incremental capacity online by the middle of this year.
Pushing out the project to early next year allows us to rebuild the inventory necessary to support the outage and better time to launch with the annual contracting period in the industrial market.
The phase III and phase four investments we announced in June are under review as we evaluate the market outlook and weigh the benefits of reducing costs versus adding capacity.
The list of projects is still expected to generate high rates of return, but we are being very thoughtful about the timing and sequence given a range of internal and external factors.
In the meantime, we've increased our outlook for sustaining capital expenditures to approximately $175 million per year in light of the operational challenges. We experienced last year increased maintenance spend will help mitigate additional issues in the future. This.
This higher budget allows us to address aging control on electrical systems as well as upgrade shop floor ERP systems.
Investments will not only mitigate risk with moving forward. They will also support quicker decision, making and.
In smart manufacturing opportunities, we expect sustaining capital expenditures to be at these levels for the next few years.
And we have some late breaking news this morning to share on the Grenfell tower fire.
We learned just this morning of an update on the <unk> matter, which is the product liability case filed in the United States.
The Supreme Court announced this morning that it would not review the case.
That decision means that those U S litigation claims are now fully and finally dismissed.
You'll also note that our financial statements include an accounting charge and insurance receivable related to developments in the alternative dispute resolution process in the United Kingdom.
Due to the continent confidential nature of the process that resulted in the charge we are not in a position to comment beyond what is included in the 10-K.
Wrapping up there's a lot to be excited about in 2023.
All five of our markets. We serve remained solid in the face of global uncertainty.
Aluminum continues to win with customers and consumers.
We expect to grow adjusted EBITDA and free cash flow.
And the bottom line, we continue investing in our business and generating strong returns for our shareholders.
Thank you very much for your time today now I would like to open up the call for questions Cherie.
Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile the Q&A roster.
First question will come from the line of Timna Tanners with Wolfe Research. Your line is open.
Yeah, Hey, good morning, guys. Thanks for the detail.
Good morning, good morning.
I wanted to just start out by asking if you could detail a little bit more that you mentioned re frequency projects. So switching up your capex plans potentially.
One of the new entrance, who said that they can get to a $1000 profit per ton in the downstream aluminum plants.
Certainly hasnt been an operational yet pretty far out.
What kind of Delta do you think you can get and if you do focus on on the cost side a bit more and how.
How far along are you in making that decision just a little more color on the thinking about cost versus added capacity.
Sure Timna, let me.
Start from the beginning.
We were in I think good position to finish out the phase II project and Lancaster.
With the operational challenges that we had in the second half.
Depleted our inventory positions and we.
We have some backlog that we carried into this year.
To rebuild the inventory that we need to take the hot mill down again.
It was going to take us several quarters and it actually got to the point, where it looks like it could be an EBIT of negative events for the year because the length of the outage would offset the incremental growth that we got.
So we decided that it would be more prudent to do that next year. It also allows us to align with annual contracting period with large industrial customers, because it's sometimes hard for them to commit to ramping up in the middle of the year a lot of them are distributors back those contracts up with end market customers.
So that was the first I think major decision. The second one is if you go back to what.
What we announced in June .
<unk>.
We had I think.
The lion's share of the investment was going to go.
In the Lancaster and it was a combination of cash.
Casting and then another incremental step up in our hot mill capacity.
As we looked at that project more closely we had some other.
<unk> that we were looking at.
That were also casting and recycling related.
What we've decided to do is we have two relatively large casting projects instead of putting them Bolton Lancaster.
We're going to put one of them in Lancaster, which will be an extension to an existing building or an adjacent building.
And then we have the opportunity to.
Expand our casting capacity in Davenport, and Thats actually floor space that we have under an existing rooftop.
The reason, we like those projects and we're prioritizing them is.
We actually bought over a half a billion pounds of slab and get last year.
So these are simply supply chain cost out projects.
I haven't really contemplated what that means in terms of dollars per metric ton, but when you think about the significant savings will have versus paying billet premiums are ingot premiums out of 5 billion pounds.
The amount of debt that we offset with the casting projects.
And it allows us to consume more scrap both of which are significant.
Value streams for us so we're pulling those projects forward and then.
The what.
Which represent about half half of the EBIT uplift that we have in phase III.
And then the large project that would be left as the Lancaster Hot mill upgrade and we're going to push that one out to the end of our investment period.
Again, we will have a stronger post cost profile and Lancaster with the increased casting.
It's also going to be another significant outage and we certainly want to make sure. We derisk that project. So we don't have another experience like we had in Lancaster last year.
To help okay, yeah, no that helps us dig in a little more than that.
Just wanted to ask you about is obviously the huge spike in the Midwest premium over the last several weeks implications from that on your operations and is that already in your outlook.
So that is in our outlook in terms of.
<unk>.
Disturbing earnings we pass that through so it's part of our contracts in North America. In particular, it's widely accepted that the Midwest premium is a pass through.
Where it does have an impact on free cash flow.
But the $250 million.
In guidance.
Is roughly in line with the 3000.
Dollars, a metric ton, which is <unk> and Midwest included I think this morning, it was closer to 3100.
But very much in alignment with the guidance we're providing.
Okay. Thanks, and I guess, one final one for me I'll Handoff is on you mentioned some lingering impacts in the fourth quarter from.
Productivity challenges and issues I'm, just wondering if you could give us that we fully behind on those kinds of challenges there will some of that linger into the first half.
Yes, I would say that.
First of all Tennessee in Davenport recovered in the third quarter pretty much ran at.
Our expected rates through the fourth quarter.
<unk> catheter.
We didn't make it all the way back by the end of the fourth quarter.
I think in December we ran a little bit over 75% of our demonstrated capacity prior to that outage.
That's really the difference between the top of the range in the center of the range. We came in at the center.
I'd say that Lancaster was about $15 million less than we would've liked.
<unk> run the month of January at or above that pre outage level.
After the hot mill, So we're recovering.
Back filling inventory positions taken down backlog that we brought into the year.
So that'll have a little bit of absorption overhang in the <unk>.
<unk> 2022 pricing in industrial wasn't quite as good as 2023 sold Miss a little opportunity there but.
That overhang will be behind us before we exited the quarter.
And.
Right now our operations are running really well.
Okay, great. Thank you.
Thank you one moment for our next question.
And that will come from the line of Curt Woodworth with credit Suisse. Your line is open.
Yeah, Hey, thanks, good morning.
Good morning, good morning.
I was hoping you could maybe provide a little bit more.
Granular level of detail with respect to the guidance so.
We look at the pro forma EBIT.
EBITDA result for this year at $6 35, and then you outlined last quarter about $100 million.
<unk> related issues, so that would put you at like kind of a 735 base.
And then with respect to the phase two investment program you did I believe finished the costing for the Davenport and there I think there was some work done at the heartfelt Lancaster.
I know you outlined $75 million of uplift from those projects I assume youre, not maybe get all of that or parcel of that this year, but.
To me it seems like just the base business comp would be maybe $750 million of EBITDA and then the low end of the guide of 650.
So it seemed to insinuate either.
Much more negative price cost or.
Or are there things going on so I mean, maybe if you could the degree you can just help us walk through kind of the bridge in the PFS segment level outlook that would be helpful.
So let me let me touch on two big ones I think that you mentioned there. The first one is.
Phase II growth and what do we see flowing through.
So we brought up the casting capacity in the second half of last year, we got a full a full quarter of running that in the fourth quarter.
When we unpack the phase II growth initiative, we said it was <unk>.
<unk>.
Two thirds, one third between Davenport, and Lancaster with Lancaster being the more significant so if you think about.
<unk> bin.
Five or $6 million a quarter.
We got a quarter last year, so we're going to see a benefit this year.
Between 15 and $20 million of EBITDA.
The Lancaster project. The installation is put in in two phases and really the end game here is we want to increase the throughput on the hot mill by 15%. The first half of the installation, which we did last year really focused on improving throughput upstream.
Of the <unk>.
Hot mill.
Particularly the scalper.
And then we put the frame and the foundation for the four stand.
We can't really accelerate.
The.
Throughput on the Hot mill until we put the actual drives and motors and that's the part of the outage that we're going to do in 2024. So we're really not going to get a benefit for that part of the phase two this year.
And then I.
Think the big issue for Us is Europe .
Europe is almost offsetting the north American.
EBIT earnings growth that we're targeting.
If we look at.
I mentioned, the fourth quarter, we were down 40% year on year and demand in Europe , and we are seeing a similar comparable in the first quarter.
That takes our largest facility in in Europe . The one in Hungary to essentially breakeven we've got some headwinds in our building construction segment over there that I mentioned about 30% of our sales in this segment.
So we are seeing is a significant decline in.
Europe , and we're right now projecting that that's going to continue on because we haven't seen any significant change in order behavior.
So that could be upside to the outlook that we're providing but at this point until we see it.
We're not going to forecast it and then China opened up a little soft year on year.
It's still too early to say, whether thats endemic we've definitely seen more pressure on domestic pricing in China.
If you think back to last year.
During the Chinese new year, they were locked down during COVID-19.
So I'm, hoping that part of it is just the comparable that we're seeing in January in order activity because people were away from.
The businesses and we will see that restore but right now China is also a little bit soft for us. So those are the big offsets.
Versus the growth that we're seeing in our North American assets.
Okay, and then with respect to the P&C business can you just kind of talk to the backlog strength. There and then it seems like the business are performing extremely well from an EBITDA perspective.
So pricing obviously, so instead of at least North America. So maybe just talk to your expectations for that business. This year and then is there any update on some of the strategic.
Options you are evaluating for that business. Thank you.
So I would say that.
That business continues to perform well.
70% of the sales are in North America, but I would say that the North American region is also more profitable because we have a.
Larger footprint here.
The <unk> brand is well well well established in North America over a century old and so.
We're continuing to enjoy.
Good conditions with our systems business here in North America.
We've continued to be able to pass through inflation.
Our order book looks good I think I've shared in the past its a project by project business and it also has an in and out element to it.
So you can always feel good about two quarters out right now I feel good about two quarters out we got to keep an eye on what happens with the U S economy to see if that changes.
As I mentioned earlier Europe is not really contributing strongly to BCS performance and then part of that business is a products business.
It's basically a coil coating business in Europe , and then here.
We make ACM.
Which is also coated product that that business is a little soft right now very similar to a particularly I'm talking about in Europe very similar to what we're seeing in the rolling business. The coil coating business for us in Europe is very soft right now.
In regards to strategic alternatives.
That business continues to perform well.
We haven't changed our view of strategic alternatives, but I also don't think we've changed our view on the capital markets.
So we're continuing to enjoy strong performance in BCS.
Right now I feel pretty good about it.
Okay, great. Thanks, a lot guys.
Thank you one moment our next question.
And that will come from the line of Corinne Blanchard with Deutsche Bank. Your line is open.
Hey, good morning, Tim and Eric.
Two questions from my side. The first one can you we have followed from your peers.
But.
The Bavarian segment, then Ken this token operating and Nike Anthony for the next few months. So just trying to understand what's your view there.
And then the second question might be more for Eric, but I noticed the copyright adjustments Roswell EBIT no money has been negative and I think this quarter you had a positive so trying to think about.
What the rationale was there and how to think about it going forward this year.
Perfect.
Corey Thanks for the questions I'll take the can sheet question and Eric can cover the adjusted corporate adjustment.
From a can sheet perspective.
First of all we've got relatively small exposure there I mean, I think about 4% of the North American market, if I recall.
We secured that across fixed customers and.
Each of those contracts has min Max requirements.
So we have seen on some of our customers pulling at the men in the first quarter.
I've read in fact, I saw last week that <unk>.
Published something that the can sheet market was down 10%, we're not seeing that.
If I look at our first quarter.
I would say that we're probably off about a little less than 5%.
Versus a straight line. If you think 300 million pound 75 million pounds of quarter I think we're right now looking at being about 4 million pounds below that this quarter.
So I think were somewhat isolated from it just by the nature of our contracts.
And as I said earlier the growth that we'll see this year as we were ramping up in the first and second quarter. So we're already ramped up to that rate and running at that rate.
First half of this year, so we should see incremental growth year on year.
Current as it relates to where corporate two items to point out one would be start youll see it in the appendix pages on the walk of EBIT adjusted Ebitdas stock based compensation expense.
Which will fall out, but we did true up the performance share adjustment in the quarter and so youll see.
That impact on a run rate and then due to our operating performance. We did have a drop of incentives.
In the quarter, which created favorable adjustments to quicker.
Alright, Thank you for all that color.
Thank you one moment for our next question.
We will come from the line of Emily Chang with Goldman Sachs. Your line is open.
Good morning, Tim and Eric My question is just around perhaps if you could help us with the EBITDA bridge through to 2020 Paul.
You did mention I think in your remarks that if you want to take down the line caster now during 2023 that could've been a negative EBITDA outcome for that outage, but.
When you look at that being pushed into 2020, Paul any comments that you think that around Scott.
That would still be a negative EBITDA impact and what the bridge from 'twenty three to 'twenty Falcon Brook like as Paul Thank you.
I think the simple answer is if we execute well that should be a $50 million uplift next year.
And assuming that we can get all the inventory in place what we typically do.
He is.
We've got more capacity downstream in the hot mill and Lancaster, the Cold Mills can outrun the hot mill and so what we do is we try and build the.
Inventory from Lancaster, and some our other plants in the network. So that we would have that inventory pre packed and then.
Yes, we would.
Be able to ship right through it so to speak so.
If the plants operate the way, they're supposed to I would expect to get the uplift for phase.
For phase two in Lancaster next year.
Understood and then just sort of confirm the comment you made that with more to do with some of the inventory build that would have had to be done.
Thus as what you'd be pulling out throughout the course of 'twenty three in preparation for the outage in 2020 Paul.
Exactly so what you have embedded in our forecast. This year is that we will be building some inventory.
And it's a sizable amount of inventory think 50 million pounds.
That could have been revenue bearing.
Right. So we won't have to replicate that next year. That's why I think we will get the full benefit on the other big question, Mark obviously for 2020 for us.
How does Europe recover.
Because right now we're forecasting that to be a significant headwind in 2023.
Understood that's very clear thank you.
Thank you all for participating in today's question and answer session I would now like to turn the call back over to Mr. Tim Myers for any closing remarks.
Thank you Sherry.
I think simply in closing we're excited about 2023 and the opportunities that we have to grow earnings.
<unk> continued to generate strong returns for our shareholders.
Look forward to giving you an up another update next quarter and thanks again for joining us.
Thank you all for participating. This concludes today's program you may now disconnect.
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