Q3 2023 Energizer Holdings Inc Earnings Call
Other factors that could cause actual results to differ materially from these statements are included in reports, we file with the SEC.
We also refer in our presentation to non-GAAP financial measures.
A reconciliation of non-GAAP financial measures to comparable GAAP financial measures is shown in our press release issued earlier today, which is available on our website.
Information concerning our categories in estimated market share discussed on let's call relates to the categories, where we compete and is based on Energizer is internal data.
Data from industry analysis, and estimates, we believe to be reasonable.
The battery category information includes both brick and mortar and e-commerce retail sales.
Unless otherwise noted all comments regarding the quarter and year pertained to energize, our fiscal year and all comparisons to prior year relate to the same period in fiscal 2022.
With that I would like to turn the call over to Mark.
Thank you John good morning.
Everyone and welcome to our third quarter earnings call.
There are three key messages I would like to reinforce in my remarks today.
First when we laid out our priorities for fiscal 'twenty, three we highlighted three strategic areas of focus.
The restoration of gross margin there.
The return to healthy free cash flow generation and reduction of debt.
Three quarters ended the year with solidly delivered against all three.
Second the demand environment has not progressed as we expected.
And while we are tempering, our topline outlook for the year, we are reaffirming our original ranges for both EPS and EBITDA.
At the lower end, which has been made possible by the terrific work from the organization to sustain the earnings power of our business.
And third we are making tremendous progress on our project momentum with the savings and cash flow generated in the first three quarters exceeding our expectations.
We have also identified a substantial pipeline of incremental initiatives, which will be executed over the next two years.
As a result, we are increasing our savings expectation by $50 million for a total program savings of $130 million to $150 million by the end of fiscal 2025.
Let's dig into the progress we have made.
Gross margin recovery has outpaced our expectations through the first three quarters of the year and we are on track to achieve a gross margin of approximately 40% in the fourth quarter, which would represent a full year improvement of nearly 200 basis points.
The over delivery in gross margin is primarily driven by project momentum, which we expect to deliver between $45 million to $50 million in savings and increase versus our previous forecast of $30 million to $40 million.
We are not yet back to pre pandemic levels, but we have come a long way this year and set ourselves up for further progress in 2024.
We have also generated free cash flow of over $260 million year to date, while absorbing the cash outlays required by project momentum.
And finally, we have paid down $200 billion of debt in the first three quarters and are on track to reduce leverage by over half a turn from our peak in fiscal 2022.
While we have made significant progress against many of our key objectives. This year has also presented us with challenges as consumers manage through the effects of high inflation rising interest rates and economic uncertainty.
Specifically in batteries consumers continue to prioritize the category, but after those critical needs such as food fuel and shelter.
While volumes continue to improve in the quarter. They did not recover as quickly as anticipated.
And value growth, which was largely driven by pricing has slowed as we lap those price increases.
Some of the factors, which have influenced the volumetric trends we've been seeing are as follows.
First a slowdown in the U S housing market driving lower foot traffic at retailers, who benefit from home sales, which is a key channel for batteries.
Second a shift in consumers' engagement with devices from both buying new and using existing devices to spending more time and dollars on experiences like travel.
And third consumers across all income groups changing their behavior to offset the reduced purchasing power, including reducing their household inventory, which is contributing to a 1% reduction in purchase frequency.
Our brands however have outperformed the category marked by continued global share growth in the latest three months.
Looking ahead, we expect category volumes to continue to improve with value more closely tracking volume as price increases are lapped.
In the most recent reporting cycle category volumes improved to low single digit growth in the U S.
Now turning to the auto category.
Our appearance Air Freshener and performance chemicals businesses, all performed in line with expectations.
Refrigerants, however were impacted by mild weather during the quarter across much of the United States.
Which created revenue headwinds.
We are seeing positive sales trends in July however, as the extreme heat across the country has stimulated consumer demands.
While weather has been a challenge to topline growth, we have made significant progress improving the profitability of our auto portfolio.
In the quarter, we improved segment profit by 270 basis points and year to date, we have grown segment profit by 55%.
This exceptional progress reflects a combination of focused cost measures sourcing event and input cost favorability.
We also continue to execute against our international growth plans, where we drove organic top line growth of more than 10% in the quarter.
Moving on to project momentum.
We have accelerated many of our plants and enacted new initiatives to counter the impact of the challenging demand environment.
To date project momentum has delivered $32 million in savings. The addition of a third year as well as the inclusion of more initiatives into the program will increase our savings range by $50 million to a $130 million to $150 million by the end of fiscal 2025.
These savings are independent of inflationary impacts.
The incremental savings reflect opportunities uncovered by the team since the inception of the program and reflect additional benefits from further optimizing our batteries network, including executing longer lead time initiatives that weren't possible in the two year program.
And ultimately create a network that will enable us to even more efficiently and effectively serve our customers and consumers.
The incremental opportunities also involves changes to our operating model to drive a step change in our cost structure all of which is enabled by digital transformation through the implementation of global standard processes and tools that allow us to streamline the organization reduce spans and layers to create a flatter or.
Agi organization.
Overall, roughly 60% of the program savings will be generated from operational and distribution network efficiencies.
One, 8% from procurement savings and 20% from SG&A improvements.
Consistent with our previous guidance, we expect 80% of the program savings will be delivered through gross margin with the balance to SG&A.
We are proud of the progress we have made on our strategic priorities to date encouraged by recent demand trends and very pleased with the early success of project momentum. This program should deliver significant savings over the next two years, which will help fuel our investments in sustainable growth and deliver long term shareholder value.
Now, let me turn the call over to John to provide additional details about our third quarter performance and balance of the year guidance.
Thanks, Mark and good morning, everyone I will provide a more detailed summary of the quarter and some additional color on the evolution of our outlook for the year.
For the quarter reported net sales were down three 9% with organic revenue down two 7%.
Lower volumes in batteries contributed about 600 basis points of the decline due to delayed volume recovery as macroeconomic headwinds and price increases negatively impacted the category.
Weaker performance during the quarter in non tracked channels as well as lower sales to device manufacturers as they delayed some new product launches in the quarter.
Although volumes were down roughly 300 basis points almost entirely due to lower refrigerant sales owing to cooler weather in the first two months of the quarter.
The negative volume impacts in both businesses were partially offset by 650 basis points of pricing in the quarter.
Adjusted gross margin was 38, 8% for the quarter, representing a sequential 90 basis point improvement over our second quarter performance.
As you will recall last year's third quarter input costs were favorably impacted by the building of excess inventories in a rising cost environment.
All of which substantially reversed in the subsequent quarter.
This year reflects a more normalized inventory level, resulting in more consistent gross margin performance and a 160 basis point decline in the third quarter versus the prior year.
As I'll note in a few minutes, we expect our margins to continue to sequentially improve with a meaningful increase in the fourth quarter relative to the same period last year.
Adjusted SG&A decreased $5 6 million.
Primarily driven by project momentum savings favorable currency and Comping, an elevated environmental charge in the prior year.
Partially offset by higher compensation expense and factoring fees tied to rising interest rates.
A&P as a percent of sales was five 4% consistent with our investment levels in the prior year.
Interest expense increased $1 $1 million year over year due to an increase in interest rates, partially offset by lower average debt outstanding.
We delivered adjusted EBITDA and adjusted earnings per share of $126 8 million and 54 per share.
On a currency neutral basis, adjusted EBITDA and adjusted earnings per share were $132 million and 58 per share respectively.
Through the first nine months of the year, we have generated $261 million of free cash flow or over 12% of net sales.
We achieved these excellent results by combining strong operating earnings with a nearly 200 basis points improvement in working capital since the start of the year.
We have also paid down $200 million of debt year to date and over $260 million over the last four quarters.
Our debt capital structure remains in great shape with a weighted average cost of debt of around four and three quarters percent and over 90% fixed with no meaningful maturities until 2027.
Now turning to our outlook.
As we entered the third quarter, we anticipated top line organic growth of 3% to 5% for the remainder of the year.
Actual performance in the quarter was below that level, primarily due to a slower than planned recovery in volumes in the battery category weaker.
Weaker refrigerant sales due to cooler weather in April and May and much lower sales in non tracked channels during the quarter.
As we start the fourth quarter, we have seen an acceleration in battery category performance and warmer weather in June and July and now expect organic revenue in the fourth quarter to partially recover to roughly flat year over year.
All in we are now calling for full year organic revenue to be down low single digits.
We also expect gross margins in the fourth quarter to be up 350 to 400 basis points as they meaningfully benefit from input cost tailwind, specifically freight and incremental project momentum savings driving significant gross margin expansion year over year.
We expect A&P spending in the fourth quarter to be slightly above prior year levels with our full year forecast of just below 5% of net sales.
We expect that SG&A in the fourth quarter will improve by roughly 100 basis points relative to the prior year due to continuing project momentum savings.
Fourth quarter interest expense is expected to be relatively flat to the prior year with higher interest rates being offset by lower average outstanding debt in the year.
And finally at current rates, we expect the currency impact on earnings to be slightly positive in the quarter.
2023 has presented many challenges, which our team has been able to meet throughout the year.
Recognizing we are still operating in a fluid environment, especially as it relates to the consumer we now expect to deliver adjusted EPS for the fourth quarter between $1 10, and $1 20 per share and adjusted EBITDA of 173 and $183 million.
Based on our outlook for the fourth quarter, we expect to deliver full year earnings at the low end of our previously communicated ranges.
We also remain on track to generate free cash flow at the high end of our long term target of 10% to 12% of net sales.
Now I would like to turn the call back over to Mark for closing remarks.
Thanks, John So the year has not progressed as expected the impressive work from the organization gives us confidence to deliver adjusted earnings per share and adjusted EBITDA at the low end of our original guidance.
I am proud of the progress we continue to make across our strategic priorities and remain confident that we are executing the right strategies to navigate the environment and deliver our long term objectives.
Thank you we will now begin the question answer session.
To ask a question you May press Star then one on your thoughts on phone.
Using a speakerphone please pick up your handset before pressing the keys.
Draw. Your question. Please press Star then two.
As a reminder, please limit yourself to one question and one follow up.
This time, we'll pause momentarily to assemble the roster.
First question will be from <unk> towards Securities. Please go ahead.
Hey, Thanks, Good morning, Good morning, Bill Hornbuckle.
As we talked about all of this journey.
Wanted to understand.
The battery volumes like why why why they took a dip this quarter, even just sequentially and I think you're kind of alluding to there were some elasticity, but it.
Didn't really understand why that was more so now than the prior couple of quarters and and what gives you confidence that yes.
You said, it's kind of stabilized.
<unk>.
That continues.
Just because we lap the price increase has taken a year ago.
Yes. Good question Bill I'll get started and I'll turn it over to John who can give a little bit of a year over year bridge.
The Q3, I definitely did not transpire as we expected.
There was also significant positives per quarter, but let me address your question first on top line the volume trends.
Are progressing from a trajectory standpoint, as we expected although it's at a slower pace, which was the reason for the call down on the top line in tracked channels volume trends remain negative remained negative longer than we expected. Although we have seen this turn positive. So that's a point for why we feel confident that we have.
Turning the corner on that if you look at the latest four week data that ended July 23rd it was up volume for 2%.
In untracked channels, which home center on hardware those have trailed track channels.
And that was also a drag on volume.
OEM customers that we have contracts with for new device launches have paused or delayed some of their launches, which had an impact on volume and then the final piece is refrigerants, which with the weather in May and June .
Was the volume drag on our business, but we've seen it pick back up in July as some of the record heat has hit across the U S.
As we take a step back I think with all of those factors. There's also a lot to be happy about this quarter and we don't want the top line to overshadowed I mean, one gross margin recovery ahead of schedule free cash flows at the high end of the range. We're on track to reduce leverage by half a turn ahead of schedule and we've been able to find $50 million of additional savings.
<unk> added that to momentum so certainly a challenging quarter from a top line perspective.
But we also feel like it validates a lot of what the work. The teams are doing to make sure that we put the business back in the shape to compete long term and deliver value. John you might talk Q3, yes, maybe just to put some numbers behind what you just said Marc the category volumes, improving but still negative that was a 270 basis point decline year over year the non <unk>.
Tracked channels issue was home hardware and certain club stores that was about 280 basis point drag.
The device manufacturers delaying or reducing orders in the quarter that hit us for about 150 basis points and then the cooler weather in April and May impacting refrigerant sales that was a 220 basis point.
Decline those were partially offset by still 650 basis points of pricing and then maybe just to give a little bit of color of what we're thinking for the fourth quarter. We originally thought mid single digit growth. We're now calling for flat top line in the fourth quarter, we're seeing that slower category recovery is probably 100 basis point drag from where we thought.
The non measured performance.
Issues in the U S is probably a 200 basis points.
Drag and then the.
Device manufacturers OEM sales is probably another 100 basis points.
And that will shift our full year view of the kind of from that.
Up low single digits to download or single digits for the full year and bill on the volume trends, we did post a slide today, which at least provides an illustration of the track channels, which you can reference which shows some of the progress that we're referencing as well.
Got it.
As a follow up.
Well I think on batteries in particular.
The Street worries.
We go back to the pre pandemic trends of kind of flat to no volume growth category.
And obviously these past few years.
So I mean everything for a loop and it's tough to forecast, but just trying to see anything you see make you make you change your kind of longer term outlook for battery volume growth.
Nothing has changed our long term view Bill I would say as we look at the battery category today. It is still larger than it was pre pandemic.
We have some data that shows it's about 1 billion cells larger globally than it was pre pandemic in the U S. It's continues to be larger so what we've said in the past as you.
And we're in the process of establishing that new base, which will be larger than pre pandemic and then youll grow off of that new base at the same level that what we call, which is sort of flat to low single digit growth going forward I do think we have worked our way through some some choppy waters as it relates to macro pressures.
Cautious consumers as well as all the pricing that both energizer as well as our CPG companies.
<unk> taken over the last 12 months to 18 months, we're working through that cycle I think we're about through it.
Okay, great. Thank you.
Thanks, Bill Thanks Bill.
Thank you. Our next question will be from Laura Lieberman with Barclays. Please go ahead.
Great. Thanks. Good morning, So first thing I, just sorry, I wanted to clarify you've given so much great detail, but on the non track channel shortfall was that destocking at these retailers in particular was their shelf space changes I was just curious a little bit more detail on the non tracked.
It is not reduced distribution it is simply.
Foot traffic in Pos, it's just lower sales in non tracked channels.
Okay, the overall channel and not necessarily an inventory dynamic at those retailers correct.
Okay.
Okay and then just following on that point do you have a sense of inventory levels with those retailers such that there is risk of.
Further.
Headwinds in Q4 or even into Q1 as inventory levels are in excess of what foot traffic wood with demand.
We've taken a look at inventory levels across both autos and batteries as we as we head into Q4 and on balance there.
A relatively normal position there are some retailers that are a little light and some that are a little heavy but specifically in non tracked channels. We don't have inventory concerns related to those.
Okay, Okay great.
And then just as we look forward and as you said the gross margin recovery is kind of coming through ahead of plan.
<unk>.
I just wanted to maybe step back and think about kind of structural gross margin and profitability to the business because of project momentum and so on and the cost savings that you are in the midst of Sue do you have any thoughts on kind of longer term.
Gross margin or even just overall margin profile for the business.
John Why don't you talk through sort of the Q4 gross margin improvement and what's driving that and then we can talk longer term.
Yes.
Well, let me, let me talk a little bit about the third quarter, where we are with what we delivered and then I think we can talk about where we think thats going even a little bit further out.
So when we're looking at the upcoming fourth quarter last year, we built.
Excess inventory in a rising cost environment I talked about that in a couple of minutes ago.
That really resulted in third quarter margin last year above 40% as we had some temporary benefit to the P&L as a lot of those costs got moved into inventory that came back in the fourth quarter, that's going to give us a pretty easy comp going into this fourth quarter I would say broadly where you start to look at our raw material input cost we've seen decent favorability across most of the.
Input complex and so spot prices as I look at the list of the key ones that come for us.
Mostly favorable over the last couple of months and we will start to see that come through our P&L really in the fourth quarter I think it will be the first time in a while that we've seen raw material input cost turn favorable overall.
We still are seeing some headwinds from higher labor and energy costs, but I think that we're getting into a pretty good spot here.
And then I think third is you talked about we've got momentum savings that we expected to contribute about 125 basis points. This year. So all of those together.
We think that the fourth quarter, we're going to be up $350 to 400 basis points, that's going to put us up for the year of 150 to 200 basis points, which is ahead of where we originally thought we'd be and as we look at the fourth quarter going into 'twenty for all of the key indicators would say that we've got good positive momentum going into next year to see continued improvement in that gross margin line.
And then Lauren I think long term the.
The number that we talk about and have circled is when we bought these businesses. The consolidated gross margin was 41 and a half that certainly the first milestone we want to make sure that we get back to longer term.
John and I, both have aspirations beyond that but Ivan.
We don't want to get too far ahead of ourselves, let's achieve that gross margin on a consolidated basis that was existed at their acquisition first and then go from there.
Okay. Thanks, I really appreciate that detail.
Thanks Lauren.
Yeah. Thank you.
Thank you. Our next question will be from Jason English Goldman Sachs. Please go ahead.
Hey, good morning folks.
Hey, Jason.
So one real quick tactical question.
Lauren asked about inventory situation. It sounds like you feel its clean, including a refrigerant switches, which is encouraging given the seasonality. There is the same true with OEM manufacturers are there any inventory inventory issues to be concerned with there.
No.
Okay.
And then if I'm looking at your battery sales and it looks like we're down now versus pre COVID-19 levels.
Which is on vault volume metrically, which is which is kind of shocking given what you've.
As discussed many times incremental devices in these homes.
Not to mention the internet of things, which you characterized as a bit of a secular trend for profit for our battery demand growth.
Those are clearly should've been tailwind that created more demand for batteries, yet battery volume is down so what's the offset.
Either has there been a reacceleration of the secular demand destruction within batteries and if so where are you seeing that weakness.
Jason that we may be looking at different data then it may be worth a longer conversation to understand what datasets. We're both using I mean I'm looking at data here just in North America that shows that volumetric, Italy. The battery category is up versus pre pandemic levels. How our data includes both the measured universe in the U S as well as Amazon, which.
Where <unk> seen growth in that channel as well. It does not include home center, but it does include <unk>.
Measured plus Amazon if yours does not include Amazon Youre missing a big piece of the component of growth that existed during that period of time, if you have Amazon in your numbers and maybe it's worth a longer conversation to understand where the disconnects may be but we are showing volumes both in the U S and globally higher than pre pandemic levels.
I'm just looking at your reported sales Youre battery sales were up 14, 5% versus 2019 same quarter, you've taken more than 14, 5% pricing, you're you're you're and you're telling me you grew share. So your global battery volume is down versus 2019.
Believe assuming you've taken more than 14%.
And you've said you'd grow share implicitly the category data you've reported that.
Well, if youre speaking specifically on quarter over quarter sales over a multi year period I would want to make sure. We went back and understood from a detailed level what was in and out of those quarters from a timing perspective.
So, let's make sure we follow up on that because.
At a broad level volume trends have held up nicely in the battery category in terms of the timing and sequence and cadence of our sales in a quarter over a four year period, I think we'd need to we need to dig into that further make sure we were comparing apples to apples.
Yeah. That's fair that's fair I think it can definitely be timing.
Quarter to quarter, Alright, well, let's take it afterwards, thank you I appreciate it I'll pass it on.
Yep, Thanks, Jamie Thanks, Jamie.
Thank you next question will be from Andre to share of Jpmorgan. Please go ahead.
Thank you good morning.
Thank you for the bridge that's Super helpful in terms of the revenue.
Sure.
Retracting on track, but also the volume side. So I was wondering as we we all ask about topline.
How youre seeing in terms of the.
While the consumer is doing at this point it doesn't look like you.
And SSL FCC.
But it seems that the consumer is taking inventory out of the pantry sovereigns I'm wondering if you can comment on that and how do you see.
That inventory shift or if youre seeing consumers more sensitive to your point of your prepared remarks that there.
Is it needs and then comes batteries.
Youre seeing them, making tough choices.
As it relates to their own.
And on choices there on the shelf like perhaps you know private label picking up we don't see the Amazon private label that much so.
Hi.
Challenging.
On the sell side to see what's the dynamic there, but if you can comment on on first that consumer behavior and then secondly.
Good morning.
Are your customers.
Sure Andre.
A lot of topics within that question, let me make sure I may give a shot of covering all of my first from a consumer standpoint, as we highlighted last quarter.
Consumers began to shop cautiously and we started to see their behavior shifts certainly their needs based food fuel shelter are going to come first in terms of the priority stack batteries is an essential product, but its beneath those areas and we did start to see consumers react to higher inflation macroeconomic uncertainty, we did see a particular blip in.
The April may timeframe as well.
But.
And what we're seeing in pharma, where consumers are doing differently. They are.
Using their devices less.
And then there are also leveraging their household inventory to buy batteries more judiciously. So there may be skipping a cycle they may be.
Engaging in other activities and they may be borrowing batteries from one device to another in order to delay battery purchases, we have seen that turnaround a little bit and we have seen trends improve as we mentioned in tracked channels. In particular, we're starting to see volume growth. So consumers are working their way through that.
It's tough to blame it on elasticity I would say our elasticity models have roughly held I would say the recovery has taken a little bit longer than we anticipated I am not sure I would attribute that to our elasticity or pricing as much as just the general environment that consumers are shopping and as well as the need to.
Absorb price increases which have occurred across the store.
So I would say we have.
We are very confident heading into Q4 in terms of the recovery is underway admittedly at a slower pace than we expected which is.
Why do we call it on the top line that we did but as it flows through the P&L. We continue to make progress in all the areas that we can control, which is why we were able to hold the earnings ranges.
Okay. Thank you.
Thanks Andrea.
Thank you next question from William Reuter of Bank of America. Please go ahead.
Good morning.
Just have two the first is you had alluded to the fact that we could see some tailwind from lower input costs in 2024, I know its early and as you are probably not going to want to say a lot but is there anything you can expand on that in terms of which.
Cost, specifically and will these be offset by other areas of inflation.
Bill there's puts and takes but we have seen a number of inputs on both the battery and the auto side come down so zinc has come down pretty significantly over the last couple of months, which will start to see flow through our our Cogs in.
In the fourth and first quarter next year.
Lithium has abated a little bit although that one moves around a lot we're still seeing the.
The gas that we use in the refrigerant at a pretty elevated level, but it has kind of stabilized.
We've seen some of the other like silicone has come back for us on the auto side jet fuel has come back to us. So those are coming not not all the way down to where they were pre pandemic, but have come off their highs a bit over the last couple of months. So that those are should be benefits to us.
Okay, and then given a little bit slower velocity.
At retail are you expecting any changes in your promotional activity either surrounding the holiday period. This year have you heard anything from your retail customers in terms of what they.
Our expectations or hopes.
Around how may be that promotional strategy will change.
I wouldn't expect a material change in our promotional strategy I mean, if you look at the latest 52 week data you are at roughly pre pandemic levels. If you look at the 13 week data youre actually below pre pandemic levels, we're going to do some shifting between A&P in trade spend.
You'll have some of that spend be closer to the consumer.
We're not interested in share promotion I think what we're focused on is keeping the consumer engaged in the category maintaining the premium end of the category make smart investments in any promotion that we do engage in while continuing to improve gross margin overall.
Great. That's all for me thank you.
Thanks Bill.
Thank you next question will be from <unk> Barclays. Please go ahead.
Hi, Good morning, I had two questions Mark.
Mark's.
Discretion on two of the three issues that kind of drove the volume weakness with home depot.
Home centers and pantry Destocking.
In the recovery that Youre seeing in the current quarter of the current fiscal fourth quarter.
That's sort of flip that you think are sending folks are back to normalized demand state.
What we're seeing the recovery that we're seeing is in track plus Amazon <unk>.
Amalgamation of those two channels in terms of home center and hardware, we would expect that recovery to lag just based on what we're seeing from a wholesale standpoint, yes.
We specifically said that was probably a 200 basis point drag in the fourth quarter and the non tracked channels.
Got it.
And the last one is sort of a longer term guidance no change from the expectation of your ability to sort of de lever by about half a turn a year going forward.
No that's still our expectations, we've made really good progress this year.
We saw a little bit of a blip as the earnings dropped in this quarter versus last year's third quarter, but with the recovery in the fourth quarter and continued debt paydown.
We would expect to end this year five five or below.
Great. Thank you very much.
Thanks.
Thank you again, if we have a question. Please press Star then one.
Next question will be from Carla Casella Jpmorgan. Please go ahead.
Hi, most of my questions have been answered, but just one clarification on when you talk to me about inventory at retail on the battery side.
Could you give us sense for inventory at retail how comfortable you are with it on the auto side.
Yeah, and if you can give us some detail by channel type of channel.
Well I mean, the <unk> mass and auto channels is really where you will speak to in terms of inventory and I believe our answer was meant to be sort of a consolidated inventory answer, but certainly it applies to auto care.
And we have slightly elevated or slightly lower.
Inventory levels, depending upon an individual retailer and an individual's subcategory, but on balance there are not inventory concerns that we have in that business.
Okay, great and the rest of my questions have been answered thanks.
Thanks Carla.
Thank you.
This concludes our question and answer session.
Okay.
Great.
Over to Mr. Mark <unk> for closing remarks. Please go ahead.
Okay.
Thanks for your time today and hope everyone has a great rest of the day.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.