Q2 2023 Coca-Cola Europacific Partners PLC Earnings Call
Okay.
Yeah.
Hello, and thank you for sending by and welcome to today's Coca Cola European Partners H, One 'twenty two 'twenty three resort and proposed joint acquisition of C. C. P. P. I conference call. At this time all participants are in a listen only mode. After the Speakers' remarks, there'll be a question and answer session.
To ask a question during the session you will need to press star one on your telephone I must advise you that this conference call is being recorded today I would now like to turn the conference over to Vice President of Investor Relations and corporate strategy. Sarah Willett. Please go ahead, sorry, Rob.
Thank you all for joining us today I'm here in Manila, with Damian Gammell, I'll say, a niche M. D. C. S. I before we begin with our opening remarks reminds you of our cautionary statements of cool cool.
Forward looking management comments and other statements, reflecting our outlook.
These comments should be considered in conjunction with the cautionary language contained today as well as the detailed cautionary statements found in reports filed with the U K U S Dutch and Spanish real harsh eight copies.
A copy of this information is available on our website at Www Dot Icarly E P Dot com.
Having remarks will be made my Damian Nik and accompanied by a slide deck. We will then turn the call over to your questions unless otherwise stated metrics presented today will be on a comparable and FX neutral basis throughout.
Following the call a full transcript will be made available as soon as possible on our website I will now turn the call over to our CEO Damian.
Thank you Sarah and good morning, good afternoon, and good evening everybody from Manila.
Thank you for joining us today.
Before we get into the detail of today's announcements I just wanted to take a moment to stand back and reflect.
We continue to execute our clear strategy, we have an unwavering commitment to stakeholder value creation.
Our retail customers continue to sharing our success since 2017.
We've created more value for them than any of our peers.
And indeed, our <unk> speaks for itself.
We've had a fantastic first half driving an impressive upgrade to full year guidance <unk>.
Supported by unparalleled in market execution.
Further geographic diversification is reinforced today.
With our proposed unexciting acquisition of Coca Cola beverages, Philippines, which will also which will also support our transformation journey in Indonesia.
We're also clear in the strategic choices, we make from simplifying our portfolio to driving a more efficient business, while investing for the long term.
Always aligned with the Coca Cola company.
All our brand partners.
So now to the agenda, let's start with our strong first half.
Before I begin I would like to take this opportunity to thank all of my great colleagues at CCP for the hard work commitment and dedication to our customers onto our business.
I am very pleased with our financial performance, achieving double digit top and bottom line growth.
These share gains unimpressive free cash flow generation.
Topline growth was price mix led but importantly, also supported by solid volume growth.
In addition, we grew transactions ahead of volume in Europe , Australia, and New Zealand.
This collectively has enabled us to raise our full year guidance today, which Nick will cover in more detail shortly.
And we have continued to invest in the business for growth across our portfolio digital supply chain sustainability and of course in a highly engaged people.
We are focused on great people, great service, great beverages, all of them sustainably for a better shared future.
I'll touch on each of these areas as we take a brief look back at the first half.
Starting with great people, whose wellbeing and safety continues to be our number one priority at CCP.
I am extremely pleased that even more of our colleagues participated in our global engagement survey. This year, we achieved an excellent score.
<unk> comfortably ahead of industry benchmark group.
We continue to be externally recognized as being a great place to work.
We are committed to building, an even more inclusive and diverse culture, we celebrated a number of key events across our business, including Pride International Women's day, and we support the Special Olympics with our colleagues from the Coca Cola Company.
Great service will always be a key priority at CCP as we strive to make it even easier for our customers to do business with US we continue.
To invest in our supply chain like the new state of the art <unk> lines, we recently installed in Australia, and Norway on our new PT line in Iceland.
Our journey to be the world's most digitized Butler's continues as we invest in a broader digital capabilities and.
In fact, our <unk> portal <unk> dot com celebrated its fifth birthday last week and through ongoing investment. We are on track to have over 200000 customers generating an impressive 2 billion of revenue through the platform in Europe alone.
Most importantly, our customers continue to share and support our success.
As we once again created more value in the retail channel for our customers within FMC G in Europe .
And within any RTD in Australia, and New Zealand and our peers.
Activation both in store and online is key to our success.
We picked up some great plans for the summer and we have some really exciting plans for the FIFA Women's World Cup.
Louise and of course Christmas Nicole.
And finally, our great beverages.
We are extremely privileged to make move and sell some of the world's most loved brands.
We continue to invest and innovate to make them even better.
To appeal to even more consumers in.
In fact in Europe over 75% of households purchased from our <unk>.
Portfolio.
50 basis points versus last year.
Coca Cola zero Sugar continues to be a great example of successful innovation achieve.
Achieving good share and volume growth across all key markets with volume of five 5% in the first half as consumer trends for loan low calorie beverages continue.
And energy months' or continue to gain share through innovation.
With even more flavors in the juice and ultra ranges and supported by some great celebrity collaborations.
We also expanded our footprint in the alcoholic ready to drink category with an encouraging start for Jack and Coke.
So now moving on to two strategic choices, we've made in our beverage portfolio.
Our partnerships as we strive to further simplify to grow our business profitably.
We believe these choices are right for the long term success of our business, enabling a greater focus on our priority categories.
In this vein in Australia, and New Zealand, we will maximize our extensive knowledge in the RTD category by launching new scalable offerings aligned with the Coca Cola company.
The category is highly attractive.
One in which we are well positioned for a great future, having recently become the market leader with over 16 years experience.
It is of course complementary to our core business from a manufacturing sales and distribution perspective.
In this context, our partnership with beam Suntory will come to an end in the second half of 2025.
And in Europe , our partnership with Capri Sun will come to an end during the full year 'twenty four.
As you see here neither of these choices will have a significant impact to CCP.
Importantly, we continue to make great progress on our sustainability journey.
We remain focused on our packaging commitments and reaching our ultimate goal of using 100% recycled.
Renewable plastics in Europe and API.
We recently introduced 100% recycled bottles in Indonesia and.
And in Australia, and New Zealand, and Indonesia, we move sprite, the Trier bottles, making them easier to recycle so now in line with our European markets.
We continue to invest in sustainability focused technology to our CCP ventures, and we are proud to be part of the recently announced Coca Cola system sustainable venture.
Unimportant Lee we continue to be recognized externally. So all in all great progress for the first half.
I'd like to turn now to our first half performance highlights.
As I mentioned earlier, we are very pleased with our topline performance.
Solid underlying demand in the developed markets. The continued recovery of the away from home.
Panel in the first quarter and resilient trading in the home channel helped drive volume growth of 1%.
I am, particularly pleased with the volume growth in Europe .
In light of the headline pricing demonstrating consumers love our brands.
Execution.
All of our dynamic pricing strategies across our markets drove solid revenue per case growth of 10%.
Our headline pricing remains ahead of pre pandemic levels.
Put below realized cost inflation reflected in our margins as we continues continue to prioritize relevance and affordability.
We gained value share both in store and online within the RTD.
Also continued to win with our customers remaining focused on delivering fantastic activation.
It even easier to do business with us.
Our continued focus on efficiency as we close out our full year 'twenty one to 'twenty three programs together with strong topline growth drove strong operating profit growth.
13%.
This supported impressive free cash flow generation of 850 million euros.
And as I said, just now we have today upgraded our full year guidance.
I would now like to hand over to Nick to talk in more detail to the financials.
Thank you Damian and thank you all for joining US today, let me start by taking you through our financial summary.
So we delivered total revenue of 9 billion euros and increase of 10, 5%, which I'll come back to shortly while our cost of sales per unit case increased by 9%.
As communicated previously we anticipated the cost of sales per unit case increased to be weighted more towards the first half given the comparables from last year.
We delivered comparable operating profit of $1 2 billion up 13%.
This reflects our strong topline performance as well as the benefits of our continued focus on efficiencies and discretionary spend.
All investor resulted in comparable diluted earnings per share of one euro and <unk> 85.
Up 17%.
Free cash flow generation continues to be a core priority and we delivered an impressive 850 million euros during the first half.
And finally on shareholder returns, we paid our first half interim dividend per share of <unk> 67 year event, which we declared in the first quarter and paid out in May.
As a reminder, this was calculated as 40% of the full year 2022 dividends.
So if you now turn to our revenue highlights as we anticipated the strong growth in our top line was driven by an increase in revenue per unit case and good underlying volume demand in our developed market with overall reported volumes up 1%, despite lapping strong comparables and of course our.
Strategic portfolio alignment choices, primarily in Indonesia, but also the exit of bulk water and frozen in Australia.
In Europe trading momentum continued in the away from home channel with volumes up 4%.
In the first half lapping 38% growth last year and.
And very importantly, this is up two 5% versus 2019 levels.
The home channel continued to remain resilient growing one 5% lapping strong growth of 4% last year for the same period.
While oil markets when volume growth, France outperformed delivering high single digit volume growth and Germany delivered mid single digit volume growth.
In API very good trading momentum in Australia, and New Zealand was offset by Indonesia with volume down five 5% as I explained the SKU rationalization was the main driver of this and excluding these one off volumes and API would've been down one 5% more importantly, when you.
Both look at Australia, and New Zealand and you back out some of these choices in Australia, Australia was up 3% on a volume basis, and New Zealand and the Pacific Islands were up three 5%. So as Damian said, we're really pleased with the underlying strong volume momentum despite.
What we continue to have to manage through in terms of the pricing environment.
In Indonesia, we did see some solid and encouraging growth in our affordable packs.
Consumer spending in Indonesia, as a result of the macro softness we referred to in our Q1 trading update is really what contributed.
Moving to the revenue per unit case, which grew by 10% in the first half. This reflects positive headline price continued focus on promotional optimization and revenue growth management initiatives Encouragingly, we continue to be relevant to our consumers and shoppers and continue to leverage our broad path.
This architecture that we have continued to develop over the years.
Revenue by segment is also referred to here with more detailed commentary by geography in the release.
Now to our upgraded guidance for full year, 2023, which reflects our current view of market conditions.
Starting with the top line, we now anticipate revenue growth of 8% to 9% an increase from 6% to 8% driven by solid underlying demand in first half.
And the implementation of our price increases.
As far our previous guidance top line growth will be mainly price mix led but as I said the volume performance supporting that has been very impressive.
We do have Germany, and Netherlands due to be implemented in the third quarter in terms of pricing, but that combined with the annualized impact of last year's second round of pricing, we would expect some moderation in our revenue per case in the second half.
Promotional efficiency of course remains a top priority for us our consumer centric approach has a clear focus on maintaining affordability and relevant.
For example in France, we are already committed to an additional three months of promotional activity on Coke zero sugar and are continuing to look at opportunities across other markets as well.
As always we continue to manage the business for the longer term with the overall realized pricing still tracking below inflation as reflected in our margin clear.
Clearly, we remain focused on improving our margins over the midterm.
The <unk> category has remained resilient to date demonstrated by the value growth in all of our market.
And with our ongoing investments in innovation and our great brands. We believe we can at least maintain or grow our share in this robust category.
We continue to see a dynamic external environment with consumers increasingly being cost conscious.
With this in mind, we continue to leverage our recommended price pack architecture to address different consumer needs.
Ross the spectrum of affordability and premium amortization.
From a cost perspective, we now expect commodity inflation of around 8% previously, 10% driven by lower gas and power and recycled plastic pricing.
We are now over 95% hedged on our commodity exposure for this financial year.
We still anticipate an increase of around 8% on a cogs per unit case.
While we will benefit from slightly more favorable commodity pricing this will be offset by upward pressure through the concentrate line as a result of strong revenue per case and strong mix as well as the geographic mix.
As a reminder, concentrate accounts for approximately 45% of our cost of goods.
And as we look out further we continue to build covert and we're now over 65% hedged for 2024 and around 30% hedged for 2025.
We will update of course more in due course.
Given our improved top line outlook and our continued focus on Opex management, we will now look to deliver operating profit growth of 12%, 13% an increase from 6% to 7%.
From a phasing perspective, we now anticipate operating profit growth to be more evenly phased across the first and second half of the year.
Our updated guidance today implies that we expect to improve our full year operating margin by 40 to 50 basis points, a focus area for us as I said earlier.
Please note that these growth rates continue to be provided on an FX neutral basis, and whilst it's too early to provide finite FX guidance for modeling purposes. We continue to expect to see a translational headwinds of approximately 200 basis points for the year based on current rates.
As Bob treated previous guidance, we anticipated an upward trend on our effective tax rate driven by the known tax rate increases such as the recent UK tax rate increase we now expect our full year comparable ETR to be around 24%, implying a higher ETR in the second half. This is primarily due.
Due to the timing of the UK statutory rate increase which only came into effect April of this year and of course as well lower reversals of unrealized tax position.
And finally, we now expect to deliver free cash flow of at least $1 7 billion euros increased from around $1 6 billion euros.
With that I'm going to hand back to Damian to talk about the transaction.
Thank you Nick So now turning to the proposed acquisition of Coca Cola beverages, Philippines.
A great next step for CCP, and an exciting opportunity for two great partners to come together and unlock even more potential in what is already a successful unprofitable business and a great market.
So just over two years ago on from the acquisition of Coca Cola Amatil.
This will be a great next step for us as we further expand our geographic footprint in the region.
The strategic rationale behind this proposed transaction is compelling.
It would underpin our ambitious midterm objectives.
And will solidify our position not only as a largest coca Cola bottlers globally by revenue, but also by volume.
We have been reviewing the potential transaction and have invested significant time understanding the Philippines business.
And the attractive market in which it operates are put simply we are really excited by the journey ahead.
Further diversification into an exciting part of the world with a strong local partner who shares our passion and focus on people and culture innovation and doing business sustainably we've.
We've talked before to the meaningful benefits of scaling knowledge best practice of talent across the CCP family.
As we extend to 30 markets. This would naturally amplify our ability to go even further together.
And by adding the second most populous market in southeast Asia, alongside our presence in the first.
We would not only significant increase our consumer reach and a successful and growing market would also further we will also further support our transformation journey in Indonesia.
Where we see a strong opportunity to share learnings.
We believe this will in turn create value for all our stakeholders and of course further solidify.
Already strongly aligned relationship with the Coca Cola company.
As I mentioned earlier, the Philippines operates in a large and attractive <unk> RTD category.
Currently valued at around $8 billion, which would therefore take ccp's addressable market in euros to around $140 billion.
The category is fast growing estimated at around 10% per annum in value terms. So well ahead of CCP current group average of 3% to 4%.
Within DNA RTD category, sparkling as well established representing around 55% of volume.
With per caps over four times higher than the average for Asia Pacific.
Theres still remains attractive headroom for growth when compared to other markets, where the category has a rich history and a longstanding relevance to consumers.
And with consumer trends following their direction and future growth opportunities with them too low and no sugar energy and alcohol.
So lots to shoot for and leverage from the rest of the group.
It is also a market that comes with attractive macros. The Philippines is a 13th largest country globally with solid GDP and population growth and a fast growing middle class.
All metrics that are clearly ahead of Europe .
So all in all across the fundamentals on the category opportunities ahead of US this would be a great 30th market to be adding to the CCP facility.
Moving now to look at the Philippines business.
It is the number one beverage supplier currently accounting for over 40% of the any RTD category.
And nearly 70% of the sparkling category.
The business serves around 1 million outlets through an extensive supply chain.
<unk> 9000 highly engaged colleagues.
Known as the Coca Cola Tigers.
Like <unk> Zealand recently in CCP, the Philippines won the prestigious Coca Cola system come to cope best Butler in 2019.
And the Coca Cola brand has a low 111 year history in the Philippines.
It was in fact, the first market outside of the Americas, where our great brands were introduced.
As an established business with a proven track record the Philippines has delivered solid top and bottom line growth.
Last year, the business delivered around 650 million unit cases, which would double the size of our API business.
It's also generated around $1 $7 billion of revenue and $90 million of profit before tax.
So already a business with attractive profitability and scale.
Unlike CCP and avoids the Philippines alone has a strong focus on people and sustainability.
For example around 50% of our sparkling volume is already sold and returnable glass packaging.
So two people the CCP family.
Would be set to grow by around 9000 colleagues to 42000.
Our people will have even more opportunity to grow and develop as we create a more diverse and inclusive culture.
Tour legacy as I'm confident you would agree we have a strong track record of integrating and driving value creation.
As I mentioned, just now we could not only benefit from combining our talent tools and sharing learnings and best practices, including our partners are voids.
These will be in areas such as by no means exclusively digital technology procurement and sustainability.
This transaction would be expected to support our transformation journey in Indonesia.
Were there any RTD category is less developed at around 10%.
Now I'd like to hand back to Nick to talk to the proposed transaction under Goldman's arrangements Nick.
Thanks Damian.
So the proposal is for <unk> to acquire 60% of Cc BPI with an enterprise value of around one 8 billion.
Our business with very attractive profitability and growth prospects as Damian has just talked to.
<unk> will be acquiring a majority stake the business is expected to be consolidated into our results from an accounting perspective with the voices minority stake recognized as a noncontrolling interest.
From a financing perspective, the transaction would be primarily funded by existing liquidity with a modest incremental borrowing that we would look to access from the public debt market.
Given our strong and flexible balance sheet together with our solid free cash flow generation. The transaction would only have a modest impact on our leverage position we.
We had previously guided to return to the top end of our net debt to adjusted EBITDA range of two five to three times by the end of 2023. This would now instead, we expect it to be achieved during 2024.
The transaction would be immediately EPS accretive and by working together with the voices and the Coca Cola company, we would be able to unlock even more potential for the Philippines. So clearly a great use of our cash and a great deal for our shareholders.
Moving now to avoid a family one of the leading conglomerates in southeast Asia as EV avoided equity ventures is a publicly listed company and brings over 100 years of experience across multiple sectors, including food power banking.
Infrastructure construction and land and data science.
Our voices is considerably considerable experience after market and cultural dynamics together with a strong local connections and proven partnership experience working with multinationals like the CEB would no doubt be invaluable to us.
Bringing this together with Tcp's proven track record as one of the worlds largest consumer goods companies with deep buttoning expertise. We believe this will be a very very powerful combination.
By working together our voices in CCP would therefore be unable to unlock even more potential for the Philippines business.
And similar to CCP voices have a clear long term investment mindset with a large family ownership. So all in all a very complementary partner.
Of course this is endorsed by the Coca Cola Company and we are tremendously excited to be working with the voices family.
Now before finishing with the next steps a few comments on governance and how we would work with the Avoiders.
Thank you Sir.
It up.
A strong governance framework would be put into place the local board of directors, which consists of five members three appointed by CCP, including the chair.
Two other directors would be appointed by our voices.
CCP would also point to CEO the highly regarded general manager Gara Lagoon would continue and growth supported by a strong local leadership team.
As expected, although both TCP and the voices are committed to this transaction and the partnership for the long term and exit mechanism has been agreed in advance should the need arise.
Subject to redefine initial lockup period.
The Philippines would naturally be incorporated into <unk> existing API business unit led by Peter West.
Peter recently stepped away from the running of the Australia business day to day, enabling him to spend more time across API, including the Philippines. Once this potential transaction closes.
And I think we have a strong focus both to support the Indonesia transformation and being across some great learnings as Damian referred to earlier.
So finally to next steps the proposed transaction is subject to satisfactory completion of customary due diligence.
By both <unk> and <unk>.
The voyage group, which is well underway today and all parties, obviously, then concluding definitive agreements and the receipt of the requisite regulatory approvals. Therefore.
Therefore, there is no certainty at this stage that the acquisition of <unk> will be entered into or completed so as it stands the potential transaction if entered into would be expected to close around the end of the year.
We will of course update you on our progress here in more detail during the course of the next months and with that I'm going to hand back to Damian for some closing remarks.
Thank you Nick.
We remain very focused on.
Delivering a very successful rest.
Rest of year at CCT, we have a lot to look forward to in the second half of the year and beyond.
With some great activation plans on an exciting innovation pipeline some of which you can see on this slide.
As we've talked about today, we've had a strong first half driving an impressive rates of our full year guidance.
We're really very excited about the proposed acquisition of the Philippines business. This transaction demonstrates our commitment to further diversification.
And underpins our mid term objectives.
We are equally committed to driving shareholder value creation.
Only with Disproportions action be immediately accretive to earnings and therefore, our absolute dividend will does not compromise our deleveraging path.
Even though we will only have a modest impact.
To close I would like to thank again, our customers our brand partners and our great people, whose hard work and commitment and we're able to go further together for all our stakeholders. So thank you very much Nick and I will now be happy to take your questions. Thank you operator.
Thank you we will now begin the question and answer session. As a reminder, we kindly request only one question per analyst. If you would like to ask a question. Please press star one on one on your telephone and wait for your name to be announced if you wish to come to your request. Please also press star one on one once again please.
Star One if you wish to ask a question. Please standby, while we compile the Q&A queue. This will only take a few moments.
We will now go to a fast question.
One moment please.
And your first question comes from the line of Ed Mundy from Jefferies. Please go ahead.
Afternoon, or evening, Damian Nik Sarah I've got one question on the transaction it looks like revenue per cases about just under two and a half euros for the business, which has a relatively high market share and I'd call. It a decent proportion of sparkling could you talk to the headroom to grow revenue per case that you've got in your other regions.
Throughout the Euro <unk> toolkit or portfolio did you bring a bit more stress to you if I could tell you that and Thats part of the same question.
Could you, perhaps clarify what the multiples paid for this business looks positive, but does it multiple but love to get some clarification around that.
Hi, Ed maybe I'll just touch on the first.
Part of your question. Thank you.
Obviously, we've got a number of <unk>.
Experiences.
Toolkits across CCP that we would like to bring.
To this transaction.
If it closes and I think that would allow us to look at the revenue per case.
And our overall <unk> strategy. So obviously as we get to understand this business a bit more and learn.
What is and what has been quite a successful business.
We see the opportunity to share best practices, and learnings, whether thats from Europe , Australia, and New Zealand.
And obviously, we see an opportunity to share learnings package in Indonesia, So that combination really excites us.
One of those outcomes will clearly be to see can we use some of those revenue growth management tools.
In the Philippines to extract more value from what is as you called out pretty uniquely high sparkling share.
And a pretty uniquely high any RTD share so that certainly gives us a platform to explore it.
So more to come on that once we get get into the business a little bit later, Nick do you want to comment on the transaction, yes, sure. So as you've seen we're paying $1 $8 billion on that 60 40 saw share would be roughly that $1 1 billion.
We've obviously disclosed the revenue as well as the Pvt pvt is pretty much a proxy I would say for operating income.
So.
When you add back the depreciation impact.
Get to an EBITDA you'd you'd come off and approximately 10 times multiple.
Got it thank you and congrats on the transaction.
Thank you.
Thank you.
Yes.
Our next question.
Comes from the line of Lauren Lieberman from Barclays. Please go ahead.
Hi, everyone.
So so many questions.
I guess first thing would be.
Along with when we get one more in.
Got it.
And then just kidding, okay. So I guess.
I'm going to.
Follow up to ads and then throw in an extra so the follow up on ads with just.
What can you tell us the profitability of this business before sort of inflationary times I was just curious if the margin profile, while great Philippines makes good money.
The margins were materially higher.
And let's go back two or three years ago before there was inflation I'm, assuming it's been pretty significant in the Philippines as well.
And then the second thing, which is route to market I know with Indonesia wanted the big long list of things to it.
Mark or figure out was.
Route to market in this very complex.
And tough to serve marketplace. So what could you tell us about what that looks like in the Philippines today. Thanks.
Yes.
Maybe I'll just take the second part of your question.
Yeah. So clearly there is a lot of similarities in terms of.
Both markets between the Philippines, and Indonesia from a route to market perspective, a lot of outlet small outlets islands. So a high degree of logistics focus.
I think clearly when you look at the results of the Philippine business, they've clearly found a way to.
Execute in the market and create value for the shareholder.
And that comes down to quite inefficient.
And I would say flexible route to market system that we're still learning about so obviously, taking those learnings back to Indonesia is something that excites us.
Clearly the Philippines business benefits from a much higher per cap.
It's a business that should the transaction close the Philippines will become our oldest market and CCP.
Having been here well over 100 years, so that's quite an unusual dynamics so the category.
Has got scale, it's got relevance with that comes a lot of velocity and they've got a route to market that allows that to grow and make money.
So while the category dynamics are slightly different in terms of per capita the.
The volume of outlets the geography.
The impact of islands et cetera, very very similar to what we're experiencing in Indonesia. So we're already taking back some learnings.
And I think both countries could collaborate really strongly to build out.
Particularly on the systems and technology side, some solutions that would work well above market so more to come on that but clearly as we looked at this opportunity it's something that we really felt could create value.
Outside of the Philippines book, particularly in Indonesia, So more to come on that Nick do you want to comment on the profitability of margins, yes. So Lauren it's an interesting question because I think to your point.
No no single market has been immune to the inflationary pressures, but if you look over the last.
Couple of years.
Both <unk> and.
Gareth to run the operation, who will be continuing to work with us and we're really excited about that had been quite focused on being able to achieve pricing in the market and they've actually had three rounds of pricing in the last two years to try and protect some of that margin erosion as a result of the inflation inter.
Singly enough and I think this is where we have strong a strong local partner that can really help us continue to unlock some of the value. When you think about some of the structural issues.
We can talk more about once the transaction is closed and that will also give us more opportunities in terms of unlocking future margin opportunities as well.
How we continue to look at.
Pac evolution to help drive that margin opportunity as well so I think we've gotten some initial.
On that true Gareth and the team and I think we're excited about the opportunities going forward on that margin evolution as well so more to come.
Great. Thanks, so much.
Thanks Keith.
We will now take the next question.
Your next question.
Comes from the line of Charlie Higgs from Redburn. Please go ahead.
Good morning, David Cook, you're both well.
We've touched on Philippines. Congrats so I just wanted to talk maybe a bit about Indonesia.
Clearly quite a big impact from the SKU trimmed down there.
Can you, maybe just give us a sense of the reception on the ground in customers and maybe how the underlying portfolio. Excluding that extra you trim is performing and then just what it means in terms of the revenue per case and margins going forward. Thank you.
Thanks, Charlie.
So no surprise in Indonesia as we.
As we laid out our near term strategy in that market clearly, we felt that the simplification of our portfolio would unlock value in the medium term both for us and for our customers. So.
If you look at the categories that we've decided to exit or streamline.
They are they are not as profitable as sparkling.
So those are our customers so while we haven't guided on the impact of that.
Clearly its part of our plan to bring margin.
To CCP, but also to our customers on a sustainable basis. So yes, there's a near term impact obviously, you see that in the volume line.
As we expected.
It doesn't look I think a lot more value in the medium term both from an asset utilization for us in Indonesia.
Prioritizing our sales force, which is a very large sales force in Indonesia, using the space that we get and our customers more efficiently for <unk>. So as you can imagine as I mentioned in the Philippines, a lot of small outlets not a lot of space. So you've got to be really choice about what you put into that space.
I think one of the learnings that we've seen in Indonesia.
Some ways, we crowd of that space.
With categories that didn't really create value so.
We've executed that now we'll cycle through that in 2023.
And again that would give us a platform for 24, so no specific guidance on margins, but all I can say is that what we prioritize the sparkling and that is our highest margin category in Indonesia, So I think for us and our customers.
It supports that midterm value creation story.
Thank you.
Thank you.
We will now go to the next question.
One moment please.
And your next question comes from the line of Bonnie Herzog from Goldman Sachs. Please go ahead.
Alright, Thank you hi, everyone.
I have a question on your guidance. This morning, you did raise and tightened your top line guidance, which is great that implies a little bit more modest topline growth in the second half of mid single digits. I mean, you highlighted the expected moderation in net revenue per case, but could you talk about some of the other.
Drivers and maybe what's factored into topline guidance in terms of elasticity and future pricing and then your guidance also implies greater operating leverage in the second half, which you touched on but maybe you wanted to better understand the visibility you have on this and maybe a little bit more color on the drivers of that too.
Thank you.
Yes, sure Hey, Bonnie So I think a couple of things.
To call out so if you look at the topline, it's primarily being driven by obviously the moderation that you would expect because we are getting the benefit in our revenue per case from last year's price increases and everything that we've taken this year as well and so that's effectively what is driving that from a volume perspective.
Clearly remember we are also lapping through a very very tough comps in the third quarter. If you remember last year. So we are mindful of that because July has been quite a wet months across most of Europe as you probably have seen on the news.
Which is a bit of a change in what we saw in terms of the performance in May and June .
This year, which really helped us buck and manage through some of those comps from last year.
I think the other piece that we're cognizant off obviously is continuing to remain like I said affordable and relevant.
And ensuring that we have the right level of promotional support as well too.
Ensure that our products remain relevant to that consumer base. So I think that's on the top line. So we will obviously provide you an update in a lot of it will play.
Play out based on how August and September which is critically important months trend for Q3, and then obviously December is an important month for us as you know as well.
On the cost side and the margin piece that really comes back to the fact that we had always indicated that hub.
Hogs per case was more weighted towards the first half.
And as I said, if you look at the guidance for 8% Cogs per unit case, and the fact that it was up 9% in the first half.
Naturally that's about 7%. So you are getting that type of leverage then coming through to support that oi growth and that margin expansion as I alluded to as well. So all in all we feel good in terms of where we are.
And feel that that's still a very healthy level of topline and bottom line growth for the year.
And maybe just wanting to add to Mike's comments I think when we are experiencing.
Above average inflation on the revenue side that we see that across all of our markets I think it's really important to focus on volume and transactions.
Because I think they in that type of environment demonstrate the strength of our consumer relationships. So as Nick called out as we look at the second half of the year.
We really want to continue to replicate what we achieved in the first which is to deliver really good topline revenue growth with price mix, but also with volume and transactions because I think as we continue to navigate the higher cost of living challenges.
Making sure that our consumers are still connecting with our brands is really important and I think that's something that we've reflected in our second half guidance as well.
Okay I'll make sense. Thank you.
Thank you.
We will now take your next question.
And the question comes from the line of Eric <unk> from Morgan Stanley . Please go ahead.
Good morning, and good evening.
So the Philippines business has been under different various different owners.
Over the past.
10 years or so.
<unk> you could give some perspective as to what.
TCP and your new partner plans to do different from previous owners, what you guys bring to the table, that's a bit different and how youre approaching the strategy for the business that would be different.
Yes, hi.
Yes from our perspective, I think there's a couple of elements that we feel excited about I mean, clearly we're going to bring a lot of scale and best practice.
Learning to to the Philippines from both within the region with our API business and also from from Europe .
I think we've got clearly a long term focus on this business with our shareholders materially we believed that the Philippines.
<unk> our partner represents a fantastic long term opportunity.
For CCP I know our partners feel the same way we.
We do feel in this instance, having a local partner can unlock more value.
And I think that is a different structure to what.
When previously on.
And I also think the business is in a very different place now I think on there too.
Leadership of garrison BRG as you can see from the numbers, we shared today, it's a growing business. It's a profitable business. It has momentum and clearly we believe by bringing it into the family of CCP that we can accelerate that value creation.
So we had a lot of different phases of the Philippine business, but it's a very very established in all business. So it's managed all of those really well with.
We clearly believe by bringing it into CCP now, it's a new chapter that gives certainty to the employees.
Certainty to our customers and with a local partner I think adds an extra dynamic that we believe gives us more relevance within the Philippine market. So that's a unique combination that hasn't existed before the ownership structure and obviously, we do that with the support of the Coca Cola Company, which as you can appreciate.
As a critical enabler as we look forward in the Philippines. So a number of elements as we move forward and the proposed transaction.
And as we aim to close clearly that question is something we'd love to come back to work.
With a bit more detail and granularity about how that looks for the next two or three years, but clearly that will come probably early 2024.
Great. Thanks, so much.
Thank you.
We will now go to the next question.
And the next question comes from the line of Mitch <unk> from Deutsche Bank. Please go ahead.
Hi, Damien Hi, Nick.
When you pull amatil.
Felt like the Indonesia business.
Nice addition, and you were really trying to apply your European toolkit to another developed market, but I guess this is a different proposition given that youre buying and geography.
Given that this only delays youre hearing.
Yes, I'm interested in the strategic direction, you think you'll take going forward. So do you think.
That building a bigger presence.
Presence is the most attractive to create some value from here are you more interested in and focusing on TM focused assets or is it really just dependent on what assets are available.
Those assets bring in terms of value creation opportunities.
Mitch.
So I.
I mean, clearly if you look at Ccp's value creation story.
It will remain predominantly coming from the developed markets of Europe .
We've unlocked tremendous value very quickly from Australia, New Zealand. So yes, I think that supports our cash flow that supports a value creation story for our shareholders ultimately will allow us to deleverage and then move as you said, probably a little bit later than planned but not too much later into returning even more cash to our shareholders. So.
Part of the story remains the biggest part of that story at CCP.
As you pointed out we were excited about the opportunity Indonesia represented when we did the amatil deal.
300 million consumers young are very under developed market in terms of the category.
So we do see continued upside there what's unique about the Philippines is you may define the Philippines is a M.
From an economic perspective, but from a category perspective was quite well developed if you look at the per capita as we showed earlier.
It's not obviously a mature business, it's a growing business for this got a very strong foundation. So.
When the opportunity arose to consider it was always something we had on our radar.
When we acquired Indonesia, we felt that would be potentially one more step in this part of the world to allow us to build scale.
And I think by combining the Philippines, and Indonesia, We will have achieved that I think we will have brought up.
Market set of similarities, but as I mentioned earlier quite different category dynamics.
And I am confident that we can extract a lot of value from what the Philippines, a stone to build the sparkling category and an efficient route to market back into Indonesia.
But if you look at our numbers, our free cash flow on a profit generation.
We will still be very much focused on the developed markets.
So a little bit like a commentary in Indonesia, I think it is a fantastic addition.
So our business if the deal closes.
But ultimately it'll balance in a nice way what is a really great developed market and cash generated business and that obviously will remain our core focus.
And I would just add I would just add to that if you did take that traditional approach of an M versus DM.
Even with adding in.
This market from a revenue perspective, if you looked at that as ECM and Damien rightfully said, it's actually very developed in terms of the category, but it's only 10% of our revenues is Indonesia and CCI together.
So that's still the majority of our business is coming from the DM side.
Practical sense one.
And two I think you shouldn't underestimate the power of having a larger platform with two of the most populous countries in southeast Asia with Indonesia, and the Philippines in terms of how we can think about things from a perspective of synergies from a digital perspective from a digitization person.
<unk> et cetera.
And cross learning. So I think we're very excited about that opportunity and to the point around leverage is really a minor tweaks I wouldn't be then.
Be over indexing on that in any way.
Thank you both.
Thank you.
Okay.
Okay.
Our next question.
Comes from the line of Bryan Spillane from Bank of America. Please go ahead.
Thanks, operator.
And at what time of the data whatever good day everyone.
Yeah.
So.
Just two quick ones related to the Philippines, Nick you I think what you inferred in an answer to the earlier question was roughly a $180 million of EBITDA and I believe.
Coca Cola FEMSA disclosed when they were exiting.
I think EBITDA in 2017 is $1 78 so.
Similar I guess today versus what it was in 2017, but but just kind of interested because you did mentioned inflation just so what's the path has been.
EBITDA and EBITDA margins improved and maybe we've taken a step back on inflation. So just kind of some perspective, there and then the second is just.
If I look across kind of where consensus estimates are for next year I think some folks have put share repurchases in their models and so just maybe some thoughts there in terms of how we should be thinking about that now.
Given this transaction should should we be thinking about maybe pushing share repurchase add a little bit further in the future. Thank you.
So let's take the second one for us because just to be clear, we had never guided towards any kind of share repurchases.
Outside of what people decided to put it in the model. So I can help you change them models, but if youre looking at it from an angle of.
What this does as we had said this would have taken us to the top end of our leverage by the end of this year. If you think about the size and scale of the 60% based on the $1 8 billion that we'd be paying in dollars Youre talking about 1 billion euros right.
Significantly less than what we generate in free cash flow. So really from a timing perspective. This is really a tweak like I said and again, we've always said, we would continue to work towards that midpoint.
Our net debt to EBITDA ratio.
And accordingly, then be able to consider absent other M&A, which obviously, we don't see anything on the horizon today, but as we all know thats opportunistic.
<unk> commitment to being shareholder friendly and maintaining an efficient balance sheet is unchanged.
So I think the modeling can work pretty well to be able to tell you when that might come in so volume and safe that could be a 2025 event absent some of the other areas.
Areas that I talked about in terms of.
Lastly, the fact that you are looking at a 2017 number.
In the wilds away given the fact that we've had COVID-19 and then you had a significant inflationary impact as well I think the team has done a great job, but keep in mind. These are 2022 numbers that I have given you.
2022, clearly also had some issues that I referred to in the broader comment around some of the structural issues.
Which had an impact on both the topline and bottom line, which clearly we would expect to start seeing improving.
In this year and going forward. So I think once the transaction closes Bryan we'd be able to give you some more information as to how you might be able to model that but clearly keep in mind. There were some one offs are structurally that caused that number in 2022 to be what it is.
Okay.
Thank you.
We will now go to the next question.
And your next question.
Comes from the line of Sandeep <unk> from Credit Suisse. Please go ahead.
Hey, Damian Nik.
Just curious on the timing of this transaction why now when you're still busy integrating avatar.
Urgency from the Coca Cola company to get this done just just love to get a bit more perspective that please thanks.
No not at all I mean, we felt it was the right time I think if you look at the results that we've delivered two years into the Amazon transaction I think we're even ahead of our expectations unless genomic and I always have very high expectations of the business.
But clearly we felt very comfortable with the leadership of Peter Cross API and the talent that we've acquired so that gave us comfort to look for.
Bigger opportunities in the region.
So we felt this was the right time.
Clearly we've got to go through a process probably till the end of year to get it closed so from a kind of implementation integration phase Youre looking probably 24.
Two five years after the amatil transaction closed so for us we can be a bit in patients on <unk>. So we felt.
It's a good time and we found a good partner so yeah, we're very happy with the timing and the balance sheet allowed it as well.
Got it.
With respect to when did you start working on this transaction and what's the oversupply in on day, one to incorporate local partner.
Well, we've been looking I suppose.
Probably predates amatil, so as we looked at.
Acquisition opportunities that we felt could create significant value for our shareholders obviously amatil.
Time came out as a priority.
And obviously, we've demonstrated that was the right decision. We had also look below that at the same time.
Other bottling assets that we felt were valuable and creating value.
And through that process, we had identified the Philippines.
And then pretty much over.
For a period of time, we explored up with the Coca Cola company.
And then obviously through the process, we explored a local partner has been.
Good option to unlock some more of that value. So yes over over a number of months as you can appreciate these things take time I'm glad we got to the day that we could announce it procure who has got a bit more work to do to close it and that's our priority at the moment.
Great. Thanks, and just a quick follow up for Nick can you just give us a bit of a sense of how commodity culture shaping up to 24.
The portion that <unk> hedged today.
Yes, I think the portion that we've hedged to date obviously.
Remember, we don't look to try and beat the market. We're always trying to make sure that we're getting the certainty so that the business can plan appropriately I would say to you.
Generally, we've obviously gone and when we've seen.
The right trigger points, but I said, it's a combination of that uncertainty.
Most important piece that you need to keep in mind Thats still open is on sugar and that's probably the.
Elements that we're working on right now for a couple of our markets and again, we'll be able to provide you with some more color on that.
As we go through the year, but clearly youre seeing not the same levels of absent the sugar piece of what obviously, we have seen in the last couple of years, particularly with.
Gas and power leasing a lot some of the lease cycle.
Costs coming down et cetera, but then again, it's a volatile market, but in terms of how oil prices have reacted over the last 10 days. So I feel good about where we are covered for now and we'll provide you more updates in due course.
Great and just to be clear at this stage, you're seeing commodity cost is inflationary or deflationary, but to a lesser degree than in recent years the message.
Exactly exactly thank you.
Thank you.
Our next question.
Comes from the line of.
Nik Oliver from UBS. Please go ahead.
Okay.
Thank you for the question just one on liquidity in Europe , because I guess.
Most liquidity is still on the U S line.
There are a number of investors would like to own at TCP part count and.
Anything that you can share with us on broader approaches to getting more liquidity in Europe .
Well listen that the only approach to getting more liquidity in Europe is actually doing an equity offering.
In Europe , which we are not currently planning are contemplating.
Any shape or form so the potential unlock or that could be.
What might happen in the UK with the FCA announcements.
Announcements and what the FTSE, then might do which is towards moving to a single segment. So getting away from what is the standard and premium listing segments to have one single segment clearly if the FTSE maintained its current rules, which obviously, we'll wait to.
See in the fall what they come out with a once the finalization of the Scf Ca's position.
And then that would mean that from a size perspective, we would become a FTSE 30 company and like I said, if the rules do exist and we get fast track just based on size. Then we would immediately be a part of the FTSE index, which naturally would.
Drive more liquidity either pre.
During or post.
Yes.
We will continue to monitor and I'm sure. All of you are monitoring it as well yeah, well yeah. We are.
Yeah, Yeah yeah.
Just in terms of timing.
I guess I think maybe.
Automatic that's when they're going to the next update.
Correct correct ultimately when the FCA would.
Give that update because the consultation period should then have been through and then the FTSE. Obviously is working in the background we are assuming.
To be able to hopefully.
Thumb its rules, which I said is that both happened then hopefully we would get included into the index just based on our size and our liquidity and then that would be tested.
At periodic intervals on how that liquidity, then moves and our trading liquidity happens on that exchange, which in some ways comes back to my point around that pre during and post but the more that happens the more of that support US then remaining as a part of that index.
Perfect.
Super clear thank you.
Yes.
Thank you.
Our next question.
Comes from the line of.
Well that Aten Stein from Evercore ISI. Please go ahead.
Great. Thank you very much.
Damian I'm wondering if you could just give us a very short history lesson.
<unk>.
On the on the FEMSA situation.
Bought back they had bought 51% I think of the business.
They sold it back to Coca Cola I think if I recall right.
There was there was labor issues, there was a sugar tax.
Some other issues, so maybe kind of give your sense of what happened what went wrong.
In that go around and where things stand on.
The labor sugar any any of those sorts of factors that.
Lead to that outcome. Thank you.
Hi, Robert.
I mean, it's quite a while since since that period and honestly I don't have.
The history, I think you've probably just outlined that better than <unk>.
And I think to be fair I think FEMSA are probably the best people to talk to around their learnings and experiences.
I think I can look at the last three to five years, because I think it's just a bit closer in time I think some of.
The elements that disrupted the business like sugar tax.
Et cetera is in the base now.
Certainly when I look at the business and they speak to the team locally.
Theres been stronger topline growth.
Good value creation profitable.
So I suppose we're looking at it based on what we see today in the past couple of years really.
Going back to those days Im not sure without a lot of value, but clearly if you're curious, but I think you did a good summary.
I am sure FEMSA will be able to answer that better than we will.
All I can say is we're just really excited based on what we've seen.
What we've looked at.
And I think again.
It's a great soft drinks business in.
That's unusual in this part of the World and I suppose that's what excites US make you Andre Yes, Robert are all I would add to damien's comments is remember that the way. The deal was constructed it did have a put and call option.
Which obviously engaged fans that flexibility of that ability to sell that back or exercise.
<unk>.
So we haven't taken that approach we have a very long term mindset as do our partners via voice as well.
Believes this is a very attractive business with an attractive growth profile.
Very developed sparkling categories, we talked about with high shares.
Hi, any RTD share and a great management team and I think for US we look at it more in terms of looking forward with a with a strong long term mindset.
Great and you.
References regulatory issues.
Is there anything is there anything unusual on the regulatory side that we should be aware of or anything that gives you particular caution or is this just solar corner normal procedural things that just take time just to be clear I didn't mentioned regulatory issues I said regulatory clearance, which is correct.
Matt sorry, that's what I meant.
It's just the normal process with any transaction.
Which we don't we don't anticipate any issues, but obviously you need to plan for the timing of that.
Uh huh.
Most agreement of docks. So yeah, that's all it is robin.
Got it thank you very much.
Thank you.
We will now take our next question.
And our next question comes from the line of Richard with Aten from Kepler. Please go ahead.
Yes Hello.
And thanks for the questions.
I want to get back to.
Promotional effectiveness.
<unk> Nikko Damian why don't you to mention that.
Does it help to get to the 10% revenue.
Unit case growth so what.
What changes are you, putting true and which tools helps you to achieve.
The improvement in promotional effectiveness and then maybe Nick if I can quickly squeeze in what kind of cost of capital are you assuming for the for the Philippines transaction. Please.
Thanks Richard.
So I suppose on the promotional effectiveness, it's been a multiyear journey I think it started particularly in Europe and then obviously, it's followed in Australia, New Zealand, where.
What was the first step was to broaden.
The number of Skus and pack offerings, we presented to shoppers and consumers.
We've done that quite successfully an example will be our mini cans or a new small PDT and some of our markets than we've overlaid that with some really good data and analytics tools that allow us to really go back and look up while there has been the impact of any given promotion in the market.
And then we measure that against purely what it means for our customers profitability. What are the main four Eric profitability and most importantly, what does it mean to the shelter. So did it add shoppers to the grow frequency will grow penetration to.
So the growth transaction size.
Over many many quarters, we build up really solid database of what really works and what environment. As you can appreciate in Europe really in the back half of last year, we start to pivot some of our promotional effectiveness against some of those more affordable packs, because we realized with the cost of living pressures energy prices.
Et cetera.
A number of our shoppers will probably become more value conscious and they've been previously.
So that allows us to kind of discuss what our customers pretty much against the same aligned objectives. They want to they want to retain shopper loyalty.
Want to retain brands, because thats, where they generate higher margin, particularly cash margin.
And then we look at the mechanics are locked up.
So it's quite a good process now.
It was unlocked a lot of value in Australia, and New Zealand.
And it's something that we've built into our routines now so it's not a one off its part of the way we do business.
More we do that.
Richard a history of data gets and that allows us to make even smarter decisions going forward.
We are also embarking on a new SAP platform and that will allow us to have a fully integrated system across all of our markets.
Which will include.
Our proposed transaction of the Philippines, and that will even make it more seamless so looking forward to that that will take a bit of wild.
But in the meantime, we're using the same tool everywhere. So thats exciting Mcdonald Covenant Bulks capital, Yes, we could have looked at a range of 90% to 95% of our cost of capital.
Yeah.
Alright, very good guys. Thanks.
Thank you.
We will now take our last question for today.
And our last question.
From the line of Carlos Laboy from HSBC. Please go ahead.
Yes, Hello, everyone.
Damian Nik will you.
Do you think youll be able to secure some form.
L T R M.
Model.
In the Philippines for ensuring that you can.
Comfortably exceed your cost of capital they're.
Looking out over the long term.
And then sort of related the backbone of the Philippine affordability strategy is renewables.
Is it your intention to grow or to reduce refillable.
In the Philippines, and how do you view the.
The role of renewables over the long term there.
Hi, Carlos.
So I think we've we've been working on the <unk> with the Coke company across all of our markets in the Philippines will be.
No different than that that model will allow us both to achieve.
Our financial goals on our growth goals, So I think we've.
Done quite well in Europe .
And in the old Amatil territories will do the same in the Philippines. So we're already having those conversations so I feel good about that I think refillable as one of the strengths of the Philippino business. When we look at it both in terms of driving affordability and relevance.
So we see that as a key part of our future clearly we will look at how do we extract value from that pack.
From the supply chain.
We look at our investments going forward clearly, it's an area that we'd look to see if we can optimize as you know we've got a big receivables business in Europe , both in glass and in PMT.
So when you combine the Philippines.
Sizable Butler in terms of using refillable packaging. So we're working with the company on some new initiatives around universal bottles float higher amortization, so that will allow us to maintain that affordability, which we know is critical particularly in markets like Indonesia.
In the Philippines, but also unlock value and I think that's critical so yes very excited about it.
It's about 50% of the sparkling business is growing we expect it to grow in the future.
And it's something that we see as a core part of our proposition not just in the Philippines, but we use it across all of our markets.
Where it makes sense and I think that will continue to tell us.
You.
Thank you.
Now I'd like to turn the conference back over to Damian Gammell for his closing remarks Damien. Please go ahead.
Thank you operator, and again I just want to say a big thank you to everybody for joining US today as you can appreciate it's been a long and exciting day for all of the team here in Manila.
And I just wanted to kind of end with a few closing remarks.
I think most importantly, I'm extremely pleased with our strong first half performance.
And our ability today to raise our guidance.
That performance when you look at the topline volume growth to free cash flow generation has allowed us to take the next step in our journey, which is obviously, we're very excited today to announce the proposed transaction of the Philippines bottling business with a local partner and I think thats something that sets a new era for for a busy.
This in this part of the World and also supports our Indonesian business going forward.
And then finally as you would expect from from CCP, we remain fully committed to shareholder value creation, we see the proposed transaction to be accretive to earnings and a very modest impact on our leverage.
And I think demonstrates the strong free cash flow of this business allows us to make the right choices for all of our shareholders and our customers as we continue to look forward to a growing business that CCP. So thank you again.
And look forward to speaking to you all to have a great rest of day.
Thank you that concludes our conference for today. Thank you for participating you may all disconnect.
Sure.
Yes.
Yes.
[music].
Okay.
[music].
Yes.
Yes.
[music].
Hum.
[music].
Okay.
[music].
Yes.
Okay.
[music].
Yes.
[music].
Yes.
Yes.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
[music].
Okay.
Okay.
Sure.
[music].
Okay.
[music].
Okay.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
Okay.
Yes.
Okay.
[music].
Thanks.
Okay.
Sure.
[music].
Yes.
Okay.
[music].
Sure.
[music].
Okay.
[music].
Yes.
Please.
[music].
Okay.
[music].
Yes.
Okay.
[music].
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
Okay.
[music].
Okay.
Yes.
Okay.
Okay.
[music].
Sure.
Yes.
Okay.
Okay.
Okay.
Yes.
Yes.
Yes.
Okay.
[music].
Sure.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Sure.
[music].
Yes.
[music].
Okay.
Yes.
[music].
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Sure.
[music].
Okay.
Yes.
Yes.
Yes.
Yes.
[music].
Okay.
Great.
Okay.
Okay.
Okay.
Thanks.
Okay.
Yes.
Okay.
Sure.
[music].
Okay.
Yes.
[music].
Okay.
Okay.
[music].
Okay.
Okay.
Yes.
Sure.
Okay.
<unk>.
Thanks.
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
[music].
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
Okay.
[music].
Okay.
[music].
Yes.
Yes.
Yes.
Yes.
Okay.
Sure.
Okay.
[music].
Thank you.
Yes.
Yes.
Yes.
Thank you.
Yes.
Yes.
Okay.
Sure.
Yes.
Yes.
Okay.
Okay.
Sure.
Okay.
Yes.
Yes.
Okay.
Yes.
Okay.
Yes.
Sure.
Okay.
Sure.
Right.
Yes.
Yes.
Okay.
Yes.
Okay.
Sure.
Yes.
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
[music].
Okay.
Hum.
Okay.
[music].
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Sure.
Okay.
Okay.
<unk>.
Sure.
Okay.
Sure.
Okay.
Sure.
Okay.
Yes.
Okay.
[music].
Okay.
[music].
Yes.
Yes.
Okay.
Okay.
[music].
Okay.
Thank you.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Sure.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Sure.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Yes.
Yes.
Okay.
Yes.
Okay.
Sure.
Yes.
[music].
Yes.
Okay.
Okay.
Yes.
Okay.
Hum.
Yes.
Yes.
Thank you.
Thank you.
[music].
Thanks.
Okay.
Yes.