Q3 2024 Constellation Brands Inc Earnings Call
Yes.
Greetings and welcome to the constellation brands third quarter fiscal year 2024 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is.
Is being recorded I will now turn the conference over to your host Joseph Schwartz Senior Vice President of Investor Relations. Thank you you may begin.
Joseph Schwartz: Thank you David Good morning, and happy New year welcome to constellation Brands' Q3 fiscal 'twenty four conference call I'm here. This morning, with Bill Newlands, our CEO and Garth Hankinson our CFO.
Speaker Change: As a reminder, reconciliations between the most directly comparable GAAP measures and any non-GAAP financial measures discussed on this call are included in our news release or otherwise available on the company's website at Www Dot C brand stockpile.
Speaker Change: Please refer to the news release and constellations SEC filings for risk factors, which may impact forward looking statements made on this call. Following the call will also be making available in the investors section of our company's website a series of slides with key highlights of the prepared remarks shared by Bill and Garth and today's call before turning the call over to Bill.
Speaker Change: In line with prior quarters, I would like to ask that we limit everyone to one question per person, which will help us win our call on time.
Speaker Change: Thanks in advance and now here's bill.
Thank you Joe and congratulations on your recent promotion and good morning, all happy new year to everyone and welcome to our Q3 fiscal 'twenty for a call I Hope you all had a wonderful holiday season, and we're able to enjoy some of our great products with your family and friends.
Speaker Change: We have several topics to address on today's call. So let's start with the key takeaways for this quarter first I am pleased to report that our <unk> business again delivered very strong performance that accelerated throughout Q3.
Speaker Change: We achieved depletion growth of over 8% for our beer portfolio with a particularly outstanding add to the month of November.
Speaker Change: We led Thanksgiving beer sales and U S track channels and continue to see accelerating momentum in the last week of the month, reflecting both ongoing strong consumer demand and restocking after the earlier Thanksgiving holiday this year.
Speaker Change: And once again for another entire quarter, we achieved leading share gains in tracked channels with more than two point expansion in the U S beer category and a nearly three point gain in the higher Ed.
Speaker Change: This marks the 55th consecutive quarter of depletion growth for our beer business and the 10th leading share gains.
Speaker Change: Secondly.
Speaker Change: In line with our consistent disciplined and balanced approach to capital allocation, we executed $215 million of.
Speaker Change: Of share repurchases in Q3, while maintaining our net leverage ratio, excluding canopy equity and earnings unchanged from last quarter at three two times as well as continuing to deliver cash returns through our dividend and advancing our organic growth investments at our overdone.
Speaker Change: Rory and new brewery site in Veracruz to support additional production capacity for our beer business.
Speaker Change: And thirdly as noted at our recent Investor day over the past few months, our wine and spirits business much like others across the industry has seen a broader marketplace deceleration.
Speaker Change: In light of these and other near term headwinds we are further revising our fiscal 'twenty four organic net sales guidance for wine and spirits to be down 79% and the operating income guidance for that business. Excluding gross profit less marketing our brands divested last year to be down 6% to 8%, which I will.
Speaker Change: Labrie on shortly of course, we are not pleased with these revisions at both our leadership team and our wine and spirits teams remain fully committed to improving the performance of this business and to achieving its medium term targets.
In addition, as announced earlier today, Robert Hanson has elected to step down from his role as president of our wine and spirits business in a few weeks at the end of the current fiscal year, we have initiated a process to identify a successor for this role and I will step in to lead the wine and spirits business in the interim.
Speaker Change: While of course, retaining my chief executive oversight across both the enterprise and our beer business.
Speaker Change: Despite these revisions of leadership changes as noted at our recent Investor Day, we continue to believe that over the medium term, our wine and spirits business should accelerate its net sales growth to 1% to 3% and improve operating margins to 25% to 26% supported by the significant transformation undertaken over.
Speaker Change: The last few years to better align our portfolio with broader consumer led premium amortization trends expand our omnichannel capabilities and extend into targeted international markets more.
Speaker Change: More importantly in fiscal 'twenty four we still expect our enterprise comparable EPS guidance, excluding canopy to remain within our previously stated range of $12 $12 20.
Speaker Change: And over the medium term, we continue to expect low double digit EPS growth as outlined at our Investor day.
Speaker Change: Now, let's step through these key points for Q3 in more detail.
Speaker Change: As noted our beer team once again delivered remarkable results Modelo especial led the charge achieving a roughly 12% increase in Depletions and remained the leading share gaining brand and track channel dollar sales <unk>.
Speaker Change: Strengthening its position as the number one beer brand in the U S market, having ultimately achieve that top spot now on a 52 week basis.
Speaker Change: The broader Modelo brand family also delivered phenomenal results <unk> achieved an increase in depletions of approximately 22% year over year in Q3 and on a rolling 12 month basis. The combined set of gelato flavors and pack sizes reached the 20 million case milestone.
Speaker Change: Which is over 350% more than that set of brands was doing just five years ago in fiscal 19.
Speaker Change: Additionally, modelo <unk>, especially out our original flavor, which was recently launched in a 12 pack 12 ounce format was a top 15 share gainer and <unk> in Q3, and we are excited about the opportunities ahead for our new chill out of flavor and pack size additions.
Speaker Change: Also on the Modelo family oral continued its strong first year of going national with a third quarter is a top five share gainer in the high end.
Speaker Change: We look forward to the growth opportunities ahead for Oro as awareness grows and we introduce new patch sizes next fiscal year.
Speaker Change: Beyond model, our Corona extra and Pacific, though core beer brands continued to perform strongly in Q3.
Speaker Change: Rona extra maintained depletion growth at about 1%, while <unk> delivered an outstanding 19% increase.
Speaker Change: And on a rolling 12 month basis, but <unk> also reached the 20 million case milestone doubled its volume from five years ago.
Speaker Change: In addition, both brands remain top 10 share gainers across the entire U S beer market and track dollar sales.
Speaker Change: Our beer brands clearly continue to resonate strongly with the consumer and I'm incredibly proud of and thankful to our entire <unk> team for their consistently strong execution.
Speaker Change: With that backdrop, we remain confident in our fiscal 2000 and for net sales growth guidance of 8% to 9% and from an operating income guidance perspective, we now expect our beer business to deliver 7% to 8% growth for fiscal 'twenty four.
Speaker Change: As we realize additional benefits this year from the marketing effectiveness actions discussed during our Investor day.
Over the medium term, we still see significant opportunities to continue to achieve net sales growth of 7% to 9% and our beer business supported by the fundamental distribution innovation and demographic drivers as well as consumer led trends also discussed at our recent Investor day.
Speaker Change: As well as to continue to achieve best in class operating margins of 39% to 40%.
Speaker Change: Supported by savings and efficiency initiatives across our cost of goods sold marketing and broader SG&A.
Speaker Change: And last but not least we continue to support the growth of our beer business through modular investments in brewing capacity and productivity initiatives to unlock further production upside.
Speaker Change: Moving on to the wine and spirits business as noted earlier, our wine and spirits business is operating amid a broader marketplace deceleration.
Speaker Change: As we have shared in recent quarters, we are actively working to address mainstream headwinds affecting our two largest volume brands Woodbridge and sector. However, we anticipate these efforts to extend beyond fiscal 'twenty four.
Speaker Change: More broadly while we are maintaining a disciplined approach to taking price across our portfolio. The competitive environment is now getting pressure with more aggressive discounting and price points beyond mainstream.
Again, we believe the broader deceleration in these higher end categories to be temporary and have continued to execute strategic pricing actions instead of implementing reductions like certain competitors.
Speaker Change: In addition, we have made the decision to adjust some aspects of our U S. Wholesale distributor agreements focused on improving mix inventory and state and channel level sales execution.
Speaker Change: We are actively engaged with our largest distributor partner to ensure that our portfolio continues to make progress against our vision of leading the higher end as well as on the revitalization of our mainstream brands.
Speaker Change: From an international perspective, while we experienced a decline in the quarter driven by previously noted weakness in our more mature markets inventory levels in Canada, our largest export market seem to now be normalized following the destocking from recent changes to inventory regulations. So we anticipate more balanced supply.
Speaker Change: Demand dynamics for this market going forward.
Speaker Change: Thirdly, despite the impact of these near term headwinds on organic net sales are prudent pricing and cost efficiency efforts enabled margin improvement for wine and spirits in Q3.
Speaker Change: Beyond these near term challenges our focus remains on driving growth across our higher end brands.
Speaker Change: As shared during Investor day over the last few years, our wine and spirits business has established a stronger foundation to advance toward these targets since fiscal 19, we have doubled the number of fine wine and craft spirits brands in our portfolio and we have invested and expanded our footprint in higher growth DTC channel.
Speaker Change: <unk> and targeted international markets.
Speaker Change: With our structural transformation securely in place I want to thank Robert Hanson for his contributions over many years, including initially as a nonexecutive member of the board, we wish Robert well and all the best in his future endeavors and look forward to announcing the appointment of our next wine and spirits business president in the near future.
Speaker Change: Lastly, I'd like to emphasize again, our unwavering commitment to our consistent balanced and disciplined approach to capital allocation.
Speaker Change: As noted at our Investor Day event, we continue to target a strong balance sheet that supports our investment grade rating and we are working toward a net leverage ratio of three times, which we expect to achieve within fiscal 'twenty five.
Speaker Change: We expect to maintain a dividend payout ratio of approximately 30% supporting continued growth of our dividend per share in line with our earnings expectations.
Speaker Change: We plan to invest approximately $5 billion and growth and maintenance Capex from fiscal 'twenty four to fiscal 'twenty eight primarily focused on growing capacity expansions for our beer business. We continued to opportunistically buy back shares with $215 million repurchased in Q3.
Speaker Change: Which leaves us with an additional $2 $6 billion still within our existing share repurchase authorization and.
Speaker Change: And finally, we continue to look at tuck in gap filling M&A opportunities with a highly rigorous transaction criteria.
So to close let's go back to the key takeaways for the quarter first we have a beer portfolio and team that consistently delivers industry, leading performance and we see significant opportunities as outlined in our investor day to continue to drive similarly strong growth over the medium term.
Speaker Change: Second we remain committed to delivering value to our shareholders through consistent execution of our balanced and disciplined capital allocation priorities and third our wine and spirits business is focus on realizing net sales growth and improved operating margins by leveraging its reshaped higher and leaning poor.
Speaker Change: Folio as well as our enhanced DTC channel and international market footprint and capability and lastly, and importantly, we continue to expect our enterprise comparable EPS guidance in fiscal 'twenty four excluding canopy to remain within our previously stated range.
Speaker Change: <unk> of $12 to $12 20, and over the medium term, we continue to expect low double digit EPS growth as we outlined at our Investor day, and with that I will now turn the call over to Garth who will review our financial results in greater detail.
Garth Hankinson: Thank you Bill and good morning, everyone as usual my discussion on our financial performance will mainly focus on comparable basis results in stepping through our P&L.
Garth Hankinson: However, as of this quarter, we will discuss enterprise results followed by business segment detail to better address our performance against the outlook shared at our Investor day at these different levels.
Garth Hankinson: Beginning with net sales, we achieved enterprise wide topline growth of 1% for the quarter. This was the result of solid beer net sales growth of 4%, partially offset by the wine and spirits net sales decline of 8%.
Garth Hankinson: While spirits net sales decline was 7% on an organic basis.
Garth Hankinson: As Bill noted beer business Depletions for the quarter were up above 8% as the year over year growth momentum from summer continued through the fall supported by ongoing strong consumer demand of our portfolio.
Garth Hankinson: Again, we saw particular acceleration in depletion volumes at the end of November as we extended our leadership across key holidays with outstanding performance during U S. Thanksgiving.
Our on premise channel realized modest growth in Depletions of about 1% for Q3 and accounted for approximately 11% of our total volumes.
Garth Hankinson: As we've been able to replenish inventories following the cake disruption over the summer and began to advance growth and drive performance in the on premise.
Garth Hankinson: Shipment volumes for beer business grew three 4% and we achieved favorable pricing slightly above 1% as we began to lap the elevated pricing increases from last fall.
These volume and pricing uplifts were partially offset by a shift in packaging mix.
Garth Hankinson: Altogether these year over year shipment pricing and mix changes drove the 4% or approximately $77 million increase in beer net sales for the quarter.
Garth Hankinson: For our wine and spirits business organic net sales declined 7% driven by lower shipment volumes due to the previously referenced category headwinds and the change in our process aimed at aligning shipments and depletions.
Garth Hankinson: As a reminder per prior calls this year, we now make quarterly shipment adjustments to align with depletions versus our former practice of only doing one annual adjustment in the fourth fiscal quarter.
Garth Hankinson: We believe this process change is partially driven less favorable comparisons for the first three quarters of fiscal 2024.
Now shifting to operating margins for Q3 enterprise wide operating income increased 7% and operating margin increased 170 basis points to 32, 3%.
This was primarily a result of an increase in operating income up 7% for our beer business, which also drove a 100 basis point increase in beer business operating margin to 38, 5%.
Enterprise wide operating margins also benefited from a 13% reduction in corporate expense.
Garth Hankinson: These beer business and corporate expense <unk> were partially offset by 5% decrease in our wine and spirits business operating income, which still yielded a 60 basis point increase in operating margin to 25, 4% for the wine and spirits business.
Garth Hankinson: Excluding the gross profit less marketing of the brands that are no longer part of the business. Following their divestiture operating income and operating margin for the wine and spirits business decreased by 4% and increased by 80 basis points respectively.
Garth Hankinson: Stepping through these drivers in more detail starting with beer.
Garth Hankinson: The increase in operating income and margin were result of benefits and cost of products sold as we continue to build cost efficiency and productivity savings for the quarter total cost savings were approximately $55 million.
Garth Hankinson: And $11 million or a 6% decrease in marketing costs as a result of shifts in timing of spend.
Garth Hankinson: Note that marketing as a percent of net sales was eight 7% for the quarter.
Garth Hankinson: A $4 million decrease in SG&A expense, primarily driven by lower legal fees, partially offset by higher compensation and benefit expenses.
And $6 million of favorability from the divestiture of our craft beer business.
These benefits were partially offset by a $12 million unfavorable foreign currency impact as we still realized a higher Mexico peso Mexican peso rate year over year inclusive of our multiyear hedging positions.
Garth Hankinson: Additionally in line with our full year expectations and guidance, we are still facing higher costs in our packaging and raw materials, which resulted in a $17 million headwind for the quarter.
Garth Hankinson: We have also faced an $11 million increase in depreciation as a result of our capacity expansions.
The reduction in our corporate expense, which for the quarter was $10 million was primarily driven by the reduction in third party services, particularly in our digital business acceleration investments, partially offset by increased compensation and benefits.
Garth Hankinson: Our wine and spirits operating income margin, excluding the gross profit less marketing of the brands that are no longer part of the business following last year's divestiture.
Garth Hankinson: On a year over year improvement is the volume declines and unfavorable mix were more than offset by reduced logistics and warehousing costs favorable SG&A cost due to reduced third party consulting expenses and lower compensation and benefits.
More favorable material cost driven by our cost savings initiatives and reduced marketing expense as we continued to shift our marketing focus towards more efficient high return efforts.
Garth Hankinson: Interest expense for the quarter was approximately $104 million driven by higher average borrowings and higher weighted average interest rates as a reminder, approximately 5% of our debt obligations are subject to adjustable rates.
As Bill noted we ended the quarter with a net leverage ratio of approximately three two times, excluding canopy equity and earnings and remain on track to reach our target goal of three times within fiscal 2025.
Garth Hankinson: Our comparable effective tax rate, excluding canopy equity and earnings for the quarter was 18% versus 18, 8% last year.
Our comparable EPS for the quarter, excluding canopy equity and earnings was $3 20 for rift.
Garth Hankinson: Reflecting the consistent growth of our business and representing an 8% increase.
Garth Hankinson: Moving to free cash flow, which we define as net cash provided by operating activities less capex.
Garth Hankinson: We generated free cash flow of $1 4 billion through the first three quarters of fiscal 2020 for a 10% decrease driven by a 33% increase in capex investments attributable to the expansions at our existing <unk> facility and the construction of our new brewery located in Veracruz.
Garth Hankinson: As we look towards the end of fiscal 'twenty for our guidance for enterprise comparable EPS, excluding canopy equity and earnings remains unchanged at $12 to $12 20.
Garth Hankinson: Underpinned by the following expectations.
Garth Hankinson: First an unchanged, 8% to 9% net sales growth outlook, but a higher 7% to 8% operating income growth expectation for our beer business.
Garth Hankinson: As stated in our prior calls this year and at our recent Investor day event for our beer net sales, we continue to expect pricing to be between 1% to 2% and mid to high single digit volume growth in fiscal 'twenty four.
Garth Hankinson: And we still anticipate shipment volumes for the second half to account for approximately 45% of the full year total bill.
Garth Hankinson: Bill already addressed the drivers of the uplift in our beer operating income growth guidance, but it is also important to note that we still expect beer operating margin to be approximately 38% for the full year.
Garth Hankinson: Second for our wine and spirits business, we now expect a decline of 7% to 9% organic net sales and a decline of 6% to 8% and operating income excluding the impact of the divested wine brands that are no longer part of our results they'll also already addressed the drivers for these revisions.
Garth Hankinson: Third from a corporate expense perspective, we now expect that to be approximately $260 million to $270 million for the full year.
Garth Hankinson: Which includes a slightly lower end to the range versus our prior expectation and similarly, our interest expense expectations are now slightly lower added approximately $450 million.
Garth Hankinson: And last but not least we continue to expect our comparable effective tax rate, excluding canopy to be approximately 19%.
Garth Hankinson: And despite the additional $215 million of share repurchases executed in the third quarter. We also continue to anticipate weighted average diluted shares outstanding to be approximately a $184 million.
Garth Hankinson: Beyond the P&L for free cash flow, we expect to be in the range of one four to $1 5 billion for fiscal 'twenty four reflective of two six to $2 8 billion in operating cash flow and one two to $1 3 billion of Capex.
Garth Hankinson: In closing, we continue to deliver industry, leading results in our beer business and remain confident in our ability to achieve our stated EPS targets for this fiscal year, despite incremental category headwinds affecting our wine and spirits business.
Garth Hankinson: As we look further ahead, we remain excited about continuing opportunities to build shareholder value over the medium term, which we hope to achieve by capturing the substantial growth opportunities that exist for our beer business.
Garth Hankinson: Executing against our consistent disciplined and balanced capital allocation priorities and delivering enhanced performance in wine and spirits supported by the significant transformation that business has undergone and the actions that we're taking to improve this business.
Garth Hankinson: We encourage existing and prospective shareholders, who have not yet had an opportunity to review our recent investor day presentations to access those through our Investor Relations website, IR Dot C brands Dot com.
Garth Hankinson: Any further insights into our medium term perspective on these topics.
Speaker Change: And with that Bill and I are happy to take your questions.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.
Speaker Change: Our first question comes from the line of Nik Modi with RBC capital markets. Please proceed with your question.
Nik Modi: Thank you good morning, everyone and happy new year.
Speaker Change: Same to you.
Speaker Change: Hey.
Speaker Change: So bill.
Speaker Change: Maybe you can provide some context, obviously provided a few inter quarter updates one at the analyst day and one of them at the Morgan Stanley Conference just regarding both the beer and wine and spirits business and obviously things came out a little bit differently. So I was hoping you can just kind of give us some perspective on what exactly.
Speaker Change: Exactly happened.
Speaker Change: Cause some of the Delta.
Speaker Change: The clarity or perspective, you gave us around the gaps between scanner data and your actual results. How we should think about that because I'm sure that's going to be something we're all going to have to start thinking about over the next couple of weeks.
Speaker Change: Sure, Thanks, Nick and again happy new year to you.
Speaker Change: As we said in our prepared remarks, we're obviously very pleased with our beer business in Q3, and we were particularly happy with the strong acceleration in the momentum.
Speaker Change: It came out of November.
Speaker Change: Interestingly enough the delta between <unk> and.
Speaker Change: And our numbers sort of changed about the minute guard stopped speaking at the conference in November So that was always interesting how that works.
Speaker Change: As we've noted we expect about 45% of our beer business volumes.
Speaker Change: We will be achieved in <unk>, two which is in line with the normal seasonality of that business.
Speaker Change: And for Q4, specifically, we expect those shipments and depletes will end up being about 20% to 21% of our total fiscal year volumes.
Speaker Change: But we also expect that we're going to continue to drive mid to high single digit volume growth annually, which is consistent with the depletion performance that we've now achieved for over a decade.
Speaker Change: And again, that's consistent with what we've also said, 1% to 2% annual average pricing increases which supports the 7% to 9% annual net sales algorithm that we've said we will do in the medium term.
Speaker Change: On the wine and spirits side, obviously or further revising our guidance down was not a decision we took lightly.
Speaker Change: And we're certainly not happy about it.
We examine numerous scenarios and ultimately determined the adjustment was really needed to reflect a number of things the broader category deceleration and other factors that affected our performance including gaps.
Speaker Change: From our prior U S wholesale expectations that we're actively addressing with our distributor partners and importantly, while making sure we maintain an appropriate inventory level for the remainder of this year setting ourselves in good position to see sequential improvement in fiscal 'twenty five.
Speaker Change: Of course as I said, we're not pleased with these revisions and neither has our leadership team and our wine and spirits team, but we're certainly committed to improving that performance in the medium term and expect that our net sales and operating margin targets will be consistent with what we said at Investor day as you've also seen I'm going to be temporarily <unk>.
Speaker Change: <unk> over that business and I will be spending a fair amount of time with the wine and spirits Division as we worked through the process of appointing a new leader.
Speaker Change: We have already started considering both internal and external candidates as you probably know better than many I spent several years of my career within the wine and spirits categories and I look forward to working more closely with that team in the interim, particularly as that business turns its focus toward enhancing operational effectiveness and market.
Speaker Change: Place execution to build on the reconstituted higher end portfolio and organizational structure that we put in place over the last few years, but ultimately I would like to Nick reiterate this one more time in fiscal 'twenty four we still expect our enterprise EPS guidance to remain within our previously stated.
Speaker Change: <unk> range of 12% to 12, 'twenty and over the medium term. We also continue to expect low digit EPS growth as outlined at Investor day, hopefully that gives you. Some good perspective on those elements you asked about.
Speaker Change: Thank you. Our next question comes from the line of Bonnie Herzog with Goldman Sachs. Please proceed with your question Alright.
Alright, Thank you good morning, and happy new year everyone.
Speaker Change: Thanks.
Speaker Change: To drill down a bit more on your margins.
Speaker Change: Bill and Darcy you raised your fiscal year beer operating income growth guidance.
Speaker Change: That's still imply very low op margins in Q4, so I guess I'd like to better understand the drivers of this and really know how.
How much visibility you have in terms of whether it's your marketing plans or commodity hedges et cetera for the rest of them.
Speaker Change: This fiscal year and then.
Speaker Change: Possibly any color on how margins should be facing next fiscal year would be helpful. Thanks.
Speaker Change: Yeah, well if I just.
Speaker Change: To start on the question for next fiscal year, obviously, we'll give probably we will give guidance on next fiscal year at our next conference call in April but as it relates to margins. This year I mean, obviously margins are progressing in line with what our expectations are and what you saw in the third quarter with this is the first time from a year over year perspective, where we had margin improvement.
Speaker Change: Which again is what we expected at the outset of the year.
Speaker Change: We've always said about margins and this ties back to what we've said about.
Speaker Change: Volumes and shipments and Depletions is at 55% of our activity will occur in the first half of the year of 45 in the second half of the year.
Speaker Change: And Q4 are specific to your question on Q4 that it's always typically one of our lower shipping quarters and so therefore margins are lower just by virtue of reduced throughput through.
Through it through our facilities.
Speaker Change: On top of that we continue to have increasing depreciation cost.
Speaker Change: We referenced during our prepared remarks.
Speaker Change: But as I say, we do expect that Q4 margins. This year will be better than they were last year, continuing the trend of year over year improvement.
Speaker Change: And which obviously, we feel confident about our ability to get back into our 39% to 40% range as we went into a very very good detail at our Investor day.
Speaker Change: Thank you. Our next question comes from the line of Camo Gosh, we're wallet with Jefferies. Please proceed with your question.
Camo Gosh: Hi, guys good morning.
Camo Gosh: Depleting right now you're at a run rate of about 8% or I guess the data for the quarter.
Camo Gosh: There is expectation for some pretty good gain in April.
Camo Gosh: Could you give some context on.
Camo Gosh: What that might mean for a pickup in depletion.
Camo Gosh: Well, here's what I'd say about that is as we said earlier, we were very pleased with the eight 2% that we got in the quarter and we finished November very very strong and certainly.
Camo Gosh: We're up as you would've expected that strong performance in late November continued into December. So we're very excited about the <unk>.
Camo Gosh: <unk> continued to see exceptional depletions as as we move into this calendar year and soon into the new fiscal year.
Camo Gosh: The important thing to me is we continue to gain share or to Sharepoint gains you saw in the overall category nearly three and a high and continue to be industry, leading and our Frac frankly, an acceleration of our share gains had been earlier in the year. So we're very comfortable.
Camo Gosh: Again, 7% to 9% top line.
Driven by mid plus single digit growth profile.
Camo Gosh: Which we've said we see the runway on that for a long time to come.
And certainly this quarter and certainly our expectations for the rest of the year and consistent with that.
Okay.
Speaker Change: Thank you. Our next question comes from the line of Bryan Spillane with Bank of America. Please proceed with your question.
Bryan Spillane: Thanks, operator, and good morning, everyone.
Bryan Spillane: I wanted to go back Bill and just ask a bit about that.
The management transition in wine and spirits and I guess.
Bryan Spillane: What are what are you looking for like what are the attributes or the.
Bryan Spillane: The skill set that you think is needed and then if you could just maybe separate how much of the focus on wine or how much of the improvement path is going to be dependent on uncontrollable. So just.
Bryan Spillane: The category, improving and how much of it is you think things that are controllable things that execution elements are things that that constellation can do to it.
Bryan Spillane: To improve.
Speaker Change: Sure. Thanks for the question Brian.
Speaker Change: I would say this.
Speaker Change: Our transformation of that business is largely complete.
Speaker Change: As we've said now a number of times, it's a very different business than what it was several years ago, even though we still have a fair amount of business in the in the <unk>.
In the lower end of the business, but I would say is this.
Speaker Change: We will be focused on an individual who can bring great operating efficiencies and execution in the marketplace. We think it's critically important that we improve our wholesale performance in the United States.
Speaker Change: And we think theres going to be continuing opportunities for us to perform very well in DTC and international channels as we have developed that business over the last couple of years.
Speaker Change: All of those things I would argue are well within our control a lot of work is being done on the mainstream portion of the business, particularly on Spectre in Woodbridge to enhance the performance of those businesses.
Speaker Change: I think that will you'll start to see that play out in the new fiscal year.
Speaker Change: And.
We believe that some we believe some of the softening that occurred in the overall business is transitory and we will we will come back our way given the real strength that we've seen in our in our higher end business like <unk> and Kim Crawford and the prisoner, Amit capo and things of that nature. So.
Speaker Change: Im always of the belief that a significant portion of your results are really within your control and we're going to focus on those critical factors that improve our business performance as we head into the new fiscal year.
Speaker Change: Thank you. Our next question comes from the line of Nadine <unk> with Bernstein. Please proceed with your question.
Nadine: Everybody. Thank you for taking my question a two parter for me.
You, obviously, you posted really good beer depletions this quarter.
Nadine: Looking at 2020.
Nadine: <unk> 23 for the overall industry USTR has been.
Nadine: Weaker than the historic call, it plus or minus 1% that we've seen over the last decade I'd love to hear your thoughts and your experience why do you think that edge.
Key takeaways to share on the health of the consumer and what would you expect to see for the industry as a whole in 'twenty four and then finally just to come back to wine and spirits again, good to hear you reiterating that medium term growth algorithm you disclosed at the investor.
Speaker Change: But would it be possible for you to share more.
Speaker Change: Details as to how.
Speaker Change: Where does that conviction in achieving that is given the guidance today.
Speaker Change: Building blocks.
Speaker Change: Appreciate the initiatives you mentioned clearly the gap between the guidance for this fiscal year and that medium growth algo is quite big so any color would be appreciated. Thank you sure. So let's start with the overall beer market.
Speaker Change: One of the things that we've seen in <unk>.
Speaker Change: It's accelerated a bit.
Speaker Change: The separation between the low end and the high end in the beer market. The high end continues to be where the strength is and we continue to be the leader in the high end gaining almost three share points in the most recent period.
Part of that is driven I think by a couple of things.
Speaker Change: One is we have such a strong base with the Hispanic consumer where beer remains a critical part of their consumption pattern. Our brands have great brand loyalty and again, that's very valuable to us as time goes forward.
Speaker Change: But one of the things that we also noted.
Speaker Change: Let's take the light beer category, while theres been a lot of movement within that category within brands. The overall sector is not overly healthy it's down.
And we've noted that continuously so I think the important part as you think about the overall beer sector is to look at it bifurcated. The low end has not been successful and has been challenged on a volumetric basis, but the high end continues to perform well and we're fortunate that we are leading at the high end as it relates to the wind.
Speaker Change: On spirits, what I'd like to do on that particular point given I'm about to do a major deep dive into that business is we'll come back to you with more details on where we see our progress going to occur in that particular business. When we do our next earnings call at the beginning of the new fiscal year, what I would say is this.
Speaker Change: We're going to be focused.
Speaker Change: Very very focused on execution and working closely with our distribution partners to make sure that we are outperforming the categories in which we play through our distributor network, that's going to be an important part of our ongoing success.
Speaker Change: Going forward and it'll be a critical part of where I'm spending my time.
Okay.
Speaker Change: Thank you. Our next question comes from the line of Chris Terry with Wells Fargo. Please proceed with your question.
Speaker Change: Yes.
Hi, good morning.
Chris Terry: Good morning, Hi, Chris.
Chris Terry: Garth.
Chris Terry: The beer savings number that you called out, which I believe was $55 million.
Chris Terry: Is a big number certainly in the context of.
Chris Terry: The savings targets through fiscal 2008 that you laid out at Investor day.
Chris Terry: So.
Chris Terry: I guess are you.
Chris Terry: Moving forward savings into fiscal 'twenty four from from other years.
Chris Terry: Or are you, perhaps just getting better at the ability to drive savings in the near term and perhaps we should be thinking about.
Chris Terry: Over delivery or maybe just building more confidence in your ability to hit those targets.
Chris Terry: Over time, so again I'm, just trying to get some context for yourself pulp.
Chris Terry: Capacity in the beer gross margin, which was quite strong this quarter.
Chris Terry: Chris.
Chris Terry: Thanks for the question and I guess the short answer. Your question is no. We're not pulling anything forward from future years in FY 'twenty four I do think that what youre seeing this year is a continuation of a couple of things one of which we detailed at Investor day, which is the shift from us for being builders of breweries to operators.
Chris Terry: Breweries and so we're getting more efficient where we're doing a better job.
Chris Terry: From an end to end supply chain.
Chris Terry: That's what gave us the confidence not just in this year, but in the cost savings.
Chris Terry: Targets that we laid out at Investor day, another thing that where we're seeing benefits from us out of our digital business acceleration activities.
Chris Terry: Activities, which have.
When coupled with the.
Chris Terry: The discipline that we're creating on an end to end supply chain and has driven significant savings.
Chris Terry: And a whole host of areas as it relates to procurement.
Chris Terry: So again.
Chris Terry: It is somewhat new muscle that we're building.
Chris Terry: Really more of an extension of existing muscle as we again migrate from being builders to operators.
Speaker Change: Thank you. Our next question comes from the line of Dara <unk> with Morgan Stanley. Please proceed with your question.
Dara: Hey, guys.
Dara: Just two follow ups, probably a mix question.
Dara: First on beer just to understand the strength in Depletions at the end of the quarter.
Dara: Is that more underlying strength was there anything timing related there or is it continuing December should we look at sort of the 8% result in the quarter as sort of a true underlying gauge of the business at least short term understanding that's not the guidance, but how should we think about that.
Dara: I know, it's tough to talk about the gap versus scanner data, obviously it bounces around.
Speaker Change: But just any specific thoughts on what that could be going forward and then I also have a one question if I could follow up on that.
Speaker Change: Don't want to do that right away because usually once you ask your question.
Speaker Change: Further access what's your one question okay.
Speaker Change: I mean, just look the comments on the revision were helpful in the longer term portfolio transformation, but.
Speaker Change: At the risk of being blunt, it's been sort of years of disappointment on that business. It's a pretty large negative revision after analyst day in a short period of time. So I just wanted to hear a little more about the response bill and how you might manage that business differently from a strategic lens longer term, perhaps a greater focus on productivity or whatever the change.
Does our butt.
Speaker Change: How do you sort of think about managing the business differently and maybe how it fits in the portfolio just juxtaposition versus what's very attractive beer business. As we saw again this morning from a growth and margin standpoint.
Sure sure.
So, let's let's cover the first one initially about the depletions coming out of the quarter, obviously, there's always a little bit of benefit when you have an early Thanksgiving because you give retailers a chance to restock.
Speaker Change: After Thanksgiving, but let's make no mistake that take out that we had around the Thanksgiving holiday was exceptional which you wouldn't get the great restocking. If you didn't have an exceptional take out period.
Speaker Change: And obviously, we're very pleased to see without going into specifics that the strong November is playing into December as we expected it would because the underlying trends for our business remain very strong and as I stated on an earlier question our actual share gains.
Has accelerated during the course of the year, which I think is very positive as well relative to our continuing success in that business.
Speaker Change: As it relates to wine.
Speaker Change: As I said before the thing that we were most concerned about are coming out of this particular quarter is that we end our year and an appropriate inventory position and that we are preparing ourselves to work closely with our wholesale distributor partners to accelerate that business going forward.
So that we are winning in the categories and channels in which we participate.
Speaker Change: We've got a lot of work to do there.
Speaker Change: But we continue to believe the strategy work that's been done over the past few years to reposition our our portfolio much more to the higher end.
Speaker Change: It's going to pay dividends.
Speaker Change: And that.
Speaker Change: And again as I said, I think to Nadine a moment ago I'll come back with some more specific thinking.
We're going to do as you can understand a fairly deep dive into that business.
Speaker Change: And I'll have some more thoughts on that as we get to our next call.
Speaker Change: And Dara as it relates to that.
Speaker Change: The gaps and second versus Depletions and as you mentioned in your question it can be a bit difficult to draw parallels between the two.
Speaker Change: Look for the balance of the Yugo offer for at least the balance of the year going forward, we will give updates on this as we see fit but I think you still have to think about that gap being in the mid single digits.
Speaker Change: That being said ill kind of remind everybody of the comments we made at your conference last month, which is.
Speaker Change: We think that looking at that syndicated consumer.
Consumer takeaway data is really best to gauge long term trends as well as relative performance just as a reminder for our own business.
Speaker Change: <unk> picks up 50% of our total volumes and there are certainly gaps between the volume growth of different tracked channel data providers.
Speaker Change: And importantly.
Speaker Change: You don't see things picked up per se as it relates to differences in time periods, meaning there can be shifts between key weekends or holidays between period to period.
Speaker Change: Make it hard to tie.
Speaker Change: <unk> with this or kind of data so again.
Speaker Change: This is not we don't use the syndicated consumer takeaway data the way that you do and Thats why we say, it's not necessarily the best way to gauge our business.
Speaker Change: Thank you. Our next question comes from the line of Andre <unk> with Jpmorgan. Please proceed with your question.
Andre: Thank you operator, and good morning, everyone. So with your comments just now on the cadence of the quarter and into the fourth quarter.
Andre: I Wonder why you Havent raised guidance for <unk>.
Andre: Sure.
Andre: In terms of topline and.
Andre: Second part of your question looking ahead into the spring how much you would expect from that.
Andre: Sure.
Speaker Change: Michelle with that on the backup business trends will come we'll start to four five months, 7% to 9% algorithm.
Speaker Change: Well, let's start with the second question first.
Speaker Change: We were quite pleased with the more limited changes that occurred on the shelf set in the back half of last calendar year, but were expecting some giving gains greater than our than our growth profile here as we get to the spring resets.
Speaker Change: You would notice that.
Speaker Change: We fully expect that we're going to finish our year in a very strong performance you will note that we raised the bottom.
Speaker Change: Of our guidance.
Speaker Change: <unk> noted and I think I noted in my remarks as well so we actually have raised our expectations around the income side.
And of course that translates through into better cash and various other things as Curt noted. So I think you should take away.
Speaker Change: Hopefully we were trying to portray which is our business continues to deliver exactly what we've told you we would deliver on the beer side, 7% to 9% topline growth and.
And strong bottom operating growth to match.
Speaker Change: And certainly I think our depletion rate coming out of Q3 reflects that strength.
Okay.
Yes.
Speaker Change: Thank you. Our next question comes from the line of Rob Einstein with Evercore. Please proceed with your question.
Great. Thank you two two.
Two questions first so I'm wondering if you could talk a little bit about pricing.
Speaker Change: I know that you are talking about one to two it was one here so kind of two parts to this one.
Speaker Change: What is what is the kind of the general environment for pricing in the beer industry now the sense that you get and second I know that you do kind of a sporadic pricing. So it's a lot of the countries zero and then certain parts as maybe four 5% and so then it averages out one to two can you talk.
Speaker Change: A little bit about kind of the timing of your your price increases my understanding that you are.
Speaker Change: Your major competitors, who are pricing at the end of the end of January and the beginning of February So how does how does your pricing fit into that.
Speaker Change: Question number one and then question number two is.
Speaker Change: Kind of hearing a little bit reading about an innovation Corona Sun Brew I think some Bruce citrus.
Speaker Change: After a good start is wondering if you could talk a little bit more about that thank you.
Speaker Change: Sure, obviously, I'm not going to comment on competitor pricing, but what I would say Robert is.
Speaker Change: Look we said early on and in fact, some of you probably question Garth on eye on occasion about it that we believe that 1% to 2% was the right approach we've done that historically over the long run we were a little bit higher than that during the really high inflationary timeframe.
Speaker Change: Round, Covid, which we fully acknowledged and recognized but I'll go back to what we've always said, which is we really want to keep our consumer it's a whole lot more expensive. If you chase them off and have to go re acquire a consumer than it is to never lose them in the first place and the 1% to 2% algorithm has proven very solid for.
Speaker Change: US over the long term and it's one that we're going to continue I think certainly.
Speaker Change: Youll see in other categories people being careful about pricing.
Speaker Change: And I think that reflects just an understanding of where the consumer may or may not be in various categories.
Speaker Change: As it relates to innovation.
Speaker Change: <unk> is coming and we.
Speaker Change: Plan to talk mainly about that at our at our introduction for that which will occur at the beginning of March so im not going to spill the beans on it but we're we're particularly excited about that we think it's going to be again, another very interesting.
New product launch for our company on the heels of very successful oral launch and very successful Agua Fresca as launch that has occurred in modelo.
Speaker Change: As you know is also expanding here in the coming year. So please stay tuned on that one.
Speaker Change: But I think we're.
Speaker Change: We're very optimistic that that provides some great opportunity in.
Speaker Change: And the Corona franchise.
Speaker Change: Our next question comes from the line of Lauren Lieberman with Barclays. Please proceed with your question.
Lauren Lieberman: Great. Thanks, Good morning, I know, we've covered a lot of ground, but I was hoping you could just touch on the improved cash flow outlook for the year is a pretty material change in exciting. So just wondering if you could talk a little bit about the key drivers on that uptick and outlook. Thanks.
Speaker Change: Yeah. Thanks, Thanks Lauren.
Speaker Change: Mike.
Speaker Change: There are obviously a few drivers of the of the change in cash flow.
Speaker Change: Obviously, I think that seeing the increase in cash flow just goes to <unk>.
Speaker Change: Further evidence.
<unk>.
Speaker Change: Very disciplined approach, we take to managing the cash of the company.
Speaker Change: Obviously some of the drivers there will include things.
Speaker Change: Like.
Speaker Change: The increase in beer margin or I should say beer operating income that bill referenced.
Speaker Change: In his remarks.
There, obviously will be some favorability in the tax taxes that I referenced in my remarks.
Speaker Change: As well as some other favorability on things like.
Speaker Change: Tax rate their taxes and things of that nature, but.
Speaker Change: Art.
Speaker Change: But those are those are those are the primary drivers.
Speaker Change: Thank you. Our next question comes from the line of Filippo for learning with Citi. Please proceed with your question.
Filippo: Hey, good morning, guys and happy new year.
Wanted to go back to the on premise channel sort of beer business. I think got you mentioned grew about 1% in the Florida I was wondering if theres any more.
Filippo: To recall there from the CAD issue that you guys had and then if you think about next fiscal year.
Filippo: We've talked a lot about the opportunity to gain share in off premise, but can you comment on your ability to gain tap handles and gain more distribution and non premise channel as well. Thank you.
Speaker Change: Yes, you bet.
Speaker Change: As we said we had some temporary impact around <unk>, which was largely in Q2 of this year, but I think it is important to point out that last year, both modelo, especially on Pacific, though we're the number one and number two share gainers in draft. Despite some of those temporary issues.
Speaker Change: <unk> remains a great opportunity for us when you think about it I mean, let's let's use an example, modelo especial <unk> is number five on draft, but as the number one beer by dollars in this country, but it's certainly not number one in the on premise at this point again, a great opportunity so.
Speaker Change: Interestingly Corona extra is the number one packaged beer on premise, so again still having opportunity in the DRAM side. So we continue to think that draft is going to be an opportunity for us as one of the growth drivers for us going forward.
Speaker Change: Pacific is a great example, even though it was the number two gainer when you see the just the real acceleration you have in that brand I think they are there remains opportunities for both.
Speaker Change: Especially our Pacific go in particular in the on premise and I certainly would hope to see both of those brands maintaining their number one share gainer status as we get into this calendar year.
Speaker Change: Thank you. Our next question comes from the line of Gerald Pascarelli with Wedbush. Please proceed with your question.
Gerald Pascarelli: Great. Thanks, very much for your question.
Just had a question on your measured versus non measured channels within beer. So if we look at Nielsen you price mix has moderated at retail it looks to be currently running right in line with the midpoint of.
Gerald Pascarelli: Of your 1% to 2% target. So if we compare this to non measured channels. Just curious if you've seen any near term moderation in pricing and if not would.
Gerald Pascarelli: Could you maybe you expect trends to become a little more aligned as we look out over the near term. Thank you.
Speaker Change: I think by and large the answer to your question is yes that those are usually reflective.
Speaker Change: We don't see a lot of variation amongst channels on that particular thing although.
Speaker Change: What you do have some very big markets that are not generally covered by.
Speaker Change: Some of those tracked channels, New York being an interesting one so yes, you do.
Speaker Change: You do see some variation from time to time, but we don't expect that to be significant.
Speaker Change: Moving forward about what the track versus what the non tracked channels look like.
Speaker Change: Moderation that you referenced is really just attributable to the lapping of the incremental pricing that we took control of last year absolutely.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Peter Grom with UBS. Please proceed with your question.
Peter Grom: Thanks, operator, and good morning, everyone hope you're doing well so far if I.
Peter Grom: I may have missed this.
Peter Grom: Expectation is still for beer depletions and shipment can be roughly equal for the year and then I think it was mentioned that shipments in the fourth quarter would be around 20% and 21% of full year shipments.
Speaker Change: Is that quarterly mix similar for completions as well just we've seen a lot of changes in quarterly mix over the past few years that have resulted in differences in growth rates between depletions and shipments. So just trying to understand how we should think about it specifically for the fourth quarter. Thanks.
Speaker Change: Yes, so so.
Speaker Change: Shipments and Depletions, yes, those should be largely in line with one another for a full year, that's consistent with how we operate the business every year.
Speaker Change: And from a from a Q4 timing as it relates to shipments and Depletions, yes. Both of those are in that 20% to 21% range that bill referenced earlier.
Oh.
Speaker Change: Thank you. Our next question comes from the line of Andrew <unk> with BMO. Please proceed with your question.
Andrew: Great. Thanks for taking the question.
Andrew: Minds about the competitive and promotional environment in beer.
Speaker Change: It's about your expectations on shelf space gains in the spring the wider spread between light and premium beer and even some of the pricing dynamics in wine. So just curious you know.
Speaker Change: And then what you're seeing across the competitive set now how you're expecting that to evolve.
Speaker Change: As the year progresses next year, and maybe any plans or programs or levers.
Speaker Change: The environment intensify.
Speaker Change: Sure certainly.
We expect the promotional environment to be fairly consistent with what usually is we don't think theres going to be any radical changes around that topic I think a lot of it goes back to what we've often said which is the velocities that we have on our brands are superb and obviously at the end of the day.
Speaker Change: <unk>.
Speaker Change: The retail environment is very interested in having brands focused on those that deliver outstanding velocities and sales per point of distribution, we shared at our Investor day that our sales per point of distribution is radically better than the competition and I think that's going to continue to.
Speaker Change: Serve us well, especially when you consider the strong brand loyalty that we have with consumers.
Speaker Change: As we've also said on numerous occasions, our judicious, 1% to 2% pricing actions, we don't we don't pull back on our pricing.
Speaker Change: In the marketplace, which I think is important also so when we make those commitments. So one to two that's what we deliver.
Thank you. Our next question comes from the line of Bill Kirk with Roth. Please proceed with your question.
Bill Kirk: Hey, just one for me maybe for Gary I heard the comment about $17 million higher and packaging material costs for beer.
Bill Kirk: That's the lowest year over year increase in some time, so is that the low level of inflation you'd expect you're expecting there going forward or is deflation on those items, even possible in calendar 2024, and I guess separately it will probably be in the 10-Q later so it was the transportation cost line for beer was that.
Bill Kirk: <unk> year over year in the period.
Speaker Change: Yes so.
Speaker Change: As we as we as we said all year long, we would start to see benefits from from from easing inflation as we move through the year and obviously we saw that.
Speaker Change: In Q3.
Speaker Change: Going going forward.
Speaker Change: I asked the question around whether this is the low point of our inflationary in nature, but I would say on that is as we laid out a pretty good detail at our investor day around what's.
Speaker Change: What the drivers are that we're expecting over the medium term that are going to result in us getting back in our 39% to 40% operating margins and that includes in low low single digit inflation net of our cost savings initiatives.
Speaker Change: And obviously there is some other offsets that can sound like.
Speaker Change: Yes.
Speaker Change: Depreciation, but those really are the drivers moving forward.
Speaker Change: Yes.
Speaker Change: And then on logistics.
Speaker Change: <unk> was a bit favorable in Q3 as well.
Speaker Change: Thank you our final question will come from the line of Bill Chappell with <unk> Securities. Please proceed with your question.
Bill Chappell: Hey, Thanks for taking my question just one follow up on the acceleration of the beer in November and into December I think I'm right in saying a year ago. You had started to see a slowdown due to weather in California, and the price increases are just taking there was some elasticity so was there more than.
Bill Chappell: Then I guess more favorable comps that you saw that drove the acceleration or is that a key part of it were where the comps maybe and maybe not as affected as by this by weather and price increases last year as we had assumed.
Bill Chappell: You often know lots of things go into why you see acceleration I think you've pointed out some I think weather in California was better than it was the prior year.
Bill Chappell: You saw Thanksgiving being slightly earlier than it was in prior year I think all of those things are true what I would emphasize though is that at the take out around our business around Thanksgiving was particularly strong and our share gains that occurred.
During that period were as good as we saw during the entire year, which again just speaks to the strength of the brands. There's gives and takes all the way along in the year as you know from various factors that occur, but when you see that kind of share acceleration that we've been seeing in the sort of the two point range on the overall category.
Bill Chappell: Three point range in the high end that just speaks to the continuing strength of our beer business irrespective of the potential gives and takes that occur naturally over the course of the year.
Speaker Change: Thank you we have reached the end of our question and answer session.
Speaker Change: To turn the floor back over to Bill Newlands for closing remarks.
Bill Newlands: Thanks, very much and thank you all for joining today's call again, we're very pleased that our beer business delivered strong performance in Q3 and is on track to achieve the higher end of our initial net sales and operating income guidance for the fiscal year, our beer portfolio continues to deliver industry, leading performance and we see a long run.
Bill Newlands: Way of opportunities to continue to drive strong growth in our wine and spirits business, we're fully committed to realizing net sales growth and improving our operating margins in line with our medium term outlook for that business as we leverage reshaped higher end leaning portfolio and enhanced DTC and international footprint.
Bill Newlands: And from a capital allocation perspective, we continue to consistently execute against our balanced and disciplined priorities, which are maintaining our investment grade balance sheet consistently returning cash to our shareholders through our dividend and executing opportunistic opportunistic share repurchases beyond those.
Bill Newlands: Needed to cover dilution, while advancing our organic investments to support additional production capacity for our beer business and deploying excess cash to smaller acquisitions that fill portfolio gaps, but with a thoughtful and prudent approach altogether, we remain confident in our outlook for the full year.
Bill Newlands: <unk> and continue to expect our enterprise comparable EPS guidance for fiscal 'twenty four excluding canopy to remain within our previously stated range of 12% to 12 to 20 and over the medium term. We continue to expect low double digit EPS growth as we outlined in our <unk>.
Speaker Change: <unk> date, so thanks again, everyone for joining the call and I wish you all a safe happy and prosperous new year. Thank you again for joining us.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect your lines at this time.
Speaker Change: Have a great day.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change:
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yeah.