Q3 2024 Newell Brands Inc Earnings Call
Okay.
Speaker Change: Good morning, and welcome to Newell Brands' third quarter 2024 earnings conference call at this time.
Speaker Change: All participants are in a listen only mode. After a brief discussion by management, we will open up the call for questions in order to stay within the time scheduled for the call. Please limit yourself to one question during the Q&A session. Today's conference call is being recorded a live webcast of this call is available at IR Dot Newell brand's dotcom.
Speaker Change: I will now turn the call over to Joanne Freiberger VP of Investor Relations. Mr. Freiburger, you may begin.
Joanne Freiberger: Thank you good morning, everyone and welcome to Newell Brands' third quarter earnings call on the call with me today are Chris Peterson, our president and CEO and Mark <unk>, our CFO before we begin I would like to inform you that during today's call, we will be making forward looking statements, which involve risks and uncertainty.
Speaker Change: Pete.
Speaker Change: So our results and outcomes may differ materially and we undertake no obligation to update forward looking statements I refer you to the cautionary language and risk factors are available in our earnings release, our Form 10-K Form 10-Q, and other SEC filings available on our Investor Relations website for a further discussion of the factors.
Affecting forward looking statements.
Speaker Change: <unk> also recognize that today's remarks will refer to certain non-GAAP financial measures, including those refer to as normalized measures. We believe these non-GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with GAAP explanations of these non-GAAP measures are available and.
Speaker Change: Filiation between GAAP and non-GAAP measures can be found on today's earnings release and tables that were furnished to the SEC. Thank you and now I will turn the call over to Chris.
Chris Peterson: Thank you Joanne and good morning, everyone and welcome to our third quarter earnings call before we begin I want to welcome Joanne who recently joined US as our new Vice President of Investor Relations and will be <unk> primary investor contact going forward.
Chris Peterson: With that let's turn to the results we.
We had a strong third quarter and executed well against our new corporate strategy, which we rolled out in June of 2023.
Chris Peterson: <unk> came in at the high end or ahead of plan across most of our key metrics.
Chris Peterson: Core sales year over year performance continued to improve sequentially gross margin increased versus last year for the fifth consecutive quarter as outstanding productivity results more than offset inflation.
Normalized operating margin came in well above plan once again, despite planned higher A&P investments.
Chris Peterson: Normalized earnings per share was at the high end of plan driven by strong operational performance, we reduced <unk> cash conversion cycle versus year ago, and we significantly deleveraged the balance sheet to under five times.
The strong performance in the first nine months of 2024 gives us confidence to once again raise our outlook for the full year, we are increasing our full year expectations on normalized operating margin improvement normalized earnings per share and operating cash flow Mark will share. The specifics later in the call.
Chris Peterson: Over a year ago, we announced our new corporate strategy, which focuses on disproportionately investing in innovation brand building and go to market excellence in our largest and most profitable brands and markets, while driving further standardization and scale efficiencies across the supply chain and back office functions.
Chris Peterson: And just nine months ago, we transitioned into a new operating model, which is designed to accelerate the new strategy by enhancing organization effectiveness and agility, while creating a high performing innovative and inclusive culture.
Chris Peterson: While we are still in relatively early days, we believe the new strategy and operating model changes are clearly beginning to yield results as evidenced by improving topline trends margin expansion and strong cash flow.
Chris Peterson: Since introducing the new strategy, we have now reported five quarters of results and.
Chris Peterson: And we have improved the rate of core sales growth sequentially in each period. We also delivered year to date positive core sales growth in our most profitable segment learning and development as well as our combined international business. We have improved normalized gross margins for five quarters in a row versus prior year and are up 500.
Chris Peterson: <unk> basis points year to date versus year ago, we have improved year to date normalized operating margin by over 200 basis points versus last year, despite significantly increasing investment in A&P.
Chris Peterson: We've reduced net debt by over $560 million in the past five quarters.
Chris Peterson: Normalized EBITDA has increased by 22% on a trailing 12 month basis versus prior year from $739 million to $903 million, we have taken a turn and a half out of Newell's leverage ratio going from six five times in June of 2023.
Chris Peterson: One to four nine times this quarter.
Chris Peterson: And we continue to make significant progress improving the companys front end capabilities of consumer understanding innovation brand building and go to market.
Chris Peterson: From a segment perspective learning and developed delivered a third consecutive quarter of positive core sales growth driven by the baby business and home and commercial improved core sales growth by 200 basis points sequentially.
Chris Peterson: The outdoor recreation segment, which is the smallest segment Newell's portfolio improved core sales growth sequentially moving to negative 16, 8% year over year in the third quarter versus 18, 2% year over year decline in the second quarter. While performance has been challenged and we believe it will take additional time before we fully unlock the potential of.
Chris Peterson: The iconic brands such as Coleman, we believe the business bottomed earlier in the year and it is encouraging to see our trends improved sequentially starting in the third quarter.
Chris Peterson: No we will focus on new product innovation continues last quarter. We shared several that we have recently launched or soon to be launched touching on a few today. We will continue with brand investment and 360 degree support for these new MPP HCP product positions, including Graco Smart soothing bassinet.
Chris Peterson: And swing, which detect and respond to baby's cries and seconds with Susan soothing sound and motion.
Chris Peterson: We've had strong performance at launches these innovative products deliver enhanced benefits at a much better value than the leading competitor.
Chris Peterson: Mr Coffee perfect brew its most advanced coffeemaker, yet to help home Brewers create barista quality beverages at home. This new pod free coffee maker uses intelligent technology to automatically adjust brew time temperature and water to unlock best tasting coffee and tea flavor certified by experts the Mr. Crawford.
Chris Peterson: Perfect Peru is one of the few at home Brewers certified by the specialty Coffee Association and recognized by professional coffee tasters as the gold standard for at home Brewing.
And this month in time for peak season for the holidays, we introduced a new food saver handheld plus machine, which is the first to market cordless handheld and countertop vacuum sealer and one with unmatched versatility combining the power of our countertop vacuum sealer with the convenience of our cordless handheld vacuum this innovate.
Chris Peterson: Sealer keeps food fresh up to five times longer compared to ordinary storage methods and helps prevent freezer burn as the only vacuum sealing system on the market to include a detachable cordless handheld unit users can easily vacuum seal Tcl and marinade, all with one device.
Chris Peterson: The investments we are making in key brands are on trend and creating positive results.
Chris Peterson: A couple of recent programs include <unk> debut of a new limited edition a water bottle collection designed in partnership with renowned fitness expert ally Love. This collaboration comes as the first of many as contango is adding <unk> to its suite C suite as the brand's first ever Chief Hydration officer in this role.
Chris Peterson: Ali will bring her love for fitness fashion, and hydration to contango to create an unbeatable hydration experience.
Chris Peterson: Over the next three years Ali will service <unk> product style is collaborating closely with the brands to develop trendy reliable water bottles that encourage healthy hydration habits.
Chris Peterson: Some of you may have seen that Coleman launched a new campaign on Thursday night football on Amazon Prime marking the first time <unk> has done a TV spot in more than 10 years. The early measurable results are encouraging with a strong double digit increase in sales in the days after the AD aired versus year ago.
Chris Peterson: The new campaign focuses on addressing the broader outdoor market instead of the traditional camping subsection consistent with our strategy reset for the brand.
Chris Peterson: We continue to make progress on new business development, expanding our brand's distribution of cost across both new and existing retailers, which has been one of the drivers of the strengthened topline results in recent quarters.
Chris Peterson: International continues to be a growth engine for the company and we had positive core sales growth in the first nine months of 2024.
Before turning the call over to Mark I want to provide some perspective on recent consumer trends and behavior.
We continue to see the broader general merchandise market is down low single digits. This year consistent with our expectations.
Chris Peterson: This is an improvement to the high single digit decline last year.
Importantly, within that we are seeing a market bifurcation in consumer dynamics between low income versus higher income households at lower income levels. There has been a significant decrease in unit volume compared with pre pandemic market levels. As these households are prioritizing spending on basic needs like food.
Chris Peterson: Rent and insurance due to the cumulative impact of inflation outpacing wage increases.
Chris Peterson: Conversely, the higher income households have increased spending significantly in both units and dollars as these consumers are benefiting from home price appreciation and stock market gains.
Chris Peterson: With higher income consumers driving in the market, we are seeing stronger demand for more premium priced products that represent a good consumer value.
Chris Peterson: Our strategy to focus on our largest brands with superior innovation targeting MPP and HPV price points positions us well to capitalize on this trend.
Chris Peterson: Since implementing the new corporate strategy, we've taken bold and decisive actions that have improved the company's topline progression towards growth significantly increased margins through productivity de levered, the balance sheet and improved cash flow performance.
Chris Peterson: Strong results have allowed us to increase our outlook twice in 2024, we deployed our new corporate strategy five quarters ago and based on the results today Newell's business transformation is well underway.
Chris Peterson: While we still have much more work to do we are confident in our ability to continue to strengthen the company's performance and create value for our shareholders over time.
Chris Peterson: I would like to thank our talented employees for their continued commitment to operating with excellence and delighting, our consumers by lighting up everyday moments I'll now hand, the call over to Mark Thanks, Chris and good morning, everyone as Chris indicated during his prepared remarks, we believe our third quarter results provide additional evidence that newell's, new corporate strategy coupled with.
Mark: Strict operational discipline and its execution is positively impacting the current business and setting the stage for future progress.
Mark: For example, core sales came in at minus one 7% during the third quarter of 2024, which represented a vast improvement versus our 2023 run rate and meaningful progress versus the first half of 2024.
Mark: Pricing in international markets, particularly Latin America was a meaningful contributor to Q3 core sales performance and a 3% headwind from currency accounted for most of the difference between core sales at minus one, 7% and net sales and minus four 9%.
Mark: Q3 also represented another quarter of significant gross margin expansion strong fuel productivity savings were once again center stage with some early positive signs from our strategy shift, which places much more emphasis on providing consumers with MVP and ACP offerings have also started to emerge as a contributing factor.
Mark: Consistent with this and as a direct result of the cost reduction efforts, we are pursuing and the new commercialization strategies, we have implemented third quarter normalized gross margin increased by 470 basis points versus last year to 35, 4%, which built on the 130 450, 390 and 600 basis.
Expansion that occurred during the four sequential quarters that preceded it respectively.
Mark: Now you may have noticed that the numbers just cited are slightly different than the ones previously provided this.
Mark: This is because we recently completed a routine review of our public disclosures with the SEC.
Mark: Upon completion of that process and starting with the third quarter, but retroactively back to 2022, we have adjusted our normalization approach to no longer exclude restructuring related accelerated depreciation and inventory charges and a prior period adjustment related to a bad debt reserve and its subsequent recovery for an international customer.
Mark: <unk>.
Mark: These adjustments take our 2023 normalized gross margin through the third quarter down from the previously reported 29, 5% to 28, 9%, which when compared to 2020 for fiscal year to date normalized gross margin of 33, 9% produces a year over year improvement of nearly 500 basis points.
Mark: It also bears mentioning that the 35, 4% normalized gross margin, we just posted for the third quarter of 2024 is in the absolute the highest that <unk> achieved since at least 2020.
During Q3, Newell's normalized operating margin also rose sharply increasing by 210 basis points versus last year to nine 5%.
Mark: The increase versus last year was due to strong productivity and positive pricing as well as ongoing organizational restructuring related savings, partly offset by higher year over year spending in three areas.
Mark: First we purposely increased A&P investment levels in absolute dollar terms and as a percentage of sales.
Mark: Second we continue to make targeted overhead investments in several critical front end commercial capabilities.
Mark: Third based on our strong financial results, we've delivered to date and are projecting for the full year incentive compensation is being accrued at a higher level than last year.
Net interest expense increased by $6 million to $75 million, primarily due to higher interest rates and a normalized tax provision of about $34 million was recorded in the quarter.
Mark: Normalized diluted earnings per share and a 16 versus our 2014 to 17 guidance range.
Mark: However, please note that absent the changes in our normalization approach mentioned earlier, our third quarter normalized earnings per share would've been <unk> <unk> higher.
Mark: Turning to cash flow, new will generate $346 million of operating cash flow during the first nine months of 2024.
Mark: Which was driven in part by a nine day improvement in our year over year third quarter cash conversion cycle and we are very pleased to report that our leverage ratio was four nine times at the end of Q3.
Our leverage ratio once again improved sequentially and is now one five fold turns better than Q3 of 2023 the.
Mark: The year over year improvement was driven by $250 million of net debt reduction and a 22% increase in our trailing 12 month normalized EBITDA.
Mark: Moving on to our fourth quarter, we've assumed the following.
Mark: Core sales are expected to be down 2% to 5% with net sales declining in the range of 4% to 7%. The two point differential between core net sales is largely due to foreign exchange.
Mark: We recognized and acknowledged that our fourth quarter core sales guidance range on the surface represents a slight step backwards from our third quarter results.
However, we believe that is more a function of retail selling windows than anything inherent to the implementation of our new business model in fact, as Chris and I are both repeatedly stated we believe our corporate turnaround is a game of haves not quarters.
Mark: Consistent with that philosophy, our core sales run rate was minus <unk> 14, 7% during the first half of 2023.
Mark: In the second half of 2023 was minus nine 3%.
Mark: The first half of 2024 was minus four 5% and taking our third quarter actuals and the midpoint of our fourth quarter guidance suggest that the back half of 2024 will come at around minus two 5%, which we believe is solid progress towards an expected positive and sustainable inflection in our core sales growth rate at some point during fiscal 2025.
Mark: Getting back to the fourth quarter of 2024, we expect normalized operating margin of 7% to seven 7% as an increase in SG&A expense in both absolute dollars and as a percentage of sales due in part to our decision to fund higher levels of A&P investment should be more than offset by gross margin improvement.
Mark: Finally, we expect a slight year over year increase in interest expense a normalized tax rate in the single digits and normalized earnings per share of 11% to 14.
Mark: For the full year, we are leaving our core sales and net sales range unchanged at minus 3% to 4% and minus 6% to 7% respectively.
Mark: But we are increasing our outlook for normalized operating margin to eight 1% to eight 3% from eight to eight 2% previously.
Mark: We are also increasing our normalized EPS guidance range to $63 66.
Mark: From 60 to 65.
Mark: And raising our operating cash flow forecast by $50 million to $500 million to $600 million.
Mark: This is the second time, we've increased guidance for these three critical financial targets this year.
Mark: We should also point out a few additional things first we expect a high single to low double digit full year tax rate.
Mark: Second we expect to incur about $150 million in cash restructuring and related charges through year end.
Mark: Third we expect Newell's year end leverage ratio to be slightly below five times with our long term goal of achieving an investment grade credit rating unchanged.
Mark: In closing it's been five full quarters since we deployed our new strategy and while there is still plenty of work ahead, we feel exceedingly good about the progress all of Newell brands passionate and highly capable employees have allowed us to make.
Topline results are improving and margins are expanding with five consecutive quarters of robust year over year gross margin improvement with Q3 being the highest gross margin quarter since 2020, and three straight quarters of year over year normalized operating margin expansion, while investing more in advertising and promotion and beefing up several critical front end capabilities.
Mark: During that same period, our strong cash performance and EBITDA growth had allowed us to pay down debt and lower our leverage ratio.
Mark: As we start to think about 2025, we are confident that the capabilities. We are developing in support of our new corporate strategy and the operational rigor we are bringing to all aspects of the business will allow us to make additional progress on our multiyear journey to transform Newell brands into a world class consumer products company that delivers exceptional financial returns for our.
Mark: <unk>.
Mark: Operator, if you could please open the call for questions.
Thank you as a reminder, desk a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Speaker Change: Our first question goes from Olivia Tong with Raymond James You May proceed.
Olivia Tong: Great. Thank you good morning.
Olivia Tong: Perhaps can we start with just a walk around the categories given such a divergence in performance across divisions.
Olivia Tong: Particularly as you think about planning for next year, and then secondly, you talked about the price mix contribution.
Olivia Tong: This quarter and the capability around that could you talk about a little bit more about that in terms of the impact of sales and gross margin not only this quarter, but your expectations going forward as you pivot your portfolio more towards.
And higher price point, and the OTT MTT area. Thank you.
Speaker Change: Yeah, Thanks, Olivia happy to do it so let me start with the walk around sort of the divisions. So.
Speaker Change: As we've talked in the past the starting point.
Speaker Change: <unk> abilities in our in our different business units was different and as a result, as we put the new strategy in place focused on building capability on consumer understanding innovation brand building and go to market. The front end capabilities that is showing up at different speeds and the different businesses.
Speaker Change: We're very encouraged that our largest and most profitable business.
Speaker Change: Turning in development.
Speaker Change: Continues with three straight quarters of core sales growth.
We feel good about the writing business and the baby business.
Speaker Change: We've recently finished as you know the back to school period in writing and we gained market share during the back to school season. This year. The baby business has had strong core sales growth behind.
Speaker Change: Very good innovation, we are gaining market share on car seats on play yards and with the recently.
Speaker Change: Newly launched.
Speaker Change: Smartphones.
Smartphones, soothing bassinet and swing product that we're pretty excited about so we believe that business is going from strength to strength and we believe that business. We've got strong capability and a strong innovation pipeline heading into next year, the home and commercial business.
Speaker Change: And it's been a slightly different state.
Speaker Change: Its next in terms of improvement we're excited that.
Speaker Change: Yes.
We improved the rate of core sales growth in the third quarter for home and commercial by 200 basis points versus the prior period I think we've talked about the commercial business being in pretty good shape and driving core sales growth, which it did in the third quarter.
Speaker Change: The home fragrance business.
Speaker Change: Sure.
With Yankee candle is just launching a new.
Speaker Change: Marketing campaign that we're pretty excited about that we believe will bode well heading into next year and we've got some very exciting innovation coming on the kitchen business some of which we've talked about.
With things like the Mr. Coffee cold brew product that we recently launched I think we announced it a week or two ago that allows consumers to.
Speaker Change: Through cold Brew at home in 10 minutes, which is a new.
Speaker Change: Concept under the Mr. Coffee brand that that was previously unavailable.
Speaker Change: To name an example.
Speaker Change: And then outdoor and Rec is the segment that is going to take the longest to turnaround because thats. The one where we were.
Speaker Change: We feel good about the progress we've made we've re staffed the team we've reset the strategy to move Coleman, which is the largest brand from camping focus to more of an outdoor focus we've talked about the teller.
Speaker Change: TV spot that we just put on Amazon, which is getting good traction.
Speaker Change: <unk> partnership with Ali Love, which is off to a great start and I think the team that we've built in outdoor and rec.
Speaker Change: Building a very positive.
Speaker Change: <unk>.
Speaker Change: Innovation pipeline that is going to be coming to market in 2026 and so.
Speaker Change: That is the one that we will take the longest from a price mix standpoint, what I would say there is.
Speaker Change: As we look going forward, we're not taking price increases on our base products were driving productivity benefits through the supply chain, but we are driving mix benefit by law.
Our launching products that our gross margin accretive and so the plan going forward really is more dependent on mix benefit than it is on pricing and if I just add a little bit to that because in addition to the work that we've done to basically make sure that all the initiatives that go out the door or gross margin accretive we've done a number of other things look we've looked at all the businesses in our <unk>.
Speaker Change: Categories and for those that were structurally unsound, we either took pricing actions, where we've effectively starting to walk away from those businesses. We also put in place a real strong cost analysts capability that hit or two we didn't have that allows us to titrate in and understand SKU level economics better than previously we've also been doing a lot of work on our price line logic.
Speaker Change: Which we believe presents a real opportunity for us to access additional pricing, but in a way that's not really.
Speaker Change: <unk> as a price increase to the consumer said, it's simply a matter of fixing all the priceline logic, where sometimes there's inconsistency. So there's a lot of things we're doing on price mix right now to be fair. The 470 basis points were up on the gross margin in Q3 versus the prior period is largely driven by our fuel productivity efforts, but we really believe that managing price mix favorability in the future.
Speaker Change: It will be a bigger part of that story.
Thank you.
Speaker Change: Yes.
Speaker Change: Our next question comes from Chris Carey with Wells Fargo Securities You May proceed.
Speaker Change: Chris carry your line is now open.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Lauren Lieberman with Barclays. You May proceed.
Great. Thanks, good morning.
Lauren Lieberman: So learning language sales.
Speaker Change: Morning.
Lauren Lieberman: The guidance range for the fourth quarter implied it really is pretty wide and.
So I just wanted to get a sense, if you're seeing or hearing anything that's giving you pause around retailer inventory Destocking you spoke very clearly about high end versus Midland and low income consumers, but just curious on kind of that thank you. The lower end of the range on sales is effectively on the table for for Q.
And then also you had.
Lauren Lieberman: You mentioned I think the language seem to change a little bit on the inflection in core sales growth sometime in 'twenty five so I just wanted to.
Lauren Lieberman: Kind of chicken on that Brian is that really driven by the slower.
Lauren Lieberman: Progress in outdoor or if it's something else. Thanks.
Lauren Lieberman: Yes, So let me start with the fourth quarter Guide I think the fourth quarter.
Lauren Lieberman: We're entering the holiday season, and everything we're hearing from sort of the prognosticators on market growth would suggest.
Lauren Lieberman: That we're headed for a holiday season, where our consumers are likely to spend more money this year than last year.
Lauren Lieberman: However.
Lauren Lieberman: That money is likely going to be spent in areas that are more focused on food and essential items as opposed to general merchandise. So our planning stance for the fourth quarter is a continuation of a market that is sort of down low single digits.
Lauren Lieberman: We may be wrong on that but that's what we've got embedded in our guidance that has been the case and we're not assuming a turnaround in terms of market growth in the fourth quarter.
Lauren Lieberman: The range that we've given it has more to do with what Mark talked about in his prepared remarks on retailer shipping windows, it's not about.
Inventory Destocking, we think retailer inventories are in a very good place. This is more about the timing of rent and retailers take inventory to reset their store shelves, which doesn't neatly lineup with our quarters.
Lauren Lieberman: We tend to look at it more in terms of halves.
Lauren Lieberman: And we're pretty excited that we are continuing to make sequential progress in the second half of this year versus the first half as we go to next year in terms of core sales growth.
Lauren Lieberman: We are working through the plan right now we will provide guidance on our normal.
Cadence at the at the February call, but what I will say is that we are pretty excited about the capability investments that we're making on the front end.
Lauren Lieberman: And we expect next year to have a stronger innovation pipeline next year than this year, we expect our rate of core sales growth to be better next year than this year. What we don't know yet is sort of how the market dynamics are going to be from a overall market growth standpoint.
Lauren Lieberman: As we stand today most of what we're hearing and seeing is that we think that the general merchandise market is going to improve next year versus this year from being down low single digits to maybe being closer to flat next year, but there is a lot of volatility on that not not not to mention the least of which is intellect.
Lauren Lieberman: <unk>, that's coming up in two weeks with very different economic policies.
Lauren Lieberman: <unk> to it so I think we're monitoring the situation closely we feel good about the progress we're making on the front end capability.
Lauren Lieberman: And I believe that we're going to have a plan.
Lauren Lieberman: That strengthen our core sales delivery next year versus this year.
Lauren Lieberman: And we will provide guidance on our normal cadence.
Speaker Change: Okay, great. Thanks, so much.
Lauren Lieberman: Thank you.
Speaker Change: Our next question comes from Bill <unk> with <unk> Securities You May proceed.
Speaker Change: Thanks, Good morning, just.
Speaker Change: Wanted to talk a little bit more about good morning.
Speaker Change: The categories.
Speaker Change: I understand you're making strides in regaining share in merchandising what have you, but trying to specifically look at the outlook for.
Speaker Change: Kitchen electrics fragrance baby.
Speaker Change: Camping like are these categories do you think that actually returned to growth.
And solid and consistent growth as we move to $25 26 are you seeing specific trends that gets you encouraged and then with that.
Speaker Change: You talked about how you are encouraged by the sequential movement, but some of the business is seasonal so maybe a few more examples of what gets you. So encouraged on your own business would be great. Thanks.
Yeah, So I think.
Speaker Change: A number of our categories. So we have different types of categories, but let me give you some examples.
Speaker Change: Some of our categories have long purchase cycles. So if you think about.
Speaker Change: Kitchen for example, and kitchen appliances purchase cycles in that category tend to be three or four years.
Speaker Change: There was a surge of demand during COVID-19 that happened in 'twenty one.
Speaker Change: Now seeing that pull forward if you will.
Speaker Change: <unk> caused a normalization in demand.
And the following years in 'twenty, three and 'twenty four is beginning to be behind us and so we're seeing real evidence.
Speaker Change: And real forecast prognosis that those consumers that bought during the Covid pandemic.
Speaker Change: Period are now likely going to come back into the market and in fact, we recently met with.
Speaker Change: So kind of who is projecting that that business.
Speaker Change: <unk> is going to be back to core sales growth next year.
Speaker Change: Because of this dynamic of lapping the pull forward dynamic.
Speaker Change: I think that's also true in some of the other categories like outdoor and Rec.
Speaker Change: On baby and writing I think it's more the case not so much of the pull forward dynamic on baby and writing I think it's a case of we've got a strong innovation pipeline that we feel very good about this.
Speaker Change: Brightcove smart.
Speaker Change: Soothing bassinet and swing that we launched just recently.
Speaker Change: It's a pretty big deal.
Speaker Change: A lot of people are familiar with snus new is selling.
Speaker Change: A similar product that to $500. We've come out with these products are $400 and we believe our product has more features and benefits. So we think we've got a huge opportunity.
Speaker Change: Two to grow and gain market share behind innovative products that we're launching in the marketplace.
Speaker Change: Similarly on writing.
Speaker Change: Launched as you know the.
Speaker Change: Creative markers under Sharpie. We've also recently launched a pauper S gel pen as where premium rising the portfolio.
Speaker Change: When we launched the first S gel pen.
Speaker Change: <unk> was one dollar we launched metal barrel pens at $2 50, we've just launched a copper S gel pen at $10.
Speaker Change: Getting very strong.
Speaker Change: Support and so we're driving trade up and we're driving category growth.
Speaker Change: And categories like that.
Speaker Change: We continue to do well with the paper made enjoy gel pens.
Well and then I think on home fragrance, we've got a relaunch.
Speaker Change: On Yankee candle.
Speaker Change: That is going to play out over the course of next year that gives us confidence that we're going to be able to return that business to growth next year. So.
Speaker Change: I'm feeling pretty good about the stuff that's within our control mall, so feeling that we as the market leader can begin to start to drive category growth. So that it doesn't happen to us, but we take a little bit more ownership of driving category growth with some of our innovation that is geared to more mid.
Speaker Change: Mid and premium segments. So that's that's sort of what we're looking at but we don't control is the consumer dynamics.
Certainly.
Speaker Change: The volatility in the market, but I believe that for the stuff. That's in our control we are making real progress and I believe we have a stronger plan heading into next year from a commercial standpoint than we did heading into this year.
Great. Thanks.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Andrea to show with Jpmorgan You May proceed.
Thank you good morning.
Andrea: I was hoping to see and I appreciate all the commentary about the kitchen appliances are now.
Speaker Change: So the innovation in other areas of the business as you as you get out of.
Andrea: Morning sluggish.
Andrea: Gory environment, but I was thinking more long term.
Your R&D investment and innovation in general.
Andrea: I mean, not surprisingly U verse typically less than some of the other peers in the Disruptors out there is there any way.
Andrea: Way you can kind of.
Andrea: Help us.
Speaker Change: You want to take that number.
Speaker Change: I believe it's about 5% at this point.
Speaker Change: And you think about also how much you're contributing reinvesting savings.
Speaker Change: This assumes an advertisement and promotion.
Speaker Change: How we should be thinking of.
Speaker Change: We're going.
Speaker Change: We're going to be the best in class and then more short term.
Speaker Change: How we should be thinking.
Of distribution are you completely.
Speaker Change: We'd be thinking of the holidays as well.
Speaker Change: In terms of the categories you compete in how we should be thinking of distribution as we go into the fourth quarter and into 2025.
Speaker Change: Yes, So let me try to take those.
Speaker Change: In turn.
Speaker Change: Maybe I'll start with distribution.
Speaker Change: So distribution I expect to be a more positive tailwind next year compared to this year.
Speaker Change: So if you think about the journey we've been on one of the things that we did when we put the new strategy in place was we looked at the structurally unprofitable parts of the business.
Speaker Change: And we exited some of those structurally unprofitable parts of the business. We also exited some of our smaller brands recall, we were starting with 80 brands.
Speaker Change: We expect at the end of this year to be down closer to 50 brands.
Speaker Change: And those sort of tail brands to be out of our base period, and as we've exited that structurally unattractive business.
Speaker Change: Distribution has been a headwind in 2024, which is embedded in our guidance as we go into next year, we no longer have that headwind and in fact.
Speaker Change: Think we're going to be on our front foot trying to gain distribution.
Speaker Change: As opposed to have it as a headwind so I am expecting and what we're seeing so far from the line reviews that we've had is that distribution is going to be.
Speaker Change: Much more positive driver of core sales.
Speaker Change: Friends next year compared to this year.
Speaker Change: The first point, which is consistent with the strategy.
Speaker Change: So the second question.
Speaker Change: I'm on the R&D partner accounts innovation, yes, the margins.
Speaker Change: So we have historically, we've been spending on A&P about 4%.
Speaker Change: This year, we have ramped that up and I expect that will probably come close to 5%.
Speaker Change: And where we where we net out this year.
Cause of the increase and support behind the new innovations as we're ramping that up I expect over time, when we look at our categories and the mix of categories that we have that probably the right long term target for us is somewhere around six or 7%.
It's a little bit higher than where we are today, but we don't want to we want to be ROI driven on this and so we're not ramping up the spending before we have the innovation, we're ramping up consistent with when the innovation is coming.
Speaker Change: The first point the <unk>.
Speaker Change: Second point is we still have a lot of opportunity to go on gross margin improvement and on overhead reduction and so we continue to expect that the gross margin improvement and the overhead reduction as a percent of sales is going to be significantly more meaningful than the ramp up in A&P.
Speaker Change: Which is why we think that we've got an opportunity to take our operating margins significantly higher as part of our strategy.
Speaker Change: And so you've seen this year, despite ramping up A&P from let's call. It 4% to 5% were up 200 basis points and operating margin through the first nine months of the year and Thats really been driven by gross margin improvement I think youre going to see something similar longer term where we.
Speaker Change: To take the operating margins of the business off.
Reinvest some of the gross margin and overhead improvements and higher A&P, but we bring a significant amount to the bottom line as well.
Speaker Change: And then can you quantify this is super helpful. Chris, but can you quantify how much of a headwind was the distribution losses, where the distribution losses this year.
Chris: Yes, it's a little bit hard to hard to get at but I would say.
Chris Peterson: Probably a couple of points is what I would say as best we can tell.
<unk>.
Chris Peterson: And what I would say about that is they were purposeful there.
Chris Peterson: Sure.
Chris Peterson: There is a reason why our trailing 12 months EBITDA is up 22%, which is a remarkable number.
Chris Peterson: Not that many companies and consumer products that drive a 12 month EBITDA growth of 22% in absolute dollar terms, particularly in an environment, where revenue is going down and that's.
Chris Peterson: That's a function of incredible productivity results from the supply chain and from the centralization of the supply chain in the back office, it's a function as it is.
Chris Peterson: Also a function of.
Structural profitability improvement across the business and walking away from some of these businesses, where the company frankly was losing money.
Chris Peterson: And so I think we have a stronger portfolio today.
Chris Peterson: Then we did.
Chris Peterson: Five quarters ago, when we started the strategy. So the quality of our portfolio is also improving.
Chris Peterson: As we go forward.
Chris Peterson: And it's hard to parse out that film also from the <unk>.
Speaker Change: Q rationalization that you're still at the backend of air tried it towards the end of 2024.
Speaker Change: So but yes.
Speaker Change: Uh-huh.
Speaker Change: Yes, that's right and we're going to we're down to.
Speaker Change: As we sit here today, we're down to about 20000 Skus. So recall when we started the journey back in 2019, we had over 100000. So we've gone from over 100000 down to 2000, and we've made again significant progress this year and our revenue per SKU.
Speaker Change: Has has more than tripled now versus when we started so we feel good about where we are from a SKU count standpoint, we still have some opportunities ahead, but I think the opportunity ahead is different than the opportunity we've had previously.
Speaker Change: That's fair. Thank you so much.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Chris <unk> with Wells Fargo Securities You May proceed.
Chris: Hey, good morning, guys. Thanks for getting me back in the queue.
Chris <unk>: Just a couple of questions if I if I could one is the question that I've asked on these earnings calls in the past, but I'm always curious on progress.
Chris <unk>: There was a major maybe pull forward of demand in a number of your categories. During COVID-19 and we've seen that normalization carryout for some time now and as you talk about the sequential improvement in core sales growth.
Chris <unk>: Do you think that some of that is the consumer coming back for replenishment.
Chris <unk>: At the tail end of some sort of cycle normalization and we're re approaching a new cycle I know youre looking at a flattish.
Chris <unk>: Flattish general merchandise category growth next year.
Chris <unk>: How much of that is just embedding kind of this re normalization phase.
Chris <unk>: And then if I.
Chris <unk>: Just could you did.
Chris <unk>: Have a quick nod to elections.
Chris <unk>: Miss if I didn't ask I know there's been a.
Chris <unk>: Two diversify or.
Chris <unk>: Your geographic basis sourcing and manufacturing.
Chris <unk>: How do you think about that evolution in the context of <unk>.
Chris <unk>: <unk> policies.
Can go different ways, depending on how the election plays out thanks.
Speaker Change: Yes so.
Speaker Change: I think I think your comment on normalization from Covid pull forward of demand is right and I think we are seeing that pull forward of demand.
Speaker Change: And subsequent.
Speaker Change: Category decline is a result of that come to an end.
Speaker Change: And so we do think that's a factor that will affect next year.
Speaker Change: Which is why from what we're seeing today, we expect the category growth dynamics to be a little better next year than this year at the same time, we also expect that our market share.
Speaker Change: <unk> is going to be better next year versus this year, because we are gaining in terms of our innovation portfolio. Our brand building A&P investment in our go to market capability and so.
Speaker Change: We think the market is improving we think our ability to grow market share is improving and we think the combination of those two things is what we're focused on with regard to the top line on your question on the election I think the biggest thing we've been focused on is tariff risks and I talked about that at the last quarter's call I feel very.
Speaker Change: Good about where we are with regard to that.
Speaker Change: We have spent the last several years diversifying our supply chain several years ago, we had over 30% of our cost of goods sold was.
Speaker Change: Coming from China, and being sold in the U S.
That number today is down below 15%.
Speaker Change: And by.
By the end of next year, we expect that number to be below 10%.
Speaker Change: We also have a very strong U S manufacturing presence with a large writing plant in Tennessee with a rubbermaid food storage.
Speaker Change: Manufacturing plant in Ohio, with the cooler plant in Kansas with a rubbermaid commercial products.
Speaker Change: Large plant in Virginia, and so we believe in a number of categories. If there were tariffs implemented we would benefit and we would be in a position to benefit.
Speaker Change: From that and so.
Speaker Change: We're watching it closely.
Speaker Change: We've been preparing for the.
Speaker Change: The potential for tariffs.
Speaker Change: And I think we are as well positioned as we can be to benefit in some categories. There are some categories that.
Speaker Change: We still would be subject to risks the biggest.
Speaker Change: <unk>, we have from a China tariff standpoint, as we've talked in the past is the.
Speaker Change: Our baby business, but.
Speaker Change: But that has been exempted in the past from 301 tariffs altogether.
Speaker Change: Because of the <unk>.
Speaker Change: Difficulty of moving the supply chain on those products and the impact on families of putting tariffs in place and so.
Speaker Change: That's the primary exposure that we expect we would have as we head into <unk>.
Speaker Change: Next year.
Very helpful. If you humor me for one follow up.
The profitability you mentioned it.
Speaker Change: Is very impressive.
Speaker Change: Amidst the revenue trend of the business.
Speaker Change: How would you think about the sustainability of profit improvement.
Speaker Change: Growth remains uneven.
Speaker Change: He then said another way are you are you finding limits of course, youre not going to see the same level of recovery, but just maybe talk about your ability to sustain some level of profit growth even as the revenue line has been exactly growing.
Speaker Change: As as demonstrably as you would have wanted to in the past.
Speaker Change: Yes, yes, I think we continue to see strong opportunities for profit improvement. So we do expect the revenue line to improve going forward as I mentioned, that's both a function of category growth and a function of the front end capability investments that we're making we also continue to have a strong pipeline.
Speaker Change: Productivity savings projects, both across the supply chain and across a lot of our back office functions.
Speaker Change: And so I expect that youre going to see us.
Continue to drive margin improvement on both the gross margin line and the operating margin line as a result of that and so.
Speaker Change: So that gives us confidence that.
Speaker Change: We can continue to drive.
Speaker Change: Absolute dollar EBITDA growth going forward now I will say, 22% EBITDA growth in a year is an exceptional performance.
Speaker Change: I'm not sure we're going to be able to drive EBITDA growth at a 22% rate I don't think thats likely going forward.
Speaker Change: But I think we can drive very strong EBITDA growth going forward. I also think we've got an opportunity to continue to drive cash conversion cycle down and continuing to Delever the company going forward.
Speaker Change: We've which we've had very strong.
Progress on over the last five quarters as I mentioned going from <unk>.
Speaker Change: Six five time net debt to EBITDA ratio down to $4 nine, which I think is very encouraging.
Speaker Change: I'll, let the operators, we've built a scaled distribution in a scaled supply chain at this point in time and once we do see the top line and flat. If we can just get a little additional volume into our facilities. The marginal economics on that are going to be very very attractive for us.
Speaker Change: Okay. Thanks, so much.
Speaker Change: Thank you.
Our next question comes from Brian Mcnamara with Canaccord Genuity you May proceed.
Brian McNamara: Hey, good morning, guys. Thanks for taking the question. So the turnaround looks to be achieving strong improvement in a number of areas outside of the top line, thus far particularly margins, but the biggest question investors ask us.
Brian McNamara: Kind of when this company will sustainably grow again, I know youre not guiding for 2025, yet and you mentioned your performance will be impacted by the general merchandize environment next year, but what should give investors confidence in the company achieving its long term evergreen target of kind of low single digit annual growth.
Speaker Change: Well I think good question and it's something that we talk about everyday in the company and we are acutely aware that we have set out a goal of returning the company to sustainable.
Brian McNamara: Profitable topline growth.
Brian McNamara: That's why as part of the strategy, we've invested in building our consumer insights function.
Brian McNamara: Completely redesigning our innovation pipeline.
Brian McNamara: Changing the way in implementing our brand management model focused on our top 25 brands consolidating our U S selling organization and putting a new business development function in place and driving a one new international approach across the enterprise.
I think all of those things at this point.
Brian McNamara: Or have been implemented we move to the new operating model just nine months ago. If you recall in January those teams are now in place. Those teams are working and you can see the improvement sequentially in the rate of top line growth.
Brian McNamara: We've gone from.
Brian McNamara: Last year as Mark mentioned, a core sales that was down double digits to this quarter, we were down one 7%.
So we've had a meaningful improvement we've also.
Started to see improvement.
Brian McNamara: Improvement in market share trends on a significant number of our top 25 brands not all of them.
Brian McNamara: We are gaining market share and more top 25 brands today than than we were 12 months ago.
<unk>.
Brian McNamara: And so I think those are the things that we look at that give us confidence.
Brian McNamara: And we are focused on getting there and we think when we get there we have a real opportunity to.
Brian McNamara: Sort of prove it to the to the street.
Brian McNamara: The investments that we've made on the front end can do this I expect that we're going to get the top line growth at some point during next year.
Brian McNamara: <unk>.
Brian McNamara: During 2025, but its a little premature for us to give guidance at this point given the.
Brian McNamara: Uncertainty in the macro context.
Speaker Change: Thanks, that's helpful and if I could just squeeze a follow up in here. There is a large player with a strong focus on innovation and marketing that were public about 15 months ago and compete with you in some categories. In your view is this competitor good for your categories, particularly kitchen appliances or does it represent another headwind and from our vantage point it doesn't.
Speaker Change: Appear that retailers are allocating incremental shelf space to a number of your categories, especially in kitchen appliances.
Speaker Change: Yes, we actually think it's good because.
Ben: Ben I'll describe why because what it shows is that we're on the right strategy.
Ben: What it shows is that the categories we compete in.
Ben: Sure.
Our responsive to innovation, they're responsive to consumer insights.
They're responsive to strong branding so the.
Ben: The strategy that we put in place focused on improving our consumer insights improving our innovation behind leading brands.
We think has been demonstrated in the company you are talking about shows what is possible when you do that.
We inherited a front end.
Ben: That was.
Ben: Bereft of those capabilities and I think we've been racing to put them in place and I think we're starting to see strong results and progress from the work we've done over the last five quarters.
Ben: And if we continue on the journey that we're on I think it shows you what's possible in the categories with the brands that we have.
Ben: So we look at it as the glass is half full on that.
Speaker Change: Got it very helpful. Thanks, very much best of luck.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Philip <unk> with Citi. You May proceed our final question.
Speaker Change: Hi, good morning, everyone.
Speaker Change: I wanted to go back to the profitability you clearly deliver very strong results and you sounded pretty positive about next year.
Speaker Change: Just looking at your disclosure, particularly on the organizational realignment.
Speaker Change: Savings there it does seem based on your run rate savings and what you're realizing this year you still have another $10 million to $20 million of savings from that.
Speaker Change: No you are not going to give guidance today, but maybe can you give us a sense of what other savings you have line of sight for next year and kind of thinking like how much of the profitability is under your control.
Speaker Change: How the general merchandise category is going to outperform thank you.
Speaker Change: I would say maybe I'll start and then mark can add.
Speaker Change: The biggest savings program that we have in the company is the fuel productivity program across the supply chain. This year that fuel productivity program, which is an all encompassing program that has more than 2000 projects that we are executing as as.
Speaker Change: As part of the program, some big and some smaller.
Speaker Change: Going to generate over 6% cost of goods sold takeout. So thats a huge positive impact on the cost of goods sold line now thats being partially offset by inflation and other things.
Speaker Change: But that's been a big driver of the gross margin improvement has been that program and that program is continuing as we go into next year. So I am expecting that we will have continued strong fuel gross productivity savings as we go into next year.
Speaker Change: We will deliver gross margin improvement.
On the overhead side I think theres, a number of things that we're looking at.
Speaker Change: As part of the strategy, we have put our.
A lot of our back office functions into a centralized organization structure and I think on that.
Speaker Change: Areas, we've got opportunity to drive greater scale and drive greater productivity.
Speaker Change: We started implementing things like artificial intelligence and a few of the areas. So we've turned on artificial intelligence in our customer service and some of our consumer service.
Speaker Change: Functions, and that's driving better quality service results for our customers and our consumers.
Speaker Change: And driving a productivity benefit at the same time and I think there's more that we can do in those areas to drive overhead efficiency as well, yes, and I'll just offer a few other areas that we're super excited about we touched on this a little bit earlier, but just getting the structural economics of our innovation programs correct upfront is a huge enabler for us.
Speaker Change: If you think about the fact that right now.
Speaker Change: <unk> utilization is roughly 40% anything that we do on the volume side is going to have as I said earlier really attractive structural economics associated with it we put a huge amount of automation programs in place and if you think about automation and you think about the marginal cost of getting that next unit. After an automated line, it's really really attractive and we've talked about the invoice to net trade by management system.
Speaker Change: That we are standing up in January just kind of let us basically put a performance based program in place with our retailer partners and be able to do proper joint business planning with proper promotion analysis, that's a big big unlock because there's literally over about $1 billion in just the U S alone that to this point in time, we haven't really been able to.
Speaker Change: The diagnostic tools to properly manage so we're really excited and we think that we still have a lot of runway as it relates to cost takeout.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: We'll conclude the call there and.
Speaker Change: Thank you everybody for joining the call and we'll look forward to talking with.
Speaker Change: Any of you in follow up calls as as you'd like.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference call. Thank you for your participation a replay of today's call will be available later today on the company's website at IR Dot Newell brands' Dot Com you may disconnect have a great day.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
[music].
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Dan.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
<unk>.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Okay.
Speaker Change: Yes.
Speaker Change: And.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
[music].
Speaker Change: Okay.
Speaker Change: Okay.
Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
[music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Yes.
Speaker Change: [music].
Speaker Change: Yes.
[music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Okay.
[music].
Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Sure.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Sure.
Okay.
Speaker Change: Yes.
Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Okay.
Speaker Change: Okay.
Speaker Change: [music].
Sure.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Thanks.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Great.
Sure.
Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
[music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Thanks.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Okay.
Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Great.
Speaker Change: Sure.
Okay.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
[music].
Yes.
Speaker Change: Yes.
Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Thanks.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
[music].
Speaker Change: Sure.
Sure.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Thanks.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Okay.
Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Sure.
Okay.
Okay.
Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Okay.
Speaker Change: Thanks.
Speaker Change: Yeah.