Q1 2025 Reynolds Consumer Products Inc Earnings Call
Yeah.
Operator: Greetings and welcome to the Reynolds Consumer Products First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode.
Speaker Change: Greetings and welcome to the Reynolds consumer Products' first quarter 'twenty 25 earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation should anyone require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder.
Operator: A brief question and answer session will follow the formal presentation.
Operator: Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Under this conference is being recorded.
Mark Swartzberg: It is now my pleasure to introduce your host, Mark Swartzberg, Vice President of Investor Relations. Thank you, sir. You may begin. Thank you, operator.
Speaker Change: It is now my pleasure to introduce your host Mark Schwartz Burke, Vice President of Investor Relations. Thank you Sir you may begin.
Speaker Change: Thank you operator, good morning, and thank you for joining us for Reynolds consumer Products' first quarter earnings Conference call. Please note. This call is being webcast on the Investor Relations section of our corporate site at Reynolds consumer products the dotcom.
Mark Swartzberg: Good morning and thank you for joining us for Reynolds Consumer Products first quarter earnings conference call. Please note this call is being webcast on the investor relations section of our corporate site at ReynoldsConsumerProducts.com. Our earnings press release and investor deck are also available.
Speaker Change: Our earnings press release, and Investor deck are also available.
Mark Swartzberg: With me on the call today are Scott Huckins, our President and Chief Executive Officer, and Nathan Lowe, our Chief Financial Officer.
Speaker Change: With me on the call today are Scott Huckins, our President and Chief Executive Officer, and Nathan Lowe, our Chief Financial Officer.
Mark Swartzberg: Following prepared remarks, we will open the call for a brief question and answer session. Before we begin, I would like to remind you that this morning's discussion will contain forward-looking statements which are subject to risks, uncertainties, and changes in circumstances that could cause actual results and outcomes to differ materially from those described today. Please refer to the risk factors section in our SEC file. The company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after the call.
Speaker Change: Following prepared remarks, we will open the call for a brief question and answer session.
Speaker Change: Before we begin I would like to remind you that this morning's discussion will contain forward looking statements, which are subject to risks uncertainties and changes in circumstances that could cause actual results and outcomes to differ materially from those described today. Please.
Speaker Change: Please refer to the risk factors section in our SEC filings.
Speaker Change: <unk> does not intend to update or alter these forward looking statements to reflect events or circumstances arising after the call.
Mark Swartzberg: During today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these GAAP and non-GAAP financial measures are available in our earnings press release, investor presentation deck, and Form 10-Q, which can be found on the investor relations section of our website.
Speaker Change: During today's call, we will refer to certain non-GAAP or adjusted financial measures reconciliations of these GAAP to non-GAAP financial measures are available in our earnings press release Investor presentation deck and Form 10-Q, which can be found on the Investor Relations section of our website now.
Scott Huckins: Now I'd like to turn the call over to Scott. Thank you, Mark, and good morning, everyone. We are executing well in a dynamic consumer and retail environment. I am proud of our team for remaining nimble, staying close to our retail partners, and working at pace to manage through this period of heightened uncertainty. We also continue to invest in growth and margin expansion, as we are committed to unlocking additional value for our CP and our shareholder.
Scott Huckins: Now I'd like to turn the call over to Scott.
Mark: Mark and good morning, everyone.
Speaker Change: We are executing well in a dynamic consumer and retail environment I am proud of our team for remaining nimble staying close to our retail partners and working at pace to manage through this period of heightened uncertainty.
Speaker Change: We also continued to invest in growth and margin expansion as we are committed to unlocking additional value for our C P and our shareholders.
Scott Huckins: I will review performance and how we were driving our business before passing the call to Nathan to review the financials, our guide, and our plans for capital allocation. As you know, our priorities are to drive growth at or above our categories, expand margins, and invest in a more stable earnings growth model. We made great progress against these priorities during the quarter. We outperformed our categories by two points at retail, capturing share in household foil, waste bags, food bags, and non-foam disposable tableware. And we did so without an increase in promotional spend versus the year-ago quarter, demonstrating our success in driving innovation and net gains in distribution, including.
Speaker Change: I will review performance and how we're driving our business before passing the call to Nathan to review the financials, our guide and our plans for capital allocation.
Speaker Change: As you know our priorities are to drive growth at or above our categories expand margins and invest in a more stable earnings growth model, we made great progress against these priorities during the quarter.
Speaker Change: We outperformed our categories by two points at retail capturing share in household foil waste bags food bags and non thumb disposable tableware.
Speaker Change: And we did so without an increase in promotional spend versus the year ago quarter, demonstrating our success in driving innovation and net gains in distribution, including.
Scott Huckins: Hefty Presta-Close food bags in the addition of new scents to the growing line of Hefty Fabulosa waste bags. The introduction of hefty compostable cutlery, leveraging and commercializing new technology from the Atacama acquisition. introducing new cooking and baking products, including Reynolds Kitchen air fryer cups, building on our success connecting with younger consumers. in the scaling of multiple new store brand products. We delivered our earnings guide in spite of unanticipated retailer to stocking in a very dynamic macro environment. And we employed our strong balance sheet to invest in the high-return growth and margin expansion programs I reviewed in February.
Speaker Change: As the press to closed food bags, and the addition of new science to the growing line of hefty Fabulous so waste bags.
Speaker Change: The introduction of hefty proposed to book cutlery, leveraging in commercializing new technology from the out of Karma acquisition.
Speaker Change: Introducing new cooking and baking products, including Reynolds kitchen Air Fryer Cups building on our success connecting with younger consumers.
Speaker Change: In the scaling of multiple new store brand products, we delivered our earnings guide in spite of unanticipated retailer destocking in a very dynamic macro environment.
Speaker Change: And we employed our strong balance sheet to invest in our high return growth and margin expansion programs I reviewed in February.
Scott Huckins: In other words, the underlying health of our business is strong, we are acting decisively to respond to the changing macrodynamics, and we remain focused on progressing our strategic initiative. We are implementing spring resets and price increases according to plan, gaining shelf space and points of distribution across RCP. in response to the increased cost environment. And for those of you who are new to our business, we have a clear record of fully recovering gross profit through pricing and productivity. These capabilities are rooted in competitive advantages, including our strong brands and associated pricing power, resilient business model, and category leadership position.
Speaker Change: In other words, the underlying health of our business is strong we are acting decisively to respond to the changing macro dynamics and we remain focused on progressing our strategic initiatives.
Speaker Change: We are implementing spring resets and price increases according to plan, gaining shelf space and points of distribution across our C. P.
Speaker Change: In response to the increased cost environment and for those of you who are new to our business. We have a clear record of fully recovering gross profit through pricing and productivity.
Speaker Change: These capabilities are rooted in competitive advantages, including our strong brands and associated pricing power.
Speaker Change: Resilient business model and category leadership positions.
Scott Huckins: Some of the insights guiding our work with our retail partners include targeted promotions on more discretionary items. assortment changes to meet certain consumers increased quest for value, and continued price pack architecture work to deliver the right combination of value and purchase size.
Speaker Change: Some of the insights guiding our work with our retail partners include targeted promotions on more discretionary items.
Speaker Change: Assortment changes to meet certain consumers increased quest for value and continued price pack architecture work to deliver the right combination of value and purchase size.
Scott Huckins: That said, tariffs and their resulting impact on consumer sentiment have made for a more dynamic, near-term environment, and we have tempered our fiscal 2025 expectations accordingly. We could ultimately benefit from changes in U.S. trade policy, given our domestic-oriented supply chain, and continue to be guided by the priorities we set for the year.
Speaker Change: That said tariffs and their resulting impact on consumer sentiment has made for a more dynamic near term environment and we have tempered our fiscal 'twenty twenty-five expectations accordingly.
Speaker Change: We could ultimately benefit from changes in U S trade policy, given our domestic oriented supply chain and continue to be guided by the priorities we set for the year.
Scott Huckins: Turning to progress against our core priorities, we are fortunate to have begun scoping growth and margin expansion initiatives in 2024. And we are executing well against the related pillars I reviewed in February. As a reminder, in the growth pillar, our work consists of targeted distribution gains, the prioritizing and resourcing of larger scale innovation, and reallocating promotional spend to higher return opportunities. In the area of margin expansion, we are unpacking our supply chain, reviewing input costs, and identifying opportunities to improve productivity across our network. Many of these opportunities are supported by the deployment of capital with attractive returns, and we remain committed to investing in growth.
Speaker Change: Turning to progress against our core priorities. We are fortunate to have begun scoping growth and margin expansion initiatives in 2024, and we are executing well against the related pillars I reviewed in February.
Speaker Change: As a reminder, and a growth pillar. Our work consists of targeted distribution gains the prioritizing and resourcing of larger scale innovation.
Speaker Change: And reallocating promotional spend to higher return opportunities.
Speaker Change: In the area of margin expansion, we are unpacking, our supply chain, we're viewing input costs and identifying opportunities to improve productivity across our network.
Speaker Change: Many of these opportunities are supported by the deployment of capital with attractive returns and we remain committed to investing in growth.
Scott Huckins: Our work in each area is progressing well and includes success, identifying impactful innovation and resourcing it accordingly. Further opportunities to drive share, including the deployment of our developing revenue growth management capabilities, and favorable early reads on efficiencies and cost savings through additional optimization of our supply chain.
Speaker Change: Our work in each area is progressing well and includes success identifying impactful innovation and resourcing. It accordingly.
Speaker Change: Further opportunities to drive share, including the deployment of our developing revenue growth management capabilities in.
Speaker Change: And favorable early reads on efficiencies and cost savings through additional optimization of our supply chain.
Scott Huckins: I look forward to reporting more on our progress, particularly as we begin to see benefits late this year. And to be clear, the recent tariff announcements and more challenging retail environment have not caused us to alter our strategic direction. If anything, they reinforce the need for us to control our own destiny by driving the top line with innovation and distribution gains while expanding margins through cost-out work. In closing, we are spending even more time in the field with our retail partners, listening to their needs, unlocking shared growth opportunities with insights and products that drive our category.
Speaker Change: I look forward to reporting more on our progress, particularly as we begin to see benefits late this year and.
Speaker Change: And to be clear the recent tariff announcements and more challenging retail environment have not caused us to alter our strategic direction.
Speaker Change: If anything they reinforced the need for us to control our own destiny by driving the top line with innovation and distribution gains while expanding margins through cost out work.
Speaker Change: In closing we are spending even more time in the field with our retail partners listening to their needs unlocking shared growth opportunities with insights and products that drive our categories.
Scott Huckins: We are acting with nimbleness and discipline, pulling our many levers to drive financial performance in a very dynamic macro environment. And we are investing with discipline across RCP in high return work streams to drive future performance.
Speaker Change: We are acting with nimbleness and discipline point, our many levers to drive financial performance in a very dynamic macro environment.
Speaker Change: And we are investing with discipline across our C. P and high return work streams to drive future performance.
Nathan Lowe: Nathan, over to you. Thank you, Scott, and good morning. I am pleased with our first quarter performance, which is consistent with the expectations we outlined in early February, in spite of the unanticipated headwind from retailer destocking. We delivered net revenues of $818 million. Retail revenues of $767 million were $28 million below retail revenues in the first quarter of 2024, reflecting the headwind from later Easter timing, retailer de-stocking and declines in the foam category. Across the balance of our portfolio, we grew volumes at retail and outperformed category takeaways by approximately two points. Non-retail revenues increased $12 million.
Nathan Lowe: Nathan over to you.
Scott Huckins: Scott and good morning.
Scott Huckins: I am pleased with our first quarter performance, which is consistent with the expectations. We outlined in early February in spite of the unanticipated headwind from retailer Destocking.
Scott Huckins: We delivered net revenues of $818 million.
Scott Huckins: Retail revenues of $767 million with $28 million below our retail revenues in the first quarter of 2024, reflecting the headwind from later Easter timing retailer Destocking and declines in the same category.
Scott Huckins: Across the balance of our portfolio, we grew volumes at retail and outperformed category takeaways by approximately two points non retail revenues increased $12 million.
Nathan Lowe: Adjusted EBITDA of $117 million was at the midpoint of our guide and compares to $122 million of adjusted EBITDA in the year-ago period, primarily driven by lower retail sales. And adjusted earnings per share was unchanged at $0.23 versus the first quarter of 2024. Adjusted EPS excludes $0.05 of term loan refinancing costs after tax and $0.04 of strategic investments in revenue growth and operational cost savings initiatives and CEO transition costs after tax. Our fundamentals are strong and we will continue to deploy our wide range of tools to deliver against our commercial, operational and financial priorities in a very dynamic environment.
Scott Huckins: Adjusted EBITDAR of $117 million was at the midpoint of our guide and compares to $122 million of adjusted EBITDA in the year ago period, primarily driven by lower retail sales.
Scott Huckins: And adjusted earnings per share was unchanged at 23 cents for the first quarter of 2024.
Scott Huckins: Adjusted EPS excludes five cents of term loan refinancing costs after tax and false sense of strategic investments in revenue growth and operational cost savings initiatives and CEO transition costs after tax.
Our fundamentals are strong and we will continue to deploy a wide range of tools to deliver against our commercial operational and financial priorities in a very dynamic environment.
Scott Huckins: Yeah.
Nathan Lowe: We continue to expect 2025 net revenues to be down low single digits by comparison to 2024 net revenues and now expect adjusted EBITDA in a range of $650 million to $670 million and adjusted EPS of $1.54 to $1.61 for the year. It is worth noting that our purchases of products from countries currently subject to increased tariffs represent a single-digit percentage of our overall COGS, and we currently estimate $100 million to $200 million in cost headwinds on an annualised basis, considering both the direct and indirect impact from tariffs. We are offsetting these headwinds through a combination of pricing, productivity and incremental cost reduction.
Scott Huckins: We continue to expect 2025 net revenues to be down low single digits by comparison to 2024 net revenues and now expect adjusted EBITDA in the range of $650 million to $670 million and adjusted EPS of $1 54 to $1 61 for the year.
Scott Huckins: Yeah.
Scott Huckins: It is worth noting that our purchases of products from countries currently subject to increased tariffs represent a single digit percentage of our overall Cogs and we currently estimate $100 million to $200 million in cost headwinds on an annualized basis, considering both the direct.
Scott Huckins: And indirect impact from tariffs.
Scott Huckins: We are offsetting these headwinds through a combination of pricing productivity and incremental cost reductions.
Nathan Lowe: On the topic of pricing, our revenue guide now contemplates two to four points of pricing reflecting one element of these recovery actions. We continue to expect retail volume at or above category performance but anticipate more pressure on our categories, which we previously estimated to be flat, excluding funds. lower consumer confidence, elasticities, and retailers managing inventory levels are all contributing factors. As a reminder, our expectations for Adjusted EBITDA, Adjusted Net Income and Adjusted EPS exclude approximately $25 to $35 million of pre-tax costs to execute strategic initiatives and CEO transitions. In addition, the term loan refinancing costs incurred in the first quarter are also excluded from adjusted net income and adjusted EPS for the year.
Scott Huckins: On the topic of pricing our revenue guide now contemplates two to four points of pricing, reflecting one element of these recovery actions.
Scott Huckins: We continue to expect retail volume at or above category performance, but anticipate more pressure on our categories, which we previously estimated to be flat excluding fun.
Scott Huckins: Lower consumer confidence elasticities and retailers managing inventory levels are all contributing factors.
Scott Huckins: As a reminder, our expectations for adjusted EBITDA, adjusted net income and adjusted EPS exclude approximately $25 million to $35 million of pre tax costs to execute strategic initiatives and CEO transition costs.
Scott Huckins: In addition, the term loan refinancing costs incurred in the first quarter are also excluded from adjusted net income and adjusted EPS for the year.
Nathan Lowe: The work related to these strategic initiatives is going well and on target for delivery of financial benefits late this year. I am particularly pleased with what has been identified in the area of manufacturing productivity and network optimisation, as well as the quality of the automation investments we have begun and the return profile of our pipeline of opportunities. In the second quarter, we expect net revenues to be down 2% to 5% by comparison to second quarter 2024, net revenues of $930 million. driven by lower volumes and partially offset by price. We expect Adjusted EBITDA to be in a range of $155 million to $165 million by comparison to second quarter 2024 Adjusted EBITDA of $172 million.
Scott Huckins: The work related to these strategic initiatives is going well and on target for delivery of financial benefits late this year.
Scott Huckins: I'm, particularly pleased with what has been identified in the area of manufacturing productivity and network optimization as well as the quality of the automation investments, we have begun and the return profile of our pipeline of opportunities.
Scott Huckins: Second quarter, we expect net revenues to be down 2% to 5% by comparison to second quarter 2024.
Scott Huckins: Net revenues of $930 million driven.
Scott Huckins: Driven by lower volumes, and partially offset by pricing.
Scott Huckins: We expect adjusted EBITDA to be in a range of 155 million to $165 million by comparison to second quarter 2024, adjusted EBITDA of $172 million.
Nathan Lowe: and expect adjusted earnings per share in a range of $0.35 to $0.39 versus $0.46 in the year-ago period. As a reminder, we are lapping a one-time tax benefit in the second quarter of last year that equates to a 5 cent EPS headwind.
Scott Huckins: And expect adjusted earnings per share in a range of 35 to 39 cents versus <unk> 46 cents in the year ago period.
Scott Huckins: As a reminder, we are lapping a one time tax benefit in the second quarter of last year that equates to a five cent EPS headwind.
Nathan Lowe: Before turning to capital allocation, please note that effective January 1st, 2025, we have updated our segment reporting to now reflect our international business based on product category alignment, as opposed to the entirety of international results historically being reported in the Reynolds Cooking and Baking segment. Reported comparison periods have also been updated to align with our new reporting.
Scott Huckins: Before turning to capital allocation. Please not that effective January 1st 2025, we have updated our segment reporting to now reflect our international business based on product category alignment as opposed to the entirety of international results historically been reported in the Reynolds cooking and baking segment.
Scott Huckins: <unk> reported.
Scott Huckins: Reported comparison periods have also been updated to align with our new reporting.
Nathan Lowe: Now turning to cash flow and capital allocation. In March, we successfully refinanced our term loan facility, extending the maturity of our debt and further enhancing the company's financial flexibility. Along with the upsizing of our revolving credit facility last October, we are now even better positioned to support our strategic priorities and create long-term value for our shareholders. We remain focused on all elements of strong free cash flow, including working capital, where we see opportunities for additional improvement. And we continue to flow all investment decisions through our returns based capital allocation framework and continue to anticipate a $20 to $40 million increase in capital spending in 2025 to drive growth, margin expansion and a more robust earnings In closing, we are adapting well in a very dynamic market and investing in high-return programs to drive future performance.
Scott Huckins: Now turning to cash flow and capital allocation.
Scott Huckins: In March we successfully refinanced our term loan facility extending the maturity of that debt and further enhancing the company's financial flexibility.
Scott Huckins: Along with the upsizing of our revolving credit facility last October we are now even better positioned to support our strategic priorities and create long term value for our shareholders.
Scott Huckins: We remain focused on all elements of strong free cash flow, including working capital, where we see opportunities for additional improvements.
Scott Huckins: And we continue to flow all investment decisions through our returns based capital allocation framework and continue to anticipate a $20 million to $40 million increase in capital spending in 2025 to drive gross margin expansion and a more robust earnings model.
Scott Huckins: In closing, we are adapting well in a very dynamic market and investing in high return programs to drive future performance.
Nathan Lowe: We will continue leveraging our competitive advantages and insights to drive our categories, and we remain focused on profitability, cash flow, and investment discipline to drive value in 2025 and over the long term.
Scott Huckins: We will continue leveraging our competitive advantages and insights to drive our categories and we remained focused on profitability cash flow and investment discipline to drive value in 2025 and over the long term with that let's turn to your questions operator.
Operator: With that, let's turn to your questions. Operator? Thank you.
Scott Huckins: Thank you we will now.
Operator: We will now be conducting a question and answer session. Please limit yourself to one question and one follow-up, and then join the queue again for any subsequent questions. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove it from the call.
Scott Huckins: Ill be conducting a question and answer session. Please limit yourself to one question and one follow up and then join the queue again for any subsequent questions.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question. Kim You May Press star two if he would like to remove it from the Q4.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start One moment, please, while we pull.
Speaker Change: 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 questions.
Kamil Gajrawalla: The first question is from Kamil Gajrawalla from Jefferies. Please go ahead. Everybody, good morning.
Speaker Change: The first question is from Kamil <unk> from Jefferies. Please go ahead.
Speaker Change: Hey, everybody good morning.
Scott Huckins: Can we maybe dig into the retailer de-stocking piece of the equation? We've heard it from others as well. As it relates to your business, are you, is this something that seems temporary, maybe just a one-time adjustment to permanently lower inventories? Or is this something that is maybe just related to retailers operating differently in this environment and perhaps there'll be somewhat of a reversal as we get into the back half of the year?
Speaker Change: Can we maybe dig into the retailer destocking.
Speaker Change: Piece of the equation, we've heard it from others as well as it relates to your business are you there.
Speaker Change: Is there something that seems temporary maybe just a one time adjustment to permanently lower inventories or is this something that.
Speaker Change: Maybe just related to retailers operating differently in this environment and perhaps there'll be.
Speaker Change: Yes.
Speaker Change: Somewhat of a.
Speaker Change: So as we get into the back half of the year.
Scott Huckins: Good morning. Thanks for the question. I guess, as we evaluated the first quarter, we certainly did incur headwinds from retailer to stocking. We don't have any reason to think there'll be a step change on a go-forward basis, meaning I'm not expecting to see a reversal of that. Our assumption is that what happened in the first quarter sort of flows through the balance of the year. We've been poring over April results, trying to figure out whether there's a step change in it. It's not conclusive at this point. We don't have the benefit of even a full month's worth of data.
Speaker Change: Hi, good morning. Thanks, Thanks for the question I guess as we as we evaluated this first quarter.
Speaker Change: Certainly did incur headwinds from retailer Destocking.
Speaker Change: We don't have any reason to think there'll be a step change on a go forward basis, meaning.
Speaker Change: Not expecting.
Speaker Change: To see a reversal of that our assumption is that what happened in the first quarter sort of flows through the balance of the year and we've been we've been pouring over April results trying to figure out whether there's a step change and it is not conclusive at this point, we don't have the benefit of being three to four months worth of data and of course, we're also trying to figure out the.
Scott Huckins: Of course, we're also trying to figure out the Easter lap and the timing difference this year versus last year. I'd say we certainly saw it in Q1. Our assumption is that it's permanent and flows through.
Speaker Change: The Easter lab, and a timing difference this year versus last year or so.
Speaker Change: We certainly saw it in Q1, our assumption is that.
Speaker Change: That is permanent and it's led us to the full year.
Kamil Gajrawalla: Okay, great.
Speaker Change: Okay, Great and then on some of the strategic expenses I guess revenue growth management and some of the other things Nathan that you mentioned along with the Capex is this is that the same thing do they overlap how should we just think about really how you're what you're investing in to evolve the business.
Kamil Gajrawalla: And then on some of the strategic expenses, I guess, revenue growth management, and some of the other things, Nathan, that you mentioned, along with the CapEx, is this, is that the same thing? Do they overlap?
Nathan Lowe: How should we just think about really how you're, what you're investing in to evolve the business forward? Good question. So the strategic investments that we're referring to there are really focused on the P&L. I think you hit it, and just to remind everybody, we have three things happening. We're evaluating and developing the implementation of revenue growth management. We're evaluating cost out work around all things procurement. So, you know, any and all third party input costs. And then lastly, evaluating the efficiency of our overall supply chain network.
Speaker Change: This forward.
Speaker Change: Good good question, so the strategic investments that we're referring to there I really focus on the P&L I think I think you hit it and just to remind everybody we have three things happening.
Speaker Change: Are you evaluating and developing the implementation of revenue growth management.
Speaker Change: Evaluating cost out work around all things procurement so any at all third party input costs, and then lastly, evaluating the efficiency of our overall supply chain networks at those our P&L dollars.
Nathan Lowe: So those are P&L dollars that is, as you know, we baked into our guide and added back from an EBITDA standpoint that's separate from capital.
Nathan Lowe: As you know, we baked into our guide and add them back from an EBITDA standpoint, that's separate from capital, though I'll, let Nathan comment on capital.
Nathan Lowe: Well, I'll let Nathan comment. Yeah, I mean, I can give you, I guess, a little bit of a flavor of some of the capital work where we're doing, Camille, but in general, I think we talked a little bit about this earlier in the year was we've really gone through all of our manufacturing operations to get a sense of the level of automation in all components. And where we have opportunities, we're now ranking, stacking them and executing against that.
Speaker Change: Yeah.
Speaker Change: I guess, a little bit of a flavor.
Speaker Change: Some of the capital work, we're doing coming out but in general I think we talked a little bit about this.
Speaker Change: Yeah. It was really telling the truth about manufacturing operations to get a sense of level of automation.
Speaker Change: All components.
Speaker Change: Where we have opportunities went out ranking stacking them and executing against that.
Yes.
Kamil Gajrawalla: Got it, thank you.
Speaker Change: Got it thank you.
Peter Grom: The next question is from Peter Grom from UBS. Please go ahead. Thanks, operator. Good morning, everyone. I hope you're doing well.
Speaker Change: The next question is from Peter Grom from UBS. Please go ahead.
Peter Grom: Thanks, operator, good morning, everyone I hope you're doing well I was hoping to just get some color on what is now contemplated in the guidance from a category growth perspective, you mentioned that it's worse versus the prior outlook, but is there any way you can maybe provide some guardrails in terms of what you were expecting.
Nathan Lowe: I was hoping to just get some color on what is now contemplated in the guidance from a category growth perspective. You mentioned it's worse versus the prior outlook, but is there any way you can maybe provide some guardrails in terms of what you're expecting? Yeah, sure. Really, two factors account for the change for the guide. I mean, you could see in our guide that it now contemplates what's the revenue guide is unchanged, now contemplates a greater quantum of pricing. So the two factors I would say that are the offset to that with a lower expectation of retail volumes.
Peter Grom: Yeah sure really to two factors account for the change.
Peter Grom: I mean, you could see that card now contemplates once the revenue guide is unchanged.
Peter Grom: Contemplate.
Peter Grom: Quite a quantum of pricing outside the two factors on one side or the offset to that expectation of retail volumes.
Nathan Lowe: First of all, the retailer de-stocking was a factor in the first quarter. As Scott just said, we don't expect that to reverse. So that equates to roughly a point headwind for the full year. The balance of the change really relates to the consumer being under pressure in general, as well as elasticity implications from higher prices that we expect to show up at retail.
Peter Grom: Oh, the retailer Destocking was a factor in our first quarter as Scott just said, we don't expect that to reverse.
Speaker Change: Question, roughly a point headwind for the.
Speaker Change: The balance of the change really relates to the consumer thing under pressure and general and swimmers plasticity implications from higher prices that we expect it to show up every time.
Nathan Lowe: That's super helpful, Nathan. I guess, just following up on just the cost headwinds, and I would love to just maybe get some perspective on phasing. How should we think about the mitigation impact as we move through the year? I guess what I'm trying to get at is you outline 100 to $200 million of what I think are gross impacts related to the tariffs and indirect costs. But just any thoughts in terms of how we should be thinking about the net impact as we move through the balance of the year would be helpful.
Speaker Change: That's super helpful. Nathan I guess.
Speaker Change: Just following up on just the cost headwinds that I would love to just maybe get some perspective on spacing, how how should we think about the mitigation impact as we move through the year I guess, what I'm trying to get at as you outlined $100 billion to $200 billion, what I think our price impacts related to the tariffs and indirect cost, but just any thoughts.
Speaker Change: In terms of how we should be thinking about the net impact as we move through the balance of the year would be helpful.
Nathan Lowe: Yeah, I think probably the best way to think about it is we've given a range of pricing outcomes, and they are generally tied to the range of Scott Huckins, Jim Abbott, Nathan Lowe, Reynolds Cnsmr, Scott Huckins, Brian McNamara, Nathan Thank you so much. I'll pass it on.
Speaker Change: Yeah, I think probably the best way to think about it is we've.
Speaker Change: Given a range of pricing outcomes.
Speaker Change: Hi.
Speaker Change: Generally tied to the range of cost.
Speaker Change: Cost headwinds that we would anticipate to show up in that.
Speaker Change: Yeah, which is different to the $100 million to $200 million of annualized cost. So I think if you if you factor all of that and it gives you a.
Speaker Change: And since.
Speaker Change: In general I think came out and matched.
Speaker Change: Our cost flow through timing ranges from two to six months depending on the.
Speaker Change: Business, so you'd expect that to be true.
Speaker Change: Any impact of tariffs.
Speaker Change: Thank you so much I'll pass it on.
Lauren Lieberman: The next question is from Lauren Lieberman from Barclays. Please go ahead. Great, thanks.
Lauren Lieberman: The next question is from Lauren Lieberman from Barclays. Please go ahead.
Lauren Lieberman: Great. Thanks.
Nathan Lowe: I was wondering if you could first just talk a little bit about where exactly the tariff pressure is coming from. I know you said it's direct and indirect, but just curious about finished goods, you know, packaging, raw materials, if you could give us any delineation on that. Thanks. Yep, certainly.
Lauren Lieberman: I was wondering if you could first just talk a little bit about where exactly the tariff pressures coming from a nathan of direct and indirect but just curious that finished goods.
Lauren Lieberman: Packaging raw materials, if you could give us any delineation on that thanks.
Speaker Change: Yeah, certainly so probably just worth unpacking it.
Nathan Lowe: So probably just worth unpacking it a little bit further, clearly an area of interest. So as I mentioned, and as a reminder, our direct tariff exposure represents roughly single digit of our overall COGS. The $100 million to $200 million in annualised costs increases includes both the direct and indirect impact of tariffs, with the indirect impact commodities such as aluminum contributing significantly to these costs. We've deliberately contemplated a range of outcomes to account for any tariffs announced since January, including the impact they may have on commodity markets. For completeness, our Revenue Guide contemplates a range of pricing outcomes similar to the range of tariff outcomes in response to the headwinds.
Lauren Lieberman: An area of interest.
Speaker Change: You mentioned.
Speaker Change: Under a direct tariff exposure represents roughly seems.
Speaker Change: About one phone calls.
Speaker Change: The 100 to 200 million in annualized cost increases includes both the direct and indirect impact of tariffs.
Speaker Change: Indirect impact.
Speaker Change: Commodities, such as aluminum contributing significantly to the east coast.
Speaker Change: We've deliberately contemplating a range of outcomes to account for the tariffs for any tariffs announced since January including the impact that might have on commodity markets.
Speaker Change: For completeness, our revenue guidance contemplates a range of pricing outcomes similar to the range of tariff outcomes.
Speaker Change: And in response to.
Speaker Change: Headwinds.
Nathan Lowe: At the middle of the range, approximately 50% of the headwind would be from commodities. The balance would be on what we would consider direct impact of tariffs from importing either Finnish goods or in some cases... Okay, great. Thank you.
Speaker Change: At the middle once the range approximately 50% of the headwind would be from commodities the balance would be on what we would consider a direct impact of tariffs from importing into finished goods or in some cases.
Okay, great. Thank you and then also just curious on the reassignment of that product lines related to international distribution. Just curious if you can give us some more color to kind of explain with more words, what that what that is and why thanks.
Lauren Lieberman: And then also just curious on this reassignment of product lines related to international distribution.
Nathan Lowe: Just curious if you can give us some more color to kind of explain with more words, you know, what that is and why. Thanks. Yeah, sure. I mean, the international business represents less than 5% of our revenue. Over time, that business has developed and grown away from what was used to be the core business in cooking and baking. So now that it has more breadth across the RCP categories, we thought it made sense to better align them with the commercial activities in the domestic business, just with the intent, of course, growing faster.
Speaker Change: Yes sure.
Speaker Change: International business represents less than 5% about revenue over time.
Speaker Change: That business has developed and Brian White from what used to be the core business and cooking and baking. So now that it has more breadth across the categories.
Speaker Change: Categories, we thought it made sense to better align them with the commercial activities in the domestic business just yet.
Speaker Change: The intent of course is growing faster.
Nathan Lowe: Okay, so previously all of International was reported in cooking and baking and now you're putting it in the business lines, is that right? That's exactly right. Perfect. Okay. Thanks so much.
Speaker Change: Okay. So previously all of international that was reported in cooking and baking in now youre, putting it in the business lines that right.
Speaker Change: Exactly right.
Speaker Change: Perfect. Okay. Thanks, so much I'll pass it on.
Lauren Lieberman: I'll pass it on.
Speaker Change: Yeah.
Andrea Teixeira: The next question is from Andrea Teixeira from J.P. Morgan. Please go ahead. Hi, good morning, everyone. I was just hoping to see if you can comment how consumption has performed in the exit of the quarter. And then in terms of like the pricing realization that you talked about, what we should expect in terms of support, it seems like you're pricing it, so you're assuming, of course, some elasticity, as Nathan, you mentioned, but also how we should be thinking of that $20 million reduction at the midpoint of your EBITDA, if you're thinking part of it is coming from supporting, scaffolding these price increases with promo.
Speaker Change: The next question is from Andrew It takes area from J P. Morgan. Please go ahead.
Andrew: Hi, Good morning, everyone. I was just hoping to see if you can comment how consumption has.
Speaker Change: Formed in the exit of the quarter.
Speaker Change: And then.
Speaker Change: Something like the pricing realization that you talked about what we should expect in terms of support it seems like you your pricing Andy or assuming of course similar to see it's Nathan use you you mentioned, but also how we should be thinking of that $20 million reduction at the midpoint of your EBITDA. If you will.
Speaker Change: Thinking part of it is coming from supporting a scaffolding. These price increases with our with promo. So how we should be thinking of a number one consumption as we exit and number two how a promotional environment has been in relation to private label and all of that you know details that are important.
Andrea Teixeira: So how we should be thinking of, number one, consumption as we exit, and number two, how promotional environment has been in relation to private label and all of that, you know, details that.
Speaker Change: <unk>.
Andrea Teixeira: We might hit these in reverse, so what I heard was explaining the $20 million EBITDA a little bit in the context of volume expectations. some understanding of the timing of pricing and then the exit performance of consumption, I think, out of Q1 and into April.
Speaker Change: It might hit these in reverse.
Speaker Change: Explaining the $20 million <unk> fit in the context of volume expectations.
Speaker Change: Understanding of the timing of crossing and then exit a performance of consumption I think out of Q1.
Nathan Lowe: So, I'll start with the last one. Our lower EBITDA guide, which we lowered $20 million, as you pointed out, contemplates really just our lower retail volume expectation. The revenue guide is unchanged, but the pricing component of that really just serves to neutralise both the direct and indirect impact of tariffs. So, it's a net neutral. So, what you're seeing is the volume flow through, which I unpacked a few minutes ago. As for the price timing, it's really related to the timing of when tariffs have been announced and then our response to those respective announcements. So, from the first tariffs that were announced late January, early February, you'll start to see some pricing recovery of that in the second quarter.
Speaker Change: I'll start with the last one.
Speaker Change: Our EBITDA guide, which we love and $20 million as you pointed out contemplates really just out of our retail volume expectation.
Speaker Change: God is unchanged at the pricing component of that really just says to neutralize the direct and indirect impact of tariffs.
Speaker Change: Net neutral so what you're saying is that's all.
Speaker Change: Can fly through.
Speaker Change: We try and pack.
Speaker Change: Few minutes ago.
Speaker Change: As for the price timing.
Speaker Change: It's really related to the timing of when tariffs have been announced and then out in response to those respective announcements so.
Speaker Change: From the first tariffs that were announced late January early February.
Speaker Change: Got to see some pricing recovery of that showing up in the second quarter.
Nathan Lowe: And for the other tariffs later in the second quarter, you would see some.
Speaker Change: And for the other tariffs lighter in the second quarter, you would see some upsides.
Scott Huckins: And hi, Andrea, it's Scott. I'll try to pick on the remaining questions. I think the first was around consumption in the quarter. I'd say at the macro level at retail, the business performed very much, you know, like we had expected, specifically, you know, the categories that retailed down to, as I think I mentioned in my prepared remarks, we outperformed the categories by about two, so call that flat. The stocking, you know, was the net effect of what flowed through the P&L. As I reflect on the quarter, you know, by month, I think it'd be fair to say March was actually better than my reflections or our reflections on Jan and Feb, so maybe that's a bit of perspective.
Scott Huckins: Hi, Andrew It's Scott I'll try to pick on the remaining questions I think the first was around consumption in the quarter.
Scott Huckins: I'd say at the macro level at retail the business performed very much like we had expected specifically.
Scott Huckins: Categories at retail down too because I think I mentioned in my prepared remarks, we outperformed the category by about two so call that flat to stocking was the net effect of what flows to the P&L.
Scott Huckins: As I reflect on a on a quarter by month I think it would be fair to say March was actually better than my reflections are reflections on Shannon fab. So maybe that's a bit of perspective I think he wants to it also asked about the promotion environment. So a couple of points on that I think in prepared remarks, we wanted to make.
Scott Huckins: I think you also asked about the promotion environment, so a couple of points on that. I think in prepared remarks, we wanted to make clear that our outperformance in the quarter, first quarter, was actually not driven by an increase in promotion, just to make sure that that point is clear. Second point I'd offer is we do think we'll see a bit of an increase in promotion in the second quarter directly linked to some of the distribution wins and gains that we commented on in prepared remarks. And then I think third, kind of wrap up, as we think about 2025 taken as a whole, we would expect, you know, promotion to look a lot like 2024, certainly across, you know, the overwhelming majority of our categories, and that, in fact, looks a lot like what we experienced and saw in the visit.
Scott Huckins: Clear that our outperformance in the quarter first quarter was actually not driven by an increase in promotion just to make sure that that point is clear second.
Scott Huckins: Second point I would offer is we do think we'll see a bit of an increase in promotion in the second quarter directly linked to some of the distribution wins and gains that we commented on.
Scott Huckins: In prepared remarks, and then I think third and our wrap up as we think about 2025 taken as a whole.
Scott Huckins: I would expect you know promotion to look a lot like 2024, certainly across the overwhelming majority of our categories.
Scott Huckins: And that in fact looks a lot like what we experienced in saw in the business pre pandemic.
Andrea Teixeira: Very helpful. Thank you.
Scott Huckins: Very helpful. Thank you.
Scott Huckins: Yeah.
Operator: As a reminder, to ask a question, please press star 1.
Speaker Change: As a reminder to ask a question. Please press star one.
Javier Insolente: The next question is from Javier Insolente from Evercore ISI, please go ahead. Hello, good morning, everyone. I wonder whether you can discuss. Q1 and how that informs your Q2 forecast. This dynamic of retail destocking versus consumer demand, because what is happening in tableware is very different to what is happening in. in Hefti, which you have very strong growth. So I'm a little bit surprised by Q2 given that you have distribution gains.
Speaker Change: The next question is from Javier.
Javier: From Evercore ISI. Please go ahead.
Javier: Hello, Good morning, everyone I Wonder whether you can cause Q1, and how that informs your Q2 forecast.
Javier: This dynamic of retail destocking versus consumer demand.
Javier: What is happening in tableware is very different to what is happening in in hefty, which you have very strong growth. So I'm a little bit surprised by Q2, given that you have distribution gains and you would have the benefit of the Easter shift.
Scott Huckins: and you have the benefit of the Easter shift, so why is it that, you know, the expectation is for sales to be down two to five percent? Yes, it's a great question, Javier. I think, generally speaking, for the balance of the year, our assumptions for revenue are consistent in each quarter. So Q2, very similar to what we're saying for the balance of the year guide. With retail volumes down, of course, we don't have the same level of price. which I just mentioned. Your observation about Easter is astute. I think that the counter to that, that's balancing that out, is that what we did see in some of our categories was a little bit of consumer pantry loading in the first quarter, purchasing ahead of tariffs.
Javier: So why is it that you know the expectation is for sales to be down two 5%.
Javier: Yes. It is.
Javier: Great question.
Javier: I think generally speaking for the balance of the year, our assumptions for revenue are consistent.
Javier: In each quarter, so Q2, very similar to what we're saying for the balance of the year God with retail volumes down.
Javier: We don't have the same level of pricing in Q2.
Javier: Which I just mentioned.
Javier: Your observation about Easter is skewed I think that the counter to that this balancing that out so what we did see in some of our categories was a little bit of consumer pantry loading in the first quarter purchasing ahead of tariffs. So you'd expect some of that to unwind. If you will in the second quarter and that largely.
Scott Huckins: So you'd expect some of that to unwind, if you will, in the second quarter, and that largely offsets the benefit of the Easter.
Javier: Since the benefit of the Easter volume increase.
Javier Insolente: and a follow-up if you can comment on because it's part of what it has. use Purchase Frequencies because people are buying in club and buying online. If you can tell us how much of your sales do you believe are taking place online?
Speaker Change: And a follow up if you can comment on because it's part of what he has reduced purchase frequencies. Because people are people are buying in club I'm buying online if you can tell us.
Speaker Change: How much of yourselves do you believe are taking place or in line.
Speaker Change: And thinking about.
Javier Insolente: Thinking about reinvestments, whether you think that that shift would eventually require some sort of a system upgrade as we and other players.
Speaker Change: Reinvestment, whether you're saying that that shift would eventually require some sort of a system upgrade we had seen in.
Speaker Change: In other players in H B C. Thank you.
Scott Huckins: Good morning, Javier. So, so I think the first part of the question is about channel and channel shipping. I think it's fair to say that, you know, the research we've looked at suggests that club, you know, has has taken share across retail categories, as has omni channel or, or online business. taken as a whole.
Speaker Change: And good morning.
Speaker Change: So I think the first part of the question is about channel and channel shifts I think it's fair to say that.
Speaker Change: The research we've looked at suggest that club.
Speaker Change: <unk> has taken share across retail categories.
Speaker Change: Amit channel or our online business.
Speaker Change: Taken as a whole.
Scott Huckins: In terms of what that portends for investment, I wouldn't say anything different than I answered earlier about, again, taking our categories as a whole, 25 looking a lot like 24, you know, across the overwhelming majority of our portfolio. I think your last one was about percentage of our business online. And I guess what we'd share is the analysis we see suggests that, you know, retailers are somewhere in the high teens in their percentage of business that are deemed online or omni-channel. And our results would be quite consistent.
Speaker Change: In terms of what that portends for investment.
Speaker Change: Didn't see anything different than I answered earlier about again taken our categories as a whole twenty-five looking a lot like 24 across.
Speaker Change: The overwhelming majority of our portfolio I think your last one was about percentage of our business.
Speaker Change: Online and I guess would it be chair is the analysis. We see suggests that retailers are somewhere in the high teens and their percentage of business that are deemed hotliner omni channel and our results to be quite consistent with that.
Speaker Change: Thank you.
Speaker Change: Okay.
Bill Chappell: The next question is from Bill Chappell from Truist Securities. Please go ahead. Hi, good morning.
Speaker Change: The next question is from Bill Chappell from <unk> Securities. Please go ahead.
Speaker Change: Hi, Good morning. This is David I'll come on for Bill Chappell.
Davis Holcombe: This is Davis Holcombe for Bill Chappell. We've talked a lot about, you know, productivity and RGM and, you know, other things that are, I guess, pretty relevant to the consumer backdrop these days. But I was wondering if you could kind of Give us a little bit of color on how the innovation pipeline is looking for this year, given that it's one of your drivers of accelerating growth on the top line. And thanks for the question. So I'll start. I'd offer, we're feeling pretty good about the innovation pipeline, and a couple of examples. One would be we have another cent added to our hefty, fabulous lineup.
Speaker Change:
Speaker Change: We've talked a lot about.
Speaker Change: Productivity in RCM and other things that are I guess pretty irrelevant to the consumer backdrop. These days, but I was wondering if you could kind of.
Speaker Change: Give us a little bit of color on how the innovation pipeline is looking for this year given that it's one of your.
Speaker Change: Drivers of this accelerating growth on the top line.
Speaker Change: Yeah. Thanks for the question so I'll start.
Speaker Change: I'd offer we're feeling pretty good about the innovation pipeline and a couple of examples.
Speaker Change: One would be.
Speaker Change: Have another scent added to our ft. Fabulous lineup. We are they are gaining distribution with that and investing behind that that would be a good example of I think we talked about in our Q4 call.
Scott Huckins: We are gaining distribution with that and investing behind that. That would be a good example of, I think we talked about in our Q4 call, really prioritizing and resourcing innovation based on scale. The second one would be a different example, which is the launch of hefty compostable cutlery. We're pretty excited about that, because that's the first commercialization of the technology and resin work from the Atacama acquisition from late in 2023. Our assessment is that that will do well in the marketplace, albeit this is early days, this is the first launch, but I'm trying to share two very different forms of innovation as examples about what makes us excited.
Speaker Change: Really prioritizing and Resourcing innovation based on scale.
Speaker Change: Second one would be a different example, which is the the launch of a hefty composed about cutlery, we're pretty excited about that because that's the first commercialization of the technology and resin work yet.
Speaker Change: Datacom acquisition from from late in 2023.
Speaker Change: Our assessment is that that will do well in the marketplace, albeit it's early days. This is the first launch, but I'm trying to kind of share to two very different forms of innovation as examples about what makes us excited.
Scott Huckins: Great. Thanks for that.
Speaker Change: Great. Thanks for that color I guess I'll pass it on.
Davis Holcombe: I guess I'll pass.
Brian McNamara: The next question is from Brian McNamara from Kennecord Genuity. Please go ahead. Hey, good morning, guys. Thanks for taking the question. This might have been asked in a couple of different ways already, but I was hoping you could some clarity here. Can you remind us of your pricing mechanics, particularly in aluminum foil and the lag between when you take pricing with your customers and when it actually hits retailer shelves? I'm assuming that the stocking alters that typical timeline. And then in this environment, would you expect private label to kind of gain share? Or do you think just maintaining price caps will be sufficient to holding brand?
Speaker Change: The next question is from Brian Mcnamara from Canaccord Genuity. Please go ahead.
Brian McNamara: Hey, good morning, guys. Thanks for taking the question this might have been asked.
Brian McNamara: A couple of different ways already but I was hoping you could offer some clarity here can you remind us of your pricing mechanics, particularly in aluminum foil and the lag between when you take pricing with your customers and when it actually hits retailer shelves I'm, assuming the destocking alters that typical timeline and then in this environment would you expect private label.
Brian McNamara: To kind of gain share or do you think they're just maintaining price gaps will be sufficient to holding Brad it sure. Thank you.
Scott Huckins: Good morning. Thanks for the question. I'll start on, I think, your private label question. I'd say when we look at the categories, you know, taken as a whole, they're actually quite stable. We don't see, you know, significant changes in one direction or another. So, for instance, as we looked at the first quarter, we see a couple of categories might have added a point or two of store brand share gains, and we would see other categories where, you know, store brands lost a point or two. An interesting learning from the quarter was for our three largest categories.
Brian McNamara: Good morning. Thanks. Thanks for the question I'll start on I think your private label question.
Brian McNamara: Say when we look at the categories taken as a whole they are actually quite stable, we don't see cigna.
Brian McNamara: Significant changes in one direction or another so for instance, as we looked at the first quarter. We see a couple of categories might have added a point or two of store brand new share gains and we would see other categories, where store brands lost a point or two in an interesting learning from the quarter.
Brian McNamara: As for our three largest categories, so that would be foil waste bags food bags one.
Scott Huckins: So that would be foil, waste bags, and food bags. One, RCP enjoyed retail takeaway growth. And two, in each of those categories, store brands actually took a step back in share, just to provide some context directly on point with the largest parts of our business.
Nathan Lowe: <unk> enjoyed retail takeaway growth and two in each of those categories store brands actually took a step back and share just to provide some some context directly on point with the largest parts of our business and I'll defer to Nathan on the balance.
Nathan Lowe: And I'll defer to Nathan on the balance. Yeah, thanks. Brian, so I think really you're asking what our cost flow-through timing is and then how that lines up with pricing. I would say our costs would not flow through in a period shorter than two months, and they would not flow through in a period longer than six. It varies a lot by business and product category, but that's the range. Conveniently, that's also roughly the amount of time it takes to communicate pricing to retailers and then start to see those flying through at show.
Speaker Change: Yeah. Thanks, Bryan So I think really you're asking what cost flows through timely news and then how that lines up with crossing I'm sorry.
Nathan Lowe: Costs would not flow through in a period shorter than two months.
Nathan Lowe: It would not flow through in a period longer than six it varies a lot by business.
Nathan Lowe: Product category, but that's the range.
Nathan Lowe: Conveniently that's also roughly the amount of time it takes to communicate pricing to <unk>.
Nathan Lowe: You start to see how it's flowing through through at shelf.
Nathan Lowe: Very helpful. Thank you, guys.
Nathan Lowe: Very helpful. Thank you guys.
Nathan Lowe: Okay.
Operator: There are no further questions at this time.
Speaker Change: There are no further questions at this time I would like to turn the floor back over to Scott Huckins CEO for closing comments.
Scott Huckins: I would like to turn the floor back over to Scott Huckins, CEO, for closing comments. Thank you operator and thank you all for your time today and your interest in our business. We wish you a great rest of your day.
Scott Huckins: Thank you operator, and thank you all for your time today and your interest in our business and wish you a great rest of your day.
Operator: This concludes today's teleconference, you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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