Q3 2025 Molson Coors Beverage Co Earnings Call
It has been an incredible journey and I could not be prouder of this team and the strong Foundation that we have built. This includes our iconic Brands, across the world are leading capabilities from supply chain to marketing. A dramatically improved balance sheet, and our strong free cash flow generation.
And while I'm retiring during a difficult time in the industry, I am confident in the company's ability to return to growth.
So with that, it is my great pleasure to introduce Rahul. He took over the role of CEO on October the 1st
during my 6 years as a CEO, I worked closely with Google his deep, strategic insights, institutional knowledge,
Fresh perspectives and proven ability to deliver, which are particularly important in these Dynamic times, make him in my view, the right choice for the job. And while he has only been enrolled for about a month, he has certainly hit the ground running, and to share more about this. I'll pass the call to Rahul.
Thank You. Gavin, it has been a true privilege to work with you for so many years and I look forward to building on your many accomplishments and continue to support the strong culture. You have built that makes Bolton course so special.
Now, clearly these are Dynamic times, and we like many Staples companies have been impacted by macro related factors that have pressured consumption Behavior.
In the US. These macro impacts have had a disproportionate effect on the lower income and Hispanic consumer. And within their, these consumer segments, have driven a reduction in the number of buyers, as well as spent per trip with a continued shift to singles. In the third quarter in Europe, the macro environment has also contributed to continue industry softness pressuring demand across our regions, but we continue to believe that the incremental softness in the industry, this year is cyclical. And we believe that we are well positioned with a healthy balance sheet, strong free cash flow, and great brands that serve a wide range of consumer, occasions and preferences.
In our business to support the long-term growth.
I know everyone is eager to hear more about my vision for the future and there will be more details to come today. I would like to provide a high level view of our strategic priorities and how we plan to adapt in these challenging times, improve our commercial performance capitalize on opportunities and ultimately return to top and bottom line grow.
I want to assure you that we are moving with a sense of urgency and with a clear purpose.
In my first 30 days we have already begun to implement. Structural changes both in terms of leadership and operations to put us on the path to success at the highest level. It begins by focusing on our portfolio.
To build strong and scalable brands, in both beer and Beyond beer.
This entails prioritizing our investments to build on the strengths of our core and economy. We are portfolios and to transform about bringing India and Beyond beer portfolios.
In beer, we already have a strong core portfolio with iconic, Global Brands and regional market leader.
They are the majority of our business.
So, we intend to continue to put strong commercial pressure behind that.
And cause like this means new campaigns and high-profile Sports and music alliances that build on their strong brand health and support our ambition for share growth. For these brands,
And for banquet, we intend to capitalize on its impressive success by Leading in even more to fuel it. Strong momentum and to continue to bring this sizable distribution Gap towards life.
Recall, that banquet is only in just over half the buying Outlets of course why.
And not only is banquet an important growth driver in our us business, but it offers learnings that we believe can be applied more broadly across the portfolio.
We also plan to selectively increase our focus on certain economy Brands like Maher, life and Keystone life which are big brands with loyal consumer base.
We firmly believe that. All price, segments matter.
And while as an industry, we are not seeing trade down at the Brand level in today's environment more than ever. Economy is an important segment and we continue to see big opportunities in about premium while we have had strong premiumization success in markets outside. The US be meaningfully under indexed in above premium in the US.
And we plan to lean in even harder to change that in both beer and Beyond beer in beer. It's no secret that we think Peroni has great potential. It's only been 2 quarters since we fully onshore Peroni and activated at commercial plans and we are already seeing good progress with brand volume up. 25%, in the third quarter,
And with expected increases in media investment next year, including programming for the Olympics and with only about 1/3 of the distribution of the other major competitors. We see significant Runway ahead
We also remain committed to stabilizing Blue Moon and to be frank, we haven't seen the success. We would like
Recent Innovation with non-al and high ABV. Brand extensions have been encouraging. While the core Blue Moon Belgian white continues to be challenged.
We are going to be looking closely with a fresh commercial perspective at what we can do differently to best ensure that this big and important brand supports our premiumization objectives.
Now, while beer is Our Roots and at the core of our business, you can also expect us to step up our focus on Beyond beer because we believe we can win here.
Not only does it help to premise our business, but it also creates value for our customers by appealing to a wider range of consumer preferences and serving more occasions.
In flavored alcohol, we already have big brands, and some have been recharged recently.
But toppo, Chico is a great example of how with the right commercial approach we can improve trends.
By focusing Investments on the markets where the Topo Chico brand most strongly resonates and through thoughtful Innovation, we achieved positive Dollar share gains in the thought third quarter in these features.
And we recognize we have gaps, including RTD spirits and we intend to fill them.
In in non-alcoholic, we are focused on building scale and we are off to a great start.
In the US provides a strong base for which to grow our total non-alcoholic portfolio.
In fact, we retrieve volume has been performing strongly and it has been a very well-received by Distributors and retailers and we are excited by the opportunity to significantly grow the brand in the years to come.
And this is just the beginning of our non-alcoholic efforts, as we see opportunities to enter some other interesting areas.
So we are making the infrastructure investments in people and systems that help to support the development of this business into something meaningful over time.
Now to a commercial Ambitions, we are taking a fresh look at our approach to commercial execution, and that opportunity is to optimize our cost structure for fuel reinvestment in the business.
On the commercial side, creating value for our customers and consumers remains at the Forefront of all that we do.
But we believe we can be even more effective at this by focusing on ownership of the business, even closer to the market.
And we intend to do this by deploying marketing and GNA Investments based on specific market, dynamics and portfolio. Priorities.
This should help to increase our speed of decision, making agility to execute and ensure greater accountability and return oriented mindset at the local level of our business.
On the cost side, as announced last month, we are implementing a corporate restructuring plan for our Americas business unit.
Designed to create a leaner more agile organization while advancing our ability to reinvest in the business.
This entails reducing our America's salaried head count by approximately 400 positions or 9% by the end of the year.
This includes hundreds of salary positions that were already open due to headcount prioritization efforts earlier this year. And those who may be granted the voluntary Severance as part of this restructure.
We intend to redeploy. Some of these savings to step up our investments behind key Brands commercial capabilities, and in supply chain and technology that support ongoing productivity and efficiency.
And we will continue to be disciplined toward our capital using a dynamic capital allocation approach, balancing investments in M&A to fill portfolio gaps while continuing to return cash to shareholders.
We'll be sharing more on capital allocation in the near future. But today, let me be very clear on two things first. We seek scalable deals that we expect to be accretive to both the top and bottom line and are prudent from a balance sheet perspective.
And second, we remain committed to our dividend and to our share repurchase program as we continue to view our stock as a compelling investment.
Now there is a lot of work to do, but we see a clear path forward results. Will take some time, but we are moving with a sense of urgency.
We're confident, we have the right Brands and the plans to be successful. And I look forward to updating you on more of the details of strategy and financials and operational objectives in the coming months.
with that, I will pass it to Tracy, who will talk about our financial performance and after
Thank you, Raul.
Underlying pretext income was down 11.9% and underlying earnings per share was down. 7.2%
On an underlying basis. The key quarterly drivers were largely as expected.
The US beer industry was down minus 4.7% based on our internal estimates.
Our us volume share was down 40 basis points. Based on our internal estimates, including relatively better shared performance in the on-premise channel compared to the off premise.
Contract Brewing was a 450,000, hectare leader or 3 percentage points headwind to their America's Financial volume.
Executing contract Brewing us, fcw's outpace, ftrs resulting in a nearly 2% benefit to America's Financial volume in the quarter.
Amia and APAC volume continue to be pressured across all regions for ongoing. Soft market demand and are heightened competitive landscape.
The Midwest premium remained elevated but was within the expected price range. Although at the higher end
And marketing was up while GNA was down largely due to lower incentive compensation as compared to Prior year.
Has been on an underlying basis. We also recorded a non-cash partial Goodwill impairment charge of 3.6 billion as well as non-cash, intangible asset is payment charges of 274 million in the quarter which are discussed in detail in today's earnings release and 102.
I also want to address the execution of our share research expansion during the quarter.
Restrictions under our policies have prohibited us from executing under the repurchase plan. During the open trading window Following last quarter's earnings because we were in possession of material non-public information. Regarding our CEO search,
We expect our regular quarterly trading window to open tomorrow and we want to stress that we remain fully committed to our share repurchase plan and continue to strongly. Believe our stock is a compelling investment.
With that, let's discuss our Outlook we are. Reaffirming our 2025 Garden but we now expect to come in at the low end of the prior ranges for our key metrics.
Those key metrics and ranges are as follows.
Net sales, revenue to decline, 3 to 4% on a constant currency basis.
Underlying pretext income to decline, 12 to 15% on a constant currency basis.
Underlying earnings per share to define 7 to 10%, and underlying cash flows of $1.3 billion plus or minus 10%.
Now, before we get into the details, I'll remind you that the impact of the global macro, environment or multifaceted and difficult to predict.
And while we having included in our guidance, our best estimate of some of these factors external drivers, May significantly impact our actual results, either us or down.
Starting with the Top Line. We now expect lower year, end users inventory levels.
Yesterday, US STWs largely caught up to STRs at the third quarter.
However, given lower 2025 volumes impacted by industry performance. We now anticipate year-end distributor inventories to be lower compared to year, end 2024 on an absolute basis.
But year-end days of inventory remain relatively consistent.
And at what we view as healthy levels, entering the new year.
As a result for the fourth quarter, we expect the US STW Trend to Trail the USSR Trend, excluding contract Brewing.
All at the Top Line, drivers remain unchanged.
We continue to expect us industry volume to be down on average. 46% for the second half of the Year while mindful that comparison versus the year ago. Period was somewhat softer earlier in the third quarter before becoming more difficult into your end.
We will cycle 1.9 million, hectare leaders of contract Brewing, volume in the Americas, in 2025 related to perhaps in the back and will cycle the remaining 300,000 hex in the fourth quarter.
And we continue to expect an annual net price increase of 1 to 2% in North America, in line with the average historical range, and mixed benefits from cycling contract Brewing from 2024, as well as from premiumization in both business units.
Moving down the p&l. We expect cogs to be negatively impacted by volume D leverage, including the lower expectations for year-end us distributor inventories,
Also Midwest, premium pricing has continued to increase.
Our guidance assumed a price range of 60 cents to 75 cents per pound. This implies for the full year. Midwest premium costs will exceed the prior year by 40 to 55 billion. With most of the increase occurring in the second half of the year.
However, as you can see on page 18 of our earnings slides, the price trended at the, at the end of this range in the third quarter and was slightly above it in October. Therefore, we expect increases to be at the high end of that range.
As for mg&a, we continue to expect it to be down slightly for the year due to lower incentive compensation, which is largely offset by higher non-al. Infrastructure costs as well as the Fever Tree 1-time transition and integration fees in the first half of the year.
Again, those 1-time fees were approximately 50 million and will be recovered through net sales over the next 3 years. Which began in the second quarter of this year. In closing, we remain committed to improving shareholder value. And look forward to sharing more about our strategic plans and long-term objectives in the coming months.
With that, we will take your questions, operator.
Thank you. We will now begin the question and answer session.
Please do so. Now, by pressing star, followed by the number 1 on your telephone keypad.
If you change your mind or you feel like your question has already been answered. You can press Start followed by 2 to withdraw yourself from the queue.
our first question today comes from Peter, grow with UBS
He said, please go ahead.
Great, thank you. Good morning everyone. This is 2 questions from me, 1 for Rahul and 1 for Tracy. First role, you've been in the role for about 30 days, you know, at this point and and recognizing you've been with the company for some time, but just as you step into this CEO role would love to get your perspective, on what you see, as the biggest opportunities and challenges ahead. And then Tracy, just was hoping to get some color on the implied Improvement for the fourth quarter embedded in the Top Line Guidance, just give him the commentary on tougher, category comps and now expecting the ship behind in America, so you just walk through the building blocks for Q as you see them today. Thanks.
Uh thanks Peter uh and good morning to you, you know, if you look at the the last 30 days you know, my my focus and my priority has been, I would say to friends. 1 is listening to our our people and then our customers.
And if you look at our business, right? I mean, I come from a place of, we have a strong Foundation, we got great Brands healthy balance sheet, uh, but we have great opportunities. So, you know, if you look at our performance this year, uh, you know, majority of our share losses has been a few in a few areas, the economy category or flavor category. Uh, but we got core brands that are pretty strong. And, and so, we need to find a way to make them stronger. Uh, in above premium, we have great opportunities with, uh, the portfolio. We have, uh, you know, Peroni is doing really well. Uh, we have some more work to do in Blue Moon, uh, again and then the Beyond beer strategy, I think, you know this year if we tree has been a great add to our business. So you know if you look at in Balance I'm pretty excited about a number of things we have going uh but recognize the challenges we have in some other parts of our portfolio uh and you know wanting to really get behind it. I think the the piece I'll leave you with is you know, we're we're definitely moving with a sense of urgency and pace.
Right. I mean we recognize the the volatility in the category this year, uh but we also recognize the things that we can work on uh within within our team. So um, you know, looking forward to it Peter. It's been a, it's been a quick, uh, 30 days. But uh, definitely moving with Pace. Tracy. You want to take the second 1? Yeah.
Thanks Peter for the question. So um, in terms of Q4 look, we I expecting better Topline performance um in our Amia APAC and Canada business units. Um and in addition we are lacking softer comps from contract brewing in the US.
So, um, you know, that's a big driver. Those 2, um, are the big drivers of our Top Line performance and then just as that, you know, also translates to better bottom line performance as well as um, we we will have lower GNA in the fourth quarter, really driven by the lower incentive compensation.
Thank you. Our next question comes from Chris Carey with Wells Fargo.
Please, please go ahead.
Hi, good morning, everyone.
Morning.
Um you have to say congratulations, Gavin on your career and and best of luck. Um, and so, you know, just from a um, from an inventory perspective.
I think the message today is that, you expect them to be lower, um,
In in in, you know, in 2025 on an absolute basis but closer to historical average on indeed the inventory basis.
And I just wanted to maybe check this does. Does that mean if the category improves a little bit next year, from from the current lows? You would be entering 2025 with with low inventory. Say say lower than average. It's a, you know, category, extension picks up just a little bit. So, you know, I'm just conscious beer, distributor is often used year, end to clean up inventory, and, and perhaps they're feeling a bit more anxious about that even more this year. And so, I just want to test kind of how you would see your inventory position going into next year and you know, I was listening to the um you know prepare to mark from a whole. Thank you for all that. Yeah is is it fair to say that you don't see this this massive need to to reinvest in the business as a typical when you when you enter a new leadership position and that with restructuring and, you know, is sustained commitment to some of the strategies that you've you've laid out as you evolve into new strategies, you, you don't see that or or do you see a business that perhaps is a bit underinvested in this opportunity, going into next year, on top of a, on top of a soft View.
Yeah, thank you Chris and good morning. Um you know, I think if you look at the distributor inventories, I think, the way we look at it is, you know, pretty healthy place, right? I mean you've seen what's happened to the category this year, so, you know, going into end of this year and, and getting ourselves into next year days of inventory, we believe in a good place. Um, you know, in terms of our capacity to Pivot and make sure we have the right level of Supply in q1. Uh, you know, we feel good about it without ruining network and infrastructure. So, and if you remember, you know, we were lapping a few things around the Fort Worth, um, the strike Etc earlier this year. So, I, I think we feel pretty good about, uh, being in a good place, closing out this year, but also preparing and and pivoting to getting the our Distributors, the right inventory levels next year. Um you know, in terms of your question of of uh, shape of reinvestment. You know, I I share with you a couple of comments and I know
Probably, you know, looking for clarity of of what 2026 looks like, but you know, I'm committed to making sure that we are building Our Brands. All right, and if you look at our category, we need to be championing. Their, we need to be making sure. Uh, we as along with other folks in the category are making sure that the categories is healthy. Uh, and in that we're going to be leaning in and making sure we can support Our Brands appropriately. Uh, you know whether it's the core Brands above premium uh, in
In the economy 1 you know I I call out as being very disciplined around uh Geographic view of economy portfolio uh and making sure we are investing it in a in a smart way.
The other part I just call out is our balance sheet and and cash flow, right? I mean, we are committed to returning cash to shareholders, but we also want to find ways to deploy Capital to fill some gaps in our portfolio, uh, you know, to get our growth going. So, I would say it's going to be a combination of all of those in terms of uh, making sure our brands are well supported, but also using our balance sheet in the in a smart way of uh enabling top and bottom line growth, but also returning cash to shareholders.
Thank you. Our next question comes from bunny Herzog, with Goldman Sachs,
Please go ahead. See
Thank thank you. Good morning everyone. I'm I was hoping you could give us a little more color on the pressures you're facing or that are facing the beer category and I guess why, you believe it's cyclical versus structural.
Essentially, you know, and then what is your expectation for category growth this year? And do you expect the category to recover next year? And if so, what do you think will be the drivers of this? I guess, ultimately, you know where do you see the biggest areas of opportunity and I guess risk next year. Thanks.
Thanks, Bonnie. And uh, good morning to you. So, um, I think I'll break your question into a c to a c pieces, right? So, if you think about the pressures on the category, uh, you know, pre 2025, uh, the last few years, our category has been in the minus 3 years range. And and if you look at this here, uh, you know, we've been in the minus 4 to minus 6 and I think that's what we shared at the end of Q2.
That we believe this year's category is going to be in the minus 2, minus 6, minus 4 to minus 6. And, and this year, uh, every quarter, every month has been pretty volatile, but you probably end up in that range, right? So, I think our internal estimates suggest that we're in the minus 4.7 range, uh, in terms of the category health. So there there's something different this year. Um, right now, there's, uh, the structural issues that we've all talked about in the, in the industry, whether it's health and wellness, whether it's the generational change. Um, but this year, there's been a lot of other macro issues, right? Whether that's the, uh, economic impacts tariffs.
Uh immigration. So so you know, we still believe that we are this year's this year or, you know, going into next year is cyclical. Um, you know, once we get through some of these macro issues behind us, we should be getting back to the pre 2025 levels. Uh, so that's how we're thinking about the business and, and the way I would
Moving on. So hopefully I answered your your question about uh, you know, the the category performance and and just our views on that, in the last, in the short term and then also the long term
Thank you. Our next question comes from, Andrea takes Sarah with JP Morgan.
Please go ahead.
Hey, good morning. This is Drew Levine on for Andrea. Thanks for taking our question. Um, so rule you, you just noted, um, you know, the expectation, I guess, um, that industry, you know, could return to free 20, uh, 25 levels. Um, you also noted in the prepared remarks that you know, results will will take some time to see. Um, so I guess if you could just provide any more context, um, to, you know, if you think, um, that the company could return to low single digit, organic sales growth. Um, if the industry remains down in that sort of 3% range. Um, and then, you know, you also talked about, uh, being willing to deploy, um, uh, the balance sheet and, and cash flow to fill portfolio gaps. I know under Gavin it was talked about as sort of a String of Pearls approach. Um, if you think that, you know, given where the industry is, if, if we could be on the lookout for anything, a little bit more sizable, thank you.
Yeah, thank you. Um, do just a couple of comments I think on on your few questions. So uh you know, with the industry being uh being where it is, I think we still see the pathway for for delivering uh you know, growth Sports and top and bottom line uh you know.
If you look at this here, what's impacted is obviously category, but also on the Cog side, right? I mean, there's been so much volatility around inflation with West premium and always spoken about. Um, so, you know, those are the, I would say the headwinds where we're dealing with this year, uh, if you again go back to the the, the pathway to get back to Top Line. I mean, uh, you know, in the US I I'd break down our portfolio maybe in in 4 buckets, you know?
Strengthening core and economy, becomes important and and these are Big parts of our portfolio.
And frankly, they're a big part of our distribution of portfolio, so making sure these parts of the portfolio are strong and healthy is important. And I would say we've done a decent job on on share, uh with our core Brands, right? Our core Brands is still higher share than 2022, uh, but we have work to do on economy, uh, but the runway we have in about premium is so much in here and Beyond here.
Right, and Beyond the index. And I called out my comments and, you know, we have work to do in on Belgium, white blue moon, uh, but really is, is growing, um, you know, flavor is something there is is volatile.
We had some good success with with Our Brands and but uh, this year, you know, we have some challenges with simply toppo is starting to get much stronger uh and then the non analysis, right? Fever Tree was a great ad, it's an exciting brand for us, it's a exciting brand for our Network. Um, so between the combination of that and along with our Canadian and I your own business, you know, we can get our business back in those single digit growth, uh, and then is obviously deploying Capital, right? So, your question of of m&a, uh, you know, we want to make sure we deploy capital for brands that fill gaps in our portfolio, right? So I think that's important. Do we want to be disciplined about, uh, it being a creative to both top and bottom line. Uh, right? So we're not going to chase Top Line, uh, just for the sake of Top Line. Uh, and then third is, uh, we want to do it in a way that is, uh, you know, prudent from a balance sheet perspective, and, and utilizing our balance sheet. So, you know, we we stay committed to our investment grade, uh, rating, which take,
To, uh, 2 and a half times. Leverage ratio, uh, returning. Cash to shareholders, but, you know, we can, uh, deploy Capital to really augment augment.
Portfolio. And, and
Make sure we're making some changes that are meaningful to our total length price. So, um, you know, probably can't give you a specific number or size but, uh, definitely want to lean in in the right way of, uh,
you know, enabling total Enterprise growth.
Thank you. Our next question comes from Peter, galbo with Bank of America.
Visa, please go ahead.
Structural cyclical headwinds, but 2 2 things, I'd like to ask kind of 1 um Tracy. I think there's a a this quarter you moved into um a relatively big bomb maturity, that's coming in the next 12 months. Just maybe how we should think about addressing that. Um, particularly as we, as we start to contemplate 26, uh, and the second would be just on the impairment itself. Um, again relatively sizable, um, hit hit to the balance sheet. Uh, you know, I think understandably, you have to go through impairment testing but in the context of, you know, cyclical versus structural, I would think this would lead more towards, you know, the structural end. So so maybe you can help compare and contrast, um, just what happened with the impairment charge relative to kind of your views on on the overall industry. Thanks very much.
Thank you veto. Uh, let me, uh, have to see answer the bond, uh, maturity question, and then, I'll take care of impairment questions. Yeah, thanks, Peter. So, yeah, we, we do have some dates coming due in 2026 and, you know, as with all our dates, we will review that as we get closer to the the due dates. Um, I think the important thing is that we remained focused on maintaining our leverage. Ratios rule just said, you know, in in um, alignment with the target of being below 2 and a half times and we are currently, you know, in that range. And and um, we we um, will make sure that, you know, going forward, we are in um, to sort of be the 2 and a half times. So closer to the time, you know, we'll assess
Um what we what we do with the dates, Thanks Peter.
Yeah. Thanks Tracy. And and Peter. I mean, you're you're right. Absolutely right. I mean uh, you know, we do the impairment charge to Goodwill of about 6.6 billion uh, in Q3. And so, firstly your number of factors that impacted, right? So obviously this year's performance, uh, you know, there is a question about the Outlook of of our business, uh, but the other factors that come in is, uh, you know, discount, uh, discount rates, um, you know, risk premium, uh, and frankly, the multiple, right? So, uh, the way I think about this is,
You know, we can get this business back to top and bottom line growth. Uh we think we are very undervalued in the context of uh you know, our our market cap right now. Uh, you know, those are the things that we need to lean into and make sure we can demonstrate, uh, quarter of a quarter. And, uh, you know, this is something that as, as you said, uh, it's something we need to do every year and check. Check ourselves to make sure we're thinking of the business and The Prudent way. And, and the impairment is and and the experiments are function of that,
Thank you. Our next question, comes from Bill Kirk, with Roth Capital partners.
Please go ahead.
Good morning everybody. Hey Raul. I was hoping to get a little bit more on your vision for the business. You mentioned portfolio gaps a couple times. Do you think the gaps are more related to regions are the gaps more like categories related or or the gaps brand specific, and then and then maybe backing up even further. Should the companies Focus become more narrow, or should the focus broaden and introduce new regions and categories?
Yeah. Thank you Bill. Uh, you know, definitely looking forward to sharing a lot more about, um, you know, the plans and, and, and how to think about that. But let me maybe break it down, um, in in 3 or maybe 3 different ways. So, 1 is about portfolio, you know, as you said,
uh, you know, we have a pretty broad portfolio in the US, we have a great broad portfolio in Canada, even in Europe. And and generally, we do believe, all segments matter, right? So so we do definitely need to work within that. Uh, now how we work the specific parts of the portfolio, I think that's where you see me, highlighting some of the areas of opportunity we have, uh, now in some parts we do have gaps, right? So I talked about, uh, uh, the the
Deployer, uh, people resources, how we deploy, our marketing resources, uh, has to be, uh, as close as possible to, to, uh, our consumers and customers. So, uh, there there is a definitely, uh, difference in how we execute and take that, um, to Our Brands to Market. Uh, the third element to your question is, uh, you know, capabilities. You know, we have a strong foundation in in our infrastructure, whether it's breweries whether its supply chain, uh, but it is an area that we need to make sure we are keeping up with, uh, either on the commercial side, whether it's on the technology side, you know, optimizing our Brewery footprint in the best possible way with, uh, uh, making sure we can meet some of the needs of of our new capabilities. So, uh, you definitely going to see that, uh, us leaning into that, uh, and then Capital deployment, right? I mean, our Capital, allocation approach, you know, Tracy mentioned as wanting to be disciplined about that. So I, I would say those are the broad areas. Uh, you know, your question about
Being broader or narrow, you know, we love the markets, we are in. I mean we are on some of the best profit tools in the world. Uh we just got to win in those. Um, so that's how you're going to see us lean in on on, you know, winning in the markets that we uh, currently are have a pretty strong Foundation.
Thank you. Our next question comes from philipo foni with City.
Please go ahead.
Hi, good morning everyone. Um, rool. So I wanted to ask about your experience working with and building the partnership with Coca-Cola Fever Tree. And in some of the nonar initiatives like Zora um, should we expect uh more initiatives like that from also, cause in the future to your point, as a way to fill some gaps in a capital efficient way? Or do you do you see still the opportunity for maybe more, traditional Acquisitions, going forward? And then um, on the restructuring, the you have announced recently, uh, you indicated most of the charges 35 to 50 million will be in Q4, can you provide some sense of the savings on a run rate basis going forward and and eventually expect those savings through flow through. Thank you.
Thank you, Felipe. I'll I'll let me talk about the portfolio as a partnership comments and Tracy if you can help on the the restructuring piece. Um, you know, if you look it up, uh, portfolio PP. I mean that we definitely going to be focused on beer. I just want to make sure I mean that's been our our route and it's a big part and Foundation of our business. So uh beard is always going to be super important and and definitely uh,
Feeding into that space. Uh, you know, in terms of, uh, Partnerships and and, uh, Acquisitions. I think, if you look at what we have done with both Coca-Cola Fever Tree or, you know, I think we've figured out a way of work with working with Partners to really, uh, leverage. Our platform, leverage our infrastructure to scale, uh, scale Brands. And I think, uh, I would say, both of those Partnerships have worked really well for our business, um, you know, but in terms of deploying capital, I, I do think we continue to look at areas and opportunities to deploy Capital, uh, to augment our portfolio. Um, so so your question of whether we're going to do more Partnerships versus more Acquisitions. I think that is a, as a function of, you know, how these opportunities come up. Uh, but what you will see us leaning into spaces where we have gaps in the portfolio to fill right. Um, you know, maybe 3 4 years ago we didn't have the capital to to deploy if it's right now I think
our balance sheet is in a strong way that we can do it in a disciplined way. So uh, you know, continue to focus on beer, continue to focus on some of the above premium agenda, but, um, in the Beyond beer space, uh, we probably need to be, uh, both creative and deploy Capital to fill some gaps. Um, and Tracy, you want to
Yeah, so thanks Leo. So um, yeah, in terms of cost savings, if we haven't provided specific cost, savings targets, as we still finalizing the details around this restructuring. Um, what we have said, though, you correctly, say um, we expect charges to be in the range of 35 to 50 million. Um, they are expected to be the future cash expenditures over the next 12 months, um, substantially all of the charges are expected, um, to be related to Severance payments and post employment, um benefits. But um, you know, 1 thing, in terms of the cost savings, um, look,
Did have the the open head counts as we prioritized, you know, our costs, um, in 2025. So, um, you know, that that's from sort of the cost savings point of view. But if we, we do intend to re-employ some of the savings, um, to invest behind Our Brands to invest behind a commercial capabilities, as we all have said, both in in commercial and in supply chain and in technology, to support the ongoing productivity and efficiencies um around our business.
Thank you. Our next question comes from Steve Powers with Deutsche Bank.
Please go ahead.
Great. Thank you. Um, I I guess these are probably, you know, 2 follow ups. Um so much of what you've just recently discussed on the, on the restructuring. I, I'm curious. Um, you, you spoke about how this is going to make the America's organization faster, more Nimble, more agile, just curious. Just to, you know, exactly how the restructuring will enable that, um, that increased speed number 1. And then number 2, um, Earl you've, you've talked a lot about um, the portfolio and beer versus Beyond beer. I'm just I'm, I'm
I'm still struggling to really conceptualize the, the, the balance of those investments in your mind. Uh, clearly it's a game of hand. And as you've described in, both are important. But, um, you know, just again, that, that balance beer, obviously the bigger business.
Investments to drive, premiumization seem to be a core part of the vision. Um, but I, but do you see beyond beer is a bigger growth driver, going forward? I'm trying to figure that out. And if so, how does that influence? Your investment prioritization, broader Capital, allocation, Etc. Thanks for both those
Thank you to you've uh so maybe address both a different questions. 1 is about restructuring and portfolio. So you know if if you think about going back to, you know, what I said about customer and consumer Focus, uh, we wanted to make sure that the leaders driving that agenda had a seat around the table, right? So whether it's Us sales, whether it's marketing, uh, leadership, whether it's the Canadian leadership, um, we need to make sure that, you know, in a land where category chat we challenge in the category, right? I mean, we talked about minus 3, is minus 4 to minus 6. Uh, we need to be getting much closer to how we execute in the, in the, in the front end of our business. So, you know, it starts from that thesis of making sure we can bring these leaders around the table. Really make sure we're executing, uh, with speed, uh, with pivoting where we need to, uh, we're being recently focused where we need to uh, and this also about Shifting the uh, our resources, you know, internal both people and marketing to all
Uh, where we see, uh, the opportunities, right? So that requires us to be, uh, I would say a lot more quicker a lot more Nimble. Um, and it starts with, you know, obviously being leaders having the ability to drive that, uh, the other part I I obviously uh, you know, talked about briefly was around making sure we can enable uh, our our teams who are closest to the markets, uh, to make those decisions, right? And so, how do we drive both of the decision making and accountability, uh, as close to the markets as possible? So I think those are the 2 few principles that we've used. And and that's the what we're trying to drive in terms of, uh, the restructure changes, uh, you know, uh, both in the US and in Canada, in in making sure we can execute faster. Because, yeah, we are in a, in a category context, that is that is challenged
Um, in terms of portfolio, I break it up in two different ways: one is around marketing dollars investment, and then about, you know, balance sheet deployment of capital. Um,
Steve, uh, you know, you're going to see us continue making sure we have the right pressure against our big Brands. Um, so whether that's cos light, uh, Middle Light, banquet uh, you know, things like Peroni, Blue Moon. So those are important brands that we believe, um, you know, have so much potential and make sure we are, we are winning in the in the beer landscape, so you will see us continue being, uh, super focused on those and making sure we have the right marketing.
Foundation in the Beyond beer space.
Thank you. Our next question comes from Michael Lavery, with Piper Sandler. Please go ahead.
Thank you and uh good morning and and congrats. Gavin and Rahul Rahul both um just want to come back to a couple things you touched on um needing to win an economy, uh, you touched on uh, in your opening remarks. Uh, just wanting to focus a little more on on highlight and and Keystone can you maybe touch on why? You think you might not have been winning there already and whether it's maybe an innovation issue a price issue, just not enough marketing. But what more, you know, maybe should we expect looking ahead and then just to follow up on, uh, that the Goodwill you touched on how it is impacted by the? The assessment process is impacted by this past Year's results and evidently has a bit of a backwards look. But also seems to reflect an Outlook ahead and maybe what, what is kind of the balance there and, and how much is it more a function of of what's happened already or or or what you think is to come?
Thank you, Michael. Um, so again, just let me talk about the economy portfolio and then, you know, add a few comments and Tracy, anything else? You would like to add on a good. Well, but, uh, if you, I would go back to, uh, a couple of ways to think about the economy portfolio, first is, uh, a consumer lens, right? I mean, uh,
consumer.
I think you and everybody is aware. I mean, the consumer from a stable perspective is pressured and so for us, making sure we have a portfolio that can meet our consumers, uh, you know, in in every location, you know. In this category in beer we definitely don't see trade down uh, from our from our brand perspective. Uh, but we have brands that consumers love like our life like Keystone like pills and in Canada, um, Etc. Right. So we have a a broad economy portfolio uh, that you know, consumers really love uh, and this is big Michael. I mean, this is a big part of our portfolio in terms of scale and volume. And it's frankly, it's a big part of our customers portfolio. So making sure that we're doing the right things of, keeping it, uh, as healthy as possible is, is super important. So, you know, the things you talked about all of that matters, right? Whether it's the right level of marketing, for the right level of innovation. Uh, right again. But price back in in in that part of the portfolio.
Uh, and I would call uh, the the regional element of it, right? So this is, uh, our portfolio is very Regional, um, and we need to make sure that 1 of them. We are winning in a very, very Regional way, uh, with all of that. So, you know, probably less, uh, slightly different the way we think about schools, like Middle Line. Banquet, which are big National brands that need to win, uh, in in different ways. Um, you know, the, the focus on economies I would say in a, in a, for solving a different purpose.
Um, to your point about Goodwill, you know, it is a function of, uh, this year's performance. It's a function of discount rates, uh, multiple. Uh, but yeah, it does have a, a view of the Outlook. Um, right. Again versus what we had previously, and I think that was informed by this year's uh, both category performance and our performance. So I I would say that those are the big drivers that you know as you know maths in these things, discount rates and multiples have a big uh big impact on some of these uh elements. So uh Tracy anything else.
Um, no, I think you've you've basically covered it a role. Um, you know, just maybe an added thing. Um, in terms of the, the current Outlook is um, the cost that particularly driven by the Midwest premium. Um, you know, we we have seen that now um, in in October being the highest um, level ever um, with potential, you know, more increases coming.
So you know that was also a part of of, you know, the outdoor um, for for our costs. But you know, having said that, um look we we remain confident in the resilience of it are industry. And also as role has said, you know, our ability to return to both top and bottom line growth.
Thank you. Our next question comes from Rob ottenstein with evercore.
Please go ahead.
Great. Thank you very much and congratulations, um, to to you all and, and to Gavin and, and best of luck. Um, so I guess the, the question I'd like to try to approach or um, is to get a sense of
um,
And date from the board.
um, and you know, to what you know, how much freedom
do is the board giving you, um, to the sense that, you know,
If you wanted to make significant changes is is kind of everything on the table uh no sacred cows or and and that kind of approach. So something that maybe a a a departure from the past or or or is the Mandate from the board more like um, you know,
Just kind of, you know, stay the course, tweak things around the edges, improve execution here and there. But basically, you know, let's weather the storm and and keep kind of plugging forward. So, just really just trying to get a sense of, of, kind of, you know, how those discussions went and you know what, what range of Freedom, you feel that you have to, uh, create shareholder value here. Thank you.
Good morning, Rob. And and thanks for the question. Yeah. Um, you know, I would say we definitely our board is always focused on what's the best thing for all shareholders, right? I mean, that's definitely the lens and frankly, I don't, there is no secret cause I mean, I think they've, they've given us given me the freedom to say, you know, let's make sure we have a plan that can drive those shareholder value.
And that's what we are. That's what I'm leading for. Um, so yeah, there are no sacred cows. There's no constraints, uh, you know, I think
you and everybody on this call, you know, understands the challenges that are in the category. Uh, you know, I know there's been a lot written about our portfolio. So, I mean, all of that is real and that's the context to work within. But in terms of the reaction from the board, uh, it is about driving, uh, maximizing shareholder value in the best possible way. Uh, we can so, uh, definitely don't feel any constraint. There's going to be no fixed cows. Um, you know, I think that the tricky part in terms of your colleagues asked this question, right?
Categories going through a tricky time this year. Uh, you know, again, I go back to, we are in great geographies with big profit pools, but, yeah, it comes with a different shape of category Health. Uh, and, and those are all reality contexts, but it doesn't take away from the opportunities we have for our portfolio. Um, so I, I think that's the best way. And again, that's why you see me talk about even balance sheet and, you know, while we're committed to returning cash to shareholders, who are going to
Find the right ideas to deploy Capital to get ourselves back to top and bottom line growth also. So, uh, yeah, no, I understand the question wrong, but no, no constraints here from from the board or anybody else.
Thank you. Our next question comes from. Eric zata with Morgan Stanley. Please go ahead.
Great. Thank you. And congratulations again to Gavin and Rahul, um, Rahul, we're hoping you can talk a little bit more about the overall level of investment and capabilities your comfort with the current level. I know you talked about, you know, having the right marketing pressure behind the brands but if you look a little bit more broadly, you know, investment obviously is is you know more broad than marketing support. As you look at the organization, it's come a long way in terms of capabilities. Uh since you know 2019 and the revitalization plan, you know, are there areas, you know, either that need uh increased investment um or where you need to further build out capabilities. You know, either from you know, an Opex or capex standpoint from here.
Thank you, Eric. Good morning to you. Um, yeah, no, I would break up the capabilities into probably maybe three broad buckets, right? So one is our supply chain, you know, wanting to make sure that we have the right level of capex.
Is uh, you know.
Is important. So I I think that's 1 thing. We're going to continue to look at. Um, so supply chain continues to be an area of of making sure we have strong capabilities. Again in um outside capex and supply chain is things like optimization of of logistics and transportation costs, right? So some of the new tools and Technology Etc, can enable us to do that. Um, the other 1 is commercial capabilities, right? So if you think about uh, you know, our market share in the United States, uh but our category captaincy is is significantly higher than the market share. We have
And and that means we are, you know, playing a role in in driving that uh capability with our retailers. So that that again goes back to examples of capabilities.
And then the last part is technology. Uh, you know, both in terms of Baseline technology needs, but some of the new capabilities around Ai and how do we leverage that with our infrastructure? So, you know, we're going to continue focusing on these areas. I think your question around, what's the right level of investment? Um, you know, I think again more to come on that as we think about our total business, but the lens we usually have on this is, what is the driving for our business, right? Is it productively is, it efficiency? Is it enabling a dock line? So being very clear on all the kpis or metrics that, um, you know, we use to to make sure that this, this these Investments are
Turning something to the business. So so while we will focus on capabilities, it is from a lens of productivity efficiency or or to enable top and bottom line.
Thank you. Our next question. Comes from. Kevin Grundy with BMP, parabar.
Please go ahead. Kevin
Great. Uh, thanks. Good morning, everyone. Um, I have two questions for me, actually kind of pulled together some of the themes that we've talked about. Um, and that is, you know, your assessment of the company's cost structure more broadly, and particularly from a supply chain and brewery optimization perspective. So, the company made some difficult choices at the corporate level. Um, but the volume outlook has certainly become quite a bit more challenging. Uh, perhaps the company's fixed cost structure is not appropriately sized for kind of the new reality, if you will. So, one, do you view that as a fair assessment? And two, in light of one of the questions earlier on investment levels, do you view incremental productivity as an enabler to support higher investment levels, or would incremental investment be a near-term drag on margins? So, thank you for that.
Thank you, Kevin. Um, so let me address your first thing around the brewery 1 and the second 1. I I just want to make sure I got your question, right. Uh, but on the brewery stuff, uh, on our Brewery infrastructure, I mean, we always looking at ways of making our Brewery Network efficient, right? And you've seen some of the actions we've taken in, in the past, uh, the
Couple of things I'd call out, as we think about uprooting infrastructure, 1 is around, uh, Transportation costs, right? And making sure that we are looking at really infrastructure in the context of of Transportation. Uh, the other part is the seasonality of our business, right? So seasonality, in terms of Summer and and being showed, uh, think about that. So, uh, to answer your question, broadly, yeah we're absolutely going to be thinking about all the elements of of, uh, of our fixed cost base. Um, you know, right now, I don't believe, uh, we need to be, uh, closing the brewery. Uh, I think we need to be smart about how we think about, uh, you know, lines in particular breweries where we produce, what product, how do we get smarter about? You know, some of the, uh, efficiency in in terms of moving Our Brands around. Um, I I think that's how we think about it. Um, but you know, fair question as we think about the volume Outlook and and what that does. But you know, of course thing will always
Be a focus for us, whether it's on the fixed side, whether it's on the GNA side, I think uh uh that that that priority and focus will I I would say always remain your question about you know. Do we need investment to drive productivity? I think that was a theme of the question. I I I don't believe we need some high elevated levels of investment to drive productivity. I think we need to uh, you know, look at our capex in the right way and and be checking ourselves
Again, but check test ourselves to make sure we're getting the right return on the marketing, right? So
so hopefully I answered Kevin both your questions in terms of the fixed cost thing and the
Uh, investment profile.
Thank you. Our next question comes from Camille gajjala with Jeffries.
Please go ahead.
Uh, Hey everybody. Good morning. Uh, congratulations all around. Uh, also, I think congratulations to Eric, Sado might have been the first analysts to pronounce your name correctly. Uh, you'll find name pronunciation to be a thing on, uh, many of these calls. Uh, you're getting the same question I guess over and over again, around the restructuring and, and investment levels. And I think a lot of that is because in many instances, when an industry is struggling and and has struggled for um, you know, over a decade. Uh, we see bigger bigger. Restructuring is bigger savings at the time of, uh, of management change and what has been out so far seems small. So just, um, curious is, is this just the first step and there's bigger restructuring to come or, um, is it sort of, everything's in place now? And it's, it's time to go.
Common. Thanks for thanks for the question. Um, you know, I think, um, I, I know I'm Keen to also, uh, talk about our, our total plan, and I look forward to sharing, uh, that in, in the coming months, right? I mean,
Uh, you know, we we definitely if you think about our business and and you said this with respect to long-term trends, making sure we are looking at our cost base in in the right way. Um, you know, I I think we're going to look at everything. Uh, you know, these that we took action on in the in the short term in the last 30 days was to make sure we have set up well in the Americas for 2026. So um, you know, I I would say more to come in as we think about all the elements of the plan um you know cost and and efficiency is is another element that is super important. Uh, but we were trying to move with Pace as we think about uh setting ourselves up in the Americas for 2026.
Thank you. Our next question comes from Lauren. Lieberman with Barclays.
Please go ahead. Great. Thanks.
Thanks so much, good morning. Um, 1 thing, I want to go back to was just um in the prepared remarks role when you commented on. I'm just trying to find a quote again um and the commercial changes and I know you in answer to these question. You talked a little bit about or structure, but you also talked about deploying marketing, um, based on market dynamics and port.
Pulling a priority is and I just, um, was curious like, what were you doing before? Cuz that sounds like, I would think that's what's already happening. So I'm just curious how you maybe compare and contrast. Um and you know what it is that need that needs to change. Thanks so much.
Yeah, thank you Lauren and, and, uh, you know, absolutely fair question. I think. Um, the way I would think about this is, is how do we react faster, uh, to the, uh, external market dynamics, right? I mean, if you look at Brands while we have big, uh, National Brands, they play different roles, regionally they. They uh, you know, operate in in, in terms of market share, we have in in each state, or each season is different. And we need to just uh find ways of being.
Flowing, our internal resources in a stronger way. Uh, the added part, you know, and some of this we were doing, right? But again, I the pieces I would say is different or will be different is in the context of accountability. How do we make sure our decision making is as close to, uh, those markets as possible? How do we make sure we can shift, uh, both people and dollar resources, closest to that decision making. Uh, and I think that's those, are the changes that would, you know, would would feel different for our teams, how we operate, how we engage with our distributor network? Uh, Lauren. So, I think, uh, you know, it is since I would say we were doing, but we just need to lean in harder given, um, you know, how the the
Uh you know those I would say those are the big highlights. I would call out Lauren to your question.
Thank you. Our next question comes from Nadine sawat with Bernstein.
Please go ahead.
Yes. Hi. Thank you for taking my question. I'd like to come back to some of the cyclical pressures that you called out in the prepared remarks.
Um and in particular, you know what are you seeing in terms of consumer sentiment for your consumers in Q3 and to the extent that you can comment on this in October? I appreciate, you know, the prepared remarks you made. But are there any internal surveys or analytics that you're able to share about what's driving consumer Behavior today? And how does that help you be more confident in your statement that the incremental pressure we're seeing today is firmly cyclical as opposed to structural. Thank you.
Yeah, and then, you know, again, I understand the question. But, um, if I address it and maybe a few added points to give you some context, that would be how we're seeing it. I mean,
If you go again back to 325, I mean some of these Trends have been with us uh at the beer category uh for a long time, right? Whether it's health and wellness, whether it's uh, uh, generational change, whether it's, uh, people making choices around, uh, alcohol. I think that some of those have been, uh, you know,
So we and and everybody in the industry have known about those. And uh, if if you look at the category, historically used to be in the minus 1 2 and you know, the last few years has been romantic cish range.
You know, this year, I would say there's been definitely, uh, added pressure and you see that, you know, across Staples and, and, you know, we hasn't been immune to that. So whether that is, uh,
Impact of tariffs on on consumer sentiment. If it is, uh, the
On the Hispanic Community. Uh, any of those elements. So I I do believe uh, that has had a different type of an impact to, uh, severe category this year. Um, and and uh, you know, that's where once we've got through these macro issues, uh, then we need to, uh, get back to those, uh, Baseline levels of how we think about the category and then making sure we're winning in that category.
Thank you. Our next question comes from Robert Moscow, with TD Cohen
Please go ahead.
Hey, uh, thank you where I will. Um, I'm trying to um, trying to summarize, you know, all of the commentary about the the the regional execution versus the national, uh, marketing of your brand. And I just want to make sure I understand like you have Coors Light and, and Miller Lite. Your 2 biggest brands, is it your view that on a national level?
Uh, that that the marketing of those brands has been just fine. Because I, you know, there there's been multi-year, share, losses of those 1 of your competitors has made great inroads in the light category, probably at their expense. So
No, thank you for that question. Uh, you know, we definitely think there's opportunities for us as we think about, uh, how these Brands show up. Um, you know, if you think about, uh, the work we are doing on Miller Lite, 150, 50 Year campaign. Um, you know, I think, uh, and if you look at share share losses, of course, light versus in Q3 versus Q2. So, uh, you know, definitely, that's something we're looking at of, of the national campaigns for our big Brands and how do we, uh, lean into a different team? How we think about it, going forward, uh, and I just want you to, uh, pointed out to us. Banquet, right. I mean, I think it's a brand that has, uh, you know, really managers human need has resonated with consumers, uh, you know, we've obviously executed well in context of distribution gains.
But, you know, absolutely, uh, focused on making sure we got the right campaigns uh, for Co Latin Middle Light and and I think you'll see some of that layout as um, you know, with with live sports in the, in the coming months.
Thank you. Our final question. Today comes from Gerald pascarelli with Neiman Co
Gerald, please go ahead.
Great, thank you very much. Um,
Commentary on this call and to summarize um is it fair to assume or expect that bolt-on m&a or a more aggressive portion to be on beer ultimately becomes a more important part or a larger part of the capital allocation strategy looking forward. And then uh for Tracy just going back to the Midwest premium it's obviously been increasing 81 cents per pound. Um I know there's like less than 2 months left in the year but if the premium continues to spike um is there a spot price threshold for us to be mindful of? That could potentially put your PBT guidance um at risk for the year any color? That would be great. Thanks.
Yeah, thank you, Jeff for that. And and morning. Um, you know, if you look at m&a and and deploying those Capital, uh, you know, we have a pretty strong we have portfolio across across the world, right? I mean, we continue to fill some gaps in that but, uh, the places where we need to fill some gaps, are probably in the Beyond beer. So, in terms of deploying Capital, um, you know, you will see us probably lean in a lot more on the Beyond beer space uh than the beer space. Um, you know, but if if there are ideas that make sense that um, you know, augment our business and drive top and bottom line growth, uh, we're going to look at that. Um, but but I think broadly speaking, um, you know, I think your assessment of just blowing your energy and dollars in Beyond beer is probably uh, the right way to think about it. Uh, so if you want to address the
Yeah, so, um, how do you look? I mean we've spoken about them at least premium a lot. Um, and um, as you rightly say, you know, just continues to increase, um, and hit an all-time high in October, um, you know, potentially going much higher. Now, we do have an extensive heating program. Um, you know, that that operates sort of there's a blend between structured, um, as well as where we, you know, use opportunistic, um, you know, depending on the markets, uh, we able to hedge out multiple years and really, the objective is to smooth out the impacts of any unfavorable swings in in Commodities and in Forex.
Um but you know, as it relates specifically to the Midwest premium look we do have coverage and and we do follow the guardrails in our program. But you know, as I, as I've said before, it's a very difficult and very expensive commodity to hedge. Um, it's pricing does not follow a conventional Market Edge and flows, um, and liquidity is limited. And so, um, you know, it continues to be a headwind for us. Um, and you know, we, we do try and, um, you know, eliminate the volatility through hedging. But, you know, at at the levels that it that it is, um, there there's no, there's no, um, sort of reason for that. So we'll we'll just continue to track it and and do what we can in terms of, you know, trying to
um, mitigate the volatility that we do see in that commodity
Thank you. That concludes our question and answer period. You may now disconnect