Good morning and welcome to the Hormel Foods First Quarter 2023 Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to David Dahlstrom, Director of Investor Relations. Please go ahead, sir.

Good morning. Welcome to the Hormel Foods conference call for the first quarter of fiscal 2023. We released our results this morning before the market opened around 6:30 AM Eastern. If you did not receive a copy of the release, you can find it on our website at hormelfoods.com under the Investors section. On our call today is Jim Snee, Chairman of the Board, President and Chief Executive Officer; Jacinth Smiley, Executive Vice President and Chief Financial Officer; and Deanna Brady, Executive Vice President of the Retail segment. Jim will review the company's first quarter results and give a perspective on the rest of fiscal 2023. Jacinth will provide detailed financial results and further commentary on our outlook, and Deanna will join for the Q&A portion of the call. The line will be opened for questions following Jacinth’s remarks. As a courtesy to the other analysts, please limit yourself to one question with one follow up. If you have additional questions, you are welcome to get back into the queue. At the conclusion of this morning's call, a webcast replay will be posted to our investor website in archive for one year. Additionally, earlier this week, we filed a Form 8-K with the U.S. Securities and Exchange Commission that included supplemental segment financial information for fis years 2021 and 2022 related to the GoFWD initiative. We have posted a copy of the Form 8-K to our investor website, investor.hormelfoods.com. Before we get started, I need to reference the Safe Harbor statement. Some of the comments made today will be forward looking and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which can be accessed at hormelfoods.com under the Investors section. I will now turn the call over to Jim Snee.

Thank you, David. Good morning, everyone. With the release of our recast financial information earlier this week, our transition from a structural and reporting perspective is now complete for the GoFWD initiative. I want to take time to acknowledge the immense amount of work the entire team has put in to transition the business to our new strategic operating model. We have spent time discussing the strategic rationale and how our actions over the past decade have positioned us for go forward. But there has been a lot of blocking and tackling that had to take place first to get us to where we are today. Over the past six months, we stood up three new business segments, and consolidated the Jennie-O Turkey Store segment. This included organizing the Retail segment into six distinct verticals, and combining the foodservice businesses across the enterprise. We invested in new centers of excellence, including brand fuel, and a dedicated FP&A team. And we made changes to the administrative side of the business to recast the financial statements, align and structure our entities and duties, maintain controls across the business, and of course, operate our business without interruption. We have learned a lot about our people, processes and technology going through this transition. While we have work to do in all of these areas, I am encouraged by the conversations that are taking place across the organization. The operating environment remains challenging. And while many areas of the business performed ahead of last year during the first quarter, our results were disappointing and below our expectations. From a top-line perspective, demand from consumers and operators generally remained elevated in key categories. And we delivered balanced growth between volume and price across many parts of our portfolio. We continue to see elevated demand for many…

Thank you, Jim. Good morning, everyone. Net sales for the first quarter were $3 billion, a 2% decline to last year. Planned lower commodity pork and turkey volumes were the primary drivers of the decrease in net sales. We have now lapped our new pork supply agreement as of January and turkey supplies have improved since the fall. We anticipate more normalized volume comparisons for the remainder of the year, barring a return of HPAI in the spring. First quarter gross profit was $496 million compared to $539 million last year. Gross profit margin declined 100 basis points as the impact from pricing actions was more than offset by unfavorable mix and persistent inflationary pressures. For the first quarter, SG&A expenses as a percent of net sales increased marginally to 7.5%. The company continued to support its leading brands through advertising investments. Advertising expenses were $47 million during the quarter, comparable to last year. Of note, we promoted Black Label bacon over the holiday season and the Planters brand was once again front and center at this year's big game with The Roast of Mr. Peanut. Equity in earnings of affiliates for the first quarter increased significantly compared to last year due to improved results for MegaMex and our joint venture in the Philippines. Operating income for the first quarter was $289 million compared to $320 million last year. Operating margins compressed to 9.7% compared to 10.5% last year. Net unallocated expenses in the first quarter increased $7 million. This increase was driven by higher employee-related expenses and outside consulting fees. The effective tax rate for the quarter moved modestly higher to 22.6% compared to 22.4% last year. Last year's rate reflected higher stock option exercise benefits. The effective tax rate for fiscal 2023 is expected to be 21% to…

[Operator Instructions] The first question comes from Rupesh Parikh of Oppenheimer.

So to start out for us, the report today is not really consistent with what we typically see for Hormel. So what happened? And what are the key efforts from here to improve performance?

Good morning, Rupesh. We agree with you. The word that we used is we're disappointed, and these are not results that we expected. But I do think it's important that even with that disappointment, to remember just how far we've come with our supply chain and everything they've been through over the last three years. We go back to, obviously, the COVID impact when plants were shut down, and we didn't have labor. And then when we did have labor, it was turning over. And so we are in a more stable operating environment for sure. And so fill rates continue to improve, labor is better and production capacity across key categories for us is good. But as we think about Quarter 1 that -- in the context of our -- this dynamic and volatile environment is a bit more explainable. We talked about China. That's easy to understand. Foodservice had a period of softness, but their business continues to be strong and will stay strong for the balance of the year. We mentioned Planters, which we met our expectations last year, but are seeing a slower start this year, and we know what we need to get done there, and then avian influenza still battling that. So we've said since the fall, we've been operating with elevated inventories. We wanted to get fill rates up. We needed more inventory to support our expanded network. The big thing here is probably a misalignment of our inventory and our demand because we expected the inventory to clear, it didn't and it hasn't. And it's resulted in inefficiencies across the supply chain and higher operating costs when we think about product and warehouses and probably moving it more than we had expected. And so those are real dollars that impacted us in the quarter. And then the other thing is we want to be careful when we talk about inventory because as we progress throughout the year, it's not going to be as simple as just looking at a dollar amount to gauge how we're doing. Mix is huge in our portfolio. When we think about pounds versus dollars impacts of markets, a potential rebound in turkey, times when we may be building inventory to support customer promotional activity. All those things are part of our inventory mix. And really, for us, we'll be talking to all of you, just like we're doing today in a very transparent manner to say is our demand -- or is our inventory aligned with our demand. And that's really going to be the key indicator going forward. So we're disappointed where we are, but we know what we need to do and probably said the most simple way possible is that after almost three years of chasing this unprecedented demand, supply caught demand and we needed to react sooner and we didn't.

Yes. And another important point to just mention here, Rupesh, is that as we have this elevated inventory, what it does is also just delay us from recognizing and benefiting from some of the costs coming down. When we think about freight rates, markets coming down, we haven't really been able to realize those, and that's been delayed. We talked about it in the fourth quarter that we should see that relief here and those benefits showing up in our margins this quarter, and that's been delayed as well and affecting where we're sitting right now from a guidance perspective.

Great. I'm going to slip in another question. So I think in your prepared comments, you mentioned something about learning about people, I think you said technology and processes. What are the key learnings there? And then how quickly can they be implemented?

Yes. I'll go ahead and start on that, Rupesh. I mean I think there's a couple of things there that we need to talk about just to level set those comments. I mean the first thing is we're a much larger company today than we were two years ago. And it's not just the Planters acquisition. That's part of it. But we've seen significant growth in our business. We haven't stopped acting on our strategic priorities. Everything that we've talked about in terms of becoming more balanced, transforming our company. We've continued to move that forward, all while navigating this crazy current environment and managing through avian influenza. And so when we say that we've learned a lot about our people. We have the right people as we've gone through our GoFWD initiative, we just need to make sure that we have them doing the right work and GoFWD will help with that. When we talk about processes, as we've integrated our businesses, there are processes that will need a refresh. When we think about inventory, pricing decisions, brand resourcing, and GoFWD will help with that as well. And then on the technology side, I'll maybe let Jacinth add some color there.

Yes. So from a short-term perspective, we are probably just a level set, I mean, this team knows how to manage inventory. And so what we're doing in the immediate term here is just returning to that pre-pandemic discipline when we think about S&OE and the process that is aligned with ensuring that we're listening to demand signal, connecting our commercial team with our supply chain team and getting all our supply planning aligned. And so that's what we're doing in the immediate term. And then from a long-term perspective, we have made significant investment from a systems and technology standpoint with Project Orion. And we paused that intentionally as we were integrating Planters, integrating JOTS and that was purposeful to get those done correctly. And now we're now continuing that work to enhance our S&OP and our end-to-end planning and be able to leverage our technology and our people to get us to the next level.

The next question comes from Robert Moskow of Credit Suisse.

I guess I'm a little confused as to where the inventory is building up in terms of your portfolio? And what categories did you underestimate the volume weakness. Is it bellies? Is it protein? Is it in the freezers? Because you mentioned in your prepared remarks, a lot of products that did really, really well and you talked about strong demand. So what kind of demand were you expecting? And where did it fall short?

Yes, we did also say that we had across all segments, some volume softness. So we certainly had a lot of brands and categories that did really well. We talked about Planters being off to a slower start. So that's a part of it. And we did also talk about that period of time with our foodservice business where we had softness. And so that, too, is part of it. The foodservice piece will experience growth for the balance of the year, less concerned about that. But it's really -- I mean it's a little bit across the part to consider is what we're talking about with our supply chain is there's a level of overproduction as well. And so as we've gotten better in our supply chain and wanted to run it more productively, more efficiently, they've been running hard, and we've built that inventory. In some cases, that inventory is not aligned with the demand. And so that's really our issue is it's a little bit across the board on the product side or I'll say the sales side. And then across on the supply chain side, this overproduction, which built the inventory.

Okay. Because if I can dig in a little, Jim, like I think six to nine months ago, the issue was labor shortages, turnover, couldn't run the plants effectively enough to meet demand. And now they're overproducing?

Exactly. Yes. Rob, I mean that's exactly -- and I said that a little while ago, if we go back over the last three years, everything that we've been through and that -- those different scenarios of, you're right, not having people. And then when we were getting people, they were turning over. And now that we're getting people, we're keeping people. The plants are running more productively and more efficiently. And our goal is to make sure that we're getting up to fill rates, and that we do have some production capacity. So our plants have gotten better. And like I said, in some cases, they've out-produced demand, and that is definitely part of the problem.

Okay. Last question on Planters. When I look at the Nielsen tracking data, the unit sales are certainly down. The volumes are down over the last 12 weeks, like 6% or 7%, but that's been consistent for the past 52 weeks. Unit sales have been down by that amount. Were you expecting a big pickup in unit sales and total sales in the quarter on stronger marketing and Super Bowl marketing and it just didn't play out?

Yes, I think a couple of things there, Rob, and I'll turn it over to Deanna. As we think about Planters in the short term, it is about execution, driving demand and also the mix. We've said this multiple times, and it just bears restating is that we did deliver on our year one commitments. We've maintained some stable distribution. And we've seen some channel shifting with the businesses as well. But the demand is certainly lower versus our expectations in Q1. And so as we're thinking about this business now, it's really what are we going to do in the short term from an execution perspective. And Deanna, I'll let you add some color there.

Yes, sure. Thanks, Rob. Just as we think about it, we knew this business was where it was when we acquired it. And again, we were interested in this business from the snacking perspective and really is a long-term ambition for us. So when we think about plant-based protein, entertaining, snacking and our ambitions for C-store, those still remain front and center. In the short term, we do have execution challenges, in particular, our base business, which is a top priority for the team. When I also look to Q1, that was when we cut over the inventory from the prior owner. So there is some noise there and some things that happened in the quarter as well as we inherited some distribution losses right out of the gate that the team has been working against. And as we head into Q2, we'll recover some of those important distribution points that will really help stabilize the base business. We're really energized by the innovation. I was with our Planters R&D and marketing team earlier this week, and the pipeline of innovation that this team has in front of us for both the rest of '23, '24 and beyond is exceptional and really energizing in regards to where they see this business going. When we talk about innovation, you'll also see innovation launch in this quarter, both in the core business as well as in our C-store business. You mentioned Super Bowl. We did have a really fun Super Bowl ad that was really centered on peanut because we do know that the consumers are thinking about the mix of nuts and snacking right now, and peanuts are really valuable item for them. So reminding them of how much fun Planters peanuts can be as well as the protein they deliver…

The next question comes from Eric Larson, Seaport Research Partners.

So just a couple of questions. Can you provide a little bit more detail again or just remind us kind of the cadence of turkey volumes. I think turkey volumes on a year-over-year basis still have a difficult comp in Q2. And then I believe you were expecting those to start rebounding in the second half. And then also do the same thing for us with your commodity pork volumes. You should be starting to anniversary; I think when you offloaded with the new contracts, some of that commodity volume. When do we sort of anniversary sort of the adverse comp that you would have on your commodity pork?

Yes. So on the turkey side, the numbers that we've been talking about have come through that turkey has been down high 20s, 30% in terms of volume, and we expect that through the first half or now the second quarter of this year and expect volumes to rebound in the back half of the year. And that's all with the assumption that we don't have another significant AI outbreak like we did last year and then, of course, some events into the winter months. On the pork side, we are now just lapping that supply agreement. And so as we go throughout the balance of the year, the comps will be more normalized.

Okay. And then just a quick follow-up, and this is maybe for Deanna. Can you give us a little -- you mentioned elasticities and where you were seeing some of the maybe more elasticity in some of your retail products. Can you give us a little bit more color on where those are and whether you may have to have some promotional adjustments on that that was mentioned, I believe, in some of the prepared comments.

Yes. So it's very interesting because it's a bit bipolar in that you've got some categories where the elasticities are playing out exactly as expected. We've got other categories where the consumer has acknowledged the change in price on shelf and continues to purchase in their regular cycles. I would say where we're seeing more elasticity would be in areas that could be higher rings. So thinking of like a fully cooked rack of ribs, we've seen some demand declines there. Obviously, having other areas for the consumer to shift to, so take a tub of barbecue or a dinner entree that has a lower price ring, but still allows or meets the same consumer need of putting dinner on the table. So making sure that, as you mentioned, that we're promoting our products and pulsing in some of those areas and that we're advertising and making sure our consumers understand the value of our products and how they can utilize them speaks to the breadth of our portfolio. We've always talked about why it's valuable to have products at different price points and that meet different consumer need states, and it's exceedingly important right now.

The next question comes from Ben Theurer of Barclays.

Just one I had on the different demand drivers, retail versus foodservice, in particular, because if we look into it, they're both somewhat equally down in sales, but then at the same time, in foodservice, you were actually able to expand margins on retail, we saw the margin contraction. So if we come back to the whole inventory and the misalignment and demand kind of exceeding -- well supply kind of exceeding demand. Is that particularly in retail where you got these issues and this misalignment, which caused the margins to be under pressure? Or is that also something you saw in foodservice just not at the same magnitude, maybe because of mix for falls into foodservice?

Yes, Ben, I think the way you described it there at the end of your question is correct. I mean there are inventory issues in both, but retail is currently more. As you talked about the foodservice pricing and sales, the element of that is, and we've talked about this frequently is we have seen some commodity relief and on the foodservice side of the business, they're able to price closer to the market. The pricing is a lot more fluid.

Okay. And then my follow-up, just quickly on China. I mean we all know fourth quarter, particularly December, was a very tough one with the whole reopening and cases, et cetera. But as of today, early March, have you seen like particularly in February and like signs of consumers being in a more normal environment of consumption? Is it fair to assume that, that could be an easier fix go forward than maybe some of the issues you have on the inventory side over in North America.

Yes. Again, Ben, that's a very fair assessment. And we said that, that we have seen early in the second quarter. The China foodservice business has seen a nice uptick or a nice rebound as consumer or Chinese population seems to be making their way through COVID and are now heading back out. So we've seen foodservice up on the retail side of the business. We're really excited about the continued innovation that we've been able to deliver. The other thing, when we built that plant several years ago, we put in a SPAM line and our SPAM business has done really well, especially our SPAM Singles business. And so we've seen that continue to grow on the retail side to the point where we'll be making some additional investments to support that growth. But your take on China is exactly what we're seeing and how we're thinking about it.

The next question comes from Tom Palmer of JPMorgan.

I'm sorry to belabor the inventory discussion. I just want to clarify something a bit. So it sounded like in the prepared remarks, there were some constraints in terms of sourcing pork and turkey right now, and that you're unable to produce enough peanut butter. So maybe I heard this wrong, but I don't think Planters can account for a lot of the inventory issue. So I just hope to better understand what types of products you've built up too much inventory of? And is it certain pork products that fall into that equation?

Yes. So Tom, I'll start with that first question. So we didn't have any difficulty sourcing pork products for production. What we have said is it’s just the decline is what we would have normally had coming at us that we don’t today. So we used to have to sell it. Today, we don’t. That’s what we are talking about for the pork decline. The turkey is -- absolutely not enough turkey coming through to support the business. But as we think about the inventory across the entire portfolio, you are right. I mean it’s not all Planter. I mean that’s part of it. When we think about -- as I described earlier, some of it is inventory that has been built for promotion. So think SPAM as we get into bigger promotions throughout the year. We do have elevated inventories of ribs. We have some elevated inventories of complete bacon bits. So it is a mixed bag, other perishable refrigerated items. So it's a mixed bag across the inventory that we have and the portfolio. And so yes, we're not trying to pin this on any one item or one category. I mean, it is broad-based.

Okay. And maybe just on the price increases you mentioned retail. Just any detail on how much of the portfolio is being addressed with pricing? Any help on the magnitude, the timing, and then just are there certain commodity types that need to be addressed in particular?

Yes, Tom, thanks. This is Deanna. I'll jump in there. So we still have wraparound pricing that's flowing through. We took several price increases last year, and some of those are still flowing through. We have a chunk of the portfolio that is currently in price increases, roughly about 5%. We've taken a very mindful approach to our pricing and thinking about elasticities, volumes, where we've added capacity. Obviously, we want to make sure that we're able to leverage that capacity. And so we've tried to be very mindful. So we've taken multiple price increases probably in smaller increments than some of our competitors have announced. And really, the increases we're taking are justified for inflation. And so -- and we'll continue to monitor that. We've got the ones, as I mentioned, that are already in the quarter happening, and we've got a few other categories that we're evaluating as we sit today.

The next question comes from Peter Galbo of Bank of America.

Maybe just a first question, more of a technical question around the resegmentation. And just to level set everybody on the call, have you disclosed at all, just what percentage of the new retail business will be captured in Scanner data so in Nielsen and IRI. And I think you had a helpful breakout for retail, particularly just on the different verticals. Is there anything you can do to help us on the foodservice side? I don't think there was anything in the slide deck from Tuesday.

So in terms of the retail component, it will be somewhere around 80%. And then on the foodservice side, I mean, there wouldn't be anything that you would actually see…

Sorry, go ahead.

No, that's okay. Peter, we're not going to have the same kind of vertical structure within foodservice just because it doesn't -- I mean the industry doesn't even really think about it that way. What we will try to do over time is provide you more color. So for example, in this quarter as we integrated the JOTS business, and we've talked about how that is going to be a benefit to both the JOTS business and the Hormel business, a channel like K-12, our school business, had a really good quarter. So we'll continue to try to provide that type of color but from, I'll say, a typical reporting, it will all roll up just into foodservice.

Okay. And then again, just to go back to the inventory side and maybe just to think about it in a little bit of a different manner. If you are going to be selling through more of your inventory or trying to get it more rightsized, I guess why wasn't there an adjustment to the sales line as well? Just thinking about if you're going to sell into more discount channels or whatever you're going to have to do? And then the second part of that question is just in your conversations with retailers, how should we think about what they're asking you to do? Is it to carry more of the burden of working capital, carry more inventory for them because they want to have less in terms of their working capital needs and just the implications as how you're thinking about it on cash flow. So I know that's a lot, kind of as a two-part question, but I appreciate the thoughts.

Yes. No, it's a really good question. And so no, we have not moved off of our top line guidance. We know that there's a turkey uncertainty and expect that to come back in the back half of the year. The other part of this is our foodservice business. And so even though we had some softness for a period of time in the first quarter, we expect growth for the balance of the year. So those really are two drivers. And then as we expect our international business to come back with some of those challenges abating, we do believe that we'll be able to deliver that top line. And then the second part of that question, we're not getting that pressure from retailers in terms of keep more inventory. As Jacinth said earlier, we know how to run this business. And historically, we've had very, very strong fill rates. It's obviously some of the supply chain challenges that we've had over the last two, three years that have prevented us from getting to those fill rates. But slowly but surely, we are getting those fill rates back to where they were. And so we were able to operate the way that we did pre-pandemic. That's really the expectation.

The next question comes from Michael Lavery of Piper Sandler.

I just want to come back to Planters specifically, when you detail some of these challenges, it's one of the three things you call out as a focus area in terms of optimizing promotional support and everything else. But then you also called out the capacity expansion, even though those volumes have been down kind of mid or more single digits for some time. Can you just maybe elaborate on what pain point the capacity expansion solves given the current situation?

Sure. Thanks, Michael. The capacity expansion specifically addressed the continued evolution of snacking as well as C-store and club channel. So the capacity we're adding a specific packaging. That really is on trend with how consumers want to snack today, when you think about the tube nut in particular, both in a singular purchase as well as in a club variety. The additional capacity is really designed to help us continue to meet the demand, which is exceptional there. And then the other area of growth that we haven't talked about that is really a hidden gem in the portfolio is the core nut business, and some really great flavors that are coming to market. And as we think of the convenience store business, really the 100 days of summer is where that business really comes to life. So adding capacity both for C-store and club store is where we're leaning into right now.

And I think it's important to know, Michael, these are things that we knew when we bought the business. We knew that there was going to have to be some packaging innovation, which we did last year with the new bottle and then also some capacity investments. So it was existing packaging, but we saw that as an opportunity. It was just a matter of what the timing was that we were going to need it. And then as Deanna mentioned, we've seen really, really strong growth since Day 1 for the corn nuts business, and we don't expect that to slow down.

Okay. That's helpful. And just coming back to Garuda, did you have an option for a bigger stake there? Or could you at some point? How do we think about whether or not that ever becomes part of above the line in operations?

Yes. I think for now, it was -- we took out the previous private equity owner. That was the big stake that was for sale. So for us, it was the right size at the right time. And again, I mean, we've been a partner with them, but it's early days, and we still need to learn about the business, about the market. We know it supports our two strategic initiatives for adding scale and snacking, entertaining and developing that global presence. And so as we go along, we certainly think there will be opportunities for us to -- if the business delivers for us to take a bigger position.

Our last question comes from Adam Samuelson of Goldman Sachs.

So I guess first question just on Jennie-O, or turkey, I should say, you're talking about volumes improving and starting to normalize in the back half, assuming no further HPAI, but I think and you already started to see this commodity breast in pricing coming down and that would continue if there is no further supply disruptions in the turkey market. Commodity resin pricing was actually a big margin uplift to that business last year. I know it's now getting -- it's now split between retail and foodservice international, so it's not as visible. But did your full year outlook for your turkey business profitability actually come down with this update? I just it's not clear because it would seem like turkey breast meat pricing is a pretty big -- could be a pretty big headwind over the balance of the year?

Yes, Adam, we have not changed the outlook for the turkey business at all. You're right that we've seen lower breast meat markets. But the turkey business is still in a very favorable position. Turkey demand is strong. The value-added portion of the business continues to do well. And as we get more meat, we'll be able to fill more of that. We know that whole birds cleared really well this holiday season. And that bodes well as we head into the next holiday season. And then I do think for us, this is all about what happens with AI, and we'll know a lot more here in the next couple of months as to what, if any, impact it will have in the business. But yes, we've not changed our outlook and feel like there's still plenty of opportunities to drive a strong performance even as the breast meat market has gone lower.

Okay. And then if I could just ask one last follow-up, and this inventory question has come up in a lot of different ways. But I guess I'm struck with the new reporting structure and the new segment structure kind of there's a little bit less kind of connectivity between some of the plants and the end sales channels than there might have been before. There's always some disparity, but you now have like bacon going through two different channels versus one previously or two reporting units? And how are you thinking about kind of the ownership on working capital and kind of tying performance of business leaders to not just segment profit or sales but also whether it's a cash flow return on net asset kind of metric that I don't think has been a big part of the incentive compensation structure previously.

Yes. So Adam, I mean, the flow of the product through the sales side really hasn't changed. And we've had the bacon example you mentioned, we've had it going into retail, and we've had it going into foodservice the same way that we always have. If anything, this structure actually centralizes and creates less confusion in terms of who has responsibility with -- Deanna now overseeing retail. And it's really, really helpful. We do have elements of our incentive that are -- that do take into account return on invested capital. We use that more as a modifier to make sure that the team continues to keep an eye on that because we know how important it is. But we're not -- we don't have any plans to change the rate of that as an element of compensation. We feel like we've got the proper oversight to drive improvement over time.

Yes. And just for -- just to clarify or just to emphasize, the GoFWD structure hasn't in any way mudded up the waters in terms of how we look at the business and how incentives are aligned to drive the results. It actually does a complete opposite. And now there is very clear delineation and transparency in terms of objectives in driving the results and the outcome for the business.

Ladies and gentlemen, this does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.