Post Holdings, Inc. (POST) Q1 2022 Earnings Report, Transcript and Summary

Hello, and welcome to the Post Holdings First Quarter 2022 Earnings Conference Call and Webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer; and Jeff Zadoks, Chief Financial Officer. Today's call is being recorded and will be made available for replay beginning at 12:00 p.m. Eastern Time. The dial-in phone number is (800) 839-5324, no passcode is required. [Operator Instructions] It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of Post Holdings for introductions. You may begin.

Good morning, and thank you for joining us today for Post's First Quarter Fiscal 2022 Earnings Call. With me today are Rob Vitale, our President and CEO; and Jeff Zadoks, our CFO. Rob and Jeff will begin with prepared remarks, and afterwards, we'll have a brief question-and-answer session. The press release that supports today's remarks is posted on our website in both the Investor Relations and the SEC filings section at postholdings.com, in addition, the release is available on the SEC's website. Before we continue, I would like to remind you that this call will contain forward-looking statements which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. Additional information regarding these risks and uncertainties is discussed under the forward-looking statements section in the press release we issued yesterday and other press releases we have issued with respect to the proposed distribution of our interest in BellRing Brands which are posted on our website. We also urge you to read the registration statements, the proxy statement and prospectuses, the related amendments of these filings, and other documents related to the proposed distribution of our interest in BellRing Brands that have been and will be filed with the SEC because they contain important information. These forward-looking statements are current as of the date of this call, and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website. And finally, this call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday posted on our website. With that, I will turn the call over to Rob.

Thank you, Jennifer, and thank you all for joining us. Despite a challenging environment, we delivered a quarter largely in line with expectations, and we continue to maintain our expectations for the full year. However, as you all know, the degree of uncertainty remains high, and we face variables to lend both risk and upside to our outlook. While our outlook continues to be presented on a basis consolidated with BellRing, respective outlook remains largely unchanged. We will initiate post RemainCo guidance no later than our next earnings call, by which time we expect the separation have been completed. With respect to the separation execution, I have some updates. First, we've been cleared by the SEC to move forward with the transaction. Second, we expect to complete the transaction by the end of March. Third, we expect the amount of cash that will be distributed to BellRing stockholders, including Post to be approximately $400 million. Finally, we will pro rata distribute approximately 78 million of BellRing shares rather than exchange any of them for Post shares. This transaction required and continues to require a considerable effort across both organizations, and I want to thank everyone involved. With respect to near-term business results, each segment had 2 overarching themes. First, cost inflation ran ahead of pricing actions. We have taken the pricing needed to offset our inflation in all segment, but with varying effective dates. Second, each segment had unmet customer demand resulting from shortages and labor inhibiting production and/or shortages in transportation resulting in unshipped orders. In U.S. Cereal, consumption for our branded products continues to run ahead of pre-COVID levels by nearly 2%, and our related market share is just shy of 20%. Pebbles in particular, continues to show strong growth. Last quarter, I mentioned we may have seen an inflection point in the value trade. And so far, that is holding. Our value segment sequentially improved throughout the quarter. A shift to value in the category is margin dilutive to Post, but it's profit-accretive. Foodservice performed as expected, meaning it had a weak profit quarter as this segment was the one most dramatically impacted by costs running ahead of pricing. This refers to non-pass-through prices as pass-through prices automatically reset. We have taken nearly $150 million in annualized pricing with the majority beginning in Q2 but includes pricing occurring into the third quarter. Moreover, labor guests persist in foodservice. However, no plant was worse and several improved. We continue to expect sequential improvement towards recovery to pre-pandemic levels of profit in 2023. During the second quarter, we are experiencing some soft demand resulting from the Omicron COVID variant. Nevertheless, we now understand that the volumes bounce back quickly as variant received, and we expect this softness to be limited to a month or 2. Refrigerator Retail made great strides this quarter. Our staffing levels are much improved, and we saw far greater capacity utilization. Most products remain on allocation so we remain below our potential, but I'm quite pleased with the progress. Weetabix continues to be a rock solid performer, all the factors our U.S. businesses face are present in the key U.K. market. The pricing and mix is pacing favorably. BellRing will have its call shortly. Suffice to say that it continues to performed well in a great category, but the current year results are constrained by insufficient capacity. On balance, I would say we navigated the first quarter effectively. We feel good about how we are managing the controllables, and we're remaining nimble enough to adapt to curve balls as they come our way. In terms of capital allocation, we continue to be an active buyer of our shares, Jeff will provide the details. REIT and M&A is performing to plan with the exception of Almark, which has seen costs accelerate ahead of pricing. We expect pricing action to return to our underwriting case as the volumes are exactly in line with expectations. We continue to actively explore acquisition opportunities both large and small across the business. We will not undertake an acquisition that jeopardizes our execution in a challenging year, but we believe there are opportunities to find value that complements our efforts. I want to close with some comments about our outlook. We expect to see similar aggregate results in Q2 with considerable improvement in foodservice and the expected sequential decline at BellRing. We then expect significant second half acceleration stemming from price realization, improvements in supply chain execution, Foodservice volume recovery and BellRing capacity expansion. As I mentioned, assuming the spin proceeds to plan, we will provide separate stand-alone guidance for the remaining business, no later than our May call. Thank you for your time this morning and your continued support. With that, I will turn the call over to Jeff.

Thanks, Rob, and good morning, everyone. First quarter consolidated net sales were $1.6 billion and adjusted EBITDA was $263 million. Net sales increased 13% and benefited from approximately $98 million from recent acquisitions, volume demand recovery in the Foodservice segment and pricing actions across each segment. Higher manufacturing input and freight costs continue to pressure margins this quarter and internal and external labor shortages disrupted supply chain. Similar to last quarter, throughput decline and per unit product costs increased. Additionally, our customer order fulfillment rates suffered. Turning to our segments and starting with Post Consumer Brands. Net sales and volumes increased 14% and 8%, respectively. Excluding the benefit from the private label cereal and Peter Pan acquisitions, net sales and volumes declined 1% and 9%, respectively. This primarily resulted from year-over-year softness across value in private label cereal products and our exit of certain low-margin business. Honey Bunches of Oats was also a driver of the decline as we lap the prior year club promotional activity that did not repeat this year. Cereal average net pricing increased 9%, driven by favorable product mix and pricing actions. Adjusted EBITDA decreased 5% versus prior year, primarily driven by higher manufacturing costs resulting from supply chain disruptions across freight, supplier reliability and warehousing. These disruptions drove declines in throughput and along with lower volumes, poor fixed cost proportion, causing higher manufacturing cost per pound of production. Our pricing actions mitigated the effect of raw material and freight inflation. Weetabix net sales increased 4.5%, benefiting from a stronger British pound to U.S. dollar exchange rate and higher average net selling prices, reflecting lower trade spending and base price increases. Volumes declined 4% as growth in new products was not enough to offset declines in all other products. Specifically, prior year benefited from COVID-related increased at-home consumption and customers increasing inventory ahead of Brexit. Supply chain disruptions, most notably in packaging and transportation availability, contributed to the volume declines and drove a 3% decline in adjusted EBITDA. Our Foodservice business saw net sales and volume growth of 24% and 13%, respectively, and were lifted by higher away-from-home demand and distribution gains. Revenue growth continued to outpace volume growth as revenue reflects the impact of our commodity cost pass-through pricing model and other pricing actions. Although we saw year-over-year growth this quarter, total segment volumes remained below pre-pandemic levels. Adjusted EBITDA was relatively flat to prior year, benefiting from volume recovery and improved average net pricing, which was only able to partially offset increases in freight costs, poor fixed cost absorption and other costs to produce. We expect the price/cost relationship to significantly improve in the second quarter as more of our pricing actions take effect. Refrigerator Retail net sales increased 4% and volumes decreased 5%. Excluding the Egg Beaters and Almark acquisitions and Willamette Egg Farms, the business we divested on December 1 and net sales and volumes declined 2% and 7%, respectively. Pricing actions drove increases in average net pricing for side dish, sausage and cheese products. Supply chain constraints, most notably around labor availability, suppressed side dish and sausage volumes. Recall our ability to build our side dish inventory ahead of the holiday demand spike was limited. Adjusted EBITDA decreased to approximately $36 million and was pressured by lower volumes, significantly higher sale, cheese and egg input costs, increased freight and higher manufacturing costs. BellRing net sales increased 8.5% and benefited from pricing actions across both Premier Protein and Dymatize. Premier Protein net sales increased 4.5%, a slower rate than recent quarters resulting from shape capacity constraints. Dymatize net sales grew 41%, benefiting from price increases, strong velocities and distribution gains. Higher raw material and freight costs drove a decline in segment gross margins. You can hear further detail about BellRing's results on their conference call later this morning. Moving to cash flow. We generated $106 million from operations in the quarter. Our working capital increased slightly, reflecting a decrease in payables and increased inventories for U.S. cereal and powders at BellRing. Regarding capital markets activities. During the quarter, we purchased $1.5 million of our shares at an average price of $103.37 per share. Our remaining share repurchase authorization was approximately $330 million. Our net leverage at the end of the first quarter, as measured by our credit facility was approximately 6.4 times. On this basis, we expect to deleverage between 3 quarters at a full term once we have completed all steps in our separation of BellRing. We anticipate completion of all steps will reduce post gross debt by $1.3 billion to $1.6 billion. During the quarter, we issued $500 million in principal value of senior notes as a tack-on to our 5.5% senior notes due in December 2029. Our debt ladder remains low cost, insulated from rising interest rates and have no near-term maturities. When combined with our undrawn revolver and strong cash flow, we maintain significant financial flexibility. With that, I'd like to turn the call back over to the operator for questions.

[Operator Instructions] And we will take our first question from Andrew Lazar with Barclays.

Rob, when -- I think when Post provided its initial fiscal '22 EBITDA guidance, I think it was predicated on the thought that inflation will have peaked and labor markets have sort of normalized. And obviously, you reaffirmed the full year guidance today. So I'm trying to get a better understanding, I guess, of if in your view inflation has peaked and labor expectations have played out as you initially built into guidance. Or maybe it's more of a matter of having built in enough flexibility in guidance to deal with what still feels like a very unsettled environment, at least in listening to so many of the other companies that have reported thus far. So maybe you could get into that a little bit more. I'm trying to get a feel for how that played out and what that means for your expectations on those metrics, right, as we go into the latter part of the year.

Yes. So first, I would say that it certainly remains an unsettled environment. So we're not trying to take any exception with that comment. The -- what I would characterize the year is shaping up to reflect is pretty strong ability to get pricing where needed so that the Peanut pricing net of cost while negative this quarter is moving in the right direction, and we feel good about that vis-a-vis inflation now, obviously, inflation accelerates from here that could have a different potential outcome. And I would say that the labor situation and supply chain is not worse and it is marginally better. We are significantly better in some segments, and we are no worse than others. So I feel that specifically to Post, we're making progress. I would by no means want to say that it's smooth sailing ahead. We still have some choppy waters. But sitting here at quarter end, we still have a, I think, good shot at delivering on our expectations for the year, barring dramatic changes in the macro environment.

And then I think you mentioned it might have been specific to Post consumer brands, but I want to make sure I understood it that your comments from last quarter about having just really started to see a bit of an inflection in sort of the value brands, sort of private label side of things, it has been holding. And as -- and is that specific to Post consumer brands or does that go for sort of 8th Avenue as well? And the reason I ask is in trying to track all of these various categories across the space in terms of either trade down or private label trends, still just not really seeing it in the broader industry data. And maybe that's not exactly how your specific businesses are behaving. So I'm trying to get a little bit more clarity on that and what you're seeing.

Yes. So we -- the comment was specific to post-consumer brands where we saw a flattening of our value segment, which includes the Monbag portfolio as well as private label. It was a fairly dramatic flattening after some double-digit declines earlier in the calendar year approaching even by the end of the year. There are some exogenous factors. Of course, there was a competitor with some strike issue creating some strange factors in the demand dynamic within the category that could also be contributing. But we've also seen some improved volumes in our private label businesses and 8th Avenue volumes, although margins are under pressure. So by no means is this data that you could extrapolate very far, but it reinforces what we thought 3 months ago.

Okay. And then just lastly would be, I think you move into a lot more detail on this on the BellRing call, but I may have heard you say that you expect a deceleration at BellRing in 2Q. And I just want to make sure I understood what was driving that?

Normal seasonality. We tend from a promotional cadence and a new year to you shipping timing to have a sequential dip into Q2, so nothing more than the normal. It was already factored into the prior guidance and prior expectations.

Now we'll take our next question from Chris Growe with Stifel.

I just had a question if I can ask you first on in terms of the proposed spinoff of the BellRing shares, just to get your perspective on that. And obviously, there are varying scenarios that you explored as part of the distribution. I just thought it'd be good to hear your perspective on why it's just a spin-off? Or is that BellRing valuation, Post valuation? Just wanted to get some thoughts on why you sell on the spin-off of the shares?

Well, if you go back to when we announced it, we tried to announce the whole mortgage Board of opportunities to execute because these things have a long period of time and you're trying to -- I mean, a long execution time line. So you're trying to hit a fairly good target. And as we approach execution point, it strikes us that there is significant opportunity in both shares and it doesn't make sense to trade one for the other. Neither is particularly in our opinion, overvalued, we would rather let our shareholders have the value in each shares, not incur the frictional cost of the premium related to exchange and then shareholders can move to whatever mix of securities they prefer without us having incurred the cost of premium from a Post side at a discount from a BellRing side.

Okay. That makes sense. I guess I'm just curious, a split-off would have been a way for -- immediate way for Post to retire a large chunk of its shares, depending on how much it would split off. So I guess with that aside now, assuming that does not occur, would you expect to be more aggressive or purchasing the Post shares then with this improved balance sheet once you get the distribution completed?

Well, before I answer that, let me go back to the premise of the question. I think, yes, we would had an opportunity to shrink a lot of BellRing shares. But at a cost of using what we think are very attractively priced, meaning low-priced bearing shares. So that would have been a way to shrink a lot of Post shares at what we think would have been a very expensive cost in terms of giving away a lot of upside to BellRing. So going back to the second part of the question, the -- we certainly have the option to be more aggressive in share buybacks once the transaction is complete. But as we always do, we would look across the landscape and compare that to opportunities to invest externally as well. So we wouldn't necessarily commit to a course right now. We would certainly view that as one possible course.

Okay. And just one quick one, if I could. You talked about -- I think each business had some missed sales or lost sales opportunities throughout the business due to capacity constraints. I guess I'm curious, do you have any frame of reference for how much that is, it depends by business, no doubt. And then just -- is that just less of a factor in Q2 and Q3. It’s just get better each -- sequentially each quarter based on your expectations, I guess, for labor and your availability of products?

Our supply chains are certainly getting better, worse case staying the same beat. The larger driver of our having unmet demand was transportation. We are continuing to see situations in which we are unable to get trucks to move product and we have inventory sitting in the wrong place. So I would say that it's also not getting worse. Perhaps slowly getting better, but the load-to-truck factor is still very high, historically high. So I don't think that we're through the would yet on transportation, both costs and availability, that could be another couple of months.

We'll take our next question from Michael Lavery, please go ahead -- with Piper Sandler.

Just was curious if you could give a little bit more color on 8th Avenue. I know in the past, you've given that stand-alone financial information unless I may have missed this somehow I don't think I saw that this time. What's the update on how that's going?

The business has underperformed. We've been on the wrong side of the pricing versus cost inflation, and we are attempting in fiscal '22 to have a fairly significant catch-up on that. We expect to underperform our longer-term expectations through '22 and see recovery in ’23 as that pricing annualizes. We've had some previously discussed execution issues around expanding our capacity in peanut butter. We continue to very much like the categories we're in. We think the pricing will come through, but it's taken longer than we expected. From an overall Post perspective, we won’t talk about it much because from a contribution to our overall value, we took out the entirety of our capital investment a couple of years ago and we have what amounts to an option value position in the company. So simply from a matter of relative value, we don't talk about a lot, but we still think that there is long-term value to the company that is surpassed couple of years by some external and some internal factors.

Okay. That's really helpful. And then just on Weetabix, partly from different COVID restriction dynamics, the entire grocery store in the U.K. is seeing declines. And even excluding currency, it looks like you were -- you had sales up modestly. It sounds like driven by pricing. But is that a timing shift? Is it just share gains? Can you help us maybe understand little bit of what's given you such a lift there and partly in mind just how to think about modeling the rest of the year?

Yes. Over the course of the pandemic, we picked up about a share point in Weetabix. So that's a key driver as well as pricing. So between the 2, that has given us the lift you're reflecting on.

Ex-currency would have similar kind of modest -- flat to slightly up be probably appropriate for the balance of the year?

I was commenting up in British pound. So in currency if you go back a couple of years. Jeff, do you want to?

Yes. Currency this quarter was slightly favorable. But on a year-over-year basis, it's slightly unfavorable.

We will take our next question from Bill Chappell with Truist Securities.

Rob, can you just give us kind of as we're going into '22, what's your thoughts on the state of the cereal market, both U.S. and U.K.? I mean, I guess the thought is there were certainly more consumers that came into the category with the start of the pandemic. It probably extended as the pandemic has extended. And so the concern is -- or the question is, how many of those consumers do we retain as 1 day the pandemic ends or if people go back to kind of the normal lives. How much of that drop off have we already seen? Or -- and how much do we see kind of in the future? So just any thoughts of, is the category that much better than it was 2, 3 years ago in terms of health? Or are we going to go back to kind of where it was 2, 3 years ago?

You're asking somewhat of a crystal ball question, of course. So I'll treat it with that level of specific --

I won't hold you to it.

First of all, it's been a difficult analytic process because we've had external factors. I think that some consumers left just this past quarter because of unavailability of product. But it’s my intuition, and that's what it is, tells me that we're in a zero to 1, maybe 1.5 growth category. Once you get through the noise of the key strike, the different variants, the consumer behavior that has caused some premiumization. Once you factor all that out and get in to a normal run rate somewhere between zero and 1, 1.5 which is 100 basis points to 200 basis points better than it was pre-pandemic. And then, of course, there's -- whatever the new pricing dynamic is going forward from today.

Got it. So we're at the normal level, not necessarily have a drop on a volume basis to come.

That's right. I think we actually could see some volume pickup because as the supply chains normalize. And you certainly saw some consumers with the Kellogg strike, you probably saw some consumers make different choices. I expect we'll come back to the category as those brands are more completely distributed. So you've seen a couple of different exogenous events.

And just as a follow-up on that, if you look -- or a follow-up to kind of Andrew's question, as you look across your categories, do you see anyone being more or less elastic than the others as you put -- pass on net pricing?

Not yet. Right now, elasticity feels very low across the landscape.

We will take our next question from Jason English with Goldman Sachs.

So foodservice. Your annualized EBITDA of this quarter has tracked somewhere around 160. And Rob, I think I heard you say you expect to be back to pre-COVID levels in fiscal '23 which is just around 3 times. So we've got a walk from 160 run rate to 310, 150 gap. Give me the building blocks that get us there? I think I heard you talk about a lot more pricing, is that over and above the commodity pass-through? I'm sure you're going to be hit with some other offsets, they're going to eat into some of that and I’m sure you also have a lot of operational improvements you're trying to attack. Just help me get the building blocks, so that I and the investors be comfortable of that walk.

Well, let's keep it real simple and just say the current quarter times 4 and add $150 million of pricing. I think that gets you to -- now obviously, there are puts and takes -- there's going to be some improvement, there's going to be some additional -- I mean there's going to be some operational improvements, some going to be some additional costs. I'm trying to keep that as the very simplistic but when you look at the magnitude of the pricing versus the cost we’ve already incur, you get -- it's a pretty clear runway.

So let's keep it simple then. You said you're implementing that 150 annualized run rate in 2Q, probably not all the following year by 2Q, but it should be in 3Q. So are we back to that sort of run rate as fast as the back half of this year?

No. No. It will be phased in throughout Q2 and Q3. So it's much more of a run rate.

But we can at least look forward?

It's much more in terms of confidence for Q4 and 2023 and trying to reflect on a number for Q2 or Q3 of 2022.

We'll take our next question from Rob Dickerson with Jefferies.

Great. Two quick questions. Just given all the commentary on pricing peanut margin getting progressively better as you get through the year. Obviously, gross margin is down substantially in Q1. And then to get to kind of the guide on the EBITDA side, I mean, it seems as if kind of the sequential progression in Q2 should get better relative to year-over-year Q1, but then as pricing kind of fully implemented throughout the year, are we -- or should we be assuming that you should be able to recover? It's actually at least the majority, if not all, and more of that gross margin pressure you saw in Q4. So basically, just as we get through the year, can we actually see gross margin up probably as we exit the year?

Let me make sure I understood the way you sequenced it because in my comments, I made the reference that Q2 will look a lot like Q1. So the real step-up is Q2 to Q3, not Q1 to Q2. So while there could be slight marginal improvement. We really has a first half, second half story because of the timing and pricing. So if the rest of the question is related to gross margin vis-a-vis prior year, I would say the answer is yes, we can see getting back to prior levels. But prior year levels, to had some noise in them. I don't particularly want to comment on long-term gross margins right now because I think there are too many variables yet to play out. But we certainly feel like we can expand margins back to where they started or at least ended the last year.

Okay. Fair enough. Helpful. And then just secondly, as we kind of all go through the different segments, Refrigerated Retail volumes down a bit, not down in all categories, some commentary or just around some capacity constraints. As we look at Q3 compares obviously, a little bit easier, and in the back half just overall. So I'm just curious, is there kind of expectation that maybe the capacity environment for you specifically just in side dishes, let's say, can get a little bit better as we get through the year? And as long as elasticity holds and consumer demand there that there could be an expectation for that business to gradually improve as well as we get through the year.

Yes, very much so. And I think that one of the things that I think is important to keep in mind is that the particular timing of the capacity pinch point in Refrigerated Retail was a challenge for '22 because it's the 1 business that we have that has a considerable amount of holiday seasonality. So we were not able to build the inventory that we normally would have built to support Thanksgiving and the Christmas holidays. So absent that volume, we will track below the prior year. But if you look quarter-to-quarter, we're going to accelerate through the year because capacity is expanding pretty dramatically as we get the staffing levels back to where they need to be. So we feel despite the fact that year-over-year was a challenging quarter. I'm very optimistic about the Refrigerated Retail segment because of the sequential progression we're making and just recognizing that come the next holiday season, we're going to be in a much better position.

And we'll take our final question from Ken Zaslow with Bank of Montreal.

Just two questions. What actions can you take -- and have you been taking to ease the labor and transportation. Are there things within your control that you've been doing to change the direction of how that is, how that's happening?

Well, labor is easier and more controllable for us than transportation because, by and large, we're a buyer transportation for our third parties. But on labor, of course, there's cost of labor, but there's also things like work rules trying to facilitate transportation of workers in this case. So we're looking at all things around culture retention, the way we pay, the frequency that we pay, how we get people to and from work, how we recruit to different communities, all the things that companies like ours are doing. So it's a pretty broad array of tools. We're trying to throw against the problem. Transportation, we're a price taker in a commoditized market right now. So that one is a bit tougher. We have some businesses that have longer contracts and some that have shorter contracts so the key variable is where you are on contract cycles right now.

Okay. And then just longer term, you do it every now and then and you kind of give like, hey, how do you think of the longer-term businesses of where you are. Can you give a quick view on that? It's been a little bit just because there's been some, obviously, COVID, and there's been some issues going on. Can you just frame a little bit of where you think the growth of each of the businesses are, again, 15, 20 seconds per one, just wanted to make sure that we're aligned with how you're thinking about it longer term, not just this year.

Yes. In this forum, I'll do that qualitatively versus quantitatively vis-a-vis how we thought about it pre-pandemic. So if you think about cereal, both in the U.S. and the U.K., we view it as a steady, maybe a slightly faster growing or slower shrinking business than it was previously at the volume line with better pricing and steady cash generation, really similar to the way it performed previously. With Refrigerated Retail, specifically around the Bob Evans side dish business, we have equal, if not more confidence in the quality of that character and our position in it. That one is very difficult to prove out through the numbers right now because there's been so much disruption around supply chain and staffing. But we clearly see as the staffing and availability product comes back so to does the demand. If you look at our Foodservice business and BellRing, I think you know what we think about BellRing, we continue to believe it's got a very substantial growth ahead of it. And as I’ve already talked about in terms of the decision to spend versus split, we are acting in alignment with that expectation of further growth. Foodservice is the one that obviously gets the most attention. And we would have to argue that once we get through the rebate of the crisis amidst the pandemic and we see where volumes settle, that our growth trajectory is really consistent with where we enter the pandemic. What we don't know still 2 years in, is where does travel ultimately land, where do offices ultimately land. There may be a couple of points of exposure to the baseline, but we think the growth is intact.

And this does conclude today's Q&A session as well as our conference call for today. You may now disconnect your lines, and have a great day.

Thank you.