Ladies and gentlemen, thank you for standing by, and welcome to the Valvoline's Fiscal Third Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Mr. Sean Cornett, Head of Investor Relations, please go ahead.

Thanks, Krystal. Good morning, and welcome to Valvoline's third quarter fiscal 2020 conference call and webcast. Valvoline released results for the quarter ended June 30, 2020, at approximately 5:00 p.m. Eastern Time yesterday, August 3. And this presentation and remarks should be viewed in conjunction with that earnings release, a copy of which is available on our Investor Relations website at investors.valvoline.com. These results are preliminary until we file our Form 10-Q with the Securities and Exchange Commission. A copy of the news release has been furnished to the SEC on a Form 8-K. With me on the call today are Valvoline's Chief Executive Officer, Sam Mitchell; and Mary Meixelsperger, Chief Financial Officer. As shown on Slide 2, any of our remarks today that are not statements of historical fact are forward-looking statements. These forward-looking statements are based on current assumptions as of the date of this presentation and are subject to certain risks and uncertainties that may cause actual results to differ materially from such statements. Valvoline assumes no obligation to update any forward-looking statements unless required by law. In this presentation and in our remarks, we will be discussing our results on an adjusted basis, unless otherwise noted. Adjusted results exclude key items which are unusual, non-operational or restructuring in nature. We believe this approach enhances the understanding of our ongoing business. A reconciliation of our adjusted results to amounts reported under GAAP and a discussion of management's use of non-GAAP measures was included in the presentation appendix. The non-GAAP information provided is used by our management and may not be comparable to similar measures used by other companies. As we turn to Slide 3, let's review our financial results for the quarter. For the fiscal third quarter, Valvoline delivered reported operating income of $88 million, net income of $59 million and EPS of $0.32. Year-to-date cash flow from operating activities was $271 million. The key items in the quarter were non-service pension and OPEB income of $7 million after tax followed by legacy and separation related expenses of $1 million after tax. In Q3 of fiscal 2019, key items totaled $5 million of after tax expense, including business interruption expenses of $4 million, restructuring and related expense of $3 million partially offset by pension and OPEB income of $2 million. Excluding key items, results for the current quarter included adjusted operating income of $89 million, adjusted EBITDA of $106 million and adjusted EPS of $0.28. Year-to-date free cash flow was $177 million. Now, as we move to Slide 4, let me turn the call over to Sam to discuss our results and operations in more detail.

Thanks, Sean. Good morning, everyone. My hope is that you and your families are doing well and staying healthy and safe in this challenging time. As the COVID-19 crisis unfolded, our business was impacted by the abrupt decline in miles driven caused by shelter-in-place restrictions designed to limit the spread of the virus. As those restrictions began to ease, our business bounce back quickly as you saw in the sequential updates that we reported for May and June and continues to perform well. As we monitored the developments, we took decisive action to ensure the health and safety of our people and other key stakeholders to increase our financial flexibility. Our results for the quarter are quite strong and came in ahead of our expectations considering the scale of the impact that we saw in April. The rapid recovery on the top line was led by our Quick Lubes and Core North America segments. In Quick Lubes, we saw an increasing contribution from new customers to same-store sales. Within Core North America, the DIY category led the recovery. While do-it-for-me, lad DIY, the combined impact of our retail volume performance and lower cost and expenses benefited Core North America's profitability. In fact, segment adjusted EBITDA grew 20% over year-over-year. In international, there was also a significant sequential improvement in volume during the quarter, but the face of recovery varied by region. Q3 results also include generating $80 million in free cash flow, a 45% increase from last year. Our strength prior to COVID-19 and our performance in Q3 showed that the underlying business remains healthy and demonstrates the fundamental resiliency of our preventive maintenance model. Let's take a closer look at the recovery in Quick Lubes on the next slide. New customer acquisition is a fundamental component of our approach…

Thanks, Sam. Slide 11 shows our adjusted results for Q3. Steeper declines in volume and sales early in the quarter was moderated by the rapid recovery across the business sequentially in Q3. The sales decline impact on profitability was moderated by the variable nature of our cost structure as well as lower costs and expenses and favorable mix. A higher mix of retail volume and lower raw material costs in Core North America were the primary drivers of the improvement in overall gross margin, while reduced discretionary expenses benefited SG&A. Our broad cost savings initiative was also a contributor to both favorable margin and lower SG&A. Mix and lower operating expenses drove adjusted EBITDA growth of $9 million in Core North America, which was more than offset by declines in Quick Lubes and International. Based on our recovery in Q3 and full year outlook, we recorded $10 million of variable compensation expense in unallocated and other. This partially offsets the benefits to SG&A we recorded in Q2. While we're pleased with the rapid recovery of business in the quarter, COVID-19 did have a significant impact on our results. We estimate that the pandemic reduced EBITDA in the range of $30 million to $35 million, nearly all of which happened in Q3. Without the crisis, we were poised for significant growth this fiscal year, which is a testament to the fundamental health of the business. Let's move to Slide 12 to discuss cash flow. As Sam mentioned earlier, as the COVID-19 pandemic spread globally in March, we began taking decisive actions to strengthen our liquidity position and increase our financial flexibility. The net effect of these actions was to increase our total liquidity to just over $1.3 billion at the end of June, while leaving our net debt essentially unchanged. Our…

Thank you, Mary. As we discussed on last quarter's call, one of the advantages of our business model is its resiliency, which you can clearly see in the rapid recovery we made in Q3. This is similar to our performance during the last recession, a short-term impact, followed by a quick bounce back. Whether consumers are buying a new vehicle or taking care of the one they already own, preventive maintenance is non-discretionary. This allows demand in our stores and at our customers' locations to remain steady, and for our business model to perform well across cycles. Our multiple routes to market and geographic diversity across our three business segments also provided effective diversification protection during this volatile time. With Core North America benefiting from its highly variable cost structure, favorable price-cost lag and strong retail channel performance offsetting a deeper COVID-19 impacts in Quick Lubes and International segments. Let's turn now to the last slide. We acted quickly and made the right moves to enhance our financial flexibility and liquidity as the COVID-19 crisis began to spread. We weathered a significant impact in Q3, but recovered quickly, thanks to the durability and resiliency of our model and the efforts of our teams. Given the current status of COVID-19, which is subject to change and with miles driven trends improving, we're solidly on the road to recovery. With the strong Q4, we expect our 14th straight year of same-store sales growth, and we see a clear pathway to be in line with last year's adjusted EBITDA. We expect Q4 to be another step forward in our approach to grow Quick Lubes, stabilize Core North America and develop International. What we have learned during these unprecedented times is that our in-store execution is effective because of the quick, easy and trusted customer experience and because of the safety aspects of our service delivery. We're well positioned to continue to take advantage of the opportunities we have to grow Quick Lubes. We also intend to accelerate our share growth by being a consolidator of a highly fragmented part of the market. This is a key aspect of our long-term strategy of shifting to a more service-driven business model. For now, we're staying highly focused on finishing the year in a strong position and building momentum for fiscal 2021. With that, I'll hand things back to Sean to open the line for Q&A.

Thanks, Sam. I'd like to just remind everyone before we open the line to Q&A to limit your questions to 1 and a follow-up so that we can get -- have time to get to everyone. Krystal, please open the line.

[Operator Instructions] Your first question from the line of Simeon Gutman with Morgan Stanley.

Thanks, everyone. Good morning.

Good morning, Simeon.

Hey, good morning, Sam. My question is on North America and gross profit per gallon. If you take us back, it was a year or two where prices were rising, and it took a little time to get price increases, I think, particularly in the DIY channel. And now we're seeing moderation in prices there. I guess, in theory, prices will come back down to consumers as well. And that's why you're calling for normalization in gross profit per gallon. So can you talk about that dynamic? What occurred in terms of getting prices up and now we're going to go back down and just any volatility that we can expect going forward?

Right. Yes. Historically, Valvoline has always been effective at passing through cost increases through the different channels, whether it's DIY, installer, and heavy-duty. And yet in DIY, you tend to have a little bit longer price lag impact. As some may recall, much of our volume on the installer side, also our pricing to the Quick Lubes channel, is contractual and it adjusts based on posted base oil prices on a quarterly basis. So you really don't get much lag effect there. But in DIY, where you've got set promotions with the different retailers, it's more of a negotiated price increase, and you can see some lag. So in a rising cost environment, similar to the last couple of years, you do see bit of a headwinds from that. In the current environment in DIY and parts of the installer business where we had rapidly falling raw material costs, we benefited from that positive lag effect in Q3. And then going forward, and that really moderates as we pass through the pricing, and we have taken actions similar to our competitors and passing through price decreases. So the effect on Q4 will bring down our unit margins from Q3, and we’ll see that across, particularly the Core North American business, both in the retail channel and on the installer side of the business. What I did note during the presentation is that we expect the margins to be closer to the $4 per gallon range for total Core North America, which is still a very good level when you consider where we were last year. And so we’re confident that we’ve made some nice steps forward in stabilizing those margins, particularly with some of the cost-saving efforts that we’ve executed.

Yes. And then my follow-up, Sam, to that would be, I think the $4 is still a better number than I think the pre-COVID or 2021 or 2020 guidance in total. And so is there anything structural that $4 – the $4 level becomes a new normal? Or is it still subject to the volatility in the market?

I mean, there’s still a range that we’re talking about, right? It’s – and we’re structurally better than where we were going into 2020, and much of that has to do with the effectiveness of our cost savings initiatives and possibly some improvements on a relatively small basis structurally in pricing and margin to different segments. But that range being in the high $3s to low $4 range is a good place to be for us in managing the overall business.

Thank you.

You bet.

Your next question comes from the line of Mike Harrison with Seaport Global Securities.

Hi, good morning.

Good morning, Mike.

Congratulations on a nice quarter in a challenging environment.

Thank you, appreciate that.

Sam, we typically think of oil change activity is tracking miles driven. You mentioned that miles driven based on gasoline demand, still down a little bit year-on-year. You guys are guiding to high single-digit growth in the Quick Lubes business. You mentioned the new customer gains. Is that delta all share gains? Or do you think that there’s some pent-up demand that we’re seeing from – still from lower oil change activity that happened in April and May? Maybe a little bit more color on how you’re seeing demand shaping up right now?

Yes. I really don’t see it as pent-up demand in the results that we’re seeing. Maybe we saw that early on in the bounce back, say, in late April and early May that there was some pent-up demand after things began to open back up. But if you look at our comp, same-store sales performance for the Quick Lubes business and what we’ve been delivering in the last couple of months, they’re very consistent with what we’re delivering prior to the COVID-19 impact. So this really tells me that we’re back on track, executing our plan, executing a very strong customer experience that the marketing programs are working. So for us to be delivering that while driving behavior hasn’t quite returned to normal, does imply that our share growth is even increasing at a faster rate than it was prior to COVID-19. So I’m really impressed with the performance of the Quick Lubes business and the momentum that we’ve got there right now, and did call out that the safety aspect is becoming a more important benefit to consumers. And so while we’re working hard to introduce Valvoline Instant Oil Change to more and more consumers in the markets where we compete, this safety benefit and the fact that you stay-in-your-car really resonates well with our customer base. And so we’re messaging into that with our advertising and some of the safety processes that we have in the stores, we’re getting some great feedback from the customers. So I just have a lot of confidence that we’re going to be able to continue to grow share and execute at a high level in driving same-store sales performance in Q4 and into fiscal 2021.

And Mike, I would add to that, we’re seeing almost 60% of our new customers coming from car dealerships and tire and repair shops and other types of auto service centers. It’s really showing the competitive advantage of our quick easy trusted and safe model relative to some of our competition. So I do think that that’s been a reason why we’ve seen some divergence and miles driven still being down year-over-year, but our comp store-sales being up in June and in July, better than where we were in June. So as Sam said, there might have been some pent-up demand, but I really think that the broader business is really taking share.

Yes. And Mike, back to your just question regarding the demand environment. We do see it as very much dependent on miles driven. We see the impact that it’s had in Core North America. We know that it has an impact on Valvoline Instant Oil Change too, and certainly the International businesses. So it’s something that we watch closely and the fact that it hasn’t returned to normal implies that there’s some good upside as miles driven improves, hopefully, through the balance of the year. But we have to admit that in this environment with still the high level of cases that we’re battling in the U.S. and other markets, that recovery of miles driven is hard to predict. But the key point that I think everyone should take away is when you look at our performance in this environment, it’s impressive. And obviously, we feel like we can deliver strong results into Q4 in the current environment.

All right. Thanks for that. And then the other question I had is related to costs. I wanted to ask you about three different buckets. Number one, the Core North America SG&A number appears to have had a lot of discretionary costs taken out. How much of that comes back? Then also the advertising campaign in Quick Lubes, how much additional cost is associated with that? And can you also comment on incentive comp and whether we’re going to see another headwind in that corporate unallocated segment in the fourth quarter? Thank you.

Yes. The – let me speak to the advertising and Mary can speak to incentive comp and overall SG&A. But in Q4, we are increasing our advertising spend versus Q3. And this goes for both the Core North American business and then also be the Quick Lubes business because in both businesses we cut back significantly during Q3. So we expect to see a more normalized level, more consistent with last year's spend in both Core North America and the Quick Lubes business. So Mary, I don't know if you want to provide any more detail?

Yes. The only thing I would add on the other discretionary spend flow back in Core North America, we certainly saw a pullback in travel expenses, our field sales force largely being locked down for a substantial portion of the quarter. And we did benefit as well with putting some holds on discretionary projects and other discretionary spending in the quarter. I think the travel will likely continue to be low for a period of time. And you'll see some continued benefits from that while we have reinstituted the advertising that Sam said based on the strengthening of the business that we've seen and we expect to get a return on that investment from an advertising, both in the Core North America and Quick Lubes over the next 12 months. As it relates to the incentive comp, we did reinstate back in the second quarter, frankly, we pulled down the incentive compensation accruals because we really thought we would not make our thresholds on those plans and we're pleasantly surprised with the rebound in the business that we saw in Q3 that allowed us to reinstitute some but not all of that. We still have about $4 million of expense in that unallocated corporate segment. And if we're – that's based on our – the guidance that we've provided today. So based on our current outlook, we think that we're properly accrued relative to where those incentive plans are to payout.

Undertood, thanks very much.

Our next question comes from the line of Olivia Tong with Bank of America.

Thanks, good morning Sam. Good morning, Mary.

Hi, Olivia.

How are you?

Very good.

I wanted to ask you a little bit about what you're seeing in terms of the M&A environment in Quick Lubes because, clearly, those numbers are – seem to be coming back quite nicely? So presumably, small business owners right now are probably fairly exhausted by the current environment. So is there an opportunity for you to further consolidate share in Quick Lubes via M&A and what are you doing to explore that? Thanks.

Yes. The opportunity is significant for us. And we – the last few years, we've had some very good success in bringing in some solid regional operators and that continues to be our focus. So working with and developing those relationships with operators of 10-plus stores and that strength in a given market, again, we're very much focused on the stronger operators and those with good solid real estate those make the most sense for us. The information that we shared to over the last year at Investor Day and the Cagny presentation is that there's still a large opportunity with the small operators that may operate one to two stores, that are solid operators, good real estate and yet the effort to reach them is going to be a little bit different than working with some of the larger operators. So this is a focus of our Quick Lubes team, our development team in reaching out more aggressively to those small operators where we think they could benefit from being part of the Valvoline system. And so that – our feeling is that this is going to be very important for us to ramp up and have success in 2021, 2022, in the years ahead to further consolidate the space. We – that kind of gets back to the growth rates for Valvoline, as we laid out the – we expect to grow at 100-plus stores a year, about half of that's going to come from building stores in developing some of the markets that we've been pressing into over the last couple of years. But the other half of that growth is going to come from a combination of our franchisee growth. We continue to work with our franchisees to support their growth opportunities. But also making acquisitions and so that focus that we have on more than 1,000-plus locations out there that we think potentially model well to be part of Valvoline system, we're going to be working hard to develop those relationships.

Got it. Thanks. And then just on the advertising you talked about sort of feeling confident enough to reinstate a bit of that. So obviously, none of us know what's going to happen in the next couple of months with the environment. But can you talk about your flexibility to either push or pull the frequency of advertising? How quickly can you change the content, whether national or regional, depending on the market? I'm just trying to understand your ability to flex that ADT spend? Thank you.

Yes. Yes, we can move very quickly with regard to advertising, both in terms of the spent and the messaging typically within 30 days. So the shift to digital enhances our ability to move quickly with regard to messaging and media spend. So there's good flexibility there. Obviously, with the Quick Lubes business, we get very quick feedback on what's working and enables us to continue to improve the effectiveness of that spent. And advertising and the marketing in Quick Lubes has become such a key part of reaching new customers and continuing to grow the customer base, that's one of the reasons why we have confidence in growing our same-store sale is that we continue to have a really nice balance between growing transactions and then the opportunities to improve ticket. So that combination allows us to deliver these very strong comps that we've been delivering now for quite some time.

Thank you.

You’re welcome.

[Operator Instructions] Your next question comes from the line of Jason English with Goldman Sachs.

Hey, good morning folks, thanks for allowing me in.

Good morning.

I want to build off of Olivia's question on the Quick Lubes build-out. I think your 2022 vision calls for Quick Lubes to generate 51% of company EBITDA by fiscal 2022. How has that changed in the wake of COVID-19 just organically, if at all? How has it changed in context of what sounds like in response to Olivia's question, an accelerated M&A story? And also, what are you seeing on the real estate side? We're seeing a lot of depressed real estate values out there. Are there new opportunities opening up for you to perhaps accelerate over and beyond the 50-store count, your own store build plans?

Yes. Jason, if anything, in the COVID-19 environment, in post-COVID-19, I think it helps us accelerate the transition to a more service-driven business and seeing faster growth from the Quick Lubes business. We're seeing that in our operations. And then I do feel like there are going to be more opportunities on the acquisition front. In the real estate front, as you mentioned too, real estate has been tight and highly competitive over the last couple of years and we're seeing some signs of that changing and more opportunities. So that's very encouraging for us. And then, if course, we've really been developing our internal capabilities in developing new stores too. So real pleased with that progress. But I do think on the acquisition front that given the challenges that this environment presents, particularly the smaller businesses that Valvoline is in a really good position to be a strong consolidator for the high-quality systems out there. So just getting back to that target that we shared for 2022, I mean, I have more confidence today than ever before that we'll exceed that. That – and this is what's so important for, I think, investors to understand about Valvoline is that our mix continues to improve towards retail, where we have significant competitive advantage and where we have long-term growth opportunities. So this can serve to enhance our margins over time and help drive faster growth rates. It is important, of course, that we continue to make progress on stabilizing Core North America. But when you look at the performance in the EBITDA delivery, say, over the last six quarters, I think you'll see pretty good consistent performance there. So I feel like we've made some real good progress, and there's still steps to go. But last piece, of course, is international growth. And it's a tougher environment internationally right now, but long-term trends and the opportunities are still quite significant for Valvoline.

Sam, why is a 100 still the right target? If you've got new M&A opportunities opening up, new real estate opportunities opening up, why not really slam on the accelerator and go for a higher target than just the 100 bills that you had before?

Yes, it's a great question. And certainly, the development team, the Quick Lubes team, we're talking about it frequently and how we continue to build our capabilities and move on that number faster because the opportunity is there. And we've come a long way just in terms of just developing new stores and building – from three years ago where we had zero and now 30, 40, moving what we just said is 50 stores a year as we prepare for 2021 and beyond. Hopefully, we can do better than that over time. But the key will be for us is on the acquisition front and continuing to see our franchisees make investments in growth too. And so we're working closely with our franchise partners to solidify their growth plans. And then on the acquisition front, we will have to get better. We'll need some breakthrough in terms of bringing more of the smaller operators in. And so that's probably the biggest opportunity and also where we have to be conservative because we haven't had as much success in the past at bringing the smaller operators in at a fast enough rate. But after we're – after we bring in those regional operators that we feel should be part of the Valvoline system, our focus, and we're working on it now on how to make a stronger outreach to the smaller operators, will be key to being able to deliver more than 100 stores a year.

Okay. Got it. Thank you very much. Good luck.

Thank you.

Your next question comes from the line of Jeff Zekauskas with JPMorgan.

Thanks very much. I appreciate your slide on do-it-for-me market and relative size of Quick Lubes. If we were looking at that slide, I don't know, five years ago, will the market share of Quick Lubes be very different than numbers that you've presented? So in the slide, you've got Quick Lubes is about 22% of the overall do-it-for-me market. What was it five years ago?

Jeff, about the same number. So the Quick Lubes market really has not grown. So while Valvoline has been growing at a nice rate, the overall market really has not seen the same success. And instead, we've probably seen a little bit more growth from car dealers in conducting all changes versus Quick Lubes. So been relatively flat and kind of speaks to the opportunity that Valvoline has with our model and our ability to grow that we can grow not only into Quick Lubes and taking share from some of our competitors, which we know we're doing to also growing into the larger market.

So in the slide, you – so Valvoline in 2019 in the Quick Lubes – in your Quick Lubes business maybe used 28 million gallons and maybe an average oil change is, I don't know, 1.25 gallons, five quarts, something like that. So is it fair to say your market share of Quick Lubes market is, I don't know, about 21% or something in the low 20s given that slot?

Yes. Actually, when you look at the slide, it's – you'd say 18 million oil changes. Now here we're looking at oil changes and not gallons. So we're doing 18 million of the 100 million estimated oil changes in Quick Lubes. But yes, so it's right in that range, right? And when you consider the fact that if you look – we're to look at it on a dollar basis with our strong mix of premiums, growth of synthetics, et cetera, our share in Quick Lubes, potentially stronger than that.

Yes. And if you look at it relative to the total addressable market, of course, our share is quite a bit less. And that's where we're seeing now 60% of our new customers coming from outside of Quick Lubes and DIY and coming from the broader marketplace, which just underlies the substantial growth opportunity we have going forward in that business.

So what was your share five years ago for the Quick Lubes market or three years ago? How much share have you taken?

It's been significant with the kind of high single-digit same-store sales growth that we've seen across a macro environment that's been relatively stable. In terms of the macro environment, we've seen substantial share gain within the overall DIFM oil change space over the last three to five years.

We'd have to go back and look at some of the math, but certainly, we've added millions of oil changes when you consider both the growth in transactions, but also the acquisitions and the store growth that we've made. Go back to some of our earlier presentations on overall system-wide size and our system wide sales have been growing in the high teens year-over-year over the last four years.

And that's especially since the separation from Ashland, when we've been able to allocate our own capital directly towards the high growth, high margin, Quick Lubes business where we've seen substantial amount of gains in the last 4 years.

No, I know that. I just was wondering what the amount of share gain was. Got it. Thanks so much.

Sure.

Your next question comes from the line of Stephanie Benzema with SunTrust.

Hi. Good morning.

Good morning, Stephanie.

I wanted to touch on the Core North America unit margins. Obviously, you've made some nice improvement this year. I think each quarter, some of those benefits have been a little quarter specific, whether it being mix, but also seeing some nice savings and just some cost reductions that were launched last year. I wanted for you to touch on, if possible, kind of what you expect that unit margin range to be on a more go-forward basis? Obviously, some unique situations that happen throughout this year, but kind of how should we think about that after all the effort that has been made over the last year? And then Sam, also you mentioned that there were still some – what is left, and there's still some opportunity and some room to – some room for more improvement? If you could just update us on what is left for that in that program? Thanks.

Well, I'll start, Stephanie, and just talk about expectations going forward. I think we talked – Sam talked about – a little bit about it with the first question we got today around unit margins. We do expect to see more of a normalization in our channel mix. And you can tell based on the strong growth in our unit margins in Q3 that we've – the strong benefit we've had from the DIY business substantially outperforming the DIFM business. So if you look at Q3 volumes, two-thirds of our volume in Q3 in Core North America came from the DIY business versus the DIFM business with a much faster recovery than what – in DIY versus DIFM. So that really has been a driver. And we do expect that mix to more normalize going forward. But given the COVID-19 environment, there still is a lot of uncertainty around that. So to the extent that, that has a bigger impact on our DIFM customer base, we may see some upside to unit margins continuing just based on that channel mix. Although right now, with the guidance we've provided, we're showing it to be a more normalized unit margin in the high $3 range, low $4 per gallon range for Core North America for our Q4. And we'll provide a better outlook for that for our fiscal 2021 in our next earnings call, as we see more stabilization happening in that business. And then as it relates to the profit improvement program we had, we are starting to lap that program in Q3, and we'll have a more significant lap of that program in Q4. So I still expect it to be a driver of improved margins, although at a more modest level in Q4 than what we saw in Q3.

Got it. And then switching gears to International. The press release called out with just some slower in recovery – slower recovery in Latin America and India. Is there anything – I mean, is this just a situation where those particular regions are just behind what we've seen in the U.S. and Europe? Or is there something else, whether it's more that we should be thinking about in terms of kind of estimating the pace of recovery in those regions? Thanks.

Yes. We call out those two regions just because we're seeing a slower recovery there and more government restrictions. And so with India, we've seen certain large markets that have been locked down again. So India has been recovering kind of in fits and starts. And that's also true in parts of Latin America where we have good share and focus Central America and Mexico, for example. And Mexico too is operating behind, particularly where Core North America is when it comes to its recovery. So just a lot of the regional shutdowns have continued to impact the International recovery. But nonetheless, we're – our teams are poised and staying connected with our customers, and we're taking advantage of opportunities as they exist. And we've seen some good steady improvement over the last couple of months. I think, basically, as we look forward, Stephanie, in the next year, I believe we'll still feel some impact from COVID-19 on the International business, but I obviously think we'll see improvement too. And when you look at some of the stronger markets like China, for example, and the movement there and the progress in our business, that gives us confidence that we're going to see stronger performance internationally across the board. But we won't completely be through the impact, especially early in the year.

Got it. Thank you so much.

And that does conclude our allotted time for questions. This concludes today's conference call. We thank you for your participation and ask that you please disconnect at this time.