SIG - NYSE

Good morning, and welcome to the Signet Jewelers Fiscal 2023 Second Quarter Earnings Call. [Operator Instructions] Please note, this event is being recorded. I'd like to turn the conference over to Vinnie Sinisi, Senior Vice President, Investor Relations.

Good morning, and welcome to our second quarter earnings conference call. On the call today are Signet's CEO, Gina Drosos; and Chief Financial and Strategy Officer, Joan Hilson. During today's presentation, we'll make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. We urge you to read the risk factors, cautionary language and other disclosure in our annual report on Form 10-K ,quarterly reports on Form 10-Q and current reports on Form 8-K. Except as required by law, we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events. During the call, we will discuss certain non-GAAP financial measures. For further discussion of the non-GAAP financial measures as well as reconciliations of the non-GAAP measures to the most directly comparable GAAP measures, investors should review the news release we posted on our website at www.signetjewelers.com/investors. And with that, I'll turn the call over to Gina.

Thank you, Vinny, and thanks to all of you for joining us today. I want to begin by thanking our Signet team. Their passion for building lifetime relationships with our customers and fulfilling our purpose is central to everything we do. I continue to be inspired by their excellence and agility every day, no matter the conditions. It's an honor to work at their side. Here are the key takeaways from my remarks today. We believe that Signet's growth strategy and the structural advantages we've created in our operating model enable us to do three things consistently. First, deliver an annual double-digit operating margin; second, invest to achieve market share expansion; and third, create meaningful shareholder value. Q2 was yet another demonstration of these advantages. Our team delivered $1.8 billion in revenue and $193 million in non-GAAP operating income. Revenue was down 1.9% versus record-setting second quarter sales last year, and up 29% versus the second quarter of our fiscal year '20, which was the pre-pandemic base. Importantly, we delivered operating income within our original guidance range and non-GAAP operating margin was strong at 11%, which is nearly 3x higher than Signet's operating rate in fiscal year '20. So despite a softer top line environment, our structural transformation and the flexibility we now have in our operating model enabled us to leverage SG&A to deliver double-digit operating margin and maintain strategic investments and return capital to shareholders in Q2. Our strategy is working. We are winning in our biggest businesses with our diversified portfolio of Banter, expanding accessible luxury, accelerating services and leading in digital. We are able to be strategically flexible leaning further into the areas of our business with the most growth opportunities driving both customer and shareholder value. Before I get into our results, let me first share some jewelry category context. What we're seeing in our proprietary data is that consumers shopping at lower price points, primarily buying discretionary fashion items or with lower incomes are being impacted most directly by macroeconomic pressures. We believe lower jewelry price tiers are also seeing the most negative impact from deep discounting in apparel and other fashion and discretionary categories. So in general, jewelry price points below $500, are seeing steep decline with price points below $1,000 also being negatively impacted. Conversely, higher price point items are showing more strength and this is reflected in the fastest jewelry growth being luxury price tiers, followed by accessible luxury. What's particularly interesting is that our proprietary customer research for Kay, Jared and

Thanks, Gina, and good morning, everyone. I want to leave you with three messages today that all illustrate the sustainability of our operating model. First, we are confident we can deliver annual double-digit operating margin, while growing market share consistently and reliably. We believe we have the disciplined operating structure and innovative culture to do this year after year. Second, with the health of our balance sheet and working capital efficiencies, we believe we are well positioned to make strategic investments that drive long-term growth. And third, we continue to prioritize shareholder returns alongside continued investments. Now turning to second quarter performance. Q2 is a perfect example of how we are effectively managing the top and bottom line. We delivered total sales of $1.8 billion down 1.9% compared to the record-setting sales performance we delivered in Q2 a year ago. The answer represented almost 1/3 of our comp decline during the quarter, offsetting a strong performance in bridal and accessible luxury. As Gina explained, we are taking full advantage of our strength in bridal and leaning into higher price points, while at the same time, moving Banter out of underperforming malls and accelerating the growth of digital. As previously reported, we saw trends soften across all price points in July, along with weaker traffic. That said, for the quarter, our average transaction value in North America was up 10.8% on a comp basis. Sales per square foot was up over 40% compared to the second quarter of FY '20, a direct result of our connected commerce strategy, coupled with our fleet rationalization that reduced our store base by 20%. In addition, warranty and repair services were drivers in the quarter and delivered nearly 7% growth. Importantly, we began to see improvement in August as a result of non-comp activities. Now let's turn to gross margin. Non-GAAP gross margin was 38% of sales, down 190 basis points compared to the second quarter last year. This reflects deleverage of occupancy on a negative 8.2% comp and the impact of Diamond's Direct, which carries a lower relative margin. Importantly, our organic banners merchandise margin was similar to last year. Additionally, strategic technology investments and the absence of COVID-related tax abatements from prior year also impacted the change in gross margin. In spite of softer top line, we leveraged SG&A this quarter. SG&A was $477 million or 27% of sales, a 90 basis point improvement over last year. Our team managed SG&A in response to shifting market conditions, all while maintaining priority growth investments and returns to shareholders. This is driven by our disciplined spend management, our gating approach to investments, lower payroll costs driven by our flexible labor model and benefits from our enhanced financial services agreements. Non-GAAP operating income was $190 million or 11% of sales, which excludes acquisition-related charges of $6.4 million and compares to $223 million or 12.5% of sales last year. Please note that last year included $9 million of income, primarily from COVID-related brands. Notably, our Q2 operating margin performance is nearly 3x higher than FY '20. Looking back further, this also exceeds our performance seven years ago when we had credit factored into our margin mix. This demonstrates the strength of our transformed operating model. Let's look now at the strength of our balance sheet. We have the flexibility to innovate and invest in even a softer top line environment because of our working capital efficiencies. We continue to deploy capital consistent with our stated priorities. At the end of the quarter, we had $852 million in cash and equivalents. Our focus on cash and working capital efficiencies have enabled us to achieve the following since FY '20. We returned cash to shareholders through $600 million of share repurchases and given our stock's current multiple, which we believe is undervalued, we will continue to use our remaining $622 million multiyear authorization. We paid $37 million in common dividends since reinstatement with a goal to become a dividend growth company. We've also invested nearly $900 million in strategic acquisitions, augmenting our accessible luxury tier within our differentiated portfolio. Further, our leverage ratio on a trailing 12-month basis currently stands at approximately 1.9x EBITDA, and well below our previously stated goal of below 3x and down nearly 50% from FY '20. And today, reflecting the strength and confidence in our operating model, we're revising our leverage ratio target to maintain below 2.75x EBITDA. Now I'd like to turn to inventory, which remains a critical differentiator for Signet. Inventory management is at the heart of our working capital efficiencies. Since fiscal year '20, we've made it a strategic imperative to reduce inventory overall, and we've done it even including Diamond Direct. Overall, core inventory is down 13% in the quarter compared to the second quarter of FY '20 or $300 million and importantly, it's also nearly 2% down for last year, indicating our ability to change quickly in response to macroeconomic shifts. Penetration of clearance inventory at the end of Q2 is down one point to last year and down eight points compared to FY '20, reflecting the health of our inventory, and inventory turn of 1.5x at quarter end is turning 47% faster compared to pre-pandemic levels and is also improved to last year. We continue to use the appropriate levers to maintain a healthy level of inventory and are well prepared for holiday season. We partnered with our vendors to secure the right inventory to meet consumer demands and trends. While still maintaining the rigorous inventory management that drives much of our cash and cost discipline, we manage inventory holistically to grow market share and improve operating margin. This has become a reliable component of our annual double-digit operating margin commitment. Now let me move to guidance and then we're happy to take your questions. We are reaffirming our full year fiscal '23 annual revenue and operating income guidance. We now expect non-GAAP earnings per share for full year of fiscal 2023 in the range of $10.98 to $11.57, including the impact of share repurchases through the second quarter. Our full year fiscal '23 guidance does not include a material worsening of macroeconomic factors, and it does not include Blue Nile's performance. For the third quarter, we expect revenue in the range of $1.46 billion to $1.49 billion with non-GAAP operating income in the range of $20 million to $34 million. Please note that our strategic shift to an always-on marketing model has moved cost to the third quarter with associated revenue largely occurring in the fourth quarter. Before we open the call for Q&A, I want to acknowledge the capability and commitment that I see in our team day in and day out. Our team members operate with such commitment to our customers and accountability to our shareholders, and it is genuinely inspiring. What I love most about this team is that they are both high performance and high potential, delivering exceptional performance every single day and striving to be even better with that fail. And on that note, we'll be happy to take your questions.

[Operator Instructions] We take our first question from Ike Boruchow from Wells Fargo. Please go ahead.

Hi everyone. Thanks for the question. Two quick ones. Just on the quarter-to-date, it sounds like August has gotten a little better. When we look at your Q2 performance versus the Q3 guide, it does look like you're embedding a decent slowdown in revenues organically both one year and on a multiyear basis. So just kind of walk us through the conservatism built in and what you commented on what you've seen in August, a lot of retailers have seen a little bit of a rebound? And then a quick follow-up is just on the Blue Nile transaction. Assuming this does close before holiday, I understand your guidance does not include any impacts from them. But if the deal does close ahead of holiday, would that be a positive or a negative to your EBIT that you're currently guiding to in the fourth quarter. Thank you.

Hi, Ike, thanks for your questions. I'll start with the first one. So when we guided a couple of weeks on the balance of the year at the time that we announced the transaction with Blue Nile. We really wanted to make sure we were reflecting the current reality of where we see the customer now. And so the low end of our guide was very clearly representing a continuation of the trends that we were seeing, not a material worsening, not including Blue Nile. We did see some improvement in August. I think that's really a combination of the customer. We have continued to see some strength, as I said in my remarks, at higher price points. and also for considered purchases, especially sentimental gifts and bridal, which we saw up 5% in the quarter. So I think there's some good news as we've come into August, but we didn't reflect any of that in the low end of the guide that we gave. And then, Joan, you want to talk a little bit about Bueno. We have already closed that transaction.

Yes, we closed the transaction recently. Our team has been on the ground over the last week or so really pulling together and working hand-in-hand with the Blue Nile team to put together our holiday plans. And so it would be premature at this time to talk about our view of the fourth quarter, Ike. But that said, based on the work that we've done. We're very excited about the opportunities for synergy and the ability to integrate the two banners under the -- with the James Allen team. So and really leveraging the synergies of back office. So lots of opportunity in our view and just a little premature to really give guidance on the fourth quarter.

Okay. Thank you.

The next question comes from Lorraine Hutchinson from Bank of America. Please go ahead, Lorraine.

Thank you. Good morning. Encouraging to hear about the August stabilization. But I guess I just wanted to see how you were stress testing the model. And maybe here your view if sales soften further, just talk through some of the levers that you can use to offset that deleverage to allow you to maintain that goal of double-digit operating margin?

Thanks, Lauren, for the question. So our commitment and goal is to maintain an annual double-digit operating margin. And so what -- if you think about what we closed off in the second quarter, it was a negative 8.2% comp, and we delivered a very strong double-digit operating margin. So how did we do that was, one, strong inventory management, healthy inventories, clearance was below last year. And clearance sales were below last year. So again, healthy margins, as I mentioned, merchandise mix in our organic banners was similar to last year. So really able to leverage and build on the strong inventory disciplines that our teams are working on and have really put as part of our daily operating. The other levers are labor, right? What we said is we have a very flexible labor model, we use data analytics to manage labor to traffic and ensure that our teams are. We're putting coverage in the stores to support our customers at the right time and in the right locations and then our spend management, we gate our investments. And it is - and it's really gated against our view of where we see the top line trending. We protect priority investments that are critical to long-term growth and really evaluate each based on our - the ability to support our revenue in the short term with the eye to the long term, as I mentioned. I would also say that as we're looking forward into the back half, we've applied all of these same disciplines, and we work very closely with our NPI teams and vendors on inventory to ensure that we have the right trends, but we have the flexibility to move receipts should that be needed. And then from the P&L perspective, are always on marketing, the shift that I mentioned, the rain for the third quarter is just wanted to amplify that because it's a cost in the quarter that we continue to drive, and the revenue relates to the fourth quarter. And then I would say in the third quarter, recall that as we are anniversarying investments in the prior year, we don't really get to that investment anniversary until the fourth quarter. So we are very closely watching our investments. And really, as we think of our guidance for the third quarter and then the implied guide for the back half, we have considered all of those factors.

Thank you.

The next question comes from Dana Telsey from Telsey Advisory Group. Please go ahead.

Hi, good morning, everyone. As you think about the gross margin and now the new buckets of the gross margin with new businesses entering like Diamonds Direct, how do you think about the shaping of it, whether on an annual basis, a quarterly basis and what the opportunity is for the levers of gross margin?

Thanks, Dana. So gross margin, as I mentioned, our organic banners in the second quarter were similar to last year. As we move forward into the back half of the year, we have the same Diamond's direct mix, which carries a relatively lower margin because of the bridal mix, but also our inventories are healthy. And what that means is that our clearance marks are not as deep. And therefore, our yield on clearance selling is stronger. So that's a lever that we continue to pull and use clearance as a strategic lever for us for promotion, but able to carry a relatively higher margin given the health of the clearance inventory. Then vertical integration is another lever for us to continue to drive to optimize our costs and continue to drive expansion in gross margin over time. And then I would also add the value engineering that Gina mentioned in her remarks, as we work with our vendor base in this environment, we continue to value engineer to ensure that we're bringing beautiful product that's relevant on trend across that enables us to have the right pricing and also bring value to the customer.

Thank you.

The next question comes from Oliver Chen from Cowen and Company. Please go ahead, Oliver.

Hi Gina, and Joan, thank you. Regarding the lower price point products, what do you see for innovation there ahead? And what's necessary and timing on that? And how does that relate to traffic and merchandise margins and you're calling out promotions and also the reality of the bifurcation in the lower end to consumer? And Joan, as we think about inventory turns, you made a lot of progress there. Which parts of the product portfolio have the most opportunity to increase inventory turns. Thank you very much.

Hi, Oliver, thanks for your questions. So we -- as we've really developed our consumer insight capability over the last several years, look at the category by price tiers, also by journeys. So from a price tier standpoint, as I mentioned in my remarks, luxury has been very strong. So that's a part of the category that continues to grow. That's generally above where Signet plays. But what we've been doing is tiering up all of our banners to have higher price point offerings. And we think we grew two points of market share in accessible luxury in the quarter. That's something we got behind very early. So we've placed our holiday orders by Memorial Day. So we really have gotten ahead of that and everything Joan talked about on inventory includes the fact that we have tiered up to higher price points in our inventory this year. In terms of lower price customers, like you were talking about, they're really, I think, challenged by two factors, one is macroeconomic, inflation, all of that. And so particularly in the self-purchase journey, we've seen a falloff there that would be primarily price points under $500. The other factor impacting that is the very heavy discounting that we're seeing because of high inventories in apparel and other discretionary categories. So that is impacting that customer right now. We would expect to see, as we go toward holiday that the product that we've worked on for those customers, the value engineered product we think will be very appealing. So we've been using lab-created diamonds, for example, as a way to get a big look for less for those customers. We have worked on our items at a price in a way to make sure that we are providing excellent value. We've been very conscious of how we've taken price increases especially at the low end, and we believe we've done that in a way that creates a superior value at Signet relative to the rest of the market. We've worked with our vendors to use diamonds they had on hand. So had a lower cost basis, call it last year's inventory, and we've been able to use those to create product that can really appeal to that customer. Another area of innovation is diamond cut gold. So we've worked with many of our factories in Italy to come up with a laser cutting technique that actually creates the look of diamonds in a piece of gold even though there are no diamonds present. So it gives a really rich look for still a very affordable price point. And then the last thing is we've leaned into the financing offers that we have for our value customers. Those are, of course, split pay. We saw a 35% increase on split pay use in e-commerce. So we're definitely seeing customers lean into that as an opportunity. Leasing we have available and then we've increased our 0% down promotional offerings for our private label credit card as an opportunity for those value challenge customers. So we're really, I think, based on our consumer insights, we've been able to get our orders in early and to work early on the kind of innovation that is giving us more access to the part of the market that's growing, but also helping us be very competitive and offer great value at the lower end of the market. And Oliver, to address your inventory turns, there's a couple of things that I would note here. One is that because of the health of our inventory and our consignment inventory position has been substantially lowered from several years ago. We've been able to work more flexibly with our vendors to test product, bring it in on memo and roll to the balance of our portfolio based on its acceptance by the customer. So that enhances our ability to have strong newness as well as improved churn. So I think that's something that we'll continue to drive with the merchandise teams and they're really -- that's something that we started last year in a smaller way and really -- it's really taking hold as we drive through this fiscal year. And then the other is flexible fulfillment capabilities. Our team has done a really amazing job with our fulfillment team, our supply chain team and our merchandise planning teams to really integrate our flexible fulfillment capabilities into our purchasing as well as into the fulfillment of product from all of our locations, our stores and our DCs, which really has opened up are the selling aperture for us and able to really continue to drive inventory turn there. So that's underway, but still moving up the maturity curve to enhance inventories. And then I think -- the third would just be this idea of turning inventory more towards just in time and working with our vendors with core inventory products. So we believe that we still have room to go but it will take time, and it will be -- it will take more precision across our operation.

Thank you. Best regards.

[Operator Instructions] We take our next question from Jim Sanderson from North Coast Research. Please go ahead, Jim.

Thanks for the questions. Just wondering if you could walk us through the back half of the year, how -- what the puts and takes are between overhead expense and gross margin that gets you to a considerably lower dollar operating income in the current quarter and a nice pickup or acceleration in the fourth quarter. What are the building blocks between those cost centers that get you to the end of the year guidance based on what you're looking at for the third quarter?

Thanks for the question. So when we think about the back half, the third and fourth quarter splits, our guidance for the third quarter includes incremental investments that we will anniversary in the fourth quarter. So that's the operating income deterioration that you see in the third quarter, but it's largely due to these investments that we will anniversary in the future quarter. I'd also say that as we're looking at our always-on marketing strategy, this -- as I mentioned in my remarks, this seeds marketing costs in the third quarter that are incremental, but the revenue is not generated until the fourth quarter largely. So I think that's the split between the quarters that you're seeing, Jim. And then things to remember about last year in the fourth quarter of last year, we had an inventory-related charge based on the reduction in our inventory. We took a charge related to capitalized overhead that was positioned in inventory. So that is a positive for us as we anniversary that this year.

Thank you.

Okay. We'll take the next question.

Thank you. So the next question comes from Paul Lejuez from Citi. Please go ahead, Paul.

Hi everyone. This is Brandon Cheatham on for Paul. Thanks for taking our question. I was wondering if you could talk a little bit about how ticket and traffic trended this quarter? And when did you start seeing this kind of inflection in the kind of higher price point penetration that seemingly is driving results? And what are your expectations for that price point for the rest of the year?

So in terms of traffic, we actually saw traffic begin to go down in the spring. So call it, March, April kind of time line with a more significant drop after Mother's Day, brick-and-mortar traffic this year relative to e-commerce traffic has been stronger that's customers' desire to return to store. Of course, in our case, it's really not just about e-commerce sales. Digital for us is very much about browsing and preparing customers for their store journey, we have 2/3 of our customers now that are having a multichannel experience with us, but we have seen more purchase and more traffic happening in brick-and-mortar. And then in terms of the sort of bifurcation of challenged lower price points and growing higher price points, I would say that was most pronounced following Mother's Day. We saw that as a big kind of June sort of phenomenon. July, the surprise of July was that higher price points actually became a bit more challenged. But as we've said, we have seen some stabilization in August from that.

And is your guidance assumed that that trend kind of continues in the higher price points? Or are you expecting kind of an inflection in your lower value range?

So the way to think about it is our high guide assumes a continuation of the Q2 trend on comp, carries into Q3, and Q4 is positioned with a modest improvement, largely from noncomp activities that we're putting in place to improve performance. Our low guide positions Q3 and Q4 comps similar to the trends that we saw in July and August. And the underlying assumption here is that the macro environment remains constrained in the back half.

Got it. That's helpful. And then I was wondering, you've talked in the past about gaining more share of kind of wedding day related jewelry. I think historically, you did a good job of capturing the engagement and then you didn't capture as much of the wedding day. as you wanted. So I was wondering if you could kind of talk about how is your penetration on the wedding day related jewelry going? Where do you think that, that can kind of grow to and where you are in kind of that progression? Thank you.

I would say we're reasonably early in that progression, but our first-party data capture the investments we've made in our consumer data platform, all of that is really a big help to us. So we are, I would say, more than ever able to not just get to know couples at the engagement stage but then really stay with them to work toward wedding band purchases and all the different wedding day purchases I talked about. The research that I quoted is Signet's proprietary research around wedding activities and the fact that 43% of all gifts given around the wedding or jewelry, we think, is a big opportunity for us. We are launching new programs to go after that. So give guides that help the broad. She is a big to-do list coming out of the engagement and working toward the wedding. So the more we can help on that, the better. And I'm excited about some of the other innovations. So I talked in my remarks about what we're doing on Rocksbox and having launched a bridal event rental program. That's a great opportunity for brides to be able to where nice or jewelry than they might have otherwise for all of their events, whether it's the bachelor [indiscernible] party or announcement of the engagement all the way to the wedding day. And of course, once she's been looking at those photos for a year or more of that beautiful jewelry, we're certainly then using our data and our targeted marketing efforts to try to drive a choice of that as a great first anniversary gift or birthday gift during the first year. So it's really a combination of the consumer insights that we've developed the work that we're doing with our CDP to capture more and more information and be more helpful to our customers throughout the process and then the assortment that we're putting in place that we think can really help them. So our services business coming to life matched up with data and assortment.

Our final question comes from Mauricio Serna from UBS. Please go ahead.

Good morning. And thanks for taking my questions. I wanted to ask just very quickly, you mentioned that you closed the Blue Nile acquisition. So I'm just wondering like is that something that will be already be reflected in Q3? Or it just -- does that begin in Q4? So maybe if you could provide some guidance around that? And then maybe if you could elaborate a little bit more about how you see this acquisition versus specifically the James Allen business. Just wondering if there's any big customer overlap or anything there that could be leading to some cannibalization between both formats? And then maybe if you can talk about Q3 sales outlook, I think it implies roughly 24% sales growth versus in 2019. But if you take your guidance for the year, I think that assumes like a 20% growth in Q4. So just wondering what are you thinking there in the guidance for sales? Thank you.

Thanks, Mauricio. I'll take the first one, and then I'll come back on the guidance, Gina. So that Blue Nile acquisition we closed in the third quarter, and it will be reflected in our performance from the point of closing forward. As I mentioned, Mauricio, we were -- our teams have been working diligently. They've been on the ground there for about a week, and we have really been working very closely to develop the forecast and the plans collectively for the balance of the year. So stay tuned on that. But as I mentioned, it is not in our guidance for the balance of this year.

And then in terms of incrementality of Blue Nile, we see that as a great market share growth opportunity. We did a considerable amount of consumer research before the acquisition. And we found that that Blue Nile has a distinctive cohort, it's younger, more diverse, more affluent than the rest of our portfolio. They also have some different go-to-market models versus our James Allen business. So with 23 showrooms, they have a very low inventory model, but a high-touch, high-service environment for customers to be able to see styles try-on pieces, really get a feel for what they want, but then they place the order online in a marketplace that's very similar what we do on James Allen. So there are a lot of back-office synergies, we think that can come to life in this acquisition, which then will give us more fuel to really invest to grow both of these as distinctive banners within our portfolio. And to Joan's point, we did -- we had our team out meeting with the Blue Nile team the day after we closed. And we've just been so pleased with the caliber of talent in the Blue Nile organization and the excitement that they have to really make this transition a very successful one. So I would say we're off to a good start on that front.

Then to address the Q3, Q4, as I mentioned, the high guide assumes a continuation of the Q2 trend on a comp basis. And it carries that carries into Q3 and modest improvement in Q4 related to non-comp activities that the team has tested and put in play for the holiday -- it will put in play for the holiday season. On the low end, the guide positions Q3 and Q4 similar to the trend that we saw in July and August, and I believe that's more conservative and just put out the note again that we did see some improvement in August, which gave us confidence in the high guide.

But just to be really clear, Blue Nile is not in our guide at this point in time. It's just too early for us to really know what that's going to look like for Q3 or Q4.

That's very helpful. And any thoughts on the share repurchases outlook or potential share repurchases given that you still have over $600 million available?

Well, what we said is that we -- it remains part of our state of capital priorities. And given our belief that we believe our stock is undervalued, that we will remain part of our priorities, and we have a multiyear program and the authorization is $622 million.

We have no further questions left in the queue. So I'll hand it back to management for any closing remarks.

I want to thank everyone again for joining us today. What I hope you took away is that Signet has the strategic clarity, structural advantages, financial flexibility and winning culture to deliver consistent, reliable and sustainable growth and meaningful shareholder value. Thank you, everyone.