Greetings. Welcome to the Reynolds Consumer Products, Inc. Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded.

I will now turn the conference over to your host, Mark Swartzberg, Vice President of Investor Relations. Thank you. You may begin..

Thank you. Good morning and thank you for joining us on Reynolds Consumer Products' third quarter 2021 earnings conference call. On the call today are Lance Mitchell, President and Chief Executive Officer; and Michael Graham, Chief Financial Officer.

For our agenda today, Lance will focus on market conditions and our fundamentals and Michael will review our quarter and outlook. Together, our remarks will be approximately 15 minutes, then we will open it up for your questions.

During the course of this call, management may make forward-looking statements within the meaning of the federal securities laws.

These statements are based on management's current expectations and involve risks and uncertainties that could cause actual results and outcomes to differ materially from those described in these forward-looking statements.

Please refer to Reynolds Consumer Products' annual report on Form 10-K and other reports filed from time to time with the Securities and Exchange Commission and its press release issued this morning for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Please note management's remarks today will focus on non-GAAP or adjusted financial measures. A reconciliation of GAAP measures to non-GAAP financial measures is available in the earnings release posted under the Investor Relations heading on our website at reynoldsconsumerproducts.com.

The company has also prepared a few presentation slides and additional supplemental financial information which are posted on Reynolds website under the Investor Relations heading. This call is being webcast and an archive of it will also be available on the website. We'd like to answer all of your questions during the question-and-answer session.

In the interest of time, we ask you ask one question and a follow-up and rejoin the queue if you have additional questions. And now, I'd like to turn the call over to Lance Mitchell..

Consumer demand, price increases, innovation and expanded manufacturing and supply chain capabilities. Together with our market share performance, we expect these drivers to remain a sustained source of long-term growth. First, consumer demand. Household use of our products remain elevated versus pre-pandemic levels.

According to our latest Harris Poll which we conducted again in September, everyday use of foil is up more than fourfold versus pre-pandemic levels and weekly use of waste bags and food bags is up more than 30% versus pre-pandemic levels.

In addition, according to our fourth Numerator poll, the overwhelming majority of respondents continue to expect to maintain or increase their foil, waste bag and food bag use beyond 2021. Our household penetration has increased from pre-pandemic levels with 24 of 25 households now having one or more of our products.

This sets up our categories, our brands and our product portfolio for continued strong performance and that's what we're seeing. On an omnichannel basis through October 10, branded dollar share in foil, waste bags and disposable cups and dishes is up versus year ago levels and improving sequentially.

These figures include e-commerce and in track channels, it's the same trend, brand dollar share in foil, waste bags and disposable costs and dishes higher than year ago levels and improving sequentially. We're also building on our e-commerce momentum. E-commerce-related sales are growing strong double digits.

Growth is broad-based across RCP and major e-commerce retailers. And we continue to expand, participating in third-party marketplaces while also testing and launching direct-to-consumer initiatives. The next driver of our revenue growth is price.

Our third round of pricing actions was implemented as planned and a fourth round goes into effect during the first quarter of next year. We expect sequential improvement in profitability in the fourth quarter and a pronounced improvement in profitability by the end of the first quarter of 2022 as a result of these increases.

This assumes key commodity rates stabilize. Michael will speak more to the timing and results of our pricing actions in a moment. I know that elasticity is also a topic of interest to all of you. We're watching that closely, given the amount of pricing across retail.

As you know, historically, our categories have demonstrated low elasticity by comparison to many consumer staple categories. That remains the case and we factored our latest research on elasticity into our guide. The third driver of our strong growth is innovation.

Hefty Fabuloso continues to exceed our expectations and drive volume, thanks to Hefty's quality consumer preference for Colgate-Palmolive Fabuloso scent and our sales and category management team's effectiveness partnering with our retail customers.

In fact, Hefty Fabuloso helped drive Hefty Waste & Storage past $1 billion in annual retail sales for the first time in the quarter. Cooking & Baking results are also seeing a substantial benefit from new products, strengthening our market position, bringing us into new adjacencies and expanding the scope of our sustainable offerings.

Notable Reynolds innovations include Reynolds Wrap's Everyday Non-stick Foil, Reynolds Wrap 100% Recycled Foil and Reynolds Kitchen's unbleached and compostable partial paper. In tableware, EcoSafe is now the number one sustainable brand and disposable tableware according to IRI.

And innovation on store brands also contributed to our strong performance across RCP categories including share gains for our Presto unit and private label food bags. I also hope that you saw the recent release of our ESG scorecard. The scorecard provides baseline metrics for evaluating our performance against the goals we announced in April.

Development and expansion of sustainable products is interval to our business. We've introduced numerous sustainable product solutions and have more in the pipeline for introduction in 2022. We're also on track to achieve our goal of a sustainable option all product lines by 2025.

Our fourth growth driver is expanded manufacturing and supply chain capabilities. The capacity additions we undertook last year have allowed us to maintain strong market shares and retailer in stocks for most of our products remain well above pandemic-related lows.

These and other improvements to our manufacturing and supply chain capabilities position us well in our categories. Having said that, we're not immune to the staffing and logistics-related pressures across the economy and we're actively working to minimize related disruptions to production and shipment of our products.

Before I pass the call over to Michael, I'd like to leave you with the following. Our business remains strong and we have a history of dependable volume, earnings and cash flow.

We have the brands, the product portfolio, the category management team, the manufacturing and supply capabilities, the pricing actions, the cost savings and, most of all, the people to position us for substantial improvement and earnings growth when inflation moderates and over the long term.

I look forward to our future growth and success for our company, our partners and our shareholders. With that, over to you, Michael..

net revenues to grow in the mid- to high teens on $888 million in the prior year, adjusted net income to be in the range of $93 million to $108 million, adjusted EBITDA to be in the range of $170 million to $190 million and adjusted EPS to be in the range of $0.44 to $0.51.

We plan to provide our guidance for 2022 with the announcement of fourth quarter results in February. Nonetheless, I thought it would be helpful to provide an update on some of the items we reviewed last quarter. In the area of pricing, as Lance said, our fourth round of pricing to offset additional cost increases is being implemented across RCP.

The majority of the increases have been announced and go into effect in January. Assuming current rates of resin and aluminum hold, we will fully recover these higher commodity costs through pricing actions for Reynolds, Cooking & Baking, Hefty Tableware and Presto by the end of the first quarter of 2022.

We could also see ongoing unfavorable gap between commodity costs and pricings for Hefty Waste and Storage moderate if we announce additional waste bag pricing, or resin rates are lower than we are forecasting. We're planning to return to a more typical level of trade promotion and advertising in 2022.

Investing in revolution cost savings programs is being accelerating and remains a major source of our funding for growth. We continue to expect more than 200 basis points of EBITDA margin from revolution cost savings in 2021 and expect to grow revolution dollar cost savings again in 2022.

We're investing approximately $25 million in automation related projects in 2021 and plan to invest more than double that in 2022. We expect spooling automation in our Louisville operations to contribute significantly to the increase at a total of nearly $50 million in spending over three years of 2021 through 2023.

This project is typical of automation-related projects, providing an estimated payback of less than three years.

Numerous additional automation and intelligent factory projects are also under way across RCP, including the installation of a high-speed cutting equipment for Cooking & Baking, line upgrades for Hefty Waste & Storage and Presto, robotics and related line expansions for Hefty Tableware and other improvements in equipment and line efficiencies throughout our operations.

Now, before I turn the call back over to Mark and your questions, I'd like to leave you with the following. As Lance reviewed, our business remains strong. Demand for our products is up. Our market shares are strong. And our manufacturing and supply chain capabilities are strong and we are investing to strengthen them further.

Nonetheless, it is important to remember that an environment for staffing and logistics-related services has become more challenging and material cost increases have been difficult to predict with accuracy. We consider this year's profit pressure is temporary and expect sequential improvement in profitability in the fourth quarter.

We also expect to return to pre-pandemic levels of profitability when inflation moderates. As I previously said, we will fully recover these higher commodity costs through our pricing actions for Reynolds Cooking & Baking, Hefty Tableware and Presto by the end of the first quarter of 2022, assuming current rates for resin and aluminum hold.

And we remain committed to strong cash generation and disciplined capital allocation. Investment in internal growth and upgrades to our cost structure remain our top priority. We continue to focus on deleveraging with a target ratio of 2x to 2.5x EBITDA.

We plan to continue returning excess cash flow to shareholders through dividends and we recently announced a quarterly dividend of $0.23 payable November 30, 2021. And we continue to opportunistically pursue bolt-on M&A in our categories and adjacencies domestically and internationally. With that, I'll hand the call back over to you, Mark. Thank you..

Thanks, Michael. As I turn it over to the operator for the questions, I'd like to remind you that we ask that you ask one question and a follow-up and then rejoin the queue if you have additional questions.

Operator?.

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from the line of Nik Modi with RBC Capital Markets. Please proceed with your question..

Yes, thank you. Good morning, everyone. I just had a quick clarification question just on the raw material sale. If you could just provide some details around that. And then the broader question is just on the price elasticity. You talked about having done a study. I would be curious to hear kind of what the conclusion was of that.

And how do you see the consumer and as they kind of draw down all of the cash that they've been sitting on given all the stimulus as we kind of move into 2022, how do you think that's going to manifest in just the receptivity of pricing generally, because it's not just in your categories it's basically every category? Thanks..

Yes. I'll take the first part of that on the raw materials sale. We thought ourselves long on raw materials and we really don't speculate in this space. And so we decided to sell off those raw materials, so we got market prices at that. There was a nominal increase from a margin -- I mean nominal level from a margin perspective.

But overall, it was the best thing to do and it's a prudent thing to do at that point in time..

And I'll take the elasticity question, Nik. We've done elasticity studies over the course of the history of our company. And they've always come back as these categories have relatively low elasticity. There's no question we're in a dynamic environment now that's different than we've seen historically and it did come back again with low elasticity.

But as I said, it's dynamic. So we're going to watch it very closely. And we'll of course correct and adjust as necessary. But stimulus packages and consumer spending, while it's factored into that study, it's not necessarily able to predict it any better than any of us. So we'll have to of course correct if necessary as we go forward..

And Lance, if I could just follow up, do you see the competitive situation playing out as you would have hoped? Or is there still some disconnect in terms of you guys moving versus some of your competitors across your categories?.

Well, we've taken pricing across 85% of our products, as Michael indicated. So as Michael also said, the recovery in waste bags will be dependent upon the easing of commodity rates, additional pricing or both.

There's numerous factors we're going to consider in making those decisions -- consumer demand, category strength, retail price points and, of course, working with our retail partners in the competitive environment. Right now, our focus on waste bags is -- demand is exceeding our increased waste bag capacity currently.

So as a result, our focus is on improving case fill and service to our retail partners..

Great, thanks..

Our next question comes from the line of Rob Ottenstein with Evercore. Please proceed with your question..

Great, thank you. Just first, a point of clarification. Did I hear you say that you expect to get back to kind of normal margins at the end of Q1 2022, assuming that no further cost increases and I suspect it's market share gains that is driving that conviction? So that's just kind of the follow-up question.

And if we stand back and think longer term, once we get into a normal environment, given all the gains that you've gotten from Reyvolution, given your market share, trends, given what looks like sustainably higher consumer demand, is there any reason why you won't be able to earn materially more than what you did in 2019 when you get to a more stable environment? Thank you..

Yes. So just to clarify, when we were talking about recovery, our overall intent is that we feel by the end of Q1 that we'll have full recovery from -- on the commodity increases that we've seen. So that was -- it was not intended to be margin related, it was full recovery from a more of a cost standpoint.

Obviously, labor and logistics continue to be a bit of a challenge and we're still working through that but we think we have a good plan to address that as well..

And Mike -- and Robert, this is Mark. Just to add to what Michael said that full recovery comment pertained to Reynolds Cooking & Baking, to Tableware and to Presto..

And what's going on with the rest of the business?.

Well, the rest of the business is the Hefty. And I think we've talked about that quite a bit in that Hefty portfolio, we have to be very mindful of what competition is doing from a pricing standpoint. And so at this point in time, there's no further actions that we're taking around pricing..

Just to add to that, we've implemented mid-to-single digits in the first quarter on Hefty waste bag, a 9% increase in August, together representing a 14% increase in those products..

And the competition is lagging?.

Yes..

Great. Thank you very much..

Our next question comes from the line of Lauren Lieberman with Barclays. Please proceed with your question..

Great, thanks. I was curious about private label. And given the breadth of your portfolio, how you are thinking about or actually already communicating with retailers about if there's an inevitability that the pinch on the consumer wallet from such widespread inflation does cause some trade down.

I just would love to hear how, if it's in prior cycles but what you can offer in terms of how your portfolio can fair given the private label participation that you have..

Yes. As we've talked about on numerous occasions, Lauren, over the last couple of years since we went public, these categories through these cycles have remained very stable from a percentage of brands and store brands. And part of that because it's already highly penetrated. Of course, we closely watch this and manage price gaps.

But our studies show as part of the elasticity models that in the current environment that, that should hold going forward as well..

Okay, that's great. And then, my follow-up was I do recall having you guys having spoken in the past about there being like a magic price point in foil. And it's $4.99 maybe. But there actually was an element, at least in the foil business as there being a magic price point that elasticity kind of kicked in above that level.

There's incredibly increased demand in that category. So I'm just curious if you think that magic price point conversation goes out the window because of the greater usage and household penetration you've had in that category through the pandemic..

Well, we've gone far enough past that price point now with the two price increases that we've already announced and implemented in Reynolds Wrap and that price point was $3.99. We've long surpassed that in the last couple of months. And you can see from the category and our share data that it's continued to be very strong.

So out the window, I think, is a great comment. It's a very inflationary environment now and that was different when we crossed that price point previously..

Okay, that's great. Thanks so much..

Our next question comes from the line of Mark Astrachan with Stifel. Please proceed with your question..

Yes. Hey, thanks and morning, everyone. I guess just to start as a follow-up.

Could you maybe comment on where price gaps are today and whether private label is moving generally in unison with the multiple rounds of price that you've taken across relevant categories?.

Yes. So as you know, we have a large percentage of our business is also store brands and the pricing that we've taken on ours as well as competitive store brands have been consistent with the brands. So in most categories, there has been a consistent price gap maintained in most of these categories.

The exception may be waste bags and we're watching that closely. We have taken up as well as we've seen competition in store brand waste bags take price increases more than the brands..

Got it. Okay, that's helpful. And then, broadly speaking and maybe some of this is -- a is unknown and b is a bit optimistic. But if we kind of look forward to next year and, say, in a perfect world the spot rates for key inputs to either stay where they are or even come down.

Could you just remind how to think about this -- how much of the pricing -- it will be four rounds, I guess, by beginning of next year in key categories.

How much of that sustains, retains, versus how much is given back in just reductions of price, increased promotions, et cetera?.

Yes, that's a very -- it's a very dynamic question because it really depends on where commodities are at that point. But as we've said historically, the price increases that we take of commodities stabilize or retreat modestly, we don't reflect that in price decreases. And in this environment, there are other offsets that we've got to consider.

We have higher labor costs. We have higher logistics costs. We have higher input costs, including energy and packaging. And all of those have got to be considered as part of the pricing equation as we go forward even if commodities retreat..

Got it. Okay, thank you..

Our next question comes from the line of Bill Chappell with Truist Securities. Please proceed with your question..

Thanks. Good morning. Just as expected, another question on commodities and input inflation.

Just trying to understand how much of it right now is, I guess, specific to the company, thinking more like aluminum? And how much of it is also more what you would view as transitory? We had heard some other companies talk about kind of Hurricane Ida affecting resin prices and that, that would -- and shortages and stuff like that.

I don't think you really alluded to that.

But just kind of maybe as you look at your basket, how much you feel that does probably start to ease versus some of it being more, I guess, longer lasting than anything else?.

I think it's very difficult, historically, to accurately predict forward commodity costs. If we were able to do so, we'd price to that forecast versus the actual cost and that's what we're doing across the vast majority of our product portfolio. One thing is pretty certain. Resin is not going to retreat back to pre-pandemic levels.

We do see the modernization and stabilization occurring in resin but we're not predicting a big pullback. We'll watch it closely, of course. And I've talked to all the major resin suppliers personally and they're not predicting a major pullback either. On aluminum, it's been very dynamic and volatile. It is almost doubled at one point versus prior year.

It's retreated modestly in the last week. But it's up substantially versus 2020 levels..

Okay, great. And then, just a follow-up kind of on the upcoming holiday season. I feel like a year ago, you felt like the fewer family outings would -- I think it would maybe have a benefit just because -- fewer big get-togethers and lots of smaller family outings would be a lift for your products.

So how does that -- we characterize that coming to this holiday season.

I mean should there be just greater occasion usage? Or just how you're looking at that from a volume perspective?.

Yes, you're correct. We did predict that and our prediction turned out to be incorrect. We did not see the kind of holiday gatherings that we've historically seen, particularly for the Cooking & Baking products in 2020. And so what we're seeing in '21 is a return to the more normal holiday gatherings in 2021..

Great, thank you..

Our next question comes from the line of Andrea Teixeira with JP Morgan. Please proceed with your question..

So you lowered the EPS for the fourth quarter but your top line came in well ahead in the mid- to high teens. So can you break down a bit between volumes and pricing? I saw the increase of inventory. So it seems that you were prepared to meet the higher demand.

But given the puts and takes of each of the divisions, I think Tableware has these comps and Cooking & Baking as well in terms of volumes but you have tough comparisons in the Hefty Waste & Storage.

So how can we think about added to the price increase that you took in that decision? And how to think -- as we just discussed with you now from a holiday perspective, how to think about the puts and takes?.

Yes. So I was -- you probably recall, I did say that about $450 million -- we've seen a $450 million increase in materials, logistics and related costs. Now $50 million of that is higher than what we anticipated in early August. And so that $50 million is really driven by additional labor and aluminum costs and logistics costs.

If I broke that out, so about $30 million of that $50 million is materials and the rest of it is labor and logistics. So that's really the driver of why that's challenging us further..

Right. Yes -- no, that's helpful, Michael. But then in terms of the top line, kind of the mid-teens and high teens, I think, came in way ahead of consensus in our numbers.

So what informs you in terms of demand of the top line growth? Are you seeing early signs from your retailers that they are taking in way more inventory for coking? And for Tableware normalizing, how we should be thinking in to get that -- into that number for the fourth quarter?.

Before he answers that Andrea, can I just clarify, are you asking about Q4?.

Yes, Q4..

Okay. All right. Go ahead, MG..

I thought you were talking about the top line for Q3, where a lot of that was driven by the excess aluminum sale..

Yes. No, no worries. Sorry if I wasn't clear. It's more about like the forward looking, the fourth quarter. It seems it came in ahead. Of course, you have the pressure that led to your EPS being lowered.

But on the top line, what is your view of that status?.

So bottom line, I think it's timing, right? So there's no real change in the full year, right? So it's basically just about a matter of timing shift between Q3 and Q4..

Okay. And in terms of demand, you're not seeing what you just discussed that holiday season or inventory levels at the retail.

How we should be thinking of that?.

It's still early in the quarter but our guide holds that we're seeing strong demand in the quarter compared to prior year, particularly in Cooking & Baking. But what Michael is saying is the headwinds on higher commodity costs and logistics cost is approximately $50 million more than we've seen in early August..

That's fair. I'll pass it on. Thank you..

Our next question comes from the line of Wendy Nicholson with Citi. Please proceed with your question..

Hi, good morning. My first question has to do with the comment about the sale of the excess raw materials. I don't know if I've ever heard that before and it just as sort of a strange thing given the scarcity of raw materials and whatnot.

So can you just give us a little bit more color of what that was? Was there a mismatch in terms of raw materials you had on hand versus what you were selling? Or how did that come about?.

Yes. It was primarily in aluminum space. And over a period of time, we accumulated more inventory in that overall space than we anticipated, right? And so typically, when we have a situation where we have excess amounts and if the market conditions are such that we could sell it at a margin, even if it's a low margin, we'll exit that.

Because we don't want to get in the practice of speculating and holding on excess levels of inventory that can't be used in a reasonable amount of time..

Got it. Okay, fair enough. And I guess just longer term and I apologize for the second question but I think I'm near the end of the queue. So hopefully that's okay.

Just, Michael, what you said about sort of the commodity environment and resin prices aren't coming down anytime soon and how you're not taking pricing in Hefty sort of given the competitive environment, I'm just curious if you take a step back, for Reynolds in particular, just specifically you, how long do you think it will take? Or is it even in the cards for you guys to get back to kind of a high 20s gross margin? Had structurally changed? Do you think -- I mean I don't -- I can't imagine you or any of your competitors want to be structurally lower gross margin going forward.

But if you're not taking enough pricing to insulate margins in Hefty, what does it take for you to get back to that high 20s gross margin? Is that a two-year event, three-year event? Or has something just changed?.

Before Michael answers that, one thing I will just state is the math is going to change with these numerators and denominators moving around so much. So when we talk about high 20s, we need to calibrate less on percentages and more on actual dollars.

Michael?.

Yes. So overall, I believe we're taking all the right actions to return to pre-pandemic profitability, right? We've talked about the fact that our pricing actions are in place to recover by the end of first quarter, assuming that we don't see further increases in material costs. We're also taking great extensive cost reductions across the portfolio.

And we're managing within our existing footprint which is pretty critical, right? And that's underpinned by automation, innovation and continued -- as well as continued demand. Currently, there are three notable headwinds that we have to overcome; Waste & Storage resin costs in excess of current levels of pricing. We've talked about that.

The labor market remains tight. And then there's tight logistics conditions driving the efficiencies and rate increases. So we have to overcome those. But overall, I think we're well positioned and we're taking all the right steps..

And so just to put a fine point on that, when inflation stabilizes and the commodity costs stabilize, we will return to the dollar gross margins because of the actions we've taken in prices and increases and cost reductions..

Terrific. Thanks so much..

Our next question comes from the line of Peter Grom with UBS..

Good morning, everyone. I hope you are doing well. So maybe just following up on Wendy's question regarding the margin recovery. I know you mentioned 4Q margin should improve sequentially. But coming from down 1,200 basis points, that's a pretty wide range.

So can you maybe help us understand the magnitude of the improvement? And looking out to '22, when do you actually anticipate gross margin expansion given the comments you made around pricing offsetting commodities for three of the four divisions?.

Yes. I want to be -- I want to go back to what Lance said around gross margins, right? So overall, you got to factor in the fact that there's a math equation, right, in all the pricing that we've taken.

So that's going to continue to challenge us from a gross margin perspective, right? So I just can't overemphasize that if you guys are building your models purely on the margin perspective, you have to be cognizant of that..

And I'll just add that all through fiscal 2021, we've been taking price increases sufficient to recover commodity increases but it's been on a lag. And assuming the current commodity cost hold where they are right now, our Q1 2022 pricing actions will see us fully recovered on 85% of our business.

And a similar statement could have been made in August with regard to Q3 pricing actions but obviously commodities moved up from that point. So when they stabilize, as I said a moment ago, we will have recovered..

Got it. And then, maybe just asking on margins more around SG&A; it's clearly been a nice tailwind this year.

So just in theory, like if gross margin should improve, like how should we think about some of the between-the-line spending coming back? Or do you think you kind of have -- found some efficiencies that should gross margin improved or gross profit dollars improved that you would actually see that flow through to earnings?.

No, I would say that 2021 was primarily a lot of belt tightening that we did and it's not necessarily something that we will repeat in 2022. And of course, we'll provide that in more detail with our guide in 2022..

Great. Thank you so much..

Our next question is a follow-up from Rob Ottenstein with Evercore. Please proceed with your question..

Great. Thank you very much. Can you talk a little bit about the competitive dynamics on the waste bag side and compare that -- of how it's been over the prior years? It seems that there's a little bit of a change in that dynamic.

I don't know if -- whether it's around competitors looking to gain share, keep share, differences in what's going on in the channels or innovation. But it just -- it kind of feels like there's something a little bit different going on. So maybe you can kind of help us understand that a little bit better.

And why that part of your business should be lagging in terms of margin recovery?.

Well, as I said, we implemented 2 price increases that added up to 14% in the Hefty waste bags. And as a result, the price gaps, while they vary by channel, in most channels, they've narrowed. We continue to watch this category very closely. And as I also said, we're -- demand is exceeding our increased waste bag capacity.

So our focus right now in Hefty waste bag is improving case billing service to our retail partners..

Great. Thank you..

Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call over to Lance Mitchell for closing remarks..

Thank you for your questions. We appreciate your time this morning. Our revenue is growing and we expect accelerating revenue growth and sequentially improving margins in the fourth quarter driven by consumer demand, pricing and innovation and our expanded manufacturing and supply chain capabilities.

I want to particularly thank our employees for continuing to follow prevention measures and putting safety first as we grow our business in this exceptional time. Thank you and stay safe..

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation and have a wonderful day..