Procter & Gamble Q2 2024 Earnings Call Transcript

AlphaStreet
Provided by AlphaStreet
January 22, 2025
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Operator

Good morning Good morning, and welcome to Procter &a Gamble's Quarter End Conference Call. Today's event is being recorded for replay. This discussion will include a number of forward-looking statements. If you will refer to PNG's most recent 10-K, 10-Q and 8-K reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections.

As required by Regulation G, Procter Gamble needs to make you aware that during the discussion, the company will make a number of references to non-GAAP and other financial measures. Procter Gamble believes these measures provide investors with useful perspective on underlying business trends and has posted on its Investor Relations website, www.pginvestor.com, a full reconciliation of non-GAAP financial measures. Now, I will turn the call over to PNG's Chief Financial Officer, Andre Shulton.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Good morning. Joining me on the call today are John, Chairman of the Board, President and Chief Executive Officer; and John Chevalier, Senior Vice-President, Investor Relations. I'll start with an overview of second-quarter results. John will add perspective on our results and strategy, and we'll close with guidance for fiscal '25 and then take your questions.

Second-quarter results were largely in-line with our going-in expectations despite a high degree of volatility within the quarter. Ultimately, acceleration in organic sales growth, EPS growth, strong cash return to shareowners. Organic sales for the quarter grew 3%, volume contributed two points to organic sales growth, mix added one point and pricing was roughly in-line with prior year. The top-line results were better-than-anticipated in early December.

Our team was able to fully overcome the two-week outage of our global transportation management system provider and support strong late December customer orders ahead of early-January merchandising events. Growth was broad-based across categories with nine of 10 product categories growing organic sales for the quarter. Family Care was up double-digits. Home Care and Skin and Personal Care were up mid-singles. Personal healthcare, hair-care, oral care, Feminine Care, fabric care and grooming grew low-single digits. Baby Care was down low singles.

Organic sales in focus markets grew 4% and enterprise markets were in-line with prior year. Organic sales in North-America grew 4%, driven by four points of volume growth. Over the last six quarters, North-America has grown organic sales 7%, 5%, 3%, 4%, 4% and now again 4% on volume growth of 3% to 4% each quarter. The region delivered broad-based market-share growth this quarter with eight of 10 categories holding or growing volume share and eight of 10 categories holding or growing value share. Europe-focused markets organic sales were up 4%, driven by four points of volume growth.

Over the last six quarters, Europe-focused markets have grown organic sales on average 6% on volume growth of 3%. Latin-America and European enterprise markets each grew low-single digits and the Asia, Middle-East and Africa region declined low singles. Greater China organic sales declined 3%. While down versus prior year, this is a solid step forward in our second-largest market from a 15% decline last quarter. Notably, FK2 in Greater China grew 5% with strong growth during the 11-11 key consumption period and modest growth in travel retail. Underlying market conditions remain soft and we are trending back to a growth in Greater China.

Global aggregate value share was in-line with prior year with 28 of our top-50 category country combinations holding or growing share for the quarter. On the bottom-line, line, core earnings per share were $1.88, up 2% versus prior year. On a currency-neutral basis, core EPS increased 3%. The quarter included roughly $0.02 per share of incremental costs to manage through the transportation services disruption, almost entirely in cost-of-goods-sold. Core gross margin was down 30 basis-points and core operating margin declined 80 basis-points. Currency-neutral core operating margin decreased 50 basis-points. The quarter included a strong productivity improvement of 260 basis-points.

Adjusted free-cash flow productivity was 84%. We returned over $4.9 billion of cash to shareowners this quarter, $2.4 billion in dividends and $2.5 billion in share repurchases. To summarize results, accelerating organic sales growth, solid core EPS growth and cash return to shareowners, keeping us on-track to deliver within our fiscal year guidance ranges. Overall, good performance in what continues to be a challenging economic and geopolitical environment. Over to John.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Thanks, Andre. Our team continues to execute our strategy with excellence, enabling strong results over the past six-plus years, pre-COVID, during COVID, through a historic inflationary and pricing cycle and through geopolitical tensions. They've now delivered 26 consecutive quarters of 2% or better organic sales growth, averaging 5.5% organic sales growth over those 6.5 years. We've now delivered 8.5 fiscal years of 2% or better core earnings per share growth, averaging nearly 8% over that period.

This is the type of long-term -- sorry, turning to my page here, balanced top and bottom-line growth we strive to deliver, solid consistent growth over-time. As we expected, heading into the fiscal year, first-half results were below the guidance ranges we set for the full-year. And while recent consumer trends and FX rates make the balance of the year more challenging, we continue to expect stronger results in the second-half. Andre will discuss this more in the guidance update. We remain committed to the integrated strategy that has enabled our strong results and that is the foundation for balanced growth and value-creation. We highlighted many of the reasons we're confident in this strategy at our Investor Day in November.

If you weren't able to attend, I encourage you to listen to the replay on our IR website. To recap, we remain very disciplined in our portfolio choices, including some moves over the past year to strengthen our ability to generate US dollar-based returns. We're doubling down on superiority across all five vectors. No single vector of superiority can carry the day itself. It's all five together. The innovation plans to create and extend superiority across the business are very strong and we continue to leverage recent innovations by driving more trial and household penetration.

A few examples, Charmin with its patented scalloped edge, the biggest innovation in toilet paper in 100 years, continues to drive Charmon volume and value share growth in the US. We were first to launch the whole body deodorant sprays now across the Old Spice secret and native brands and we continue to drive trial in the growing segment -- in this growing segment of the category. P&G US deodorant volume and value share are each up nearly a point over the last year.

Dawn Powerwash continues to drive market-share up more than a point in the US market after nearly three years in the market. Swifer PowerMob has become the largest innovation in Swifer's history, contributing to 40% growth of the brand portfolio and driving a remarkable 35% growth in the category. We've launched our most advanced power toothbrush, Oral B IO10 early last year. We followed up with IO2, the first IO designed to help consumers trade-up from a manual toothbrush to a power brush. Early results in the US are very encouraging and we're expanding IO2 across major markets over the next several months. We just launched our best-ever whitening toothpaste, Crest 3D White Deep staining remover.

The new formula works in just one day-to dissolve the bonds that lock stains to your teeth and better prevent stains from occurring. The early trial period for deep stain remover is off to a great start. We're expanding Zivo, our insect killing sprays, mosquito and tick repellants and insect traps with worry-free ingredients inspired by plants' natural defenses against bugs. We're building distribution and trial and receiving very strong consumer ratings and reviews. OxyBoost power pods have just launched online with a great response from retailers and customers.

OxyBoost includes two times the OxyPower to provide Tide's most powerful clean. OxyBoost power pods will be available in-stores soon and will be following-up quickly with additional innovations in laundry detergents and fabric enhancers. Finally, tied EVO, our new laundry detergent developed on our breakthrough functional fibers platform, continues to exceed expectations in our Colorado test market, surpassing our year-one performance goals in just the first 12 weeks after launch. We're progressing through the last phase of supply-chain readiness and we'll be assessing our expansion plans in the coming months.

There are many more examples we could share considering the next six months six-month of innovations across Tide, Game, Downey,, Dawn, Cascade, Mr Clean, Pampers, Loves, Tampax always, always discrete, Bioty, Old Spice, Crest, Gillette and Venus brands. And that's just in the US. I hope you can see this is one reason we're confident in our prospects going-forward. We're improving productivity in all areas of our operations to fuel investments in superiority, mitigate cost and currency headwinds and drive margin expansion. We've extended our visibility to productivity improvement with each business unit building three-year cost-savings master plans, mirroring what we've done for years in our innovation program.

We're driving constructive disruption of ourselves and our industry, a willingness to change, adapt and create new trends, technologies and capabilities that will shape the future of our industry and extend our competitive advantage. We've designed and continue to refine and strengthen P&G's organization structure so that it enables P&G people to be fully empowered, agile and accountable focused on business outcomes to deliver the greatest value-creation. We call this an integrated strategy for a reason. Each part of the strategy needs to be delivered. It's not a menu to pick and choose from. Each element is incredibly -- incredibly important.

The real advantage comes from being able to do all of these things at the same time. The strategy is inherently dynamic. It adapts to the changing needs of consumers, customers and society. It demands that we not sit still. We continue to believe our best path forward is to double down on this integrated strategy, operating with a focus on driving market growth, creating business versus taking business to deliver balanced top and bottom-line growth and value-creation. With that, I'll hand it back to Andre to discuss guidance.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Thank you, John. So with half of the fiscal year complete, our guidance ranges for fiscal '25 are unchanged and remain consistent with our long-term algorithm. We've highlighted, we continue to expect the environment around us to remain volatile and challenging from input costs to currencies to consumer, competitor, retailer and geopolitical dynamics.

On the top-line, we are maintaining our organic sales growth guidance in the range of 3% to 5%. We continue to expect the markets in which we compete to deliver local-currency sales growth in the range of 3% to 4% for the year and our objective remains to grow organic sales modestly ahead of the underlying growth of these markets. On the bottom-line, our core EPS guidance range for fiscal '25 remains at growth of 5% to 7% versus fiscal '24 core EPS of $6.59. This guidance equates to a range of $6.91 to $7.05 per share.

Our outlook for commodity costs remains consistent with our most recent guidance, expecting a commodity cost headwind of approximately $200 million after tax, which equates to a headwind of $0.08 per share for fiscal '25. Since last earnings, foreign-exchange rates have moved sharply against us, we are now expecting a headwind of approximately $300 million after tax, which equates to a headwind of $0.12 per share for fiscal '25.

We continue to expect lower non-operating income benefits this fiscal year and a somewhat higher tax-rate versus the prior year. Combined, these additional headwinds amount to $0.10 to $0.12 to core EPS on-top of the commodities and FX headwinds I mentioned. With projected softer market growth and stronger foreign-exchange headwinds, we currently have good visibility towards the lower-end of the top and bottom-line guidance ranges. However, we will continue to push all levers in our control to offset these headwinds that are largely not in our control.

We expect adjusted free-cash flow productivity of 90% for the year, and we have plans to pay around $10 billion in dividends and to repurchase $6 bill $7 billion in common stock combined returning $16 billion to $17 billion of cash to shareowners for the fiscal year. This outlook is based on current market growth estimates, commodity prices and foreign-exchange rates, significant additional currency weakness, commodity cost increases, geopolitical disruptions, major supply-chain disruptions or store closures are not anticipated within the guidance ranges. Now I'll hand it over to John for closing thoughts.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

We're very pleased with the results P&G people have delivered in a very challenging and volatile environment, a good first-half of the year and a stronger outlook for the second-half. We remain focused on excellent execution of our integrated dynamic market constructive strategy aimed at delivering balanced top and bottom-line growth and value-creation, starting with a commitment to deliver a reasonably superior propositions to consumers and retailers. With that, we'll be happy to take your questions.

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Operator

If you have a question, please press star followed by one on your phone. If your question has been answered or you would like to withdraw your question, please press star followed by two. Your first question comes from the line of Dara Vasinian of Morgan Stanley. Please go-ahead.

Dara Mohsenian
Analyst at Morgan Stanley

Hey, good morning, guys. I just wanted to drill down a bit more short-term into organic sales growth for the back-half of the year, given some of the volatility over the last year, you've talked historically about the OSG split between the robust 85% in-country mix versus a lagging 15% the last few quarters. Can you just give us a bit of update on the performance in fiscal Q2 in each of those buckets? Do you think you're on-track for continued improvement in the 15% in the back-half of the year as you look versus Q2 and also just sustainability of growth in that 85% that's stronger, presumably driven by the US and Europe? Thanks.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Morning, Dara. Thanks for the question. I'll take a crack at it and John will jump-in. So if you look at quarter two and I apply the same logic that we've been using to explain the divergence of the majority of the business versus some of the tougher markets. 85% of the business, so comprising of the US, Europe and Latin-America, the Latin-America and Europe enterprise markets, that 85% continues to grow at around 4%. What has improved is the 15%. So the performance of the balance of the markets, mainly the Asia, Middle-East, Africa markets, but the significant improvement in Greater China. And so China was down 15% organic sales in-quarter one and was down as we mentioned in the prepared remarks, only 3% in-quarter two.

So we see encouraging momentum towards recovery and hopefully a more neutral picture as we go into half-two. And that's exactly what we're expecting as we go into the second-half of the year. We expect the US to continue to grow at the pace that we've seen in-quarter two and quarter one. We expect some increased momentum across Europe and Latin-America, specifically as comps ease versus the base period.

And with that, if we are -- if we are combining hopefully a little bit stronger growth in North-America, easier comps in Europe, L.A. and Asia, Middle-East, Africa. And if China continues to move towards a more neutral contribution to sales growth, that would actually allow us to be at the midpoint of organic sales growth guidance, maybe a little bit higher. Conversely, if we saw weakening across some of the core markets of North-America and Europe, all we saw China returning to more negative territory, that would move us to the lower-end or slightly below the current organic sales growth guidance. Our base-case, Darah, to summarize, continued strong performance, around 4% in the 85% of the business continued recovery on the 15%.

Operator

The next question will come from Lauren Lieberman of Barclays. Please go-ahead.

Lauren Lieberman
Analyst at Barclays

Thanks. Good morning. And so Andre, I think you were kind of running through projected performance for P&G's business, but I was hoping you could also comment on what you're seeing in terms of consumer behavior and dynamics. I think in December, you guys had flagged a little bit of a softening in the consumer environment in the US as maybe it's something that sticks, maybe it doesn't. But would just love to get a read on that and same in Europe, sort of the consumer dynamic, not just your own performance and market-share trajectory? Thanks.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Yeah. Hey, Lauren. Generally, I would describe the consumer in our categories, which are again nondiscretionary and very focused on performance as stable. In Europe, specifically, the market continues to grow at around 4% in focus markets and in double-digits actually in enterprise markets. Our ability to continue to grow ahead of that, I think is visible in the volume share numbers. We are growing volume share about 50 basis-points in focus markets and 60 basis-points in enterprise markets. Inflation is down in Europe to about 2% and we see a relatively stable environment, which we expect to continue going into half-two, and we are investing in strong innovation in half-two to benefit from that stable consumer environment.

In the US, the current quarter has been a bit more volatile in terms of phasing of consumption. We saw very strong consumption in October, driven by hurricanes and by port strikes easing off a little bit in October -- in November and then coming back-in December. So it was volatile. But when I step-back, I would characterize the situation very similarly to the European consumer, stable in our categories. Market growth continues to be around 4% and volume growth continues to be around 3%. And again, our job is to encourage consumption in our categories with strong innovation and communication, which we're doing and continue to do across half-two.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

The only thing I would add to Andre's comments is in terms of reflecting on consumer behavior, we're also seeing continued flat to declining private-label shares in both the United States and in Europe. So that again is relatively reassuring in terms of the stable consumer that Andre rightly referred to

Operator

Your next question will come from Steve Powers of Deutsche Bank. Please go-ahead.

Stephen Powers
Analyst at Deutsche Bank Aktiengesellschaft

Thank you. Good morning. I guess, Andre, I'm a little surprised that your currency outlook as it relates to the impacts on the top-line didn't move off the negative 1% call you had in-place as of October even as the after-tax profit impact stepped-up by the $300 million. So maybe you could just talk about any key moving parts there and whether you've assumed further currency movements or if the full-year now sort of effectively assumes spot rates as we've seen in the last few weeks? And then relatedly, I guess I'd love a little bit more discussion of the productivity and pricing levers you have available to you as an offset to those dynamics and whether you see any limitations to implementing them over the balance of the year? I'm asking that in the context that historically 3Q, 4Q gross margins stepped down sequentially. So I think your guidance assumes some fairly strong operating leverage over the balance of the year in SG&A, but just wanted to see if you could clarify those moving parts. Thank you.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Good morning, Steve. I think we'll -- we are forecasting right now at spot rates as we always do, both on the on the P&L side and the organic sales growth side. And Europe will see -- we're seeing high volatility in currencies, obviously that are moving on a daily basis based on commentary. So we'll reserve our ability to update here, but for now, we're reflecting spot rates. The impact of foreign-exchange rate will mostly hit in the second-half. So we saw a lot of the commodity impact in the first-half and the corresponding impact of FX will be mostly in half-two. And that is built into our guidance logic that we've communicated.

Our ability to deal with foreign-exchange as with any headwind is a combination of productivity, which we feel very good about for the year across all productivity buckets. So we're confident in our $1.5 billion productivity guidance on cost-of-goods-sold and the EUR2 billion guidance overall, including SG&A and pricing levers. Pricing is probably most pronounced in enterprise markets where we see strong foreign-exchange rate exposure, but it's going to be a combination of both. All of that is baked-in, in our guidance commentary. But again, we'll watch this closely because there's a lot of volatility in this, as you know.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Just on pricing, Steve, the -- you know, our business model is hopefully was reflected again in my comments this morning is heavily innovation-based. It's at the heart of everything we do. And that's the primary enabler of modest amounts of pricing as we move forward. If you look at our history, again, as a source of potential confidence in our ability to continue to execute modest amounts of pricing, even as Andre said in the focus markets, pricing has been a neutral or positive contributor to our top-line growth for 19 out-of-the last 20 years and for 54 of the last 57 quarters. Andre mentioned, we have very strong second-half innovation of programs across markets. And so that should enable us to continue to put some upward pressure on the top-line. Again, modest, but we're in a pretty good position with all of that innovation.

Operator

The next question will come from Brian Spillane of Bank of America. Please go-ahead.

Bryan Spillane
Analyst at Bank of America

Thank you, operator. Good morning, guys. So just a question or maybe two on China. One, just the 3% in the quarter, just how did Chinese New Year's impact that -- impact that? So I guess, is that kind of reflective of consumption or is there any timing shift shipment versus consumption? And then maybe just more broadly, John, you know that the market is changing, and does it create opportunities? Are you looking now to kind of use your position as a position of strength and expand in China while the market is soft. Just curious if the change in the marketplace at all has changed the way you're thinking about the market strategically?

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Let me answer the first part.

Andre Schulten
Chief Financial Officer at Procter & Gamble

I can. Hey, Brian. So I think that the China results are not impacted by heavy phasing within the quarter that was phasing in China on the timing of pre-shipments for 111, but that kind of evened out across the quarter. So the progress is really what we had anticipated. We're getting into easier comps, part of that. And part of that is SK2 is returning to growth in China at 5%, which is encouraging to see. And the last point I'll make is on the core brands, we're making progress. We are innovating on hair-care across, head and shoulders. We're innovating on fabric here. We're innovating on Ole and that is driving progress. We are carefully investing in the fastest-growing channel in to ensure that we create value there, but that allows us to now grow share in that channel.

And the last element is, I think the go-to-market interventions that we've made. We talked about in the last call where we improve our collaboration and synchronization with our core distributors is paying dividends. So all of that is moving in the right direction. I want to be clear, I don't think China is out-of-the woods. This will continue to be difficult. It will continue to be volatile as reflected in my guidance commentary, that volatility can drive us to the midpoint or the lower-end of the guidance. And so we don't want to get ahead of ourselves, but it's good to see the trend going more positive.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

And you make a very, very good point on taking advantage of significant change that's occurring in the marketplace, both with regard to consumer behavior and with regard to our customer behavior and channels and we intend to do exactly as you described, which is to take advantage of those changes. One of the -- there are a couple of things that I just want to bring a little bit more focus to that are very, very important.

One is, if you look at our distributor channels, largely feeding the wholesale markets in smaller grocery stores, they were being paid based on total PNG business and we've changed that. So they're now being paid by category. So they have to deliver against each of the categories that we have products in order to be fully compensated. That might not seem like a big deal, that's a big deal. It changes behavior significantly. We've also moved -- we've taken advantage of all the changes that are going on to move our China operations even closer to, for example, how we manage things in the US or focus Europe in terms of end-to-end, meaning that the categories own everything from the front-end of innovation all the way through to the customer discussions. And that wasn't fully the case say two years ago, even a year-ago. So those are -- those are big changes.

The third big change is really reorienting the conversation that we're having internally and externally with our customers to one of market growth and demonstrating how we can be the biggest drivers, their strongest partners in driving that market growth, which is something that everyone wants badly. So that's another example of taking advantage of the current situation to become even stronger and more relevant to our customers. So thanks for asking that question. I think it's an excellent one and it's something we're very much focused on.

Operator

Your next question will come from Peter Grom of UBS. Please go-ahead.

Peter Grom
Analyst at UBS Group

Thanks, operator, and good morning, everyone. Hope you're doing well. I wanted to get just some perspective on the input cost environment. I recognize you maintained your outlook for the $200 million after-tax headwind, but we've seen some volatility across some of your key raw materials over the past few months. So Andre, can you maybe just give us or unpack what you're seeing or expecting across your key cost buckets? And then just kind of looking at the first-half impact and the full-year guidance, you kind of alluded to Steve's question. Are you anticipating input cost deflation in the back-half of the year when we think about our gross margin bridge? Thanks.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Good morning, Peter. Input costs for us, obviously, you can appreciate as a wide variety of different materials and commodities. What I'll tell you, which I think is most relevant for what you're after is any variation that we see now versus what we already incurred in half-one, which is the majority of the EUR200 million impact that we are talking about will likely not hit the current year P&L. Because of variance holding and because of our contract structures, any major deviation in terms of oil prices outside of maybe transportation will impact half-one of next fiscal year.

Most of our materials and commodities will impact the first-half of next fiscal year. So we feel relatively good about that end-of-the equation because it provides stability for the second-half, where more of the volatility is again in foreign-exchange rate and that doesn't mean we don't look at our input costs carefully because as we said, we need to get ready to deal with it in the first-half of next fiscal year, which then comes to John's point on appropriately developing pricing plans with innovation, productivity programs, et-cetera. But the variability in the current year, we believe is going to be limited.

Operator

Our next question will come from Andrea of JPMorgan. Please go-ahead.

Andrea Teixeira
Analyst at J.P. Morgan

Thank you, operator. Good morning, everyone. If we step-back from the tone on the first-quarter and then now the second-quarter of fiscal, in regards to the range of guidance for both organic and EPS growth, is it fair to say you're feeling a bit better about getting to the midpoint on the top-line, but EPS more pressured given the increased headwinds in FX. I mean, I just want to understand how it changed and then if so, if any changes, it seems like your productivity is coming in or even your operating leverage is coming in better-than-anticipated or better than feared, if you will?

And related to that, just a clarification about the disruptions you called out in December in one of your suppliers. I've been getting questions regarding there is anything in terms of selling, sell-out. I understand there wasn't anything material in the quarter, either like a catching-up to that or anything that we should be aware of into the fiscal 3rd-quarter? Thank you so much.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Good morning, Andrea. So related to guidance, what I'd tell you is what I mentioned in the prepared remarks, right? At the moment, when we -- when you look at foreign-exchange rates, you look at what we've delivered in the front-half of the year, we would say we have good visibility and confidence to the lower-end of the guidance range, both on organic sales growth and on core EPS. That doesn't mean that we don't have a shot at delivering the middle of the range. And as I said, if we continue to make-good progress in China, if we continue to see some easing of the tensions in the Middle-East and therefore business picks up, if Europe and North-America continue to deliver, we have a good shot at the top-line around the midpoint of the range and corresponding EPS. But at the moment, I would point you to the lower-end.

On Transportation Management system interruption, look, we wanted to give you guys visibility to what we were seeing. We -- when we experienced the disruption, we saw a backlog of orders building up that would have been worth about 60 to 70 basis-points of the quarter. And we had assumed at that point that we would get rid of half of that backlog through intense work by the team to operate a backup solution and get us back on the main operating system. The team did way better. They were able to not only work-through the full backlog and get us back on the operating system faster, they were also able to then process strong orders in late December. There is no impact quarter-over-quarter driven by the transportation management system outage. And so no unusual effect to consider there. Just great work by the team to get us through this without any impact on the quarter.

Operator

Question will come from Robert of Evercore ISI. Please go-ahead.

Robert Ottenstein
Analyst at Evercore ISI

Great. Thank you very much. Just first a clarification on China and apologies if I missed it, but I know that you're doing better, your brands are doing better, SK2 is doing better, but just wanted to get any commentary on the Chinese consumer, the health of the Chinese consumer as the quarter developed and then into January. So just as a follow-up on that.

And then my main question is on innovation this year. You sound more upbeat positive on this and excited in terms of what you're bringing out in calendar 2025. Is there any way to quantify that versus prior years? Any way to think whether it's incremental shelf-space or you know the expected impact of the business on the top and bottom-line so that we can kind of try to model that. Thank you.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Thanks, Robert. From a Chinese consumer standpoint, as Andre intimated in some of his commentary, it's still a challenge. So that really hasn't changed significantly. There are signs though of some improvement. What am I talking about? So for example, if we just look at the number of Chinese travelers to Korea and Japan, it's up pretty significantly quarter-on-quarter. We actually see that reflected in our SK2 business in those countries. So that would indicate, you know, more confidence and a willingness to spend. This -- the growth of SK2 itself and actually consumption growth in that business is a little bit ahead of even our shipment growth is an indication of confidence that's, as you know, a very premium-priced product but the broad swath of society is not confident and is still struggling. And that's why Andre says we're not out-of-the woods. I agree with that statement and that it will take some time still to get to dependable growth in China.

Andre Schulten
Chief Financial Officer at Procter & Gamble

And the best data we have, Robert, to confirm what John was describing, past three months market in our categories in dollar terms is down 5%, past 12 months was down 5%. So macro consumer environment pretty much stable, but not positive.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Relative to innovation, I don't have a numerical ability to describe the strength of our -- the innovation that's coming to-market over the next six months vis-a-vis a year-ago. But we are relatively -- we have gained confidence in that program in-part because of what we're seeing in the marketplace and what we're seeing in terms of consumer response to, for example, the Tide Evo test market in Colorado, again, we've delivered what we expected to deliver in the first year we've delivered in 12 weeks. We're looking at the continued growth of some of our premium innovations in terms of household penetration and market-share. I went through a litany of those examples earlier and then of course, there are some things that I'm not at liberty to talk about, but in general, your observation in terms of, as you describe, excitement or confidence in our innovation program is strong.

Operator

Our next question will come from Bonnie Herzog of Goldman Sachs. Please go-ahead.

Bonnie Herzog
Analyst at The Goldman Sachs Group

Thank you. Good morning. I guess thinking about your guidance this year, if your organic sales come in at the lower-end as you kind of touched on, if trends decelerate further and thinking about gross margin tailwinds likely moderating this year, curious how much flexibility you have to deliver on your EPS guidance range? And then in the context of that, do you see a potential that you might need to lower your reinvestment levels to deliver on your bottom-line guidance? Any color on just how to think about your ability to continue to reinvest in your business? Thank you.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Hey, Bonnie, when we went through the years with really significant headwinds in terms of currency, commodities and FX, and I'm talking there about a 55%, 0% reduction in our profit over a two-year period because of those items. We increased our spending on innovation. We increased our spending on commercialization of that innovation and we grew earnings modestly. So that's our mindset. And I just described a strong innovation pipeline, we will fully support that pipeline and frankly, I don't think it will, but if that means that we come in a little bit lower, then that's what we need to accept and we'll be very transparent and clear about that if that were to be the case. Currently, it's not. But we're going to continue to invest in both innovation and commercialization of that innovation.

Operator

Next question will come from Filipino Felorni of Citi. Please go-ahead.

Filippo Falorni
Analyst at Smith Barney Citigroup

Hi, good morning, everyone. I wanted to ask a little more color on the enterprise market business. You talked about Europe enterprise market still growing solidly. Maybe can you give a little more color on Latin-America? How is the consumer and general health there in key countries like Brazil and Mexico? And then on the Middle-East, you're starting to cycle easier comps. Is your expectation of a return to growth in the second-half of '25? Thank you.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Good morning, Filippo. L.A. LA in aggregate delivered 3% growth in this quarter on a base of 17%. So quite impressive base period and continued growth across the markets. If you look at the consumers, I would describe Mexico as a more difficult right now, but we are making good progress and I have great confidence in the half-two plans that we are executing and the same is true for Brazil. So my expectation would be an acceleration in Latin-America, partially driven by the base becoming a little bit easier, but also given strong plans across those core markets. Europe enterprise markets were up a point in the quarter on a base of 8% growth.

Encouragingly, we are growing volume share in enterprise markets in Europe by 60 basis-points. Market growth still very strong. And so we feel-good about the market context, but also about our own ability to execute. I was just there with our COO last week. The innovation plans are very strong. The go-to-market plans are very strong, the stores look phenomenal and the opportunity is huge and the profitability we have in both Latin-America and in Europe enterprise markets allows us to remain fully invested in that innovation and the support thereof. AMA, Asia, Middle-East, Africa, look, the main driver here will be stabilization in the Middle-East. We hope that progress is sustaining and we can go from there, but I think it will remain a more difficult environment for us through the second-half.

Operator

Your next question will come from Chris Carey of Wells Fargo Securities. Please go-ahead.

Christopher Carey
Analyst at Wells Fargo Securities

Hi, everyone. Thank you for the question. I'd like to ask a few category-specific questions. I'll count this as one single category question if you'll allow. In the family care business, the double-digit growth you saw, would you attribute most of that to timing with some sort of reversal expected in the next quarter in the oral care business, it's the second-quarter consecutive of low-single digit, which is a bit below trend than what we've seen over the prior one year-one year period. And then just in the baby business, you did highlight that you'll be making some merchandising investments.

John spent some time on the resilience and longer-term history of pricing at P&G as a contributor to organic sales. Clearly, this is one of those categories that has been a bit more challenged over-time and you're leaning in a bit more on investments. Can you expand on that a bit more? What drives those sorts of decisions and why now? So just those three kind of category questions and any kind of timing dynamics specifically with Family Care that we should be thinking about going into next quarter? Thank you very much.

Andre Schulten
Chief Financial Officer at Procter & Gamble

All right. Good morning, Chris. Let me take them one-by-one. So Family Care, we saw very strong shipments and very strong consumption most importantly. And as I mentioned, we had the port strike in October and we had hurricane in October. Both of those led to pantry loading from a consumer standpoint. So there was some pantry upstocking clearly in October. And we also saw strong shipments in late December in anticipation of a January merge event that's typical. We've had the same thing happen last year, but there isn't some increased pantry inventory.

History would tell us that consumers tend to hold-on to that pantry loading for quite a while. We've seen this during COVID and we always expected it would come out, it never did. So hard to say what the going impact is for the year. I think we've appropriately protected for that in the guidance, but it's pantry inventory loading and we expect the majority of that will sustain through the -- through the next quarter.

Ora Care, I would point you to two things. Number-one, we're rolling out the full lineup of IO innovation, both IO 10, so up the value chain and IO2 down to lower-price points. And as we do that, I think the full opportunity across the Power Oral Care business will become more accessible to us. And even in high penetration markets like in Europe, lowering the price point with IO2 will give us access to more consumers. We have a very strong marketing campaign building on the insight that power oral care removes 100% of plug, while manual brushing only removes 50% of plug that seems to resonate well with consumers. We also have the strongest paste innovation program, including heavy focus on whitening where we had an opportunity to strengthen. So all of that gives me confidence that in the second-half, we'll see acceleration.

Last point on baby, the reason why we want to make investments on baby, both in communication and potentially in promo is due to innovation. We have talked for a while about the opportunity to continue to innovate across the entire lineup. We've seen the love's innovation now hit the market in September. We see sequential share growth on. So we want to give consumers the incentive and the opportunity to try those propositions while continuing to drive the premium end-of-the portfolio, swaddlers and cruisers. So it's really about a combination of combining innovation with strong in-store visibility and incentive to try and strong communication to ensure consumers understand the benefit. And all of those the foundation to create growth in baby, which is one of the tougher categories to do so.

Operator

The next question will come from Olivia Tong of Raymond James. Please go-ahead.

Olivia Tong
Analyst at Raymond James

Great. Thanks. Good morning. Sorry, a two-parter here. First on China, you mentioned you expect continued normalization. So how much of this is category growth versus your market-share improvements as you cycle less demanding comps? And I asked that because comps aren't particularly demanding in second-half, of course, but they do get a little less easy than the minus 15% that you're comping this quarter? And then just if you could talk briefly about the level of investment necessary to achieve your broader goals, not specific to China, but more broadly, does it have to go higher or can you leverage many of the brand support investments that you talked about in and-answer to a different question that you've already made. Thanks.

Andre Schulten
Chief Financial Officer at Procter & Gamble

So hey, Olivia, on China, what I tell you is I -- it's a bit of both, right? We would expect some improvement as the market cycles to more forgiving comps. And we for sure would expect some improvement in our business. We talked about all the interventions we've made on innovation, on-brand building, on go-to-market, including the distributor model that John elaborated on. So it's going to be a bit of both. Unfortunately, a bit of both means we have two hard-to-predict elements here. And so we hope this is going to result in a more neutral organic sales growth contribution of China in the back-half, but we also are fully aware that this could go either way.

From an investment standpoint, my take on this would be, you see us adjusting based on the opportunity. We have 30 basis-points of incremental investment in the front-half. That was more moderate than what you would have seen in the base period or even a couple of years before. And some of the experimentation that we talked about and how far can we push frequency and reach, I think we concluded where it makes sense and where it doesn't make sense. So we're now more clear on where that playbook goes. And we're focusing mostly now on optimizing within that playbook and improving content quality as we go into the half-two innovation. And so we will continue to invest where it makes sense, albeit probably at a slower pace than what we've seen in the last years.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Yeah, I would just add a couple of things. In response to your question, Olivia, just one nit for clarity. The minus 15 isn't what we're comping from an index standpoint. That's a sequential number last quarter. So just for clarity on that. The -- on in terms of investments of investments in commercialization and advertising and other forms of marketing. I agree with what Andres said. At the same time, he talked about optimizing within that context, we're making significant strides to be more profitable in the fastest-growing categories or fastest-growing channels in the country. So while we will be opportunistic in investing, I expect as well we'll be saving. For example, bringing the support of key opinion leaders in-house and utilizing some of our R&D resources for that activity. That saves a bunch of money and our testing shows that it's as are more effective. So it's not as simple as the level of reach and frequency, which are important, but it's also the cost of delivering that, which we're working to bring down

Operator

The next question will come from Kevin Grundy of BNP Paribas. Please go-ahead.

Kevin Grundy
Analyst at BNP Paribas

Great. Thanks. Good morning, everyone. I'd like to pivot to capital allocation, two-part question. One, just updated thoughts on appropriateness of M&A as a potential avenue to drive shareholder value and what looks like it's going to be a slower-growth environment here. And then two, with respect to buyback, consumer staples stocks, including proctors have underperformed the market, valuations are below historical averages versus the S&P 500. In that sort of context, has there been any school of thought internally to accelerate the pace of share repurchases as an avenue to drive shareholder value. So thanks for that.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

I'll take the -- thanks, Kevin. I'll take the M&A question. Andre can add to it and then move to your share repurchase question. The answer is the same as it's been for some period of time here, which is that it starts with in most of our categories, we wouldn't contemplate acquisition being part of the growth model in-kind of any economic environment simply because our market positions as typically the number-one and sometimes both the number-one and number two brands would preclude any acquisition of any size.

There are two categories that we compete in that are attractive, that we like were -- that are much more fragmented in their current constitution. And we've talked about those before. One is personal healthcare, another is skin and other parts of specialty beauty. We don't -- we're going to be -- continue to be extraordinarily responsible in regards to pursuit of any potential acquisitions. We don't engage in hostile attempts. So basically assets have to be available and then we have to be able to make sense of the purchase of that asset in a way that leaves us highly confident that we can create value. So that's kind of it from a an M&A standpoint.

Before I turn it over to Andre, just one comment on share repurchase. As Andre said in his prepared remarks, we're going to be returning between dividend and share repurchase $16 billion to $17 billion to shareholders this year. And as a general element of our capital allocation approach, I would expect significant cash return to shareholders to continue to play prominently. But with that, I'll turn it over to Andre.

Andre Schulten
Chief Financial Officer at Procter & Gamble

I agree with everything you said on M&A, Joan. It's nice not to have to do it. So we can do it if it makes sense. On the capital allocation, Kevin, nothing new here. We will continue to aggressively fund the growth in the business. We will continue to pay the dividend, likely increase the dividend. We will do M&A if we find a target that makes sense and is willing to play. And the rest goes to shareholders in share repurchase. That's really the simple logic that we apply. So it's an outcome rather than a target.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

And we don't -- there isn't a lot of, if you will, publicity about a special share repurchase program or a newly approved share repurchase program and why is that? It's because we do it every year and we do it at the highest levels we can. And as Andre said, we'll continue to pursue that approach.

Operator

Your next question will come from Mark Astrakan of Stifel. Please go-ahead.

Mark Astrachan
Analyst at Stifel Nicolaus

Great. Thanks. Good morning, everybody. Two quick ones. Just remind us on the approach to offset FX pressures where pronounced in places like LatAm, where the dollar has strengthened via pricing. And then just returning to SK2, it seems a little bit like the performance was a little bit better-than-anticipated at Investor Day where I think Alex had highlighted Mainland China improvement would suggest obviously on China, a little bit weaker at the time, but your commentary would suggest otherwise. I guess is part of the improvement that the Chinese consumer perception of the brand, the geopolitic angle, that improved? Is it category improvement? Is it both? Just any color there would be helpful. Thank you.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Hey, Mark, good morning. Approach on foreign-exchange is not different. So I just want to confirm we will -- in enterprise markets, mainly, there's a relatively good market discipline to price for foreign-exchange rate. We want to be part of that and we will combine pricing with innovation wherever that's possible and reasonable. That approach has worked well in Europe enterprise markets in LatAm and across, and we'll continue to follow that playbook.

On SK2, you're right. I think it's a -- it's actually good to see the brand strengthening with the China consumer, number-one, the whole dynamic of Japanese brand sentiment, I think is easing. We most importantly, I think, have made significant investments in brand-building. As soon as we were able to get back into broad media coverage, we've done so with very strong amplification of the benefit and the efficacy of the product, which has worked well. We've upgraded our department store presence both from a counter standpoint and from a personnel standpoint to ensure that consumers can see us, find us at high-quality locations. And we've innovated.

We've launched a super-premium proposition called LXP, which is doing very well in the market and again is contributing to the brand equity that we want to build and reestablish. So all of that is contributing. And the last element I would say you consumption -- I would tell you is consumption is actually stronger than organic sales. And specifically in travel retail, the sales number is still negative, but the consumption continues to return in-line with John's earlier comments that we also see increased Chinese travel to two different locations. So generally, I think more positive outlook on SK2, you're right than what we would have given at Investor Day.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

And just to build a little bit on that, the SK2, I mean, you never know-how you've got this cross current of geopolitical sentiment and brand sentiment, as you rightly point out in your question. The geopolitical dynamic, one of the ways we track that in terms of how it affects consumer behavior is through social media references. And those are down significantly in terms of -- so in other words, the number of positive comments is much higher than the number of negative comments and that's continued to improve.

So yes, as Andre confirmed, that is an improvement there is part of what's going on. The -- but the branding part is that he also mentioned is an equally significant component, which he suggested. If you look at the premium skincare segment right now, SK2 is the fastest-growing brand within that segment. Now growth on SK2 is going is going to be a strange to follow simply because of the base period dynamics. But so the important thing to look at is what's happening to consumption trends quarter-on-quarter. And as Andre indicated, that that's given us some confidence.

Operator

Our next question will come from Tamil Gotrawala of Jefferies. Please go-ahead.

Kaumil Gajrawala
Analyst at Jefferies Financial Group

Hey everyone. Good morning. I know to Chris' question you answered for a few different categories, but if we can maybe dig in a little bit more on consumer health or healthcare, it's -- the comp was a bit easier, slowed down a little bit, if just anything in there that we should be aware about be interesting to know? Thanks.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

The trends there, you know, year-to-year, quarter-to-quarter are most impacted by the cough-cold season, which really hasn't existed significantly, at least through the month of December, which is the period of time that we're reporting results for currently. We continue to be very happy about the growth delivery and the growth prospects for the broader PHC business and have brands outside of the cough-cold space that are growing very well. By the way, within the cough-cold space, we continue to build share. So that's kind of what's going on and I don't want to wish for illness. But that's less illness, we'll have slower-growth, more illness will have higher-growth

Andre Schulten
Chief Financial Officer at Procter & Gamble

Our family is contributing heavily to that growth by the way.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

And I'm sitting right next to you. That's not good

Operator

Our next question will come from Edward Lewis of Redburn Atlantic. Please go-ahead.

Edward Lewis
Analyst at Redburn Atlantic

Thanks, operator. Yeah, I just wanted to, I guess, look at the components of the focus on CBO superiority plan, particularly on the consumer value side. So I look at this quarter, it's another quarter of -- it's flat pricing, but if I look-back over, say, the last three years, on average, pricing is still up around 4% and you're clearly getting positive volumes. So I wonder if you just talk to sort of what the consumer value side of the focus on superiority is telling you and whether we should then -- or whether you should have confident about possibly being able to take more pricing sort of in subsequent quarters or years with the evidence you're seeing from the data you're getting from the focus on security plan.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

I think we will be taking more pricing as we move forward as we bring a more -- as we bring innovation that produces a more efficacious product and a better experience to consumers, the data that you referenced do indicate to us that we have the ability with that combination to continue contributing to the top-line through a modest amount of pricing.

Operator

The next question will come from Linda Bolton-Weiser of D.A. Davidson. Please go-ahead.

Linda Bolton Weiser
Analyst at D.A. Davidson

Yes, hi. You've talked quite a bit about beauty in China and certainly the SK2 improvement is contributing to that beauty improvement we saw in the quarter. But I was curious about the US side of it and whether -- what you're doing in OA in the US like focusing more on Regenerist as a core grower, if that's paying any benefits in terms of market-share changes? And also just in beauty overall, it was a little curious why volume was actually down 1% for the whole category -- for the whole segment for you, whereas volume had been sort of flat-to-up in the previous quarters. Thank you.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Hey, Lena, good morning. Look, let me start with North-America. And it's similar. Beauty is a story of pockets of real strength and some pockets of opportunity. And that's true for North-America and the globe. If you look at our antiperspirant and deodorant business in the US, it's growing 11%. And we are the number-one whole body segment brand or have the number-one position across our brands in that whole body segment. Personal care, North-America is growing 16%. So again, real source of strength. Hair-care in North-America is up 3% on a base of 15%, so real strength. As you point out skincare is an opportunity. Skincare is down in North-America, double-digits and we are working to increase the innovation, specifically on the jar business.

The new innovation that we've launched, so Old Meltz and, those are doing very well, but they are just not big enough yet to offset the decline in the core business of jars where we saw some distribution changes in the club channel. But also I think a shift in consumer benefit space that we need to address. Similarly, at the globe, same logic, strength on APDO, strength on personal care, strength on hair-care with an opportunity on skin care and again, same dynamic there. The only point I'll call-out in China, for example, the brand has been historically focused on tone benefits. The market is shifting more towards anti-aging or multi-benefit products. And so we've launched innovation there, which is going-in that direction. So work to do on skincare, real strength across the other categories within beauty.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

Relative to your question on volume, Linda, China -- beauty broadly has a higher presence in China than any of our other categories. And we're still not out-of-the woods. We'll use that expression again on volume in China. So while sales were 3%, I believe volume was minus 6%, I feel comfortable that's going to continue to improve. But when you look at beauty volumes, you have to realize that China waiting, which in many periods has been a very positive thing, but now presents a challenge.

Operator

Next question will come from Robert Moscow of TD Cowen. Please go-ahead. And Robert, your line is live. You may be muted.

Robert Moskow
Analyst at TD Cowen

Sorry about that. Can you hear me now?

Operator

We can hear you.

Robert Moskow
Analyst at TD Cowen

Yeah, my apologies. I was -- I wanted to ask about pricing in a different way. This is the first-quarter where pricing has been flat in many quarters. And is there any scenario you could imagine where pricing turns negative? Or is there just a line in the sand here where there you -- that just won't happen. And then secondly, on mix, mix is positive and I wanted to know what's driving that. Is it geographic? Can we assume that if Europe and US continue to outperform, will that be positive to your mix or is there something within the categories that's driving debt? Thanks.

Andre Schulten
Chief Financial Officer at Procter & Gamble

I can start, John jump-in, please. So price is an outcome that consistently helps our organic sales growth number. I think John mentioned this 54, 57 quarters from the contribution of price-mix is our organic sales. And the timing of pricing outside of foreign-exchange rate pricing or heavy commodity prices. We've given a lot of the pricing in-period is mostly driven by our innovation segments because we like it, we tend to take pricing with innovation and that just falls in different quarters. But generally, that effect of modest pricing with inflation or foreign-exchange rate in enterprise markets and pricing for innovation is driving that consistent contribution of pricing to our organic sales growth numbers and we'll continue to do so.

What is driving mix here? I would focus less on geographic mix. I think what we're seeing is trade-up within our categories and you see that impacting the top-line positively and impacting the gross margin line negatively. So as consumers trade-up from liquid laundry detergent into unit dose or even within unit dose to the highest-performing variants, they pay more per unit and we make more profit per unit, but mathematically, the gross margin is lower. And that's really the effect you see on the top-line positive effect of mix. On the gross margin line, the slightly negative effect of mix, which is exactly what we want. So healthy dynamics on both. We expect both of those, the pricing dynamic with innovation and the mix dynamic to continue.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

And we're going to -- there is no straight-line or red line on pricing. We're going to do what maximizes -- we make the choices that maximize value and we'll be responsive to consumer needs in that context. But I don't think in all-the-time that I've been working on this business, I've ever thought about the question of, you know, would we have negative pricing? It's just not part of our thought process. We're focused on value-creation. And as Andre said, pricing is kind of an outcome of that series of decisions.

Operator

Your final question today will come from the line of Wolfmeyer of Piper Sandler. Please go-ahead.

Korinne Wolfmeyer
Analyst at Piper Sandler Companies

Hey, good morning. Thanks for taking the question. I just want to touch a little bit on how you're feeling about or how your conversations with some of your retail partners have been going really across the globe. What are the confidence levels you're feeling with them? Are they still being cautious of inventory orders? Is that more normalized? And then how are you thinking about that heading into the back-half of the fiscal year? Thanks.

Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer at Procter & Gamble

So I just spent time I'm with two of my counterparts who are CEOs of large European retailers, I had a top-to-top meeting with the largest customer outside of the US just yesterday. The entirety of those conversations is focused on-market growth and how as we pursue market growth, we can do that most efficiently. So working together, we Call-IT one supply-chain to figure out how -- and there's a lot of power in that because we used to optimize parts of our respective supply chains, but bringing that view altogether has produced significant results, both for ourselves and our retail partners.

So right now, the conversation is very positive generally and focuses on the opportunities that we have in front of us. In the US so those that's kind of Europe. In the US in the retail environment currently you have some retailers who are doing extraordinarily well and some retailers and channels of trade that have more challenges. And you can imagine that the conversations are slightly different across that universe of customers. But in general, it follows the same pattern that I just described for Europe.

Andre Schulten
Chief Financial Officer at Procter & Gamble

All right. I think that concludes our call. Again, in summary, good quarter, good progress across multiple geographies, cautiously optimistic with a lot of moving pieces throughout the second-half. Thanks for your time today. We're available for any follow-up questions. So please don't hesitate to reach-out and have a great rest of the day. Thank you.

Operator

That concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day

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