Procter & Gamble Q2 2023 Earnings Call Transcript

AlphaStreet
Provided by AlphaStreet
January 23, 2024
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Operator

Good morning, and welcome to Procter and 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 P&G'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 and 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 and 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 P&G's Chief Financial Officer, Andre Schulten.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Good morning, everyone. Joining me on the call today are Jon Moeller, Chairman of the Board, President and Chief Executive Officer, and John Chevalier, Senior Vice-President, Investor Relations.

I'll start with an overview of results for the October to December quarter, Jon will add perspective on our recent results and strategic focus areas and capabilities. We'll close with guidance for fiscal '24, and then take your questions.

October to December, was another strong quarter. Execution of our integrated strategy drove solid sales and market-share results and another quarter of strong margin progress, delivering strong earnings and cash results for the quarter. The strong results we've delivered in the first half of fiscal '24, enable us to raise our outlook for core earnings per share and keep us on track to deliver within our fiscal year guidance ranges for organic sales growth, cash productivity and cash return to shareowners. We continue to see the upper range on organic sales and core EPS as likely outcome for fiscal '23 -- '24. So, moving to second quarter numbers, organic sales grew 4%, volume rounded down to a decline of one point as continued volume acceleration in North America and Europe focused markets was offset by softer shipments in Greater China, Eastern Europe and Middle East, Africa regions due to local issues in select markets.

Pricing contributed four points to sales growth, consistent with the guidance we provided, mix was neutral to organic sales growth. Growth across categories continues to be broad based with eight of 10 product categories holding or growing organic sales this quarter. Home care, hair care and grooming grew sales high single digits. Fabric care, family care, feminine care and oral care were up mid single digits. Baby care was in line with prior year. Personal health care was down low singles against a very tough comp and a late developing cold and flu season this year. Skin and personal care was down mid singles due to SK-II in China.

Growth was also broad based across geographies with North America, Europe, Asia Pacific focus markets and Latin America and Europe enterprise markets each growing organic sales. Focus markets grew 3% for the quarter and enterprise markets grew 7%.

Organic sales in North America grew 5% with four points of volume growth. Over the last five quarters, volume growth in North America has been minus three, flat, then 2% growth plus 3% and now plus 4%, strong acceleration well ahead of the underlying market trends.

Europe focused markets were up 7% with three points of volume growth. As expected, both regions saw a step down in pricing contribution to sales growth as a large portion of price increases from last year have annualized. Importantly, volume accelerated in both regions to partially offset the pricing impact.

Latin America delivered another very strong quarter with 17% organic sales growth, continued strong results in these regions. There are some targeted issues affecting other markets. Greater China organic sales were down minus 15% versus prior year. Underlying market growth was down mid to high single digits as consumer confidence weakened further. The SK-II brand in greater China was down 34% due to soft market conditions and a temporary headwind for Japanese brands in the market.

Our consumer research indicates SK-II brand sentiment is improving and we expect to see sequential improvement in the back half. Underlying market trends have softened in some Europe enterprise and Asia Pacific, Middle East, Africa countries such as Egypt, Saudi Arabia and Turkey, following multiple rounds of pricing to offset inflation and due to heightened tensions in the Middle East.

Global aggregate value share was up 40 basis points versus prior year with 28 of our top 50 category country combinations holding or growing share. In the U.S., all outlet value share was up 20 basis points versus prior year. U.S. volume share was up 50 basis points reflecting strong volume growth. Value share in European focus markets was up 90 basis points over the past three months.

In summary, North America, Europe focus Markets, Asia Pacific focus markets and Latin America, which combined represent three-quarters of company sales, delivered over 6% of organic sales growth in quarter two, with three points of volume growth and three points of price mix. These same markets grew 9% in quarter one with around two points of volume growth and seven points of price mix.

Continued strong organic sales growth with accelerating volume growth to mitigate the anticipated annualization of pricing, consistent with our guidance. The balanced 25% of company sales including Greater China, Eastern Europe and Middle East Africa were impacted by local market issues we described.

Quarter two organic sales for this group were down five points versus prior year. We expect most of these effects in these regions to be temporary or annualizing, SK-II consumption is sequentially improving. We continue to expect China market growth to improve, and over time return to mid singles, and we expect market pressures in the Middle east and Turkey to ease over time.

Moving to the bottom line, core earnings per share were $1.84, up 16% versus prior year. On a currency neutral basis, core EPS increased 18%. Core operating margin increased 400 basis points as 520 basis points of gross margin expansion were partially offset by increased marketing investments, wage and benefit inflation and foreign exchange impacts in SG&A. Currency neutral core operating margin increased 470 basis points. Productivity improvements were a very strong 340 basis points helped to the quarter. Adjusted free cash flow productivity was 95%. We returned $3.3 billion of cash to share owners, approximately $2.3 billion in dividends and $1 billion in share repurchase.

In summary, against what continues to be a challenging and volatile operating environment, strong overall progress in the first half of the year keeping us on track for our fiscal year guidance ranges.

Now I'll pass it over to Jon for his perspective.

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

Thanks Andre, and good morning, everyone. I'll start by underscoring a few points Andre made in his discussion of the topline trends. Overall, continued strong top line progressed 22nd consecutive quarter of 4% or better organic sales growth, volume acceleration in key markets, increases in aggregate market shares. This despite several notable headwinds, which should be temporary. Tensions in the Middle East will hopefully ease. Enterprise market volume impacts following price increases are usually temporary.

While we can't talk specifics of future pricing in any market, more stable foreign exchange and commodity costs will ideally reduce the need for additional large price increases.

I spent six days in China with the team two weeks ago. I met with consumers in their homes, with retail CEOs with our team, and with several government officials. In my view, the long-term China opportunity remains intact. The near term is likely to present some challenges.

We'll see what happens with the global cough cold season as a soft start to the season either reverses or eventually annualizes. No guarantee of immediate bounce back in any of these, but reason to believe they will improve over time.

In addition to continued aggregate topline progress, a very strong bottom line, mid teens core earnings per share growth two quarters in a row, while increasing investments in innovation, brand building and market growth. Our team continues to execute our strategy with excellence, enabling strong results over each of the past five years, pre COVID, during COVID and through a historic inflationary and pricing cycle. I want to thank them both for what they delivered and for what they're working to continue to accomplish.

Our integrated strategy is unchanged. A focused portfolio of products and daily use categories where performance drives brand choice. The portfolio is performing, delivering broad based growth across nearly all categories and most geographies for several years. The announcements we made in December to change our go to market approach in Argentina and Nigeria will further sharpen our focus and strengthen our value creation potential. A good example of the dynamic nature of our strategy and our desire to aggressively allocate resources to where they create the most shareholder value.

Next strategy element, ongoing commitment to an investment in irresistible superiority through innovation across the five vectors of product package, brand communication, retail execution and value holistically defined. Leveraging that superiority to grow markets and our share in them to jointly create value with retail partners. The plans across the businesses are broader and stronger than at any time in the recent past as each team works to increase their margin of superiority and consumer delight.

Superior innovations that are driven by deep consumer insights communicated to consumers with more effective and efficient marketing programs, executed in stores and online in conjunction with retailer strategies to grow categories and our brands, priced to deliver superior value across each price tier where we compete. Smooth tear Charmin Ultra Soft Smooth with scalloped edge perforations, a great example of consumer insights driving innovation to improve the in-use experience. Consumer response to the new product has been overwhelmingly positive and is driving word of mouth recommendations in social media.

Gillette's superior propositions like the GilletteLabs razor with an exfoliating bar that removes dirt and debris before the blades, continue to drive growth in the global grooming category. GilletteLabs has reached shares greater than 20% in markets like Spain and France, and is building momentum in the U.S. and China. The global grooming category is on track for $1 billion of retail sales growth this fiscal year, with Gillette driving two-thirds of the increase, well ahead of our global share.

Superior innovations like Dawn Power Wash and Dawn EZ-Squeeze in the U.S. and Fairy power spray and Fairy Max in Europe are disproportionately driving market growth in hand dishwashing with value share in the U.S. approaching 67%, merely 50% across Europe focused markets.

Third strategy element productivity, improvement in all of our operations to fund investments in innovation, brand building and market growth, to mitigate cost and currency challenges, and to expand margins and generate cash. We're reaccelerating productivity back to pre-COVID levels with an objective for gross savings and cost of goods of up to $1.5 billion before tax.

Visibility to more savings opportunity is increasing enabled by platform programs with global application across categories like supply chain 3.0. We're working in a new way with retailers on the totality of the supply chain, end to end, versus simply trying to optimize each piece. One example using data and machine learning algorithms to optimize truck scheduling to minimize idle time for drivers. We're also using AI tools to optimize fill rates and for dynamic routing and sourcing optimization, $200 million to $300 million of savings opportunity across these areas. We have line of sight to savings from improved marketing productivity, more efficiency and greater effectiveness, avoiding excess frequency and reducing waste while increasing reach.

We're taking targeted steps to reduce overhead as we digitize more of our operations. The team has delivered strong cost savings in the first half of the year, and plans to build on this momentum.

Next, 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 continue to be a constructive disruptor of brand building, in-housing more of the media planning and placement activity, using our proprietary tools and consumer data to increase effectiveness and efficiency of our communication. We're disrupting traditional lab-based innovation models to dramatically increase the speed and breadth of discovery.

Last but clearly not least, we've designed and continue to refine an empowered, agile and accountable organization model. Also, an increasingly diverse organization, enabling us to better serve an increasingly diverse set of consumers. So strong progress across all strategic pillars with significant opportunity ahead of us. No reason to stand still, as illustrated by the four focus areas we've outlined previously. Supply chain 3.0 is delivering productivity as we just talked. We're also driving improved capacity planning, greater supply agility, flexibility, data transparency, scale and resilience, all the way up and down the supply chain, inclusive of our retail partners. All of this was driving higher quality, increased supply assurance and higher on-shelf availability of our products, and of course better cash and cost structures. These programs improve superiority with consumers and further strengthen what is already the top ranked supply chain by our retail partners and third-party industry surveys.

Environmental sustainability -- superior propositions for consumers, customers and share owners that are sustainable, driving sales and profitability while reducing the footprint of our operations, enabling consumers to reduce their footprint and innovating to deliver cross industry solutions for some of our most pressing challenges. A good example is the four chamber Ariel platinum PODS innovation that we launched in a new cardboard package.

Extending our superiority advantage in product performance while improving sustainability by enabling great wash results even in cold water, already contributing to a two-degree Celsius reduction in wash temperatures in Europe against a five-degree target. Also extending packaging superiority with a more attractive and more sustainable cardboard box.

Digital acumen -- Leveraging data and digitization to delight consumers, streamline the supply chain, increase quality, drive productivity, all driving shareholder value.

Fourth -- the superior value equation for all employees, inclusive of all genders, races, ethnicities, sexual orientations, ages and abilities for all roles to ensure we continue to attract, retain and develop the best talent, and are best positioned to serve all consumers. These four focus areas are not new and separate strategies. They simply strengthen our ability to execute the strategy.

Our strategic choices on portfolio superiority, productivity, constructive disruption and organization reinforce and build on each other. We continue to believe that there is merit in doubling down on this integrated strategy, starting with a commitment to deliver irresistibly superior propositions to consumers and retail partners fueled by productivity.

We remain as confident as ever in our strategy and our ability to drive market growth, and to deliver balanced growth and value creation to delight consumers, customers, employees, society and share owners.

Now back to Andre for guidance.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Thanks Jon. As I mentioned, we expect the environment around us to continue to be volatile and challenging from input costs to currencies to consumer, retailer and geopolitical dynamics. However, our strong first half results enable us to raise or maintain key guidance metrics for the year. We're maintaining our guidance range for organic sales growth of 4% to 5% for the fiscal year. This outlook includes a normalization in underlying market growth rates that we began to see in our second quarter results as the market lapse, the last waves of cost recovery pricing.

For P&G, we expect the pricing contribution to topline growth to reduce by an additional 1 to 2 points in the back half of the year. We will continue to price for new innovations when warranted and to mitigate FX impacts.

On the bottom line enabled by very strong earnings growth in the first half of the year, we're raising our outlook for fiscal '24 core earnings per share from a range of 6% to 9% to a range of 8% to 9% growth versus last fiscal year. This guidance implies slower bottom-line growth in the second half. As we highlighted last quarter, the second half of the fiscal year will see less pricing benefit as we annualize more prior year increases. We will also see less commodity cost benefit in the second half. Wage and benefit inflation continues throughout the supply chain and in our direct costs, and FX headwinds will increase versus the first half of the fiscal year.

As I mentioned, we continue to expect organic sales and core EPS growth toward the upper end of the renewed guidance ranges. We estimate commodities will be a tailwind of around $800 million after tax in fiscal '24 based on current spot prices. This is consistent with the outlook we provided last quarter. We continue to expect foreign exchange will be a headwind of approximately $1 billion after tax for the fiscal year. The vast majority of this impact is driven by Argentina, and is heavily skewed towards the back half of the year. This outlook is based on a forecast for continued significant devaluation of the Argentine Peso, which we expect to largely offset with appropriate price increases.

We now expect higher net interest expense of approximately $100 million after tax versus prior year. General inflation and higher wage and benefit costs weakness are also earnings headwinds for the year. We expect adjusted free cash flow productivity of 90%. We expect to pay more than $9 billion in dividends and to repurchase $5 billion to $6 billion in common stock, combined a plan to return $14 billion to $15 billion of cash to share owners this fiscal year.

This outlook is based on current market growth rate estimates, commodity prices and foreign exchange rates. Significant additional currency weakness, commodity cost increases, geopolitical disruptions or major production stoppages are not anticipated within the guidance ranges.

Finally, we'll be closely watching the more volatile regions we mentioned earlier, including the health of the China market, and we'll be keeping close watch on competitive dynamics to ensure P&G brands remain superior value for consumers and retailers.

Now, I'll hand it back to Jon for closing thoughts.

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

We continue to be very pleased with the strong results P&G people are delivering in a challenging operating and competitive environment. Continued excellent execution of an integrated market constructive strategy. I want to thank each of them for that. While we expect volatile consumer and macrodynamics to continue, we remain confident that the best path forward is to double down on the strategy that has enabled strong results and remain committed to delivering balanced top and bottom-line growth and value creation for shareholders. With that, we'll be happy to take your questions.

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Operator

[Operator Instructions] Our first question will come from Dara Mohsenian of Morgan Stanley. Please go ahead.

Dara Mohsenian
Analyst at Morgan Stanley

Hey, good morning, guys. So just wanted to focus on the back half. Clearly the 4% Q2 core sales growth result wasn't as strong as the 7% Q1 delivery, which is very robust result. So obviously some quarterly volatility here. Can you just give us some perspective for the fiscal back half relative to Q2 in light of that first half volatility as you think through some of the key geographies and volume versus price mix, and some of the temporary impacts Jon mentioned? And then just same question on EPS basically, obviously very strong first half that continued in Q2, full year guidance implies a more muted second half. So, is there some conservatism baked in there? Help us understand that. I know Andre touched on it, but maybe give us a bit more detail there on the back half from an earnings perspective. Thanks.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Yeah, morning Dara, let me start and Jon will add. On the top line, if you look at the first half, we are right in line with what we're projecting for the year, an average of 5%, and we obviously then expect about 5% for the back half. We see volatility, as you had pointed out in some geographies that we mentioned in the script. I think the core point though is the core geography, 75% of the sales are performing very well. We continue to see acceleration in volume growth in North America with 4% volume growth, 5% sales growth. Europe is very strong. Latin America very strong. We continue to see volume acceleration in most places. So that gives us confidence that that projects well for the second half of the year.

We also expect some of the volatility that we experienced in quarter two to disappear or at least improve in the second half. The SK-II sentiment is improving based on our consumer research in China, and we are continuing to drive innovation, equity investment and really relying on our most loyal and passionate user base to help amplify that messaging, which is working well. So, we expect the effects to improve year-over-year -- quarter over quarter.

From an enterprise market standpoint, we also view the pricing impacts that are impacting some of the markets like Turkey to disappear over time, as pricing in the market is established, competitive pricing catches up and then the impact of the tensions in the Middle East certainly hopefully will improve as well. So very strong continued performance on the core markets, which are 75% of the sales, and we expect somewhat improving trends and stabilization in the other 25%.

On the EPS side, very strong performance in the front half, 17% in quarter one, 16% in quarter two, sets us up well for the upper end of their guidance range, which is reflected in the tightening of their guidance. However, to keep in mind, we see a reversal of a number of effects that have supported the half one results. We saw the majority of the commodity help flow through in the first half, and this is part of the improvement in quarter two EPS. We see the flow through happening faster than we would have anticipated in some instances, so that leaves less of a contribution for the second half.

We also have the majority of the foreign exchange hurt in the second half, about 75% of FX hurt of the billion dollars will hit the second half. As we indicated, the majority of that is Argentina, so we will try to offset via appropriate pricing. Nevertheless, the growth impact is tilted towards the back half. Price mix contribution will ease. We saw still significant contribution in the first half, that will lower by 1 point to 2 points in the back half, which also has an impact on EPS growth.

And lastly, we continue to see wage inflation in our own operation as well as in our supply chain flowing through. Now, that being said, if everything goes well, could there be upside? Sure. But we believe that guidance is appropriately reflecting the potential variability here. So those are the core drivers. Jon, any perspective?

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

I have nothing to add on Andre's bottom line perspective. I would just reiterate one thing and add one thing on the top line. There are two questions that we've been discussing as we've gone through the first half of the year. The first relates to our ability to reaccelerate volume, which we've talked about several times in this conversation this morning. And I just want to reiterate how encouraging that progress has been. We've said it before, but it's worth saying again in our largest market, North America, past five quarters, minus 30, plus two, plus three, plus four. Europe, which tends to be fairly price sensitive, volumes, plus three. So that gives us confidence in terms of the momentum of the business on a forward basis.

The other thing I would just call out that adds to this discussion is the breadth of the top line progress that the team has been making. Eight out of 10 categories held or grew sales in the quarter that we just completed, 21 of our top 25 brands did the same. And if you look at our top 12 brands, nine of those are growing at high singles or better rates. And that's inclusive of all the challenges that we're managing around the world.

So that gives us confidence that the top line growth that we've been delivering should continue, just as Andre said, and that should provide the ability to continue to deliver decent levels of bottom-line growth as well.

Operator

The next question comes from Bryan Spillane of Bank of America. Please go ahead.

Bryan Spillane
Analyst at Bank of America

Thanks, operator. Good morning, everyone. I want a clarification, Andre, to your answer to Dara's question. And then I have a question. So, the clarification, I think when you responded regarding organic sales growth for the back half and tacking to the year, the 5%, is it that Proctor is tracking to 5% organic sales for the year? Or were you saying an expectation for 5% organic sales growth for the back half? I wasn't quite sure if you were talking full year or specifically about the back half.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Hey, Bryan. No, what I was talking was the full year expectation. So again, we reiterate the range of four to five, but we see the possibility and strong probability that we'll be able to deliver towards the upper end of that range for the fiscal year.

Operator

The next question comes from Lauren Lieberman of Barclays. Please go ahead.

Lauren Lieberman
Analyst at Barclays

Great, thanks. Good morning. So, with the very sizable gross margin delivery this quarter and the outlook for the full year, there's a ton of reinvestment going back into P&L, right. And this quarter you called out the specifics, but I think know that's pretty well implied for the second half as well. So, I was just curious if you could talk a little bit about incremental areas of reinvestment because the basis points are big and the dollars are even bigger. And so, I don't know, like, it might sound ridiculous, but it gets to a point where you start to worry externally, is there an excessive amount of reinvestment? So, I'd love it, Jon, if you could talk through your perspective on that, on making sure there's not money effectively being spent less efficiently in the P&L simply because you have that much flexibility. Thanks.

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

Are you saying, Lauren, that you want 30% core rates for share growth? Just kidding.

Lauren Lieberman
Analyst at Barclays

Well, that's kind of what I'm getting at, right? Yeah.

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

All right, I'll speak first on this, and I'm sure Andre has some perspective as well. But if you look at the amount of innovation that's coming to market, both currently and in the future, and if you look at the opportunity to fully penetrate households with that innovation in ways that delights them and improves their lives, now is not the time to be pulling back on investments in marketing or commercialization efforts of that innovation. And that's where the majority of the incremental spend has come from and will come from, we look very carefully. I don't want to ignore your question on the effectiveness of that spend and continue to see through the addition of many tools and data sets that we can increase the effectiveness of that advertising, increase the return rates of that advertising as you see in our bottom line, while increasing reach. So that's what we'll be focusing on. We'll be very disciplined in that effort. Neither Andre or I or the rest of the team has any desire to spend money that isn't working for us.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Yeah. And maybe just to add, we just talked with our team actually about being very granular about the assessment of the ROI. So, we don't have good investments, cover for bad investments. So really go down to the country level, to the brand level, to the channel level when we assess whether we are getting a payout on the investments. But the majority of the spend, as Jon said, is really focused on driving market growth.

When you think about the opportunity on FE, for example, we've created 100% of the market growth in North America on FE, and it's still the biggest opportunity the team has in order to continue to accelerate both our own growth in a constructive way and the market given the low penetration FE has -- Fabric Enhancers. Oran-B, another example, a power Oral-B was launched -- Oral-B iO10 and we're also expanding distribution of Oral-B iO3, 4 and 5.

We've led 70% of global market growth with those launches. So, communicating the benefit and driving penetration is a huge opportunity. So be assured we look at ROI very carefully. And again, market growth continues to be the main area of focus when we invest incrementally.

Operator

The next question comes from Robert Ottenstein of Evercore ISI. Please go ahead.

Rob Ottenstein
Analyst at Evercore ISI

Terrific. Thank you very much. I was wondering if you could go into a little bit more detail on the state of the consumer in your two most important markets, the U.S. and China, how consumer demand developed through the quarter and into January? And when you talk about China, if you could also touch upon travel retail and maybe what SK-II was on a greater China basis, including travel retail as well. Thank you.

Andre Schulten
Chief Financial Officer at Procter & Gamble

I'll start. Morning Robert. Look, the US continues to be very solid, continues to impress with I think a very smooth transition from pricing, annualizing and overall consumption coming up in terms of volume, which is enabling us to post the volume improvements Jon was quoting over the past few quarters, and still accelerating ahead of market with 4% volume growth and 50 basis points of market share growth. We continue to see trade up within our propositions. So as consumers come in, maybe at a lower tier and a lower value proposition, they continue to trade up in the U.S., which speaks to the health of the proposition but also the health of the consumer and willingness to invest.

The last data point I'll give you on the U.S. is we are able to grow as private label shares are slightly up, we are up the same range. So, some consumers will look for value in private label, but an equal if not higher amount of consumers find better value in our propositions as we drive continued superiority via innovation. So, feel very strongly about the U.S., we'll continue to invest to drive more market growth there, but the consumer is resilient and the business is doing well.

On China, I'll begin. I'm sure Jon has incremental perspective, but the China opportunity remains intact. If you look at the underlying market size, if you look at the potential development of the middle class, if you look at the ability to drive category penetration in our categories, all of those are huge opportunities for us, and all of those point to continued investment and commitment to the Chinese market. We have a very capable organization, and we continue to be very optimistic that we can create value.

Honestly, when the market requires market growth to be driven by manufacturers, I think that positions us very well with our retail partners in China to have a competitive advantage and execute the model that we know how to execute in many parts of the world. In the short term, we mentioned it in the script, consumer sentiment is not fully recovered yet, and that is reflected in the results.

Again, if you want to take a silver lining, we see the attractiveness of key opinion leaders and heavy discounting in key consumption periods decreasing. And that's actually good for us. And we believe that a focus on brand equity, a focus on strong everyday value via the priority, will allow us to help grow the market back to mid-single digits and strengthen our position in the market.

Last point on SK-II, no specifics. The numbers we're quoting, obviously on the quarter, minus 34% include the domestic travel retail channel. Nothing else to add there other than we remain confident that as the sentiment improves, which we see already, with continued investment in SK-II, we see that business recovering over the back half.

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

Robert, as Andre suggested, I'll just provide a little bit of additional color on China. Having spent a fair amount of my career involved in that market and having just spent almost a full week there, in digesting the Q2 numbers, the P&G numbers in China, you have to think about a couple things. One is SK-II, which, just for clarity for everybody, is really driven by an anti-Japanese brand sentiment which Andre described. Our opening remarks that's related to the release of wastewater from the Fukushima nuclear facility, and we've had not identical but similar consumer sentiment dynamics in the past as relates to this brand and as relates to the relationship between those two countries. And it has always resolved itself with SK-II moving to higher heights. So, if you look at the decline in China on the quarter, on our business, I don't know the exact number, but basically think of it as 50% of that being the dynamic I just described and 50% of it being the market dynamics.

The second thing that Andre referred to is important to understand as well. The heaviest purchase period historically in China was in November. I'm talking years past. And that was always a little bit disconcerting for us because a disproportionate amount of product moved during Double Eleven. It filled consumer pantries. It filled some retailer pantries, inventories and warehouses. It often moved at heavily discounted prices. The amount of movement during that period this year was much lower. And as Andre said, we view that as a good thing. And it's a temporary impact, a quarterly impact, a Q2 impact on the indices, but it moves us into a healthier position.

If you think about the medium to longer term, Andre mentioned the expected addition of 200 million middle income consumers to China's population, that's very encouraging. Also, I mentioned I was in homes, I was in stores, I was with our retail partners. They remain encouraged about the future of China. I was talking to our organization at the end of the trip, our organization in China, and I told them I had never seen as much alignment in the market between our intentions and our strategy, our retailers intention and their strategy and the government's intention and their strategy, all focused on what's being referred to as quality market growth. As Andre suggested, that's a very good thing for us.

We can play very effectively and help with that agenda, help society on a parallel path. And so, you put all that together, and I agree with Andre, and I said it earlier, I think the growth potential here remains intact. There are some specific items that exacerbate the trend that you're seeing on the quarter, but I expect this will continue to be a source of both growth and value creation for P&G. Sorry for the long answer, but I think it's important.

Operator

The next question comes from Steve Powers of Deutsche Bank. Please go ahead.

Steve Powers
Analyst at Deutsche Bank Aktiengesellschaft

Thanks, and good morning. At the risk of provoking another long answer, I guess what struck me this morning is just the confidence and front footedness, if that's a word, in both of your comments this morning, and I think, Jon, your strategic perspective struck me as particularly assertive. I say that in the context on the outside, I think faced with some of the market challenges, you've called out China, the Middle east, etc., this quarter, concerns grow that P&G is likely to be thrown off course or maybe getting complacent. And I guess my question is, why is that wrong? And what to you are the keys to keeping the organization's eye on the ball, focused, grounded and executing on all those strategic pillars that you went through.

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

Thanks, Steve. I want to step back first. We do face a lot of challenges in the world that we all live in, and those have impacted our business. But stepping back probably five years, the level of challenge has always existed, whether it was COVID, whether it was the highest consumer inflation in 40 years, whether it was the 50% reduction, 50 in our profit over two years as a result of commodities, foreign exchange, and transportation costs, and this organization overcame all of that. They've overcome the challenges we faced in the last quarter, and that gives me a huge amount of confidence that we have the ability, the skills, the strategy and the agility to continue to meet challenges, face first, and work through them in ways that are constructive for consumers, for customers, for employees, for society, and for share owners.

We talk a lot internally about the complacency and the evils associated with it. So, it's front and center in our thought process. I have a couple of kind of trite sayings that I use in communicating with the organization, and one of them is that complacency kills. You don't see a complacent organization when you're looking at the breadth of growth that they're delivering. When you're looking at the continued, after a decade, continued work on productivity, yielding the kind of margin progress that we saw this quarter, you don't see it as they reinvest that into growing markets and to growing household penetration and shares. We're not immune to it, so you're right to raise it. But I feel, as you said, I feel the organization, not just myself, are very much on their front foot as they move to take advantage of the opportunities that we see in front of us.

I've frankly never seen as many opportunities. Now, there's a lot of work associated with capitalizing on those opportunities, and there will be lots of challenges and forces that will be working against us in that endeavor. But the accomplishments of the midterm past, the most recent past, the reflection of the work that the organization is doing all the way down the income statement and the innovation progress that I'm seeing not only in market or coming to market, but as we review the pipelines across each of the categories also give me a good degree of confidence.

Operator

The next question comes from Filippo Falorni of Citi. Please go ahead.

Filippo Falorni
Analyst at Smith Barney Citigroup

Hey, good morning, everyone. Jon, I wanted to go back to China. You mentioned clearly that there was an impact from the cycling of the eleven-eleven shipments. And can you give us some sense, like how down was China and SK-II during that period, and maybe some of the axial rate coming out of December that gives you some confidence in the improvement in the country in the second half. Thank you.

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

I apologize. I honestly don't operate at that level of data aggregation. So, I don't have the answer with any degree of specificity, but I know the impact was there. I know it's a good thing for us long term, and apologize, but I'm just going to leave it there.

Operator

The next question comes from Chris Carey of Wells Fargo Securities, please go ahead.

Chris Carey
Analyst at Wells Fargo Securities

Hi, good morning. The U.S. volume growth improvement is very constructive. It's quite a bit better than what we can see in the U.S. Nielsen data, for example. I know the data is far from perfect, but I wonder if you could just help characterize whether you have any non-track channel boosts or in general talk about some of the specifics of what has really driven this volume improvement over the past five quarters. And I think maybe just connected to that if you could. There's a lot of debate right now across consumer staples around just what does drive volume improvement, whether that's promotional activity or increased advertising or just the lapping of pricing. And I find it interesting today that this dynamic of sequential volume growth, and I wonder if you can just maybe talk about in general why this seems to be happening, what you're doing to drive this, or whether this is just the natural evolution of markets post substantial pricing. So, thanks so much for that.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Yeah. Hey Chris, let me start. On the non-covered channel side, we've seen non-covered outpace cover channels for a period of time. This is not different. There's nothing specific happening there. We see a trend of some consumers going into larger pack sizes. Those are in club, those are online, and many of those effects continue. But there's nothing differential between covered and non-covered channels. Both are performing well. Non covered, a little bit ahead of covered, so that's why you don't see the results in the track data.

What's driving the growth? I would argue it's all of the above that you've mentioned, right. I think we're seeing pricing lapping, consumers seeing the pricing normalizing on the shelves. We don't see an increase in promotion depth or frequency quite frankly. We are still operating at about 85% of pre-COVID levels from a volume sold on deal perspective, competition is in a similar range. So, there's no escalation of promotion. But what drives it is strong innovation, innovation that is focused on growing the market and strong communication of that innovation in a very targeted way, leveraging our capability to be very detailed and very intentional on who we talk to, at what point in time, with what messaging? and the U.S. is probably our most sophisticated market in that regard. And it shows in the ROIs and in the results, back to Lauren's question earlier.

A few examples, just the Gillette business -- innovation on the core with the Labs razor provides a growth driver, but adding new jobs to be done, like female facial hair removal or male and female body hair removal. Incremental jobs that when communicated appropriately of the benefit of the product drive incremental consumption. I mentioned Oral-B penetration still low on the electric toothbrush, and as we're converting more and more users, that drives incremental growth with more innovation but also expansion of the lower priced options of Oral-B iO3, 4 and 5, and then the launch of Oral-B10. Last example I'll give you and then I'll let Jon add is Olay Super Serum. Just to cover a few of the categories, here is a new serum -- the most successful new serum in the category. 30% of those users are new to the category. So again, communication, strong innovation, premium propositions, and bringing new cruises to the category is what's driving that accelerated volume growth.

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

And I'll just pile on with -- I agree with everything that Andre said. So just a couple more examples to show you again the breadth of the innovation that's being commercialized currently. He talked about Olay, very exciting innovation in our hair care business as well. An example, Head and Shoulders BARE, which is a more efficacious anti-dandruff offering with the bare minimum number of ingredients, nine to be exact, in an eco-friendly package, 45% less plastic. And it's one of the drivers of growth, particularly in North America, on the head and shoulders brand, which is up 8% fiscal year to date.

Another example in a different category, Swiffer PowerMop, which is driving that business up 11% fiscal year-to-date, and has built both volume and value share at about a point and a half level.

And back to Steve's question on complacency, this is what we need to keep doing. And that's why we talk about the best path forward being doubling down on exactly these things. They do drive market, they do drive volume, they do drive sales, and they do it profitably.

Operator

The next question comes from Andrea Teixeira of J.P. Morgan. Please go ahead.

Andrea Teixeira
Analyst at JPMorgan Chase & Co.

Thank you. Good morning. So, I wanted to go back to that 4% volume growth commentary in the U.S. and 3% in the EU focused markets. And despite the tough comparison for the cold and flu season, seems that you had market share gains and laundry and some other key categories. So, can you comment on how you exited the quarter for the cold and flu season in the U.S. and in Europe? And separately, it seems like you secured more distribution in the balance of this fiscal year. So, any comment on that and a clarification on China. You said that you're confident that the growth will resume to the mid-single digit level. I'm assuming that's not a comment for this fiscal year, but as you commented out, Jon, in terms of like the Head and Shoulder, and I know hair care is a big category there and you're comping easy comps in hair. So, I was wondering if you can elaborate a little bit more than SK-II in particular. Thank you.

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

Let me just take China real quick and then turn it over to Andre on the cough, cold trend, etc. The mid-single digit number that we referred to is an expectation of longer-term market growth. You're correct, it is not an expectation of ours for either the market or our business in this current fiscal year. On the broader beauty question, when you take SK-II and the market impacts in China, out of the equation, you see the business that's performing extraordinarily well. I mentioned Head and Shoulders, which is the largest shampoo brand in the world, up 8% fiscal year to date. If you look at North America, Pantene fiscal year to date, up 15%. Our skin and personal care business up double digits. The same is true for the beauty business in Enterprise LA and in Europe. So, it's a very strong business, benefiting from the exact same strategies, obviously applied differently, that we're executing across the balance of the company. And that will, over time, as the market corrects itself, be demonstrated in China as well.

Andre Schulten
Chief Financial Officer at Procter & Gamble

So, on the other two questions on PHC, Andrea, look, the business is obviously very strong past for your average growth rate of 13%. So, the underlying strength of the business is very healthy. We see an impact of the cold cough season. The season is still above average, but it's below a record season last year, and it's developing a little bit slower in the current profile, which means there could be some upside coming as time goes by. Last year, Vicks was 28% in the same quarter, so, you can see the high base that we mentioned in the prepared remarks.

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

Just one thing on that. Sorry to interrupt, Andre, that I think is relatively straightforward. But it's worth mentioning, as we were all coming out of COVID, going through our first non-COVID or light COVID cough/cold season, it's not surprising having spent time in our homes for the last two to three years, that the level of immunity was not high, and therefore the level of incidence was very high. So that's what we're annualizing against combined with a slower start to the normal season. As Andre says, we'll wait to see how that all materializes. We have seen some increase in incidence. You can probably hear a little bit of a frog in my voice this morning, and I heard one in Andre's... right

Andre Schulten
Chief Financial Officer at Procter & Gamble

We're contributing. Here we go.

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

Just last point on PHC. If you look at the share development in every treatment area that we cover in PHC, we're up in share in every treatment area, we're up in organic sales across regions. So again, it's purely a seasonal element.

On distribution, Andrea, I won't give you an answer other than obviously driving innovation, driving incremental sales for our retail partners, driving category growth helps with their desire to have our brands present on their shelves.

Operator

The next question comes from Peter Grom of UBS. Please go ahead.

Peter Grom
Analyst at UBS Group

Thanks, operator. And good morning, everyone. So, I know you maintained your commodity outlook this morning, but just given the first half performance, the outlook does not embed as much of a tailwind from here, which you alluded to, Andre, but can you maybe just unpack what you're seeing across your key cost buckets? Where are things getting better? Where are things getting worse? And maybe just based on current spot rates, how should we think about the phasing? Would you expect deflation in both 3Q and 4Q? Or is there any potential for costs to become a headwind as we exit the year? Thanks.

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

Hey Peter, the commodity basket is wide, complex and changing very quickly. So, the best guess we have is what we told you, $800 million of tailwind for the year, which the majority of which has been flown through the PNL in the front half. What I'll leave you with, I don't expect any headwind from commodity in the second half. It continues to be a tailwind. The second thought I leave you with is the impact on the P&L given the time it takes for commodity changes to flow through our contract structures, and our own variance holding policy make the time lag significant. So even if we saw significant volatility on commodity spot prices, the impact on the fiscal will decrease over time simply because of those two dynamics, but continue to expect tailwinds just less than you saw in half one.

Operator

The next question comes from Jason English of Goldman Sachs. Please go ahead.

Jason English
Analyst at The Goldman Sachs Group

Hey, good morning, folks. Thanks for slotting me in, and a belated happy new year to you all. A couple of questions. We've talked a few times about the North America volume strength. I had in my notes that you're lapping some under-shipment that should have been a couple point benefit to this quarter, yet I don't think you've mentioned it so far. So, A-- am I wrong? Was there not a sizable transitory benefit this quarter? And then it's encouraging to hear the confidence that you're expressing around it. Sounds like an imminent improvement in SK-II with words like recovery and improvement throughout the back half, with the decline sort of half related to Japan boycotts and half related to market conditions, where are you seeing the improvement? Is that dissipating concerns around Japanese brands, or are you actually seeing improvement in market conditions? Thank you.

Andre Schulten
Chief Financial Officer at Procter & Gamble

So, the volume, we don't see a transitory effect on the volume side, Jason. Morning, first of all. So, there's always some base volatility, as you know, in terms of inventories, in terms of our ability to ship, but there is no material impact that I would call out that would have to be taken into account as you look at the U.S. volume results. So, nothing there. The SK-II improvement, again, I want to pace expectations, but the improvement is really in the consumer sentiment that we're seeing, where we had very high social media coverage in quarter one, leading to negative sentiment and negative top of mind awareness of the brand, that is now dying down. And honestly, most consumers have gone back to a neutral position open to SK-II, and so what we're doing is really doubling down with innovation and doubling down with communication on the efficacy, the quality of the product, the quality of the brand, and leveraging the most loyal and passionate consumer group to help us make the case for SK-II, which we believe will help us improve run rates in the second half.

The market dynamics, we continue to see bumpy even over the next quarters improving, but there will be volatility there.

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

It's just an N of one, Jason. So, it's kind of irrelevant, but I was in the home of a heavy SK-II user in Beijing, and I asked her about this dynamic and how it was affecting her purchasing, and she kind of laughed, and it wasn't the normal nervous laugh. And she said she followed that up with -- if Japanese consumers aren't afraid of this, why should I be? And she said, I'm much more afraid of the pimple that I will get if I don't use this than I am about. So, it's starting to normalize again. That's N of one. It was also interesting to me to see what was happening with her kind of personal inventory, and just looking at the liquid fill levels in the bottles, which were low. So, I think there's a dynamic as well where a number of consumers just kind of waited to see how this whole thing played out, and reduced their personal stocks in the process. But again, that's probably neither here nor there, but I thought it was worth sharing.

Operator

The next question comes from Callum Elliott of Bernstein. Please go ahead.

Callum Elliott
Analyst at Sanford C. Bernstein

Hi, good morning. My question, guys, is about your enterprise market restructuring, which I think in the release you describe as substantial liquidation of the affected markets in places like Argentina and Nigeria. And I guess, look, recognizing that these are not huge markets for you today. From a profit perspective, this still feels like a fairly extreme decision, and clearly a challenging macro backdrop today in those markets. But in the case of Nigeria, probably one of the highest long-term potential economic markets. So, my question is, Jon, I know these enterprise markets were your baby, so to speak, for a number of years. Just hoping you can walk us through what I imagine must have been a difficult strategic decision.

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

Yeah, these decisions are not taken lightly. A couple of points. One is where we're moving to an import model, which will be the case in Nigeria. We maintain an option on the future of those brands in those markets. We're just choosing to operate in a way thats frankly is viable. You get into some tough situations in some of these markets with currency controls, with pricing controls, with the ability to dividend money out of these markets, and at some point, you run into a set of conditions that just make it impossible to operate. You can't source dollars, as an example, in order to purchase the ingredients and raw materials you need to manufacture your products. We've come to a decision when those situations present themselves to be pragmatic, to be value accretive, and to flow resources to bigger opportunities that present more near-term opportunity, while in some cases maintaining our optionality on the long term. Andre, I don't know if you want to add anything to.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Yeah, I just want to clarify because the strategic intent really is what Jon described, right. We are moving in Nigeria to an import market. We will still be present, but it's a better way to serve the consumer and a better way for us to create value.

In Argentina, we are divesting our fabric and home care business and again, are looking to find a better go to market model. The language you're quoting, Callum, is substantial liquidation. That's an accounting term. And that accounting term is really defining the point at which we recognize the accumulated foreign exchange translation loss in those markets, which is part of that non-cash restructuring that we talked about.

So, the accounting term doesn't represent the business execution. It is a technical term that once we get to that point of substantial liquidation, we will recognize the accumulated foreign exchange translation loss.

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

By the way, the prior CFO would have had no hope of explaining that to you as eloquently as the current CFO just did.

Andre Schulten
Chief Financial Officer at Procter & Gamble

I won't comment.

Operator

The next question comes from Olivia Tong of Raymond James. Please go ahead.

Olivia Tong
Analyst at Raymond James

Great, thanks. Good morning. Clearly, you've generated some impressive growth in the U.S. and Europe, so I wanted to bring it back to the developed markets, and you've held on very nicely to price. So, I wanted to ask you about competitive response and any pushback from retailers or increase in promotion from competition, given the share gains you've made and whether you're seeing any response there. Thanks.

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

You want to talk competitive promotion, Andre? And then I'll talk customers.

Andre Schulten
Chief Financial Officer at Procter & Gamble

Happy to. Hey, Olivia. So, I started to mention this. In the U.S., our promotion level still below pre-COVID, about an 85 index, competitive promotion level around a 90 index, so very similar. We don't see a substantial increase in either depth or frequency in the U.S. In Europe, we do see an increase in frequency. We do not see any increase in depth. Actually, both frequency and depth are still below pre-COVID levels, but frequency is increasing. So competitive environment still stable. And I think it's also driven by the fact that we are driving growth, we are driving market growth, and that contributes to the share growth, which means we can grow. But also, it doesn't drive necessarily negative cycles in terms of pricing in the market.

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

The whole idea, just building on Andre's last point there, is to create business, not take business, and that works out well for us, it works out well for the categories that we compete in and it works out well for our retail partners. And that is really the focus of the existing interchange with our retail partners. It was number one, two and three supply. As we've solidified our supply chains, the conversation moves very quickly to how do we work together to grow markets. That's a win-win-win proposition, a win for them, a win for us, a win for consumers, and of course, adding a fourth win for shareholders. So that's the state of play, and I experienced that in Europe. I experienced that -- I was in Europe just before Christmas. As you know, I was just in China, that was the nature of the conversation there. And it's clearly the nature of the conversation here in the U.S.

Operator

The next question comes from Mark Astrachan of Stifel. Please go ahead.

Mark Astrachan
Analyst at Stifel Nicolaus

Thanks, and morning everybody. Wanted to go back to China for 7th or 8th time, I guess on this call. The last quarter, you guys had talked about a portfolio structure examination. I guess I'm curious whether there's any updates on that or what even does that mean? And maybe specifically any underlying changes in consumer attitude towards beauty as a category, including what is perceived to be relevant by brand or efficacy. Also sort of related to that, it just seems a bit more of a fickle category, more trendy category than some of the others that you're in. And I guess I'm specifically talking in China as opposed to globally, so you can sort of parse out that, I guess, if you want. But any thoughts on maintaining a presence in a category that has more subjective sort of usage than some of your other categories on everyday usage? Thanks.

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

I'd offer a couple thoughts there. One, China is our second largest market, sales and profits. Beauty represents a significantly disproportionate amount of the business. So, if we weren't committed to the beauty business in China, you'd have to ask yourself a different question. Second, when we did our significant portfolio restructuring, however many years ago, that was now, into daily use categories where performance drives brand choice, we did the same with beauty. Exiting the most fickle, to use your semantics, portions of the business, we exited what I called fashion, fragrances and flavors. The brands that we have remaining and the categories that we play in, there's real opportunity to drive long-term loyalty with superior performance. That's true in China, that's true outside of China. And there will always be a higher trial rate in that category than in many other categories, that's not a bad thing. It helps demonstrate the superiority of what we do offer and people come back to our brands.

So, if the question is commitment to beauty in China, the answer is yes.

Operator

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

Edward Lewis
Analyst at Redburn Atlantic

Yes, thanks very much. We've been accustomed to strong performance in the U.S. for a number of years, but notable to see the strong performance in Europe again with volume and price. I guess that comes at a time when there's plenty of scrutiny over here on pricing levels. Can you talk more about what's behind the strong results for Europe at present?

Andre Schulten
Chief Financial Officer at Procter & Gamble

Look, I think the execution of the strategy in Europe is really behind the strength of the results. The team has done a fantastic job in combining the price increases that needed to be taken to recover the commodity cost increases, with very strong innovation that delights the consumer at the time when they see higher pricing materialize on the shelf. And that's really behind the benign volume impact as we took the pricing, and behind the acceleration of volume growth. Now that pricing is established in the market. We've done that. A few examples. Jon mentioned Ariel, I'll mention Ariel as well. But Ariel PODS in a more sustainable packaging, launched with the price increase that we needed to take, has been building organic sales by up to 20% or higher. So, the results are really a combination of strong innovation, pricing, and therefore maintaining consumers coming into the franchise and trading up, not different from the U.S.

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

We convinced ourselves for years that what mattered most in Europe was price. Specifically, the lower the better. And that wasn't an uninformed decision. You had the highest development of heavy discounters, for example, in Europe, which would indicate that price is an important part of the consumer value proposition. But as Andre said, in the last number of years, we've really pushed innovation as a driver of value, not forgetting about value, but delivering it through performance. And that, combined with the executional capability of that market, which has just been phenomenal. And I want to thank them all as long as you've given me the opportunity to do that, has led to just really terrific results, and I believe sustainable results.

Great. Thank you for your time this morning. I know it's a little bit of a difficult quarter to unpack. There's a lot going on. The net of that, although, is very positive, strong, really strong earnings per share growth while increasing investments in the business, both present and future, maintaining top line momentum, building volume momentum and building share. As I expressed before, I have a high degree of confidence in our ability to achieve a level of success going forward. And that's based entirely on both the strategy and the ability of our organization to deliver against that.

Look forward to seeing many of you at Cagney in a month or so, and we'll advance the conversation at that point. We're around John Chevalier is sitting across the table from me right now. He's around all day. Andre's around. They'll get angry if you call me, so call them. But have a great day. Thanks.

Operator

[Operator Closing Remarks]

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