Molson Coors Beverage Q3 2022 Earnings Call Transcript

Quartr
Provided by Quartr
November 1, 2022

Key Takeaways

  • Molson Coors delivered six straight quarters of net sales revenue growth, posting the second‐highest U.S. dollar share gain and its best dollar share trend in over a decade.
  • The company is implementing an average 10% price increase in the U.S. (and strong pricing in Canada, U.K., EMEA/APAC), with full‐quarter benefit expected in Q4 to help offset inflation.
  • Rapid input cost inflation remains a headwind—COGS rose about 11% in the Americas and 14% in EMEA/APAC—while hedging and cost‐savings programs mitigate but can’t fully prevent pressure, especially in lower‐income Central & Eastern European markets.
  • Core beer brands are strengthening and above‐premium innovations are accelerating, led by Miller Lite, Coors Light and Carling share gains, plus strong growth in Topo Chico Hard Seltzer, Simply Spiked Lemonade and other premium offerings.
  • Despite FX headwinds and macro volatility, Molson Coors reaffirmed its full‐year outlook of mid‐single‐digit net sales growth, high‐single‐digit underlying pretax income growth (at the lower end of the range) and over $1 billion in free cash flow.
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Earnings Conference Call
Molson Coors Beverage Q3 2022
00:00 / 00:00

There are 15 speakers on the call.

Operator

Good day, and welcome to the Molson Coors Beverage Company Third Quarter Fiscal Year 2022 Earnings Conference Call. You can find related slides with an updated format on the Investor Relations page of the Molson Coors website. Our speakers today are Gavin Hattersley, President and Chief Executive Officer and Tracey Joubert, Chief Financial Officer. With that, I'll hand over to Greg Tierney, Vice President of FP and A and Investor Relations.

Speaker 1

Thank you, Nadia, and hello, everyone. Following prepared remarks today from Gavin and Tracy, we will take your questions. In an effort to address as many questions as possible, we ask that you limit yourself to one question. And pick them up with our IR team in the days weeks that follow. Today's discussion includes forward looking statements.

Speaker 1

Actual results or trends could differ materially from our forecasts. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward looking statements. GAAP reconciliations for any non U. S.

Speaker 1

GAAP measures are included in our news release. Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period in U. S. Dollars and in constant currency when discussing percentage changes from the prior year period. Further, in our remarks today, we will reference underlying pretax income, which equates to underlying income before income taxes on the condensed consolidated statements of operations.

Speaker 1

With that, over to you, Gavin. Thanks, Greg, and thank

Speaker 2

you all for joining us this morning. I'm pleased to report that Molson Coors grew both the top and bottom line on both the constant currency and an underlying basis in the 3rd quarter. I'm particularly pleased because nearly 3 years into our revitalization plan to turn around this business, Molson Coors' top and bottom line growth is not just story of a quarter is becoming a trend. And that is important. For many, many years, you all knew Molson Coors as a cash generative business that was willing to make of hard cuts to meet the bottom line, but one that struggled mightily to grow the top line.

Speaker 2

When we launched our revitalization plan, The goal was to change that trajectory and position Balsam Coors for sustainable long term top and bottom line growth, and we are making progress. Going back to the beginning of last year, we have grown on a constant currency basis, the top and bottom line on an underlying basis in 4 out of 7 quarters. We've logged 6 straight quarters of net sales revenue growth. We are growing net sales revenue in both business units. And through the Q3 of the year, our global net sales revenue is above 2019 levels on a constant currency basis.

Speaker 2

Those results are also translating into strong industry share performance in our largest global markets. Across the U. S. Beer industry, we earned the 2nd highest dollar share gain and the best dollar share trend improvement in the quarter relative to the last 52 weeks. Moreover, our 3rd quarter STR trend was the best quarterly performance we have seen in over a decade.

Speaker 2

We have gained share in the UK. We gained share in Canada year to date. We're factoring out Quebec, which was recovering from the strike earlier this year. So it's not surprising to us that 3 quarters of the way through 2022, we are able to reiterate the key financial metrics of our full year guidance. I know that some of you are skeptical, but we have several tailwinds that give us confidence.

Speaker 2

We are benefiting from strong pricing in the U. S, Canada and EMEA and APAC. In the U. S, by far our largest market, our recent actions mean pricing will be up close to 10% on average versus the Q4 of last year as opposed to our historical 1% to 2% annual price increase and we will see that pricing benefit for the entirety of the quarter. Our U.

Speaker 2

K. And Canadian markets were heavily impacted by the Omicron variant in the Q4 of last year, which we will be comping. I know it's hard to remember, but the on premise in both markets was virtually closed for a portion of the quarter in 2021, and we do not foresee this happening again. Additionally, as expected, we plan to have less marketing in the Q4 of this year, which relates of phasing as we think about how and when to most heavily market our brand. And we expect the World Cup to be a large benefit to our EMEA APAC business.

Speaker 2

To major on premise beer occasion, particularly in Europe and it has never been this late in the year. Tracy will get into our guidance in more details, but these are some of the factors that give us confidence to again reiterate our full year key financial guidance. And I would point out that we can do so without contemplating some hockey stick trajectory for retail sales in the 4th quarter. Now while we don't believe they will impede our ability to deliver on our full year guidance, I do want to take a couple of minutes discuss 2 challenges that impacted our 3rd quarter results because there are some notable trends we are beginning to see. 1st and most obviously, while the rapid rise in input costs is not new this quarter, what is noticeable is the difference in COGS inflation rates between the two sides of the Atlantic.

Speaker 2

While it was high in all our markets, underlying COGS per hectoliter rose nearly 14% in EMEA and APAC compared to about 11% in the Americas. While we have been aggressive in taking price compared to historical benchmarks in beer and we are deploying other levers to recover as much of these costs as possible. In some markets, it's been difficult to keep up with the rampant pace of inflation. And in other markets like Central and Eastern Europe, some consumers simply cannot withstand higher levels of pricing. And that is the second trend, which is a diverging trend among our Global Markets.

Speaker 2

While volumes have remained strong elsewhere, we are seeing weakened consumer demand across the beer industry in our Central and Eastern European markets. Compared to their counterparts across the continent, these consumers tend to have less disposable income and are therefore more prone to inflationary pressure, which has put strain on this portion of our business. And that's in contrast to what we're seeing elsewhere. The U. S.

Speaker 2

Consumer remains resilient to date. The industry is continuing to trade up and we aren't seeing signs of significant channel shifting. September and third quarter on premise mix of total volume has remained consistent with the year to date trend and above 2021 level. And these trends are visible in the strong quarterly top line results for the Americas business unit. Consumer trends are similar in Canada, where the broader for your STING trailer and our portfolio is premiumizing.

Speaker 2

Volumes are even holding up in the U. K. In the Q3, on premise volumes in this market with flat with pre pandemic levels despite the very volatile and uncertain economic environment there. So again, no signs of significant channel shifting in the UK. Should consumer behavior in these other markets change, we have the right portfolio to compete in a more challenging economic environment.

Speaker 2

And thanks to the revitalization plan, we also have a business that is able to adjust the conditions more nimbly. So we will continue to make the investments and decisions necessary to ensure this business delivers top and bottom line growth, not just for 1 quarter or for 1 year, but year after year after year. That consistent approach has been the determining factor in the progress we have made. When we launched the revitalization plan nearly 3 years ago, we told you we're working towards a stronger core, aggressive growth in above premium and scale beyond the beer aisle, and we continue to deliver. Our core brands have not only stabilized, they are getting stronger.

Speaker 2

In the U. S, our premium brands are holding industry share and the combination of Coors Light, Miller Lite and Coors Banquet combined to grow over a full share point of the premium beer category. Miller Lite and Coors Banquet grew volume as well. In the U. K, Carlin continues growing share of the familiar Trusted Lager segment and again widened its lead as the country's number one beer.

Speaker 2

In Canada, Molson Canadian continues to grow net sales revenue and share of segment, while Miller Lite brand volumes are growing double digits with the brand achieving industry share growth. And in Central and Eastern Europe, we are growing segment share with our national power brands in the majority of markets. Our global portfolio continues to premiumize rapidly. In the U. K, Madri remains on an incredible rise.

Speaker 2

It is already our number 3 brand in that market and has gained the most market share of any of our global brand innovations since the Molson Coors merger in 2,000 of 5. Topo Chica Hard Seltzer remains the fastest growing hard seltzer in the U. S. And was a top 5 industry growth brand in the quarter. Simply Spike Lemonade is the fastest growing new FAB in the U.

Speaker 2

S. And was also a top industry growth brand finishing in the top 10. The Blue Moon family grew share of the craft segment in the U. S, while Peroni volumes were up double digits. In Canada, our hard seltzers grew double digits and continued to gain share of the seltzer category with Vizzy and Coors Seltzer now the number 4 and number 6 seltzer brands, respectively.

Speaker 2

We're also meaningfully expanding beyond the beer aisle. And our beyond beer space is about to get bigger as we recently announced our emerging growth team plans to launch Topo Chico's Spirited, an RTD cocktail early next year. The continued strength of our brands helped our business deliver on the top line globally. And while coverage inflation globally and consumer weakness in Central and Eastern Europe hampered our bottom line results in the Q3. Today, we remain on track to grow our top line and bottom line this year for the first time in over a decade.

Speaker 2

We have made substantial progress across this business in under 3 years. We've done it in spite of serious challenges no one saw coming. And we remain focused on setting up Molson Coors for long term sustainable top and bottom line growth. Now to give you more details on the financials and outlook, I'll hand it over to our Chief Financial Officer, Tracey Dube. Tracey?

Speaker 3

Thank you, Gavin, and hello, everyone. For the Q3, we delivered another quarter of net sales revenue and underlying pretax growth. We continue to invest in our business. We reduced net debt and we returned cash to shareholders. Despite the challenging global macro environment and overall industry softness, beer consumers remained resilient in our 3 major markets in the Q3, while we saw softness in our Central and Eastern European Business.

Speaker 3

And as expected, global inflationary pressures continue to be a headwind for our bottom line performance. Taking this all into account, we are maintaining our 2022 key financial guidance, but we do not underlying pretax income growth on a constant currency basis to be at the lower end of our high single digit range. While we discuss our business performance on a constant currency basis, it is also relevant to consider the currency impact of the strong U. S. Dollar, which was a meaningful headwind to the reported results in the quarter.

Speaker 3

On a reported basis, our 3rd quarter net sales revenue was negative impacted by $109,000,000 and our underlying pretax income was negatively impacted by $21,000,000 Before we discuss our quarterly performance, I wanted to provide some context on our on premise recovery. Our Q3 on premise has nearly fully recovered to 2019 total revenue level. However, in looking at the map on Slide 8, we can see there are variations by market. In the U. S, the on premise reached 94% of 2019 total revenues, the highest since the pandemic.

Speaker 3

While in Canada, where on premise restrictions have been more severe, The on premise continued to improve on a sequential basis, but has not returned to 2019 levels. However, in the U. K, similar to the Q2, the on premise well exceeded 2019 total revenues. Now I'll take you through our quarterly performance and our outlook. Turning to Slide 9, consolidated net sales revenue grew 7.9%, driven by strong global net pricing and favorable sales mix.

Speaker 3

Consolidated financial volumes were essentially flat. Americas shipments were down due to the continued impact of the Quebec labor strike, which was resolved in June, while financial volumes were higher in EMEA and APAC on increased U. K. Brand volume. Net sales per hectoliter on a brand volume basis increased 9.2%, driven by strong global net pricing and positive sales mix across both business units.

Speaker 3

As expected, inflationary pressures continue to be a headwind in the quarter. As you can see on Slide 10, underlying COGS per hect Visa increased 12%. The 2 biggest drivers were cost inflation and mix. Cost inflation comprised more than 2 thirds of the increase and included high input materials, transportation and energy costs. Our mix drove roughly 350 basis points of the increase and was due to premiumization, which is a negative in terms of COGS, but a positive in terms of gross margin.

Speaker 3

While inflation remains a significant headwind, we continue to judiciously deploy our multiple levers, including pricing, premiumization and our hedging and cost savings program to help mitigate the impact. As it pertains to our hedging program, it is worth reminding that our program is longer term in nature as we hedge commodities over 1 to 3 years. And we operate within guardrails and take a more opportunistic rather than programmatic approach. The purpose of the hedging program is to smooth out impacts of big swings in commodity prices. So in a situation like the Q3 where we saw some sequential easing of certain commodities, it will take time to see that impact on and P and L.

Speaker 3

Further, we are exposed to other costs that cannot be hedged such as freight, but also material conversion costs and 3rd party manufacturer contracts that extend over periods of time, which can be material contributors to our COGS. MG and A increased 3.5% as lower marketing spend was more than offset by higher G and A. Marketing investment decreased as we cycled higher spend in the prior year period when investments exceeded Q3 2019 levels. We continue to provide strong commercial support behind our core brands and new innovations like the U. S.

Speaker 3

Launch of Simply Spiked. G and A increased due to increased people related costs, including travel and entertainment expenses and legal costs as well as cycling the Yingling Company equity income, which was included in G and A in the prior year period. Now let's take a look at our results by business unit. Turning to Slide 11, the Americas net sales revenue increased 7.4%, benefiting from net pricing growth and positive brand mix, partially offset by lower financial volumes. Americas financial volumes decreased 1% driven by Canada, while U.

Speaker 3

S. Domestic shipments increased 1.4%. Americas brand volumes decreased 1.5% driven by Quebec and U. S. Brand volume declines of 0.9%, which approximated industry performance.

Speaker 3

U. S. Brand volume trends were driven by high single digit declines in the economy brands largely due to the SKU rationalization program and to a lesser degree by low single digit declines in premium brands. Conversely, the U. S.

Speaker 3

Above premium portfolio continued to grow strongly, up low double digits for the quarter. Brand volumes in Latin America also increased. Net sales per hectoliter on a brand volume basis increased 7.5% due to net pricing growth and favorable brand mix. And as you can see in the slide, strong pricing and premiumization in our 2 largest markets in the Americas, the U. S.

Speaker 3

And Canada drove that performance. On the cost side, Americas underlying COGS per hectoliter increased 11.4%. As with our consolidated results, the primary drivers were inflation, including higher material, energy and transportation costs, as well as mix impacts from premiumization. MG and A decreased 1.4% driven by lower marketing spend. As I mentioned, we strongly supported the national launch of Simply Spice, but Overall, marketing spend declined due to lower U.

Speaker 3

S. National marketing and sales control spend related to Alliance and Media phasing. G and A increased as a result of the same drivers discussed for the consolidated G and A I mentioned earlier. As a result, Americas underlying pretax income increased 10.5%. Turning to EMEA and APAC on Slide 12, net sales revenue increased 9.6%, driven by higher financial volumes, net pricing growth and favorable mix.

Speaker 3

Financial volumes grew 2% due to higher brand volumes in Western Europe, where the demand remains strong, along with higher factor brand volume. This was partially offset by brand volume declines due to Russia's war in Ukraine and weakened demand due to inflationary pressures in Central and Eastern Europe. EMEA and APAC net sales per hectoliter on a brand volume basis was up 14.3%, driven by positive net pricing as well as favorable sales mix, driven by the strength in our above premium brands like Madrid and positive geographic mix. On the cost side, underlying COGS per hectoliter increased 13.8%. Similar to the Americas, the drivers were cost inflation and mix from premiumization.

Speaker 3

MG and A increased 21.7% as we accelerated marketing investments behind our national champion and above premium brands, especially in the U. K. Supporting Carling, Madre and Star Promise and fueling on premise strength. G and A also increased as recycled lower relative spending in the prior year. As a result of these higher costs, EMEA and APAC underlying pretax income declined 38.9%.

Speaker 3

Turning to Slide 13, our underlying free cash flow was $597,000,000 for the 1st 9 months of the year, a decrease of 3.36 $1,000,000 from the same period last year. This is primarily due to higher capital expenditures and lower underlying pretax income, partially offset by the prior year net repayments of various tax payment deferral programs related to the pandemic and lower cash taxes. Our capital allocation priorities remain to invest in our business to drive top line growth and efficiencies, reduce net debt and to return cash to shareholders. Capital expenditures paid were $531,000,000 for the 1st 9 months of the year, an increase of $167,000,000 from the prior year period and we're focused on expanding our production capacity and capabilities program, which supports improved efficiencies and help us deliver our sustainability goals. Capital expenditure levels remain in line of our expectations of approximating pre pandemic annual levels.

Speaker 3

We ended the quarter with net debt of $6,100,000,000 down nearly $500,000,000 since December 31, 2021, and a trailing 12 month net debt to underlying EBITDA ratio of 3.13 times, approaching our target of below 3 times by the end of 2022. We ended the quarter with $125,000,000 of commercial paper outstanding. In this rising interest rate environment, it's notable that substantially all our debt is at fixed rate. In terms of returning cash to shareholders during the Q3, we paid a quarterly cash dividend of $0.58 per share to holders of Class A and the common stockholders and we paid approximately $12,600,000 for 230,000 shares under our share repurchase program, which is essentially an anti dilution program for annual employee equity grants. Now let's discuss our outlook, which you can see on Slide 14.

Speaker 3

And while we start year over year growth rates in constant currency, please note that current exchange rates would generate a headwind in our 4th quarter reported results at similar relative levels to what we experienced in the Q3 due to the strength of the U. S. Dollar. For 2022, we are reaffirming our guidance of mid single digit net sales revenue growth, high single digit underlying pretax income growth and underlying free cash flow of $1,000,000,000 plus or minus 10%. However, given increased inflationary cost pressures and weakening demand in Central and Eastern Europe, we expect underlying pretax income growth to be at the lower end of the range.

Speaker 3

Based on our annual guidance, this would imply for the Q4 on a constant currency basis underlying pretax income growth in the range of approximately 45% to 60%, and we expect to be at the lower end of the range. Now let me walk through some of the assumptions that will help you understand why we have reaffirmed our guidance. Gavin has already discussed some of the top line drivers like our fall pricing in the U. S, easing comparisons in the U. K.

Speaker 3

And Canada and the World Cup tournament. Also in the Q4, we have fully lapped the shipment headwind from our economy SKU rationalization. These drivers are partially offset by weakened demand in Central and Eastern Europe. From a COGS point of view, we continue to expect margins to be impacted by inflationary pressures, particularly with acceleration in commodity costs in EMEA and APAC. But offsetting some of the inflation costs, we continue to expect our cost savings program to be weighted to the 4th quarter.

Speaker 3

And we now expect lower depreciation, which is due to the timing of capital projects and the impact of significant foreign exchange movements. Turning to marketing, we continue to expect overall spend to be down in the Q4 compared to the prior year period. We're comfortable with our planned level of marketing investment, which is comparing against the prior year period when marketing investment exceeded 2019 levels. Looking out to 2023, while we are not prepared to provide any guidance, we remain committed to putting the right commercial pressure behind our core brands and key innovations, including our 1st official Super Bowl ad in more than 30 years. In terms of our other guidance metrics, we continue to net interest expense of $265,000,000 plus or minus 5%.

Speaker 3

However, we are lowering our underlying effective tax rate to a range of 21% to 22% from our prior guidance range of 22% to 24%. And we are lowering our underlying depreciation and amortization to $700,000,000 plus or minus 5 percent from our previous guidance of 7 of $50,000,000 plus or minus 5 percent for the reasons I just mentioned. So in closing, we put up another quarter of growth and did stay in a challenging macro environment. While these remain dynamic and uncertain times, under our revitalization plan, We have built our business to manage food challenges. With strong brands across all our segments and greatly enhanced financial and operational flexibility, We remain confident in our ability to navigate near term macro challenges, while investing in the business and staying the course towards our goal of long term sustainable top and bottom line growth.

Speaker 3

And with that, we look forward to answering your questions. Operator?

Operator

Thank if you choose to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure your phone is unmuted locally. And our first question today goes to Kevin Grundy of Jefferies. Kevin, please go ahead. Your line is open.

Speaker 4

Great. Thanks. Good morning, everyone. Two questions, if I could, Gavin. The first, long term oriented, the second, more near term.

Speaker 4

The first, just regarding your outlook for the U. S. Beer industry. Jim Koch recently drew some attention with his comments at Boston Beer's Wholesaler Meeting that traditional beer may never grow again in our lifetimes in the U. S.

Speaker 4

ABI's leadership was recently asked to react to Jim's comments on their earnings call. So I'd like to get your reaction And then the second more near term oriented, what adjustments are you making here, if any, to the playbook over the next 12 months, given the more challenging inflationary backdrop and weaker consumer environment, particularly in your European business. So thanks for that.

Speaker 2

Thanks, Kevin, and good morning. Yes, look, to your first question, I mean, I personally thought that was quite a A self serving statement from Jim. And I guess what you would expect to hear from the leader of the business is only got 10% of their portfolio in beer. I also thought it was odd that they would make on the same call a comment that Trudy was losing share to Premium Lights, which is obviously beer. So look, I mean beer has been around for 1000 years, Kevin.

Speaker 2

It's the most popular alcohol beverage in the world. In fact, outside of water and tea, beer is the 3rd most popular beverage of any kind in the whole world. So I don't think it's going anywhere. And our results over the past few years would suggest as much. If you go back a few years, people were We're speculating that light beer was dead because of Celsius and I could show you the headlines of all those comments and I don't think you hear a lot about that Any more today.

Speaker 2

In fact, you hear quite the opposite. So it's from our perspective, Coors Light, middle lite are growing NSR. Middle lite just grew volume in Q3. So are we going to find a way to leverage our competitive strengths and take advantage Of growth opportunities beyond beer? Absolutely, we are.

Speaker 2

But make no mistake, Kevin, beer is always going to be the heartbeat of our business and beer, I think, is always going to be a favorite of consumers as the moderate choice Of alcohol compared with hard liquor. So yes, that's my comments on Jim's comments. As far as the adjustments we're making to our business, look, our revitalization plan we launched 3 years ago focusing on our core brands, growing our above premium brands and building capabilities In our business and driving beyond beer, and I think we've made tremendous progress against those. I think during that time, we have shown that we are nimble and we can make adjustments when we need to make them. I'd point to the most high profile adjustment we made was back when the pandemic hit and our marketing department almost overnight changed the campaigns of both Miller Lite and Coors Light and shifted our media into the digital space where the consumer was and no longer necessarily on the traditional side.

Speaker 2

And Make no mistake, we'll make adjustments where we think we need to make them in Europe. It's interesting though that There's a bifurcation in Europe. Western Europe is just continuing as they were. Consumer demand is holding up strongly. We've also put in strong price increases in Western Europe, particularly the U.

Speaker 2

K. And And so far, we're not seeing any negative price elasticity because of that. The challenge We've had has come in Central and Eastern Europe, where the consumers got less headwind or headspace From a disposable income point of view and energy costs certainly and inflation are impacting those markets in a more meaningful way. Notwithstanding that, as you saw, we grew our marketing spend in EMEA APAC in the Q3, putting money behind our new innovation of Madri and some of our brands in local markets in EMEA, APAC. I think we'll continue to make the right decisions behind our brands that we need to keep the momentum that we've got right now, Kevin.

Speaker 4

Okay, very good. Thanks, Gavin. Good luck.

Speaker 2

Thanks.

Operator

Thank you. And our next Question goes to Rob Ottenstein of Evercore. Rob, please go ahead. Your line is open.

Speaker 5

Great. Thank you very much. Gavin, I know you don't talk about kind of the upcoming quarter, but it's kind of out there That, in the U. S, October was really, really weak. We're hearing from some distributors Down double digit.

Speaker 5

Wondering if you can make any comments on that at all. And Just kind of give us some sort of sense about how you're looking at pricing in the U. S. And in Europe and why the kind of levels that you're looking to get, which are historically high and clearly justified by the commodity increases, but whether those are levels that the consumer is going to be able to absorb particularly with some tightening in the economy. Thank you.

Speaker 2

Thanks, Rob. Look, I mean, let's if you look at pricing, we obviously took a fairly meaningful price increase in the spring Of this year, it was higher than our normal average, so 3% to 5% in the spring. And then we put a pretty similar price increase through in the fall. So it's a little soon to Determine the impact of the second price increase, which we put into the marketplace. I mean, some instances, we're actually still putting price there.

Speaker 2

Some of it went to back end of September, some in October, and we've got some going in November. So There isn't the data to show what that price increase is or has done to the consumer or will do. The price increase that we took in the spring, the price elasticities were not as elastic as you as they have been historically. I think the consumer has been quite resilient to Price increases we've put into the market, given that they're actually quite substantially lower than many other fast moving goods that consumers have been exposed to. So same effect that we've had in Canada and the same effect that we've had in U.

Speaker 2

K. It's only really EMEA APAC Central, Eastern Europe business where I think The sort of headspace and disposable income hasn't proven to be as strong as the rest of our businesses. As far as the service Sorry, Robert?

Speaker 5

I was just going to ask

Speaker 2

I was just sorry, I

Speaker 5

was just going to didn't mean to interrupt you. I'm sorry, Is the price increase ranges the same in the UK and Europe or is it a little bit less?

Speaker 2

We've actually taken different price increases by market, Robert. So in some Central Eastern European markets, we've taken double digits in the United Kingdom, not as much as that. The United Kingdom price increases are closer to what we've done in the U. S. Again, by brand, by pack, by country.

Speaker 2

If you then look at your first

Speaker 5

So, has it been 2 price increases, sorry, in Europe, so a spring 1 and a fall 1 also?

Speaker 2

We don't follow the same pricing calendar in the United Kingdom as we do in the U. S. As If my memory serves me, we have taken more than one price increase though, but it's not the same timing as the U. S. Now you're up to 4 questions, Robert.

Speaker 2

So I'm going to answer your Quickly and then move on to someone else. But from an October point of view, Look, it's too soon to tell what the impact is, right? Because there was load in from some of our price increases in late September and surely that is impacted in the 1st couple of weeks of October just as every price increase has a load in many of our markets That sell through has now taken place and we've reverted back to trends that existed But in other markets, the sell through is still taking place. So I think we'll get a good assessment of it, obviously in the next few weeks. Just remember also that in October of last year, that was really where we recovered our inventory levels following the cybersecurity attack.

Speaker 2

If you remember, we spent the whole of the second and third quarters playing catch up and just keeping our head above water from a shipments point of view. And We really did recover shipments in the Q4 of last year. We exited the Q3 this year with our inventories in a really good place. And so that will be a sort of negative headwind, so to speak, for the Q4 as we do plan to ship to full year consumption. Thanks, Robert.

Speaker 2

Thank you.

Operator

Thank you. And the next question goes to Chris Terry of Wells Fargo Securities. Chris, please go ahead. Your line is open.

Speaker 6

Hi, good morning. Gavin, can I just confirm what you just said and then I'll switch to my question? But Did you just say that inventories are now clean and so that could be a bit of a headwind and you'll shift to consumption In Q4, and I'd just like to confirm whether some of the recent headwinds associated with the Quebec strike and and the economy SKU reductions and some of these other things that have been lingering through the year have now are now in the rear view. So just wanted to confirm that, then I'll I'll ask you the question here.

Speaker 2

Yes, Chris. So my comment related to the U. S. So the U. S.

Speaker 2

Inventory, I would say, with a few minor exceptions with some SKUs is where we want it to be. It was we had got it to a really good place at the end of the Q3. And if you remember last year in the U. S, We were still rebuilding our inventories following the cybersecurity deck all the way through the Q4. So yes, headwind from a shipments point of view in the U.

Speaker 2

S. In Quebec, we are still recovering from that, right. It just does take time for us to get our inventories back to the level that we want to have them at. We had a 12 week strike essentially, and It's taking time to get back to where we needed to be. So that would still be a relative tailwind in the Q4 from a Quebec point of view.

Speaker 6

Okay. Okay, thanks. And then Gavin, can you just give us an update on how you see this portfolio shaping up Over the next year from a mixed percentage, obviously, you've put out some targets for the percentage of emerging growth, the percentage of the portfolio that will be premium. I wonder if you can talk to the Craft business effectively. There are some strategies to evolve this portfolio over Time and that timeline over the next year is kind of how you guys have described that.

Speaker 6

I wonder if you can just give us an update On how you see things today and how these things are evolving. And then just Tracy, if I could squeeze in just Did you say that non commodity inflation should continue to pick up as your commodity inflation eases? So that's just again, I just wanted to confirm That's from Tracy, but really Gavin, the complexion of the portfolio over the next year would be helpful.

Speaker 2

Yes, thanks. Chris, look, I'll take them by each of our revitalization plan strategies, right? So our core brands strengthening our core brands, We're seeing that globally. If you just look at the United States, Coors Light, Miller Lite continuing their share trend improvement. Miller Lite holding share for the 2nd consecutive quarter Coors Light, Miller Lite gaining more than 100 points of premium light space.

Speaker 2

And they're both growing dollar sales. Coors Light was up mid single digits in NSR. Miller Lite was up double digits. So We're obviously going to continue to push both of those brands in the U. S.

Speaker 2

They're in really good shape From a brand health point of view and reacting really well to the differentiated marketing campaigns that we've got behind them. You're seeing the same impact in Canada. We've got Coors Light that's strengthening, Miller Light that's going double digits and Molson Canadian even starting to show and performance trend improvements. And in the U. K, Carling is doing well, Ojusco is doing well in Croatia.

Speaker 2

So we feel that our core brand portfolio is in good shape, reacting really well to our marketing and our marketing investments, and we're going to continue to push that. So from an above premium point of view, I don't believe we've had a target we specifically put out there from a share of our portfolio point of view, but we had another record share of our portfolio for above premium. And then obviously, we want to continue to drive that. We've had some extremely successful innovations in both our North America business unit with Simply Spiked and with Topo Chico and also in our EMEA APAC business unit where Madrid is shaping up to be the best innovation that that market has ever launched, continuing to grow share at a rapid On top of that Blue Moon, Blue Moon Light Sky, I mean Blue Moon is the number one craft brand. Blue Moon Light Sky is the number one light craft brand.

Speaker 2

Peroni is growing very strongly in the double digits. And so we would expect our above premium portfolio to continue to grow from strength to strength. And then from an economy point of view, not really a player in our EMEA APAC business unit, more relevant in the U. S. And there I think it's safe to say that we are now through the screw rationalization process in the Q4.

Speaker 2

Certainly, there were no more shipment comparisons that were going up against. And I'm sure there were a few You know laggards from a sales to retail point of view, but by and large, we are through that. And our focus on our 4 core economy brands It's proving beneficial, right, both from a marketing point of view, a sales point of view and a distributor point of view. So as I said in our prepared remarks, Chris, I think our brands and our portfolio is really well positioned to take advantage of whatever happens. I mean, right now, we're not seeing a trade down in our U.

Speaker 2

S. Market, albeit premiumization has slowed down a bit, we're not seeing trade down. If it happens, we've got The ideal portfolio for that, we've always said that all segments matter and we've got brands that are now strong and ready to take advantage of that. Thanks. Tracy, yes, COGS.

Speaker 3

Yes. So, Chris, what I just take from a COGS point of view is we expect to have our margins continue to be impacted by inflationary pressures, particularly in EMEA and APAC. And then also, we are exposed to other costs that can't be hedged. So again, we're comfortable with our hedge coverage levels for the balance of 2022 and into 2023, but There are costs that can be material contributors to our COGS such as freight that we can't hedge, material conversion costs I mentioned and then our 3rd party co manufacturing costs, which also cannot be hedged. So based on the COGS

Speaker 2

side. Thanks, Chris.

Speaker 6

Much appreciated. Thank you.

Operator

Thank you. And the next question goes to Vivien Azer of Cowen. Vivien, please go ahead. Your line is open.

Speaker 7

Thank you. Good morning, Gavin and Tracy. I apologize, I dropped off the call momentarily, so I hope this hasn't been repeated. But I did want to follow-up on Robert's question around October. So it seems like with the beer purchasers index being remarkably low in the quarter.

Speaker 7

That might be a function of the fact that you overshipped to your inventory squared away. But just to follow-up on that theme, I'm just curious in your discussions with wholesalers and distributors, whether there's been any shift in your alignment around perspective on price elasticity given the price increase. Thank you.

Speaker 2

Thanks, Vivien. Yes, from a price increase point of view, as I said, We don't have any data at this point in time to suggest anything around our price increase that we took in the fall. We do on the price increase we took in the spring, which was pretty much double what we normally have taken In a year for a fairly long period of time, probably the last decade, the price elasticities We're less than what we would have historically expected. So the price increase that we put in the market was Seem to have been well received by consumers. Certainly, the retailers understand the cost pressures that we're facing and We're supportive.

Speaker 2

So I would say too soon to have any perspective on the recent Price increase. As I said, we're still actually putting some price increases into the market in some states. And some states, we put it early October, some in mid October. And there's always a load in that takes place and there's always a bit of a payback after that. When you couple that with the fact that we were still building inventories heavily in Q4 of last year and we don't have to do that this Because our inventories are in really good shape.

Speaker 2

Our stocks are as low as they've been for quite some time with only some very, very few SKUs where we have issues. I think we're in good shape from that perspective. But Again, I'm reiterating that that is a headwind in our U. S. Market in the 4th quarter.

Speaker 2

Thanks, Vivien.

Speaker 7

Certainly. Thank you.

Operator

And the next question goes to Steve Powers of Deutsche Bank. Steve, please go ahead. Your line is open.

Speaker 8

All right. Thanks so much. I wanted to To clarify on the pricing, you called out the near 10% in the 4th quarter. I'm just was wondering if we have a comparable number For where you were in the Q3 and if that near 10% contemplates mix or if it's strictly rate for clarification there would be great.

Speaker 2

And then I also wanted to

Speaker 8

ask on the lower D and A and in two respects. One is you've been running just Just north of $170,000,000 kind of run rate all year. I'm assuming, I guess, base case that that's a good place to start in the 4th quarter. But wanted to understand if there's any reason why that would deviate. And then you mentioned FX as a partial driver of that, which makes sense, But also the timing of certain capital projects.

Speaker 8

And I'm just maybe you could talk

Speaker 2

a little bit

Speaker 8

about what types of capital projects may have been deferred and if we should think about those as fiscal 'twenty three initiatives or if they're longer term, just a little bit more context on what on the drivers behind that lower D and A and how it impacts the future. Thank you.

Speaker 9

Okay.

Speaker 2

Thanks, Steve. Good morning. Tracy, if you can take 2 and 3, I'll take 1. From a comparable Point of view in the Q3, Steve, I'd say around 5% was in the Q3. So That lines up well with the sort of 3% to 5% that we put in back end of September and then into October.

Speaker 2

So that's a North American number. The U. S. Number is not terribly dissimilar from that. So The quarter at 5% is the comparable number.

Speaker 9

Okay.

Speaker 2

Tracy?

Speaker 10

That helps. Thank you.

Speaker 3

Yes. Yes. So

Speaker 8

Steve? Sorry, I don't want to talk over yet.

Speaker 3

Okay. Yes, on the D and that run rate is reasonable again depending on ForEx. There's nothing that we have pulled back on it's really a lot is about timing. And as I said, we expect our CapEx spend to sort of equate to for sort of pre pandemic levels, and nothing has changed from there.

Speaker 8

Okay. Thank you very much.

Operator

Thank you. And the next question goes to Andrea Teixeira of JPMorgan. Andrea, please go ahead. Your line is open.

Speaker 11

Thank you. Good morning. So my question is more on the bridge. Tracy, you helped us just now with the pricing, the bridge for gross margin and into what is implied. If our math is correct, I think it's implying that Profit before tax would be up like more than 40%.

Speaker 11

So I was wondering if you can comment on how you were able to understand the mix The impact of the economy going away, the lap, but if you can and the pricing you just discussed, but if you think about the COGS and how the hedges will roll over into 23. So if you can help us reconcile. And if under the 48 ish percent implied upside form that you embed in your guide, Is that also related mostly for the marketing spend that you mentioned that is down? Or even in the gross margin line you see an expansion in the Q4. Thank you.

Speaker 2

Thanks, Andrea. Look, I'll take that one. Let me just go back again to the drivers of why we're Confident on our guidance for the Q4 and obviously the full year. And just to be clear, yes, Your math is correct, right? It does imply income before income tax growth of around 40% to 60%.

Speaker 2

And we're As we said on the call, Tracey said on the call, we expect to be at the lower end of that. If you look at the top line, number of positive tailwinds for us in in the Q4. We've got the strong pricing in the U. S, Canada and the United Kingdom. As I said, in Q4, when you combine that with the pricing that we put in earlier in the year, we're looking at around a 10% price increase per hectoliter in Q4.

Speaker 2

We're comping Omicron in the prior year of Q4, which if you remember had a really big impact in the U. K. And Canada. We lost the Christmas Holidays in Canada and that sorry, in the U. K, that's a big selling occasion for the U.

Speaker 2

K. Market. We're not expecting that. And frankly, because of all the impacts that we had last year, we only made $5,000,000 in the EMEA APAC business unit last year. So it doesn't take much of a move to produce meaningful profit increase percentages in our EMEA APAC business.

Speaker 2

We're also looking at the World Cup as I said in November. It's a really big beer drinking occasion particularly in the U. K. And it's never been this late before. And as you rightly point out in Q4, we fully lapped the economy's SKU rationalization.

Speaker 2

Partially offsetting this, as I said, Is the weakened demand that we're seeing in Central and Eastern Europe and the shipment comp that we've got coming through in the U. S. Business in the Q4 of last year. And then a positive tailwind again is our Quebec business as we rebuild our inventory levels in Quebec, Canada. From a COGS point of view, that's a headwind for us.

Speaker 2

There's no question about that. It's a headwind for everybody and we're not immune from that. Tracy has talked about that. We do expect savings under our cost savings program to come through in the Q4. If I remember correctly, it was actually weighted towards the Q4 of this Yes.

Speaker 2

Tracey has talked about the lower depreciation. And yes, we are expecting marketing to be done year over year. We've said that from the beginning of the year, right, that we were phasing our marketing into the first half of the year and less so in the second half Of the year. So that is also a positive. And then we've got positive mix coming through, right?

Speaker 2

We've got Nice positive mix coming through from our above premiumization strategy across the world, not just in the United States. So That's what gives us confidence to keep our guidance at the levels that we have.

Speaker 11

That's super helpful. And then on the hedging, as we think about next year, Like I understand that obviously the hedges and just to make sure that it's just the lapping of the hedges or it's also obviously the carryover from A couple of other costs, because I understand obviously cans are being slightly cheaper now and more available. Just to think how we should to think about also the transportation COGS and all of that embedded in your guide.

Speaker 2

I can talk about the hedging. I'll talk about it from a high level, So we're not going to give guidance on this call. We always give it on the Q4 call, which is February once all our internal plans are signed off and signed off by our Board. But step back to the revitalization plan, Andrea. The objective of that plan was to drive both top line and bottom line growth on a consistent basis.

Speaker 2

Grew top line in 2021. Our guidance is to update that we're going to grow top and bottom line in 2022. And it's not meant to be a one off thing. It's meant to be a consistent driver of top line and bottom line growth for our business Is the very essence of our revitalization plan. But from a hedging point of view, can you give any more color without giving guidance?

Speaker 3

Yes. I think thanks, Kevin. So I think one of the important things around our hedging program is it really is there to help us smooth some of the volatility as we see in the commodity price fluctuations. We've said that we're comfortable with the coverage levels for the balance of the year and in 2023. And that the way that we hedge is, it's not programmatic.

Speaker 3

So it does allow us to be opportunistic. And then typically we have the highest hedges in year 1 and then less in year 2 and less in year 3. So Again, it's a tight program. We operate within guardrails, but it's really to smooth the commodity price fluctuations.

Speaker 2

Thanks, Trace.

Speaker 3

Thank you, both.

Operator

Thank you. And the next question goes to Eric Salota of Morgan Stanley. Eric, please go ahead. Your line is open.

Speaker 12

Great. Thanks for taking the question. Wondering if you have any color in terms of the phasing of Or the cadence of your trends in Western Europe. Summer was obviously quite strong, particularly in the U. K, but any signs of weakness coming out of the quarter or entering the 4th quarter, particularly in light of what one of your competitors said recently.

Speaker 2

Thanks, Eric. Look, I mean, as I said, if you look at the UK Market demand has been resilient. The consumer is holding up and we haven't seen any change in that post the end of the quarter. Certainly, we have started to see a tightening in the Central and Eastern Europe market. As I said, the head space from a disposable Point of view is a lot tighter in Central and Eastern Europe and the impact of energy and inflation has been a lot stronger in our Central and Eastern European markets.

Speaker 2

So we certainly have seen a softening in demand from our Central European business, but in the UK, the consumers Has remained resilient.

Speaker 12

Great. Thanks. The rest of my questions

Speaker 1

have been answered, so I'll pass it on.

Speaker 9

Thanks, Derek.

Operator

Thank you. And the next question goes to Nadine Sarwat of Bernstein Team. Nadine, please go ahead. Your line is open.

Speaker 13

Hi, thank you. Two quick questions from me, please. So first, could you just walk us exactly through what changed between the last results and today, such that you're guiding the earnings growth guidance to the bottom end. So just working through what has happened that was unexpected versus what you thought last quarter. And then secondly, can you give us any indication of how you plan to approach pricing next year, especially given that in cost headwinds will still be there given the hedging programs Tracy flagged.

Speaker 13

Thank you.

Speaker 2

Thanks, Nadine. Good morning. Look, I would say 2 things, Right. From what changed to drive us to the lower end would be consumer demand in our Central and Eastern European Businesses, plus some slightly higher cost of goods sold in those markets for unhedged areas and that would apply probably across the board, but more meaningfully in in our Central and Eastern European Business. As far as pricing is concerned, look, Nadine, I think it's a little too soon to tell, right?

Speaker 2

We've just put in historic price increases In 2022 of almost 10%, as I said. And we need to see we need to let that play out a little bit, right? We don't have any data for our latest price increase showing what if any impact it's had on the consumer from a price elasticity point of view. And so we've got several months to make that decision on how much or if at all we need to put a price increase into the marketplace. Certainly, the benefits of the 10% we've just put in this year will flow through into next year From a positive point of view, not only in the U.

Speaker 2

S, but also the price increases we put in Canada, U. K. And Central and Eastern Europe.

Speaker 13

Got it. Thank you.

Speaker 2

Thanks, Nadine.

Operator

Thank you. And the next question go to Camille Gajuana of Credit Suisse. Camille, please go ahead. Your line is open.

Speaker 10

Hi, good morning or good afternoon, I suppose, by now. Can you maybe just I want to square some of your answer to Nadine's question on the pressure in Eastern Europe and what's driven guidance to the lower end of the range. Shouldn't that be more than offset by the $50,000,000 change in your depreciation expectations?

Speaker 2

Remember, our guidance, Komal, is in constant currency, right? So we eliminate the impact of foreign exchange Flow throughs in our guidance. So it's a constant currency basis.

Speaker 10

Yes, but the question on depreciation, if your depreciation ends up being $50,000,000 less than you thought, I'm just thinking about the amount of cushion that gives you given the magnitude of that change. It just feels like it should have been able to offset Quite a change on the areas where you were negatively impacted. Is that not the case?

Speaker 3

Yes. So just remember that the €50,000,000 reduction is for the full year. So it has been running lower for the 3rd 9 months of the year. So don't expect like a full €50,000,000 in Q4.

Speaker 2

Remember our guidance was €750,000,000 plus or minus, right? So, we have been running at the lower end of that for the 9 months, Carmel. So yes, there's not a $50,000,000 benefit in the 4th quarter. That is for sure.

Speaker 10

All right. Got it. That clarifies that. Thank you. And then just quickly on the World Cup and marketing, just maybe it's just timing, but I might have expected that marketing would be higher during a World Cup period.

Speaker 10

And I think in the past or before years, there's this little sort of bump in marketing. Just curious why it's intended to be lower at this time.

Speaker 2

Look, I mean, our approach to marketing at Comal It's constantly to optimize our media spend to reach drinkers with the right brands, at the right moments, at the right level of Investments and we are agile and we do pivot to drive the best possible return that we can get in the marketplace. Obviously, the World Cup is less of a thing, so to speak, in our North American business. But having said that, it's a big deal with our Latino consumer and that's why we're going to have a very significant presence in the World Cup with the Topo Chico Hot Seltzer. We're going to be advertising on 50 games on Spanish language TV and We're actually really excited about that opportunity given that Topo Chica has got less than half of the awareness of White Claw, but over indexes with Latino consumers are under indexed in the sales of space. So This is a perfect opportunity for us to bring Topo Chico to life through the World Cup and we'll be on the big games, Mexico, U.

Speaker 2

S. And so on that really resonate with our Latino consumers. In the U. K. And in some of the other markets Where soccer is a big deal, we will certainly be putting more money behind our brands.

Speaker 2

Carling Is a fine example. Carling will play very well during the World Cup given its market share and the on premise and how World Cup Soccer has traditionally driven people into the on premise outlet. So we will be supporting our brands, And particularly, where soccer makes a big difference, which is in our EMEA, APAC business.

Speaker 10

Got it. Thank you.

Speaker 2

Thanks, Carmel.

Operator

Thank you. And the next question goes to Gerald Pasquarelli of Wedbush Securities. Gerald, please go ahead. Your line is open.

Speaker 9

Hi. Thank you very much for the question. In flavored malt beverages, you've been a consistent market share gainer over the course of the year, largely on the strength in Tubbo Chico and Simply Spiked, both of which are benefiting from incremental distribution gains, which will need to be cycled next year. So my question is how are you thinking Sustaining momentum in flavored malt beverages. And are you seeing anything in terms of consumer repeat rates on these two brands that give you confidence and being able to successfully cycle what would be a year of tough compares in 2023.

Speaker 9

Thanks.

Speaker 2

Thanks, Gerald. Look, we see these two brands as operating in quite different places, right? So Topo Chico is way more in the seltzer space And simply is in the flavored malt beverage space, right, the fuller flavored area. So let's Just take those 2 separately. Simply Spark has been an incredible success so far.

Speaker 2

It's the number one new item in total beer since launch. We only launched it halfway through the year. So we've got a full 6 months next year of no compras at all. And then we've got a full 6 months frankly where we not a full 6 months, it's the biggest selling season for Simply where we were severely constrained from Our point of view because this brand just blew our socks off from a volume point of view. In terms of compers, we've got a lot of tailwind behind SimplySpark next year.

Speaker 2

We've got the production to handle it. We in source it into Fort Worth much quicker than we were originally thinking we were going to do. And we're certainly going to innovate with Simply Spiked as well. I mean Simply the non ALK version is the number one chilled juice brand in the United States. It's found in 1 out of every 2 American households.

Speaker 2

And As we look to the future, we can tap into the Simply non out portfolio for ideas and how we're going to take innovation forward with Simply. So yes, strong, strong potential for this brand next year and we have the production and the distribution gains to do that. And you're right, it was the number one flavored malt beverage this summer across many of of our top retailers. The Topachica is slightly different, right? But just as impressive performance from our perspective, I mean, from a Topachika in its 1st year of national distribution is growing more dollar share than any other seltzer brand in the last 52 weeks.

Speaker 2

Molson Coors as a whole with Topo Chico and Busy has got the fastest growing hard sell to portfolio of any brand in our competitive set. Obviously, Topo Chico drives a large part of it, but we've just scratched the surface with Topo Chico Hot Seltzer. As I said, it's only got half the awareness of White Claw. It's got strong momentum and performance across the country, not only in its expansion markets like Michigan or Wisconsin and North Carolina, But also in its original markets of Texas and California, it's bringing new drinkers into the category. We over index significantly with the Latina consumer who has typically under indexed from A Seltzer point of view, and we've got lots of innovation planned around Topo Chica.

Speaker 2

We launched Ranch Water in January. We had Topachica Margarita that we launched in April and we've got Topachica Spirit that's coming next year. So Overall, in 2 very different spaces, we think we've got some really exciting innovation that's got a lot of run rate, a lot of tailwind behind it. Thanks Gerald.

Operator

Thank you. And the final question today goes to Brett Cooper of TEMA Research, Brett, please go ahead. Your line is open.

Speaker 14

Thank you. Gavin, as we continue to see Miller Lite advertise or position itself against Ultra, I have To assume that you're finding success in recruiting or winning consumers relative to a competing brand, I was hoping that you could speak to the interaction between brands and your success. And then I guess this is a backward looking question, so where we are today, but also cognizant of thinking about the competition that's coming into light beer from large brands in 2023. Thanks.

Speaker 2

Thanks, Brett. Look, I mean, you're right. We've got fantastic momentum behind Miller Lite right now. It grew NSR in 2021. It's growing NSR year to date in 2022.

Speaker 2

And We continue to believe that Miller Lite's brand positioning as a beer is beer or the beer for people who just love the taste of a great beer is resonating really, really well. It's come to life across all of Miller Lite's marketing from New localization spots that resonate around football. We've got the competitive spots that show Miller Lite Superior Taste compared to other light beers and one of which you mentioned in your question. Our marketing effectiveness for this brand has meaningfully increased over the summer period, June to August. We've got strong feature and display growth through the football season.

Speaker 2

And that's paying off with Our largest chain retailers with one of our largest chains, Miller Lite is now the number 4 brand for total beer sales and the number 1 most Blade brand. So we've increased its media investment and it's become the major sponsor of ESPN Fantasy and it's taking share from many of its competitors, including, Nick Ultra and Bud Light to name 2. Thanks, Britt.

Speaker 6

Okay. Thank you.

Operator

Thank you. We have no further questions. I'll hand back to Greg for any closing remarks.

Speaker 1

Very good. Thanks, Nadia. So Appreciate everyone's time today. I know there may be some questions we weren't able to get to, but please follow-up with our Investor Relations team in the days and weeks that follow and we will look forward to talking with you as the year progresses. Thanks everybody for joining us on today's call.

Operator

Thank you. This now concludes today's call. Thank you for joining. You may now disconnect your

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