HALEON PLC

LSE:HLN

Earnings Call Analysis

Improved Margins and Strong Organic Growth

The company forecasts a 7% to 8% organic sales growth for 2023, signaling a 4% to 6% growth in the latter half of the year. Executives project a very strong underlying improvement with margin enhancements, even after offsetting FX losses. The updated guidance suggests a profit increase of 9% to 11%, minus a 6.5% deduction from incremental translational effects, resulting in a moderate decline in AR profit growth.

Introduction and Second Half Sales Outlook

Haleon's Half Year 2023 Q&A Conference Call opened with a reminder of the forward-looking nature of the discussion and the influences that could affect actual outcomes differently from estimates, plans, and expectations discussed. A key point raised was the 7% to 8% full year 2023 organic sales growth guide, suggesting a 4% to 6% growth rate in the second half of the year, which aligns with the company's medium-term guidance. This guidance is set against a backdrop of a strong first-half performance despite the anticipation of a tougher second half influenced by normalizing cold and flu season volumes.

Margin Dynamics and FX Impact

Regarding margins, the expectation set was for a 9% to 11% growth in EBIT, demonstrating strong underlying improvement and eclipsing transactional foreign exchange (FX) losses. The margin improvement discussion addressed FX impacts and how they might create a drag on margins, with a suggestion that underlying margin delivery would be slightly better than expected despite FX headwinds. Overall, the company foresees margins staying flat, in line with previous guidance. The commentary indicates an ability to offset translational FX impacts operationally, although actual margin improvements would fluctuate based upon FX rates at the time.

Pricing Strategies and Market Share

Pricing outlook targeted no major changes for the second half of the year, continuing the trend of previous pricing increases, particularly in emerging markets. Any indications of price modifications or increased promotional activities were downplayed, reaffirming the strategic preference to invest in marketing and consumer connections over promotional discounting. Moreover, the management alluded to a current trend of maintaining or gaining value share in 55% of the portfolio, which reflected an improvement from earlier parts of the year and a potential positive trajectory moving forward. The pricing strategy seems to have contributed to transient fluctuations in market share within the competitive landscape.

Translation FX and Long-term Financial Planning

Finally, when it comes to translational FX, management discussed that while current year headwinds are being mitigated, the overarching strategy is to offset adverse FX effects and capitalize on favorable FX conditions. This adaptive approach to FX impact management underscores a broader financial planning perspective that emphasizes resilience and responsiveness to changing market conditions rather than rigid adherence to pre-determined margin goals.

Earnings Call Transcript 2023-Q2

[Sonya Ghobrial, Head, Investor Relations]

Good morning, everyone and welcome to Haleon’s Half Year 2023 Q&A Conference Call. I'm Sonya Ghobrial, Head of Investor Relations and I'm joined this morning by Brian McNamara, our Chief Executive Officer; and Tobias Hestler, our Chief Financial Officer.

Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements including those that refer to our estimates, plans and expectations. Please refer to this morning's announcement and the company's UK and SEC filings for more details including factors that could lead to actual results to differ materially from those expressed in, or implied by such forward-looking statements. We've posted today's presentation on the website this morning with prepared remarks running through the results in detail.

So with that, we'll go straight and open the call for Q&A. Thank you.

[Operator]

[Operator Instructions] And our first question today comes from Iain Simpson from Barclays. Ian, your line is open. Please go ahead.

[Iain Simpson, Barclays]

Good morning, everyone. Two questions from me please. Firstly that 7% to 8% full year 2023 organic sales growth guide that implies 4% to 6% in the second half, which is obviously in line with your medium-term guidance. Is that how you should think about it, you're basically booking the strong first half and just delivering on the algo in the second half? And in terms of the moving parts within that second half. There was some nervousness that tough, cold and flu comps and respiratory might be an H2 headwind. Do you feel more relaxed about those now, or do you expect strength elsewhere in the business to offset tough respiratory comps in the second half?

And then in terms of second question, just wondered if we could unpick the moving parts in the margin. So you're guiding 7% to 8% organic, top line 9% to 11% constant FX EBIT, so margins adding 2% to 3% to EBIT. But then in terms of FX impact on the business, we seem to be looking at sort of 4% top line, 6% to 7% EBIT, so 2% to 3% drag from FX.

So in terms of margins for the year, should we be thinking underlying margin delivery a little bit better than expected FX headwinds maybe a little bit worse than expected net-net margins probably staying flat in line with your previous guidance? Thank you very much.

[Brian McNamara, Chief Executive Officer]

Thanks Iain. I'll take the first question and I'll pass it to Tobias on the margin. So as you said, we had a very good first half and we feel good about the growth in the first half and the fiscal year outlook. I think there's two things in the first half that won't repeat in the second half.

And the first one you mentioned is cold and flu. So if you look at the 22% growth we had in the first half that contributed about two points to our overall growth. And then this outlook we're expecting an average season, which would be below last year from a volume perspective.

Now I want to be clear it's hard to predict cold and flu season these days, but we've taken an assumption that we believe is right at this point. So we're talking about volumes being down, but pricing largely offsetting that, so roughly a flat category in the second half. Also in the first half we did see strong growth in China with over 20% growth. And that was -- we had good performance across the portfolio, but Fenbid and Contac in particular, which is a pain relief brand and a cold and flu brand saw a significant demand coming out of COVID lockdown and as a zero COVID. And as a reminder in zero COVID those brands were actually on sales restriction because they treated COVID symptoms. So in zero COVID they didn't want that.

So there's two dynamics, one was lockdowns coming off getting back to a normalized level for those brands, and then some incremental demand based on COVID actually going through the country. So that's where the full year guidance comes you're right that the back half would imply 4% to 6%, we're thinking about it of the dynamics in the back half and what we're seeing. Tobias?

[Tobias Hestler, Chief Financial Officer]

Yeah. So on the margin, so I mean clearly we've said 7% to 8% on top line for the year 9% to 11%. So I think that gives you I think a very strong underlying improvement and strong underlying margin improvement. And as such just to clarify that includes offsetting the transactional FX losses in the business. As you've also seen in my prepared remarks in the -- we had 60 bps of margin improvement operationally that fully offset the transactional losses in that.

So underlying absolutely, an upgrade and an improvement coming through on the margin from the strong performance in the business. And then yes FX and that depends a little bit on where you build it from. But I mean ultimately, the consensus was around 5% to 6% CER growth. Our improved guidance is 9% to 11%. So you should add at the midpoint four to five points of profit growth. And then you deduct from that incremental translational, which is 6.5%. So, a small down -- sold down on AR profit growth. And again, if exchange rates would stay where they are in June and I've given you a little bit more color on how to model that in the appendix of the slide deck. So, we've added a few more of the currencies to help you model that out.

[Operator]

The next question comes from Guillaume Delmas from UBS. Guillaume, your line is open. Please go ahead.

[Guillaume Delmas, UBS]

Many thanks. Good morning, Brian, Tobias and Sonya. Two questions for me please. The first one is on pricing. I was wondering, what the outlook was for pricing as we think about the second half. In particular, are you planning additional pricing actions, or kind of the opposite, would you be looking at some price downward adjustments maybe increase in promo activities to maintain your level of competitiveness and maybe improve your volume share momentum. I know I think it's more a value share number you're looking at, but I noticed that 55% of your portfolio was gaining or holding shares at the end of the first half versus two-thirds at the end of last year. So, any color on that would be helpful.

And then my second question is on translational FX, because it's looking like it will be a significant headwind this year that you'll be able to mitigate. But big picture-wise, how should we think about this impact? Is it the case of trying to offset it when it goes against you and letting some of the benefit fall through to the bottom line when translational FX is more favorable. So for instance, if we were to see some reversal next year, should we expect better than moderate margin improvement in 2024. So, anything you can say about your mindset when it comes to translational FX, would be very helpful. Thank you.

[Brian McNamara, Chief Executive Officer]

Great. Thanks, Guillaume. Let me address the question on 55% share and then I'll pass it over to Tobias to talk pricing in the back half and big picture. So, yes, year-to-date, we are 55% of the business maintaining and gaining share. We have seen that number strengthen in recent months. So we think there's a positive trend there. And you mentioned it, but this is a value share measure. So we were impacted a bit earlier in the year by the phasing and timing of price increases. So just to bring that to life, I'll give you one example. Tums for instance in our US business, we took pricing at the end of Q1, some competitors happen to take pricing earlier in the year. We are now -- so we didn't grow share in Q1 and now we're back to strong share growth. So there's a bit of that dynamic happening.

And just on promotions, we tend to be a lower promoted business, even in categories that can be high promotion like Oral Health because of our strategy of therapeutic Oral Health. We invest more behind the dental detailing and the marketing in connection with consumers then we do promotion. We don't anticipate changing that strategy and OTC in general also tends to be a lower promoted category. So, we didn't anticipate any change. Tobias, on pricing and big picture.

[Tobias Hestler, Chief Financial Officer]

So the pricing, I think I mean for the half two probably mostly rolled over from what we've done in half one. Also, don't forget, we took increased pricing during half two of last year as well. Of course, I mean in emerging markets, we would keep pricing up as we can and as we've always done and then look here or there, when we see there's an opportunity to do something we would do it, but I wouldn't expect widespread further pricing increases. And Brian has already answered you promotional question on pricing. So, I wouldn't expect anything going backwards on that either.

And then on translational, look, I mean I can't plan for translational. So, I think -- and I believe in the way we've guided and the guidance change we've made, I think we're giving you the CER growth on profit and then I'll update you on a quarterly basis around what the translational impact is and this might go one direction or might go the other. And I hope with the additional color I've given you on more currencies in the backup that helps you also model it through yourself and have a bit more upfront visibility on that. Thank you.

[Guillaume Delmas, UBS]

Thank you.

[Operator]

The next question comes from Rashad Kawan from Morgan Stanley. Please go ahead.

[Rashad Kawan, Morgan Stanley]

Hey. Good morning, Brian and Sonya. Thanks for taking my questions. Just two for me please. The first one on VMS obviously positive in Q2 but in the present as you mentioned you expect continued pressures on immunity in the U.S. with emergency specifically. Does that alter your midterm outlook on VMS at that kind of mid- to high single-digit growth overall? And then just a second question on the consumer broadly. Are you seeing any changes in terms of behavior or any change in terms of down trading trends or shifts to private label especially in Europe as you've taken more pricing? I know volume dynamics still seem to be robust but any color you can shed there would be great. Thank you.

[Brian McNamara, Chief Executive Officer]

Great. Thanks Rashad. So first on VMS. As you said we were down 3.7% in Q1 and up 2.7% in Q2. So for the year we were down 0.5%. And if you just break that down across regions, we were mid-single-digit growth in Europe Middle East Africa and Latin America and in APAC but we were down double digits in North America. And two things impacted that. One was the lapping capacity coming on stream last year where we build inventory. So that was a negative impact.

And then on immunity subcategory, which you mentioned we are seeing a bit of a change in consumer behavior of the immunity category going back to more pre-COVID type levels. Now we saw incredibly strong demand in the base period as you know as COVID spikes came in. Now that was a category that always had good mid-single-digit growth. So it was a healthy category pre-COVID fully expected to be a healthy category post normalizing but we do expect and in our outlook we're assuming that that will still be a drag on the VMS business as we look at the back half of the year. So nothing has changed in my medium-term outlook.

And obviously, we'd update for next year when we get there but we feel like it's still a very good category 35% of our business is U.S. We like our geographic footprint and we're seeing good growth outside that. On consumer behavior and specifically about Europe. To date we are not seeing that. Now a reminder in Europe is that we have very little private label dynamic because there is very little private label dynamic on Oral Health, which is in mass market. Obviously, there's lower priced brands and we're seeing good dynamics on our Oral Health business.

And then in the OTC business we're sold through pharmacies and there's really no private label "to speak up". There is generic products in pharmacies. They tend to be under the -- behind the counter in the drawer so people are going up to the shelf and doing comparison. So to date we haven't seen a shift. Obviously unprecedented times where we're keeping close eye on it to see if anything changes there. But to date we've really seen the categories hold up.

[Tobias Hestler, Chief Financial Officer]

Rashad, I think you asked on the U.S. I think private label no change visible in our category. So I think when you look in aggregate private label shares actually are slightly down across all of our categories. Of course, you have some subcategories where it's slightly up slightly down but no shift visible in sort of consumer behaviors when they're in front of the shelf vis-a-vis the private label that is there.

[Rashad Kawan, Morgan Stanley]

Thank you very much.

[Tobias Hestler, Chief Financial Officer]

Thank you.

[Operator]

[Operator Instructions] Your next question comes from Chris Pitcher from Redburn. Chris, your line is open. Please go ahead.

[Chris Pitcher, Redburn]

Thank you. A couple of questions. Firstly, on China. Thank you for the extra detail in the presentation. Can I just make sure I've got the messaging right for the second half. Growth moderated but was still double digit in Q2 based on your disclosure. You're talking about a normalization in Fenbid [ph] but it does look like there's still strong opportunity amongst VMS.

Could you talk a bit about Oral Health and how you'd look to grow that in terms of strength of local and international competitors. And in terms of your raised full year guidance does that still imply double-digit growth in China in the second half? And then just secondly on the Lamisil divestment, obviously, helping the deleveraging. Can you give us a bit of a feel for the sales and profit impact -- cash impact on that? Thanks very much.

[Brian McNamara, Chief Executive Officer]

Thanks, Chris. I'll take the first question and then pass it to Tobias. So as you said we had a good first half in China. We grew over 20%. And obviously, we benefited from the COVID lockdown or the zero COVID policy going away and Fenbid and Contac. The VMS business also is growing so in good shape. So we continue to see trends there. And then on the Oral Health business what we saw was the category declining as we entered into the year. We are still seeing the category declining although declining less in most recent periods we're growing share so we're declining less than the category.

We expect that to in the back half continue to stabilize. Listen we feel good about Sensodyne in China. There's no question that there is competitive environment in China that can be a bit different in the sense of local competitors and they're not to be taken lightly. But we've been there and we've been competing against them and that's something that's always been something we look at. But we're -- we feel good about our business in China.

And on the back half I wouldn't give specific guidance on China but we expect to be able to see growth in China as we go into the back half. Obviously, we'll see less of that COVID impact the lockdowns were still in place. Zero COVID was still in place a year ago. So sales restrictions were still on things like Contac and Fenbid. But obviously in the first half we saw COVID waves coming into the country which drove demand above that. Tobias, Lamisil?

[Tobias Hestler, Chief Financial Officer]

Yes. So on Lamisil so it was £54 million of revenue last year I think with a very healthy gross margin as an OTC brand and small A&P. So I think you get clearly a negative hit from that on the OP and from the margin with the £54 million I think we sold at a very healthy sales price. So that is about a 4 times, 7 times revenue multiple that we get. So -- and of course it was declining in sales. So it's slightly -- very slightly dilutive to sales growth. But I mean that's really a tiny. And then we would of course expect to offset the negative impact from the divestment on the profit with the benefits from the productivity program next year.

[Chris Pitcher, Redburn]

And maybe just a follow up would we expect similar brands potentially to come out or you're done now for divestments.?

[Brian McNamara, Chief Executive Officer]

No, look, I mean as I've said before right I mean we said at full year we're going to be active in our portfolio. You've seen us do two things this year so far. I mean we've divested Lamisil, which I think at a very good price and this is classic example of being there's a better owner out there for that brand and we got good value for it. So it makes sense to divest that because I think it's clearly above our own key valuation that you see from the price.

We've also agreed to deal with Futura. So we brought something into the portfolio. And I mean you would expect us in a company with about 100 brands to look at things if they create value or not. So I think we do this but it's -- you have to test the market to see if you get value for it or not and that's exactly what we've been doing and Lamisil is an example. So expect us to be active. But if something comes through or not we don't know you can't plan for it. And we would of course always tell you when something is coming through.

[Chris Pitcher, Redburn]

Thanks very much.

[Operator]

The next question comes from Alicia Forry from Investec. Alicia, your line is open. Please go ahead.

[Alicia Forry, Investec]

Hi. Good morning, Brian and Tobias. A couple of questions from me. I wonder if you could update us on the inflationary picture that you're seeing across the operating cost base so beyond COGS. Any color would be helpful. And then on the A&P spend I assume given the market share performance that remains quite positive that you're happy with the current rate of A&P spend versus sales. Should we expect any change in the growth rate of A&P relative to sales going forward over the near term? Thank you.

[Brian McNamara, Chief Executive Officer]

Tobias.

[Tobias Hestler, Chief Financial Officer]

Yes. So look on inflation, right, I think, let me maybe start with commodities. I mean, some stabilization, but we haven't seen product prices massively come down. Sugar prices orbital prices still very, very high. Packaging comes down a little bit. But I mean still way above before the inflationary headwind where it was.

And I think outside of that, I think, it's mainly on people. So we just need to see where inflation rates are. So I think as you've seen, I think, we have strong operating leverage in half one. We were able to offset that. So I think from that point of view I think the ability in our model should be able to offset that through pricing and efficiencies.

And on the A&P spend so look in half, I mean, first of all, I think, we're happy with the level we are in percent of revenue. So we don't think there is a major shift in any direction. We've increased our consumer-facing A&P spend 8%. If you exclude Russia where we stopped advertising last year, so I think we healthily invested into the brands. And we would expect -- you should expect us to continue doing that going forward.

Of course, I mean, you have a year with organic sales growth like we had you wouldn't expect us to spend A&P ahead of that ratio. So I think you spend heavily. And of course, we also look for efficiencies in the non-consumer facing A&P spend as well.

[Alicia Forry, Investec]

Thank you.

[Operator]

The next question is a follow-up from Iain Simpson from Barclays. Iain, your line is open. Please go ahead.

[Iain Simpson, Barclays]

Thank you so much for allowing this first quarter. I'm going to be cheeky and ask another two questions if I may. Firstly, could you just remind us how we should think about working capital seasonality is something to get our heads around what you being a relatively new company. Typically, we see working capital kind of an outflow in the first half and then an inflow in the second half for most consumer companies. Would you be any different, or how should we think about that?

And then secondly in terms of your efficiency program, you're talking about some quite large numbers in terms of gross savings for that efficiency program. You also just said that you think A&P is in the right place as a percentage of sales. So I was just intrigued as to how we should think about where those efficiency savings will be going? Will they be reinvested back into the business? If so where given your comments on A&P or what proportion might fall through the bottom line medium-term? Thank you so much.

[Tobias Hestler, Chief Financial Officer]

Thanks, Iain. Let me start with working capital. So I think, yes, I think, we probably see similar pictures that you -- as you mentioned I think for us particularly, I think in half one, we've always see working capital outflows and that's largely driven by us building cold and flu inventories ahead of the big season sell and that's in Q3. Of course, this year it was a bit more pronounced given the strong sales growth.

Just to give you a color, I think, our days sales outstanding actually have improved. So, from 55 to 50 days in half one. So I think this year it's a bit more pronounced given the strong sellout. But you would always expect working capital outflow half one and then I think it's reversing out in the second half of the year.

And I think as a result our cash flow free cash flow by the way you saw it last year also what we did between separation and year-end, you would expect a much stronger free cash flow performance in the second half of the year. And then while I am at cash flow just I think for you to note as I had guided, I mean, of course, this year first time we have the interest cost cash out, because the payment of the interest is arrear. So that has normalized and also the cash tax has normalized, because we had a benefit in before so both as I had guided you for half one in.

[Brian McNamara, Chief Executive Officer]

Yes. Iain on your question on the efficiency program. As we previously communicated, £300 million majority of which will happen in 2024 and 2025. And I think Tobias' comments on A&P we're certainly for this year, we feel like it's in the right place. And the reason I say that is, we'll provide guidance at the year-end on what that looks like. But this £300 million certainly gives us the flexibility to understand what is the best way to move forward. If there's more growth opportunities to go after we have the opportunity to look at that and we feel like we get the right returns. If not, then there's an opportunity to use those funds in other ways. So it's really about the flexibility of that. But certainly, as we get into the end of this year, we'll give more clear guidance next year on where we think that will come out.

[Iain Simpson, Barclays]

Thank you so much.

[Operator]

The next question is from Olivier Nicolai from Goldman Sachs. Nicolai, your line is open. Please go ahead.

[Olivier Nicolai, Goldman Sachs]

Hi, good morning, Brian, Tobias and Sonya. Just two questions on my side please. First, a follow-up on China and Sensodyne. So growth last year for Sensodyne was affected by the lockdowns for Oral Health, I mean in general was affected by the lockdown. How are we compared to pre-COVID levels? Is there still much of a catch-up to be done in China for Oral Health?

And secondly, question is more on the -- more for Tobias this one. You're obviously expecting a strong growth for this year than at the beginning of the year. Your cash flow tends to be much stronger in H2. You've done one disposal at a really good price. And the bulk of your debt is in dollar which is weakening. So could we expect your net debt to EBITDA to be below 3 times maybe at the very beginning of 2024 which will still be within the guidance or even at year end? Thank you.

[Brian McNamara, Chief Executive Officer]

Good. Let me start on China. Yeah, we are seeing like I said earlier, we are seeing a little bit of softness in that category. And again, our negative category were slightly less negative than that. So we had to see share growth in the most recent periods. We do expect it to stabilize. I mean, it was certainly a dynamic that again towards the second half of last year. So in the back half, we're hoping to see that category -- expecting see that category more stabilized and us being in a position where we can get back to growth on the business.

[Tobias Hestler, Chief Financial Officer]

Yeah. So on the leverage, I mean look we've guided to less than three during 2024. I think doing the divest I think gives us increases that confidence that we get to that place. I mean as you mentioned, yes there is currency benefit coming through on the US dollar debt. However, also remember on the leverage side, it goes against the adjusted EBITDA number and on the adjusted EBITDA number you take the currency -- the translational currency hit as well. So I think there is a bit of an offset. I mean over time, I think this evens each other out and it really depends on exactly where it lands if you get -- because you never get like 12 months to 12 months. So in the long-term, I think we've broadly aligned our currencies of debt with the currencies where we have our earnings as we spread the debt across the dollar, the euro to a small extent the pounds and the Chinese renminbi as well.

[Olivier Nicolai, Goldman Sachs]

Thank you.

[Operator]

The next question comes from Bruno Monteyne from Bernstein. Bruno, your line is open. Please go ahead.

[Bruno Monteyne, Bernstein]

Hi, good morning. Tobias, I just want to come back to something you said earlier say investors wouldn't want to see A&P grow above the 10% organic sales growth. I don't really recognize that its investor sentiment. I think if you are able to grow A&P ahead of sales growth, we invest some of the operating leverage in more A&P and actually further strengthening future growth. I'm pretty much sure that most investors would actually be happy about it. So was it just a short-term observation? How do you think about it in the medium and long term?

[Tobias Hestler, Chief Financial Officer]

Yeah. Thanks, Bruno. Thanks for checking back, right? I think it was meant as a short-term comment, right? I think when we get benefits, strong benefits short term coming through from cold and flu or the benefits from China, right? I think that's not where you pump in more money to deliver that. I think long-term is I think exactly what Brian said, was said before of course keen to invest in A&P and looking for the growth opportunities that we have in the business there.

[Bruno Monteyne, Bernstein]

Thank you.

[Operator]

[Operator Instructions] The next question comes from Tom Sykes from Deutsche Bank. Tom, your line is open. Please go ahead.

[Tom Sykes, Deutsche Bank]

Yeah. Morning. Thank you. I just wanted to clarify some of the things you were saying on APAC and the APAC margin, because I think the minority is up by quite a lot. I think the minorities up by 60% or so which I thought the majority of that or all was the JV you had in China. And yes, that's obviously a long way about what the organic operating profit increase was for the APAC region.

So could you just explain and I know you gave some other points in the slide on APAC. So thank you there could you just explain what is happening to profitability outside what is included in that JV? And maybe could you just remind us what of that pie chart you gave what goes through that JV which comes out in the minority, please?

[Brian McNamara, Chief Executive Officer]

Yeah. Sure, Tom. So the joint venture in China has the over-the-counter medicines business in it. So it's about third of the sales in China. So it's really the OTC sales that go through that. And of course, that's where you had or we had in half one the major pickup in revenue because on both Fenbid and Contac which were the ones that were blocked before and then you have the massive demand coming through that we're able to meet given our local production footprint there and also the production footprint is also in that Joint Venture. So I think really strong support locally to run the production 24/7.

So that means that of course a part of that upside, we have to share with our JV partner and that's why you see that increase in the minority. And that of course is predominantly in half one where that stepped up, right? And then, I think the JV doesn't share for example cost allocations on the stand-alone costs and so on that are applied to the overall region. That's why you get a difference in the overall region margin picture compared to what sits in the JV as part of the JV agreement. Yeah. So I think it's a bit unusual in half one just given that strong benefit and Contac growth coming through there.

[Tom Sykes, Deutsche Bank]

Okay. Thank you.

[Operator]

[Operator Instructions] As we have no further questions, I'll hand the call back to Brian McNamara, for closing remarks.

[Brian McNamara, Chief Executive Officer]

Great. Thanks everyone. Appreciate your time and questions. As we said, we feel great about how the first half has gone. And we're confident in the outlook that we laid out today. So I hope you all have a great summer. And if you have any further questions, feel free to reach out to Sonya and the Investor Relations team. Thanks again for your interest.