General Mills Inc

NYSE:GIS

Earnings Call Transcript 2022-Q3

[Operator]

Greetings, and welcome to the General Mills Third Quarter Fiscal 2022 Earnings Q&A Webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Wednesday, March 23, 2022. I would now like to turn the conference over to Mr. Jeff Siemon. Please go ahead.

[Jeff Siemon, VP, IR]

Thank you, Frank, and good morning, everyone. Thanks for joining us today for our Q&A session on third quarter results. I hope everyone had time to review our press release, listen to our prepared remarks, and view our presentation materials, which were made available this morning on our Investor Relations website. As a reminder, beginning this quarter, we are reporting results under a new segment structure. You can find supplementary information on our website that shows our historical net sales and segment operating profit results recast for this new segment structure. I'll also remind you that in our Q&A session, we may make forward-looking statements that are based on management's current views and assumptions. Please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call. Joining me this morning are Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; and Jon Nudi, Group President of our North America Retail segment. Let's go ahead and get to the first question. Frank, could you get us started, please?

[Operator]

[Operator Instructions]. Our first question comes from Andrew Lazar with Barclays. Please proceed.

[Andrew Lazar, Barclays]

So, Jeff, maybe if we put aside General Mills’ comments from CAGNY around sort of 3Q expectations and such, I guess the bottom-line is the company has still raised its full year outlook above where that initial sort of set of company forecasts were prior to the start of 3Q despite a very tough environment. So I guess a twofold question on that. First, what do you think enabled that? Because I think there has been still ample industry skepticism around the industry's ability to sort of deal with the current environment as it is. And then more importantly, I know you're not going to give sort of detailed guidance for next year until next quarter. But do you think this dynamic of managing through this can hold as you move through fiscal '23? Because the concern I hear from many investors really is that the industry is just sort of kicking the can down the road so to speak about when the impact of certain things like costs, particularly in light of recent global events will ultimately catch up to the group. That would be my questions. Thank you.

[Jeff Harmening, Chairman and CEO]

So, Andrew, as I think about this year, I mean importantly, we ended the Q3 with momentum and the reason we headed with momentum is because our service levels improved. And as a result, our volume approved more than we had thought, even before we were going into CAGNY. And as we look at the fourth quarter this year, I think it's important to realize we're still going to have inflation. In fact, inflation in the fourth quarter will be higher. My pricing will also be higher in the fourth quarter. And in line, Q3, our inflation and pricing was in line with what we'd expected. And so we feel as if we have a good handle on both those items. And then -- so then what's really driving the improvement in the fourth quarter is just a little bit better volume than what we had anticipated, given service levels a little bit higher. We're also seeing -- a lot has been made of elasticities. I mean, it's a pretty benign elasticity environment right now, which is not to say there's no elasticity. Certainly as prices go up, there will be some level of elasticity, but it's also important to note that it's not in line with historical elasticities given this current environment. And so, our raise on the fourth quarter really is confidence in our underlying assumptions around inflation and pricing. We are, as we said, mostly hedged on commodities through the calendar year, which obviously includes the fourth quarter. And inflation and pricing, we saw the pricing we thought we would get through. And so, it really has increased confidence in our ability to service the business in the fourth quarter. Now our service levels won't be as they have historically been. So we're not anticipating getting all the way back to that. As we look at '23, I mean, it's a pretty volatile environment. And so, usually as you well know, Andrew, we don't comment even on hedging. We don't comment on past and current fiscal year, but these are unusual times. And so we thought we'd give a little bit of color into what we have hedged through the calendar year. And what our hedging does is, it mostly buys us time, and we'll have inflation in fiscal '22. Though we'll have a significant inflation in fiscal '23, it just won't be at the level of spot prices at least in the calendar year you're seeing now in the market.

[Operator]

Our next question comes from Ken Goldman with JP Morgan. Please proceed.

[Ken Goldman, JPMorgan]

I wanted to just ask specifically on pet for the margin. I think dropped to its lowest level since you brought Blue Buffalo. Can you talk a little bit about what caused the pressure in terms of input costs? And I assume that those are here to stay for a while. I think you also mentioned higher SG&A. So I'm just curious, how do you think about the potential for pricing to start offsetting some of these headwinds? When do you expect sort of the bottom in that margin to be reached? Just trying to get a little bit of a better sense for how to view that progression?

[Kofi Bruce, CFO]

Ken, I'll take that. This is Kofi. Thanks for the question. So one of the important things to also think about here is the impact of pet brands on the pet margins. So that is dilutive to the margins this year. There's some specific one-time charges related to purchase accounting flowing through in the -- weighing on the margins as well. So we expect as we both bring that more fully into our production system and get it online for HMM that we'll see those margins improve on the pet brands business and -- on the acquired brands, excuse me. And then as we step forward, we expect a gap between inflation and pricing to close. So pet will be a meaningful contributor to the pricing step up we expect in Q4.

[Operator]

Our next question comes from Michael Lavery with Piper Sandler.

[Michael Lavery, Piper Sandler]

I appreciate just even a little peek under the tent for fiscal '23. I guess maybe I'm pushing our luck here, but would love just to know when you say you've got some coverage through calendar '22, it still noted that there's significant inflation, would that -- if things are where they sit now, if that holds, would that be an acceleration in inflation or does the coverage give any moderation? Maybe just order of magnitude what you're seeing as far a little bit of a further look ahead?

[Jeff Harmening, Chairman and CEO]

Yes, Michael, thanks for the question. And yes, you might be pushing your luck a little bit. I think it's fair to say. We expect the inflation to be significant. I wouldn't want to go much further than that. And I think our expectation at this point in the year would be -- a normal policy would be to be about 50% hedged, which is the perspective I give on why we guided you to calendar 2022. So the goal here is to buy ourselves the time to get actions aligned up in the market, and frankly, to give ourselves time to read whether or not we see the inflation as being structural.

[Michael Lavery, Piper Sandler]

Maybe just a follow -up, on the service levels for pizza and dough and snack, you said you kind of really pushed to get more out the door in the last couple of weeks of the quarter, short period of time, but your margin performance was still quite good in North America Retail relatively speaking with fairly modest sequential and year-over-year declines compared to what we've been seeing. Was it just the pricing that really drove that and obviously it was significant? Or is there some other things going on that are just good to keep in mind for how we think about your momentum and margin outlook in that segment?

[Kofi Bruce, CFO]

Yes, I'll start. And then I'll ask Jon to provide any fillers if I missed anything. So I think you got it mostly right. So we saw pricing actions come-in in the quarter probably towards the middle to tail end of the quarter. So as we go forward, we'd expect that to be a meaningful step up in this segment as well as a meaningful contributor therefore to the step up for the total company. On top of that, as Jeff referenced in his comments on the first question, we expect service levels to reform closer to in line with what they had been trending prior to the quarter. So I think the combination of those two things is what gives us a good portion of a confidence that drove our guidance rate.

[Jon Nudi, Group President, North America Retail]

Yes, I think that's exactly right. So again, pricing and service are the two big things that we are focused on across our end. Maybe I'll spend just a minute to go a little bit deeper on service. Obviously, that's been a big challenge for us this year and it's really evolved as well. At the beginning of the year, it's really about our distribution centers and logistics bottlenecks. We have done a nice job at staffing distribution centers up and feel good about our ability to move product now. The biggest issue we’re seeing is really around materials selection. So, ingredients coming into our plants to run our products. In Q3, it was particularly challenging, particularly in RBG, pizza and hot snacks, so things like fats and oils and starch and packaging. So we spent a lot of time really working as a team to improve on those platforms. We've seen an improvement in our case fill and on-shelf availability, but our service levels are still quite a bit below historical levels. We trade 98% to 99%. We were in the 70s overall for Q3. We expect to get better but not near historical levels. We expect to be in the 80s as we go into Q4. So we've taken lots of actions, really proud of the team. Supply chain team is doing the elements work, and it's really one business team working together. And we've pulled many levers. We started up control towers daily at the working team level. At the senior level, we're meeting once a week on RBG and hot snacks or other constrained platforms to make sure that we're removing hurdles or at the senior level getting on the phone with suppliers, at senior levels to make sure that we prioritize for ingredients. We've adjusted formulations. In some of our products, we've reformulated over 20 times year-to-date. Every time you make an ingredient change, you have to change the formulation, which is obviously a lot of work by our [IGT] teams. We just did freight lanes as well pretty significantly to make sure that we can get to our customers on time. We've added capacity on things like OEP, fruit, cereal, potatoes. We're adding ESC. So we're spending a good chunk of our time making sure that we service our business. We did better, I think, as we entered this quarter. We've got a lot more work to do, and we'll stay very focused on that.

[Operator]

Our next question comes from Robert Moskow with Credit Suisse.

[Robert Moskow, Credit Suisse]

Just a couple of quick ones. Jeff, can you talk a little bit about your plans for capacity expansion in this calendar year? I believe you're adding more in refrigerated dough. I wanted some more specifics there and see if there's any other categories that you've been expanded. And then secondly, I want to know in the flour milling grain merchandising business, do you expect any kind of benefits from dislocation in the grain markets?

[Jeff Harmening, Chairman and CEO]

So Rob, on the 2 questions, in terms of capacity expansion, I probably won't go product line by product line. However, I do appreciate the question. And what I will say is that we are certainly willing and will be spending capital to expand capacity on a few of our lines in the coming year. And really, the businesses are -- that we'll spend money on are the ones that performed well pre-pandemic and continue to have momentum during the pandemic, and there are actually a number of those. And so what you'll see in the coming year is that we will expand capacity on several of our major businesses. We'll probably give an update at the end of the year on where we intend to do that. But your question is a fair one and just know that we do -- our first call on capital is investing in our current business. We have momentum on a number of businesses that we had pre-pandemic and we have during the pandemic. In terms of the question about flour milling and dislocations, I mean, I don't know that we're going to see any benefits. Having said that, I think we'll have full supply on our grain milling businesses. We're world-class in that. We've been milling flour since 1866, so we have a pretty long history of being able to do that effectively.

[Operator]

Our next question comes from Steve Powers from Deutsche Bank.

[Steve Powers, Deutsche Bank]

You -- I guess you performed well on HMM cost savings despite the supply constraints that you've been talking about. And I guess I'm curious just to what degree you think that HMM cost savings momentum continue, but may actually be able to accelerate to some degree as those supply constraints abate and you're able to focus more on so-called business-as-usual conditions, hopefully, into the new year. Just some commentary around HMM would be great.

[Kofi Bruce, CFO]

Appreciate the question, and I'd love for business-as-usual conditions tomorrow if you've got that in your powers. So I think our expectation is HMM is a core capability for us. And we've been at it as a disciplined really since the start of -- close to the start of this century. We've been pretty consistent in delivering mid-single-digit COGS productivity off of it. I don't have any concerns about our ability to keep doing that. What I would expect is that if we -- if and when -- or when, I should say, we get to, and it's hard to say when that is, when we get to more stable conditions that we'll be in a position that HMM will be the lever that allows us to shed a lot of the operating costs that we put on in this environment due to disruption. And so what that will do is allow us to bring our margins -- our gross margins back up as a result of the SRM actions that we've taken in this environment to deal with the extraordinary inflation.

[Steve Powers, Deutsche Bank]

If I could, just on a fully different tact, just on pet. I'd love your perspective on how you expect the category broadly, I mean your brands specifically, but the category broadly, high-end, premium pet care, pet food to hold up if we enter a more adverse consumer environment. Just how you think that category has evolved and solidified itself to be able to persevere through a cycle?

[Jeff Harmening, Chairman and CEO]

Yes. Steve, this is -- it's -- we anticipate the category will continue to perform well, and we think that our segment will continue to perform quite well. And even through the last recession, which was a long time ago, one of the things before we even bought Blue Buffalo, we look at how the category performed during a recession, and it turns out it performs very well. The last thing you want to do in tough times is sub-optimize what you're going to give your pet. And I would tell you that on top of that, the predominant trend in pet food now, and I think will be going forward, is the humanization of pet food. And we're clearly very well positioned in that area given that we're the #1 natural pet food in the pet category by a long, long way. And so we believe we have the best brand and the best part of a really good segment and a really good category that holds up well during recessions. And by the way, as a result, all those things have very low exposure to private label.

[Operator]

Our next question comes from Bryan Spillane with Bank of America.

[Bryan Spillane, Bank of America]

So my question is around elasticity, and I guess wanted to just get 2 perspectives on it. Jeff, I think in the prepared remarks, you mentioned -- there's a mention about the sort of expectation that this elevated level of demand is -- you expect it to stick. And so is part of that just a function that now given where inflation is, just an expectation that consumers just be eating more at home? So we've kind of shifted from being at home because of COVID to now eating more at home because it's so expensive to go out? And then maybe just a second point, maybe for Jon Nudi, is anything that you're seeing now in terms of like cross-elasticity between channels. So consumers making different choices in terms of maybe avoiding food stores and/or convenience stores or just anything that's going on between channels as we're just watching the pricing set in? I know there's a lot there, but would appreciate.

[Jon Nudi, Group President, North America Retail]

Thanks, Bryan. This is Jon. So maybe I'll tackle pricing here, and then I'll get to elasticities in a second. So obviously, I talked about supply chain. Pricing, the other subject, we're spending a lot of time on. We do believe that we're pricing effectively within the market, and for each brand, that looks different. And one of the things I'm really proud of is the SRM capability, our strategic revenue management capability we've built over the last 5 or 6 years under Jeff's leadership. And our SRM plans look different for every brand and really go down to the SKU level. It's an always-on capability. We're looking at what's coming at us from an inflation standpoint. We're looking at what's happening in market. And then we're leveraging the full SRM toolkit. So that's car lot advances, it's trade optimization, tag price architecture and mix. And in the U.S., our measured data or our average unit prices are up a bit more than our categories, and that's really where we want to be. In many cases, we're the leaders in the category. We feel like it's on us to make sure that we have clear pricing strategies. At the end of the day, our goal is to pass as little as needed. But certainly inflation, we need to take pricing at this point to preserve our margins. So we work closely with the retailers. Pricing is never an easy discussion. Everyone is facing inflation, though. So again, we can lock in and provide a good rationale for why we're taking the pricing, and more importantly, a coherent plan for what pricing will look like in market. We've been able to find good acceptance, and more importantly, good reflection in the market. So it's been a big focus area for us. I feel great about what we've done to date. We've got a road map for each of our brands and down to the SKU level for the future as well if more pricing is needed. In terms of elasticity, I mean, Jeff touched on this earlier, I mean, we are seeing elasticity. So again, it's not like we're not. This is not at historical levels. We've seen elasticities remain pretty consistent quarter-to-quarter. So what we saw in Q3 was consistent to Q2. We expect that to be the case in Q4 number. And we're going to have more price/mix in Q4. So we expect to see a bit more elasticity as a result, but again, not back to historical levels. In terms of what's happening and across segments and categories and channels, there's obviously a lot of noise in the data, everything from product availability to consumer mobility to government support levels and significant inflation away-from-home channel. It's really hard to try to parse them out, but we'll continue to try to do that. But again, elasticities remain constant. That's the important thing to remember and not at historical levels as well.

[Operator]

Our next question comes from Alexia Howard with Bernstein.

[Alexia Howard, Sanford C. Bernstein]

Could I ask about marketing and innovation? Obviously, there's so much disruption going on in the industry. You've talked about supply chain issues starting to be resolved. I can imagine there's a lot of fires to put out right now. But on the underlying marketing, it sounded as though SG&A was down this quarter. Does that mean that the marketing spending was down? Is that likely to remain that way until things get easier on the supply chain? And then also on the innovation side, has that also had to be ratcheted back just because of the current state of play out there in the world?

[Jeff Harmening, Chairman and CEO]

Alexia, I really do appreciate that question. This is Jeff. The -- I think the key to remember is that we've gained market share in more than 60% of our categories for 4 years in a row. And there's a reason why we've done that, and that's because we really haven't cut back on marketing spending or our levels of innovation. In fact, our levels of new product innovation have led most of our categories all over the world. And we've actually increased our marketing spending over time. And you can't just turn on and off marketing spending on brands and have those brands be effective, and the same will be true of innovation. So through this whole pandemic, we -- one of the things we see is that companies that come out of rough periods like we have been through, the ones who invest in their brands, whether that's new product innovation or whether that's marketing, are the ones that are successful. With regard to the latest quarter, the reason our SG&A is down, the #1 reason is that our admin costs are down. Our marketing spending is down just a touch, but that really is a reflection of a very short period in time. But broader picture, we've continued to innovate and we've continued our marketing, and that's the reason why we're growing share pretty much everywhere in the world.

[Operator]

Our next question comes from Laurent Grandet with Guggenheim.

[Laurent Grandet, Guggenheim Securities]

I'd like to come back a bit on pets and pricing because that's a question I've got from many investors. So first on, what is the price, what is the mix in pet food in the third quarter? What -- if you can really unbundle those 2? And are you seeing pet parents shutting down to smaller pack size as we are seeing from -- for some of the brands? And anything you could share on price elasticity, again, as it's one of the major concern, specifically for that business from investors? And finally, could you please update us on the split between mass retail and e-commerce and pet specialty impact and what are [they into next year]?

[Kofi Bruce, CFO]

Sure. This is Kofi. So I'll start with the front part of the question on price/mix. Just to give you a sense here, we saw about 7 points of price/mix on pet in the quarter. And then our expectation is that we'll see that step up as we go forward into Q4. I think the rest of your question was about the channel split, which we may have to get back to you just to verify. I don't have that at fingertips. Do you have it, Jeff?

[Jeff Siemon, VP, IR]

Yes. I think, Laurent, the -- I mean broadly, the channel splits, we're at about 1/3, 1/3, 1/3 across food, drug and mass, probably a little bit higher in food, drug and mass down, maybe closer to 40%; and then e-commerce and specialty, maybe about 30% each. So in kind of broad terms, that's roughly where we are from a channel. I just wanted to -- it’s actually correct, Kofi’s comment on -- looking at maybe on the reported number. On the -- for pet on an organic basis, price/mix was plus 13% in the quarter. And that's a -- you've got a combination of pricing, which was -- we did have some pricing going to the market in the quarter. So we only have a partial benefit of that in the quarter and then some mix benefit as you heard us talk about at CAGNY, our Tastefuls launch, for instance, on wet cat food on a price per pound basis, as you know, both treats and wet food are advantaged relative to dry, and those are growing faster for us both for Tastefuls as well as from the acquired brands that we've had here recently.

[Jeff Harmening, Chairman and CEO]

And Laurent, you asked a couple of other questions -- more detailed questions. In terms of elasticity, the pet category is relatively inelastic. Even in recessionary periods, it's relatively inelastic. And you asked about pack sizes, one of the things we've seen is that demand has been so strong in the pet category, and we anticipate going forward. The consumers really are buying what they can find in the shelves. And whether that's wet food or whether that's dry food, the availability really is driving consumer acquisition at this point. There's really not a trade down in pack size. It's going to trade off in pack sizes. Really the availability is the key because the category is so strong, and we believe it's going to remain strong. And as we said in our kind of opening remarks, as we look at the fourth quarter, our pricing will catch up to inflation, which will have a positive impact on our pet margins in the fourth quarter.

[Operator]

Our next question comes from Chris Growe with Stifel.

[Chris Growe, Stifel]

Just had 2 quick questions. The first would just be -- maybe one for Kofi. As we think about this pricing cost dynamic and inflation picks out or it's going to be double digit, I should say, in the fourth quarter. The pricing is accelerating as well. Obviously, that reflects in the guidance. But should we expect the same kind of gross rate of change in gross margin year-over-year, and therefore, should improve sequentially but should be down still year-over-year? Just trying to get some order of magnitude there. And then I had a second question, maybe more for Jon. On the undershipment in North American Retail, you that 3-point gap you called out. Does that quantify the sales shortfall in the quarter from the service issues you had? And I guess also I'm curious about rebuilding inventory. Are you in that -- are you still hoping to do that? And should you be shipping ahead of consumption theoretically to keep up with demand here?

[Kofi Bruce, CFO]

Okay. So let me take the first part of your question. I expect the price/mix step up to be meaningful. And obviously, embedding our range, if you do the squeeze on gross margin would be -- is absolutely a sequential improvement and the possibility, obviously, of a gross margin increase year-over-year.

[Jon Nudi, Group President, North America Retail]

And on the shipments versus consumption question, Chris, U.S. net sales did lag Nielsen measured retail sales growth by 3 points in the quarter, as you mentioned, really driven by the service issues on RBG, pizza and hot snacks. We don't expect shipments to lag sales in Q4. We also don't expect to rebuild inventories in Q4, and that's really reflected in our guidance. If we can do a bit better and service levels improve, we might be able to rebuild a bit, but likely will push into fiscal '23, where hopefully, we can get back to more historical inventory levels.

[Operator]

Our next question comes from Ken Zaslow with Bank of Montreal.

[Ken Zaslow, BMO Capital Markets]

I don't want to go dig a little deeper into the elasticity question. You said that there's been a little bit of elasticity. Is it just similar level across all your categories? Or is there a spectrum of elasticity where certain categories are showing zero elasticity and some categories are showing a greater variability of elasticity? And can you talk about either the spectrum or is it flat?

[Jon Nudi, Group President, North America Retail]

Yes. So this is Jon. It's -- for U.S. and for not a long, we competed in over 250 categories. We have had obviously in the U.S. and in our global businesses. And I can tell you, every category is reacting differently. So we are seeing elasticities that vary. There's not a single category that has zero elasticity, though. So when you take price and particularly the levels of pricing that we're seeing due to the heightened inflation, there are elasticities for sure. Again, there are changes between categories. But at this point, we are seeing elasticity in everything. As I mentioned earlier, though, those elasticities are generally holding. So again, they're not increasing. They're not getting towards historical levels. They're holding at lower levels than what we've seen in the past.

[Ken Zaslow, BMO Capital Markets]

Okay. And then my second question is on data analytics. Can you talk about the speed to which -- or the real-time data analytics? The idea that the service levels came back quicker is obviously a positive. Was it -- in your understanding, how quick it came back, were you able to understand that came back in real time? Or was there a lag in the understanding of when it actually occurred? And just kind of figuring that out, is the real-time data and your data analytics on real-time data analytics improved, changed or stayed the same? And I'll leave it there. Appreciate it.

[Jon Nudi, Group President, North America Retail]

Yes. So related to data analysis on this one, I think was pretty simple. So at the end of the day, we had -- particularly on RBG, pizza and hot snacks, more demand than supply and was really focused on getting as much as we could out of our plants. And the big issue, again, was not so much capacity on those platforms, those getting the ingredients to get our lines running literally 24 hours a day. So as we get towards the end of the quarter, we had put a full court press. Our teams did a great job, and we were able to pump out significantly more volume than what we had originally thought. And we shipped that directly to customers. So again, through our distribution centers in some cases; in some cases, directed to our retailers. And as a result, of that, we were able to see some stronger sales to end the quarter and our -- so again, it really wasn't a data analytics thing. It was more about just our ability to run product. And again, our supply team did a terrific job really significantly improving that situation.

[Jeff Siemon, VP, IR]

We have time for one more Frank.

[Operator]

Our next question comes from Nik Modi with RBC Capital Markets.

[Nik Modi, RBC Capital Markets]

Just 2 quick questions on the consumer. You guys talked about at CAGNY about deal prep. So I just wanted to see if you have any more evolved thoughts on that and what you've been seeing. And then, I guess, given what's been happening with inflation and just thinking about the consumer, would you guys agree with the statement that perhaps the low-income consumer is going to maybe go into a quasi-recession sooner rather than later just given what's going on with all the external pressures? Or is that not the way you see it?

[Jeff Harmening, Chairman and CEO]

I guess I would start by saying our -- I think our success is going to be determined by how fast we can pivot, as witnessed by Jon Nudi's latest comment about supply, rather than our ability to predict exactly what's going to happen in the future. I mean -- and I'm not trying to be opaque on purpose. It's just that there are so many moving pieces. We have some people returning back to the office, yet demand will be greater than pre-pandemic levels for quite a while. There is a possibility of a recession, but it's certainly not here yet. There is going to be inflation, but how much that inflation is a couple of quarters from now is yet to be determined. And the state of the consumer and their financial well-being, they're -- consumers are in a good place now. How that can look for 2 quarters from now is difficult to say. And so I think our ability to be successful over the last couple of years has really been predicated on another ability to determine what's going to happen next but our ability to react to what's happened next. And that's what I feel great about. And you'll see that in pet. You see that in North America Retail, you see it all over the world. And so as we think about the future, there are a variety of outcomes that are possible. But I will tell you there's been a variety of outcomes over the last few years, and we've been successful through all of them. And so we're confident that whatever comes at us next, we'll be able to deal with that, at least as well as our competitors, if not perfectly.

[Jeff Siemon, VP, IR]

Great. Frank, I think that's all the time we have today. Appreciate everyone following along, and appreciate the good questions this morning. Please feel free to reach out to the IR team if you have follow-ups today. Otherwise, wish you a good day, and we'll talk next quarter.

[Operator]

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.