Cencora, Inc. (COR) Earnings Call Transcript & Summary

Good morning, and thank you for joining us. My name is Lisa Gill, and I head up Healthcare Services at JPMorgan. It is with great pleasure this morning that we have with us Cencora. Presenting for Cencora will be CEO, Bob Mauch. In addition, we have Jim Cleary, CFO, who will join me for the Q&A session. With that, I'm going to turn it over to Bob.

Thank you, Lisa. Hi, everyone. Thank you for being here. Thank you for your interest in Cencora. I'll pause here for our cautionary note regarding forward-looking statements. And if you would like additional information, please go to our website at investor.cencora.com. So Cencora is a global pharmaceutical services health care company. We ship more than 1 billion medications yearly through our MSO investments. We have the #1 retina research network, 51,000 purpose-driven team members. And in the past year, we were fortunate to increase our revenue by 9% year-over-year and 16% for both our adjusted operating income and our adjusted diluted EPS, all while generating $3 billion in free cash flow. Most importantly -- or yes, most importantly, actually, we're a purpose-driven company, and we're united in our responsibility to create healthier futures, and that drives everything we do and is the leading indicator of those outcomes I just described. We're very focused on being strategically disciplined and continuing to do that. We have 4 strategic drivers where we're focused. One is our digital transformation, optimizing our business process, leveraging advanced analytics and AI to improve business performance and outcomes for our customers and their patients. We're very focused on talent. We want Cencora to be a place where someone can come and grow their career, stay with us for the long term, and we will demonstrate to you how Cencora will invest in your career and make sure you accomplish what you want to accomplish within that career. We're also identifying capabilities for continuous improvement. And one of the best examples of that is a refocus on productivity. As a company that's very focused on pharmaceutical distribution, you can assume that we're highly efficient, and we are highly efficient. At the same time, we see real opportunity to continue to focus on ongoing capability of productivity to make sure that we are not only efficient today, but we're leading in efficiency tomorrow, next month and next year. One of the big areas of focus over the past several months, and you saw this in our designation of an Other segment is prioritize our growth-oriented investments. So we have an ongoing process where we're looking at our businesses. We're looking at our capabilities and assuring that they align with our strategy going forward. They may have been terrific contributors and aligned as we look backwards, but we want to make sure that we're doing that on an ongoing basis in the future. So you saw us designate our Other segment. And within that is our MWI Animal Health business, an investment in Brazil that we have called Profarma as well as our legacy U.S. patient hub services business as a part of our PharmaLex business. All within this, as we're focused on building higher growth, higher-margin businesses, our global distribution services are the foundation of everything that we do. Recent highlights, evidence of execution of the strategy is just about a year ago we completed the acquisition of Retina Consultants of America, which we're very excited about. The business is performing excellently. Most recently, we announced our intent to accelerate our acquisition of OneOncology. Really, then we'll be able to pull together our overall MSO platform and drive additional value. Internal investments are also incredibly important to our performance as we go forward and look to the future. And we recently announced our plans to invest $1 billion in supply chain infrastructure through 2030, both expanded capacity overall and specifically cold chain capacity. We've also invested in expanding our global specialty logistics and 3PL offering. And when you think about Cencora, I hope you think about specialty and when you think about specialty in Europe, you should be thinking specialty logistics and 3PL, and we continue to make investments there. We're very proud that we were able to raise our long-term guidance for operating income and adjusted diluted EPS to reflect the strength of our U.S. Healthcare Solutions segment and the expected contribution of OneOncology. Our U.S. Healthcare Solutions segment, again, foundation in pharmaceutical distribution, significant leadership in specialty pharmaceuticals, and that's specialty distribution, our wraparound GPO services and then the next natural step, which is our MSO services. This is the fastest-growing part of the market, incredible innovation within specialty, and we're very proud at Cencora to not only be well positioned from a solutions and capability set, but also with the manufacturer relationships and the downstream provider relationships that have allowed us to grow the way we have within this reporting segment over recent times and expect to continue to do that with our updated long-term guidance. When you think about the MSOs, this is really the next natural step. I mentioned the specialty distribution. I mentioned GPO. The MSO is really the next natural step. It helps us streamline back-office services for the provider. It enhances our access to the innovative treatments in clinical trials that then the physicians can use with their patients. And importantly, it strengthens our relationships with pharma. And when you think about the back-office services that we provide and you think about them broadly, I hope you hear what that does is it allows the physicians to have more time to care for patients. The MSO will take care of the back-office services and the clinicians can then, therefore, make the best decisions they can for patient care. We're very excited, as I mentioned earlier, we have the acquisition of RCA. We've announced our intent to accelerate the full acquisition of OneOncology. And when we do that, we'll have an overall platform in the pharmaceutical-centric specialties where we will continue to be focused, both in retina and oncology. Our International Healthcare Solutions segment is also foundationally based on pharmaceutical distribution. We have a significant pan-European pharmaceutical presence. I mentioned the global specialty logistics. So that is both in the business that we call World Courier, which is very high-end specialty logistics clinical trial support, but also the 3PL services that we provide in Europe, also in the United States. That is the primary route of specialty distribution in Europe. We also have a good mix of the higher growth, higher-margin businesses within our International Healthcare Solutions segment. So when you look forward and think about Cencora, I hope you see us as a long-standing health care solutions partner. Really, our performance is driven by innovation in the pharmaceutical industry, but also the demographics that we see in the aging populations and a long legacy of leadership in specialty. As we enhance our value proposition, we're investing to advance our pharmaceutical-centric strategy, furthering solutions to support both providers and pharma and focusing our portfolio on those that are highly aligned with our strategy and allowing us to accelerate growth. We'll continue to generate strong free cash flow, maintain our high return on invested capital and achieve our long-term guidance. So once again, I hope that was helpful information for all of you. Thank you for being here today, and thank you for your interest in Cencora.

Thanks very much. So Bob, why don't you come, I'll sit in the middle. That will probably be easier that way.

So thank you very much for the presentation today. So let's start with volumes, right? Volumes across pharma have been incredibly strong, both specialty as well as traditional pharmaceuticals. You've increased your long-term operating profit targets twice since October. What gives you the confidence to increase the long-term targets, one? And then secondly, what are you currently seeing today in the overall utilization environment?

Yes. So Lisa, continuing trends, and I'll start and I'll hand it over to Jim, but continuing trends that we've seen throughout the last years actually. And what gives us confidence is, one, our positioning in that specialty space. So our capabilities that we have; secondly, the customer base that we have and the innovation that is happening in the pharmaceutical industry is remarkable, frankly. So we're in the right space. We're well positioned there. We have the right customers. And we have the financial flexibility to continue to invest, which you see us deploying capital, not only on acquisitions, but also the internal investments that I mentioned.

Thanks, Bob. I'll just add a bit to what Bob was saying. And as Lisa said, we've increased our long-term guidance twice in the last 2.5 months. And the first time we did it was in early November when we were announcing our fourth quarter results and introducing our guidance for fiscal year '26. And we increased our operating income growth guidance, long-term guidance from 5% to 8% to 6% to 9% and another 3% to 4% from capital deployment. So we increased our EPS guidance from 8% to 12% to 9% to 13%. Basically, the reason that we did that is we've been outperforming our long-term guidance for quite some time. And it was really driven by the fundamental factors in our markets and our execution that Bob talked about. So given the fact that we've been outperforming, we decided to increase our long-term guidance when we announced our fourth quarter results in November. And then after the acquisition of -- when we announced that we will be acquiring OneOncology on December 15, we raised our long-term guidance a second time. And so we raised the 6% to 9% to 7% to 10% with another 3% to 4% from capital deployment. So we raised our long-term EPS guidance to 10% to 14% and that was really driven by the announcement of the OneOncology acquisition. As Bob talked about, this is a real growth part of the market. Our growth has been driven by our strength in sales of specialty products to physician practices and health systems. It's driven by our distribution. It's driven by wraparound services like GPO, and now it's driven by the MSOs, which is the natural extension of the very successful part of our business. And so in that this MSO platform is going to be -- it's going to drive additional growth because of the acquisition, the announced acquisition. That's the reason why we raised our long-term guidance for the second time in the last 2.5 months.

And Bob or Jim, the acceleration of the second step here for OneOncology made a lot of sense to us. As we think about the MSO, can we maybe spend a minute and talk about contribution and profitability from the MSO? What organic growth looks like for this business? And why you decided to complete the transaction now rather than at some point in the future?

Yes, Lisa. I mean we're super excited to be able to once approved to accelerate this. The reasons are practical in a lot of ways. We have this investment in OneOncology, which has performed incredibly well since our investment. It's in one of the fastest-growing parts of the overall business within Cencora. And then when you look about -- think about just management, the people and synergy, it really made sense for us to try to do it sooner. And that becomes a financial question, right, at that point. And does it make sense? And as we've talked about, we had a structured process and a deal with TPG, our partner in there. But we found that it also made financial sense to accelerate it. So now that we have announced it and hopefully, we'll close relatively soon, we'll have the ability to really focus on synergies that we can help drive within OneOncology, but also the synergies across between RCA and OneOncology.

And maybe just coming back to like that profit and growth question. Can we talk about like how we see organic growth in the MSO? And then maybe just dovetail a little bit back into what the synergies are between RCA and OneOncology and where you see some future opportunities.

Jim, do you want to...

Yes, sure. A couple of questions there. And I'll start with the second one, and then I'll go to the first. So the -- with regard to synergies, we think there are very good synergies between RCA and OneOncology. And that's one of the key reasons why we did the acquisition earlier. And it probably doesn't take those of you by surprise who have heard us at investor conferences over the past several months, we indicated that we really like OneOncology and wanted to own the business as soon as possible. And I put those synergies into 3 buckets. One is clinical trials. And RCA is really the leader in clinical trial sites in the retina market and OneOncology is strong also. But by putting that skill set and learnings together, we feel that there's synergy opportunity in clinical trial sites. Kind of the second bucket of synergies that I referenced, I'll call back-office support. And I'll just give a few examples. One would be revenue cycle management. The second would be staffing and recruiting. And even though the medical markets are different, there's still a good synergy by having that common staffing and recruiting staff. And then a third area in the back office support would be management of IT. There's kind of good synergy opportunities there, we feel in management of IT across the 2 businesses. And then the third bucket of synergies, and this one is longer term, but perhaps the most exciting is data and analytics and to have those data and analytics skills and capabilities that could have a lot of value over the long term. We feel that, that's another bucket of synergies. And this gets to one of the reasons why we wanted to acquire the business earlier is, of course, it didn't make sense for us to be executing on synergies now in the OneOncology business if we didn't own all of it because it would just cause us to have to pay more for the business over the long term. So it was just better to do the acquisition sooner. And then from a growth standpoint, one of the things that I'll call out is we've been talking for quite some time about a key driver of Cencora's growth is sales of specialty products to physician practices and health systems. And one of the key things that's really been driving that growth is our sales to OneOncology. OneOncology has been growing so well over time, both organically and inorganically that it's been a real driver of our growth in specialty. And then also one of the things that you'll see now that we own the business and you look over the intermediate to long term, you'll see an improvement in our margin structure in that part of the business because, of course, the MSOs are a higher-margin service business. Thank you.

Yes. So as we think about that business, we get a lot of questions around MFN, IRA pricing, what it means to Part B drugs, which is what we're talking about here. Do you view this as a potential headwind or potential opportunity with your GPO? And how do you think about your ability to purchase under some of these changes on the pricing side of the pharmaceutical would be the first question.

Yes. Thanks, Lisa. We spend a lot of time, as you would expect, monitoring, studying scenario planning and importantly, a lot of time in Washington, D.C. and making sure that we're having the right meetings with the right people to make sure that there's an understanding of what the impact would be of any given policy change. And I think we've seen that play out pretty well over the past year or so. And I would say manageable for the industry broadly, we've said that if there were WAC decreases that we felt like we would be able to have conversations with manufacturers and come to a reasonable agreement there, which is generally what's happened. I think on the demonstration projects or the CMMI initiative, I think we'll see how that actually plays out. But what we see so far is what we would expect is that there's no intent there to have that have an impact on physician reimbursement. And that's one of the things that we hope continues and we stay really focused on is making sure that as we're thinking about overall health policy and pharmaceutical pricing policy that, that doesn't impact physician reimbursement because if it does, that's ultimately going to impact patient care. And the community setting is the most cost-effective and most accessible site of care for patients. So we're confident that there's not an intention in Washington, D.C. to impact that. So we're going to stay close and continue to monitor, but okay about it. Jim?

Yes. If I could just add one thing there, and that is our experience in the recent past as it relates to any WAC price decreases. We have a very strong strategic global sourcing department at Cencora. Our contracts with manufacturers indicate that if there are meaningful reductions in price that we have the ability to renegotiate. We talked about for some time the kind of case study on insulin where there was a reduction in WAC pricing, and we were able to maintain our gross margin dollars. And we had a similar experience in the last several months when there were the WAC prices related to IRA, we went and we renegotiated with manufacturers. And again, our strategic global sourcing team at Cencora did a very good job at maintaining gross margin dollars.

And I think that's important. Just going back to CMMI and the initiative that they have, are physicians within OneOncology participating in that demonstration?

To be determined.

To be determined?

Yes.

So we just talked about WAC and talked about the impact from changes there. Very dynamic generic market right now. And it's been favorable trends in the last couple of years, right? For a number of years, we had a lot of price deflation. It feels like it's been somewhat stable in the last few years. What do you attribute that stability to in the market? And is that sustainable going forward?

Yes. And so really nothing new to call out. As Lisa said, what we've been saying for the last few years is that generic deflation has been moderating. And really, there's nothing new to call out today. And it's probably driven by a number of things, but probably one of the really key things it's been driven by is prioritization of portfolios by the generic manufacturers. So again, nothing new to call out. The trends of moderating generic deflation are the same as what we've seen in the last couple of years or so.

Jim, there's a few things that you called out when we think about the guidance for fiscal '26 within the U.S. Healthcare Solutions, including the loss of the bladder Cancer care specialists, adding a quarter of RCA contribution. Is there anything else to consider as we think about the cadence of earnings for '26 versus '25?

As we look at fiscal year '26 and we look back at fiscal year '25, in fiscal year '25, we had tremendous outperformance. It was driven by the things that Bob talked about in his presentation, the utilization trends that we've been seeing, the strength of our sales of specialty products to physician practices and health systems, just the broad-based performance in our U.S. businesses, particularly our largest businesses in the U.S., the RCA acquisition, which is working out really well. And so Bob had up on his slide 16% adjusted operating income growth in fiscal year '25. In fiscal year '26, we expect to have continued strong performance. But what's in our guidance is that it won't be the same level of outperformance that we had in fiscal year '25. And so our adjusted operating income growth that we're guiding to on a consolidated basis is 8% to 10% growth. And in the U.S. part of our business, it's 9% to 11% growth, driven by the same trends that we've talked about a couple of times now. As we look at kind of things that will impact cadence, we have the extra quarter of RCA, which was our first fiscal quarter. There's an oncology customer that we no longer have because it was acquired by a competitor, and we'll have 3 quarters of headwind as a result of that. So if you look at the net of those 2 things, it will be a net operating income headwind of 1%, and that's, of course, included in our guidance. Other kind of things you'll see in the first quarter, we were tracking COVID sales. It's not nearly as big an impact as it was in the past years, but that's kind of the sorts of things that we're tracking in the first quarter. And so other things that we'll see that will impact cadence over the course of the year will be the stuff that I just talked about. The incremental quarter of RCA helps us in the first fiscal quarter. Once we lap the oncology customer that was bought by a competitor, that will cause our growth rate to accelerate in our fourth fiscal quarter. So it's those sorts of things which will impact the cadence of the year. But we feel very good about the performance of the business and very good about our guidance.

As we think about fiscal '25 or actually calendar '25, there were a number of changes that happened with Medicare Part D and the out-of-pocket cost for the senior. Many of the managed care companies and others have called out the fact that they anticipate in the fourth quarter, they'll continue to see an acceleration in utilization by that senior population. I know it's difficult to talk about a specific quarter. But when we think about Part D, did you see an acceleration in '25? And how do we think about that going into '26? Was that part of the contribution? Because you didn't name Part D specifically.

Yes. And there's a reason there. And so we've been talking about the strong utilization trends for quite some time. And that probably -- the out-of-pocket caps is probably one of the things that's benefited our utilization trends that we've seen. But I think the key thing to keep in mind is the specific question on the out-of-pocket caps relates to Part D. And where we really see the benefit from an operating income growth, as we've been talking about is Part B, the specialty sales to physician practices and health systems. And so the Part D utilization benefit we're seeing there is more of a revenue benefit. It is an operating income benefit, but a much, much smaller benefit than Part B. And the reason is in Part D, a lot of those sales are in the mail order channel, which are shipments of pallets of products to a few locations around the country. So those would naturally be lower gross margin sales.

When we think about gross margin sales, you've talked a lot about GLP-1s and that they carry a lower margin because of cold chain and the time to deliver. As we think about oral drugs coming to the market for GLP-1s, will that carry a better margin?

Yes. And so there's really nothing new that we'll be calling out today on that. And it's still early. Those products have just recently come on the market, and we've just recently been shipping those products. And what we've said historically on GLP-1s is, of course, they're a big driver of top line growth, and we publish every quarter what our growth is in GLP-1 sales. But we've also consistently said that they're minimally profitable for us. And as we see the oral product come on the market, there's really nothing new in our commentary to call out there. Still a big driver of our top line sales, but minimally profitable for us. They are probably a little bit less expensive to ship because not having the cold chain and not having expensive shipping costs, but that isn't material enough to really change the way that we're talking about GLP-1s.

Over the last 18 months, Walgreens has closed a number of stores. It's a little less visible now that they're privately owned to know what the future is. Has there been any meaningful impact to you from a volume perspective? And then secondly, what are some of the future opportunities to work with Walgreens as we know that they've been working in the last few years even before going private around trying to manage their cost basis?

Yes, Lisa, I'll take that. I think first and foremost, Walgreens is a really important customer of Cencora and not only Walgreens in the U.S., but Boots in the U.K. And not only important to Cencora, community pharmacy is really important to health care, and that includes Walgreens and everyone. So we are, as we always have been, very focused on helping them in any way that we can implement their transformation, whether that's as a public company or a private company. You'll notice we haven't called out any changes based on the store closures. And I think, one, they're pretty good at this, and we support them in doing it, right? So I think that they're able to capture the volume that they expect to capture as they're closing stores. And we have really incredible commitment to helping them do whatever it is they need to do. One of the things that Cencora works really hard at doing is understanding our customer strategy and then bringing the resources of Cencora to help them implement that strategy. That's true for many of our customers, and it's certainly true for Walgreens.

When I think about the operating profit structure for Cencora for, say, a Walgreens, which is a large customer with a lot of buying power versus, say, a community pharmacy, our understanding has always been that the community pharmacy is a better economic value to Cencora. So did you see volumes that shifted from Walgreens? So maybe you don't need to call that out because if you were making -- make up a number, $1 at Walgreens, you're making $1.15 from the independent, and therefore, it more than offset it even if the volumes were less. Is that a way to think about it or...?

Yes. I think I wouldn't necessarily speak to kind of a delta in profitability, but I think the reality is...

You still maintain the scripts.

As a store closes -- yes, we have a lot of customers that they -- that could have picked up those prescriptions. And we certainly do see independents picking up prescriptions from store closures from Walgreens and others.

Yes. I think over the years, for many, many years, we have talked about the independent pharmacy. And I know a lot of you in this audience have heard me say this that one of my first jobs at JPMorgan when I started following the industry in 1998, I cringe when I say that, was to make a prediction around how many independent pharmacies there would be in the next 3, 5 and 10 years. And at the time, you may recall that you had Walgreens and CVS building new stores at a rate that was double digit. And we predicted -- and at the time, just to put the numbers in perspective, it was a little more than 20,000 independent pharmacies that were in place in 1998. And we predicted that within 10 years, there would be about 8,000 of them would be gone, and we'd be down to about 2,000. As we sit here today, there are more than 20,000 independent pharmacies. Obviously, not the same independent pharmacies from 1998, changed hands, right, new people open. So putting that into context, really 2 questions here. One, do you see any changes in the independent pharmacy business? Two, when we think about businesses like you have like, for example, your GPO or your Good Neighbor Pharmacy that I think have really helped the independents in the marketplace. Maybe talk about some of those opportunities and if you do see any kind of changes that are happening in the independent market.

Yes. Lisa, I mean it's such an interesting observation. And as you may know and others may know, so I grew up in independent pharmacy, my parents owned independent drug stores. So I've seen this kind of up close for a long time. And it's amazing to me the resiliency and the grit that you see in that because it's not easy. Reimbursement is not getting easier. I mean there are significant challenges for community pharmacy, yet we continue to see these entrepreneurs find the right business for their community. And I've talked in the past about our entire executive team going out and visiting some Good Neighbor Pharmacy stores. And it's just amazing the diversity of services, the things that they're able to do that attract patients that just continues to work for them. And I believe, and this could be a little bit of a bias because of where and how I grew up. But I do think there's a segment of the population that needs to have a really tight relationship with the pharmacists. If you have multiple diseases and multiple medications, you need a relationship with a pharmacist, not just pharmacy...

#1 touch point, right, when you think about health care...?

That right. And I think the independents do that particularly well.

Just kind of shifting back to specialty because it's so incredibly important. As we think about Part B drugs that will lose patent protection and have biosimilars coming to the market, maybe spend a minute talking about which drugs you're most excited about? And then secondly, help people to understand biosimilar versus the traditional drug when we think about the opportunity for Cencora.

Biosimilar launches and penetration in the market is really important for health care, really important for patients, really important for all of the payers involved. And within Part B in particular, we've seen incredible uptake in...

A number of oncology drugs, right, over the last several years...

As well as retina. So we're seeing. That -- in both of the specialties that we're very close to, we see biosimilar adoption on the higher end. As you know, in Part D, it's more variable, but we do expect that biosimilar adoption will continue to accelerate. And also believe it's part of a healthy market. So it's only the biosimilars that we need for a healthy market. We also need the incredible innovation that's happening. So the new innovative products that are coming to market at the same time, we have biosimilars. That's what creates the right ecosystem and the right economics for the channel.

We haven't really spent a lot of time talking about international. You kind of touched on it a little bit earlier. How do we think about the long-term opportunities within the international segment? Fiscal '25 saw some softness. But what is the time line to recovery look like? And when we think about longer term, how do we think about that market?

Sure. I will start out. And as you know, as we look at our overall operating income, U.S. is about 80% and international is about 20%. Our guidance for this fiscal year in International is 5% to 8% operating income growth, and our long-term guidance is 5% to 8% adjusted operating income growth. Fiscal year '25 was a softer year in our International segment and was really driven by 2 things. One is our global specialty logistics business, which was impacted by some softness in clinical trials and then also our global consulting business. One thing I will say is in our fourth fiscal quarter, we saw volumes increase year-over-year in our global specialty logistics business, and so that was great to see. And in the fourth quarter, we just -- we saw operating income growth in every business in our International segment, except for our global consulting business, our PharmaLex business. We feel good about the long term, and we feel it's important to have that international business so we can provide services to manufacturers across territories. We feel good about our distribution business. In particular, we feel good about our 3PL business because specialty products in Europe are distributed 3PL. And we just expect to have better performance than we had in fiscal year '25. And I'll just call out a few things. One would be an improvement in volumes in our global specialty logistics business. A second thing is that it's a more focused portfolio because we moved some of the underperforming parts, parts of our PharmaLex business into other and have the parts remaining where we feel like we have the ability to win. And also just the year-over-year comps are easier in fiscal year '26. Thanks, Lisa.

Just along that, the time line to evaluate strategic options for those businesses you moved into the other category, is there anything that investors should think about or keep in mind around the cadence of the other businesses in fiscal '26? And like I said, the time line for that evaluation?

Sure. And so businesses we moved into Other include the MWI Animal Health business, which is performing very well. It includes our legacy U.S. patient services business, Lash, and it includes in -- the international business includes our equity investment in Profarma in Brazil and then parts of the PharmaLex business where we decided to kind of put those parts in other and then keep other parts in the International segment. And as -- from a timing standpoint, as we look at strategic alternatives, that will vary from business to business. And so there's nothing I'm going to specifically call out from a timing standpoint. And then I'll also say, as we look at kind of cadence over the course of the year, the comps get a little bit easier in the second half of the year because of a customer that we no longer do business with in our U.S. patient services business. But what I'm going to say overall is that there are a lot of very good businesses we have in other. And these are businesses that can continue to grow, and we just feel like they will be better performing under different ownership that has more focus on these businesses. And again, this is all really consistent with one of the strategic objectives that Bob put up on the screen, which is prioritizing growth-oriented investments like our specialty business.

We only have about 30 seconds left together, but you paused the share repurchase due to the acquisition of OneOncology What's the time line for resuming share repurchase? And anything else that we should think about from a capital deployment perspective?

Yes, sure. And so we typically have paused share repurchases after large acquisitions, and we do this for a period of time so that we can prioritize paying down debt and maintain our strong investment-grade credit rating. And then we go back to doing share repurchases. And this will be a similar story here. And if you look at it over the long term, we'll really have balanced capital deployment between investing in the business, strategic acquisitions, opportunistic share repurchases and having a reasonable growing dividend. In this most recent year, we grew our dividend by 9% at the low end of our long-term guidance growth rate range for EPS. And this is something we've done consistently is growing our dividend.

Thank you so much, Bob and Jim, and thank you, everyone, for joining us.

Yes. Thank you, Lisa.