Kellanova (K) Earnings Call Transcript & Summary

Good morning, and welcome to the Kellogg Company's conference call to announce its latest portfolio transformation. [Operator Instructions] At this time, I will turn the call over to John Renwick, Vice President, Investor Relations and Corporate Planning for the Kellogg Company. Mr. Renwick, you may begin your conference call.

Thank you, operator. Good morning, and thank you all for joining us today, especially on such short notice. I'm joined this morning by Steve Cahillane, our Chairman and CEO; and Amit Banati, our Chief Financial Officer. Before we start, Slide #2 shows our forward-looking statements and non-GAAP financial measures disclaimers. As you are aware, certain statements made today, such as projections for Kellogg Company's future performance, are forward-looking statements. Actual results could be materially different from those projected. For further information concerning factors that could cause these results to differ, please refer to the second slide of this presentation as well as to our public SEC filings. And now I'll turn it over to Steve.

Thanks, John, and good morning, everyone. We are very excited to be announcing today the spin-off of 2 of our businesses, an action which will create 3 stronger independent companies. Slide #4 shows that this move is consistent with our Deploy for Balanced Growth strategy and is the latest in what has been a series of significant actions we've taken in recent years to transform our portfolio. We acquired Pringles in 2012, turned it into a global powerhouse brand and added about $1 billion of net sales to that brand since we acquired it. We made a big bet on Africa, filling in geographic gaps with acquisitions and partnerships. These have given us a stronghold in an emerging market that is poised for exceptional growth for a long time. We made the bold move of exiting direct store delivery in our U.S. Snacks business, a move that swapped out declining ROI overhead in favor of brand building behind world-class brands like Cheez-It, Pop-Tarts and Rice Krispies Treats. And you've seen the tremendous growth those brands have realized ever since. We also acquired RXBAR, giving us a strong entry into performance-based snacks, and we also divested 4 businesses: cookies, fruit snacks, pie crusts and ice cream cones, that we felt were not core businesses for us. And along the way, we've shifted resources into growth businesses, notably snacks and emerging markets. The result is a more growth-oriented portfolio that has produced strong growth. The reshape portfolio is working, but we believe it could work even better, particularly if our U.S. and Canada cereal and plant-based businesses were independent. Hence, our announcement to spin off those 2 businesses. Our shareowners will own a trio of strong independent companies with iconic brands, attractive economics and improved outlooks. These are shown on Slide #5. We'll come back to you later with their new names, but for now, we'll refer to them with generic temporary names. Global Snacking Co., with about $11.4 billion in net sales, will be a leading company in global snacking, international cereal and noodles and North America frozen breakfast with iconic world-class brands and strong underlying growth momentum and profitability. North America Cereal Co., with about $2.4 billion in annual net sales, will be a leading cereal company in the U.S., Canada and the Caribbean with a portfolio of iconic world-class brands and compelling opportunities for investment and improved profit growth. And Plant Co., which generates annual net sales of about $340 million, is a leading profitable pure-play plant-based foods company anchored by the Morningstar Farms brand with significant opportunity to capitalize on strong long-term category prospects by investing further in North America penetration and future international expansion. The rationale for this separation is very compelling, and it is summarized on Slide #6. Each of the 3 companies is, from day 1, a scaled business with strong brands and category shares, a solid supply chain and financial flexibility. As independent companies, all 3 will be better positioned to do the following: focus on their distinct strategic priorities with the financial targets that best fit their own markets and opportunities; execute with increased agility and operational flexibility, enabling more focused allocation of capital and resources in a manner consistent with those strategic priorities; realize improved outlooks for profitable growth and shape distinctive corporate cultures rooted in our strong Kellogg Company values and rewarding career paths for employees of each company. Let's look more closely at each of these 3 companies. We'll start with Global Snacking Co., which represents roughly 80% of the current Kellogg Company sales. In effect, this includes the remainder of our North America region after spinning off cereal and plant-based foods. It also includes our existing international regions, which remain almost completely intact. It remains a big scale business with well over $11 billion in annual sales and with a portfolio that will be more profitable and more shaped to our growth than it is today. Slide #8 shows what the Global Snacking Co. portfolio will look like from a category standpoint. Based on 2021 data, nearly 60% of its net sales will come from global snacks, participating in growing categories and led by iconic world-class brands, including Pringles, Cheez-It, Pop-Tarts, Rice Krispies Treats, Nutri-Grain and RXBAR, among others. Over 2020 and 2021, this portion of the business grew net sales organically at a mid-single-digit CAGR. Less than 1/4 of its net sales will come from cereal and international markets featuring world-class brands such as Kellogg's Frosties or Zucaritas, Special K, Tresor or Krave, Coco Pops and Crunchy Nut, among others. Over 2020 and 2021, this portion of the business grew net sales organically at a mid-single-digit CAGR as well. By remaining with Global Snacking Co., this international cereal business provides scale, continuity and growth for the Europe, Latin America and EMEA regions. The next largest portion of the portfolio represents about 10% of sales and is comprised principally of our rapidly growing noodles business in Africa. This business grew net sales organically at a very strong double-digit CAGR during 2020 and 2021. And finally, there is our frozen breakfast business, representing less than 10% of sales and led by the world-class Eggo brand. This business grew net sales organically at a low single-digit CAGR during 2020 and 2021, even despite capacity constraints. Slide #9 shows how this portfolio is geared toward growth geographically as well. Using 2021 data, North America will represent less than half of Global Snacking Co.'s net sales, and its portfolio grew net sales organically at a mid-single-digit rate in this region across 2020 and 2021, led by snacks. And to the right, you can see the in-market momentum of the world-class brands in the U.S., brands that make up about 3/4 of Global Snacking Co.'s North American net sales. More than 20% of Global Snacking Co. sales will come from Europe, where over the past 2 years, we have generated an organic net sales CAGR in the mid-single digits, with growth in both snacks and cereal. And about 30% of sales will come from fast-growing emerging markets in Latin America and Asia Pacific, Middle East and Africa or EMEA. Over the same time period, our organic net sales grew at a compound annual rate in the double digits for EMEA and in the high single digits for Latin America. Put it all together and Global Snacking Co. grew organic net sales at a high single-digit CAGR during the 2-year 2020, 2021 period, along with expansion in its operating profit margin. Slide #10 offers some insight into what to expect from Global Snacking Co. Building on its track record of sales and profit growth and leveraging its portfolio of world-class brands, strong positions in attractive categories and geographic diversification, this will be a higher growth company than today's Kellogg Company. Net sales growth will be aided by more focused resources and attention to brand-building, innovation and international expansion of world-class brands and to building scale in emerging markets. Profit margins are expected to expand over time, driven by operating leverage, revenue growth management, productivity and increasing emerging market scale. From a balance sheet perspective, we are committed to maintaining our investment-grade credit rating for Global Snacking Co. after the separations, giving us good financial flexibility. And we are committed to paying an attractive dividend in line with our peer group. In sum, it will be plain to see that Global Snacking Co. is a higher-growth, higher-margin company with strong financial flexibility. Now let's discuss North America Cereal Co., the first of the 2 businesses that we intend to spin off to shareowners. This business is summarized on Slide #12. This is a $2.4 billion business operating in the U.S., Canada and the Caribbean. Its portfolio is comprised of some of the most beloved and iconic brands in the category, such as Kellogg's, Frosted Flakes, Fruit Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi and Bear Naked. It also has a portfolio that stretches across the category's product segments from taste brands to wellness brands to natural brands. It has been successful for over a century as a pioneer, innovator and leader in ready-to-eat cereal. This is a business with a strong foundation for future performance and growth. Slide #13 shows just a few of the iconic brands in this portfolio. It currently holds a strong #2 position in the U.S., with 5 of the top 11 brands in the category. It also holds the #1 share in the other major North America Cereal Co. markets, Canada and Puerto Rico. You are well aware of the supply disruptions that have pulled down our North America sales and profit recently. Our priority this year has been to restore production and inventory across our SKUs and then to resume our playbook to get back to winning in the marketplace. And we are well on our way with total distribution points and share recovering sequentially. We've already gained back 4 share points since the beginning of this year. This speaks to the importance of these brands in the store, and it demonstrates the strong foundation from which North America Cereal Co. can build as an independent company. Slide #14 takes a look at what we expect from a stand-alone North America Cereal Co. While the focus near term is on this sequential recovery, which will not only improve net sales but also restore profit margins, the prospects for a stand-alone North America Cereal Co. Are even more promising. No longer part of a snacks-dominated portfolio, North America Cereal Co. will be able to focus its resources on strengthening the business through investments in its portfolio, packaging capabilities and productivity. With this enhanced focus, North America Cereal Co. is expected to generate stable net sales over time, consistent with the category's long-term trend with improving profit margins that will drive profit growth, higher cash flow and increased return on invested capital. In addition to better and more reliable in-market and financial performance, North America Cereal Co. will be set up with financial flexibility from a balance sheet perspective and with an attractive dividend. We'll now turn to Plant Co., the North American plant-based foods business that we intend to spin off to shareowners while also looking at other strategic alternatives, including a possible sale. As discussed on Slide #16, this is a $340 million business focused solely on plant-based foods and operating in the United States, Canada and the Caribbean. Founded in the 1970s, the Morningstar Farms brand is a pioneer and leader in this on-trend category with a full portfolio of plant-based offerings across multiple product segments and eating occasions. Kellogg has grown Morningstar Farms steadily since its acquisition over 20 years ago, and the brand has the highest share in household penetration in the frozen veg/vegan components category. Slide #17 shows the in-market performance of Morningstar Farms in recent years. This is clearly a world-class brand, and it is supported by innovative and proprietary processes and technology in a world-class manufacturing network, and it has tremendous long-term growth potential in a category that benefits from rising consumer interest in plant-based foods, both for nutrition needs and environmental reasons. Slide #18 offers some reasons we believe this business will thrive more as a stand-alone company. Plant Co. will be a pure-play on a secular trend in favor of plant-based foods. It is anchored by the world-class Morningstar Farms brand with a long heritage of innovation and a broad portfolio. Already very profitable, this business has the opportunity to take a more aggressive stance toward future growth. By spinning off into its own company, resources that previously may have been diluted by priorities in other Kellogg businesses can now be directed toward these growth opportunities. This may include investing more in brand building to build consumer awareness and increase household penetration. It may include investing more in emerging food technologies, new supply chain capabilities, extended distribution across channels and expansion into international markets. We see this business accelerating its sales and profit growth over time, while an unleveraged balance sheet will give it financial flexibility to pursue investments. Let me now turn it over to Amit, who will walk you through our next steps.

Thanks, Steve. On Slide #20, let me first provide some details about the transaction and the steps required to get there. The proposed spin-offs are intended to result in tax-free distributions of North American Cereal Co. and Plant Co. shares to Kellogg Company shareowners. Shareowners would receive shares in the 2 spin-off entities on a pro rata basis relative to the Kellogg Holdings at a record date for each spin-off. We expect the North America Cereal Co. spin-off may proceed that of Plant Co., with both currently targeted to be completed by the end of 2023. Over the next several months, we will be working to finalize organizational structures and management teams of each of the spin-off companies as well as capital structures and dividends. We will also be completing audited financials of the 3 companies. And of course, the transactions are subject to reviews and final approvals by Kellogg's Board of Directors, relevant tax authorities and the SEC. Slide #21 offers some financial elements to expect from us. We will share details with you along the way, both in our normal quarterly earnings releases as well as on an ongoing basis through a special website, unleashingourpotential.com. Importantly, we'll be very focused on sustaining our good business and financial momentum, taking care to mitigate against any potential disruption. From a financial perspective, we can only share with you some preliminary high-level aspects at this time. We've already discussed our preliminary estimates of how net sales and EBITDA split across these entities in 2021, though they should be considered directional only, as they are preliminary and include a fairly simplistic methodology of allocating center and other shared expenses. We are committed to maintaining an investment-grade rating for Global Snacking Co. after the separations, preserving access to commercial paper. And we will ensure the spin-off companies are equipped with solid balance sheets and return on capital profiles. We expect to maintain our strong dividend in the aggregate, and we will determine later how it splits across the 3 businesses. The company will begin incurring pretax expenses related to executing the transaction and setting up the new companies. To ensure visibility into the ongoing results of the businesses, the company will disclose these upfront costs and exclude them from its adjusted basis results and its external reporting. So at this point, this is what we can share with you. We will keep you apprised of all developments as well as updating you on the performance of each business as we always do. And with that, I'll turn it back to Steve.

Thanks, Amit. I think you recognized this news as Kellogg Company taking yet another bold, decisive move to create shareowner value. We already have the company performing very well, and you have seen this in our results. Now from a position of strength and momentum, we're ready to take the next step and further unleash the potential of our portfolio. We'll have much more details to share in the coming months. And now we'll open up the line for questions.

[Operator Instructions] Our first question comes from Andrew Lazar of Barclays.

So I guess my question would be, I mean, clearly, a sizable portion of the value-creation opportunity here is how the global snack business will be valued. I guess I'm trying to get a sense of how you balance the decision to include some other pieces like the international cereal, Eggo, Africa noodles obviously for scale and given the growth profile of those businesses versus, I guess, the risk of potentially diluting what otherwise be more of a pure-play global snacking asset.

Yes. Thanks, Andrew. I think you hit on it. Scale is very important. And when we look at our international businesses, having the symbiotic relationship between our snacking business and our cereal business is quite important, and they're growth businesses for us as well. So we're very confident that it's the right strategic move to keep those in place. Africa noodles is another terrific business, providing great scale in West Africa through our multipro distributor. And so as we evaluate all these opportunities, scale was one component of it. But what was best for the brands is also another component of it. You mentioned Eggo. And Eggo, we believe, also has international expansion opportunities. So when you think about Cereal Co., think about it as a Canada, U.S., Caribbean business and therefore, wouldn't really have opportunities to expand Eggo internationally. The other thing I'd just like to hit on, when you talk about value creation, there's tremendous value creation in the cereal business as well. And so having a solely focused, dedicated business against U.S., Canadian, Caribbean cereal, we think, is a great value creation opportunity as well. And we think that, as an independent business, has great fortunes in front of us and equally plant-based in that space. So all 3 components, we believe, provide tremendous value-creation opportunities for our share owners. And we like the way that we've apportioned the businesses on an international perspective.

Our next question comes from Cody Ross of UBS.

Just real quick, have you guys previewed this transaction with any of the ratings agencies? Just curious how they're going to treat it. I know you said that it's your intention to make the Global Snacking business investment grade. Can you just describe the other 2? Will those be investment grade as well?

Thanks, Cody. We've obviously been in dialogue with the rating agencies. I think as you'd expect, at this stage, given the size of the transaction and the lack of detailed financials, that dialogue is ongoing. I think we're committed to remaining investment grade with access to commercial paper on Global Snacking. And I think the capital structure of the other 2 companies, we will determine closer to the spin. So that's the current thinking.

Got you. And then just last question for me. How long has this been in the works for you guys? How long have you been kicking the tires and really been thinking about this?

So Cody, I'd say it goes all the way back to when we launched our original Deploy for Growth strategy. One of the important planks of that was shaping a growth portfolio. And so you've seen us do a number of things, even before that strategy 10 years ago, acquiring Pringles, obviously, a fantastic acquisition. But since Deploy for Growth, we've purchased RXBAR. We doubled down in Africa with investments there. We divested the Keebler pie cones, ice cream cone crust business. And so we've constantly been evaluating it. And this has been a part of that, looking hard at the entirety of the portfolio and how the different parts of the portfolio could best be served and could best flourish. And so obviously, during the pandemic, you put a lot of things on pause as you're just making sure that you can keep people safe, keep food flowing through the system, giving back to our communities, but we never stopped exploring value-creation opportunities. And the time is right now, because we've got lots of strength. We feel like our top line has been reliably restored to terrific growth. And this is just the next unlock in that transformation journey and deploying for growth by shaping a growth portfolio, and we're excited about the prospects that this gives us.

Our next question comes from Ken Goldman of JPMorgan.

Wondering if you can give us a little bit of a rough sense of how much of a margin opportunity there might be within the domestic cereal business over time? And kind of what do you see as a more normal margin today? I know you provided some numbers, but I assume that's still a little bit deflated just given the strike or the fire. So I just want to get a sense of kind of where you think run rate is on a normal basis and where you think that can get to, just roughly, if possible.

I think, obviously, the margins that we shared, and we've given you the '21 EBITDA, that is -- and it's preliminary. I think it assumes allocations on a simplistic sales basis across the 3 companies. But I think if you look at that, that has clearly been impacted by the fire and strike in 2021. And I think as we've talked previously, that impact flows through into the first half of this year as well. I think as we get into the second half, that will normalize. And I think as that business builds back -- and like we've talked, right, we've been singularly focused on the recovery of that business. And we're making good progress on that. And so I think you'd expect that margin to start picking back up. I think from a longer-term standpoint, I think the dedicated focus and the investments into capability, into margin growth opportunities, the North America Cereal Co. will have that ability to pursue that and would continue, and we'd expect for that business to continue to drive margins.

Okay. And then quickly, Steve, I do appreciate the value-creation potential. We've certainly seen companies over time split off some growth from some value in different geographies and so forth. I'm just curious, though, and I know you touched on this a little bit, are there certain aspects of the business together that were sort of holding you back? Meaning are there things that you'll be able to do, whether whoever runs each of these companies will be able to do from a strategic or an M&A or an operational standpoint that maybe you couldn't do when it was all part of 1 entity?

Yes, Ken, I think that's right. And so if you just look at the cereal business, Cereal will be solely dedicated to winning in cereal in the 3 geographies: the Caribbean, the U.S. and Canada. And we'll not have to compete for resources against the high-growth snacking business. So Frosted Flakes does not have to compete with Pringles for resources. And now an economist might say, well, you could do that without splitting up the companies, but we don't live in a textbook. We live in the real world. And that's just the way it works. And so having the ability to focus first thing in the morning on how am I going to win in cereal and then thinking at the end of the day, what worked and what didn't work in cereal and planning the next day's activities, it's just we see that opportunity to focus solely on the businesses at hand. Same thing for Global Snacking Co. and plant-based. It just has the resource allocation strategy, dedicated and focused. It has your balance sheet, your capital structure, everything focused on how you're going to win in that dedicated category. So we do think that there's going to be unlocks and great opportunities for all 3 businesses because they'll be independent.

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

I'm going to -- let me try and ask Ken's question a little bit differently. What has Kellogg's historical margins been in cereal? And there's 1 competitor out there that we see has about a 20%-plus EBITDA margin. Is there a reason why Kellogg would not be able to achieve that? Would there be something that prevents Kellogg from moving in that direction? And then my follow-up question would be without a management team in place for the cereal, how do you keep everybody motivated in the next year, 1.5 years to progress towards that goal?

Yes. So maybe I'll start with the margins, and then I'll pass it on to Steve. I think like I mentioned, in the near term, the margin has clearly been impacted by the fire and strike, right? And I think as we previously mentioned and as you're seeing today, the impact from a '21 standpoint and from a '22 first half standpoint. And I think we'd expect that to recover in the second half and into '23, as that -- as we restore supply and full commercial activity behind cereal. I think longer term, and I think going back to the previous question on value-creation opportunities, I think margin improvement in the cereal -- in the U.S. cereal business is definitely a value-creation opportunity for that company. And they'll have the capital, resources, focus to go after that margin opportunity.

And Ken, great question. How do you keep people engaged during times of transition and change? As exciting as this is, obviously, it creates uncertainty, and we're well aware of that. But we have a very strong change management agenda in place to keep our employees informed, motivated and engaged. Also keep in mind, our international regions stay almost entirely intact, and then splitting the 3 companies creates exciting career opportunities for our folks. So where we have one of -- one thing, we're going to have 3, right? We're going to have 3 heads of communication, 3 IR heads. Those types of opportunities are very exciting for our people. And when we separated our Keebler business, we created exciting opportunities for our people there, and we always -- we will always treat our people fairly with dignity and respect. But this is an exciting time. This is an exciting time for our people. It's additive. It's the next step in our transformation. We're -- as soon as we're done with this call, we've got a global town hall, which I'm excited to talk to all of our people about. So I'm very confident we're going to keep our people engaged, enthused, excited about the business at hand for the next 18 months, but also the opportunities that this presents going forward for all of our people. We're very focused on that.

Our next question comes from Robert Moskow of Credit Suisse.

I'm just trying to figure out an estimate for dissynergies from the transaction. I know that you're going to provide us with that down the road. But can you just give us some color on what kind of inefficiencies you'd expect this to create in distribution and procurement? We know they need different IR departments, but can you speak a little bit about that?

Yes. So I think on an ongoing basis, there will be dissynergies. I mean, I think our North America business is an integrated business. And so I think as we stand up the 3 companies, you would expect there to be some dissynergies in common areas. I would say that we expect transition services agreements for a couple of years post the split. So if you think about the spin-off timing, we've talked about 18 months for that, transition service agreements running for a couple of years after that. So we've got time to work through the dissynergies. I would also say that we've done a really good job of eliminating the dissynergies and the stranded costs post the Keebler divestiture, and you've seen that flow through in our '21 results. So I think we've done this before. We've got a good experience in doing it, and we've got time to address the dissynergies.

And just so I understand, the TSA agreement, would that be like the spin-offs paying a TSA kind of payment to the Global Snacks business?

Yes, I think so. I think post the spin, right, you'd expect in areas like IT, for example, global shared services that, for a period of time, there would be shared services -- there would be transition agreements for those shared services, even in areas like maybe logistics, maybe distribution centers.

Our next question comes from David Palmer of Evercore ISI.

Just a follow-up on North America cereal. I think it was really -- it was Ken's question I'm following up on. The low double-digit EBITDA margins on a depressed '21 sales is probably a lot worse than your peak levels. Could you speak to maybe where those were? As an example, I'm looking at rough benchmarks, the EBITDA margin for post cereal business, for example, [indiscernible] retail businesses are in the 20s. So I'm just wondering if you could give us a sense about where that business might have been in sort of recent periods, pre-strike and fire and some of the other reconfigurations you've been doing.

Yes. I think -- so firstly, like I said, it has been -- our margins were significantly impacted by the fire and strike, right? And I think it's also important to understand or to -- these are fully allocated. So it includes a share of corporate allocations as well as opposed to potentially, you may have been referring to divisional profitability numbers. These are fully allocated numbers. So there's some -- so that will impact the margins as well. But having said all of that, right, I think from the 21 basis, there is a marginal opportunity in the cereal business.

Our next question comes from Alexia Howard of Bernstein.

Can I ask about the timing of news about this over the next few months? So what are the next milestones during the course of 2022? When do you anticipate the financial breakout and the standard of the extra cost of the synergies and so on, just so that we have an idea of the playbook there.

Yes. So I think -- from a time line standpoint, right, I think we've got to prepare 3 years of audited statements for the spin-out companies. We expect to do that somewhere in the second half of '23. So call it about a year from now, and there's significant work associated with that. I think from a rest of '22 standpoint, we'd be reporting. And obviously, we'd be updating you on the performance of these businesses as part of our earnings calls. But you can expect that for the rest of the year, we'd be continuing to report on a total basis as we have with updates on the performance of each of these businesses. And then I think from a '23 standpoint, we'd probably give guidance on a total basis. And then as we get into '23 and as we have the carve-outs, we'll start sharing the details of each of the specific companies.

Our next question comes from Pamela Kaufman of Morgan Stanley.

So just given the length of time between the announcement and when you expect to complete the transaction, I was wondering if you can give us any sense for how you plan to prioritize investment behind the 3 businesses. You mentioned that typically, the snacks business would be a priority over cereal, but if you could give us a sense for how you plan to incentivize the employees and allocate investment over that time frame? That would be helpful.

Thanks, Pamela. So I would say it's really business as usual over the course of the next 18 months. And business as usual for us means that the U.S. cereal business, for example, coming out of the fire and strike, we're fully dedicated to bringing that business back, and we've been very successful in doing that and ahead of plan in terms of the production capacity we're getting out of the 4 cereal plants, in terms of the total distribution points that we're building back at store. And in terms of the share, we gained 4 share points since the beginning of the year. So we are determined to continue that momentum and continue driving that forward. And obviously, we've got great momentum in our snacking business, and we've got a good business plan for this year, which we've been performing well against. You saw our first quarter results. We'll have more to report, obviously, on August 3. And then when we get into August 4 -- when we get into next year, we'll talk about exactly what that business plan looks like, but we're very confident in our business. You've heard us say we're going to come out of the pandemic as a stronger company. We believe that, that has happened. The strength of our portfolio and the robustness in our top line is what allows us to make this bold move. And so we're going to run the business, as we've normally run it, as we prepare for the split down the road.

And then just a question on how you plan to allocate debt to the businesses? You mentioned that the plant-based company will be debt free. So should we assume -- how should we think about the split of debt across the other 2 businesses?