McCormick & Company, Incorporated (MKC) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to our next session. I'm thrilled to welcome back McCormick to the conference. Today, we're going to do entirely a fireside chat. Lawrence Kurzius, Chairman and Chief Executive Officer; and Brendan Foley, President and Chief Operating Officer, and I will just have a chat. And I think we're going to cover quite a bit of ground today. So let's just dive right in. So first of all, thank you both for coming back, and it's great to see you.

Sure. Steve, thanks for having us. It's great to be here.

Thank you all for joining us today.

So I guess just to start off, I mean last year was a difficult year for the company, especially kind of post this conference a year ago, second half. But you've started up '23 resoundingly well, very strong first quarter. You exceeded consensus expectations pretty much on every metric and allows you to confidently reaffirm the full year. I guess, as we sit here today, how do you think the business is performing? How do you feel about results to date? And has anything changed from a historical standpoint as you reflect back on the challenges of last year?

Well, Steve, first of all, the long-term fundamentals of our business are intact. Our strategies that we've been pursuing are still intact. And although we had a challenging year last year, and there's been a lot of volatility over the last couple of years from COVID and then all of the disruptions of the reopening post-COVID. We've had a constant focus -- consistent focus on our core strategies. And we just believe that those -- that the fundamentals of the business are intact. We did have a solid Q1. I think when we were here last year, we signaled some areas that were under pressure, but we had a really good start to the year -- this year. And we continue to drive for a sustainable and sustained growth. And your question is really about whether the business has changed in some fundamental way. And we don't believe that it has. Our long-term algorithm is for 4% to 6% top-line growth over time. We're going through a period of pricing right now or many around us are taking or getting big growth from price as we are. But what we believe that the fundamentals that drive our underlying volume growth are intact and will allow us to continue to drive strong long-term volume growth. In the near term and the current performance is this -- the limited amount that I can say about it. We're literally 3 weeks from earnings today. And so we'll talk about it a bit more in 3 weeks. But I will say if you look at the Scanner data, Americas is looking very solid for us, good sequential improvement there. Europe is much the same. China, there's no Scanner data, but I can say that our recovery there is strong. We are cautiously optimistic about their economy. The recovery there might be moving at a different pace than it was expected, but our recovery there has been pretty strong. We also just did a pulse check with consumers last month. We've done these periodically through the pandemic time and even before. And 2/3 of consumers are saying that life has gotten back to normal for them, which I don't think should be a big surprise. And this is a global survey. This is not a U.S. or European survey. And for us, normal is a positive. In normal times, there's been a long-term trend towards more cooking at home, towards healthier eating, more scratch cooking. All of these things are constructive to our business in the long term. One other finding that came out that shouldn't be a big surprise is that 75% of -- about 75% of consumers are feeling a financial pinch. And we expected that in our business plans. Our plans have a strong orientation towards value communication to consumers. And so we're taking that all of stride. I'd say overall, we feel really confident in our long-term outlook.

Okay. Good. So let's talk a little bit about the 2 sides of your business. First, about Consumer business, which is about 60% of the portfolio. And it's got a very broad reach across geographies and categories and channels. I guess what are the specifics of how McCormick has set up its operation that make that such a promising business? And maybe if you can, just touch a little bit on things you're doing this year. You mentioned the orientation towards value, but reinvigoration of everyday spices, the store shelf reset and around that consumer preferred packaging.

I'm going to allow Brendan to take most of this, but I'm going to just say a few words at the beginning. So one of the things that's a great set up for us is, I mentioned consumer trends and return to normal. Our alignment to long-term secular trends is foundational to our business. There is a current to the river that is flowing in one direction, and that is towards more demand for flavor, more interest in scratch cooking and more interest in healthier eating. Consumers are cooking at home more partly because somebody in the household has got pretty good at cooking, but partly because consumers like cooking and believe that it's a healthier way to eat. And so these long-term trends have been intact. In many ways, they were in place before the pandemic. There had been a trend towards cooking more at home, eating more at home. That got augmented during the pandemic, and we believe the trend is still very much intact.

If you build off of some of the points that Lawrence just said there, I mean, I think there are some fundamental strengths that we think are just part of our entire system of advantages. And it's going to range from category management to brand marketing to the innovation and just to kind of pick up on a couple of those and probably hit a couple of the areas that you called out, Steve. If I just look at category management, our role is just to really optimize the performance of that category for the retailer, but also spend a lot of time making sure it's also -- we keep improving it for the consumer overall. And if I just use spices and seasonings as an example, right before the pandemic, we started really this idea of aisle reinvention and really reorganizing the aisle in partnership with retailers because the consumers' number one problem is I can't find what I'm looking for in-store. And we've made a lot of progress with that over the pandemic to the point where in a lot of the stores that we since really turned over, we just see faster performance for the category, but also McCormick when we've done that. And so that's an example, just kind of bring that category management mindset, I think, in with our retailer partners, and having a lot of success in getting that. And then more recently, we have renovated our entire everyday line of spices into new packaging. It's just starting to roll out really. It started shipping in March, and it will start to flow through the balance of the year. But what that does is really now [ it attacks ] what are the #1 desire for consumers just to have fresh herbs and spices every time they open that jar. So we built in a really interesting technology by nitrogen flushing it before we pack it so that the first time you open it, then it's as fresh as it can be. But then there's a great cap on it that just really kind of snaps and seals it even better than the current one. And that just preserves a lot of freshness. And just it's easier to see the quality of the product, and the package. And do simple things, and this may not seem like a big idea, but it is when you're in your pantry, you can't find the spice you want. We printed the name of the spice on the cap. And then the Best By Date. So it's always there for everyone to take a look at. And these are renovation approaches that I think that we do that really, I think, carry the category forward plus our brand. This is going to be backed up now by just -- probably, I think this will be the highest level of brand marketing spend that we'll have up against McCormick. And we haven't even hit that yet. It will probably start in the third quarter where we really spend even more behind this renovation, So it will be pretty exciting when we do that. We're also seeing a lot of sort of interesting growth in certain channels. I'll give you an example. In EMEA, the discounter channel is probably the fastest-growing channel in this part of the world. And we're seeing a lot of new penetration of our brand there. And so we're seeing a lot of nice double-digit growth in the discounter channel. Similarly, in the U.S., we're seeing consistent double-digit growth in e-commerce. Feels like, well, why are we still talking about that. But we just see continued penetration and growth, and it's representing a bigger, bigger percentage of our overall net sales. So -- and our share keeps growing in that part of the market. So we're seeing a lot of great growth behind all this increased focus, I think, around category management, the category, brand marketing. So these are areas that I think are pretty exciting. From a brand marketing standpoint, we consistently spend as a percentage of sales at the highest level compared to our peers. And even when times are difficult and challenging like last year, we still have increased brand marketing support around the brand, especially behind the fourth quarter because as we got into 2023, we're sort of leaning into strength as we start off the year. So those are areas where not only do we have kind of that great share of voice in our categories, but it's backed up by just some strong messaging and engagement rates in digital as well as just very strong ROIs compared to kind of what peers start to see. From an innovation standpoint, 2023 is a big turnaround compared to kind of the last couple of years because the pandemic really tamped down the ability to innovate where everyone was so worried about supply as we were. But we have 6x, just in spices and seasonings 6x the new items that we launched last year in 2022. And we're doing the same thing globally. We're really launching a lot more from an innovation standpoint. We're also putting even more attention into sort of innovation around value. And so that is, I think, something that definitely you're seeing a lot more in '23 and also in 2024. We talked about this Lawry's opening price point. As price pockets expanded, this created a role for this brand and kind of come in just above private label. And that allowed us to really start to see some interesting growth where we have that in distribution, and it's continuing to build this year. About 53% of the people who are buying that brand are new to McCormick. It's also driving category growth with our retailers, and it's trading people up from private label into the brand because they're still looking for high quality and so they know they'll get that with the Lawry's brand. And then -- we've talked about this a number of times, but the data just keeps rolling in, in terms of how strong this is. But going to larger sizes may seem pretty like average in terms of just basic blocking and tackling, but it's having a real impact in our category. And it's really showing where consumers are trying to go for quality, but they also want greater value. We have this range called the Super Deal in the U.S. and that business is up 20% every year since the pandemic started. But what's interesting about that is you get 3x more product in that bottle, but the purchase rate or the purchase cycle is just as long as it was in our smaller sizes. So what that means is that people are just simply consuming and using more spices. So when it's in our pantry, they're using up through just as quickly as they did a smaller size. And we're seeing just frankly, our volume metrics are even stronger than our unit metrics. So it just shows that people are really starting to trade up in size, but they're looking for value there, too. And so these are areas where I think it's pretty prominent in terms of where we see a lot of new innovation. We're also -- the summer is grilling season for McCormick. It's a real exciting time of the year just like the holidays are. And so we have a lot of activity going on right now. Here in France, we are celebrating Ducros, which is the herb and spice brand that we have here in France, the 60th anniversary, so it's getting a lot of increased merchandising and sort of grilling season support and driving excitement with the retailer. In the U.K., we're also doing the same thing behind the Schwartz brand. Just a lot of sort of -- sorry, increased promotion and excitement around the grilling season. And we're doing the same thing in the U.S. Also in the U.K., we're seeing a lot more grilling activity even in the discounter channel. So we expect to see some nice growth from that. But back to the U.S., new items. That's a big part of it. We're launching new items in Grill Mates, seasonings like garlic butter. We're even taking some of our flavor solutions technology into our consumer business behind the Stubb's brand, and we're launching this smoke seasoning rubs for -- behind Stubb's and what uses is our FONA True Taste technology, and that gives us kind of that authentic hardwood smoke flavor and seasoning rubs. And so this is the type of excitement I think that we're kind of getting back to and driving execution across the business, and this is what I think is a good example of how we're getting back to the standard of how we execute across our categories great...

That's right.

And Steve, if I could just add to that. So you heard distribution, category management, brand marketing, innovation, you also heard promotion. And with the restoration of supply, we can go out and do volume building promotion. And I know that one of the concerns, that investors have had, is about promotion levels. We feel that our promotion levels got back to normal in the second half of last year. And to us, promotions drive displays, that you to drive new trial. Promotions are not about inefficient cost discounting.

One thing I would also call it from a private label perspective because that tends to drive some questions. What we're seeing right now is we continue to see that price gaps are narrowing, right, just behind private label taking more and more price on an item basis. So what that means is the trends that we're seeing is the deceleration in units and sales on the private label line, and McCormick is kind of -- sequentially continues to improve on sales units and volume, as I said earlier. And EMEA is some interesting sort of perspective there. Private label right now has shared as kind of in 2022 is lower than it was in 2019. Kind of curious, but that's happening both in the U.K. and France. I just don't think that we're seeing necessarily private label sort of gain much more increased traction during this period of time. And while at the same time, McCormick brands are growing share, or holding share in many of our major markets in the EMEA. So that's kind of the state...

Of the most.

Yes, most. That's how the state of sort of how we're thinking about private label right now and what their trends are. But overall, I would say, just going back to the U.S., we continue to see just sequential improvement quarter-to-quarter on dollar sales, units, and volume. And that's really sort of the trend lines that we're seeing also in distribution points, too.

You preempted about 15 questions. But one thing you didn't mention is anything -- you didn't mention hot sauce or heat will come back to that because that's topical. The other 40% of your business, Flavor Solutions, I guess, just what differentiates McCormick in that industry -- maybe we'll start there and then...

I'll try to give an answer, it's 40% more concise than the last -- I think what differentiates us and Flavor are the things that many of you have heard us in conferences talk about before. We start with real food. We're culinary inspired. Our roots are in cooking, real food, natural ingredients are origins as a company and our foundation are not as a specialty chemical manufacturer or perfume. We have really unmatched breadth and reach in our offering. We have unrivaled insights. We get insights from our own brands on the proprietary research, the research I mentioned a few minutes ago. We get access to insights to our restaurant and foodservice business, and we get insights from our Flavor customers. who come to us with their own. We're able to bring all of those insights together. And I think that, that is a strong advantage for participation of both segments for one, but also gives us a real advantage in the Flavor business. Our consumers are generally our customers and clients' consumers. We also have our own unique suite of technologies from FlavorReal to Optify, which is a flavor modulation technology. We believe we offer a differentiated customer experience in terms of the way we work and collaborate with our customers. And I think most importantly, we are 100% focused on flavor. I mean, as a company, we're flavor from end to end, whether it's consumers flavoring products in their kitchens at home to restaurants at a tabletop or back of house to their complex flavor systems that we sell to our CPG and health industry customers. But all of our focus is on flavor. Nobody is trying to think about how to get onto the [ Chanel ] account, go the [ operating ] or best scientist wake up every day thinking about flavor.

Well, I was just going to add that we're also really building scale through organically and also through acquisition. And it just shows the consistency of when we've made acquisitions, we really performed quite well. The latest one we did here in the Flavor Solutions area is FONA. And that's been not only strategically important, I think, for our business, but also it's really exceeded our expectations, both on sales and margins. It's been very accretive. We were very pleased with that acquisition. And it's an example of where it really expanded, I think, both our capabilities and broaden our customer platforms. And so what we've really seen the benefit come through, and the reason why it's exceeded our expectations is really that opportunity through cross-selling through the different platforms that we brought together has helped us really diversify our customer base. And so that's been a definite bright spot as we think about just sort of the role in which both organic and acquisitions have played a lot of growth in Flavor Solutions. So those are areas, I think, that are kind of important to call out. But also when you think about Flavor Solutions, it includes our branded foodservice business. We're seeing a lot of healthy growth there. Yes, through the pandemic, people kind of moved away from eating away from home. And today, you would say those rates were sort of flat to slightly behind where they were in 2019. Yet we've seen a lot of sales growth and share growth in branded foodservice. And we're serving quick-serve restaurants, casual restaurants, institutional customers, hotels, everything else. And we're getting those brands, our brands on the Consumer segment, out in front of consumers there on tabletop and our menu, and that creates a nice sort of trial and awareness cycle that we benefit from in branded foodservice. And that's been an area, I think, that's really been pleasant just given the conditions in the market, we've seen a lot of growth.

Yes [Technical Difficulty] last year into this year, you were -- you had some challenges in that business financially, just kind of keep it, getting up, catching up with the cost structure, pricing and et cetera. That, as of the first quarter seemed like you had essentially resolved that you were caught up. Is that fair? And if...

I think you're going to see continued progress in that area. And that -- okay. Very good. But I mentioned heat earlier. You've talked about this a lot, but I guess any updated thoughts on -- from your perspective or for those who aren't as familiar, just why you think the demand for heat is so attractive, so intense from a consumer perspective? And how do we know it's sustainable?

Well, when we think about heat, it's more than just the Frank's RedHot brand and Cholula Hot Sauc, obviously, that could sort of get you thinking right away. But what we're seeing in consumer trends, even just beyond the hot sauce category really reinforced this idea of just heat just being not only seeing some nice previous growth, but just continued growth overall. Categories like hot sauce, growing at 9%, but we're also seeing heat as part of a component of other larger categories like spices, seasons, or in snacks, those are growing at double digit. And so this has been a consistent trend that we've seen over the past 3 years. It obviously started well prior to that. But as we think about growth rates, we're seeing higher growth rates and things surrounding heat than maybe sort of their base categories. And so you see the consumer really moving towards this. We're also seeing it in flavor solutions, particularly in snacking. I think our other center of the store items, those are also seeing double-digit growth rates overall in terms of consumer, just sort of looking and seeking out that flavor profile. A lot of the bridges we get from our customers and Flavor Solutions are dedicated to eat in some way. So these are definitely some enduring trends overall. And I think that what's underpinning a lot of this is really younger generations. So generation Z is driving much of this. And also households with teens are really driving a lot of the growth in heat. But anywhere north of 70%, they're having an influence in any sort of way you measure this. They're bringing in heat to the households. The generation Z is, particularly there is teens in the households, they're sort of bringing in those very sort of heat-driven snacks that you'll find that we also supply. And so this just gives you a sense for, I think, where heat is just more prevalent around our overall course of the business. But we see it in both sides of our segments. And this is an area where we feel like we have real capabilities and we're going to continue to sort of build more and be more intentional on building a platform around that because we do see more of an enduring trend around heat.

Yes. And with -- I mean, so with brands like Frank's and Cholula and the Flavor Solutions platform. I think to me, it's intuitive as to why you're well positioned, if not advantaged, to capitalize on it. Is there a way to quantify or dimension like how you think about the growth potential or just how much of the overall company's resources are actually going in the direction of heat?

It's hard to quantify a specific flavor across our net sales. But as we sort of try to in sort of get more scientific in pulling that together, right now, our rough estimation is it's above 20% of McCormick's total net sales. Growing at a rate depending on if you're talking Consumer or Flavor Solutions anywhere from 10% to 13%. So we see our growth rates in this flavor profile being higher than what are also really strong tailwinds in our categories. So that's kind of a way to think about sort of its scope overall and at scale. What really underpins this for us, though, is really why we're doing, we're better at this than most. It's just simply a system of advantages we have around being really strong in heat. It ranges everything from supply chain all the way from consumer insights to science and technology. The supply chain, for example, we have a lot of sourcing expertise. So we've been sourcing from these areas in these regions long before we even on the Frank's brand, places like India and Mexico, whether it be chillies or other raw material that really speaks to heat, we sort of have an expertise in that. We also have a lot of expertise in just the complicated process of heat manufacturing in a number of facilities around our overall base. I can't say enough about our consumer insights in both segments of our business. We have just a ton of sensory information and a lot of knowledge, not only from our Flavor Solutions customers but also our hot-sauce brands as well and bring those 2 things together, brings a real strength in consumer insights. Product development is kind of where it really kind of meets sort of the rubber on the road where we can take a chilli and bring that into an extract and kind of transform it in that way or we can also just take sort of a hot sauce and kind of convert that into a dry seasoning and kind of find new applications for that. So from a product development standpoint, we also have some really sort of deep capabilities. And I think I'd just wrap it up with science and technology. A lot of our flavor scientists understand the origin, the aging, either process it, fermentations are kind of a big lever here too. And this is an area where we just have a lot of scientific technology as a foundation for driving that growth. That, plus younger generations, we see a lot of momentum.

It's momentum in my household. I'll tell you that. Let me shift gears. Coming into the year, well, in general, but also coming to this year especially, I think you've prioritized cost savings and operational excellence and efficiencies to help fund a lot of the growth issue. We just you talked about programs like the Global Operating Effectiveness Program, right? The CCI. How do you balance that focus on productivity and emphasis on cost reduction with the growth mentality?

That's a great question because there has been a strong focus on cost savings and operational excellence as we've seen in our -- especially in our communications this year. Our focus is still first and foremost on growth, though. And we think of ourselves as a growth company. We believe that we are differentiated in our ability to grow, and that is a big driver of value creation. And we've always had a discipline around cost and a very structured approach to cost out our CCI program. It regularly generates really meaningful cost savings to the business. And our long-term algorithm includes about 40 basis points a year of margin improvement on a run rate basis. And some of those disciplines had slipped during the COVID. And there was an accumulation of excessive cost to serve our customers that had accumulated. There are things that we did to make sure that we kept our customers in stock that we -- on the Flavor side, if we short a customer, they're out of stock. And we felt that the long-term good of the business was best served by doing really whatever it took to keep them in supply and that sometimes came at the expense of the P&L. We have estimated that there is about $100 million of excess costs in our Americas supply chain, and we have committed to getting that out. And we expect to do that over the course of this year and early start in the fourth quarter of last year, this year and next year with $75 million of that hitting the P&L this year. And we would say that $75 million benefit, we're not talking about we're going to reinvest half of it so that investors never see it. This is real savings that are going to drop through the P&L. And there's about another $25 million of organizational streamlining that goes with that. So that 70 -- so $125 million total P&L benefit over this year and the next, with $75 million of it this year. The heaviest lift for us in terms of the action that we have to take is really in the first half. And we really wanted to prioritize getting the foundation of that program in place, doing the things that are kind of the hard difficult things around cost reduction, the people impact out of the way in the first half so we can be focused on growth going forward.

Great.

And we have a high level of confidence that as we sit here with the first half, actually complete that we were well on track. Yes.

Okay. Good. Another topic you've emphasized in the past is the principle of performance-led performance.

Purpose-led performance.

Well, that's...

Performance-led performance, sorry. But even performance by...

Yes, purpose-led. But performance either way. I guess maybe highlights on those goals to sustainability actions is just because you've obviously been recognized as a leader in sustainability.

First of all, it does start with performance. So all joking aside, if you don't have top-tier performance, it's hard to do the other things. But purpose-led, we're 135 years old. Our foundation is in some agricultural products like pepper and vanilla that come from areas of the world that are really subject to climate change. And we believe we've been a good actor in this space long before corporate social responsibility or ESG became buzzwords. We have launched a series of commitments, and we published -- you all can go out and find very substantial reporting on this. It's a substantial set of goals aligned with the United Nations Sustainable Development Goals. I'll mention a couple of things that are great examples of the substance. A lot of our products are grown by smallholder farmers, tropical areas. Our goal is to work with 35,000 of those farmers on improving their agricultural practices, their own income resilience, and the benefit we get from that is we are directly at the source. And so we've eliminated a lot of middlemen. We get better traceability, better quality in the product that ultimately better cost by eliminating middlemen. Right now, we're at about 31,000. So good progress towards that 2025 goal. We have a goal to source our top 5 most iconic ingredients 100% sustainably by 2025. We're very far along on that goal and several of them are already there. And we have recently expanded that goal to the next seven largest agricultural commodities that we source by 2028 to be 100% sustainably sourced. We have a set of goals around climate and carbon reduction. Our original Scope 1 and 2 carbon reduction goals for 2025 turned out to be less ambitious than they could have been. We achieved those actually already. And so we've established a higher goal for 2025. And we've also established goals for 2030 that are aligned with the 1.5-degree C temperature rise that the UN is encouraging all of us to align to. And that goal has been science -- has been validated by the science-based target initiative, which most -- a lot of people have made the goal, set the goal, but it hasn't been validated. And we've also set a goal to be carbon zero by 2050. That is not yet validated by the science-based path, but we are working on that and we've stated that as our ambition. And then in packaging, especially plastic packaging is a real sensitive point for consumers. Right now, we're at 84% circular packaging as a company. The things that we are doing today, like the renovation of our ready spice line that Brendan mentioned, take us further down that path. That packaging is 50% post-consumer content and is also a 20% carbon reduction. So we're substance behind the program that we're doing. Corporate Knights for 7 years in a row now has recognized us in their top 100 most sustainable companies. And in each of those 7 years is also recognized as this is #1 in the food industry. in terms of sustainability. And it really matters to our business. Consumers want to buy from companies that are doing the right thing, not all of them. But this is a business where a few percentage points really makes a difference. And our customers are all trying to be sustainable themselves. And we are part of their sustainable supply chain. And so that's an area where we can win. I will also say in recent news that the UN Assistant Secretary-General and CEO of the United Nations Global Compact, Sanda Ojiambo, visited our company with their staff just last week. It was like a full state visit. This is something they normally do for countries, not for companies. This is the first company that they've actually spent a full day where they really came to recognize the work that we're doing. See it firsthand and hold us up as an example to others.

That's great. Have you -- how far have you gone within the organization to codify some of those objectives in compensation.

We haven't set specific compensation goals around an outside people's performance objectives. But I can tell you that it does run deep. We were also just for the rank and file workers. Do not count [ goal. ] Well, first of all, everyone is really motivated by it because everybody wants to work for a company, that's doing the right thing. But we also have -- we've launched a sustainability batch program that people can go through their actions or the batch. It's a very visible display of their commitment.

Okay. Great. Just a couple of minutes left. So I want to just close by some reflections on where we've been and where we're going to go. And I think it's been hard for investors through COVID, drill the supply chain disruptions, inflation and pricing, all the things we've talked about to think about what has changed, what hasn't changed and how we should think about long-term growth objectives. So as you think about your business, how do you think about long-term objectives? You've had a long-term algorithm? Is that still relevant? Or has what we've been through caused any change in that thinking?

We've got a long-term algorithm that was set, not by Brendan and me, but by folks who came before us, that has held up really well, and we don't see any reason for it to change. I mean that 4% to 6% top-line growth and 7% to 9% operating income growth, constant currency. And you get a little bit of financial leverage and if you get -- you get to 9% to 11% EPS growth, put a dividend on that and you've got a double-digit return built in. And we believe that algorithm that we have not outgrown it and that the circumstances of the market and our -- and the impact of our strategies with good execution, sustain that algorithm. Getting back -- taking all the noise that you were just talking about away, getting back to normal is good for us. When things were normal, most of our peers were roughly flat to low single-digit growth. And that -- and we were at the high end of that growth algorithm. And with the return to stability and normalization of cost, we believe that algorithm is still appropriate. And normalization progresses will differentiate us in terms of our growth going forward. The underlying trends and fundamentals are there, I think our strategies are sound.

Well, here's the normal then. All right. We're out of time. So thank you, Lawrence. Thank you, Brendan. Thanks, everybody, for joining us, and...

Thank you all for your attention. Thank you, Steve.