Mondelez International, Inc. (MDLZ) Earnings Call Transcript & Summary

Okay. Well, thank you all. For the next session, we welcome Mondelez to the stage. Joining us today are Dirk Van de Put, the Chairman and Chief Executive Officer of Mondelez; Luca Zaramella, Mondelez's Chief Financial Officer; as well as Vince Gruber, who heads up Europe as its President. So thank you, all 3 gentlemen, for being here. Very happy that we're going to run the session exclusively through Q&A. And again, thank you for your participation and your answers in advance.

I guess, let's just start very broadly, if we could. Needless to say, there's been a tremendous amount of change that's faced everybody at the conference, every company at the conference. But it came at a time when you were changing and reprioritizing and evolving the strategy at Mondelez. As you think back on the last few years, I guess, how would you take away the greatest accomplishments. And I say that in a -- with an eye towards what will enable you to navigate what is likely to be an increasingly volatile time going forward as well?

Yes. Well, from probably the highest level, we were up to 2017 and after we had sold the coffee business, we were very focused on our margins And we were a cost-oriented business because we realized that our margins weren't as high as they should be. As I came in and Irene retired, the big question was can we make a pivot towards growth? And can we become a growth company? And I would say the biggest achievement is that we achieved that. So our growth has been 4.2% top line for the last 4 years. At the same time, we also wanted to revamp focus on our brands and our categories. So we've done a lot of work on rebuilding our global brands or strengthening our global brands. But we also -- we are a house of many brands, I would say. We have 55% of our portfolio, which is local brands, which had been neglected a little bit before. So we have been revamping those and investing more, and they've reacted really well. I think that's a big achievement. And if you ask me what's going to lead to the future, I think the fact that we've been building up and every year increasing our investment in our brands is going to help us well in the coming years. The other thing, and I would probably maybe some of the investments we've done. But during the pandemic, the consumers started to live more from home in our categories, which are mainly biscuits and chocolate have benefited from that. So our categories, which were biscuits and chocolate, particularly, which were around the 3%, 4% growth, got lifted up to a 6% growth. We have other categories like gum that got negative effect. But I still see at the moment that momentum in those categories. We clearly see a change in the attitude of consumers, where snacking every year is becoming more important. Millennials and Generation Z particularly like to eat in between meals, and they don't think in sit-down meals. But while before the pandemic, there was a big movement towards healthier snacking. What the pandemic has also brought to bear is that indulgent snacking has become more and more important. And so 83% of consumers don't think there's anything wrong with having an indulgent snack or several a day. And so I think that bodes well. So the investment we've done, plus the changed attitude of the consumer, plus our -- strengthening of our brands, those altogether, I think, positions us really well for the years to come.

Great. Within snacking categories, biscuits, chocolates and increasingly cakes and pastries and chocobakery, are where you're most focused, I guess, maybe some perspective on how you size the overall opportunity in those categories? And the key areas of strength, the competitive advantage that Mondelez has? And maybe, Vince, you can pile on and to Dirk from a global perspective and then Vince, we're in your large -- we're in Mondelez's largest market, would love your perspective on how it applies here.

Well, first of all, there's our strength in those categories. We are, I would say, by far, the leader in biscuits globally, probably 5x the size of the next competitor. And in chocolate, we are #2, but with more momentum than the #1. So I would dare to predict that we will become the leader in chocolate. I've talked about how those categories have accelerated. And for us to be the world leaders in those that's going to -- that I think is a competitive strength. We are very global company, more than 75% of our business is outside of North America. In fact, Europe, and Vince will certainly talk a little bit about that, is our biggest market. But at the same time, we are present in all the major markets around the world and doing quite well. That combination of global and local brands. I think I would also see as a strength. If you go to Belgium, where I'm from, we've Côte d'Or. But if you go to Sweden, we've Marabou, you go to the U.K., we've Cadbury. So we have the strong local brands also plus we have that range of biscuit products that really helps us. I think the fact that we have had a cost period behind us, and our margins are solid. We are a very cost-focused company. We haven't lost that. We went on a diet and we're staying, let's say, we're keeping the weight off. I think that also is going to be one of our competitive advantages as we go forward. The other thing we've recently seen is that the pricing power is there. We've increased our prices, but so far, our volumes have not suffered. If anything, they've accelerated. So that, I think, is also one of our strengths. I'll stop there and let Vince start a little.

Yes. I mean if I start with the categories first. I think if you look at chocolate in Europe, to Dirk's point, I think we have the signature taste in pretty much every country where chocolate, we are playing. If you take Cadbury in U.K. is the #1, not just by number, but also by love, consumer, that's the taste of the nation. You have the same Milka in Germany, you have the Cote d'Or in Belgium, you have the Lacta in Greece. So those are really assets. And the reason why I'm saying that one, it's so important because it's a model which then can work beyond chocolate itself and to bridge into biscuit. We have created over the last couple of years in Europe, in particular, a segment on its own that is called chocobakery or chocobiscuit, where we took our chocolate brands into that other category, which is a different occasion, a different moment in the day consumers are using. So if you think about the latest acquisition we have done with Chipita, which gives us the entry point into the baked snacks or then into the consumer business, which again you can imagine the business there is already great and strong in the Eastern European part. But if you bring it to other markets, we will bring the choco-pastry in that territory again. So I think what we have is a great model, which goes across categories. Each of these categories are different occasions in moments of consumers' time. So they're very accretive in that sense. And I think the investments over the last year, we have done in those in brands, in general, the biscuit and chocolate has grown those brand year-over-year into an element where today, they stand for chocolate and biscuit but also for segments left and right. So the accretiveness of our segments and territories we go is just -- has just proven over time.

How -- I think there's been a lot of investor confusion to some extent about the move into cakes and pastries and chocobakery. How big is that opportunity for Mondelez? And how do you exploit that opportunity without diluting the core focus?

Yes. I think when you use the word cakes and pastries, people can have different ideas of what that means. But the way to think about it that we see it is that if you are a consumer these days and you walk through the aisles in a supermarket, you might find yourself in what you think is a biscuit section, but it's a soft cake section. And it's the same brands that play there and the shelves are right next to each other. And so it's an extension of the biscuits shelf. It's usually portion-sized. It's not big cakes or so on. And I think the other thing that is important is there is an opportunity to consolidate this area to bring real branding quality products through this area. In general, those products sell at a higher price point with higher dollar margins and it's the size that is very close to the biscuit market size. We are almost doubling the opportunity that we have, as Vince was explaining, we've proven that our brands can play on both sides. And the growth is similar to biscuits. So that's the way to think about it. You probably all have had already a Milka cake or a Cadbury pastry. So it's a continuation of a universe of the market. That's the way to think about it. Vince can maybe talk a little bit about what that means in Europe, the opportunity that we have there, and now you want to tap into that.

If I look at the 2 markets, the cake and pastry category segment is literally in Europe that is doubling our operating space. So biscuit is around $18 billion, $19 billion in Europe, and this cake and pastries adding another $17 billion, $18 billion space for us to grow. And to Dirk's point, it's not that new to us. I think in particular on the mini cake part, we're already playing quite successful for years now in the market. So it's the pastry partner with Chipita, which comes on top of them. So it's doubling our playground from biscuits into the cake and pastry part and is giving us new footfall into those markets. Important element is that these are accretive because from a consumer point of view, those are tapping into different occasions in the day. Pastry is more – croissant is more in the midmorning, cake is more in the afternoon a soft cake and chocolate is in the middle or more in the evening. So I think what it does for us, it's an accretive, high incremental play. It's not so much tapping on each other. And at the same time, to my earlier point with chocolate, you can leverage the synergies in terms of taste, sensation and value creation because everything we bring to the market is a value accretive element for the retailers and for us.

Okay. At your most recent Investor Day, there were a couple of other points of accretive growth opportunity you laid out in chocolate, more strength in seasonals and sharing, specifically a brand like Toblerone as a focus for growth. And then across both biscuits and chocolate, you highlighted historical geographic imbalance. Some markets are strong in chocolate, not so strong in biscuits and vice versa. What's the aggregate opportunity there? And how quickly do you expect to make tangible progress there, so us as investors can actually measure success?

Yes, the aggregate opportunity is quite big. It's -- I can probably hand or count on 2 hands the markets where we are the #1 or 2 in chocolate and the #1 or 2 in biscuits. Well, globally, we are, as I was explaining. If you go individually market by market, think about us in the U.S., we're a biscuit player. Think about us in the U.K., we're a chocolate player. We are a smaller biscuit player, still opportunity there. As you go around the world like that and you have this situation, it goes without saying, if you already have a presence, you know the trade that it is easier to develop a second category. We have the brands. We have the knowledge. We should be focusing very strongly on building up that strength next to it. The opportunity, maybe Oreo is an example. So Oreo at this stage is 60% of its business is the U.S. and China. But we think that we can grow Oreo by $1 billion every 3 years. It's getting close to a $4 billion brand. And that growth is largely coming from markets where we already have a presence on chocolate or in biscuits, but where we're using our local knowledge, our local plans to start producing and selling Oreo. So we now have several markets where Oreo is approaching $100 million. India would be one and Mexico would be another market. And in those markets, like U.S. and China, Oreo captures about 10% of the biscuit market. If you start to imagine that we could do that in most biscuits markets of the world, and I see no reason why Oreo, which is the world's most popular cookie, why we would not, over time, could make that happen. That gives you an idea of the size and the speed we can make that happen. So I think it's going to be substantial for our growth. If we then can complement that sometimes by the local acquisition, then that can really accelerate things in a major way.

So I guess that brings up portfolio reshaping, which has been very important over the recent timeline of Mondelez, is clearly important as we go forward. I guess, maybe put it, maybe let you explain like what is the -- what are the major improvements you've made in the portfolio? How important has portfolio reshaping been to your aspired growth algorithm? And should we expect you to remain as active as you have been going forward in a constant pursuit of an optimized portfolio?

Maybe Luca wants to talk about that.

We see the portfolio reshaping as a true strategic enabler for us. It is not necessary to achieve the algorithm that we disclosed at the last Investor Day, but it will be accretive and acceleration of that algorithm. Today, we are in a position where within the coffee stakes that we have, potential opportunities that we have by exiting some part of our portfolio. And on the other side, by making acquisitions, we can really change the shape, not only of the P&L, but also of our cash flow. Particularly as you think about Chipita just few numbers, it is a $600 million, $700 million platform. It is a platform that grows in excess of 3, 4 points compared to the average growth of the company. It is an acquisition that we funded through that, that we acquired in Europe at 0 cost pretty much. And it's going to be accretive in a meaningful way already next year. So it is top line accretive. It is 0 cost of capital pretty much to us, and it is something that is fairly accretive. You are fast forward, and you do a series of these acquisitions, and we have done a few already. Obviously, the Mexico acquisition of Ricolino, it's another one, very excited about because it is an accelerator for the ability we have to establish even more in that country. In that country, we have 5% share of market of biscuits. With the acquisition of Ricolino, we can push that number up. We can also establish a presence in chocolate. So acquisition for us, given the opportunity we have through coffee, some divestitures and with these acquisitions can lead to a place that is very accretive even to the algorithm we disclosed at Investor Day.

And taking Mexico as an example, how quickly can you make good on that opportunity? Is that something we can see output on in '23 or is it going to take more time?

I think you already see it, quite frankly. If you look at the impact of what we call the ventures in the North American segment, [ Ergo ], Tate's, Perfect Snacks, Give & Go, et cetera, it is already quite accretive to the top and bottom line. And so as you think about Tate's, the ability we had to put that brand on a distribution system like DSD. It resulted in material share gains in the U.S. I think Tate's over the last 3 years in the U.S. is most likely ,if not the top, the second brand in terms of share gains. And so they are coming to fruition. Obviously, we need to stay tuned. There is quite a bit in the pipeline at the moment. We have been establishing connections with a lot of potential targets. And hopefully, there's more to come. But I would say that as of next year, you're going to see the impact of the acquisition of Chipita on the bottom line. And obviously, top line it will be the first year of organic sales growth. Ricolino, I'm very excited in size terms, it is the same of Chipita. And so these things will compound over time by the fact that we will be exiting developed market gaps and holes. You're going to see even better benefits on the top line going forward.

Great. On those divestitures, maybe you could just expand a bit more on what the divestment criteria were or are when you get into noncore assets? And also, how you're thinking about utilizing noncore assets like remaining stakes in KDP and JDEP to fund the portfolio optimization.

When you dissect the growth on Mondelez and you're not privy to category P&Ls, but obviously, we are -- you really realize that as you look at chocolate and biscuits, that are pretty much 80% of the portfolio. Those 2 categories have been delivering stunning top line growth, share growth over the last few years and certainly double-digit EBIT growth. And the merit of a company that is more focused in these 2 categories and by the way, it can add to adjacent categories, namely bars and baked snacks that are even more accretive in terms of growth and where we have the right to play and where margins are good, you can have in your mind the picture that is really a high growth, high earnings type of company. And that's really the ambition we have. We want to use those other categories that are pretty much 20% of the portfolio that obviously haven't grown as fast and have been dragging us down quite frankly as the way to establish an even more predominant presence in chocolate and biscuits. And between those and the coffee assets, the goal is very clear. It's just a matter of clearly a bit of time, making sure that we pace ourselves both on the way in and on the way out. And so we want really to be thoughtful in the way we exit some of those categories necessarily -- not necessarily by the time we have something, but by optimizing the absolute value of those assets as well. So it is a value component that we have in mind. It is clearly the fact that we want to manage stranded cost. It is the fact that those will provide the firepower for more acquisitions.

Okay. And if we think about the here and now, right? So if we think about where we are in calendar '22. Dirk alluded to pricing and pricing power to date. Should investors be more concerned about negative elasticity in your categories going forward? How do we think about your business holding up against the more uncertain and potentially deteriorating consumer environment, whether it's in Europe or the U.S. or globally?

Yes. Maybe a number of data points or observations. First of all, history says that during recessions, our categories do quite well. They're a limited out of pocket. They are kind of a comfort type of categories related to the kids and so on and so on. There's many reasons why biscuits and chocolate during a recession are not that heavily affected. And in fact, we've seen biscuits sometimes accelerate during recession. So that's one data point. The second one is the overall elasticity of what's going on. So we know that if the elasticity or the relative price points within a category don't change then elasticity is more limited. And that's one of the reasons why we see limited elasticity because everybody is moving up in the category. The second consideration is if the consumer compares to other categories, is this particular category, i.e., biscuits and chocolate getting more expensive versus those other categories. At the moment, that's not the case. If anything, maybe even a little bit more affordable. And the third one is are we reaching price points where the consumer starts to say, no, this is too much. We do know that the consumer at the moment has high savings, spends less on cloths, spends less on eating out, spends less on travel. And on top, in emerging markets, has a little bit of the relief of, through the pandemic, that all leads to a consumer that is prepared to spend and is prepared to spend on the grocery basket, i.e., biscuits and chocolates. So today, snapshot, things are really good and price increases have passed and have had compared to the trend that we had before really have no effect. Now is that going to last? I wish I could tell you that, but I don't. What I do know is that we are doing everything that's in our power to prepare for potentially a consumer that reacts. We every year have increased investment in our brands. We're doing that this year, and we're planning to continue to do that. And if need to, we would increase even more because I don't think you can increase prices and cut investment. At the same time, we are doubling down on our cost focus and making sure that there's some benefit to be had as it relates to cost. And then as it relates to pricing, you need to be clever in the way you do pricing. There's a number of techniques in general, described as RGM, revenue growth management, that will play a role, but the situation is so serious cost wise that you need to go really with list price increases at the moment. And so that has been going well. I would say, if you look at our cost picture, we are largely 85% covered for the year. I would say, apart from some round of pricing that's going on in Europe at the moment, we're getting there for the year. So for this year, I would feel relatively comfortable, and we are making sure that we enter the next year with some momentum from a pricing perspective and that we have some coverage already into next year. I mean, for the rest, it's really -- we will have to react to what the situation is and make sure that consumers keep on considering our categories. But the underlying trends consumer snack more, indulgence is on the rise. They are very attached to our brands who sometimes are playing an emotional role. Oreo is the most popular food brands with millennials and Generation Z and so on. I think all the momentum is there to assume that considering all things that could go on that we should be doing well in these circumstances.

Luca, from a cost perspective, have the underpinned -- underpinning assumptions that you laid out exiting the first quarter, evolved at all or changed at all over the last 3 months? Are you seeing more cost pressure? If so, where? And as Dirk alluded to, you guys were in -- it seems like you still are pretty intentional about your efforts to price ahead of inflation you can see into '23. Is there anything in the environment you've seen over the last 3 months that has made you a bit more cautious on that pricing stance?

As we just said, we are fairly well covered for 2022. So in terms of incremental cost into 2022, the impact has not been material, but the dislocation of certain commodities and some packaging and ingredient costs that we saw after the market reacted to the Ukraine-Russia war has resulted in additional cost for us, particularly into 2023, as we run out of coverage into next year. I think as I said during the earnings call, we see inflation this year on the total COGS line that is low double digits, which is a way to say and about 12%, give or take, at this point in time. We see in absolute terms into next year the same type of inflation. Now what we have been developing is clearly a pricing plan that is fairly comprehensive. I think it touches pretty much every single country around the world, and there are situations where very limited where we priced only once and we are okay. There are situations where we have already priced a couple of times. There are situations where we are about to price for the third time in certain markets. So as you think into next year, fair to say that the absolute dollar inflation is going to be around about the same as this year at this point in time based on the current spot rate. But one of the benefits is that by having priced in second quarter, third and fourth, we will have a carryover impact into next year. And so the pricing -- incremental pricing that we're going to see into next year, albeit relevant, is not going to be as high as we have this year. And again, I want to make sure we understand each other. It is based on what we see at the moment on current spot rates. We are also sensible in terms of how we cover into next year. We tend to buy commodities at this point in time that are pretty much neutral year-on-year. And we are putting in place colors, such as, should the market correct to the downside we participate to that benefit? It is really a fine balance. The reality is – the important part for all of us in the company is continue to invest in the franchises, continue to invest in quality of the product because there might be a temporary dislocation due to elasticity that might be a little bit more severe than the very positive benefits we have seen so far. The reality is after that temporary dislocation, our categories are poised to grow and our brands within the categories are even more higher growth than the category themselves.

Is there any place in the organization or in the P&L where you've made the choice to defer investments? Or is -- are strategic investments around advertising and brand building and capabilities enhancement and R&D, are those all full speed ahead?

Yes, there is no place where of materiality. Clearly, if there are situations where we don't have the product we tend to look into, it does it make sense to advertise. But the overwhelming answer is independently from the market, independently from global and local brands, independently from chocolate or biscuits, we are investing and going forward. In terms of capacity, we are putting down capacity around Milka, Cadbury and Oreo specifically, so proven capacity platforms. And the other one where we are putting down capacity, it is Give & Go, which is a tremendous platform. Again, $600 million -- $700 million of revenue, growing high single digit, if not double digit, where as part of the synergy play that we had, we identified some capital expenditures. So full steam ahead.

Okay. Great. A couple of more questions on the current environment and the uncertainties ahead of us. You talked about not being able to predict the future, which I think is fully understandable. When you think about and way concerns on consumer demand in the U.S. versus in Europe versus in emerging markets. How do you rank order the relative concerns? Is it developed market focused? Is it -- I think that's the market's concern. We haven't heard -- emerging markets are not front-center in the dialogue, although they are critically important to your business. So how do you think about the range of probabilities out there and where you're most cautious?

At this stage, I would probably see Europe as the more doubtful consumer situation, driven by the fact that we will see the inflation, driven by the fact that historically the European consumer is a little bit more susceptible to negative feelings plus there is a whole issue of the war that is hanging as a cloud. So -- and the discussions with the retailers on pricing are always a little bit more difficult in Europe. I would say the U.S. consumer has surprised me because if you look at pricing situation from our perspective, we priced already much more in the U.S. than in Europe. And the reaction has been very limited so far. So a lot of resiliency from the U.S. consumer, I think, driven also by the fact that U.S. consumers for all the reasons that I mentioned before, is feeling pretty good as it relates to biscuits and chocolates. Emerging markets is a bit of enigma at the moment where we are seeing stronger growth than what we've seen in recent past. So we've increased prices, particularly in Latin America, quite significantly. But volume growth is very strong. And we chart it down to the fact that consumer has saved money, feeling good about the pandemic, and they are kind of living their life like, they want to live it. In India and China, inflation pressure is less and so we don't have to price as much as we have to do in the rest of the world. That's why we see the good volume performance. So that's a little bit around the world.

That's good. Vince, Dirk mentioned retailer pushback to pricing. Has that -- have you noticed that escalating of late? Is that -- is it harder to get those pricing discussions going in a positive direction than it was acknowledging that it was never super positive?

Yes. I think obviously, the need in Europe to price was the same as in the rest of the world. And as you know it's after the one at the beginning of the year. We are now in the second wave now at the moment. But I think the conversation with the retailers is on one side is definitely also not just the pricing but also how is that impacting the consumption going forward. And I think what we do is kind of we will go through with the retailers together now the pricing action, but also then to invest in the brands going forward. And so what you -- what gives me confident in our categories, in particular, if you look at the also better learning in COVID, different moment, consumer behavior might not so much different. A, we are very resilient categories in chocolate and biscuit itself. B, people have been very much hanging on the brands they love and like. If you look at our portfolio, we are very much, I call it, all family fitting and kind of we are not the super high-end portfolio, kind of the old family fitting portfolio, which is also driving a lot of consumption. The third thing is, I think the in-home consumption where we will have a revival in that sense because people will be going less out. And so I think from a consumption point of view, there are some indicators where I think we feel good and being relatively well set on the whole thing. And as to Dirk's and Luca's point before, we will not step back any investment in the brands and in the markets as we go forward.

Yes. Great. Another topic that's been top of mind for investors related to you, especially as I travel around Europe the last couple of weeks, has been HFSS in the U.K. Maybe just a little bit of perspective on that from where you stand and what you're doing, what the company is doing in the U.K. specifically to get ahead of that.

Yes. I think one little change came up in the last couple of weeks with the government said, okay, on certain parts of the original regulation comes a year later. But yes, the location in store will change by October going forward. What we have done is pretty much with every major retailer in the U.K. have been working on what is the -- our reading, what is our assumption in behavior? And what are the test and learns we can take? So it just retailers have done partially in partnership with us, test and learn in different placements in store to see how the offtake is. If you ask me what most likely we will see going forward, I think we will see one shelf, the main shelf will remain the key destination for consumers when it comes to chocolate. So that is not changing the people know where chocolate sit, and will still be there. So the kind of our approach is how to brand that thing, how to make the brand more standout of that shelf ever -- more than ever before. Second, when it comes to promotional, I think, each of the customers, and retailers are planning for dedicated, call it, promo or power aisles as they call them, where the promotion will take place because it's still you're allowed to do the promotional element. It just different places are not anymore open, others are open. So it will be power aisle more than today, you find in store, which allows to place the category and the products there. And thirdly, I think, which is quite important for retailers and for us is the seasonal business itself, Christmas, Easter as the main season. There, you sense a very high interest from a retailer point of view also to create -- you still have Christmas in store. It's something when people enter, consumers enter, it has to happen. So instead of doing it front of store, it will be behind -- it will be in the store at a different place. But there's a high interest and the high collaboration, in particular, in U.K. with us, given the position we have to make the season big again.

And so net of that, do you feel like it's an adjustment period for the consumer and demand that lasts months before finding a kind of a new normal or resume normal under different circumstances? Or is it going to take the category longer to normalize?

I think it will take a bit time because I think what people will see in -- you could see, in the main aisle or the main where people go is a bit less visibility because that's the intent behind. But I think people -- and we have seen that when consumers do have as much as we say, it's a spontaneous buyer, but chocolate and biscuit is something people want and like. So they will find the shelf. They will see the season and they will get the promotional attractiveness by what retailers and we will do. They might need to find a new way or new kind of course in the store to get there. But I do expect there will be kind of an adaptation phase for the category. I think our position and our share there would let me assume that we will not -- it's not a share game, it's a category game. So there will be different adaptation, but not a major one.

Yes. Great. We're just about out of time. And we covered a lot. Of all the strategic initiatives and imperatives that you have before you and before the company, are there 1 or 2 that you would highlight as most important, where you think you can make tangible progress on over the next 6 to 12 months, whereas if we reconvene here in 1 year, we're able to give an A+ report out?

Yes. I think the -- what we've done over the last 3 years is kind of execute really well and grow the core of our business. I don't see that changing. And in fact, we believe we can accelerate the growth of our core business. So over the core of our business. So I think that would be a good report card seeing the fact that we're in the middle of inflation and pricing. And so if we can come back and show that our categories have continued to grow and that we have been the winner in our categories that would be a major step forward. And when I say growth, I mean volume growth in our categories. I think the other one is that our geographical footprint as we go around the world and as we are trying to be stronger should change significantly, maybe not in the next 12 months, but give us 24 months, there should be a significant change happening. And you will see some of those portfolio changes that we've been talking about. Those would be the big 3.

Big 3. Okay. Thank you very much. Thank you all for joining us.

Thank you.

Thank you.