Philip Morris International Inc. (PM) Earnings Call Transcript & Summary

Good morning, everyone. I'm Eric Serotta from Morgan Stanley's Beverages, Tobacco and Household Products team, and I'm very pleased to welcome Philip Morris International back to Morgan Stanley's Global Consumer & Retail Conference. Before we begin, please see the Morgan Stanley research website at www.morganstanley.com/researchdisclosures for important disclosures. And if you have any questions, you could reach out to your MS sales rep. PMI is a leading global tobacco company, which is actively driving a transition to reduce risk smoke-free products. It's smoke-free products are now available in over 100 markets globally. And account for over 40% of PMI sales at accretive margins to its legacy cigarette business. Joining us today is CEO, Jacek Olczak. Jacek, thank you for being here.

Always a pleasure.

I'm going to turn it over to Jacek for a couple of big-picture comments, and then we'll get into some Q&A.

Yes. So small picture comment is that we just -- couple of hours ago, we issued a press release reaffirming our guidance from Q3. Now big picture, Yes, we are present now with 100-plus markets, but importantly, in 30-plus markets, we have more than one proposition of a smoke-free product. I think one of the key questions that investors, but many other audiences also would like to know which of these product platforms will prevail or which one is going to take it all. Is it a heat-not-burn with our flagship vehicles? Is it pouches with ZYN? Or is it the e-vape product? I actually think that from a smoker's perspective, target audience, adult smoker's perspective, you actually need to have all 3 platforms because all of these 3 platforms are delivering a different usage occasions for smokers. And in aggregate, they offer them this almost -- giving them no reasons to stay with smoking actually, further incentivizing them to quit and move to the new proposition. I mean the pouches, as you know, can be used in a very discrete manner. They have a different nicotine release, different nicotine profile. Vape is more of the path on the demand of smoking on the demand. IQOS is replicating as much as possible. Obviously, the ritual of smoking. And if you look at what is happening at the smoker levels, and we have run a number of tests. And actually, this is the backbone of our commercialization philosophy today, that our objective is to equip the smoker with all 3 platforms. Because this is the best way to keep them away from smoking. There is obviously also element that the some of the parts of the consumption moments during the day is higher than the individual basis. Because remember, smokers are in many places in the world, including very much this market, the U.S. market. for many decades has been thrown into the corner, kick out of the bars, kick out of the offices and despite the fact that they pay extremely high price for the habit, I mean, they're not really treated by the society. And there is a lot ostracizing, a lot of finger pointing, et cetera. So I think smokers are actually regaining the freedom and each of these products offer them something. Net-net what you see in the market when the smoke-free products are available, cigarette sales accelerated decline. And this is, to me, something which is essentially one-way street. I mean a very rarely we see smokers coming back from a smoke-free products to smoking. It only will happen if you have a temporary setbacks in terms of some adverse regulatory intervention, sometimes not really based on the science and the fact. And very quickly, the flow of the demand from a smoker, adult smokers to the smoke-free product is very strong. The smoke-free product will grow somewhere in the double digit around 10% on a global basis. I mean Philip Morris growth of a smoke-free product will be somewhere in the range 10% to 12%. So we are by a notch or two notches above the industry trend. And we see the different accelerations, the accelerations across the different category. We have carried with us all the positive elements of the past tobacco model. In a sense of a strong prices, brand loyalty, high gross margins and the high bottom margins still we have the room to improve, which we have demonstrated. Over the -- especially over the last few years. And if you consider the demand which is coming from smokers and say there is 1 billion-plus smokers in the world, differently distributed in the different geographies and where the smoke-free category stays today still early days of the smoke-free categories despite the fact that you already see that not only volume but also financial results coming from those who strongly participate in this category. We have also carried with us the strong cash conversion, which was one of the characteristics of the tobacco industry in the past. So the business model is like from an investment perspective is very much similar, but with the one difference, you have a different volume outlook. And Philip Morris, in particular, we are now about to close our fifth year in a row with the total positive volumes. That is smoke-free products are offsetting -- more than offsetting declines on the cigarette market. We still have a number of geographies, which the products for a variety of very much irrational reasons are not open, and they are like big, big cherries on the cake, which is in front of Philip Morris in the industry because if I take the markets like India, Vietnam, Turkey and a few others and just focus on the markets, which are about 100-plus billion units cigarette sales, which at a certain moment will should be converted into the smoke-free product, you have a quite a room for growth. So this is the high level picture. Eric, back to you.

Great. So good overview.

Let's start with U.S. then 6% to 7% of revenue, but clearly, an outsized driver of your multiple on the stock. Starting off, going back to the third quarter, did the $100 million investment to jump start the commercial engine, did that have the impact that you expected to drive trial? And then how has your retail takeaway volumes been trending versus your expectations as we've moved into October, November and sort of gotten past that investment?

So this was a hard landing from a helicopter view to the quarter, $100 million. Appreciate it. Look, ZYN had, as many of you, I guess, know, I mean ZYN was in a permanent out of stock, undersupply situation for about the fourth quarter. We obviously did a lot of adjustments in terms of the spend behind the brand. There was no point activating many of the programs if you couldn't supply the market. That situation is going to resolve a little bit faster than we initially thought, which is good. In a sense that we ramp up the capacity faster and they could start fulfilling all the orders earlier than initially we anticipated in a year. Now what has happened in the Q3, we essentially gave the brand, all the different elements of the marketing mix, I know that everyone is focused on the price promotion and especially the -- one cannot ZYN free for purchase of any tobacco products. So there was like a culmination or concentration, maybe is better word of all the activities in 1 quarter, and I think we've been very clear, transparent in the earnings release after Q3. This this is not something which we should or one should expect going forward. Having said so, brand of ZYN, of its magnitude obviously deserves a variety of their support, and we will not stay shy in standing behind the brand and supporting this. If you look what has happened in the Q3 and the -- okay. Q4 is still in a making. But if you look at the sequential evolution of the offtake, et cetera, it is obviously, we had an acceleration of the ZYN volumes, but the sequential growth continue. Category somewhere growth, U.S. pouches grow somewhere in the range of 30%. ZYN is presumably taking today 50-plus percent of the growth over the category despite the fact that ZYN commands a much higher price than a main competitors or other product in the market, which is good for us. But there will be a support going on for ZYN, but I wouldn't look into this Q3 as something which is to become a normal, frequently repeated, et cetera. There was a silence for ZYN for a long period of time. And the moment when we felt very comfortable with increasing the shipments, et cetera, we just put a lot of marketing, including price promotional effort behind the brand. One thing which came as the positive surprise in terms of the frequency of the consumer response, how much equity parameters of ZYN has shoot up very shortly after the Q3 acceleration of the marketing spend because we knew that this is not just about the price and rewarding existing, but also incentivizing the new consumers to join the category to join the brand. But in my history when I sold the brand, which is increasing its equity parameter. So it's beyond just the price by the double-digit number in a short period of time. It's reconfirmed that the silent period around the ZYN when we have not done much, when we've been in the supply constrained situations was actually the right way to do because it's not just the price, it is about talking about the brands, brands all of a sudden is being visible at the retail but not only -- and this is what the consumers of a premium proposition like ZYN, which is our positioning of the brand expects from the brand.

And then not to harp on price too much, but you did call out back in September that ZYN was at about a 60%, 65% premium on a per pouch basis to the leading competitor and a short-term goal of sort of volume share stabilization. Is holding volume share still the shorter-term goal? And are your price gaps today, which are probably in the 30s, are in the right place?

Maybe talk about the price gaps and the target price gaps in the public for obvious reasons. But look then was is and will be the premium proposition in the market. Obviously, there was a moment at the beginning of the year, maybe towards the end of previous year that in a shortage situation, retailers tend to price the product up and competitions were accelerating their presence in the market and also was supporting this with some pricing activities. So obviously, the price gap tend to go higher than it normally should be. But if I look at the evolutions where we are today, I don't think anything is special as again. If category grows 30-something percent, around 30%, if the ZYN capture strong 50-plus percent of the category growth despite the fact that we have that pricing in the market. I don't think I should be that much sure. We have a few -- what is very important is how quickly we'll have a response or action taken by FDA with regardless of the couple of still pending important PMTAs, which will further complement the portfolio line up of the brand, both in terms of a nicotine strengths and the formulation, maybe a few flavors. As you know, that FDA has made the commitment that they are few PMTAs, which we want to put on a fast track. And initially, I think the promise was that this -- we should hear from them before the year-end -- we still before the year-end. But I think somewhere in '26 in the next year, we should see some additions to the portfolio to the brand, which will further support the growth.

So then as you take a step back, nicotine pouches, modern oral, it's 6%, 7% share in the U.S. today of total tobacco on a spend basis in track channels. Where do you think that can go and over what time frame?

Yes, This is -- by the way, I guess the pouch category is in -- but the pouch category is the fastest-growing category, I believe, in the many channels today. Ahead of the energy drinks and many others. But there is a robust growth, and I don't see it today, okay that I look very positively into '26, right, which of the strengths in terms of the category growth in performance kind of will continue for the next year. We're not in a guidance, a session for the next year, but the outlook looks positive. Also, what gives me the reason for being positive that not many people have noticed this one, it's the first time in the history of various regulatory bodies in the U.S., but not only, let's stay with the focus on the U.S. that I haven't heard anything this [structure] being with regards to the conversations around the nicotine unlike it was in the past. I mean you will remember there were some controversy earned under the modern -- around the vape. There was the whole controversy around EVALI and who was -- and which product should be blamed for what and which products were blamed. But if I look at the alignment from the Health Secretary, that going very much with the FDA, including the office of Tobacco, et cetera was actually desire to straighten the conversations around the nicotine because a lot of harm in terms of equipping adult smokers with the ability to make the right decisions has been done by the -- all these information, which is around the nicotine. And this administration is on the health side. I mean it's pretty clear in their views and there is a strong science. Very well it's not the nicotine which causes the problems caused by the smoking. Yes, it is addictive. Yes, it is a stimulant works on a certain cognitive skills, et cetera. But the substance deserves the normal conversations and other conversations, which is borrowed from 20 or 30 years ago when the only product in a consumption were the combustible cigarette. So that's another important element. And I wish, obviously, this translate into faster turnaround at FDA in terms of processing the application. But I believe it is more -- the process itself is pretty heavy and many administrations can be lost in this process. But if I look at the mindset, what is the thinking, et cetera, it's further support there is there is quite a room to grow, quite a lot of room to grow. So you mentioned pouches are not even the double digit of the total nicotine in the U.S., okay -- speaking for ZYN, how about ZYN and ZYN sources, initially sourced a lot from the oral tobacco, more traditional oral tobacco, but very quickly start sourcing from the e-vape and start sourcing, obviously, from a cigarette. Okay, it depends on the time frame in which you measure this whole thing, but as a rule of thumb. It's like 1/3 is coming from each of these main nicotine categories in the market. And this is what supports the growth, and I believe this thing is going to stay. So you have e-vape product and I know that e-vape product has quite a lot of challenges on the regulatory side and what is the legal, illegal market. But the most important is there is the demand for these products. I believe category is going to stay. There is a demand growing demand for the oral product pouches, and it's going to continue, that's going to stay. And okay, we're also waiting for one day, hopefully, next year, we'll bring a heat-not-burn with IQOS to the U.S. territory and all 3 boxes will be ticked in the sense that U.S. will be brought to the full multi-category smoke-free proposition for smokers.

Great. Well, I'll come back to IQOS in the U.S. But moving on from ZYN to the other 94% of your business, starting with the international IQOS. Your guidance is 10% to 12% HTU IMS volumes this year in terms of growth, realizing you aren't giving guidance yet for next year, but can you discuss the puts and takes for IQOS volume growth next year? You have the characterizing flavor ban in Poland, excise tax equalization in Japan, some competitive activity there.

So okay, we're repeating again that the IQOS, heat-not-burn category was very much IQOS, which is lion's share of the category and it's holding its share, is in the 11th consecutive year of the growth. Some of you may remember, there was some slowdown of the growth in Japan, some many years ago. Some people were immediately predicting, this is the end of the heat-not-burn. If you look at from today's perspective, it was just a blip on the graph. So there is a growing demand despite the fact that there are price increases. There's also some excise tax-driven price increases, also manufacturers price increases and a variety of the different regulatory frameworks in which these products can reach the adult smokers. Some are much more open, i.e., the communications with adult smoker is -- can be more broader, deeper. Take Japan, there half of the market. I think that this year, Japan will turn the mark of a 50% combustible product volume, not value and 50% smoke-free products. Yes. So at the level of 50% is Japan is -- seems that they're going to implement the stage type of tax increases with the closing the gap of equalization of the smoke-free product taxations to CC. There will be as per the latest version of the plan about the 2 -- well, not about 2 tax interventions on the heat-not-burn in '26 and then goes in the multiyear price -- sorry, tax changes for CC and heat-not-burn in next 3 years, '27, '28 and '29, I believe. Now the magnitude is that for IQOS, which occupies the higher end of the price ladder, actually its on the top of the price ladder. The TEREA would have a pass on somewhere in the range of the JPY 40, SENTIA which is our second propositions under IQOS umbrella is about the JPY 60 and the rest of the market is in JPY 100 territory. So as you see, there will be a lot of pressure assuming that this is a pass on type of a scenario to roll this fully in the market in one or more steps. I don't want to go into the detail. Then obviously, we'll have some impact in '26 on the volume evolution in Japan. But that will take a little bit broader or longer view of what's going to happen. There is a continuous growth of category in IQOS. And this is also despite a very intense competition in terms of the new products coming into the market from our 2 major competitors, right, in the Japanese market. And there is also quite a strong and very aggressive price competition, but IQOS holds the share and they participate fully in the growth of the category. So yes, we'll have that sort of a headwind coming from Japan, okay? We still have a few months to fine-tune the details how we're going to play, what the market customer response is going to be. But look, we went with IQOS, heat-not-burn with IQOS for the flavor ban in most of the European Union countries, the last country, which we have in front of us is Poland. And you remember, in Italy, we had a couple of quarters of a slowdown growth. If you look at the growth of Italy today, post the ban in -- post the flavor ban implementation like just another blip which happened in the past and the story continues. We had some various tax events in Germany this year, which we had to manage for the pricing and the Germany IQOS keeps on growing. So you always will have -- they are the same things are happening on e-vape category that different countries are coming with some regulatory tax and regulatory ideas. If I look at the longer period of any of the smoke-free category, we only have one conclusion. They can slow you down on a quarter. It doesn't change the trajectory or the direction of the longer-term growth. And I believe work for Philip Morris in particular, but I believe also for the industry is a good problem to have...

Great...

I was supposed to sound optimistic.

So looking around the world and leaving aside the U.S. for a moment and leaving aside some of the markets that you mentioned like the Vietnams and India is where tobacco isn't authorized, where do you see the greatest opportunity for IQOS over the next 3 to 5 years or 5 to 10 years? And then looking back, ILUMA rollout was a major driver of smoker conversion, real step change in user experience. I guess what are the drivers of the next leg of growth for IQOS...

Well, you may remember when we started the whole journey of IQOS, 10, 11 years ago. The first model was called actually the market never saw that model was 2.0, when we went to the market with 2.4, 2.4 plus, 3.0, 3 point something, 4.0. Now we enter 4 1. And I guess there is the reasons where we put this -- the real numbers in the like there will be IQOS, there will be next IQOS in the market. I mean, there is still the room of innovation, you're also tapping to the -- this audience which may be a more conservative or more attached to cigarettes. So you need to design the product slightly different. Okay. IQOS ILUMA, as you remember, was the step change in the user experience. So you get rid of the blade and all the associated challenges cleaning, breakage, et cetera. You go to the seamless experience. I think that's going to stay, but there is the room for the innovation. I don't think we should be assuming that -- I know the ideal scenario would be that what is the next mile burn, can we produce the same product for another 50 years and enjoying the attractive economics. But the way we look at this is the category still serve us very well so far but the category is still at the very early stages. They are still vastly more smokers out there than those who have converted to this product. And there is a learning curve on our side. There is also a technology, et cetera, which allows you to improve further the user experience, make the products better, et cetera, and address still some unmet, unsatisfied needs at the consumer level. So IQOS 5 years from now will be looking different. And I just may not know exactly what it is, but I'm also thinking that 10 years from now, pouches will look different. There is innovations which is supporting by the attractiveness of the category by the growing demand. Obviously, people have -- consumers have their own individual type of expectations. I think there is a room for innovation going beyond the flavors, which we also know that on occasions may trigger some unintended consequence in terms of the usage profile, and the age what I believe where there is quite a discipline in execution from a marketing perspective, not to trigger this undesired type of a situation, but there is still a room for innovation. We are well equipped. I mean, we have been on the front foot of innovations around the heat-not-burn. The innovation is not just on the product level, but the whole ecosystem model, which we have behind the integrations between the digital brand retail, we've never been in a brand retail. We own the majority of the relations with the consumers, maybe, not the transactions, but it was not our desire, and it serves very well that every time we go now to the market with another proposition either from IQOS or P4 or the, sorry, electronic cigarettes or other pouches we somehow benefiting from everything which we have installed already before, very much on the back of IQOS. And as you know, as I mentioned at the very beginning, with 100-plus markets in which the smoke-free products are present, gives you quite a room to play.

Great. So then turning back to the U.S. How are you framing the potential for IQOS ILUMA once it's authorized. Huge market, 28 million smokers, also a large e-vapor market, but a lot of poly use, is 10 share and 5 years from launch still how you think about the targets? And then are there new learnings from the IQOS 3.0...

We -- yes, I volunteer that number, but it's not today pick up any number. If I look where the most of the international markets were in the year 5, whatever of penetration of IQOS. This is -- my view is very attainable number. Now you can add to this that U.S. will start with the latest version of IQOS international markets who are going to have the history of the blade and early problems of the device and usability of the proposition. So this should further enforce that sort of a number is attainable. Now even here when IQOS, it's not from the -- U.S. is not in isolation. People travel and there is a quite a few IQOS users, at least judging who is working on the streets here. So the awareness of the product is there. So the starting point is much better as you would really open U.S. as a green market, right, the greenfield market that nothing has been done. Now we have -- we're conducting as we speak, some tiny commercial operations or test on the previous versions on IQOS, which would rather go and switch to the latest version because it completely allows us to deploy the different commercialization model, less labor and also financially less intensive than the supporting previous versions of IQOS. Judging how people react, I'm very positive. There is definitely a room for the proposition like IQOS in the U.S. market.

Great. And then zooming back out to the group level, you have a powerful margin tailwind from smoke-free growing faster than combustibles. Within that, ZYN growing faster than IQOS. And you've also spoken about PMI being very early in the journey of optimizing the cost structure for IQOS. We've also seen some more normalization in margins for ZYN with, as you said, some of the promotional levels normalizing. So taking all these moving pieces together, how do you frame the margin improvement potential for PMI over the next few years? And can you really start to get at the IQOS cost efficiencies where you're still really driving growth worldwide?

Well, on the gross margin level, okay, then obviously, where all the economies of scale in terms of manufacturing, et cetera, presence in a number of markets, et cetera, kick in. I mean as a smoke-free products are offering you by a notch even better margins than the figures. And we know that the cigarettes had a very strong margin. Now there's different drivers of the room for growth both on CC, which is more the combustible cigarette sorry, which is more driven by the pricing and this pricing remains strong and you saw within our results it is a significant contributor to the growth of a combustible from a financial perspective of the combustible category. The smoke-free products, we position them all in the upper parts of the market. So definitely, we're taking an advantage of the premium underlying rate margins amplified by the fact that you're in the premium part of this market, it's the case of -- IQOS model. So our electronic cigarettes that we discussed. And there is the room to grow because ZYN in the U.S., it has scaled. Yes, it's a tiny category, but already you can play it, you can leverage the scale in terms of the capacity, et cetera. Before electronic cigarettes are coming to the same level and IQOS just continues enjoying its scale. So net-net, I believe there is a room for a growth of CC, of the combustible cigarette margin. There's definitely the room to grow on the margins on SFP. And when I mean the margins, don't only focus on the gross margin, but also what stays in operating income level. And if you see this year and the past year, despite the fact that there was continuous investments behind the R&D and the commercial support, et cetera, we will still have the room to grow the market. Okay? Sometimes you can accelerate that growth, sometimes it depends on the timing of the event, opening the markets and some marketing initiatives very positive on the margins. Now we had the period over -- going back to the -- I think the U.S., obviously, we scaled back the marketing, commercial allowance, that promotional support obviously, margins will shoot up higher. That's not the level which normally the brand should have. But once you normalize, I think there is room for growth of the margin. Pricing is very strong. We're taking pricing on a smoke-free product. And obviously, we're taking the pricing on a combustible as everyone knows, and I believe that's going to stay.

Great. So then with third quarter results, you announced a new organizational structure, 2 business units, U.S. and international. 3 reporting segments, international smoke-free, the combustibles and then the U.S. So what's the rationale behind this? And what do you see as the expected benefit of the new structure?

Well, that's the way as we -- us and as a management and us as the board -- with the board, looking at the business and our conversations about the international U.S. and our conversations are about the smoke-free and CC and we somehow have that structure, which we designed in 2008, right, when we when we left the U.S. at that time, the original structure, frankly speaking, these regions for us, which are reportable segment. We didn't really run the business like this, but it created a lot of work to be done, or if anybody talk with the investors engagement. I don't remember when was the last time I go to my CFO or our CFO got the questions about the specific region. The questions are U.S., Japan, Germany, Italy, this is where the P&L, this is where the business is. And that level of consolidation was not really important to anybody. So we clarify the structure. Now if you look at the history of Philip Morris International, our longer history, we're essentially coming back to the structure that we -- when we were with the U.S. before 2008. So you remember, you have the Philip Morris USA, Philip Morris International, okay, at the time was a craft and [Miller beer] and a few other units. And you have this corporate type of overlay, which was some central functions, which are providing services to both parts of the business. So we just wanted to clarify from a governance, et cetera, and the way the management looks perspective, the design because otherwise, we would have to take a U.S. reporting to international, which I also spent quite a lot of time talking with some other companies, which has a similar type of setup. And I believe keeping U.S. and international, some have at the parallel level and letting them -- it is one company, but let them run these businesses is not only more efficient. It's actually more effective.

So in a couple of minutes we have left, maybe we could talk a bit about capital allocation priorities from here. You're well on the way to getting back to your 2x leverage target post Swedish Match and the IQOS U.S. rights acquisitions. Do you foresee any sizable M&A opportunities? Are there any portfolio or capability gaps that would be easier to fill inorganically?

Well, I mean most of our growth is based for the organic growth. Obviously, there was a Swedish Match acquisition, but still in totality of the smoke-free this all came from organic. I mean will it continue? I mean the future will tell. I mean, from a capital notation is, I think the deleveraging of the company post the acquisition of Swedish Match is well on its -- progressing on target with $11.5 billion cash flow target for this year. I think we're coming into the desired level of the leverage, which is 2 points or 2 around the 2 for the next year. And we have said that at this moment, we'll be looking with the board what to do in a sense. I mean you know our views on the dividend and the last increase of the dividend was a reconfirmation how Philip Morris strongly thinks about the rewarding the shareholders for the dividend, dividend growth. But obviously, absent other allocations, we'll have conversations with the Board, what are the other potential ways of returning cash to shareholders. This is not the CapEx. When we talk about the investments behind the smoke-free products and continuous growth, double-digit and as in the U.S. but the whole business on a global basis, this is -- we are not running a very CapEx-intensive business. So for us to, from time to time, add extra capacity, you're talking investment in a range of a few hundred -- a couple of hundred, few hundred million dollars. So from a totality of our cash generation capacity of PMI, this is not really that much of a disturbing factor.

Great. Well, in the last few seconds that we have, I just want to wrap up. Are there any parts of the PMI story that you think are sort of misunderstood by investors here?

No. I mean, look, this is all smoke-free products at the very beginning in a sense yes, there is some longer or shorter history and you've asked that the natural desire to like extrapolate for what it is. The reality is that, as I said at the beginning, I have more than 1 billion smokers in the global basis. And in each of the countries, even in Japan, which is well progressed with heat-not-burn, there is still a lot of smokers out there. That's the one thing. So this is -- this supports the continuous strong demand for the smoke-free products. The second thing is, I believe the worst in terms of conversations around this category, smoke-free products and the nicotine from regulatory type of the risk, I think that this is more behind us than in front of us because the people who are smokers who have adopted these products. I mean they have their own observations. They know that these products did the job for them, tremendous job for them, they managed to quit smoking. There is a more and more mature type of conversations around the nicotine, which I believe it all goes in the right direction. So actually the last second, it was one of your predecessors, which I remember, David Adelman was [indiscernible]...

Yes [indiscernible]

And sometimes, you have -- the audience have a free time on a weekend or whatever to read. There was an interview with David Adelman from 2005, which I think was titled, Forbes or Fortune, one of those, okay? Title was, Marlboro Man. And the way he predicted what the industry can be, I don't think he should be called analyst. He was closer to fortuneteller. Thank you.

Great. Thanks so much, Jacek. And with that, we'll wrap up here.

Thank you.