TreeHouse Foods, Inc. (THS) Earnings Call Transcript & Summary

Okay. Hello, everyone. Again, thank you for joining us for day 2 of TD Cowen's Sipping & Snacking Virtual Summit. I'm Rob Moskow, senior food analyst. Our next segment is with the TreeHouse management team. TreeHouse is a leader in the private label food and beverage industry, which has been and should continue to benefit from consumers trading down. After the divestiture of the Meal Prep business, TreeHouse is on the verge of a promising future. With us from the company today are Chairman and CEO and President, Steve Oakland; and EVP and CFO, Patrick O'Donnell. So very nice to see you all again, and thanks for joining us.

Good to see you all.

Thanks, Rob.

Great to see you, Rob.

Yes. So I'm going to start with some kind of broader consumer questions and then get into company-specific ones. And also, for those of you who are listening or watching today, there is a way for you to send questions to me directly. So please do that, and I can probably include them as well.

So let's start with the consumer, Steve. I'd argue that consumer behavior has been pretty confusing over the past couple of years. You have wage growth higher than inflation, employment is high, so people should feel good about their economic well-being. But yet, they're cutting back on spending at the grocery store significantly compared to last year. And last year was confusing because elasticity seemed to be 0. So do you have any thoughts on what's driving the weakness in grocery trends this year and how it's influencing private label sales?

Sure. That's a question we have with all my senior partners at the retail level as well. We're all having this exact same conversation, right? And I think you got to go back to your macroeconomics [ 101 ], right? The price elasticity of demand. Retail grocery prices in some 18 to 24 months went up 30% to 35%, right? I mean, that's unprecedented and anything we've ever seen or modeled, right? And so people are managing and they're buying less, right? Now we've seen brands down 3% to 4%, a lot -- in some categories, more than that. That's probably the number for our categories. We've seen private label down 1% to 2% in those categories. So we've had a run of share gains for private label but we're gaining share of a smaller pie, which means total units are, in fact, down just a bit. And so we think share is a great measure for health of the business, and we're encouraged by the share. And we're working with the retailer. We know that the units will turn positive at some point, right? We've got student loans and gas prices and all of that stuff on the horizon. So we're positioning ourselves to help the retailer as that flips for us.

Okay. Are you surprised -- since your Investor Day, just -- it was in June, right? I mean, it seems like almost like a different environment just in the past couple of months or 3 months since then. I would have bet on private label gaining a lot more share than it did. And so I understand the pie is smaller but why do you think the market share gains have not been more robust?

That's a great question. And I don't know if it's the hangover of consumer financial stability. I mean you mentioned it earlier, right? Wages are solid. I think there's a lot of uncertainty. People are traveling a lot. People are doing a lot of things. We all see airplanes full. Now it's interesting, we don't see restaurant traffic up, right? So I think it's up on the weekends and maybe not during the week. It's a really interesting time frame. But we continue to gain share. We talked about this on our earnings call. The second quarter share for private label was the highest we've ever measured, okay, in our categories. So it's not coming maybe as fast as we'd like. I can tell you that the supply chain has recovered. Our service levels are really solid, and we'll fill a lot more demand in the back half of this year and in the fourth quarter than we did a year ago, and there'll be promotions this fourth quarter that there weren't a year ago, right? And so that's encouraging for us, right? There hasn't been for 2 years, actually. So we're encouraged by what's in front of us. We've also guided numbers that don't really require anything heroic from a volume standpoint to meet our earnings growth. That's coming from supply chain and pricing. We've got our pricing and our cost aligned. And now we're on the supply chain. We're a simpler company to do that in. So we've tried to guide to a more conservative top line just because we just -- it's really hard to project based on what we've seen in the last 2 years, 3 years.

Yes. Great. Okay. Well, let's talk about the company some more. TreeHouse has gone through significant transformation, divesting Meal Prep, you recently acquired Farmer Brothers Coffee and then flavored pretzels, and now you're selling snack bars. So can you go a little deeper into maybe take a step back and talk about the rationale for these major portfolio changes? And also, secondly, how is it helping improve the focus of the organization and stronger execution?

Sure. Well, maybe I'll start with the strategy question. Why do all this? Well, in private label, especially if you're public, that category matters, right? It's got to be growing and it's got to be good margins and a good private label category, where the consumer buys private label, okay? The bars divestiture, a great category, quite frankly, exciting category but it's a branded category. Think about the winners in the bars business. It's not private label. It's branded bars, right? So we sold that -- those assets to a group that will make branded bars for us. So that will be a much more valuable set of assets for them than it would be for us. But our strategy, you've seen our strategy really come to life, okay? It's about going deeper in really good private label categories, coffee, right? Big category, great private label penetration. We didn't have all the assets we needed to be the partner of choice there. The Farmer Brothers assets came about at the time. It was right for both companies. We brought a -- we bought a brand-new state-of-the-art facility. So we'll be that partner in a big, fast-growing category. Same thing with our little Coop's Pretzels acquisition, right? Seasoned pretzels that -- who would have thought that a lady in North Dakota would figure out that it took seasoning and salty snacks, right, to be successful? So there's a lot of things you'll see us do but I'll go back to the transaction. The transaction also enabled our balance sheet, right? It made us -- it took us to the bottom of our leverage range. It allowed us to let our cash flow be invested in our business and a very different capital allocation situation. We were really focused on paying down debt for the first 3 or 4 years that I was here. Now we can focus on a much more balanced of investing in our business, right, and doing it on a methodical basis. And you've seen that come to life with the small acquisitions we've made in the last year.

Okay. Can you talk -- maybe go a little deeper into coffee. It is a significant facility that you bought. Where does that put you in terms of private label coffee market share? I don't think you've ever provided that number, but maybe you can give it just kind of roughly -- there's obviously, KDP is the biggest. Is there a lot of little ones after that? Or are you now kind of like the biggest of the little ones for the retailer?

So we were first mover, right? We were really early in that, and we were simply a packer of private-label coffee pots, right? Well, I have a background in that industry. And the category of the retailer is much more important than that. And to the consumer, it's much more important than that. It's about experience. It's about all the different forms. So Farmer Brothers really gives us the capabilities to provide the retailer with a program across their coffee portfolio, right? All those different forms, whether it be sustainable or free trade or fair trade or whatever they need, we now have the capabilities to do that. Farmer Brothers built those capabilities. Farmer Brothers was a key supplier to us, right? And supplied this roast and ground coffee for our pots, right? So we knew that facility well. We felt like it would allow us to be that vendor of choice. So it did not come because it's not their core business with a lot of extra volume. It gave us the capabilities now to be that partner with the customer. We'll see that in the synergies from that show up early in next year. We think we'll have the integration done, the systems integration, which is the key for us to get at the synergies in late in the fourth quarter. So we really bought -- it was a build versus buy decision. We bought a beautiful state-of-the-art facility that would have taken us years to build and cost us a lot more money. So it's a chance for us to accelerate that growth.

Okay. Okay. Maybe we could dig a little deeper into the categories that you now operate. And you provided some of this on your Investor Day but like where are the categories where you have built up the strongest capabilities and the most depth? We talked about coffee but where else? You're in a lot, and sometimes it's hard for people from the outside to understand where you're really strong.

Yes, certainly. I think the biggest example of that would be our cracker business, right? We have a 3-plant network. We have a cost and a quality equation here across an assortment of crackers that I think is unmatched in the industry. Since I've been here, we've shipped crackers to New Zealand, we shipped private label crackers to the U.K. I mean -- so people internationally come to us to source high-end entertainer crackers, those kinds of things. So I think we have very unique capabilities there. We're going to continue to invest in that. That is a business that got investment through the whole TreeHouse years, right? And so it's probably much more up-to-date capabilities, and we intend to continue that leadership. We did the same thing in pretzels, right? We've got great capability in traditional pretzels and filled pretzels and now seasoned pretzels, right? So we can bring a classic salty snack to the retailers' private label shop with all the varieties that they want. And now with the seasoned opportunity, we can customize it for them, right, give them something unique, allow that customer to be unique. We do the same thing and I would say in the aseptic broth business and we make aseptic nondairy creamers. We do flavored creamers. We're big in that business from the old original Bay Valley days but that business has morphed into a much more value-added business. And I think we're incredibly deep there. So I think there's a number of places where we're deep. There's a number of places we think there's opportunities to get better, right? We're in the cookie business. We think we can be -- we make amazing cookies. We think we can make more of them, and we need the capacity do it. So there's places we'll invest. But I think crackers, pretzels, broth, those are great examples of big powerful categories where private label is strong, and we can earn great margins long term and participate in the growth.

Okay. I'm surprised that the capabilities are really in crackers but then you say you need to get better in cookies. Maybe I could dig a little bit more there. How many cookie facilities do you have? It seems like legacy Ralcorp had a lot. What do you have in cookies?

We have 2 core cookie facilities, right? And we're just capacity constrained, right? We sell all the cookies and some of them -- at least 1 of them that we can make, right? We make a great product, and we sell everyone we can make. So there's opportunities for us to build capacity and sell more.

And you don't have to answer this question if you don't want to but I'm a heavy user of a certain sandwich cookie at a popular hard discounter. I don't know how hard they are. But they were out for the month of July and August. And they're a customer of yours, like -- and they've changed suppliers. So I was very -- I bring it up because I mean, these sandwich cookies can't be that hard to source. So is that unusual to kind of run out like that in the midst of a transition? And is there anything that we should know about how that impacts your business or it doesn't?

Here, I think -- Rob, I think you made a great observation there. Changing private label from one vendor to another in a larger category is not easy, right? They require sensory. It requires all those things. But it also requires a lot of coordination in the supply chain. And so that's why if you've got good service and you've got great quality, those relationships can be sticky, right? And I can only imagine which retailer that is. But in that particular category, there was a lot of disruption, and there was a lot -- there were some ingredient issues that happened. And so that transition was probably complicated by that transition. Our cookie -- we actually invested a lot of maintenance capital in ours. We talked about some extra maintenance capital we put into our system across it. We did that in our cookie business to really solidify that supply chain for the back half of this year. We feel that that's one place where we will ship significantly more. We'll be in a lot better shape this year than we were a year ago. Last year, we had ingredient and packaging disruption in that particular segment. So I'm not surprised that -- I'm not sure which one, I'm just guessing, which retailer you're talking about, but I'm guessing that their vendor experienced the same problem.

Well, it's Trader Joe's, I'll just tell you. So back on shelf now, and I'm swimming in them. So we're okay.

Okay. Okay. Great customer.

Okay. Yes. Yes, they had a great store chain. At the Investor Day, you talked a lot about the investments in training you've conducted internally to -- for your sales force to improve operational effectiveness. You've been talking about TMOS for many, many years. Can you talk about how that's improved your OEE and how much more do you have to go? How do you have us quantify that?

Sure. maybe I'll let Pat jump in on one because of the operating income question.

Yes. We'll get Steve a breather on this. So you talked about TMOS and some of the history there. I would say our early days at TMOS were very foundational, continuous improvement sort of exercises. And then today, we're building more capability. And so we're trying to train our manufacturing teams on how to identify waste, how to root cause problems. How do you maintain equipment. And we probably focused a bit on cost cutting in the past. And TMOS today is more about capability building. And so we're trying to have teams that can function and bring capability for everything that you need to do in the plants and really understand the equipment. And we're being very targeted about how we deploy this time. We have a good sense of where profit is in our plants and in our lines. And so we're targeting those lines where we see the most growth potential and we see the most profit potential. And where we've implemented in a meaningful way, we've seen 5% to 15% OEE improvement. And so we're still in the early phases. We tried to highlight in our Princeton plant, as an example, which is one of our cracker facilities. We were more mature there, and we were able to eliminate $2 million of annual waste through the first TMOS implementation. That -- that's another category where we could use more capacity, and TMOS created about 8 million pounds more capacity in that business. Not huge from that standpoint, but in a category where you can sell every cracker, that's meaningful to us. And so that equipment effectiveness is just 1 metric. We'll continue to see waste reduction as we go forward. And certainly, service is better as we've moved into the back half of the year and we're back at target service levels. So we're seeing early stages of this but some of the early metrics that we monitor are encouraging in terms of our progress.

The 2 themes I hear the most when people talk about supply chain, Patrick, is that digitization of information flow, so that the plant floor -- I'm sorry, the plant floor, the warehouses and even -- and the demand forecasters are just more closely aligned. People have been talking about alignment for years and years but maybe there's more capabilities to do it now than in the past. And then secondly, like training people on the plant floor to make more decisions on their own, rather than waiting for a week for -- to get construction on what to do. So do you make that part of TMOS as well and maybe start with like what are the technological improvements that have enabled better communication flow.

Yes. But that's a good question. I think your observation is exactly right. We talk about TMOS maybe more on the operations side of the house publicly more, but we are applying TMOS principles to our planning process as well and then supplementing that with some more state-of-the-art technology from a planning standpoint. So you can imagine in a business like ours where you have more SKUs than, say, a branded competitor, managing that assortment is more important -- is as important to us, given that. And so we're investing in a more state-of-the-art planning system that will allow -- has some AI built into it that we'll be able to deploy that will help us plan better. We'll get better information to our manufacturing locations in terms of what we need to produce. And then we are looking at technology on the plant floor that is digitally enabled, where you can have operation instructions, maintenance, information and that type of thing in the hands of the operators so that they can operate more effectively. And so still early stages in terms of the deployment for that. The plant floor is kind of in pilot stages and the planning software is in implementation stages. But we're -- we're very optimistic about our ability to go drive improvement through those processes. And that's included in terms of how we think about TMOS broadly.

The branded companies sound anyway, a little bit farther along than that. Is private label -- the private label industry is pretty fragmented, a lot of smaller suppliers, do you think that the supply chain investments that your industry has made have lagged the big, branded companies in some form or fashion? Or am I off base on that?

I can comment on that. They're radically different than what I was used to when I came here, right? And I think that's why a lot of our investors have said, "Well, Steve and Pat, you guys have guided pretty substantial savings, right, as a percentage of EBITDA, how can that number be that big?" And I think that's exactly it, right? I think you could in the software that we're talking about for planning, you couldn't afford it on one of our categories. Even our cracker business, right? A big, profitable business. You wouldn't justify that on just that business. We can justify it against 17 businesses, right? And so I think we have the opportunity to master complexity, which will be a competitive advantage for us, right? We'll have less working capital tied up in our business than our competitor. We'll have less -- we'll have better service, those kinds of things. And so we see a path to that, and we'll have a little bit lower cost, right? So I do think it's radically different. You made a statement on your previous question, too, about empowering the worker to make decisions. That's the classic, self-directed work team, right? What Procter & Gamble started years ago, what Lean drives, all of those key -- we use the -- our system is based on the P&G system, right? And the team that's running it for us did this at P&G as well. It's that self-directed. If you empower those people on the front line, you make corrections quicker, you eliminate volatility. They know exactly -- they can tell when that piece of equipment isn't perfect. Don't wait for the maintenance guy, fix it right there. So you make their life more -- quite frankly, in their job more fulfilling as well, right? You give them some autonomy. And I think that work for the future -- that line work of the future, making their job something they're excited to come to every day. Not easy to do but it is the key to being the employer where you have those workers. Because I think that's going to be a key competitive advantage as having talent in your plants long term.

Okay. Maybe we can tie this to capital spending, Patrick. CapEx, I think, is going to be a little more elevated than what it's been historically. Is this a new normal for CapEx spending in order to capitalize on all these technological improvements and automation? Or is this kind of like a year or 2 thing?

I think we see this to be able to be a new normal. As we think about -- Steve made reference earlier in terms of cash deployment. In the past, we've had to be more focused on debt reduction and maintaining leverage. And with leverage in a place that we're much more comfortable with today, that allows us to go back and invest in our businesses differently. In pandemic days, we were probably more focused on safety protocols, and you're not able to get into the plant and do maintenance and the types of investments. As we sit here today and with labor in a better place and being able to go execute against CapEx, we think there's the opportunity to go to play against growth CapEx, which is some of that new equipment. We think capacity expansion, some of the automation and continuous improvement activities, I think coffee and pretzels, again, are pretty good examples of how we think about that. And we've got line of sight into what are some other investments we can make that will help drive growth. The other part of that, that I think is maybe probably a 50-50 split for now, and then I think we can pivot more to growth over time is maintenance. Is -- in the COVID time frame, you had literal deferred maintenance because we weren't able to get OEM manufacturers into our plants. You saw us make a little bit of an investment in the second quarter in maintenance. That's our seasonally lowest quarter, and so it made sense to go try to secure the production that we need for the back half of the year by doing some of that activity in the second quarter. Dough is a great example, a very seasonal business, wanted to win the season there. And so we did a little bit more maintenance. And so this year, we think that CapEx is closer to 50-50 between growth and maintenance. And as we catch up, you'll see us pivot a little bit more to growth over time.

I'm glad you mentioned, dough, because it's definitely showing up in the retail tracking data, private label Doughs is back on shelf. Pillsbury's market share category is good, but Pillsbury market share is normalizing lower. Is this a significant volume benefit for you for the year? Because I know that there were some significant constraints in 2022.

Yes. As I think about the service improvements year-over-year, dough is one of those categories where we said, "Hey, we can now service the demand that exists." Dough is a great example of that. That was a category certainly last year, and I would say maybe for a couple of years where you were capacity constrained. And so that's a part of how we think about the back half of the year in terms of investments that we made to help secure us.

I mean, literally on the shelf, I mean, years ago, I remember I think your market share in like those types of Pillsbury-style products is very, very high. Is that still the case? Or has things changed there?

No, I don't think we've seen any significant change there. I think we believe that that's a category where we've got a nice advantage. We've got good assets, and we're able to compete effectively in that space. And so it's really a matter of keeping product on shelf. We've had some customers who were frustrated they couldn't get all the product in the past, and now we're trying to secure that production for them this year.

We did pair some assortment during COVID so that we could focus on the 1 or 2 top items, right? And now we're able to refill those assortments. So yes, people's favorite items will be back on the shelf this season. That will be good.

Well, my next question may be the wrong question but I recall in the past that there have been times when TreeHouse would lose business to competitors who had excess capacity, very aggressive on pricing and what had been a normal margin business so it becomes a low-margin business. And I thought that -- that capacity coming back online would pose a similar competitive intensity in 2023. So far, we've talked a lot about tight capacity. So are -- have you seen any resumption of competitive intensity in any of your categories as your competitors regain capacity?

I think that would have been a great question for the old TreeHouse. We intentionally put ourselves in faster-growing categories, right? And by doing that, if you're in a declining category, the competitive intensity because capacity increases every year is incredibly vibrant, right? In growth categories, our capacity is more important to our retail partners because the category tends to be more important to them for their private label position. And so locking in that capacity up and having a longer-term agreement or having a pass-through agreement on cost, et cetera, is more important to them. So I wouldn't say private label will ever not be competitive. It's always going to be competitive. But growth really helps a lot of that. And we consciously built this business, the new TreeHouse with categories that we knew we had for the most part, great advantage, and we could be the partner of choice. Those places where we need to invest, we are. Things like coffee, we're making that a better business, right? We're a good pod packer, but that was pretty limited. So I think, Rob, that was a great question for the -- and I would have been answering it differently had we not done the transaction last year.

Very good. Okay. Maybe we can talk about priority of free cash flow. I think you've forecasted $800 million of free cash flow over the next 4 years starting 2024. That's a healthy amount. And this is after your CapEx spending. So what kind of flexibility do you think you have to buy back shares, make more tack-on acquisitions? What's your priority list right now?

Yes, I can take that. So our first priority is to continue to invest in the business. We'll make the investments that generate the best returns. And right now, we think investing in the business is going to generate the best return. We talked a bit about coffee and pretzels earlier. That's the kind of capability building investment that we think generates good returns for us. You also see us invest in our infrastructure, ensuring that we've got the resiliency of our equipment and the right capacity to go drive the growth that we've got and to continue to support TMOS and continuous improvement. So we continue to think investing in the business is the right thing to do, and we'll continue to evaluate opportunities and pick highest returning ones. Secondly, we'll continue to service our debt. We've made great progress over the last few quarters. We have a target leverage range of 3x to 3.5x on a covenant basis today. And so we sit at the low end of that, which gives us plenty of flexibility to go support our strategy. Our debt is in a place where we're fixed out for a period of time here at about 4.5% on average. So that's relatively attractive in the current market. And so we'll continue to maintain that leverage ratio as we make investments in the business. And then last, we will look to opportunistically return capital to shareholders. We have an active share repurchase authorization. And obviously, we recently bought back $50 million in shares as we thought post-quarter end, that was a nice -- that was an example of where opportunity presented itself and we took action. And so we'll continue to evaluate those opportunities as they make sense in terms of our framework.

So maybe I misunderstood but you said you're at the low end of your target range for debt leverage. But you also said that you want -- your priority is to continue to service your debt. So haven't you already serviced it adequately?

Yes. Maybe the -- to say that differently, our priority is to continue to maintain the right leverage ratio, maybe be the better way to say that. And so we're not going to go look to make investment to go change our leverage profile significantly. So we'll maintain our 3x to 3.5x leverage ratio.

Okay, I see. And when you say you're at 4.5% fixed out, is it all locked in? Or is some of that still susceptible to short-term rising rates?

No, over the short term and the current period, we're largely fixed in. In terms of our option arrangements, we have a couple of the very out years where we're not yet fixed but we'll continue to evaluate the market there in terms of what makes sense. And we don't have any debt coming due until 2026 and a large part of 2028.

Well, you bought back $50 million of shares. I mean, I think everyone would agree that the stock is not where you want it to be. What would be the conditions that would make you feel comfortable taking a more aggressive stance on share repurchase?

Yes. We continue to -- I think it's the -- what do we think provides the highest return. So we're going to balance the share repurchase against what are the investments in the business against maintaining that leverage ratio. And so I don't think that there's specific set of conditions. Obviously, the share price, we felt was attractive and could provide a nice return to shareholders at that point. And that was an amount that made sense to us given -- we disposed of our bars business, we'll get about that amount of cash back as a part of that. And so it made sense at that point to return that to shareholders from our perspective. So we want to have the highest returning investments for shareholders, and we'll continue to balance that across the 3 areas that we talked about.

Okay. Steve, in the past, you've talked about the growth rates of your categories exceeding the growth rate of overall private label. Is that still the case today? I mean we're looking at Nielsen data today. It seems like everything is going south. So how is it going right now?

I would say our categories are holding up. But no, every category, I think, across the grocery store with the exception of 1 or 2. And I know there's a couple you can point to that are growing. But to your point, I think our categories are holding up just fine. And -- we don't think there's major demographic shifts, right? I think the snackification or whatever you want to call it, of the consumer trends, right, is here to stay. And so we think we're invested in the right categories in the right place. We think things will normalize. We're probably one of the few places that would love to see a little deflation and pass that back. It won't affect our -- any profit. It will probably improve our margins, right? We pass those things through. Commodities, right? So we think things will normalize, right? The consumer will get back to where they were, and we're in the right businesses for the long term. But you're right. The short term has been really odd, right? And really...

And on top of that, you can see just much more deal activity in the snack categories, coffee, Smucker just had a rollback and Dunkin'. And I think they had rollbacks everywhere. So I mean, is the -- how do you feel about price gaps right now in your business? And do you feel like you have to take actions too?

Sure. It's funny. We will get to -- and I'm excited to do that because merchandising, I think, is really important for private label. It hasn't happened in a couple of years. Price gaps are still just marginally ahead of what they were pre-pandemic, right? And so price gaps are solid. And we have -- in anything but the pandemic years, there was always promotional activity from brands. There was always some promotional activity from private label. So I think we're just coming close to that. Even though promotions are up substantially, they're still below what we used to manage against, right, pre-pandemic. So we think we're positioned well. Our cost structure is right. Our gaps are a little higher than normal. And so we're probably in the best position to manage that return to normal that I could imagine. So I think we see that as opportunity, not as risk. We see promoting our stuff as opportunity.

Right. Okay. And just for the listeners here. So when there's merchandising in private label, it's really the retailers that are funding that. Is that right?

Correct. That's correct. There are times we have some categories that have accruals built in them. Right? So there are some categories that have merchandising accruals. Club channels will do that, for example. You see end aisle [ pallets ] at club, that kind of thing. They will build in a normal accrual process. We have some traditional retailers who do that. But that's right. It isn't us adding trade, typically. It's typically either comes -- they merchandise at their own cost or it is built into the pricing contract that we have with them, and it's been accrued since the day 1. Right.

Okay. Well, we have 1 question from viewers here. And trying to think how I would answer this. Could you elaborate on the strategy behind the expansion into aseptic plant-based milk? Are you in plant-based milk? Or are you in the creamers?

It's mostly nondairy creamer, and it's almond-based, it's that kind of stuff, right? We make almond-based, plant-based creamers. So those are -- you can call those milks, I guess. They'd be the equivalent of an almond milk creamer, right? So we make flavored and nondairy creamers in an aseptic package for a couple of the best retailers in the country. So yes, that's a small part of our aseptic business, but one we'd like to grow. And we want to go there because the consumer's there.

Okay. All right. Well, I'm going to leave it there and help everyone get to their next meeting. So Steve and Pat, thanks so much for doing this with us. It's good to see you again, and looking forward to seeing you live, too.

Great. Thanks, Rob, and thank you, everybody, for being with us today. Have a great day.

Thank you.

Bye-bye.