Flowers Foods, Inc (NYSE: FLO) Q1 2023 Earnings Call dated May. 19, 2023
Corporate Participants:
J.T. Rieck — Executive Vice President of Finance and Investor Relations
A. Ryals McMullian — President and Chief Executive Officer
R. Steve Kinsey — Chief Financial Officer and Chief Accounting Officer
Analysts:
Stephen Powers — Deutsche Bank AG — Analyst
Bill Chappell — Truist Securities, Inc. — Analyst
Robert Dickerson — Jefferies, LLC — Analyst
Mitchell Pinheiro — Sturdivant & Co. — Analyst
Connor Rattigan — Consumer Edge Research — Analyst
Jim Salera — Stephens, Inc. — Analyst
Presentation:
Operator
Good day, and thank you for standing by. Welcome to the Flowers Foods First Quarter 2023 Results Conference Call. Please be advised that today’s event is being recorded. I would now like to hand the conference over to your speaker today, J.T. Rieck, Executive Vice President of Finance and Investor Relations. Please go ahead.
J.T. Rieck — Executive Vice President of Finance and Investor Relations
Thank you, Shannon. And good morning. I hope everyone had the opportunity to review our earnings release, listen to our prepared remarks, and view the slide presentation that were all posted yesterday evening on our Investor Relations website. After today’s Q&A session, we will also post an audio replay of this call.
Please note that in this Q&A session, we may make forward-looking statements about the company’s performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially. In addition to what you hear in these remarks, important factors relating to Flowers Foods’ business are fully detailed in our SEC filings. We also provide non-GAAP financial measures for which disclosure and reconciliations are provided in the earnings release and at the end of the slide presentation on our website. Joining me today are Ryals McMullian, President and CEO; and Steve Kinsey, our CFO.
Ryals, I’ll turn it over to you.
A. Ryals McMullian — President and Chief Executive Officer
Okay. Thanks, J.T. Good morning, everybody. Thanks for joining the call. Our results this quarter reflect the strength of our leading brands and the dedication of our Flowers team, and I do want to thank them for their hard work. It was instrumental in helping us drive record quarterly sales. We did face difficult year-over-year comparisons in the quarter due to a strong impact from the Omicron surge early last year and by some storm activity during the same time period. The macroeconomic environment remains challenging with inflation pressure and consumer demand and input costs and demand patterns continue to shift as the impact of the pandemic wanes. We adjusted our 2023 financial guidance to reflect those factors. But we believe the current environment is temporary, and we are focused on positioning ourselves for long-term success. Our investments in innovation, including the exciting nationwide launch of the DKB snack bars, and digital and supply chain initiatives are designed to enhance our competitive position. Some of these initiatives may impact near-term results, but they are crucial for enabling our growth plans. I’m excited about our prospects, and I’ve really never been more confident in our ability to grow shareholder value over time.
So with that, Shannon, we are ready to take questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from the line of Steve Powers with Deutsche Bank. Your line is now open.
Stephen Powers — Deutsche Bank AG — Analyst
Hey, thanks, and good morning, everybody.
A. Ryals McMullian — President and Chief Executive Officer
Morning, Steve.
Stephen Powers — Deutsche Bank AG — Analyst
I guess picking up on those opening comments, just how much of the temporary transitory nature of the headwinds that you’re seeing do you expect to improve within this year? I guess that wasn’t clear from your prepared remarks last night. In other words, are you assuming that things get better? Is it temporary within the year, or is it temporary over a longer period of time?
A. Ryals McMullian — President and Chief Executive Officer
Yeah. Steve, I appreciate the question. Look, we are likely being a little bit conservative with the guidance, just given the soft start to the year. We felt it just most prudent to do that at this time. However, what we did see towards the end of the quarter was some pretty meaningful improvement. And by that I mean our branded retail units turned flat to positive in several of the last weeks of the quarter. And at the same time, private label share gains really started to come down. When we started off the year, I think in the first period of the year, we saw private label gain the most unit share that we’ve seen during this whole trade-down situation. Gained 120 basis points. By the end of the quarter, it was 50% [Phonetic]. So we are starting to see that come down. It is still a tale of two channels in the sense that we’re not seeing the same dynamics in grocery that we’re seeing in mass. Most of the private label activity has been concentrated in mass. So that’s a continuation of what we’ve talked about in prior quarters. So as to exactly when it’s going to happen, that’s a little bit difficult to predict. But I do have at least some hope at this point that things already look like they’re beginning to get better. But for the time being, we’ve decided to be conservative.
Stephen Powers — Deutsche Bank AG — Analyst
Okay. So I guess that’s — so the soft start you called out in the year, I guess, it’s evident in the data. And I guess what I’m trying to reconcile is it seems like that would have been evident also to you when you guided in early February, things are getting better towards the end of the quarter. So what got worse is my question.
A. Ryals McMullian — President and Chief Executive Officer
Well, yeah, fair enough. The start to the year was softer than we expected out of the gate. And it was significant enough to make us perhaps be a little bit more cautious about the health of the consumer than we were at the start of the year. Look, we knew it was going to be a challenging year, right? We said that. But given the really soft start, it turned out to be a little more challenging than we anticipated. Hopefully, that helps.
Stephen Powers — Deutsche Bank AG — Analyst
Okay. And I’ll pass it on in a second. But just one more question, if I could. You called out the temporary imbalance between capacity and production as a result of the softer start. I guess just could you elaborate a little bit on that in terms of what the implications are from a financial perspective and then just the timeline you expect some resolution through the supply chain optimization work?
A. Ryals McMullian — President and Chief Executive Officer
Yeah, sure. We’re not going to quantify it, but I want to make it clear too that the imbalance was certainly a factor in the quarter. It is definitely not the factor. The factor is the consumer and the softness in the category. So I just want to be very clear about that. But we try to be transparent with you guys and give you as complete of a picture as we can as to what’s going on, good, bad, or indifferent with the company. And when we talk about our portfolio strategy, and we’ve talked about not really so much the SKU rationalization. That’s a common ongoing thing, but more of the business exits where we have elected to exit certain lines of business that were marginally profitable and really didn’t have a chance to ever really meet our profitability thresholds through pricing or efficiencies or whatever. Those types of exits are what I’m referring to. And typically those pieces of business do contribute at least a little bit of something to the business, right? So you’re going to have a little bit of stranded cost when you exit those pieces of business. Now over time, as we — and we’ve talked a lot about network optimization over time. That’s where that comes into play. And once again you’ve seen us do this. You’ve seen us — we exited the Phoenix bakery recently, but we’ve also converted facilities to organic production, all bran [Phonetic], that type of thing, that’s what will take care of that, in addition to branded growth over time will take care of that imbalance.
Stephen Powers — Deutsche Bank AG — Analyst
Okay. Thanks, Ryals. Appreciate everybody. Thank you.
A. Ryals McMullian — President and Chief Executive Officer
Sure. My pleasure.
Operator
Thank you. Our next question comes from the line of Bill Chappell with Truist Securities. Your line is now open.
Bill Chappell — Truist Securities, Inc. — Analyst
Hey, good morning. This is Stephen Lengel on for Bill Chappell. Thank you for taking our question. Can you guys give us some more color regarding the price gap dynamics following another pricing round? How have the mass retailers reacted to additional pricing? Is it fair to assume that maybe the gaps have started to rewiden and you might need some time to catch up? Any color there would be super helpful.
A. Ryals McMullian — President and Chief Executive Officer
Yeah. So if you recall last year when we implemented pricing, the gaps between brand and private label did widen. Some retailers were holding their retail prices down. And I believe it was late in the year or early this year that gap’s started to narrow as the private label retailers came back up. We have recently taken some additional branded pricing that goes into effect this month, so there could be a much smaller increase in the gap because our branded price increases this round were quite a bit smaller than what we’ve done in the last few rounds. So that could widen the gap temporarily at least for a while, but it’s too early to say because the pricing just went in, so we haven’t seen the data yet.
Bill Chappell — Truist Securities, Inc. — Analyst
Got it. Understood. Thank you. And thank you for some of the color on the DKB launch. It seems like you guys are making some real progress there. Can you share some high-level thoughts on how you’re performing versus maybe your internal expectations?
A. Ryals McMullian — President and Chief Executive Officer
Yeah. No, we’re still really excited about it. So we’re in about 6,000 stores now, so call it roughly halfway to where we want to be by the end of the year. And as far as us entering the retailers that we expected to, we’re largely on track there. As far as the performance goes, where the bars have been in the market the longest, we’re doing really, really well. Where we’re newer, it’s a little bit lower, but you expect that. We had — just in one retailer in particular, we had a few executional issues just on the front end. We’re getting all that taken care of, so those numbers are already starting to track better. So, all in all, we’re in really good position and super excited about where we’re headed with the bars.
Bill Chappell — Truist Securities, Inc. — Analyst
Awesome. Thank you very much and I’ll pass it on.
A. Ryals McMullian — President and Chief Executive Officer
Thank you.
Operator
Our next question comes from the line of Robert Dickerson with Jefferies LLC. Your line is now open.
Robert Dickerson — Jefferies, LLC — Analyst
Great. Thanks so much. Couple of questions. First question is just with respect to that incremental pricing that’s coming through, I know that was already discussed previously. Just where you’re seeing your share trends as you’re entering — sorry, as you’re exiting the quarter? Is there a scenario that plays out such that maybe you do need to promote a little bit more because I know, Ryals, you’ve said, historically, it’s not a very heavily promoted category. But at the same time, at some point, volume growth should matter. So I’m just curious how you think about that right now.
A. Ryals McMullian — President and Chief Executive Officer
Yeah, absolutely. So, Rob, the branded pricing just went in, so we’re not really — we can’t really see any impacts from that just yet. I will tell you we promoted a little bit more in the quarter. It wasn’t terribly significant, but we did pick up a little bit as far as our activity went, to your direct point. Yeah, I know that, particularly with — if you think about elasticities with our business, set the category softness aside for a second, we’re still performing very, very well against our elasticity models. So it hasn’t — we’re outperforming virtually everything. Now when you look at something like Tastykake, for example, where we don’t have as strong of a brand, we’ve had more elasticities there and have had to promote a little bit more from that standpoint, but that probably wouldn’t be a surprise to anybody. But overall, we’ve seen — once again, we’ve seen some pockets of competitive activity from our competitors in the category. And our promotional level did tick up just a little bit in the category. But as of yet, Rob, I wouldn’t call out anything terribly meaningful. I think we’re going to continue, to your point, continue to watch the volume trends. Once again, they did start to get better, and we actually saw unit increases towards the end of the quarter, so that gives me a little bit of confidence. I just don’t have enough of a trendline yet, because it happened right at the end of the quarter to call it a long-term trend just yet. So once again, that’s why we’re a little bit conservative with the guidance.
Robert Dickerson — Jefferies, LLC — Analyst
Got it. Okay. And then, I guess, just questions around input costs where the grain markets have gone, how that could potentially benefit you. I think in the prepared remarks you said there could be some back-half benefit, but not really stating that there will be. Looks like you’re 80% covered for the year. And then previously you said probably about flat gross margin. So just wrap it all that in, gross margin was down as expected, maybe a little bit more in Q1, guide comes down a little bit on EBITDA, which I’m assuming is gross margin driven while at the same time grain is deflated. So I would assume at some point, that does become a benefit, but I don’t know if you’re being conservative because maybe you need to reinvest some of that back in. So lot in there, but just trying to gauge as to how the year could play out, right, in terms of gross margin? Thanks.
R. Steve Kinsey — Chief Financial Officer and Chief Accounting Officer
The reality is, overall, we expect inflation throughout the whole year. The first half is definitely our toughest comp because we had pretty favorable hedges coming into the year last year. And then obviously, the inflationary environment around wheat really didn’t begin to ramp until. early first half, and we would have been covered. for most of that period last year. So look into the the full year and thinking about Cadence, obviously the first half is the top, but back half, like I said, we still expect inflation, a lot of it is driven by other buckets other than flour across the input bucket. Gluten is up pretty significantly, and we use quite a bit of gluten because of typically because of protein quality. within the wheat. We’re also seeing yeast is up, honey. Several other small or minor ingredients so. So while we do expect better comps in the back half, we are expecting an inflationary environment throughout the whole year.
Robert Dickerson — Jefferies, LLC — Analyst
Okay. Got it. Fair enough. That’s helpful. And then, look, I know it’s not really your style, so to speak, to speak to the next quarter, right, or quarterly guide, but I’m curious, maybe in more general terms, we saw this EBITDA step down in Q1. Is there any way you can frame it, so we understand a little bit of the cadence as we get through the year, we’ll probably again see more of a step down in Q2 relative to what we would expect in the back half? Just thinking about the midpoint of the updated guidance. That’s it. Thanks so much.
R. Steve Kinsey — Chief Financial Officer and Chief Accounting Officer
Obviously, you’re right, we don’t give quarterly guidance. So when you think about the annual guidance that we’ve given from an EBITDA perspective, again, we do think comps get easier in the back half. And overall from a cadence perspective, hopefully, as Ryals said, too, we’re seeing improvement across markets coming out of the first quarter. So not speaking specifically to any quarter, I think, we should come in, in line with some of the comments you’ve made and expectations.
Robert Dickerson — Jefferies, LLC — Analyst
All right, great. Thank you, guys. Appreciate it.
R. Steve Kinsey — Chief Financial Officer and Chief Accounting Officer
Thanks, Rob.
Operator
Thank you. Our next question comes from the line of Mitchell Pinheiro with Sturdivant & Co. Your line is now open.
Mitchell Pinheiro — Sturdivant & Co. — Analyst
Hey, good morning.
A. Ryals McMullian — President and Chief Executive Officer
Hey, Mitch.
Mitchell Pinheiro — Sturdivant & Co. — Analyst
So why do you think the environment is transitory and not — and I don’t know what transitory means. Like is it quarter, two quarters or transitory it’s shorter than that. But the environment looks pressured and looks pressured for longer, at least in our view. So why do you see it as transitory?
A. Ryals McMullian — President and Chief Executive Officer
Yeah. Mitch, I think the transitory to me means temporary, right? So I don’t think that this is a permanent situation that we’re in. There are a variety of competing factors out there. You read the same stuff that we do. Inflation continues to tick down. The job market looks pretty strong. So I can’t say with any assurance exactly when things are going to turn, but I do believe that they will. And the reason I believe that is because eventually we’re going to come out of this inflationary cycle. Presumably, at some point, you have a recovering consumer. And when you think about our business in particular and the trade down to private label, I firmly believe that the premiumization of the category is a long-term trend. I do believe that people will come back to differentiation. I do believe that people will come back to our top brands. That’s why I believe that it’s temporary. Now is that two months? Is it six months? Is it nine months? Is it a year? I don’t know that. But I do believe it will come back, and I think we’ll be well positioned to take advantage of it when it does. Once again, we’re keeping up our brand investments, we’re keeping up our market activity, we’re investing in the business, we’re investing in our team. So we wouldn’t be doing that if we believed that this is a permanent circumstance.
Mitchell Pinheiro — Sturdivant & Co. — Analyst
Also you talked about taking specific steps in the short term to mitigate some of these pressures. And I heard you said that you did step up promotion a little bit in the quarter — at the end of the quarter. What else are you doing in the short term here?
A. Ryals McMullian — President and Chief Executive Officer
Well, obviously, cost savings activities. I think we said in the prepared remarks, we’re on track for our $20 million to $30 million for this year. All the investments that we’re making in the bakeries from a digital standpoint, bakery of the future, in particular, which I’m excited to say, is really starting to show some nice returns. It took it a while to gain some momentum. But once we got through the first period or so of this year, it’s really starting to come on strong. And that’s going to be particularly meaningful this summer during the height of the summer bun season because we did not operate well last year. Though our financial results were good last year, we really struggled in the bakeries last year. So that is going to be a good comp for us coming up this year. You may also recall, we had some of the packaging issues in the second quarter last year that we’ll be comping as well. We don’t have those issues this year. We’re in great shape from a supply chain standpoint. So all of those factors together help to mitigate not only inflation but just the overall macro environment that we’re facing today.
Mitchell Pinheiro — Sturdivant & Co. — Analyst
Okay. Thank you much.
A. Ryals McMullian — President and Chief Executive Officer
Thanks, Mitch.
Operator
Our next question comes from the line of Connor Rattigan with Consumer Edge. Your line is now open.
Connor Rattigan — Consumer Edge Research — Analyst
Good morning, guys. Thanks for the question.
A. Ryals McMullian — President and Chief Executive Officer
Hey, Connor.
Connor Rattigan — Consumer Edge Research — Analyst
Yeah, So it seems like you guys are doing really well in grocery. The pressure really is just coming from the mass channel. And so I guess I’m trying to better understand the dynamics here. So I suppose we can assume the more budget-conscious shopper is more likely to both trade down via channel and the private label. But I guess if we think about the consumer’s decision to make either jump, have you typically seen a consumer jump right from, say, a Nature’s Own loaf in grocery into private label and mass, or has this been a gradual waning? And also for those consumers that have already made the jump, how should we think about bringing them back into the branded fold?
A. Ryals McMullian — President and Chief Executive Officer
Yeah, exactly. Well, I think to the last part of your question, it goes back to the brand investments, frankly, no matter where they shop, whether they’re shopping at mass, whether they’re shopping at club, dollar, grocery, we have an omnichannel strategy. So we look at all of those different channels. The dynamics are interesting, though, because you’re right, our grocery performance has far exceeded our performance in mass for a couple of reasons. One, there’s been a channel shift. So people across — frankly, across the income spectrum, quite interestingly, including your higher income shoppers are looking for bargains given the environment that we face. So there has been a bit of that channel shift in the mass, in the club, in the dollar stores and away from grocery, so that does play into it. However, for those shoppers that are still in grocery, our performance has been really good. We were up in unit share in grocery, and we were up across the board in every category — well, flat or up across every category — subcategory rather.
So it is an interesting dynamic. But I think, to your point about how do you bring them back to brands if they traded down to private label, I think you’ve got to keep them front and center. We’ve got to be spot on with our display execution. We have to put our marketing dollars in the right places, whether that’s digital or TV or whatever to keep these brands in front of people. And then I think it’s also still about innovation. We’re not slowing down our innovation just because of the environment we’re facing. I think it’s more important than ever now. And so whether that’s in our core category in terms of our Keto loaf or our Hawaiian, these new items that we’re putting out, or whether it’s outside of our core category in terms of the bars, keeping these brands front and center for consumers is more important than ever today.
Connor Rattigan — Consumer Edge Research — Analyst
That was great, Ryals. Really helpful. And then also just a quick follow-up, too. So on Canyon, I think in the prepared remarks, you guys commented that the track data was skewed just given the mix shift in club channel. And yeah, I think you guys quantified about 80 bps of share losses, but flat unit sales. I guess, how are share trends looking when accounting for the club channel mix shift?
A. Ryals McMullian — President and Chief Executive Officer
So the ultimate question is — Connor, sorry.
Connor Rattigan — Consumer Edge Research — Analyst
I just want to get a sense for how share trends were looking for Canyon when accounting for that club channel mix shift? Because I think in track channels, you guys had — share was down about 80 bps, but I assume it will be better in the club channel — when you account for the club channel that is.
A. Ryals McMullian — President and Chief Executive Officer
It is. Yeah. So our internal data, we’re still up. We’ve got every confidence in Canyon. It’s proven to be one of the most inelastic brands that we have, which I guess makes sense given some of the dietary issues with folks and gluten allergies. But yeah, we’re still really excited about Canyon. It’s doing quite well. And frankly, from an innovation standpoint, we’re really excited as well. Obviously, we started with DKB from an innovation standpoint just because it’s a bigger category. But I think that we’ve got some really nice opportunities to innovate both inside and outside the core with Canyon as well.
Connor Rattigan — Consumer Edge Research — Analyst
All right. That was great. Thank you, Ryals.
A. Ryals McMullian — President and Chief Executive Officer
Okay. Thank you.
Operator
Thank you. Our next question comes from the line of Jim Salera with Stephens. Your line is now open.
Jim Salera — Stephens, Inc. — Analyst
Hey, guys. Good morning. Thanks for taking our question. Can you just follow up on the Canyon dynamic there a little bit. I believe in the prepared remarks you mentioned some dislocation just as you’re doing some SKU rat and some product availability. Should we think about the Canyon as you have a limited amount of Canyon product. You shifted distribution towards club. And as the production capacity comes back online and moving forward, do you have a chance to refill the SKUs in the track channels, or should we think of those as gone?
A. Ryals McMullian — President and Chief Executive Officer
No, no. It’s a good news-bad news situation because we are a little bit strained with Canyon, but we’re strained because it’s grown so much. So once we get our capacity situation resolved, which we’re obviously actively working on, we expect to refill in that space.
Jim Salera — Stephens, Inc. — Analyst
Okay, got it. And then maybe more broadly just across the branded portfolio, you talked about the price gap narrowing. Obviously, consumer is strained right now. But as things hopefully ease as the year progresses, do you think that the consumer will just gradually come back to branded, or are you going to need to have some additional push to pull that consumer back into the branded portfolio if they’ve shifted towards private label?
A. Ryals McMullian — President and Chief Executive Officer
Yeah, that’s a really good question, and I’ll answer it in two parts. Frankly, it depends on what brand you’re talking about. If you’re talking about a brand like DKB, it has tremendous consumer pull, right? So there you don’t have to do as much to draw people back today [Phonetic] because they want to come back to it naturally because it is so differentiated and high quality. Frankly, when you’re talking about a brand like Nature’s Own, yeah, you’re probably going to need a little bit more push there, hence the marketing investment. That’s why we’re not stopping that. And we’re not waiting for the consumer to get healthy before we start that marketing and we want to keep it front and center now so that they want to come back to us. So I do think it depends on which brand you’re talking about. Some will take a little bit more pushing than others will, if that makes sense.
Jim Salera — Stephens, Inc. — Analyst
Yeah, yeah, absolutely. Should we think about from the levers that you guys have to pull to bring them back, is it more traditional marketing, just making the consumer more aware or highlighting the positives of the brand? Or is it promotion, getting them to come back with an initial lower price point and then hoping that with the inertia, as you pull the promotion, they stay in the branded portfolio?
A. Ryals McMullian — President and Chief Executive Officer
Well, we certainly hope it’s not in the latter, right? But sometimes you have to pull that lever. But I go back to execution as well. Display execution in our category, off-shelf display execution is so important in our category. And sometimes that does come with a promotion to bring people back to the brand, but we’ve got to be best-in-class in that regard. If we can do that, and I believe we can, when the consumer is ready, I think we’re well positioned to win. So it’s really, you’ve got a toolbox of things, right? You’ve got marking, you’ve got some, hopefully, limited promotions, you’ve got display execution. You’ve got minimal out-of-stocks, minimizing your nil picks for e-commerce purposes. All these things are important. It’s not just one thing. You’ve got to have — you’ve got to be really excellent at a mix of tools to be successful. Fortunately, from a promotional standpoint, as we’ve said before, we’re so much better positioned now with the data that we have, so when we do run promotions, we’re getting a good ROI on that promotion and not just doing it for the sake of doing it and driving a week’s worth of unit volume.
Jim Salera — Stephens, Inc. — Analyst
Got it. And then maybe if I could sneak in one more question. Just looking at DKB bar launch, I know we still got a lot of opportunity to ramp that. The initial results that you guys are seeing, are there existing DKB buyers that are just expanding their buy rate and taking it into new categories? Or do you see incremental buyers that maybe aren’t a DKB bread buyer that will buy the bar and then obviously they hope that you crosspollinate into the traditional bread category.
A. Ryals McMullian — President and Chief Executive Officer
Yeah, it’s both. It’s both. This is why the opportunity for DKB is so interesting and so fun to think about going forward. I’ve talked about the household penetration for DKB many times in the past, and it’s actually still quite low. Matter of fact, I was actually speaking with recently retired Chief Marketing Officer from a major CPG company that had never heard of DKB before. And this is a person that’s in the business of marketing. So it just goes to show you that as well as that brand has done, we still have a tremendous runway ahead of us, both with the core items and with the new consumers. So to answer your question, it’s both. There are people that are discovering bars that may not even know that the bread exists and vice versa. And we’re also doing some things from a shopper marketing standpoint to crosspollinate that and encourage it more.
Jim Salera — Stephens, Inc. — Analyst
Okay, great. Thanks, guys. I’ll pass along.
A. Ryals McMullian — President and Chief Executive Officer
Thank you.
Operator
Thank you. I’m showing no further questions at this time. I’d like to hand the call back over to Ryals McMullian for closing remarks.
A. Ryals McMullian — President and Chief Executive Officer
Okay. I want to thank everybody for taking time today and joining us for questions. Thank you very much for your interest in our company. And as always, we look forward to speaking with you again next quarter. Take care.
Operator
[Operator Closing Remarks]