O-I Glass, Inc.
Q4 2017 Earnings Call Transcript

Published: 7 Feb 2018

[Operator:]

Good morning. My name is Zatania, and I will be your conference operator today. At this time, I would like to welcome everyone to O-I's Fourth Quarter and Full Year 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Mr. David Johnson, Treasurer and Vice President of Investor Relations. Sir, you may begin your conference.

[David Johnson:]

Thank you, Zatania. Welcome, everyone, to O-I's earnings conference call. Our discussion today will be led by Andres Lopez, our CEO, and Jan Bertsch, our CFO. Today, we will discuss key business developments, review financial results for 2017, and we'll highlight our overall expectations for 2018. Following our prepared remarks, we'll host a Q&A session. Presentation materials for this earnings call are available on the company's website at o-i.com. Please review the safe harbor comments and disclosure of our use of non-GAAP financial measures included in those materials. Unless otherwise noted, the financial results we are presenting today relate to adjusted earnings and adjusted cash flow, which excludes certain items that management considers not representative of ongoing operations. A reconciliation of GAAP to non-GAAP earnings can be found in our earnings press release and in the appendix to this presentation. Now, I'd like to turn the call over to Andres.

[Andres Alberto Lopez:]

Thank you, Dave, and good morning, everyone. Let's begin with our summary review and outlook on slide 3. I'm very pleased to report a strong financial performance in the fourth quarter and for full year 2017, once again consistently meeting or beating consensus and the key commitments we laid out at Investor Day in early 2016. 2017 unfolded largely as expected with adjusted earnings at the top end of our guidance range, driven by the approximate 1% growth in shipments which benefits the top line, and also a solid continued contributions to the bottom line from our Total Systems Cost focus. Cash was robust, reaching $393 million in adjusted free cash flow, substantially higher than our guidance. As we shift to 2018, we expect the positive trends in volumes and Total System Costs to generate higher earnings and cash flow. Our confidence is based on the strong foundation we continue to build upon. We are materially improving how we serve our customers, generating very favorable feedback and positive impact on sales. We are addressing productivity across all businesses, functions, processes, and geographies through TSC organizational design and best-in-class business practices. In order to accomplish that, we have one single enterprise plan focused on large-scale global projects and supported by a very capable enterprise-wide project management office. We meet briefly on a weekly basis with our top 70 global leaders on telepresence to track business performance and progress on high-impact initiatives. We are implementing integrated business planning, and we are putting in place best-in-class organizational and talent development practices. In summary, we are building a very capable, simple, agile, vibrant and high-performance organization. We are focused on organic growth while continuing to explore non-organic growth opportunities. And we continue to consistently make long-term investments in product innovation and process technology to significantly improve our position within the industry. We believe this strategic focus will drive substantial shareholder value. Of course, the timing of non-organic opportunities depends on external factors and long-term investments will take time to manifest. So, while our leverage ratio continues to decline, we are pleased to announce a share buyback program. With the high-level review and outlook complete, let's turn to slide 4. We have been building our critical capabilities and competencies to elevate performance across the company in every function, in every geography. I'm very excited about our investments and improvement in the commercial space where we have already began to see benefits. One of the key imperatives we strive for at O-I is always treating the customer right, focusing on long-term relationships and customer value creation not just simple quick wins. This is where we are aiming. Through our strategic customer management platform which includes cross-functional key account management supported by a state-of-the-art customer relationship management system and a customer loyalty measurement program, we continue the journey to improve customer-facing capabilities, customer service, and organic volume. Based on customer segmentation analysis, the commercial team is further refining its service offerings to deliver what our customers value and will pay for. This includes a pragmatic and results-oriented approach to innovation and for new business development, again, delivering what our customers value and what we can make profitable. We have made and continue to make significant progress in our entire supply chain. Our journey in this dimension is focused on taking our nearly 80 factories around the world to a standard work and continuous improvement methodologies while we continue the execution of our asset advancement program which improves the alignment of assets and a dynamic market, as well as set up factories for higher performance. Then, we layer in supply chain capabilities and practices for product, demand, supply, and inventory and logistics planning led by industry experts that are now applying best-in-class solutions. Logistics costs, for instance, are consistently lowered year-on-year, and we continue to make headway in inventory. In Europe, for example, inventory day sales were down more than five days in December compared with the end of 2016. More recently, we have built a Global Procurement team that will strategically drive down cost as we deepen our relationships with suppliers and apply best-in-class procurement practices. Last year, our Total System Cost approach delivered nearly $40 million in segment operating profit. In 2018, we expect to see about $30 million of incremental benefit after taking into account higher spending associated with the engineering activity and factory money leveraged (07

[Jan A. Bertsch:]

Thank you, Andres, and good day. Let's turn to slide 7 where I'd like to begin with a review of 2017. O-I achieved full year adjusted earnings of $2.65 per share, an increase of 15% versus 2016. The clear driver for earnings growth came from the better business performance that Andres just covered plus a modest currency tailwind. We benefited from lower interest expense due to our concerted actions to tap low-cost euro markets, to refinance high coupon debt, and our ongoing deleveraging efforts. Our effective tax rate on adjusted earnings was only 21% for the full year. This was driven lower than we saw the year ago by several favorable settlements as we have discussed on prior calls. We don't expect to replicate this level of activity again in 2018. Non-controlling interest was up, particularly in Latin America as we share our gains with our JV partners, and we round out our year-on-year analysis with a few cents headwind for share count. I'll talk more later about how we're going to address this. Turning to slide 8, cash generation remains one of our top priorities, and our focus is on delivering results. Adjusted free cash flow for 2017 was $393 million, driven by higher earnings and the benefits of trade working capital. This was 8% higher than our guidance of $365 million. Our expectation for CapEx was $500 million for the year. Due to the high level of activity near year end, we actually spent $441 million while $44 million ended up as an increase in CapEx-related payables which was a source of cash at year end. So in total, we had $485 million of CapEx-related activity, about $15 million less than our projection for the year. This source of cash was partially offset by timing of payments in non-trade working capital accounts such as prepaid expenses, interest in taxes, as well as salaries and wages. In all, we generated $30 million more cash than our guidance. From a year-on-year perspective, the key deltas were the higher earnings after backing out non-cash charges which was more than offset by the non repeat of the Mexican VAT refund received in 2016. On slide 9, I'd like to switch gears and look into 2018, first to the high level. The weakening U.S. dollar, if sustained over the course of the year, would be a nice tailwind for us. Our guidance uses end-of-January FX rates. We expect strong improvement in our operating performance driven by several factors

[Andres Alberto Lopez:]

Thanks, Jan, and let's turn to slide 15. We are meeting the financial commitments we set two years ago. As a result, segment profit margins, EPS and adjusted free cash flow reflect a growing trend. We continue to invest in specific capabilities intended to sustain these trends and that will meet the needs of our key stakeholders in the future. And by sustain, we mean more than just in the financial or environmental sense of the world. While manufacturing air-friendly products is at the heart of who we are and our commitment to improving our environmental footprint remains unchanged, we believe even the smallest steps in improving all important factors such as health, safety, communities, diversity and more, ultimately leads to making the world a better place. These focus areas combined with our financial strength enable O-I to thrive as a sustainable enterprise. And now, we will open the lines for your questions.

[David Johnson:]

Zatania, do you want to give people the instructions again for the Q&A?

[Operator:]

Your first question comes from the line of George Staphos from Bank of America Merrill Lynch.

[George Leon Staphos:]

Hi, everyone. Good morning.

[Andres Alberto Lopez:]

Good morning, George.

[Jan A. Bertsch:]

Good morning.

[George Leon Staphos:]

Congratulations on the year and thanks for the details. My question is on the outlook in Europe and the U.S. and recognizing that you're folding in North America to the Americas overall, Andres, can you comment at all on what you're seeing in North American beer and what was leading to what looked to be destocking by distributors in the quarter and whether any of that can be alleviated in the first quarter? And then the related point, can you comment on the price cost outlook in North America and Europe? You said Europe was constructive. Could you provide a bit more color on both regions? Thank you for the time.

[Andres Alberto Lopez:]

Okay. Thank you, George. When looking at the Americas, when we look at the beer trends, we expect to continue with the same trends we had through 2017. Nevertheless, as you mentioned, there was a slowdown in decline, in Q4. And what we're seeing is coming into the first quarter, we are seeing an slightly better demand than we were expecting to for beer. Now, as you know, the growth in beer is driven by the imported brands and by super premium, and we are very well-positioned to supply the growing brands in this segment. So now, when we look at the North American market, we are also very well positioned to supply wine, food, spirits and NAB segments which are all growing. So, when you look at our numbers in the fourth quarter and just going into 2018, you got to factor in the growth of those categories. And specifically in the fourth quarter, our volumes were supported quite a bit by new business development which kicked in in that quarter as well as growth in those categories which, as you know, we've been developing for quite a while now. We always mention about our focus on not only expanding in those categories, but adapting our footprint to be able to serve them better. And we've done so. Now, when it comes to pricing, we are continuing to see a constructive environment in Europe. And as you know, this is the season in which we negotiate. So, in this quarter, we are negotiating all these deals. So, we're going to know more about the final outcome of this as we go into the second quarter. But I think the conditions are very constructive. Our expectations is we're going to recover inflation in Europe this year. I think it's long due. As you know, in previous years, we couldn't. And I think this is the year in which we're going to get this recovery in place. So that's our consideration. And everything we see in the market today indicates that. It's very important to take into consideration that demand in Europe is very, very solid. We've seen that through 2017. We are seeing the same as we start the year. An important data point is beer production and consumption is at the highest level in nine years in Europe. So, we are enjoying that. And we are seeing good demand in Italy, in France, in the UK, in Eastern Europe; Portugal and Spain which are very important for the dynamics of pricing are also growing. And what that means is glassware (38

[Operator:]

Your next question comes from the line of Anthony Pettinari from Citigroup.

[Anthony Pettinari:]

Good morning.

[Jan A. Bertsch:]

Good morning.

[Anthony Pettinari:]

I was wondering as you look beyond kind of modestly higher CapEx in 2018 where we could see kind of long-term run rate CapEx shaped out at? And then, how much of the $70 million that you expect to spend on the fifth furnace for Constellation – how much of that is baked into this year? And then, I guess, just a last question on CapEx, baked into your 2017 number, you talked about the $44 million from payables related to CapEx in the reconciliation. And it's too soon to tell on 2018, but I don't know, Jan, if there's some kind of way that we should think about CapEx payables in 2018? Any color you could give on those would be helpful.

[Jan A. Bertsch:]

Sure. Anthony, let me start first with your general question about CapEx beyond 2018. I think the $500 million type of number that we're using for 2018 is probably an appropriate number to think of for next year as well. So, I would just keep that pretty flat. Related to Constellation, as you all may remember, we had – we have a $140 million investment in the fifth furnace that'll be split equally between the two partners, so our share will be $70 million. It's spent over two years, 2018 and 2019. So, I would guess somewhere around $30 million this year. We don't know for a fact yet. And in the first four furnaces, we also were able to underspend slightly to targets. So, we're hoping that that may be the case as well. So, I would assume about $30 million this year. And then lastly, related to the payables issue at year end. So we had a pretty remarkable year end, I think, on the CapEx front. We had a lot of spending backloaded into the year there. And in December, $44 million of that activity ended up in the payables area. So, I don't believe that we would expect that same level of activity in 2018 back end, but we do have – we do expect to see that fleshing out clearly in the first quarter here. So, when I look at 2018, adjusted free cash flow of $400 million, that's comprised of year-over-year growth earnings. Again, lower levels of inventory, probably similar to 2017 at a few days of IDS. We have lower restructuring payments down from the $62 million last year. I would assume those will be coming down around $15 million to $20 million. So, closer to the $40 million, $45 million level for 2018, and that will be mostly offset by this higher CapEx cash spending that we see because of the phenomena at year end. at a few days of IDS

[Operator:]

Your next question comes from Scott Gaffner from Barclays Capital.

[Scott L. Gaffner:]

Thanks. Good morning.

[Andres Alberto Lopez:]

Good morning.

[Scott L. Gaffner:]

Andres, you talked a lot about the pricing side of the equation and the strength in European market, but obviously energy inflation, particularly in Europe, has been relatively – has been a pretty decent headwind recently. Can you talk about sort of your view on inflation in Europe, in particularly on the energy side, and your ability to hedge out some of that inflation on a go-forward basis? How much of that's built into the guidance? Thanks.

[Andres Alberto Lopez:]

Yes. So, the – there is inflation in the commodity portion of the energy in Europe, there are other components like transportation and other components like ranch (42

[Operator:]

Your next question comes from the line of Mark Wilde from BMO Capital Markets.

[Mark William Wilde:]

Good morning, Andres. Good morning, Jan.

[Jan A. Bertsch:]

Good morning.

[Andres Alberto Lopez:]

Morning.

[Mark William Wilde:]

Jan, I wondered if you could just help us a little bit on the share repurchase. Can you give us any sense of kind of cadence for – through the year? It sounds like they might be kind of weighted to the back half of the year. And then can you confirm that there's no benefit from repurchase in your EPS guidance?

[Jan A. Bertsch:]

Yes. True, Mark, there is no benefit baked into the EPS guidance that we shared with you today. And it's true that we generate most of our cash in the latter part of the year, but we'll be doing – we'll be discussing this internally and sharing more information as the year goes out. But I think it's – we're shifting to this more balanced approach to capital allocation and there's lots of things to take into consideration that we're looking at for the year. This is one of them. And clearly, we think the right move forward as we're continuing to evaluate improvement in shareholder value through accretive acquisitions or growth investments or this move here to begin the share repurchase program that we actually had before the Vitro acquisition that we are re-energizing again here for the company.

[Operator:]

Your next question comes from Debbie Jones from Deutsche Bank.

[Debbie A. Jones:]

Hey. Good morning.

[Jan A. Bertsch:]

Good morning, Debbie.

[Debbie A. Jones:]

Congratulations on the role (45

[Andres Alberto Lopez:]

So, I can start with a couple of comments. What we're seeing in APAC is temporary, is primarily concentrated in Q1 – Q4, Q1 and part of Q2. And what we have in that region is twofold. We – as we implement the asset advancement program around the world, you always have a number of assets that are due for repair in any given calendar year. In the case of this region, we have a concentration of those beverage (46

[Jan A. Bertsch:]

And , Debbie, I think our capital expenditures over the last several years between 2015 and 2017 were in the range of $50 million to $60 million per year. So, they might be up a bit in 2018. But I think it's just a little bit more visible now given the result of the region.

[Operator:]

Your next question comes from Lars Kjellberg from Credit Suisse.

[Lars F. Kjellberg:]

Hey. Good morning. I just want to...

[Andres Alberto Lopez:]

Good morning.

[Lars F. Kjellberg:]

...follow-up – good morning. Just to follow-up a bit on the – sorry, the CapEx and the impacts that we should see in 2019. I guess, you alluded to it's probably going to be the same amount of CapEx, i.e. around the $400 million number. But should we see these sort of discrete items that is weighing on EPS performance this year? Should they gradually go away, i.e. that you start to see the net benefits of this program overpowering these negatives? And equally so, if you look on the performance in 2017 you had, of course, called out – you raised your guidance for the margin expansion from 80 basis points – from, sorry, from 40 basis points to 80 basis points, you ended up at 60 basis points. You're staying 40 basis points for the current year. What happened in that 20-basis-point shortfall and why is that not following through into 2018?

[Andres Alberto Lopez:]

So, let me just talk about the assets first. We've been quite disciplined in executing on the asset advancement program and I think we're making very good progress. As we look forward, we anticipate that we're going to accumulate enough critical mass in all this activity to start moderating the level of activity around 2020, 2021. So, we should have that in mind. So, we're going to be consistently doing this at what has been the, let's say, the historical rate. I mean, I think this year is higher because of this confluence of beverage, but that doesn't mean it builds a trend. It's not a trend. It's just a year. So, that's what we see there. When it comes to margins, as you know, we were dealing with the recovery of Brazil, and that has a significant impact in how far we can go. And I think we did quite well, but that was a pretty unstable and volatile situation anyway into the second half. We're seeing that country now doing better and better, the demand sustained and increased as we were going farther into the year. And as we go – we came into this year, we are seeing even a stronger demand coming out of that country. So, things like that change our ability to deliver the margin. But you got to take into consideration that we ended up, in any case, higher than the original guidance we had. So, we had 40 basis points, we went to 80 basis points, we ended up in 60 basis points.

[Jan A. Bertsch:]

Right. And I think the changes that caused the change in the margin, which we discussed a little bit at the conference that we were at the end of November when we settled in closer to 60 basis points, it's largely in our control. I mean, we made the decision to invest more in the fourth quarter and in the first, second quarter this year, as Andres had mentioned in his dialog up front, so that we could get ahead of the season and so that we could enjoy the benefits of that better performance throughout the balance of the year.

[Andres Alberto Lopez:]

So, we touched essentially on Asia Pacific, and I think that conscious decision, obviously in the fourth quarter, impacted the margins, right? But I think we're doing the right thing and we're going to enjoy the benefits as we go into a later part of the year.

[Operator:]

Your next question comes from Chris Manuel from Wells Fargo.

[Chris D. Manuel:]

Good morning, and congratulations on the good progress here in 2017. It looks like you're going to have another terrific year in 2018.

[David Johnson:]

Thank you. Thank you, Chris.

[Chris D. Manuel:]

I just wanted to ask one question around kind of shifting gears a little bit towards M&A in your strategy. That was something that you indicated you've got some stuff it seems like you're looking at, but yet you're going to pick up some share repurchase. Could you maybe give us a little color as to how you're looking at outside opportunities? Are they big ones? Are they smaller bolt-ons? Or they're more regions or technology, or how you're thinking about looking at inorganic opportunities?

[Andres Alberto Lopez:]

Yeah. So, as you know, we continually explore opportunities around the world, and this company is, as you know, present in 60% of the glass market in the world. It's not present in 40%. And obviously here in – within the regions or markets in which we are present, there are specific areas in which we are not that high in shares. So, we are continually exploring for opportunities. We see that there are opportunities out there that make strategic sense and will increase shareholder value. Now, they won't be, in any case, of the size or magnitude of Vitro. So, to your question, they're going to be more modest. However, they're going to be very good strategically and from a shareholder value creation, if we ever get there. But at this point in time, we contemplate that there are opportunities in the horizon. The timing of those opportunities is uncertain. That's an important consideration. So, we just got to monitor that, see when they come. And in the meantime, we think it is the right thing to move into a share repurchase program to be able to add shareholder value through 2018.

[Operator:]

So our next question comes from Ghansham Panjabi from R.W. Baird.

[Matthew T. Krueger:]

Hi. Good morning. This is actually Matt Krueger sitting in for Ghansham. How are you doing this morning?

[Andres Alberto Lopez:]

Good morning.

[Jan A. Bertsch:]

Good morning.

[David Johnson:]

Hi, Matt.

[Matthew T. Krueger:]

Hi. Can you give us a sense of your current capacity utilization by region with a particular focus on any areas of excess capacity? And then on a related note, how do shifts in customer mix and demand away from products such as mega beer impacted how you view this production network and supply chain in the context of that capacity utilization?

[Andres Alberto Lopez:]

Okay. So, when we look at capacity utilization, I think it is expected to be quite high in 2018. In Europe, we shut down the plant in Netherlands. So in our case, we are balanced. So we're going to be using our capacity at a very high rate in Europe. But I think it is the case around the world, too. So, we are seeing the same situation in North America even though there is a shift in mix. But you know that for the last two years we've been sharing with you while on the calls that we are investing on adapting the footprint to be able to serve the growing users (54

[Operator:]

Your next question comes from Chip Dillon from Vertical Research.

[Chip Dillon:]

Hi, good morning.

[David Johnson:]

Good morning.

[Jan A. Bertsch:]

Good morning.

[Andres Alberto Lopez:]

Good morning.

[Chip Dillon:]

Just a couple of quick ones. I noticed the asbestos expectation, the rate of decline seems to be slowing down, $125 million, $110 million, now, $100 million. If you can just give us a rough guess of what 2019, 2020 might look like there? And then, I guess on the second point, just to clean this up, I think you mentioned that you're going to contribute about $30 million to the CBI joint venture this year. What should that be next year or short of ongoing, if anything? And, secondly, you mentioned $500 million in CapEx, but you used to combine that with restructuring. Is there a separate restructuring number in their cash number that we should expect for this year or next year?

[Jan A. Bertsch:]

Okay. Let me try to tackle those, Chip. On asbestos, we indicated that we expect about $100 million paid in 2018. We really don't speculate going forward. However, we've had a long trend going back that has been relatively consistent in its rate of decline over the last eight or nine years. CBI, yeah, the total investment for our portion of the fifth furnace is $70 million, spent over 2018 and 2019. We estimate about $30 million this year, but it could be slightly higher or lower. We just don't know yet. So, the balance of it next year and if we're able to fund that fifth furnace for under $140 million in total for both parties, that would be a good thing, too, that we're looking forward to. And then lastly with CapEx, you asked about restructuring. Restructuring was about $62 million in 2017 and I'm estimating at this point with what we have baked into our plan, it should be $15 million to $20 million lower than that for 2018.

[Operator:]

Your next question comes from Edlain Rodriguez from UBS.

[Edlain Rodriguez:]

Thank you. Good morning.

[Andres Alberto Lopez:]

Good morning.

[Edlain Rodriguez:]

Just one quick one. On the margin uplift you expect in Asia from the asset improvement investment, and do you still believe that you could get margins there to be in that 12%, 14% this year?

[Andres Alberto Lopez:]

So, we have a few things that are going to drive margin up. At this point in time, obviously, we'll see in the low point in Q4 and we'll see it in the early part of the year. However, manufacturing cost is going to be impacted by the investments we're making. So, it's going to be improved. But also, we are prioritizing serving customers at this point and that's extremely important for us. So, our cost to serve is higher. As we go into the second half, that's going to go down, so that's going to be an improvement. And the other part of this is, as we retrofit those assets to better fit market, we're going to see a mix improvement in the emerging market and that's going to help our margins, too. So, we should be moving from these low margins in the early part to fairly high margins in the second part. And all together, it will end up being a positive margin evolution for the year.

[Operator:]

Your next question comes from Arun Viswanathan of RBC Capital Markets.

[Arun Viswanathan:]

Great. Thanks. Good morning. I just wanted to ask a question about the non-mass beer in North America. How much does that make up of your North American business? Do you have a target mix for that in 2018, 2019, 2020? I mean, as you provide (59

[Andres Alberto Lopez:]

So, we've been – well, we're seeing the decline over the years in that category. At this point in time, it is about 25% of the total volume. We've been adapting our footprint in a continuous basis, I will say, for the last three years. So, I – we see this as an ongoing activity. No, a massive activity at some point in time. How far down this is going to go? It's to be seen. So, at least the latest information we see is a little bit more encouraging than we saw before, but that's only for Q4, and then very early Q1. But we don't envision any major activity to restructure anything at this point. We are not considering type of M&As at this point in the region either. I think we are very well-established with the footprint we have, and we don't have any plans for that.

[Operator:]

Your last question comes from Brian Maguire from Goldman Sachs.

[Brian Maguire:]

Yeah. Thanks for taking my question and congrats on the progress so far also. I just want to focus on one...

[Andres Alberto Lopez:]

Thank you.

[Brian Maguire:]

...one country in particular. I know Mexico is not your largest country, but it does contribute a disproportionate amount to the growth of the company. So, now that we've gotten NAFTA back in the headlines and I know there's a presidential election coming up this summer, it seems like the volatility there might be picking up after a period where it's been pretty tame for the last couple of years. Just wondering if – how you're thinking about those two political events. And are you baking in any kind of disruptions or change in the economic environment in your forecasts either for 2018 or as you go out further?

[Andres Alberto Lopez:]

Okay. So, at this point, what we expect out of Mexico is a solid performance with growth in the low-single digits. This operation has opportunities for us in the Total System Costs, productivity. So, we will continue working on them. This would all should be also beneficial. And I think as part of the political dynamics, they're not any different than the ones we normally face in emerging markets and our operations continue moving forward. I think you have the best example today of Brazil, which has a very, very unstable political scenario. Now, in those circumstances, our growth is in the mid-teens if you will. So, we are doing quite well. You see Colombia which is facing a similar situation as Mexico and we're seeing a good outlook, positive outlook for Colombia. Same situation happens in Peru, Ecuador. So, we're used to that. That's emerging markets. But I think we think that our outlook is quite positive. NAFTA, it's still to be seen. There are some aspects of it that have been positive in the evolution. We're tracking that closely, but we just got to be – got to see what the final outcome of that is.

[David Johnson:]

Thank you, everyone. That concludes our earnings conference call. Please note that our first quarter conference call is currently scheduled for April 24, 2018. And, folks, remember, when faced with a packaging choice, have class, choose glass. Thank you.

[Operator:]

This concludes today's conference call. You may now disconnect.