ACCO Brands Corporation (NYSE:ACCO) Q4 2023 Earnings Call Transcript

ACCO Brands Corporation (NYSE:ACCO) Q4 2023 Earnings Call Transcript February 23, 2024

ACCO Brands Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for the tune in. I’d like to welcome you the ACCO Brands Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Prica, and I’ll be your moderator for today. [Operator Instructions] I’d now like to turn the call over to your host, Chris McGinnis, Senior Director of Investor Relations to begin. Hey, Chris, please go ahead.

Christopher McGinnis: Good morning, and welcome to the ACCO Brands’ Fourth Quarter and Full Year 2023 Conference Call. This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today is Tom Tedford, President and Chief Executive Officer of ACCO Brands Corporation. Tom will provide an overview of our fourth quarter and full year results and our 2024 priorities. Also speaking today is Deborah O’Connor, Executive Vice President and Chief Financial Officer, who will provide greater detail on our fourth quarter and full year results and our 2024 and first quarter outlook. We will then open the lines for questions. Slides that accompany this call have been posted to the Investor Relations section of accobrands.com.

When speaking about our results, we may refer to adjusted results. Adjusted results exclude amortization and restructuring costs, a noncash goodwill impairment charge, the change in fair value of the contingent consideration related to the Power A earn-out and other non-recurring items and reflect an adjusted tax rate. Schedules of adjusted results and other non-GAAP financial measures and a reconciliation of these measures to the most directly comparable GAAP measures are in the earnings release and the slides that accompany this call. Due to the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our forward-looking non-GAAP measures. Forward-looking statements made during the call are based on the beliefs and assumptions of management based on information available to us at the time the statements are made.

Our forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially. Please refer to our earnings release and SEC filings for an explanation of certain risk factors and assumptions. Our forward-looking statements are made as of today, and we assume no obligation to update them going forward. Now I will turn the call over to Tom Tedford.

Tom Tedford : Thank you, Chris. Good morning, everyone and welcome to our fourth quarter and full year 2023 call. Last night we reported fourth quarter and full year results with reported sales as well as adjusted EPS and free cash flow exceeding our full year outlook. The stronger finish allowed us to end the year with the lower consolidated net leverage ratio at 3.4x, an improvement of 0.8x compared to last year. These results reflect our team’s strong execution against the priorities we laid out at the beginning of 2023. Our top priority in 2023 was to restore our gross margin rates, which were challenged throughout 2022 due to the extreme levels of inflation. Through the cumulative effect of our pricing and cost actions, we successfully restored our gross margins to pre-pandemic levels, ending the year at a rate of 32.6%, a 420 basis point improvement compared to 2022.

Additionally, as the demand environment remained challenging, we accelerated our efforts to rationalize our global footprint, announcing the closure of four facilities over the course of the year. We delivered $29 million in cost savings from our restructuring and productivity actions slightly ahead of the target we set at the start of 2023. Our broad assortment of value-to-premium offerings allowed us to win in back-to-school, especially in a price-conscious environment. In addition, we gained market share during the U.S. back-to-school season in both dollars and units. We continued to invest in growth by supporting our key brands and brought new and refreshed products to market. As I mentioned on our third quarter call, we are sharpening our focus on innovation and new product development.

As a part of our restructuring, I have put leaders with the best track records in charge of these initiatives. Lastly, we managed our SG&A expenses and inventory well, as we remained laser-focused on controlling costs and prudently managing headcount. For the year, we reduced inventory by 17% or almost $68 million versus the prior year. Before touching on our 2024 priorities, let me discuss our comparable sales results for the full year, which were down 6.5% from the prior year, reflecting soft demand in many of our categories. Our two global technology businesses, Kensington and PowerA, were also challenged by category-specific factors. Globally, lower IT spend and PC purchasing continued to impact sales of our Kensington branded computer accessories in the fourth quarter and with a significant headwind for the full year.

One of our largest product categories is Universal Docking Stations. Over the last year, the docking station market has changed considerably. Two consecutive years of disruption in the PC market lets an oversupply of product as well as significant competitive discounting. While PC sales are expected to rebound late in 2024, we anticipate that the demand for third-party docking stations will remain soft, with partial recovery beginning late in 2024 and full recovery in 2025. Regarding our PowerA branded gaming accessories category, the recovery and third-party gaming accessories was uneven throughout 2023 due to lower consumer demand and industry specific competitive dynamics. Earlier this week, we announced the licensing agreement with Epic Games, the maker of Fortnite, one of the most popular video game franchises, and we are excited about this opportunity.

In addition, in 2023, we made considerable progress on our international expansion efforts. We recently announced licensing agreements to sell PowerA accessories in Japan with both Nintendo and Sony. The Japanese market represents a significant gamer base for consoles and a growth opportunity for PowerA. Near term, the agreements will be small on a revenue basis, but we expect as we strengthen these partnerships, they will provide revenue growth long term. On a segment basis, we finished the year strong in our international segment, with revenue up 5% in 2023 on a comparable basis, led by the recovery of back-to-school sales in Latin America. In EMEA, the demand environment remained muted, reflecting the economic and inflationary pressures.

North America was also affected by the macroeconomic environment as retailers continued to manage inventory tightly and to POS, which was down. Our commercial channel sales were lower than anticipated because of the lack of white collar workers returning to end office work. Office occupancy rates have stabilized at 40% to 50% of pre-pandemic levels in the U.S. We do not expect tailwinds from a material improvement in office occupancy rates going forward. Now, I’d like to highlight the actions we are taking in 2024 as we reposition the company for long-term, sustainable, profitable growth. I have been in the CEO role for four months, and we are acting quickly to implement changes to reset our cost structure and expand our growth prospects. In late January, we announced a multiyear cost restructuring program targeting at least $60 million.

The program will simplify and delayer the company’s operating structure while reducing costs. We also accelerated work on our global footprint rationalization program, announcing the closure of our Sydney, New York manufacturing facility. In 2023, we announced a total of four facility closures and continued to review our footprint, with the goal of improving our profitability and asset utilization. Given our global scale, we are also identifying ways to better leverage our sourcing capabilities. We recently consolidated our supply chain to operate globally under one leader. This will reduce supply chain complexity, leverage best practices, deliver cost savings, and better meet our customers’ needs. As a result of our restructuring program, key business leaders will be closer to commercial activities.

This will allow them to engage with our customers more frequently and focus on opportunities to gain incremental market share, drive innovation, ideation, and execution of new and refreshed products, and channel expansion while supporting our category-leading brands. Additionally, our cost actions will provide important resources to invest and grow. We are looking to improve the cadence of new and refreshed product introductions. We see opportunities across our portfolio to bring new products to market, which will help reinvigorate our growth profile. There is a pipeline of projects to bring products to market that we are excited about. Before I turn the call over to Deb, I want to close by emphasizing how excited I am about the opportunity we have at ACCO Brands as we reposition the company for long-term, sustainable, profitable growth.

I am confident our actions will improve our potential for sales growth and strengthen our future profits and cash flows. Our portfolio is geographically diverse, with iconic brands that resonate with local consumers. We deliver unmatched customer service and sell our products in over 100 countries. Our products range from value to premium price points, which appeal to the vast needs of today’s consumers. This broad assortment allows our retail customers to win in key seasonal sets, which has strengthened these important relationships and made ACCO Brands a trusted supplier. Over the years, we have also reduced our dependence on commercial channels in mature market and have repositioned the company around key retailers. While we have expanded our portfolio beyond traditional commercial products, they remain an important part of the portfolio, generating significant cash flow to reinvest for future growth.

We have always been a consistent generator of strong free cash flow and will continue to prioritize dividend payments and reduce debt. Our balance sheet is strong, with no debt maturities until 2026 and low fixed interest rates on over half of our outstanding debt. Lastly, we have an experienced leadership team with a deep knowledge of the categories we compete in and strong customer relationships. They have the experience to execute on the actions we are taking and I am confident we will successfully position ACCO Brands to deliver long-term sustainable, profitable growth. I will now hand it over to Deb and we’ll come back to answer your questions. Deb?

Deborah O’Connor: Thank you, Tom and good morning, everyone. When we last spoke in November, we highlighted a slow demand environment due to the current macroeconomic backdrop. While this continued in the fourth quarter, we were able to report sales ahead of our outlook and we did benefit slightly from favorable foreign currency exchange. We continue to make great progress in recovering our lost margin from the extreme inflation that challenged the company’s margin profile in 2022. Our gross margin profile significantly improved in the fourth quarter and full year and we managed cost well, which allowed us to deliver adjusted EPS and cash flow above our outlook. I want to provide more detail on the cost reduction program. As Tom discussed earlier, the program is targeting at least $60 million in pre-tax annual savings at the completion of the programs in late 2026.

In the fourth quarter, we recognize restructuring charges of $21 million related to the program, largely in our North America segment. Total cash expenditures are expected to be $18 million in 2024. We expect to realize over $20 million of cost savings in 2024 specifically from this program. These savings will help offset merit and overall inflation, stabilizing profitability in a challenging sales environment. In 2025 and 2026, we expect a greater benefit to both profits and cash flows while positioning the company for growth. We are also moving from three operating segments to two, and will begin reporting under the New Americas and International segments, beginning with the first quarter of 2024. In addition, in the fourth quarter, we took a noncash goodwill impairment charge of $90 million.

The charge is reflected in our North America segment, which carries a significant amount of goodwill from previous acquisitions. It reflects the market challenges that have impacted the segment over the past few years. Now turning to sales. Reported sales in the fourth quarter of 2023 decreased 2.5% versus the prior year. Comparable sales, excluding foreign exchange, were down 5% versus the prior year. The sales decline was due to lower volumes in North America and EMEA more than offsetting global price increases and growth in the International segment. The declines largely reflect a more challenging macroeconomic environment especially relating to our computer accessories offering. Growth profit for the fourth quarter was $170 million, an increase of 17% despite lower sales, as growth margin improved 570 basis points from the cumulative effect of our pricing and cost reduction actions and moderating input costs.

Adjusted SG&A expense of $102 million was up from $93 million in the fourth quarter. Adjusted SG&A as a percent of sales increased to 20.8% due to the lower level of sale. Strong cost controls were more than offset by loading back in a normalized level of incentive compensation expense. Adjusted operating income for the fourth quarter was $68 million, up 31%, compared with the $52 million last year. Adjusted EPS was $0.39 per share versus $0.32 for share in 2022 as our growth in adjusted operating was somewhat offset by increases in interest and nonoperating pension expenses. Now let’s turn to our segment results. I will highlight the full year results as quarterly trends were similar throughout the course of the year. In North America, reported and comparable sales both declined 11% as volume declines more than offset a cumulative pricing action.

Sales for the full year were impacted by lower business and consumer demand. Much of a decline was related to our computer accessories offering as IT spending was constricted throughout the year, especially for PCs. Outside of computer accessories, the product category declines were less. Sales of our products were also challenged by a lower than anticipated return to office trend, and retailers continued to manage their inventory tightly, replenishing only to POS. In our gaming accessories category, demand was uneven throughout the year and saw a decline for the full year due to weaker consumer spending trends and increased competition. North America adjusted operating income margin for the full year, increased 160 basis points to 13.8% from the prior year with adjusted operating income growing 1% despite the sales decline.

The increase in both was due the cumulative effect of our pricing and cost actions. Now, let’s turn to EMEA. For the full year, reported sales declined 6% and comparable sales were down 7% due to volume declines. Lower sales of technology accessories were the main driver of the decline, largely due to weaker IT and gaming spend. Demand for our commercial products remain challenged due to the economic environment. EMEA’s adjusted operating income margin for the full year increased 500 basis points to 11.4% with adjusted operating income growing almost 70% for the full year. The improvement in adjusted operating income was due to our pricing and cost reduction actions as well as moderating input costs. Our pricing actions lagged the impact of extreme inflation last year, but this year we have successfully recovered most of our margins.

Moving to the International segment, for the full year reported sales increased 8% and comparable sales increased 5%. The growth in both reflects price increases and volume growth in Latin America as back-to-school continued its recovery. These were partially offset by reduced demand for technology accessories and lower overall demand due to weaker economies in Australia and Asia. For the full year, the international segment posted an adjusted operating margin of 17.1%, an increase of 130 basis points, an adjusted operating income of $68 million, an increase of 17%. The improvements were due to pricing and cost actions which more than offset higher go-to-market spending and increased people costs and incentive compensation. Switching to cash flow and balance sheet items, as we have previously discussed due to our seasonality, we generally use cash in the first half of the year and generate significant cash flow in the second half of the year.

In 2023, adjusted free cash flow was $118 million versus $78 million in 2022. The $40 million improvement was driven by improved working capital management as we lowered inventory by 17% and had lower prior year incentives payouts. We ended the quarter with a consolidated leverage ratio of 3.4x down from the 4.2x at the end of ‘22 and well below our 4.25x covenant ratio. Longer term, we are still targeting a ratio of 2x to 2.5x. At year end, we had $566 million of remaining availability on our $600 million Revolving Credit Facility. As shown on our earning slide, more than half of our debt is at a fixed interest rate of 4.25% and does not mature until 2029. We ended the year with total growth debt of $926 million, $88 million lower than the same time last year and our cash balance was $66 million.

Turning to 2024, we are anticipating softer sales given economic indications of muted consumer demand and the uncertainty of business spending. In addition, industry expectations for our back-to-school products are to be down modestly. While Tom spoke earlier about our expectation of an extended recovery in our Kensington-branded computer accessories, we also believe that PowerA will continue to recover at a choppier, slower pace. We expect demand for our gaming accessories to remain muted as consoles approach the end of their product life cycles. At the beginning of the year, we made decisions to optimize our product portfolio by exiting low-margin business and strategically reducing distribution in certain channels. These actions were primarily in their North American segments.

Our full year outlook cost for demand trends to improve in the second half of 2024 as the economic environment improves and technology spends rebounds. Therefore, we are providing an outlook of reported sales to be within a range of down 2% to down 5% for the full year. We do expect 2024 to be a reset year as we believe the actions we are currently undertaken when implemented will better position us to deliver longer-term growth. For the full year, we expect adjusted EPS to be comparable to 2023 and are guiding to a range of $1.7 to $1.11 per share. We expect full year growth margins to be flat to modestly improve compared to 2023. SG&A costs will be consistent or slightly down to the prior year as savings from our cost actions are somewhat offset by inflationary pressures related to labor and other costs.

The adjusted tax rate is expected to be approximately 29% in tangible amortization for the full year is estimated to be $42 million, which equates to approximately $0.30 of adjusted EPS. We expect our free cash flow to be at least $120 million after CapEx of $15 million. Looking at cash uses in 2024, we expect to continue to prioritize dividends and debt reduction and expect to end 2024 with a consolidated leverage ratio of approximately 3x to 3.2x. As typical, our first quarter has the lowest level of sales and EPS compared to the other quarters. There is also more sales variability in the first and second quarter given the timing of shipments for back-to-school. The portfolio optimization in North America that I discussed earlier will disproportionately impact the first and second quarters.

Therefore, we expect reported sales to be down 6.5% to down 8% in the first quarter. In addition, due to a change phasing of our incentive compensation expense, our SG&A will be higher in the first half of 2024 versus the prior year. While this change will reduce first half EPS, the difference will be made up entirely in the back half of the year. Our first quarter outlook is for adjusted EPS to be in a range of $0.01 to $0.04 per share. Now, let’s move on to Q &A, where Tom and I will be happy to take your questions. Operator?

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Q&A Session

Operator: [Operator Instructions] We have first question from Gregory Burns of Sidoti & Company.

Gregory Burns: Morning. With the goodwill impairment, was that tied to anyone acquisition in particular or was it just broad based across the portfolio of acquisitions you’ve done?

Deborah O’Connor: No, that’s right, Greg. It’s Deb. Hi. Thanks for joining. It was across the board. Really, we look at goodwill on a segment basis and the cash flows given some of the forecasting challenges that we’ve had just warranted that review. And once you get into it, unfortunately, our WAC was higher given interest rates and things like that, but it’s broad based.

Gregory Burns: Okay. And then when you look at the outlook for technology spending, what gives you confidence that you see it either stabilize or rebound as we go into the back half of this year? Are you seeing anything in particular that gives you confidence in that view?

Tom Tedford : Yes, Greg, good morning. This is Tom. Let me give you a couple of insights or points of insights that may help address that question. So first of all, yes, we are starting to see some signs of life within parts of our technology accessories business. So that’s the first reason for optimism. Number two, right, we’re cycling through a fairly significant dip in a historically consistent industry, right. The laptop PC industry has historically been kind of a 3 to 5% CAGR business, and we saw that dip pretty significantly. So history would tell we, that it will return and rebound. In addition, you have AI computing, Windows 11, you have a number of different other developments that are going to require new deployments of PCs in the near term. So a number of different factors give us confidence that it will return. We are being cautious in our view, and we think it likely is a late 2024 story before we get into more robust spend.

Gregory Burns: How much is that business down for the peak, maybe in absolute dollars if you give it or percentage -wise?

Deborah O’Connor: Yes, are you speaking to the computer accessories specifically, Greg?

Gregory Burns: Yes, Kensington.

Deborah O’Connor: Yes, we’re down a good double digit in that category over the last year.

Gregory Burns: Okay, and then on the gaming side, what’s the nature of your partnership with Epic? Is it a global licensing agreement? Is it North America-specific? Can you just give us some more details there? And then when you look at the growth potential for PowerA, how much of that business is levered to the switch? I think there’s a new switch coming out from Nintendo, and maybe also we’re starting about three years past the pandemic now. Is there a potential replacement cycle with some of those that bubble of pandemic activity that happened a few years ago? Thank you.

Tom Tedford : Sure. So, first, let me take the Fortnite question. It is a global license we just announced it. So we’re in the early stages of commercializing it in the markets in which we compete in. And then in terms of gaming in general, it is fairly cyclical, and it is tied to console launches. And our business is tied disproportionately to Xbox and Nintendo, Microsoft and Nintendo. We have not heard definitively when new console releases will hit the market, so it’s difficult for us to comment specifically. But we do see rebounds, nice rebounds, and attach rates when new consoles are introduced. And so that is definitely an opportunity for us to expand sales when those consoles hit the market. So, we’re excited about that. We keep a close eye on it, but we don’t have any insights definitively as to when the [inaudible] or Xbox and Nintendo will drop new consoles.

Operator: We now have Joseph Gomes of NOBLE Capital.

Joseph Gomes: Good morning. Thanks for taking my questions. Just wanted to see if you could dive in a little bit more detail into what drove the better than expected fourth quarter top line?

Deborah O’Connor: Sure. I think we saw a little bit of demand moderating in the fourth quarter throughout the organization. And I think as we look to the future, or hopefully that continues, as we talk about the first and second quarter being a little bit more pressured, but kind of longer term in the year, reflecting more like that fourth quarter.

Joseph Gomes: Okay, and have you seen any significant or material switch to the generic products from branded?

Tom Tedford : Joe, this is Tom, so thank you for the question. We watch market shares across all of our key categories quite closely, and we haven’t seen any significant or material shifts in trend and market share. So that is something we pay very close attention to, and candidly it’s a big focus of ours in 2024 and beyond, is to take market share in each of our categories. But to answer the question specifically, we haven’t seen a material shift or change in trend in market shares in these uncertain economic times. Our brands have held up quite well.

Joseph Gomes: Okay, great. One last one for me, I get back in queue. In the release, you talked about exiting low margin businesses. Again, I’m wondering if you could give us a little more color on what specifically are you exiting?

Tom Tedford : Yes, another solid question, Joe, and thank you. So the concentration of those business exits is predominantly in our U.S. business, and there is a range that we have exited globally, and I’ll talk about that in a moment. But it’s predominantly private-label business, and it’s predominantly around the back-to-school season, so it’s disproportionately impacting us in the first half of the year, as Deb mentioned earlier. While we’re exiting those businesses, it frees up, frankly capacity of our marketing team and our sales team to focus on more value-added revenue streams, and frankly, it’s going to impact our gross margin in a positive way. So we view that net as a positive development, even though it does impact the top line in the short term.

And then specifically to global product exits, we have exited certain products within our wellness category. And that was a category that was really impacted by the pandemic where we saw a number of competitors, mostly from Asia, come into the market and really drive down the price points into the category that we just believe were unsustainable for us. And so we made a tough decision, but we believe the right business decision to exit certain categories in the wellness space globally. So those are the two primary drivers that impact that piece of the conversation. And we think they both better position us long term.

Operator: We now have William Reuter from Bank of America.

William Reuter : Good morning. So firstly, you mentioned some increased competition in terms of gaming accessories. What’s going on there? Is it new entrance who are producing products that are competing with your own or are the branded manufacturers making additional products that are somehow in competition with yours?

Tom Tedford : Yes, Bill, thank you for the question. So it’s a bit of both. It is some existing competitors getting a bit more aggressive in certain channels and with certain customers in certain markets. And it is some new entrance into certain markets. They’re not new into the category globally, but they’ve entered into new countries as they’ve expanded their efforts. And so it’s a combination of both of those factors that we are dealing with in the category at the moment.

William Reuter : Is the new competition that is not necessarily the branded guys, but more like yourself, are they introducing products that have greater functionality, or are they trying to either introduce lower list prices, are they being more promotional? What is their strategy?

Tom Tedford : Yes, it’s really driven on promotions and some pricing actions to take peg space in retail. We’re not seeing globally new entrants into the competitive set. However, we are seeing some competitors act differently as they are likely trying to move through excess inventory and gain market share in a declining cycle of the category. So we have good plans in place. We think we’re well positioned long term with our retail partners. We think our products add more value to the gaming experience. We think we’re a better value for all of the consumers who choose PowerA. So we think we’re well positioned long term, but we have seen some things that are a little bit different than what we’ve seen historically in the last 12 months.

William Reuter : Okay. And then on the traditional office products or computer accessories business is, how were POS in those categories in the fourth quarter? And if you could talk about how inventory levels are at retail due to the selling sales, are they working to reduce their inventory such that your sell-in is actually below sell-through? How do those two compares?

Tom Tedford : Okay. Yes. It’s a good question though. So POS, as Deb mentioned earlier, moderated a bit in Q4, which was an encouraging development for the business. And I think that was reflected in our sales performance. We saw kind of mixed POS depending on the category, which isn’t inconsistent with what we typically see, but we did see improvement in trends and a number of key business categories for us. The POS being down is reflected in our current inventory positions with our key customers. We track that information fairly closely, particularly here in the U.S. and our weeks of supply are pretty consistent year-over-year. However they are buying to POS with POS being down, obviously purchases are down as well.

Operator: And we have the next question from Hale Holden of Barclays.

Hale Holden: Hey, good morning. Tom, that was a pretty full-throated kind of embrace of innovation. So I was wondering if you could give us some categories that you guys were focused on or how much you thought new products could move the needle?

Tom Tedford : Yes, Hale, it is a big emphasis of our senior leadership team at ACCO Brands leaning in more heavily than we have historically into product development and new product innovation. We see opportunities for growth really in the entire portfolio. Now, the strategies that we’re going to deploy are going to be a bit different in categories that have some specular headwinds. It’s going to be about market share gains. And so what can we do? What can we introduce to better position us to take market share. And then in certain categories, obviously, we’re going to follow form factor changes in computer accessories. For example, we’ll follow console development and gaming, but we will lean in across each of them and not the same, right?

We’ll disproportionately distort resources and investments to where we believe the highest growth opportunities reside. So in the near term, we’re clearly focused on computer accessories and gaming accessories. Those businesses provide us the long-term growth opportunities and with the reset that we’ve seen in the marketplace provide opportunities for us to lean in with some product options for consumers and businesses. That doesn’t mean the rest of the portfolio will be starved. We’ll absolutely invest in other categories, but those two categories will get distorted investments compared to others.

Hale Holden: Great. Thank you. And then, Deb, can you, I guess, give us a sense of the dollar shift between first half and second half on incentive comp? Is that stock-based comp or cash comp that’s coming out of SG&A in terms of the swing?

Deborah O’Connor: Sure. Yes, it’s the swing. I mean, we had a half year plan historically that we aren’t having anymore, and so our whole way of looking at it and incentive comp kind of takes us back to how most companies do it, which is the pro rata way. And it’s probably a couple a cent shifts out of the first half into the second.

Operator: We have had no further questions, so I’d like to hand it back to Tom Tedford for any final remarks.

Tom Tedford : Thank you for your interest in ACCO Brands. We look forward to talking to you in a couple of months to report on our first quarter results.

Operator: Thank you for joining. I can confirm that does conclude today’s ACCO Brands fourth quarter and full year 2023 earnings conference call. You may now disconnect your lines. And please enjoy the rest of your day.