Lauren Lieberman: Great. Thanks. Good morning. I know we’ve covered a lot of ground, but I was hoping you could just touch on the improved cash flow outlook for the year. It was a pretty material change and exciting. So I’m just wondering if you could talk a little bit about the key drivers on that uptick in outlook. Thanks.
Garth Hankinson: Yeah, thanks, Lauren. So there’s obviously a few drivers of the change in cash flow. And obviously I think that seeing the increase in cash flow just goes to further evidence the very disciplined approach we take to managing the cash of the company. Obviously, some of the drivers there will include things like the increase in beer margin, or I should say beer operating income that Bill referenced in his remarks. There, obviously will be some favorability in the taxes that I referenced in my remarks as well as some other favorability on things like tax rates there — taxes and things of that nature. But those are the primary drivers.
Operator: Thank you. Our next question comes from the line of Filippo Falorni with Citi. Please proceed with your question.
Filippo Falorni: Hey, good morning guys and Happy New Year. I want to go back to the on-premise channel for the Beer business. I think Garth mentioned we grew about 1% in the quarter. I was wondering if there’s any more to recover from the keg issue that you guys had. And then if you think about next fiscal year, we talked a lot about the opportunity to gain share in off-premise, but can you comment on your ability to gain tap handles and gain more distribution in the on-premise channel as well? Thank you.
Bill Newlands: Yeah, you bet. As we said, we had some temporary impact around kegs, which was largely in Q2 of this year. But I think it is important to point out that last year, both Modelo Especial and Pacifico were the number one and number two share gainers in draft despite some of those temporary issues. Remains a great opportunity for us when you think about it. I mean, let’s use an example. Modelo Especial is number five on draft, but is the number one beer by dollars in this country. But it’s certainly — it’s not number one in the on-premise at this point. Again, a great opportunity. So interestingly, Corona Extra is the number one packaged beer on premise but again still having opportunity in the draft side. So we continue to think the draft is going to be an opportunity for us as one of the growth drivers for us going forward.
And, Pacifico is a great example, even though it was the number two gainer, when you see just the real acceleration you have in that brand, I think there remains opportunities for both Modelo Especial and Pacifico in particular in the on-premise. And I certainly would hope to see both of those brands maintaining their number one share gainer status as we get into this calendar year.
Operator: Thank you. Our next question comes from the line of Gerald Pascarelli with Wedbush. Please proceed with your question.
Gerald Pascarelli: Great. Thanks very much for the question. Just had a question on your measured versus non-measured channels within beer. So if we look at Nielsen, your price mix is moderated at retail. It looks to be currently running right in line with the midpoint of your 1% to 2% target. So if we compare this to non-measured channels, just curious if you’ve seen any near-term moderation in pricing. And if not, would you maybe expect trends to become a little more aligned as we look out over the near term? Thank you.
Bill Newlands: I think by and large the answer to your question is yes, that those are usually reflective. We don’t see a lot of variation amongst channels on that particular thing. Although, you do have some very big markets that are not generally covered by some of those tracked channels, New York being an interesting one. So you do see some variation from time to time, but we don’t expect that to be significant moving forward about what the tracked versus what the non-tracked channels look like.
Garth Hankinson: And the moderation that you referenced is really just attributable to the lapping of the incremental pricing that we took control of last year.
Bill Newlands: Absolutely.
Operator: Thank you. Our next question comes from the line of Peter Grom with UBS. Please proceed with your question.
Peter Grom: Thanks, operator, and good morning, everyone. Hope you’re doing well. So, Garth, I may have missed this, but is the expectation still for beer depletions and shipments to be roughly equal for the year? And then I think it was mentioned that shipments in the fourth quarter would be around 20% to 21% of full year shipments. Is that quarterly mix similar for depletions as well? Just, we’ve seen a lot of changes in quarterly mix over the past few years that have resulted in differences in growth rates between depletions and shipments. So just trying to understand how we should think about it specifically for the fourth quarter. Thanks.
Garth Hankinson: Yeah, so shipments and depletions, yes, those should be largely in line with one another for a full year. That’s consistent with how we operate the business every year. And from a Q4 timing as it relates to shipments and depletions, yes, both of those are in that 20% to 21% range that Bill referenced earlier.
Operator: Thank you. Our next question comes from the line of Andrew Strelzik with BMO. Please proceed with your question.
Andrew Strelzik: Great. Thanks for taking the question. Mine’s about the competitive and promotional environment in beer. You’ve talked about your expectations on shelf space gains in the spring, the wider spread between light and premium beer and even some of the pricing dynamics in wine. So just curious, then what you’re seeing across the competitive set now, how you’re expecting that to evolve as the year progresses next year and maybe any plans or programs or levers should the environment intensify? Thanks.
Bill Newlands: Certainly. We expect the promotional environment to be fairly consistent with what it usually is. We don’t think there’s going to be any radical changes around that topic. I think a lot of it goes back to what we’ve often said, which is the velocities that we have on our brands are superb. And obviously at the end of the day, the retail environment is very interested in having brands focused on those that deliver outstanding velocities and sales per point of distribution. We shared at our Investor Day that our sales per point of distribution is radically better than the competition, And I think that’s going to continue to serve us well, especially when you consider the strong brand loyalty that we have with consumers. As we’ve also said on numerous occasions, our judicious 1% to 2% pricing actions, we don’t pull back on our pricing in the marketplace, which I think is important also. So when we make those commitments to 1% to 2%, that’s what we deliver.
