Energizer (ENR) Q2 2026 Earnings Transcript

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DATE

Tuesday, May 5, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Mark LaVigne
• Executive Vice President and Chief Financial Officer — John Drabik

TAKEAWAYS

• Organic Net Sales -- Expected to be flat for the year, reflecting a "cautious consumer."
• EPS Guidance -- Management stated they "expect to deliver the high end of our fiscal 2026 earnings outlook."
• Tariff-Related Refund Receivable -- Recorded a $65 million receivable; $48 million recognized in the current quarter P&L, with the remainder to "flush through" in Q3.
• Tariff Credits Run Rate -- Production credits from U.S.-made inventory are projected to be about 10%-15% lower than originally planned this year due to flushing foreign sourced product through inventory.
• Gross Margin Outlook -- Guided to a “gross margin rate kind of in the low 40s” by fiscal year-end, with Q4 margins expected to reflect a normalized $15 million quarterly tariff impact and no further offsets.
• Free Cash Flow (Last 3 Years) -- Cumulative $740 million generated, used to reduce debt and fund dividends and share repurchases.
• Auto Care Segment Outlook -- Now expected to be "roughly flat for the year" instead of achieving mild growth, citing heightened consumer caution.
• Batteries Segment – U.S. Category -- Saw volume and value growth, aided by winter storms; replenishment orders lower than typical due to "tighter retailer inventory management."
• Middle East Sales Impact -- Region contributed about 1% of revenue; in the quarter, shipments delays in Battery and Auto caused a "50 basis point drag to our top line," considered a timing issue.
• Distribution Gains -- Armor All Podium Series expanded from 15,000 to 25,000 retail locations year over year.
• Global Market Share -- "We grew share globally. We grew share in the U.S.," per management, at the aggregate level.
• Promotional Activity -- Frequency of promotions is "increasing" in battery category amid cautious consumer posture, but "the depth is staying about the same."
• Private Label Dynamics -- Private label batteries are "gaining a little bit of share," but the company reported recent distribution wins at retailers by leveraging value brands like Rayovac and Eveready instead of private label replacements.
• Project Momentum -- Management cited the initiative as central to reshaping the cost base, strengthening supply chain, and improving working capital efficiency over the last three years.
• Innovation Highlights -- Recent launches include Energizer Ultimate Child Shield and ongoing growth of the Armor All Podium Series in Auto Care.

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RISKS

• Management adjusted full-year sales guidance “just a touch” citing a more cautious consumer outlook than anticipated entering November.
• Tariff credits expected to be “about 10% to 15% lower than we originally planned,” for the year due to flushing more foreign sourced product through inventory.
• Auto Care segment revised from mild growth to “roughly flat for the year,” attributed to “a bit of a softer start reflecting this consumer environment.”
• Shipments to the Middle East caused a “50 basis point drag to our top line,” though recovery is expected to be a timing issue.

SUMMARY

Management affirmed a disciplined strategic focus on restoring growth and margins, supported by supply chain optimization, pricing, and innovation across categories. The third quarter is projected as a potential inflection point for organic net sales, driven by stable category trends, expanded distribution, and the continued integration of the APS business. The $65 million tariff-related refund, partially recognized this quarter, materially impacts fiscal 2026 results but is not expected to alter underlying cash flow this year due to its status as a long-term receivable. Management pointed to effective cost controls and Project Momentum initiatives as central drivers of multi-year margin expansion and cumulative $740 million in free cash flow. Ongoing promotional frequency in the U.S. battery category and increased consumer sensitivity are being actively addressed by leveraging brand and channel diversity.

• The administrative process for tariff refunds remains uncertain in timing, with management stating "the right to recover is not in question, but the process and the timing is a little open."
• Pricing strategies in recent years were not materially based on IEEPA tariff impacts, suggesting current refund recognition does not necessitate pricing rollbacks.
• Management is leveraging its portfolio flexibility and supply network to offset inflationary headwinds and to adapt quickly to evolving demand patterns.
• Recent international battery sales showed a lagged pattern, with some softness trailing behind U.S. trends by "a quarter or 2."
• The company highlighted its ability to win new placements for value brands in accounts that otherwise would have pursued private label offerings, capitalizing on retailers' desire for branded alternatives in a cautious spending environment.

INDUSTRY GLOSSARY

• Project Momentum: Energizer (NYSE:ENR)'s multiyear operational initiative targeting cost structure, supply chain optimization, and working capital improvements.
• IEEPA Tariffs: Tariffs imposed under the International Emergency Economic Powers Act; relevant for determining import cost recovery and related refund eligibility.
• APS Integration: Refers to integration of the Auto Care Products and Solutions business acquired or merged by Energizer Holdings.

Full Conference Call Transcript

Mark LaVigne, President and Chief Executive Officer; and John Drabik, Executive Vice President and Chief Financial Officer. In just a moment, Mark will share a few opening comments, and then we'll take your questions. A replay of this call will be available on the Investor Relations section of our website, energizerholdings.com. In addition, please note that our earnings release, prepared remarks and a slide deck are also posted on our website. During the call, we will make forward-looking statements about the company's future business and financial performance, among other matters. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these statements.

We do not undertake to update these forward-looking statements. Other factors that could cause actual results to differ materially from these statements are included in reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed on this call relates to the categories where we compete and is based on Energizer's internal data, data from industry analysis and estimates we believe to be reasonable. The Battery category information includes both brick-and-mortar and e-commerce retail sales.

Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year and all comparisons to prior year relate to the same period in fiscal 2025. With that, I would like to turn the call over to Mark.

Mark LaVigne: Good morning, and thanks for joining us today. As in prior quarters, we posted prepared remarks on our website that provide a detailed review of our second quarter performance and our outlook, but I wanted to begin with a few brief comments. As we move through fiscal 2026, our strategic priorities remain clear and consistent, restoring growth, rebuilding margins impacted by tariffs and returning the business to its long-term historical cash flow profile. The second quarter marked an important step forward as disciplined execution across pricing, supply chain optimization and an improved cost structure produced tangible results.

During the quarter, tariff-related developments provided an incremental benefit, further supporting our ability to restore margins while still reinvesting in the business to drive sustainable top and bottom line growth. The building blocks for a return to growth are in place. We expect the third quarter to mark an inflection in organic net sales, supported by stable category dynamics, higher quality distribution across our portfolio, continued progress on the APS integration and strong innovation. Innovation remains a core pillar of our strategy, as highlighted by the recent launch of Energizer Ultimate Child Shield. In Auto Care, growing distribution of the Armor All Podium Series, together with continued innovation across the portfolio is enhancing the business' long-term earnings and growth potential.

Stepping back, performance in the first half of fiscal 2026 was largely consistent with our expectations and reflected a transition that will be followed by a second half with organic sales growth and profitability continuing to benefit from announced and accepted pricing and ongoing supply chain initiatives. As a result, we expect to deliver the high end of our fiscal 2026 earnings outlook. Thank you for your continued confidence in Energizer. And with that, let's open the call for questions.

Operator: [Operator Instructions] And your first question comes from the line of Peter Grom of UBS.

Peter Grom: I was just hoping to get some perspective on the guidance for the year. Can you maybe just give us a sense for how FY '26 is playing out relative to your expectations? And I ask this just more in context of moving to the high end of the range, but that now incorporates a tailwind related to tariff refunds, which would suggest pressure in other areas. And then I guess my second question, you have this slide that really shows the multiyear progress of the business despite all the external volatility. How does this inform your view on the path forward? And maybe specifically, where do we go from here as we look out to '27?

Mark LaVigne: Peter, I'll kick off, and let's start with the '26 first, and I'll cover a little bit, John will cover a little bit, and then maybe I can come back on the longer-term view. Look, I would say there's been a lot of moving pieces in fiscal '26. It is on track to be a successful year for Energizer. Our goals going into the year were to restore growth, rebuild margins and restore free cash flow. We've had nice success against all 3. When you think about it on a top line perspective, the first half and the back half are playing out largely as we expected.

We knew the first half we're going to have organic declines, and we still expect growth in Q3 and Q4. The growth in the back half of the year is really driven by the integration of the APS business. Some exciting new innovation that we're launching, new distribution that we've been able to achieve as well as a little bit of pricing. Those are in place. Those are known decisions. So that should drive the organic growth as we get into Q3 and Q4. We are tempering a bit in terms of the macro outlook.

So we did bring down our overall call for Q3 and Q4 just a touch because we do see a little bit more of a cautious consumer than maybe what we anticipated going into November. On the margins, we've done a lot of work on the network on our cost structure. We obviously have the benefit from the tariff recovery as well. So all in all, I think it's been a successful year so far. We're set up for success as we get into the back half of the year, and that's where the delivery at the high end of the earnings range is despite some of the headwinds that I just talked about.

And John can maybe put a little finer point on some of the puts and takes as it relates to the tariffs.

John Drabik: Yes. Well, I probably would just maybe a couple of numbers on that, Mark. So on the top line, we're calling top line kind of organic flat. And that's what you just talked about reflecting that cautious consumer. I think there's a corresponding gross profit impact. So that's one of the items that we're calling out in the back half of the year. We also -- we're benefiting from these production credits. We get those credits on product that we make in the U.S. and sell anywhere. We still have some foreign sourced product in our inventory, and we're going to flush more of that through than we originally planned.

So those credits will probably in '26 be about 10% to 15% lower than we originally planned, but that doesn't change kind of the run rate of what we expect from those credits over time. But it will be a bit of an impact in the back half of '26. And then to Mark's point, what we're going to continue to reinvest for future growth? And I'd say that's in some of the innovation, e-comm and consumer engagement throughout the rest of the year. So that's really what you're kind of seeing on the back half, a bit more on the number side.

Mark LaVigne: And Peter, on the -- in your question in terms of the longer term, we did put the slides in the earnings slides that we posted today because we really wanted to zoom out and take a look at how the business has performed over the last 3 years. I know you all get frustrated at the amount of seismic changes that seems to occur with the different factors that are driving our business with tariffs, production credits, [indiscernible] tariff refunds.

But when you take a step back and looking at how we've operated through the COVID disruption, historic inflation, the tariff pressure and through all that volatility, we stayed disciplined on the financial algorithm, which is centered on growth, margin expansion and free cash flow. When you look at the longer-term slides, I mean, the results speak to the resilience of what we've been able to do. And over that time period, we've maintained stable net sales while expanding our share. We've improved gross margins by about 360 basis points, and we've delivered consistent growth in both adjusted EBITDA and adjusted earnings per share. And that wasn't driven by tailwinds.

That was really driven by really solid execution in the organization and structural changes that we've been able to make as all of those events were occurring. Free cash flow has been a critical proof point. Over the last 3 years, we've generated $740 million of cumulative free cash flow, which has allowed us to reduce debt and return capital through dividends and share repo. Project Momentum, which you've all heard a lot about has been central to all of that. It reshaped the cost base. It strengthened the supply chain and improved working capital efficiency.

So I think when you take a step back and you look at that longer-term horizon, the takeaway is that even in a highly volatile environment, which we're still in, we have the ability to drive this business and deliver solid financial performance and disciplined capital deployment. And so it was that overall track record, which gives us confidence that we're going to build on that as we finish out '26, and we think we're set up to do just that, and that's reflected in the outlook that we provided today by taking the earnings to the high end of the range. Anything else, Peter?

Peter Grom: No. That was super helpful.

Operator: And your next [indiscernible] comes [indiscernible] Dara Mohsenian of Morgan Stanley.

Dara Mohsenian: Maybe just to build on that, the weaker consumer you touched on and pulling down the full year top line guidance to account for that. Can you give us a bit more detail there? Auto Care, you mentioned the weaker start to the peak season. What's driving that? Is that just the consumer volatility around macros we see here? Or are there other factors there? Do you expect that to linger? And how do you think your own business is positioned just from a market share and innovation standpoint heading into the full peak season? And then just on the Battery side, are you seeing anything in the U.S. or Europe from a consumer standpoint in terms of demand impacts?

And also just help us understand any impact from the Middle East and how you guys are thinking about that going forward?

Mark LaVigne: Thanks, Dara. Let me get started. A lot of questions in there. So let me answer them and then maybe as a follow-up, you can tell me where we fell short in terms of answer. Let's start with just the consumer generally. We've said it before, you've heard it from a number of our peers. They are certainly in a cautious position. They're seeking value. They are willing to switch channels, retailers, brands, pack sizes to get what they want. We are committed to meeting consumers where they are.

And we're best positioned in both of our categories in Batteries and Auto Care better than any of our competitors because of our broad portfolio of brands and offerings that we have. We're confident we can win regardless of the environment. We have a broad distribution footprint. We have multiple brands, including value brands, which we've been able to leverage to meet consumers as well as the best innovation in our categories. So in terms of controlling what we can on that front, I think we're doing an excellent job. Now let's turn to some of the category specifics on Auto Care, for example, we're just entering peak season now. A slightly colder start to the peak season.

I don't think it's anything to be unduly worried about. We continue to see the high-end consumer engage in the category. Our Podium Series launch was very timely. We've expanded that offering this year. We've expanded from 15,000 retail locations to 25,000. So from -- [indiscernible] able to capture the growth there, I think we're on solid footing. Some mainstream consumers, again, this is where the caution probably is a little more heightened than it is at the higher end. They're starting to opt out, starting to delay, starting to engage in some other habits. Some of them are switching from do-it-for-me to do-it-yourself, which is a natural offset to that. We have the portfolio to win in Auto Care.

I think we're calling for the Auto Care business to be roughly flat for the year instead of maybe some mild growth, which we thought it was going to be before. It's not a big call down. I think we're just reflecting the overall cautious consumer environment. Let me switch to Batteries, which is obviously the biggest business we have. The category in the last 13 weeks in the U.S. has been strong. You've seen volume growth. You've seen value growth. It was driven in part by some of the winter storm that you saw. That was offset in terms of our sales by a little bit of tighter retailer inventory management.

So we didn't see as much of a flow-through from replenishment as we typically would in storms, but still a net very positive benefit to the category. Globally, you're seeing similar dynamics. You're seeing volume and value growth. What I would say in that is in some of the international modern markets, they're trailing a little bit of the dynamic of what you saw in the U.S. by maybe a quarter or 2. So you're seeing a little bit of softness there that you saw in the U.S. maybe 6 months ago. But all in all, I think it is a healthy category.

I do think as we look ahead and we see higher gas prices and we continue to see the impact on the consumer that we thought it was prudent to inject some caution in our forward look in terms of what we thought out of the consumer going forward. But both of our categories are stable. We expect to continue to drive growth. It's just not going to be as high as we thought it would be maybe 6 months ago. Let me stop there and see if -- where you want to take that, Dara.

Dara Mohsenian: That's very helpful. And I guess it sounds like Auto Care, a bit of a softer start reflecting this consumer environment, just given the Middle East situation, any changes in April versus March or it's more sort of the environment you're seeing generally externally and that softer start in Auto in fiscal Q2?

Mark LaVigne: Auto is going to be very weather dependent. So you did see a pickup as you got further along into April. So you saw some momentum in a positive direction with Auto Care. I still think you want to make sure that you play that season out. I also think on the Middle East, there was a question of how big of an impact that is. John?

John Drabik: Yes. So Middle East for us is about 1% of our revenue. In the quarter, we had some shipments of finished goods on both Battery and Auto side that were held up. It was about a 50 basis point drag to our top line. So we've got a team working on alternative routes. We think we're still going to get the majority of that back into those markets, but it's more of a timing issue at this point. But obviously, we'll continue to watch that area closely.

Operator: And your next question comes from the line of Rob Ottenstein of Evercore Partners.

Robert Ottenstein: I was wondering if you could comment a little bit more on the Battery side in terms of your share trends and in particular, by channel, if there are different trends by channel? And then given some of your concerns on the consumer, do you think that the industry is going to get -- start getting a bit more promotional as the year goes? And how do you plan on combating that?

Mark LaVigne: Sure, Robert. I think on the share side, let me -- I want to speak at a macro level and not get into individual retail share or even channel share. But what I would say is we grew share globally. We grew share in the U.S. So our share position continues to be strong. In terms of what I would expect from a category standpoint, I do think when you're dealing with cautious consumers, there is a tendency to have slightly more promotion. I think you're seeing that play out in the category. I think the frequency is increasing, but the depth is staying about the same.

So you're going to see slightly more promotions than what maybe you would typically see. But all that is for us is the sign of investing to stay consumers connected with the category. As long as we can do that in a way that still drives the gross margin improvement, that's really the calibrating factor here. I think it's a wise investment in this environment to promote a little bit to stay connected to those consumers and still continue to engage with them in a way that creates long-term benefits to your business. And we're doing it in a way that still allows us to improve gross margin in the way we've talked about throughout the year.

Operator: Your next question comes from the line of Andrea Teixeira, JPMorgan.

Andrea Teixeira: I was just hoping to see the 480 basis points that you had as a help for the quarter. It has obviously other quarters in from the tariff refund. How much it was in this quarter or the second quarter fiscal, just to think about like how the normalized gross margin would be? And then related to that also, I know commodities, even though you have some important commodities, but they don't represent a lot. But just thinking how we should be thinking -- I think transportation is part of your COGS, but you have a quite valuable cargo like for the weight of it.

So just thinking how to think in your outlook, how we incorporate it and if you can pinpoint the amount that you're incorporating for the headwind in commodities and transportation. And then as I'm sure you know, all the other HPC names kind of called out some impact already in the outlook. I know it might be more kind of like a fiscal '27 conversation, but then if you can give us like a little bit of a normalized margin going forward, that would be great. And then on the Battery side, the category, as you said, like it's improving over the last few quarters.

Just thinking of how like Amazon sales have been trending and private label, as it sounds like consumers may be a bit more cautious, but by the same token, you had a very good job kind of creating that premiumization factor, the new packaging. So how to think about like your value share against private label and how they would pass through these cost pressures as you hear what you see in the trade?

Mark LaVigne: All right. Andrea, you win for squeezing in the most topics [indiscernible] questions. Let me -- let's get started, and I'm sure we're going to have to double back on some of that. But let me start with a little bit on '27. Like it's just too early for us to call anything related to fiscal '27, as you can appreciate. Things are changing in a relatively rapid way. We're going to approach it -- but take a step back, we are seeing what's happening in terms of any volatility related to our business.

We're going to approach it the way we have the last 3 years, which is part of why we included those slides in the deck we did today. We're going to work to offset any inflationary pressures that we're feeling with cost initiatives. We're going to leverage the flexibility that we've built into our network over the last 3 years. And then obviously, we'll take a look at pricing as it might become required because of those. Too early to call '27. I think for purposes of '26, we're largely locked. And so any of the margins that we're talking about today have largely reflected any input cost variation that we've experienced over the course of this year.

In terms of the Battery category question in terms of private label, private label, again, I think as would be expected in this environment is gaining a little bit of share. It is isolated at fewer retailers. It's not broad-based. Our portfolio gives us an advantage, and we certainly are having a lot of success leveraging our value brands so that we can meet consumers where they are, including Rayovac and Eveready. And we've had some nice distribution wins over the last couple of quarters where we are successfully leveraging the value brands in lieu of private label with certain retailers to be able to capture that demand. And I think we're having great success.

And I think the categories where we are doing that with our retailers are benefiting from that. And as a result, we're going to continue to lean in. Private label will always have a role in the category. It's something that we don't take lightly, and we make sure that we invest to keep consumers invested with brands.

John Drabik: Let me shoehorn a couple of answers into that, Mark. So going back to the tariffs and kind of what a normal run rate is. Andrea, we continue to incur tariffs at roughly a consistent rate with how we entered the year. So that's something like $15 million a quarter based on what we know right now or $60 million on a yearly basis. Obviously, a lot of moving ins and outs through the first 3 quarters this year. I think what we would point to is fourth quarter should be relatively clean. It should be kind of that $15 million tariff hit with no offsets from any sort of receivables, any of those credits.

So as we kind of get to the end of the year, we think it's much more normalized, and we're looking at a gross margin rate kind of in the low 40s at that point. So we think we've been able to, at least for this year, feel really good about getting a lot of those inefficiencies out, kind of normalizing the tariffs, pulling the levers that we can and getting back to a nice gross margin run rate at the end of the year.

Andrea Teixeira: Yes. No, I just like -- just specifically the $48 million that you have as a credit, how much it was the second quarter itself of the $48 million?

Mark LaVigne: Yes. So we actually booked a receivable for $65 million. We're getting about 75% of that coming into the P&L in the second quarter, which is that $48 million or so. And then the rest of it will flush through most likely. We've written down inventory, and that will flush through the P&L in Q3.

Operator: And your next question comes from the line of Brian McNamara of Canaccord.

Brian McNamara: I think we touched a little bit on part of the question I wanted to ask here. But more broadly, I think you guys are the first company, at least that I cover that has received tariff refunds. So would you expect some of the tariff-related pricing you've taken to be subsequently clawed back given this dynamic?

Mark LaVigne: So let me clarify there, Brian. We have not gotten any refunds yet. We're booking a receivable. It's a long-term receivable. So our view is that our portfolio of IEEPA tariffs was relatively clean. You had the Supreme Court ruling based on everything that we understand around the process, we feel like we are in good shape to go get this money back. So realizability is not in question. It's really just a matter of process and timing. So we are booking the receivable. We're not changing our cash flow outlook for the year. Again, it's a longer-term receivable. So we would expect to get that sometime out into the future, the actual cash back.

And Brian, I mean, we'll constantly have pricing discussions with our retailers. But just to level set, when you go back to last year, the vast majority of the pricing we took last year were -- it was before the IEEPA tariffs were put in place. And so we didn't then double back and take additional rounds of pricing as IEEPA came into place. So there wasn't a pricing justification based on IEEPA as we went through the pricing discussions.

John Drabik: I would point that you would see that in our gross margins that we generated in Q4, Q1 this year and would have been in Q2 that those IEEPA tariffs really were not offset by pricing.

Brian McNamara: Okay. Great. And then secondly, on Consumer Health, can you opine kind of what you've observed from higher tax refunds, obviously, in the season and then any notable detriment from higher gas prices? Were they a net positive, neutral or negative as you see it?

Mark LaVigne: I would say the consumer tends to just continue to be in a cautious posture. I think that maybe the increased tax refund that consumers are seeing is bolstering them a little bit. A lot of that is likely the way at the price of fuel that they're having to pay today. So I don't think that the consumer has moved in a meaningful direction because of tax refunds or necessarily because of the price of gas. I think they've offset each other. But I still think the longer the consumer continues to be in that cautious posture, the more likely it is they're going to start to engage in different behaviors or change their spending habits.

And so it's a duration issue as well for the consumer. So they're hanging in there. They're resilient. They're still spending money, but they are willing to change behaviors and they're seeking value in order to get what they need. And that's what I mentioned earlier, which is they'll switch channels, retailers, brands, pack sizes in order to meet the needs that they have.

Operator: And your next question comes from the line of William of Bank of America.

William Reuter: I just have 2. The first one, the guidance, does that now include not only the $48 million credit that you got in the second quarter, but also the remaining, I guess, it would be $24 million that you expect will hit the P&L for the remainder of the year of that receivable?

Mark LaVigne: It does include the entire amount. It should be like $16 million or $17 million. It would be a $65 million total.

William Reuter: Okay. $65 million is total, not $72 million. I must have just heard that incorrectly.

Mark LaVigne: Yes, 65%.

William Reuter: Got it. And then have you -- just my follow-up to that, have you -- you mentioned that you guys have an understanding of the process. I have no clue if there's any dialogue that goes back and forth between those that have filed their refund requests and the governmental entities that will be paying those. Do they provide any color on when you actually may receive funds?

Mark LaVigne: Not at this point. I think right now, there's a process that's opened up. There's a tool that they've implemented in order for people to submit their refunds. They're in Phase 1. We would be in Phase 2 of that refund process. As John mentioned earlier, our refund analysis is pretty clean. So we wouldn't expect a lot of back and forth. But as soon as the portal opens for us to submit, we'll submit and we'll start the process. I'm happy to have any dialogue along the way to clarify.

And then in terms of when the refunds actually get processed and issued, I still think that's an open question, which is why we've kind of had the position of the right to recover is not in question, but the process and the timing is a little open, and we're going to continue to work that process and see if we can receive the funds as soon as possible.

Operator: [Operator Instructions] And there are no further questions at this time. I will now turn the call back over to Mark LaVigne.

Mark LaVigne: Thank you all for joining us today. I hope you all have a great rest of the day.

Operator: Ladies and gentlemen, this concludes today's call. Thank you, everyone, for joining. You may now disconnect.

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