Church & Dwight - Q3 2024
November 1, 2024
Transcript
Operator (participant)
Good morning, ladies and gentlemen, and welcome to the Church & Dwight's third quarter 2024 earnings conference call. Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company's financial objectives and forecast. These statements are subject to risk and uncertainties and other factors that are described in detail in the company's SEC filings. I would now like to introduce your host for today's call, Mr. Matt Farrell, Chairman, President, and Chief Executive Officer of Church & Dwight. Please go ahead, sir.
Matt Farrell (Chairman, President, and CEO)
Good morning, everyone, and thanks for joining us today. I'll begin with a review of the Q3 results, then I'll turn the mic over to Rick Dierker, our CFO and head of business operations. And once Rick is done, we'll open the call up for some Q&A. All right, Q3 was another solid quarter for Church & Dwight. Reported sales growth was 3.8%, which beat our outlook of 2.5%, and that was thanks to strong results from our domestic, international, and specialty products businesses. Organic sales grew 4.3%, which exceeded our 3% Q3 outlook, with volume accounting for a very healthy 3.1% of our growth. Adjusted gross margin expanded 60 basis points. At the same time, we increased marketing spending, and we gained market share in the majority of our categories. Adjusted EPS was $0.79, which was $0.12 higher than our $0.67 outlook, a nice beat.
The quality results were driven by higher-than-expected sales growth and gross margin expansion. Our online class of trade continues to perform well, with online sales as a percentage of global sales at approximately 21%. Next, I'm going to comment on each of the three businesses, and the first up will be the U.S. business with 3.3% organic sales growth. Volume growth was 2.6%, and this is the fifth consecutive quarter of volume growth in our U.S. business, with five of our seven power brands gaining market share in the quarter. Now, let's look at a few important categories in the U.S. Innovation, of course, is a big contributor to our success this year and every year. As I comment on the categories, I'll highlight the success of the new product launches. I'm going to start off with laundry detergent.
Arm & Hammer liquid laundry detergent consumption grew 2%, which outpaced a flat category, with Arm & Hammer's share in the quarter reaching 14.7%. The unit dose category declined 1.1%. However, Arm & Hammer unit dose saw a consumption growth of 16.5%, and we grew a share of 70 basis points to 4.8% of unit dose. Regarding new products, this year we launched two new products into the detergent category: Arm & Hammer Deep Clean and Arm & Hammer Power Sheets. Deep Clean is our most premium laundry detergent, where we entered the mid-tier of liquid laundry. Deep Clean accounted for a little over 40% of Arm & Hammer's liquid laundry detergent consumption growth in the quarter, and it's highly incremental to our franchise. The second new product is Power Sheets.
This is a new form of laundry detergent, and you may remember in August of 2023, Arm & Hammer was the first major brand to offer this new unit dose form in the U.S. Our fresh linen scented sheet is now the number two sheet on Amazon, and since launching this product into bricks and mortar this year, we have seen high consumer interest in the form. Arm & Hammer is the number one sheet brand at Kroger. It's also the number two brand in all of Food. We feel great about the future prospects for this new form. Now I'm going to switch over to litter. The category was flat in Q3. That's category consumption. As expected, Arm & Hammer litter consumption declined 1.5%, and this reflects the absence of a competitor out-of-stock situation, which benefited our prior year market share.
The good news is we've held on to about half of our prior year share gains. Our new lightweight Arm & Hammer clumping litter, which is our new product this year, is outperforming our expectations as our share of the lightweight category continues to grow. This is important because lightweight accounts for 17% of the clumping litter category. HardBall became the number two major brand in the lightweight segment in Q3. Now I'm going to switch over to personal care. The gummy vitamins business continues to be a drag on the company's organic growth. The gummy vitamin category declined 0.3%. We can call that flat in Q3, which is an improvement from the category declines in the past few quarters. The bad news is our consumption was down even greater. We were down 10%.
The improvement of this business has taken far longer than we expected, and as you saw in the release, has reduced our expectations about the long-term growth and profit of the business. This has resulted in a $357 million write-down of the book value of the assets. We continue to move forward with our stabilization actions, which include new packaging, upgraded formulas to improve the consumer experience, and higher marketing investments, which gives us some degree of optimism for the business, is the innovation that we have coming in 2025. Next up is Batiste, which continues to see strong growth with consumption up 6% in Q3, growing share to 46%. Batiste continues to be the global leader in dry shampoo. This year we launched Batiste Sweat Activated and Batiste Touch Activated. These innovations continue to bring new users to the category, which is very important.
Already these two new products account for 2% of the dry shampoo category, and Sweat Activated is the number one new product on dry shampoo. Over in mouthwash, TheraBreath continues to perform extremely well. The mouthwash category was up 5% in Q3, but here's a few stats. Alcohol-based mouthwash was down 1%, while non-alcohol category grew 11%. TheraBreath is the number one alcohol-free mouthwash with a 35% share and is the number three brand in total mouthwash with an 18% share. Getting over to new products, this year we entered the antiseptic segment of the category with the launch of TheraBreath Deep Clean Oral Rinse. It's important to note that the antiseptic subcategory represents about 30% of the $2 billion mouthwash category, and our launch into antiseptics has accounted for 100 basis points of our 400 basis points year-over-year growth in market share.
So a great indicator of the future for the antiseptic launch. Hero is the number one brand in acne care with a 22 share and continues to drive the majority of the growth in the category. The patch category grew 42%, while Hero grew patch market share by 1.7 basis points to 57 shares. So Hero continues to launch innovative solutions and patches and is very bullish about the future of that brand. I'm going to provide you with a couple of remarks on promotional levels in our household categories. In the liquid laundry detergent, we've seen stable sold on promotion in the low 30s over the last few quarters. Over in unit dose, pretty much the same story. Percentage sold on promotion is also stable, averaging in the low 30s over the last few quarters. Litter is a different story. In litter, conditions are different and promotional levels have increased.
Here's the trend line. If you look at Q1, sold-on deal was 15.5%. Q2 was a little over 18%. In Q3, it was 19.5%, and it's going to be even higher in Q4. The increase in litter promotions is primarily driven by one major competitor, where sold-on deal exceeds 40%. All right, turning now to international and specialty products. Our international business delivered organic growth of 8.1% in Q3. That's right on our algorithm of 8%. This was driven by strong growth in every one of our subsidiaries as well as our Global Markets Group. Finally, specialty products. Organic sales increased 7.5%. That's three quarters now of solid organic growth for this business. We're confident that this division will achieve 5% organic sales growth this year and will hit our evergreen growth target. We feel great about our progress in specialty products. Just commentary on the consumer.
In July, we noted a deceleration in consumption in our categories. This continued in Q3 as we expected. After seeing 4.5% growth in our categories for the first five months of the year, June, July, and August were closer to 2.5%. Now, in September, we saw consumption in our category strengthen to about 3%. And then in October, category consumption was up 5%. But let's all remind ourselves that the hurricane and the port strike no doubt influenced those results. So we remain cautious in Q4 regarding the U.S. consumer and category growth rates. I want to wrap up my comments by reiterating that the company is performing well with all three divisions, delivering strong growth. I want to thank all the Church & Dwight's out there for doing such a great job each and every day. Great team.
Now I'm going to turn it over to Rick to provide more color on the quarter and full year outlook.
Rick Dierker (CFO)
All right, thank you, Matt. And good morning, everybody. We'll start with EPS. On a reported basis, we had a loss of $0.31 a share, primarily due to non-cash asset impairment of our vitamin business. Third quarter adjusted EPS was $0.79, up almost 7% from the prior year. The $0.79 was better than our $0.67 outlook and is a high-quality beat, primarily driven by higher-than-expected operating profits. Reported revenue was up 3.8%, and organic sales were up 4.3%. Organic sales were driven by volume with 3.1% and positive price mix of 1.2%. Volume was again the primary driver of organic growth, and we expect volume growth to continue in Q4. Our third quarter adjusted gross margin was 45%, a 60 basis points increase from a year ago, primarily due to productivity, volume, mix, net of the impact of higher manufacturing costs.
Let me walk you through the Q3 bridge. Gross margin was made up of the following: a positive 140 basis point impact from volume and mix, a positive 130 basis point impact from productivity, and a 10 basis point positive impact related to acquisitions. This was partially offset by 220 basis points from higher manufacturing costs. Moving to marketing. Marketing was up $18 million year-over-year. Marketing expenses percent of net sales was 12.3%, or 80 basis points higher than Q3 of last year, and helped drive share gains. For Q3, SG&A, adjusted SG&A increased 20 basis points year-over-year, primarily due to international R&D and IT investments. Other expense decreased by $11.9 million. We now expect other expense for the full-year to be approximately $65 million on an adjusted basis. In Q3, there was a tax benefit of 25.9%, and this was related to the vitamin impairment.
Excluding that impact, our effective rate was 23.8%, and that compares to 24.1% in Q3 of 2023. The expected adjusted effective tax rate for the full-year is now approximately 22.5% versus the previous outlook of 23%. And now to cash. For the first nine months of 2024, cash from operating activities was $854 million, an increase of almost $70 million driven by higher cash earnings. We now expect full-year cash flow from operations to be approximately $1.1 billion. We're having a great year in regards to cash. CapEx for the first nine months was $125 million, almost a $4 million increase from the prior year as capacity expansion projects proceeded as planned. We expect 2024 CapEx of approximately $180 million as we complete the majority of those investments that were initiated in 2023.
We continue to expect CapEx to return to historical levels of 2% of sales in 2025 and beyond. Now for the full-year outlook. As Matt mentioned, while we saw U.S. consumption in our categories improve slightly towards the end of the third quarter, we remain cautious regarding the U.S. consumer and category growth rates for the remainder of the year. We continue to expect our organic revenue outlook to be approximately 4% and reported sales growth to be approximately 3.5%. We continue to expect full-year Adjusted EPS to be approximately 8%. Turning to gross margin, we now expect expansion of approximately 110 basis points to the high end of the previous range, and we now expect marketing as percent of sales to be above 11%.
And as you read in the release, to the extent our business does better than our outlook, we plan on incrementally investing behind marketing and SG&A to help in our 2025 with momentum. And with that, Matt and I would be happy to take any questions.
Operator (participant)
At this time, if you would like to ask a question, please press the Star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing Star two. Once again, that is Star and 1 if you would like to ask a question. And we'll take our first question from Chris Carey with Wells Fargo Securities. Please go ahead. Your line is open.
Chris Carey (Senior Equity Analyst)
Hey, good morning, guys. Thanks for the question. Hey, how are you? I'm going to start with the outlook for Q4. I want to understand if there are any inventory timing dynamics which are going into Q3 or Q4, or if this outlook is primarily reflecting, I guess, a view that consumption trends should start to decelerate through the quarter as you lapse some of these atypical benefits that maybe you've seen of late. And so we should be expecting that and perhaps just some lingering conservatism about not trying to call any improvement in category growth rates versus, say, again, some sort of inventory or shipment timing dynamic.
Rick Dierker (CFO)
Yeah, I'll take the first one, part of it on inventory, and then Matt will talk about the category consumption growth rates. We hear small things on retail inventory, but not anything that we would call out and not enough to impact anything. There's small examples, but not enough to influence what we would be calling.
Matt Farrell (Chairman, President, and CEO)
Yeah. And Chris, as far as the categories grow, if you just, you kind of look at Q1, Q2, and Q3 for some of our major categories. So if you look at liquid laundry detergent, Q1, Q2, Q3, the category was up 3%, up 1%, flat. Then you look at litter, up 5%, up 2%, flat. And then going to mouthwash, up 13%, up 9%, and then 5%. Patches are pretty steady, high double digits. But the acne category is 14%, 8%, 7%. But obviously, Hero being patches, so we're somewhat unaffected by that. But if you just look at the trend, you can see a deceleration. So that's one of the reasons why we'll say, "Hey, we're still cautious about the economy." That's the categories. We tend to be doing better because we're taking share.
But that's always the only lever you have when things are starting to slow down. So yeah, we feel good about our performance. We called 3% in Q3. We put up a 4. We had some good performance in our brands and some share take. But kind of like where we are going into Q4.
Chris Carey (Senior Equity Analyst)
Okay, that makes sense. Then one quick follow-up would be there's an expectation over time for the U.S. business to be delivering 4% top-line growth. Clearly, you're still trying to figure out what the appropriate level is in the current environment relative to where the categories are going. But how much visibility do you think you have in that top-line growth objective in the U.S. from here? It's not really a 2025 guidance question per se, but just the ability to deliver against an objective which came up by about a point relative to past in the current environment. And if not, how long you think you'd need to get there again? So thanks so much.
Matt Farrell (Chairman, President, and CEO)
Yeah, that was sort of a veiled attempt at 2025 guidance.
Chris Carey (Senior Equity Analyst)
You take that how you will. Thanks.
Matt Farrell (Chairman, President, and CEO)
I want to correct you on one thing. As far as our algorithm goes, when we moved from 3%-4% top line, the U.S. portion of that was going from 2%-3%. So obviously, that's the big dog. It's the lion's share of our business. So the expectation is that we're going to grow at 3% going forward.
Rick Dierker (CFO)
3% for domestic business, 8% for international, 5% for SPD. That's how we get to our 4% coming in.
Chris Carey (Senior Equity Analyst)
Yeah, sorry if I didn't come across. That was really embedded in the question. Thanks.
Matt Farrell (Chairman, President, and CEO)
Yeah. And we kind of look at our portfolio and say, when you have a long-term algorithm, it's not just 2025. It's 2025, 2026, 2027. So we look at the strength of our brands. We look at the innovation we have planned over a three-year basis, 2025, 2026, 2027. And consequently, we're always encouraged that if you look back, our history is we hit our algorithm just about every year. In fact, you know yourself, over the last 10 years, we've hit 4%. That was one of the reasons why we said, "Hey, why don't we just make that our algorithm going forward?
Rick Dierker (CFO)
Yeah. And I think just to add to that, why do we take share over time? Well, one of the reasons is we have great innovation, and we're putting support behind innovation to go drive trial, to grow households. And that's kind of also where we're reinvesting as we overdeliver in 2024. So that's why we think we're going to enter 2025 with momentum.
Matt Farrell (Chairman, President, and CEO)
Yeah. So when you have contracting categories, the way home is always going to be innovation and share gain.
Chris Carey (Senior Equity Analyst)
Okay. Thanks, Rick.
Operator (participant)
Thank you. We'll take our next question from Rupesh Parikh with Oppenheimer. Your line is open.
Rupesh Parikh (Senior Analyst)
Good morning, and thanks for taking my question. So just going back to the vitamin business, so an impairment this quarter, how are you thinking about the path to stabilization and then growth? Do you think in 2025 we maybe start to see stabilization in that business? And just any green shoots maybe you're seeing with the efforts there?
Matt Farrell (Chairman, President, and CEO)
Yeah. We've been at this now for probably more than a year and a half, and the things such as graphics and packaging and messaging, those things that we can control are in place. As far as innovation goes, that has not hit the market. We really haven't had any meaningful innovation for a few years now, and that's what, as I said in my earlier remarks, that's what gives us some optimism about stabilizing this business in 2025.
Rick Dierker (CFO)
Yeah, and maybe some other green shoots. As Matt said, we have probably 10 different things that are happening. The core of it is we got to get the consumer being delighted in our product again, right, and making sure that we're doing all of our reformulations so that consumers are picking our products and our brand that they know and they love for a long period of time. But some green shoots, I would say we've seen some lifts in some retailers where a few of these things are kind of ahead of the curve, and so that's been encouraging. We did one of those 10 levers was looking at price gaps, and we adjusted a price gap in a couple of areas, and units are up dramatically, so there's good progress. Like Matt said, innovation really is coming in March, April of next year.
So we got to give that a shot. And we're optimistic.
Matt Farrell (Chairman, President, and CEO)
Yeah. If you're looking for green shoots, this is a smaller part of the business, but L'il Critters has been really responsive so far. In fact, L'il Critters gained some share in the past quarter. So that's a good thing. But really, the lion's share of the business is adult, and that's where we need the innovation.
Rupesh Parikh (Senior Analyst)
Great. Well, thank you. Thank you, i will pass along.
Matt Farrell (Chairman, President, and CEO)
Okay.
Operator (participant)
Thank you. We'll take our next question from Bonnie Herzog with Goldman Sachs. Your line is open.
Bonnie Herzog (Managing Director)
All right. Thank you. Good morning. I had a question on your marketing investments. You called out expected stepped-up spend in Q4, and you raised your guidance a bit this year to more than 11% as a percentage of sales. So could you give us more color behind the greater investments in terms of types of spend, any changes with strategy, either channel, medium, etc.? And then I would be curious to hear if more of the dollars will be shifted internationally. And then if I may, finally, just on a go-forward basis, should we assume you're going to continue to step up this spend as a percentage of sales in the next several years to support your 4% organic sales growth expectations as you've called out in your evergreen model? Thank you.
Rick Dierker (CFO)
Hey, Bonnie. That's a good detailed question. I'll start, and I'm sure Matt wants to add a couple of thoughts. But when you look at our raise of marketing spend, going to 11% to somewhere between probably 11% and 11.5%, that's meaningful. That's $20+ million dollars in some cases. And some of that is international across markets because we're driving different brands, and they're doing really well too. But TheraBreath expansion, Hero expansion, Sterimar, Batiste internationally. But in the U.S., we have a lot of places where we're spending, but most of that spend's behind our innovation again. This is one of our best years of innovation. We believe that's why we're getting share in many cases. That's why we're doing so well and overdelivering even our top-line expectations.
A lot of the marketing spend goes behind things like Deep Clean on laundry, things like sheets on laundry, things like HardBall on litter, and our new Batiste and our TheraBreath.
Matt Farrell (Chairman, President, and CEO)
Yeah, and the other thing I would add to that is 85% of our advertising is digital right now, so we have a great ability to move around and take advantage of different vehicles at different times of the year, so I wouldn't say any more than that. We can go brand by brand, but Rick's right. International is part of where the spend is in the fourth quarter, as is domestic, even a little bit in specialty products.
Rick Dierker (CFO)
And as far as our future-looking marketing as a percentage, our algorithm's around 11%. It all depends on how our share. Share is the scorecard. So our shares are doing fantastically well. You heard in the release, 5 of 7. I think year to date, we're 10 of 14 for all of our brands, all of our old power brands. So that scorecard is what really matters. And as long as we're gaining share and more often than not, I think that's the right level. And if we feel like it's not, then we'll adjust.
Bonnie Herzog (Managing Director)
All right. Thank you. I did ask multiple questions at once, so I'll pass it along. Thank you.
Operator (participant)
Thank you. We'll take our next question from Steve Powers with Deutsche Bank. Your line is now open.
Stephen Powers (Equity Research Analyst)
Thanks very much. Actually, to follow up on that, sorry, I might have missed it in your answer, but the marketing spend in the third quarter came in a little bit lower than at least external expectations, obviously made up for in the fourth quarter. But was there anything from your perspective that shifted that marketing support from 3Q to 4Q, or is it just more of an anomaly versus how we all on the outside modeled it?
Rick Dierker (CFO)
Yeah, I think it is more of an anomaly. I mean, we're getting very specific, but we were up 80 basis points in Q3, which is a significant increase. We had told everybody that we were going to be down a few hundred in Q4 because we were spreading that spend that was maybe a little higher in Q4 of last year over to Q1, Q2, and Q3 to better support innovation, and I wouldn't even call it timing. It was probably just a disconnect between the outside models and what we were going to do.
Stephen Powers (Equity Research Analyst)
Okay. Okay. Cool. And I guess more of an overarching question. You've kind of touched upon some of this, some of what I think is going to be in your answer. But the perception among many investors of late is that Church & Dwight's in a relatively fragile position navigating this second half and heading into next year, just given that so much growth has been driven by TheraBreath and Hero, whereas investors view the core legacy business as being a bit more choppy, probably with added focus there on categories like vitamins and litter of late. But just how do you respond to that, either with respect to reasons to believe in the resilience of TheraBreath and Hero, or conversely, reasons for more holistic confidence in that legacy core business?
Matt Farrell (Chairman, President, and CEO)
Yeah. Hey, I'll take a swing at that. In the kind of pile-on. Look, we manage a portfolio, and we're in lots of different categories. And yeah, it's true that TheraBreath and Hero have delivering outsized performance over the past year. But this ebbs and flows over the years. If you look back over many years, there's different times where different businesses pull the train. So I think the new products that we have in those some of the categories that you may be referring to, like laundry and litter, are going to be a big part of our growth in the future. That would be sheets, and that would be hardBall. And also the innovation in other categories outside of patches as well. But if you look long-term, the TheraBreath is not done.
When we bought this business, we said, "Hey, this can be a $500 million business over time." So whereas we'd say, "Yeah, the distribution for that business has probably been achieved as far as number of doors," we haven't done a spread out on shelf with other variants. So I think there's still significant growth ahead of us for TheraBreath. And as far as Hero goes, we don't want to get distracted by moving into other categories. We want to make sure we nailed and grew patches and created more awareness around that and more household penetration. But the Hero brand has the opportunity to spread into adjacent categories going forward. So I think the investors should be confident that those two brands will continue to grow in the future.
Because of the innovation we have in laundry and litter, dry shampoo, etc., we have differentiated products that will drive growth in the future as well.
Rick Dierker (CFO)
Yeah. And I would just echo a few of those comments. I think TheraBreath and Hero have years of runway. TDPs in some cases, but just household penetration. Mouthwash is an example of 65% household penetration, and TheraBreath is around 9%. It's now the number two mouthwash. So there's lots of runway for those two. But really, the crux of your question is, "Well, what about your base business?" And so I would say a lot of optimism on our base business. Litter, for example, it's kind of messy right now as you look at year-over-year comps because some competitor was out of stock for such a long period of time. But if you look back before the outage that they had, at our share and at our share today, we've maintained about 40% of those share gains. And so I don't really look at the week-over-week or month-over-month numbers.
They're kind of meaningless right now. But if we look at baselines, that's what I look at. And so I feel like litter is strong and getting stronger. Innovation, as Matt said, laundry. Laundry, we're still at all-time high shares. We feel like over a long period of time, we have the same stair step-up that we've experienced before. We're entering the mid-tier with Deep Clean. It's doing well. It's driving incremental category growth for retailers. Unit dose is hitting all-time share highs. We're going into sheets, and sheets is a category that's growing 30%. So a lot of optimism.
Stephen Powers (Equity Research Analyst)
Great. Thank you very much.
Operator (participant)
Thank you. We'll take our next question from Dara Mohsenian with Morgan Stanley. Your line is now open.
Dara Mohsenian (Managing Director of Equity Research)
Hey, g`ood morning, guys. So first, just to follow up on category growth. Matt, you didn't sound particularly excited about the pickup in category growth in September, October. Is that just because you think a lot of it was driven by hurricane volume? And as you parsed the underlying data, you didn't necessarily see as much of a pickup. Is it just a short enough period of time that you're not much more enthusiastic around category growth? And I know you touched on it a bit, but just trying to get a sense as we look beyond Q4 if we're in this more muted category growth environment given the lack of pricing, or if you think you're starting to see some green shoots from a category perspective. Thanks.
Matt Farrell (Chairman, President, and CEO)
Yeah. I guess I must have curbed my enthusiasm. So I would say this, Dara, that if you looked at the first couple of weeks of October, you'd see double-digit consumption growth in some categories. I said, "Well, that's not sustainable." And it was so different from what we saw in any week in September or since then. We would say the hurricane and the port strike no doubt influenced the results. So consequently, if there's some pantry loading that went on in the first couple of weeks, that's just pulling forward from somewhere else in Q4. So we would say, "Hey, I'm going to kind of look at that as October as maybe an anomaly." And maybe the quarter is more like September, where we inflected from June, July, August, being our categories up 2.5% versus 3% in September.
But it's not. Our remarks are not necessarily a broad commentary on the U.S. economy. We're commenting on our categories. So we look at our categories. That is what we're commenting on. I think 3% to me is pretty healthy.
Rick Dierker (CFO)
Yeah. If you look back at history, if we were growing 4% as a company, many times the categories would be growing 2% or 3%, we'd be taking share, and that's how we got to the 4%. So I'd say it's kind of in line with history.
Dara Mohsenian (Managing Director of Equity Research)
Great. That's helpful. And then on Hero and TheraBreath, can you give us an update on how much of the business is international today for each of those brands and how much incrementality you see looking out to 2025 in terms of expansion potential?
Matt Farrell (Chairman, President, and CEO)
Yeah. What I can tell you without quoting numbers for sales is that we've been running really hard to get TheraBreath and Hero registered in other countries. And our goal was to have Hero registered in 40 countries by the end of 2024. And we're there. So we feel good about that. And the impediment, of course, is regulatory bodies, and they vary from country to country. But we're pleasantly surprised that both brands do travel well, even TheraBreath. Now, TheraBreath is the highest-priced mouthwash market in the U.S. Naturally, when you go to international markets, there's a raised eyebrow about, "Geez, how are you going to be successful with such an expensive mouthwash?" But yet it has been. So we'll keep that in mind for maybe end of January when we talk to you guys and have an Analyst Day.
We'll frame out a little bit better Hero and TheraBreath percentage U.S. versus international, how many countries we're registered in, and what our expectations are.
Dara Mohsenian (Managing Director of Equity Research)
Great. Thanks. I'll pass it on.
Operator (participant)
Thank you. We'll take our next question from Peter Grom with UBS. Your line is now open.
Peter Grom (Equity Research Analyst)
Thanks, operator. Good morning, everyone. I just wanted to follow up on Dara's question there. I mean, maybe just to be clear, can you just help us understand what you are assuming for category growth in 4Q? Matt, I think you just said you're kind of assuming the September trends for the quarter rather than the stronger October or the weaker July and August. So I just wanted to clarify that. And then I guess if that is the case, if you are assuming slightly stronger category growth this quarter, and I apologize if I did miss it, but can you maybe help us understand what's driving the sequential slowdown in the 4Q organic sales? Thanks.
Matt Farrell (Chairman, President, and CEO)
Let's go to your first question with respect to categories. It was 4.5 for the first five months of the year. The next three months were 2.5%. And then we'd say, "Hey, September was 3%, and October was a really big number." We'd say Q4 on average will be 2.5%. And we'll say, "Hey, the month of October is an anomaly," and that November, December will be a lot like June, July, and August. And that's no different than what we thought in July. So consequently, yeah, we had a really good third quarter, but we beat our number organically. But we're saying, yeah, for the second half, we still feel good about 3% in total for the second half. And that's why we said 2%-3% is fine as a call for Q4.
Peter Grom (Equity Research Analyst)
Got it. I'll pass it on. Thank you.
Operator (participant)
Thank you. We'll take our next question from Anna Lizzul with Bank of America. Your line is open.
Anna Lizzul (VP of Equity Research)
Hi. Good morning. Thanks so much for the question. I wanted to touch on gross margin, which outperformed this quarter. The guidance for the full year seems a bit conservative. So I was just wondering if you could talk about your outlook on commodity costs and manufacturing. I think you noted in Q3 that manufacturing costs were a bit higher. Is that also expected to impact Q4? Thank you.
Rick Dierker (CFO)
Yeah. Hey, Anna. It's Rick. I think from a gross margin perspective, you're right. It's a little bit more conservative. If you say the full-year is at 110, it means Q4 is up slightly. I would just remind everyone that Q4 a year ago was our high watermark at 44.6%. That's part of it. Some of the commodities were flat in the first half, like ethylene. They're up in the back half, around 9%. Same for liner board. We have investments in our warehouse, and we talked about it Analyst Day in kind of our network, and that built throughout the year. So yeah, could that be a little conservative? Maybe. I think also we have, as we look forward, we still are seeing inflation. That's what we're seeing, and our job is to offset that with productivity. So that's what we're focused on.
And then the other thing on gross margin is, as we make investments to support these new products like in trade or couponing, that also impacts gross margin. So that's kind of an eclectic and wide-ranging view, but those are the details.
Anna Lizzul (VP of Equity Research)
All right. Thank you. That's helpful. And just as a follow-up on the category discussion here, are you seeing any difference in customer purchasing habits between retail channels or on quantities here? Thanks.
Rick Dierker (CFO)
No. I would say, remember, we've been growing volume for five quarters in a row, and we continue to see most of the categories are volume-driven growth. Our categories and purchasing patterns are the same.
Anna Lizzul (VP of Equity Research)
Okay. Great. Thank you so much.
Operator (participant)
Thank you. We'll take our next question from Lauren Lieberman with Barclays. Your line is now open.
Lauren Lieberman (Equity Research Analyst)
Great. Thanks. Good morning. Just want to talk a little bit about the promotional environment in laundry in particular. In last year's fourth quarter, you talked about pulling some of the unprofitable promotional activity, and scanner sales were down. So just want to think about 4Q. Is it kind of like an easy comp as you get into fourth quarter, or is it more like the right base now, and last year was the adjustment period? And anything else you'd add on kind of the promo environment in laundry? Thanks.
Matt Farrell (Chairman, President, and CEO)
Yeah. I'd say you're right about that, Lauren. We did eliminate some what we thought were just not profitable or uneconomical investments. What's different this year is we had such a great year in new products, particularly in household, litter with hardball and Deep Clean and sheets, and look at laundry detergent. And so that'll be one of the places we'll be investing in Q4 in trade promotion. One of the things that Rick called out in his response to gross margin. So yeah.
Lauren Lieberman (Equity Research Analyst)
One thing I noticed also, I know Deep Clean has been really successful, and this may be me being too picky, but it was interesting to me that in some of the Q&A thus far, when you've been talking about laundry innovation, you're putting, it seems like, a bit more emphasis on sheet versus Deep Clean. Can you just maybe talk about the direction of travel you see for category development? How significant do you think sheets can be? Because Procter, of course, has been doing a trial of this, and as they go, it probably really helps to amplify awareness in the category of this form. So just curious your thoughts on the relevance of sheets as a new form, and then the profitability of that versus the traditional liquid business, even the higher price point Deep Clean.
Matt Farrell (Chairman, President, and CEO)
Yeah. You're right. It is a good question, and it's true. We're very excited about sheets. But let me go back to deep clean. So the whole idea around Deep Clean was to have a good, better, best strategy. So the good is the orange bottle. It's the base, Arm & Hammer. The better is Arm & Hammer with OxiClean. And the best is Deep Clean. And Ceep Clean is in mid-tier. It's our highest-priced laundry detergent. Just to give you some sense, it's a 90% premium to the yellow box. Well, not the yellow box, but yellow bottle. And it's kind of like a 40% premium to the Arm & Hammer with OxiClean. But we're still at 15-plus% discount to premium. And if you look at the trends, it's mid-tier that's been growing. So we feel kind of good about the timing of our launch.
It's important that that sticks so we have good, better, best going forward long-term and we think that Deep Clean can be a source of growth for us in the future and that's, I would say, if you go back to Steve Powers' question about why you feel good going forward about your big businesses like laundry and litter, laundry in particular, it's reasons like that and then sheets. Sheets is a brand new form, and it's efficacious. There's no plastic. It's, yeah, could it cannibalize some of your existing business? Yeah. That's true, but we're the first major brand to launch in this form. It's good to be first so we think that'll be a bigger emphasis for us going forward. Unit dose today is like 22%-23% of the category. We have not had a big share in unit dose historically.
We've just been bounced around between 4% and 5% of that very big subcategory. So sheets, then, in addition to our existing pods, is the way home for us to grow in unit dose. So I appreciate the question because this all fits together, and that's why we think we're in a good position going forward in the detergent.
Lauren Lieberman (Equity Research Analyst)
Great. Okay. Thanks so much for all that. I really appreciate it.
Operator (participant)
Thank you. We'll take our next question from Kevin Grundy with BNP Paribas. Your line is open.
Kevin Grundy (Managing Director)
Great. Thanks. Good morning, everyone. Question on litter and the promotional environment there and how you potentially intend to respond. Matt, as you mentioned, Clorox has stepped up promotion levels to remarkably high levels. Most of the regained share that you're seeing with Fresh Step is coming at the expense of Arm & Hammer. So a couple of questions. Have you been surprised by the magnitude of the spend here on trade support from Clorox? It's taken dollars out of the category. It doesn't do anything to impact consumption. Seems like you're trying to get the share back in sort of one quick swing. And then how do you intend to respond? It kind of feels like it has the earmarks of a potential price war like we saw in laundry like over a decade ago.
But Rick, if I'm interpreting your tone correctly, it seems like you're generally okay relinquishing the share gains over the past year. So your thoughts there would be appreciated. And then I have an unrelated follow-up. Thanks.
Rick Dierker (CFO)
Yeah. I'll give you a couple of comments, and then Matt will chime in, I'm sure. My comments were really happy with where we are at litter. This year-over-year, as Clorox comes back in stock, is what it is. Our baseline volumes are higher than they were. Our shares are higher than they were. We are really happy with a 40% or so share gain if you look back when this whole stuff started. We're not going to go chase share on a race to the bottom to go promote. If we promote, it's going to be behind our innovation to go drive a fair share in lightweight litter because we think that's where the opportunity is. So that's what we're doing. I'm optimistic that we're going to retain share because that, over time, it's difficult for cats to switch litters. It just is.
After they've been out for a while and they have one product, that's what they get used to. And that's also why maybe the effectiveness of some of the competitor promotions aren't as high as they used to be because it's hard to switch litters or harder. So anyway, that's some context. Matt, anything you'd like to add?
Matt Farrell (Chairman, President, and CEO)
Yeah. No. When you see numbers like in a 40%-45% sold-on deal, so we're not going to chase that, Kevin. To the extent we promote, it's going to be behind HardBall, which is our new product. And yeah, obviously, when you're hit with kind of like a cyber event, obviously, the expectation was that, yeah, of course, competitors are going to spend back to try to win back consumers. But yeah, we're going to be on the sidelines as far as spend a lot of money to chase that number.
Kevin Grundy (Managing Director)
Okay. Very good. Quick follow-up, and then I'll pass it on. Just on portfolio pruning, so Rick, I think you've expressed an openness here, which has generally not been part of the company's strategy for a very long time. We naturally have the CEO transition, which is going to be occurring in March. You need to bring a CFO on board. If you could just give us an update on potential parameters, scope, timing of what seems like it will be a potentially newer sort of leg to the stool, if you will, of the company's strategy, and then I'll pass it on. Thank you.
Rick Dierker (CFO)
Yeah. I mean, as a backdrop, we got to remember a lot of stuff that we do, we're going to keep doing. The company's performing extremely well. The strategy is sound. We're leaders in e-com growth, as an example. M&A is best in class. We can identify, acquire, integrate, and grow acquisitions. We do a few things uniquely in the company. Every year, we value every brand that we have, and we know what brands or businesses are creating value or destroying value, and we take that back, and we usually have internal teams that go turn that around or address root causes, and to the extent that we don't, then that's when more strategic conversations are had. Now, I'm not going to front-run any of that. I'd say maybe in early to mid-next year, we'll talk more about that.
But it's really we've been doing it for a long time. It's what we do internally, and we got to hold kind of mirror up to all of our brands, just like we do when we do acquisitions. But remember, we have a great portfolio of brands. We have a high-performing company. We're gaining share in most of our businesses. So we're coming from a position of strength.
Matt Farrell (Chairman, President, and CEO)
Yeah. Hey, Kevin, I want to remind everybody too. I think back to when I got the job in January of 2016. Within a couple of years, I hit a new head of marketing, supply chain, R&D, sales. Three of those four came from the outside. So we've been here before. We just got such a rock-solid core of the company. There's just a lot of talent here. There's no way we could get the numbers that we get year after year, what happened. A lot of talent up and down the line. So yeah, I think we're all excited about doing a couple of searches and getting some new people in the company, new ideas, new energy. So I think we're in a real good place.
Kevin Grundy (Managing Director)
Okay. Very good. I appreciate it. Thank you both.
Matt Farrell (Chairman, President, and CEO)
Yep.
Operator (participant)
Thank you. We'll take our next question from Andrea Teixeira with JPMorgan. Your line is now open.
Andrea Teixeira (Senior Equity Research Analyst)
Yeah. Thank you. Good morning. So on the gross margin side, how should we be thinking about the percentage ahead of commodities, and the timing of certain contracts influence your view, especially in fiscal 2025? And a follow-up on the M&A, I think that's the only question we haven't asked yet in terms of how you're seeing the landscape. I know you're very purposeful and cautious about what your targets are, but just as a follow-up and an update on how you're thinking about organic growth. Thank you.
Rick Dierker (CFO)
Yeah. I'll take the gross margin question. I would say I kind of commented already on we do see inflation. As we look forward, we see inflation. Our jobs to offset that through productivity. As you take a big step back, though, the different macroeconomic indications like China demand and really the U.S. economy, stable but not outsized growth, we have taken a position of not hedging as much as we usually do, believing that some of those commodities will come down over time. So I would tell you that's probably a good indication of our expectations as we look forward.
Matt Farrell (Chairman, President, and CEO)
Yeah. Andrew, could you clarify your other question about M&A?
Andrea Teixeira (Senior Equity Research Analyst)
Yeah. No. Thank you, Matt. I was just thinking more how it's been. I know it's part of your algorithm long-term. Not necessarily, of course, what you're giving. The evergreen model does not include that. But indirectly, it does because as you buy these brands and companies, you create future growth. And it's part of your long-term algorithm. So I was thinking more it's been a while since you and you're accumulating cash, since you've done acquisitions. Of course, the last two were very good, very creative. So just thinking of how we should be approaching that, or we should be thinking you're focusing more in organic at this point.
Matt Farrell (Chairman, President, and CEO)
Look, we're always on the hunt to generate so much cash. Of course, our criteria is pretty strict, so we're pretty fussy about the things that we'll buy. It is true that you can buy a couple of businesses that can be fast-growing for a couple of years, but then they have to grow 3%-4% or faster, depending on which categories are going forward. I would say no, we're not saying that we're focusing solely on the existing portfolio. I'll remind everybody, if you go back in time, we've had periods where we've had droughts before where we didn't buy a business. I think the longest one was probably between 2008 and 2011, when in 2008, we bought Orajel. The next one was Batiste in 2011. Still, if you look at that through a three-year period, we've had three great years.
Our algorithm isn't dependent upon going off an acquisition.
Rick Dierker (CFO)
Yeah. And the reason we, as you look back, the reason we are more successful than most to identify, acquire, integrate, and grow acquisitions is because we're really fussy. And so that's part of the model, and that's what we're going to continue to be. We want to make sure we do the right deal when we do the deal.
Andrea Teixeira (Senior Equity Research Analyst)
Okay. Thank you.
Operator (participant)
Thank you. We'll take our next question from Filippo Falorni with Citi. Your line is open.
Filippo Falorni (Director of Equity Research)
Hey. Good morning, everyone. I wanted to ask you about innovation, and maybe you can give us some context of the contribution from innovation this year in laundry and the rest of your business, and just any plans for 2025 and areas of potential further innovation. And then a quick follow-up. So on the gross margin, as we think about elections and potential for tariffs, last time, there was some implication on the Waterpik business from some portion that were imported from China. Maybe can you remind us of any potential exposure on China tariffs? Thank you.
Rick Dierker (CFO)
Yeah. No, thanks for the question. Innovation, we're actually super excited about innovation. It's close to around 2% incremental net sales for us in 2024. So remember, we have a high bar. We don't call gross sales. We don't call gross new product contribution. It's incremental net sales. So about half of our growth is kind of coming from innovation, which is fantastic. That's been accelerated. It used to be 1, 1.5%. And so we've built that muscle. We have a lot of different inputs. Carlos, our leader in R&D. Leslie, our leader in NPD. All across the commercial team, we are doing really well on innovation. I expect that to continue. I think as we look forward, we have great pipelines over the next two or three years. We're not really even talking about 2025 right now. We're talking about 2026 and even early conversations on 2027.
So that muscle's alive and well, and we're going to keep investing behind it and driving investment behind it. On China, right, just like everybody, we're well aware of implications there. I would say two things. One is we did reclass a lot of our SIC codes, import codes. And so that has helped as you draw a circle around what may or may not be impacted. The second thing is we have moved some production outside of China. And so it's most material for the Waterpik business, but there are plans in place and actions that we've taken to mitigate that impact.
Filippo Falorni (Director of Equity Research)
Right. Thank you.
Operator (participant)
Thank you. We'll take our next question from Bill Chappell with Truist Securities. Your line is now open.
Will Chappell (Managing Director)
Good morning, and thanks for squeezing me in. Hey, just going back to vitamins. So I guess I'm having a tough time. Or maybe help me understand two things. One, just from a business standpoint, I mean, are you now thinking you need to spend more money behind it in 2025? Because with you being down 10% and the category being down, basically flat, I'm not sure I understand the green shoots. It seems like things are getting worse. And so you can either step up and put a lot of money behind it, or you can kind of ease back and manage it more and more for cash. So are we at that point in a decision standpoint? And then second, kind of related, I also don't fully understand maybe the impairment charge 10 years after acquiring the business.
So, maybe can help me understand why that was there and the timing and what that says, if anything. Thanks so much.
Rick Dierker (CFO)
Yeah. Sure, Bill. I would say let me take the, I guess, the second one first. When we do an impairment charge, all that is is just a looking forward of our model on what our growth rate assumption is, and that has what the category's growing at and what our expectations are, as well as our margin expectations. And they've come down since we originally put all those assets on the books. And so it's kind of a reconciling of that, right? The original expectations to what our current number is after we have amortization or we have valued that versus the intangible numbers, and we say, "Oh, we have a gap, and future growth and profits aren't as strong as they used to be." And so that's how you take the charge 10 years after.
Your first question was on, "Oh, why do we think we're putting more money behind it?" We're not going to go chase incremental spending on promotions and trade and advertising. That was a few of the levers that we pulled this year. And you're right. Some of that is not working as we had hoped. Some of the things are working, and they do have green shoots. The biggest, most important single thing that we can do is make sure that our core products are delighting the consumer. And that's why we're so focused on the innovation piece. We think this is the first time in a few years that we've put the full strength of the company on reformulating vitamins so that we have our taste advantage back. We're hitting key marks in the market on sugar-free, on plussing up our vitamins.
So all those things are, I think, putting us in a better position to compete. And they're way more important than spending more on trade or getting displays or doing other packaging stuff.
Matt Farrell (Chairman, President, and CEO)
Yep. The only thing I'd add to that is when you buy a business, the excess that you purchase for extra tangible assets is largely going to be goodwill. So that's always going to be a big part of any write-off, and it's all dependent upon this DCF model. And as far as green shoots, Bill, that was not in our commentary. I think somebody offered up that they were asking about green shoots. We would say that we've done the things we can control. We have seen some benefit and some growth in L'il Critters. It's not the lion's share of the business. And this business really struggled through and post-COVID, and we got punished for that by the retailers.
In the meantime, we've been just working on improving our supply chain, which we now have in a good place, and in doing the work on new products. So the innovation is ahead of us. And we thought 2024 was going to be an inflection point. It was not. That was dependent upon all the things we have talked about, meaning packaging and graphics and positioning and messaging and advertising. But in the end, it's going to be the innovation, Bill. And that work went through some of the things we're changing. And that's ahead of us in 2025. So this time next year, we'll hope to be having a different conversation with you.
Will Chappell (Managing Director)
Got it. Which leads me to this time next year, we won't be having a conversation. So congratulations on the—I know we'll have you for a few more months, Matt, on the retirement and Rick on the promotion. Thanks.
Matt Farrell (Chairman, President, and CEO)
Okay, Bill. I hope you make it to New York in January.
Will Chappell (Managing Director)
We'd miss it.
Matt Farrell (Chairman, President, and CEO)
Thanks, Bill.
Operator (participant)
We'll take our next question from Olivia Tong with Raymond James. Your line is now open.
Olivia Tong (Managing Director and Senior Analyst)
Great. Thanks so much and congrats on retirement and promotion to you guys as well. My question is primarily around some of the more recent premium price innovation that you've benefited from, particularly laundry with deep clean and the Power Sheets and then in litter as well. So as we go into a potentially more, or we are in a more challenging backdrop, does your trade-off opportunity become more challenging relative to your peers when macros get more challenging since your consumers obviously skew a little bit more towards value tier? Therefore, I would imagine that they're a bit more pressured relative to consumer average, so just wondering about your ability there, and then the mixed implications, given that you obviously have been able to continue to eke out a bit of mixed benefit in the domestic business despite obviously all the pricing lapping. Thank you.
Matt Farrell (Chairman, President, and CEO)
Okay. You got a lot in there. I think if I wanted to boil it down, you're wondering, because of our premium offerings of late, would that disadvantage us? I would say if you just take them one at a time before I start with HardBall, our HarBball has been contributing to our share growth quarter after quarter. Last year, our share was like 4.5% of the category, the lightweight category, and that's grown quite a bit. We'll update everybody in January about what our share gain was on the entire year, but we think that's going to continue to grow. It's because of the performance of the product, which just seizes up. It's like close to as hard as a rock. There's nothing in the category like it. Power Sheets, it's laundry in a box.
And I think given over time, maybe it's been a slow roll as far as the consumer willing to pay for sustainable products. But this one seems to be a winner for us. So we don't think that simply because our category historically or our portfolio historically has been focused on value, that because we now have products in laundry and litter where our core products are value. So the yellow box in litter and the yellow bottle in laundry detergent, those are value products. But over time, we've offered premium products, and our consumer has traded up to them. And we've had other consumers and other brands trade over to us. So again, in the end, I think for most consumer product companies, innovation is always going to be the story in any environment, in any economy. So we feel very positive about those two innovations in particular. Yeah.
And, just an example, for deep cleaners, mid-tier in the laundry category, that's still a value to the premium tier. So folks can still trade down to that. It's growing categories, though, because folks are trading down and trading up from value in other areas. So net-net, we still think it's a positive in most any economic environment. And what was your gross margin question, Olivia?
Olivia Tong (Managing Director and Senior Analyst)
It was just around mix, more importantly, and the impact of mix as time progresses. But I think you answered that within the top-line question.
Rick Dierker (CFO)
Okay. Thanks.
Olivia Tong (Managing Director and Senior Analyst)
Thanks so much. Really appreciate it. I'll pass it along.
Operator (participant)
Thank you. We'll take our next question from Javier Escalante with Evercore. Your line is open.
Javier Escalante (Beauty, Personal Care and Households Analyst)
Hi. Good morning, everyone. Wonder whether you can expand on the international business in the context of increase in reinvestment in Q4, if you can flag geographies or brands that you are seeing more traction, and also whether there is any measurable contribution of the business that you acquired in Japan or it's just too early? And then I have a follow-up.
Matt Farrell (Chairman, President, and CEO)
Yeah. I would say with respect to international, when we're doing well like this, considering we have so many countries and so many brands, including regional brands, and the call goes out to our general managers and our subsidiaries, and so consequently, where we think we can spend to drive growth or position ourselves well for next year is where we're going to go, but I wouldn't say there's any one particular, in international, one particular category or brand that we would be over-indexing on in Q4. It's just opportunistic spend.
Javier Escalante (Beauty, Personal Care and Households Analyst)
Understood.
Matt Farrell (Chairman, President, and CEO)
The other question was Japan. It's probably too early to talk about that, Javier. I mean, we're optimistic. It is a relatively small business, but we're excited about the opportunity to add a few of our global brands into Japan with a great team that is doing a great job with OxiClean. We think they can also do a great job with a handful of other brands.
Javier Escalante (Beauty, Personal Care and Households Analyst)
Thank you, guys. And the follow-up is on the legacy, let's call it that way, detergent business. Deep Clean doing well. This is kind of like the second iteration that you go into mid-tier. You did the OxiClean detergent, I believe, and didn't pan out. So what is driving the success this time around? Do you feel it's the consumer, something with the competition from our friends in Germany? Are the retailers more susceptible to this mid-tier? Anything that you can contrast relative to the OxiClean extension in detergent that didn't pan out as well as Deep Clean? That would be very helpful. Thank you.
Rick Dierker (CFO)
Yeah. It's a fair question. I think it's actually a simpler answer. OxiClean is a brand, but it's an additive brand. And it was not. There was consumer confusion as we tried to go into laundry. It just didn't make the connection. Here, Arm & Hammer is well-known for laundry, and just going up and down the tiers is a much easier proposition. And that's why I think we're finding early success.
Javier Escalante (Beauty, Personal Care and Households Analyst)
Thank you.
Operator (participant)
Thank you. We'll take our next question from Korinne Wolfmeyer with Piper Sandler. Your line is open.
Korinne Wolfmeyer (Research Analyst)
Hey, good morning. Thanks for taking the question. As we think about some of your innovations next year, and particularly around the VMS business, how should we be thinking about this R&D spend and some of this extra innovation spend? Is there any risk to the SG&A as we head into next year due to these investments? And then anything else we should be considering? I think you called out some IT spend. That was a bit of a headwind. Anything else to consider for SG&A as we head into Q4 next year? Thanks.
Rick Dierker (CFO)
Yeah. I mean, over a long period of time, we spent around 2% of SG&A on R&D, and that's been a pretty good number for us. Next year, we're implementing an SAP project, updating our ERP system. Just last time we did that was 2009. It's just time for an upgrade. But I wouldn't really qualify or call out anything at this point in time. We'll do that in January at our Analyst Day.
Korinne Wolfmeyer (Research Analyst)
Great. Thanks.
Operator (participant)
And that was our last question. I will turn the call back over to Matt for any additional or closing remarks.
Matt Farrell (Chairman, President, and CEO)
No. I think that kind of wraps it up for today. We're looking forward to seeing everybody at our Analyst Day in New York City at The Exchange at the end of January, and until then, go on.
Operator (participant)
This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful day.