PepsiCo - Q2 2023

Transcript

Operator (participant)

Good morning. Welcome to PepsiCo's 2023 second quarter earnings question and answer session. Your lines have been placed on listen only until it's your turn to ask a question. In order to ask a question or make a comment, please press star, followed by one one on your touchtone phone at any time. You may remove yourself from the queue by pressing star one one again. Today's call is being recorded and will be archived at www.pepsico.com. It is now my pleasure to introduce Mr. Ravi Pamnani, Senior Vice President of Investor Relations. Mr. Pamnani, you may begin.

Ravi Pamnani (SVP of Investor Relations)

Thank you, operator. Good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans and updated 2023 guidance. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, July 13th, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results.

Please refer to our second quarter 2023 earnings release and second quarter 2023 Form 10-Q, available on pepsico.com, for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Vice Chairman and CFO, Hugh Johnston. We ask that you please limit yourself to one question. With that, I will turn it over to the operator for the first question.

Operator (participant)

Thank you. Once again, in order to ask a question or make a comment, please press star, followed by one one at any time on your touchtone phone. One moment before our first question. Our first question comes from Bryan Spillane with Bank of America. Your line is open.

Bryan Spillane (Managing Director of Equity Research)

Thanks, operator. Hey, good morning, Hugh. Good morning, Ramon.

Ramon Laguarta (Chairman and CEO)

Good morning, Bryan.

Ravi Pamnani (SVP of Investor Relations)

Good morning, Bryan.

Bryan Spillane (Managing Director of Equity Research)

I guess, Ramon, my question is more kind of related just how you're looking at the bigger kind of macro picture in the consumer specifically. I think as we went into this year, you know, there was an expectation that elasticity would increase and, you know, there'd be more, you know, of a consumer response, I guess, to all the inflation we're seeing really globally. I guess, it's, you know, it seems like in the first half, volumes effectively have been better than expected. I guess as we're kind of looking forward in the back half of the year and even into next year, can you just kind of give us a little bit of

A you know, some insight into how what you're seeing with the consumer, what your expectations are, and, you know, just how that may have differed from what we were seeing or what you were thinking maybe going into the start of the year?

Ramon Laguarta (Chairman and CEO)

Good morning, Bryan. I'll give you two, like, there are two areas where, which we're looking at very carefully. One is on the supply side, things are become much better. We're seeing much better flow of materials from suppliers. We're seeing, in general, better labor market, that has helped us to run a better company. You know, that's one area we're looking at very carefully. During COVID, it was, you know, not perfect. It's becoming better, that's why you will see that our costs are performing better and how we're flowing some of the net revenue down into the bottom line.

On the consumer front as well, we were planning the year with more of historical data on elasticities, both in developed and developing markets. We're seeing in the majority of the markets where we operate, we're seeing better elasticities. That is continued to be there in the first half of the year. Even though we're seeing lower-income consumers strategizing around obviously optimizing their budgets, but we're seeing the majority of consumers staying within our categories, staying within our brands. It's remarkable what our marketing teams, our commercial teams, have been doing to minimize elasticities. In some respects, is what we have been investing for the last few years. Our brands are stronger.

The perceived value of our products is better than it was, and obviously, we've been able to raise prices, and consumers stay within our brand. Now, we're seeing consumers making some adjustments, right? We're seeing consumers shopping in more stores than before. They're looking for better deals. They're starting to look for optimization. They're going to channels that have better perceived value. They're buying more in dollar stores, or they're buying more in mass or in clubs. Every segment of the consumer is making an adjustment. Overall, we're seeing very positive, and I think it has to do with the levels of unemployment that we're seeing all around the world. Unemployment is very low in most of the economies, if you think about developed markets, but also developing markets.

You know, markets like Mexico, you know, record low unemployment, some markets in Asia as well. We're seeing overall very good consumer behavior, especially when it refers to our categories. That's why we raised guidance on our top line, and because of the first factor, we raised guidance on the bottom line as well.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Dara Mohsenian with Morgan Stanley. Your line is open.

Dara Mohsenian (Managing Director and Senior Equity Analyst)

Hey, Thanks. Maybe can we just extend that question a little bit? You mentioned some of the strength in Mexico. International came in very strong in general in the quarter. Obviously, you have a lot of different countries and regions within that and two distinct businesses. Just high-level thoughts on what drove the international strength, the state of the consumer internationally. Then I'm thinking particularly about the pricing side of things. Obviously, we're sort of cycling tougher comps going forward globally, not just internationally. You know, can you also give us an update on the competitive environment you're seeing around the world, heading into a period when, in theory, pricing drops off as we cycle these tougher comps? Thanks.

Ramon Laguarta (Chairman and CEO)

Yeah. Thank you. Thank you there. There are obviously some markets around the world that are suffering from currency situations, and there we have to adjust to the reality, and I'm talking about Turkey, Pakistan, Egypt, Argentina. There's a subsegment of markets where I would not apply the global rule, and we're acting very specifically in those markets. Beyond those markets, overall, we're seeing, and I think it's because what I was saying earlier, unemployment levels being very low, we're seeing consumers continue to behave in a positive way. Our category penetrations in most of those markets is still relatively low, and we continue to be an affordable treat in those markets.

Our products continue to be part of the repertoire that they can afford, and they make trade-offs to stay within our category. We're seeing that in a very positive way. Now, competitive-wise, I think there's very rational competition across the world, from what we can observe in the first half of the year, both in our snacks and our beverage business, and that's what we're assuming in the balance of the year.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

Great. Thanks, Good morning. I'm gonna get a little bit more specific around some of the innovation activity, that you guys have been pursuing, particularly on category. In the meals data for what, it's just dollar sales-

Ramon Laguarta (Chairman and CEO)

Lauren, hi. We cannot hear you very well. You're.

Hugh Johnston (Vice Chairman and CFO)

You're breaking up.

Ramon Laguarta (Chairman and CEO)

You're breaking up. I don't know if it's our phone or it's

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

Okay.

Ramon Laguarta (Chairman and CEO)

Now it seems to be better.

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

Is it better? Is it better a little?

Hugh Johnston (Vice Chairman and CFO)

A little better.

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

I'll dial back.

Hugh Johnston (Vice Chairman and CFO)

Maybe call back.

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

I'll hang up and call back. I don't believe this out.

Ramon Laguarta (Chairman and CEO)

Okay, thank you. Sorry for that.

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

Bye.

Operator (participant)

One moment before our next question. Our next question comes from Bonnie Herzog with Goldman Sachs. Your line is open.

Bonnie Herzog (Managing Director and Senior Consumer Analyst)

All right, thank you. Good morning, Ramon and Hugh. I wanted to circle back on your guidance. I just had a question on it. You know, your new guidance implies, I guess, above algo growth in the second half, but I guess doesn't really imply much bottom-line leverage. I wanted to understand, you know, if there might be some level of conservatism baked in, or if you're, you know, planning on stepping up your reinvestments in the second half, or if there are any, you know, incremental headwinds we should be aware of. Thanks.

Hugh Johnston (Vice Chairman and CFO)

Great, great question, Bonnie, it's Hugh. You're right in that the balance or the, yeah, the balance of the year guidance is in effect, seven and a half revenue, eight and a half EPS. That's the squeeze on the balance of the year. What is implied in the margins are two things. Number one, actually continued strong productivity, and if you look at where we are year-to-date, our pricing and our commodities are right in line with each other.

The margin improvement that you saw in the quarter, 132 bips on gross and 45 on net, is entirely driven by productivity, which is reflective of the productivity investments that we've made over the last couple of years, in things like digitalization and in automation and in leveraging Global Business Services to standardize how we operate. That's actually kind of been a pivot this year, and that's a pivot that I think you'll see ongoing, not just in the back half of this year, but actually into 2024 and beyond, where we're getting margin improvement out of these productivity initiatives. Obviously, the margins are quite good year to date, entirely driven by productivity. In the back half, you'll continue to see that level of productivity improvement. If anything, it'll accelerate. We are continuing to invest.

We're investing in advertising and marketing. A&M was up 50 bips in the 2nd quarter. You're gonna continue to see us invest in A&M. You're gonna continue to see us invest in capabilities. Our investment cycles tend to be more back-half oriented than they are front-half oriented, when we have a sense as to how the year is gonna turn out. That's what you're seeing in the implied guidance in the balance of the year. It's not that the productivity is gonna diminish. It's not that anything is going on with pricing other than the overlapped effect, overlap effects of pricing. It's really a reflection of some of the productivity being reinvested in the back half of the year, so that we continue that strong momentum into 2024 and beyond.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Vivien Azer with TD Cowen. Your line is open.

Vivien Azer (Managing Director and Senior Research Analyst)

Hi, good morning. Thank you. I was hoping to actually follow up, good morning, on Bonnie's question, but just to drill down on PBNA margins, down a little bit year-over-year. In your prepared remarks, you reiterated your confidence in expanding margins on a full year basis. I was hoping you could just expand on some of the headwinds that you saw in the quarter and what gives you confidence on the full year margin outlook for the segment specifically. Thank you.

Hugh Johnston (Vice Chairman and CFO)

Yeah. Hi, Vivien, it's Hugh. The margin in PBNA was down in the second quarter. We had a big gain on an asset transaction in 2022. We're cycling over that transaction in 2023. For the full year on PBNA, you'll see the margins up in a healthy way, and north of 100 basis points.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

Hi. Is this better? Hopefully.

Hugh Johnston (Vice Chairman and CFO)

Much better.

Operator (participant)

It is.

Hugh Johnston (Vice Chairman and CFO)

Much better.

Lauren Lieberman (Managing Director and Senior Equity Research Analyst)

Okay, cool. I'm still sitting in the same place. Okay. I'm really sorry about that. I was gonna ask about Gatorade. Tons of innovation activity. You guys have talked about it. We're seeing it very much in the marketplace. In the release, you talked about Gatorade being up double digits in the quarter. When we look at Nielsen, it shows something that, you know, significantly trails that. Was just curious, I guess, about mix of on track, how much of maybe some of the performance you're seeing has to do with incremental shelf space and distribution, given the breadth of innovation and new product activity there's been?

Ramon Laguarta (Chairman and CEO)

Lauren, I think there are a couple of factors. The G to DSD has a meaningful impact on timing and on when we reflect our sales and when the consumer actually buys compared to previous years. The cycle has reduced substantially, given our DSD. That might have some implications on the readings. We feel good about the sports category, even though it has been cold in some parts of the country, for the month of June and so on. In general, within the categories, continues to have, you know, healthy metrics in terms of penetration and usage and everything else.

Our innovation, Gatorade Fit, Gatorlyte, and most importantly, for us, long term, our powders and tablets is going very, very well. We believe in those subsegments continue to develop, along with G Zero, which, you know, continues to attract new consumers to the category. We feel good. We're seeing all the execution metrics for Gatorade improving. In, you know, inventory on display, you know, service levels to our customers, which were a little bit, you know, handicapped in the past due to supply chain issues. We're seeing the health of the brand and the category at a pretty good level. It is true that there are some new entrants in the category, like PRIME, that have been taking some space, especially with younger audiences.

They've been affecting Gatorade, but they've been affecting more some other brands in the category that had that kind of profile. We feel good about the execution. We feel good about how the brand is performing. We've increased advertising substantially against Gatorade, and we'll continue to do so in the back end of the summer and the year. We feel good about Gatorade. I think the G to DSD is gonna be a structural move that will give us better execution and capacity to respond to weather changes and opportunities in the marketplace going forward.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Andrea Teixeira with JPMorgan. Your line is open.

Andrea Teixeira (Managing Director and Senior Equity Research Analyst)

Hi, good morning, everyone. My question is more on the balance of pricing and volumes. Obviously, you're lapping some of the most strong price increases from last year, and you're expecting, I would say, are you expecting still high single digits in the second half with volumes more flat or still negative? Because to get to the math of 10%, perhaps, you know, you're lapping Russia, but seems that the U.K. and France and Spain have lagged a bit for the top line. I'm trying to reconcile the implied organic 7.5-ish with better volumes. In other words, you are seeing some improvement there as pricing kind of ease off for the consumer?

How we should be thinking, to Ramon's comment on some of the discounters and that happening, or are you still seeing room for continued pricing, but to a lesser extent, as you mentioned at CNBC interview? Thank you.

Hugh Johnston (Vice Chairman and CFO)

Go ahead, Ramon.

Ramon Laguarta (Chairman and CEO)

Yeah, no, we can have Hugh continue the CNBC interview.

Hugh Johnston (Vice Chairman and CFO)

Hi, Andrea. Balance sheet revenue, the squeeze is 7.5%. What I think we're gonna see is volumes will be sort of in the flattish range for the balance of the year. Obviously, there's still carryover pricing, and I don't think we'll do anything different than our normal cycles on pricing in the balance of the year. You tend to see pricing in the beverage business in the fourth quarter. Frito-Lay tends not to go in the balance of the year, that's C&G. We'll see how the year plays out. The implication that we have in the forecast right now is kind of back to our relatively more normal pricing. Obviously, that sets us up for 2024.

I mean, there are a lot of ways to think about it, as the back half of the year is a little bit ahead of our long-term guidance, which I think is the momentum that we'll carry forward.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Chris Carey with Wells Fargo Securities.

Chris Carey (Managing Director and Head of Consumer Staples Research)

Good morning.

Hugh Johnston (Vice Chairman and CFO)

Morning, Chris.

Chris Carey (Managing Director and Head of Consumer Staples Research)

Hey, Hugh. Just one quick follow-up on the gross margin. You said that the pricing tailwinds year to date are basically in line or offsetting inflation. I couldn't tell if you said commodity inflation. You know, I guess what I see is about 600 basis point benefit from pricing and a 400 basis point headwind from commodity inflation. It seems like you're actually tracking ahead. When you made that comment, was that a total inflation, you know, comment? Is there a mix tailwind as well, so maybe price is actually below what we can see in price mix? I just wanted to clarify that.

I guess connected is just, you know, in the context of full year gross margin, you know, unless there's some offsets, it seems like you could see some notable expansion, you know, for the full year. You know, am I reading that wrong, and that's gonna allow you to invest, or are there some offsets I'm not thinking about? Thanks so much.

Hugh Johnston (Vice Chairman and CFO)

Yeah. Hey, Chris Carey, it's Hugh Johnston. What I had said was, pricing was up exactly in line with our commodity inflation. Both are in the teens, and the numbers are basically identical. That obviously is not driving margin improvement because those two are essentially offsetting each other. In terms of the balance of the year margins, yeah, we have previously communicated we'd be at least equal with where we were last year. We're now clearly gonna be ahead of where we were last year. Margins will improve this year as opposed to the at least equal that we had previously communicated. The driver, of course, behind that is productivity and the things that I've been talking about, and Ramon's been talking about for a while.

You know, we've made these investments in digitalization. We've made these investments in automation. We've been investing in building out a Global Business Services operation. I think that's the pivot that you see happening inside of our numbers right now, is that the margins will improve, I think, on a sustained basis, and it'll be driven by productivity, and that productivity will come out of those three buckets. I don't think this is a one or two-quarter thing. I think you're gonna see margins continue to steadily improve this year and into the coming years.

Operator (participant)

Thank you. One moment before our next question. Our next question comes from Peter Grom with UBS. Your line is open.

Peter Grom (Executive Director and Senior Equity Research Analyst)

Thanks, operator, and good morning, everyone. I was hoping to get some updated thoughts on the Celsius agreement and kind of what you've learned over the past several months. You know, obviously, the growth has been tremendous, but has that outsized growth or better-than-expected share performance shifted your view as to whether this is the right structure for PepsiCo longer term? Then just, you know, having previously distributed Bang and kind of given the Bang and Monster news, do you have any updated thoughts as to whether this could impact the growth trajectory for Celsius looking ahead? Thanks.

Ramon Laguarta (Chairman and CEO)

Good morning. Listen, I think there's a couple of realizations on this. The number one is that the power of our distribution system, our DSD machine in the U.S., is very powerful. Obviously, you can see by the increase in the numerical distribution and the quality of execution. That's one element that makes us feel very strong about our capabilities in the U.S. beverages. Second, I think Celsius is a brand that is capturing new consumers to the energy category, consumers that were not consuming energy drinks for many reasons in the past, the flavor or image or some other elements. That is a positive. The category keeps expanding, and we're glad that that's in our portfolio.

We're working together with Celsius to see additional international opportunities, whether we can expand the brand in some other markets, especially more developed markets where the category is a bit more developed. Those are the three conclusions that we're taking from our relationship so far.

Hugh Johnston (Vice Chairman and CFO)

You're right. The only thing I'd add is we're very happy with the investment we've made, and we feel very comfortable where we are with that company right now. I think we're both benefiting from each other's capabilities.

Operator (participant)

Thank you. One moment before our next question. Our next question comes from Robert Ottenstein with Evercore ISI. Your line is open.

Robert Ottenstein (Senior Managing Director and Head of Global Beverages and Household Products Team)

Great. Thank you very much, congratulations on another terrific quarter. I wonder if we could focus on an area we haven't spent that much time talking about in the past, but is really doing well, and that's Europe. Maybe perhaps parse out for us, you know, or remind us, you know, the business mix in Europe between snacks and beverages. Talk a little bit about how the business is doing so well, you know, very significant pricing. I know you had relatively easy comps. Whether you think that there are structural long-term changes in the pricing dynamics in Europe. I mean, for many years, Europe was very deflationary and extremely competitive.

Hugh Johnston (Vice Chairman and CFO)

Tough retail, I'm sure a lot of that persists, but there, you know, are there clues here that maybe there are structural changes in that environment that can go forward? Thank you.

Ramon Laguarta (Chairman and CEO)

Yeah, thank you. Yes, good diagnostic. The fact that our European business clearly has had a terrific first half of the year, and we're expecting that to continue in the second half. A couple of elements, I think we have a portfolio that is quite robust on the snacks side. We have very good market positions in snacks, and we have good challenging positions in beverages, and our zero propositions in Europe are growing very fast, and they're taking market share in some of the more, you know, more affluent markets in Europe. Good portfolio mix and good focus by the team on growing that portfolio.

As you said, we were a little bit late to pricing last year in 22, and the team has been courageous and has been able to find win-win solutions with our customers in 23. You know, as you see from the numbers, a good pricing levels. What is also very remarkable in Europe is the levels of productivity that the team has been executing through simplification of the business and everything else that Hugh was saying about digitalization and automation and, you know, also moving some service to essential points that we can service the businesses more effectively, more efficiently. A good work by the European team, both on portfolio manage simplification and then in driving productivity. We feel good about Europe.

We have very strong business in both Central Europe, you know, Eastern Europe and parts of the economy that are growing faster. We feel good about the portfolio composition and the business going forward.

Operator (participant)

Thank you. One moment before our next question. Our next question comes from Steven Powers with Deutsche Bank. Your line is open.

Steven Powers (Managing Director and Lead US Consumer Packaged Goods Analyst)

Great. Thanks, Good morning. You know, maybe putting a final bow around Bryan's original top-line question, I guess, Hugh, the volume cadence that you implied a little earlier, you know, down 2% or so in the first half based on results reported to date, and if I heard you correctly, flattish in the second half. How does that compare with your outlook coming into the year? I guess just stepping back, I'm trying to get a better sense of whether the 4 points of upside you now see in organic growth versus that February forecast is more driven by better volumes, or whether the upside is really driven by greater than expected price mix realization, or whether it's some kind of combination. Thanks.

Hugh Johnston (Vice Chairman and CFO)

Yeah. Hey, Steve, good morning. It's a combination. Volumes are certainly a bit better than we expected, and price realization is a little better than we expected as well. It's a combo. It's not dominant one or the other.

Ramon Laguarta (Chairman and CEO)

Yeah, I would say the commercial teams have done a great job in minimizing elasticity. Going into the year, of course, we were assuming a level of elasticity that was more based on historical levels. I think we've been positively surprised on the strength of the brands in some markets, and obviously, as I said earlier, the consequence of the investment we've been making. The way the teams have executed innovation, have executed range expansion, you know, multiple displays around the store and some of the tactics we normally use to drive volume and minimize elasticities, have been really well executed. I think we link it as well to as being a more intelligent company in a broader sense, having better data, having better digitalization and execution capabilities.

It is all connected, and, yeah, we feel good about how the business performed in that respect versus what we had initially planned.

Operator (participant)

Thank you. One moment before our next question. Our next question comes from Filippo Falorni with Citi. Your line is open.

Filippo Falorni (Director and the Lead Analyst for US Beverages, Household Products, and Personal Care)

Hey, good morning, everyone. Quick question on Frito-Lay North America. Clearly very strong results in the quarter. Over the last couple of weeks, we have seen a bit of a slowdown in track channels. The first question is: What do you think is driving the recent slowdown? Partly is obviously cycling, high price realization, but also just general sense on what you're seeing from a volume standpoint. Also, why are you seeing untracked channels in that business? Thank you.

Ramon Laguarta (Chairman and CEO)

Yeah, the Frito-Lay is having a tremendous year again on top of a very good 2022, and it's been driven by our large brands performing very well, linking to what I said earlier about very strong brand programs and commercial programs. The away from home business and the small store independent business where there is a lot of impulse consumption, is not really reflected normally by a lot of the reports that you've probably seen, so that might be a gap there. Obviously, in the summer, this is very relevant as people move around more. We're seeing the only thing we're seeing in Frito-Lay in the last few weeks is the lapping versus the P6 price increase we did last year. That's the only element.

Everything else, we're seeing a much better supply chain, so our service levels to our key customers is improving a lot. That's good news because we were a little bit handicapped in last year and first half of this year. We're seeing much a broader portfolio, so the smaller SKUs that drive, we know they drive frequency and they drive penetration in some sub-consumers. We're seeing a lot of positive trends. Some of our innovation, if you think about minis or if you think about some of the new launches like the jerky product or or our relaunch of the nuts and seeds or our permissible portfolio, they're really doing very well along with our big brands.

We feel good about the portfolio composition and the continued executional capabilities of Frito-Lay to drive availability universally almost. We're feeling good about the business.

Operator (participant)

Thank you. One moment before our next question. Our last question comes from Gerald Pascarelli with Wedbush Securities. Your line is open.

Gerald Pascarelli (SVP of Equity Research)

Hi, Thanks very much for the question. mine's also on energy drinks, specifically regarding near-term distribution opportunities. you've obviously been a great partner for Celsius since you took over distribution of their products, which has been readily apparent in measured channels. Looking forward, how do you think about the opportunity to penetrate some of the non-measured channels that have yet to scratch the surface, specifically related to food service, like college campuses, as an example? Is a comprehensive rollout of these products something we should expect in the back half of this year, or is that more of a 2024 opportunity? I guess any incremental color you could provide on timing and then the potential halo effect that Celsius could have on your legacy portfolio of energy products would be helpful. Thank you.

Ramon Laguarta (Chairman and CEO)

Yeah, listen, we take our energy products along with the rest of the portfolio where it makes sense, right? Some of the channels you're mentioning, like college and universities, they are very large channels for our energy execution, right? When you go to a normal campus, you will see a Rockstar, you will see Celsius, you will see our coffee business, you will see, you know, the new Gatorade energy, Fast Twitch. You know, you will see all this execution. Wherever there are consumers that are looking for energy, we tend to be there. We're not holding on any opportunities at this point to maximize the reach of our brand. No, don't wait for 2024. We're executing as we speak.

Great.

Gerald Pascarelli (SVP of Equity Research)

Thanks.

Ramon Laguarta (Chairman and CEO)

I think this is the end of the conversation. Thank you very much. Thank you, all of you, for joining us today, and especially for the confidence that you've placed in us with your investments. We hope that you'll have a great summer, and stay safe and healthy. Thank you.

Operator (participant)

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.