TreeHouse Foods, Inc. (NYSE:THS) Q2 2025 Earnings Call Transcript

TreeHouse Foods, Inc. (NYSE:THS) Q2 2025 Earnings Call Transcript July 31, 2025

TreeHouse Foods, Inc. beats earnings expectations. Reported EPS is $0.17, expectations were $0.1.

Operator: Welcome to the TreeHouse Foods Second Quarter 2025 Conference Call. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the call over to TreeHouse Foods for the reading of the safe harbor statement.

Matthew D. Siler: Good morning, and thank you for joining us today. Earlier this morning, we issued our second quarter earnings release and posted our earnings deck. These items are available within the Investor Relations section of our website at treehousefoods.com. Before we begin, I would like to advise you that all forward-looking statements made on today’s call are intended to fall within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections and involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. Information concerning these risks is contained in the company’s filings with the SEC.

A reconciliation of non-GAAP measures to their most direct comparable GAAP measures can be found in the release and the appendix tables of today’s earnings deck. With that, let me now turn the call over to our Chairman, CEO and President, Mr. Steve Oakland.

Steven T. Oakland: Thank you, Matt, and good morning, everyone. Today, Pat and I will discuss our second quarter financial results and provide an update on our operations and our outlook for the remainder of the year. Our results are outlined on Slide 4. I’m pleased to report we achieved adjusted net sales and adjusted EBITDA results that exceeded the upper end of our guidance ranges. This performance further demonstrates the execution of our margin improvement plan we discussed with you earlier this year. We are confident the plan will meaningfully benefit results for the remainder of this year and beyond. The operating environment remains dynamic, but we are focused on controlling what we can control and executing against our plans to drive profits and cash flow regardless of the macro headwinds.

Our comments today will reflect efforts to reduce structural costs and to better align our business with what we’re experiencing in the near term, while we position the business to create value over the longer term. Additionally, we are focused on execution, maintaining our improved service levels and our griddle business is now in a place to positively impact our results in the second half of the year. Shifting gears, let’s take a look at the consumer trends we experienced during the second quarter in the categories in which we operate, which are detailed on Slide 5. The progression on volume this quarter unfolded largely as we expected. We began our margin management activities as early as the fourth quarter of last year, leading to some deliberate pricing and distribution choices to make our manufacturing network more efficient.

Q&A Session

In some cases, we now serve a narrow set of customer needs, but do that more efficiently. This, combined with softer ongoing consumer trends, which were felt across the broader market, put pressure on units during the quarter. Pricing more than offset the unit volumes driving growth for the quarter. We expect these volumes and pricing dynamics to continue in the third quarter, with unit volumes improving in the fourth quarter. At a macro level, the private brand industry dynamics remain favorable relative to national brands, as you can see on Slide 6. Specifically, price gaps are healthy and private brands continue to either take or maintain share despite the lower consumption environment. As it relates to promotion levels, what we have experienced thus far in 2025 is similar to what we experienced a year ago.

With that said, you have probably heard plenty of commentary about promotions from others in our industry. So we thought it would be helpful to spend some time on historical levels of national brand promotion within our categories. On Slide 7, you can see a 10-year view of national brand promotion levels as a percent of total sales within our categories. The current level of promotion remains well below the levels seen prior to the pandemic. Now looking ahead, we do anticipate some increase in promotional intensity in some of our categories, which is reflected in our guidance today. As you move to Slide 8, you’ll notice that private brands have consistently gained share over the last 2 decades, which we believe will continue over the longer term.

This gradual share growth occurred despite higher levels of promotion and a variety of promotional strategies over this period of time. Continuing with the discussion of the long-term private brand opportunity on Slide 9. It’s clear that many grocery retailers also see further runway for growth in private brands and are making their own strategic investments accordingly. Private brands provide an opportunity to deliver higher margins at a time when retailers across the industry are dealing with cost pressures, whether it be labor, input cost inflation or tariffs. Some examples of these retailers include ALDI, which continues its store base expansion across the U.S. with an assortment that is focused almost exclusively on private brands. Walmart is focused on growing better goods, a private brand, which makes quality trend forward and chef-inspired food approachable and affordable.

These are 2 of many examples that underscore the opportunity available to TreeHouse to partner with our retail customers, gain share and create value over the long term. I’d like to conclude by providing some perspective on how we continue to manage the business to align with the near-term realities of slower category growth. The foundation we’ve built with our supply chain initiatives remains strong, and we’re focused on executing what you see outlined on Slide 10. We’re taking actions to deliver our commitment of $250 million of gross supply chain savings through 2027. In the current environment, we think it’s prudent to focus on profitability and cash flow. We have strengthened our margin management function, allowing us to enhance our profitability by allocating our capacity to the most attractive mix of businesses that best drives benefits for both our customers and TreeHouse.

This quarter’s results are another example of our disciplined approach. While this is impacting our volumes, it aligns with our strategic focus on margin and cash flow. Ultimately, the impact will be seen in our adjusted EBITDA. Finally, we are also focused on our cost structure. We are empowering our organization to make faster decisions to better serve the complex needs of our customers. We are focused on running a lean organization and driving synergies through a broader utilization of shared services. We also have an opportunity to optimize our plants and their capacity. In most of our categories, we have multiple production locations. This allows us to move production to gain efficiency depending on the needs of the business, as we discussed last quarter within our nondairy creamer business.

Furthering this effort, we recently made the decision to close 2 plants to rightsize our network within our pickles and cookies businesses. We believe these strategic decisions improve our competitive positioning and also allow us to be more flexible with capital, focusing our investments in areas that will provide better margin profiles and growth potential. all in an effort to drive improved profit and cash flow. I’ll now turn the call over to Pat for further detail on our second quarter results and our outlook. Pat?

Patrick M. O’Donnell: Thanks, Steve, and good morning, everyone. I’d like to start by thanking the team for their commitment to execution again this quarter. You can see a summary of our second quarter results on Slide 11. Our adjusted net sales were up 1.4% year-over-year. We delivered strong adjusted EBITDA of $73.3 million, which was up about 4% year-over-year. Our adjusted EBITDA margin rose 20 basis points to 9.1%. On Slide 12, we have provided further detail on the drivers of our year-over-year adjusted net sales. The decline in volume and mix reflects planned margin management actions, some slower takeaway in the quarter and service impacts due to the restoration of our Griddle facility, all of which were in line with our expectations.

Our acquisition of Harris Tea was a benefit of almost 5% as expected. Pricing was a benefit of approximately 4% due to commodity-related pricing adjustments, primarily within our coffee business. Additionally, net sales were negatively impacted by Griddle recall-related returns, our ready-to-drink business exit last year and a modest foreign exchange drag, which in total resulted in a decline of just over 1%. Moving on to Slide 13. I’ll take you through our adjusted EBITDA drivers. Volume and mix provided a drag of $1.1 million, driven by lower volumes, including the impact of our margin management actions, which were largely offset by Harris Tea volume. PNOC, pricing net of commodities, was a drag of $9.7 million year-over-year and was driven by higher costs due to commodity inflation.

Operations and supply chain delivered a $10.6 million benefit versus the prior year, driven by supply chain cost savings and improved operational execution. Lastly, SG&A and other delivered a $2.9 million benefit versus the prior year, driven primarily by cost reduction efforts. Moving on to our capital allocation strategy, which is outlined on Slide 14. The Board and management continue to be focused on deploying capital in a manner that enhances returns for shareholders. Our first priority remains investing in our business, which we do organically through CapEx and inorganically by strategically adding depth and capabilities as we did with our acquisition of Harris Tea earlier this year. We will maintain our balance sheet, which currently involves building cash throughout the year to drive our net debt to adjusted EBITDA ratio to our desired range by year-end.

We will continue to be disciplined and look at all capital deployment decisions by evaluating risk-adjusted returns. Moving on to our outlook on Slide 15. We are anticipating our full year adjusted net sales will grow between negative 0.5% and 1% year-over-year or in a range of $3.36 billion to $3.415 billion. Company volume and mix are still expected to decline approximately 1% year-over-year, driven by an expected 1% decline in base volume and mix. The Harris Tea volume benefit is still expected to be offset by our previously announced decision to exit the ready-to-drink business and other margin management actions, along with the impact of the griddle recovery. We now expect that commodity-related pricing will be a low single-digit benefit in 2025, driven by pricing to offset commodity inflation.

We are reiterating our adjusted EBITDA guidance range of $345 million to $375 million. We are also reiterating our free cash flow expectations of at least $130 million. Our guidance for net interest expense and capital expenditures remain unchanged. Additionally, our current guidance contemplates what is in place as it relates to tariff policies as of today. With that said, we will continue to monitor and evaluate any potential additional impacts as new information becomes known. As it relates to the third quarter, we expect adjusted net sales to be in the range of $840 million to $870 million, representing approximately flat growth at the midpoint. Organic volume and mix are expected to decline high single digits as a result of margin management actions.

Pricing is expected to provide an approximate 4% benefit. Our third quarter adjusted EBITDA is expected to be in the range of $90 million to $110 million. With that, I’ll turn it back over to Steve for closing remarks. Steve?

Steven T. Oakland: Thanks, Pat. As we continue to navigate the consumer backdrop in 2025, we are keenly focused on further strengthening the foundation of our supply chain and margin management initiatives, leveraging our improved service levels in key categories ahead of our peak seasonal period and pursuing profitable new business opportunities. With that, I’ll now turn the call over to the operator to open the line for your questions.

Operator: [Operator Instructions] The first question comes from Andrew Lazar of Barclays.

Andrew Lazar: Steve, I guess, first off, based on some of the charts in your slides, the percent price gaps, right, between branded and private label, while still above historical levels, it looked like they’ve been narrowing a bit relative to last year. As you know, private label has taken some more pricing in the second quarter maybe than did some of the branded players. As a result, it looks like in the second quarter, brands actually saw better volume performance in your categories relative to private label. Just hoping you can provide maybe a bit more color on how the competitive environment played out in the quarter, I guess, relative to your expectations and how you see that dynamic playing out through the balance of the year?

Steven T. Oakland: Sure. Sure. First of all, let me touch on the pricing piece. As you know, most of the pricing that went through was commodity, a little bit of tariff pricing. And usually, those are the same on a unit basis, right? So if a private label unit has $0.20 of commodity increase, a branded unit will have $0.20. So when you look at a chart that’s within a couple of tent, right, I apologize for the scale, 4.1% to 3.9% looks pretty dramatic. But it’s really the same thing. And when you think that brands are 25% more expensive because they have trade and marketing in their price list, right? So we’ve actually moved our prices the same or maybe even $0.01 or $0.02 less when it comes to shelf price. So that commodity increase is pretty much the same.

And I think that’s why you’ve seen the gaps hold up so well, right? So I think we’ve taken a higher percentage price increase, but we’ve taken basically the same penny per unit. And so that’s why the shelf prices have changed about the same. So that’s one thing. I would also say that the second quarter for us is a quarter where is our smallest sequential quarter, typically, we look at our top 5 categories. And in 4 of our top 5 categories, we performed at or above the private label share, right? So we’ve held or gained share. And in the one that we didn’t, quite frankly, it’s a customer mix. And maybe, Pat, you can speak to the customer issue here.

Patrick M. O’Donnell: Yes. I think looking at the IRI data is helpful. It’s probably directional from a private label because we don’t have all the distribution that shows up in the IRI by customer. And so depending on what distribution we have by customer in each category, that will vary a little bit. So I don’t think we see that as too disconnected.

Steven T. Oakland: Yes. We don’t align exactly with the total universe of private label — so I guess we look at the second quarter as our biggest businesses did pretty well. There’s some margin management involved here, which we expected and we guided to. And the forecast from the customers for the third and fourth quarters, our 2 biggest quarters are pretty solid. So we think the year is going to unfold pretty much how we thought. There is some promotional noise that we know in the back half, and we’ve accounted for that, we think. So we think the year will fold out just about as we expected.

Andrew Lazar: Got it. Got it. And then just a quick follow-up. I know you guys have been pretty disciplined about the types of assets that you’ve been willing to sort of pick up, ones that give you more depth maybe in capabilities in certain categories where you want to go deeper or vertically integrate more like what you’ve done in coffee or tea, what have you. Has the environment along those lines in terms of maybe availability of interesting assets that might fit in terms of improving your depth or capabilities in certain categories increase at all just given how difficult growth has been to come by in the industry. And I’m curious if there’s a change in that perspective at all.

Steven T. Oakland: Well, Andrew, that’s a great catch. We — this year, ’25, we looked at as a year to reset our cost structure, right? And we talked about margin management. We’ve talked about some plant consolidations now that are public. We’ve done some organizational streamlining, those kinds of things. But investing in our hot beverage business, coffee and tea, if you look at within private label, coffee and tea over the last few years have done really well, right? And so we think that’s a place to position ourselves. The same thing we’ve done, we’ve done it more organically in our cookies and crackers business. That’s been investments in our plants. So we’re trying to be really disciplined on our capital allocation. And the opportunities when we get them to do it inorganically just make it faster, quite frankly, things like the Harris Tea got us to a place we wanted to be much quicker.

But that investment will be in those categories that we think are performing the best. We like all of our categories, but several of them, we think, have a little more momentum in them for the near term and the long term, and that’s where the capital allocation is going, if we can.

Operator: The next question comes from Jim Salera of Stephens Inc.

James Ronald Salera: Steve, I wanted to ask a question regarding innovation. We’ve heard a lot of companies that have reported talk about innovation as a way to kind of stand out and engage with the consumer, particularly in kind of a softer macro backdrop. How does that flow through in your position? And do we see private label kind of riding on the coattails of some of that innovation and trying to have innovation alongside branded? Or do we find that if branded innovation ticks up, that can maybe pull some attention away from private label? Just any thoughts on kind of the push pull there?

Steven T. Oakland: Sure. The nice thing about private label from an innovation standpoint is we are fast followers, right? And if you look at our investments in things like pretzels, right, we have a seasoned pretzel business that is really a result of the innovation in the industry, right, and the dots phenomena, all of those things. So we see branded innovation in categories is really important. The key for us is trying to determine when it really becomes a trend, right? We got to make sure it’s not a fad, it’s a trend. We have tried to get in too early in the past, and that’s not been successful. We have to — you remember, private label is maybe 20% of a great category, less than that of a lot of categories. So we need that innovation to get moving so that 20% of that is meaningful for us.

So there’s a lag between branded innovation and private label follow, but we’re excited about it. We have it in coffee with cold brew. We have brew over rice, all of those things. We have it in pretzels with seasoned and filled. And we have it in other categories. We have it in broth with bone, those things. So we see innovation as positive for the whole industry and the categories and the key for private label is picking those places to invest so that we can follow quickly.

James Ronald Salera: And maybe thinking about optimizing your supply chain relative to other suppliers that some of the private label partners could go to. Do you feel that your capabilities on innovation are much more — are you in a structural advantage relative to peers such that you can be much quicker to kind of catch on to if you see something established as a trend and not a fad?

Steven T. Oakland: Sure, sure. I think our balance sheet helps us a lot there, right? Our size and scale give us some opportunity there. I think we’ve been able to move faster on things like pretzels. We’ve actually made acquisitions in that — in those spaces when we see the opportunity, right, to get us there faster. I think the work we’ve done in the coffee business, you’ll start to see that over the next couple of years. I think we put not just great assets in place, but great people and great capabilities. So I think that’s where our balance sheet helps us, right, especially in a higher cost capital environment. You might have had a time a couple of years ago when capital was much cheaper that it was a little easier for some of the smaller guys to do it. But I think our size and our balance sheet give us some advantage today.

Operator: The next question comes from Robert Moskow of TD Cowen.

Robert Bain Moskow: I wanted to see if you could drill down a little bit into a couple of categories. You bought the Northlake facility, expanded your coffee capabilities significantly. And you can see in the tracking data, some pretty extraordinarily good demand for ground coffee even with prices being higher, the category volume is still really high. And I want to know if you’re seeing that in your results also. Is that segment of your business performing well? And what do you think is going to happen in August when all these brands start raising price?

Steven T. Oakland: That’s a great question. Yes, we see demand for — and we see opportunity in ground coffee right now. And we pack ground coffee for both retailers and some large foodservice institutions. And so that’s a great new business for us. I talked about investment we made. Farmer Brothers built a wonderful asset there, but we felt it needed to be fully built out. That work is just finishing as we speak right now. So it’s giving us capability. We’re literally bidding on projects that we could have never bid on before, right, for next year. So we’re encouraged by that. We have the Brazilian tariffs coming in place, it will — that’s 40-some percent or the largest coffee or coffee growing country in the world. Hopefully, most of us have a little bit of that hedged and are in a good place with that.

I think we’ll see what happens over the next few months. There are formulation alternatives. Our team has worked on all of those, but we will probably see, assuming those tariffs stay in place, big assumption, right, as you know, what the volatility of tariffs have been. But I think ground coffee on a per serving basis is still really reasonable compared to every other way to consume coffee. So I think the consumer will be frugal. I think private label will have a nice opportunity because of our price gaps, but I think the category will hold up. I don’t think we’ll change if you think about a 50% price tariff on 40% of the input cost, I don’t think that will change the per serving price enough to change the consumer dynamics. But I do think it’s an opportunity for private label because we’ll have lower price points on the shelf.

Robert Bain Moskow: Okay. And a follow-up is on broth. I didn’t hear much mention of it. Where are you at in terms of regaining market share in broth after the plant issues that you had? Do you expect to be more competitive in this coming soup season?

Steven T. Oakland: Yes. I think — thank you. It’s kind of nice not to talk about it for a quarter, frankly. It’s — we’ve had fantastic service, like we’re virtually weeks of 100% service in broth. — over the last month or 2. And so it’s really nice to see that team delivering. Literally, there were conversations as recently as yesterday with some of our largest partners on the broth forecast and getting it exactly right for November, December, October, November, December, let’s call it. And so we feel that business — that business was one of our fastest growing pre-pandemic, and we feel like it’s on the verge to coming back to that.

Operator: Your next question comes from Matt Smith of Stifel.

Matthew Edward Smith: Steve, just the first question would be regarding the private — the underlying volume decline you called out for the year around 1%. Can you talk about the expectations in the second half? I think volumes on an underlying basis are down a little over 2.5% year-to-date. You have some tailwinds like Griddle and broth, but what are you embedding for the underlying category performance for private label in the outlook?

Patrick M. O’Donnell: Sure. Yes. Matt, I’ll take that one. I think we’re embedding, I would say, more of the same. I do think you’ve got some tailwinds that you highlighted in terms of getting all the broth production online and Griddle production online that will be tailwinds for us from that perspective. But from a — if you’re asking about kind of underlying consumer trend, we’re not expecting anything significantly different from what we saw in the first couple of quarters this year.

Steven T. Oakland: Yes. Really, it’s us lapping those supply chain issues and holding steady with where we are today from a consumer standpoint. If the consumer comes back to us a bit, that would all be on top of what we’ve guided. But if not, we feel really good about what we’ve guided.

Matthew Edward Smith: And as a follow-up, you mentioned beginning to lap some of the margin management activity that you pursued in the fourth quarter. Now you have a couple of quarters of experience and the benefit that’s flowing through the P&L. Are you looking at a broader range across the business for opportunities for more margin management activity? And how would you scale that opportunity relative to the actions that you’ve taken over the last couple of quarters?

Steven T. Oakland: Hopefully, in the prepared remarks, we got started early. We got started in the fourth quarter of last year. I think we’ll see most of that behind us. And we look at ’25 as that reset the cost structure, get those things behind us. And then that cost structure, we think, is going to make us much more competitive in a couple of targeted categories. So we see ’26 as the start of a growth year, not another margin management year. So we think we’ve targeted the vast majority of the opportunity there, and it’s gone really well. I think you can see in our dollar sales numbers. There are places where we price for some complexity and came to a nice agreement with the customer and other places where we worked with the customer to get that product out of our system. So we had both things happen there, which we hoped would happen and it did, but we hope to get it behind us. So I think we’ll be on a normal growth trajectory coming in ’26.

Operator: The next question comes from Scott Marks with Jefferies.

Scott Michael Marks: First one I wanted to ask about was just the Q3 guide. There were some comments in the release about expectations for organic vol mix to be down high single-digit percentages, which I think was a little bit less than what maybe some folks were expecting. So wondering if you can just kind of break that down for us a bit in terms of how you see the different components impacting that?

Patrick M. O’Donnell: Yes. From a Q3 standpoint, we’ll have a couple of things coming towards us. I think we’re expecting consumer trend to be more or less the same. You are starting to see the Griddle recovery from a valve mix standpoint start to play through. And then you’ve got the margin management activities that are starting to that we’ve taken that will impact that number as well. So hopefully, that helps.

Scott Michael Marks: Yes. Understood. I mean is there maybe a step-up in the margin management activities? Just trying to understand kind of why down high single digit as opposed to, let’s say, mid-single digit if some of the griddle recovery is starting to play out, especially?

Patrick M. O’Donnell: Yes. And you’ve got pricing up and then that’s impacting the volume as well. So I think — I’m not sure we’re implying anything significantly different from a third quarter standpoint compared to.

Steven T. Oakland: And what I tried to say in the prepared remarks, there’s a sales cycle here, right? When we go to a customer and we decide to exit something together, there’s usually 90 days of packaging, that kind of stuff. So that’s why that really hit in the second quarter. And so that will be in the third quarter. But the Griddle primarily it’s in the fourth quarter, right? And we actually had returns in the fourth quarter, right, product we took back. So there’s a significant bump up from griddle in the fourth quarter. So that’s why we say third will be similar and fourth will be significantly different.

Scott Michael Marks: Okay. Got it. And then just a quick follow-up. In terms of some of the pricing actions that are being taken, I assume it’s related to coffee and cocoa needs mostly, but wondering if you can just provide a little commentary on where some of those pricing actions are being taken.

Patrick M. O’Donnell: Yes, Coffee is the largest part. There was probably a tiny bit of cocoa. That’s not our biggest commodity. I think we’ve seen a few of the oil complex also move a little bit. Those would be the biggest areas. And then we’ve had a very small amount of tariff pricing. that we’ve had to push through as well.

Operator: [Operator Instructions] Our last question today comes from the line of John Baumgartner with Mizuho.

John Joseph Baumgartner: Maybe first off, Steve, in terms of the expectations for increased promotion in H2 that you mentioned, how do you see that playing out? Are you anticipating the balance of that promo between price versus non-price I mean, do you think brands increased resources allocated to feature and display? How do you see that impacting visibility for store brands? And how do you think about potential that retailers maybe deemphasize some store brand programs in H2 in light of the branded activity?

Steven T. Oakland: I think the retailers enjoy the margins from branded promotion and the cost that they charge for branded promotion. But I think the message we’re getting from the retailer and the forecast we have from the retailers suggests that they’re going to support private label as well. So we don’t see a big difference in that this year. In fact, like I say, the conversations right now are really confirming supply availability or confirming quantities or confirming all of those things, which would suggest that the merchandising, the support for private label is solid. So I do think there’ll be branded spend. I mean we all hear about it. We’ve listened to the other calls and understand what’s going on. You can read that chart a couple of ways with price gaps, if that spending is going on and the percentage of volume on promotion isn’t going up, it’s about efficiency of that promotional spend, right?

It’s not driving the kind of units that I think we all thought or all feared would happen. So I think the retailer is committed to both is a long way of saying that.

John Joseph Baumgartner: Okay. And then Pat, looking at gross margin, a bit of pressure here in Q2. Presumably, that ties back to the PNOC drag. How are you thinking about gross margin evolution from here on a year-on-year basis given all the moving parts between efficiencies, the Griddle recovery, the margin management versus deleverage? I mean, assuming PNOC flips back positive, is it too ambitious to believe that gross margin grows for H2 at this point?

Patrick M. O’Donnell: I think you’d see it sort of flattish through the third quarter, and then you’ll start to see it improve over the fourth quarter. I think some of the — there’s probably a little bit of PNOC drag into Q3. And you are getting some of those efficiencies and supply chain cost savings that are coming through then through the latter part of the year.

John Joseph Baumgartner: The PNOC drag, it looked like it turned the corner last quarter in Q1, and you saw pricing accelerate here in Q2. Has anything changed the margin? Are there other inputs as opposed to coffee at this point that are incrementally sending worse for you?

Patrick M. O’Donnell: No, I don’t think so. Again, we take 3 to — 60 to 90 days generally to pass through as commodities go up. And I think what we’re seeing is maybe just slightly elevated compared to what we estimated. So I think we’re getting it all in the year. I just think you’re seeing a little bit of the timing shift in terms of it was a little bit more, so we had to get the pricing through.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Steve Oakland for closing remarks.

Steven T. Oakland: Yes. I’d like to thank you all for being with us today, and we look forward to the opportunity to talk to you individually and in person soon. Have a great day.

Operator: This concludes today’s conference call. You may now disconnect.