Kimberly-Clark Corporation (NYSE:KMB ) Barclays 2022 Global Consumer Staples Conference September 7, 2022 9:00 AM ET

We’re going to get started. So, now we have Kimberly-Clark up next to present and we have CEO, Mike Hsu; and CFO, Nelson Urdaneta with us. They’re going go through some prepared remarks and then we’ll host a Q&A session. So Mike, I’m turning it to you.

Okay. Thank you, Lauren. It’s great to be here. Good morning, everyone. We’re really glad to be here today to share how we’re executing our strategies for growth and long term value creation. But first, I want to remind you that standard reminders apply today about any forward-looking statements we make and any reference to non-GAAP financial measures. And I’ll refer you to our latest 10-K and our website for further information.

Our key messages for today: Our strategy to elevate our categories and expand our markets is working; the strength of our organic sales growth reflects improved commercial execution; we’re taking significant actions to offset supply chain headwinds and recover margins; and we’re confident in our ability to deliver balanced and sustainable growth and create shareholder value.

At Kimberly-Clark we’re led by purpose to provide better care for a better world. And we strive to provide better care for our stakeholders and our planet. Our purpose drives the social and environmental commitments in our approach to sustainability. So, by 2030, we aspire to advance the wellbeing of 1 billion people through social programs. And we plan to reduce our environmental footprint by half through a focus on climate, FORCE, water and plastics. We’ve been focused on sustainability for a very long time and we’re committed to building on our excellent track record.

We deliver better care with iconic brands that improve the health and hygiene of people around the world. And this year marks the 150th year of providing better care. We’re proud of our history and our track record of innovation. And we’re also proud stewards of a portfolio of iconic and trusted brands, including Huggies, Kleenex, Kotex and Scott. Our brands hold the number one or number two market share position in about 80 countries and our categories and markets have significant growth potential.

Now, three years ago, we introduced K-C Strategy 2022 as our medium term plan to drive balanced and sustainable growth. Our strategy has three pillars, which you can see on this chart: driving growth of our portfolio of iconic brands; leveraging our cost and financial discipline; and allocating capital in value-creating ways.

Now, over the first three years of this plan we grew organic sales on average of 3%, delivered over $1.5 billion in cumulative savings through FORCE and restructuring, and we returned $6.3 billion to shareholders through dividends and buybacks. We remain committed to our balanced and sustainable approach to creating shareholder value.

Better execution is accelerating our organic growth and we’ve also taken decisive action to offset significant headwinds. Our organic growth has accelerated behind improved execution. However, our earnings have been impacted by significant inflation and supply disruption, about $3 billion over the last two years, which has been about an 85% drag on our EPS.

Now, we’ve taken decisive action to offset a significant portion of that drag. And we remain committed to offsetting the effects of inflation with price realization and cost savings over time. So, we’ll continue to invest in our brands and capabilities to ensure our ability to deliver balanced and sustainable growth now and for the long-term.

Our first half organic growth reflects excellent execution of pricing initiatives and continued investment in brand building. In July, we raised our organic sales guidance for the year to reflect better price realization as pricing execution and volume were both better than we initially modeled.

Meanwhile, our inflation outlook has increased by $700 million this year to more than $1.50 a share. Despite the significantly higher costs, we’ve maintained our full year adjusted earnings per share range. We continue to expect pricing and cost savings to offset a significant amount of inflation. But as we said in July, we now expect to be at the lower end of that EPS range.

We’re accelerating growth by elevating our categories and expanding our markets. Elevate our categories means driving premiumization through innovation and delivering enhanced consumer benefits. Expand our markets is making our products available to more consumers, and accelerating development of our categories in developing and emerging markets.

Now to enable these trends strategies, we’re consistently applying our growth playbook around the world. And so, we’ve made significant investment to build and enhance our commercial capabilities. We’re deploying these enhanced capabilities consistently around the world. And this is enabling us to win locally by moving faster, powered by the global scale of Kimberly-Clark.

And I’ll share just a few examples of how we’re enhancing our commercial capabilities. We’re scaling our best product technology. 80% of our top innovations are now scaled around the world. And that’s up significantly from our past practice. Today 70% of our investment -- global marketing investment is digital. Personalized brand engagement enables us to have an ongoing relationship with our consumers as well as better efficiency and ROI. Our end market execution work is moving us towards perfect store and e-shelf. Our teams are very focused on expanding distribution of our core SKUs. And finally, our investment in pricing analytics is helping us to make faster smarter revenue management decisions. We’ve delivered positive net pricing mix in each of the past three years. Enhanced commercial capability has been key to accelerating our organic growth.

And our growth acceleration is perhaps most clearly illustrated in personal care. K-C personal care is a $10 billion business that has accelerated from an average of 1% growth to over 5% of organic growth in the past three years.

Our momentum continued as organic sales increased 11% in the first half. We also grew or held market share in more than 60% of our personal care category -- country combinations in both 2020 and 2021, and we continued to grow share in over half of our cohorts through the first half of this year. Personal care remains a big growth opportunity, and there remains significant opportunity for us to expand penetration, frequency and premiumization.

Our performance in China provides a great illustration of how we’re executing on our growth playbook. Our local teams saw the Chinese consumers, which internally we would view as among the most sophisticated in the world in our categories. These consumers are raising the bar for what they expected for comfort for their children in the diaper category. And so, our team moved fast to develop a winning offering at first locally and then by leveraging our global technology platforms. We’re now on version 5 of our 5D diaper in China and continue to move fast to make them even better. The same team, the team has been leading edge in the development and application of data analytics to create a digital relationship with mom through sophisticated partners like Alibaba and JD.

So, in the face of a declining birth rate, our China business has grown at a double-digit pace and took overall market share leadership in the baby care category.

So, in summary, Kimberly-Clark is accelerating growth, and we see a long runway of growth ahead of us. We’re growing our top line, strengthening our brands and our company for the long term. While near-term headwinds are significant, we are committed to restoring and eventually expanding our margins over time. And I remain confident in our ability to deliver balanced and sustainable growth and create long-term value for shareholders.

So with that, Lauren, I’ll turn it back over to you.

Okay, great. Thank you. I’ll let you sit down. Great. So, I think it’s actually interesting ending with the statistics that you shared on China, on the double-digit growth even with the declining growth rate. Because I remember, at CAGNY in ‘21, you were asked of declining birth rate, particularly in the U.S. and Alison responded, we can manage through this. We control what we can control. So, how does that mentality apply kind of in the current consumer landscape as we think about pressures on the consumer wallet when something so core to your strategy has been that premiumization?

Yes. First of all, that’s why Alison is a great Chief Growth Officer, because -- again, I think she’s focused on what we control, but also very focused on what we can do as a company to grow our categories. And I think it’s an important question, Lauren as I think consumer confidence is waning a bit and you can see that broadly in the marketplace. So, value is becoming more important. But for us, I would say the long-term strategy still is to elevate the categories and expand our markets, and I see a lot of opportunity for that over the long term.

And maybe the point that Alison made at CAGNY was if you look at China, which is the largest diaper market in the world right now, it’s still a developing market. And on a dollars per baby basis, their consumption is less than half of what developed markets are. So, I think we have a long road ahead of us in terms of elevating categories in many markets over time in both developed and developing and emerging markets. But your point, I think, is a correct one, which is in the near term, even though it’s our long-term strategy, we do have to pivot at times to make sure that we’re meeting the consumer where they need us to be.

And so certainly, in a market like the U.S., we are seeing increasingly consumers becoming more value conscious. And so for us, our goal is to lead the category and not be a niche premium player. And so, we have a very good value offering as well as we climb the full ladder up to premium and super premium. And our focus in markets like these or in times like these would be sharpening our offering at the value price point. We bring innovation to the category in the value tiers. We’re very cognizant about opening price points, and so we may sharpen that offering as well. This is something that we’ve been doing actually for a number of years now, you probably know, in Latin America.

The funny story, Lauren, is we were very concentrated in value tiers about five years ago. And so, we went down, we took a look at that and said, holy cow, we have strategies to elevate. So, we made this big shift to drive our mix to the premium tiers. And I think after 18 months, we made a multi-thousand basis-point shift in mix up to the premium tier. But when COVID hit, a lot of our consumers were out of work, right, because the economies were shut down. And so, they were really concerned around value. And so, our team made, I think, a very wise choice to shift their emphasis back to the value tiers. And so, we brought innovation, we brought a terrific, what we call, thin-core innovation to our value tiers across Latin America. We down counted to have a -- or a lower-priced opening price point for consumers because the absolute dollar ring for them was a struggle. And so, we really improved our business that way. And those are some of the same tactics we’ll apply in other markets where I think consumers are under pressure on their wallets.

Okay. Are you able to adapt that quickly in the U.S. given the retail landscape here?

Well, of course, there’s always those lead times around getting the right products to shelf. Certainly, I think the consumer and trade promotion tactics can move quickly. And then, we can -- usually innovation has its own time. The product development probably for us is not the lead time. It’s really around getting packaging and getting the commitments correct with the retailers.

Okay, great. In the U.S., you have actually started to win back market share that was lost following the Texas freeze event and then the supply chain challenges that followed. So, I guess, outside of on-shelf availability, what have been the core drivers of that? And do you think that getting back to that prior high-water mark on market share is something on the near-term horizon?

Yes. We’re getting back. We’re going to get back. But that Texas freeze feels like so long ago. And for those of you who aren’t aware -- or actually the point being, Lauren, that for the two years before the freeze happened, which was last February, we were actually growing share in baby and child care for the prior two years. And so, I think our team was on a very good roll. And then what happened is when the storms hit Texas, we have one of our largest diaper plants in Texas and one of our largest tissue plants in Oklahoma. And so, those were shut down for a few weeks. And so that put us in a very difficult supply situation.

Here’s how bad it was, which is -- we had conversations with customers recommending that they take Huggies out and put a competitive brand in. So, you can imagine how painful it was for us to initiate those discussions. And so, it really was a supply side problem. And I got to tell you, our team did a fantastic job getting us back to -- I would say, our service levels now are very good. And in fact, even last year, we were rated, I think, in one publication voted by retailers the number two on service overall for the industry.

So, I think we feel very good about our recovery. But I think the point around market share and where we expect to go, I mean, we want to lead our categories around the world. I think what really changed is our conversations with customers, it was probably back around 2017, 2018. And you may recall there was a period where there’s some price discounting in our category. And there was always a question of was it retail led, is that manufacturing led, everybody blamed everybody, but the reality was -- I think when pricing came down, our category, it’s about in June of 2017, so the first day I was the Chief Operating Officer. Some of our big retailers called us in and said, "Hey, what are you guys doing? Like, why are you guys destroying the category?" All right? And so, we want to see your plans for how you’re going to grow the category the right way.

And so, we really shifted to our conversations and shared kind of our vision for what category growth looked like. This is the same time we were developing our Elevate strategy. And so, we painted our vision for what the future was, which included our long-term innovation plans and how we engage with consumers. And I think our customers really bought into that. And so -- and that’s been, I think, the secret of success on Huggies and child care overall for the last several years is they really buy into the vision and the innovation and our plans for the category. And so, we’ve gotten a lot of support.

So, I think we recovered. And you saw in last quarter, I think we were up a couple of share points in diapers here in the U.S. And so, we’ve done a nice job recovering from the supply challenges. I think the strategy has been well supported by customers and consumers.

I would highlight there’s a little share softness more recently, and we probably saw that toward the end of the second quarter. And I’d say, we’ve been very -- I think we’ve advanced pricing fast and at a significant level and because we prioritized margin recovery. And because of that, not all brands have moved at the pace or the levels that we have. And so, we’ll keep a close eye on that. I mean, we have to have a great value proposition. We’re going to have a great value proposition. But again, walking the balance between the right margin recovery but also growing for the long term. And our teams know our goal is to grow market share and be the leaders for the long term.

Okay. And you’ve talked actually, on the last call or -- to this balance, right, you have to lock in pricing, volume and market share. So, I know we can’t do like the full walk around the world, but you’ve given us a little bit of a thought process is now on U.S. personal care. How does that balance differ when you think about the tissue business in the -- consumer tissue business in the U.S., and then, the other key markets outside the U.S. that are worth calling out on either business?

Yes. I think the -- our focus on balance and sustainable growth is for everyone. And so right now, I think we have an emphasis on margin recovery, just as you point out where our margins are. And so we know there’s work for us to do. I’ll tell you a funny story.

So after our -- so most of our employees listen to the earnings call every quarter. And so right after the earnings call, we have an internal global town hall where people get to ask questions. And so -- the first question that came up after the first quarter, like, Mike, what do you want from us this year? Do you want share or do you want margin? And I said, "Yes." And that’s a typical question. People don’t ask that question as much anymore. But the -- and I explained -- I said yes because we want the balance. And so, we’re always going to hold you accountable in the same way that our investors and our Board holds me accountable, which is we want the balance of organic growth, market share, profit growth and cash flow.

And those are the four things that we’re really judged on. And so, we’ve got to find the right balance. And Alison’s language is, the genius is in the markets. And so, the reason we do it that way and we treat our markets like adults is that they can find ways to deliver that balance that we may not be able to see in Dallas, right?

And so, that’s why we believe the genius is in the markets. And so, that’s kind of the ask of the organization. And so, they know we need market share over the long term, and we need to deliver the financial objectives over the long term. In a year like that, it’s absolutely true that we are prioritizing margin recovery because our margins have taken a big hit. It’s why we have driven significant pricing.

But we can’t recover our margins through price alone. And so, obviously, cost savings play a big part of that. We have to find another level of that. And so, our teams are working hard, both in terms of leveraging revenue management and our cost programs to drive the right balance, market share growth, margin and cash around the world.

Okay. Nelson, you’ve been with the company about 4 months, so I’d love to hear a bit about your strategic priorities, where you believe you can have the most impact on the company.

Sure. Since I joined around 4.5 months ago, I’ve had the opportunity to spend time with our leaders across business units and functions to understand their business plans, their priorities as we focus, as Mike said, in driving balance and sustainable growth. I’ve also had a chance to visit some of our operations, including North America, and more recently, Asia Pacific, where Mike and I spent a week, weeks ago, over in India and Indonesia, looking at growth markets and opportunities that we’re investing to drive that growth.

Overall, I’m very impressed with how our teams are executing our strategic imperatives as Mike just shared, also how resilient they have been in maneuvering through the complexities of the business, ensuring that our products are available, being a necessity of course. And more importantly, how they focused -- how focused they are in driving margin recovery for all the levers we’ve been talking about.

In Indonesia, as an example, we had a chance to see firsthand Softex, very exciting opportunity and really how our strategy of expanding our market is coming to life. As you know, we completed this acquisition in the midst of the pandemic in 2020. And Mike and I spent three days with the team on the ground doing store checks, reviewing the plans and really seeing how this is going to come to life and contribute to the growth that we’re going to have. Very exciting.

Indonesia is a market; it’s over with 275 million people. It’s growing incomes; it’s a growing birth rate market. And overall, it just crossed a threshold that we consider very important for category development, which is per capita GDP over $4,000. So, very excited about those prospects.

As I think about my priorities where I’m spending my time, I’ll talk about three. One is really partnering with our leaders across the globe to drive this balanced and sustainable growth; obviously, margin recovery. This is a key priority for us. We’ve been fully focused on driving all the levers at our disposal to drive that margin recovery and then expand it. And then lastly, it’s about capital allocation. We need to remain very disciplined in capital allocation. And our priorities remain unchanged. I mean, we’ve talked clearly about one, it’s about investing in the business. We’ll continue to do that to drive our brands, our innovation and our capabilities. Then it’s also about growing our dividend. We’ve just crossed the mark of 50 years straight of increasing our dividend, and we remain fully committed. And then it’s about M&A and smart M&A. Softex I just mentioned. Earlier this year, we did Thinx, which is quite an innovation for us in the reusable sector. So very, very exciting opportunity. And then any residual cash, we will deploy the share buybacks.

Okay, great. Just sticking with gross margin and recovery. So, gross margins this year are probably going to be close to 20 -- the 2008 troughs and just slightly below the recent 2011 cycle, which is painful, as they have been -- suggests that dramatic structural improvements given how much more severe the inflation has been and what the business weathered in both of those periods of time.

So with that as context, like can you share a bit about the path to rebuilding margins? Because there’s been so much structural progress, how much of this needs to come from deflation coming through -- or are there tremendous opportunities to go after in terms of productivity?

Yes. I can take and Mike, you can jump in. So, we know that cost reversion in our input costs will happen. Historically in every cycle we’ve gone through, that’s been the case. And really, it’s not a matter of if; it’s a matter of when. Having said that, we remain fully committed, Lauren, to recovering our margins, even if our input costs remain elevated. We’ve been dealing, as Mike shared with unprecedented cost inflation in the last two years. It’s about $3 billion between 2022, 2021.

Looking at -- back at any cycle, two-year cycle, this is over 2x what we ever faced. And this represents, as Mike indicated, a drag in EPS of over 85%, just around that level. Clearly, we’ve been pushing hard on the pricing realization lever. That has been one of the key levers that we’ve been driving across the globe, and we are pleased with how the teams are quickly executing to offset commodity and ForEx.

We’ve continued to make investment in our analytical capabilities, so we enhance our capacity to drive pricing realization. As you would have seen in our Q2 results, we saw an acceleration in pricing sequentially versus Q1, and we expect that trend to continue.

There is also opportunities on costs. We’ve always been very proactive about managing our cost structure. And that tackles both, variable costs and fixed costs. Historically, we’ve delivered strong savings for our FORCE program. And as I shared in July, our pipeline of productivity remains strong. And we expect FORCE savings to accelerate in the second half of the year.

We’ve not been shy about restructuring the business when there’s been a need for it. And we will pull this lever as need be to ensure that we get our costs where they need to be. Having said that, I always want to stress the fact that we’ve had to make some investments, as I shared in July, especially in our logistics and distribution network, to address some of the supply challenges that we were seeing in the overall distribution network, and tackle and address some of the fulfillment rates and service levels.

As Mike shared, we’re happy to see that our service levels in North America have gotten well into the 90s, and that’s something we needed to do as of the end of the second quarter. So, with that said, we will continue fully focused on driving the levers at our disposal to drive margin. I am -- I have the full conviction that we will recover margins pre-pandemic levels, and we will expand beyond that.

I think a good point to stare at is the fact that in the second quarter, we expanded gross margin by 40 basis points on a sequential basis versus Q1. And based on our assumptions, we expect that trend to continue in the second half of the year.

Well, it’s clear, Lauren, he’s assimilating quickly. And a couple of things. We remain committed to not just recovering margins, but expanding margins over time. As you may recall, when I came into this role, we’re very aware that our margins are lower than some of our peers in the industry. And so, over time, we believe we have to get our margins to an expansion mode. We weren’t planning on taking $3 billion of inflation. So, we’ll recognize that that’s something we have to manage through, but we’re committed to that.

I was here for that -- for the -- maybe the expansive part of the recovery from 2008. And so -- and I think the tactics are similar, which is what we applied was very good programs around revenue management, including pricing, but also pack count and sheet count and things like that.

But the other side of it is, though, there are -- there’ll continue to be great opportunities in our cost structure, and we’re going to -- we’ll continue to go after those. As Nelson pointed out, there’s been a lot of supply chain disruption. And so -- and we’ve been working really hard to recover service. And so, there’s a lot of expediting costs. And so, we think over time that there’s going to be significant opportunity for us to get better as the supply conditions may be normalized.

Okay. So, those expediting costs and the investments you mentioned for more short term, there’s been -- to get through this period…

I mean not last year, but in 2020, I don’t know if you recall, but we were shipping tissue around the world to service our customers. And so, we worked through some of that. But -- so I think it’s not as extreme as that, but you can imagine with supply conditions, there’s still a lot of excess cost in the system.

Okay. I also need to ask a sort of shorter term -- not shorter term, but just natural gas in Europe. I mean, you are an asset-heavy business in Europe. So, any perspective you can offer on visibility you have into costs across Europe?

Yes. So, I mean, I will not get into specifics of our hedging strategies and our specific risk management strategies. But as you’re aware, I mean, the energy space, we’ve seen incremental costs. And again, oil has subsided, at least from the peaks that we saw in June, but natural gas is really a matter that we’re dealing with in Europe. We -- for our tissue business, and we talked about this in July, it is a point that we’re managing through. And obviously, the whole industry is looking through it. We have risk management strategies deployed in terms of covering some of the risks. But obviously, there’s a lot that’s still in flux. And again, we will be nimble. We’ll be quick to manage the controllables that we have in terms in front of us. And we will pull all the levers at our disposal to try to offset some of those costs as we look forward.

Okay, great. Consumer tissue. I know you emphasized earlier, but it sounded like as you’re thinking of the personal care business, particularly in the U.S., already trying to work through the playbook for how to deal with the compression of the consumer wallet. But tissue has been a category that, of course, is most susceptible to private label trade down. So, I guess, what are you seeing currently? Are there things that you might be doing differently to manage the consumer tissue business today versus in prior cycles to weather that storm, or is it just an absolute, we have to prioritize margin to protect the long-term profit?

I think, we would say the same playbook applies and we still think there’s an opportunity to elevate the categories in tissue, and we’re doing that and also expand the markets as well. There’s a couple of things going on, which is, I’d say, our bath tissue business, especially Scott, in North America, proceeding very well. And for us, there had been a supply issue, but I think we’ve worked our way through that. And so, we’re confident of where our that business is.

Kleenex share’s a little soft, mostly because of supply constraints. And we’ve had some material availability issues. And so, we’re well aware of that and working through that. But overall, we think there’s a significant opportunity overall on consumer tissue to elevate the category experience. Internally, we feel like the category has been marketed on convention soft and strong for a long time.

And we’re more focused on giving consumers in back a better clean, better hygiene. And so that’s an angle that we think plays. Obviously, there was an innovation years ago with Moist, which I think is a superior experience. But we also think there’s other things we could do even on the dry side that deliver a better experience for consumers. So, I think the playbook still applies in both categories, and we’re bullish on both categories.

That said, I think if you look at the margins, we know costs have gone to a different level, and we’re going to be accountable for our business. So, as Nelson points out, we’re going to unturn every rock to make sure that we can get -- recover the margins in that business.

Okay, great. In that vein, K-C Professional, right, the margins that have taken the largest hit versus pre-COVID levels. You mentioned unafraid to restructure. So, I guess, how are you thinking about the size of that business? I guess, step one would be what’s the revenue line look like? So, how are you assessing the relative size of K-C Professional longer term as you presumably embark upon a thought process on restructuring?

Yes. So -- and we’re not back embarking on restructuring right now. I just want to -- so I want that to delay that out. But I mean, clearly, our Professional business has been the hardest hit because of the pandemic with the ways we’ve changed how we work, how we live. And that’s been shown in -- we reduced demand for our washroom business, significant increases in costs, both operating and fixed cost -- not fixed cost, but overall operating costs, and volatility in demand for the other sectors because we have other sectors within it.

Our team has been executing a very clear plan to recover, not just demand but also to grow share. We’ve been launching innovation which is margin accretive. You’ve seen a new ICON dispenser, which has been performing very well ahead of what we’ve got. And clearly, the number one priority for them has been to drive margin recovery. We’ve been pricing that’s been coming through. We saw that in the second quarter, and all the actions are being taken globally. On top of that, we’re also looking at costs.

On your question on the demand, washroom which is roughly a little over 50% of the business, we expect demand to remain muted in the near to midterm. And we will need to address some of the costs that are on a fixed basis in the business. But I think it’s important to note that it’s not as significant as you might think because obviously, we have won a portfolio, not just one segment within professional. Secondly, we do source some of our products externally. So it’s not all internally manufactured. And then we also have assets there, assets that are shared across some of our platforms. So, there are elements of levers that we can pull to maneuver.

With that said, I mean, we’re obviously taking a look at all the elements in the business. We’ve seen a good revenue recovery, to your point, well over 90% now as we’re getting closer to where we were in the revenue. We will address the costs. And we’re confident that we will get our margins back. I mean, that is the key. The plans are working. We’re seeing them come through. The team is on it. And we believe that Professional going forward will remain a source of profitable growth for K-C.

Okay, great. Just in our final minute, I touched on capital allocation, but I did want to ask about M&A and kind of what do you see as the most applicable places to see where you could take the portfolio.

Yes. Well, we love our portfolio, and we love the categories we’re in. And for reasons that I laid out in the presentation, we think there’s a lot of growth left in our categories for long term. That said, we’ve been working very hard to develop world-class capability commercially. And I think we’re making strides on that. And so, we will look for opportunities that might be accretive to growth, accretive to margin. Softex, as an example, does -- is a home run, which is in exactly our categories in a market with huge growth potential, right? The forecast is, I think incomes are going to triple over the next 10 to 15 years. And so, that’s an exciting market for us.

But would we be interested in looking at some adjacencies beyond? Yes. I think the logic for us probably is more consumer-oriented, right? If there’s a consumer insight, a consumer logic, a consumer relationship that we can leverage our commercial capability behind, yes, that might be interesting for us. But we’re going to be very-disciplined as you know we are and make sure that we’re focused on long-term value creation.

Okay, great. I think we’ve got to wrap it up there, but thank you so much for being here. Nelson, it’s great to meet you too.

Thank you for having us. It’s great to be here, Lauren.