Earnings Transcript for BB.PA - Q1 Fiscal Year 2022

Operator: Hello, and welcome to the BIC First Quarter 2022 Results Presentation. My name is Jess, and I'll be your coordinator for today's events. For the duration of the call, your lines will be on listen-only. However, there will be the opportunity to ask questions. [Operator Instructions]. I will now hand over to your host, Sophie Palliez, to begin today's call. Thank you.

Sophie Palliez-Capian: Thank you. And good afternoon, everyone. So welcome to BIC First Quarter 2022 results presentation. The call will be hosted by Gonzalve Bich, BIC Chief Executive Officer and Chad Spooner, Chief Financial Officer. We will start with the usual presentation and then open the floor to your questions. Gonzalve.

Gonzalve Bich: Thanks very much Sophie and welcome everyone. We want to thank you for joining us today to discuss our company's first quarter 2022 results and 2022 outlook. But first, I'd like to take a moment to acknowledge the increasing struggles of the conflict in Ukraine is causing for its people. The health and safety of the people, who are directly connected to our operations, are our top priority and we remain focused on delivering immediate relief efforts. Our hearts go out to everyone affected. Our 2022 is off to a strong start, powered by the continued implementation of our Horizon strategy. It's a far reaching impacts across all facets of our business. We can now more rapidly respond to shifting consumer trends and the evermore challenging macroeconomic environment. While remaining committed to our mission, providing everyday essentials that bring simplicity and joy at people's lives all around the world. I'm extremely proud of how our teams have pulled together to deliver an exceptional quarter with double-digit growth across all our categories and accomplishing this, while navigating continued supply chain issues and rising inflation in addition to labor shortages of last year. Through this, we continue to enter untapped into rich areas for growth, fueling our ascension into added value segments. We increased our digital first capabilities to further allow us to dialogue with a new generation of consumers and we launched several products innovations while continuing to invest in future capabilities. In short, our incremental focus on consumers is yielding results. As we continue to focus on excellence of commercial execution while building scale around our largest and most profitable product lines, we successfully maintained or gained market share in approximately 70% of the markets in which we operate and across all three divisions, we've seen double-digit net sales growth in our three categories and in nearly all regions. Our Human Expression division provides a notable example of solid commercial execution this quarter. Our teams did a tremendous job during the back-to-school season in Brazil. On the back of a soft first quarter 2021, the stationary market increased doubled digit. And we gained 50 basis points value share and consolidated our solid number one position with more than 57% market share. Moreover, we continue to grow and gain two points of market share and coloring a key strategic segment for us. Our next major milestone within reach is attaining a 15th share of this important pillar of horizon. Let me pause here to highlight the incredible job of our Brazilian team. In less than 24 months, they transformed their market approach. Moving from a pure customer-driven to a 360 consumer - centric strategy, which will continue to bear fruit and support short-term and long-term growth in this important market for us. Moreover, Mexico, South Africa, and India, which were hit hard by the pandemic are now bouncing back. And we were able to reach high double-digit to triple-digit like-for-like growth in these important growth market. In Mexico the outstanding first-quarter performance of the market was driven by the return to in-person classes and preludes to a very good 2022 back-to-school. Our Flame For Life results were a major achievement this quarter, despite a strong unfavorable comparable base. The U.S. was the main growth driver contributing to 37% of the net sales growth on a like-for-like basis. Part of this strong performance was due to the delayed shipments of orders in the fourth quarters -- fourth quarter of 2021 effected by supply chain issues. However, equally important to growth and more sustainable with distribution gains, effective pricing actions, and favorable product mix, including added-value products like the EZ Reach utility lighter, which now reached almost 6% of market share in value just two years after its launch. EZ Reach is absolutely a runaway success. We've reached close to 100% ACV and modern mass market channel and still have considerable opportunities in convenience stores. I'm convinced we can reach 10% market share by the end of 2023. Our partnership with Martha Stewart and Snoop Dog is a truly symbiotic relationship that we recently extended with the second wave of integrated advertising and promotional efforts driving 50 million incremental impressions and strong consumer engagement thus far this year. When we announced the launch of our B2B business and Shaver Bic Blade-Tech, we expected that the first visible outcomes of this new strategy would not occur before this year 2022. So here we are, and so are the results. Bic Blade-Tech contributed to nearly 30% of the Blade Excellence growth in the first quarter, with a positive impact in profitability. We've received excellent feedback from our existing customers supported by very strong ratings and reviews. And we're evaluating plans to increase capacities to answer, increasing demand. In the non-refillable segment our added-value shavers represented an impressive 70% of the total division sales, confirming the relevance of our premiumization strategy. Across divisions, two important pillars of commercial excellence, our e-commerce and revenue growth management. In e-commerce, we achieved double-digit to triple-digit growth in developing markets like, India and Brazil. On the back of a strong Q1 2021, our e-commerce Stationery Business was soft, primarily with large pure players. However, in shave, online sales grew more than 50%, notably driven by North America. Our consistent with our Horizon Plan, we successfully executed our RGM strategy, which is key in an inflationary market. As we continue to focus on driving complexity reduction across our portfolio, we achieved a 10% SKU reduction in the first quarter of this year. On the innovation front, our investments in consumer centricity are driving success for new products. For instance, fixed new intensity, color change pen, which transforms every day writing into a creative opportunity is launched in most geographies. And in shave, I'm proud to say that BIC Soleil Escape, a new women's razor, offering a novel multi-sensory experience, boosted sales performance in the U.S., as soon as it launched. Before moving to a rapid overview of our financial KPIs, I'd like to say a word on the recent acquisition of Inkbox, the leading brand of high-quality semi-permanent tattoos. This digital native direct to consumer powerhouse, strengthens our presence in creative expression market and accelerates our transformation into a fast-moving consumer - centric company. Inkbox and BodyMark are temporary tattoo marker for the first building blocks of our journey into skin creative. Their unique brand positioning offers tremendous growth opportunities and you should expect more initiatives from us in the near future. With this in mind, let's take a look at a snapshot of our financial performance in the first quarter of 2022. Net sales for the full net sales were €515.7 million up 20.4% at constant currency. Our adjusted EBIT was a €101.9 million with a 19.8% margin. Adjusted earnings per share were €1.60 up 67% versus last year. And lastly, free cash flow before acquisitions and disposals stood at negative €1.9 million, negatively impacted by 2022 back-to-school inventory bills. I'll now give the floor to Chad, who'll take us through our operational and financial performance in more detail.

Chad Spooner: Thank you, Gonzalve. I'll now review our operational and consolidated results for the first quarter of 2022, starting with our performance in Human Expression division. Net sales were €168.3 million up 25.4% at constant currencies, and adjusted EBIT was €11.4 million with a 6.8% margin. [Indiscernible] performance was driven by successful back-to-school seasons in both Brazil and South Africa, as well as early shipments to customers for the upcoming back-to-school season in both the U.S. and Europe, which added approximately €5 million to Q1 net sales. Developing markets such as Mexico, South Africa, and India, which were hit hard by the pandemic, recovered well with double to the triple-digit growth during the first quarter. [Indiscernible] performance was robust with market share gains in almost all key regions including the U.S., France, UK, South Africa, and Brazil. Q1 2022 Human Expression adjusted EBIT margin increased by 4.2 points. This increase was driven by net sales leverage and favorable fixed cost absorption, partially offset by the increase in raw material and freight costs, as well as Inkbox 's investment in growth. Now, turning to our Flame For Life division, net sales were €226.4 million up 22.9% at constant currencies, and adjusted EBIT was €87.1 million with a 38.5% margin. Net sales performance was driven by U.S. lighters outstanding results. As we benefited from orders that cannot be completed in the fourth quarter of 2021 due to supply chain issues which are carried out over the first quarter of 2022. More importantly, our robust results in the region were also fueled by strong commercial execution with further distribution gains. The continued success of EZ Reach and effective pricing actions. In Europe, net sales grew double-digit, driven by price increases, the continued recovery in traditional channels, and the success of added-value products, such as Djeep and sleeve lighters. In Latin America, we performed strongly in Brazil, driven by the continued demand for smoking and nonsmoking usages, helped by high barriers for import lighters, as well as successful price increases implementations. Finally, in line with our horizon goals, added value lighters represented 38.6% of total Flame For Life net sales in Q1. Adjusted EBIT margin for the division increased by 1.2 points, explained by favorable net sales leverage and favorable fixed cost absorption. This was partially offset by higher raw materials and air and sea freight import costs, as well as an increase in brand support, notably driven by BIC EZ Reach advertising campaign in the U.S. Lastly, and Blade Excellence, net sales were €113.5 million up 12.5% at constant currencies, and Adjusted EBIT was €25.4 million with a 22.4% margin. Our sell-in performance was driven by strong results from premium products, such as the flex and solely ranges in Europe. In the U.S. the launch of our new razor Soleil Escape was a success and contributed to growth. In Latin America our trade-up strategy continued to pay off as we outperformed the markets in both Brazil and Mexico. Thanks to three-blade products such as Comfort 3 and Simply Soleil. Finally, as Gonzalve mentioned, BIC Blade-Tech successfully contributed to approximately 30% of the division's growth. Turning to blade excellences, adjusted EBIT margin, it increased by 9.7 points driven by net sales leverage, favorable fixed cost absorption, as well as the positive contribution from BIC Blade-Tech B2B business. Let's now review our consolidated results, starting with Q1 2022 net sales evolution. On an as-reported basis, net sales for Q1 2022 totaled €515.7 million up 25.5% versus last year. On a comparative basis, our net sales were up 18.8%, mainly explained by a strong performance in North America lighter, as well as the big stationary business rebound in Brazil and South Africa. Currency fluctuations had a positive impact of plus 5.4 points, excluding the foreign exchange impact from Argentina. This was mainly due to the increase in the U.S. dollar and the Brazilian real against the euro. The perimeter impact adjustments include mainly the acquisition of Inkbox, partially offset by the Pimaco divestiture. Let me now review the adjusted EBIT margin change versus prior year for the first quarter of 2022. The Q1 gross profit margin increased by 0.2 points to 51.8% compared to 51.6% in Q1 of 2021. Excluding Inkbox, the gross profit margin increased by 0.1 points. This improvement is mainly driven by the strong increase in North America lighter sales, price increases and a favorable fixed cost absorption. This was partially offset by the negative impact of raw material costs and sea and airfreight costs. The adjusted EBIT margin was 19.8% compared to 14.7% in Q1 of 2021. It has been favorably impacted by +6.3 points from operating leverage, from net sales growth. The increase in overall freight and distribution costs, was driven by the acceleration of customer demand. Brand support was higher by 1.0 points, as we continue to invest in our brands to support short and long-term growth. This next slide shows the impact of input cost inflation on gross profit in 2021 and 2022 in millions of Euros. We expect approximately a €100 million impact on adjusted EBIT for the full year, to be more than offset by higher volume and positive pricing. On Slide 8, you can see the key elements of the summarized P&L results. Adjusted EBIT for Q1 2022 was €101.9 million compared to €60.5 million last year, with an adjusted EBIT margin of 19.8% this year versus 14.7% last year. As we look at the €4 million of non-recurring items in Q1 of 2022, it was driven by €1 million of acquisition costs related to Inkbox announced in January of 2022, and €3 million related to impairment of our Ukraine operations. Q1 2022 income before tax was €95.2 million with 29.0% tax rate compared to €228.2 million in 2021. Net finance revenue was negative €2.6 million compared to a positive €0.8 million for the same period in 2021. This is explained by the 2022 unfavorable impact of the fair value adjustments to financial assets denominated in U.S. dollar against the Brazilian real. Net income group share was €67.6 million as reported for Q1 of 2022 compared to €161.6 million for Q1 of 2021. Adjusted net income group share for Q1 2022 was €71.0 million compared to €43.0 million last year for the same period. EPS group share for Q1 2022 was €1.53 compared to €3.59 in Q1 2021. Adjusted EPS group share for Q1 2022 increased by 67% to €1.60 compared to €0.96 last year. In Q1 of 2022, we invested €17.6 million in CapEx. As we move towards a more efficient capital allocation, the greatest focus was in our Flame For Life division, which accounted for 43% of the total. On Slide 10, we see the main elements in working capital. Inventories ended the period at €593.7 million. The €84.9 million increase was driven by the 2022 back-to-school sell-in stock build, which we told you about last year. This is to ensure strong supply to our customers who asked to have inventories delivered earlier this year and to a lesser extent, input cost inflation, such as raw material, freight, and electricity. Trade and other receivables increased by €49.3 million and ended the period at €476.9 million as a result of strong net sales growth. We decreased the DSO as a result of our collection processes, improvements. Trade and other payables were €271.0 million at the end of Q1 of 2022. This next slide summarizes the evolution of our net cash position between December of 2021 and March 2022. Net cash from operating activities was €15.7 million, including €122.8 million in operating cash flow and €107.1 million of negative impact from the change in working capital and others. In the first quarter of 2022, we invested €58.3 million related to the Inkbox acquisition, net cash was also impacted by investments in CapEx as we invested €17.6 million during Q1 of 2022. We bought back €13.1 million worth of shares in the first-quarter of 2022. And our net cash position at the end of March of 2022 was €340.1 million. This ends the review of Q1 of 2022 consolidated results. Now let me give the floor back to Gonzalve.

Gonzalve Bich: Thanks, Chad. We started 2022 with strong momentum. Our three divisions experienced double-digit growth across nearly all regions, encouraging news for overall performance in 2022. Given the first quarter better-than-expected performance on a 12-month rolling growth rate greater than 10%, we now expect to be at the high end of our 7% to 9% net sales growth objective at constant currencies. Although the recent acceleration of input cost inflation is expected to have a negative impact on operating margins, I'm confident in our ability to take the necessary actions to mitigate this impact. As a result, we expect full-year 2022 Adjusted EBIT and earnings to grow year-on-year, driven by higher volumes and positive price impacts. And we maintain our target of over €200 million of free cash flow. When I reflect on the past 18 months, I see clearly the resilience and drive of our teams in re-imagining our future. Building on our strengths while adding new capabilities to ensure that we're future fit and that we drive growth as we drive towards our Horizon Plan together. And a little under 24 months, we've assembled an outstanding management team. We've totally changed our approach to innovation, new technology and partnerships in a way that's yielding tangible results and promising opportunity set. We've doubled down on our manufacturing capabilities and realize the potential of our unique industrial expertise, and where appropriate, commercialized it in an accretive way. We've reframed our historical approach by category, to include incremental, fast-growing adjacencies and made some active moves there in bringing in Rocketbook and Inkbox, as we build out new division. We've accelerated our path to sustainability with dozens of innovative moves and products with environmental benefits, ready to be launched. And we're on track to achieve our ambitious plastics commitments. With a relentless focus on consumers, our Horizon strategy is well underway in yielding results. I have every confidence in our strategic choices and our ability to achieve our objectives, including sustainable returns to shareholders. This ends our presentation for today, and we're now ready to answer your questions. Thank you.

Operator: [Operator Instructions]. Please ensure your line is unmuted locally, as you will be advised when to ask your question. [Operator Instructions] And the first question comes from the line of Nicolas Langlet from BNP Paribas. Please go ahead.

Nicolas Langlet : Hello, everyone. I've about four questions, please. The first one in terms of price adjustment. Have you now implemented all the adjustments you expect for the full year or you see room for [Indiscernible] increase potentially in the coming months and quarter? And on those price increases, have you noticed any [Indiscernible]? Second question on input cost, so you now expect €100 million headwind for the full year. Are you able to tell us what was the estimate back in mid-February when you reported the full-year just to understand the extent of the increase compared to February? And do you expect to fully offset that -- to fully offset that increase through the adjustment you mentioned before? Third on Lighter, what is the current levels of inventory in the U.S. vis -a - vis China? Do you see there is a catch-up essentially in Q2 or has it been done in Q1? And looking at the Lighter U.S. markets for the full-year, I think you should expect mid to high-single-digit decline in absolute term, what are the main driver of such a decline? And beyond 2022, how do you see the U.S. Lighter market evolving in value term? And the last question, quick one on the U.S. Europe position for 2023, have you accelerated your [Indiscernible] given the current level of the exchange rate? Thank you.

Chad Spooner: Hi Nicolas, this is Chad. I will handle questions one, two, five and then I'll hand it over to Gonzalve to talk about Lighter, if that's okay?

Gonzalve Bich: He said there were four. You've added a question.

Chad Spooner: He added a question, actually.

Gonzalve Bich: He did.

Chad Spooner: He added a question in U.S. Lighter industry. So the first one you asked about is about, price increases, and have we pass them all along? Currently, we passed on approximately 20% in the first quarter. So we will see the remainder of them happening throughout the rest of the year. The majority of them will happen before the end of the first half of the year. So they will be implemented through first half will be the majority. We're not seen any material volume elasticity to date. And what I want to say is, this is all a proof point we've talked a lot about our RGM efforts, our revenue growth management. And really this is where we are seeing this benefit from, right? Our ability also to improve on promotional efficiency. How do we increase our revenue for SKU pricing? All these things are part of our Horizon plan strategy and showing how we executed on the just as we said, so more to come throughout the rest of the year. Your next question was about input cost headwinds, and how has it changed compared to what we sold since we spoke to you last? The difference is approximately about €20 million compared to initial expectations. And a lot of these changes are really driven by the electricity increases that we've seen, especially in Europe in the first quarter. Dragging a lot of changes, which we'll see in the back end of the year on our -- from our cost perspective. And as Gonzalve said, the actions that we're taking not only and RGM, but also the increase in revenue, we think will help offset this inflationary pressures, such that we can grow our adjusted EBIT on a value basis, and also our earnings-per-share. So those are how we respond there. And the third question -- the fifth, but I'll call my third question, is the U.S. -- Euro hedging. Yes, we are actively hedging for next year, given the favorable rates that we're seeing right now on the U.S. dollar. So I would say ahead of the game there. And I will now hand it over to Gonzalve for the lighter questions.

Gonzalve Bich: Which I will tackle in a second. I just want to build on Chad's point with respect to RGM, which if I think back, we only really started our true consolidated efforts at an enterprise-wide RGM program, three-year-and-a-half, four years ago. Let's call it. I'm so glad that we did because today we have an ability to really look at global pricing corridors and understanding the different inputs and outputs much more finally, than we didn't. So Chad, your point, it's not only about prices, it's also about promotional effectiveness. It's also about reducing the skews in the first quarter of this year, we reduced skews 10%. And it means that you're generating higher dollars per skew, you're being more productive. We all know that in mass manufacturing business like BIC, that translates into mid and long term sustainable savings, which can either be reinvested into the business or dropped to the bottom line. The RGM is absolutely critical. And I'm really pleased with what the team's been doing. To your question about the U.S. Lighter market. Do I think that they're an inventory dislocation? No. Do I think that there could be further touch up in Q2? I don't think so. And if there is any, it shouldn't be material. It's really important as always that we ensure that customers have just the right inventory, not too much, not too little. And that's what the teams are really doing. If we turn back the clock a little, it's important for us to remember that the first quarter of '22 performance was extremely strong. We had those in sell out in the market as well. We had stimulus payments in December of 2020 and then in January of '21, and in March of 21, all which had impact in discretionary spending especially in certain channels. And we do expect for the full year low to mid-single decrease in the market, absolutely we won't be shy in grabbing any opportunity that we see in fueling consumption as well as driving it with the advertising and promotional programs with Martha and Snoop and all the other things because there are other things that we do in US Lighter apart from Martha and Snoop. From a market perspective, Nicola for '23, I think you're going to see a continued softness. And the challenge for us is really getting back to that Flame For Life Horizon strategy of increasing value over volume, but also driving volume where we have consumer appreciation. Today, EZ reach is almost at 6% market share. Like I said, a little bit back, I think we could get to 10% share with EZ reach, which is accretive, both from a sales perspective, as well as from an overall market share perspective. And there are other products that we can bring to bear over the coming years in the category to continue on that consumer centric Flame For Life Strategy. So I'm guardedly optimistic about the perspective for the future.

Nicolas Langlet : Okay. Perfect. Very clear. And maybe one last quick question on the innovation. You mentioned that a lot of time during the call, is there anything we should expect in H2 and major innovation for any category in H2?

Gonzalve Bich: Not in H2. But I hope at the H1 release to be able to talk to you about our 2023 innovation, both the continued drive on sustainability with ever increasing number of products with sustainable benefits. Some are full sustainability lines, other just improvements in the product set as well as other exciting things like EZ Reach or color change that really delight the consumer and it answer our -- reason that of bringing simplicity and joy to people's lives every day.

Operator: The next question comes from the line of Marie Fort from Societe Generale. Please go ahead.

Marie Fort: Yes. Good afternoon. First question is about your visibility. You've got on the second quarter because we understand that you would good visibility for the back-to-school and for the stationary division. How do you see the profile for Q2 for Lighter and Shavers? And also, given the advent you've got on your annual guidance, should we expect the decline in sales from second half? So that's from the topline. My second question is about your €100 million impact from raw material for the year. Can we have an idea of how these impacts could be phased between H1 and H2, do you anticipate stronger impact in Q2, Q3, just to have an idea. My third question is concerning Rocketbook. Do you plan to launch new product because the performance was pretty weak for the Q1 and to our point of view but we are probably less well-placed than you to comment, that is that the product portfolio seems quite limited for work at books. So do you plan to strengthen the deal firm? And the last question is about Coloring. How much digits represent yourself in Q2, and all the margin in this category have progressing today. That's all for my questions.

Chad Spooner: Thanks. This is Chad. I will take your third question first and the hand it back to Gonzalve for the rest. In regards to the 100 million of impact for this year. Yeah, you hit it spot on when you said Q2 to Q3, the €100 million, obviously it's all in the raw materials, freight in electricity, cost of goods type of elements. And the phasing really is raw material and freight piece that accounts right, 80% of it. It's going to happen across all the quarters. But the main, the largest quarter will be Q2, Q3. Of course, we will see a greater impact as well and will have some impact obviously in Q4, but Q2, Q3 will be the larger of the quarter's overall. And then as I mentioned before in Nicolas question, some of the electricity in. increases that we've seen in Q1 will start to hit us in Q4. So the phasing will happen across year like that.

Gonzalve Bich: Thanks, [Indiscernible] for your question. Just the first one which was the visibility on Lighter and shave in the second quarter. We're confident that we're going to grow net sales in both of these divisions in Q2, which is going to lead to that stronger H1 that we've always talked about. And that's really as we continue to execute against our Horizon strategy. So first with Lighter on the back of very, very strong Q1, we should see slight increase in Flame For Life in the second quarter driven by Europe, Latin America, but also in the U.S. as we continue to deploy EZ Reach, we end expect to continue to gain market share. Very strong comps on Q -- on the first half of last year and Flame For Life. Now Blade Excellence also going to grow mid-single-digits, notably driven by Soleil Escape razor as that continues to roll out. The launch of BIC Click Soleil 5, which if you remember, is that the new female shave product to the sustainability benefit in recycled materials that we partnered with Avient to do them really pleased that we've been able to bring that to market. And again, demonstrate not only our commitment to sustainability in our product design, but also bring that to consumers and show them that really takes this and puts it in their hand every day. And of course, the continued ramp up of our B2B business Bic Blade-Tech. As we continue to ramp up sales to the different customer sets. Now, to your point, we'll also grow in Human Expression. We have a good back-to-school in front of us in all of the geographies, Europe, North America, Mexico, those are the big ones for third quarter, which will finish shipping in Q2. Now, on the back of that, what -- what is H2 look like? H2, very clear, will grow. That's our expectation, but it's going to be at a lower rate to get us to that top end of the 7% to 9% growth rate for the full year, than H1 of course. But we will be growing in all of the divisions. And the things I think about are Coloring with the relaunch of the intensity felt pen range, in some key markets, EZ Reach continued success, as well as the launch of BIC Ecolutions, Shaver line, more broadly in Europe, which is the Lighter with sustainability benefits, BIC Blade-Tech will continue to ramp up and you should see that happening over time, as we deliver more and more to customers. And we could potentially have some new product announcements that Nicolas talked about or asked about a second ago, that would fuel 2023 and might even have a pipeline in December. But you never really know that that depends on when the planogram resets our with our customer base.

Marie Fort: Okay.

Gonzalve Bich: For the Rocket -- Sorry, did you have a follow-up?

Marie Fort: No, that's fine. [Indiscernible] Thank you.

Gonzalve Bich: Rocketbook. So I want a comeback because last year they launched six products in the year to broaden the range. And if you go to the website, you dig around, you're going to find a lot of different things. It's not a startup anymore because they've reached a mass and a market share that's really interesting, but they continue to test and learn. And we should continue to see the company do that. They have a new product roadmap and we'll be rolling that out. There's also international development, notably actually in Europe that's driving some sales expansion should continue to do that for the balance of the year and it's really the same story at Inkbox. When we announced the acquisition two months ago, not even two months ago. We talked about the launch of a subscription offer, which we're going to be doing, and more collaborations with artists. And the drop on Gorillas, I think was last week or the week before. And I really love that collaboration and you should continue to see those really interesting, edgy designs that are so critical to the appeal of the product in addition to its tremendous just application benefits.

Chad Spooner: Coloring.

Gonzalve Bich: I'm sorry?

Chad Spooner: Updating coloring

Gonzalve Bich: Updating coloring. I'm sorry. Yes, I can't even read my own handwriting. In the first quarter, the Coloring segment performed well at 16% growth, net sales versus prior year, especially strong Mexico, Brazil, and South Africa. And today, it represents about 7% of our total stationery sales in the first quarter. And we plan really to continue to drive that because it's one of those critical, important pillars of the Human Expression strategy that we have in Horizon.

Chad Spooner: Marie.

Marie Fort: Thank you very much.

Operator: We currently have no questions in queue. So as a reminder, [Operator Instructions] we have no further questions in the queue, so I will hand the call back to your host for some closing remarks.

Sophie Palliez-Capian: Okay. Thank you. Thank you very much, everyone. Thank you for listening the call and joining us. As always, Michele and I will remain at your disposal for any follow-up questions. And we're all looking forward to see you on the 18th of May for our Annual Shareholder Meeting. Thank you again for your question and see you soon.

Gonzalve Bich: Thank you.

Chad Spooner: Thank you.

Operator: Thank you for joining today's call. You may now disconnect your lines.