Earnings call: Lassonde Industries reports record sales, dividend policy

 

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In a recent earnings call, Lassonde Industries Inc. (LAS.A) presented a robust financial performance for the year 2023, with record sales figures and a notable improvement in profitability. The company saw a 7.6% increase in sales, largely attributed to price adjustments and an enhanced sales mix in the US market.

Despite a general decline in consumer demand for fruit juices and drinks, Lassonde achieved growth in market share within Canada. The company’s strategic efforts, including a turnaround plan in the US and a simplification of its product portfolio, have yielded efficiency gains and better overall performance. Lassonde Industries is preparing to launch a new aseptic single-serve line in North Carolina, which is expected to open up growth opportunities in new markets. Financially, the fourth quarter showed an 8.8% increase in sales to $605 million, with a gross profit of $153 million.

Adjusted EBITDA for the quarter rose by 37% to $53 million, while the full-year adjusted EBITDA increased by 32% to $207 million. The company successfully reduced its net debt and introduced a new dividend policy, with a quarterly dividend of $1 per share to be paid on March 15. For 2024, Lassonde anticipates mid-single-digit sales growth, with a focus on volume recovery in the US, strengthening its leadership in Canada, and expanding its specialty food offerings.

Key Takeaways

• Lassonde Industries experienced a 7.6% increase in sales for 2023, reaching $2.3 billion.
• The company’s gross margin improved by over 100 basis points, driven by higher gross margins and reduced freight costs.
• Despite a decline in the juice and drink market, Lassonde grew its market share in Canada and improved US operations through strategic initiatives.
• A new aseptic single-serve line is set to commission in North Carolina in the latter half of the year.
• Lassonde announced a new dividend policy with a quarterly dividend of $1 per share.
• The company expects mid-single-digit sales growth in 2024, focusing on the US market, Canadian leadership, and specialty food growth.

Company Outlook

• Lassonde plans to capitalize on new market opportunities with the commissioning of its aseptic single-serve line.
• In Canada, initiatives in innovation, channel expansion, brand marketing, and productivity are expected to strengthen the company’s leading position.
• Sales growth for 2024 is projected to be in the mid-single-digit range, driven by price adjustments and volume growth in the second half of the year.

Bearish Highlights

• The company is managing the impact of persistent inflation, particularly for orange juice and concentrates.
• There is a need to diversify the portfolio to reduce exposure to commodity price fluctuations.

Bullish Highlights

• Lassonde’s strategic turnaround plan and portfolio simplification in the US have led to improved performance.
• The company reported improved cash flow from operating activities, increasing to $78 million in Q4 2023.

Misses

• Industry demand faced a negative mid-single-digit decline, with an expected stabilization in 2024.
• The acquisition of Diamond is not expected to significantly affect Lassonde’s long-term financials.

Q&A Highlights

• Eric Gemme and Vince Timpano discussed the potential impact of different strategic approaches on the company’s future volume and profitability.
• The company is exploring growth options in specialty foods, including both organic growth and acquisitions.
• Lassonde is focused on maximizing the performance of its core business, with updates on progress to come.

In summary, Lassonde Industries is navigating a challenging market with strategic initiatives aimed at sustaining growth and profitability. The company’s outlook for 2024 remains positive as it continues to adapt to market conditions and leverage new opportunities for expansion.

Full transcript – None (LSDAF) Q4 2023:

Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Lassonde Industries 2023 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session open to research analysts only. [Operator Instructions]. Before turning the meeting over to management, please be advised that this conference call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. I would like to remind everyone that this conference call is being recorded today, Friday, March 22, 2024. I would now like to turn the call over to Vince Timpano, President and Chief Operating Officer. Please go ahead.

Vince Timpano: Good morning, ladies and gentlemen. I am here with Eric Gemme, Chief Financial Officer of Lassonde Industries. Thank you for joining us for this discussion of the financial and operating results for our fourth quarter and fiscal year ended December 31, 2023. Our press release reporting these results was published yesterday after market close. It can be found on our website at Lassonde.com, along with our MD&A and financial statements. These documents are available on SEDAR plus as well. We also posted a presentation supporting this conference call on our website. Let me remind you that all figures expressed on today’s call are in Canadian dollars unless otherwise stated. Now let’s turn to Slide 4. Lassonde achieved solid performance in 2023, concluding the year with record sales and strong operating profitability improvement. Sales for the year increased 7.6%, mainly reflecting selling price adjustments in Canada and the US, as well as a better sales mix in our US operations. These factors improved gross margin by more than 100 basis points. Meanwhile, higher gross margins and lower freight costs, due in part to a new TMS system helped produce a 32% increase in adjusted EBITDA versus the prior year in spite of higher performance-related compensation expenses. Our performance reflects sustained market share growth momentum in Canada, including private label category growth. This in the context of declining consumer demand for fruit juices and drinks. According to industry data, the North America volume decrease was in the mid-single-digit range in the first half of 2023 and slightly above that level in the latter half. While we experienced lower volume in 2023 compared to 2022, a significant portion of the decline was anticipated as part of our US portfolio simplification process completed during the year. Looking more specifically at the fourth quarter, volume increased slightly as our US operations were lapping a difficult period in 2022, marked by certain issues at the New Jersey facility, notably impacting cranberry sauce production. The increase is also noteworthy, considering portfolio simplification. As for profitability, all divisions once again delivered higher gross profit than in the same period last year. I will now dive deeper into our operations by geographic market. Turning to Slide 5 for an overview of our US activities. We reaped further benefits from our turnaround plan. Our performance continues to improve, driven by a portfolio simplification process, which enabled us to free up valuable capacity by diminishing cost change over time. The important investments made at our New Jersey facility also enabled us to reduce conversion costs by improving yields and run speeds. Efficiency gains and savings continue to be unlocked from deploying new decision-making tools and technology such as transportation management and demand planning systems and as well as applying new processes. Going forward, we will seek to leverage the productivity, efficiency and profitability improvements achieved thus far. As we increasingly focus on building back our US volume, and in doing so, better absorbing our cost, these gains will enable us on to generate growth at a better margin. We are still on schedule for the addition of an aseptic single-serve line at our North Carolina facility and our team is currently installing the equipment. As planned, we are on track to commission the new line in the second half of year. Following a ramp-up phase, we expect full production to begin in early 2025. This new line will play a key role in providing growth opportunities in new markets across both our branded and private label businesses. Lastly, as part of our network optimization efforts in the US, a new high-speed juice box line has been commissioned in January 2024 in Rougemont, Quebec to bring in-house US volume previously produced by a co-packer. It will also enable us to better serve our customers, fuel future growth and increased profitability. Turning to our Canadian activities on Slide 6. We are sustaining our growth momentum, thanks to our diversified product portfolio, extensive market reach and solid customer relationships. As anticipated, we continue to see a slight shift in consumer preferences in favor of private label products and this was reflected in our volume for the quarter. Still, within the branded category, our brands continue to outperform the market. I’m also pleased to report that Oasis was voted Canada’s most trusted juice brand in Canada according to a BrandSpark study for the second consecutive year, which speaks highly about the strength of our brand. As we look ahead, our goal is to further strengthen our leadership position in the Canadian beverage sector through a relentless focus on innovation, channel expansion, brand marketing and productivity initiatives. In this regard, in the latter half of the year, a second new aseptic high-speed juice box line will be commissioned in Rougemont and will allow us to progressively decommission older and smaller lines that have been in service for over 40 years, thereby improving efficiency. I now turn it over to Eric for a review of our results. Eric?

Eric Gemme: Thank you, Vince. Good morning, everyone. Before I begin, please note that most amounts have been rounded to ease the presentation. Also note that although I refer to non-IFRS measures or ratio in my remarks, mostly to ease comparability between periods, reconciliations are provided in the appendix to our presentation. As you may know, we acquired a controlling interest in Diamond Estates Wines & Spirits effective November 14, 2023. Diamond’s financial results have been consolidated into our financial statement as of that date. In the fourth quarter, Diamond accounted for sales of $3.8 million, gross profit of $1.3 million and contributed to a negative EBITDA of $0.4 million. However, note that we also recognized a non-recurring gain on business acquisition or negative goodwill of $1.9 million for this transaction. Let’s move on to Slide 7 with our fourth quarter sales, which amounted to $605 million, up 8.8% from $556 million last year. Excluding a favorable FX impact and the Diamond contribution, sales increased 7.9%, mainly reflecting selling price adjustment coming mostly from Canada but also from the US. Volume was slightly up, but I remind you that last year’s fourth quarter was affected by certain production and supply chain issues. Excluding these factors, year-over-year volume was down in the fourth quarter but we believe Lassonde still outperformed the industry. Moving on to Slide 8. Gross profit reached $153 million, representing 25.2% of sales, up significantly from $124 million a year ago or 22.2% of sales. Net of FX variation and Diamond, gross profit rose $31 million, reflecting higher sales and a lesser increase of 2.9% in the cost of sales in constant currency. The higher gross profit is mainly due to the run rate effect of prior selling price adjustments, lower conversion costs and last year’s effect on gross profit of issues that affected our New Jersey facility. These two factors were partially offset by higher input costs for apple and orange concentrates as well as $2 million in expenses related to the various business optimization initiatives. SG&A expenses were $120 million, up from $107 million last year. Excluding nearly $2 million in expenses from the consolidation of Diamond, the increase reflects a higher performance-related compensation expense this year versus last year as well as a higher selling, marketing, administrative and warehousing expenses. These factors were partially offset by lower transportation costs due to lower base rates and surcharges as well as the benefit from the new processes and system in the US. Excluding items that impact comparability between the two periods, adjusted EBITDA increased 37% to $53 million or 8.7% of sales from $38 million or 6.9% of sales last year. This variation in adjusted EBITDA doesn’t consider the impact of the variation in performance-related compensation expenses. Although affecting the comparability between the periods, these expenses cannot be qualified as outside the normal course of business. Adjusted profit attributable to the corporation shareholders came in at $21 million or $3.14 per share compared to $14 million or $2.09 per share last year. Year-end results are shown on Slide 9. Sales reached $2.3 billion in 2023, up 7.6% from 2022. Excluding foreign exchange variation in Diamond, the increase was 5.4%. Adjusted EBITDA amounted to $207 million, up 32% from $150 million last year. And adjusted profit attributable to shareholders was $90 million or $13.18 per share, up from $64 million or $9.37 a share last year. Once again, these amounts do not reflect the effect of the variation between the two years in performance-related compensation expenses. Turning over to our balance sheet on Slide 10. As anticipated, days invested in operating working capital have settled at the higher end of its pre-COVID range. I would like to take a moment to note that we made a few adjustments in the calculation of our working capital ratios. These adjustments were made to better represent what we are trying to measure by removing certain amounts that were not directly related to the collection of receivable or the payment of supplier or by reclassifying certain amounts that should be viewed on a net basis. The details of the revised approach are available in Section 18.6 of our annual MD&A. Also, going forward, we will provide you with the details required to reconcile our calculation on a quarterly basis. For this reason, I advise you not to compare this chart with the one published at the end of the previous quarter. This said, days of operating working capital, the blue line, amounted to 44 days at the end of 2023, down sequentially from 49 at the end of the third quarter and down from 50 days at the end of 2022. The sequential improvement stems from further reduction in days of inventory outstanding, the yellow bar, which cuts back to its historical range and from higher DPOs. Our objective remains for days of operating working capital to settle within our pre-COVID range by the end of 2024. However, we may continue to use our balance sheet to secure price and/or availability of certain commodities. Turning to cash flow on Slide 11. Operating activities generated $78 million in the quarter compared to $52 million in the fourth quarter last year. The improvement reflects better profitability and a $35 million cash generation from working capital this year, up from $26 million last year. Also reflecting improved profitability and working capital release, annual operating cash flow reached $225 million in 2023, up significantly from $24 million in 2022. Capital expenditure amounted to $42 million in Q4 2023 compared to $20 million last year. For the year, CapEx reached $106 million, up from $47 million in 2022. Looking ahead at 2024, we expect CapEx to reach up to 5% of sales, largely in support of our multiyear strategy. A solid cash flow generation also allowed Lassonde to reduce its debt throughout the year, as shown on Slide 12. We concluded 2023 with net debt of $191 million, up marginally from $188 million three months ago, since we are now reflecting the debt of Diamond amounting to $25 million, but substantially down from $247 million at the beginning of the year. Driven by higher profitability, our net debt to adjusted EBITDA ratio improved to 0.92:1 at the end of the fourth quarter versus 0.98:1 three months ago. Excluding the effect of consolidating Diamond, the ratio would have been 0.8:1. Adding to the year-over-year effect of debt reduction, the ratio is down sharply from 1.57:1 at the beginning of the year. Before turning the call back to Vince, Slide 13 brings your attention to our new dividend policy announced in February. The previous policy consisted of paying dividends, representing 25% of the profit attributable to the shareholder from the prior year. The amended policy states that dividend declaration, amount and payment will be at the discretion of the Board, which will take into consideration our financial results, our capital requirement, available cash flow, the outlook for activity and as well as any other factor deemed relevant. In keeping with this new policy, a quarterly dividend of $1 per share was paid on March 15. Based on the recent stock price, this represents a yield of approximately 2.7%. The amount is currently expected to remain at this level, subject to the Board’s ongoing review of the aforementioned factors. I turn the call back to Vince for the outlook. Vince?

Vince Timpano: Thank you, Eric. Let’s turn to Slide 14. As we look ahead to 2024, our priorities are building back US volume by leveraging last year’s progress, fortifying our leadership position in Canada through product innovation and service excellence, channel expansion and through further productivity improvements and pursuing the assessment of options to grow our specialty food offering to capitalize on solid market demand. We remain focused on executing our strategy to accelerate sales growth, improve overall profitability and drive long-term value. Now on Slide 15. In the short term, we continue to closely monitor and manage the impact of persistent inflation for orange juice and concentrates. Although orange prices have pulled back from the all-time peak reached last October, they remain high by historical standards as availability constraints are anticipated due to low worldwide inventory levels in a context of sustained global demand. One way to mitigate the impact is through pricing to our customers. We began implementing the latest round of adjustments in quarter four, 2023, and quarter one, 2024 on both branded and private label products. We remain very mindful of the impact pricing has on our customers and consumers. To that end, we continue to pursue opportunities to reduce cost and drive innovation as a means to provide more options for consumers, as shown on Slide 16. Through branded and private label products and our presence in multiple categories, we already provide consumers with an extensive offering. However, given the maturity of the categories in which we compete, further diversifying our portfolio to reduce commodity exposure is important, and one of our paths to success will be through innovation. We can achieve this objective by accelerating our focus on innovation through our new center of excellence by focusing on bringing novelty to market and product formulation, formats, packaging and product development. Moving to Slide 17. Given our priorities and market dynamics, we expect 2024 sales growth rate to be in the mid-single-digit range, excluding foreign exchange impacts. This growth rate is primarily driven by selling price adjustments and year-over-year volume growth in the second half. We anticipate a volume decline in the first half of 2024, followed by sequential improvement in the second half resulting from the combination of expectations from the gradual pace of US demand build-back, additional volumes available following the commissioning of the single-serve line in North Carolina and demand normalization. In closing, we are pleased with our 2023 performance. Persistent focus on executing our strategy should set the stage for further progress in 2024, which would constitute another important step towards achieving our long-term growth ambitions. This concludes our prepared remarks. We will now be pleased to answer your questions.

Operator: [Operator Instructions] The first question comes from Vishal Shreedhar of National Bank Financial. Please go ahead.

Vishal Shreedhar: Hi, thanks for taking my questions. Just looking at your 2024 expectations, can you give us the reasons why we should expect volumes lower in H1? Is that related to the pricing that you’re taking to offset orange juice? And how confident are you that volumes will turn in H2? Do you have committed orders for the new capacity or indications? And what’s giving you comfort that the H2 turn is imminent?

Vince Timpano: Vishal, it’s Vince. Thank you for the question. I would say, one, in terms of the first half, we will continue to feel sort of the effects of inflation, as you noted, based on the pricing being taken on orange juice. Secondly, in terms of the confidence that we have in the back half, I would say it is related to a few things. One is, as we move forward on our build-back plan in the US, securing important customer agreements where we’ll start to see the benefits of those build-back in the second half. Secondly, as you talked about the commissioning of the single-serve line and our ability to secure some customer agreements that allow us to fulfill that demand in the back half. And thirdly, when we take a look at the Canadian business in orange juice in particular, it’s not just pricing actions, but when you look at the back half as well, is we’ve got a series of new product innovations that we’ve got slated for the market. So we assume that we’ll start to benefit from in that back half.

Vishal Shreedhar: Okay. Thank you. And do your current pricing actions taken for orange juice, do they cover all of the magnitude of the increase of the input costs? Or could there be more pricing action to come depending on what you see with elasticity?

Vince Timpano: So right now, when I take a look at our current plan, we do not anticipate further pricing action to be taken. As I noted in my remarks, if, in fact, inflation persists, we will take additional pricing actions, if necessary. But at the same time, we continue to take a look at other mitigations to pricing because we understand the impact that it has on the category. So whether that’s taking a look at our own cost internally, but also taking a look at additional innovations to stimulate that performance.

Vishal Shreedhar: Okay. And you highlighted that you’re going to continue to look at specialty as a focus. How did specialty perform in the quarter? And did it meet your expectations? And maybe you can give us a sense on the performance?

Vince Timpano: So let me address part of it because we don’t disclose the information, as you know, at that level. But are we confident with the — are we happy with the performance of specialty foods through 2023? I would say, yes. Did it meet our expectations for 2023? It did. So we continue to feel very confident about the specialty foods business and pleased with the performance.

Vishal Shreedhar: Okay. And maybe just two more ones here. On CapEx intensity, 5% in 2024, I think in the past, the goal was to return to 2% to 3% by 2025. How should we think about that evolving?

Eric Gemme: So at the moment — so we call 2024, usually, we don’t give an outlook beyond the current year. But in the Investor Day, as you remember, we were saying by 2025, ’26, 2% to 3%. So at the moment, it’s still something that is a reasonable view. However, it’s all subject to timing of some disbursement in project. And keep in mind, we’re talking about the 2% to 3% as more of a maintenance nature and very nominal growth. So if we have CapEx, that would be growth CapEx, then we’ll — it would be in addition to that 2% to 3% range. But maintenance, I think you can, in your long-term model, safely assume the 2% to 3% range.

Vishal Shreedhar: Okay. And lastly on Diamond. On the EBITDA line, on the EPS line, it’s offsetting some of the benefits that you’re seeing. Should we model continued losses for Diamond in 2024? And when should we expect that to inflect?

Eric Gemme: So it’s a good question. So as you know, Diamond is a public company. So you can have access to their separate filing and outlook and MD&A. But if you were to look at this, what you’d see is a business that is in a challenging position, they are in the middle of a turnaround. And that’s also we — but we believe in that organization and that’s why we’ve invested. So for 2024 modeling, what I suggest we do is to take a look at their last 12 months. Sales, about $30 million. I would use that as you’re — in your model. Gross profit, a little bit more than 30%. I would use that 30%. EBITDA, I suggest that we assume a neutral EBITDA. So zero at the moment because — and then if there’s anything significant because they do something, it will be an item that has not a recurring nature. So an item that will affect the comparability between the period. And if it’s material to Lassonde, of course, we’ll disclose that in our MD&A. So that’s how I — again, I don’t want to give guidance, but that’s how I would look at how Diamond affects Lassonde. And keep in mind, there’s a bit of distortion in the quarter, this quarter, when it gets to our debt-to-EBITDA ratio and when you look into our working capital trend. But in the end, Diamond is not a big element into Lassonde. So on the long run or on a full year, when we have a full quarter of their results in our statement, it should not be very dilutive to Lassonde even though there’s a bit of a challenge at the moment.

Vishal Shreedhar: Thanks a lot, Eric.

Eric Gemme: Pleasure, Vishal.

Operator: The next question comes from Luke Hannan of Canaccord Genuity. Please go ahead.

Luke Hannan: Thanks and good morning everyone. I wanted to quickly ask on the ramping up both the single-serve line later this year and then also the high-speed juice box lines that you have. Can you just take us through maybe the broad activities, I guess, that are involved with ramping those up? Specifically, what I’m trying to get at is, how should we think about the impact to the corporate EBITDA margins as a result of those ramp-ups? Do you anticipate taking period costs, for example, as those ramp-ups are going on? Just maybe a little bit more detail on that?

Eric Gemme: So Luke, I’m not sure I understood your question. So were you talking about the volume ramp-up?

Luke Hannan: Yes.

Eric Gemme: Can you repeat the question, Luke, because I’m not sure I really understood what you meant.

Luke Hannan: Sure. I’ll ask it again. So the volume ramp-up associated with the single-serve line — we’ll start with the new single-serve line, later we’ll see the commissioning of that line. Should we expect, as that line is ramped up, because there could be a period of inefficiencies, as you’re ramping that up, should that be dilutive to Lassonde’s corporate margins?

Eric Gemme: No. Because we see that line, that product as margin accretive. So worst case, I think in the back half of the year, it would be maybe a margin-neutral effect. But at the moment, there’s no — from an overall Lassonde margin, we don’t see a contraction because of that start-up.

Vince Timpano: And let me just build on that, and I know this is somewhat different than the question that you had asked. When you take a look at the new line that we’re commissioning in North Carolina, we have those capabilities in Canada. So the US team will continue to leverage those capabilities. So our confidence in the ramp-up is quite high. When we take a look at the timing of the ramp-up, the view is that we’ll be where we need to be through the first quarter of 2025. And really where all the focus is right now is ensuring that we’ve got a demand pipeline that closely matches the ramp-up on capacity, okay?

Luke Hannan: Yep. That makes sense. Thanks. And then as my follow-up here, on specialty foods, I know that you guys are looking at different avenues to grow this business, whether it’s organic or inorganic. Maybe just share your thoughts on which of those avenues looks a little bit more attractive now? Or maybe if that’s changed at all over the course of the last quarter, whether you think incremental capital would be better spent building out capabilities or equipment internally? Or if M&A looks like a little bit more of an attractive avenue right now?

Eric Gemme: Hey, Luke, I like your question, but I would like to answer it maybe in the next quarter or after. Seriously, we are progressing well in our scenario analysis, but it’s not — we’re not ready for prime time on this one. So — but thank you for the question, very pertinent, it’s very part of what keeps us busy in 2024. But more to come on this one.

Luke Hannan: Okay. That’s it from me. Thank you very much,

Vince Timpano: Thanks, Luke.

Eric Gemme: Thanks, Luke.

Operator: [Operator Instructions]. The next question comes from Frederic Tremblay of Desjardins. Please go ahead.

Frederic Tremblay: Thanks, good morning. Maybe just following up on Luke’s last question there. Just seeing in your slides that you’re assessing options for specialty food in terms of growth in 2024. Should we — should we read into that, that the growth in specialty will be more weighted towards 2025 or 2026, just given maybe 2024 is about assessing options and the potential cash deployment whether organic or acquisition that could have more of an impact in 2025 and beyond?

Eric Gemme: So again, good question. And of course, I’ll take the same bit path that I took with Luke. So if we take build approach, then of course, what you will see in 2024 is to start the disbursement associated with the CapEx. So absolutely no new volume, no profitability yet. If we take the M&A approach, then, of course, day one after the acquisition, you would be able to see a stream of revenue and profitability from the acquisition. And if we were to take that path and, of course, we’re going to provide pro forma and some visibility in terms of how much you should adjust your model for this acquisition.

Vince Timpano: Yeah. And I know there’s a lot of attention on this. And frankly, there’s a lot of attention from our end on it as well. So we look forward to continuing to update you as we make progress on it. But until then, you should assume that we continue to focus on maximizing the performance of the existing business. I mean, that’s a key priority for us. It’s been a key driver of our success over the course of the last few years. We were happy with the performance that have delivered in 2024. Clearly, the evolution of that business will accelerate our anticipated growth from that business. But until we’ve got more to report on, we continue to focus on maximizing the performance of that core business for us.

Frederic Tremblay: Got it. Thanks. Maybe moving to the 2024 sales growth guidance, particular on the second half of the year in terms of the volume growth there, there’s one element that maybe I’d like to clarify. When you say about — when you talk about overall stabilization of demand, or in the slide, I think you called the normalization of demand. It’s quite a step from the negative mid-single-digit rate decline that we’re seeing in the industry currently. What sort of gives you the confidence that industry demand will normalize as we move into 2024?

Eric Gemme: So Frederic, it’s Friday morning, let’s take it lightly. So we are confident in the quality of our supplier of crystal balls. But more seriously, when you look at 2023, there was a lot of price increases in the market that had an effect on demand. Early in 2024, there’s still pricing action on orange that continues to have an impact on demand. However, as in a world where we, at the moment, see a stabilization and inflation for cost are still under a spotlight, it means that it should translate also in a stabilization in terms of pricing inflation, which should stop the — a bit of the erosion that we see on the demand. So that’s why it’s a stabilization of the erosion. So we’re not talking about going back to a pre-2023 level. It’s more of a neutral decrease or a neutral rate in terms of volume versus 2023, which was down mid-single-digit level. Is that clear?

Frederic Tremblay: Yeah, that’s helpful. That’s all I had. Thank you.

Eric Gemme: Okay.

Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Vince Timpano for any closing remarks.

Vince Timpano: Thank you, operator, and thank you for joining us this morning. We look forward to speaking with you again at our next quarterly call. Have a great day, everyone.

Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

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