WD 40 (WDFC) Q3 2025 earnings call transcript

I would now like to turn the presentation over to the host for today's call, Wendy Kelly, vice president, stakeholder and investor engagement, please proceed.

Thank you, good afternoon, and thanks to everyone for joining us today. On our call today are WD-40 Company's president and chief executive officer, Steve Brass, and vice president and chief financial officer, Sarah Heizer. In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release, and form 10Q for the period ending May 31st, 2025.

These documents will be made available on our investor relations website at investor. wd40company. com. A replay and transcript of today's call will also be made available shortly after this call. On today's call, we will discuss certain non-GAP measures. The descriptions and reconciliations of these non-GAP measures are available in our SEC filings, as well as the earnings documents posted on our investor relations website.

As a reminder, today's call includes forward looking statements about our expectations for the company's future performance. Actual results could differ materially. The company's expectations, beliefs, and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion.

Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, July 10th, 2025. The company disclaims any duty or obligation to update any forward looking information as a result of new information, future events, or otherwise.

With that, I'd now like to turn the call over to Steve.

Thanks, Wendy, and thank you all for joining us today. Today, I'll start with an overview of our thousands of the third fiscal quarter of 2025, along with updates on our must-win battles and key strategic enablers. Then Sarah will dive deeper into our third quarter performance, review our 55-3025 business model, give a brief update on the expected divestiture of our home-care and killing business, and share our updated outlook for fiscal year 25.

After that, we'll open the floor for your questions. Today, we reported third quarter net sales of 156.9 million, a 1% increase compared to the same period last year. This marks a record sales quarter for the company, reflecting continued progress and momentum. Changes in foreign currency exchange rates have continued to be a bit of a headwind for us. Adjusting estimated translation impact of foreign currency, net sales would have been 158.6 million, reflecting an increase of 2% compared to the same period last year.

We reported third quarter net sales of 150.4 million in maintenance products. Our core strategic focus, reflecting a 2% year-over-year increase. While the quarter came in below our long-term growth targets for maintenance products, we remain confident in our growth trajectory. Year to date, net sales of maintenance products reach 435.2 million, representing a 6% increase and aligns with our mid to high single-digit long-term growth targets.

We're also pleased to report a strong start to the fourth quarter with June delivering robust performance across all three trade blocks. This positive momentum reinforces our confidence in concluding the fiscal year with solid growth.

Now let's talk about third quarter sales results in dollars by segment, starting with the Americas. Sales in the Americas, which includes the United States, Latin America and Canada, increased 4% in the third quarter to 78.2 million compared to the same period last year. Adjusting for estimated translation impact of foreign currency, net sales in the Americas would have increased by 7% compared to the prior year fiscal quarter.

Sales of maintenance products increased 4% in the third quarter to 75 million compared to the same period last year. The bulk of this growth was driven by higher sales of Deputy 40 multi-use product in the United States, which increased 7% driven by increased promotional activity and the timing of customer orders. Sales in Latin America remain constant. While distributor markets in the region experience a decline in volume primarily due to reduced promotional activity and the timing of customer orders, this is largely offset by solid growth in Brazil, which continues to demonstrate strong market momentum.

Higher sales in the United States were partially offset by lower sales in Canada, which decreased 6% compared to the prior year quarter due to changes in distribution and reduced promotional activity.

In the Americas, sales of Deputy 40 specialist increased 4% compared to the prior year fiscal quarter primarily due to expanding distribution in the United States.

From guaranteeing cleaning product sales remain steady across periods, reflecting our strategic shift toward higher margin maintenance products in alignment with our four by four strategic framework. In total, our Americas segment had up 50% of our global business in the third quarter.

Now, let's take a look at our sales in IMAEA, which includes Europe, India, the Middle East and Africa. Total sales in IMAEA declined 5% in the third quarter to 56.7 million compared to the same period last year. Foreign currency translation had no material impact on our third quarter results.

Sales of maintenance products decreased 3% in the third quarter to 55.6 million compared to the same period last year. The decline was largely attributed to a 6% decrease in sales of Deputy 40 multi-use product, which came at the strong performance due in the same period last year. The decline in sales of Deputy 40 multi-use product was primarily driven by lower sales volumes to our marketing distributed customers, particularly in Turkey and the Middle East, resulting in a $3.9 million impact.

Sales in Turkey were impacted by the timing of customer orders, reflecting the inherent variability we often experience in our distributor markets. Sales in the Middle East were impacted by operational changes, aligned with our long-term strategic objectives.

As part of our commitment to manufacturing closer to end users, delivering both economic and environmental benefits, we recently onboarded a new manufacturing partner in the region. While this transition supports our long-term goals, it has resulted in short-term disruption as customers adapt to the new supply chain. However, we continue to see strong sales plans in most of our direct markets, where sales volumes of maintenance products remain strong.

Notably, sales of these products increased by 9% in France, 14% in Dak, 13% in Iberia, and 7% in the United Kingdom.

In Iberia, sales of W40 specialist increased 15% compared to the prior year for school quarter, driven primarily by higher volumes, resulting from strong demand across many of our direct markets, as well as increased promotional activity for our W40 specialist bike line in the Dak region.

Some current cleaning products sales declined 1.2 million, primarily due to reduced demand in the UK, while lower levels of advertising and promotional activity impacted performance.

This shift reflects our continued focus on driving growth in maintenance products in alignment with our four-by-four strategic framework. In total, our EMEA segment made up to 36% of our global business in the third quarter.

Now on to Asia Pacific. Southern Asia Pacific, which includes Australia, China and other countries in the Asia region, increased 7% in the third quarter to 22 million, compared to the same period last year. Adjusting for estimated translation impact of foreign currency in South Asia Pacific would have increased by 8% compared to the prior year for school quarter.

Sales of maintenance products increased 9% in the third quarter to 19.8 million, compared to the same period last year. This growth has driven by higher sales of the W40-1 to use product in China and our Asia distributed markets where sales increased 19% and 8% respectively. In China, the increases fueled by successful promotional programs, expanded marketing activities and broader distribution.

In our Asia distributed markets, growth is supported by strong promotional execution and increased demand, particularly in Indonesia and Taiwan.

In Australia, sales of maintenance products remained relatively constant. Home care and cleaning products sales declined 9%. Primarily due to reduced promotional activity in the timing of customer orders.

In Asia Pacific, sales of W40 specialists were up 6% in the third quarter, due to higher sales volume from successful promotions and marketing efforts in our Asia distributor markets in China. In total, our Asia Pacific segment made up 14% of our global business in the third quarter.

Now let's talk about our must-win battles. Our must-win battles are centered on driving revenue growth in maintenance products and enhancing overall profitability. Execution across these priorities remains strong with performance generally tracking in line with expectations and supporting our long-term value creation objectives.

Starting with must-win battle number one, lead geographic expansion. Year to date, global sales of W40 multi-use product reached 353 million, reflecting a 6% increase compared to the same period last year. This performance aligns with our long-term growth objective driven by solid execution across key markets. In our mayor, our flagship brand delivered 8% growth while the Americas posted a 6% increase.

Although sales in Asia Pacific were flat here to date, the region showed encouraging momentum with double-digit growth in the third quarter. We've made excellent progress here to date in many key markets with strong sales growth at 19% in Latin America, 12% in France, 40% in India, 12% in China, 15% in Iberia, and 21% in Benelux. We estimate the global addressable market for W40 multi-use product to be approximately $1.6 billion based on benchmark sales potential.

Our strategy to capture this opportunity remains focused and effective. Expand product availability across channels and geographies and increase penetration by placing more cans directly in the hands of our core and users worldwide.

Next is must-win battle number two, accelerating premiumization. Our second must-win battle is to accelerate the growth of premium formats of W40 multi-use product. Provenization is a key driver of our strategy to enhance profitability and our premium offerings consistently deliver superior user experiences that foster strong brand loyalty and create positive lasting memories. Yet to date, sales of W40 Smart Straw and easy reach when combined were up 7% compared to the prior year period.

On a go-forward basis, we'll be targeting a compound and your growth rate for net sales of premiumized products at greater than 10%. Our third must-win battle is to drive W40 specialist growth, to our W40 specialist product line who are focusing on achieving category leadership and expanding market share by leveraging the strength and trust of our core brand. This approach allows us to extend our brand equity into adjacent categories while meeting the evolving needs of professional and industrial users.

Year to date, sales of W40 specialist products were 59.8 million off the 11% compared to the same period last year. On a go-forward basis, we'll be targeting a compound and your growth rate for net sales of the W40 specialist at greater than 15%.

Our fourth must-win battle is to turbocharge digital commerce. Our digital commerce strategy is not solely focused on driving online sales. It plays a pivotal role in accelerating progress across all our Muslim battles. The e-commerce sales are up 11% year to date. The digital channel serves as far more than a transactional platform. It's a tool for building brand awareness and educating end users about the unique value of our products.

By leveraging digital touchpoints, we deepen engagement and enhance products understanding and strengthen brand affinity across our global customer base.

Now, let's move to the second element of our four-by-four strategic framework our strategic enablers, which emphasize operational excellence. Today, I'll provide an update on strategic enablers 1 and 2. Our first strategic enablers to ensure a people-first mindset. Today, I want to highlight one important outcome of that commitment, employee tenure. Longer employee tenure creates meaningful economic value by reducing turnover costs, preserving institutional knowledge, enhancing productivity, and strengthening stakeholder relationships, all of which contribute to sustained, profitable growth.

While the median employee tenure at US companies is approximately four years, the average tenure at W40 company is double that, eight years. We take great pride in this distinction. I want to take a moment to extend my deepest thanks to all our employees for your dedication, hard work, and passion. It's because of your unwavering commitment that W40 company continues to achieve great things.

Your contributions are the foundation of our success, and we are truly grateful. Moving on to our second strategic enabler, which is to build an enduring business for the future. W40 company has long been committed to purpose-driven growth, operating in a way that balances economic performance, environmental stewardship, and social responsibility to create and protect long-term stakeholder value. Today, I want to highlight our commitment to social responsibility and share an update on our broader citizenship efforts.

For over 40 years, W40 company has supported communities by contributing to a wide range of nonprofit organizations and initiatives. Recently, we completed a re-evaluation of our social mission to ensure it reflects who we are today and where we're headed. Rooted in our people-first culture, values, and brand mission, the purpose of our new citizenship framework is to empower doers around the world to build a better future.

A new citizenship framework is anchored in three strategic pillars, training, preparation, and restoration. These pillars align with our 2030 strategy, reinforce our company's purpose, and support the United Nations' sustainable development goals in meaningful ways.

One way we're bringing the training pillar to life is through programs like Training the Trades. This program supports aspiring technicians and tradespeople around the world with the goal of developing the next generation of skilled professionals. By doing so, we help strengthen communities and address critical talent gaps in many of the regions where we operate.

With that, I'll now turn over the call to Sarah.

Thanks, Steve. Today, I'll offer insights into our business model. I like key takeaways from our third quarter performance and provide a brief update on the planned divestiture of our home care and cleaning business in the Americas and the UK. I'll also share our updated outlook for fiscal year 2025.

Let's start with a look at our business model. Our 5530-25 business model remains a long-term strategic guidepost. In the near-to-mid term, we continue to evaluate each component of the model within a range, allowing us to adapt while staying aligned with our long-term objectives.

I'll kick off with an overview of our third quarter gross margin performance. We target a range of 50 to 55% for gross margin, and we have made excellent progress on gross margin recovery. In the third quarter, our gross margin was 56.2%, up from 53.1% last year, representing an improvement of 310 basis points. Gross margin improved due to several favorable factors.

110 basis points from higher average selling prices including the impact of premiumization. 80 basis points from lower specialty chemical costs and 60 basis points from reduced can costs. There were no material unfavorable impacts to gross margin this quarter.

We're also pleased to report that gross margin improved across all three trade blocks this quarter compared to the same period last year. Gross margin in the Americas rose 360 basis points from 50.6 to 54.2%. Driven by lower specialty chemical costs than higher average selling prices.

Gross margin in IMAA increased 290 basis points from 54.8 to 57.7%. Driven by higher average selling prices, favorable shifts in sales and market mix, and lower input costs.

Gross margin in Asia Pacific rose 140 basis points from 57.6 to 59%. Primarily due to higher average selling prices.

As a reminder, gross margin recovery has been a central focus for senior leadership who are incentivized to recover gross margin to 55% and beyond. Year to date, our gross margin was 55.2% up from 53.1% last year. It is great to see our supply chain initiatives having an impact on our overall gross margin results.

For the full fiscal year, we currently project gross margin will be between 55 and 56%. One year ahead of our original timeline, while risks remain, including cost volatility, tariffs, the timing of supply chain cost initiatives and progress on our asset divestitures were closely monitoring these factors. Gross margin has strengthened steadily in recent quarters, giving us confidence in exceeding our 55% long-term objectives this fiscal year.

Now turning to our cost of doing business, which we define as total operating expenses, less adjustments for certain non-cash expenses. Our cost of doing business is primarily driven by three key areas. Strategic investments in our people, global brand building efforts, and freight expenses associated with delivering products to our customers.

While our long-term goal is to manage cost of doing business within the 30 to 35% range, we continue to make thoughtful, strategic investments to support long-term growth. These include initiatives in brand building, technology, ESG, innovation, and regulatory compliance.

This quarter, our cost of doing business is 38% of net sales, up from 34% in the same period last year. In dollar terms, our cost of doing business increased 5.9 million or 11%, of which 2.9 million was driven by timing differences for our incentive compensation accrolled as quarter, as compared to the prior year.

Increases were also driven by higher employee-related expenses, including additional headcounts, to support our sales growth initiatives outlined in our strategic framework, as well as staffing to enhance our information systems.

Advertising and promotional expenses remained relatively constant year over year. As the percentage of net sales, A&P spend was 5.8% this quarter, compared to 6% in the same period last year. While we are currently tracking below our full-year guidance of 6% of net sales, we have several brand-building initiatives planned for the remainder of the fiscal year, which we expect will bring A&P investment in line with our guidance.

We expect to see improvements in our cost of doing business metric over time as sales growth, which is the most important factor in managing our cost of doing business towards our long-term target of 30 to 35%.

Turning now to adjusted EBITDA, we believe adjusted EBITDA as a percentage of sales is a valuable metric for assessing both profitability and operational efficiency. Our long-term target is a range of 20 to 25%, and we've made solid progress towards achieving this aspiration.

In the third quarter, our adjusted EBITDA margin was 20%, compared to 19% in the same period last year. We believe looking at adjusted EBITDA in dollar terms can also be useful for assessing absolute performance. In the third quarter, our adjusted EBITDA was 30.7 million, up 3% from prior quarter.

Adjusted EBITDA is a critical component of our business model. With our low depth capital-like structure, much of it converts to free cash flow, enabling consistent stockholder returns and long-term value creation.

Let's turn to other key measures of our financial performance, operating income and earnings per share. Operating income improved to 27.4 million in the third quarter, an increase of 1% over the prior period.

Deluded earnings per common share were $1.54 in the third quarter, compared to $1.46 last year, reflecting an increase of 5%. Our diluted EPS reflects 13.6 million weighted average shares outstanding.

Next, let's review our balance sheet and capital allocation strategy. Our financial position and liquidity remain strong, supporting a balanced capital allocation strategy that invests in long-term growth while delivering meaningful returns to stockholders. Maintaining a disciplined and balanced capital allocation approach remains a priority for us. For the foreseeable future, we expect maintenance capex of between 1% and 2% of sales per fiscal year, which is in line with our asset-like strategy.

Our cash flows from operations this quarter was $35 million, and we elected to use approximately 20 million of that cash to pay down a portion of our short-term higher interest rate borrowings. Our intent is to continue to pay down higher interest borrowings under the current interest rate environment.

We continue to return capital to our stockholders through regular dividends and buybacks. Annual dividends will continue to be our priority, and are targeted at greater than 50% of earnings. On June 17, our Board of Directors approved a quarterly cash dividend of $0.94 per share. During the third quarter, we repurchased approximately $12,750 shares of our stock at a total cost of approximately $3 million under our current share repurchase plan.

On June 16, our Board of Directors approved an amendment to extend the current share repurchase plan for an additional year, resulting in a new expiration date of August 31, 2026. We plan to remain active in the market and expect to repurchase at least enough shares to offset shares issued. Our goal is to return capital to stockholders in the most accretive way possible.

Finally, before I move to guidance, I would like to provide a brief update on the household divestiture. Our investment bank continues active discussions with multiple potential buyers both in the United States and in the United Kingdom. Although there's no certainty of a deal, we remain optimistic and I will provide further updates as appropriate.

Let's turn to FY 25 guidance, which we have made revisions to reflect our current view of the business. As a reminder, we issued this year's guidance on a pro forma basis, excluding the financial impact of the home care and cleaning brands we have classified as assets held for sale. Given that the timing of the transaction remains uncertain, we continue to believe this approach provides investors with clarity on the direction of the core business and helps minimize the noise surrounding the transaction.

In addition, this guidance excludes the release of a non-cash, one-time, uncertain tax position that generated a favorable income tax adjustment, which we disclosed in the second quarter of fiscal year 2025.

I encourage investors to review our third quarter fiscal year 2025 earnings presentation, which includes a pro forma view. With only one quarter to go, we are pleased with the outlook for the full year and as Steve indicated, we are seeing a strong start to our fourth quarter.

With that, our updated guidance for fiscal year 2025 is projected as follows. Net sales growth from the pro forma 2024 results have been narrowed to be between 6 and 9 percent, with net sales between 600 and 620 million, after adjusting for translation impacts of foreign currency.

We continue to expect full-year growth margin to be in the range of 55 to 56 percent. Advertising and promotion investment continues to be around 6 percent of net sales.

Operating income has been increased to be between 96 and 101 million, now representing growth of between 7 and 12 percent over the pro forma 2024 results.

The provision for income tax is expected to continue to be around 22 and a half percent, and we are increasing our diluted earnings per share guidance, primarily due to the impact of foreign currency exchange rate fluctuations and changes in non-operating items. It is now expected to be between 5.30 and 5.60, which is based on an estimated 13.5 million weighted average shares outstanding.

This range now represents growth of between 12 and 18 percent over the pro forma 2024 results. This guidance assumes no major changes to the current economic environment.

Unanticipated inflationary headwinds, foreign currency exchange fluctuations, changes in trade tariffs and other unforeseen events may further affect the company's financial results. In the event we are unsuccessful in divesting the assets currently held for sale, our guidance would be positively impacted by approximately 20 million in net sales, 6 million in operating income and 33 cents and diluted EPS on a full year basis.

That completes the financial overview. Now I would like to turn the call back to Steve.

Thank you Sarah. In summary, what did you hear from us on this call? You heard that the third quarter was a record sales quarter for the company, reflecting continued progress and momentum. You heard that sales of our maintenance products were up 6 percent year to date and that this performance aligns with our long term growth targets.

You heard that we are pleased to report a strong start for the fourth quarter with June delivering robust performance across all three trade blocks.

You heard that sales of DIVI 40 multi-use products were up 6 percent year to date. You heard that sales of DIVI 40 specialists were up 11 percent year to date. You heard that sales in the e-commerce channel were up 11 percent year to date. You heard that while the US median employee tenure is four years, DIVI 40 company averages eight twice as long. You heard that we're launching a renewed citizenship platform designed to empower doers around the world to build a better future.

You heard that in the third quarter our gross margin was 56.2 percent and we believe we will end fiscal year 2025 within our guidance range of 55 to 56 percent. You heard that we narrowed our net sales guidance and now expect net sales growth between 6 and 9 percent in fiscal year 25 which aligns with our mid to high single-digit long-term growth target.

And you heard that we made an upward revision to our fourth fiscal year 25 operating income and EPS guidance. Thank you for joining our call today. We'd now be pleased to answer your questions.

I'll kick off with that Daniel and Sarah you feel free to chime in. And so yeah our guidance I mean obviously we're now only eight to ten weeks out to the year end and so we have a much clearer view of where we're headed. So we did narrow the guidance slightly just to reflect our latest estimate which is fully within our historical kind of targets of six to nine percent of maintenance products. And so we feel that obviously the third quarter we were a little lighter in terms of revenue growth albeit delivering a record sales quarter up against a tough comparable and the fourth quarter is also quite a tough comparable compared to prior year.

And so we feel good about where we're targeting the revenue numbers several do you have anything to add?

Just that. Hi Daniel a lot of times the promotional activity as we get to the end of a quarter or the end of the year can swing it from one direction if something gets pulled forward or something gets pushed out. And so sometimes that is out of our control along with the timing of when especially in our marketing distributor markets if you know an order or two slips even just a couple days that actually can have a decent impact because those orders tend to be fairly sizable. So it's one of the reasons why we kept a a decent range but also felt that it was appropriate to narrow it just where we're where we think the year is going to land.

Yeah I mean I think obviously we're very pleased with where margin has held throughout the course of the year and believe will be in line with that 55 to 56 percent. I think we've indicated right we necessarily won't be stopping at 55 percent we do have a number of supply chain initiatives in the pipeline that we think could potentially be a creative if we don't encounter additional inflationary headwinds and so you know we're pleased that where margin is obviously the stability of the input cost has been in our favor this year and if we do encounter any inflationary headwinds going into next year I think we're pretty confident that we have enough supply chain initiatives in the pipeline to offset those but if the cost stays stable then those supply chain initiatives would would likely be a creative to us.

Yeah I think we'll continue if you look at on a global basis right the biggest headwind we had for FX was in the second quarter that pulled back a little bit in the third quarter actually was finally thought flip positive for us in Europe in particular which is where we have the biggest impact of currency if we sit here with the rates sitting here today compared to Q4 last year I would expect that to be a positive for us albeit you know the Mexican and the Brazilian currencies have been have been our biggest headwinds for the full year and that will likely continue into the fourth quarter.

Not really Dan you know we've kind of made the statement last quarter but you know we are relatively we're not immune from tariffs in particular in our America's business we do have some exposure but no there's no kind of real lumpiness around ordering patterns I wouldn't say and we do have substantial supply chain initiative which are largely offsetting the impact of tariffs and so where there is particularly with our America's region has some tariff exposure particularly around steel cans with the tariffs you know we are managing to offset that globally in terms of countermeasures from supply chain initiatives making it virtually awash globally for us.

Thank you.

Yeah hey Mike so I think it's you know you get further to the year and you know you're eight ten weeks away from the year end you know you get a clearer picture on how things are tracking and so yeah eight ten weeks away you know this kind of guidance of six to nine percent which is where we guide to long-term is kind of where we see it from today's vantage point and so we're narrowing the guidance you know you see the sort of sort of comparable numbers were lapping now in Europe for the third and fourth quarter that's that's a part of it we did talk to some kind of slow down within our Middle Eastern region and so therefore that's the structural reasons we've implemented a new manufacturing partner in Dubai and so what's happened there is our local partners are reduced that's reduced the inventory needs and so whereas they were sourcing before by a sea shipment and it was taking a month they're now able to get product within five days or seven days and so the need for inventory is considerably less and so there we have a one-off kind of change that we weren't quite sure when in the year we're going to be implementing so that has a had a material impact we also spoke about you know turkey you know this is one of those emerging markets where one year you can grow at 66 percent like we did last year and this year we're declining by almost 40 percent so the long-term story is still extremely positive but some of these emerging markets are more volatile and that does lead to some predictability and then my maybe if I can just add on a little bit so the the sales guidance that we put out is is on a constant currency basis and so we try to take the constant or the currency out of that six to nine percent growth what you're seeing then on the change for the operating income and the EPS is that when we were sitting here at Q2 the euro in particular was at a much lower rate it has since improved and held and we're using more current rates so we're seeing a positive impact actually to our operating income and an EPS and then you know just one or two other non-operating items that are positive in our favor but all in all I think when we put out guidance at the beginning of the year kind of where we're landing at the end of the year you know the business is actually pretty in line with where we expected it with some some currency noise in the first half of the year then being you know coming back and giving us a little bit of tailwind back half of the year got it makes sense thanks if I could ask one other question it's interesting I think of some of the revenue and something we talked about some of the the reasons you talk about promotions helping drive business as well as in some of the products so if you could talk about the promotional activity that you're seeing and I guess within the context of the idea that even though you're talking about promotional activity driving businesses your promotions other percent of that was actually down year to date a little bit so just just try to square that circle yeah I think you have to differentiate between promotions and brand building right and so most of our marketing investments are in in terms of brand building and things simple marketing programs like sampling we've spoken about you the sampling programs we put out across the world particularly in places like China and India to bring in new end users and so that's kind of part of that the other aspect is then with our big kind of box retailers particularly in the Americas you know those whether whether a promotion land so you know it isn't always a price promotion it can be an off-shelf promotion or or whatever you know whether that lands in one particular quarter in the next can be in down to a matter of days and so they can be pretty substantial chunks of business we have a very strong promotional program particularly in our US business as we look at the Q4 and so we're very confident about the the US business which perform well in Q3 and going into Q4 we believe a well set up for a strong year you know with modest single-digit growth within the US market.

Thank you.