Dr. Pepper Snapple Group, Inc. Q2 2009 Earnings Call Transcript

Aug.13.09 | About: Dr Pepper (DPS)

Dr. Pepper Snapple Group, Inc. (NYSE:DPS)

Q2 2009 Earnings Call

August 13, 2009 11:00 am ET

Executives

Aly Noormohamed – Senior Vice President Finance and Investor Relations

Larry D. Young – President and Chief Executive Officer

John O. Stewart – Chief Financial Officer

Analysts

Kaumil Gajrawala - UBS

Judy Hong - Goldman Sachs & Company, Inc.

Mark Swartzberg - Stifel Nicolaus & Company, Inc.

Damian Witkowski - Gabelli & Company

Andrew Kieley - Deutsche Bank Securities

Operator

Welcome to Dr. Pepper Snapple Group’s second quarter 2009 earnings conference call. (Operator Instructions) Today’s call is being recorded and includes a slide presentation which can be accessed at www.drpeppersnapple.com. The call and slides will also be available for replay and download after the call has ended. (Operator Instructions)

It is now my pleasure to introduce Mr. Aly Noormohamed, Senior Vice President Finance and Investor Relations. Sir you may begin.

Aly Noormohamed

Thank you and good morning everyone. Before we begin I would like to direct your attention to the Safe Harbor statement and remind you that this conference call contains forward-looking statements including statements concerning our future financial and operational performance. These forward-looking statements should also be considered in connection with cautionary statements and disclaimers contained in the Safe Harbor statement in this morning’s earnings press release and our SEC filings. Our actual performance could differ materially from these statements and we undertake no duty to update these forward-looking statements.

During this call we may reference certain non-GAAP financial measures which we believe provide useful information for investors. Reconciliations of those non-GAAP measures to GAAP can be found in our earnings press release and on the Investor Relations page at www.drpeppersnapple.com.

This morning’s prepared remarks will be made by Larry Young, Dr. Pepper Snapple Group’s President and CEO and John Stewart, our CFO. Following our prepared remarks we will open the call for your questions.

With that let me turn the call over to Larry.

Larry Young

Thanks Aly and good morning everyone. I am sure many of you have questions regarding what impact the acquisition of the two Pepsi bottlers may or may not have for our business. What this transaction clearly shows is the strategic importance and growth potential of the North American beverage market. In this context, DPS’ existing advantages are clear. We are the undisputed leader in flavored CSD’s, the number one juice and juice drink manufacturer by volume and number on in premium teas We have broad and flexible route to markets that we believe strike a good balance between company-owned DSD and our bottling partners.

Our journey to create a fully integrated packaged beverage business did not start a week ago. It started in earnest in October 2007 and after 20 months of hard work our integration is nearing completion. With a leading brand portfolio and distribution flexibility we believe we are well positioned to exploit the significant per capita development opportunities that are out there. Single serve availability, award winning innovation and 360 degree consumer communications will ensure our brands are top of mind and always close at hand.

Our crush cost mindset will also ensure we manage the leanest and most efficient operating model possible. As I have said before, our guiding principle is to always do what is best for our brands, our customers, our consumers and ultimately you, our stockholders. We are reviewing a number of possible strategic options that build on our already strong growth prospects. As I am sure you will appreciate, discussions with customers or potential customers are something best handled in private.

Therefore it would be premature and certainly inappropriate for us to further comment on this transaction for the time being. We will come back to you with more news when we have something to share.

Now turning to our second quarter I am pleased to report strong results across all our segments. This continues the momentum we established in the first quarter. We are seeing greater economic stability with LRB trends improving sequentially. Against this backdrop consumers are still seeking out flavored CSD’s and value offerings and we expect these trends to continue.

Our flexible routes to market have allowed us to effectively navigate a challenging macroeconomic environment. Our CDS’s and value juices continue to perform well and pricing remains rational. For both the quarter and year-to-date and on an adjusted basis volume grew 4%. Net sales grew 3% and 4% respectively. Segment operating profit as adjusted was up 16% for the quarter and 17% year-to-date.

CSD volume grew 4% in the quarter. Dr. Pepper volume grew 4% led by Cherry which we reformulated to target the light user. Crush more than doubled in volume, adding three points to overall CSD growth on expanded distribution. We also benefited from the shift of Easter into the second quarter as well as strong support for our Fourth of July promotions. Our CSD volume growth was partially offset by continued de-stocking of certain bottlers in Mexico, especially with Squirt.

In the quarter our fountain volume was down less than 1% at a time when QSR traffic was down 2%. Year-to-date our fountain volume was up 1%. This reflects a continuing shift to flavors which now account for 53% of all regular CSD fountain service. Adding to the win at McDonalds we recently announced the expansion of Diet Dr. Pepper to all 2,200 Jack in the Box restaurants. We expect to complete this roll out by the end of 2009. We are targeting to have regular Dr. Pepper in 100% of McDonalds and Diet Dr. Pepper in 50% of McDonalds by the end of 2010.

Weakness in the premium priced beverages continued as consumers migrated to value offerings. While Snapple declined double digit in the quarter we are encouraged by the improvements we are seeing in its trends. The new six pack premium offering and our national media campaign are clearly having a positive impact.

In Mexico our team continues to offset a weak economy with new distribution. Crush flavor and package innovation and most recently the launch of our Venom Energy Drink.

Moving to net sales, we continued to benefit from price increases taken earlier in the year reflecting the strength of our brands. As in the first quarter volume and price increases were offset by the negative mix from higher sales of Hawaiian Punch and CSD concentrate as well as lower sales of Snapple. Segment operating profit, as adjusted, grew a healthy 16% driven by significantly lower packaging, ingredient and fuel costs and a continued cost control focus. This was partially offset by selective brand and marketplace investments.

In the quarter our supply chain team once again demonstrated operating excellence with service levels up two points, operating equipment effectiveness our manufacturing efficiency measure up four points and obsolescence down 20%.

As our products gain broad distribution we are also realizing greater returns on our consumer communication efforts and new product launches. Feedback from our customers and consumers tell us we are on the right track. We are benefiting from lower advertising rates and combined with incremental investments our GRPs are up strong double digits.

Dr. Pepper is blanketing the light user with a diet user sampling, targeted couponing on pack and under the cap promotions and incremental media featuring our latest Dr., Dr. Dre. In June, Dr. Pepper teamed up with Electronic Arts to bring gaming fans access to exclusive, premium downloadable content in 2010 through codes found under more than 500 specially marked Dr. Pepper packages. For the tenth year in a row Dr. Pepper was the official co-sponsor of the Teen Choice 2009 which aired this past Monday on Fox.

7Up continues to perform well relative to the category. Year-to-date volume was up 1% while we estimate the category to be down mid single digits. We are seeing growth in two areas. First, Cherry 7Up with antioxidants is bringing consumers back to CSDs. Half of its volume is being sourced from noncarbonates while the other half is coming from non-DP CSDs.

Second, our continued focus on Hispanic programming is driving almost two points of share growth in our Hispanic tracked markets. We recently launched Sevenisima, a campaign that celebrates the flavorful moments experienced through a natural way of life. In July we launched our Up To Us campaign, asking consumers to help us conserve over 3 million pounds of plastic using our new environmentally friendly 2 liter eco bottle. With up to 40% post consumer recycled material, this is one of the several initiatives we have underway to reduce our environmental impact. You will hear more about these efforts in the coming months.

Canada Dry took the top spot for beverages at the Canadian Grand Prix new products award with its Green Tea Ginger Ale product and for the first time in eight years we returned to the U.S. airwaves in support of the re-staged ginger ale product with new graphics calling out its made with real ginger credentials.

Our Snapple premium six pack continues to gain momentum. ACV distribution hit 68% in the latest four week Nielsen period with markets like Des Moines, Denver, Chicago and Seattle at over 90% ACV. Snapple Value tea hit 51% ACV distribution, now ahead of our target range for the year. On June 10 we celebrated National Iced Tea Day with a full page ad in the USA Today offering consumers the opportunity to try a bottle of Snapple for free.

To drive additional Snapple premium trial and display we are adding Try Me Free mail in rebates in September. For a limited time only we will introduce a mint inspired tea under the slogan, “Make a Mint Tea” that will offer consumers an opportunity to win free rent.

Venom Energy’s partnership with Andretti Green Racing is providing great visibility to the brand and having lapped its launch in 2008 Venom still continues to post strong volume growth with grocery ACV now at 56%. In keeping with our grass roots efforts to build Venom one bottle at a time, we have also gathered an unprecedented team of professional athletes from Joe Johnson in Atlanta to Patrick Willis in San Francisco to promote the brand in their local markets. We will continue to be category manager of choice of several of our large accounts and most recently were honored by 7-11 as vendor of the year for the second year running. This award recognizes the strength of our partnership, the value of our brands and our commitment to customer service.

The integration of our company owned DSD operations is nearing completion and is already delivering results. Moving to one common sales, supply chain and back office platform has provided much needed standardization and productivity. Since the integration began our business has generated over $100 million in annualized savings. Our SAP 6.0 upgrade is progressing to plan. A combination of a successful pilot, extensive planning and very active business engagement has allowed us to complete our Southwest, West and Northeast regions with no loss in business continuity. We are about 80% through the rollout with our Central and Southeast regions scheduled for deployment in Q4 2009 and Q1 2010.

Our handheld roll out is almost ¾ complete and is delivering improved sales and route analytics, better fleet utilization, greater sales efficiency and improved customer service. We are also on schedule with our Victorville facility, a key plant in our five regional center strategy. We continue to expect the first line to be operational during the first quarter of 2010. We are also very proud to say that Victorville will be Lean certified.

With a solid foundation in place we are now leveraging this business to drive profitable growth. Through July we have placed 23,000 cold drink units, in line with our asset placement plan. This week we announced expanded distribution of HyDrive Energy Drinks and added energy chews into the mix. Since taking a stake in HyDrive Energy, we have been pleased with the support for and the performance of this brand. We are continuously refining our distribution network to drive the absolute lowest delivered cost and we are leveraging our productivity office to accelerate cost saving initiatives.

Finally, our new segment reporting makes it much easier to see our progress and over time we expect to see further improvement in operating performance on a constant product mix basis.

With that let me turn the call over to John to walk you through some of our financial highlights and our 2009 guidance update in more detail.

John Stewart

Thanks Larry. Let me start by addressing our unallocated corporate costs. In line with our beginning of the year guidance and for the quarter we incurred higher stand alone costs to establish corporate functions as well as increased stock based compensation expense. Additionally, as we have taken longer cover against certain commodities we have increased our exposure to unrealized mark to market gains and losses.

In the second quarter we recorded a mark to market gain of $8 million. We have also started to incur expenses that are being funded by our productivity office. While we are still in the ramp up mode we are starting to see some savings being generated. A good example would be our recent entry into a 5-year IT outsourcing agreement with HCL Technologies which provides application support and maintenance, end user computing as well as an integrated service desk and network management. Additionally, HCL offers us deep SAP capabilities, an area of particular importance to us.

We are also building on our existing back office outsourcing agreement with Genpac. In June our order entry processes for concentrate and warehouse products went live. Our billing to cash project which will drive both savings and improve cash flow is underway and scheduled to go live this fall. On the accounts payable side we just kicked off an e-invoicing project which should allow us to improve payment processes and reduce cost per transaction. By closely monitoring our service level agreements we are delivering or exceeding our established productivity goals.

Our tax rate for the quarter was 130 basis points below our full-year expected tax rate. This was driven by the timing of items indemnified by Cadbury as well as the timing of certain tax planning initiatives.

Year-to-date cash provided from operating activity increased $93 million to $371 million compared to the year-ago period. A continued focus on trade working capital, particularly on receivables, drove a $12 million improvement in the year-to-date period. Net capital spending was $134 million and is tracking in line with our full year guidance of 5% of net sales. Through June we made optional principle repayments of $280 million that cover all but $12 million of our 2010 obligations.

As Larry mentioned earlier, we are seeing an input cost environment that is substantially better than our beginning of the year expectations. In fact, we now expect packaging and ingredients to reduce costs by 3% for the year. As a reminder, packaging and ingredients make up roughly 60% of our total cost basket. In order of dollar spend magnitude this basket comprises; cans and ends, bottles and caps, sweeteners, glass, apple and other fruit concentrates, corrugate and paperboard, flavors, colors and acidulates, labels and films and all others. We are seeing favorability across the entire basket especially in HFCS, PET, glass and paper. This reflects not just the sequential improvement in the underlying prices for these components but also lower negotiated rates for tolling and other conversion fees.

Moving on to guidance, on a currency neutral basis and excluding the loss of Hansen product distribution we continue to expect net sales growth to grow 2-4%. This range is unchanged from our previous guidance. We expect CSD and value juice strength to continue and Snapple to improve sequentially. As a reminder, we will be lapping the concentrate buy-in in the fourth quarter 2008 as well as strong double digit growth in Hawaiian Punch in the second half of 2008.

We now expect earnings per share excluding certain items to be in the $1.88 to $1.96 range. This represents an increase of $0.18 from our previous guidance and principally reflects the lesser input cost environment with packaging and ingredient costs now expected to reduce total costs by 3% for the full year. We expect our tax rate to be approximately 38% as we benefit from favorable tax planning initiatives and higher profit leverage. As a reminder, our tax rate includes approximately $20 million of items indemnified by Cadbury.

We continue to seek out growth and productivity investments to support the long-term health of our brands and drive further cost efficiencies. Our incremental media weight is second half loaded and will spotlight Dr. Pepper, Diet Dr. Pepper, 7UP, Canada Dry and Snapple.

In terms of cash, our priorities remain unchanged. We continue to expect strong cash from operations and we continue to focus on working capital improvement. Our CapEx target remains at 5% of net sales. Given the continued strength in our business and consistent with the $0.29 increase in EPS compared with our beginning of the year guidance, we now expect to repay $75 million more in optional principle payments bringing our full year debt repayment to at least $475 million.

With that let me turn the call back to Larry.

Larry Young

Thanks John. Before we open the lines for questions let me leave you with a few thoughts. We are executing against our focus strategy. Our package beverages integration is nearing completion and is already delivering results. We remain confident in DPS’ ability to seize the substantial growth opportunities in North America both in the near-term and the long-term. It is this confidence that supports our increase in the EPS guidance and our forecast of optional debt repayment. As I said at the beginning of the call the acquisition of two Pepsi bottlers clearly shows the strategic importance and growth potential of the North American beverage market.

We are reviewing a number of possible strategic options and therefore it would be inappropriate for us to answer any questions on this topic at this time.

Operator, we are ready for our first question.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from the line of Kaumil Gajrawala – UBS.

Kaumil Gajrawala - UBS

My first question is if you can give us an update or a progress report on the cooler roll outs. Then, within that context how your cold drink business is doing and how you see it doing towards the end of the year?

Larry Young

Like I said we are on track and are on plan. We have placed 23,000. We are seeing great opportunities out there. Of course you always do in the beginning when you first start something like this. I will say I think everyone it is still kind of challenging on the single drink volume. We are starting to feel much more positive and seeing an uptick but we are very happy with the cold drink placement. Within the existing accounts we are still looking for more opportunities for driving traffic and promotional activities to drive that volume.

Kaumil Gajrawala - UBS

No fundamental changes in the channel?

Larry Young

No.

Operator

The next question comes from the line of Judy Hong - Goldman Sachs & Company, Inc.

Judy Hong - Goldman Sachs & Company, Inc.

In the last call I think you talked about how marketing spending was going to be skewed more into the second quarter and it sounds like on this call you are saying it is more second half weighted. Was there a bit of a timing shift in terms of the marketing spending from second quarter to the third quarter or second half?

John Stewart

No, no real shift. We indicated somewhere in the mid-teen’s millions more that would have shifted from Q3 of 2008 into Q2 2009. We have seen that in this Q but remember it is split between net sales. Some of it is coupon expense and some of it is marketing. What we are talking about here or really flagging here is incremental media weight. In other words we are seeing the benefits from commodities dropping through to our bottom line. We are not letting 100% of that drop through. We are going to spend incrementally in the back half and I would guide you that spend would be more in Q4 than Q3. So expect a bit more in Q4 with a big focus as I called out on Dr. Pepper, Canada Dry, Snapple and the like.

Judy Hong - Goldman Sachs & Company, Inc.

I was wondering if you could give us some perspective on how you think pricing and the promotional environment will unfold in the back half especially since now your competitors are going to also benefit from a more beneficial commodity environment.

Larry Young

I think as you look at it pricing continues to remain rational. We are seeing more promotion instead of just price off which I think helps to drive excitement and traffic into the aisle. If you look at the latest Nielsen, it was up 4.4 points and Fourth of July activity was more buy/gift instead of just heavy discounting. I don’t see anything out there to tell me that is going to change. I think it is going to stay rational. I think promotional activity could heat up but again that is what this business is all about.

Judy Hong - Goldman Sachs & Company, Inc.

Do you have a view as to what long-term LRB category growth rate would be?

Larry Young

I think if we look at the LRB we are looking at probably somewhere in the flat to one.

Judy Hong - Goldman Sachs & Company, Inc.

I know you said you don’t want to give too much detail about what might happen to your brands that are with the Pepsi system but is there any way in a general sense of what the options might be and in a sense of the pros and cons of some of those options?

Larry Young

No. We have just really got into it right now. We don’t see a lot of cons but as our team works on it and looks at the different options just to emphasize what we look at is the strength of our brand and what is right for our customer, consumer and shareholder. That is the decision we will make.

Judy Hong - Goldman Sachs & Company, Inc.

From a timing perspective will the decision be made after the deal closes or would some decision be…is it possible for a decision to be reached before that time?

Larry Young

I don’t have any idea when their deal is closing. We will just see when all our facts come in.

Operator

The next question comes from the line of Mark Swartzberg - Stifel Nicolaus & Company, Inc.

Mark Swartzberg - Stifel Nicolaus & Company, Inc.

I was hoping to get a little more granularity on recent trends both for you and for the category here in the U.S. more broadly. Can you give us an idea of how you think the category performed on an all channel basis over 4th of July and then over the last five weeks ago again from a category and DPS perspective?

Larry Young

I think we have all recognized that CSDs are definitely benefiting from the current economic climate. I think what we have seen here in the first half and continuing now into the second I don’t think is going to change a whole lot. I think we are seeing our retailers allocate a lot more space to CSDs and they are also using private label to attract consumers. We really expect this trend to continue into 2010.

Mark Swartzberg - Stifel Nicolaus & Company, Inc.

So it sounds like not a lot of a trend change, if you will, at the start of the second half of the year.

Larry Young

No.

Mark Swartzberg - Stifel Nicolaus & Company, Inc.

As we think about 2010 from a packaging and ingredient perspective, you have adopted a more favorable view for 2009, 3% off of COGS with year-over-year savings on those inputs. If we simply assume those inputs collectively stay where they are right here for the next 12 months is it correct to think that 3% number goes to a 4-5% negative number in 2010? Or is that too optimistic?

John Stewart

I think that is too optimistic. It is too early for us to be giving guidance on 2010 at this stage but clearly we have benefited relative to our competitive set. At negative 3% we have benefited significantly but that obviously means we won’t benefit as much in 2010 on a relative basis. As we look at it at the moment we are probably today looking at a closer to flat environment, maybe to modestly down, but that is compared with a negative three base.

Operator

The next question comes from the line of Damian Witkowski - Gabelli & Company.

Damian Witkowski - Gabelli & Company

I just wanted to get into a little bit more on the success of Dr. Pepper Cherry. Any way of telling if you are sourcing new consumers to the Dr. Pepper category or is it just more frequent use by your existing consumers?

Larry Young

What we are seeing is we are bringing new people into the category and it is our light user. If your remember when we first started looking at it we found that some people thought the Dr. Pepper was a little strong. So we smoothed it out with the taste of cherry. We are just thrilled to death with the result. Los Angeles is right now our number one market so it is working very well in our strategy to hit the coast, to hit the lower developed markets so we start growing those per caps across the United States.

Damian Witkowski - Gabelli & Company

Speaking of geography, are you seeing strength pretty much across the board or are different regions doing better than others in the U.S.?

Larry Young

Pretty much across the board. I think everybody in the category has had some weather through this summer so you can see some regions that were affected a little bit by that but we are seeing pretty well consistent performance.

Damian Witkowski - Gabelli & Company

On pricing, you have talked about a rational environment. Is there a difference amongst categories? Is the tea category more price competitive than the CRDs?

Larry Young

You might see a little more in the value teas but I think if you watch what is happening with teas most of the growth in there is on these pre-priced 24 ounce cans and the gallon. Again, people driving to that value equation. Like I said earlier we are very happy with what we are seeing in the relaunch of Snapple premium. The momentum we are building we are very pleased.

Damian Witkowski - Gabelli & Company

I know you said this but do I have this right, the ACV for the Snapple mainstream is up to 68%? Is that right?

Larry Young

Mainstream was 51%. The six pack premium was the other one.

Operator

The next question comes from the line of Andrew Kieley - Deutsche Bank Securities.

Andrew Kieley - Deutsche Bank Securities

The 4% growth or so in brand Dr. Pepper was most of that in Cherry or were there other factors?

Larry Young

Most of it was driven by cherry, yes.

Andrew Kieley - Deutsche Bank Securities

I think earlier in the year for your total CSD volume you had talked about 1% growth. How do you think about that today given how you have done in the first half?

Larry Young

Well if you look at our numbers right now with Crush being three points we are still very solid on our CSD growth being flat to up one X Crush.

Andrew Kieley - Deutsche Bank Securities

Could you talk a little bit more about the timing of commodity cost coverage you have? How far it extends. Into 2010? Maybe where most of the variability is for you at this point.

John Stewart

Most of the variability is in the ones we can’t lock so the PET would be the best example where we are only ever 2-3 months out. Barring PET for the most part 2009 is covered. We have taken the advantage or opportunity in weeks and recent months to extend into 2010 and that is in the areas of aluminum, corn and gas is the three that highlight where we have moved cover forward into 2010. I wouldn’t give you a percentage on that yet. Look for an update when we give you more specific 2010 guidance in the fall.

Andrew Kieley - Deutsche Bank Securities

Are you able to give on the McDonalds rollout a sense of what kind of progress you achieved this quarter and maybe are you able to put the profit number on that for the year?

John Stewart

I think there is a couple of factors with the McDonalds rollout. One is we are doing the straight replacement of Pibb into existing valves that is going to be relatively straight forward and should mostly be accomplished by the end of this year. That is probably 2,500 outlets. For the other outlets where Dr. Pepper is brand new we are going to have to coordinate with McDonalds as they go through their beverage strategy rollout as they want to disturb the stores really only once and we want to make sure that we are hooked up with them as they roll out [Frape’s] and finalize the rollout of coffee. So that will cause the McDonalds rollout to go all the way through 2010 and that was why we called out it would be the end of 2010 before that is complete. At this stage there wouldn’t be a significant impact to 2009. We will call out more of the 2010 impact when we get to that stage of guidance.

Andrew Kieley - Deutsche Bank Securities

I know you can’t talk a lot about the Pepsi situation but thematically or structurally they talk a lot of the focus on the deal is cost savings. I was wondering, are there any comparisons you can draw for what opportunities for you in your system are in terms of cost savings, infrastructure, rationalization and those kinds of things going forward?

Larry Young

Like I said earlier we started in 2007. We are about complete with our integration. We have at DPS a never ending mindset of continuous improvement in operating efficiency so with a fresh cost mentality and constantly into the Lean Six Sigma and continuous improvement. We are always looking for more but we captured the majority of ours the last couple of years.

Operator

The next question comes from the line of Judy Hong - Goldman Sachs & Company, Inc.

Judy Hong - Goldman Sachs & Company, Inc.

In the beverage concentrate business you cited the higher fountain food service contractual discount that drove the pricing in the quarter. Can you explain what that is and quantify how much that is and is this something that is more of one-time in nature or as you have these fountain contracts you are likely to see this continuing going forward?

John Stewart

It is an ongoing feature. As you know it is a very challenging environment. It is the least profitable of the concentrate businesses by a long margin. Indeed, if I take the McDonalds example we were talking about earlier you should think of the business as more paid sampling for bottle and can halo than in true marketing spend. So it is a feature that is going to be with us for some time.

Judy Hong - Goldman Sachs & Company, Inc.

Do you have a quantification of what magnitude the drive would be?

John Stewart

Magnitude is probably less than $10 million at a profit level.

Operator

The next question comes from the line of Mark Swartzberg - Stifel Nicolaus & Company, Inc.

Mark Swartzberg - Stifel Nicolaus & Company, Inc.

Snapple, I might have missed it but earlier this year you were talking about expecting to see that brand actually post growth by the time the year ended from a volume perspective. Is that still your view?

Larry Young

Yes. Like I said the trends we are seeing are very encouraging. I think everybody in the premium category had a really tough fourth quarter so we are very bullish on what we are seeing with our Snapple and like I said on our last call it kind of put us back a quarter where we thought we would back but I still think we are going to get there.

I want to thank everyone for joining us today and especially for your continued interest in Dr. Pepper Snapple Group. Thank you.

Operator

This concludes your conference. You may now disconnect. Thank you for your participation.

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