Participants

Christopher McGinnis; Senior Director, Investor Relations; ACCO Brands USA LLC

Tom Tedford; President, CEO, & Director; ACCO Brands Corp

Deborah O Connor; Chief Financial Officer, Executive Vice President; ACCO Brands Corp

Greg Burns; Analyst; Sidoti & Company

Joe Gomes; Analyst; Noble Capital Markets, Inc.

Kevin Steinke; Analyst; Barrington Research

Hale Holden; Analyst; Barclays Bank

William Reuter; Analyst; BofA Securities

Presentation

Operator

Hello, and welcome to the ACCO Brands First Quarter 2024 conference call. My name is Annie, and I'll be coordinating your call today. (Operator Instructions) I'd now like to hand over to Chris McGinnis, Senior Director of Investor Relations. The floor is yours. Please go.

Christopher McGinnis

Good morning and welcome to the Echo Brands' First Quarter 2024 conference call. This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today, is Tom Tedford, President and Chief Executive Officer of ACCO Corporation. Tom will provide an overview of our first quarter results, and I'll update you on our 2024 priorities. Also speaking today is Deb O'Connor, Executive Vice President and Chief Financial Officer, who will provide greater detail on our first quarter results and update you on our outlook for the full year 2024 and the second quarter. We will then open the line for questions.
Slides that accompany this call have been posted to the Investor Relations section of accobrands.com. When speaking about our results, we may refer to adjusted results. Adjusted results exclude amortization and restructuring costs, non-cash goodwill impairment charges and other nonrecurring items and unusual tax items.
An adjustment to reflect the estimated annual tax rate on quarterly earnings, schedule of adjusted results and other non-GAAP financial measures and a reconciliation of these measures to the most directly comparable GAAP measures in the earnings release and the slides that accompany this call due to the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our forward-looking non-GAAP measures.
Forward-looking statements made during this call are based on the beliefs and assumption of management based on information available to us at the time the statements are made are forward looking statements are subject to risks and uncertainties, and our actual results could differ materially. Please refer to our earnings release and SEC filings for an explanation of certain risk factors and assumptions are forward-looking statements are made as of today, and we assume no obligation to update them going forward.
And now I will turn the call over to Tom.

Tom Tedford

Thank you, Chris. Good morning, everyone. And welcome to today's call. Last night, we reported first quarter 2024 results with adjusted EPS of $0.03 within our outlook range. While we anticipated that 2024 would be a reset year with sales being below 2023. Q1 was modestly weaker than planned as demand for our categories remains muted. Our proactive disciplined cost management, combined with recent strategic pricing in several regions enabled us to expand our gross margin rate by 120 basis points. We effectively controlled our costs and managed our working capital as inventory was down considerably versus Q1 of the prior year. These actions translated into a healthy free cash flow of $26 million in the quarter, a $51 million improvement over last year. It enabled us to end the quarter with a leverage ratio of 3.5 times, well below the 4.3 times ratio at the end of Q1 last year and our debt covenants. As a reminder, the first quarter is seasonally our smallest in terms of sales and profitability.
We continue to expect relative improvement in both as we progress through the balance of the year. We are encouraged by the trends in our technology accessories categories and believe along with improving sales trends within our learning and creative and office products. Businesses that the rate of sales decline will moderate in the second half of the year. First quarter comparable sales were down 11% with approximately 2% from the planned exit of lower-margin business and another 3% relating to softer sales at the end of the back-to-school season in Brazil. The remaining decline represents the persistent global headwinds from softer consumer and business demand on a segment basis, sales declined the most in the Americas. Sales of our office products in the US and Canada were pressured in the quarter as market demand for our categories was weaker than anticipated structural shifts in how and where people were have created headwinds for the office products industry since the pandemic, we expect these sales declines to moderate and are now exploring innovative new product solutions that solve the challenges of the future of work for the important back-to-school season.
In the US industry experts continue to forecast sales for the season to be down modestly compared to prior year. We expect our year over year declines to be greater than the broader market as we exited lower margin private label products within the back-to-school category, we have initiatives underway to gain market share with our category leading Five Star need brands for the upcoming back-to-school season and expect another year of strong performance the value our leading brands offer consumers transcends economic conditions as evidenced by our market share gains pre and post pandemic, while declines in the US and Canada were expected due to the softer demand environment and the season sales for back-to-school products in Brazil were weaker than anticipated in the quarter. Despite this weakness for the full back-to-school season, we had good sales growth in Brazil. As a reminder, Brazil's back-to-school season sell-in occurs later in the year and concludes in the first quarter. Based on customer feedback this year, sell-through was good and customer inventory levels are healthy in the region. As a result, we expect sales trends to improve as we move throughout the year. We are also working closely with our valued retail partners to ensure we are well positioned to capitalize on all sales opportunities in Brazil and the rest of Latin America.
Our international segment also faced top line pressures with sales down year over year. The demand environment remained challenging across the segment due to weaker economic activity. Sales declines highlight the impact of the current macroeconomic environment on consumer and business spending globally. We introduced new products within the segment in Q1 with several product launches exceeding our initial expectations. Our market shares in key categories in the segment are stable with the support of leading brands like lights, repeat, Kensington and Powerade. Our teams operating in the segment maintained price discipline and tight cost controls, allowing us to expand operating margin 40 basis points. While we faced top line pressures across our core office products. We are seeing improved sales trends in our two global technology businesses, Kensington and power. A Q1 was encouraging as sales declines for Kensington computer accessories business moderated significantly. Our channel partners continue to work through excess inventory and docking station. And as their inventory positions improve, we anticipate our sales trends will as well.
The combination of improving market conditions as we move through 2024 and our pipeline of innovative new product launches give us confidence that the year-over-year declines we experienced in 2023 are largely behind us and at Kensington will return to growth in 2024.
Powerade, our leading gaming accessories brand saw solid sales growth of 14% in the quarter. Driven by a greater supply of wireless gaming controllers and our international expansion. We still anticipate sales trends will remain choppy as we navigate quarterly programs and certain market dynamics in the video gaming category. We remain excited about the growth opportunities for Powerade with our global licensing agreement with Epic Games, the maker of Fortnite and licensing agreements with both Nintendo and Sony in Japan. While still in the early days of commercialization, we are receiving positive feedback from our partners.
Now let me transition to an update on the progress we are making against our multiyear cost restructuring initiative as we reposition the Company for long-term profitable growth. As a reminder, we are targeting at least $60 million in cost savings from this multiyear program in the first quarter, our team successfully implemented a series of cost savings initiatives, and we are on track to deliver more than $20 million in expected savings in 2024. We realized $4 million of savings in the quarter and expect more substantial savings throughout the year as these actions gain traction as part of the restructuring, we have streamlined our management structure moving from three business segments to two. This combination has brought our leadership teams closer to our customers, enabling greater engagement and collaboration. We are encouraged by the conversations we are having with our valued customers, which point to opportunities for Alcoa brands to become an even larger, more strategic supplier as we position our brands to assist them in achieving their business objectives. An additional area of focus within the restructuring program is to better leverage our global scale to improve our profitability. As an initial step, we are reviewing opportunities to harmonize processes and to better use technology tools to assist in productivity. Our supply chain optimization work is on track and is delivering cost savings, improving our customer service and enabling better inventory management. Importantly, we remain committed to investing in incremental growth opportunities. Our global platforms and diverse product portfolio provide anchor brands multiple areas to bring innovative, new and refreshed products to market. While still early. I'm excited about the pipeline of new products in closing the actions we are taking to reset our cost structure, improve our revenue management execution and enhance our focus on innovation and new product development are the right strategic moves to reposition the Company for long-term profitable growth. We have a solid foundation with a global portfolio of leading brands and consistent free cash flow generation. Our strong balance sheet with no debt maturities until 2026 and low fixed interest rates on more than half of our debt provides financial flexibility to invest in growth initiatives as well as support our dividend and reduce debt near term, we have an experienced leadership team that will successfully execute our repositioning strategy. While challenges remain in the near term, I am confident in the actions we are taking in 2024.
I will now hand it over to Deb, and we'll come back to answer your questions.

Deborah O Connor

Deb Thank you, Tom, and good morning, everyone. When we last spoke in February, we highlighted the slow demand environment due to the current macroeconomic backdrop. As expected, this trend continued in the first quarter as consumer and business demand remained muted. However, a combination of weaker industry-wide trends in our office product categories and lower than expected end of season back-to-school sales in Brazil led to our sales shortfall versus outlook. Offsetting the lower top line. We continue to make progress in improving our gross margin rate, which expanded 120 basis points versus the prior year, benefiting from a combination of moderating input costs and pricing and cost actions. These improvements allowed us to deliver adjusted EPS within our outlook range.
Consolidated reported and comparable sales in the first quarter of 2024 decreased 11% versus the prior year due to the planned exit of lower-margin business, which negatively impacted sales by approximately 2% and softer back-to-school sales at the end of the season in Brazil, which accounted for another 3% of the decline. In addition, we continue to see overall soft global demand for our products, which was in line with industry trends.
Gross profit for the first quarter was $110 million, a decrease of 8% due to the lower sales. Sg&a expense of $94 million was down slightly versus the prior year as cost reductions were offset by merit increases and inflation. Adjusted operating income for the first quarter was $16 million compared to the $24 million last year due to the sales decline.
Now let's turn to our segment results. This is the first quarter we are reporting under the new two segment structure of the Americas and International. In the Americas segment, comparable sales declined 15%, driven by volume declines due to industry-wide trends and from the exit of lower margin business. Demand for our traditional office product categories remains under pressure. We did see moderating rates of decline in our computer accessories category and growth in gaming accessories. In addition, the end of season. Sales for our back-to-school products in Brazil were lower than anticipated. Overall, the full back-to-school season in Brazil was up 6%. The timing of our sales reflected earlier stronger purchases offset by lower replenishment demand in Q1. As Tom mentioned earlier, the back-to-school season in Brazil begins in Q three and ends in Q1. We are expecting improved sales from Brazil going forward and remain positive about this year's back-to-school season.
The Americas adjusted operating income margin for the first quarter was 6.2% versus the 8.1% rate in 2023, with the decline in the margin rate due to the lower volume in the quarter and negative fixed cost leverage in our larger future quarters, we would expect our cost reduction actions to expand this margin rate.
Now let's turn to our international segment. For the first quarter, reported and comparable sales declined 6% due to volume declines as the demand environment remained soft for our traditional categories, we are seeing growth in our gaming accessories across the segment, an improvement in the rate of decline for our computer accessories International adjusted operating income margin for the first quarter increased 40 basis points to 10.5%, with adjusted operating income down modestly. The improvement in adjusted operating income margin rate was due to moderating input costs in our pricing and cost reduction actions.
Now let's switch to cash flow and balance sheet items. Historically, due to our seasonality, we generally use cash in the first half of the year and generate significant cash flow in the second half of the year. Our working capital reduction resulted in positive operating cash flow during the first quarter, which historically has been very hard to achieve due to the seasonality of the business. Free cash flow improved $51 million compared to the prior year, driven by this working capital inventory continues to be down significantly from the prior year, 17% down as of March 31st. We ended the quarter with total gross debt of $961 million. That's $138 million lower than the same time last year. Our cash balance was $125 million, similar to last year's first quarter in the first quarter, our cash balances higher and largely held in Brazil through the timing of collections. We intend to use those dollars to fund our Brazilian business throughout the year. At the end of the quarter, we had $518 million of remaining availability on our $600 million revolving credit facility. As shown on our earnings slide, more than half of our debt is at a fixed interest rate of 4.4% and does not mature until 2029. We ended the quarter with a consolidated leverage ratio of 3.5 times, down from the 4.3 times leverage ratio in Q1 of last year and well below our 4.5 times covenant ratio. Longer term, we are still targeting a ratio of 2 to 2.5 times.
Now I want to update you on our outlook for 2024, given the sales shortfall in the first quarter and the softer demand trends we are seeing in our office product category, we are tempering our full year outlook until we begin to see some positive sales momentum. We continue to expect improvement throughout the year, especially in the second half as the economic environment improves and technology spend rebounds. We also anticipate modest increases in the current year back-to-school season in Brazil. Our full year outlook now calls for reported sales to be within a range of down five to down 7% for the full year, which reflects continued soft demand and the exit of lower-margin business. For the full year, we expect adjusted EPS to be in a range of $1.2 to $1.7 per share. We continue to expect full year gross margin rate to be flat to modestly improved compared to 2023. Sg&a costs will be slightly down to the prior year as savings from our cost actions are somewhat offset by inflationary pressures related to labor and other costs. The adjusted tax rate is expected to be approximately 29%. Intangibles amortization for the full year is estimated to be $42 million, which equates to approximately $0.3 of adjusted EPS. Given the strong cash flow start to the year, we remain confident in our expectation that free cash flow for the full year will be at least $120 million.
Looking at cash uses in 2024, we expect to continue to prioritize dividends and debt reduction and expect to end 2024 with a consolidated leverage ratio of approximately 3 to 3.2 times. For the second quarter, we expect reported sales to be down seven to down 9%. I do want to highlight that our planned exit of certain low-margin businesses will be most impactful to our top line in the second quarter and in our Americas segment. Our second quarter outlook is for adjusted EPS to be in the range of $0.3 per share to $0.33 per share.
Now let's move on to Q&A. Where Tom and I will be happy to take your questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Greg Burns, Sidoti.

Greg Burns

Morning. Um, in terms of the low margin business you've been exiting, how much more is there more to go or is what you're projecting just going to be the impact of what you've already done or is there more pruning be done on that front?

Tom Tedford

Good morning, Greg. This is Tom Yes. So let me address that question. So what we've made decisions on the large, the largest part of the impact is yet to be felt Q2 will be seasonally the biggest quarter. That's impacted by the business exits and then it abates a bit in Q3 and Q4. But we think for the most part, Greg, moving forward that we've optimized our product portfolio. We like our gross margin rates and I don't anticipate significant product pruning or business exits moving forward after this year.

Deborah O Connor

And Greg, I would just add it does spike up in the second quarter and we end the year kind of in the range of what we talked about in the first quarter where it has an effect of two 3%, but it does spike up to Tom's point in the quarter second quarter.

Greg Burns

Okay, great. And then and in terms of the I guess, b, the Corautus trends you're seeing any improvement there on that front and or work return to office trends or anything positive that might make you again, this might make you have a more positive view going forward?
There? Or is it just going to be a function of maybe new product introductions? Like what's your view on that core office space and the demand trends that you're seeing there Yes, Greg.

Tom Tedford

So Q1 was was weaker than we anticipated. So we subscribe to Cercon, I which is a data aggregation source here in the US and they have an annual forecast that we use in addition to the information that we have in Q1 came in a bit weaker than the market had anticipated for our legacy office categories. And there is some bright spots within that data. Certainly in some of the bigger categories that we track. We took market share, which we're excited about, and I think it's yet to be determined that's why we're being a bit cautious on our outlook for the year. We're not exactly sure when these categories will start to rebound. Thus the reason why we've brought our revenue outlook down, our brands are performing strong, really globally. We've maintained or gained market share in most of our key categories. And as the market rebounds, we think we're well positioned to out perform our categories in our markets globally.

Greg Burns

Thank you.

Operator

Joe Gomes, NOBLE Capital.

Joe Gomes

Good morning.

Tom Tedford

Good morning, Joe.

Joe Gomes

Just wondering maybe get a little more color on what occurred in Brazil to make the last part of the back-to-school season. So there was there anything specific going on there?

Tom Tedford

Just overall malaise. Yes. So there are a few things that that that happened in Brazil, and I think the proper color would be helpful. So the back-to-school season, as we've talked about in our prepared remarks was and really good in Brazil for the full season and it was up year over year. Unfortunately, the back-to-school season is in two years, two, physical years and so the timing of our back-to-school was a little different than we had originally anticipated. And so that was a big driver in the weaker back half of the season. And I think there's there's certainly persistent inflation in the market. There's certainly other things are pressuring consumers. So our retail partners were a little cautious in late season demand fulfillment and replenishment. But overall, we felt really good about the season.
We think we're well prepared as we go into next year's back-to-school, well positioned to continue to grow and take market share in that very important season for our Brazilian business.
So overall, the season was good. The timing of it was a little different than we had anticipated, thus the shortfall in Q1, but we think we're well positioned in the Brazilian back-to-school environment moving forward, and we anticipate next year to be really strong again.

Joe Gomes

Okay. Thanks for that. And let me look at your distribution channels are any performing better than expected or no. If you look at the office supply or the big box retailers or the e-tailers or any of the other distribution channels, you have. Are you getting any positives from any of them?

Tom Tedford

Yes. So Q1 is seasonably seasonally a really like quarter for the business. And so it's hard to draw a full year conclusions on on Q1, but we continue to believe that we're distorting our investments towards e-commerce and retail globally makes sense for the consumer. We want to be really where the consumer is looking for our products. We want to be distributed across all of our channels and equally, we support them and they're all very important to us. But we do believe that e-commerce is going to continue to perform better than most channels. We continue to see that in our own business results, and that's really where most of our investments tend to get distorted is driving demand through our e-com e-commerce partners.

Joe Gomes

Okay. And one more for me, if I may. You talked about in the press release looking at additional cost savings initiatives. I'm just wondering if you just add some color as to where else are you looking at it looking at additional facility rationalization or anything that you'd provide as to where you think these additional cost savings can come from.

Deborah O Connor

As you know, Joe, you followed us a long time and you know, we're good at as the demand changes and as things evolve, looking at our cost structure and and I'm really pulling out where we need to pull out. So I would tell you we're going through some reviews now and just understanding where some of that may come, but this is sort of Alcoa's DNA and we're looking at a lot of different areas, make sure we're tight.

Tom Tedford

Yes, Joe, it's obviously early in the year and we want to be careful about still ensuring we're protecting our investments to drive future growth. And so we're not going to compromise the future. And I think that's important to reinforce to you and others that we'll continue to earn gross income to invest in demand drivers and innovation, and we'll prudently manage our costs elsewhere.

Joe Gomes

Okay. Thank you for that. I'll get back in queue.

Tom Tedford

Thank you, Joe.

Operator

Kevin Steinke, Barrington Research.

Kevin Steinke

Morning.

Tom Tedford

Good morning, Kevin.

Kevin Steinke

I wanted to yes, I wanted to just ask again about some of the softer demand in office products that you're experiencing might be a tough one to answer, but and how much would you have that would you attribute just to the changing the way people work versus the softer macro environment?
I don't know if there's any way you can apportion. We're there the softer demand is coming from?

Tom Tedford

Yes, Kevin, it's a really good question and one that our marketing teams are closely and monitoring. So we do believe that there are shifts in the way people work that are going to be permanent. And there's opportunities embedded in that that our marketing teams are exploring for solutions that we believe our brands and our products can support moving forward. I'm excited to see the early thoughts on this topic from our marketing teams and our product development teams. But I think it These changes are here to stay, and it's a great opportunity for us to step in and offer solutions to consumers and end users that they need in this changing work environment. But I don't really see a catalyst to bring home office occupancy up significantly in the near term, something's going to have to so no change for that to accelerate. And we just don't see that in the near term. And again, it's one of the reasons why we're being a bit cautious on our revenue outlook for the balance of the year.

Kevin Steinke

Okay. Thank you. And and the cost savings I don't know if I'm reading too much into this, but you had talked I think you said SG&A expected to be down slightly. I think last quarter you are saying flat to down slightly central up. You're a bit ahead on the cost savings or is that on that $20 million is still the number to think about?
Yes.

Tom Tedford

So the $20 million is absolutely the number that we, we believe is going to be delivered in 2024. We are looking at two and prudently manage the balance of the year and that likely means we'll come in slightly above that $20 million. And that again, has revenue moves, right? We'll make sure that our cost structure is in support of the sales for the business, and we've done a good job that and historically and we'll continue to do that moving forward.

Kevin Steinke

Okay, understood. Thanks for taking the questions.

Tom Tedford

Thank you, Kevin.

Operator

Hale Holden, Barclays.

Hale Holden

Good morning. Just question one question. Tom, you made the point in your script on exiting private label, but that your brands would sort of carry the day and then in U.S. back-to-school this summer and what we're seeing in other categories away from yours and trade down to value and private label. So I was wondering how confident you are on that or how much ForEx risk to the guy there was around that assumption?

Tom Tedford

Yes, it's a great question. And certainly, there there are certain categories that we're seeing trade down. The good thing about Alcoa brands as we have and a very diverse brand portfolio and for our back-to-school customers and obviously, five stars are our value brand or value enhanced brand, and it's one that we feel very strongly and supporting it. And it serves our consumers really during difficult financial times and more robust economic times. So Five Star has proved to perform quite well regardless of the macro backdrop, but we also offer a need, which is a value brand at a lower price for consumers. I mean, so last year, if you think of last year as a bit of a proxy, our combined brands in the market took market share. And that I think was our fourth or 5th year in a row of taking market share competing against all of our competitors, including private label. So it's important that we're Sharp with our value proposition it's important that we're Sharp with our pricing in the marketplace, and we're kind of on point with our promotions, which we do a really good job of in North America. So I anticipate this year will be no different than previous years. That will perform well during the season. We've got great partnerships with retailers and e-commerce, and that's it good recipe for our business and it's proven to work well over time.

Hale Holden

Great. Thank you so much. I appreciate it.

Tom Tedford

Thank you.

Operator

(Operator Instructions) William Reuter, Bank of America.

William Reuter

Good morning. On my first the first question is a topic which you've touched upon a couple of times here. You've talked about when the market improves. You've also talked and being positioned for that. You've also talked about how you don't really see any there's no expectation that office occupancy is going to improve in the near term. So what are the drivers that could cause kind of your core office products category to return to growth or at least stabilize? Like what types of you know it changes in the environment?
Yes, it's a good question.

Tom Tedford

So I've alluded to the work that we're doing really to address some of the needs of the consumers and the future of work. So our expectation is moving forward. We'll have a bigger, larger impact on revenue from new products that we're introducing into the market. I think that is extremely important. That's a big focus of our management team and organization, and we believe that's a critical element of growth moving forward and market share gains. Our brands are usually number one or number two globally in the categories that we compete in and making sure that our value proposition is sharp, making sure that we're distributed across all the channels. That matter is also important. So making sure that we're managing that piece of our business is a component of driving growth. We're also looking at international expansion. So we've got strong brands and strong products that are distributed in certain markets that aren't distributed in others. Our teams are looking at leveraging that as a part of our growth strategy moving forward and then the net impact of price, right? So there will be some price increases that we need in the market in the market in certain markets. And that combination of activities, along with improving kind of macro trends, we believe better positions the business for growth when those things occur, it's difficult at this point to tell. But we're confident that as we look ahead for the balance of the year, sequentially, the quarters will get better building off of Q1.

William Reuter

Got it. That makes sense. And then in terms of innovation and are there certain of your different product categories that you think there's more opportunity for innovation than others? And what would some of those be you kind of mentioned that it sounds like the management team is working more closely with some of your customers to kind of fill their needs. So what is what is what have you heard from some of those customers about where there are needs that could be addressed with innovation?
Yes.

Tom Tedford

So we've talked a little bit about the future of work and the changing needs of professionals as they work in a more hybrid environment, they're not simply working at a desk anymore. They're working sometimes out of their car at a coffee shop at home, right? So there's opportunities that we think are are across many of our categories just in supporting in users where they were. We're excited about some of the product categories that we're introducing. We've gotten some recent awards on new products that have been introduced, but we're also leaning in on a wellness trend that we think is something that is going to continue to grow. So ergonomics is an area that we have been in the past. We probably under invested in it. But when we think about the opportunities to improve the wellness of end users regardless of where they work. We think that's a really big and intriguing opportunity moving forward, but we don't typically get into a ton of insights into our pipeline until after the products are released. But I can tell you that it's a robust pipeline growing, and we're excited about the future revenue opportunities from the work that we're doing today.

William Reuter

Got it. That makes sense. And then just lastly for me, I think I heard correctly that gaming accessories returned to growth in the Americas on. Was that I guess was it up in the US and what is driving the increase there?

Tom Tedford

I had felt like in general, that's been a little bit of a kind of soft industry of late Yes. So we did return to growth globally. We were up 14%. And our Powerise business, we also grew in the U.S. and part of that growth is being driven by our expansion internationally. We've talked a bit about that in our prepared remarks, and part of it is a return to stock for some products that we were out of stock in in Q1 of last year. And our brand Powerade performed well in the marketplace and it took market share, which we were excited to see and excited about and the return to growth we believe is a positive development. However, we see the same things that you're seeing and we think that the market remains a bit uncertain and we think sales will be choppy for the rest of the year. But we're excited that Q1 is off to a good start for PowerA.

William Reuter

Got it. That's all for me. Thank you.

Tom Tedford

Okay. Thank you.

Operator

This concludes our Q&A. I'll now hand back to Tom Tedford for closing remarks.

Tom Tedford

Thank you for your interest in Alcoa brands. We look forward to taking talking to you in a couple of months to report on our second quarter results.

Operator

Ladies and gentlemen, today's call is now concluded, and we'd like to thank you for your participation. You may now disconnect your lines.