T-Mobile, P&G, Lemonade CEOs & More: C-Suite Insights

Every week, Yahoo Finance brings you insightful conversations with leading c-suite executives.

(00:00:16) This week, we spoke with Lemonade (LMND) CEO Daniel Schreiber regarding the reasons behind rising insurance premiums.

(00:08:05) T-Mobile (TMUS) CEO Mike Sievert gave insight into the company's second quarter results and the possible impact a new iPhone with AI features would have on T-Mobile's business.

(00:12:59) CNO Financial Group (CNO) CEO Gary Bhojwani discussed the health insurance industry's views on retirement for Americans as life expectancy rises.

(00:17:03) Motto Co-founder and CEO Sunny Bonnell shared her thoughts on brand partnerships and product placements at the Paris Olympics.

(00:21:11) Tilray (TLRY) CEO Irwin Simon discussed company's efforts to expand products in the beer category and "make beer fun again."

(00:30:14) P&G (PG) CEO Jon Moeller shared his thoughts on consumers' purchasing behavior in the US and China.

(00:38:28) Finally, Greg McGauley, Bank of America Head of Merrill Private Wealth Management, and Brent Richard, IMG Academy CEO, discussed their plans to create a financial education curriculum for college student athletes.

For more expert insight and the latest market action, click here.

This post was written by Meredith Lawrence.

Video transcript

Every week.

Yahoo Finance brings you conversations and valuable insights from leading C suite executives.

We discuss their current challenges and explore future opportunities.

Take a peek at this week's insightful interviews.

Turning now to insurance company lemonade shares of the company are falling today as investors weigh a slightly lower profit than they were expecting.

But a key point that we want to pull out from this report is premiums growth, lemonade reporting, premiums per customer rose 8% over a year to $387 here to tell us how that's impacting consumers.

We've got Daniel Schreiber, who is the lemonade, Ceo Daniel.

Always a pleasure to grab some time with you and thanks for joining us on Yahoo Finance.

Take us into the court, some of the catalysts and the the health of the business right now.

Great to be with you as well.

Brad.

Thank you for having me on again.

The quarter that we just announced has really been spectacular um on pretty much every metric that matters.

We're seeing everything, all the lights are green, things moving ahead pretty dramatically.

So we're seeing the impact you were just talking about mcdonald's struggling with A I.

Well, at lemonade A I is doing exactly what it's meant to be doing.

We're seeing tremendous efficiency drives just in the last year, our business grew 22% but a head count contracted by 9% over the course of the last couple of years, we've seen the efficiency per human double as a result of all these systems.

So every employee that we have is now responsible for twice as much premium as they were just a couple of years ago.

Indeed, we've seen this tremendous growth, 50% growth over the last couple of years with a decline in operating expenses, excluding marketing and growth expenses.

So we're seeing the fundamentals of the business, the scale and the advantages of scale that A I always promised are now very much invisible sites and uh really in evidence across our report this quarter.

Where are you seeing the highest jump in premiums?

I know, I know you have a couple of different segments.

You've got pet, you've got of course, home ownership auto as well.

Where where is the biggest jump right now in premiums that you're seeing?

And and why?

So the average premium per customer that you spoke of is an amalgam of.

Yes, people pay more for the same kind of policy.

We did see inflation take a bite out of profitability for the entire sector and now prices are clawing their way back up to a profitable measure.

Indeed.

Our loss ratio came down by 15 points year on year in insurance.

That's almost unheard of.

And that's a reflection of getting risk and rate match as they ought to be.

That's translated into us becoming cash flow positive this quarter, this has translated into us seeing 100 and 55% growth in gross profit.

So those prices coming back in line with where they need to be, are having dramatic ripple effects across our financials.

Certainly.

And you know, I, I have friends that perhaps some of them lemonade and some of them uh users of different services, but all of them when they kind of continue to talk about why they're paying higher premiums.

A lot of them might not know just why, why are people having to pay higher premiums right now?

It's really driven not by corporate greed or anything like that.

We've actually seen insurance companies suffer um unparalleled losses, you know, huge, big well known names USA a reporting a couple of quarters ago, the first loss into the founding of the company pretty much 100 years ago.

And we saw that across the board.

What happened was that inflation which was rampant across the United States was particularly pronounced, disproportionately pronounced in the auto space in the cars, buying cars, fixing cars, getting parts for cars and home repairs.

And your two most crucial insurance products are home insurance and car insurance.

And there you saw not 78 9% inflation, but often times 15 to 20 22% inflation depending on the states.

So suddenly you were sold a policy that assumed a certain cost of repair or replacement.

By the time that cost came due, uh the insurance company was paying a lot more than they factored when they set that price.

And there's always a time lag even though that inflation has died down because of the regulatory environment.

it takes a couple of years for insurance companies to get those new premiums approved.

And that's what your friends are experiencing.

I will tell you those of them who are not currently uh um buying insurance from lemonade will probably get a savings by switching to lemonade.

We are priced lower than most of the incumbents.

But the fact is that you just uh um highlighted or truly across the industry, you're going through your own expansion right now as well.

Daniel and I I saw that within some of the announcement here, the expansion in France and the UK as well here.

Uh So a lot of people perhaps over in Paris enjoying the Olympics, uh they, they may have heard some of their friends talking about that new lemonade coming into their, their uh territory, all of these things considered.

What is the expansion road map look like for lemonade from this juncture?

Well, we do expect to continue to accelerate our growth for several quarters in a row.

Now we've not merely been growing but accelerating growth and that will continue as best we can tell several quarters into the future.

So we will be growing along several axes.

One is geo geography.

So launching new products, Homeowners Insurance that just launched in the UK and a few weeks before that in France, adding states where we don't of products today in the United States will be adding States during the course of next year as well.

So definitely expanding the the range of products that we offer and the territories in which we offer them.

But more than that growing with our customers, we now have over 2 million customers, most of whom bought a single policy like renters insurance or pet insurance, they often have a car that they need to et cetera.

And we are seeing very powerful growth dynamics of growing with our customers.

We've already acquired them, those products are profitable, they've paid for themselves.

And now we get to sell them some of the most profitable and highest growth products like car insurance, auto insurance or homeowners insurance without having to invest in the customer acquisition costs that plague the industry.

So all of the finance turn around once you have a large install base of millions of happy customers to whom you can Upsell more products.

And that will be a big part of our expansion in the coming years as well.

Just lastly while we have you here, I I know you mentioned earlier about your employees being able to benefit from A I and how that's leveraged for productivity.

How are you also leveraging this for the claims process?

Absolutely.

So 98% of our claims are handled by an A I to start with.

So you'll pick up your phone, you'll press a button and you will simply talk into the phone and say, hey, my laptop was stolen or I made a claim for my pet um at the veterinary or whatever it is and then A I will be taking that claim and the A I will then ask you follow up questions.

Do you have a receipt?

Do you have a police report?

Can you take a photo of that whatever is needed in about 50% of our claims?

The A I will handle the entirety of the claim start to finish instantaneously right through to wiring the money into your bank account without any human intervention, we pay claims in as little as two or three seconds in those kinds of instances.

And even at times when the A I for whatever reason isn't authorized to go the whole way to settle the claim will need some human to look it over.

They'll alert the human.

But so much of the heavy lifting has been done that the cost of handling claims for lemonade has already reached parity or best in class with the companies that are 10 and 100 times bigger than us.

So incredible early indicators of these efficiencies, but it also translates into happier customers because nobody wants a claim delayed um handled slowly bureaucracy.

You want 24 7 instantaneous response and that's what they get.

Daniel Schriver, who is the lemonade ceo?

Great to see you as always and thanks for hopping on here with Yahoo Finance.

Appreciate it.

Wonderful to be with you.

Thank you so much.

Welcome back to Yahoo Finance.

You're probably seeing a lot of action on the T mobile ticker page on the Yahoo finance platform.

That's after a really good quarter by T Mobile.

I'm down here at the New York Stock Exchange, the T Mobile C, Mike Seaver, Mike.

Good to see you.

It feels like I just saw you but maybe not a quarter.

So great to see you.

Good to see.

It's a really big quarter.

You just got off your earnings call.

What are some of the top takeaways for investors?

It was just a fantastic performance across the board.

You know, we beat on top line growth, total revenues service reven 7% on post paid service revenues.

By far the industry's best 9% on E three times the growth rate of our principal competitors and 54% year over year growth in cash flow.

And it's all on the strength of the biggest Q two in company history.

When it comes to postpaid net editions, we watch a lot of economic signals yah finds as you can imagine consumer confidence is struggling.

Consumers pulling back on various purchases, but they're still hanging on to their phone.

I mean, is the economy just not that bad.

Well, phones are just that essential, you know, and what we have lots of ways we look at this one are people switching to us.

Are they buying actively?

Now?

You do see upgrade rates have moderated in the industry and so people are keeping their phones a little longer.

That might be.

But one thing we look at is the bad debt rate, 1.4% this quarter industry best.

A lot of people don't give us credit for the fact that T mobile customers are better payers than at and T or Verizon customers.

And you were seeing normative rates of bad debt from before the pandemic.

You're a hell of a smack talker.

You just taking market share from at and T Verizon.

Well, you know what we're trying to do is grow the overall company and certainly that's been one of the ways we've done it, but also the industry continues to grow.

I mean, my principal competitors both also outperformed expectations on nets.

So we're competing in a very healthy industry.

And I think that's a good thing that's good for consumers because the values are some of the best you've ever seen.

Five G has allowed people to have four times more data than just five years ago and triple the speeds for about the same price.

And so everybody is a winner.

Is that five G moment?

Finally here feels like we heard about it like four or five years prior is now that it's having that moment and you're able to push through higher prices because this stuff is just so damn good.

Well, what we're able to do is attract people to T mobile because five G was a catalyst for T Mobile to leapfrog everyone and get the best network and people want a great network because wireless connectivity is so important.

But yeah, we're living through that five G dividend again.

If you've got a world where all the major players are producing fantastic cash flow.

But consumers are winning with a price per unit.

A price per gig.

That's a third of what it was five years ago.

They're using way more data and consuming it way faster than ever before for similar prices to five years ago.

So they're winning, we're winning but T Mobile is winning.

Most of all.

I talked to a top executive, one of your competitors not going to name their name.

I asked him, are you excited about the new A I iphone?

And they said, well, we really don't worry about the upgrade cycle, but are you excited about this A I iphone?

Will it power, I guess higher bills for consumers?

Will it spur and what does a higher upgrade or a faster upgrade cycle mean for you guys?

We're excited about A I because we know our customers are excited about A I, it's what everybody is talking about and this isn't just about having something, recite you some poems or make you a goofy picture.

This is, you know, essentially about having an assistant to help you run your life.

And so we were really excited about what apple foreshadowed at their announcement.

I think it's going to be an exciting launch.

That being said, a lot of the capabilities are good on your current phone too.

So we'll see how much it drives an upgrade cycle and for us, we're ready either way, you know, if there's a big upgrade cycle, that's a share taking opportunity for us.

But if upgrade rates stay low, well, that's a chance for us to remain very efficient.

So either way we're ready to compete.

I think you've surprised a lot of investors.

You surprised me, Mike making a lot of acquisitions.

I mean, you work on another one because I think they're coming a little bit out of left field, but they're like transforming your company in a big way.

Well, one of the things I said on my call this morning is that no, we're not currently in any deep engagements on another one because these have been coming kind of rapid fire.

But that's because, you know, we have a pretty clear strategy now that you can discern from the announcements that we've made.

We are a fiber player.

We want to be in fiber and we want to be in best in class pure play assets.

That's our bias.

And so you saw us with our recent announcement to collaborate with KKR to acquire Metro Net, that is the fastest growing pure play wireless fiber company or fiber company in the country and arguably the most important pure play fiber asset.

And so we wanted to partner with them and we're delighted now to be on a business plan to go past 6.5 million homes by 2030.

Fascinating to see this T mobile reinvention, Mike Seaver.

Always great to get some time with you.

Thanks.

I'll talk to you soon.

Be good.

Good news.

Us, life expectancy is rising.

Us adults are expected to live to over 77 years old according to the CDC couple that with rising medical costs, that means you might need to save more than you initially expected for retirement to discuss.

Let's bring in Gary Bomani, who is the CNO Financial Group ceo great to have you here in from the windy city with us.

Yes, sir.

I mean, of course, it's in Chicago right now, but all things considered people living longer.

This could be a bad thing if you're not prepared financially for the savings that you need in order to weather health care for longer.

Potentially a and some of the other costs that people might not have budgeted for.

I mean, do we have a sense of what the real number is that people should be saving for a, at this juncture, knowing that it varies.

Yeah, it varies so much, depending on, on what your expenses are, how long you're gonna live, how much you're gonna have to spend on medicine.

What your family situation is.

They're just a countless number of variables.

Um, our company in particular, we specialize in the middle market.

We've got kind of a unique niche and especially for the middle market, there are so few alternatives and most people don't realize there's 11,000 folks turning 65 every single day and that's gonna continue for roughly the next decade and the vast majority of those haven't done enough to prepare.

So there's a tremendous need.

What is the biggest concern that you're seeing among people as they're getting towards retirement right now?

I think the biggest concern that people have and statistically this bears out.

So as an insurance business, we watch this stuff statistically, what, what really the biggest risk people have is frankly outliving their money living too long.

Uh You know, you think of a life insurer as covering against the risk of dying too young.

The real risk for most Americans is living too long and not having enough money.

And so what is the way that you're kind of coaching people into changing their strategy in retirement planning, knowing that they're going to live longer as well?

Yeah, so I think there's a handful of things that folks need to do.

Number one and most important, you've got to find somebody that you trust to advise you.

Um And most people think of, of wealth managers or wealth advisor as being for the wealthy.

That's just not true.

We focus specifically on middle income America and this is what we do for a living.

So step one is make sure you got somebody that you trust and so on are a great way to go.

Number two, assume you're not gonna be able to work as long as you think either because your company makes changes.

You have a sick loved one, you yourself are ill, the vast majority of people end up not being able to make the type of income they thought for as long as they thought.

And then finally, number three, you, you gotta start out by assuming that health care costs are gonna continue to go up and it's gonna cost more than you think in retirement to maintain that lifestyle because even Medicare only covers roughly 80% of the expenses.

You still gotta come up with a fair bit.

You know, I was looking through and, and while we're on that, that Medicare portion here, I was looking through some of the earnings results for companies like United Health Companies like even GE health Care that reported here today.

And of course they have different kind of systems and and ways that they're tracking their own company's financial success.

But at the end of the day, it's the patient experience that is getting more expensive and that we're trying to decode here a little bit more as people are going into retirement and perhaps incurring a lot more of those bills than they may have anticipated.

How can they take more control of the Medicare or the medical costs?

Uh Even if they don't anticipate how much those costs might rise as well.

Yeah, so there's a number of things that folks can do and we just actually we just released our second quarter earnings yesterday.

We had our eighth consecutive quarter of sales growth and, and our stock was up 10% yesterday, just had a wonderful quarterly result.

And all of that is stemming from this continued need that we're seeing on the part of consumers.

Some of the products that are doing the best are long term care products up 88%.

Um Our Medicare Advantage product up 78%.

Our annuities were up significantly and annuities are the only products out there that can guarantee income for life.

So we're really seeing the American consumer recognize they've got a need that they need to address and focus in on the various products that help cover those things you can't watch for too long without seeing the Nike swoosh on someone's chest and then you have a B Inbev who's Corona zero.

A non alcoholic beer is the official beer sponsor of the Olympics through 2028.

So what are the key things that come and fans get out of this partnership?

Joining me is now we've got Sonny Bunnell who is the co founder and CEO of motto.

Great to have you here with us.

So, as we're looking through all of these brands trying to get either product placement or just some type of logo visibility, is there anyone that's standing out among the pack that's, that's doing it right?

And then those perhaps that spend a lot of money but are missing the mark.

Well, I think that some of there's so many brands that are uh you know, having a platform right now.

And I think one of the greatest things that we're seeing is, you know, Nike is what we call motto, a big idea brand.

So they know how to inspire people to push their limits.

And so you're seeing this kind of uh global recognition of these brands on this stage, which gives you so many eyeballs, so much awareness and just brand equity over the long haul.

So that's why these brands are really uh uh playing it well.

And I think Anheuser Busch who had mentioned that just shortly ago that they are getting into the game for uh non alcoholic beverages, which we're seeing sort of a fallback of Budweiser advertising this year in order to sort of lean forward and uh bring non alcoholic to the stage because I think the trends are showing that uh more awareness around those types of uh you know, good for you.

Drinks of choice is what uh the audience is looking for, Sonny.

How long tail typically is the return on investment that a company that has some type of high profile athlete or positioning of their brand in an event like this multi week as it is grand.

And of course, world stage, how long tail is that return on investment as it flows through to their business?

Well, look at moto, we say great marketing is about meaning making, right?

It's about how do you attach meaning to your brand.

So in the case of even Ralph Lauren being the team usa uh outfits for the opening ceremony that immediately the CEO is talking about how much uh return on investment that's already bringing.

So that's driving, that's driving awareness, but it's a long and short game.

You have teams where or excuse me, brands that uh immediately have an RO I and then you have other opportunities where brand is a little bit of a labor of love where over time you begin to see uh that it drives sales, it drives awareness and it's not always immediate.

But I think in the Olympics, in this particular case, it would be, you know, we often think about it and, and try to best evaluate which companies which uh athletes rather are winning at the Olympics and that's a little bit more clear to tell by the medals that they're able to achieve which brands though, from your perspective, which brand is winning the Olympics right now?

Oh, I think, I mean, I would bring it back to Nike.

I think one of their biggest campaigns right now, winning isn't for everyone, in my opinion, it's resonating, they're bringing it back to some of their roots.

I mean, Nike is the brand of athletes.

It's, they lead the sports industry in innovation.

Um And so when you see an athlete, you see a player decorated or wearing any type of Nike, I think that it really sends us signal to the audience, the demographic.

Hey, I wanna be part of that too and it, it's, it, it creates this kind of brand loyalty and brand association which all great brands know that, you know, there's three areas of, of, of impact that you wanna have.

You wanna have brand repetition, you wanna have brand recognition and you wanna have brand association.

So even uh looking at a brand like Coca Cola, they've been advertising with the Olympics and partnering with the Olympics since 1928 that's over 100 years of brand recognition, brand loyalty, brand build.

And so you have to kind of play the the long game when you're building out these brands and you're thinking about how to get that much exposure.

So I think those two brands in particular are doing it really well.

Shares are on a tear today.

It's beverage alcohol segment, driving its fourth quarter earnings beat and for the first time, that segment exceeding the size of its cannabis segment by revenue.

Joining me to discuss Irwin Simon to a CEO I It's good to see you.

Thanks for joining us.

Good to see you Julie.

How are you?

I'm doing well.

Thank you.

I want to dig into this beverage alcohol uh side of the business here because um you saw big growth that saw that by revenue at least last quarter was bigger than the cannabis business.

And I know in addition to being uh one of the biggest craft brewers in the country, you guys are also rolling out a lot of new product there, non alcoholic beverages, energy beverages.

So I'm kind of curious if you can get a little bit more granular here where that growth is coming from.

Is it some of those new products?

Is it beer?

What's going on?

So Julie step back and just come back and look at tray brands today in a free uh you know, I took over the business in 2019.

It was a $50 million business and cannabis, you know, legal in Canada uh from a recreational and from a medical standpoint, what I knew and could never depend upon was us legalization and what would happen.

And uh you know, it's almost like I looked into a crystal ball And here today, we don't know if rescheduling is going to happen and what's going to happen with the new president, uh whether it's Trump or Harris, et cetera.

So with that, we in, in, in 2020 got into the beverage alcohol business with uh Sweetwater Brewery.

We required that doing 2.5 million cases this year on a run rate to do about 13 million cases of beer.

So it's been a great entry for us.

And listen, the beer category is declining cannibalization of the cannabis industry.

So there were some big bets on that.

Um With that, you know, the challenge and the strategy.

How do you make beer fun again?

Well, what do you do about beer?

Unique?

There's perception it was on beer was drank mostly by, you know, white men out there.

And how do you bring more females into beer?

How do you bring that younger generation?

And also we repositioned herself as tray beverages.

We got into the water, the energy drinks, non alcoholic beer and really came out with some great fun products within the beer category.

And that's where we're seeing the growth now, you know, Sweetwater was owned by an entrepreneur, we acquired that from him.

Um in regards to Montoc, it was started by two founders.

Um and there was a financial group behind it.

We acquired that and then the eight, you know, businesses that we acquired from A B I um great brands that sort of got lost within the A B I craft beer infrastructure.

So it, it's taking businesses that were already in place and putting great marketing, great sales and marketing, great leadership under Ty Gilmore and his team.

And we're seeing some great results.

And I think the important thing is also we have 500 beer distributors out there that lost, you know, a lot of their sales, whether through, you know, the Bud Light issue or some of the other issues out there with the beer are looking for new products or looking for innovation and that's where we're getting our growth from.

Um Irwin, I, I wanna turn to, to cannabis now because um ca Canadian cannabis pricing has been under some pressure, but you guys talked about maybe some stabilization last quarter.

Do you think it's bottom?

Do you think we're gonna see some improvements even in pricing in that market?

You know, great question.

If you come back and look at tire um over the last 3.5, 4 years, we lost about $200 million in price compression, which ultimately drops to the bottom line and that's $200 million you know, that would be going into our net income.

Now, with that, you know, at the same time, we're paying the same amount of excise tax as we pay a dollar per gram and excise tax kept going, kept going up and, and ultimately price compression came down So that came out to about $200 million.

Now, the good news is, this year we lost about $12 million in regards to price compression.

We did not see any price compression in our fourth quarter.

So that's a good news and that's a good sign.

And that again, Julie is you introduce new innovation products?

I think, you know, as I mentioned on our conference call, 90% of our products come from us making them ourselves so we can innovate, we have unique products out there.

You know, and we really look at what our genetics are, what are, you know, strength are in regards to potency.

Um So that is something that's real important instead of just putting out a regular pre roll or just putting out regular flowers and hopefully we can get some price in there.

Um You know, I always like to ask you about regulation Irwin and um this of course, being a presidential election year, I can't help but compare cannabis to another industry that wants to see deregulation or maybe reregulation.

And that's the crypto industry which has been very, very aggressive season and sort of targeting candidates.

Um and being very outspoken on that front, it feels like cannabis has been a little quieter and I'm wondering what your take is on whether the industry has been assertive or aggressive enough in lobbying its case in Washington particularly this year.

Listen, we've been lobbying for the last four or five years and every time we get to, you know, the finish line, something changes.

Ok. And you know, President Biden came back and, you know, push this up to different agencies in regards to rescheduling and the recommendations have come out and suggested rescheduling and where cannabis is today, it's, you know, from a rescheduling standpoint as a schedule one narcotic, which is higher than heroin and cocaine, which is crazy.

Um So II, I don't think the industry at all has gone quiet.

I think it's a wait and see.

Now I'm quite concerned what will happen out there um, under a Trump administration, I'm not sure we'd see anything change under Harris who's been for rescheduling and for legalization.

I think we could see something that's just my, you know, that's just my opinion.

Do you think rescheduling is going to happen after all?

It seems like there's been sort of fits and starts this year?

Julie, there's 100 days to the election.

Ok. And you know, we have a new presidential candidate in place there.

Um You know, II, I guess I, I'm not sure, but uh I'm not optimistic either but uh I, I, again, something's got to happen and that's what the thing interesting and exciting about Tray.

We did not sit back and wait with the hopes of rescheduling happening.

We now have a strong beer business.

We have a spears business, we have a hemp business and listen, I'm real excited.

We didn't talk about Germany, what's happened in Germany in regards to rescheduling there, you know, 80 million people, what will happen in Europe.

So we're well positioned if rescheduling doesn't happen.

And if rescheduling happened where I'm excited is this here with our medical cannabis business in Canada, our medical cannabis business in Europe, you know, we have over 5 million square feet of grow and with NAFTA in place, could we bring a lot of that grow into the US and be able to sell medical cannabis here immediately?

And we could um I when you mentioned maybe another democratic administration would be more friendly towards a rescheduling or eventual legalization.

There are millions of people across the country who are now using cannabis legally.

Do you think they'll be voting uh with that as an issue in November?

Listen, I come back cannabis from a recreational standpoint is legal in 27 states.

It's legal in 35 states from the medical cannabis.

So, you know, over you know, half the population cannabis is legal today, but it's not legal from a federal standpoint.

So I come back and look today at Gen Z and millennials, there's more cannabis being consumed each day now than in regard than alcohol.

So, I it's just let's clear this up and that's where it's confusing out there.

You know, you heard me say before we pay 100 and $50 million Canadian in excise tax in Canada there's over close to a billion dollars in excise tax paid in the Canadian cannabis industry that the Canadian government has been able to, you know, achieved with legalizing cannabis.

If you take the 10 times, there's $10 billion of, you know, tax dollars that the US government could be bringing in from cannabis.

And right now they're not bringing, bringing it in because it's all coming through the illicit market or going to the province or going to the States.

Right.

Exactly.

Uh Irwin, thanks so much for joining us.

Interesting stuff, thought provoking stuff.

Appreciate your time.

Thank you very much and nice to see you again.

You too.

All right, PNG out with its latest earnings report.

Let's get right to PNG chair and CEO John Mull John, always great to get some time with you.

I know uh time is indeed scarce uh with someone in your role, talk to us a little bit about about the quarter here.

I think the street might be locking in on uh some uh below expectations on the organic sales growth of 2%.

What did you see as the quarter progressed in terms of the US consumer?

Yeah.

Well, first, let me just back up a little bit.

This quarter marks the end of our, the completion of our fiscal year.

We went into the fiscal year guiding to a 4 to 5% organic sales growth rate we delivered for uh the core earnings per share guidance was 6 to 9.

We delivered 12 which is uh 16 on a constant currency basis, free cash flow productivity.

The guide was 90%.

We delivered 100 and five which allowed us to increase the dividend seven percent.

The 134th consecutive year, this company's paid a dividend the 68th consecutive year.

Uh We've increased the dividend.

The quarter that we just completed was a little bit softer than the prior uh three.

primarily due to some um one time uh events that should annually as we go through next year.

So as we transition to next year, we're again, guiding to 3 to 5 on the top line, that's organic sales core earnings per share of um uh 5 to 7% and again, 90% free cash flow productivity.

We've seen uh some recent reports that, that the US shopper is becoming more discerning and maybe they're not in the in Walmart or target splurging for that extra extra item.

Have you seen a more cautious shopper?

Not really, I don't doubt that some uh shoppers are uh more cautious.

That would make sense.

But if we look at a couple of things, a couple of uh data points that, that we have access to.

One is uh the um the volume share of uh private label, which is kind of a proxy for uh trade down in our categories.

It's really unchanged versus both pre panem periods and the last uh couple of quarters.

The other thing that I look very closely at is are our unit volume rates.

Um And in the US uh the past five quarters they've been plus three, this is versus year ago plus three plus three plus three plus four plus three.

So it's hard within those two data sets, at least to conclude that there's a significant amount of uh of trade down within that full year guidance, John, it does look like you're looking for um a re acceleration in organic sales versus what you saw in the fiscal fourth quarter within that guide.

Are you, are you playing any more consumer promotions just to get volume, re accelerated and headed in a different direction?

Well, as I indicated volume is in pretty good shape.

I just gave you the uh us figures uh in, in Europe.

Uh we see the same thing.

So past four quarters volume versus year ago plus two plus three plus four plus three are um I can't talk about future um uh plans as relates to, to either pricing or promotion.

Um But what I will tell you is if we just look at the last quarter as indicative uh potentially of the future uh promotion and volume sold on promotion was still at about 85% of pre COVID levels and about at the same level as it was the prior quarter, the third quarter.

Um So at least as plans have played out.

Uh thus far, we haven't needed significant increases in promotion to keep that very strong volume growth.

I was surprised John about the uh the call out in the, in the inflation hit for the full fiscal year 500 million.

I I thought inflation was coming down.

Well, that number last year would have been a much higher number.

So on a relative basis, uh you're absolutely right.

It is, it is coming down, but we still see a modest uh amount of inflation.

Think for example, about uh wages as uh as one driver of that, is there a way to that, you know, you're looking at it from a management perspective to, to find more productivity inside the business to, to offset some of that inflation.

Absolutely.

Uh Absolutely.

And you know, our, our fundamental business model is centered on innovation in daily use categories where performance drives brand choice.

So increasing that performance increases the overall value proposition uh for consumers without necessarily uh though sometimes we'll, we'll introduce some without necessarily pricing.

You know, the value proposition is a combination of price uh efficacy uh uses experience.

Uh it, it, it, it, it encapsulates the entirety of consumer delight and we're working on every one of those vectors.

And as you rightly point out uh holding costs as low as we can, of course, PNG is a global company and uh correct me if I'm wrong.

I mean, China is about 10% of your business.

What are you seeing in China?

Because a lot of folks that I've been talking to lately sounds like quarter over quarter.

The economy there worsened sales trends worsened.

What is PNG seeing, uh some of the same?

It's slow.

Uh We have very strong expectations for, you know, the midterm and the long term, but I accepted the short term reality that things are gonna be uh slower than they were from a growth standpoint, certainly uh than pre COVID.

Um So, for example, in the quarter, we just completed um a big driver of the numbers we talked about was in fact, China where, where sales were down uh 9% John, I think you and I have been talking for, I don't know about a decade and I was thinking back to your time as uh PNG CFO for what, what 12 years.

So I think you're equipped to handle this one, how, how impactful had lower corporate taxes been to a company like PNG the past few years, uh incredibly impactful.

Um And you know, that element of the dialogue is gonna increase as we get uh through the election and start talking about 2025 when some of the tax provisions that were passed in 2017 sunset.

Um But if you just look at our investment in the US pre uh and post the 2017 Act is up significantly, our uh employment is up significantly and importantly, our taxes, the taxes we're paying to the US government are up significantly.

Uh So it's really led to a significant economic activity in this country.

We've invested more in terms of capital spending, uh manufacturing facilities, et ce, et cetera in, in that period of time than we, uh than, than we did prior to that.

So it's an important uh economic driver.

Um, and we'll be working to make sure that that's well understood.

If those tax cuts are not set in stone again or, or carried over, does that impact or will that impact how png invests in its business?

Uh especially here in the US on the margin, it will certainly have an impact.

You know, every decision that we make is based on uh present value of discounted cash flow and uh that's on an after tax basis.

Um And so it it begins favoring on a comparative basis other uh uh locations for um for investment.

So yes, it will have an impact.

That's why I love talking to you, John.

You know, every single thing about PNG, every line item, every number, there's nothing, there's just, I mean, you're just at the top of your game as always.

Um We'll leave it there.

Uh Good luck uh for the rest of your earnings day, PNG chair and Co John Mueller.

Always a pleasure to snack some time with you.

We appreciate it.

Thanks so much financial opportunities, whether through nil or other brand deals are becoming available for student athletes at younger and younger ages.

That's why IMG Academy, the world's leading sports education brand and one of the top athletic high schools in the country is partnering with Merrill Wealth Management to build a financial education curriculum to help prep young student athletes for the opportunities coming their way in the future.

For more.

We welcome in Greg mcgauley who is the Bank of America, head of Merrill Private Wealth Management, and Brent Richard, who is the IMG Academy CEO.

It's great to have both of you here with us.

First, Greg, I'll just start with you.

What made this partnership make sense and what can students expect?

Well, uh Maryland Img Academy, you know, announced a three year partnership to offer more education and resources around financial awareness to student athletes and their families.

You know, we've been serving clients in the sports industry, players, owners, coaches and agents for a long time.

And a few years ago, Merrill created a dedicated sports and entertainment group of advisers who've experienced providing strategies for our, our clients.

This program is gonna allow us to provide a amount of financial education to the students at a young age in order to help them better prepare for life in general, Brent.

Uh First, congratulations to some of the success that you've seen over at IMG Academy.

I was taking a look at of course, this most recent NBA draft, that kind of cemented uh 10 year status of IMG Academy at least two alumni selected in the NBA draft seven times including uh 2014, 2015, 2020 2021 2022 23 and 24 here.

I mean, this is kind of an incredible track record that you're really lining up here, but it comes back to not just sports preparedness but financial preparedness too.

You know, what do you want the students to take away from their experience off the quarter off the, the pitch or the mound or wherever and whichever sport they may be competing.

Yeah, sure.

Well, thanks for having me.

Uh first of all, and it has been uh incredible success at IMG Academy.

Um One of the more interesting stats is actually that we send as many student athletes every year to the Ivy Leagues as we do the professional leagues.

And so on one hand, we have 15 current or former student athletes that are currently in the Olympics.

On the other hand, we had almost 30 student athletes last year that went to top 25 US news ranked academic schools.

So, you know, for all of our products, both on campus and online, we have camps, boarding school, online recruiting and coaching.

We share uh uh one purpose which is to empower student athletes to win their future.

We say preparing them for college and for life.

Uh We believe sports is a platform for life.

We believe sports is a platform for uh education.

Um We are in incredibly intentional about teaching life skills.

We have staff on this campus that all they do is teach resilience the same way that uh we teach algebra.

So I think this is what sets us apart in a lot of ways, this combination of uh sports and school and uh life skills.

And it's just very obvious, especially in this moment that the next frontier of building this base of life skills is financial education.

Uh It is a critical life skill, it always has been a critical life skill, I would say in this moment, it's very relevant to today's student athletes.

Um There's more financial opportunity coming sooner than it ever has before to student athletes all around uh all around the country and we have to be great in this area.

And I think with Merrill, we think that we can be and part of one of the reasons, at least for that financial opportunity and, and wealth building coming earlier is really kind of pegged to nil name image and likeness deals that young athletes are seeing if they have a large following or if they go to the right school and are able to use.

That is a platform as well, you know, keeping a pulse on the athletes, the student athletes at your school.

What is the talk around the the hallways or you know, even on the campuses around students and how they're being approached and the brands that they wanna work with, as well as you're evaluating what opportunities are right for them and trying to coach them financially as well.

Brent.

So most of the conversation has been really around that path to college and the opportunity uh in college and it used to be uh tuition and books, which was a tremendous financial opportunity for student athletes.

And today it's not only tuition in books, it is now uh not only name image likeness, but as you've seen recently, the Power Four and some of the settlements going on uh potentially moving into revenue sharing uh as well.

And so uh there are a lot of questions from families.

We are getting pulled into these conversations from families asking what does this mean in my college decision process?

And when uh financial opportunity comes, uh how do I think about it?

How do I manage it?

How do I attach myself to the right brands?

Um And as we say at IMG Academy, it's um we work on both sides of that equation.

The first question is who am I?

So we have character development as a core part of our curriculum.

You have to say, who am I before you can say what brand do I want to attach myself to?

And only after that, do you get to start to talk about?

Well, what do I do with um the income that I'm now getting as a result of uh name image likeness, revenue share or some of these other opportunities that are coming uh sooner and sooner to student athletes.

Greg.

I, I wonder from your perspective on the wealth management side, are there, are there pitfalls that you've seen at least in the early innings, especially compared to, you know, where we are on the, on the broader scale of some of these deals coming about for student athletes.

Some of the pitfalls that you've seen in the past that students can avoid at this juncture.

I I think that the idea of the financial education starting in an early age prevents a lot of those pitfalls from happening.

But more specifically, it's like understanding, you know, the f that financial decisions have an impact on your bottom line.

So the decisions that they make early are going to impact their future in a major way.

I also think that, you know, um understanding how they're going to get compensated and the full impact of taxes um can lead to a better understanding of how to manage cash flow, things like develop, not developing a budget and staying within that budget and living to a lifestyle that you're able to continue to save money for um for the present and the future helps as well.

And then, you know, protecting their, their information, um even from things like cyber threats, you know, um help them preserve their wealth and, and not have it deteriorated or taken from them very, very quickly and then really around, you know, understanding at an early age, different investment options.

You, we've all seen athletes and, and even young adults get involved in things that they necessarily shouldn't from an investment standpoint.

And so having investments that match their goals and objectives are really important even at a young age, just lastly while we have you here, Brent, I mean, I'm looking across IMG Academy and the success that we talked about at the start of this.

How, how far are we from looking at IMG Academy as a type of program that has different locations?

I mean, primarily in Florida right now, but are we gonna be looking at Img Academy East or IMG South or Img West at some point?

What's the expansion look like?

We're, we're, we are always evaluating what I'd say is, um, what we've done over the last four or five years is we've added sports, we added women's volleyball.

Uh We just announced we've added uh girls, uh women's, uh softball as well.

So we've added sports onto our Bradenton campus.

Uh, and really importantly for us, we are trying to make our programming available to any family that believes in sports as a platform for life.

So we have over 100,000 online customers.

Now, uh working with us in our online recruiting product called N CS A.

We have uh online mets, performance coaches, online nutrition coaches, and hopefully, uh here pretty soon online, uh, finan, uh, financial education, uh, coaches as well.

So we are trying to make it easier and easier if you're a family anywhere in the world, uh, to access img academy education.

All right.

I wasn't good enough.

I wouldn't have made the cut.

But, I mean, I'd love to see the, the student athletes really performing at such a level that really sets them up for success in the future and a partnership like this, that helps them get a little bit more financially minded ahead of time as well and add on to the skill sets that they already have.

Greg mcgauley, who is the Bank of America, Head of Merrill Private Wealth Management and Brent Richard Img Academy CEO.

Thank you both so much for taking the time.