Armstrong World Industries, Inc. (AWI) Earnings Call Transcript & Summary

Well. Okay. All right. Well, hello, everyone. Good afternoon. Thanks for joining us today. I'm Susan Maklari, the homebuilding and building products analyst here at Goldman. And I'm delighted to be joined today by Vic Grizzle, the CEO of Armstrong. Welcome.

Thank you. Good to be here.

We're going to do the session in the form of a fireside chat today. We will take questions later on. And I'd also just like to make you aware of the disclosures that are available if you're interested in that. So welcome, Vic, why don't we start really high level. Tell us what makes ceilings a unique business within the building products industry. And how has Armstrong sort of created this note for itself within its business?

Okay. Yes. It's a good place to start. It's a very old company, frankly, right, a 160-year-old company. We are a company that's weathered a lot of things, I think, but this is all we do, ceilings and specialty wells is all we do. And that level of focus really helps us be better than most in this segment. But -- it's a unique -- and I've learned about this. I've been in the business 12 years now. And what I've learned about ceilings, different than other building product commodities is that it's a highly specified product. Architects and designers really care about what goes in the ceiling because it has a large impact on the functionality of the space. And again, when I say specification, they spec the -- not only the manufacturer but the product number very specifically, it's not a generic spec. And you may hear other building products company say, yes, our product is specified by the ad community. But that's a generic spec a lot of times, but not in the ceilings category. And so when it gets to the contractor community, there is a big pull that they have to use Armstrong this particular undrawn product because of the -- again, the attributes and the functionality that it brings to the space. So that's a unique feature that allows us to innovate into and get paid for that innovation. And again, a lot of CEOs of building products companies will tell you, they have to innovate to hold their prices or to hold their position with an aspirational customer like an architect, we can innovate into that specification cycle and get paid for it. They're willing to pay for more attributes into the product, again because it has a large impact on the space.

Yes. And talk a little bit about when we think about ceilings in the course of a project, right, it's a relatively a percentage of that.

That's right. That's right.

But talk about the functionality and what ceiling sort of bring to the building itself or the structure.

Yes. I mean, it's true. -- it's about 3% to 5% of the total project cost of a major renovation of an interior space. So we're a relatively small part but it's a very important part, again, back to the point around the functionality space. So it has fire protection attributes which are really important for fire codes, earthquake protection, Certainly, acoustics, which is probably the bread and butter of the business in terms of how it's became such a big category as the acoustical performance of it. And then, of course, the aesthetics and so very nice aesthetics here in this room. It can bring to a space as well. So -- and now I think the latest attribute that's really, really important is healthy spaces and how to -- the role the ceiling plays in being able to contain pathogens to be able to clean pathogens out of the air. It's an exciting attribute that we're adding to those other elements of functionality.

Yes. No, absolutely. Before we get into healthy spaces, why don't we just talk a little bit about the underlying activity that you're seeing in the business, some of the bidding that's coming through. Tell us what sort of is going on across your verticals and geographies?

Yes. Ever since the downturn in 2020 when we had these government-mandated shutdowns of these markets where all construction activity, frankly, was suppressed. We've been watching the level of activity coming out of that. And so since the second quarter of '21, we've been watching the level of bidding activity increase. And it's been ranging between 20% and 30% every quarter. And again, I reported on that in the first quarter, we saw again a greater than 20% level of activity, bidding activity. Now we're not seeing that in sales right now. So what does that mean? That means there's a lot of demand out there. There's a lot of pent-up demand for renovation in particular. It's not new construction. It's really renovation activity. It's out there. It hasn't landed yet. And we think the reason why it hasn't landed is because materials aren't available or labor is not available. And of course, this inflationary component now, I think, is now factoring into the decision process. So -- the good news, the way I think about this is it's a positive leading indicator of the activity that's out there. And eventually, that -- those jobs will land into the business. But as I outlooked it in the first quarter, low single-digit volume growth as we're seeing through our distribution network.

Yes. What are some of the regional trends that you're seeing. One of the things that feels like it's coming a little bit clearer as we move through this pandemic is the geographic shift. Talk about what that means for Armstrong and what you're seeing perhaps in those sort of 7 core markets that we talk about, the New York and Boston versus some of the other cities?

Yes. We started calling those out in 2020 because they were the hardest hit by these government-mandated shutdowns, and they actually lagged in coming out of those and off of those shutdowns. So we start calling those out, and they're a very important part of our business, right? Some of the highest value products that we make and sell go into markets like New York City, for example. So we've been watching that very, very closely. At the end of last year, the 7 major metropolitan areas that we track had reached back to their proportionality to the overall business. So they're not all at the same place, I would say. I was just in San Francisco yesterday, literally, I flew in this morning from there. And it's still like it goes down in San Francisco. It's amazing how they're not back to the office in San Francisco. I was in L.A. the day before, L.A. is just a little bit better, but come to New York City and again, it's almost like back to normal in a lot of ways. So of course, it's not all the way back yet. Same in Boston, certainly, the southern cities have been back for a number of months now. So it's a little bit -- they're coming out of it unevenly. But overall, in total, which plays a big part of our mix story. They're back to their proportionality, normal proportionality.

Yes. And one of the questions I think we get a lot is how to think about how people will use offices or how people will use this space in a post-pandemic world? Talk about how you're thinking about that and what the opportunity set is for Armstrong within it?

Yes. I mean it's -- the pendulum has swung, right? I mean it was all the way -- I can still remember, right, nobody is going to -- everybody is going to get out of their office. Jobs coming back to the office and same with classrooms, right, with many classrooms. They can all -- but that pendulum has swung, I think, all the way back. And I think the hybrid model, the way we're thinking about it, we're executing at Armstrong. The hybrid model is probably here to stay and some level of flexibility for employees is here to stay. But I think what people are realizing is that this notion of being able to get rid of your office space is debunked now. Even if it's only 3 days a week, you're going to need space for 100% of your employees. And I think that -- I think thought process is kind of balanced out the use of overall office space. But the conversations that we're involved with the A&D community now is so what does the office space need to be and look like for how we want to operate in a hybrid environment and the use of technology. And when they're in the office, they're not in their offices with the door shut on Zoom meetings. How do we get them into collaborative spaces? And so again, I was in San Francisco yesterday, as I mentioned, all the conversations with the architects are around redesigning office space for a different flow of traffic in the office space for different uses and additional flexibility to change the uses based on maybe days of the week, for example. So there's a lot of work going on in reconfiguring the office and how we're going to use it going forward. And again, the healthy spaces part of it is ingrained in that conversation now. There was a meeting I was in yesterday that didn't have healthy spaces as part of the conversation. They're all trying to figure out between Ash Ray, well building, the lead standards, how are they going to design these spaces to create a more well-being environment for their employees. And then to be able to market that to the labor pool who really cares about that in terms of competing for labor in the market plan. So there's a lot going on right now. It hasn't fully landed. And I think there's a lot more to come here, so.

Yes. No, absolutely. And when we think about your Mineral Fiber business specifically at your February Investor Day, you guided to growing the volumes in that business about 2%, 4% a year, which is really sort of in contrast to what we've seen, talk about what's driving that and what gives you that confidence to see that volume growth?

Yes. Since the acoustical ceiling solution has been around for 60-plus years, it's everywhere. It's in all commercial spaces. So our end markets are quite diversified. And when I think about what's happened over the last 10 years, it's been plus or minus 1% growth for the last 10 years. And the reason is because we've had a very low GDP environment, 2%, 2.5% GDP environment. And when that is the situation, you have some markets participating and some markets not participating. And certainly, office was participating in the upturn since 2014, '15 time frame and on, but health care and education has not participated. And so you get this mix effect on -- so if you're just following the market, you're in this tight range really of no growth, plus or minus 1%. And so when we separated from our flooring business, we spun that off. We got really focused on how do we grow the Mineral Fiber business. And again, this is never going to be a high single-digit growth business. The installed base is too large and it's driven by renovation activity and a rate of renovation. But how do we stimulate and accelerate the rate of innovation is what we've been focusing on. And so what we talked about back in March was around digital tools and digital initiatives to reach parts of the market as late in demand and stimulate that demand by making it easy for them, making them aware of what to do. It's interesting. Our research shows there's 40 billion square feet of mineral fiber ceiling towers out there today. And so you can imagine just 1% or 2% of that turning over is like we'd have to build a plant. I mean, it's a big opportunity. But there's a lot of old ceiling tiles out there that need to be renovated, but people don't know where to go. They don't know how to get it done, and they think it's really expensive. And what our digital initiatives are around is touching those parts of the market that we couldn't cost effectively cover with our feet on the street, nor our distributors with feet on the street is reach out and touch them. Make it easy -- educate them, make it easier for them to transact, to stimulate renovation activity. We have some really good traction. We're 2 years into it, really excited about it. I think it's going to be a whole new channel for the company. And again, it's about growing the pie a bit so that we can accelerate Mineral Fiber volume growth beyond just what the market gyrations are.

Yes. And so I guess that sort of brings us to some of your initiatives. You've got Kanopi out there.

It's one of our digital initiatives, yes.

It's one of your digital -- so talk a little bit about that and what you're doing to sort of embrace these end markets that were perhaps a bit and neglected, if you will, in the past?

Yes. I mean you can imagine the local dentist office or the local medical facility. And again, they're so small, they're not going to get the attention of a large contractor, even a medium-sized contract or distribution. So we're trying to reach out and with this Kanopi platform is, again, educate them, connect them to the -- where they can get the information all the way through transacting and then access to installers. So it's a one-stop shop platform to make it really easy for them to renovate or update their ceiling systems. So again, with healthy spaces, we can really cater a different message to them now, that's something that's obviously top of mind for them. So again, that digital platform is the way that we're going to reach out. And then think about this platform, we can add tools like for visioning. They can create. They can test, acoustically, how does it warden their space. There's a digital tools that we can put on the platform that make itself serve for customers who couldn't get service in other way. As a way to again to stimulate demand.

You also launched Project Works, which is an automated design process, if you will. Talk a little bit about that and what that's allowing you to do and how it's expanding the business.

Yes. It's really -- it's an automation tool, like you said, for a very complicated design process with the A&D community and how they iterate design and how they try to create what ends up being what their design intent is within budget. That's within budget. That's the hard part, a lot of times they have -- they're very aspirational and they want something unique, but it doesn't always fit the budget. So it creates the iteration cycle of changing a design, which takes weeks for a designer or a CAD designer, an Armstrong designer to tell them, okay, what that design change looks like. And then what does it cost. And what we have done is we've developed a platform to automate that. So real time, they can change the ceiling from squares to triangles. They can change it from one material to another material, they can change the colors and instantaneously, they can get the impact on their cost and the bill of materials and which they have to use to construct. So we're really excited about it because there's no other product like this out there for the ceiling category. And it's a huge speed competitive advantage for -- and productivity for the customer certainly. And then internally, so what this allows -- I'm particularly excited about it, we can scale this business without adding one-for-one headcount for growing the business. Now through this, we can do 10 more projects for every person because of the automation and the speed it provides.

The other thing that you talked about was the ability to partner with some other companies out there. I mean we think about the ceilings. Obviously, there's electrical, there's lighting. There's other things that are going on within there. Talk about that opportunity set. And what would make an ideal partner for you?

Yes, within the healthy spaces category, in particular, the more we get into this, it's not just about COVID, I think healthy spaces is now getting defined around some platforms. Air quality is obviously -- it's obvious. But Acoustics continues to be part of the well be equation. Temperature Control, which is part of the sustainability, comfort for employees, but also the sustainability of the buildings and the carbon emissions of the buildings, as is lighting. So those 4 blocks are nontraditional ceiling players, obviously, but it's all into the integration into the ceiling plane. All 4 of those blocks. The one thing they have in common is they have to come together in the ceiling plane. And so what this is creating for us is these additional partnerships with nontraditional companies obviously, not acquisitions, but they're real partnerships for us to bring a solution to the marketplace and really change the way Ashrae and Well and Lead, they regulate around now these new healthy buildings that are emerging. Carbon emissions is going to be the next wave of differentiation for the building products industry. It's going to be regulated. It's going to be driven. Companies are setting their own goals for carbon emissions or I know at Armstrong, we have ours. I'm sure most of you or companies have carbon emissions goals. If you haven't set them yet, they're going to be required to set them. And so low carbon and embedded carbon products are going to be a way companies can lower their carbon footprint and carbon emissions to get to their goals.

And one of the things when we do think about air quality and improving the air quality, it goes to schools a lot, right? Talk about the opportunity that Armstrong has there to capture some of that budget that's out there now to upgrade some of those schools.

Yes. For the first time in 10 years, right, schools are actually getting some budgets. It sounds great. That's one of the laggards for us over the last 10 years is that they haven't had the renovation money and the money that they have, they've gone probably to the right places, which is around school materials and really in parts of the need there. But these ESR funds that are now available through the CARES Act is a huge stimulus of money, and it's been specifically earmarked for creating healthier spaces first. And again, that's a real opportunity for us because we know how to do this in the health care environment. So with gasketed ceiling to control pathogens from going room to room. We know how to create negative pressure versus positive pressure rooms. Nurse's offices now are being regulated. They have to have that, at least in the buildings. We have our new VidaShield product that actually cleans the air in the space versus trying to distribute it throughout the building. So there's some real solutions that we're excited about in the education facility. We just closed our largest project to date down in New Mexico and a huge school district down there, where every classroom is going to have Armstrong VidaShield in it, which makes total sense. I can't imagine a K2 classroom not having this device in the ceiling. And putting it in a ceiling makes it a permanent solution versus the ones to sit in the corner or sit in the middle of the room. Some of these rooms I've been into is it's amazing They'll put one of these in the center of the room and all the desks surround it. And what they're essentially doing is drawing all of the potentially pathogen in the air across the desks of the kids. It makes no sense to me. But they're reacting to a solution to have a solution in place or putting it in the corner of the room where it doesn't do much other than the one localizer. Having it in the ceiling is exactly where it needs to be for a permanent solution. It draws the air away from the occupants in the space. It treats the air and pushes it back down, which is why you have your diffusers and other HVAC inlets and outlets in the ceiling. It's a natural place for -- to create the right flow in the buildings. Anyway, I think the permanent solutions are still yet to come for education facilities. And finally, they have the money to spend on.

Yes, which is good right? And you've got a couple of wins, you mentioned this project, Florida, I think you've obviously seen some success.

Florida, we had a large private charter school program down there as well.

Yes. So it seems like they're starting to come in, which is good. Turning back to Mineral Fiber. You've gotten a lot of pricing, obviously, in the last year, which people perhaps take for granted because you have seeing pricing.

We have a track record there, yes.

You do have a good track record there. But obviously, inflation has intensified. Talk about how you've been able to offset that? And maybe with that, how are you thinking about the stickiness of the pricing because it's been so above and beyond what you normally do see?

Yes. Again, we have a track record, right? Of -- there's a -- we have an attractive industry structure, number one. We've been the industry leader for a long time. we innovate, as we were talking about, so we're driving new products. And we really do have the best distribution in the industry. And when you're 55%, 60% share leader of an industry for 30-plus years, you can drive the best distribution, and we do have that now. So it's really the combination of all those things. We're doing the best job on specifications pulling demand through distribution. Having the best distribution best service, you can really earn and drive the price increases as you need to stay ahead of inflation. Again, we have a 10-plus year track record doing that every single year. And again back to one of your first questions about what's unique about ceilings that I find is when prices or when volumes go down in building products, prices follow. Yes. you can go back and look at Armstrong's -- when ceilings volumes go down, the prices don't follow. And we have to work hard to sell the value to make sure that we're not we're not falling into that cycle, but we're earning these price increases. And I think last year was a really good example of when you need it the most and inflation is the greatest that we're able to realize enough price to stay ahead of inflation and stay ahead of inflation enough to grow margins, not just covering inflationary dollars. We've managed the business to grow our gross margin percentages, not just to cover inflationary dollars. And again, we have the structure that helps us. We have the track record, the brand the innovation, and then we have the business model that allows us to continue to do that every year.

Yes. And it feels like people almost take for granted your pricing power, right?

I wish they wouldn't do that.

It's -- you've done a lot to hold on to that, but it feels like in these environments, people like, well, we know they get price, but you've done a lot of work there. It's not easy.

It's not easy. My sales people can hear me talk about pricing subsided, they would be really upset. Because it's really hard.

I'm sure. I'm sure, they would. And then on Architectural Specialties, you've done a lot to integrate those recent acquisitions into the business. Talk about the success that you're seeing there.

Yes. This is an adjacency to Mineral Fiber that -- we really have a strong right to win there because we have a successful Mineral Fiber business. We have so many years. We have a strong seat at the table with architects to get spec. And it's an adjacency that has many points of leverage. A lot of times, we get excited about an adjacency because there's one point to leverage. But we have several points of leverage that gives us a really strong right to win there. And so we're excited about that adjacency. The same architect that we have a long relationship with on Mineral Fiber is the same architect specking the Architectural Specialty products. So we really do get to bundle the portfolio and be a one-stop shop for architects. And that's really important for them, but it's also for the contractor as the Freedom Tower that we won, the first 26 floors in that building, I remember the contractor saying, I just want one throat to choke, right? And so it was important for him, too, to have the mineral fiber, the wood and the metal all being supplied by one company. So there's, again, lots of points of leverage there that makes us a really strong right to win area for us. We've been growing that double digit for the last 5 years. Our share position is a very fragmented segment. So there's -- although we're the largest in the 20% to 25% share, there's a long ways for us to go to penetrate to get to our 50%, 55% entitlement share that we believe we can get. So we're growing that business double digit, not because the market is growing that much, but because we're leveraging these points of leverage, better service, better specs and the broadest portfolio. Now we're leveraging those points of leverage to grow faster than the market.

And it's also helping your margin in that part of the business. You've targeted that 20% -- 20-plus percent rate. You saw a really nice step-up in the first quarter. Talk about that progression that's coming through there.

Yes. In contrast to our Mineral Fiber business, right, which is close to a 40% EBITDA business. And we don't have any fantasies that this Architectural Specialty business, which is much more of a custom batch-oriented business that we could ever get to those kind of margins. But we've set a floor. We certainly believe that there's -- the SG&A leverage that we have in our Mineral Fiber business, we can benefit from on the architecture. So 20% EBITDA is our floor a minimum, which would be a pretty good building product business for us. But yes, we -- we were there before. We were at 22%. We bought some companies that were at lower margins that mixed us down. We made some additional investments. And now we're getting some leverage on that, and I expect us to be back to 20% next year.

And you mentioned the double-digit growth that you're seeing in that business, it's really expanding rapidly. Is there the need to invest to continue to support that demand, especially as you do integrate some of these offerings right, and you think about the opportunity there?

Yes. I think it's another reason why I think we're not trying to optimize margins too quickly here. There's -- we have lots of penetration opportunities. So we want to -- it's a growth engine for the company. So we'll be investing, feathering in investments as we go to keep our growth trajectory going into that business which again is why I'd be very satisfied with 20% as a floor and then we can incrementally improve from that, but I'm not trying to optimize the margin of that business too quickly here. There's lots of growth, and we want to go as quickly as we can to capture the growth. I expect double-digit growth in that business for years to come.

Yes. You've done some M&A in that space. You took last year off from M&A, just sort of the timing of some things. But talk about the pipeline that you're seeing there and some of the targets that you're looking at?

Yes, we did 3 acquisitions in 2020 during the pandemic. So we were very busy with that. And we're very fortunate to get those deals done in a pandemic year. But it's timing, right? It's -- we don't get the control of timing. A lot of these companies aren't for sale. They're not in a sale process that we're participating in. They are -- they have unique capabilities. We've targeted them. We're building relationships with them and hopefully, when they're ready to were the first phone call and we get an opportunity to acquire the company. So I have a dedicated team that gets up every day and does the pipeline development. And so I continue to be excited about the pipeline and what's out there. I'm seeing a shift a bit too also to these partnerships that you asked you about earlier. Not everything has to be an acquisition. We -- if we can partner and leverage each other's assets without equity and ownership changing then that's another value creation mode for us that we can develop.

And you've done that to some extent with the WAVE JV, right? Talk a little bit about what's made that relationship so successful for you and what you can sort of leverage from that.

Yes, that's really one of a kind is I mean, it's a 50-50 joint venture. It's 30-years old now and it is the most profitable grid business out there in the world. Frankly, it's 40% -- I think close to 45% EBITDA business. It's been a huge success story. But what's made that successful is the 2 parents are clear about and share the mutual objective for the JV. And there's no competition for what we do. They have metal expertise. They buy directly from the mills because they're the largest steel processor in the country. And so we can buy smart, we have these contracts in place that we get the leverage from them. And they bring a lot of expertise on how to process metal very efficiently. And what we bring is the best-in-class go-to-market capability, specifications, distribution and so forth. And so -- there's no overlap. We both bring something very valuable to the joint venture that the joint venture is able to leverage. And I think that's one of the reasons why it's been as successful as that. But it's a great model for how we can -- and again, it's a little bit of a credibility story, too, right? If somebody who doesn't know us that well, it's a great model for them to consider about how we can partner with companies like Worthington, and do it very well.

Yes. No, absolutely, it is. We're almost out, but there's 2 other things I want to hit on. One is, obviously, we've seen you spending on SG&A to support a lot of these initiatives that you've talked about. When should we expect that to start to normalize? How do we think about the cadence there?

Yes. I think very purposeful, right, because this has not been something Armstrong has done for 10 years. But when we separate from the Flooring business, and we set out to grow the Mineral Fiber business, we've worked on '17 and '18, divesting of our international business, and so we could focus on that Mineral Fiber portion of the business right here in North America. And then we started investing in '19. So we know we're in our third year of investing behind these 2 major platforms of growth initiatives. And what we outlooked at our Investor Day was in '23, we are expecting operating leverage and the returns start to show up for those 2 major platforms. So I think this year, we'll see a little bit of flattening out of the leverage on that -- deleveraging on that and then '23 and on, we should start to see good operating leverage on those. So I'm excited about that. We're seeing the traction in the first part of this year I talked about in our first quarter call, that gives us some optimism for offsetting some of that destocking that we saw in the quarter.

This business also is very cash generative. You guided to, I think it's $215 million to $235 million of free cash flow this year. We talked a little bit about M&A and Architectural Specialties, but talk a little bit about how you think about capital allocation and some of the other uses.

Yes. I mean it's a high ROIC business. You can imagine, right, with upper 30s EBITDA business. So our first priority always is to invest right back into the business because we know we can get a really good return there. And now that we're focused on this North American market, we're even more confident on that. But we've capped around $90 million, $95 million worth of capital back into the business. And again, generating over $200 million, it gives us lots of free cash to do other things. So these bolt-on acquisitions in Architectural Specialties are big accelerators for us to keep growing and capturing more of that market. But in the absence of those, we have an opportunity, I think, to give back to our shareholders through a dividend and a share repurchase program. And that's really our flex. We view the share repurchase program. We have over $450 million of authorization still remaining. We can flex into that as we have lulls in our acquisition activity. And especially where the market is today, there's some good value in our stock today. So -- we expect to really be able to do all 3 back into the business, do acquisitions and return cash to shareholders because we are very cash generative.

Yes, and you did about $30 million of buybacks in the first quarter, which is good. It's a good sign. Why don't we see if there's any questions in the audience question. No? No questions. I guess lastly, one of the things that we've heard a lot when you think on a broader macro perspective is how tight the construction labor market is? And it's definitely -- it seems like it's become a with all the housing activity that's going on now as well today. How does that impact your business. And you talked about the fact that there's a lot of bidding going on, but maybe not as much on the ground. How does that all sort of come together for Armstrong?

Well, I think one of the biggest issues is the supply chain disruptions from material availability, but also from the labor availability. And that really shows up on the job sites. We're not having an issue internally, fortunately. But on the job sites, they're not able to get the labor either on time when they need it or they're not able to get it at all. And that really extends the construction cycle. We have some data that supports that the elongation of a typical job site is almost 50% of the normal cycle time. So -- and again, it's back to is material available on time or the labor availability on time. And so it really shows up for us in the job site. So one of the things that -- the question I used to get is what are you worried about? I mean that's the risk for us, right? It's something out of our control that these jobs just get extended, and we're later in the cycle. So the ceiling demand can get -- continues to get pushed and pushed and until the supply chain, the labor thing settles down, I think that's going to be dynamic and the choppiness that we're going to experience probably throughout this year for sure.

Yes. And I guess one last question, building on that is there's obviously a lot of macro crosscurrents happening right now. When you think about the recovery that you're seeing in some of your end markets. And yet, obviously, we've got a rising rate environment and the Fed trying to push in a different agenda in there. How do you think about that all coming together and what it could mean for the business?

Well, I think the recession is everybody is worried about high inflation and no growth, right? Stack inflation, I think that's the sentiment that's out there now, and we're watching that very closely, obviously. But the one thing that I don't worry about so much is in a normal garden variety type of recession, Armstrong continues to generate a lot of cash. We're able to expand margins because we hold our prices in a deflationary period. And so I don't worry so much about that. But again, the depth and the -- how hard the landing is on the recession, I think could have some reverberations in the marketplace that you would want to gauge your level of spending accordingly. And so we're watching out for that. But again, when you go back and you look at how we performed in 2008, '09 during the downturn and then again, during the downturn in 2020, we were able to grow cash. So we can expand our margins and grow cash in spite of it. So -- those were pretty serious recessions. I was hoping we don't have another one of those coming, right?

We don't need that -- but no, you did a great job during those periods. So, it's all good, yes.

Thank you. Good to be here with you.

Yes. Thank you. Thank you for being here. We appreciate it. Thank you to everyone that joined.