Leggett & Platt, Incorporated (LEG) Earnings Call Transcript & Summary

Well, good morning, everybody. Thank you for joining us virtually at Raymond James 42nd Annual Institutional Investor Conference. Today, I'm pleased to introduce Karl Glassman, Chairman and Chief Executive Officer of Leggett & Platt. Also in attendance from the company are Susan McCoy, Senior VP of IR; and Cassie Branscum, Senior Director of IR. Today's format will be a fireside chat between Karl and myself. So if the audience has any questions, please submit them to the chat box function, and I will try to work them into our discussion. So Karl, first, thank you for joining us. As always, we appreciate the support. And I must say, I'm looking forward to hopefully doing this next year in person.

Yes. Thank you, Bobby. As always, we appreciate the kindness of you including us in the conference. It's important to us. So I appreciate it. It's good to see you as well.

Yes. Very good to see everybody. So maybe to get us started a little bit, Leggett & Platt, a very diverse company, a lot of different end markets. Maybe for some of the generalist investors or people that are new to the story, can you give a quick brief overview of Leggett and some of its key business units.

Yes. Happy to do so. Thanks, Bobby. As many of you know, Leggett is a diversified manufacturer. We've been in business for 138 years. Most of our products are sold to other manufacturers. Kind of the things that set us apart, really strong balance sheet and cash flow. Very disciplined uses of cash. 49 years in a row of dividend increases and a current dividend yield of 3.6%, so about 2x -- probably 2.5x the S&P 500 average yield. We have a leadership position in most of our markets, and we're strongly positioned for long-term growth. Our macro market exposure, about 60% consumer durables, primarily focused on the home, 20% each in auto and a combination of commercial industrial. Geographic positioning, about 2/3 in the U.S., another 10% each in the EU and China and in smaller amounts in other countries. We manufacture in 17 countries around the world. We report in 3 segments. The largest is Bedding, which is about 48% of the total. In Bedding, a little different mode to market than many others and that we're deeply vertically integrated into -- all the way back to a steel mill through wire drawing processing and then primarily used -- that output primarily used internally into the manufacturer of bedsprings in the United States. We're also very much vertical in foam and that we formulate our own specialty chemicals, which is a key competency that differentiates us from the other commodity foam suppliers. We then use -- the innersprings will sell as disparate components. The foam also in component form of specialty products. But in many cases, we'll also combine those materials for application in either full foam mattresses or hybrid mattresses that are then sold on, on behalf of private label, on behalf of other marketers. The other segment specialized, which is the second largest, primarily dominated by automotive, where we design and produce customized comfort and convenience solutions primarily for seating. Automotive and Bedding are certainly the 2 largest business units and make up about 2/3 of the company. Also within specialized are smaller hydraulic cylinders and aerospace business. And the last but not least is, what we call, our FF&T segment, which is made up of 2 furniture businesses, home and work furniture. And then a flooring business, which is North American-based, primarily carpet cushion. And then 2 textile businesses, one's an Industrial Products business, which is primarily dedicated to furniture and bedding and the other into specialty applications into Geo Components.

Okay. Good. And I think we have -- I think out there is a 6% to 9% kind of long-term revenue target. So maybe let's start there and we'll unpack some of the building blocks to get to that target, how M&A fits into the equation, GDP growth, pricing, anything like that.

All right. Okay. Great. Thanks. We feel that there's a really credible path in a non-pandemic environment to 6% to 9% growth. And it's made up of those building blocks. We assume -- remember, those are long-term targets. So we assume over the long term that GDP -- foundational GDP is about 2% a year. We also know that there's significant opportunities in our Bedding and Automotive businesses for content gains as we further penetrate mattress, the conversation we had about foam from components to finished products. And then our expansive growth in Automotive in terms of more applications per vehicle. So if you take the combination of GDP and content gains, that easily gets us to 6% as a baseline from there. And then we assume acquisitions, again, to get us to the remainder of the 6% to 9%.

Okay. And then maybe since -- I'll jump around here a little bit different. But maybe since we're talking about the content gains, let's first dive into Bedding and the future content opportunities you see in that segment, and then we'll switch over to Auto as well since both of those are very important to the story.

Right. Okay. Great. Yes, that -- Bedding is a continuation of a long story. And if we look at the basic innerspring side that -- Bobby, when we first started talking to one another, Comfort Core was a much less significant portion of our total Bedding sales. In 2020, it was 62% of our domestic units, a greater percentage in Europe, by the way, were Comfort Core. Why is that important? There's more value. There's more -- higher average unit selling price in Comfort Core than the traditional Open Coil product that it replaces. And then augment that with what we call Quantum Edge, which is a smaller diameter coil that goes around the perimeter of a mattress and now Quantum Edge is about 56% of all of the Comfort Core mattresses. So it gives us additional dollars per mattress. Actually, that's accelerating, the application of Quantum Edge because of the significant price increases and, frankly, scarcity of polyurethane foam. So we think that there's continued good momentum there. So Bedding continues to be a great story. And then, again, augment that with the conversation that we had about foam. So not just foam, specialty foam, which is higher-value, higher-dollar product, and then the application of that product into finished mattresses in both a standard foam, full foam form -- that's hard to say -- and hybrid. So really important.

Okay. And then -- yes, when you look at the foam side of the business, I mean one of the interesting aspects now is how deep and wide Leggett is in inside bedding. So maybe some of the work that's been done to connect those 2 businesses together, really participate more in the manufacturing -- the full manufacturing process of the bed, connect innerspring. Comfort Core as well as your foam and kind of what is that on an ASP basis versus kind of what we used to have a couple of years ago, when maybe we just had an innerspring or innerspring in a Quantum Edge unit? And how big of a difference that could be for content per bed or even revenue driving?

All right. Okay. Great. It's kind of the compounding evolution of that. So if we go back 5 years ago, an average unit selling price, inflation adjusted, by the way, of an innerspring -- Open Coil innerspring, call it, $25. Comfort Core, ballpark $60 to $70. Application of Quantum Edge then adds -- it depends on coil's diameters, gauges. But consider an average of $20. So that additive nature of an innerspring in raw form is really, really important. And then take those specialty chemicals and apply them into a finished mattress, if it's all foam, that mattress is going to sell at wholesale for probably on average $300, $350. When you add an innerspring to make it a hybrid, then you'll pick up another $100. So that's where the content gain really is derived and becomes real important. Now bed in the box -- the growth of bed in the box or compressed mattresses is significant as well as a percentage of the story. So today, we believe probably 40% of the mattresses sold in the United States have been compressed. A very high percentage of those mattresses have Comfort Core with Quantum Edge and also have our specialty materials. So that's where that content gain story is really, really live and viable. And I believe we're in the early innings there.

Very good. And then sticking with Bedding, I mean, another unique aspect of the story is the vertical integration all the way back to the steel mill. And inflation is top of mind right now from investors. So maybe let's talk a little bit about how inflation impacts the business, the abilities of Leggett to pass-through price increases when we're in inflationary times? And then maybe on the second part of it, there's been some restructuring done over the last couple of years around businesses. How does that better position the company for inflationary environments or more consistent EBIT growth?

Okay. Great. That -- actually, steel inflation had been really pretty stagnant for all of 2020 until suddenly in December the industry was impacted by about a $70 a ton increase and then augmented by an additional $100 a ton in January. February, there was a reduction of about $40 a ton. And I would have told you 2 or 3 weeks ago, pre-weather events in the United States that steel scrap probably would have been flat in March. It now looks like it may be up $30 to $50 a ton. We'll find out in the next couple of weeks. So there is significant steel inflation. We have pricing power through our Bedding business to pass that through. Most of those arrangements are contractual long-term agreements. So admittedly, there's about a 90-day lag, but think in terms of quarters. So based on the inflation in December, we impacted or affected a price increase that went into effect January 15 to our domestic Bedding customers and European. And then now they'll be hit with an April 15 price increase. It's not that price increases are always pleasant, but they're kind of nonnegotiable. They're formula-driven. They're not emotional. So our bedding customers know to expect that inflation. From a long-term perspective, it's impossible to call. We would think that steel inflation will be somewhat benign the rest of the year, but it's demand-driven, weather-affected, highly correlated with the price of iron ore, so it's difficult to predict. But at this point, we think that the first quarter will be most significantly impacted by the lag. On top of that, there's significant chemical inflation. So we just earlier this week announced our fifth selling price increase on chemicals. So when you aggregate all of those, to give you an order of magnitude, on commodity foam, aggregated all 5, 52% increase. Visco foam, 27% increase. And bed in the box, 18% increase. And so we announced that Monday, it will go into effect about -- well, actually, on April 5. So you can see that the delay is much shorter on the foam side than it is on the spring side. And frankly, Bobby, with the shortage of chemicals globally right now, we have no problem passing that through. Our customers are just begging for more product at this point. And we've also told them, when we hit them with the fifth increase, to expect a sixth increase. We think that, that will follow in May. It's dependent on what happens in terms of chemical availability. So really long-winded, but the summary of that is significant pricing power that has been augmented by the restructuring that you made reference to. And in 2018, there was another spike in steel. And that's the first time in my really long career at Leggett that we didn't have pricing power. It became evident in Home Furniture and in our Fashion Bed business, certainly pricing power in our spring and industrial materials business. So I don't want anybody to get concerned about that. We pass-through. As I said, they're contractually driven. But in the the Home Furniture business, that business, while had been profitable -- very profitable actually, was probably too commodity-oriented. So we restructured that business, shrunk it, invested more in proprietary products, more IP protection. So the business is slightly smaller today, but its mix of customers is better and with that comes pricing power and the profitability of that business is probably higher than it's ever been. Our teams have done a really good job of restructuring it. So again, long-winded, significant pricing power there. The Fashion Bed business, we just got out of. I mean, commodity business, so we no longer have that.

From the -- you touched briefly on it, but from the chemical availability side, there's been a lot of talk out there in the industry about limited ability to get foam, to get chemicals. How is that progressing? Clearly, it's not back to normal. But just in context of last quarter and the quarter before, is it -- are we at least making progress from availability standpoint and working our way back towards normal?

If you don't mind, let's start with innersprings first, and I'll go -- because -- the reason I went back to innersprings is in the previous quarters, the investor group will know that we had some supply chain disruptions around nonwoven materials. That is over. We are fully caught up on innersprings. We have no issues. No supply chain constraints there. If there's any issue, we don't always have enough Quantum Edge capacity because of the foam replacement issue that I made reference to, but we're adding significant equipment there. So no issue on innerspring. Part of the reason we don't have an issue on innerspring, even though the demand is significant, is because of the foam availability issue that you made reference to. So as recently as 2 -- call it, 3 weeks ago, all of the foam suppliers in the United States were on an allocation of about 80% of their previous purchases of foam chemicals. And chemicals were slowly starting to become more available. So a lesser issue with TDI and MDI, the higher-value, more specialty chemicals than there had been previously. But this weather event in Texas has just absolutely decimated the chemical supply infrastructure. And so today, every -- this is not a Leggett issue exclusively. Every foam supplier in the country is now on allocation at a rate of about 50% of the previously allocated 80% [indiscernible]. So chemical availability is a real issue. Even today, as we speak, the chemical suppliers can't tell us when they'll be up running full. That infrastructure was just decimated by freeze and thaw, and they continue to do diagnostics around that. So we'll see how that develops. The good news is order input still continues at a really high rate. So I think our customers would probably tell you that we mitigated a little of the backlog with the availability of innersprings, and now the backlog is probably starting to grow again because of the industry-wide lack of availability of foam.

Okay. And maybe a couple more on Bedding before we switch over to some of the other segments here. But Comfort Core is higher in Europe than it is in the U.S. Do you see that Europe penetration has a potential -- penetration in the U.S. can work its way to? And then on, I guess, kind of the vice versa of that is, is there an opportunity to better marry the ECS capabilities with your European Spring business and drive further content gains on that side of it?

Yes. That's a great question, Bobby, that we continue to evaluate. We'll start with Europe. Europe, Comfort Core penetration is about 75%, not the same level of Quantum Edge penetration. That's growing now because of the same chemical situations. There -- it's a global shortage. So we're starting to get some benefit of Quantum Edge. And bed in the box proliferation is in early stage in Europe, so way behind the United States. But we're starting to see some significant momentum building there, which will take more Comfort Core. So I don't want anybody to think that 75% penetration in Europe is topped out. I think that there's more upside and certainly, Quantum Edge opportunity. We continue to investigate taking the ECS assets, manufacturing processes and know-how to Europe, more to be written on that chapter. In pure chemical form or specialty chemical form, we do at ECS sell chemicals into the European infrastructure, but we don't pour finished product. So that was a potential synergy of the acquisition that we will exploit in the future. Back to U.S., Bobby, to quickly answer that, it's 62% penetration of Comfort Core. We're not near done yet. Just growth of bed in the box, it will continue to expand.

And looking at the other big news in the industry is the second round of antidumping duties. You, I and everybody here at Leggett's lived a couple of these rounds. So you're starting with China. But maybe touch on briefly kind of what these new duties put in place? What kind of you're seeing or hearing? Is the supply chain starting to shift back? And how the ECS business is positioned and maybe take advantage of that, if it does stick?

Right. Okay. It will stick. The duties have been declared. They'll become final in May. So -- and I know some of your competitors believe that the mattress manufacturing capacity will move around the world. Frankly, there's not a lot of places for them to go. So the short answer is yes. That manufacturing capacity is coming back to the U.S. If you look at the numbers, October, the importation from those 7 countries, which actually were about 90% of the total units -- Bobby, you do a great job of reporting on this issue, by the way. The investment community should look to you as a source because you really -- you stay right on top of it. You do a great job of it. So you know that, that import level in October -- as recently as October was about 1 million units. Well, the duties went final on November 3, so we saw November import dropped to 250,000 units and then December to 150,000. We don't have -- there's a lag in data. So we don't have January yet, but we expect that those import numbers will start to -- continue their significant decline. And really, kind of proof of the industry's expectation of that is some of the Chinese manufacturers who previously had poured foam and, in our opinion, transshipped to those other 7 countries. Those other 7 countries never had a lot of manufacturing capacity, with the lone exception of Vietnam. That was all illegally transshipped product, in our opinion. But the Chinese manufacturers have now started to set up shop in the U.S. Well, our position is we'll gladly compete with anybody on a level playing field. So it bodes really well for ECS from a long-term perspective and that ECS never played in the really low end. It just never made sense. ECS isn't subsidized. The Asian producers were. So there was input cost in equity that no longer is the case. So average unit selling prices will start to go up. You'll see ECS have a larger share. And you'll also see our Spring business grow as well because the middle points of the Spring infrastructure will start to expand.

And I guess -- this is the last one, and then we'll jump over to Auto. But the bedding industry, very important for you guys. And there's been, over the last 5, 7 years, a lot of different moving parts. Imports coming on the scene, retailer breakups with manufacturers and bed in the box. But when you sit out here today, at least from my point of view, it looks like, structurally, it's healthier than maybe it has been in the last 3 or 5 years from a competitive standpoint, from imports, e-commerce side of things, your position in it. Is that a fair assessment of how you guys see the industry when you compare it back to what it's been over the last 3, 4, 5 years?

Absolutely. The industry is better positioned for Leggett today than it has been in the last 5 years, without question, augmented by the ECS acquisition. And actually, the pandemic -- I hate to say anything positive came from it, but it probably accelerated the expansion and acceptance of bed in the box, which is really good for ECS and the spring business from a hybrid proliferation perspective. So it really accelerated the hypotheses that we used when we invested in ECS. So we are extremely bullish. And also, Bobby, I think the pandemic made people more aware of the home and their surroundings in home and home investment, so -- augmented by the other things that have historically driven bedding consumption, a really robust housing environment. Consumer confidence, that looks to be high, especially once vaccines are fully rolled out. So we are really, really bullish.

Okay. Maybe let's -- yes, we'll switch over to Automotive, another big, very important business for Leggett. That's been really a growth engine for the last 5, 7 years since I started covering the company. So I guess quickly, just how do you see the global automotive supply chain recovering from the COVID impact? And we'll dive into some of the Leggett specifics.

Right. Okay. Well, it was recovering really well. You saw fourth quarter, our auto sales were up 6%. The IHS numbers continued to grow each quarter. We have a -- the industry has a little bit of probably a short-term setback in terms of semiconductor availability. So that's been widely reported. Doesn't directly impact our business much, but anything that slows manufacturing capability at the OEM level is ultimately going to come back to us to some degree. So -- as a matter of fact, IHS just published the February data just a couple of days ago, and they're still expecting that the major market global growth will be in the 12% range for 2021, 14% for the total market. So probably pushed out a little bit to the back half as the chips become more available.

And from -- when you look at that and your content growth, is the formula still there where you believe the Leggett's Auto business can outgrow global production from a content -- given the content gain story?

Without any hesitancy. All of the things, customer convenience, seating comfort, all of those demands that the consumer has in place continue to grow. Electric vehicles are good for our auto business and that we've been engineering solutions for lightweight, small size and noiseless for a very, very long time. Electrification of vehicles really kind of correlate to the expansion of our total addressable market. You'll remember that we used to define the addressable market at about $10 billion. We expanded that to $20 billion because of electrification. We've invested significantly in that area, stood up a development center in Detroit, hired a tremendous number of electric engineers. We're having really robust conversations with the OEMs. And we're a known solution provider. We customize, we're quick and we run global programs. So this is a pretty easy sell to those folks who are looking for solutions. So all of the characteristics of automotive demand going forward are absolutely in our wheelhouse.

That was -- actually, my next question was that at 2019 Investor Day, we did talk about building out the adjacent electronics and software. So I guess just -- you mentioned you stood up a facility there in Detroit, hired some teams, but anything else on how that initiative is progressing? Is that more tied to potential EV growth? Or the technology advances that we're seeing in cars, will that ultimately still drive better content per vehicle as these EVs and other automation in cars take over -- or not take over, but grow in penetration, I guess, is a better way to say it?

Grow. Actually, I think that the shortage of chips are testimony to electrification in vehicles. And today, there is so little inventory of autos globally that the OEMs are really heavy-weighting production of SUVs and trucks, which is kind of counterintuitive because there's more electrification in those vehicles. The average F-150 uses 130 microprocessors, so -- but that's where the consumer demand is. That's where there's more demand for the comfort solutions that we provide as well. So the motors, actuators, the historic legacy business that has grown so well for us in the past is continuing to be driven by that trend augmented by electrification.

And then I guess, lastly, and then we'll move over to kind of M&A and capital allocation stuff for the final 10 minutes or so. But how does raw material inflation impact the Auto segment versus some of your other segments?

Actually, not significantly. There's not a lot of steel content. There's a lot of plastics, resins. It historically -- there's obviously material content. With electronic system costs being reduced as there's mass manufacturing that that's kind of offset the hard materials, so to speak. So it just really hasn't been an issue in the last few years. Certainly, globally, we're going to see more commodity inflation, so our teams continue to work in that business as they do with all our customers as we spoke to earlier. So I don't want to say the commodity inflation doesn't exist, but they certainly have an ability to engineer solutions to pass that cost through.

Okay. And then -- yes, let's -- we got about 10 minutes left, so we'll move over to maybe some higher-level topics as well. First, just the overall M&A strategy, an important part of the growth algorithm here at Leggett. We saw ECS. We saw a little bit before that. We had the Hydraulic Cylinders acquisition. So maybe kind of where the M&A strategy sits today? And at what point -- ECS was a bigger one, of course, but at what point might we get back to some tuck-in, bolt-on M&A and leverage profile? And how you and the team think about all those aspects?

Okay. The characteristics of our acquisitions haven't changed. We're looking for sustainable competitive advantage, profitable growth faster than most of the industry's high margin. We're probably looking for the same thing that everybody else is. But from our perspective, we're looking for a really strong strategic fit. The ECS acquisition, as we said, you can't get a stronger strategic fit than that. The small aerospace acquisition that we made at the end of January of this year, admittedly, was small, but the strategic fit was very, very high because of the flexible joints that were a part of that. So -- value-added assembly. So it's really illustrative of what we continue to look for. As you said, large acquisitions are probably off the table as we continue to delever, but we're looking at a lot of opportunities. So expect continued bolt-on acquisitions that are small size. Small size characteristics would be probably $200 million or less that are tucked in. I don't see new growth platforms at this point. They're inherently larger bets. They're higher risk. And we're not fishing in those ponds, so to speak, at this point. So think bolt-on of our existing businesses.

And be in the businesses, if we look at through your business units, you're looking at like the Hydraulic Cylinders or aerospace? Or is there -- could you even foresee additional capabilities in one of the larger ones like Bedding? Or is any of the end units on the table or end business units on the table for tuck-ins?

Yes. The businesses that you should look at, you made reference to it. Bedding, there's opportunity in Europe from an ECS perspective. Our market shares on the Spring side in Europe are high, similar to the U.S. So there's not a lot of opportunity there. But there is foam penetration capability. But I would also -- aerospace, we're not done. That's an industry that we're comfortable with. You said it, Hydraulic Cylinders. Automotive is a possibility. It would be more technologically driven and capability, some adjacencies there. Geo Components is a business that we continue to add to through small acquisitions. It's very, very fragmented, but it's high growth. We're pretty confident in the Biden administration. You'll see some increased infrastructure spending, which is good for Geo Components. So there's some opportunities there. There's -- those are highly synergistic acquisitions because of the purchasing leverage that we have.

And then no -- given the cash flow profile of Leggett, no conversation is complete without talking about capital allocation and priorities for free cash flow and uses of cash. So maybe let's dive into that a little bit and then maybe we'll end up -- we got 5 minutes left. We'll end up with a little bit of talk on ESG and some of the initiatives there.

Okay. There's some things at Leggett that just don't change, and capital allocation is one of them. So we're, first and foremost, going to invest in organic growth. So we've told you our capital expenditure forecast this year is certainly higher than last, but very similar to actual spending in 2019. A good bit of that is additional capacity from a bedding perspective. So we're adding 25% to our Comfort Core capacity in the United States through a combination of physical machine additions and the addition of some labor. So funding organic growth is first and foremost. Paying the dividend, we're very proud to be a dividend aristocrat. There are only 65 companies in the S&P 500 that can make that claim of increasing their dividend for 25 years in a row. So we're at 49. So paying the dividend -- increasing the dividend is important. As I said, funding strategic acquisitions is kind of the next in the hierarchy. And then finally, as it has been for a long time, when there's available cash and our leverage is in a comfortable position, we'll repurchase the equity. I wouldn't expect a lot of that in the near term. But heck, our leverage is getting to the point where it's relatively low compared to where we were a year ago.

Yes. And on the 25% capacity move, we'll start with that. Is that -- that will get built out throughout the year? Or is that by the end of the year? If I look at December 31 of this year versus last year, that's where the -- will be -- at that point, you'll be running 25% more ability to produce Comfort Core? Like how does that get layered in through the year, I guess?

Good question. About half of that capacity is driven by additional labor. So we're hiring now. We're training. As these new machines come online, we're standing up a fourth shift in every one of our Comfort Core departments across the country. So every one of them today is running a fourth shift, where none of them would have been just 90, 120 days ago. And the machines are rolling in every day. Every machine will be here, based on current plan, by the end of July. So that 25% will be in place by end of July, 1st of August. A good bit of that is our comfort in knowing that some of this formerly dumped product is coming back to the United States. Bobby, it's important to know, and I know you know this, but I don't know that the investment community understands the magnitude of those imports. They were 1/3 of the units that are sold in the United States. If some high percentage of those units come back, that's in excess of 10 million innersprings. I'm talking 10 million mattresses, some of which are going to be innerspring, some of which are going to be foam. I'm kind of at the point now where, heck, I don't -- I used to care. I don't care anymore.

Exactly. Kind of indifferent now between the setup there. And the best is if you could get a little foam in, a little spring on them, then I think you'll probably be the happiest.

Especially if it was a private-label OEM finished mattress that we sell on behalf of our customers.

Absolutely. I guess, lastly, we have a minute or 2, maybe just for -- this is for anybody really, but just touch on a few of the ESG initiatives and some of those areas of focus that Leggett's been working at over the last year or 2.

Okay. Great. Thanks for that question. I believe we've done a really good job on ESG in the past. We just -- and continue to. We just haven't done a good job of talking about it, like many companies. So if you think from an environmental perspective, that steel mill, its input, 95% of it is scrap, which is used automobiles, refrigerators, things of that nature. Our carpet cushion business is on almost 100% recycled product. So we just haven't -- and let's talk about governance as well. We have a very diverse board that meets all of the ISS, Glass Lewis requirements around good governance. That's not why we do it. We believe a diverse environment and good governance is in the best interest of the shareholders and drives profitability. So you will see our first ESG sustainability report published. Current plan is end of the month, certainly within the next 60 days. So we're looking at drafts, aggregating all that data together, and we've got a great story to sell.

Good. Well, I think we're right on time. So Karl, Susan and Cassie, thank you again for the support. Thank you for joining us. Best of luck here in the first quarter. And for everybody watching virtually, have a great rest of your day.

Thank you, Bobby.