Marriott Vacations Worldwide Corporation (VAC) Earnings Call Transcript & Summary

Good morning, everyone. This is Brandt Montour with JPMorgan. I'm very happy to have with us here the team from Marriott Vacations. We have CFO, John Geller; as well as Neal Goldner, who heads up Investor Relations there. Just a reminder to everybody, this is a 35-minute session. We will have time at the end for questions. Please post your questions on the conference website, and I'll get to them at the end. Guys, maybe we could just dive right in.I think earlier this week, there was an announcement from Hilton Grand Vacations doing an acquisition of privately held Diamond Resorts, the largest independent timeshare operator. Just wanted to get your thoughts on how this might change the competitive environment, the competitive landscape within timeshare? And then also just your thoughts on their strategic rationale?

Sure. Yes. In terms of the competitive environment, I'm not sure it really changes too much. I think for us, we will be the only upper, upscale luxury focused vacation ownership exchange business, right, in terms of how you think about the customer base that we focus on. But as I've always said, when you think about our -- even Hilton or Wyndham as competitors, all of us are focused in to our hotel loyalty programs, the most loyal hotel guests, right? So not that there couldn't be overlap among brands. But we all start focusing from a marketing perspective in those areas, right? So -- and so there's always competition around the edges for consumers that have the economic demographic that we're searching for as well as the -- hopefully, the desire to own timeshare and all the different things you look at. But I'm not sure it changes how we go about our business or things that we're going to execute and do. We've got 7 great brands. We've already diversified our portfolio with the ILG acquisition and getting a separate brand with Hyatt, and we'll talk later about the Welk acquisition and what we're going to do there. And we still have a lot to do on our ILG integration, as we've talked about, the synergies that are coming and getting that work done. So I think for Hilton, it's a great move, a good strategic fit in terms of it looks like how they want to go about it. I wish them the best, having been through the journey over the last couple of years of the ILG integration, the hard work comes now, notwithstanding, I'm sure they're all probably pretty tired going through the due diligence and a lot of the work. But it's a big organizational change and execution is obviously key. So -- but yes, I think it's great for the industry. And my sense is there's -- there'll be more opportunities out there as things move along.

Okay. And we'll get back to that in a little bit. I wanted to touch on your 1Q contract sales guidance. Contract sales is the best -- we think, the best leading indicator of timeshare sales. I think you guys would agree with that. And in terms of your guidance, it really seems like on a sequential basis, you're breaking away from the 2 other public peers in terms of the recovery or just near term. What do you think is driving that relative performance?

Yes. I mean, it's hard to say exactly. I would say my thoughts would be around probably where our mix of sales come from relative to maybe some of the others out there. I mean, we've always talked about that pre-COVID 40-plus percent of our sales come out of Hawaii and Orlando, right? So a pretty big chunk of the system sales out of those 2 markets. And as we talked about last year, for different reasons, right, Hawaii has lagged mainly through mid-October because of the self-quarantine restrictions that the government had put in place for anybody arriving to Hawaii that got lifted mid-October. The good news is we saw continued recovery through the fourth quarter, and it's only continued here as we've moved into this year. So obviously, that comes back, that's going to help. About 1/4 of our sales historically come out of Hawaii. And another not going to help us here in the first quarter, but yes, I think everyone, you're aware that the island of Kauai went back to the -- kind of a 10-day self-quarantine. The good news is that's being lifted on April 5. So they're going to be similar to the other islands in Hawaii, you just show up with a negative PCR test within 3 days of arrival. So that should help in terms of getting all of our occupancies much higher. But like I said, we continue to see continued improvement there. The other big market, Orlando, different reasons, not really the restrictions per se other than early on, there were some restrictions around occupancy at the theme parks. And I think there's some self-imposed there, but what you're hearing now here is that as spring break's kicking up, these parks are kind of sold out to whatever their restrictions are that they put on themselves. So people are coming back, and we're seeing that in our Orlando occupancies, which we're still lagging, obviously, our system back in the fourth quarter. But as we move through the first quarter here and now into March, we're continuing to see significant improvement relative to where we were in Orlando. Still not back to -- in Hawaii or Orlando, where we were pre-COVID in terms of occupancy rates. Like we are in a lot of our other markets. But that, obviously, that occupancy comes back, that's going to help drive our overall sales.

Okay. Great. And then your forward bookings color that you gave on your quarterly call, I think it was maybe the best number we'd seen in terms of forward book. Your forward bookings up 8%. And that was a back half of '21 number versus same time '19. I guess the question is, if the forward pace keeps up throughout the year, what are the factors limiting your ability to hit a normalized run rate of contract sales as you exit '21?

Yes. It's really going to be the tours that come with the occupancy, right? So you got a couple of things going on. Our tour flow right now, but it's improving because we're seeing more of the packages show up that come with the tour, but the tour flow so far has been slanted more towards owners because you have owners coming back sooner to go on vacation, right? We've always talked about 80-plus percent of our sales are coming from people that are staying in the resorts. So as those store packages come back, right, that -- and your mix is going to change, that's going to help drive tours. The issue you have in the second half of the year is you're going to start to have some level of compression, right, around occupancy because we aren't at our normal owner occupancies here in the first quarter and probably won't be back there in the second quarter, which means a lot of what you're seeing, right, is owners booking later in the year. Now that will help at some level on the sales from a mix perspective because owners have higher VPGs, typically more likely to tour and all that. So that could be a help, but the headwind is going to be, you might not have the space to get all your package tours in as things come back. And then the other piece that, that other 20% of our tour flow, a lot of it we turned off, and that's your end market, that's OPC marketing and linkage. As business comes back, we'll start to turn those linkage back on, but that's going to be the other from -- just from a tour generation, in market, getting those stores turned back on when it makes sense, that's your risk, I think, notwithstanding, I do expect, based on what we're seeing, that our occupancies in the second half of the year should be -- or at least by the fourth quarter should be above where we would typically be in a non-COVID world. You're seeing that type of booking and demand right now.

And Brandt, the other part you should think about in the second half, and we don't get question about it very much, but when you go back to 2020, and even today, frankly, the part of the business that's really suffering, if you may, is the rental part. And no different than other -- just other people, the transient part of the business has had the most -- I would say, the most difficult part. If you get more and more people getting vaccinated and wanting to come back, that certainly will help the rental business in the back half of the year.

So just the last point on my comments. The things I'm talking about even in the fourth quarter, they're temporary, right? These aren't permanent changes or shifts to our business model, right? It's just kind of where you're at in the recovery in terms of some of the compression, getting people back on vacation. That'll continue to get better. We don't have a lot of that visibility yet into the fourth quarter. But I think things are setting up well, but I just want to make sure people understand. It's not some type of permanent change in our mix, in our core flow and all that. It'll come back as things continue to get better.

Yes. It sounds like as you ramp back up the package sales and then you ramp back up the bookings of those packages, and you actually have occupancy for those packages to book, the new owner tour flow will naturally come back. I guess, my question to you is, what's the biggest challenge in getting new guests to book packages? What are the biggest challenges to getting new guests to book stays? Is that something that -- is there anything worrying in there for you?

No, exact. We're ramping back up say our package pipeline, the call transfer programs with Marriott and all things we do with other partners to sell packages ahead of time. The good news is, notwithstanding we haven't turned back on, and we're ramping those here in the first quarter, all the different -- and we're not back up to the package sales volumes, the ones that we're doing, you're seeing a higher propensity for people to take the offer and book, right? Once again, not surprising because my sense is there is that pent-up demand, right? People now see an offer, and they probably maybe don't have a vacation booked yet for later in the year. So I think the opportunity on some of the packages is where we've talked historically that there's a 12- to 18-month time line from buying the package to the person showing up. You could have some compression on that time line because typically, that 12 to 18 months is because most of the people we target might have their next couple of vacations already booked, right? And it's unclear to me, but my sense is people probably don't have multiple vacations booked yet, right? They're just starting that process. The risk, as I mentioned before, is having enough rooms available, right, to get those packages into the fourth quarter or the third quarter as our resorts get filled up with a lot of owner occupancy on a relative basis. But I said, the offset of that is owners typically are higher -- well, they are higher VPGs, right, and more likely the tour than renters and other people. So it's a good mix problem to have in the short term. But we've seen nothing -- as we talked about at year-end, our package pipeline was about where it was when we came into 2020, right? You hadn't seen -- notwithstanding people haven't been taking a lot of their vacations, they're pushing them out, right? They're not canceling, they want to get on vacation. So the pipeline remains strong and we had, as we talked about on the call, as the year-end, about 50,000 of those tours or packages were on the books, people coming. And I can tell you, in the nearer term, the trends are less cancellations, right? The risk you have with those 50,000 like you had last year, we had a lot of stuff booked, but as it got closer to going on vacation, then people, given where the vaccine or no vaccine or where COVID was, would cancel and say, I'm going to push it out or come back and look at it. The good news is that cancellation rate is continuing to decrease, right? People are showing up. People are taking on the packages or taking their vacations here, and I would expect that trend to continue on with the rollout of the vaccine sites going on right now.

That's helpful. Bigger picture question, and maybe you're in recovery mode. And so we're maybe we're getting ahead of ourselves by asking this, but we're entering a period where investors are starting to worry about inflation. And your business doesn't necessarily have a pricing lever that some other businesses that we follow might happen. So I guess, the question is, how do you -- how does your business capitalize on a more inflationary dynamic if you're a price setter? Yes.

Yes. I mean, our -- obviously, half our sale -- or half our revenues in a normalized environment are coming from the sale of vacation ownership. As we talked about, we're locked in, we have excess inventory, right? So we've locked in on the cost, for the foreseeable future subject to new deals, of our inventory, right? The lever we have is if you see inflation, our -- when you look at where our resorts are, where people are -- at some level, it's never a great comp. They're looking at the rates to rent hotel rooms, right? So if you're seeing the inflation there, that's going to give us pricing power on the average price per point. So that's pretty good because most of our costs below that, whether 25%, give or take, of product cost on those sales, like I said, is locked in at some level. We've got post close of the Welk deal, we'll have over $1.1 billion of completed inventory, which is, call it, 1.5 years of excess inventory on top of the normal kind of 1.5 years to 2 years that we would typically want, right? So we've got a period of time here that we've locked in on some good product costs. Now yes. You got some inflation risk, I guess, on some of your marketing and sales costs and compensation, depending on what would happen with inflation. But I think it's pretty leverageable when you look at that part of the business. And it's similar. I mean, rentals is the other one that is recovering, and that's another one that if you see inflation and costs are going up, we have the ability in the near term, right, to move rental rates and hopefully improve our revenue flows there. So those are probably the 2 biggest areas. Clearly, your financing income, your management fees, a lot of that's locked in for now, for at least for the coming year. If you did see big inflationary cost increases, that would manifest itself because we get a percentage of management fee -- or excuse me, a percentage of costs the operator resort for our management fee that in the future, right, that there could be some upside on your management fees, but it wouldn't be this year type thing. I -- yes, those are the different parts and the way to think about it.

Great. Okay. That's helpful. Investors love the points-based system. And I think that we've always thought about the points basis, and the only catch, if there is a catch to the points-based model is maybe some small percentage of people don't necessarily -- might not get their first choice. And so I guess, the question is, how has that system performed in an environment where, I don't know, everyone might want the same thing, drivable reserve markets?

Yes. No, I mean -- well, in the COVID world because we've got -- even today, most of our resorts aren't back to their normal occupancies, right? There's availability in the system, even for some of the more highly sought after. That will compress. But you got to remember, in a normal year, Brandt, we're running a 90% system-wide occupancy for the -- on average for a full year. So the points-based system, I know people talk about it this way, unless on a week space, you own a fixed week, right, for a specific week of the year, you've got the same compression issues, right? Not everybody, unless you own a Christmas week or a President's Day week somewhere, you typically in a week's based system, you want to seize it, right? So yes, you might be able to get on vacation, but maybe not the week you want, right, because you're going to have that in any system that you just can't -- not everybody can be in Aruba on Christmas week, right? That's just the reality of it. And so I think from a points-based world, it works well because your points are your currency, right? And the higher demand stuff costs more points, right? You need more points to get there. So it works its way out. We've always had a very -- and the reason owners buy more, right, love the product is because they can get on vacation where they want to get on vacation for the most part, right? Or you wouldn't be buying more points. So I don't think we've seen anything that impacts us in terms of the points world in kind of the post-COVID, I think the system works the way it's supposed to.

Got it. That's great. I want to give you a chance to talk about the Welk acquisition. I think everyone -- for most every investor I speak with at least came away thinking that was a very sensible acquisition, putting your Hyatt timeshare business on a path, on a trajectory of growth. My question is sort of what specific benefits do you think are not in the synergy target that you outlined?

Yes. That's a great question. I mean for us, and this is no different than really, right, how we approached ILG, it is really about the margin improvements, the cost takeouts. And that's -- when we talk about that $60 million to $70 million of EBITDA coming off the rebranded Welk business as Hyatt, it's really all around better margins. Marketing and sales, for example, I think the business today because of Welk not having a hotel brand and not having access to the branded channels that will have access to once we rebrand these resorts in the system Hyatt, they have a much higher market cost, customer acquisition, higher marketing and sales costs. So their development margin is -- in 2019 is low single digits, right? As we transform, we're not assuming revenues are going to go up significantly, right? The improvement is going to come from getting to a more branded normalized development margin like we do on the Hyatt and the Marriott side and they call it the 20-plus percent on a similar sales. The opportunity, right, as you think about a combined system is now you've got a portfolio of resorts that goes up; 8 resorts, gets you to 24; your ownership base goes up 90% from low 30s to almost 90,000 owners in this combined Hyatt product. That gives you the scale. And hopefully, as you talk to new prospects, not only are you increasing the margin on the sales side, you've got a better value proposition at the sales table, right, bigger system, and those are the opportunities that we think are there, but we didn't try and quantify those at this point. And quite frankly, it would be hard, right? You could make some assumption that, yes, on average, closing efficiency is going to go up 1 point or we're going to do some of that stuff. But I'm not sure you want to bake that into your underlying economics when we underwrote the deal, right? So we looked at it, we think, no different than we did on the ILG acquisition with I think a great economics relative to what we think we can do on a pro forma basis and the revenue synergies are really the opportunity. The other one there, too, is the rental side. We do think once they're rebranded and the ability to leverage our Hyatt rental channels and rent these as Hyatt resorts, that should help. We didn't bake a lot of upside, if you will, into that, but that should also help longer term, too, as you look at the revenue side of the opportunities.

Yes. No, I think it's common in timeshare M&A to underappreciate the revenue synergy side of the ledger. I guess, and maybe you can quantify for us on the ILG side, what inning you're in, in terms of closing that VPG gap? I know it's hard, because it's a weird dynamic and environment right now, but maybe give us a sense.

Yes. I think we'll make great strides this year. But one of the things that we talked about, how you close that gap, right? The way you close the gap was you -- specifically in Sheraton, you had lower-yielding off-premise marketing channels, right, that as you ramped up the branded channels that ILG, because of their licensing agreement didn't have access to that we did with Marriott, right, that was one of the benefits of us buying ILG to unlock that value, the idea was, right, you ramp up your call transfer, your package pipeline. And you continue to rationalize down the lower-yielding OPC. Well, COVID hit, and we turned off, obviously, all those OPC channels, and most likely on the Sheraton side, we're not turning them back on, right? We haven't turned them back on. We're going to look to, as we recover here, replace those lower-yielding VPG channels with better branded channels like the strategy was. So I think we'll -- from a VPG perspective, we'll make good progress. The key is getting the tour flow back, right, because you're not bringing those tours. And we are in a recovery ramp-up period, but we got to get that tour flow replaced as we get back to more -- to get back to more normalized 2019 sales numbers.

Yes. And just quickly on the synergy front. The $150 million that you guys have guided to in terms of incremental synergies and costs not captured in 2019, but that you'll run rate by the end of this year. How much of that do you think is from ILG? And how much of that is from legacy MVW?

That's an interesting question. We've never really tracked it that way. But because there's a lot of things, Brandt, that we did. We talked about this not just being an integration but a transformation of the vacation ownership business. So there's a lot of things that we changed together, right? A great example is our human resource information system, right? We were on ADP for a lot of that and other providers on the HR information systems side. ILG had acquired multiple companies over the year, they were on different platforms. But they did some stuff with ADP. Rather than just saying, let's just put it together and figure it out the way Marriott did it, right, on the MVW side, what are the best solutions out there today, and we ultimately partnered with Workday. I'm happy to report that our -- all of our businesses here have now in the U.S. and Caribbean are now on the Workday platform. And what's important about that was not only the cost savings you get by consolidating your platforms, it's the processes and the people around those, right? If you're running 6 or 7 different payroll systems and platforms, you have to have IT support, you have to have HR support. And the great news with Workday is that it's just a much more intuitive system, right? I can tell you when I needed to do something in ADP, I had to print out a job aid or I had to call HR to get help to do something, where now it's what you would expect from a digital world, you click on stuff and you can go through, and it's very efficient, right? It's more self-service. So how much savings did we get out of legacy MVW, that's where -- it's just hard to say. But…

Yes. It's a tough question. It's tough.

We're getting to it across the system, right, in terms of how we put stuff together.

Yes. I thought I'd give it a shot anyway. But that's fair enough. I wanted to touch on the consumer loan book. You guys took an incremental loan loss reserve charge, a modest one in the last quarter. Your larger competitor actually released reserves. Is this just as simple as saying that you under reserved and they over reserved? Or was it something else, a function of shifts in consumer behavior or whatnot?

Well, I mean, Monday morning quarterbacking, yes, I guess that's a simple way to say it, right, as it played out. But look, from our -- I can't tell you how they came up with their reserve. You just -- let's go back in time briefly, right? We're sitting here into April. The world just shut down 4 weeks ago, right, in the end of March, right? I got to book my -- close my first quarter books, I'm not even seeing any delinquencies around COVID, right? I don't know what defaults are going to be, but I needed to come up with an estimate as to maybe what those could be with very limited visibility about what's going to happen, how long COVID's going to last and all that. So as we talked about back then, ran -- our model was we went back to the last big stress event, albeit a much different event, the financial crisis, right? And we looked at how the loan portfolios performed coming out of that. We didn't own ILG at the time. So we didn't have a great sense as to the quality of the loans and all that, but we could look at the performance. And we took that performance and the higher defaults that kind of lasted with the financial crisis, kind of 15 months, plus or minus. And we took that and we applied it, and that gave us the -- call it, the $52 million charge we took. Now you fast forward, and now it's in May, we're -- we hadn't even thought about how we were going to work with our borrowers that were impacted by COVID. We rolled out some deferred payment programs, right, which at some level, just pushed out, when people's payments were for a period of time to hopefully get them back on their feet if they lost their job or income. And once again, new program, we hadn't done it. We didn't have a lot of visibility as to how many of those people would start to come back to current. The good news is of the people that went on the deferred payment program that now have payments due, we are seeing just under half making their payments, right? So it works for a period of time. Now we got a better sense as we went into the fourth quarter, how those were performing. And we got a better sense as to what was happening with delinquencies. And I guess, a little different, not surprisingly then the financial crisis, what you saw was back in May and June, our delinquencies shot up, given the impact of COVID much faster than they did coming out of the financial crisis. But as I talked about on the call, they've now -- they're now down below where they were pre-COVID, right? So what you saw was a pretty fast recovery relative to the impact of COVID. Some of that could have been the financial stimulus. Obviously, they talk about consumers having saved more, those types of things. So we took the better data we had based on how those deferred payments programs were going. And I look back with hindsight, notwithstanding we took some additional net, about $13 million of additional -- on a $2 billion loan portfolio, given the imprecise way, right, we came up with the estimate, it was an estimate. That's what we said at the time. I think it turned out and really showed that we do have very financially strong borrowers and our portfolio performed very well. It's just relative to the process of coming up with the original reserve, we needed a little bit more. But that gives you probably more history than you want to know, but hopefully, some perspective as to kind of where we're at and where we feel like the delinquencies being below where we were pre-COVID, and have continued to improve since the end of the year, things are setting up well, right, as we look at the portfolio going forward.

That's right. Okay. Great. I want to go to the Q&A and to see if any of our audience has question. So one question, I think it's -- we might have answered it, but it's around Orlando and Florida. Just with that area being a leader in reopening, with that -- what percentage of your revenue and/or EBITDA is Florida specifically?

Yes. I mean, well, when you talk Florida, our -- and they've continued to do well. You take our Florida Beach Resorts, they're running 80%, 90% occupancy plus it happened, and that's only getting stronger here with spring breaks coming up, right? So Orlando's been the laggard. I think we were high 40s in the fourth quarter on our occupancy. And what I can tell you is, those have continued to improve. We're probably more in the 60% occupancy coming into March. And as we look out, we see very good strong bookings, and people still need to show up. But we do expect those occupancies to continue to grow here as we go through March into April. So it's recovering all else being equal, pretty good.

Brandt, you see pretty -- in Orlando, you're seeing pretty consistent pattern, right? You see vacation times, people come. The question is, once you get to like late April and May, before you get to Memorial Day, what's the pattern going to be? And that's been, pretty consistent. You see very good occupancies when it's vacation time and kids are traditionally out of school. It's interesting because even though kids are at home taking school, families are still acting like they're literally physically in school. The pattern continues to be the same.

Yes. Anecdotally, I went -- was driving my son's lacrosse game and the -- I mean, it was spring break traffic yesterday here in Orlando in terms of all the cars and people out and so that's an anecdotal touch point from my observation, driving my son to a lacrosse game yesterday, but you're seeing it, right. People are coming back to Orlando.

Trying to get tickets for Tuesday's Yankee-Tigers game in Lakeland. It was sold out my friend. I can't go.

Good problem to have. I wish I was even in the game. So I think I have time for one more question, but I mean -- and I'm going to try and wrap up a couple into one, but you guys have excess inventory from the acquisition, from having depressed sales. How can this -- can you quantify, as you burn off that excess inventory, how that could manifest in excess free cash flow over the next couple of years? And then the second part of that is free cash flow is obviously going to recover and we won't be sitting here talking about capital allocation and shareholder returns at some point in the not medium term, not-so-distant future. I guess, the question is, what balance sheet leverage are you targeting? And what's your priority for capital returns in terms of share buybacks versus dividends?

We'll know that in 2 minutes.

Yes.

Great.

Anyway, it's great having 2 minutes, but…

Yes. No, quickly, on the excess inventory, we take 2019, for example, on the EBITDA we had, I think our flow-through on free cash flow was roughly 60%. Now, if you look at 2019, we did benefit from less inventory spend. So if you adjust for that, right, it was probably about a 55% flow-through of adjusted EBITDA to free cash flow. So as EBITDA comes back, right, you're going to -- most of your adjustment from adjusted EBITDA down to free cash flow are going to be variable with the return of EBITDA, like your cash taxes, right? As cash as taxes come back on your income as it comes back, your cash taxes will move with that. Interest expense is generally pretty fixed, right? So you're going to need that EBITDA to get back to your 2019 levels that will leverage your interest expense. And then your corporate CapEx, which is typically in that $90 million to $100 million, we'll manage that, right? As EBITDA comes back, it will get back to that $90 million to $100 million. But we can, obviously, as the business recover, determine as we get back to normalized spend. Therefore, the opportunity, right, as you talk about this excess $600 million, call it, $580 million of excess inventory over the next couple of years as the business recovers, it's going to take 2 or 3 years. Because we're still going to be buying back inventory on the secondary market. We do have a couple of small commitments out there. And we are going to be looking potentially to add new flags as we move forward over the next couple of years. But it will be over -- so if you think about back to the 2019, I mean, over the next couple of years, you could average $100 million, $150 million plus of additional free cash flow to increase that 55% flow through, if you will, right, on a more normalized EBITDA. That's the opportunity as you think about the free cash flow over the next, call it, 3 to 4 years as the business recovers, you're just -- we're going to leverage and burn down what we have excess on the balance sheet. The good news is, too, as you said, even post-Welk acquisition here in the second quarter, we've got plenty of liquidity, right? We have no near-term debt maturities. As EBITDA comes back, our goal is still to be, call it, in that 2.5x to 3x leverage of our debt-to-adjusted EBITDA. Debt being our corporate debt, nonsecuritized debt. So we need -- but we don't have to pay down any debt here in the near term. We can see how the EBITDA is coming back. But we have taken on additional debt since the crisis hit, not that we've really, other than on the Welk acquisition, invested it, so that's where we still have some excess liquidity. We're going to have the opportunity to kind of gauge out what the recovery looks like. And if we want to pay down some debt, we have that optionality. But we do want to get back to paying a dividend and returning capital and I'm not sure it's one or the other, right? I think we can manage, if we need to pay down some debt, we can also get back to paying the dividend at the same time and ultimately starting to return some capital. It's going to matter more about the recovery and as the cash flows come back, once we have the confidence as to where we're at the recovery, we'll start to make those decisions.

Okay. Well, it sounds to us like you're in a good position. Thanks, gentlemen, very much for your time and everyone else for tuning in. We wish you guys the best of luck, and we'll talk to you soon.

Great.

Thanks, Brandt.

Thank you.

Okay.