Purple Innovation, Inc. (PRPL) Earnings Call Transcript & Summary

Good afternoon, everyone. Thanks. My name is Curt Nagle. I'm the hardlines analyst here at Bank of America, that covers the bedding and home furnishing space. I'm very pleased to welcome today Purple CEO, Joe Megibow; and CFO, Craig Phillips, who, over the past couple of years, have transformed Purple from a small unprofitable bedding company with a good product and brand, to are very profitable and high-growth company that should have years of expansion ahead of it. Before we start with some of the more specific questions, Craig and Joe, and thank you very much for joining us.

On Purple in the industry as a whole, our team has a series of 5 questions that we've been asking our participants at the conference that I just wanted to quickly go over. The first is on the demand environment and the transition from a post-COVID environment. Bedding industry has been on absolute fire over the past year or so, with the exception of maybe a month in the spring, and the industry have been doing really well since basically 2019. How do you guys think that things trend for the industry this year and into next when compare's here, things start getting harder, consumer spending could start shifting out of the home into travel and entertainment. How sticky do you think or persistent demand is over the next 18 months?

Yes. Happy to -- I mean, obviously, we're all in unchartered territory here as we work through what happened last year and what that means into this year. A few things that we're observing, though. I mean, certainly, last year, put some pretty strong wins in the sales of categories focused on home and health and sleep as part of health, some of which, I think, are tailwinds we will see for years to come. Just the importance of sleep as a primary element of health is not something that's just going to unwind. Historically, it's been 2 legs, the diet and fitness. And increasingly, there's a body of evidence showing, it's really a 3-legged stool of diet, fitness and sleep health to drive overall health. So we've got some good tailwinds behind us. Certainly, as discretionary spend had fewer places to go as travel and experiences and sporting events and dining out and so forth were diminished last year that did create more opportunity for spend into home categories. And that also shifted much more online, which we were able to arbitrage very handsomely last year. But prior to COVID, we had a very healthy growing business. And I think the key in our category is to remember, this has been, call it, a $16 billion, $16.5 billion category year-on-year out. I mean, it's just -- it's a very, very stable category and a largely recession-proof category, that for the last 5 years has been flattish. We saw a little boost last year, but it's been a pretty flattish category. Our thesis, our opportunity for growth has never been dependent on category growth. We've been entirely a disruptive share gain, and that's coming in with a disruptive, better product, a premium product and a product we uniquely manufacture and take share from the existing incumbents. We've been doing that very effectively. All in, we're maybe 3% market share right now. So we still have a lot of headroom in front of us to continue to take share regardless of the macro environment.

Got it. And then just, yes, moving on inflation's, obviously, something that's pretty topical across the board. Certainly, in the bedding industry, we've seen prices and supply for inputs like foam steel kind of go askew, I suppose, maybe one good way to put it. Do you think this is a fairly persistent trend? A little more short-term? When do you think things stabilize in terms of just the general supply chain? And then just as a related point, thinking about sort of sell-through and pricing for the consumer, how much room do you think the industry as a whole has to take a price? Or -- and maybe just a related question, how do you think about pricing power for Purple?

Yes. So we -- a number of questions in there. So certainly supply-demand economics play out. And where there has been a lack of supply, whether it's been on inbound logistics or even last year we saw increases in outbound freight, it creates price increases. And on the raw material side, in foam, a little bit with us. We're not as foam dependent, but in coil springs, which we use in our hybrids or premium mattresses, has also driven some price pressure. As with supply and demand, we anticipate that as things settle and get back to normal, we'll see some longer-term benefit as pricing we anticipate getting back to sort of pre-compression levels. But we are absorbing some of that right now. The beauty, though, of being on the premium side is we're not at the highest price points right now, there's absolutely opportunity for us to continue to go upmarket and offer higher price points with new product as well as adjust the pricing on our mattresses. We successfully raised prices twice with no real negative impact. And especially on the premium mattresses, which is where the raw material shortages are most felt on our hybrids. We believe there is absolutely opportunity for us to play with price as cost inputs go up. And again, it's the beauty of these premium price points. We're not winning on price, we're winning on merit. And as the whole market is seeing some inflation, we are not particularly concerned on our ability to compete.

Understood. So I guess moving on to thinking about distribution. I guess, how do you think about how online penetration shakes out over, I guess, the next few years. Rates were going up, surged with COVID for the industry as a whole, Purple's leader in e-commerce in the bedding space. Do you think that there's going to be a shift back into brick-and-mortar as people kind of venture back into the world again. It's kind of a high-touch feel category? Or do you think we've set a permanently higher kind of -- high watermark going forward and goes up from here?

No. I absolutely -- I mean, we're big believers in brick-and-mortar, and I absolutely believe there's going to be a year-over-year shift back into brick-and-mortar. I mean, at the peak of the shutdown in Q2, I mean our business went to -- came into COVID with sort of a 60-40-ish split between DTC and wholesale and skyrocketed up to the low 80s on DTC. I mean, a dramatic swing, which is going to create tough comps in next quarter as well. This is a category, it's a considered purchase. It's premium price points. It is very much around feel. And those are categories that necessitate having some kind of experiential selling process where consumers can experience these products for themselves, talk to informed associates and make a decision. So we are opening our own showrooms. We continue to lean into wholesale. And we do think we're going to see some year-over-year shift back into wholesale. I think there's a broader question going into COVID, our data would suggest that about 15% of the premium category was online with the vast majority, 85% being brick-and-mortar. Is there some permanent shift into online that this just opened up, where we've introduced addressable market online that wasn't there before? I think it's certainly possible. I think the idea that, that 15% might go to 20% or a little higher than that is within the realm of possibility, we'll see. Typically anytime there's a macro consumer transformation like this, you don't end up exactly where you started, which means, yes, I think it will still be very brick-and-mortar focus. It will be predominantly brick-and-mortar, but I do think the addressable market online is going to go up.

Got it. That makes sense. And then just thinking about Purple's, I guess, investment and cost cycle over the next few years. You guys have made some pretty big commitments to CapEx for things like manufacturing, throwing up your own stores. But in terms of, I guess, the general outlook for things like labor, IT spend, supply chain capabilities, all these things that you need to continue to spend and to stay competitive. What do you think the outlook is there?

On costs in general, you're saying?

Just -- yes, in general, yes. So in terms of -- I guess, starting with labor, is that something you're starting to see pressure and just not necessarily sure?

Well, labor rates, I mean, where we've had pressure historically is just trying to get staff. We've had one primary manufacturing facility in a county outside Salt Lake, where there's been a lot of investment from other manufacturers and other distribution centers on a fairly finite labor pool. So we have seen pressure in our ability to fully staff, and that has created some labor cost pressure as well. This is one reason why we're so excited about finally having our new facility in Georgia going to production, as it gives us 2 labor pools to draw from. The labor pool in McDonough, Georgia, where we're based, is a robust labor market. Significantly a larger labor pool than we have in our backyard in Utah and very competitive rates. And when you factor in some of the overtime and other things we've had to lean in to get labor up in Utah, it actually is remarkably competitive outside Atlanta. So yes, we have had struggles in the past, but as we get a more balanced manufacturing environment and are able to distribute labor across more locations, we actually feel rejuvenated on the labor side.

Understood to your point, we're also -- you mentioned CapEx, but we are also investing in things IT that you mentioned and other infrastructure to be able to support the growth. So we've talked about it a couple of times that this is an investment year for us. We still expect to have good results, but it is an investment year and hope to leverage that going forward in future years -- CapEx.

Absolutely.

Understood. And yes, maybe a little bit we can get more into margins and things like that. So Joe, perhaps a bit of a broad question, but just kind of thinking about longer-term market share, biggest transformational opportunities for you guys. Where do you see the company in the next 5 years? I think you said a few times about 3% share at the moment, higher for higher-priced beds. But what do you think the competitive positioning looks like going forward, taking share from the majors? Smaller players? All of the above? And what do you think your footprint looks like in terms of overall distribution?

Yes. We -- so we have a lot of product that we have yet to release, where we anticipate significant assortment expansion as well as continued disruptive product offerings that challenge what's out there today on our strength of execution, on our strength of product development and our increasingly proven ability to scale. We are marketing to be right now, call it, the next 3 to 5 years, the #2 player in the space. And certainly, to achieve that, it means, yes, we're taking share from some of the larger incumbents, for sure, as well as the smaller players. We'll be talking more over the coming year on how we achieve that. But we -- this isn't a niche or a fashion-like fad. I mean, we've come up with a fundamentally different kind of sleep surface that we've been working on for 25 years. We believe it's the first real challenger to memory foam, which really had been the last big significant sleep innovation nearly 30 years ago. And on the strength of our cushioning technology, we see enormous opportunity to take share. And again, we're very early days. I think it's also important to note as you're looking more of that 5-year out, that we're not just a mattress company. We have opportunity to take our cushioning technology into many categories. And just right now, a simple example of that is the tremendous growth we're having in seat cushions, and fueled in part by the pandemic and a focus on home offices. Certainly bootstrapped this business a lot, but it doesn't change the fact that it's a great example of the extensibility of our technology, and there are many, many categories we see in our future. And even within bedding, our pillows are not just accessories to our mattress. Our pillows are leveraging the same core technology innovations. We very specifically formulate our elastic polymers to the use. So our pillows each have different formulations than our seat cushions and our mattresses with different geometries and we really optimize this for the use case. And it creates a really amazing portfolio of product that is very specifically engineered for improving human health.

Got it. Maybe just quickly, I guess, staying on the topic of kind of non-bedding products. I mean sure sky is the limit, I guess, in terms of applications going forward. The one that you seem to be, as you mentioned, hammering on the most is seating. Have you guys sized at least that market or how big an opportunity could that be? And who are the players? I mean, clearly, you guys are kind of the category enhancer and the premium player, but just how do you think about that market?

Seating -- there isn't a seating category. It's many smaller categories that collectively look very interesting. And it's because most seating, as you talk about cushioning anyway, it's very purpose-driven. You buy it for your car. You buy it for your office. You buy it for camping. You buy it for sporting events. You buy it for gaming. And many other categories. And as you look at the distribution opportunities, as it's different retailers, different channels and different price points depending on use. There's really interesting opportunity for us to take our brand in many directions, and a few look very attractive. So we're going to be leaning hard on that over the coming year.

Understood. Okay. Maybe just diving a little bit more into some of your segments. I spent a little bit of time on the retail wholesale channel. Talk long-term opportunities first and then maybe get into some of the more short-term stuff. So kind of looking at it now, it's been a nice category for growth for you, about $160 million in sales, about 30-odd percent -- 30%-odd of total revenues, 2,100 doors. This was a year where -- this is a year now where capacity is going up, right? So I think you publicly stated at least sort of up to 1,500 doors. Basically double or close to double the current footprint. So I guess what gives you the confidence that this is something that's achievable, presumably it's capacity and just, I guess, underlying demand? But how much of this are you basing on perhaps new partners coming on and contribution from existing partners, including some of your bigger ones? How should we think about that?

Yes. So I think to start with, just there needs to be a recognition that the biggest limiter of our wholesale expansion to date has just been our own intrinsic capacity. There's been a lot of pent-up demand for both new partners and existing partners to expand. And even in the doors we're in, I mean, we had very strong demand over the summer in the middle of the pandemic, and we were unable to meet demand collectively. Our own website we had 25-day delays or more on our ability to fulfill product. And we had no choice but to put some of our wholesale -- all of our wholesale partners on allocations as we just couldn't make the beds fast enough at that time. We've since continued to add capacity. This is a year that we've committed that we are growing capacity faster than our demand is growing. But the demand is out there. And I mean, we work with some terrific retailers. And the #1 job of a great retailer is to curate the brands consumers want to buy. And we are a brand that is -- that there's demand for. And there's a lot of retailers or doors within a retailer's fleet that doesn't currently sell us. So we're trying to -- I mean, it's a win-win. We're trying to get the product to our customers who are looking to buy these products through these channels. And we -- there's a lot -- I mean, there's maybe 8,500 doors or more in the U.S. We're in, call it, 1,800 of them, 1,900 of them, 2,200, if you include our doors in Canada. So we're in very early days. How we expand? We have lots of options in front of us. I mean, certainly, our Mattress Firm has been a terrific partner. We've been very beneficial to each other. We're in 900 of their 2,500 doors right now, and there's a lot of interest mutually in expanding that. And we see a lot of headroom there. We're working through what that means. It's -- these are big complex contracts, but we're working through that right now. Similarly, there are large furniture retailers that we have not entered yet that -- again, we're the one brand they don't have on the premium side. So they've all been in contact with us, and we are exploring ways to get that going as we speak. And then there's existing retailers like Rooms to Go that we've had a successful launch with. We're only in a small fraction of their stores right now, and based on the strength of our launch, they're ready to go. We have opportunity to expand. So I mean, there are way more doors we could go into than we can support at this point. So really, we're just working with our best partners and trying to find the right pace and right outcome with them.

Got it. Okay. And maybe just quickly turning to trends in wholesale over the kind of near term. I think at least to some degree, but kind of your ambition, it performed a little lower than expected. You called out things like Canada being a little loopy at the moment for a couple of reasons. Timing of sort of sell in, maybe to some degree, just expectations were a little skewed. And perhaps, to some degree, inputs being more of a constraint at the moment than pure capacity. So I guess, just kind of how do you -- how should we think through that? And just maybe some, I should say, assuage some concerns that it's not something like rising competition. And it's just more sort of short-term machinations that should kind of clear up through the year?

Yes. It's -- I mean clearly, Q1 is mostly -- we're mostly through Q1. And in our earnings last week, we did not announce any significant expansion in wholesale doors or new showroom doors that we've signed leases on or anything. So Q1 is largely a momentum quarter coming out of Q4. Most of this growth we're talking about in initiatives and showroom and wholesale expansion and so forth, really starts to kick in Q2 and then really then leaning into Q3 as much of the growth and whatever expansion doesn't happen then bleeds into Q4. So I mean that's -- which is get going as quickly as possible, kicking into Q2. One reason it's pushed into Q2 is there has absolutely been supply constraints. You've heard it from every manufacturer out there. With us, it's less on foam, our entry-level mattress, which is a foam -- all foam core mattress. We have ample supply right now. That's not where the growth of our business is. We're -- the demand in most of our revenue is from our hybrids. And it's the coil, production of our coil cores that we've been constrained on. We are constrained to this day. We're getting what I'd say, exactly what we need against our current velocity, but for us to have the growth trajectory that we are committed to this year, there are supply constraints we've got to solve. We remain optimistic. Our existing supply partners are continuing to improve and remain bullish on meeting our plans. And we have been sourcing other supply options to ensure we've got some protection. So we believe we'll get there. But if there's any risk on our business and our targets this year, I'm not concerned about our own ability to execute at this point given how early in our saturation or I'm not worried about competitive threats. What I'm most worried about is making sure we get the supply -- the supply challenges worked out.

Understood. I guess, before we move on to the next question, just a quick reminder to the audience if they want to ask a question, they can do so through the Veracast sign in, and happy to try and take any from there. So moving on to your own footprint, which is something that theoretically should be a nice sort of growth going forward. I think you now have 8 or 9 stores at the moment. Plan is an additional 20 to 25 this year.

That's right.

Could you talk a little bit about -- yes, some of the I guess, general levels of productivity you expect to see? Kind of what the cost per build is? The returns you expect? And long-term footprint? What do you think is reasonable?

Very, very early days. With our showroom build-out, as you said, we have 9 today. They don't carry a lot of inventory. They're relatively modest-sized stores. I mean, the build-out is in the mid-6 figures. I mean, they're just -- they're not that expensive to make. It's been hard for us to confidently signal where they're going to land as we had 4 operating just at the beginning of the year, 5 going into COVID. And last year wasn't exactly a great representative year for brick-and-mortar. We launched 4 more in Q4, which are still in their early months. Interestingly, those 4 have had the strongest 90 days of any launches we've had historically. So I mean, it's good to see we're getting the format better and better. We're getting the locations better and better, and we're getting stronger and stronger launches. So I mean, there's a lot we're seeing that make us increasingly confident that this is working, and it's the right strategy. So we -- what I'd say is, in addition to keeping all of the net revenue for ourselves, I mean, it's owned retail. The productivity that is carrying the entire suite of our product, telling the full brand story, having even the non-sleep stuff. We've got seat cushions at the base of every bed. We've got a really cool sort of home office display in the corner of the store, featuring those kinds of products. They produce a good amount of contribution for us. So what I'd say is our anticipation is if you look at, say, a typical specialty mattress retailer, like a Mattress Firm, which is closer to $1 million per door, a little north of that or Sleep Number that if you back out their online business, it's more like $2.5 million per door. Our doors are certainly going to be in between those 2, but leaning more in Sleep Numbers' direction. And I think as our assortment grows, we'll absolutely get in the direction of Sleep Number. So we're very optimistic. The early performance has been very, very good. It's, call it, the brand story raises all tides. I mean, as we put these into markets, it absolutely increases our brand presence in those markets, which helps our wholesale partners, and it helps our DTC business. So -- and there's enormous number of DMAs that we're not even close to entering yet. So yes, we see a lot of opportunity here. Again, 20 to 25 this year and growing from there.

Where do you tend to like to cohabitate? Is it mostly strip? Is it furniture centers? What do you think is sort of the most productive area for you in one of the stores?

It's in the mix. I mean, premium lifestyle centers where there is already some furniture presence, we do very well whether it'd be other owned stores with mattress players or some of the nicer furniture retailers. So we do very well in those kinds of lifestyle centers. But our -- I mean, our factory outlet store is in a more traditional very furniture-centric area with the larger format furniture stores. And it's our strongest store by far. So we do all with both, and we anticipate a mix of those moving forward.

Got it. So yes, moving on to marketing. In an area of strength for you guys and most certainly growth you guys have done a great job of putting a concept quirky, stands down showcasing the products. However, I think, Joe, you've commented a couple of times in the past that you want to try and reach a broader demographic. You have a new campaign coming this year. So kind of where is the focus going to be? Does the messaging change with Purple? And kind of -- aside from just, I don't know, broad demographic as possible, kind of where are you targeting?

Yes. We've had some very successful marketing. And I, by no means, would suggest it's been anything but great for us. It really is just how do we get broader appeal. And as competition -- I mean, as our claims work and as our marketing works, there's a lot of copycatting going on and making similar claims or similar marketing approaches as happens, success breeds success and imitation happens. Where we're really going to be doubling down is, call it, less quirky. We're not going to -- we always have a certain humility to our advertising and humor has its place. So we're not going to lose our roots that way, but we can have much more mature humor. And the real focus that we're doubling down on is product. It's -- we have a robust, incredible product story, product history and clear benefits that we and only we can uniquely provide. And that's gotten lost in the humor, it's gotten lost in the media. And we are really, really going to double down on what about our product is so special? Why it is uniquely ours and no one else can claim that, but us? And we're not going to be afraid to do some hard comparisons. So I mean, we believe we have significant benefit over memory foam, and we are going to be saying that pretty directly.

Got it. So new product here. I know you don't want to get into too much detail for very obvious competitive reasons. Joe, but maybe kind of asked another way, kind of twofold. Number one, if you were to gauge, I guess, what you're coming out in terms of just innovation or impact to the bottom line and revenue, how would you rate 2021? And then just a broader question of what you think over the next kind of couple of years is going to resonate well with consumers in terms of sort of new themes or new solutions for sleep?

We -- on a revenue basis, 2021 is going to be more of a fill out year. I mean we've got assortment expansion and category extensions that just makes sense. And it's just being able to service more taste and styles of customers, and hit a few price points that just are very helpful for, obviously, our revenue streams, but also meeting our customers' needs. I think toward the end of the year, you're going to start to see some really interesting new product that will really set the stage for where we're going for the long haul. I think we have an incredible runway in front of us. And we're just getting started. The key is we're putting a lot into R&D this year. We're really, really staffing up and building out our research capability. And that is all built around product we have underway right now that we're excited to get out there. But that's -- that is more of a multiyear play. This is -- this is not a one-trick pony where we'll try to milk a specific innovation. There's a lot we can do with this. And frankly, a lot of technology, some of which are published patents that have been out there, if anyone cares to look that we intend to continue to develop and bring to market.

Got it. And among many things, I think, one of the most impressive being for Purple. Over the past year and maybe a little bit longer than that was a pretty dramatic improvement in the capital position. And you guys have reified to very nice levels of debt or at least the yields are certainly good. Cash position is over $120 million relative to the cap and debt outstanding. I mean, just -- you guys have a lot of cash. So even with a big increase in CapEx this year, going to $40 million to $50 million, I think it's more than double where you were or could have been at least. You're still probably going to have a lot of cash on the books. So just generally speaking, how should we think about capital opportunities going forward? What do you think is an appropriate buffer of cash on the books? And yes, what could you do with that cash if it continues to build?

Yes. I'll take part of this, Craig can -- will jump in as well. At the highest level, and this is relatively new for us. We're getting rewarded for our execution last year and for all the work we've done to improve our margins and profitability. So it's been earned. And with that, we've been able to do things, Craig led a phenomenal refinancing effort where we not only refinanced all of our debt to a very, very attractive rate, but got us a $55 million revolver as well, which we haven't even tapped into. So we've got a lot of options. As you said, our capital investment is getting more meaningful this year in capacity expansion, the showroom expansion, which we're going to continue to lean into. I mentioned the R&D work we're doing, which has a significant CapEx portion as well. As we build out the lab, build out the equipment, build out the capabilities. There's some significant expense there. And keep in mind, as a bespoke manufacturer, part of our R&D is the manufacturing equipment itself, and there's some capital investment in that. So we're going to put this cash to work. There's the potential for M&A in our future. There's some interesting technology out there that we've looked at many opportunities. We haven't found anything that we can't either build ourselves or isn't quite right for us as well as more vertical integration opportunities, some of which we could acquire. So I mean that's not off the table either. But there's -- again, we're very early in a fairly rapid growth curve. And the good news is we've got the capital we need to invest in growth in many ways, and we intend to protect that right now. Craig, maybe you can comment on some of the -- some of our ratios and levels we're trying to preserve too.

Yes. I mean it's nice. Our rate is variable, and it does change based on what some of our ratios are. But we want to be in a position where we have the cash reserve, if anything were to change. And we proved back in the spring of last year that we were able to adapt very quickly. But it's still nice to be able to lean into things when they make sense and when they're good investments. So as far as a minimum cash position, I don't know what I'd say what that minimum is. But there's a lot of timing issues that go into it as well because as we are making investments, the return on those are going to take a little bit of time. So we're investing earlier in the year, and we'll start seeing that leverage late this year and next year, and we want to be able to -- if things go in the way that we hope, and we need to start expanding capacity into the next facility. We have that available. So if the opportunities come up for an investment through acquisition, we want to have that as well. So having not been in that position for many years, it's nice to be in a position to be able to make decisions and react quickly if the opportunities are there.

Got it. Okay. And then maybe just quickly talking -- or touching on a topic that I think is at least topical for the industry, that's tariffs on imported beds. I don't think this is at least a direct -- probably a big direct headwind for you guys because you do play at the high end of the market, as you guys have said. But in terms of just thinking about, I don't know, a piece of the market that is perhaps coming out that's less rational? Do you think that this helps overall pricing? Or is it just too much of this other segment and part of the market for you guys to really think of that?

Yes. Well, I mean, look, we're a very U.S.-grounded company, all domestic manufacturing. So we're big believers of supporting our own economy here, and that's not going to change. So anything that levels the playing field and makes things more fair in general, we think is good for the whole category. That said, it's a complex supply chain, especially on the low end. And as we've looked at it, there are many sides to the story. In the end, we're not playing on the commodity side. So I think it's impacted us less. That said, you talk about COGS and pressure. We do have components coming out of China. We do have some ancillary products that are currently manufactured in China. And those tariffs are burdensome. And that is something we feel we are sourcing more domestically as well as finding other parts of the country -- sorry, other parts of the world that we can source from that have less tariff impact. So it is absolutely part of our visibility as we get into, again, frames or bases or the fabrics that we bring in for covering our beds and so forth. We had been leaning more into China. We're doing less of that as the tariffs have shifted our focus. And I suspect we'll continue to look at the global supply chain more aggressively as these tariffs do impact our business operations.

Got it. I think we're coming up on time. So maybe just a question -- or so the typical question on kind of long-term metrics. How do you guys think about the potential for EBITDA going forward on a rate basis, revenue and probably a ways off at this point, but further international expansion beyond Canada?

Yes. We -- so all of the above. We see a lot of opportunity for forward motion. As you're talking 3 to 5 years out, I've talked about us, our goal here to be the #2 player. That puts us in the $1.50 to $2 billion range to achieve that, assuming nothing else changes. I think the idea that we could get toward the more 15% EBITDA margin 3 to 5 years out is in the realm of possibility. And to be at that level, certainly, you're talking about some international expansion. I mean, roughly half of the market is outside the U.S., very fragmented, both in customer, in customer taste, in how customers purchase and the number of brands out there, it's quite fragmented, but there are some primary international markets that look very attractive, and there's nothing about our business that would -- that it uniquely U.S. So we do anticipate entering more markets, probably starting next year is currently what we're anticipating. But again, as you're looking 3 to 5 years out, certainly, there will be more international beyond Canada.

Understood. Well, I think that was actually perfectly answered in terms of timing. So Joe and Craig, thank you so much for the time. We really appreciate it.

Appreciate it as well, Curtis.

Right. Take care.

Thank you.