Snap-on Incorporated (SNA) Earnings Call Transcript & Summary

Good day and welcome to the Snap-on Incorporated call. Today's conference is being recorded. For opening remarks and introductions, I would like to turn the call over to Curt Nagle. Please go ahead, sir.

Good. Thank you very much, operator. So yes, again, my name is Curt Nagle. I'm one of the hardline analysts here at Bank of America that covers hardline retailers and a collection of mostly consumer brand manufacturers. Today, I have the pleasure of leading a discussion with Nick Pinchuk, the Chairman and CEO of Snap-on; and Aldo Pagliari, Snap-on's CFO. Snap-on is a leading global high-end tool manufacturer and distributor based in Kenosha, Wisconsin, and last year generated $3.7 billion in sales. Snap-on primarily caters to professional mechanics in the auto, industrial, mining, aviation and military end markets, among others, over the past 100 years. It's developed a reputation of building highly specialized and innovative and high-end tools. So in terms of how we're going to lead this discussion, I'm going to first ask a series of questions around some of the more important themes for Snap-on. And then some of the more common questions I get from investors on the company, and then we'll open it up to Q&A on the line. If anyone would like to ask a question through me, please e-mail me at [email protected].

So Nick, kicking it off, I guess, my first question for you would be, as you guys see it, what distinguishes Snap-on most from its competition, particularly in the core auto repair market. And what do you think has allowed the company to command a pretty substantial pricing premium over competitors and pretty strong customer loyalty?

Yes. Look, I think it's -- there are probably a lot of reasons. But I think the 2 principal reasons are product and -- I suppose, thinking about this, one is a hard reason, a tangible reason: the product; another one is intangible: the brand itself and what it means to the people who use our tools. Let me explain. So if you talk about product, our product is born out of observing the work into the -- in the workplaces. We spend more time in more workplaces than anybody else physically observing the work. And if you're talking about repair, if you could fix, if you could anticipate the problems of repairs, the OEMs, manufacturers would do it ahead of time. They do not because it's hard to anticipate how it's going to happen and look through these various windows. And so we see that and we come out with an incredible array of strong tools, both hard tools like wrenches and also data-driven tools like diagnostics, laptops for cars, that solves the problem specifically for which our customers want. And one of the things we do is we not only have products that are very effective at solving some difficult problems and oft repeated problems, we also have a wide range of products. I think we have 80,000 SKUs. One of our franchise vans that calls on technicians has 40,000 SKUs, and it's got 3,000 SKUs on its truck and 40,000 SKUs in its catalog. And so they not only solve the relatively frequent problems. They solve the infrequent problems, but those tend to be the ones that displace the technician's time with -- infrequently but are highly costly. And so we do that. And we do it from having great wrenches to databases, which number in the, I guess, 225 billion data points. That's the product. But then the other thing is simply, over the years, since the beginning, when in 1920, 100 years ago now, our customers -- our salesmen went into the garage and laid the original tool, 5 handles and 10 sockets that snapped on interchangeably out on green felt and implied that if you use these tools, you'll be doing something special, perhaps as special as a surgeon. The Snap-on brand is the outward sign of the pride and dignity that working men and women take in their profession. That's why they wear our jackets. It's why they talk about our product. It's why they make wedding cakes with Snap-on on it. It's why they put our wrenches in the hands of their newborns, and this is not an exaggeration of what they do. It's why they proudly display the Snap-on brand in boxes and on their tools. So those are the advantages, why we get a premium.

Understood. Okay, that makes sense. And so I'll pick up a question from investors on how to think about relative competition given that Snap-on has a very high degree of market share in its core segments like hand tools and maybe to a lesser degree, software diagnostics. How would you describe Snap-on's competitive moats and maybe the risks? And have you seen any competition that has recently popped up from peers like MAC or Matco or from lower-priced imports?

Well, look, I think our moats are somewhat in what I just described, the position in the garages. We have more people. We spend more hours in more garages and more workplaces than anybody else. And so therefore, we understand work better than anyone else. I'm pretty confident of that. You can think about that in our -- if you talk about our core business, which is the Snap-on tools business, we have about 3,500 van drivers in the United States, 4,800 worldwide, and we think we have the best 3,500. The average tenure of those drivers is 14 years. Experience accrues to capability. And so we have that, and they're observing the work and feeding it back to us. This is something which is a moat, which is hard to deal with. I think our revenue per van as much -- is substantially better than or higher than the competition, so you see that situation. So in general, if you want to be -- if you want to interact with technicians, the best place to be, I think, widely seen is Snap-on. So you have that situation. You have the idea of the product line itself, which is hard to duplicate. You have databases, which I referred to before. Some of our databases associated with how to solve car problems is -- can be numbered in the billions. In fact, several of them can be numbered in the billions. We have more than 1.3 billion actual solutions to cars. So therefore, if someone wants to shortcut all procedures in solving a car, they can just say, "Well, what kind of car is this? How much mileage is it? What's the engine code? What's the trouble code?" And get a Pareto diagram on what are the most fixes, the most likely fixes, and proceed directly to those fixes. That's the database that's not possessed by anybody else. Plus we have a 230 billion data point database, which allows us to fix the -- trace and fix quickly in relatively quick fashion the problems that occur on alternate Wednesdays. And the thing about this that's kind of interesting, you did say that our hand tools are nonpareil, and they are. They're treated like jewels. But when you ask independently, we ask independent -- we have an independent survey every year of technicians asked what's your preferred form of tool. And when they say hand tools, I believe it's 69% say Snap-on, 8% is #2. But when you say diagnostics, last year it was 69% to 10%. So it's not that much different. Because our diagnostics are enabled with data that no one else has and a navigation system that is tied to the way technicians think of things. And therefore, those are the kinds of advantages we have. Now if we talk about rising competition from MAC and Matco, I think they've always been good competitors. And from time to time, we hear that they advance or don't pay advance and so on, and that can raise their revenues. But in general, they aren't our principal comparison. Our principal comparison are to ourselves. So when I talk to our franchisees, they don't necessarily talk about, "Oh, I need something better versus the competition." They say, "I need something better than the tool I have now because the problems have changed and gotten more complex, and I need you to adjust to that."

Got it. And I guess -- I mean, I think what you're trying to make is just in terms of highly specialized quality, all that sort of stuff that puts you above, I guess, the closest competitor. So I guess any competition coming in from, again, imports or lower-priced tools is not really an issue for you. Is that basically what you're saying?

I think that's right, Curt. Actually, it's like this. People decide to buy Snap-on because they want the quality. They want the efficacy or they want to display how special what they do is and, therefore, declare to the world their pride and dignity. And I do not exaggerate this at all. Or they decide to buy from among a number of other competitors. So that's sort of the view. I mean people could say, "Okay, I can't pay that much for this box or that wrench." People do that, of course. But that's the -- I think the choice. And so I don't think -- we haven't seen low-cost competitors come in and cause us much angst at this point. They come and they arise from time to time. But we -- I certainly haven't seen any imports create much problem. I guess you could -- closest thing you would see, Curt, would be in the diagnostics area, where some of our competitors come out of China. And others are European-based or the United States based. But generally, like I said, the diagnostics, when you ask technicians about diagnostics, at least at the preference level, it's 69% to 10%.

69% to 10% preference ratio for you to everyone else. Is that [indiscernible]?

Yes. 69% say Snap-on is my preference. #2 gets -- is 10% of the people.

Okay. And then maybe there's been, I could be mistaken, some rumblings about Bosch maybe trying to come in a little bit more into the market. Is that the case? Or it's still [indiscernible]?

Well, yes. I mean, gee, I don't know. I'm not sure. I haven't heard that myself. But certainly, Bosch is a large and respected competitor that would be in under, I think, the OTC brand or maybe the Bosch brand now, but -- maybe OTC brand in the U.S. market. And they could come in. I think we faced that competition. They've owned OTC for some period of time. So...

Yes, at least 10 years.

Yes. So I mean, I think they've been in the market. Now maybe they're talking about more focus. I don't know. I haven't heard that myself. And if they have more focus, we'd have to try to deal with that in the situation, but I haven't heard anything specific. And like I said, they've been in the market for [ 10 years ]. Yes.

Understood. Okay, that makes sense. So maybe moving on to just thinking about, I guess, the continued dichotomy and maybe divergence in terms of domestic and international growth, which is really in the Tools Group. What's driving, at least, the start of some improvement in the U.S.? How sustainable do you think it is? Do you expect to continue to grow your domestic tools business this year in the U.S.?

I think we do expect growth. I mean, I think we've started to get back on the growth train. It's not where we want it to be, but it certainly has generated -- it's been growing for several quarters. We think this is reflective of a reasonable market and it's reflective -- I don't -- of our product. I don't think -- actually, I do believe this, I said this on the call, I don't think our product has ever been stronger. And it's only getting stronger from this point. So I think you see that played out. I think the limiting variable here for expansion of the Tools Group is that, as I said on the call in February, the time of our franchisees. If you think of it, you got 3,500 of them. We're betting on them. They only have so much time. The cars are getting more complex. The tools are getting more complex. Therefore, the explanation is getting more complex. And so that eats up more of the time and so, therefore, the sales -- sale can take up more time. It's our job at Snap-on to try to enable our franchisees to be able to deal with that, and that's where we're doing a lot of work. And so our upward trend, I think, doesn't depend so much on the market. Certainly in a medium or longer term trajectory, it doesn't depend on the -- the market is going to go up. Cars are going to get more complex. They're going to change. And so therefore, the business is going to be there. It's our ability to follow it. We proved we can follow it with our product. We've got to be able to follow it with our capabilities in the channel. Now if you talk about international, that's being driven -- let's try to look past the current virus situation. And for a couple of quarters now, the Tools Group -- I don't know, more than a couple of quarters, about a year now. The Tools Group in international has been dominated by difficulties in the U.K. and to some late, lower -- maybe lesser extent, Australia associated with commodity prices and so on and some of the reduction in housing prices in Australia impacting that business, but the U.K. And so if you start to look at -- people ask often about Tools Group gross margin and so on. U.K. is a factor in all these things. It's our -- I mean, the Tools Group business is 85% North America, but the next biggest is the U.K. And so if that goes down, like it has, then it does tend to give you a problem on the margins. The other thing on top of that, if you move beyond the Tools Group, in general, we're seeing -- we have been seeing weakness in Central Europe and some of the other places. Germany is well documented to be weak. And so I'm kind of watching Europe a little bit. I think we're seeing it slip, sliding away, and we're wondering if it's -- so we're wondering if we don't need to take a look at our cost structures there to make sure that we don't get impacted by that. So we're kind of seeing Europe, not -- kind of weakening. I think at least looking back in history, we see the particular problem in the U.K. Now it's fascinating because the U.K. should be getting better since they approved Brexit. So it will be interesting to see how those play out in balance. U.S. markets seem okay to us.

Got it. Okay. Very good. Maybe just going back on your point, Nick, about trying to, as you discussed, increase the productivity of your franchisees. Could you go into a little more detail in terms of what you're trying to do?

Sure, I can try. Yes, here's what we're trying to do. You can think about it -- I guess you can think about it. We're doing a number of things, but let's boil it down to this: We're trying to give them better training on some of the more complex products. A classic would be Intelligent Diagnostics. Some of our -- believe it or not, some of our tool storage boxes are getting a little complex with the number of features you can put in them. But Intelligent Diagnostics wields double databases up to 1.3 billion fixes and the 230 billion data points. And then this is big data, I think. It certainly passes for big data in the auto sector, auto repair sector. And in fact, wielding that in a proper manner takes some new expertise. And then explaining and guiding how to wield it takes a -- which a franchisee would have to do, takes some more expertise. And that has to be viewed in the context of the franchisee only has limited time with each technician. And so it's our job to, when we have these complex products, to kind of keep boiling it down, keep rehearsing the franchisee, keep informing them. And sometimes, it means taking several bites at the apple, trying to get to it so that it is a compact way to communicate the power of these products. And that goes, I think, across the product line because as the cars get more complex, even the hand tools get more specialized. And so you have to work on that. So that's training associated with doing that. Then there's direct aid, which is about 25% of our franchisees have an assistant, because an assistant will pay off. Because the business is there. There are more people to call on where they don't call on all the garage they could. And we can sell more to people because the technicians would get more productivity out of some of our tools if they could only -- if they could -- if we could teach them how to use them correctly and make them understand the value of those tools. And so you want to get assistants more ubiquitous throughout the network. The problem is, is that -- this is a human problem, is I think our franchisees are generally used to working alone. And sometimes, they gravitate toward our business because it is working alone. And if you take on an assistant, you're managing people, even if you put them in another truck. And if he rides in the -- if he or she rides in the same truck, think about spending all 10 hours a day, 5, 6 days a week with the same person. There's a compatibility crunch. So that's -- I would say to anybody, this is kind of a difficult manage in a -- so we're working on ways to school our franchisees in how to manage assistants, because it clearly pays off for them and allows them to go to -- and it gives them more selling time as compacting -- just as compacting the sales pitches or the explanations of our more complex tools. And then finally, we're adding some new, I guess, facilities in the field to assist. So in the period of '11 to '16, 2011 to 2016, we -- I think, pretty clearly, people know that we added company-owned vans to help in tool storage and to help in diagnostics. They were called the Rock N' Roll Cabs and the Techno vans. I think we still have something like 62 Rock N' Roll Cabs and something like 45 Techno vans. And we're adding a new set of vans, which we call shop essentials. And this tends to be the bigger stuff, the more physical stuff, that -- like a tool storage box in combination with the diagnostic unit. And the diagnostic unit doesn't display on, say, the 10-inch screen. It displays on a 16 by 9 flat screen, and it has a number of different features that aid the use of that diagnostics inside the tool storage box. It's a -- of a physical size that can't be carried on a van, on a regular franchise van, and it's more difficult to explain. So we have -- we're deploying vans that help people explain things like that, or let's say a hand spin -- some of the more rudimentary tire balancers or tire changers, which our franchisees sell, or air conditioning units. Things like that, that tend to take a little more time and tend to be for a shop, not necessarily -- it might be a lead technician in the shop would own it or even an owner of a shop of a 1- or 2-man technician shop, which our guys call on, these will help in doing that. So basically, it provides time-shared resources to help the franchisee have more selling time. So we're doing those sort of in those 3 categories, Curt.

Okay. Very good. That makes sense. So you guys often do talk about, yes, I guess, the strength of kind of underlying fundamentals in the auto repair market and now in terms of things like increasing car complexity, age of the fleet, miles driven, all that kind of stuff. What do you think matters most in terms of driving incremental or maybe higher growth over the next few years? And what do you see as the biggest risks?

Car changes. Car changes is the incremental growth in our market. As the cars change, the faster they change, the more people need new solutions in a form of wrenches or electronic solutions to make the change, so the more the cars change. So for example, if more hybrids get in the fleet, get in the car parc, as they would say it in the industry, gee, you need a lot more insulating tools so you don't fry yourself when you're poking around under the hood. So that's kind of a good thing for us because we have a full line of insulating tools. And so those kinds of things make a difference. Of course, you wouldn't use the -- might not use the insulating tools on other units, so you need both. So I think change is by far the most important thing. And if you're looking under a hood of a car or even casually talking about a car, perusing the features list on a car or the options list, you see that there's a dizzying array of opportunities. I mean think about the Advanced Driver Assistance Program -- or System. The idea that now, deployed around almost any car is sort of a neural network of sensors. And every time the car gets dinged or there's a change or you change a headlight or you do something like that, you have to readjust and recalibrate that. This is good news for us. And so that's what drives our growth.

Okay. Understood. Maybe switching topics just a little bit. So understanding that you guys primarily serve less -- or I think you guys have described kind of semi-cyclical repair end markets, have you guys started to see any pullback related to, I guess, the broad implications of coronavirus in terms of things like falling energy prices, aviation, transportation, anything like that. Can you, yes, maybe give a comment?

We certainly don't give guidance. But look, I don't know how quickly that rolls through our universe. I think this, I think if you're talking about auto repair, remember, 70% of our business is auto repair. Auto repair just keeps going. And the big recession, biggest in my lifetime, biggest shock of my lifetime, people were talking about putting money in mattresses, if you remember, in the fall of 2008 and early 2009. It was a scary time. The Journal was writing articles like economy's glum, repair shops hum. And I think repair of cars just keeps going. Now things can move around that, that attenuate or accelerate, depending on what you're talking about. But generally, the core seems pretty solid. So during that -- we didn't see it now. Then if you pull away to the 30% of our businesses, we'd say rolling the Snap-on brand out of the garage, then you can see variations. How quickly that rolls through and whether it does, I don't know. Remember, when we're talking about critical industries, we work in quite a large number of military, aviation, natural resources, education, mining, agriculture in some case. So I think we [ have a demand ]. Some of those might be affected. Of the time constants of that effect, I don't know. I'm not sure. We'll just have to deal with that when it comes forward. If you talk about the whole virus effect, I think, on industry, you can think of it in that way. I think there's a geographic effect that will affect, will impact us, and that is certainly the Asian businesses, particularly China and some of the other more jumpy -- like Korea, for example, clearly are affected by this kind of thing because even though the factories are now up and running and people are back in the office, I think people were spooky and they're not paying attention to what would be normal consumption at any level. Some schools are still closed there, and we have businesses in schools. So I think those places are going to impact this in the near term. It won't impact the long term. I mean, I think this doesn't have any impact over the long-term valuation of the company. You wouldn't know that from the stock market, I suppose. But the thing is, in fact, it doesn't. And one of the good things about us in terms of these events are we tend to source in the markets where -- we tend to make in the markets where we sell. So the supply chain implications are much smaller. Even though there are some implications, they're much, much, much smaller for us than other companies. And then another thing that isn't paid attention to so much is that vis-à-vis people who provide, I would say, original equipment, we're in repair. So in the markets of Asia, I think I've said many times that even though they sell, what, last year, they sold something like 27 million or 28 million -- yes, I think 27 million vehicles, the car parc is still young. And so therefore, the real demand for repair is still somewhat attenuated versus other markets. And so therefore, vis-à-vis original equipment businesses, our businesses in those places are somewhat smaller because the wave is coming, but it still isn't there. So I think you can say that in the situation, not that we're not affected, not that we're not affected. I'm just saying the magnitude.

Understood. Maybe just at this point, we'll open up the question to anyone -- or turn the call to anyone who would like to ask a question. Operator?

[Operator Instructions] We'll now take our first question.

Could you talk about any supply chain risk that you are either currently seeing or that you may expect in the next several quarters from any products sourced from China?

Yes. Remember that we don't source that much from China relative to others. But we have a couple of factories. We ourselves, and we source some things through our sourcing office. I think the effects are like this: First quarter, probably not so much. There was an anticipation of the Chinese New Year, which is a furlough for the factories in Asia. And therefore, there was some inventory buildup, and then there was product underwater. So I think in general, the first quarter is -- the supply chain effect is muted. Then what happened is that, I think, people were supposed to come back, say, January 29 or something like that. In our factories and a lot of our 25 or 18 -- 20 or 25 suppliers, core suppliers, didn't come back to, say, February 17. So there's like a 2.5 week bald spot in the operations. And then there was a kind of period, at least for our factories and some of our -- and this was quite a bit of variations from China, from location to location, dependent on where the workers were when the crisis hit and how long -- how many quarantines they had to endure to get back to be in a factory situation. So for example, our Kunshan factory, which is our big facility. We started up February 17. We had 61% of the people there. We were able to go into production because we had components in inventory so -- and we had the white-collar workers working on the line. So things were all as well. But 25% of our workers were in the city where the factory is located, but they were in quarantine because they crossed the province border coming into that city. So they had to play out -- and that -- a version of that plays out throughout China and some of our suppliers. However, now it seems as though things are back to normal. And generally, we think things are going to be okay, in other words, starting to produce if we have them -- if we may -- we'll be okay in our factories if we -- if our suppliers maintain the components to our factories and they maintain the production of finished goods, we'll be okay. But I would suggest there's a risk, and I'm not saying it will happen, that they won't catch up by the second quarter. All things go well, we will -- we're pretty confident we will catch up by the end of the second quarter. And so therefore, the bald spot will be eradicated. On the other hand, you're talking about an array of 20 to 25 suppliers beyond our factories which are spread across many jurisdictions of China, all of whom have a different protocol associated with the virus. And how that plays out is somewhat uncertain. So if you're talking about risk, I see it possibly out into the second quarter for supply, maybe some risk. Right now, though, there is a path to catch up. So I can't forecast anything better than that because it's a very complex, complex array, even in our small business. However, I will say, it's a smaller -- much smaller effect for us than any place else. If you're talking about Europe, generally, in Europe, so far, our factories are working. The big problem, I think, is getting, like in Italy, the big problem is getting trucks into the factory from outside of whatever jurisdiction is locked down. So we've had to take the step of producing, putting our own people in the trucks and driving them to the border to give them to actual long haulers. And that's working so far. So we'll see how that plays out. I think for us, we think the big effect is not so much supply chain as you can't have certain jurisdictions, maybe Italy, maybe some parts of China, maybe some parts of Asia, people kind of nervous about the psychology of this has affected their commercial consumption, and that may be muted and attenuated in the near term. Long term, there's no effect.

[Operator Instructions] It appears there are no further questions at this time. So I'd like to turn the call back to our speakers for any additional or closing remarks.

Great. I think maybe I'll just -- since we've got about 5 minutes left, I'll throw in a couple of ones. So yes, Nick, a common or another common question I tend to get from investors is how to think about things like AI and EV, and as we talked about the increasing complexity of vehicles, how does that impact for each of your end markets. In theory, this should be a great thing for your diagnostic business, but maybe for some of your more, I guess, basic hand tools, not so much. How do you think about this dynamic? And do you think this is -- is it -- well yes, do you think…

[indiscernible] actually [indiscernible] talking about the other day, yes, we were. AI and ADAS...

Sure. Well, you didn't let me finish but yes. I wouldn't say it's too simplistic. But yes, please go on. Let's hear your thoughts on it.

Well, I was just going to say we were just in a meeting the other day about the amount of calibration and refined measurement that's required to make sure the more sophisticated AI systems, sensors, cameras, radar, infrared, various detection devices. Actually, it's quite complicated. And if you're insisting on wanting to keep the vehicle maintained to factory specifications, that actually creates more work for the mechanic and more need for access to measurement tools. And if you're talking about collision, that happened to be a subject that was at hand yesterday, boy, the world of collision has certainly gotten far more complicated in terms of repositioning these sensors back to factory specifications and needs like that. So if anything, we think the advent of ADAS, AI, EV actually creates more work. Yes, there's more -- I should say, fewer parts, and we've talked about this before. Not so obvious to us is there's less labor hours. So productivity will still be important to the garage and to the mechanic. And therefore, while we might not know every tool that will be required at that point in time, certainly, so far, it seems to create a need to add on to one's collection of tools and software solutions.

Consider this, I think this is worthwhile, just a little more simplistic view is then an analysis, very simple, is that, okay, in the last 3 or 4 years, the cars have gotten more electronic, more intelligent, more enabled and the demand for hand tools has skyrocketed. So I think we don't see this -- let me put it this way. It is not completely obvious that the onset of this reduces even the demand for hand tools because it hasn't happened. In fact, in my time in this job, the cars have gotten incredibly more complex and yet hand tools are more and more in demand. So I don't -- because the geometries get much more difficult to deal with. That's really what happened. And in fact, as Aldo said, right now, in the garages, they're not necessarily rebuilding engines like they used to be 30 years ago. That isn't part of the things anymore, part of their effort anymore.

Okay. Maybe I'll just end with one last question. So over several years, Snap-on has done a great job of consistently increasing EBIT margins. I don't think you guys are giving specific targets, but I believe you guys have said on a few occasions that you don't think margins are at peak. What do you think you could do to continue to get margins up? Is it mostly through your RIC (sic) [ RCI ] cost initiatives? Is it through product mix, growth in one segment over another? How do you guys think of that?

I think it's these things, Curt. I think there are 3 things that accrue to that. I think one is -- and the principal one, of course, is RCI. We're a very complex operation, 80,000 tools that's vertically integrated. From raw steel, it comes in the back of the factory all the way to putting it into the hands of the end user and 80,000 strong in terms of the number of tools that flow through that vertical integration. Therefore, there are a lot of interstices that can be improved. And therefore, RCI, Rapid Continuous Improvement; Lean; or Kaizen that you talk about these past years, that is what has kept us, allowed us to offset things like tariffs and material costs and other things that happen and some of the U.K. difficulties. And then the other thing, I think, is new product. As you bring out new products, you're able to get your value for it. If you have time, if your guys can sell the product, we'll get our -- if we have -- as we expand our capabilities of our, let's say, our franchisees or our direct salesmen to match the complexity of the product, we'll get our value for them. So those are the 2 major factors. Of course, it would be nice to get extra volume, too. That helps. There is leverage. Right.

Fair enough. Okay. Well, Nick and Aldo, thanks so much for your time. Really appreciate it. This was informative and helpful. And yes, thanks for everyone who joined us on the line.

Okay.

Curt, you have a great day.

Take care.

Take care.

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.