Valvoline Inc. (VVV) Earnings Call Transcript & Summary

It's a little chilly in here, so we're going to rely on everyone to warm it up, keep it conversational. Hi, everyone. I think this is -- I think maybe with the second afternoon. So keep it going. I'm Simeon Gutman, Morgan Stanley's hardline, broadline and food retail analyst. It's my pleasure to welcome Valvoline represented by Lori Flees, CEO and Director. Been a staple at this conference for many years. I think it's the first time we're doing fireside. So thank you for doing it. I'm going to read a quick disclosure, sit down and ask some questions. And again, feel free to raise your hand. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com, Research Disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Thank you. All right. Thanks for being here.

Thank you for having me.

First question is the story has evolved a bit over the past few years. It's now a pure-play oil change services business and evolving. New capital structure. New CEO. All carry some disruption opportunity as well. Can you talk about how the organization is adapting and how you're evolving the organization to adapt with the change and then how you're positioned to drive further growth?

Sure. You're right, 2023 was a pretty transformative year for Valvoline. We worked hard over the last year to complete the separation and sale of the Global Products division, which is about half of the business, which is very unusual for a company to do but that created a pure-play high-margin, high-growth retail business now. And while we were doing that, the retail business delivered our 17th year of same-store sales growth. We grew sales 17% for a system-wide sales of $2.8 billion, and we grew our EBITDA 20%. And so incredible year, while also returning $1.5 billion through share repurchase to shareholders. So pretty transformative year. And yes, we did make a leadership change with me becoming the CEO after being with the company 1.5-years. I would say that when you look at our leadership team, about 3/4 of the team are legacy Valvoline employees and leaders. Some have more than 30-years of experience with the company, those operating -- leading our operations in particular and about 1/4 of us come from other retailers, not even on the automotive service side. So you have Walmart, Amazon, Wingstop, McDonald's, so really bringing in retail-focused capability to try to drive our business to the next level. So it's really taking -- injecting some retail industry experience combined with legacy Valvoline, which I think is going -- is making a really great transition. The entire team has gelled and very excited about the future for growth.

When we first met, I was picking your brain on e-commerce strategy and marketplaces and incubation business models, stuff that was above what I could comprehend. So I think you've been at Valvoline for a year now. Third month as CEO, is the math right?

Yes.

So can you talk about what you got excited about the move to Valvoline from President of Retail Services now to CEO? And anything that surprised you, good or bad that you didn't fully appreciate?

Yes. I mean when we met, we were talking about how industries evolve and change and how leaders in those industries have the blessing and the curse right, of trying to drive change when you have the legacy strength. And I think Valvoline is very similar to that. When I looked at Valvoline as an opportunity, what I saw was tremendous growth in front of the company. Valvoline is the leader in its industry, but it only has 5% market share. It's incredibly fragmented. Valvoline is a little bit more than 50% franchised. Those franchisees have at least, on average, 20 to 25-years of relationship with Valvoline. So that kind of strength, combined with the track record of growth and so much more upside was exciting. I think then like general retail with e-commerce, our business and preventative maintenance is going to evolve with the electrification of the car park. And those kind of innovation challenges are ones that I gravitate to, particularly when you've got a strong team, a strong orientation around customer service, those are the companies that have the opportunity to win in those changing marketplace. So I was very excited about that. I think there are 2 things that I learned. One is like many legacy businesses that have been in operation for a long time. Technology maybe hasn't evolved as fast as the company has. And so there's a lot of opportunity to leverage technology at Valvoline both to make the experience better for customers, but also to make it more efficient and drive more efficient growth. So that's a great opportunity. The other thing I learned is that the secret sauce is really starts with the team. The consistency of our customer experience across the entire network of over 1,800 stores is impressive. We get a very high 4.6 star out of 5 rating consistently, and it's consistent across franchise and company. And it comes down to one, the way we construct our process with the team and it starts with our people. It's the training that we give them, consistently 270 hours just to start the service combined with the technology that guides it. And those three things are consistent and the customer benefits from that with an amazing quick easy trusted service.

And when we visited the headquarters, I think it was late September. We got to watch organizational change in motion and then some of the insights you being in the field a lot and then seeing how strategically that the business is already evolving.

Yes.

So you came from a retail behemoth business, it's a lot of scale, did well. This business you're at is, I don't want to say that we're dominant. It's not a good word. But it is the highest comping business, I think, in a sector. So it has -- it looks like a huge advantage over the industry. Bigger advantage than predecessor company had of. So what makes it special? How do you not touch what makes it special with evolving it in your own way?

Yes. Well, the same-store sales performance preceded me by a long shot. And there is something around the operational execution that has been driven in Valvoline and it -- it starts with the way we recruit and train people, but then how we promote. So similar to other retailers, we promote from within, and it's really apprenticeship business. And so, we have area managers, market managers, regional managers and then our Vice President of Operations that have more than 30-years of experience with the company. And it really starts with investing in the people and creating a fun environment where the team works together to win. And we have competitions, and we call it our family. So it's about not disrupting that but augmenting it with both more efficiencies so that the teams can deliver the service faster and then get more cars through the stores or through the bays. And then it's about taking what is already, I think, a best-in-class marketing capability for our sector and looking at retail more broadly and saying, that's what best-in-class marketing, consumer marketing, and B2B marketing can look like, and so raising our game to that. So we drive same-store sales. Some of it comes from tailwind like premium mix and pricing that we can -- our pricing power in the market, but a lot of it comes from Non-oil change revenue, which is around driving that process and excellence in presenting services, and then it's the marketing to drive the new customer acquisition and just maintaining that relationship with the customer to remind them when they need service. And being able to do that sharper and sharper by looking at other retailers who are at the next generation of using digital marketing in ways that our peers -- if we just compare ourselves to peers, we wouldn't do much else. But when we compare ourselves to high-growth retail, we still have a lot of opportunity there.

Do you think you're better at -- like the consumer centricity part of the marketing part today?

I actually think it's operation execution and marketing that the customers get the benefit of. And so it's not that -- you talk to our people, and it's all about customer's #1. It's about our people, it's about following the process and about aiding it with marketing, and that creates the result.

And just to give an opportunity to gloat about the performance, oil changes per day far exceed the next -- by a big margin. And we spoke about what -- I guess, what drives it, probably location as well. But I mean, I think that gap, you don't see that in retail.

No. I mean the average quick-lube operator sees about 30 plus or minus customers a day, on average, we're seeing 50 or more. And we still see plenty of opportunity. Most folks are looking at vehicles per day, we look at vehicles per bay. And we have stores that are doing 40 vehicles per bay. So when you multiply the number of days, you get a much bigger number than 50. So we see a lot more opportunity even in the stores that we currently have.

And the share is coming from where?

Share is coming -- well, when we open a new store, we take it pretty much from a significant share from Quick-Lubes in the market. But with same-store sales, we take it from dealerships, about 30% from dealerships and about 40% from other automotive service providers that are not Quick-Lubes and then about 30% from Quick-Lubes. So it's so fragmented. 40% of people still use their dealer to get their cars serviced. And they pay a lot of money for that. And it's not very convenient. And so that's a very -- it's a very attractive pool of customers that we can serve very well. But we also serve folks that may get their oil change from a tire center or a break-in general mechanic or other things where they either can't get in and/or it takes a long time. They have to wait in a waiting room. There's a little bit of -- when they come out to offer you something, did you really need it? It's not very transparent. So we have a lot of opportunity. It's very fragmented. And with us only having 5% share. It's funny when people say, where do you take customers from? well, 95% of customers go elsewhere is a lot of opportunity.

Yes. So great same-store sales. The other neat feature about the business is the return profile, the unit economics. So can you talk about the return on new stores, the payback periods, the AUV maturity curve. I'll leave it at that, and then I'll come to the rest of this question because I think there's a lot there.

Yes. So we have invested as a company in retail real estate analytics. And I think the store execution, combined with the real estate analytics has enabled us to deliver some very attractive returns on new units. For both us and franchisees, we expect our new units to deliver 15% or higher percent IRR consistently, no matter where we place the store. And over time, our stores mature at about 3 to 5-years of brand-new construction. Now we have done some really smart things, testing out marketing that will improve the first year ramp. And that, combined with the real estate analytics has created a very low risk profile for new store development, both for us and our franchisees. But we're always looking for ways to drive higher return on invested capital. So we hired a new Head of Real Estate and Construction, Brian Tabb from Wingstop, and he also has a history at McDonald's. But he's brought in a lot of tools, both to -- and partners to both improve the execution of our real estate pipeline, but also to drive down and look for ways to drive down the upfront capital cost as well as just the permit, site permitting costs and the building costs. So we expect return on invested capital continue to be well in excess of our cost of capital and deliver great returns to franchisees.

Even -- and I'm sure that's correct. But now CapEx is rising. We've talked about it, how does that impact the return profile?

So I think operational execution has also improved, and our volume per store has improved year-over-year such that our new unit economics have not deteriorated even in the face of increased construction costs. Now that doesn't mean we want to accept construction cost inflation. We want to actually bend the curve. And so we're doing a zero-based new design just to see if we can take unnecessary costs out. Things like we build out a ceiling but nobody gets out of their cars. So why do you need to build out a ceiling? That's tens of thousands of dollars to build out a ceiling and insulate the water lines and other things that we don't need. So just taking a zero-based fresh look at it will allow us -- it's not going to -- I wouldn't say it's going to cut the cost in half, but if you cut 10%, 20% out of our capital costs, that's significant. So that's what we're working on.

3,500 stores, we've talked about is a potential target. Can you talk about getting to that number, time frame and then potential upside to it?

Yes. It's a one thing when I started at Valvoline, I asked what is our -- what do we think -- how many stores could Valvoline have? Is it something that we'd set an aspiration or a target, and there hadn't been. And so working both bottom-up and top-down. We talk about 5% market share. Our stores only covers 30% to 35% of the population. And while our average market share in a DMA could be 5%, it's 3x that in certain markets where we're well penetrated. So when you just do the math, we only cover 30% to 35% of the population with the stores we have. We have markets where we're 3x bigger. It became how big could the network be. I think it could be well in excess than 3,500 at the time that was double and even just getting the team to recognize we could double and how we would get there both with company and franchise growth and putting the plans behind that was energizing. So we feel very good about the 3,500. I would argue it could be beyond that. So we say 3,500 plus. But at the time we said it more than a year ago, that was a doubling, which was a pretty -- felt like a pretty aggressive statement for the team, but we're well on path to hitting it in the near term. So when I say we've talked about getting to 100 units on the company side by 2025. And 150 on the franchise side by 2027. So if you kind of do the math, you'll know roughly how long it will take us to get there.

And when you put it in the terms of market share, it seems logical. You can have a lot more share. But when you think about the industry changing and evolving and certain things coming and going and who knows what that looks like, how does that factor into 3,500?

I don't think it factors in much. I think the car park will electrify. The question is when, how fast, where and how will that happen. But the reality is, even if you talk to EV customers today, the EV that they own, while the prices will come down over time will still be a significant part of a household balance sheet. And people are going to want to maintain that asset. Now the services that they'll need to do will be different. But a, they will want to maintain that asset and the value of that asset. Two, is they are not going to want to do it in an inconvenient way. So the drive for convenience and taking care of their car is still going to be high and OEMs as well as the new EV OEMs are not providing a service that is quick and easy and actually anything but quick and easy. So I think the combination of customers will want to maintain, they'll want something quick and easy. We have a network that is accessible and the skills and the training, which we believe will have to serve any vehicle will become the provider of choice for EVs, just like we are ICE and hybrid.

New units buying, building, franchising, how do you think about it? I feel the journey of your commentary has -- give me some time to think about franchising too -- yes, we like this idea of franchising, when we're ready. That's my perception. So anyway, just making the question a little more loaded and how to think about these.

I think we've said we -- there's so much white space. The return on invested capital is important for shareholders. And we continue to get a great return on company stores, but there is so much space where our franchisees currently operate that has more opportunity as well. And so we've -- with the leadership team and I have really invested in how do we grow our franchise unit base faster than what we already have. And it hasn't been a focus. And so we've changed our incentives to drive growth. we've put more resourcing. We've kind of shifted resourcing towards supporting franchise growth. We have spent more time talking to new franchise potential prospects than we ever have in the last 6 to 9 months than the history of the company, maybe in the early days, 20, 30 years ago, but in the last 10 years, and part of it is because there is -- it's such a great opportunity. It's very fragmented. It's high margin, has a great return on capital invested, and it's very resilient. And so you don't have the economic swings in our business that can create some uncertainty. And so as we've gone out to say we're interested in scale for a handful. We don't need hundreds of franchise partners. We'd like to add a handful. We've taken inbound and we've outreached both family offices that focus on franchising businesses as well as private equity that's focused more in our space or in and around our space. And the interest is really high. And so when you talk about wanting to drive your network growth with speed, the franchise growth becomes a multiplier effect on how fast you can go. And so that's really been the focus. When you set the goal, and let's not worry about who grows, let's just worry about growth.

Right. Yes, I think the investment community sees the multiple that franchise businesses get, higher margin, higher return, natural push. But I think you said it's the speed and that gives you the dexterity to move quicker. And that's where I think -- I guess the logic comes in. Right. Okay. Franchise relationships. And how it even relates to the 3,500, thinking about master planning and where all the units are going to come from? How do you ensure that, that pipeline is there? And where are you in that process?

So when we've laid out our goals for new franchise unit, we've set 150 new units per year by 2027. And over the last year, we've been talking to our existing franchise players and feel that about 2/3 of that are going to come from our existing franchisees. And part of where the rubber meets the road is as we changed incentives, our conversation around new development agreements, bigger development agreements has been kind of a fun change of discussion. And so we feel about 2/3 will come from existing and about 1/3 will come from those handful of franchisees who we will add to our portfolio, either taking existing franchise partners who have gotten to the end stage of their career and are looking at capitalizing on the wealth that they've created and ready to turn the business over to someone new or even entertaining some company markets where when we cap ourselves at 100 new units a year, we can't develop all the territory that our company stores are in. So can we carve out pieces where another party can come in and grow much faster, better for the business, better return on capital, better for our people because they have more opportunities to grow without moving across country.

Can you remind us how many franchisees exist today? And is it 80-20 rule where certain small percentage represent...

To do the math, it's actually more extreme than the 80-20 rule. So we have about 40 partners in the U.S. which is where most of the franchise units are. And the top 5 make up 70% of the units. The top 7 or -- not 7, the top 7 developing, they may not be the top 7 in size, they make up 80% to 90% of the new units that are delivered. So it's very consolidated in terms of where the growth is coming from.

And I would think that gives you more flexibility in a higher rate environment, larger, more sophisticated...

Absolutely. Absolutely. I think a lot of other players, either in our space or others where they're looking for single unit operators who often do personal debt to buy into the business. They're struggling because the debt markets make that pretty challenging. But for us, we have well-capitalized partners. And when we talk about recruiting new partners, again, just a handful, we don't need many. We want them to be well capitalized, looking to drive growth as a way to drive value of the business.

Yes. We're at 15-minutes, so maybe at 10, if you'd like to ask, feel free or feel free any time. I want to ask about competition. We spoke about it a little bit, the way I wrote this, we [ just posted ] the car wash, which has a lot of new entrants and attention. This industry, not so much. Maybe it's because of terminal risk, maybe because they're afraid of going against difficult or tough competitors. So how do you describe the environment getting tougher, neutral, getting easier?

Yes. I would say it's not getting easier. I wouldn't say it's getting tougher. But like car wash, quick-lube or preventative maintenance space is very fragmented. So there's roll-up opportunities, right? There's -- we drive a lot of our growth from acquisition, both us and our franchisees, as do our competitors. And it's high margin like car wash. So the only difference is it's very resilient to the economic swings, which car-wash is not and is proving to be more challenging in the current landscape. So where -- when you look at all the players and all of us are growing units and consolidating the market. And what that means is any new real estate -- and they're also developing new construction. So it's not just a roll up. There's also new construction builds across almost all of the top players. And so what that means is that when you're going to look at a site, there may be more competition for it but that's been the case for the last few years. So I'm not seeing it -- not really seeing it getting worse, but also see it still maintaining in competitive intensity.

And newer locations are ramping and you're folding out in markets and those continue to ramp with.

Correct. Like as long as Costco is still building or Sam's Club is now still building sites. There's new retail development that needs a quick-lube, by the way, and the car-wash. But -- and that's where people are going to be and that those stores do great.

Yes. We had a lull for a few years, but we see building some -- yes.

We did.

Margins. You're ending '23, I think, at the low end of the 26% to 29% EBITDA margin range. What are the levers that will drive us either higher end of this range or outside of this range over time. And why shouldn't the margin steadily approach the four walls that you're doing at the store level?

Yes. It's important when you look at '23, we landed at 26.3%, that was a 50 basis point increase from the year before. So pretty good improvement. And there are really three things that are going to drive that EBIT margin from the low end to the high end over the next 3 to 5-years. First is we're going to continue to get SG&A leverage. We still have to grow our SG&A. A lot of that comes with new store marketing, that, once we get to 100 units on the company side, we'll actually maintain and will not grow at the same rate that it has been. And then you have a lot of the other just basic general and administrative costs, which, again, will have some pockets of capability investment, but those aren't going to grow in the double digits like our total sales will grow. And so we'll get leverage out of SG&A that will drive that up. And that will happen every year, right? Every year, we'll get better. Second is on the company store, one of the things I think -- you can't have spent as much time in a win on price retailer focused on lowest cost, you cannot leave that environment and come into an environment like Valvoline and [ knock ] the opportunity for more efficiency on the company-operated stores. So that will drive some incremental leverage as we get more efficient as we scale. They've been focused on scaling and driving topline, less focus on efficiency and getting more juice from the squeeze. So that will be an opportunity. And then the biggest one will be that maturity of stores as new stores become a smaller piece of the base, that will improve, but also the mix shift towards franchise. The margin being 3x what it is for a company that will also lift the margin towards the low end. And all of those things working in concert will deliver some really strong margin improvement.

Makes sense. Base oils, demystifying it a bit. The legacy company, we have a little, I guess, post trauma from base oil volatility. Can you talk about how does base oil affect the business today? What should we think about? What should we worry about? What should we be excited about?

Yes. I think be excited that it doesn't have the same kind of impact as it would on the product side. I think we're very clear in our last earnings call that $1 increase on base oils is about a $0.50 cost increase per transaction or 50 bps. So it is really quite small in comparison to what it was before. And part of that is because a 50% of our -- of the base oil increase that gets passed on to franchisees. Whether it goes up or down, it passes on penny for penny to the franchisees. So it is not a tailwind or a headwind -- there might be some timing gaps but it's very muted. And then within the company operations, we actually sell the waste oil to offset any increase. So as base oils go up, our price for waste oil goes up and it offsets, its a natural hedge up and down. And that's the reason why it's so muted in terms of the impact. So if you think about $1 on an annualized basis, it's like $5 million to $10 million of EBITDA. So it's so small. And for us, we are looking at pricing all the time. And we're optimizing our discounting for consumers and fleets. $0.50 is an easy thing to actually make a change on if we needed to. The good news is, as base oils drop, we don't -- no one in our industry drops pricing because the lubricant price is such a small part of the overall cost equation, labor and labor inflation is really what we should be talking about.

Okay. We'll get there. Waste oil -- base oil, waste oil. Do we have to -- how do we think about the waste oil...

Just don't. We shouldn't even be talking about it.

It's a waste. We won't go there. Okay. I'll get to labor in a second, one more question. Non-oil change revenue, it's been trickling up yes, where is it as a percentage of the business? What are the opportunities? Where can it go to?

Yes. It's a little bit less than 25% of our ticket today. And most of the reason it's dropped a little bit is because our oil pricing has gone -- our oil change pricing has gone up, and the synthetic mix has gotten greater. So that part of the ticket is growing faster than the Non-oil Change Revenue part of the ticket. But Non-oil change revenue penetration has been a good 100 to 150 basis points of same-store sales growth. And as we look at just -- a lot of what we did this last year was a low-hanging fruit. We hadn't focused on it during COVID. There were a lot of things where there was one significant thing, cabin air filter, which we stopped doing during COVID because our -- we didn't want our employees to go into the car to make the guests nervous and our employees nervous given COVID. And so restarting that in a consistent way gave us some uplift. We've also created tools and the retention of our staff gives us a boost. And so I think all of these things in concert, but we still have a huge range between top quartile and bottom quartile stores. And so we've got market trainers now focused on bottom quartile stores to uplift the training and improve the performance. So we still see several years of that kind of tailwind to capture.

I'm going to ask about labor and then EVs unless there's any questions in the last, call it, 7 or so minutes. So labor, teed it up, and it's my fault, it wasn't even on my list. But I guess, tailoring the labor model, but we've seen a lot of inflation in wage rates, where is that? And then how have you managed operationally to balance the service side of it?

So obviously, coming out of COVID with the war for talent, there was massive inflation on the labor side just to keep stores staffed. That is definitely dissipated. Our attrition rate is at -- for October was the lowest we've experienced in over 24-months. And so we -- one, some of that is the market, but some of it is very specific initiatives we've put in place around onboarding, some of it in recruiting in terms of setting expectations, scheduling for new members of the team and then training, how we train them and when they have to stand on their own. We saw a big -- a big drop off in new employees on day 7 because that's when we expected them to do the job on their own. And it's -- if you've been in the store, it's a complicated job. And so just making some tweaks in that kept people longer and the longer you stay the attrition rate just falls off. So we feel really good about where the market is. So there's still opportunity for us to improve, but that has really helped us focus on training and just around the process execution. I think inflation will -- inflation of wages are going to keep going, but not at the rate they were. So I think right now, most of the economic indicators that we've seen is somewhere in the 3% to 4% is what we're expecting. And what we're doing is all of the efficiency piece I talked to you about before, we're assuming that those counter some of that wage inflation.

And most or many of your store managers there getting promoted from within?

Yes. So no store manager is a store manager until they -- they don't start as a store manager, we don't import store managers. The most senior will hire in, and it's about 2% or 3% is assistant store manager. They have to learn the process and then they get promoted. Our average store manager tenure is at least 3-years. Area managers is the next run, they're 5 to 7-years. Market managers are 10 to 15-years on average, regionals around 15 to 20 and our VPs are 30-plus. So it's an apprenticeship model with -- because of the growth, there's so much opportunity, and it creates a great dynamic.

Right. But I think it insulates a bit from more on talent because you can't hire someone else's manager to then plug into your system?

It does. It does make that challenging, but interesting, the company a while ago realized that when they put 2 store managers in a store, they more than pay for the second store manager. And that actually creates a feeder for when you have a store manager leave and/or a new store open and then you backfill and they train under a more seasoned store manager. So there are things that the company had done in trial for different reasons that are now serving us well with the attrition that we have been facing in the last 2-years.

On EVs, unless anyone has any questions. So even related to your prior role, you can model out a food business. Yes, you can a decent amount of...

Yes, you can. There are some good analogy is there.

Right. Here, you have a business that, at some point changes profoundly, there's a lot of time until that happens. How do you spend your time even thinking about it and spending the energy strategizing how to pivot. And then, yes, I don't know open-ended of when there starts to be changes that you're enacting to take advantage of that market?

Yes. So similar to e-commerce, physical retail, it's about what customers go away from the proposition you have today. And if you assume you did nothing else, how much time do you have? And the reality is because of the difference of 50 cars a day versus 30, just like happened in electronics, there are companies that got our business and allow retailers like Best Buy, a lot of runway to figure out how it will evolve to meet the needs of the customer -- changing customer dynamics. So we do have time. That said, we believe it will happen. Whether it happens to get to 100% of the market or 20% of the market, it doesn't matter. We're going to have customers who move from an ICE or a hybrid to an EV and they're still going to need preventative maintenance service. For us, it's about figuring out what the service mix will look like, figuring out how we train our team and make sure that our stores can service those vehicles and the services that we would provide, and two, really understanding what the ticket might look like and the frequency for the customer. And that's the piece that's still unfolding. So just looking at the largest vehicle producer, EV producer, they charge for a service package that's between $250 and $350 a year and has either one or two maintenance checks per year. Most of the customers don't like to go to that OEM because they can't get in, it's not timely. It's not convenient. It's not easy. So I think for us, you have to say, are people going to still want to maintain their cars, yes. Are they going to want it to be quick and easy yes? Are the OEMs going to change the way they do it, to be better service provider than us? I'm not sure I could say yes, probably no. Will the ticket be significant enough and can we provide value? likely, yes, then it becomes down to what services will it be. There'll be more wheel well, but there will be also some parts replacement. And I put odds on us that we'll be able to figure it out, and we'll have the customer experience. Fortune just came out with their first customer experience, best customer experience list across all brands. We're 11.

Congratulations.

So I think I bet on Valvoline to be able to be the preventative maintenance provider of choice.

And quick and easy and EV, there's enough boxes that you can check off of services, yes?

Yes. Yes.

I don't know how to change oil on an ICE. Perfect. Well, with that, we will end there. Thank you very much for being here. Good luck. You started your next fiscal year. So good luck.

Thank you.

I appreciate it.

Thank you.