MLKN - NASDAQ

Good evening, and welcome to the MillerKnoll's Quarterly Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Vice President of Investor Relations, Carola Mengolini.

Good evening, and welcome to MillerKnoll's Third Quarter Fiscal 2024 Conference Call. I am joined by Andi Owen, Chief Executive Officer; and Jeff Stutz, Chief Financial Officer. Also available during the Q&A session is John Michael, President of Americas Contract and Debbie Propst, President of Global Retail. Before I turn the call over to Andi, please remember our Safe Harbor regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors, which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release. The forward-looking statements are as of today and we assume no obligation to update or supplement these statements. We may also refer to certain non-GAAP financial metrics, which are reconciled and described in our press release posted on our Investor Relations website at millerknoll.com. With that, I will turn the call over to Andi. Andi?

Thanks, Carola, Good evening everyone. While this past quarter presented its challenges, we're proud to highlight our resilience and strategic focus. Despite facing a lower volume of orders and sales, we maintained a steadfast commitment to enhancing our business operations. Our efforts yielded significant results as we successfully improved gross margins across all business segments, showcasing our ability to adapt and thrive in dynamic market conditions. MillerKnoll is an agile company. We have implemented several programs across our contract and retail business to boost demand, while also putting in place restructuring measures to better align our operating costs with the evolving economic landscape. With our MillerKnoll dealer network firmly established in the U.S., we've turned our focus now to showrooms, studios and tools that make it easier to create design solutions for customers. Our showroom strategy is anchored in having fewer and more robust MillerKnoll design centers in targeted cities around the world. We're bringing our brands together so that customers and design partners can experience the full breadth of our offering in one location. To this end, we will combine our showrooms in most markets and we will also invest more heavily in dealer showrooms and dealer programs, especially in markets without a corporate showroom presence. This work is already underway in several major U.S. markets, namely Chicago, Washington DC and the Greater Los Angeles area. This follows showroom colocation enhancements that we previously announced in New York City, Toronto and London. Simultaneously, in North America alone, more than 40 dealer’s showroom refreshes are in progress with many more planned. At DWR, we recently opened a new concept studio in the San Francisco Design District. The space introduces our products in a new way, showcasing rotating galleries and interactive exhibits. We understand that enhancing our environment feels great results and we've been encouraged by the increased customer interest and foot traffic in this store. Across our retail experience, we know that most orders include a customer touch point in one of our stores. By enhancing these spaces in strategic locations, we believe it will continue to build market share, especially as macroeconomic conditions become more favorable. We are also making significant progress across our technology platform. This past January, we launched our program portal experience. These are digital hubs which serve as a singular place for clients, dealers and our architecture and design partners to access projects and product information in one place, providing a forum for collaboration and streamlined processes. Similarly, we've launched augmented reality capabilities on retail and contract websites, a supplement to our highly functional 3D configurators. We've seen that customers who use these tools have a higher conversion rate and are faster to add products to the cart. These programs reflect the confidence we have in MillerKnoll's long-term value and the opportunities ahead. However, we are re list and we understand that while encouraging, these initiatives and organizational enhancements are stepping stones to achieving our goals. Existing demand pressures including the elevated cost of capital here in North America are affecting the housing and office space market and slowing the decisions related to capital expenditures. This is taking a toll on the short-term results of our business. To match the current demand environment this quarter, we implemented targeted workforce reductions and realigned our leadership team against our different business segments and geographic areas. These moves will have a meaningful impact on our SG&A cost structure. Jeff will share more details on this later. For our Americas business, while the third quarter is usually a softer period, the step up in activity that customarily comes to the end of the quarter did not materialize as expected. Our team was fast to act however, focusing on price optimization and launching a series of initiatives to help our clients make decisions and therefore coax demand. We continue to see leading indicators trending positively. Client requests for mock ups are up over 20% year-over-year and contract activations and pricing requests are up over 30% in Q3. This quarter, we are very pleased to report growth across our international contract business as we continue to transition legacy Herman Miller dealers to full MillerKnoll dealers. The transition not only enhances the product portfolio of our existing dealerships, but also involves legacy dealers opening newly branded and furnished MillerKnoll showrooms, thereby enhancing our market presence. Furthermore, we also have aggressive plans underway to bring Knoll to new markets throughout Europe. Our network around the globe is unmatched in reach and we are in a place to deliver designs for these regions as demand starts growing. Similarly, as macroeconomic pressures ease, we anticipate a release intent of retail demand and are preparing ourselves to meet this interest. Throughout our retail organization, we maintain a strong focus on inventory management and optimizing our product assortment. We've accelerated the introduction of more than 100 new styles to designs and reach, adding HAY, Muuto and Geiger products, introducing new DWR collections and expanding the assortment from our strategic third party vendors as well as building up the Knoll offering through additional finish and materials options. Furthermore, we've expanded our design services which has resulted in an increase in the penetration of orders from design services as well as fewer returns. But right now, we are at 11-year low in the luxury housing market and our retail and specialty businesses track closely with that market. New home movers spend significantly more than the average. We'll continue to watch Fed rates as they have the potential to move in our favor this year and when they do, we are prepared to capture the wins. Over the next few months, we will have exciting and significant opportunities to connect with our key clients around the globe and share the best of our collective with our core audiences at Salone and Milan and Design Days in Chicago. These are moments for us to visually demonstrate the forward thinking, innovative spirit that will carry us to the future while establishing meaningful connections. Ahead of these events, our research and insights team is conducting seminars in over 40 cities across 3 continents, sharing actionable insights with organizations on navigating changes in the way we work and adapting your spaces to our evolving world. We're highlighting several successful project profiles in the upcoming launch of season 4 of our About Place podcast. As companies navigate change and invest in their space, they continue to turn to us as a leader for our experienced database perspective on designing for tomorrow. Our industry has a once in a lifetime opportunity to redefine how we think about spaces for decades to come. We have a chance right now to push the spaces where we live and work to better support individual wellness, productivity and a sense of belonging. And when I look across our collective, there is no team more capable of rising to this occasion. We are focused and confident in the hard work we're doing right now. As always, I thank you for your continued support in MillerKnoll, and I will pass it on to Jeff for a deeper dive into this quarter's numbers. Jeff?

Thanks, Andi. Good evening, everyone. This afternoon we shared our third quarter results and I'm pleased to announce that we have achieved adjusted earnings per share of $0.45 in line with our guidance despite softer than expected revenue. The robust profitability we demonstrated this quarter showcases the resilience of our gross margin profile and underscores the efforts of our teams in protecting it. We delivered consolidated gross margin of 38.6% which improved more than 450 basis points over the prior year. This is our fifth consecutive quarter of year-over-year improvement in adjusted gross margin. Improved operational efficiency, moderating input and delivery costs, and incremental pricing benefits were the primary drivers all of which align with the themes we have consistently communicated as our focus over the past several quarters. Furthermore, these actions were complemented by disciplined operating expense management and the ongoing benefit of our acquisition synergy program. As Andi mentioned, we took further steps this quarter aimed at improving the efficiency of our selling, general and administrative functions. This resulted in a targeted reduction of our management workforce. Additionally, we reviewed our real estate footprint and announced showroom consolidation plans in key markets which we believe will not only reduce our ongoing cost structure, but also create a more cohesive and compelling expression of our brand collective. Once fully implemented later this spring, these actions are expected to deliver annualized cost reductions of between $14 million and $16 million. At the consolidated level, net sales in the third quarter of $872 million decreased 11.4% on a reported basis and 10.1% organically compared with the same quarter last year. New orders totaled $830 million reflecting an organic decrease 4.7% from the same quarter a year ago. While we saw declines in both the America’s contract and retail segments, demand levels in the International and Specialty segment were more encouraging, particularly in the contract component of our business. Although consolidated order levels for the full quarter did not meet our near-term expectations, the trend improved across all segments as we move through the period. And for the month of February, our consolidated orders were up 2.8% over last year. Within the Americas contract segment, net sales for the quarter were $441 million representing an organic decrease of 9.2% from the same quarter a year ago. New orders in the period reflected a similar pattern coming in 9.4% lower than last year on an organic basis. Here again demand trends improved as we move through the period and into the early part of Q4. In fact over the last 2 weeks orders have trended up over 5% to last year. Despite lower sales versus last year, we again delivered much improved gross margins in the Americas segment this quarter. Net pricing benefit, moderating input costs, the realization of synergy benefits and tightly managed operating expenses contributed to achieving a gross margin of 33.1% and adjusted operating margin of 8.1%. Although, we're not yet seeing their consistent impact on order rates, we remain highly optimistic that improvement is on the horizon given a range of forward-looking data points. Indicators such as customer inquiries, project mock up requests and contract activations continue to grow year-over-year and the overall funnel of project opportunities remains encouraging. Within the funnel of projects, we are tracking the value of opportunities that we have won, but for which the actual order has not yet been received. We're encouraged to share that this number is double the value it was this time last year. All of this adds to our confidence that we are at or near a demand inflection point in the business. The question remains however one of timing. By historical comparison, we continue to experience delays in the time it takes customers to make final order decisions and this has added to the complexity and challenge of forecasting the business. Considering the current macroeconomic climate with elevated interest rates, lagging ABI readings and sentiment measures edging higher but still below pre-pandemic levels, none of this is surprising to us. Still the data we are tracking inside our business and what we hear from customers and our dealers gives us confidence that there is pent up demand awaiting further improvements in the macro backdrop. Turning to our International Contract and Specialty segment, net sales for the quarter totaled $217 million, which is down 10.6% organically year-over-year, while new orders came to $228 million reflecting a year-over-year organic increase of 7.9%. Demand patterns month-to-month continue to be inconsistent. However, orders grew in both December and February primarily driven by Mainland Europe, South Korea, India, China, Australia and in the Middle East. One of our key strategic initiatives aimed at enhancing the scope and reach of our international network is completing the transition from Herman Miller to full line MillerKnoll dealers. This effort is steadily gaining momentum with currently over 40% of this network offering the MillerKnoll product portfolio. We have a consistent schedule of additional transitions planned in the upcoming quarter. We were also pleased with the margin profile of this segment. The adjusted operating margin was 10.4% in the third quarter, albeit down 110 basis points year-over-year due to lower sales volume. Despite this, we continue to expand gross margins. In this past quarter, we achieved a record level of 44.5% favorable product mix, improved freight and distribution management and proactive restructuring initiatives taken earlier in the year all contribute to this improved profit picture. As it relates to our Global Retail segment, in the third quarter net sales totaled $214 million reflecting an organic decrease of 11.3%, while new orders totaled $183 million marking a 7.1% organic decline primarily due to subdued housing related demand. Regarding adjusted operating margin for the retail segment this quarter, we achieved 5.6%, 10 basis points higher than last year despite the decrease in net sales. The main drivers of the margin expansion were improved operational and delivery efficiency and favorable product mix. Despite the challenging retail environment, our retail team remains dedicated to improving in-store experiences, broadening our product offer, enhancing digital capabilities and elevating brand awareness. And we're confident that this strategic approach will nurture brand loyalty, promote deeper engagement and position our business to take advantage of pent up demand as market conditions improve. And we're beginning to see signs of improvement in the economic data. As Andi mentioned, home sales in the U.S. are at 11-year lows demographic trends point to robust future construction growth. This is evidenced by last month's homebuilder’s sentiment readings which posted its third consecutive monthly gain in February reaching its highest level since August of 2023. Moreover, renovation activity should also benefit from an aging housing stock and eventual turnover. As we mentioned to you last quarter, we believe that the demand fundamentals for this segment are pointing stronger and expect the retail segment to be a major contributor to both top and bottom line growth in our business for years to come. Regarding cash flow in the balance sheet this quarter, we saw cash generation of $61 million in cash from operations. This enabled us to repurchase approximately 1.5 million shares for a total cash outlay of approximately $40 million. At quarter end, our net debt to EBITDA ratio was approximately 2.65x. Now let's turn our near-term view to guidance and outlook. Given the macroeconomic conditions currently impacting our demand picture, we expect net sales the fourth quarter of fiscal 2024 to range between $880 million and $920 million. Adjusted diluted earnings per share for the period are expected to be $0.49 and $0.57. The midpoint of this earnings range implies year-over-year growth of approximately 29%, which is notable given the decline in year-over-year revenue. And based on this forecast, we expect full year adjusted diluted earnings per share of between $1.90 and $1.98. While economic uncertainty certainly persists in parts of our business, we're growing in our confidence that a favorable shift in demand patterns is on the horizon. And we believe this will translate into broad based sales and earnings growth as we move through the upcoming fiscal year. So, with that overview of the numbers, I'll now turn the call over to the operator to take your questions.

[Operator Instructions] Our first question comes from the line of Greg Burns with Sidoti.

Could you just talk about your win rates in the Americas and maybe why you think maybe it's taking longer for some of this to move through your funnel? And do you feel like there's been any changes in share in the market? And do you feel like you maybe need to get more aggressive with maybe some of your incentives to start converting maybe some of what you're seeing in your pipeline? Thank you.

Hey, Greg, it's Andi. That's a lot of questions, so I'll start with a couple of points. First off, I think demand patterns in the early part of your recovery are always choppy, and they often really vary significantly based on customer size and industry sector. So I think that's really kind of where we find ourselves currently, and I don't think we're either surprised or disheartened to see some relative differences across the competitive landscape and I think in fact every cycle in the last 25 years has played out this way. I think from a quarter-to-quarter fluctuation demand over the long term, we believe in the right position to protect our market share. From a timing perspective, I think it is still taking customers longer to make decisions on what's in the funnel and what's been won. I think our win rate is actually 3% higher than last year, which is really encouraging. We are not seeing pricing activity that is frightening to us or it feels like we need to discount more. It feels very stable out there. We're addressing pricing on a job by job basis, but we're not feeling like it is incredibly competitive. John, I'd let you add a little bit more to that if you want.

Yes, I would add Andi, if we look at what's in the funnel in addition to significant increase in new opportunities added to the funnel, as you mentioned the win rate is up slightly and Jeff mentioned in his opening comments that as we track an opportunity through the sales process, the second to last step is it's either marked closed or won and then the final step is it's booked. And the amount of projects and opportunities in that final step closed won for us has increased significantly versus prior year. So it is really just a matter of timing in terms of that converting into an order. We're still seeing construction delays and supply chain things in other industries that are impacting project timing. But again looking at all the leading indicators, they are all pointing in the right direction right now.

And then, when you look at the balance sheet, obviously generating cash looks like you bought back some stock this quarter. Are you comfortable with the leverage here? Like why not, what's your decision factor between buying back shares versus maybe paying down the debt?

We have, this is, we've been buying some shares all fiscal year at different levels and we've just been opportunistic. We think the shares are undervalued. We think it's good deal and a good investment. Now having said that we have been balanced. If you look at the course of the 1st 9 months of the fiscal year, we've taken a balanced approach in both bought shares and paid down some debt. This quarter just due to some timing of accessing some of our international cash, we did see our debt level tick up a little bit at the end of the quarter. But the intent has been in our plan going forward will continue be balanced on that front. No, we're not concerned with the leverage ratio. Again, as we look ahead and we look at the internal measures that we've noted on the call, what we see our clouds clearing from a macroeconomic perspective and the trends we've even seen within each of the 3 business segments from an order entry standpoint, we're confident we're going to see demand improvements on the horizon. Our margins are strong well above last year's levels and so we're quite comfortable with the level that we're at.

Our next question comes from the line of Budd Bugatch with Water Tower Research.

Congratulations on the profitability in the quarter. I know that's a difficult thing and you're managing that well. But I am concerned about what I see in the implied backlogs, particularly in the Americas contract, which looks to me to be somewhere, I think, probably in the $355 million to $360 million range, Jeff, if I did the math right?

That's right, Budd.

And that's the lowest backlog in America’s contract since before the acquisition, since the acquisition, time of the acquisition. And it makes it I think you told me it makes it very difficult to leverage your manufacturing at that same time, so irrespective of the pricing. What's going on there? When will we see that backlog start to rise?

Well, Budd, I won't disagree with you that we everyone in this room is nodding. We have every interest to see order rates pick up and we're spending our full efforts as an organization to support the sales organization to support the operations organization to drive order growth. And that's what it's going to take and I think we are as we said in the prepared comments we're on the cusp of seeing order demand pick up. We saw some positive trends as we move through the quarter. I made the comment that Americas orders in the last couple of weeks have increased over last year same weeks prior year. So the trends are pointing in the right direction. I think the macro indicators as we've covered are pointing in the right direction. We fully expect to see that backlog begin to grow, but you know we have been through 18 months or so of what I would call a contract economic recession and we're finding our way to the bottom of it and we will find our way through the other side of it.

I have more on that, but I know I've got one more follow-up. And let me just go to the global retail because again that looks like that's a significant drawdown in backlog, not quite as severe as AC. But what, can you talk a little bit Andi on the global retail, what you're seeing in terms of e-commerce versus in-store? How do we look on same-store, same location or same brand kind of basis, however you wanted to give us a flavor on that and the future of that particular segment as well?

Yes, Budd it's a great question and Debbie's here, so I'm going to let her answer the specifics. But I think it's very promising and some of the backlog that you're referring to from last year reflected some of the supply chain issues that we were having along with many other retailers as we work through that. I think the reduction in backlog is actually a really good thing and a point to how we're managing our inventory much more efficiently. And the cycle time from when you were ordering furniture for us now to when it's showing up in your home is much shorter. So that processing is actually really beneficial because it drives more conversion. And I would say that business is really healthy, outperforming competition. So Debbie, do you want to answer some of the specifics?

Hi, there. As it pertains to some of the channel questions you had, we're seeing fairly consistent patterns across our three channels, stores, web and wholesale, with one exception that given the design service implementation that we've been doing in our stores, we're really seeing an acceleration of average order value in that channel as the contribution of design service sales picks up. Those orders are about over 2x the size in dollar volume of our non-design service sales. So we're very focused on optimizing the store traffic and the activity around design services. We're in the process of densifying our store floor sets to showcase more of the expanded offering in stores, as well as making sure that we're being much louder and more aggressive about driving traffic towards these design services now that our sales force is fully trained in that capability.

So the average ticket in retail are you in the $2,000 to $3,000 range?

Yes, that's correct.

All right. Thank you. Good luck on the next quarters and the balance of the year.

Our next question comes from the line of Alex Fuhrman with Craig-Hallum Capital.

Andi, could you talked a little bit about consolidating some showrooms in an effort to align the cost structure. What about on the global retail side of the business? Do you think there are opportunities there to maybe consolidate some of your retail stores? Or are there still opportunities to continue to open more stores there?

It's a great question, Alex. And just to touch on the showroom consolidation, I think the major driver behind why we've decided to do this is really driven from our customers in the AD community and making sure that we have everything in an easy and convenient place for them to actually see all of our brands. So we're very excited about that. It's not really driven by cost. Cost is a great side benefit, but really driven by the customer and what they're telling us. From a retail store standpoint, we are very under stored compared to our competition. And I would say we have opportunity to increase our store footprint. We find that our customer that shops online as well as in bricks and mortar is increasingly a better customer. So we think we have a huge opportunity in the next 2 to 3 years to increase that footprint. We're also seeing really, really successful trends in our stores. Debbie mentioned design services, the work that our AEs are doing to personalize and really move the sale forward is very helpful. So, we're very bullish on store growth.

And Andi, are there any brands in particular you think are under stored or perhaps opportunities for multi branded stores?

I think primarily our initial growth will be around the DWR brand and Herman Miller. We definitely think there's possibility for Knoll as well, but we carry Knoll within design within reach as well. So, all of our brands have potential, but those 3 other ones we'll focus on first.

Our next question comes from the line of Reuben Garner with The Benchmark Company.

Just wanted to kind of clarify plus square something up, Jeff. You talked about kind of maybe nearing or being at an inflection point. I don't know if that was in Americas specific comment or just kind of in general, but you're also announcing a restructuring, implementing cost savings, I would guess, because you've had kind of consistent order pressure over the last year or 18 months as you put it. Can you kind of walk us through the decision or the thought process there, why restructuring now if we're going to start coming out of this? And then I got a follow-up.

Let me start with that one, Reuben, and then I'll pass it on to Jeff. Listen, we're always looking at our structure and how efficient we're being. And remember, we're still finishing up integration between these two companies. And as we finish some of our synergy work, as we move toward into the future, we're becoming more and more efficient in certain functions. So as we've done that, we've taken the opportunity to sort of close the circle on many of the integration activities. We think we're mostly at the end, but this is really kind of the final part of that. Jeff, what would you add?

No, Andi, I think that's right. Reuben to your question, I would caution you to read really anything into that. I mean, one of the things we have always prided ourselves on it at MillerKnoll is trying to be on our front foot and making sure that we are responding to the current market conditions that we see but also protecting the strategic investment parts of the business that we are confident are going to help grow the business top-line and profitability going forward. And this is I think you can look at this as an ongoing practice of that kind of housekeeping. I mean this was not a this was targeted as I mentioned in my prepared comments around the management ranks and it was not just a cost take out but it was also a simplification set of decisions. I mean that Andi said it in her prepared comments, but I'll just emphasize that the decisions around real estate, it would be wrong to think of that as purely focused on cost take out. This is about creating a much more compelling expression of the combined millennial brands in these major markets that we serve. So, it certainly is not all about cost and I mean, I guess, I'd leave it at that.

Sorry, I was on mute. Yes, that's helpful. And then I guess this pricing sounds like it's stable. Can you just talk about I know you're coming into the end of your fiscal year, but maybe talk about it on a go forward basis the next kind of year? What's left in the pricing actions that you've already announced? When was the last pricing action you announced? Do you need another one this year to keep up with inflation? Are you seeing your competitors announce them? I guess just kind of an update on price cost in this environment?

Yes, Reuben, this is Jeff, and John please jump in. I would characterize where we feel we are as an organization is we're kind of back to what I would say are more traditional, more ongoing annual price increases as a cadence. There are still inflationary pressures there nowhere near the level that we were seeing when we were having to do multiple price increases per year. Our last increase was last June. It will probably on that say roughly that same type of calendar schedule as we move forward and much more in line with kind of pre-COVID annualized price increase percentages.

And then, I guess last question, you kind of answered the share question. I think that was directed at the Americas side. My question is actually internationally the business seems to be holding up a little better. And in fact, it looks like the last quarter showing growth again. How much of that would you attribute to kind of maybe the benefits that there were between Knoll and Miller versus have you seen a stabilization in macro over there kind of quicker? I know it's been a volatile situation, but just kind of thoughts on how things have transpired over the last 6 that I know?

I'm getting the combination of all other things, really I think the great news about our international business is that it is very diverse. So if you still struggle in Europe, then you have China that's beginning to wake up to offset that. So I think we have markets, as we mentioned over the last several calls, the Middle East, India, Asia and China starting to wake up that are really kicking in. And that stability has driven the business forward. And the one thing to remember too, Reuben, with the differences in our business in international and the Americas is that international is much more nascent and we are much more lightly penetrated. So, we have a lot of opportunity to grow market share and to expand markets to grow dealers. And also Knoll is supplementing part of our product offer that we never had in Europe before. So, as we continue to transition Herman Miller dealers to MillerKnoll dealers, there's momentum behind that. And as dealers begin to learn the products, there's momentum behind that. So I would just say it's really just a difference in the maturity of the markets and how we penetrate in the markets. And Jeff, what would you add to that?

No, I think that covers it. I think it's spot on.

And guys, I said I think I said last one, but I'm going to sneak one more in if that's all right. Jeff, can you just maybe you said this, but just to restate it if you could. The order patterns that you saw throughout the quarter, can you walk through those, again? What kind of December, January, February look like? And then were those specific to, were those consolidated or did you break out Americas? And if you didn't, could you talk about what you're seeing in Americas on a month by month basis?

Yes, let me start Reuben with just kind of the consolidated picture. We were down from an organic order perspective down to 4.7% on the full quarter Q3, but we came into the quarter down closer to 10%, 11% and we exited at a consolidated level in February up almost 3%. So we saw a fairly steady improvement in the year-over-year organic order calcs as we move through that was consolidated. The Americas not a wildly different story there. I mean, we came into the quarter in December with larger year-on-year declines. That we saw improvement as we moved into January we were kind of mid-single-digit declines February on around that same level, so we ended the full quarter down 9.4%. So we saw that improvement as we move through February and then what's been most encouraging is quarter to date through the kind of the latest data, the Americas segment is down, that it certainly has improved down 3% and the last couple of weeks up 5%. So, it's been a fairly consistent walk toward an improving trend line.

There are no further questions. I'll now turn the floor back to President and CEO, Andi Owen, for closing remarks.

Thank you so much. I want to thank everyone again for joining us on today's call, and we look forward to connecting with you all again soon. Take care.