Good morning, ladies and gentlemen, and welcome to the Lawson Products Third Quarter 2021 Earnings Call. This call will be hosted by Michael DeCata, Lawson Products' President and Chief Executive Officer; and Ron Knutson, Lawson Products' Chief Financial Officer.

During this call they will be providing an update on the business as well as covering relevant financial and operational information. There will then be time for questions and answers.

Please note that statements on this call and in the press release contain forward-looking statements concerning goals, beliefs, expectations, strategies, plans, future operating results, and underlying assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those described.

In addition, statements made during this call are based on the company's views as of today. The company anticipates that future developments may cause these -- those views to change. Please consider the information presented in that light.

The company may at some point elect to update the forward-looking statements made today, but specifically disclaims any obligation to do so. This call is being audio simulcast on the Internet via the Lawson Products Investor Relations page on the company's website, lawsonproducts.com.

A replay of the webcast will be available on the website through November 30, 2021. I will now turn the call over to Lawson Products' CEO, Mike DeCata..

Good morning. And thank you for joining the call. This morning I'll comment on the third quarter and share some thoughts about the state of the business. Additionally, I will update you on the final stages of the Partsmaster integration. I'll also discuss the growth initiatives that I mentioned in the second quarter earnings call.

Lastly, I'll comment on the business environment, supply chain and our competence in the future growth as our market continues to expand due to ongoing customer labor shortages. Ron Knutson, our CFO, will provide a more detailed review of our financial results followed by your questions.

Before I begin my prepared remarks, I'd like to comment on our progress in evaluating the Schedule 13D amendment filed by Luther King Capital Management on May 17, 2021. While this process has taken longer than expected, the special committee of the Board is nearing the completion of their analysis. And we anticipate updating shareholders shortly.

Beyond that, we will not be able to make any additional comments on the topic at this time. Overall, our consolidated business performed well, achieving significant sales growth over the third quarter of 2020.

We benefited from the inclusion of Partsmaster as well as organic growth from Lawson core, including strategic accounts, Kent Automotive and Bolt Supply. We're seeing broad-based recovery from last year's pandemic. However, ongoing supply chain disruption and related shipping issues have slowed the overall pace of recovery.

Our supply chain and sales teams are doing an extraordinary job managing in this environment. And we are confident that we will continue to improve performance while looking forward to returning to a more normal supply chain environment. However, our expectation is that these disruptions will continue at least to the first half of next year.

On a consolidated basis, we achieved 16.9% sales growth as compared to the third quarter of 2020, including the Partsmaster acquisition, which closed on August 31, 2020. Excluding the Partsmaster acquisition, organic growth was 8.4% over the third quarter of 2020. Consolidated sales were $105.6 million.

And Partsmaster generated sales of $13.6 million in the quarter. Partsmaster sales slowed during the quarter, primarily due to a broad slowdown in military sales combined with a 2-month slowdown in 2 of Partsmaster's large strategic accounts, one of which is tied to military. Both accounts have rebounded in September.

And we are seeing good progress in the recovery. Military is also showing signs of recovery. Overall, we were very pleased with the Partsmaster integration and strategic fit with our existing business, and expect to realize significant additional benefits over the intermediate and long term.

While supply chain disruption proved to be challenging, our supply chain team is making progress in managing the -- in this challenging environment. We're working to improve items in backorder, and we're adding new suppliers and using product substitution when necessary.

The consolidated business achieved $9.4 million in adjusted EBITDA for an 8.9% adjusted EBITDA margin for the quarter. Our Lawson organic gross profit margin was 58.7% versus 57.2% in the second quarter of 2021, and 58.8% in the third quarter of 2020. Before the reclassification of service expenses into margin.

Both the third quarter and the second quarter of 2021 were impacted by inventory reserves or write-downs of PPE items. While we were up against supply chain challenges, labor shortages, transportation and vendor cost inflation, I'm very pleased with these results.

While supply chain challenges have not bated, our teams have made significant progress in managing through this environment, including passing cost increases along to customers. When we discuss supply chain challenges, it is important to include labor challenges. Lawson is not exempt from this.

However, broad labor challenges are a very large driver of our service-intensive vendor-managed inventory value proposition and provides us with great opportunities. Customers find it necessary to outsource inventory management, which has long been a key aspect of our business model and a driver of our growth.

One other aspect of VMI warrants discussion. Many people equate VMI solely to labor and inventory put-away. As we've stated previously, our service-intensive VMI includes put-away, but also anticipates and manages the customer's future needs.

This forward-thinking service value, that our sales reps provide, greatly differentiates Lawson from many others who refer to their service as VMI. Now I'd like to take a moment to discuss the integration of Partsmaster and Partsmaster quarterly performance. The integration of Partsmaster into the Lawson system is essentially complete.

The last major stage of this process is fully transitioning to our new distribution center in Dallas, which will be completed by the end of the year. As I mentioned last quarter, this distribution center will house our military business, the Torrent parts washing system and our cryogenically treated surface hardening process.

With some final steps in the months ahead, Partsmaster is now integrated and extensive new product training is underway to fully utilize our expanded product offering. As I mentioned, a moment ago, Partsmaster sales for the third quarter softened to due to the slowdown in military sales. Partsmaster core sales were flat for the quarter.

And with the exception of 2 strategic accounts, which have begun to recover in September, strategic counts portfolio showed modest growth. Our Bolt Supply business continues to perform very well, achieving a 13% EBITDA for the quarter and sales growing at over 12.5% from a year ago quarter, and nearly 2% over the second quarter of 2021.

We continue to make investments in several distribution centers, including the Dallas DC that I just mentioned, a new and larger Calgary DC, as well as significant technology upgrades in Suwanee, Georgia and McCook, Illinois.

All of these investments will add capacity and productivity to our physical infrastructure, and provide us with significant expansion capability for the -- for growth. Now turning to sales. Customers have responded very well to price increases and working with us to anticipate their future needs.

Strategic accounts achieved growth for the fifth quarter in a row at 4% versus the second quarter, and 29% versus the third quarter of 2020. Our Kent Automotive business achieved nearly 7% growth versus the second quarter, and 18% as compared to the third quarter of 2020.

We added 528 new strategic account locations on the Lawson side of the business, and 338 new Kent locations. Between the third quarter and the coming year, Kent will add several hundred new locations from new and existing auto body repair customers.

These customers have specifically commented on their labor issues along with our operational excellence as the primary drivers to their decision to engage Kent. We're also making good progress expanding our integrated supply customer base, and recently added another large integrated supply partner to this segment.

This customer segment continues to expand with several customers, partners achieving all-time highs in sales this quarter. We're also winning a continued stream of new strategic accounts. Most recently we add an account in the highway construction and another in recreational low-speed vehicles sales and service market.

Sales in our government civilian segment were down as compared to the third quarter of 2020. This is attributed to lower September sales of PPE to the K through 12 market as compared to 2020. In fact, we experienced PPE headwinds in all of our businesses. Our Lawson MRO business grew at 7.6%. However, excluding the impact of PPE, sales grew at over 10%.

On our last earnings call I mentioned 3 areas that we're investing in to accelerate growth, developing additional channels to market in underserved markets, state, local, and educational, and the rollout of our newly acquired Torrent parts washing line of products. We've made good progress in all 3 areas.

And we are confident that in 2022 these investments will show significant growth. In fact, I recently attended American Rental Association conference in which many of our construction equipment rental customers attend. One of the products that received significant interest and customer enthusiasm was the Torrent parts washing system.

Over the coming quarters we'll be reporting on our progress in these areas. Our 3-part growth strategy remains unchanged, add sales reps, drive sales rep productivity, and make accretive acquisitions. Sales rep productivity remains a key focus area. We realized an 8.2% improvement in sales per rep per day versus the third quarter of 2020.

Looking forward, I have never been more optimistic and confident in the Lawson strategy and our ability to profitably execute that strategy. The company has never been stronger, and our value proposition has never been more critical for our customers than it is now. Next year we celebrate our 70th anniversary.

Over those 70 years we've seen many challenges, but I am 100% certain that Lawson is entering an extraordinary phase of our evolution. And I am equally confident that customers, suppliers, teammates and shareholders will benefit from Lawson's success. Thank you to all of our team members for their commitment in driving this success.

I look forward to all that we will accomplish. Now I'd like to turn it over to Ron for more detailed information on our financial performance..

Thank you, Mike. And good morning, everyone. I will start with some key takeaways for the quarter, and then we'll discuss some of the details. Keep in mind that we are now lapping the August 2020 acquisition of Partsmaster as we compare against the year-ago quarter. A few highlights for the quarter.

First, consolidated sales improved by $15.3 million to $105.6 million, or nearly 17% over the third quarter of 2020 due to the inclusion of Partsmaster and continued recovery from the pandemic within Lawson and Bolt Supply. For the quarter, Partsmaster generated sales of $13.6 million.

And excluding Partsmaster, organic average daily sales increased by 8.4% compared to a year ago. Second, our consolidated gross margin percentage improved to 53.1% versus 52.3% a year-ago quarter, and 51.3% in the second quarter despite the global supply chain issues in the marketplace. I'll talk more about this in a few minutes.

Third, our reported operating income was $4.6 million for the quarter compared to $3.4 million in the second quarter of 2021, and $2 million a year ago. And our adjusted diluted EPS improved to $0.64 for the quarter.

And fourth, our adjusted EBITDA was $9.4 million or 8.9% of sales, a sequential improvement over the $8.8 million or 8.3% reported for the second quarter. As we reflect on the third quarter, we have continued to drive our business forward. Sales continued to sequentially improve in the Lawson and Bolt business, as does our sales rep productivity.

Within Partsmaster we did see a sequential decline in sales with the majority of that driven within weakness in the federal government business. Most product categories realized sequential increases over the second quarter.

We continue to make great progress in this environment, and continue our focus on driving sales, gross margins, cost controls and cash flows. We remain focused on supporting our customers in generating revenue in this environment while ensuring the safety of our teammates.

As we near our 70th anniversary as an organization, our services, products and expertise have become more critical to our customers, especially in light of the current and anticipated future labor shortages within many industries. As mentioned on previous calls, we are performing onsite visits to essentially all of our 70,000-plus VMI customers.

Consolidated gross margins for the quarter came in at 53.1% compared to 52.3% a year ago and 51.3% last quarter. On a standalone basis before the classification of certain service-related costs within gross margin, the Lawson MRO margin was 58.7% in Q3 compared to 57.2% in Q2 and essentially flat with 58.8% a year-ago quarter.

Both Q3 and Q2 MRO gross margin were burdened with additional inventory reserves associated with the write-down of PPE items in which the current market value dropped below our cost. Excluding these reserves, our MRO gross margins for 2021 were 59.2% in Q3 and 57.8% for Q2. Let me state this a little differently.

Despite all of the supply chain challenges that exist in the marketplace today and excluding the reserves for certain PPE items, our Lawson core gross margin percentage expanded 140 basis points over Q2 of 2021 and 40 basis points over Q3 of 2020.

Our gross margins are now more in line with Q1 of this year as many of the actions that we took became more concentrated in the latter half of the second quarter. In this challenging supply chain environment, we are laser-focused on growing our gross margin dollars and managing through the related inflation.

Specific actions include, but are not limited to putting price increases in place where appropriate, identifying secondary sources of supply, including national-branded products, reallocating our labor resources to focus on fast-moving products to ensure we fill our customers' needs, and working closely with our suppliers to gain better insight on delivery times and cross-stocking certain products from McCook to our forward DCs when possible.

While we're pleased with our overall gross margin percentages, our ability to get products has had a negative impact on our sales, customer backorders and service level metrics. We're adjusting our actions to manage through these challenges. However, we expect that many of the broader-base supply chain challenges may exist into the first half of 2022.

For the quarter, total operating expenses were $51.4 million compared to $45.2 million a year ago and $51.2 million in the second quarter.

This increase over a year ago was primarily due to the increase in sales, the inclusion of Partsmaster expense of $9.1 million post acquisition, reestablishment of temporary cost savings put in place a year ago during the pandemic which were partially offset by a $5.9 million reduction in the mark-to-market accounting for stock-based compensation.

Expenses during this quarter also included $3.2 million related to the potential acquisitions, including the evaluation of the Luther King Capital Management proposal disclosed in a Schedule 13D amendment filed on May 17, 2021.

Excluding nonrecurring items, adjusted operating expenses were up 1.9% compared to the second quarter of 2021, primarily driven by higher labor costs. Our reported operating income was $4.6 million for the quarter.

On an adjusted basis, excluding nonrecurring items, non-GAAP operating income was $7.3 million for the quarter compared to $6.8 million in Q2 of 2021, and $7.7 million in the year-ago quarter. And adjusted EBITDA as a percent of sales improved to 8.9% for the quarter compared to 8.3% in the second quarter.

On an adjusted basis, excluding stock-based compensation and other nonrecurring items, diluted EPS was $0.64 for the quarter versus $0.62 in the year-ago quarter and $0.60 in Q2 of 2021. Capital expenditures for the quarter were approximately $1.8 million, including work being performed to expand our Suwanee distribution capabilities.

We expect total CapEx in 2021 to now be in the range of approximately $6 million to $6.5 million, including the planned upgrades to our Suwanee facility and some enhancements at McCook to allow for increased volume in the future.

Additionally, we will be relocating our Calgary distribution center to a new location with expanded square footage in early 2022. As an organization, we continue to make investments in the business, in particular areas that have a direct impact on sales.

While continuing to respect the uncertainties and unevenness of the pandemic recovery and the related supply chain challenges, we continue to generate sequential improvements with balancing our cost structure against our sales and margin trends.

We ended the quarter in a net borrowing position of $3.2 million, inclusive of making the final $33 million payment for the Partsmaster acquisition in the second quarter, and increasing our working capital on higher sales this quarter.

We ended the quarter with $87.4 million of availability under our $100 million committed credit facility, placing us in a great position to invest in the business and support future acquisitions.

As Mike and I have both previously stated, we are managing through this challenging time with the expectation that we will come out of this environment in a stronger position than how we entered it. The integration of Partsmaster into the organization is largely behind us.

And all sales reps are now utilizing Lawson's technology systems with the order fulfillment coming from the legacy Lawson distribution center network. Going forward, certain pieces of our government business will be fulfilled from a dedicated distribution center in Texas to comply with certain federal requirements.

As with other companies, as Mike and I have both discussed, we have experienced inflationary costs due to the global supply chain disruptions. We are actively managing through these challenges as evidenced by our continued improvement in our results, including gross margins recovering to being more in line with our historical performance.

Before I turn it over to the operator, let me thank the entire team. We've had significant activities taking place on many fronts, not to mention still managing through the pandemic and more recently the global supply chain challenges.

The team continues to step up on every aspect of the business to make us stronger for our customers, our employees and our shareholders. Thank you for your efforts and your never-ending commitment. I'll now turn it over to the operator for questions..

[Operator Instructions]. Our first question today is coming from Kevin Steinke at Barrington Research Associates..

I want to start off just by asking about the supply chain issues and the hit to sales related to just a lack of product availability. If you've been able to dive in at all and kind of figure out how much of a headwind that actually is, where, you know, maybe the demand is there, but you just can't fulfill it.

I don't know if that can be quantified or at least can you talk about it a little bit more qualitatively?.

Yes. I'm sure we're going to both want to jump into this in various aspects. So what we're seeing is broad-based supply chain challenges that ranges from availability of product to slowdown because of labor, trucking, so on and so forth.

What we've done to counter that is we worked with a broader set of suppliers to find alternate products that fulfill the customers' needs. In some cases what we've done is product substitution.

And again, working closely in partnership with the customer so that we fulfill the customers' needs, though it may not have been our or their first choice for a product, but it keeps them running. So there are several actions we've taken.

And one of the challenges we see is normally for us, because of the nature of our value proposition, if there's a backorder the customer never experiences it because within the 1 week or technically 10-day calling cycle across all 90,000 customers, generally the backorder comes in, in such a short period of time that the customer never experiences the backorder.

In this environment backorders are longer and larger number. So it is our belief that when backorders extend in length and become numerous, eventually it slows down demand. So supply can eventually work its way up to a demand problem.

Now, the other challenge that we're all facing, I think everybody in the industry is facing is that while we're doing a very good job in servicing our customers, customers themselves are having labor challenges, raw material challenges unrelated to our vendor-managed inventory or MRO.

So there are multiple dimensions that we're all dealing with on the supply chain and the customer's side. Our customers are experiencing the same thing. Now, one of the things that does help us with is our service-intensive vendor-managed inventory value proposition has always been about driving and maximizing productivity of the customers.

And as you know, there's been an acute labor shortage of maintenance mechanics, diesel mechanics, truck drivers and so forth for many years unrelated to the pandemic. So that's been the cornerstone of our value proposition. It's been incredibly intensified recently.

And in fact customers, in fact very large customers were picking up lots and lots of locations where customers call us and even noncustomers reach out and basically say help.

And because of our core value proposition, we've been added so long, all of these challenges, well, they are real challenges, are ultimately helping us to cement our value proposition and cement our relationship with the existing customers.

But we are certain now because we've seen enough evidence now that we're also drawing new customers into us that for whatever reason were insourcing, they're now turning to us to outsource because of the same challenges.

Ron, did you want to?.

Yes, I'll -- Kevin, just in terms of the impact on sales, there's two pieces. Mike touched on it a little bit. One, we have seen an increase in our backorder. So if we measure our backorders from the end of June through the end of through the end of September, we certainly know what the value of that is. It's about a 1% headwind on our sales.

What's not included in that number, however, is what Mike had mentioned in that, as items are on backorders our customers may just not place the order again. So we think -- we know that we've lost some of that recurring replenishment that would typically place -- take place on those backorders. So that's a pretty difficult number to measure.

We know it's at least 1% on the increase in the actual back orders, but it's probably a multiple of that on the missed replenishments..

Okay. That's all very helpful commentary. Yes, I thought you did a nice job improving the gross margin sequentially in the Lawson MRO business.

Can we attribute that mostly a price increase? And do you feel like you're going to have to implement more price increases in the coming quarters here given that the supply chain challenges you mentioned continuing at least through the first half of next year?.

Yes, Kevin, this is Ron. So we did see a lift that helped us from a pricing perspective given some of those actions taking place later in the second quarter. So we got the third quarter kind of full benefit of that. But I think it's a combination also, right? It's also what we're doing in the distribution centers to manage our labor.

It's getting better insight into when products are coming into our McCook facility. It is trying to cross-stock more items to get those products out to the forward DC. So certainly pricing helped. But we've also seen improvements in just logistically what we're doing given some of the actions that we've taken within the DCs.

In terms of price increases in the future, tough question to answer specifically. What I would say is that we are going to continue to monitor the inflationary environment.

And if we see cost increases continue to come through, whether or not that's in transportation or within our landed cost from our suppliers, then we'll take the necessary actions to protect our margins. So we're monitoring it very, very closely, as you could see from some of the improvements that took place here in the third quarter..

Kevin, just to add [indiscernible] with the data point. During the third quarter there was a point where in our largest distribution center we had 27 job openings. And the effect of that was struggling all week to catch up and get the orders out, which also meant working on weekends, paying overtime and the inefficiencies of transportation.

At this point we have fewer than 5 openings in that same distribution center. So you would expect fewer overtime hours, lower cost labor because of the efficiency of the labor we have. So a lot has happened in our ability to navigate and manage through a difficult challenge.

So we feel like we're getting ahead of it, both on the cost of goods sold, our ability to successfully pass those cost increases along. And as well our ability to manage our own internal cost because of labor pressures that we feel like we're getting ahead of in the DCs..

All right. That's good to hear. So this is -- might be a tough question to answer too.

But just given all the actions that you've taken to improve gross margin sequentially, I know it's a very fluid environment, but do you feel like you can at least hold gross margin where it is going forward, or at least take further actions in the future to hold it as we move forward here?.

Yes, Kevin, yes, to that point you're right, it's a really fluid situation. And we have been saying for years that we raised price associated with cost. We feel like the value proposition we offer is valued by customers. Customers are willing to pay us for that value proposition.

So for many years now -- and we've been at this gross margin for a very, very long time. For many years our price increases are always associated with cost increases. It's a little hard to predict how that's all going to play out over the coming quarters and next year.

Supply chain could become more challenging or we could finally break this logjam a little bit with containers and trucking and so on and so forth. So we feel like we've got a good process in place to maintain our margin.

I will say that as we continue to grow strategic accounts, margin percent is very critical, but you take dollars to the grocery store and not percent to the grocery stores. So given the choice, we will usually focus on driving margin dollars and not exclusively looking at margin percents.

And we think that, that is also an important factor going forward, especially in the context of our growing strategic account business, our large Kent business. We've had incredible success this quarter with Kent.

And very large high-profile accounts coming to us and picking up very large numbers of new locations, both in new accounts and deeper penetration into existing accounts. Same thing is true in strategic accounts, picking up new integrated supply customers.

And when you partner with an integrated supply company, you really -- you've got a relationship with the integrated supply company, but in turn they bring us into dozens and dozens of their large factories. So it's a real multiplying leveraging effect when we partner with an integrated supplier.

And we are now doing business with a very large number of integrated suppliers and a real close partnership. So when you put all of this together, it's a long way of saying margin dollars count every bit as much as margin percent..

Right. No, understood. That makes sense.

Can you just also, following up on that, just maybe talk a little bit more on what's contributing to that momentum and adding new strategic account locations and new strategic account customers?.

Beyond the normal -- we've been at this for 70 years. Our broad supply chain, our footprint, the sales reps we have, all servicing pretty much anywhere you are in the U.S. and Canada, we can service your location, and that's very attractive to the integrated supply strategic accounts.

Beyond the integrated supply strategic accounts, interestingly, 3 or 4 Kent customers won a very long relationship, but a geography we didn't have, specifically came to us and detailed that in that large state, that large geography they were being underserved by a competitor, so they brought us in.

And this is several hundred locations that they brought us into, into an existing customer. Now by contrast, several other companies came to us that were not previously customers. And in all 3 cases they specifically spoke about our operational excellence, our reputation, even the new guys who we hadn't done business with before.

And they all talked about labor demographics and their challenge with their internal labor. By the way, as an aside, I was out at the American Rental Association conference in Las Vegas 2 weeks ago. And a noncustomer came up to us at the booth and specifically said I can't keep my shop running, I'm desperate, will you come help me.

That's music to our ears. I believe our market is expanding. Of course, it's a very large and fragmented market. But a big percentage of people buying what we sell, do it through customer-managed inventory, they insource.

That is shifting, and it's accelerating tremendously in this environment to outsource, and it's my belief that as customers outsource our operational excellence and coverage will enable us to win more than our fair share of all new business. That's exactly what we're now beginning to see.

And I look forward in future calls being able to quantify that for our investors..

Okay. Great. Just a couple more quick ones here for me just on the -- more on the number side.

Ron, do you have just the trend in monthly consolidated average daily sales as you move through the third quarter and maybe what you've seen in October?.

Sure. So I can give those to you, Kevin. So on a consolidated basis, I'll give it to you in ADS, $1.611 million in July, $1.623 million in August and $1.716 million in the month of September. So all in for the quarter we ended at $1.650 million.

What I would say relative to what we've seen here for the first couple of weeks of October is kind of up slight, I would say up slightly versus that $1.650 million for the third quarter. Pieces of our business are continuing to move right along. So again, no major changes, I would say, from what we saw in the third quarter..

All right.

And then just lastly, do we start to get past the PPE headwinds a little bit more, I guess, in the fourth quarter or as we -- I suppose as we would as we move into 2022?.

Yes, we -- yes, we do a little bit. So Mike mentioned this, and it probably deserves to be restated in that we were up against some headwinds here in the third quarter relative to PPE items. And if you isolate just the Lawson, kind of the legacy Lawson business, as Mike mentioned, we were up 7.6%. Excluding PPE, we were up over 10%.

So pretty significant headwinds versus the third quarter a year ago. And as I look at the fourth quarter, still -- we'll still be up against a little bit of headwind, but not nearly to that degree. In fact, I think the fourth quarter PPE sales on average every month were about $1.2 million.

And currently, our current trend is kind of running in that $1.2 million range. So yes, I -- not -- clearly not as much as what we saw here in the third quarter..

[Operator Instructions]. We have no questions in queue. This concludes our question-and-answer session. I would like to turn the conference back over to Mike DeCata for any closing remarks..

Thank you. Thank you. And thank you for joining the call today. Labor and productivity pressures are intensifying on our customers and the market in general. Lawson's long-standing and well-established service-intensive vendor-managed inventory model anticipates customers' future needs and enables customers to maximize their machine time utilization.

I believe the market is taking notice, and we have potential customers reaching out to us more than ever before. Our operational excellence, geographic coverage, expanded product offering and nearly 70 years of experience are being brought to bear on this challenging environment.

And we're experiencing strong market demand for our products and our services. Our investment in people, process and our analytical orientation are enabling us to navigate through difficult waters and further differentiate ourselves from our competition.

I believe that this environment -- in this environment we'll succeed in converting customers and as well showing that Lawson is a resilient, innovative and committed practitioner of service-intensive vendor-managed inventory and a trusted partner to 90,000 customers.

Thank you to our extraordinary teammates, customers and suppliers, your actions and commitment are critical, a critical component in restoring our economy to the growth we all expect. Thank you, and I look forward to speaking with you on the next call. Have a wonderful day..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..