Welcome to The Middleby Corporation third quarter conference call. With us from management are Chief Executive Officer, Tim FitzGerald; Chief Financial Officer, Bryan Mittelman; Chief Technology and Operations Officer, James Pool; and Chief Commercial Officer, Steve Spittle.

The call will begin with opening comments from management, and then we will open the lines for questions. [Operator Instructions]. Now I'd like to turn the call over to Tim FitzGerald for opening remarks. Please go ahead, sir..

investing in technology and product innovations, addressing the current dynamic market trends, furthering our strategic sales initiatives and by expanding our brand portfolio with the recent strategic acquisitions of Novy and Imperial Range. As we invest for the future, we also continue to execute on our long-term financial goals.

For the third quarter, we reported record net sales and earnings. And once again, we posted EBITDA margins at all three of our segments in excess of 20% despite significant headwinds from supply chain challenges.

These supply chain challenges meaningfully accelerated during the third quarter, impacting our ability to produce and substantially inflating our material and shipping costs. We've responded quickly, taking multiple price increases in the recent months at each of our three business segments.

However, given our record backlog, these price increases are taking longer to realize than in ordinary periods. As a result, the third quarter reflected minimal benefit from our price increases.

We will see the impact of both our price increases and continued rising costs in the upcoming quarter, and we expect to realize a net price benefit as we enter 2022, which should further improve as we continue throughout next year.

While we manage the disruptive impact of near-term supply chain challenges, we remain committed to our long-term profitability targets.

As we drive profit improvement through acquisition integration, strategic manufacturing initiatives, and evolving the mix of our product by promoting higher technology solutions that provide greater returns to our customers. Customer demand remained strong in the quarter as our orders continue to outpace shipments.

Incoming orders were not only ahead of 2020, but continue to outpace 2019 pre-COVID levels by more than 30%, both for the third quarter and for the full year. Given the continued order strength, our backlog has grown from $400 million a year ago to $1.2 billion at the end of the third quarter.

While this presents substantial operating challenges, it also presents significant visibility and momentum as we exit the current year and move into 2022. As we look toward next year, we are optimistic about the continued market demand and the strong position we hold in each business segment.

For our Commercial Foodservice business, the restaurant industry is in recovery across all segments. Categories such as casual dining, institutional and travel and lodging are joining the recovery we have already seen in categories such as quick serve, pizza and fast casual.

And more importantly, our customers are looking to make strategic investments in their foodservice operations, leading to greater acceptance of new technologies.

The foodservice industry is rapidly changing, responding to evolving consumer trends, the emergence of new business models and with an urgent need to address significant operating challenges, most importantly, the availability of labor.

The strategic investments we have made over the past several years and throughout COVID position us at the forefront of an evolving industry. This is evidenced by customer activity we've had at our Middleby Innovation Kitchens.

We are experiencing increased engagement on our latest technologies, offering labor savings automation, greater speed of service, menu flexibility and reduced operating footprint. We're excited about the pipeline developing with new customers and with our latest product launches.

At our Residential business, new home starts continue to be robust while existing home sales also remained strong and well ahead of 2019 pre-COVID levels. These favorable housing dynamics, along with increased time spent at home, is supporting the design and build of new kitchens and remodels.

These conditions support a favorable backdrop to our business carrying into 2022. In the third quarter, we were excited to have debuted our residential showroom in Dallas.

This showroom is connected to our Middleby Innovation Kitchens, demonstrating the crossover of product and innovation between our Commercial and Residential businesses, and bringing to life our differentiated ability to offer professional restaurant innovations in the home.

Our showrooms are providing to be -- are proving to be an outstanding investment and strategic asset. We are increasing our engagement with end users, dealer partners and designers. We're expanding our events, training support programs and marketing from these showrooms, further increasing the awareness and demand for our premium portfolio of brands.

At Food Processing, the effect of COVID and the related travel restrictions that has impacted demonstrations, installations and the timing of large projects is beginning to subside, providing for an expected improvement to the operating environment as we begin next year.

Despite the operating challenges encountered during the year, demand has proven to be strong as our food processing customers are facing the challenges of labor, rising food costs, safety concerns and sustainability. We are positioned to address these demands with our many new product innovations and full-line solutions.

Our entry and strategic investment into areas such as bacon, dried meats, pet foods and alternative protein is also paying off, and we're increasing our available solutions in these growing categories. Now I'll pass the call over to James to spotlight one of our many recent product innovations highlighted in our investor slides..

automation and labor savings. The next-gen griddle is a great example of how embedded automation can augment traditional technologies to improve speed, throughput and quality while reducing the amount of labor and skill required to operate the griddle. Compared to other griddles, the next-generation grill seems a little bit nonconventional.

This is because it's the first of its kind to vertically adjust the bottom platen to the food once the top platen closes, a true innovation that gives a griddle a superior advantage over other griddles that attempt to continuously adjust the top platen to a stationary bottom platen.

Top-adjusting platens struggle as the amount of torque and accuracy required to achieve this task is beyond their current mechanics.

The last slide in the deck is a summary of the features and benefits of the double-sided grill, but having worked hands-on with the grill for the past week at the Middleby Innovation Kitchens, I can say that there's nothing like it on the market today.

With a single touch of a button, the griddle can execute a simple or a complex multistep cooking profile that is designed to accelerate and optimize cooking from the vertically imposed platens all while continuously adjusting the bottom platen to account for the food to ever-changing properties, thus ensuring the desired compression is maintained during the cook.

This is a terrific product introduction for Middleby in 2022 and is on full display at the MIK. Bryan, over to you..

ales and lagers. For those looking to learn more, Brad is ready to educate you, too. Now let me get back to some bigger numbers, our order and backlog data. We have again shared details in the presentation that is available at the Investors section of our website.

We will share this information through our fourth quarter reporting, but may cease to do so over 2022. Commercial Foodservice order growth for the third quarter over 2019 was again 30%; Residential's order intake was strong at 34%; and Food Processing was up 45%.

Given these order rates and the supply chain challenges that limited our ability to generate higher revenue levels, our backlogs continue to grow, up 19% from the end of Q2 and more than double where they were at the beginning of the year. These trends have persisted in October as well.

So I will reiterate what I shared last quarter as we look forward, that we are keeping our expectations at modest levels for the near term given the supply chain limitations on significantly expanding revenue levels.

We are obviously seeing great order trends and the building acceptance of our new products, and we continue to invest in innovation, automation and robotics.

So as we look to Q4, when considering our backlog, pricing actions and inflationary pressures, we expect nominal top line growth sequentially from Q3 and margins likely at levels consistent with Q3 before starting to see margin expansion in Q1 of '22 and likely then growing into and through Q2 as well.

We invested not only in the MIK but in also four residential experience centers. And within Food Processing, we also have our Bakery Innovation Center in Dallas and our Protein and Innovation Center just outside Chicago. I always look forward to trips to any of these spots, and not just because of the great food and drink I get to enjoy while there.

Witnessing how we serve our customers, the passion and the knowledge of all that represents our brands is amazing. The energy one feels as he witness customers, designers, consultants or other partners interacting with our people and products is powerful.

Our products, innovations and our people will continue to deliver solutions that will drive growth for years to come. Thanks. That concludes all our comments for today. And operator, if you can now open up the line for questions..

[Operator Instructions] We have our first question coming from the line of Saree Boroditsky with Jefferies. Your line is open..

Good morning and thanks for taking my question.

So just given the strong backlog figures, could you help quantify the impact of the supply chain in the quarter on sales? And are you seeing customers place orders earlier than usual given the longer lead times?.

It's hard to quantify, honestly, I mean obviously, we're very restrained in what we can ship, how much more we can ship. I mean obviously, the backlog is up 30% more than what we're shipping. I think if we had unconstrained supply chain and labor issues, we would be shipping frankly, that much more.

So I think that's probably about all I can say to quantify. I think more importantly, we're trying to build capacity as we go into next year. I mean the supply chain challenges continue to be very dynamic. We have phenomenal supply chain team around the company.

They're working every day to secure availability so we can deliver to our customers, and we're trying to increase that as we move into next year..

Great. And then you talked about some of the investments you're making in automation, especially in Commercial Foodservice.

Could you quantify that spend? And how we should think about those costs going forward?.

I'll let Bryan maybe touch on that from a number standpoint. I mean I just think, as you heard in our comments, we talk about a lot, we're very committed to investing for growth in the future.

I mean we're doing that with investments in technology, but certainly with our sales initiatives as well, which certainly there's a lot we're doing on the digital front as well investing in our channels and channel partners.

But kind of the hands-on experience is really a critical one as well, so that's been a very significant commitment that we've made. And that's been increasing as we've been going through the year, and that's kind of fully reflected in the third quarter..

Saree, this is Bryan. In past quarters, we have talked about a level of spending we've had on technology, including automation and that has not diminished. I also think it's important that as you think about automation, it's not just robotics and the like but it's like products that James has talked about, the NextGen Grill.

It's products like the PLEXOR that we highlighted last quarter. So beyond the numbers I've talked about before, I'll call it, within our day-to-day R&D run rates, we're always developing new products.

So that's why as I think you think about the spend, it's what we've quoted before plus additional amounts that, again, are embedded in what we're doing across all our businesses to bring out that new innovation. So if you follow us, again, you can -- on social media, you can see our robots in robotic solutions in action.

But again, automation is more than that. It's all the things that James has really been talking about on this call and prior calls as well..

I just -- we've referenced $5 million per quarter, $20 million plus per year of incremental R&D spend. So we do have a multimillion-dollar investment in sales initiatives as well. So I just maybe call that out because I think those are exclusive items there. So that is an investment that we, again, you'll see is running through our P&L.

It's actually been building over the last couple of years as we're thinking about where we want to be in two to three years out from now..

I appreciate the color. Thanks, guys, congratulations on the quarter..

Thanks..

Thank you. We have our next question coming from the line of Joel Tiss with BMO. Your line is open..

Hey, guys. Go on good morning..

Good morning, Joe..

The first one maybe is a James question, I'm not sure.

But is there any way for you to give us a sense of how far away from the level of what the customers want in terms of automation? Like where is the industry or where are you guys versus what the customers are asking for? And any way to give us a sense of what your positioning, you feel like you're way ahead of everyone else or you're keeping pace? Or any characterization..

Yes. I think right now, you've got kind of two types of customers. You've got customers that are actively adopting our embedded automation today every day, the products like the PLEXOR, the products like the Taylor NextGen Grill as we see that in our backlog numbers.

And then you have customers that are looking beyond embedded automation and looking for, what we'll call, kind of true robotic automation that they're looking to deploy in the kitchens.

I think we are right on pace, maybe outpacing the market with our FryBot and PizzaBot solutions that we're bringing to bear on the industry for all the interrupts that we've had with our customers at the Middleby Innovation Kitchens that have seen these technologies.

They seem to be in line with their expectations of what they're looking to automate within their space. It obviously impacts the different segments, slightly different, but the ones that haven't recovered as much, frankly, lead to greater pent-up demand when they do recover, which is kind of what Steve was alluding to, talking about school systems.

So we feel pretty good about the trends continuing and don't really expect a disruption from an order standpoint based on COVID..

And then a bigger picture question in terms of acquisitions.

Are there larger acquisitions available? And then more around your focus, you're more focused on technology? Or is it still kind of building out the product lines and filling in some areas where there's exciting growth?.

Yes. I would say it's a bit of both. I mean obviously, we continue to be very active over the last several years. The company expands. We're really focused on -- continue to build on our core business to three different segments.

You've seen us enter into adjacent categories such as beverage, where we built a leading platform and then we're acquiring technologies that really help us kind of advance all the companies in the group, certainly our automation division such as L2F is a great example.

Powerhouse Dynamics with our Open Kitchen launch where we've kind of become the -- we're leading the IoT charge, and that's really coming across all of our brands. I mean I think those are all key areas. Investments in international is another one as well, 1/3 of our business, so that's north of $1 billion today is outside of the U.S.

So that is another area of focus. So in terms of size, I mean, they're all shapes and sizes. As you can see, we do large acquisitions. We do small acquisitions. As Middleby grows, that gives us the ability to actually go after some bigger fish out there, which you've seen size of acquisitions increase over time.

So there's a lot of great ideas in the pipeline that are very strategic. And certainly, the current market, we're as active as ever in terms of ideas and things that we're pursuing..

That's great. And then the last one from me.

Can you just give us a little characterization of some of the end markets that may be lagging? What I'm thinking in the back of my mind is more like a slingshot into 2023 and maybe like hotels, airports, cafeterias, places like that? Or is there enough sort of underperformance in some key end markets still, not from you guys, just from lack or demand still being a little bit weak that we could really see kind of longer term? What I mean, like '23 and '24, we can see those end markets come back and really, really add a lot of momentum to what you guys are already doing..

Yes. I want to make a quick comment, and I'm going to pass it over to Steve here. Just the one comment is obviously, there's a lot of disruption and a lot of dynamics that are driving activity in the near term and as you go across the different segments that are at different stages.

But I mean, I think we're pretty excited about what the outlook is over the long term. So despite the fact that we've had some pretty good orders here in the near term, I mean, there really is a lot of trends that are driving longer-term growth.

Those are obviously things that we were positioning for going into COVID, which COVID is accelerating a lot of those trends. But I mean I think that really does set the backdrop for kind of a longer-term period in the commercial foodservice industry. So maybe kind of digging into some of the different segments..

Yes, Joel. Yes, I would just say, again, if you think of our customers in groupings of how they've gone through the last, call it, 18 months going through COVID, the group that has certainly again done the best and continues to grow, will certainly continue to grow into next year is the QSR, fast casual, pizza, retail, C-store group.

I mean that's the group that's doing record new builds on their stores right now, and they've given us a lot of visibility certainly into next year and I think have some aggressive growth plans. So that's kind of group number one, which we found before.

I think the group after that, which probably is getting more into what you're referring to, Joel, you certainly are into more casual dining than independent restaurants. So I think they're certainly ahead of where they were kind of pre COVID. They're still lagging that first group.

This group, I think you're seeing a lot more replacement business, right? They're not opening as many new locations. They're getting the locations that were either shut down or harder hit back up and running, and you're seeing replacement business from that segment.

And then I think the last group, again, that you're probably referring to, you're into travel, leisure, healthcare, institutional segments. I think again, they're trending positive. They're just lagging those first two groups. So I would support your point of that third group certainly has runway over the next 12 to 18 months as they come back.

But I really think all three segments are trending positively. It's just kind of a measure of magnitude as to where they are in that recovery cycle, if that makes sense..

That's great, thank you so much..

Yes. Thanks, Joe..

Thank you. We have our next question coming from the line of Larry De Maria with William Blair. Your line is open..

Hi thanks good morning everybody.

As it relates to the $1.2 billion backlog, I know you've addressed this in prior calls, but can you discuss the timing and how long that's going to convert and if you're repricing any of it? Because obviously, you seem pretty confident that price cost gets better in 1Q, but I seem to recall, you had some orders into the spring for quite a while now, even maybe a year by the time they hit.

So I'm trying to understand the confidence and obviously, the price cost is getting better and whether we repriced any of the orders out there..

So we are not generally repricing the orders. So I mean, I think we've kind of taken the approach that we want to try to be -- do right by our customers and kind of make our way through an advantage as best we can kind of pulling the levers internally.

So we're not disrupting our end users, particularly in markets such as residential, where you've got -- and consumers have been waiting for their products for a while. So hence, that is the headwind, right? I mean that is what showed up in the third quarter margins.

But the price increases that we have taken, I mean, as we bleed off the backlog, it does roll on with the new pricing. So it's not like there's a magic line, right, because you've got 100 different companies within Middleby. And I think we were all fairly synchronized in pricing, but people have different backlog.

So it kind of scales in, I would say, kind of an increasing basis as we start in the fourth quarter and roll through sometime in the second quarter of next year..

Okay. And then secondly, I don't think this has come up before, but there's an awful lot of articles and things around the Taylor ice cream machines and reliability.

Can you give us a handle on what's going on with them? And maybe how much of a positive impact to Middleby, the parts and service business of Taylor is because there seems to be a lot of reliability issues and how you're addressing all that?.

Yes. So there is a lot out there. I would say, first of all, people love their ice cream from the Taylor machine, hence one of the reasons it gets spotlighted so much. It's a very critical piece of equipment and drives a lot of revenue and returning customers to our restaurant operations.

The social media is a great thing and not everything in social media is 100% newsworthy as well. So I mean, I would say that a lot of the things that you see out there are kind of hyped to a certain extent. I mean it is certainly a technical piece of equipment. We've got a great service organization that keeps the equipment up and running.

There's a lot to do with cleaning cycles, which sometimes, I would say, more often than that when there's complaints out there, it's actually that the equipment is going through a cleaning cycle because as you might think about, food safety is a big element when you're dealing with a piece of equipment like that.

So I think the -- we're doing a lot using technology actually with IoT and kind of our next-generation piece of equipment to ensure that equipment is being cleaned at the proper times, kind of thinking about preventive maintenance in equipment like that, so people know where we are in an operating cycle and so forth.

But I mean I think it's probably a lot of the news out there is really maybe a little bit misleading. And I think we're also, at the same time, doing everything we can to make sure that our piece of equipment, which is highly core to our customers, really has the best technology in there.

So it's kind of we're maximizing the uptime of that piece of equipment..

Okay, thank you. [Operator Instructions] We have our next question coming from the line of Jeff Hammond with KeyBanc. Your line is open..

Hey, good morning guys. Orange already. So I know you kind of were getting away from guidance, but you did kind of give us the update kind of midyear around the $730 million adjusted EBITDA.

It seems like the revenues are kind of falling out in line, but there are some headwinds on the cost side, and I just don't know if you can frame or quantify those headwinds. It looks like certainly price cost is an issue. And then it looks like the corporate cost, maybe some deal costs in there are headwind as well..

Yes. So I mean I think if you look at the EBITDA reconciliation, we have certainly identified the benefit in costs specific to the large deal that didn't happen this year.

Obviously, we've posted $520 million of EBITDA year-to-date for this year, and I'll leave it up to you and other analysts and investors and the like to plot out what Q4 can look like vis-a-vis what we did in Q3. But obviously, there's -- the difference between $730 million and $520 million is $210 million.

And that seems like a large number given where we currently are today. But I think, as you noted, supply chain and price costs are obviously the factors that we're actively addressing. And I think I gave some commentary as to how we think that will continue to improve starting the beginning of next year and then ramping up during the course of '22..

Okay. Very helpful.

Can you give us what price was in third quarter? And then as you think of all these additional price actions, what -- based on what you've announced, what you think the wrap-around pricing is into '22?.

Yes.

Steve, why don't you go ahead?.

Yes. So I'll just maybe highlight kind of the cadence of the pricing recently in the last few months. So again, 100 brands, but for -- so it's a little bit different across the portfolio and customer base. But for the most part, we took pricing in August across all of our brands.

And then we just recently took another round of pricing that went into effect November 1. I would say from a color standpoint, the November increase was a bigger increase than the August increase.

In terms of how we would think about when that pricing starts to come through, I think the way I would think about it is the August pricing that went into effect, you'd start to see come through in the first quarter.

And I think the November increase that just went into effect, you would start to see come through in the second quarter, if that helps answer the question..

Okay. Yes, that's perfect.

And then just on Food Processing was a lot lighter, and I just didn't know if there's anything unique there, a big shipment that got delayed or any other kind of noise around Food Processing?.

No. I wouldn't say there's any noise there. I mean we did note coming out of the Q2 release that as we looked at kind of timing of deliveries and the work that Q3 was going to see a dip, and we expect Q4 to move up from here. But the orders have been strong here. The backlog is at record level for this business as we sit here today.

So we still think the outlook is very strong here. And again, the demand factors have been coming through. I think as we went back, I got to think how long we've been living through the COVID here. But if we go back six or nine months, we are certainly talking a lot about customer challenges and getting to see us and evaluate equipment and the like.

That has not completely abated, especially since this really is a dynamic international business, but it has been improving. So the trends here, and again, as you can see, the orders and backlog is encouraging and positive for this business just like the other two segments..

Okay, great. I appreciate it..

Yes..

Thank you. We have our next question coming from the line of Tim Thein with Citigroup. Your line is open..

Thanks, good morning. Maybe just the first question is just -- pertains to kind of any ways to monitor the quality of the backlog. And I just -- maybe I was just curious as to this risk around double or triple ordering given pretty unique backdrop we're in from the standpoint of the magnitude of the price increases and the long lead times.

So I'm just curious, do you think that's much of a risk that we should be thinking about? Or is it not something that's on your radar?.

labor, speed of service, etc. So that is also something to kind of keep in the back of your mind, and we'll certainly be driving that next year..

Yes. Yes, that's interesting, Tim. Obviously, that issue around labor cost and availability, I mean, it's coming up on every restaurant companies calls here in the quarter. But -- and looking for ways to save labor and automate. But obviously, those decisions don't get made overnight, and I would guess there can be kind of a long runway.

So how do you think about -- I mean, is there a way to quantify what that opportunity could mean to either Middleby or just industry revenue potential, just assuming this issue continues and persists and you do see that greater kind of trend toward, again, automation in the kitchen? And again, I'm sure it's difficult to kind of pinpoint, but maybe you can just speak to what we're looking at or what we're kind of thinking about in terms of potential opportunities for, again, either Middleby and/or the industry?.

Yes. I mean I think this is one of the things that gets us excited, right? I mean I think we've been pushing innovation for a while and making incremental investments in it. And so that is where we see the opportunities in the industry and some of the things that are going to drive growth in the longer run.

We think it is also one of the things that is going to further differentiate Middleby as we go through the next handful of years, those investments that we have made. And I think we're still at the early stages of it. I think it does take a while for customers to adopt technologies.

But those decisions are now getting compressed, right? Like I mean, I think given that the dynamics that our customers are facing which are, in some ways, in crisis mode for them, right? Like if you cannot get labor, how are you going to think that's priority 1.

So they're engaging different -- they're looking for different solutions, their operating models are changing, that is shortening the periods that they would typically go through to adopt technology. So I think that is kind of the period that we're in and still, I would say, at the early stages of.

But I mean I think the next couple of years will be pretty exciting for us as we go through that. I would say, we talk about it a lot, the engagement that we have at the innovation center. But I mean, I think that is not us just really talking about it. I mean that has really been very hands-on.

And the innovation center has really been open for a relatively short period of time, two to three quarters, and I'll just ask James to maybe give a little bit of flavor who's come through. But I mean, I think, we've been very pleased with that investment because it really is presenting an area where we can demonstrate and engage on all this.

And our customers are engaging on it, right? Like we're not begging people that come in, we're pretty well booked..

Yes. I think the demand of the -- to come to the MIK is -- just exceeded everybody's expectations around the table. I think as it relates to customers that have come in, Steve rattled off the segments earlier.

I think every segment that Steve rattled off from hotels to C-stores to fast casual to casual dining to fine dining have been through the doors at the MIK. We do a fairly good job of tracking the traffic through the innovation kitchens.

To date, we've had probably 1,300 people through the innovation kitchens, representing about 160 different customers from mom-and-pop all the way up to the largest chains in the industry.

And at the innovation kitchens, we have all of our great new automation on display in the automation pod, which is featuring the FryBot, PizzaBot, but also as we talk about how the industry is trying to solve for labor through the adaptation of automation.

We have all of our great embedded automation at the innovation kitchen, which are great products because they are the higher-margin products that we are driving our customers to.

And then we also have our full digital IoT complement with open kitchen on display, which is garnering a tremendous amount of traction given the ability to automate the front of the house to the middle of the house to the back of the house. So I don't want to say they're beating down our doors, but it's close to it.

And so we're excited and we staffed up to manage the traffic..

Very good..

Thank you. [Operator Instructions] We have our next question coming from the line of Walt Liptak with Seaport. Your line is open..

Hi, good morning guys..

Good morning..

I wanted to ask a follow-up on the channel inventory. It sounds like that there's not a whole lot of channel build. But fourth quarters, I think in the past had been periods where there was sort of true-up on volume discounts and rebates and things like that.

I wondered if there's anything like that, like rebate payments or anything that flows through in the fourth quarter or any true-ups to get to kind of target volume levels with the channel partners..

Yes. Walt, it's Steve. So yes, I would agree with you in kind of "a normal year", you would definitely see that dynamic in the fourth quarter with your channel partners chasing year-end incentives. Obviously, we are operating in a not normal dynamic. So that will not happen this year for a number of reasons.

I mean there's very little inventory in the channel. So I guess let's start there. That's kind of your first question.

And I just think the dynamic between order placement, lead time, supply chain when you're actually getting your equipment being so dynamic right now, that really makes that kind of fourth quarter push that you would normally see in a year pretty much go out the window at this point.

And we've also been very focused, frankly, on not doing any type of discounting that we may have in the past to drive a year-end deal like that.

So it's a very different year, I guess, to answer your question, but I do not see the dynamic from prior years taking place this year and probably won't be taking place for a while, if not going away for a long time..

Okay. Great. And then the last one, I wonder if you could just comment on how your deal funnel is looking, how competitive is the market valuations, things like that..

Walt, it's Tim again. So I touched on that a little bit with the question that Joel had. I mean I'd just kind of repeat, we're -- we never run out of ideas here. Our challenge is always too many ideas, so the funnel has been pretty active.

There's been a lot going on just because I think a concern about taxes as well as kind of all the dynamics that are happening in all the industries, but we're pretty well positioned from a deal pipeline kind of consistent with the last 20 years and well positioned from a balance sheet standpoint as well. Obviously, Bryan talked about our financing.

And certainly, we were pleased and the team did a great job of upsizing our credit facility. That gives us a little bit more dry powder as we roll into next year as well..

Okay, great. Thank you..

Thanks..

That is all the questions we have today. I'd like to turn the call back over to management for any closing comments..

Okay. Thanks, everybody, for joining the call today, and we look forward to speaking with you for the next quarter..

This does concludes conference call. Thank you for participating. You may now disconnect..