Welcome to the Latham Group Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nicole Briguet, Investor Relations Representative. Please go ahead..

Thank you, and welcome to Latham’s Q3 fiscal 2022 earnings call. Earlier this morning, we issued our earnings press release, which is available on the Investor Relations portion of our website, where you can also find the slide presentation that accompanies our prepared remarks.

On today’s call are Latham’s President and CEO, Scott Rajeski, and CFO, Robert Masson. Following their remarks, we will open up the call to questions. During this call, the company may make certain statements that constitute forward-looking statements.

Such statements reflect the company’s views with respect to future events as of today and are based on our management’s current expectations, estimates, forecasts, projections, assumptions, beliefs and information. These statements are subject to a number of risks that could cause actual events and results to differ materially.

Such risks and other factors are set forth in the company’s earnings release posted to its Investor Relations website and will be provided in our Form 10-Q for the third quarter of fiscal year 2022.

The company expressly disclaims any obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

In addition, during today’s call, the company will discuss non-GAAP financial measures, which we believe could be useful in evaluating our performance. Reconciliations of adjusted EBITDA to net income calculated under GAAP can be found in our earnings press release and will be included in our Form 10-Q for Q3 2022.

I will now turn the call over to Scott Rajeski..

Good morning, everyone and thank you for joining Latham’s third quarter earnings call. Today, I will review highlights from the third quarter and spend some time discussing what we’re seeing in the macro environment as well as the actions we have taken as we look ahead.

Rob will then review our Q3 and year-to-date financials, cost reduction actions, and revised fiscal year 2022 guidance. We were really pleased with our team’s ability to drive another quarter of growth amid an increasingly difficult macro backdrop with Q3 net sales up 17% year-over-year to $189 million and adjusted EBITDA up 17% to $42 million.

We delivered nice top line growth across our product portfolio. We drove year-over-year improvement in North American fiberglass production and substantially returned to normal lead times across our non-fiberglass product portfolio.

We also continue to realize the benefits of our pricing actions which offset inflation, although not at a magnitude to hold year-over-year gross margins. As we look to the fourth quarter and the remainder of the year, we are revising our guidance for fiscal 2022 to reflect current market conditions.

Our wholesale distribution partners continue to destock packaged pool inventory levels as they service dealer demand through existing supply. This has resulted in continued volume declines in our packaged pool products in Q4.

Additionally, while interest in pool ownership remains strong, some homeowners are taking more time on their purchase decisions and establishing installation dates in light of the current macroeconomic environment.

We have responded to these dynamics with immediate actions to reduce our costs, including one, optimizing our production and shift schedules. Two, implemented a workforce reduction with a focus on retaining our top talent.

And three, taking advantage of strides we have made to improve production efficiency over the last 2 years, which is now allowing us to streamline our cover and liner manufacturing footprint with the closure of our Bossier City, Louisiana facility.

We expect these actions to generate annual operating expense savings of approximately $12 million in fiscal 2023. This, coupled with our expanding Lean and value engineering initiatives, will allow us to continue to execute on other value-added cost reduction initiatives moving forward.

At the same time, we continue to execute on our top line growth initiatives that we believe will drive our business over the long term. This includes a focus on our efforts to drive consumer awareness of fiberglass pools, generate purchase-ready leads for our dealers, and continue to expand our fiberglass manufacturing capacity.

Our direct-to-homeowner strategy and lead generation engine remain competitive advantages for us and are critical pieces of our strategy to drive demand and awareness of fiberglass and the Latham brand.

We remain an important resource for homeowners throughout their pool buying journey, thanks to investments in our digital tools, including our augmented reality app, Liner Visualizer tool, website blogs, My Latham platform, and the Pool Cost Estimator.

We continue to see the benefits of these initiatives in driving traffic to our website, increasing downloads of our My Latham and Pool Cost Estimator tools, and ultimately translate it into leads for our dealers. We believe there is tremendous untapped demand of U.S.

homes without a pool today, and we have launched targeted regional marketing campaigns in select regions where dealers have capacity and are looking to further build their pipeline into 2023. Fiberglass has been an important driver in our ability to outperform the market, including in down years.

Even in 2022, which is broadly expected to be a down year for North American pool installations, we expect to deliver fiberglass unit growth. We continue to enhance our fiberglass leadership position through capacity initiatives and model lineup expansion and by deepening and expanding our dealer relationships.

We continue to make great progress on the construction of our new Kingston, Ontario facility, which remains on track to begin production in 2023.

We also recently acquired fiberglass pool manufacturing assets in Seminole, Oklahoma, which will replace lost fiberglass manufacturing capacity in Odessa, Texas and place our production closer to strong consumer markets in the region.

The addition of these two facilities will allow us to reduce freight costs, tighten our lead times, and tap into large markets that are ripe for fiberglass conversion. We will remain diligent with staffing plans and have the flexibility to manage manufacturing capacity to match demand. As we have discussed, fiberglass’ share of U.S.

pool installs sits well below more mature markets like Australia, where fiberglass has a 70% share of the market. As we drive awareness of the aesthetics, durability and value proposition of fiberglass versus gunite, we believe we can increase fiberglass’s representation of U.S. pool installs over time and drive long-term growth for Latham.

In summary, we have delivered strong year-to-date performance despite the challenging macro environment. As market conditions evolve, we have taken actions to prudently manage our costs while continuing to make targeted investments to drive our future growth.

We believe this balanced approach will enable us to maintain our industry-leading position and emerge stronger from the current environment. With that, I’ll turn the call over to Rob to review our results in greater detail..

Thank you, Scott, and good morning, everyone. Today, I will review our third quarter and year-to-date results. Then I’ll provide a bit more detail on our continuous improvement culture and cost reduction plan, followed by a review of our revised fiscal 2022 guidance.

Note that all comparisons are on a year-over-year basis compared to third quarter and first 9 months of fiscal 2021. Starting with Q3, we are proud of our team’s ability to deliver another quarter of growth while operating in this challenging environment. Net sales for the third quarter were $189 million, up $27 million or 17% year-over-year.

By product line, net sales for in-ground swimming pools increased 22% to $102 million. Covers increased 18% to $52 million, and liners increased 4% to $35 million. The $27 million increase in third quarter net sales was driven by pricing as volumes were relatively flat versus prior year.

While fiberglass pool volume grew nicely versus prior year, it was not enough to offset the continued softness in our packaged pools driven by destocking in the wholesale distribution channel.

We generated $59 million of gross profit in Q3, up $8 million or 15% due to an increase in net sales and a $1 million year-over-year decrease in non-cash stock-based compensation expense. Q3 gross margin decreased 40 basis points to 31.1%.

Excluding non-cash stock-based compensation expense, gross margin decreased about 120 basis points to 31.5%, driven by pricing that offset inflation, but not enough to maintain last year’s gross margin.

As well as negative fixed cost leverage, which was partially offset by operational efficiencies from the build of inventory to return to normal lead times. Selling, general and administrative expenses decreased to $27 million compared to $48 million in Q3 of 2021.

This was primarily driven by a $19 million decrease in non-cash stock-based compensation expense. Excluding non-cash stock-based compensation expense, SG&A decreased $2 million or 9%. Adjusted EBITDA increased to $42 million, up $6 million or 17% and adjusted EBITDA margin remained flat at 22.3%.

Net sales for the first 9 months of fiscal 2022 were $588 million, up about $96 million or 20% year-over-year. This net sales growth was primarily attributable to our pricing actions to address inflation. By product line, net sales for in-ground pools increased 14% to $326 million.

Covers increased 30% to $123 million, and liners increased 24% to $139 million. Gross profit increased to $197 million, up 22% from $162 million in the prior year. Gross margin for the first 9 months of 2022 increased to 33.5% compared to 32.9% for the prior year period.

Excluding about $4 million in non-cash stock-based compensation expense, gross profit increased $32 million and gross margin decreased 20 basis points to 34.1%. The 20-basis point decrease in gross margin, excluding non-cash stock-based compensation expense, was driven by similar factors that impacted Q3 results.

Selling, general and administrative expenses decreased to $113.8 million compared to $170.5 million in the first 9 months of 2021. This decrease was primarily driven by a $60 million decrease in non-cash stock-based compensation expense. Excluding non-cash stock-based compensation expense, SG&A increased $4 million or 5%.

Adjusted EBITDA was $139 million for the first 9 months of 2022, up 23% from the prior year period, and adjusted EBITDA margin increased 70 basis points to 23.6% from the prior year period.

Turning to our balance sheet, as of October 1, 2022, we had cash and cash equivalents of $31 million, total debt of $313 million, and our net debt leverage ratio was 1.7x.

Net cash generated by operating activities was $5 million for the first 9 months ended October 1, 2022 compared to $29 million in the prior year period, with the year-over-year change primarily driven by investments in working capital, mainly inventory to return to normalized lead times, the embedded impact of inflation on inventory, and elevated inventory levels primarily associated with packaged pools.

Capital expenditures totaled $12 million in the third quarter of fiscal 2022 compared to $6 million in Q3 last year, driven by the increased investment in fiberglass capacity, most notably the Kingston, Ontario manufacturing facility project.

Capital expenditures totaled $29 million in the 9 months ended October 1, 2022, compared to $19 million in the prior year period. As an organization, we promote a culture of continuous improvement and the variable nature of our cost structure enables us to act quickly and decisively to adjust how we manage our business.

Throughout 2022, our operations team has been hard at work embedding Lean and value engineering disciplines into our manufacturing processes. Which have resulted in not only a number of discrete cost savings initiatives or projects, but also the discipline to continuously improve our efficiency of our manufacturing processes over time.

As Scott mentioned earlier, given current market conditions, we’re also taking several deliberate actions to reduce structural costs across the company.

These cost reduction efforts both strengthen our ability to weather a challenging market, while funding investments in our lead generation engine and fiberglass efforts to drive growth over the long haul.

As a result of these actions, we expect to incur approximately $2 million in total charges for employee severance and related costs and fixed assets and facility-related expenses. We expect to recognize these charges in the fourth quarter of 2022 and into the first quarter of 2023.

We expect to generate annual expense savings of approximately $12 million in fiscal 2023. Turning to our guidance. Based on the seasonality of our business and current market conditions, we have issued a revised outlook for full year fiscal 2022 of net sales of about $685 million to $700 million, representing 9% to 11% year-over-year growth.

Adjusted EBITDA of about $140 million to $145 million, representing flat to 4% year-over-year growth and capital expenditures of about $40 million to $45 million.

Updated top and bottom line guidance reflect continued sell-through of our wholesale partners’ existing packaged pool inventory, resulting in volume declines in this product category as well as softer homeowner demand as the macro environment extends their timeline to place new orders and schedule installation dates.

Our revised capital expenditure guidance reflects our continued commitment to investing in fiberglass capacity, primarily reflecting investments in our Kingston, Ontario facility as well as a pullback on non-fiberglass spend. As we look ahead, it’s worth highlighting seasonality trends as we look out over the next few months.

Not surprising, our peak sales quarters surround warm weather months, mostly in Q2 and Q3. Conversely, the winter months in Q4 and Q1 represent lower sales periods. Over the past few years, extended lead times and supply chain challenges somewhat moderated the impact of seasonality on our results.

With these issues largely resolved, our updated guidance reflects both the return to normal seasonality as well as current market conditions. We expect the fourth quarter of 2022 to be the lightest quarter of the year, consistent with historical seasonality of the business. Scott, I’ll turn it back to you for closing remarks..

Thanks, Rob. We have secured our position as the leading consumer brand in the residential pool market with unparalleled geographic reach and scale. We have transformed our industry with our direct-to-homeowner model and have made strides in driving the awareness and adoption of fiberglass.

We have strong confidence and conviction in our strategy, which we believe positions us to capitalize on attractive underlying trends of our industry. We benefit from ongoing migration to the suburbs and continue to work from home.

In 2020, about 95% of our net sales came from purchases of pools and other products in existing homes that had been built more than 1 year prior. Meaning the majority of our sales are not tied to new housing starts.

As the housing market cools and people stay in their current homes longer, we may benefit from continued investment in repairing, remodeling, and renovating the backyard. We cater to attractive homeowner demographics, higher income individuals, and families with higher home equity value.

We also offer products at different price points that can easily address a range of homeowner styles and budgets. We hold a leading position across all of our subcategories, including those that generate recurring revenue opportunities.

We estimate that about 180,000 to 200,000 vinyl liners and about 100,000 to 120,000 all-season covers must be replaced every year in the U.S. As the installed pool base continues to grow, we expect the recurring revenue opportunities for these products will also increase over time.

Our industry faced no shortage of challenges over the last several years, and we have grown stronger from each one, thanks to the dedication and support for our talented employees and dealers.

We are pleased with our ability to continue to deliver year-over-year growth in the first 9 months of 2022 and our balanced approach to aligning our cost structure while continuing to execute our direct-to-homeowner and fiberglass conversion strategy position, giving us confidence in the long-term prospects for our business.

Thank you for your time today and interest in Latham. We will now open the line to questions..

[Operator Instructions] The first question comes from Matt Bouley with Barclays. Please go ahead..

Questions. I know it’s not necessarily guiding to 2023 here, but given where we are in the year and sort of what you’re hearing from your customers and backlogs, I’m curious if you could kind of speak to what you’re planning for in terms of industry volumes.

How are you budgeting 2023 at this point? Obviously, we can take Q4 and annualize that, but short of us taking that approach, I’m curious if you guys can kind of walk us through a little bit how to think about next year? Thanks..

Yes, good morning. Matt, this is Scott. It’s too early to really predict what pool starts for 2023 will look like, and we’re not really here to provide guidance for ‘23. I think what we can say is that the headwinds we’re currently navigating in Q4, we expect those will persist into 2023.

And I think everyone needs to remember the seasonality of our business as well with Q4 and Q1 typically being the two lightest quarters with the strength of our sales coming in Q2 and Q3..

Okay. I appreciate that. And then you mentioned fiberglass unit volumes are clearly outperforming what the overall industry is doing in terms of new pool starts this year.

Curious if you can kind of outline or maybe give us a history lesson on sort of how fiberglass performed back when new pool starts came down in the prior recession, in the big recession. And maybe you within that, if you could sort of outline just where we are on the cost of fiberglass versus competing materials today? Thanks, guys. .

Yes. Look, none of us were here back in the 2000s. And what I’d say, Matt, is the business is completely different now than it was then. We’ve spent a lot of time focusing on fiberglass, educating the homeowner, the consumer, expanding our base of production and distribution in North America and Australia and New Zealand.

And I think what we can say is, as we look back over the last 5 years, and I think we’ve shared this in a few investor presentations, fiberglass has outperformed the market in all cycles, whether it was a wet rainy season, a down season like we saw a few years ago.

And I think let’s just take it to the present, fiberglass will show growth, nice growth this year in 2022 in what many people are predicting as a down market for 2022. We continue to stay bullish on the fiberglass material conversion story. And the economics still hold that we’ve shared with you guys over the last few years.

Fiberglass still has the lower upfront costs versus a concrete pool of comparable size, and that gap expands over the total cost of ownership of that pool. Those dynamics are still in the 25% to 30% upfront and 35% to 40% over the long-term for lower maintenance of the pool..

Great. Well, Scott, Rob. Good luck, guys..

Thanks, Matt..

Thank you..

The next question is from Rafe Jadrosich with Bank of America. Please go ahead..

Hi, good morning, guys. Thanks for taking my question. .

Hi, Rafe..

I just wanted to – if I look at the decrementals in the guidance, it looked like it was sort of in the 40% range in terms of the EBITDA reduction relative to the sales reduction.

How do we think about that in ‘23? If volume continues to decline, how should we think about the decremental margins next year? And then how does that, the $12 million of annualized cost savings, play into that?.

Yes. Thanks, Rafe. I’ll take that. We’re not giving guidance for 2023, as we said. But if you think about the seasonality in Q4 itself, it’s really more about the volume and where we are, again, seasonality peak quarters being Q2 and Q3 and then less volume relatively in Q1 and Q4..

Is there anything sort of near-term that’s pressuring margins more than you would anticipate for next year?.

Well, I think I mentioned two things on our gross margin. One is our price still remains ahead of inflation, which is good, but we haven’t been able to maintain the same margin rate. I think there is that underlying pressure with inflation and what’s happening there.

And then the second piece is, again, it’s more volume related, but our fixed cost leverage I talked about a little bit in terms of Q3, and that’s certainly a dynamic in Q4..

And then just on – in terms of material costs have, raw material costs have come down, when would you expect lower PVC and some of the lower raw material costs to flow through into your margins?.

Yes. I mean, well some costs have come down. We tend to have fairly specific supply. We see some decreases out there, but it’s much elevated from where it was originally, and we take that all into account as we look at our pricing and our value proposition of where we are..

Okay, thank you..

The next question is from Ryan Merkel with William Blair. Please go ahead..

Hey, guys. Thanks for taking the question. My first question is just on maybe take us through the quarter and when did you start to see some of these pressures really start to increase? And then take that answer and help us think about how you thought about the 4Q guide.

What are some of the key revenue assumptions in there?.

Yes. Good morning, Ryan, I think from when we were last together on the 2Q earnings call, I think we saw a continued destocking in the packaged pool category through the wholesale distribution channels over the last call it 60 days or so.

And when we step back and look maybe at the bigger macro environment, kind of coming into the 4Q dynamic and maybe some of the headwinds heading into early 2023, what we’re seeing is really the homeowner starting to take a pause and delay their purchasing decision and delaying choosing the installation date.

The good news is the demand is still there, the interest is still there. We see it in our lead generation, time on the website, interest for fiberglass pools and our products across the board. They are just not pulling the trigger as quickly as they had been historically as they kind of take a pause..

Okay. Because it looks like in 4Q, volumes are down sort of 40%.

And I’m just kind of wondering, is the destock that you’re seeing in the packaged pools, is that the majority of it? And when does that ease?.

Yes, I’d say the majority is probably the destocking in the packaged pool category. The other dynamic is as the safety cover season winds down, we’re seeing that slow here in 4Q versus a really nice 3Q we had. And again, it’s just that delay in the purchasing decision at the homeowner level.

What we’ve seen in the last couple of years is dealers being able to fill those slots with pools as they head into the Thanksgiving and Christmas season. We’re just not seeing that activity like we typically have because of that homeowner pause..

Got it. Thanks..

The next question is from Kenneth Zener with KeyBanc Capital Markets. Please go ahead..

Good morning..

Good morning, Ken..

So I’m hearing two items that you’re calling out for the sales impact.

If you could just clarify this? Packaged, just for everyone, is referring to your cover and your liners, correct? Which is about 40% of your business or is it one versus the other?.

No, so….

It’s just the metal side? Yes, just the metal stuff for the liners?.

Yes. Ken, when we say the packaged pool, the destocking, it’s the panel components. It’s the polymer wall components, the steel wall components, and the stents that would go into the ground, be assembled, for which the vinyl liner would go into.

So we keep kind of the liners and covers are off to the side, so think those stock products to wholesale distributors..

That’s in the in-ground segment, so we don’t report on it separately, but packaged pools is inside, Ken..

Okay. Right.

Just the mag – and then there was the comment – do you know how that, since you’re attributing that to inventory corrections, do you have a sense of your sell into a channel versus the POS of the channel? Is there any way for you to quantify that component of your headwind? And I’m asking this in light of the separate question about sales, which is you’re seeing customers pausing, not pulling the trigger.

Can you kind of quantify what that means in terms of sales? I mean should we infer that was all of the fourth quarter? Does that mean that they have gone from 3 to 5 months to something farther? Just because your business is still nascent to most people, I’m trying to have you expand on this so we can be better prepared. Thank you..

I can take a part of it, which is we talk about seasonality and that coming back. What had happened the prior years, we’ve had supply chain issues and long lead times. That tended to moderate the seasonality.

Because we’re through that, and we don’t have those, now the real seasonality is coming in where there is just less activity in the winter months for pool products..

And I think the drop, back to the drop in 4Q, Ken, think of the majority of it coming in the in-ground pool category, which is those packaged pool components and fiberglass. As we see that slowdown of that buying decision, it applies to both products.

One is getting pulled off the distributor shelves, the other would be coming out of our factories direct to the consumer. It’s kind of – it’s more of that particular category than let’s say liners and/or covers..

Right, which is a short cycle. But does that mean half of your sales deceleration is the destocking and half is fiberglass as we try to think about what the core trend is? And then Rob, seasonality, I mean, we’re trying to discern what seasonality means, because you’ve earned basically your guidance and EBITDA already.

Does that mean that – if 1Q and 4Q naturally are weaker quarters, should we assume the business in perpetuity is always going to have very thin EBITDA margins? I think that’s what people are trying to understand, certainly myself here. Appreciate it..

Yes. I think there is – yes, that was a little bit helpful more helpful, Ken, in terms of where you’re going.

Look, again, let’s just say that the slowdown is, the majority is in-ground pools, and it’s probably roughly two-thirds, one-thirds split between the destocking with the panels and distribution versus maybe just a slowing down of the homeowner decision on the fiberglass purchase in the last let’s say 1.5 months, 2 months of the quarter.

And again, historically, if we look at this business with Q4 and Q1 being the lightest quarters, they also historically have been the lightest absolute EBITDA dollars quarters and probably the weakest margin quarters.

And if you think about it, as the volume dips off in your light quarters, you still have all of that fixed cost basis with our facilities. We try to retain a lot of our labor so that when we come into Q1, that season starts to ramp very quickly. Q1 historically has been bigger than Q4.

We ramp up, distribution starts to take the products, season opens in the south in February, March, and everything ramps. Frame it up that way. I can’t remember it was Matt or Rafe who asked the question about annualizing 4Q going forward. Clearly, you can’t do that.

But you’ve got to kind of think of Q4 as the lightest, Q1 the second lightest, and the bulk coming in the middle of the season in Q2 and Q3..

And I’d just reiterate our overall adjusted EBITDA margins, the strength there and our ability. Even though you have that seasonality, if you think about what we’ve been able to generate and even the numbers in total we’re talking about this year, it’s quite positive..

Thank you, gentlemen..

You’re welcome, Ken..

[Operator Instructions] The next question is from Susan Maklari with Goldman Sachs. Please go ahead..

Thank you. Good morning, everyone..

Good morning, Susan..

My first question is thinking about price versus volume for next year. Clearly, price has led a lot of the revenue growth that we’ve seen in 2022.

As we think about the forward quarters, can you talk to the ability to sustain the pricing that you’ve realized? And also, how you’re thinking about what will be the key drivers of the revenues next year between price and volume?.

Yes, Susan, it’s Rob. Thanks for the question. We’re not really talking about 2023 now. We’re not prepared to do that. It’s just too early. But what I would say is, we’re always looking at our value proposition and where we sit on price. We remain nimble to adjust that. We do feel confident today where we are.

We are ahead of inflation, and we think our pricing has been set appropriately so far..

Okay.

And when you think about the macro and the demand that you’ve been talking about, can you speak to the ability to adjust at Kingston and some of your other facilities that are coming online to be in line with the demand environment?.

Yes. Susan, a lot of what we’ve been doing here in the second half of ‘22 has been adjusting shift schedules at facilities, production plan levels, trying to balance our production to the demand outlook, and keeping inventories in what I’d say a healthy position to maintain our industry-leading lead times and service levels.

As we look at the Kingston decision particularly, we would like to get that facility up and running and online. There is a great market in the Kingston, Kingston, Ontario, with fiberglass pools. The conversion we’ve done there, it will help with lead times, service and costs because we won’t need to be shipping pools up into that market anymore.

It will allow us to rebalance our focus on the other facilities in the U.S. and help our lead times there as we’re driving leads and demand to our dealers. And look, it’s a new facility coming online.

We can clearly ramp from a personnel standpoint and how many bays we would fit out molds and guns to kind of level smaller CapEx decisions so we could be prudent with that one.

And similar to our decision to replace the Odessa, Texas manufacturing capacity, we had a pretty significant hole in the southwestern part of the country shipping in from other locations.

This will give us the ability to attack a really great market in a good location, lower the cost to serve for our dealers, and really drive the conversion in a great pool market there. I think we will continue to balance and monitor.

We want to stay focused on the long-term as well, because we still believe in our long-term growth rates, the outlook, the lead generation, all of the dealer sign-ups we’ve been doing. And I think more importantly, the fact that we have seen fiberglass outperform all cycles of the market both in up and down type environments..

Okay, thank you..

You are welcome..

This concludes the question-and-answer session. I would now like to turn the conference back over to Scott for any closing remarks..

Thank you again for your time on today’s call. We really appreciate your continued interest and support of Latham. We look forward to providing further updates on future calls.

And for everyone who’s served our country, with Veterans Day coming up, I just wish everyone a Happy Veterans Day, and I wanted to thank everyone for their service to our country. And I hope you guys all have a great rest of the day..

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