Dorman Products Inc
NASDAQ:DORM

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Earnings Call Analysis

Q3-2024 Analysis
Dorman Products Inc

Dorman Products Reports Growth with Strong Margins and Upgraded Guidance

In its third quarter, Dorman Products achieved net sales of $504 million, a 3.2% increase from the previous year, driven primarily by its Light Duty segment. Adjusted operating margins expanded by 290 basis points to 17.1%, supported by easing inflation and new product sales. Earnings per share surged 40% to $1.96. The company narrowed its full-year sales guidance to a growth of 3.5% to 4.5% and expects adjusted EPS between $6.85 and $6.95, reflecting a 51% to 53% increase year-over-year. Dorman remains focused on new product development and competitive advantages in complex electronics to sustain long-term growth.

Dorman Products' Positive Momentum Continues

In the third quarter of 2024, Dorman Products showcased a commendable operational performance, achieving consolidated net sales of $504 million, up 3.2% year-over-year. This positive growth momentum reflects a robust performance driven by their Light Duty segment, propelled by increased customer demand for new products. Notably, adjusted diluted earnings per share (EPS) surged by 40% to $1.96, supported by an expanded adjusted operating margin of 17.1%, an increase of 290 basis points compared to the previous year.

Segment Insights: Light Duty Leads the Charge

The Light Duty segment reported net sales of $394 million, showing an impressive 5% growth compared to the prior year. This continued success is attributed to solid point-of-sale (POS) performance, new product launches, and enhanced operational efficiencies. The segment's profit margin also improved significantly, contributing a solid operating profit margin of 19%, increasing by 290 basis points year-over-year. This reflects Dorman's strong focus on innovation and adapting to market demands.

Heavy Duty and Specialty Vehicle Segments: Navigating Headwinds

Conversely, the Heavy Duty segment saw a decline in net sales to $60 million, down 5% from last year, aligning with a broader industry trend. Despite this, the segment achieved an improved operating margin of 4.5%, which was up 150 basis points, indicating effective cost management and productivity improvements. The Specialty Vehicle segment remained flat at $51 million in net sales due to ongoing market challenges but increased its profit margin by 350 basis points to 17% through cost-saving initiatives and a stronger focus on non-discretionary repair parts.

Adjusted Guidance and Future Outlook

Dorman Products has updated its guidance for 2024, now expecting net sales to grow between 3.5% and 4.5% compared to 2023. Encouragingly, this includes a more favorable outlook for all three segments. Additionally, they forecast adjusted diluted EPS in the range of $6.85 to $6.95, reflecting a substantial 51% to 53% increase over last year. Expectations for higher sales volumes driven by new products, operational excellence initiatives, and favorable market conditions could contribute significantly to achieving these targets.

Capital Allocation and Shareholder Returns

Dorman continues to emphasize a strong capital allocation strategy, with free cash flow recorded at $36 million during the quarter. The company used this cash flow to repay $11 million in debt and repurchase $27 million of its shares. The Board has also approved a new share repurchase program of up to $500 million, indicating a commitment to returning value to shareholders while maintaining a strong balance sheet.

Innovation and Future Growth Potential

Dorman is heavily investing in complex electronics, positioning itself to capitalize on the expanding opportunities in electric vehicle (EV) markets. The company has built a robust portfolio of SKUs supporting electronic systems across various propulsion technologies, allowing room for sustainable growth. As Dorman focuses on innovative product development, including the launch of new complex electronic parts, it enhances its competitive edge and long-term value proposition in the aftermarket space.

Earnings Call Transcript

Earnings Call Transcript
2024-Q3

from 0
Operator

Good morning, and thank you for standing by. Welcome to the Dorman Products Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I would now like to turn the conference over to Alex Whitelam, Vice President of Investor Relations and Risk Management. Thank you, sir. Please go ahead.

A
Alexander Whitelam
executive

Thank you. Good morning, everyone. Welcome to Dorman's Third Quarter 2024 Earnings Conference Call. I'm joined by Kevin Olsen, Dorman's Chief Executive Officer; and David Hession, Dorman's Chief Financial Officer. Kevin will provide a business update, then David will review the quarterly results followed by closing remarks from Kevin. After that, we'll open the call for questions.

By now, everyone should have access to our earnings release and earnings call presentation, which are available on the Investor Relations portion of our website at dormanproducts.com. Before we begin, I would like to remind everyone that our prepared remarks, earnings release and investor presentation include forward-looking statements within the meaning of federal securities laws.

We advise listeners to review the risk factors and cautionary statements in our most recent 10-Q, 10-K and earnings release for important material assumptions, expectations and factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements.

We'll also reference certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are contained in the schedules attached to our earnings release and in the appendix to this earnings call presentation, both of which can be found in the Investor Relations section of Dorman's website.

Finally, during the Q&A portion of today's call, we ask that participants limit themselves to 1 question with 1 follow-up and rejoin the queue if they have additional questions. And with that, I'll turn the call over to Kevin.

K
Kevin Olsen
executive

Thanks, Alex. Good morning and thank you for joining our third quarter 2024 earnings call. As Alex mentioned, I'll start with highlights of our performance in the quarter, then provide an overview of our segment results. I'll also spend some time discussing how Dorman is differentiating itself with a set of competencies and a growing suite of next-generation solutions within the complex electronics space.

Turning to Slide 3, if you're following along in the deck. Our positive momentum this year carried through the third quarter, with solid top line growth and operating margin expansion leading to a significant increase in adjusted diluted EPS. Consolidated net sales increased 3.2% year-over-year to $504 million. Adjusted operating margin was 17.1%, expanding 290 basis points compared to the same period last year. Margins improved on easing inflationary pressures in the quarter and favorable mix from higher new product sales, along with returns and the productivity initiatives that we have been discussing throughout the year.

As a result, adjusted diluted EPS increased 40% over last year's third quarter to $1.96. Free cash flow was solid at $36 million, allowing us to repay $11 million of debt and repurchased $27 million of our shares during the quarter. Given our results year-to-date as well as our positive outlook and visibility into the fourth quarter, we've narrowed our sales and increased our earnings guidance ranges for the year. David will cover guidance in a moment.

Moving to Slide 4. Let me provide some observations across our 3 segments. In our Light Duty segment, the same positive trends we've highlighted in the first half of the year continued in the third quarter. Vehicle miles traveled were again higher year-over-year. POS was solid, up low to mid-single digits in the quarter and generally consistent with customer shipments. Our Light Duty business delivered profitability growth, which was partially due to the automation and operational efficiency efforts we discussed in our last call. Finally, we continue to diversify our supplier base and geographic exposure.

This remains a key focus area for the business, and the team has done a nice job reorienting the supply chain over the last few years. While our Heavy Duty business continued to experience market pressure during the quarter, we drove solid year-over-year segment profit margin improvement in cost savings and productivity initiatives. Additionally, recent market indicators are signaling stabilization in the freight industry. Predicting a growth inflection in that segment remains difficult, but we're seeing positive signs across our customer base.

Our Specialty Vehicles segment's net sales were flat compared to last year's third quarter as market headwinds persisted. Despite these challenges, Specialty Vehicle increased its segment profit margin year-over-year. Looking forward, we anticipate seeing new machine demand increase if customer borrowing rates are reduced in connection with the forecasted Fed rate cuts. Additionally, our new product offerings, including a higher mix of nondiscretionary repair parts, along with enhanced dealer expansion initiatives are driving outperformance versus the overall Specialty Vehicle sector.

On Slide 5, we'll spend some time describing how our capabilities with vehicle electronics are creating growth opportunities across our segments. It's no secret that the vehicles we serve have become more complex. Electronic control components increasingly integrated into what were previously simple mechanical systems. We were an early investor in this trend, releasing our first complex electronic part, a fuel pump driver module in 2011.

Since that launch, we have continued to invest in our electronics business including our acquisition of Flight Systems 2018. These investments have deepened our capabilities in highly technical and difficult-to-address categories. Today, we have a differentiated set of capabilities that allow us to develop innovative, complex electronic solutions that technicians rely on to repair these critical systems which ensure continued functionality and safety for end-user vehicles and often improve performance. The question we get regularly is how the proliferation of electric and hybrid vehicles will impact our business over the long term.

Simply put, our diverse capabilities allow us to be truly powertrain agnostic as we see significant growth opportunities across the various propulsion technologies being deployed and developed. Our multi-platform approach offers Dorman the flexibility and optionality to accelerate growth as each platform matures over time. Vehicles with ICE engines are expected to remain the vast majority of the North American car park well into the future. According to MEMA Aftermarket Suppliers projections, in collaboration with Strategy& ICE vehicles are expected to make up approximately 90% of the 8- to 13-year-old VIO, Dorman's sweet spot through 2035.

This provides us with a long runway to continue adding to our leading portfolio of aftermarket solutions including new complex electronics for this set of vehicles. Additionally, we expect increased fuel efficiency and safety regulations will continue to drive more OE system changes and thus provide further opportunity for innovation in the aftermarket. Hybrid vehicles have already made their way into our car park sweet spot. We have a solid portfolio of solutions servicing those models today.

Hybrids offer Dorman a broader opportunity for category growth given their dual powertrain systems. And with customers becoming more comfortable with hybrid technology, we anticipate seeing future expansion of hybrid platforms. While electric vehicles are a smaller portion of the park today and some OEMs have recently wavered on their level of investment in EV models. We have and will continue to develop technology for new EV platforms with the same innovation strategy we've applied historically.

Again, we see this driving long-term value for the company as EV platforms are even more dependent on complex electronic parts. Electronic modules deployed to sense and control nearly every activity across the vehicle. We expect higher replacement costs and potentially higher failure rates with these new systems. Today, we have thousands of SKUs across our 3 business units to support electronic systems in ICE, hybrid and electric vehicles.

Our ideation and new product development teams are constantly designing and engineering innovative components, including OE fixed solutions to support new growth opportunities and solve increasingly complex challenges in today's and tomorrow's vehicles. We expect this multi-platform approach will drive long-term sustainable value for our stakeholders.

Now on Slide 6, let me provide some additional detail on our differentiated capabilities. As our electronics business grew in size and strategic importance, we recognize the need to aggregate its engineering and product development capabilities into a single stand-alone group. In 2023, we launched an electronic center of excellence to build the infrastructure and expertise needed to accelerate the development of next-generation aftermarket solutions. This cross-functional group has done an outstanding job evaluating opportunities and driving new product innovation for Dorman to expand its electronics portfolio.

From a process perspective, we begin with identifying and assessing failure points throughout our vast network of technicians and specialists who are motivated to provide us with the break points they're seeing in the field. This is not unlike the process we undertake with our other products. But as you would imagine, it requires a different and more technical expertise. Data logging and codevelopment is where our differentiation lies. Through our specialized and proprietary processing systems, our teams run thousands of tests and trials on various electronic components to log and analyze the data, then design and write our own software code for compatibility or improvement.

Finally, our software validation process is designed to ensure that the product integrates seamlessly into the vehicle safety and functional systems. This advanced set of competencies highlights Dorman's leadership and the competitive advantages we've built in the aftermarket space. We expect these advantages will contribute to our long-term success as complex electronics are poised to outpace the growth of traditional hard parts, especially on alternative propulsion technology platforms.

With that, I'll hand off to David to review our Q3 financial performance.

D
David Hession
executive

Thanks, Kevin. Turning to Slide 7. Consolidated net sales in the third quarter were $504 million, up 3% year-over-year. Similar to the second quarter, the growth was driven by the Light Duty business, which was fueled by increased customer demand and sales of new products that were launched this year. While market headwinds impacting our Heavy Duty and Specialty Vehicle businesses persisted through the quarter, both businesses drove margin improvement. I'll cover each of the segments in just a moment.

Gross margin for the quarter was 40.5%, a 300 basis point increase compared to the prior year period. This improvement was driven by inflationary pressures easing across our segments and favorable mix from higher sales of new products, bolstered by the operational efficiency initiatives we've been executing throughout the year. Adjusted SG&A expense as a percentage of net sales was flat year-over-year at 23.4%. Adjusted operating income was $86 million for the third quarter up more than 24% compared to the same period last year.

Adjusted operating margin expanded 290 basis points to 17.1%, largely on gross margin improvement. Finally, third quarter adjusted diluted EPS was $1.96, up 40% compared to the prior year period, along with increased adjusted operating income, lower interest expense, tax rate and share count contributed to our EPS growth.

Next, let me provide updates on the quarter for each of our business segments, starting with Light Duty on Slide 8. Net sales for Light Duty were $394 million in the third quarter, up 5% compared to last year. Shipments were generally in line with customer POS during the quarter and year-to-date. As we've discussed throughout the year, our new products and the strength of Dorman's brand continue to drive significant growth for Light duty. Segment profit margin in Q3 was 19% up 290 basis points compared to the same period last year.

Similar to last quarter, this margin improvement was driven by the easing inflationary pressures, favorable mix driven by higher new product sales and operational excellence initiatives, delivering cost savings across the business. As Kevin mentioned, both our Heavy Duty and Specialty Vehicle segments navigated continued market headwinds well during the quarter. Let me provide a bit more detail on the next 2 slides.

On Slide 9, Heavy Duty Q3 net sales were $60 million, down 5% compared to last year's third quarter. However, we estimate that the broader Heavy Duty market was down roughly mid-single digits, indicating that our new product development and enhanced commercialization initiatives are yielding positive results. Despite lower sales, the team did a solid job increasing the segment's margin profile. Operating margin for heavy-duty was 4.5%, up 150 basis points over last year's third quarter. While it remains difficult predicting a significant market [ churn ], we're pleased with some of the market commentary that the freight industry is stabilizing from the recent recessionary trend. We remain focused on managing the business for long-term success and capitalizing on growth opportunities as market conditions improve.

Moving to Slide 10 for our Specialty Vehicles segment. Net sales were flat year-over-year at $51 million despite higher financing rates and uncertainty in consumer sentiment driving continued market headwinds. Through our new product development strategy, including the expansion of our nondiscretionary repair parts portfolio, coupled with our new dealer growth initiatives, we were able to offset continued softness in the sector. Additionally, the team continues to drive higher margins from cost savings initiatives. These resulted in segment profit margin increasing 350 basis points year-over-year to 17%. We remain positive on the outlook for this business. As interest rate pressures continue to subside and consumer sentiment stabilizes, we expect to see increased demand for our products as end-user enthusiasm in the space remains robust.

Turning to cash flow on Slide 11. Free cash flow was $36 million in the third quarter, down 23% compared to the same period in 2023. The decline was primarily related to an increase in our inventory balance, offsetting lower operating cash with lower capital expenditures. Our capital allocation strategy remained consistent during the quarter as we repaid $11 million in debt and returned $27 million to shareholders through the repurchase of approximately 274,000 shares at an average price of $98 per share.

Additionally, with our existing share repurchase program expiring at the end of this year, Dorman's Board of Directors approved a new repurchase authorization of up to $500 million of common stock covering 2025 through 2027. Along with organic and inorganic investments, we continue to repurchase shares opportunistically, prudently returning capital to our shareholders. Our capital allocation strategy and strong balance sheet position us well to drive long-term value.

On Slide 12, I'll cover our balance sheet and liquidity. As of September 28, our net debt was $492 million or $8 million lower than Q2. Our net leverage ratio was 1.36x adjusted EBITDA down from 1.44x at the end of June and 1.87x at the end of last year. Our current leverage remains comfortably below our long-term target of 2x and well below our target of less than 3x following the first year of an acquisition. Additionally, our total liquidity was $582 million at the end of the quarter up from $576 million at the end of Q2. Our balance sheet remains strong, and we're pleased with the capacity and flexibility it provides us to continue executing our strategic plan and deploy capital for future growth investments.

Turning to Slide 13. I'd like to discuss our updated guidance for 2024. Reflecting on our performance through the first 9 months and expected strong finish to the year, we are updating our 2024 guidance. For net sales, we have narrowed our expectations to an increase of 3.5% to 4.5% over 2023. As we look across the segments, we believe that Light Duty's momentum will continue.

We anticipate POS and shipments will remain in line as they have thus far in 2024, and the macro environment will continue to be positive. Our Heavy Duty and Specialty Vehicle businesses remain well positioned to continue driving solid execution in down market. Based on these factors, we expect each of our 3 segments full year net sales performance to improve compared to their year-to-date results. Additionally, we narrowed and increased our full year earnings guidance range. We now expect adjusted diluted EPS to be in the range of $6.85 to $6.95 for 2024, representing a 51% to 53% increase over 2023.

Throughout the year, we've seen strong growth in new products, including complex electronics that Kevin spoke of earlier. Our new products generally carry a higher margin profile and their higher sales drive both volume and favorable profit mix. Additionally, our investments in operational excellence initiatives across the enterprise, including automation, productivity and global sourcing are also yielding strong results. This is a testament to our team's positive adoption of new processes and our ability to navigate dynamic, challenging market environment. So I'd like to thank our team for their hard work and dedication this year.

With that, I'll turn it back over to Kevin to conclude. Kevin?

K
Kevin Olsen
executive

Thanks, David. I'd like to echo your comments regarding our team. We've implemented a number of changes across the organization this year. Our contributors have done an outstanding job adapting and improving upon the initiatives we put in place. We're proud of our results through the year. We look forward to finishing 2024 strong, delivering significant growth over last year. We remain committed to driving long-term growth by investing in our people, our processes and the innovation need to design and deliver next-generation solutions.

With that, I would now like to open the call up for questions. Operator?

Operator

[Operator Instructions] Our first question comes from the line of Scott Stember with ROTH MKM.

S
Scott Stember
analyst

Maybe we could just touch first on Light Duty. Some of your customers have been talking about some softening even in the professional side of the business or do it for me but you guys continue to outperform. Just trying to get a sense of how much is being driven by new products and what things look like on a same SKU basis on a year-over-year basis?

K
Kevin Olsen
executive

Yes, I mean, if you look across kind of what's been going on in the aftermarket, there certainly seems to be a stronger growth profile in the commercial side of the business based on what our customers are saying and DIY, does seems to be a bit softer from a total growth perspective. If you look at Dorman Scott, as you know, we're more indexed towards the DIFM or commercial side of the house for nondiscretionary parts. And so we're not as tied to the DIY trends that seem to be out there in the market now. I mean, obviously, 1 of the major growth drivers for us has been new products, and it continues to be. It's why we focus so much on innovation and new to the aftermarket solutions. That has and will continue to be the major growth profile of lever for the company going forward.

S
Scott Stember
analyst

And then next question before I get back into the queue. You talked about signs of things stabilizing in Heavy Duty. I'm trying to get a sense of where we could look for margins, operating margin in Heavy Duty to go when things do finally start to hit their stride once again?

K
Kevin Olsen
executive

I mean, look, Heavy Duty, it seems to be that market seems to be stabilized, certainly bumping off the bottom as we see it today. It's as I said in the prepared remarks, it's difficult to call when that market is going to inflect. We certainly hope there seem to be some signs that 2025, you might see an inflection up. That business for us, obviously, is not as asset light as our Specialty or Light Duty business. So it's obviously impacted more from volume decreases with the overhead that they carry from manufacturing operations.

So from our perspective, we're going to continue to focus on innovation in that side of the house and productivity initiatives. So we think we're well positioned when that market does come back. In terms of the actual target, that business for us before the downturn was generating mid-teen operating profit margins. And so we expect to be back at that level when the market does inflect.

Operator

Our next question comes from the line of Bret Jordan with Jefferies.

B
Bret Jordan
analyst

Could you talk about in the Specialty segment, how much is now in the repair space as opposed to the discretionary mix? Have you guys developed that brake fix product line?

K
Kevin Olsen
executive

We're actually slightly above half the business is nondiscretionary repair, Bret. It was less than that when we acquired the business a little bit more than 18 months ago. As we've talked previously, we are tied to new vehicle sales because there is a high attach rate to new vehicle sales. That's why the focus on nondiscretionary repair, we've made a lot of progress on that initiative, and we continue to do so. So it's going to continue to be a focus and that kind of balance of sale will continue to increase.

B
Bret Jordan
analyst

And then question on complex electronics margins. You say, obviously, that the new product margin exceeds the average. Do complex electronics new product margins exceed the average new product margin? Is it a more profitable segment overall?

K
Kevin Olsen
executive

Well, I'll just say it this way. I mean we don't give specifics around that category in terms of margin or the size of it. But what I will say, Bret, is a lot of those parts are new to the aftermarket. Which means that part did not exist in the aftermarket the day before we launched it, okay? So those parts generally have a higher margin profile than a part that's been in the aftermarket or is not new to the aftermarket. It's the highest margin for us. It's the highest margin for our customers. So obviously, it's new -- or complex electronics is mainly new to the aftermarket, it's going to carry a higher margin profile than the balance of the business.

B
Bret Jordan
analyst

And then a quick follow-up question, I guess, on margin impact. If we do see tariffs change, you guys have talked about some supply chain -- reevaluating supply chain. But obviously, if there's going to be a big tariff increase next year, how do you see that impacting the business?

K
Kevin Olsen
executive

We're obviously watching that very closely, Bret. I would say that we're much better positioned now than we were back in, say, 2018. As you referenced, our supply chain is much more diverse. I'd also say, I think we're better positioned in that -- we have a playbook. So we know how to handle it. We know what we have to do. We'll do what's right for -- if tariffs do come on we'll do what's right for our business, and we'll do what's right for our customers and the ultimate end user at the end of the day. So I think that's how we're going to view it. I don't really want to go more into it at this point. We're just going to continue to watch and see what happens.

Operator

Our next question comes from the line of Justin Ages with CJS Securities.

P
Peter Lukas
analyst

It's Pete Lukas for Justin. You covered a lot of my questions. Just in terms of electric vehicle parts, what are you seeing now? And kind of what -- where do you see it going in the future? I know you touched on it in the prepared remarks in terms of the breakdown, but just where are we today? And kind of where do you see it going in the short term?

K
Kevin Olsen
executive

Well, I think depending on what you mean by electronic vehicles, electric vehicles. I mean how we view it as obviously, pure plug-in electric, and there's hybrid. As we mentioned in the prepared remarks, I mean, the car park is going to remain heavy ICE through 2035. There will be a continued increase in the car park in the repair age that we target for pure plug in electric and hybrid. Look, we view it just like ICE. We have the capability to address parts on any electric vehicle out there. A lot of them are complex electronics. Hence, that's why we focus and invest so much in those categories. So as those categories do increase over time, we'll continue to increase our content. But it's going to be quite some time before there's a meaningful portion of the car park in the repair age that are pure plug-in electric.

Operator

Our next question comes from the line of Gary Prestopino with Barrington Research.

G
Gary Prestopino
analyst

David, what was that $1.6 million other income positive number in the quarter?

D
David Hession
executive

On the other income and expense, Gary, that was the impact of our joint venture income. That's where that shows up.

G
Gary Prestopino
analyst

And then, Kevin, maybe you could help us out here. You're citing that new products are helping to drive growth and increase the margins. But could you maybe slap some metrics around that in terms of how much -- what percentage of sales were coming from new products over the last 9 months or in the quarter versus where they were last year. Just so we can kind of get an idea of how that is moving to the positive for the company?

K
Kevin Olsen
executive

Gary, we don't release metrics in terms of what portion of our sales dollars are tied to new products. We do release the new SKUs. As you know, SKUs in the quarter were roughly flattish to where they were a year ago that will come out in the disclosures. But I would tell you that it was last year, it was up against a very difficult comp. The 2-year stack for SKUs in the quarter was actually up 70% from where it was back in the same quarter in 2022. So look, new to the aftermarket continues to be -- again, we're always going to have line extensions, applications that retire, new applications.

But where the growth is going to be driven is new to the aftermarket. And that continues to be a strong driver of growth for us, Gary, and it's going to continue to be. But we don't specifically break out the number. I'd also say that even though the SKUs were flat in the quarter, the total new product sales dollars versus the same quarter last year were actually up. And that's going to happen from a function of not only just units being up, but also average selling prices are up as we continue to focus on more complex parts.

G
Gary Prestopino
analyst

And then getting back to the Heavy Duty, you're hearing that the market is stabilizing. So is the thought process that versus what's happened in 2024 that it will be flattish in '25 and then maybe increase in the 2026 as these new emission requirements, especially in Europe come in for 2027?

K
Kevin Olsen
executive

We haven't released guidance for 2025 at this point yet, Gary. But what I will say is that we're not going to plan on a significant inflection of growth in 2025. It's just too cloudy right now. We do hope that it's going to inflect. So our focus right now is to continue to work on new product development which is, again, get that flywheel of new product into the market, which will drive growth for years to come and productivity initiatives across the business. So when it does inflect, we'll be well positioned to ride that wave up.

Operator

There's no further question at this time. That concludes today's call. Thank you all for joining, and you may now disconnect.

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