ADENTRA Inc

TSX:ADEN

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good morning. My name is Ludy, and I will be your conference operator today. I would like to welcome everyone to the ADENTRA Second Quarter 2024 Results Conference Call [Operator Instructions]. After's the speaker's remarks, there will be a question-and-answer session

[Operator Instructions]. With me on the call are Rob Brown, ADENTRA's President and CEO; and Faiz Karmally, Vice President and CFO. ADENTRA's Q1 2024 earnings release, financial statements, MD&A and other quarterly filings are available on the Investors section of our website at www.adentragroup.com.

These statements have also been filed under ADENTRA's profile on SEDAR+ at www.sedar+.ca. I want to remind listeners that management's comments during this call may include forward-looking statements. These statements involve various known and unknown risks and uncertainties and are based on management's current expectations and beliefs, which may prove to be incorrect.

Actual results could differ materially from those described in these forward-looking statements. Please refer to the text in ADENTRA's earnings press release and financial filings for a discussion of the risks and uncertainties associated with these forward-looking statements.

All dollar figures referred to today are in U.S. dollars unless stated otherwise. I would now like to turn the call over to Rob Brown. Please go ahead.

[Robert Brown, executive]

Nice job. Thanks, Ludy. Good morning, everyone. Thanks for joining us today as we report ADENTRA's financial and operating results for the second quarter of 2024. I'll start with our key business and financial highlights for the quarter. Faiz Karmally, our CFO, will then provide details of our Q2 financial results.

I'll then finish off our prepared remarks with our outlook for 2024. As Ludy noted, I'll remind those listening. All dollar figures discussed today are in U.S. dollars unless otherwise noted. This past quarter was eventful for ADENTRA characterized by a number of significant and positive developments. First, after 11 years of dedicated service, Mr. Peter Bull stepped down from ADENTRA's Board of Directors in May and reduced his share position to just under 10% to fulfill personal, financial and estate planning goals.

We anticipate that this change will enhance the company's market float and trading liquidity over time, benefiting all shareholders. We would like to thank Peter for his years of service to the company and his continuing support as a shareholder of ADENTRA.

Second, we successfully completed a $73 million equity offering in June. This initiative reinforced our balance sheet and positioned us to pursue acquisition targets in our promising M&A pipeline. Third, we were pleased to announce the $130 million acquisition of Woolf distributing in July. Woolf is an excellent strategic fit as it enhances our geographic footprint and product range by adding complementary network locations through our U.S. Midwest operations.

It also introduces new branded specialty products in the outdoor living category and strengthens our access to the pro-dealer customer channel. I'm excited to welcome Woolf and its employees to the ADENTRA team. I'm also pleased that we deployed some of the capital from our equity raise in June expeditiously and towards an acquisition that is expected to be immediately accretive to both adjusted earnings per share and adjusted EBITDA margin.

The addition of Woolf advances us towards our destination 2028 goals, which include achieving $3.5 billion in annual run rate sales through a blend of organic and acquisition-driven growth.

Fourth, on Wednesday of this week, the U.S. Department of Commerce announced the preliminary results of a further administrative review with respect to certain hardware plywood products produced in Vietnam that were alleged to be circumventing a previously established antidumping and countervailing duty order against hardwood plywood from China. Based on the preliminary results of this administrative review, we believe we may be eligible for a refund on a significant portion of the $25.7 million in duties that have been paid related to this matter.

While the U.S. Department of Commerce's results are provisional and could change upon becoming final, we view this as a very encouraging development. And finally, the events in the quarter included solid financial and operating performance. We continued to strengthen our bottom line results with second quarter sales of $549.5 million, adjusted EBITDA of $48.5 million and adjusted earnings per share of $1.06.

While sales declined 6.2% compared to the same period last year, primarily due to product price deflation. Our gross margin percentage increased by 130 basis points year-over-year to 21.7%.

This is the 13th consecutive quarter of gross margin above 20%, which has been achieved through several strategic initiatives, including the addition of higher gross margin mix businesses in the acquisitions of Novo and Mid-Am a focus on higher-margin ready-to-install products, positive contributions from our global sourcing program and efforts to leverage data analytics and our digital platforms so that we can better manage our assets and maintain strong discipline on our product pricing.

Despite softer pricing and what was a more muted spring seasonal activity in North American construction markets, our increased gross profit margin combined with tight cost control, resulted in strong bottom line results with adjusted EBITDA increasing 5.1% and adjusted basic earnings per share growing 43.2% compared to the same period last year.

During the quarter, we generated strong cash flow with 79% of our adjusted EBITDA converting into operating cash flow before changes in working capital. This was supported by our solid operating performance as well as strategic efforts to reduce interest expenses via a combination of debt reduction and interest rate swap and a reduction in cash taxes paid.

We ended the quarter with a leverage ratio of 2.2x, which is at the lower end of our 2x to 3x range, and that positioned us to close on the Woolf transaction. We also declared a quarterly dividend of $0.14 per share payable to shareholders on October 15, 2024.

I'll now pass the call to Faiz to provide details of our Q2 financial results, and then I'll return to talk about our outlook before we open the call to questions.

[Faiz Karmally, executive]

Thanks, Rob, and good morning, everyone. I'm going to recap our financial results for the second quarter of 2024 and outline our financial position at quarter end. Again, I'll remind those listening that any dollar figures Rob and I use today are in U.S. dollars, unless we stated otherwise. Starting with consolidated revenue, we generated sales of $549.5 million in Q2. This decrease of $36.4 million or 6.2% from sales levels in Q2 of 2023 was due primarily to product price deflation as well as a 1% decline in year-over-year volumes.

On a regional basis, sales in our U.S. operations were $504.6 million or 6.7% less than Q2 2023. This was driven by a 6% decrease in product prices and a slight decline in volumes. Our Canadian operations posted Q2 2024 sales of CAD 61.4 million, which was 1.7% higher than Q2 sales in 2023. Canada experienced a 7% increase in volumes during the quarter, partially offset by a 5% decrease in product prices.

Moving now to gross profit. We earned $119.2 million in the second quarter, essentially flat versus Q2 2023. Lower sales were offset by a 130 basis point increase in gross margin to 21.7%, reflecting the positive impact of the strategic initiatives Rob discussed in his opening remarks, together with a reduction in inventory write-downs as compared to the same period last year. Our operating expenses in Q2 were $92.2 million, a 2.3% decrease compared to Q2 of 2023 with lower premise and administrative costs more than making up for inflationary cost pressures.

Looking now at our adjusted EBITDA for Q2 2024, it was $48.5 million or a 5.1% improvement over the second quarter of 2023. The main drivers of the adjusted EBITDA improvement were the increase in gross margin of 130 basis points and a $2.5 million reduction in operating expenses before changes in depreciation, amortization and office expense.

And finally, adjusted net income in the first quarter was $24.4 million, an increase of 47.3% over Q2 2023. The change was primarily driven by the growth in adjusted EBITDA, a $1.7 million decrease in finance expenses and a $4 million decrease in income tax expense. On a per share basis, adjusted basic profit per share was $1.06, which was 43.2% increase over the $0.74 we reported in Q2 of last year. Looking at our cash flow position for the first quarter. We generated $26.8 million of cash flows from operating activities as compared to $52.8 million in the Q2 period in 2023.

The year-over-year decrease was the result of Q2 working capital investments of $10.7 million compared with a $28.1 million cash inflow from the release of working capital in Q2 of 2023, a period during which we were actively reducing our inventory levels. The investment in working capital is normal for this time of year.

Moving next to our balance sheet. Our cash flow generation in Q2 was primarily used to fund our investments in working capital and combined with the $73 million equity issue resulted in a decline in our net bank debt at the end of the quarter to $329.8 million.

We exited the quarter in a solid financial position with a leverage ratio of 2.2x and unused borrowing capacity of $485 million, which gave us ample balance sheet capacity to fund a $130 million Woolf transaction after quarter end and still retain flexibility we need to advance our business strategies while managing any short-term headwinds.

The capital allocation priorities are the continued responsible management of our balance sheet, funding our growth, both through acquisitions as well as organically, and providing incremental total returns to shareholders through dividends.

With that, I will hand the call back over to Rob.

[Robert Brown, executive]

Very good. Thanks, Faiz. I'll finish up my prepared comments today with our outlook and details on our strategy to continue building the long-term value of ADENTRA. As we move into the second half of 2024, we expect that the combination of inflation and elevated interest rates will continue to have moderate impacts on the residential, repair and remodel and commercial construction markets.

However, the size, scale and sophistication of our business model allows us to implement comprehensive initiatives that drive our success and are difficult to replicate by smaller regional competitors. Such key strategies include our global sourcing program and our vendor management programs that provide us access to branded exclusive and semi-exclusive products with attractive terms.

Our digital engagement initiatives with customers with approximately 20% of our transactions occurring online and our proprietary ADENTRA university training programs and further ensure our team is well equipped to deliver exceptional service and maintain our competitive advantage. These strategies will contribute to solid performance, and we anticipate that on an organic basis, third quarter adjusted EBITDA will be similar to what we achieved in Q2 of 2024.

Acquisition-based growth is expected to build on that performance as we benefit from the inclusion of Woolf's operations for August and September 2024. These strategies are core components of our Destination 2028 plan, which targets an additional $800 million in run rate acquired revenues between 2024 and 2028.

The acquisition of Woolf puts us right on pace to achieve this goal, and we will continue to evaluate acquisition opportunities going forward. As one of the largest distributors of architectural building products in North America, with approximately a 6% market share, there remains significant opportunity for growth, and we maintain a robust pipeline of acquisition targets. Over the longer term, our business is supported by strong end market fundamentals. This includes historic underbuilding of homes, positive demographic factors, strong home equity and an aging housing stock. Decreases in interest rates could further support end market demand for our products.

We continue to see a multiyear runway for growth in our core repair and remodel, residential and commercial markets.

With that, I just want to thank you for your time this morning. I'll turn it back to our operator, Ludy to provide instructions for the Q&A period.

[Operator]

Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Ariana Milin with CIBC Capital Markets.

[Ariana Milin, analyst]

I was wondering if you could provide some visibility on pricing by product category. Have you seen prices begin to stabilize in certain categories? And then overall, when do you expect to lap negative pricing comps?

[Robert Brown, executive]

So as I think most folks on the call know, we've got a very broad and deep skew mix. We carry a lot of products, and there are different pricing dynamics across categories. So it would probably be tough and a little too freestyle to go to granular by product category. I would offer this that we are seeing the rate of product price deflation is slowing.

In the first quarter, it was high single digits 9%. In the second quarter, it was 6% year-over-year. So we are seeing that slowing, which is very positive. I would say there are some product categories. This is a broad statement where we are -- we have seen prices stabilize and, in some cases, some modest and early upticks. I would call out MDF moldings and doors as examples there. But past that, we are still facing some downward pressure on pricing, but we do think that it's coming -- nearing the finish line.

[Ariana Milin, analyst]

Okay. Great. And then turning to your acquisition of Woolf, can you provide any insight on the expected magnitude of synergies and over what time frame we should expect these synergies to fully materialize?

[Robert Brown, executive]

We haven't put a number out there on the synergies, you have to exercise some degree of caution when doing that and going through the HSR process approval, which obviously we approved and then we closed shortly thereafter. So we do have identified synergy areas. We are doing the work now to -- from an internal perspective, quantify those. And as has been our practice in all past acquisitions, we will then execute against those on a time line.

Generally, that time line depends on what it is. There's usually some immediate cost savings just by virtue of a larger companies such as ADENTRA being able to provide certain services more efficiently than a smaller regional player, and we get those in a matter of months. Some of the synergies around cross-selling and cross brand kind of product sharing generally take a little bit more time. I would say that's more within a year or it can be a little bit more. But you've seen in the past on other acquisitions we've been able to take up to a turn although our EBITDA multiple with these efforts, but it will take a little bit of time.

[Operator]

And your next question comes from the line of Yurisleidy Zoreda with Canaccord Annuity.

[Yurisleidy Zoreda, analyst]

Congrats on a good quarter. So I would like to just get some additional color on what you're expecting for Q3 and the second half of 2024. How has your outlook evolved in the last few months compared to your prior expectation of modest organic EBITDA growth for the full year?

[Robert Brown, executive]

Yes. So I mean, we had said earlier in the year that we expected the comps to get easier in the second half or to improve in the second half relative to the first. I would say -- I made the comment in my opening statements that it was a relatively muted uptick in seasonal sales between Q1 and Q2, not as much as, I think, traditionally building products space where it would anticipate.

The way we've looked at it and phrased it is when we stare at Q3, and of course, putting the results out yesterday, we have the benefit of visibility of July. So far, and our expectation is that Q3 probably looks similar to Q2. So that's what we've put out there. We've not said anything specifically about the fourth quarter. I would just make the comment that I think we all are familiar with the company, I understand that's typically a seasonally slower quarter. But as we're looking at Q3, we're viewing it as steady as she builds at this point.

[Yurisleidy Zoreda, analyst]

Okay. And perhaps just turning to the Woolf acquisition. I understand it expands your presence in the outdoor living category, which has somewhat -- so being somewhat more impacted by the current environment, at least in my understanding. So could you just share what you're seeing in that business and what your growth expectations for it are going forward?

[Robert Brown, executive]

Yes. We're very excited about that. We already were in outdoor living. This isn't our first foray into that category. But what I would say about Woolf is they do it extremely well. And they've got a real track record of success and growth in what they're doing there. This is predominantly decking and really in connectors and accessories that go with that space. If you swooped on the Woolf website, which I'm sure some folks have, you'll see that they are an [ AZEK ] TimberTech distributor. That's a premium line and it has performed very well. And maybe point you at ASX recent reporting, which was quite positive moving forward in that space.

[Operator]

And your next question comes from the line of Gabriel Moreau Scotiabank.

[Gabriel Moreau, analyst]

So I'm calling for Jonathan Goldman. Just a quick follow-up on the first question on price deflation. Do you have a sense about how much higher current price level are versus 2019?

[Faiz Karmally, executive]

Yes. Gabriel, it's Faiz. I can take that one. They're still elevated. Again, Rob's comment around just the intensive SKU mix and the variety of products we have. It's more of a ballpark range. But it could still be mid-teens, roughly in terms of where prices are relative to the period you noted. Rob mentioned that the rate has been slowing the last number of quarters. We think we're near the finish line.

You may have mentioned -- you heard us mention this before, but we don't expect prices to fall back to sort of those Pre-COVID levels that you're referencing. The inputs to the products just cost more today than they do. If you think about things like wages what you pay people. What you're paying for space, manufacturing facility, what capital and the ground costs today with higher interest rates, what freight costs are doing.

We don't see that going back to Pre-COVID level, then that should provide some support to prices closer to where they are today as opposed to where they were Pre-COVID.

[Gabriel Moreau, analyst]

That's helpful. And on the macro, today, how would you describe your outlook versus where we were maybe three months ago?

[Robert Brown, executive]

Yes, I would say that in residential, the single family continues to form reasonably well with some growth. I think there is an expectation that growth might have been a little bit more robust than it has proven to be. But it's still good. The multifamily has come off that was expected. It was coming off an extremely strong high is now what I would call more of a reversion to a regular level.

There's still good levels. The repair and remodel I think anybody is following that, we'll see that's proven to be a little bit softer than there's probably expected coming into the year. If you look at the large home centers and Lowe's is a key partner for our company. If you look at their expectations coming into the year versus current performance, that's a few points. So I would say probably weaker than the outlook statements coming into the year.

Having said that, we continue to enjoy decent performance in that sector. Because of being in the [indiscernible], which is, I would say, proportionately performed or relatively performed better than rest of store. That's been still a reasonably strong aisle. So I would say a little bit of a shift as we proceed through the year and you've seen in some outlook statements with other issuers to probably softer than [indiscernible].

[Operator]

And your next question comes from the line of Jeff Fenwick with Cormark Securities. .

[Jeff Fenwick, analyst]

Just another follow-up here on Woolf and I guess, related to the integration effort here, could you just give us a sense when you take on a business like this, the level of sort of management effort and time required to integrate it? Is it a similar ERP system that you can plug in and kind of get to work right away out of the gate?

Is there a lot of time and effort from your end to make sure it's all working well. And I'm just sort of asking that question with respect to then the ability, of course, to look forward to the next step that you want to take when you're contemplating future acquisition opportunities.

[Robert Brown, executive]

Yes. No, it's a good question. Totally get it. And well I would describe this as a transformative acquisition. It's a chunky acquisition for us. I think that's very fair. The answer would differ based on target, obviously. But specifically to Woolf, this is going to be a very smooth onboarding. We are already on the same ERP systems, both from an overall ERP system and even our payroll and HR information systems lined up very well on the same platform.

So that distraction is taken off the table right away. And then we're keeping all the folks at Woolf, they've joined the team, and they're going to be there to maintain continuity of the business. It may be a little bit of a [indiscernible]. People say business as usual.

But literally, from the day we announced that, it's business as usual. We know and understand the customer base, the vendor base and the geographic methodology that's utilized in the Midwest. The learning curve is not steepier, and we've got the same folks in place. So this should be one that does not slow us down from continuing our acquisitions program.

[Jeff Fenwick, analyst]

Okay. That's very helpful color. And then I wanted to ask about operating expenses. I mean that would seem like a standard in the quarter, you're still able to find a couple of million dollars of savings. Just sort of any commentary on what's going on there? Are you seeing some -- maybe some deflation on some of the costs now? Or is this just about finding some incremental efficiencies.

[Faiz Karmally, executive]

Yes, Jeff, it's Faiz. I can take that one. I think we're in a range about half our costs roughly are people costs -- now of course, there's a salary and benefits component to it. But there's an hourly wage component to it as well. We can flex that a little. I know you're comparing the same period in prior year. But if you just look at the last couple of quarters on a trend basis, we've sort of been in that low 90s in terms of total operating expenses as they show on the -- in the MD&A table on section 2.

I think that's our range here, at least in the short-term. We've done the optimizing of the things you mentioned. We did that actually several quarters ago, whether it was consolidating certain smaller facilities, doing the things we needed to do around people and maybe headcount as we saw more of a flattered stable environment as opposed to a little bit more of a growth environment we were anticipating. I think all those things are done. I think our run rate right now is really matched well to the pace that we expect here heading into the third quarter.

[Jeff Fenwick, analyst]

Okay. That's great color. And then maybe just a question here on your distribution channels. Are you seeing much variability between what's happening between pro-dealer retail and your manufacturing base? Or is there any sort of themes that we can sort of tease out in terms of what you're seeing right now?

[Robert Brown, executive]

Nothing that I would call out as kind of thematic there, Jeff. It's been steady. I mean that's how we've described it and as I mentioned, through the start of the quarter. So until we see something that indicates otherwise, that's how we're looking at it.

[Operator]

And your next question comes from the line of Zachary Evershed with National Bank Financial.

[Zachary Evershed, analyst]

Congrats on the quarter. What kind of adjusted EBITDA contribution are you expecting from Woolf in August and September?

[Faiz Karmally, executive]

So when we -- when we announced the deal, you recall, we noted it was accretive to our adjusted EBITDA margin. We've roughly been operating about a 9%, let's say, plus or minus. So they would be a little higher than that. We've not disclosed that, but you can sort of make your assumptions there. I think in terms of how that pencils out over the course of the year. Similar to our business, the first half is going to be just a little stronger than the second half primarily because of that Q4 seasonality that Rob has highlighted earlier.

That's going to apply equally to Woolf as it does to our own business. So you have an EBITDA estimate and maybe 45% of that happens in H2 of 2024. And then recall, we own them for 5 months essentially of 2024. So we're expecting very solid EBITDA contribution from number of expats when we went through the deal.

As Rob mentioned, they sort of hit the ground running. That's our plan, and it's been working that way so far. But for Q3, you should really think of it as 2 or 3 months of contribution. And then in Q4, we'll have the full benefit, albeit that is going to be, again, a seasonally slower quarter for them as well.

[Zachary Evershed, analyst]

Makes sense. And then as we're looking at your balance sheet and your tuck-in expectations, what are you doing in terms of fielding inbounds versus still being on the hunt and would you consider anything more commoditized SKU-wise or are you still focused on specialty products and services that can raise your margins?

[Robert Brown, executive]

So the pipeline is active. We've got that fully staffed and very capable full-time leader of that who is active in the market every week. Inbound versus outbound. We're always turning outbounds, but the inbounds are also healthy in this environment. So we cast a really wide net and look at all the opportunities that are out there to make sure we have a match for what's right for us.

In terms of what's right for us, you're quite right, we've been leaning towards upscaling to more specialty higher-margin product offerings as we look at new acquisitions, that is one criteria, but we will consider other things that the transaction could bring to the table even if it's got some more commoditized products within the mix.

But if you think about the long-term destination, it's going to be to continue to move upward risk margin, and that will be reflective in the acquisitions that we end up closing on.

[Zachary Evershed, analyst]

Perfect. And for the tax impacts in Canada, what are your expectations for use of loss carryforwards?

[Faiz Karmally, executive]

Exactly, Zach, we're going to expect to use them. Is the short answer. We've recognized most of them now. They were previously unrecognized because we didn't think we would use them at least over the planning horizon that we used to evaluate the tax loss carryforwards.

What's changed, as I mentioned in the note is there are some new Canadian tax rules, very well foreshadowed, but finally here. And so that will increase our taxable income in Canada, but we do have these losses we can now use. So you saw the recognition in the quarter, roughly $4 million in after-tax that we think we can now shelter.

There's maybe a little more we haven't recognized again. That's going to tie into our estimates of taxable income that we'll continue to refine. But most of that now has been recognized in the quarter here.

[Zachary Evershed, analyst]

Got you. And then just one last one on the macro housing start trends, given months of supply running at higher-than-normal levels for new homes. Are you worried at all about oversupply over the next two years or air pockets in demand? And then maybe looking at the rate cycle how quickly did housing activity react to 25 basis points or 50 basis points of cuts in past cycles?

[Robert Brown, executive]

I feel like a privilege you're asking is that question. That's a lot of crystal ball and opinion probably that goes with it. But yes, I don't think we envision air pockets or oversubscription of demand until something kind of gives a little bit. And the theme with our volumes setting aside product pricing, which we said is decelerating, but it's been steady for us.

So that we see something different. That's the theme. Having said that, I'm tremendously optimistic that interest rates, when they do roll over, that's going to be really helpful. And I assume it will be at a bit of a measured pace. But there's -- that will provide some relief and some entry point for folks that are looking to get into the market.

It's real dollars in terms of an after-tax monthly payments. And I feel like there's some folks that are just waiting for that to happen. So I do feel like that will be an important catalyst practically speaking as well as psychologically, when it occurs, the last it looked to be a lock that there's going to be a decrease in the U.S.

In September, we can argue around what size, but if you look at kind of forward indicators, it seems like that's what the market expectation is. And we would welcome that, obviously.

[Operator]

[Operator Instructions] Your next question comes from the line of Ian Gillies with Stifel.

[Ian Gillies, analyst]

Just maybe challenging to answer, but do you have any sense sort of your SKU mix, what your leverage is like to planned products versus, call it, mid-end products and low-end products? And I'm just asking this in the context of we're seeing changing consumer preferences across all three income brackets. .

[Robert Brown, executive]

Well, we've -- I mean, we've talked about. We've continued to upsize the proportion of our products that we would consider to be specialty. And we think of that as branded or exclusive or semi-exclusive products. So the Woolf acquisition is just another helper within the mix on that journey. I would say on your comments in terms of consumer consumption. We're obviously not in the consumer packaged good discussion here.

But our SKU mix does cover the range. So we've got good, better, best. And when I say good, that is -- it's still good, but it is -- they are lower cost alternatives all the way up through the premium products where you've got folks that frankly have wealth and that could be priced more pricing sensitive.

So that's a little bit of how we approach that by making sure we're participating in all the markets. And then within those markets, at price points that are going to suit the participants.

[Ian Gillies, analyst]

Got it. That's helpful. And apologies, I missed the first few minutes of the call. There seems to be some positive developments as it pertains to the trade case in Vietnam. Can you just remind us how much cash is tied up in the balance sheet right now as it relates to that case? And whether it's accruing interest while it sits there?

[Faiz Karmally, executive]

Yes. There's $25.7 million of duties that we've paid. We paid 15 -- rough numbers, $15 million of it last year and another $10 million through the first really essentially five months of this year. Our expectation is that it does accrue a trust. Yes. So we've noted on the preliminary, we think we may be eligible for a refund of a significant portion of that would have happened it's probably not until at least 2025, but our expectation is there would be interest payable on that as well.

[Operator]

There are no further questions at this time. I would like to turn it back to Rob Brown for closing remarks. .

[Robert Brown, executive]

Okay. Well, we will wrap then. Thanks, everyone, for joining us today on the line. As always, I appreciate your interest in the company. And as always, reach out to Faiz, [ Maggie ] or myself, if you've got follow-on questions, happy to chat with you.

[Operator]

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.