Aaon, Inc. Q4 FY2022 Earnings Call

Good day, and welcome to the AAON Incorporated Fourth Quarter 2022 Earnings Conference Call. Our host for today's call is Joseph Mondillo. At this time, all participants are in a listen-only mode. And later we will conduct a question-and-answer session. I would now like to turn the call over to your host. Joseph Mondillo, you may begin.

Thank you, operator, and good afternoon, everyone. The press release announcing our fourth quarter financial results was issued after market closed today and can be found on our website, aaon.com. The call today is accompanied with a presentation that you can also find on our website, as well as on the listen-only webcast. Please turn to slide two. We begin with our customary forward-looking statement policy. During the call, any statement presented dealing with information that is not historical is considered forward-looking and made pursuant to the Safe Harbor provisions of the Securities Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended. As such, it is subject to the occurrence of many events outside of AAON's control that could cause AAON's results to differ materially from those anticipated. You are all aware of the inherent difficulties, risks, and uncertainties in making predictive statements. Our press release and Form 10-K that we filed this afternoon detail some of the important risk factors that may cause our actual results to differ from those in our predictions. Please note that we do not have the duty to update our forward-looking statements. Joining me on today's call is Rebecca Thompson, CFO and Treasurer; and Matt Tobolski, President and Co-Founder of BasX. Unfortunately, Gary Fields, our President and CEO, is under the weather today, which is affecting his vocals a bit. That's why we have Matt here today. He will be filling in for him. We all wish Gary a speedy recovery. Matt will provide some opening remarks to start the call. Rebecca will then walk through the financials, and then we'll finish with Matt for some commentary on the quarter and outlook for 2023. With that, I will turn over the call to Matt.

Thanks, Joe, and good afternoon. So, starting on slide number three. Overall, we are very pleased with our 2022 results and particularly with how we finished the year. We started the year faced with several challenges, which resulted in a slow start. However, we quickly assessed the issues, adapted and were able to overcome those issues by the second half of the year. We reported record results in the third quarter and followed that up with another record in the fourth quarter of 2022. Despite the slow start to the year, we finished 2022 with record sales and earnings for the year. In the fourth quarter, sales were up organically 67.7%, and earnings were up over 500%. Organic volumes in the quarter were up 41%, and a two-year stack, volumes are up 46%. Compared to our previous record EPS in the third quarter, EPS was up 39%. Gross profit margins were the highest since 2020. At the same time, backlog has increased throughout the year, finishing 2022 at record levels. We've increased capacity and production output throughout the year and hope the orders continue to outpace production. Now, please turn to slide number four. This is a very interesting time for AAON. For decades, the company focused on a niche of the commercial HVAC market, centered around the design and manufacturing of premium quality, high-performing, high energy-efficient equipment. Historically, two factors prevented this niche offering from becoming mainstream, the first factor being price. AAON has historically had equipment that carried at least a 15% to 20% price premium compared to market pricing. This limited the size of our addressable market to specific applications and to our customers. The second factor is value. Up until recently, a vast majority of end-users were not focused on total cost of ownership and premium quality, higher performing equipment. However, over the past two years, the market has begun to shift dramatically in AAON's favor, with the pandemic creating more focus on indoor air quality and at the same time, markets adopting an increased focus on energy efficiency due to higher energy prices, decarbonization, electrification, and government regulations; the demand for higher performing, higher energy-efficient equipment has accelerated. Meanwhile, the price premium of AAON equipment has narrowed significantly, as government regulations related to the minimum energy efficiency standards have forced most of our competition to reengineer their equipment, causing them to use higher quality, higher-priced components in their designs. AAON's full product portfolio has been in line with these new standards for years. This regulation did not adversely affect us from a pricing perspective. As a result, the cost of manufacturing across our industry has gone up significantly more compared to our costs. This has resulted in substantially larger price increases of our competition compared to the price increases that we have initiated. The end result is, our higher-quality product offering now sells at a much more competitive price, making the value proposition even more attractive. On top of all that, we continue to maintain the lowest lead times in the industry with the best on-time delivery rates. All in all, these dynamics have paved the way for AAON to transition from a niche player to a mainstream player. I'll now hand the call over to Rebecca Thompson, to go over the financial results.

Thank you, Matt. I'd like to begin by discussing the comparative results of the three months ended December 31, 2022, versus December 31, 2021. Please turn to slide five. Net sales were up 86.8% to $254.6 million from $136.3 million. The largest driving factor to the growth was organic volume, which contributed 41%. Volume growth reflected the company's strong backlog and the fourth straight quarter of record production. Improved productivity, along with approximately 36.2% increase in total headcount, helped drive the increased production. In addition to volume, pricing contributed 26.7%, and inorganic growth contributed 19.1%. Similar to the legacy business, BasX performed extremely well in the quarter. BasX realized record sales and EBITDA for any quarter in its history. Moving to slide six. Our gross profit increased 195.9% to $78.5 million from $26.5 million. As a percentage of sales, gross profit margin was 30.8% compared to 19.5% in 2021. Gross profit margin benefited significantly from multiple price increases initiated throughout the year, reduced impacts from supply chain issues, and production efficiency improvements across all of our manufacturing locations. The year-over-year improvement in gross profit margin was also partially attributed to the abnormally low gross profit margin realized in the year-ago quarter, a result of supply chain issues at the end of 2021, which constrained production and resulted in unabsorbed fixed costs. Please turn to slide seven. Selling, general, and administrative expenses increased 51.3% to $31.9 million from $21.1 million in 2021. Adjusted SG&A expenses increased year-over-year by 85.9%. As a percentage of sales, adjusted SG&A decreased to 12.5% of total sales compared to 12.6% in the same period in 2021. In dollars, SG&A increased primarily due to our volume growth that created higher earnings, including higher profit-sharing expenses, commissions, and bonuses. Please turn to slide eight. Adjusted income from operations grew 397.2% to $46.6 million from $9.4 million in the year-ago quarter. As a percentage of sales, adjusted operating margin expanded to 18.3% from 6.9%. Adjusted operating margin was the highest of any quarter since 2020. That said, pre-pandemic, the company had achieved operating margins of over 20%. We foresee us fully returning to those levels and thus expect further improvement from what we achieved in the fourth quarter. Moving to slide nine, diluted earnings per share increased 545.5% to $0.71 per share from $0.11 per share. In the quarter, we benefited from a lower-than-normal tax rate due to increases in our expected R&D tax credits and 179D deduction. Even without this benefit in the fourth quarter, we still experienced growth when compared to our previous record earnings in the third quarter. Turning to slide 10, you'll see that our balance sheet remains quite strong. Cash totaled $5.5 million at December 31, 2022, and debt was $71 million. Within the quarter, we paid down approximately $5.3 million on our line of credit, lowering our leverage ratio to 0.46 from 0.65 at the end of the third quarter and returning us to a similar leverage ratio we were at one year ago. The increase in debt from a year ago was primarily to finance investments in working capital. We had a working capital balance of $203.5 million at December 31, 2022, compared to $131.3 million at December 31, 2021. The investment in working capital was made to help facilitate the robust volume growth while also helping mitigate supply chain issues. Capital expenditures for 2022 were $54 million, down 2.4% from a year ago. Capital investments were less than we expected at the beginning of the year, primarily due to a finding ways of increasing capacity within our current manufacturing square footage, allowing us to push out certain projects. Supply chain issues and other economic factors also delayed projects. We have not slowed our growth-related investments at all and we are still on track with our capacity expansion plans relative to our needs. We continue to be aggressive with our investment planning to help facilitate the robust organic growth we anticipate over the next several years. In 2023, we anticipate capital expenditures to be $135 million. With that, I'll now turn the call back over to Matt.

Thanks, Rebecca. I'll now turn to slide 11. As I said in my opening remarks, we are very pleased with how we finished the calendar year. Our operations continue to perform well in Q4 and I continue to commend the team for their performance. All three of our locations are pushing more volume through their respective plants than we've ever seen before. Organic volume growth of 41% realized in the fourth quarter is pretty much unheard of in this industry, and the comp was not easy. Volume in the fourth quarter of the year-ago period was up 4% from the fourth quarter in 2020. On a two-year stack, volume was up 46%. This performance is a result of several factors. First, the headcount was up 36.2% from a year ago and up 6% from the third quarter. We continue to do a great job with onboarding new employees and efficiently integrating them into our operations. Second, productivity continues to improve. Supply chain issues, while easing a bit, still very much exist. Throughout the year, we learned to manage through supply chain constraints much better, leading to improved productivity. At the same time, we're ramping up headcount at an aggressive rate, which can result in inefficiencies if not handled properly. Despite the challenges, our metrics on productivity tell us that our operations continue to become even more efficient. The team is fully adapted to the environment and has mitigated most of the financial impact, particularly when it comes to supply chain issues. We should see productivity improve even more as supply chain issues abate. Lastly, in addition to headcount and productivity improvements, the volume growth was also a reflection of our premier sales channel and the backlog our partners have been able to generate for us. I'd like to thank all of our channel partners as well as our internal sales support. Our sales channel has never been as strong as it is right now, and we're seeing remarkable share gains that we've been realizing. Please turn to Slide 12. I want to discuss our pricing and gross margin. For a couple of quarters now, we have been saying the improving margin profile of the backlog had us on track to drive a recovery in gross profit margins. We realized some progress in the third quarter. And as we expected and indicated on our last call, we saw even more progress in the fourth quarter. The 30.8% gross profit margin realized in the fourth quarter was up 380 basis points from the third quarter and 810 basis points from the second quarter. On a year-over-year basis, gross profit margin improved 1,130 basis points. In the last five years, as signs in the first quarter of 2020 when we realized gross profit margin of 31.2%, it was the strongest gross profit margin of any other quarter in history. We are certainly happy to see that. This improvement is largely related to a realignment of price versus cost. Improved productivity is also a contributing factor. Historically, we have always managed our pricing through our cost structure while targeting a gross profit margin of about 30%. However, as I addressed at the top of the call, our industry has changed a lot over the last couple of years. Secular trends related to decarbonization, energy efficiency, and new government regulations are causing the cost of manufacturing across the industry to increase much more drastically than it is for us, causing market pricing to increase more than our pricing. At the same time, our product offering is a much higher quality and offers a better total value proposition, justifying a premium price. We will continue to monitor our pricing to cost, and we are also beginning to manage pricing to market. In the end, we will be able to continue to improve our gross profit margin while maintaining a price premium that is smaller than it was a few years ago. Moving to Slide 13. Overall, demand remained strong. Total backlog was up 110.6% from a year ago and up 6.5% from the end of the third quarter. The fact that backlog continues to increase sequentially is a sign that demand remains strong, particularly because our production is also increasing. Organic bookings in the quarter were up year-over-year by 45%. Sequentially, they were up 14%, which is mostly driven by volume. Even if you remove the price increases from orders and sales to look at it on an apples-to-apples basis, orders are still outpacing production. Demand is also very strong at BasX. The backlog of BasX was up 260.9% since the end of 2021. The pipeline of projects among the data center and semiconductor manufacturing end markets have remained extensive, and the team there is doing a great job at winning orders. Likewise, the production team at BasX is doing an outstanding job in increasing capacity. Please turn to Slide 14. Demand continues to be a fairly broad base as far as our end markets. Lodging and office buildings remain soft, but outside of that, most sectors in which we participate are still quite strong. Data centers and semiconductor markets are very strong, as I mentioned already. The K-12 education vertical is also solid. I think that actually strengthens in 2023 with the majority of the stimulus money in the CARES Act having still not been spent. Health care and manufacturing are also still very good. We continue to see robust demand in growth facility markets. And while new construction of warehouses seems to be slowing, the end market remains good for us due to retrofit work. Overall, demand is solid across the board. While we continue to monitor for the slowdown that everyone is anticipating, we still do not see it. Sentiment among our channel partner group remains very positive, and the macro data we track is still encouraging. Construction spending is back to pre-pandemic levels, and construction starts are at the strongest level in years. The ABI and the Dodge Momentum Index, which tracks the pipeline of non-residential projects early in the planning stages, have recently peaked, but it still implies the pipeline is at historically high levels. Turning now to slide 15. Our biggest challenge right now continues to be ramping up production fast enough. While we are happy to see backlog growing, we'd like to see it start to come down, led by improving lead times. I think we'll start to see this happen in 2023, but it won't be until the second half of the year. The team is doing a great job with adding headcount while improving productivity. That said, our orders continue to outpace production. We want to continue to provide our channel partners and customers with the best lead times in the industry. To do this, we're going to continue to invest in the business. We will continue to add headcount and invest in capacity for long-term growth. Our CapEx in 2023, as Rebecca mentioned, is estimated to be around $135 million, which would be a 150% increase from last year. We feel strongly that we have the best product offering for the best value, which allows us to accommodate the increasing demand caused by secular trends within decarbonization, energy efficiency, higher energy prices, indoor air quality, and government regulations. We must continue to deliver at the very competitive lead times growth, so we will continue to invest in capacity. Moving to slide 16. I want to touch briefly on our parts business. At 6% of total sales, parts still made up a small percentage in 2022. However, as we discussed in the past, this is an area of the company that we have been focusing on a lot, both internally and with our sales channel partners. In the fourth quarter, part sales were up 23.1%, and in 2022, they were up 30.3%. Compared to 2020, parts sales were up 64.6% in 2022. While parts became a smaller part of the company last year, it was due to the robust growth of equipment sales as well as the acquisition of BasX. Overall though, it was a record year for parts. It could not have been even better. In 2022, the parts business arguably was the most effective part of the company on supply chain issues. While parts were not as affected on a profit margin basis, it was on a sales volume basis. Our parts business leverages the company's buying power of components and parts that go into the equipment we manufacture. Supply chain shortages limited this buying power in 2022, which, in the end, adversely affected parts sales the most because deliverability of the equipment takes precedence over part sales. Thus, despite the success we had, it could have been even better. As our supply chain normalizes, however, our parts business will reaccelerate. We'd expect to see this occur over the course of 2023. Longer-term, with what we're doing to structurally build out this part of the company, the fundamentals are very strong. Furthermore, the parts business is somewhat like a razor, razor blade type of business. With all the new AAON equipment entering the field last year and this year, parts will start to benefit from maintenance demand in just a couple of years. I'll remind you that parts gross profit margin is significantly higher than the company's average gross profit margin. We anticipate this business will become a larger part of the company, both on a sales and profitability basis. As such, we are happy to see where this business is positioned, and we expect it will continue to be a big priority within our growth strategy. Please turn to slide 17. Before finishing up and handing off the call for Q&A, I want to provide some information on our outlook for 2023. Based on the size of our backlog, the margin profile of the backlog, which continues to improve, increasing production capacity and productivity, and strong order trends, we anticipate another record year of sales and earnings. For your modeling purposes, here's some additional information that should help. Pricing will be a low double-digit contributor to sales growth. For gross profit margin, we will build off where we finished in the fourth quarter. It may not be a straight line, especially given some temporary expenses that we would see in the first quarter, but gross profit margins will continue to improve in 2023. For SG&A, you should be aware that we're making several investments that will help position the company better for long-term growth. This will limit the operating leverage you will normally see within SG&A. We think SG&A as a percent of sales will be slightly higher than we realized in 2022. And finally, CapEx will be approximately $135 million. In closing, I want to thank all of our employees, sales channel partners, and customers. I also want to announce that we'll be hosting an Investor Day on May 17 and 18 at our headquarters in Tulsa, Oklahoma. You can find more details on this event on our website. We will also be attending the Sidoti & Company's small cap conference on March 22, and Wells Fargo's Industrial Conference on June 13. I hope to see some of you at these events. Thank you. And I will now open the call for Q&A.

Thank you. Our first question today will come from Julio Romero with Sidoti & Company.

Thanks. Hey, good morning, Matt, Rebecca, Joe.

Good afternoon.

Good afternoon.

Maybe to start on the quarter, if you could just talk about what product lines drove the 41% volume growth you realized in the fourth quarter?

The overall growth in the fourth quarter was across the board. It was not isolated to one specific product or product line. We've seen consistent growth throughout all of our production facilities and across all of our production lines.

Okay. Got it. And thinking about price, I love the slide deck and love the guide. Does the pricing guide of low double-digits for 2023 assume the monthly 1% price increase kind of continues through the entire year or all the way through December of 2023?

Well, I think someone was going to ask that question, Julio. So right now, we have been continuing the 1% a month price increases. We have not determined yet if we're going to stop those price increases. This is something that we've been looking at on a continuous basis. As Matt spoke to in his presentation, a lot has changed in the industry that caused us to begin managing our pricing to market, so we do still have the 1% a month in place. And right now, we've made no decisions to stop those increases. All that being said, we do expect to see improvement in 2023 in our gross margin, although it may not necessarily be linear. As we previously mentioned in our prior calls, we're using some of this pricing to benefit our employees, so some of these benefits are expected to have a one-time impact in the first quarter. So you should expect to see a stronger half of the year when it comes to the gross margin. And we're just constantly reevaluating rather than managing to our traditional guard wells of 28% to 32%, looking more at managing to the market and how to evaluate our gross margin. So at this time, that's where I'll leave you.

I appreciate the explanation, and it makes sense. Regarding the expected gross margin, Matt, you may have mentioned that there are some temporary expenses anticipated in the first quarter that could impact the margin. Could you provide more details on that?

This is just a variety of one-time expenses as we put in place some new employee programs and better position the company to provide the employee experience that we expect. There are some one-time costs and adjustments that we’ve made in the first quarter, that's kind of driving some of that constraint on the overall margin in that quarter.

Okay. Really helpful. I’ll hop back into queue for now. Thanks so much.

And our next question will come from Brent Thielman with D.A. Davidson.

Hello. This is Jean Ramirez for Brent. How are you?

Good.

For my first question, regarding supply chain constraints, could you talk about the state of sourcing parts and materials and how AAON is positioning itself to fulfill the backlog orders?

Certainly. So…

Go ahead, Rebecca.

We have significantly increased our inventory. A few quarters ago, we mentioned that we aim to keep our inventory at about 20% of our sales. In addition to that, we capitalize on opportunistic purchases whenever possible. If we can acquire certain quantities of steel, metals, or component parts at favorable prices, we will secure those and increase our inventory beyond what we typically would to take advantage of the price reductions. We are also holding a larger stock to ensure that production runs smoothly without interruptions. However, I must note that supply chain issues and parts shortages continue to be a regular challenge for our team. They are always looking for new vendors, alternative parts, different sourcing options, and redesigning products; this has become a routine part of our operations.

Just adding a little more context as well. From a parts perspective, as Rebecca mentioned, there's continuing maintenance that goes on from a product engineering and manufacturing perspective as we kind of see these constraints coming ahead of us. The team is extremely nimble and continues to be extremely nimble in assessing the impacts of potential shortages. And proactively, basically, looking at the equipment design and configurations and alternate sourcing options and is in a continuous mode of basically redesign and modification to essentially address some of the supply chain constraints that we're experiencing. We also are very positively impacted by the fact that we are, as an organization, heavily integrated from a vertical perspective. And so, items such as the manufacturing of coils is a big example, but extending that further the production of fans and fan assemblies is a huge differentiator for us in the marketplace. And so, as we look at motor, motor constraints, motor technology constraints, electronic component constraints that are impacting a lot of our other competitors, our team has been very good at assessing alternate technologies or basically looking at ultimate vendors, coupled with the fact that we are manufacturing fans as an example, to really mitigate the overall impact in our deliverability and costing.

Thank you. And just regarding your 2023 model assumptions of gross profit margin, could you perhaps talk about what leads us to improvement from Q4 of 2022. And circling back to, can you sustain this 28% to 32% gross margins through 2023? Thank you.

Go ahead, Matt.

Yes, so we finished off Q4 just in the 30% range. But as we look at the backlog and the strength of the backlog from a gross profit margin perspective, we have an understanding of kind of the improving gross profit profile that exists inside of there. Coupling that with the, I'll say, production and volatility in the supply chain side of things, obviously, not absolute reduction in volatility, but certainly waiting a bit, is providing some higher confidence as we continue monitoring overall cost inputs. With the continuing 1% price increases that Rebecca mentioned earlier, we have the ability to absorb some of the additional inflationary pressures without impacting margin on a high level. So, as we go forward, we see from a modeling perspective and from kind of the strength of our backlog and the inputs that we have a solid understanding that we'll continue to see some increase in overall margin as we progress throughout the year.

Great. Thank you. I'll hop back into the queue. Appreciate it.

Thank you.

Your next question will come from Chris Moore with CJS Securities.

Good afternoon guys. Thanks for taking questions. So yes, maybe back to the guide for a second. Obviously, volume was very strong. Any thoughts in terms of volume growth for 2023 with those comps in mind kind of a range?

Yes, hey Chris, this is Joe. So, we're not giving volume guidance at this point in time. We gave you the price contribution to help you sort of narrow price out of the equation. And then where our backlog is and the trend of our volumes are, and you can sort of put two and two together, but at this point in time, we're not providing volume guidance.

Okay. Is there anything else you can share regarding this, perhaps in terms of pros and cons? I'm uncertain about why low single-digit figures wouldn't make sense. Is there any additional insight you could provide?

The backlog is very strong, and order trends have been positive as we entered 2023. The first half of the year is looking really good. However, as we move into the second quarter, the comparisons will become more challenging, and the latter half of the year will present even tougher comparisons. You can expect significant volume growth early in the year due to these comparisons and the strength of the backlog. However, growth should slow down in the second half. We're not providing specific guidance on this, but I hope this information is helpful.

That's helpful. I appreciate that. It was a $16.2 million data center contract that you guys have been talking about for a while. Is that something that has started to ship at this point in time? Is that something that happens in Q1?

Yeah, that project is in production. Its overall shipping schedule and basically having a product out the door is imminent. So as we continue producing that product throughout the year, it will have an impact on the first half of the calendar year.

Got it. And, I guess most importantly from that is there's kind of a theme that you've talked about in terms of these bigger orders likely coming. That's still something that you have some visibility on?

Yeah. So from an opportunity perspective and visibility perspective, the ability to leverage the Longview facility for BasX data center product remains extremely strong. And as you indicated, the overall sale of those projects continue to be of a highly attractive scale.

I just wanted to add one other thing regarding that $16 million order that you're referring to. Like Matt said, it is on schedule to some extent. However, it has got pushed a little bit. So it will end up hitting some partially in the second half of the year as well. I just don't want you to fully think about modeling that, thinking it'll fully ship by the end of the second quarter.

Got it. And it’s helpful. I leave it there. Appreciate it guys.

Your next question will come from Jon Braatz with Kansas City Capital.

Good afternoon, everyone.

Good afternoon.

Matt, sort of a strategic question. You talked about the pricing within the industry and your premium narrowing a little bit. How do you think about maybe as things continue to return to more of a premium price product and maybe giving up some volume? How do you think about strategically going back to a higher premium price given what we're seeing in the industry at this time?

We are currently assessing pricing from a market-based perspective while continuing to emphasize the value that AAON offers. We anticipate that AAON products will deliver ongoing, if not enhanced, value, and we will adjust our pricing accordingly. Our success as a company has stemmed from promoting the overall value of our products beyond just their initial cost. Even amidst changing market prices, AAON products continue to offer superior total value to our customers, and we will maintain our marketing and pricing strategies with that in mind.

So would you characterize it as maybe being that there is some upside potential to pricing based on market dynamics?

There certainly is the opportunity for some upside in the overall pricing as we look at how AAON's product is positioned in the marketplace.

Okay. All right. Thank you. Rebecca, a second question, capital spending is pretty heavy this year, $135 million. I take it, there may be some timing differences between cash flow and so on that you might have to go to the bank and borrow some money, and your debt balances may move up and down a little bit from the current levels?

Yes, certainly. So we do expect to see our operating cash flows resume their normal level. I can say our CapEx spend is heavily weighted to the first half of the year. So we do have some negative free cash flow in Q1. But after Q1, we start to see our free cash flow get back to its more normal level and about the 70% to 75% earnings free cash flow ratio by the second half of the year. And so, I mean we don't anticipate needing any additional liquidity under our credit agreement. In fact, we somewhat anticipate it could be paid off by the end of the year.

Okay. All right. Thank you very much.

We'll take a follow-up question from Julio Romero with Sidoti & Company.

Thanks. I assume you realized all of the March increase by now. Where did you exit December in terms of realizing monthly price increases?

Well, so Julio, I think this will answer your question. I have in front of me, our January backlog. So like at the end of January, we have less than 1% of the backlog that's from the March or January price increase. So everything now that's pretty much left in our backlog is the various 1% price increases that will be flowing out over the next year.

Got you. Okay. Appreciate taking the follow-up.

It appears there are no further questions at this time. Mr. Mondillo, I'll turn the call back to you for any closing remarks.

All right. I'd like to thank everyone for joining us on today's call. If anyone has any other questions over the coming days and weeks, please feel free to reach out to myself. As Matt mentioned at the closing of his remarks, we have Investor Day on May 17 and 18. We're attending the Sidoti conference on March 22, and we'll be at the Wells Fargo conference later in June on the 13. So I hope to see you at those events. And again, if you have any other questions over the next few days, feel free to reach out. Thanks, and have a great day.

This concludes today's conference call. Thank you for attending.