Leslie's, Inc. Q3 FY2025 Earnings Call

Good afternoon, everyone, and welcome to the Fiscal Third Quarter 2025 Earnings Conference Call for Leslie's. As a reminder, this conference call is being recorded and will be available for replay later today on the company's Investor Relations website. I would now like to turn the call over to Elizabeth Eisleben, Senior Vice President, Investor and Public Relations. Please go ahead, ma'am.

Good afternoon, and thank you for joining us to discuss our fiscal third quarter ended June 28. I'm joined today by Jason McDonell, our Chief Executive Officer; and Anthony Iskander, our Interim Chief Financial Officer and Treasurer. Following their prepared remarks, we will open the call to address your questions. As a reminder, our comments today may include forward-looking statements, which are subject to risks and uncertainties. Actual results may differ materially from those discussed. Please refer to our most recent 10-K, 10-Q and other SEC filings for more information. Additionally, we will reference certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures can be found in our earnings press release and on our Investor Relations website. Now I will turn the call over to Jason.

Thanks, Elisabeth. I want to begin by thanking our entire team for their hard work and resilience during what proved to be a challenging third quarter. As we face persistent macro pressures, unusual weather patterns across key markets and an increasingly competitive landscape, the team responded with urgency, focus and a relentless commitment to transform Leslie's. Before we discuss our third quarter performance and actions we're taking to accelerate our transformation, I want to welcome Amy College, who joined Leslie's last month as our Chief Merchandising and Supply Chain Officer. In addition to her significant retail, merchandising and general management experience, Amy brings a unique blend of strategic vision and operational expertise that I am confident will help us accelerate our progress and position Leslie's for long-term profitable growth. As you saw from our preliminary results from the fiscal third quarter, we faced significant challenges in both our top and bottom line that were below our expectations. The much cooler temperatures and significant precipitation across our top geographies disrupted the peak pool season, resulting in quarterly sales down 12% compared to the prior year quarter. In addition, later in the quarter, we saw heightened competitive pressure in certain categories. I will discuss these in more detail shortly. As customers delayed pool openings, we saw a meaningful reduction in our residential traffic in stores of nearly 11% in the quarter. Moving to our third quarter results. As mentioned in prior quarters, we are aiming to perform while we transform. During this quarter, our team acted with urgency to offset headwinds we faced as a result of the softer top line and mitigate the bottom line impacts where possible, including making tough but necessary decisions around cost control and strategically deferring select investments to protect our financial performance. As I mentioned briefly at the start of this call, we had significant headwinds to retail traffic and residential sales in the quarter. With that said, through the expertise of our store team and improvement in reliability, we continue to deliver growth on conversion rate, which improved approximately 70 basis points versus the prior year period. In addition, utilizing our AccuBlue water test technology, after a water test is performed in store, conversion rate increased by more than 550 basis points versus the prior year period. While sales were challenged through targeted efforts on growth and expansion, we are improving our customer proposition with the Pro segment. I am confident that our team's disciplined approach to enhancing relationships with existing Pro customers while also expanding to new customers can help us return to growth in this business. Importantly, the team has already surpassed the full year goal for new Pro partner contracts, increasing our total Pro partner contracts by 12% in the first 3 quarters compared to the prior year period. As we look at our top line in more detail, it is important to look at both category and regional performance to fully understand the impact that weather had in the quarter. Specific to category performance, chemical sales, including both core and specialty chemicals were down nearly 15% as a direct result of the cooler temperatures experienced across much of the United States. For instance, with pool water temperatures below 70 degrees, this has a direct impact on the chemical needs of a pool. Specifically, the demand for specialty chemicals such as algaecide is significantly reduced. In the quarter, algaecide and water clarifiers were down 22% and 19%, respectively. Moving to regional performance. The impact of cooler temperatures was most evident in the non-Sunbelt markets, predominantly in our North region. Historically, the North represents a large portion of our third quarter sales due to the concentration of peak demand in this region. Of note, during the 2 weeks surrounding Memorial Day weekend, which is historically the height of the season for this region, sales were down approximately 30% as temperatures were below average. With the start of what is historically peak season being disrupted in most areas of the country, the pricing dynamics in our industry changed late in our third quarter. We believe the aggressive pricing action on key SKUs late in the quarter was a result of competitors working to reduce excess inventories on hand throughout the industry. This had a direct impact on our residential sales as we closed the quarter, and we believe led to residential share loss. With all that said, the unique industry dynamics at play this season related to weather and the inventory levels in the market clearly highlighted price value opportunities in some of our categories. Therefore, we are acting with urgency and conducting deep customer research to thoughtfully address these opportunities while working to recapture and grow Leslie's share. Now shifting to transform and our strategic initiatives underway. As we have said before, we are acting with urgency to transform our business. We remain centered on 4 strategic pillars: customer centricity, convenience, asset utilization and cost optimization. Despite top line challenges in the quarter, we are beginning to see encouraging signs that the foundational changes we are making are beginning to take hold. Let me walk you through some of our early progress under each pillar as well as additional opportunities we have identified to help accelerate profitable growth in our business. Starting with our pillars of customer centricity and convenience. As we introduced last quarter, we are moving forward with the launch of same-day delivery service with our Uber partnership. Our team has been working diligently on the technology integration and are excited for our test market to go live, furthering our transformation as an omnichannel retailer. With a firm commitment to improve customer experience and Leslie's overall value proposition, we successfully launched our enhanced Pool Perks loyalty program in the third quarter. Through the program enhancements, we are improving our targeted marketing efforts as well as personalized communications to build deeper relationships with our customers. We expect this tiered program to help increase share of wallet with existing customers while attracting new pool owners to Leslie's. Importantly, the introduction of tiers provides a cost savings while allowing us to reinvest in marketing initiatives to drive traffic and incentivize customers to increase their loyalty with Leslie's. In addition to our longer-term customer centricity pillar, we recognize the urgency with which we must act and improve traffic trends at Leslie's. As the experts in pool care, coupled with our focus on personalization, we are providing custom offers on our quality products while highlighting our free water testing capabilities through our AccuBlue technology. This includes leveraging the expertise of our store team members as well as our zero-party data capability to connect directly with customers to increase traffic. Further, through our detailed customer work, which includes a mix of qualitative and quantitative research on a localized level, we have identified and began implementing regional offers to meet the needs of their specific pool market. I'm pleased with the team's work in this critical area and look forward to sharing more on the improvement of our traffic trajectory. Moving to the next pillar of asset utilization. We have seen continued benefits from our local fulfillment centers. We believe they are improving in-stock rates and accelerating fulfillment speed, especially in high-volume markets. Importantly, they also provide us the flexibility to better manage inventory and reduce working capital. Our team remains committed to optimizing inventory across our asset base, including the continued focus on our never-out SKUs that are most critical for serving both residential and professional customers. In stores in the third quarter, we achieved more than 99% in-stock levels in our top-selling never-out SKUs. This is a 140 basis point improvement compared with the prior year period and is a key factor in our ability to improve conversion rates. Importantly, while improving in-stock rates, we continue to reduce inventory by 9.6% versus the prior year period. Through further progress in the third quarter, we are increasing our previous estimate for inventory reduction this year by $5 million and now expect to end the year at least $20 million lower than the prior year-end. We are confident this will help improve cash flow and support our top capital priority of reducing debt. Finally, as we look to optimize all assets and drive efficiency, in the third quarter, we began the process of closing our warehouse in Denver, which we expect to be completed in the coming weeks. Once this is closed, we believe we can seamlessly transfer shipping demand to other distribution centers and reduce annual costs by approximately $800,000. As mentioned in our prerelease, our comprehensive operational and strategic review includes the productivity assessment of all assets across Leslie's footprint. Looking forward, we expect to share more on the optimization of all assets to help improve our omnichannel efficiency, including plans to reduce our fixed cost base, which is the primary driver of our deleverage. In addition, this review includes the evaluation of other core and non-core assets to help optimize productivity, drive efficiency and maximize profitability. We look forward to sharing more on the optimization of assets to position Leslie's for long-term growth. Now on our fourth pillar of cost optimization. I'm pleased with the early progress. We have already identified savings in indirect procurement and are continuing to evaluate our entire asset base for further efficiency opportunities. We brought on additional external resources in the quarter that are helping us supplement internal talent and accelerate this critical initiative to identify and remove excess direct and indirect costs from the business. While the quarter presented challenges, we are taking action swiftly and decisively. We remain focused on executing our strategy with discipline, continuing to improve conversion, optimizing inventory and leaning into digital capabilities. In addition, our robust strategic and operational review is focused on assessing the performance across our business. Our direct and indirect cost structure as well as other initiatives we believe helps deliver improvements in working capital and profitability. We are committed to the acceleration of this review and plan to share details on additional actions we're taking following the completion of the review in the coming months. Most importantly, we remain committed to maximizing cash flow, reducing debt and building a stronger Leslie's for long-term profitable growth. We expect to share more on each of these areas discussed today, including the corrective actions and expected financial benefits for the business in our November earnings call. There is significant opportunity ahead for Leslie's, and we look forward to sharing the path forward with enhanced transparency. Now I will turn the call over to Tony.

Thanks, Jason, and good afternoon. I want to reiterate what you heard from Jason and express my gratitude to the team for their diligence in the quarter, taking action to mitigate costs despite the difficult sales environment. We reported net sales of $500 million in our third quarter, down 12.2% versus the prior year period, primarily driven by weather-related headwinds, reduced traffic and heightened competitive pressure, as you heard from Jason. Gross profit was $197.9 million compared with $228.8 million in the prior year. Gross margin in the quarter declined 62 basis points year-over-year, primarily driven by inventory adjustments and occupancy costs, partially offset by improved product margin and lower distribution expenses. SG&A was $129.6 million compared with $131.1 million in the third quarter of the prior year. The year-over-year reduction was primarily due to variable expenses associated with lower sales, including store labor and e-commerce-related fees. On a rate basis, SG&A as a percent of sales were elevated, primarily due to a softer top line. Turning to working capital. We ended the quarter with inventory of $273.2 million, which was down approximately $29 million or 9.6% year-over-year. Our precision inventory strategy and continued investment in analytics, coupled with our local fulfillment centers are helping to build healthier inventory positioning, which we believe will continue to benefit cash flow. As we highlighted in our pre-release last week, we paid the revolver balance of $20 million in full subsequent to quarter end. We currently have no borrowings under our revolving credit facility and reducing debt remains our top capital allocation priority. In addition, as Jason mentioned, we are increasing our inventory reduction commitment and now expect to reduce inventory by at least $20 million year-over-year with additional runway into 2026. Before turning to balance of year expectations, I want to share an update on our cash and liquidity. We ended the quarter with $42.7 million in cash. And after repaying the remaining outstanding balance on the revolver, we remain confident in our ability to execute the transformation of Leslie's, and we believe we have sufficient liquidity to enable it. Based on year-to-date performance and current business trends, we now expect full year sales of $1.210 billion to $1.235 billion. Net loss of $57 million to $65 million, adjusted net loss of $31 million to $39 million and adjusted EBITDA in the range of $50 million to $60 million. As a reminder, our fiscal 2025 includes a 53rd week and is included in our expectations provided today. We expect capital spend of approximately $30 million. Now I will turn the call back to Jason for closing thoughts.

Thanks, Tony. We recognize that we are operating in a tough environment, but I remain confident in our path forward. Our team continues to rise to the challenge, taking ownership, driving change and serving our customers with care. As we move into the final quarter of the fiscal year, we remain focused on executing with discipline, maximizing peak season performance and driving incremental progress across our transformation agenda. Thank you for your continued support and time today. We will now open the line for your questions.

We'll go first this afternoon to Kate McShane of Goldman Sachs.

I wanted to ask a little bit more about what happened when you started to see the promotions pick up in the third quarter. Did you not meet the promotional environment when competitors started to get more aggressive on price? And if you did, just what did that look like? And do you have any commentary on what quarter-to-date trends look like? And if you've seen any improvement since the third quarter?

Thank you for the question, Kate. During the quarter, one of the main factors we observed was the influence of weather and the challenges posed by excess inventories during a disruptive weather season. We made price investments in the mid-single digits per pound throughout the quarter, but we also faced aggressive pricing in the marketplace. Looking ahead, we see an opportunity to reassess our strategic pricing approach. This is an area we are actively planning for and I mentioned some of these points in my prerecorded comments. We have conducted extensive research and are focusing on utilizing our zero-party data to personalize our approach for each customer, tailoring it to be more local and regional. So far this quarter, we have noted an improvement in traffic, although it still falls short of our expectations compared to the third quarter. We are implementing actions aimed at changing the trajectory of our traffic moving forward, and the team is dedicated to this effort, approaching it with urgency and diligence.

We go next now to Jonathan Matuszewski of Jefferies.

My first one was a follow-up just on Kate's question. I think you mentioned the mid-single-digit price investment on the chemical side. I wanted to better understand what you're seeing in terms of competitive pressures maybe on the equipment side of the business. That's my first question.

Yes, from an equipment perspective, we experienced a decline this quarter, particularly in the residential sector as we mentioned earlier. We observed two main areas regarding equipment performance. First, our core equipment sales were down in the mid-single digits. Overall equipment sales followed a similar trend to the residential figures, largely due to a decrease in automatic pool cleaners and other related products. While we faced challenges, they were not as severe as those in the chemicals sector, which we attributed mainly to weather conditions. However, the reduced traffic did impact our core equipment sales.

Understood. And then just a question on gross margin. Obviously, some of these results are being impacted by the promotional intensity in the industry. But maybe if you could just give us a sense of kind of the recovery in gross margin going forward as we look out to next year. I know you're not ready to provide guidance for the fiscal year, but just buckets that we should think about in terms of helping the trajectory of the current gross margin move towards historical norms over time.

Yes. Jonathan, this is Tony. So a couple of things on that. So one, as we saw and we've talked about in the past, we have a fixed cost deleverage that we deal with in this business. And as sales declined, we saw just a decline in our overall gross margin rate. what we're doing now is we've talked a lot over the last several quarters around our asset utilization pillar. Jason made mention of that during our prepared remarks. We do know that we have costs to take out in this business, and we will address those as we continue to assess the overall network of our company.

Yes. So as we articulated earlier in prior elements, we've had 2 key pillars that were critical to us in our transformation. One was the asset utilization pillar. The other one is the cost optimization pillar. And what's critical about those items is we believe that we have a significant amount of fixed cost deleverage within the P&L. And therefore, we need to make sure that we're putting actions in place to do it. And that's why we mentioned in our prepared remarks, the strategic review that we're doing, both with our internal resources, but also supplementing with external resources to help build that build that plan and act on that plan and work quickly to put those actions in place, and we look forward to be sharing that in the November meeting.

We'll go next now to Steven Forbes with Guggenheim.

Maybe just a higher-level question, right? As you look back on the third quarter performance here, I guess, externally, looking at the performance versus others that have reported, I think the question right is, like is the business executing, I guess, in the field at the level it should? Or is there opportunity to sort of improve field level execution? Like where are the biggest areas to sort of close the market share gap? Or as you sort of said before, is it very much just price value proposition?

Thank you for the question. I'm very pleased with the team's response and their execution in the market, especially in key areas we've focused on. We've emphasized improving our in-stock performance, and we've maintained over 99% in-stock levels throughout the year, which is a fantastic position for us. Our conversion rates in stores, as well as post-water test conversions, are strong, and I feel confident about that. We're also monitoring customer feedback through NPS scores, and I believe we're performing well in that aspect too. As you mentioned, we need to work on changing our traffic trajectory. We see the value equation as a combination of how we communicate the excellent value Leslie's offers to customers, including the expertise of our store staff, the quality of our water testing, in-store experience, and product quality, along with a strategic pricing approach. We're being competitive on certain SKUs while also working to enhance the overall basket value, and our field sales team plays a critical role in this execution. It's all about our value proposition, and I'm very satisfied with how things are going. We just need to ensure we convert this into increased traffic.

And maybe following up on that value proposition comment, right? We're sort of in a net inflationary environment for goods pretty broadly. Clearly, you made the investment in chemicals, right, during the quarter, pricing-wise. But any sort of way to frame up how your Leslie's outlook for average unit cost or product cost is going to trend here versus sort of the need for investment? I mean, are there other funding mechanisms? Or is the funding for the investment solely going to be in the back of Leslie's.

There are a few key points to consider. First, I want to revisit some of our strategic pillars, particularly focusing on asset utilization. Given our attention to fixed costs and the significant deleverage we've experienced, we are confident this will create advantages in certain areas that will support pricing and enhance our value proposition as we continue to expand the business.

We'll go next now to Shaun Calnan of Bank of America.

I just wanted to focus on market share a little bit here. So sales were down a little more than we expected even with the weather headwinds and some of that could be geography. But do you think pool owners are just moving away from DIY towards the Pro? Or are you seeing any changes in buying patterns from the DIY customer?

I don't see a significant difference in market share between Pro and DIY channels. I'm happy with the progress we're making in our Pro business. In previous quarters, I mentioned our specific focus in that area, having 100 Pro stores in the marketplace and targeting Pro customers in all of our 1,000 stores. We have increased our Pro contracts by approximately 12%, and the team is doing a great job. This ties into our strategic priorities, such as transforming some stores into local fulfillment centers to ensure good inventory levels for our Pro customers. We feel confident in this area. On the residential side, we see it as an area of opportunity, and we are implementing action plans and leveraging our Pool Perks program. Over 85% of our transactions are through our loyalty program, allowing us to customize our offers effectively. While I don't see a difference in buying patterns between Pro and DIY, our focus remains clear and urgent.

Okay. Got it. And then the guidance implies that 4Q sales are down about 7% at the midpoint. Can you just talk about some of those drivers? And is that where sales are currently trending? Or do you expect them to improve or get worse throughout the summer?

Hey, Shaun, it's Tony. So our current expectations for the full year contemplate what we are seeing in the fourth quarter and opportunity that we can capture within the quarter as well. So obviously, we're not pleased with our performance, but we are focused in on the fundamentals that we need to for the balance of the year, many of which Jason mentioned in his prepared remarks.

We go next now to Ryan Merkel of William Blair.

I wanted to start with a big picture question. What is your forecast for the pool retail industry sales in '25? I'm just trying to get a sense of how much share loss there might be this year.

Yes. Ryan, it's Tony. Good to talk to you again. So we've looked at a couple of things. So for us, in terms of market share, you heard Jason's comment just a second ago. But really, as we look at the market, we looked at it from both the weather analytics and impact and then the value proposition that Jason mentioned. And we've modeled the expectations for the balance of the year around both of those, what we see in our current business trends and what we're expecting in terms of just pools in general for the proximity to our stores over the next several weeks.

Okay. So just to clarify, your view is that the industry sales this year are down almost 10%, high single digits?

If you analyze our situation and consider the commentary we provided regarding the weather impacts and our value price proposition, the decline will likely be in the low to mid-single digits, rather than 10% or more.

Got it. Okay. And then you mentioned reducing costs, you're cutting labor hours. How much cost do you plan to take out in '25? And you mentioned closing the DC. Are you planning store closures?

Yes. So we reacted really well. Our team took the opportunity and reacted when we saw sales decline in the quarter, similar to Q2 as well. And we are not contemplating store closures in this year and those are not built into our current expectations or guide that we've provided. What we've provided is a very rigorous view of what we expect to achieve for the balance of the year. There's the additional $5 million to $10 million that we've talked about in cost optimization, and we expect to achieve those beginning next year.

We go next now to Simeon Gutman of Morgan Stanley.

Our first question is around leverage. Your leverage ratio is now in the low double digits. Just curious how this is maybe impacting your ability to execute on the plan you want and any thoughts around there?

Yes. Lauren, so a couple of things on that. So we are focused in on our top capital allocation priority, which is reducing our debt. To do so, we have to work on many of the strategic pillars that we are working with urgency, including our cost optimization and including our network optimization through our asset utilization pillars. We are focused on those, as you saw during Q3, while we are not pleased with the results, we are pleased with our team's ability to react quick to take out excess costs where we did not need to. We continue to focus in other areas. Jason also provided in his prepared remarks, the areas where we bought in extra help to help achieve these and accelerate these initiatives. And we believe in these initiatives under our 4 strategic pillars to drive long-term growth for the business.

And I think building off the prior question and on this question is in regards to us making sure that why we put those 4 key strategic pillars out there is we need to make sure that we are doing the due diligence and taking this with urgency on the review around some of those key items, especially in the areas of asset utilization and in cost optimization. That being said also around direct change in the trajectory in traffic. We understand the importance of improving the flow-through from a P&L standpoint to EBITDA as well as the importance, obviously, to deliver against the top capital priority of paying down the debt. We look forward to sharing a road map and a view of this in November in our November meeting.

Yes. Lauren, I want to emphasize that we are continuing to maintain enough liquidity to cover all of our obligations. We have repaid the $20 million of the revolver after Q3, and we started the year with $109 million. With full availability on the revolver as needed, we are confident that we have the liquidity to carry out our transformation agenda.

Okay. Great. That's helpful. And our follow-up is, are you seeing any supply constraints? And are you getting the inventory you want? Just any color around this?

We've made limited progress regarding our current initiatives. The commitments we are making about our inventory are part of our specific efforts in the market and focus on inventory optimization within our organization. I'm very proud of our teams for tackling the challenge of improving in-stock levels while also driving inventory optimization. As Tony mentioned, we experienced a 9.6% decrease in inventory this quarter, which amounts to a $29 million reduction. Additionally, we've increased our inventory reduction target for the year from $15 million to $20 million. This is the result of intentional actions taken at Leslie's rather than any external factors related to supplier fill.

We go next now to Justin Kleber of Baird.

First one for me. Just I know weather was not helpful during the quarter, particularly in these northern markets. So can you comment on how sales performed in these year-round markets like the Sunbelt region, where weather was presumably less of an issue for you?

As mentioned in the prepared remarks, the North experienced cooler temperatures even leading up to Memorial Day. We also observed cooler temperatures in several key locations within the Sunbelt region. While there was improved performance in some parts of the Sunbelt, water temperatures were not at their typical levels, which affected chemicals in those areas. This situation was not sufficient to counterbalance the difficulties in the North. However, the team is actively working to support our customer base. We are reaching out to former users and customers from Leslie's, and we have the resources to do so. We currently have plans in action to address this.

Okay. And then just trying to square the implied fiscal 4Q guide with the comments around traffic improving in July. If I back out the extra week from 4Q, the guidance seems to imply a similar level of comp decline. And I wouldn't think weather has been a headwind in July. So I'm just trying to understand, are you planning the business just assuming no change for fiscal 3Q? Or have you not really seen much of a pickup? It just was a little bit unclear to me in terms of what you're seeing quarter-to-date.

Yes. Just for clarity, the one piece I want to make sure and then I'll pass it to Tony is just from a traffic standpoint so far in the quarter in terms of your question, we're seeing improvements versus the prior quarter. And as I mentioned, it's still an area of change that we need to require. So I want to make sure that, that's clear. That's something we're working against. But I'll pass it to Tony for the rest of the question for sure.

To clarify, if we exclude the 53rd week from the guidance midpoint, there is a year-over-year decline, but it is not a decline compared to Q3 either. We actually expect improvement in Q4.

And we'll go next now to David Bellinger of Mizuho.

First one, even if we look back a few quarters and absent all these weather discrepancies across the country, is there sort of a wide band of store performance where some of the top-performing regions versus the bottom performing regions has widened out to some degree. Just help us understand what the potential is for some of these lower-run stores to improve over time and catch up to sort of just the average across the whole chain.

Good question. I'm working with the team to analyze store performance continuously. The team conducts a thorough analysis as we operate. I'm also pleased with the level of store performance and the focus on key trends that the teams are addressing. As part of our strategic review, we are examining our entire footprint to consider the future of Leslie's as an omnichannel player, including our stores and distribution centers. We are evaluating their performance, especially this year. I look forward to sharing more about this in November because optimizing asset utilization is crucial for improving our gross margin, increasing EBITDA, and reducing debt. I hope that helps.

Yes. Got it. And then just the next logical question here. You mentioned some of these inventory optimization. I think the $5 million of cost outs coming next year. Just curious as to why we haven't seen a more formal cost-cutting program in place. I know you mentioned not touching the store base for now. But is that something we can expect that will come out with a more formal cost-cutting outlook from here?

That's a great question. Firstly, regarding our asset base, especially concerning our stores, it's essential to recognize that stores are vital cash-generating assets. This period, particularly in the third and fourth quarters, is crucial for us. As we conduct our operational and strategic review, we have identified key pillars in asset utilization and cost optimization. We are utilizing both internal and external resources to assess these areas. We'll be bringing some of these ideas and actions to our November meeting, and I'm eager to share those updates then.

Thank you all for the time today. That was our last question, I believe, so we appreciate your support. We recognize it was a challenging quarter, and we're working hard to turn around the trajectory of the business. Have a nice afternoon.

Thank you very much, Ms. Eisleben. And again, ladies and gentlemen, that will conclude today's third quarter 2025 Leslie's conference call. Again, thanks so much for joining us, and we wish you all a great day. Goodbye.