Whirlpool Corp /De/ Q2 FY2021 Earnings Call

Thank you, and welcome to our second quarter 2021 conference call. Joining me today are Marc Bitzer, our Chairman and Chief Executive Officer; and Jim Peters, our Chief Financial Officer. Our remarks today track with a presentation available on the Investors section of our website at whirlpoolcorp.com. Before we begin, I want to remind you that as we conduct this call, we will be making forward-looking statements to assist you in better understanding Whirlpool Corporation’s future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-Q and other periodic reports. We also want to remind you that today’s presentation includes non-GAAP measures. We believe these measures are important indicators of our operations as they exclude items that may not be indicative of results from our ongoing business operations. We also think the adjusted measures will provide you a better baseline for analyzing trends in our ongoing business operations. Listeners are directed to the supplemental information package posted on the Investor Relations section of our website for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. At this time, all participants are in a listen-only mode. Following our prepared remarks, the call will be open for analyst questions. As a reminder, we ask that participants ask no more than two questions. With that, I’ll turn the call over to Marc.

Thanks, Korey, and good morning, everyone. Before we discuss our second quarter results, I'd like to note that we are comparing to periods in which the world was experiencing the greatest depth of disruption from COVID-19. While lessened disruptions from the pandemic do in fact remain along with volatile industry dynamics and numerous global supply chain constraints. Having said that, our impressive results throughout this entire period and again in Q2 demonstrate the strong execution of our global teams and the resiliency of our business model. Now turning to our second quarter highlights on Slide 4. We delivered very strong revenue growth of 32% year-over-year, which also represents growth above 2019 levels, driven by robust and sustained consumer demand and the execution of our pricing actions. Next, our decisive response plans addressed volatile industry dynamics and broad supply constraints, delivering ongoing EPS of $6.64, a $4.57 improvement year-over-year. Ongoing EBIT margin of 11.4%, a year-over-year improvement of 640 basis points, overcoming 400 basis points of cost inflation. Additionally, we generated positive free cash flow of $769 million driven by strong earnings and a successful completion of a partial tender offer of our Global China business and the divestiture of our Turkey subsidiary. These global results were driven by substantial EBIT growth and margin expansion across every region. The execution of these actions and the sustained consumer demand delivered very strong Q2 results and give us the confidence to significantly raise our guidance to approximately $26 per share. Turning to Slide 5, we show the drivers of our second quarter EBIT margin. Price and mix delivered 600 basis points of margin expansion driven by reduced promotions and the further implementation of a previously announced cost-based pricing actions. Additionally, structured cost takeout actions, higher volumes, and ongoing cost productivity initiatives delivered 550 basis points of net cost margin improvement. These margin benefits were partially offset by raw material inflation, particularly steel and resins, which resulted in an unfavorable impact of 400 basis points. Lastly, increased investment in marketing and technology and the continued impact from currency in Latin America impacted margin by a combined 100 basis points. Overall, we are very pleased to be delivering even above our long-term EBIT margin commitment and are confident this positive momentum will continue to drive outstanding results throughout 2021 and beyond. Now I'll turn it over to Jim to review our regional results.

Thanks Marc, and good morning, everyone. Turning to Slide 7, I'll review our second quarter regional results. In North America, we delivered 22% revenue growth driven by sustained strong consumer demand in the region. Additionally, we delivered another quarter of very strong EBIT margin driven by volume growth and the disciplined execution of our go-to-market actions and the previously announced cost-based price increases that were fully in place as we exited the quarter. Demand for our products remained high as we continue to produce in the constrained environment that we now expect to persist throughout 2021. Lastly, the recent outstanding results demonstrate the fundamental strength and agility of our business model. Turning to Slide 8, I'll review our second quarter results for our Europe, Middle East and Africa region. Double-digit growth in all key countries drove a fourth consecutive quarter of revenue growth above 10% in the region. Additionally, the recent delivered year-over-year EBIT improvement of $97 million was led by increased revenue and strong cost takeout, overcoming inflationary pressures. These results demonstrate the progress we are making towards our long-term goals. Turning to Slide 9, I will review our second quarter results for our Latin America region. Net sales increased 76%, led by strong demand across Brazil and Mexico and the continued growth of our direct-to-consumer business. The region delivered very strong EBIT margins of 9.7%, with continued robust demand and the execution of cost-based price actions offsetting inflation and currency devaluation. Turning to Slide 10, I'll review our second quarter results for our Asia region. In Asia, revenue declined 1% reflecting the successful partial tender offer for our Whirlpool China business, which was completed in May. Additionally, as COVID cases surged in India, we were yet again faced with shutdowns that significantly impacted the industry. However, in June, as we exited the quarter, we began to see demand recover. Despite this disruption, the region delivered year-over-year EBIT growth of $23 million led by pricing and cost productivity actions. Turning to Slide 12, Marc and I will discuss our revised full-year 2021 guidance. I will now turn it over to Marc to begin.

Thanks Jim. While the macroeconomic environment remained uncertain and volatile, we are confident that sustained strong consumer demand and our previously announced cost-based pricing actions will offset the impact of global supply constraints and rising input costs. We are raising our guidance and are expecting to drive net sales growth of approximately 16% and EBIT margin of 10.5% plus. Additionally, we now expect to deliver $1.7 billion in free cash flow or 7.5% of net sales driven by higher earnings and the completed divestitures. Excluding the impact of divestitures, we expect to deliver on our long-term goal of free cash flow at 6% of net sales. Finally, we are significantly raising our EPS guidance to approximately $26, a year-over-year increase of over 40%. Turning to Slide 13, we show the drivers of our revised EBIT margin guidance. We continue to expect 600 basis points of margin expansion driven by price and mix as we demonstrate a disciplined execution of our go-to-market strategy and capture the benefits of our previously announced cost-based pricing actions. We have increased our expectation for net cost to 275 basis points and realized further efficiencies from higher revenues and strong cost takeout initiatives. As we closely monitor cost inflation globally, particularly in steel and resins, we continue to expect our business to be negatively impacted by about $1 billion as peak increases materialize in the third quarter. Increased investments in marketing and technology and unfavorable currency primarily in Latin America are expected to impact margin by 125 basis points. Overall, based on our track record, we are confident in our ability to continue to navigate this uncertain environment and deliver 10.5% plus EBIT margin, representing our fourth consecutive year of margin expansion. Now I'll turn it over to Jim to highlight our regional industry and EBIT margin expectations.

Thanks Marc. Turning to Slide 14, we show our updated industry and regional EBIT guidance for the year. We have increased our North America industry expectation to 10% plus to reflect the continued demand strength. We continue to expect to see demand strength driven from broader home nesting trends and an undersupplied housing market. Additionally, we have updated the EBIT guidance of our North America region to reflect the benefits of increased cost efficiencies, which are more than offsetting increased costs from logistics, labor, and operational inefficiencies of producing in a heavily constrained environment. This brings our EBIT guidance for North America to approximately 17%. Lastly, we continue to expect to deliver strong growth and significant EBIT expansion across our international regions with each region contributing to our global EBIT margin of 10.5% plus. Turning to Slide 15, we will discuss the drivers of our updated 2021 free cash flow. We now expect to drive free cash flow of approximately $1.7 billion, an increase of $450 million, driven by expectations for stronger topline growth and improved EBIT margins. We increased our cash earnings guidance by $250 million. Next, we have reflected the benefit from the divestitures completed in the quarter. This represents free cash flow generation of 7.5% of sales, delivering above our long-term goal of 6%. Turning to Slide 16, we provide an update on our capital allocation priorities for 2021. We continue to expect to invest over $1 billion in capital expenditures and Research and Development, highlighting our commitment to driving innovation and growth in the future. This includes industry-leading externally recognized innovation, such as our newly launched 2-in-1 Removable Agitator in our top-load laundry machine in North America, and the launch of new products in EMEA, such as our new built-in refrigerator which is recognized as the quietest built-in fridge in the marketplace. Next, with a clear focus on returning strong levels of cash to shareholders and a signal of our confidence in the business, we expect to increase our rate of share repurchases in the second half of 2021 to at or above $300 million. Lastly, we repaid a $300 million maturing bond and issued our inaugural sustainability bond focusing on actions to drive positive environmental and social impacts. This milestone further advances our global sustainability strategy and reflects our core philosophy that sound corporate citizenship and environmental performance are good for business and underscores our leadership position in our industry as we continue our constant pursuit of improving life at home. Now on Slide 17, I’ll turn it back over to Marc to summarize our key messages.

Thanks Jim and let me just recap what you heard over the past few minutes. Q2 again impressively demonstrated our ability to operate in a very volatile environment and deliver very strong operating results. Sustained healthy market demand and strong operational execution give us the confidence to increase our guidance for revenues, EBIT, earnings per share, and free cash flow. Next, we remain unwavering in our commitment to drive strong shareholder value and return cash to shareholders. Lastly, as we look beyond 2021, we firmly believe we have demonstrated that our business is structurally improved and well-positioned to again build on our record results. Now we will end our formal remarks and open up for questions.

Your first question comes from the line of Susan Maklari with Goldman Sachs.

Thank you. Good morning everyone and congrats on a good quarter, guys. My first question is around the volumes in North America. It seems like you've trailed the industry a bit overall during the quarter. Can you talk to what drove that and how you're thinking about the back half of the year and the potential to maybe get back to that outperformance we saw in the first quarter and regain some of that market share?

Marc here. So I think what we basically state here is on a sequential base, we were not able to further improve our market share in Q2 in North America, which ultimately comes entirely back to supply chain constraints which we discussed. You will probably also ask who was the beneficiary, it's still largely the Chinese producers we've seen in Q1. Chinese-based production is a little bit less constrained than the Americas, and to some extent Europe, and that's still the beneficiary. And as you know, we largely produce in the U.S. what we sell in the U.S. Having said that, going forward, sequentially we do expect to gradually increase our shares. I'm saying gradually because the supply chain constraints will not immediately disappear. They gradually get better, but we will be fundamentally faced with supply constraints for some quarters to come, now again with every quarter becoming slightly better.

Okay, that's helpful. And then my next question is, in the revised margin guide for this year, you did increase the benefit that you can see, in terms of some of the cost reductions and the carryover from last year. Can you just talk to what is driving that? Are there any incremental projects that you're taking on, and what is the potential going forward to continue to see some of that benefit coming through?

Yes, and Susan this is Jim, and you know, kind of like we said at the beginning, and you highlighted is that we had approximately $100 million of just carryover from the prior year which is about 50 basis points. And then with additional actions that we've taken which were more in our normal cost management programs, where we look across the board at different areas of spending, for opportunities to reduce and think about typically on an annual basis we target between 50 to 150 basis points of incremental cost reduction. And so what we're seeing right now is we improved our guidance for the year is one we see some of the programs that we implemented last year, as well as early this year delivering more than we expected. And then the second thing that we're seeing is that, we did identify some of it, but there is no one large opportunity. It's just multiple opportunities that have delivered more than we expected. And then the third thing is, we expect to see some of the restructuring benefits increase within the back half of the year.

Your next question comes from the line of Eric Bosshard with Cleveland Research.

Good morning.

Good morning.

Two questions. First of all, in terms of the market share performance this is maybe more of a strategic question, as you look out over the next year or two, in an environment where promotions at some point will increase a bit, how important is market share performance for you relative to profitability? How are you thinking about managing sort of those two vectors if you will?

Eric, it's Marc here. First of all, again on a global level now to put that in context, outside the U.S. we feel pretty good about our market share performance in Q2, so we picked up slightly market share. In Europe, we were very solid. In South America and India, we also have a really strong market share for this. And so it is predominantly U.S. production constraints which kind of didn't allow us to further expand our market share in Q2. In the long term, we got to do both, we got to deliver strong financial performance while expanding our market share and then we are confident we can do that. Having said that, I think what you particularly and you told us to count our bullets is the revenue growth is down and revenue growth is not always unit market share because we're as our business model and how we explore there are multiple opportunities to get additional revenues beyond the peer unit growth and that's particularly what we need to focus on. And that's why I also feel very good about what we guided this year was $22.5 billion which is a very, very strong organic growth, no matter where you come from. And I would also expect, and I would hope for similar growth rates also going forward. Not too aggressively, obviously, because you have a baseline effect that we will go for strong organic growth also going forward.

Great. And then secondly, you've raised guidance now I think twice pretty meaningfully. As you take a step back and look at 2021, what has been some notably different than what you saw coming into the year? Obviously, there was, I guess some degree of uncertainty, but what's been most different in 2021? Is it your execution? Is it how the market has behaved? If you just talked a bit about that?

Yes, every quarter tends to be different, and we've become accustomed to that over the past year and a half, where there seems to be something new every day. Fundamentally, it still comes back to significant raw material cost inflation, which turned out to be stronger than we anticipated. However, I believe we had a good understanding by Q1 and didn’t need to make further adjustments. While it's unfortunate, we recognized the situation earlier than many others. This challenging environment with constraints is likely to persist longer than most had hoped. The positive side is that we adapted quickly and took decisive action, as demonstrated in Q2 and previous quarters, showcasing our ability to thrive in this difficult landscape. This may explain why our financial performance appears quite different from some competitors.

Yes, I think the other thing, Eric, and this is Jim, if you just look at market, the highlights there, as I mentioned earlier, we are seeing more benefits on at least some of the costs takeout areas that we've been able to realize. And additionally, the pricing that we previously announced and took at the end of the first quarter and end of the second quarter has been successful, and covering off those higher material costs. And so, to Marc's point, we did expect materials to be a significant headwind this year. They were larger, but we've really been able to offset it with the go-to-market actions we've taken.

Your next question comes from the line of Michael Rehaut with JP Morgan.

Hi, good morning everyone.

Good morning.

First, a quick clarification if I'm able to before I ask my core questions here. On the share loss, I don't want to beat a dead horse, but previously you've noted that you haven't lost any shelf space in North America. And when I say share loss, I mean obviously just the slight sequential miss. From a shelf space standpoint, do things remain stable as we've highlighted previously?

Short answer is absolutely, yes. I mean, to give you a little bit of color, Mike, we did not lose floor space. Which I think is a reflection, we feel really good about our product portfolio and about the products that we've brought to market with several innovative features. And that just helped us to absolutely protect our floor space, which is a crucial element because obviously it is a little bit of different challenge if you would have lost floor space in trying to regain market share, but we have the floor space. So kind of, dialing up once you get to production is considerably easier than in every situation. So we feel very good about the floor space, but yes, we got to work for the resupply constraints.

Great, now that’s helpful and I think it's an important distinction. Just going into two key questions here, first you mentioned that you expect raw material inflation to peak in the third quarter. You were positive price cost in the second quarter. Noting that your previous price increases cost base price increases, kind of in effect going into full force midyear, can we expect with a higher raw material headwind in the third quarter that price cost might still be positive as your prior price increases also gained momentum or would it flip negative in the third quarter?

Yes, Michael, it won't turn negative, but you will start to see a reduction. Remember that last year, in the latter half, price mix included allowances. We saw promotional spending decrease significantly during that time, and as that decreases, the impact now is that by the middle of this year, price increases begin to cover that area. Therefore, we don't expect to turn negative; we expect to maintain a positive price mix through the latter half of the year.

Your next question comes from the line of Sam Darkatsh with Raymond James.

Good morning. This is Josh filling in for Sam. Thanks for taking my questions this morning. Congrats on the quarter.

Good morning, Josh.

Good morning.

Inventories were up fairly sharply in Q2 versus Q1 despite fairly flat sequential sales and supply chain issues. Could you explain what caused that change in inventory? Was it raw materials or finished goods?

Yes, and this is Jim. I'd say it's a combination of things, but you have to realize also that we were starting off a very low base of inventory in terms of where we were. So as we've said, around the globe we're in different states with our supply chain, and some of our supply chains are actually able to keep up with some of the market demand. So we're able to build back some of the inventory to the normal buffers that we have. So I would say it's no one particular area, but it's just the beginning of us in certain countries around the world, beginning to get our inventories back to healthier levels which we had expected to do. But as Marc would have talked about earlier, from a supply chain perspective in the U.S., we're still trying to catch up, and we would expect to continue to build small amounts of inventory going forward.

Got it. And your Latin America industry unit guidance of 2% to 4% seems to suggest a substantial drop in second half sales and margin. Do we have our math right on that? And if so, how long might that softness occur? And given that much of demand may have been stimulus-triggered?

Josh, I can take it. I think your observation is correct. I mean, I would say Latin America has surprised us positively over the last several quarters relative to what everybody was expecting and at this point, we certainly can't exclude that they will beat that number easily and to be very transparent. And again, these markets are a little bit more volatile than some of the North American or European markets. But right now, you have it right; by now we have strong momentum, there is a little bit more caution going forward because you also compare comping some pretty big numbers in all transparency.

Your next question comes from the line of David MacGregor from Longbow Research.

Yes. Good morning.

Good morning, David.

Yes, let me just start off by just looking at your free cash flow, which is obviously very strong. And you've got some asset sales in there as well, but still really strong underlying cash generation. I wanted to ask you about inorganic growth, and just where M&A may stand right now, in terms of priority for the capital allocation strategy. And your competitor on their call this quarter was calling it the fact that there just isn't a lot to buy out there right now because it's kind of quiet. So I just, I guess I wanted to just sort of take your temperature on, how's your funnel look? We know we've run a gated process there, but where do things stand on development and just where M&A stands priority right now?

Yes, David, it's Marc and Jim may want to add to this later. Let me provide an overview before we discuss M&A and capital allocation. Our capital allocation policy and guidance remain the same, which is why we make this clear during every earnings call presentation. Our top priority is always to fund the business. We are investing slightly more capital compared to the past two years, which includes capacity expansion and new products. This takes time. In April, we raised dividends for the ninth consecutive year, which will continue to be a capital allocation priority. We financed this without significantly paying down debts, and we currently have a healthy cash balance. There has been some discussion about what to do with our additional capacity. As Jim mentioned earlier, we expect to ramp up share buybacks in the second half of the year compared to the first half, targeting over $300 million, though the exact amount is still up for discussion. Our company has performed well in the past and we believe it is a solid investment, which is why we are increasing share buybacks. Regarding M&A, we approach it opportunistically. We have certain targets we are monitoring that may become available at a reasonable price, although this is not guaranteed. It's not the right time to discuss immediate M&A, and nothing is imminent. However, having a strong balance sheet gives us flexibility, which is beneficial. We will remain cautious and prudent in making capital allocation decisions.

Yes, David, this is Jim. And just to echo what Marc has said is, the criteria that we use to evaluate potential acquisitions have not changed. And what we have done is we've positioned ourselves as a company, both from our balance sheet strength perspective and from having the integration of previous acquisitions behind us and those businesses on the right trajectory in terms of performance. We've positioned ourselves to be ready and able if the right opportunity would come along at some point in time.

Good, thanks for that answer. As a follow-up question, I guess I want to talk a little bit about Europe and maybe specifically if we could talk a little bit about the pricing environment over there. Again your competitor called it the fact that the pricing had been rather slight in the first half, slightly positive, and that they expected a much more pronounced pricing benefit in the second half, so just wondering if you can cover that view? And as well, just thinking about 2022 in Europe, if demand was flat, would you still be more profitable than you were in 2021, just based off all the other initiatives that you've implemented?

And David, this is Marc again. We aimed to break down the pricing strategy concerning long-term margin development in Europe. While I can't comment on our competitors, I can share our perspective. As I mentioned earlier, we recognized significant inflationary pressures quite early on. Everyone is feeling the impact. As a result, we had to make some decisions, which we communicated. When costs rise and cannot be mitigated, price increases become necessary. We made that decision early in the year and communicated it effectively. Consequently, we raised prices in most regions around the globe, including Europe, sometimes up to twice. The good news is that we implemented what we communicated, and we're beginning to see the benefits, although not fully yet, as some will recognize in Q3. If you look at reliable market data in Europe or elsewhere, it's likely you'll conclude that we're slightly ahead of the competition in recognizing and addressing these realities. Regarding our long-term margin goals, Europe is on track according to our turnaround plan. We projected an operating margin of around 2.5% for this year, and for next year, you can expect approximately 4%. This is consistent with our planned trajectory for Europe. I am pleased that we are achieving this despite various challenges, including inflation. Overall, I am optimistic about our long-term turnaround and value creation for Europe, which aligns with what I communicated to you a few quarters back.

Yes, and I think David, just to add to that, I think some of the continuing cost benefits that we'll see within EMEA, as we continue to drive our cost savings programs there, will see more benefits in the back half of the year into next year. And additionally, you said even without volume gain, we still expect to improve the mix there. And that's another thing that we've talked about is a lot of our product investments there have been to ensure that we improve our mix and grow our share of the built-in market there.

Your next question comes from the line of Ken Zener with KeyBanc.

Good morning, everybody.

Good morning, Ken.

Hi, Ken.

What a year. A couple of questions about first on raw material. It's a twofold question. But so, I think people were surprised that, with steel moving up, you had anticipated that generally, the assumption given your guidance, or were there any different tools that you kind of deployed to understand that or what gave you that confidence to assume steel prices? What are your insights I guess is what led here proper thinking early? And the implication of that into FY 2022 to be said of raw material pricing is not going to peak over the third quarter and that we got into our FY 2022 estimates. It seems logical to assume that you'll have quite a bit of this pricing still in or, how should we think about that, those two components of raw material and the price yield you pursued to get it?

So Ken, maybe let me try to take a stab at your question. So first of all, on raw material and steel specifically, I mean no transparency, compared to what we thought last year, November, we would be, we were somewhat surprised by the magnitude of raw material increase, but then frankly, as you know, from last earnings call, we saw that picture pretty much in February. And it's since stabilized, which again was a little bit earlier than probably most thought. And you also right the steel is just a big part of our cost base. And that's where we saw a significant portion of raw material, not everything, because we're also in resins and logistic costs a significant portion. I have to answer the question, but how did you know? I mean, it's basically can affect your data and experience, okay. It's not that we started buying steel this year. We've done that for about 109 or 110 years. So, we know steel, basically experienced, but we also have a lot of data. We know the cost model by steel mill everywhere. We know what our contracts are. We know how they're running, but having said that, the steel market is always, there is a spot element to it, there is a structural element. So you still got to take several facts into account, and it will despite our abilities will still always include some surprises. But right now, I think we have a steel market right now, is this pretty much where we unfortunately forecasted it will be.

Yes. And then maybe to the second part of your question about as you look towards next year, yes, with it peaking in the third quarter, obviously there could be some incremental materials. But we've also taken a lot of the pricing we've taken; we've implemented throughout Q2 here, and so there also will be continuing pricing benefits as we go into next year to offset those continuing material headwinds.

Your next question comes from the line of Mike Dahl with RBC Capital Markets.

Hi, this is actually Chris filling in for Mike. Thanks for taking my questions. My first question I just want to follow-up on the net cost benefit you're expecting particularly in the back half of the year, even with the increase to full year it seems like given the strength to date that would inflect or imply and flush it to a headwind in the back half of the year. Is that just conservative, and what's driving that?

No, I'd say the big thing you got to look at in the first half of the year, especially in the second quarter, you got to benefit from production being increased across the globe. Think about the second quarter of last year, we had factories that were either shut down or slowed down due to COVID restrictions in many parts of the world. Now, when you get into the back half of this year, the factories were up and running at full speed during that time period. So you're not getting necessarily the volume leverage benefits year-over-year that you would have seen before. Additionally, within there, as we look at some of the other costs that have increased while we've increased some of our cost-saving initiatives, when you look year-over-year in the back half of the year, you do have other things such as labor costs and transportation costs that still do provide a little bit of a headwind from that perspective. But the biggest driver is just the volume leverage, as you look at it, comparing 2020 to 2021.

Got it, that makes sense. And just my follow-up just going back to the supply constraints, in addition to the unit drag from component shortages, has there been any mixed headwind associated with these challenges? I think a competitor called out that the semiconductor shortage was particularly impactful for their higher-priced appliances, is that something you guys are seeing or incorporating in your forward outlook?

Yes, without going into specifics about the exact placement of semiconductors, it's important to clarify that there's no misunderstanding here. Not every semiconductor works for every single SKU; it would be ideal if they were universally interchangeable. However, there are instances where specific types are required, and these have faced shortages due to events like a factory fire in Japan or issues in Texas, impacting product groups in unintended ways. This is simply a reflection of the highly constrained nature of supply chains. It's also not easy to transfer semiconductors between different applications, as they are often tailored to meet specific requirements of each product. So let me maybe just wrap up here, given that we're kind of coming to the end of the questions. First of all, I appreciate you all joining, and good questions. Obviously, we're available for follow-ups. I just want to recap what you heard. Q2 again impressively demonstrated our ability to operate in a very volatile environment and deliver very strong operating results. Sustained healthy market demand and strong operational execution give us the confidence to increase our guidance for revenues, EBIT, earnings per share, and free cash flow. Next, we remain unwavering in our commitment to drive strong shareholder value and return cash to shareholders. Lastly, as we look beyond 2021, we firmly believe we have demonstrated that our business is structurally improved and well-positioned to again build on our record results. So we feel very good about where we are from financial performance. As evidenced by your questions, we're living in what I call an upside-down world. And I think that will be around us for some time to come. But I think we absolutely have demonstrated we are able and capable to perform very successfully in this upside-down environment, which ultimately is a testimony to our agility, but also the resilience of our business model. So we feel very good where we are. We feel very good about our future and looking forward to talk to you either next earnings call or in between. Thanks a lot.

Ladies and gentlemen, that does conclude today's conference call. You may now disconnect.