Good day, and thank you for standing by. Welcome to the A. O. Smith Third Quarter 2021 Earnings Call Conference. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Patricia Ackerman. Thank you, and please go ahead.

Thank you, Angeline. Good morning, and welcome to the A. O. Smith third quarter conference call. I'm Pat Ackerman, Senior Vice President, Investor Relations, Corporate Responsibility and Sustainability and Treasurer. Joining me today are Kevin Wheeler, Chairman and Chief Executive Officer; and Chuck Lauber, Chief Financial Officer. A friendly reminder that some of our comments and answers during this conference call will be forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include matters that we have described in this morning's press release, among others. [Operator Instructions] We will be using slides as we move through today's call. You can access them on our website at investor.aosmith.com. I will now turn the call over to Kevin to begin our prepared remarks. Please turn to the next slide.

Thank you, Pat, and good morning, everyone. Thank you for joining us today. I'd like to start today's call with a quick snapshot of A. O. Smith. I'm on Slide 4. We're a global leader in applying innovation and energy-efficient solutions to water heating and treating products that we manufacture and market worldwide with annual sales of approximately $3 billion. In market-leading brands, our products including water heaters, boilers and water treatment systems manufactured in 22 facilities across the globe. North America is our largest and most profitable market, followed by China, which accounts for 25% of sales. Turning to Slide 5 and our quarterly results. We are pleased with our performance in the third quarter. Our team delivered a record-setting quarter in a turbulent macro environment. Demand for water heaters in North America remains very strong. Our Rest of World segment performed well in the quarter led by China, delivering operating margins of approximately 10%. Costs continue to increase sequentially, and in response, we have taken appropriate pricing actions. We continue to successfully navigate the supply chain and transportation issues facing most companies and have improved our delivery performance since the first quarter. We acquired Giant the water heater manufacturer in Canada, growing our market share in North America and welcoming a talented group of employees to the A.O. Smith family. And finally, based on our strong performance and continued demand, we're raising our full year outlook for sales and earnings. Please turn to Slide 6. Our global A.O. Smith team delivered record third quarter EPS of $0.82, a 26% increase that was driven in part by a record 20% increase in sales compared with the third quarter of 2020. Demand for our products is robust, particularly in North America, resulting in record quarterly sales and operating earnings. We…

Thank you, Kevin, and good morning, everyone. I'm on Slide 9. We delivered record third quarter sales of $915 million, up 20% year-over-year, driven by continued strong demand and inflation-related pricing actions. These higher volumes led to third quarter net earnings of $132 million or $0.82 per share, which is a 25% increase compared with net earnings of $105 million or $0.65 per share in 2020. Please turn to Slide 10. Sales in the North America segment rose to $658 million, a 21% increase compared to the third quarter of 2020. Pricing actions largely on water heaters represented approximately 80% of the increase. Higher volumes in water heaters and boilers were driven by strong replacement and new construction demand. The higher volumes of water treatment products added to segment growth also. North America segment earnings of $152 million increased 14% compared with the third quarter of 2020. The earnings benefit of inflation-related price increases and higher volumes was offset somewhat by higher material and freight costs. Pricing actions led rapidly rising steel costs, which resulted in a lower segment operating margin of 23.1% compared with the third quarter of 2020 segment market. Moving to Slide 11. Rest of the World segment sales of $263 million increased 19% year-over-year, approximately 60% of which was due to volume increases. Currency translation of China sales favorably impacted sales by approximately $14 million. Growth in each of our product categories in China contributed to local currency growth of 12% in the quarter, impacted largely by channel inventory changes, which remained at levels similar to the beginning of the year. Our products with higher selling prices, particularly our super-quiet gas tankless water heaters and water treatment products that deliver hot and ambient filtered water, contributed to sales gains. India sales grew 38% in the quarter…

Our revenue outlook for 2021 includes the following assumptions: we increased our U.S. residential tank water heater industry volume forecast and project unit volumes to grow 6% from last year; we expect continued strength in replacement demand, partially driven by an increase in proactive replacement along with growth in new home construction; we see improvement in the growth trend and increased our commercial industry water heater volume projections to approximately 10% growth this year as pandemic-impacted businesses has continued to reopen and new construction and replacement installations come back online. China performance has shown consistency in the past 4 quarters. We are on track with our strategy to continue to expand distribution to smaller Tier 4, 5 and 6 cities in China. Consumer trends show increased demand for higher-priced products across all our categories, driven by differentiated new products that we have launched in the last 12 to 24 months. We expect year-over-year increase in local currency sale between 20% and 22% in China. We assume China currency rates will remain at current levels, adding approximately $54 million and $4 million to sales and profits over the prior year, respectively. After currency impact, the majority of the projected sales growth is driven by a reduction in channel inventory levels in 2020. Power shortages in China have been sporadic. To date, we have had minimal disruptions to our operations, our managing through shortages by reducing energy use and nonproduction-related activities and supplementing power with generators on an as-need basis. Boilers sales grew 17% this year through September 2021. We are encouraged by the stability of our record backlog and expect 13% growth in boilers for the full year. We project 12% growth in full year sales for our North America water treatment products. This is slightly lower than our July outlook of 13.5% due to deceleration of growth in online and retail sales. However, we believe sales growth for our point to use and point of entry water treatment systems will continue to be driven by consumer demand for safe drinking water and reduce single-use plastic bottles. We estimate 2021 market growth of around 7%. Please turn to Slide 16. Thanks to the tremendous effort by our procurement and operation teams, our supply chain is stabilizing. Our manufacturing lead times remained consistent since mid-year. Through our focus and determination, we believe we will close out the year on a high note and continue strong into 2022. We remain confident in our ability to capitalize on opportunities as we continue to execute our strategy. That concludes our prepared remarks, and we are now available for your questions.

[Operator Instructions] Our first question comes from the line of Matt Summerville of D.A. Davidson. Your line is now open.

Thanks. A couple of questions. Just given everything going on with the multitude or multiple, I should say, price increases that have been put in place this year and the one upcoming. What's your impression as to the picture around channel inventories here in the U.S. in the water heater business in light of that? And similarly, it looked like China inventory levels may be on the rise again. So maybe just a little bit of context on that as well.

Okay. The first question with regards to our channel inventory, say, in North America. Our [indiscernible] says that they're a bit low and that our customers are lower than where they want to be based on the demand that we're seeing in the market. As regard to China, I'll have Chuck comment on that.

Hey, good morning, Matt. So the China inventory levels are really in a good spot. Their commentary around inventory levels are really a reflection of what happened in 2020. And what happened in 2020 is, we really got ourselves in the channel and our customers in a much better positioned for inventories. So they're reduced to a low level at the end of last year. They remain at a very good level throughout this year so we're pleased kind of where we're at with channel inventories. All our commentary was really looking at some of the growth over the last year was, we took care of those issues last year or at least the channel cleaned itself up last year.

Got it. And then just as my follow-up, with respect to China and the 20% to 22% constant currency growth you're looking for there, can you delineate where you see water heaters versus water treatment around that number? And then how we should be thinking about the long-term trajectory going forward in China as we remove some of the lumpiness we've had in the last couple of years? Thank you.

Yes. I mean we've seen some headwinds on consumer demand on the water heating side. We're very pleased with how the water treatment side has grown. For the quarter, water treatment was up approximately 20%. When we look at water treatment, we're including our commercial business, which Kevin mentioned earlier. We're including our consumables in our residential business. And our outlook for the year for water treatment in China is around $300 million -- just over $300 million. So that's a 20% roughly growth over last year. So we're really pleased with how water treatment is doing in China. Kevin mentioned the Range Hood of commercial water heating, which is a component of water treatment. There's a bit of headwind on the water heating side. We saw it in the market demand. We think we're doing a little bit better than the market in consumer demand. We've got some new products in the marketplace. I mentioned the gas tankless super-quiet, and we're expecting for the full year to be up in that 12% in organic growth.

And just a little bit more color on that. We'll continue to introduce our [indiscernible] products in the wall-hung electric side of the business with added features for the consumer. And Chuck just mentioned is super-quiet, but we also just introduced a super-quiet with a water softening -- integrated water softener, which is a very high-end product that not only provides the hot water, but also the soft water to premium consumers. So we're pleased with where we're at in the market. Chuck mentioned, we're outperforming it, but we're more pleased that we're -- in the innovation side, where we're introducing new and innovative products that the Chinese consumers are willing to pay a premium for.

Our next question comes from the line of Jeff Hammond of KeyBanc. Your line is now open.

Hey, good morning.

Hey, Jeff, good morning.

So just on -- the price increases have been coming kind of fast and furious. Just trying to get a sense of how much you think price is going to be within your 4Q implied guide? And then just based on the announcements, what you think that the carryover pricing is going to be in '22?

Yes. So the way we look at it is our last price increase effective November 15 is probably not really going to impact the fourth quarter. Probably, would be coming in effect end of December as we roll into 2021 (sic) [ 2022 ]. So of that cumulative of 50%, you kind of got to back off that last price increase. As we roll it into next year, we're going to kind of reserve kind of what is going to carry over until we get a little closer to next year, a little bit of ground to cover in the fourth quarter.

Okay. And then just on, I guess, historically, you kind of keep price in wholesale and material price formulas in the DIY side. But just given the magnitude of the increases here should commodities ultimately roll over steel 30%, 40%, how do you think the same or differently about giving back price? Thanks.

Yes. I would tell you, we haven't seen the costs roll over the other way yet. So as we enter -- our goal is always to remain competitive in the market and with our customers. That's our commitment along with our value of our products and sales organization and technology. So as if or when cost start to moderate or move in a less upward direction, we'll have to evaluate it at that time. But again, I go back to -- A. O. Smith will remain competitive in all its channels and provide the value that we have over the past several decades.

Our next question comes from the line of Mike Halloran of Baird. Your line is now open.

Thank you, good morning, everyone. So first, let's start on North America here. I've see, the demand trends have been really good on the water heating side of the business. Maybe could you help with 2 things. One, kind of parse out how you think the trajectory plays out here? Obviously, the growth has been above normal trend line for a little bit now. How do you feel about the dynamics moving forward just from a volume perspective on the residential side? And on the commercial side, how are you feeling about the recovery cadence as we sit here?

Well, our residential business, as we get into the fourth quarter, the market has been up about 8%. We forecasted about 6%. So it was a very strong fourth quarter of last year. If you look at our commercial business, it continues to exceed our expectations. Again, as the economy continues to open up, which is providing more and more opportunity, there's been some pent-up demand over the last year. And now as this opportunity opens up, again, we're well positioned. We're a leader in the commercial category. So we look at commercial being in a good position in Q4. Residential may be tailing off a little bit. And then as we enter 2022, we'll have to reserve that judgment until we get a few more months underneath our belt and some more visibility into the market.

Sounds good. And then a follow-up on China. Could you just remind us what your expectations are for a percent of profitability for China cumulatively? But maybe more importantly, give some context on how you think the demand cadence plays out here? Obviously, good 3Q performance from a volume side, guidance implies some slower trends in the fourth quarter, but I think you feel pretty good about where your share is in the fourth quarter and the inventory levels. So maybe you could just help with those factors as we move into the fourth quarter here.

Yes, sure, Mike. So in China, we're kind of looking at the fourth quarter sequentially to be up from the third quarter. Fourth quarter is typically our strongest quarter. So we do expect it to tick up a bit, but not as strong as last year. Last year, we kind of view as there was some pent-up demand, some really strong online sales and a rather strong quarter for year-over-year comps. So probably less than last year. So we're kind of seeing it as somewhere in between. So we expect it to tick up from Q3, not quite as strong as last year. We're pleased with our share. I think we've said in the past, it's difficult to measure, but we're very pleased with our specialty stores and our distributors' performance in the marketplace, which is really hard to capture on an industry-wide basis.

Our next question comes from the line of Q - Damian Karas of UBS. Your line is now open.

Hi, good morning, everyone. My first question is on your guidance and in particular, just looking at margins. It seems to suggest a notable step down in the fourth quarter. Would you maybe be able to talk about the moving pieces there for the 2 segment margins? I mean from a price cost standpoint, it looks like you actually had price to offset the cost inflation in the third quarter and things came in a little bit better than, I think, most had anticipated. So could you just talk about the margin cadence here in the fourth quarter going forward? A - Kevin Wheeler Sure. Sure. So I mentioned a little earlier, our price increase effective November 15 really won't help us in the fourth quarter. We would expect that to start coming into the financials at the end of the year, beginning of next year. But what we're seeing is, the impact of the significantly higher steel costs that's been ramping up through the year. So when we look at our steel costs for Q4, sequentially, it will be up from Q3, will also be -- steel costs are about 2.5 to 3x more than what we were paying last year at that point in time in the fourth quarter. So it's a pretty significant ramp. So what we're seeing on the margin, I guess, headwind in Q4 in North America is just those costs hitting us faster than some of the price increases become effective.

Got it. And my second question is on the China business. Could you maybe comment on what your current strategy is there with respect to store build-outs and your marketing spend? I'd be curious to hear how you're thinking about all that with everything going on in the property development space.

Well, let me just talk about China from a strategic standpoint. I mean that's a 20-plus year investment for us, and we're building a strong brand, strong distribution, a terrific record for innovation. That strategy remains intact, and we'll continue to execute on that. As we mentioned in the past, we're continuing to invest in lower-tier cities. On the store fronts, we're continuing to monitor the productivity of our Tier 1, Tier 2 stores. We think we're there. We've adjusted maybe 100 to 150 and exited this last year. And then we're really building out our Tier 4 through 6 Tier cities. This year, we're up about 3,000 stores and want to qualify that a bit. It's not the same type of store as you would see in Tier 1, Tier 2, but they're mainly counters. But having 3,000 counters in a area that has grown and expanding is proving to be a very beneficial for our top line and long-term success in China. So it's overall, the commitment in China hasn't changed. Our investment in our brand continues, and we will continue to focus on innovation, our investment in R&D, again, continues to move forward. So again, some minor adjustments, moving into some other tier cities, making some adjustments in our current portfolio of stores. All on track. All we've been doing for the last 12 to 18 months. So strategically, we're still heading down the same path we have. I do want to come back to property development. And just to remind everybody, we really have no direct exposure in that particular segment. We could hit some, I would say, short-term headwinds as they work through some restructuring there, but also approximately 18 million new homes are required in China every year. That's quite an opportunity for us still regardless of what's happening in the property development market. So still a lot of opportunity in China regardless of some of the restructuring they'll have to do in their property sector.

Our next question comes from the line of Nathan Jones of Stifel. Your line is now open.

Good morning, everyone.

Good morning, Nathan.

I appreciate the revenue and operating income walks out of this quarter. You guys have talked about in total once we get to the November price increase -- having increased prices on water heater by 50%. Third quarter there has 17-point price for the entire North American segment. Can you maybe give us some more color on what the average price increase across the entire portfolio for North America is versus just the heater price increases?

No. We're -- it's a tough number to kind of parse out. I'll just kind of -- we usually talk about the announced price increases, which on the residential and commercial water heating space. Most of our other categories of businesses outside of the water heating space or in the single to mid -- to mid upper single-digit range. So they're much smaller than the water heating side.

That makes sense. I think earlier in the year due to some of the productivity challenges, the taxes rates [indiscernible] and things like that happened. You were behind on customer deliveries. Have you caught up to those now? Or are still in the process of catching up?

I would tell you that -- good memory, by the way, because Q1 was a very difficult time for us with some of the weather conditions and freezes that impacted our production. And we talked about that in Q2 that we were lagging. And so -- but that we felt as we entered into the back half of 2021, we will recover. What I'll tell you, as we entered into Q3 and exited our market share -- residential share was right on track with what we normally are in Q3 of last year. We look for that to carry over into Q4 and improving into the 2022 year. So yes, we've caught up to our share position in Q3. We still have backlogs and so forth we have to work through. We still have supply chain challenges that we'll navigate on a daily basis, but overall, I like where we're at as we exited Q3 with regards to production in our backlog. And we look for further improvement as we get into the back half of Q4.

Our next question comes from the line of Ryan Connors of Boenning Scattergood. Your line is now open.

Great, thanks for taking my question. I wanted to talk about another side of the inflation story, which is labor costs. Obviously, there's been lots of news flow around unions and strikes, and you're not a union shop, per se, but your people read the papers and their living costs are going up, too. So can you just talk about that dynamic and that news flow? And how that's impacting your labor costs, your discussions and your internally around employee comp as it relates to the inflation situation? And what kind of impact that could or could not have as we get into '22 on margins?

Right. Let me start by sort of -- let's just talk with labor shortages out there. And all businesses are experiencing that, and we're no exception to it, but I'll tell you, it doesn't compare to the supply chain. So we're still working through that. One thing that we always find out during crisis times that a company-wise we have a great culture in our company. We have long-term employees, and they make a difference during these difficult times. So our people are stepping up doing the right things. There is some spotty, I would say, labor inflation out there, but we're addressing it on a case-by-case basis. We've taken some steps on programs to have signing boards and so forth to get factory workers in select factories, but it's not across the board. And quite frankly, it's primarily in the U.S. So right now, I think we're in pretty good shape. We'll be evaluating it on an ongoing basis. And again, we're in great position from our factory production standpoint to enter Q4 and continue to improve our delivery for our customers. And we'll deal with the inflationary pressures as we see them like we had in prior years.

Okay. And then my follow-up to that would be applying the same question to your channel partners. I mean is there any cases where some of your distributors and wholesalers and so forth, are having their own kind of labor issues and that's causing a roll-up effect for you? Or do your partners have it under control pretty well?

I would tell you, we're not -- don't have definitive information on that. I would tell you from the feedback we're getting, everybody in the U.S. has some type of labor challenges. It's not impacting us as we ship them and their products and to their distribution centers. And of course, out there, as you've seen lead times on various labor and installations have gone out, but nothing that would be specific to our industry or our customers.

Our next question comes from the line of Susan Maklari of Goldman Sachs. Your line is now open.

Thank you, good morning.

Good morning.

My first question is around mix shift. As you think about the 50% cumulative price increase on tank and that kind of narrows that range between tank and say, tankless or some other alternatives. Are you seeing that volumes are increasingly shifting that way? Or anything around the demand shifts as we think about pricing relative to the value?

I would tell you, we -- as you know, we compete in all segments. So we're -- we supply hot water. And so as -- if you look at our tank product has moved up, and -- but we haven't seen really any shift. If you look across our product categories, whether they are gas, electric tank or tankless or even in our commercial side of the business and heat pumps, not a big mix shift right now at all. I think people are -- they look at water heaters as a pretty good value. It's a product that -- a residential product that lasts 15 years. That's used every day, multiple times a day. So as of right now, we've seen no real mix shift towards anything. No mix shift that would be related to any of the pricing that we've implemented throughout the last year or so.

Okay. That's helpful. And then as a follow-up, as you think about '22, are there -- is there anything in terms of the competition? Or how you think about some of the dynamics around price and perhaps, the inventories are normalizing there that could have some impacts as we think about new entrance perhaps or competition?

Yes. I mean we're not quite ready to talk about '22. We're going to defer that until we get to our January call. I would say, from a competition perspective, we don't necessarily see any significant shifts. And the demand part is really hard to read out with the price increases, and it's just a little difficult for us to take a look at a view into 2022 yet.

Yes. I would just maybe comment. We look at our competition on a pretty regular basis, and we gather market intelligent. But our primary focus is on our customer and taking care of our customers, growing their business, using our leading product lines of residential and commercial water heaters, our relationships with the engineering spec community. So while we pay attention to competition, we really focus on ourselves to make sure we're providing the value add to grow our customers profitable.

Our next question comes from the line of David MacGregor of Longbow Research. Your line is now open.

Hey, good morning, everyone. Congratulations on a great quarter. Strong results.

Thank you.

You talked about the -- just how strong commercial is right now. So I wonder if maybe my first question, we could drill-in a little further on that. And just if there's any way to just talk about -- you mentioned the 50% cumulative pricing benefit in residential. What would be the comparable figure for the commercial business and pricing there? And I guess if there's any way to maybe elaborate a little on supply channel constraints, and how they might be different in terms of how the impact on the business versus what you're seeing in the residential product? But just talk a little bit about that commercial business would be helpful. Thanks.

Yes. I mean the announced price increases that we mentioned on water heating product, the residential and commercial, I would -- they're roughly similar on that announced cumulative price increase. Not the same in the boiler mix, but on the water heating piece that we publicly announced it's in that range. Could you remind me on the second part of the question?

Well, just if there's any way to just help pricing at the boiler level would work that would be helpful as well. But I was really just trying to get you to talk a little more about the supply channel constraints that you might be facing there, and how that might be different from what you're seeing in the residential business?

Yes. If we go back to maybe the supply chain, we're having similar challenges as any other company, and that's constantly changing. But what I'll tell you is what we're doing, and I think that's more important. We're certainly working closely with our suppliers. We're upping our safety stocks when we can, ready new suppliers, certifying alternatives, prepayment to ensure that we have a supply chain. So we're doing all the things we can with regards to making sure we have a consistent supply chain. So to answer to question directly, our view today, we don't see any major disruptions whether it's on a residential front or on our commercial part of the business or on our boilers. It will continue to move forward as we've had, and we'll continue to work with our suppliers to ensure that we can deliver our customers in any timely fashion.

Yes, I mean that's truly exceptional. Good for you. My second question was really on the water treatment business. I know in the past, you've targeted 100 basis points a year margin progression. So obviously, this is a very extraordinary year, but what are your expectations for 2021? And any early thoughts on 2022 in terms of water treatment profitability? That would be appreciated.

Yes. So I mean, on 2021 -- and you're right, we've got same cost headwinds in that part of the business as we have everywhere else. We have taken some pricing actions, but to your point, the margin expansion of 100 basis points, we're going to be struggling to do that this year. We're right around 10%, though. So we're pleased with that performance on operating margin for this year. So we're continuing to set ourselves up in a good position for next year. We're working on all the same growth programs that we have in the past. We're looking for growth through all the channels, continue to look at cost reductions. And as we gain more base in that business, we're looking to leverage off of that base and continue to grow that expansion. So we haven't changed our outlook on year-over-year expansion of that, get a little bit of a headwind as we exit 2021, hopefully, in a better position for '22.

Our last question comes from the line of Sara (sic) [ Saree ] Boroditsky of Jefferies. Your line is now open.

Thanks for feeding me. So you talked about not having direct exposure to the property developed market in China, which I understand, but I think this would impact kind of consumer sentiment. Could you just provide more color what you saw from an underlying demand perspective through the quarter? And did you see any weakness later in the quarter given some of the headwinds?

Well, I think we mentioned, the sale of the quarter was down. Certainly, that has to do with some consumer sentiment. So again, when we look at this as more of a temporary headwind, short-term. We'll see how the property market kind of works its way out of where it's at today, and how the Chinese government gets involved. But I guess I'll comment that even within this, a consumer sentiment that's down a little bit, we have seen our consumers still pay up for premium products. And in the quarter, we had all 3 of our product -- core product categories have a spike trade up, and that's on water heaters, both tankless and electric as well as water treatment. So my view is, there is still opportunity regardless of how the market is performing at a point in time. But there is clearly a short-term headwind that we'll have to work through, and hopefully, the products that we have and how we bring new innovations to market will help us overcome most of those.

Great. Thank you. And then just given the strong sales growth you saw in India, maybe just talk about the margin profile on that business today? And how are you expecting it to trend overtime?

Let me touch -- we were very pleased, considering India went through a wicked COVID second wave. And to come out of it in Q3, 38% sales growth, our team outperformed the market 2x on both of our products -- key product categories. Again, our new products continue to gain momentum, and we continue to expand our market. And we're pleased with our margin expansion. We, through this difficult time this year, have really improved our bottom line, cut our losses significantly. We'll talk more about those as we exit the year, but our margin profile has improved. And with volume -- again, this is a smaller business for us, volume does make a big difference as we have some nice operating leverage as we grow the business. So where we're at today and we're in our busiest part of the season right now, which is about 1/3 of our business in the next 3 months, we're executing well there. So very, very pleased with where we're at, very pleased where we think we're going to end up in -- at the end of the year, and we'll carry get forward as well. So and it's making improvements, we just need a little help from the economy and maybe less COVID issues in that particular country.

There are no further questions at this time and turning the call back to Patricia.

Thank you all for joining us today. Let me conclude by reminding you that our global A. O. Smith team delivered record sales and earnings in the third quarter of 2021. We remain optimistic about results in the quarters to come based on robust demand for our products as well as strong execution of our strategy, despite an environment challenged by component shortages, logistical bottlenecks and inflation in both materials and transportation costs. We look forward to updating you on our progress in the quarters to come. Also, please mark your calendars to join our presentations at 2 virtual conferences next month: Robert W. Baird on November 9 and UBS on November 17. In the meantime, enjoy the rest of your day.

This concludes today's conference call. Thank you for participating. You may now disconnect.