Good afternoon. My name is Sachi and I will be your conference operator today. At this time, I would like to welcome everyone to the Fortune Brands Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would like to turn the call over to Leigh Avsec, Vice President of Investor Relations and Corporate Affairs. You may begin the conference call.

Good afternoon, everyone, and welcome to the Fortune Brands Innovations' second quarter earnings call. Hopefully, everyone has had a chance to review the earnings release. The earnings release and the audio replay of this call can be found on the Investors section of our fbin.com website. I want to remind everyone that the forward-looking statements we make on the call today, either in our prepared remarks or in the associated question-and-answer session, are based on current expectations and market outlook and are subject to certain risks and uncertainties that may cause actual results to differ materially from those currently anticipated. These risks are detailed in our various filings with the SEC. The company does not undertake any obligation to update or revise any forward-looking statements, except as required by law. Any references to operating profit or margin, earnings per share or free cash flow on today's call will focus on our results on a before charges and gains basis unless otherwise specified. Please visit our website for reconciliations. With me on the call today are Nick Fink, our Chief Executive Officer; and Dave Barry, our Chief Financial Officer. Following our prepared remarks, we have a lot of time to address some questions. I will now turn the call over to Nick. Nick?

Thanks, Leigh, and thank you to everyone for joining us today. On this call, I will walk through the highlights of our second quarter performance, give some color on the drivers of this performance, including progress on our digital strategy and offer some thoughts on the macro environment. I'll then turn the call over to Dave for a discussion of our financial results, including our updated full year 2024 guidance. Our teams continue to execute at a high level amidst the dynamic and uneven market and delivered solid sales and strong margin results in the second quarter. Our digital products portfolio saw some exciting wins this past quarter and we are seeing accelerating growth in this key market, which I will detail shortly. The benefit of our organizational realignment continues to generate real results as evidenced by our market beating sales and margin performance this quarter. These actions all support our position as a growth-focused company, powered by secular tailwinds, underpinned by leading brands, innovation and channel management, and fueled by our Fortune Brands Advantage capabilities. Turning to our second quarter performance. Our teams delivered solid top line and strong bottom line results with areas of organic growth in our core North American market. Net sales of $1.2 billion were up 7% or organic sales were $1.1 billion, down 3% versus the second quarter of 2023. Excluding China, which was impacted by lower sales as the Chinese consumer remained very cautious. Our organic sales growth was positive in the second quarter, including low single-digit growth in our Outdoors segment and Moen North America. Looking to the remainder of 2024. We expect continued outperformance in our Moen North America and Outdoors business as well as accelerated growth in our digital portfolio. Our operating income increased 9% and our operating margin was…

Thanks, Nick. As a reminder, my comments will focus on income before charges and gains to best reflect ongoing business performance. Additionally, comparisons will be made against the same period last year, unless otherwise noted. Let me start with our second quarter results. As Nick highlighted, our teams delivered solid sales and strong margin results amidst the dynamic external environment. We remain well prepared for any macro environment and are positioned for future growth as we focus on our core and accelerate digital while continuing to generate cash and make key strategic investments. In the second quarter, sales were $1.2 billion, up 7% and down 3% excluding acquisitions. Organic sales, excluding China, grew 1%. Consolidated operating income was $216 million, up 9%. Total company operating margin improved 40 basis points to 17.4% and earnings per share were $1.16, an 8% increase versus last year. Our second quarter sales performance was driven by US POS growth in Water and Outdoors as well as digital products, offset by POS declines in security and China softness. Let me provide more color on our segment results. Beginning with Water Innovations, sales were $660 million, up $43 million or 7% and down 5%, excluding the impact of acquisitions. Excluding China, organic sales were up low single-digits. Importantly, our organic sales results reflect mid-single-digit Moen North America POS growth. China sales declined more than 35% as the Chinese consumer remain cautious. As a reminder, our results this quarter also reflect the impact of lapping last year's project completions. We continue to replatform the business toward an increasingly R&R led market, so that we are prepared for growth when the market recovers. Water Innovations operating income was $153 million, an increase of 7%. Operating margin was 23.3%, an increase of 10 basis points, and we expect to…

Thanks, Dave. That concludes our prepared remarks. We will now begin taking a limited number of questions. Since there may be a number of you who would like to ask a question, I will ask that you limit your initial questions to two and then reenter the queue to ask additional questions. I will now turn the call back to the operator to begin the question-and-answer session. Operator, can you open the line? Thank you.

Thank you. [Operator Instructions] The first question is from Susan Maklari of Goldman Sachs. Please go ahead.

Thank you. Good afternoon, everyone.

Hey, Sue. How are you?

Good, Nick. The stat that you gave on the digital initiatives are very impressive, so I'd like to start there. Perhaps, can you quantify the impact of those partnerships that you mentioned over time? How do you think about the opportunity relative to the business today and the ramp that you look for as you target that over $1 billion of revenue by 2030. And then maybe within there, can you also talk about any implications for margins, both in the near term as these sales start to come through? And then over time?

Yes, absolutely. Why don't I try to break it down a little bit and give some perspective on that and Dave can round up some of the numbers. So I'll just start with the entire digital portfolio. So when you think about that, right, it's both in water and security. Obviously, Flo in the whole ecosystem that goes around Flo security, it's connected; Master Lock, it's connected lockout tagout where we're increasingly excited about the opportunity in commercial security. And then, of course, Yale and August and connected access and everything that gives us over there. I kind of start maybe with the headline answer to your question, which is dimensionalize what the opportunity is and where we start to see it. And as I said, in my remarks, we see the opportunity being well over $1 billion by 2030. And you're seeing the impact not, right? As we said, 150 basis points of growth we expect to come for the whole portfolio Fortune Brands portfolio just in the second half alone. And so we've been working on this for a while and trying to drive it to a momentum point. And now when we've seen that much impact on total company growth, knowing that this is a very rapidly compounding space as well. I think we're at a tipping point where you are starting to see some material impact on both top line and then we'll dimensionalize the margin question for you. When you break down specifically about the partnership. So you break down the Flo by Moen opportunity. And I think about it really in kind of three big pillers of route to market today. One is, call it, the straight-to-consumer route to market, driven by consumer awareness of the issue that is there to solve the disruption…

Yes. Thanks, Nick. Sue, I think the market has been looking for material proof points that the strategy is working and now we have a handful of them that are material. So I think you can sense our excitement, it's early days of the ramp of each of these opportunities, but still meaningful to our overall growth in the second half. As Nick mentioned, the 150 basis points of growth across the second half, it's probably skewed a bit more towards the fourth quarter, closer to 200 basis points of growth in the fourth quarter. And then each of these agreements and partnerships are margin accretive. I mean as we've talked about in the past, our connected product portfolio is margin accretive relative to the mechanical portfolio and then the nature of these agreements many of which are direct selling opportunities are margin accretive relative to the base portfolio. And that's a bit of what's driving some of the incremental margin coming through in the second half as these opportunities ramp. We'll continue to invest in the flywheel of the connected products business and also be able to have nice leverage from these opportunities.

Okay. That's great color. Thank you both. And then maybe shifting a little bit more to the near term and thinking about the back half. The back half guide seems to imply some relative conservatism perhaps or a bit more conservatism. And that seems in contrast to the second quarter results and the commentary that you gave. Can you talk a bit about how you're thinking of the health of the consumer? What's making you a little bit more cautious on the third and the fourth quarter outlook there? And does it vary by price point or by product category? Just any details that you can offer on that?

Sure. I'll just give some high-level perspectives and I'm sure Dave will add some color. Look, I think it is still wise to be cautious about the consumer. I think you're seeing that across industries. I mean there's been choppiness not just in our industry, but in others. Interestingly, it is a little bit a tale of two cities. We see choppiness in some areas. As we said, we've seen retail kind of steady out, not yet quite recover, but seem to have found a baseline at least for our business. But with, I would say, we're sort of where we thought we would be, not quite where we hoped is the way I think about it. And so we're sort of in line with what we had forecast maybe a bit weak certainly on the China front, but better on the single-family new construction front. But with that, I think it still is wise to be cautious, particularly as we go through the third quarter and awaits for this ramp up the connected products I was talking about. That said, I do think that the consumer is very sensitive from a confidence perspective to news around inflation and rates. And I do think as that improves, we do see proof points that they were done very quickly as they did in the beginning of the year to that kind of news and information. And so to me, I would look for that to start to see a bit of an inflection around the recovery.

And, Sue, I'll provide, let me provide a bit of context around the second half as I think some of the phasing might be counter to what you typically expect as these opportunities ramp and there are some comp dynamics to sort through. So if we look at the second half, I'd expect third quarter sales down around 2.5% and fourth quarter sales growth of 3%, of which about 200 basis points of that is connected. So the third quarter looking pretty similar to the second quarter, as Nick kind of alluded to, and then as we move to the fourth quarter, that connected growth, we have continued single-family new construction completions, which have lagged starts and we'll be having a -- it will be a soft comp on the new construction side there. And then we have some previously awarded product placements that will set in the fourth quarter across the business. And so some really strong reasons to believe in that sales phasing as we move through the period. And then with that sales phasing operating margin we expect actually will be higher in the fourth quarter, probably closer to 18.5% than in the third quarter, where we're expecting something closer to 17.5%.

Okay. That's very helpful. Thank you both and good luck with everything.

Thanks.

Thank you.

The next question is from Adam Baumgarten from Zelman & Associates. Please go ahead.

Hey, guys. A quick question on security, really strong margins in the quarter, but it looks like based on the full year guide, maybe those are stepping down a bit in the second half. Maybe if you could walk through some of the dynamics there?

Yes, Adam, as we've talked about, really strong margins, especially organically in security. We've replatformed the cost basis there in that business, and we're starting to see those results, which we expected. With Yale and August included in that, there will be periods of reinvestment back into that business. We'll also reinvest back into Master Locking. So you may see some periods of just margin volatility that will signal as we make some of those bigger investments back into the brands and to drive the product.

Okay. Got it.

The only thing I would add, Adam, about that margin journey is huge progress, obviously, on the organic margin and the cost base of the business. Of course, we like profitability, but really, we believe that this business will be a growth platform and you can invest behind profitable growth platform. So the motivation, the strong motivation of the team to get it to the point where we're not getting it is so that we can start to invest in this connected and commercial journey that we see while driving margin improvement for the business and investors but really create the fuel to drive top line as well.

Okay. Got it. And then just on the Flo business, those three pillars to market that you spoke about maybe where you see the biggest near-term opportunity within those three -- over the next year or two?

Yes. I would say it's really in that insurance pillar. I think the consumer is coming along even quicker than I might have expected at the growth rate that I was describing. But there is such a huge opportunity in insurance. And if you talk to property insurers today, it's a little bit of the same path as health insurers started down the path a few years ago. They are no longer just risk pricers. They really do need to mitigate downstream risk and take cost out of the system in order to offset the cost of insurance. I mean I think since 2021, the average US homeowners insurance is up about 30%. I think it's 27%. So there is a need to find ways to take cost out. We have a product that takes $15 billion plus of annualized cost close to zero. And so I think you'll start to see that be the fastest and largest driver as insurers start to gain confidence in this as a proposition and move towards mandating it just as they might fire suppression or alarm system in your house.

And Adam, I would just add, as I think about it simply, the insurance opportunity is really about two things. One, being able to offset unknown risk from storms, fires, et cetera, with known risk reduction, which is preventable water damage. And then two, lowering the affordability of homes, as Nick mentioned, because now you're able to price risk better to homeowners and consumers and one offer them insurance and two offer them insurance at a better rate, which helps overall affordability. So we're excited about the early progress here and where this is going to go.

Great. Good to hear. Thank you, guys. Best of luck.

Thank you.

The next question is from Matthew Bouley from Barclays. Please go ahead.

Good evening, everyone. Thank you for taking the questions. I wanted to touch on the US single-family new construction end market. It looked like, of course, you raised your guidance for the year just for that particular end market. Obviously, if you look kind of high level, there's been a little more chop in starts and new home sales and homebuilder order results. So maybe it's a little bit of timing difference going on, but I'm curious if you can kind of unpack that a little bit. What exactly are you seeing in single-family new construction and kind of what gives you the confidence there to increase the guidance for the year? Thank you.

Hey, Matt. Yes, you're correct to point out the original guidance through this segment up 5% to 7%, and now we see it up 8% to 10%. And I'd remind you, when we speak to the market, we're speaking to the market for our products and when we anticipate them being consumed. And so here in this segment, we do have a lag typically from a start to when our product is consumed and for water, for instance, it's closer to a completion for doors that comes more in the middle. And so as we look at it, first half starts were up 17%, completes were only up 1%. And while it seems like the builder orders to your point, maybe softened a bit. There's still some growth and then we have that tailwind of starts and completion gap to take us through the second half. And so that's really what gives us confidence in this segment continuing to perform through 2024 and beyond.

Got it. All right. Cool. Thank you, David. Secondly, I think you made a comment at the top around sort of confidence in the ability to hit margin guidance. I believe you mentioned some productivity come in both Outdoors and Water. So as we kind of think about the second half, I heard you loud and clear that you'll have some of that kind of margin accretive sales coming with the connected products as well. But as we kind of think about the sequential improvement in margins in the second half and water margins implied to be above 24%. And same question kind of unpack that and what specifically are you expecting on the productivity side that could support that margin ramp? Thank you.

Yes. So we have really good visibility into what's on our balance sheet. And our plants have been running well and we have some favorable costs that's going to flow through the P&L in the second half. And so we'll see that come through. I think it's in Outdoor, it's in Water. We also have favorable product mix. So as we have -- the digital growth and then incremental placements with some innovations that are going to be margin accretive, we'll see that come through in the second half. And then we're continuing to tightly manage our cost base until we see broad-based volume recovery, we've definitely seen pockets of growth, until we see more broad-based, we'll be tightly managing costs. And so I think those factors together give us confidence as we sit here today in the margin appreciation across the second half of the year.

All right. Thanks, Dave. Good luck, guys.

Thank you.

The next question is from Michael Rehaut from JPMorgan. Please go ahead.

Hi. Good afternoon. Thanks for taking my questions. First, I know, obviously, it's a multiyear ramp and we've talked a lot about digital and connected I would like to try and get a little more granular if possible and recognizing that there's a lot of white space and opportunity over the next several years. But as you're starting to kind of think some of these initial deals and start to -- the strategy becomes more and more clear. I was just hoping to get a sense for, number one, across Water Innovation and Security, what percent do you consider digital or connected today of your sales? I think you threw out a 20% number for security. And more importantly, as we think about the contributions to sales growth in '25 and '26, what type of above-market lift might we expect as these different products gain momentum, i.e., Flo and insurance and lockout tagout and other initiatives on the security side.

Hey, Mike. It's Dave. So as we think about the size of this business today and where it's going, I think a helpful reference point as we look at what we expect in the third quarter, we'll now be annualized sales north of $300 million. This is up -- the last number we gave was we were approaching $250 million. And so we're starting to see that step change in growth. I think that will be a metric we continue to follow because it's really hard as fast as things are moving and growing for us to give a retrospective view. I think it's more about what's happening in the quarter and where do we see it going from there. As we look to '25 and '26, as we talked about, the growth will be 150 basis points in the second half of the year at the early days of these initiatives and trust that the team has a full list of opportunities and the pipeline remains robust and active. And so we expect it to continue to accelerate. So as we look to drive continued above-market growth. I think this is just the tip of the iceberg for what we will execute on over the next two years.

Great. Now that's -- it's obviously really interesting and a huge opportunity over a number of years. So look forward to hearing more about that. Secondly, maybe just to kind of dive in a little bit to some of the changes in guidance by segment. If you could kind of maybe break out the drivers behind the improved margin outlook for Outdoors as well as the reduced outlook for security sales, which seems to be coming more from the acquisition piece rather than the organic piece. And I know, obviously, this quarter was a bit below our estimates in terms of the top line. So just trying to understand, number one, the drivers of the improved margin outlook for Outdoor and if that's sustainable and kind of a new baseline for the company going into next year and then kind of the drivers behind some of the volatility in the acquired sales, I guess, in security this year.

Yes, happy to. So on Outdoors, I'd say two things. So one, we took the sales up a little bit and that business is the most vertically integrated. We'll have some additional volume leverage coming through. And then as I mentioned, the plants have been performing well, especially within our doors business, and so it's driving some favorable lower cost inventory that's on the balance sheet coming through the P&L as we sell through the back half of the year. So we have good visibility to both of those things that will drive margin. And then on security, the sales adjustment down is really POS driven, I'd say, predominantly through the first half performance. And importantly, as we looked at our trends late into June up until the call, we've seen POS recover across that business and kind of gives us confidence in our full year outlook there for security. So it's really first half softness in Master Lock.

And I'll just add a couple of things to round out your question. With respect to Outdoors, as we said at our Investor Day and I'm going back a little while, I mean, this was part of the margin improvement journey as we thought about the footprint and making that business more efficient. And so absolutely expect this you know total straight line every quarter, but do expect that we are continually moving this business towards the endpoint that we communicated, and it's tracking really well. And then just on the security side, as Dave said, kind of a pure retail e-com part of Master Lock is where we saw some POS softness and as Dave alluded to improved towards the end of Q2 and into July. So that, it was good to see that improvement. And then the acquired business actually performed pretty well. What we've learned about it as we've gone through time is it's sort of a very big deal, a big deal on top of POS. And so you'll lap some big deals at times. In which case, it may feel like it's pulling back and then you're signing big deals at other times. And so I think we had some last here, but at the same time, we just announced that ADT deal. Those sales aren't really yet pulling through. And so that would be an accelerant. As the business grows, it will get a lot smoother because it will be less dependent on some big partnerships that we announced from time-to-time.

Great. Thank you.

The next question is from Phil Ng of Jefferies. Please go ahead.

Hey, guys. Mid-single-digit organic growth in Moen North America is actually really impressive. Any color on the split between volume versus price? And do you actually see that business accelerating in the back half? Because there is a decent portion of single-family. It seems like you're expecting that to kind of firm up. And then on the flip side, China was obviously weaker than we all would have hoped. Are you starting to see that business bottom out? I just wanted some color in terms of intra-quarter trends and how you think about the back half of the year?

Yes. Let me start with your Moen question, and then I'll let Nick talk big picture China and give some context to that. Yes, we actually saw volume growth and price growth in Moen North America in the quarter, which is great to see. And as we mentioned in the prepared remarks, we saw growth in all channels in Moen North America. And given -- to your point, the single-family new construction ramp and the accelerated progress with Flo , we do expect their growth to continue across the second half of the year, which is nice to see. Then I'll let Nick talk big picture China and then I can give some context there.

Yes and I'll just before jumping on just comment on a broader thing which I think is actually what you're picking up is really important. That growth in Moen North America and you had that growth in Outdoors. And so we were very pleased to see strong in this market, strong top line performance from these two key engines in our business in the key markets, right? I think that was a big take away from us, particularly, as you pull China out, you've got to see that very clearly like the course doing really well. In China, there were really two things at work one, just as a reminder, this time last year, there were a lot, the government pushed to complete a lot of projects that have been sitting kind of in mid-completion mode. And so you had that last, but the Chinese consumer, and you've seen this across the industries and segments is very, very cautious. And I think there's some work to do some Bank of China announcements this morning about interest rate easing. There is some work to do in that economy. I think there comes a point at which it definitely does turn and becomes much more of an R&R focused market and then provide nice growth optionality. It also provides some very nice innovation for the broader portfolio just being that close to some of very innovative consumer approach to the market. And so a nice pipeline there. But the one headline that I leave you with before I just give it to Dave is that as this business has come down from its peak and the China housing market has come down from its peak. The team has done a fabulous job in managing profitability and managing the size and there's really resize and replatformed the business. It's gotten to the point now where I'll offer to bottom out and provide some growth. Should it not, it actually isn't really that material anymore to the portfolio. I think in many ways kind of the worse is behind us just given its size now. And it's relative profitability of Fortune Brands it's just not a whole lot of impact to us.

Yeah, and then Phil, to put some context around that, I mean this was a $500 million business in 2021. We now think it will be about $250 million by the end of the year. So to Nick's point, a lot of this is behind us. It's taken a 50% reduction over the past three years. And if you look at -- relative to what we have going on in the rest of the portfolio, it's smaller than our digital and connected business. It's a House of Rohl business is more than twice as big. It's just a less impactful piece. And as it is replatformed and the market recovers, we do expect it to grow when we get to that point. And then from a margin standpoint, it remains profitable in what was a high-teens operating margin business is now at mid to high single-digits. And so the team is working to get cost out, but it's much smaller, much less meaningful to the overall portfolio and we have other avenues of growth going forward.

Okay. That's great perspective. And then, Dave, you were pretty confident that from an inflation standpoint for Water Innovation you covered this year, but certainly, metal prices are higher, ocean freight ship and container prices are higher. So as you -- as we look out to 2025, you guys plan to take price, do you have some increases out there? And do you have enough levers still to drive margins higher? And then certainly with potential change in administration, there is talk to tariffs potential of horizon. Just kind of remind us how you're set up now perhaps versus '18, '19 in terms of your exposure to China? And how do you kind of anticipate combating that going forward?

I'll just make a quick comment on the pricing part, maybe philosophically on the supply chain part and Dave can break it out. Just philosophically, on pricing, we've invested very heavily in category management capabilities that really allow us to understand better how to manage our categories as category leaders and where to meet the consumers. And those insights have led to a very different set of pricing discussions with customers where it really is about driving profitable growth for everybody in the category. And as a consequence of that, we've really turned our businesses that we take price every year. We may moderate, how much or how little we take, but we are in an annual price taking cadence. I think it's very important to regularly exercise that muscle. Sometimes we may go back, sometimes we may give a little bit here, but net-net, we're taking price and we will continue to do so and just do it consistently and do it in smallish increments where you're not shocking the market because you haven't done it in a long while and you get caught out, you just do it regularly and you do in a good cadence and you maintain a lot of predictability in the market and we feel very strongly about that. So with that I'll let Dave dimensionalize it.

Yes. And Phil, I think, Nick said it well, and we -- at this point, what we expect to see in 2025, we don't -- we expect to be able to cover it with both internal productivity and incremental price. And as Nick said, we look to take price every year just given our capabilities around category management, our brand strength and our innovation. But as we look across the back half of the year, given the length of our supply chains and our agreements with our suppliers, we expect to have an immaterial impact for many changes that occurred in the second quarter. And it's been nice to see, frankly, at the start of the third quarter, the metals have pulled back a bit. So that continues that will even ease the impact on 2025. Do you want to, Nick, tariff. Do you want to speak about tariff?

Okay. Just very generally because I would say, look, I think that would be important to just dimensionalize a little bit how our supply chain change and it has changed quite a bit. But we don't invite it. It would be a mental amount of work as it's been in the past. I'll just remind you even going back to the days, we had a chemist, so there's been plywood tariffs, border tariffs, COVID shutdowns. Our supply chain team has excelled at outperforming the market. And while we don't invite these types of things that are enormous amounts of work. We tend to accelerate our share gain every time it happens. And even quite recently in some very large customer discussions, our customers have demonstrated their supply chain team just even now how we are outperforming the general market in terms of our ability to deliver on time in full and be very consistent. And so I think we're certainly prepared and we're continuing to prepare ourselves no matter what the results of the election is. I think there's quite a likelihood that we may see some incremental tariffs. But with our firstly fairly heavy North American supply chain, I think, are very well equipped with the capability of the team will probably come up even stronger.

And if you look at the financials around it, Phil. So we today less than 20% of our spend -- our material spend is from China, which is down significantly from 2017 when it was north of 50%. So, Nick, it's been well positioned. Team has done a lot of work. We haven't stopped doing the work because obviously, tariffs are still in place. And areas that are still in China, we have key components that are dual sourced. And while they might be at a higher cost if we move it relative to incremental tariffs, that equation tips in the favor of the new source. And so we feel well positioned and the team has worked hard to be prepared for what comes at us.

Okay. That's great color guys. Appreciate it.

The next question is from John Lovallo from UBS. Please go ahead.

Hi, guys. Thank you for taking my questions as well. First one is maybe -- just maybe a little color on fiber on trends. I think you talked about up low single-digit POS led by wholesale. But I'm curious how that may have progressed through the quarter? And any color on what the exit rate was?

John, I think that's pretty consistent through the quarter. So we didn't see much volatility as we would have expected given it's the season for deck building.

Got it. Okay. And then if we just think bigger picture as we move out into next year, I mean, R&R has had a couple of years of being down I know you don't have a crystal ball, but how are you kind of thinking about the kind of the slope of the recovery in repair and remodel spending as we move into next year?

Yes. Looking at the usual factors that we consider when forecasting R&R, which for us is consumer confidence, unemployment, home equity levels and then existing home sales. And so there's still a tale to be told here in the back half of the year as to how the consumer responds, getting through the election, understanding what level of interest rate cuts happen, if any, and then how existing home sales -- home sales respond. And so we'll continue to look at those factors and provide an update on our 2025 view when we get to that point.

Just to add something I think about a fair amount as we think about the $33 trillion of home equity. The home equity extraction rate is half of what it was in 2021. And I think that has been a factor of rates since we've just see less people go and tap that home equity to go and do things and I would suspect as rates start to come down and either the HELOC or refi markets start to open back up and that makes more sense for people and that delta might be less large between existing mortgage rates and what they could get. If we see that extraction rates start to even get back up towards its historical average, there would just be more cash available for people to do project.

Okay. Thanks, guys.

This concludes the question-and-answer session. Thank you for joining today's conference call. You may now disconnect.