Hello all, and warm welcome to the Ferguson PLC Second Quarter and Half Year Results Conference Call. My name is Lydia, and I'll be your operator today. [Operator Instructions] I would now like to turn the call over to Mr. Brian Lantz, Ferguson's Vice President of Relations and Communication.

Good morning, everyone, and welcome to Ferguson's second quarter earnings conference call and webcast. Hopefully, you've had a chance to review the earnings announcement we issued this morning. This is available in the Investors and Media section of our corporate website and on our SEC filings webpage. A recording of this call will be made available later today. I want to remind everyone that some of our statements today may be forward-looking and are subject to certain risks and uncertainties that may cause actual results to differ materially from those projected. Additional information is included under the legal disclaimer in our earnings announcement this morning. In addition, on today's call, we will discuss certain non-GAAP financial measures. Please refer to the earnings announcement on our website for additional information regarding those non-GAAP measures, including a reconciliation to the most directly comparable GAAP financial measures. With me on the call today are Kevin Murphy, our CEO; and Bill Brundage, our CFO. I will now turn the call over to Kevin.

Thank you, Brian. And welcome everyone to Ferguson's second quarter results conference call. On today's call, I'll cover several of the highlights of our Q2 results. I'll provide a brief update on capital deployment and our journey to a primary listing on the New York Stock Exchange. And I'll provide a view of our end markets before turning the call over to Bill for the financials. I'll then come back at the end to set our outlook for the rest of the fiscal year before Bill and I take your questions. Our team's delivered an exceptional performance in the second quarter. This success was due to our associates as they continue to make our customers projects simple, successful and sustainable. We would like to express our sincere thanks to them for their remarkable efforts to serve our customers. We continue to leverage our scale, global supply chain and strong balance sheet to support our customer’s projects through a period of significant supply chain disruption, driving 32% revenue growth in the quarter. Our pricing discipline and technology enabled productivity gains delivered strong operating leverage with adjusted operating profit up 68%. This operating profit performance coupled with the execution of our share buyback program drove adjusted diluted earnings per share growth of over 75%. We are proud of this execution and the strong results in the second quarter. And we're confident in the strength of our business model as we go forward. This execution allows us to deliver on our capital priorities. We increased our interim dividend by 15% to $0.84 per share. During the second quarter, we were pleased to welcome associates from four bolt-on acquisitions, and have now closed on six acquisitions in the first half of our fiscal year, with annualized revenues of approximately $235 million. These acquisitions allow…

Thank you, Kevin. And good morning or afternoon everyone. As expected, we've seen a continuation of trends from the first quarter with strong market share gains contributing to revenue growth of 31.8%, and organic growth of 28.5%. Price inflation moved from the low teens in Q1 into the high teens in Q2, principally driven by a step-up in finished goods inflation. Gross margins were 20 basis points ahead of last year, reflecting the value we deliver to our customers, the strength of our business model and our ability to manage price inflation, offset in part by changes in business mix. Costs continue to be well controlled driving operating leverage, while investing in our talented associates, supply chain capabilities and technology program. We delivered adjusted operating profit of $588 million, up $238 million or 68% over the prior year. Adjusted operating margins expanded 190 basis points to 9%. Diluted adjusted EPS grew by 75.5%, driven by the growth in operating profit, and to a lesser extent the impact of our share buyback programs. Our balance sheet remained strong with net debt to adjusted EBITDA 0.8 times. Moving to our segment results, the US business mirrors the group results with the strong performance. Markets were supportive and we continue to take share, the sales gross of 32.6% and organic growth of 29.4%. We had a further 1.4% from acquisitions and 1.8% from an additional trading day. Price inflation stepped up into the high teens. Headcount and variable costs grew to appropriately support volume growth, and we delivered adjusted operating profit of $576 million, an increase of $226 million or 64.6% over the prior year, with adjusted operating margins expanding 180 basis points to 9.3%. We provided a breakout of the revenue growth across our largest customer groups in the US. Kevin outlined,…

Thank you, Bill. Going forward, market demand remain supportive and we anticipate solid revenue growth in the second half as we lap tougher comparatives. We also continue to be mindful that the first half tailwinds for gross margin will likely moderate, although timing is uncertain. With the backdrop of solid demand, our execution and the strength of our business model, we are confident in our full year expectations. So to summarize, the business is performing extremely well. We are leveraging our core strengths in the face of global supply chain challenges to deliver outsized market share gains. We believe we are well-positioned for growth. We remain focused on executing our strategy through the rest of the fiscal year. And we're excited about our value creation opportunities. Thank you for your time today. Bill and I are now happy to take your questions. Operator, I'll hand the call back over to you.

Thank you. [Operator Instructions] Our first question today comes from Quinn Fredrickson of Baird. Quinn, your line is open.

Hey, good morning, guys.

Good morning.

So, for my first question, just wanted to ask Kevin just on the last point you were building on, on gross margin. Last quarter, I believe you said gross margin might normalize out back to around last year's level. And obviously this quarter, that's right where you came in. So just wondering, is it a fair assumption that, you know, gross margin in the back half could be flattish sequentially? Or do you think there could be more sequential moderation from this level?

Yeah, Quinn. Its Bill. Maybe I'll start with that. And Kevin can build on that. First off, thank you for the question. To your point, we have been discussing the fact that we've had some outsized gross margin performances over the back half of last year and into Q1 of this year, and we did expect that to normalize. Really, what's happened is a couple things in the quarter. First off, we have had a pretty significant change in business mix. If you look at the growth in Waterworks, Waterworks growth in the quarter, up 61%. As we've talked about in the past, Waterworks has a lower gross margin profile than the overarching business, but a very similar and strong operating margin profile. So that add a bit of a drag on the overall gross margin. If you look at the total business mix impact, it was probably 20 to 30 basis points year-over-year in terms of gross margin drag. The second aspect is as we've talked about commodity inflation and our ability to pass along price in the market, and that price first cost differential over time that has driven a large portion of that gross margin outperformance over the last several quarters. Commodity inflation is still strong year-over-year, but pricing in commodities is traded largely sideways over the last several months. So effectively some of that cost has caught up to price on commodities. Very difficult to predict what's going to happen in the commodity markets as we look forward. Clearly a lot of geopolitical events that could impact what happens with those commodity prices. But we could see again, as those normalize a bit more compression on the gross margin side of the business. Going into the second half, difficult to predict the overarching gross margin profile. But we still believe, you know, being in that 30% to 31% range is a reasonable range for us from a margin perspective. And we're very much so though focused on the operating margin side of the business and continuing to drive and build from that 9.2% that we delivered last year.

Okay, thank you for that. That's helpful. And then maybe just on the mix comments, just similarly wondering, kind of in the second half, do you anticipate Waterworks continue to be the real standout? And then also just on the residential construction side, just with mortgage rates creeping up any feedback from the field at all, that demand is slower? And do you think that remains strong?

Yeah. Quinn, I'll probably weave those two together. In terms of Waterworks, we've seen really good balanced strength through that business. We spoke - Bill spoke on the call earlier about Waterworks and its impact on our non-residential growth rates. Good strong growth in warehouse, big box distribution center build out, good growth inside of public works, municipal spend, metering - metering technology and the light [ph] But it's also been quite strong on residential new construction and subdivision work. And if we look at the market, we think that Waterworks will continue to grow. The growth in both volume, as well as price went through Q2, we see that going into Q3 and Q4. And the residential side of that business, we do see strong signs of support. Yes, we're mindful of what interest rates can do. We're mindful of what price can do in the overall market. But when you look at 1.9 million from a permit perspective, when we look at our Waterworks subdivision bidding activity and construction activity, that still remains strong. And as we play it out into other customer groups that go down the line, we see that Waterworks new construction, going on to residential new construction, plumbing, outpacing repair, remodel, so that faith [ph] and that confidence in residential new construction remains pretty firm right now.

Okay, thank you both.

Thank you, Quinn.

Our next question in the queue comes from Kathryn Thompson of Thompson Research Group. Please go ahead.

Hi, thank you for taking my questions today. In light of pretty historic inflation, we've seen a number of distributors take a different approach to carrying inventory, namely, being more strategic or actually increasing their buy programs. What if any changes have you made strategically, as you manage inventory, understanding that the value of trade inventories that's incrementally higher because of supply chain disruptions, too? Thank you.

Thank you, Kathryn. I think if you if you take a step back and look at how we've approached the supply chain aspects, really, it's been a combination of things. Number one, from a global sourcing perspective and a scale perspective, being able to bring in product into, call it, 1600 plus locations across the US and move that product around such that, say depressed bill rates moved into good solid in stock. The second piece has been to use that balance sheet to make sure that we're investing in inventory. If you look year-on-year, that's about a $1 billion increase in overall inventory levels. For us as a company, it has been surgical based on the product categories that are the most problematic in terms of that supply chain impact, as well as making sure that we are in stock and ready to deliver for our customers on their construction projects. And then the third aspect of that is how our associates are engaging with our customers in a consultative way to make sure we're guiding the solution to the product that we can deliver at the right time and at the right place. And all those three things came together, really to start to drive that over market performance that we've highlighted. But investment in inventory has absolutely been a key part of that equation.

Okay, helpful. And following up on the very strong Waterworks performance in the quarter and that's been carrying for a bit. Typically that's the precursor to residential construction, which would lead to non-res. Is there anything - should we expect anything differently historically than what you've seen from that trend?

We do not see anything different playing out, as suggested when Quinn us the call - asked a question on the call, we see new subdivision growth. And we see that continuing in our Waterworks business. We don't see any decrease, a discernible decrease in lot count or cancellation or postponement of those projects. We actually see this playing in strongly with our residential trade plumbing business. And we fully expect that the knock on commercial build out, following new res to happen similarly to what it has in the past. We're seeing a little bit that play out right now. Again, we stay mindful of what that inflationary impact might mean on that commercial build out, but we don't expect anything different this time.

Okay. And just one quick question. Pretty significant increase in the buyback program. Any changes in terms of capital allocation and any change in the M&A outlook, given what we - what we're all facing in the current landscape? Thank you.

Thank you, Kathryn. No change to capital allocation in terms of priority or our leverage range target. As we look at the M&A pipeline again, we have a pretty healthy pipeline right now, pleased to have completed six deals in the first half. And you should expect ongoing deals closing in the second half. From a sizing of the buyback perspective. You know, we're a good way through our existing $1 billion program, as we've talked about, now through Friday of last week, about $659 million through that program, just over $300 million left. So we felt as we looked at our balance sheet position, sitting at 0.8 times net debt clearly, net debt to EBITDA clearly below our leverage range, that topping that program up and setting out a guidance range of completing that remaining call it, $1.3 billion sometime over the next 12 months is the appropriate level and will help to step us back into that low end of the range. Clearly the timing of acquisitions will have an impact in terms of how fast we get there, as will the environment that we operate in from a supply chain perspective and any additional investments, we need to make in inventory. But we're confident in the outlook and in stepping back into that leverage range. And pleased to announce that $1 billion additional top up.

Yeah. Kathryn to build on that, we feel pretty good about where our capital allocation priorities are and how we implemented that in the first half. If you look, from top to bottom, investment organically in the business, we talked about the investment in inventory surgically to make sure we can take care of our customers. But in addition, technology investments both front side and back side, the rollout of our market distribution centers, we're in process now on Phoenix, Houston to come, Dallas and then DC Metro in knock on sequential order. And then stepping down to the second priority growth of the dividend at 15% for the interim, a balanced acquisition portfolio, Bill talked about the pipeline a bit. When we look at the mix between capability acquisitions, own brand, as well as commercial water heaters in the first half, and then geographic bolt-ons in places like St. Louis with plumber supply. And then lastly, with the buyback. That is a - that's a good representation of how we see capital allocation.

Great. Thank you very much.

Thank you, Kathryn.

Our next question comes from Elodie Rall of JPMorgan. Please go ahead, Elodie.

Hi. Good morning. And thanks for taking my question. So you've mentioned that you've gained market share quite strongly in the quarter. So I was wondering if you could give us a flavor of the outperformance that you've had versus the underlying market. And also, with comps getting harder and with inflation intensifying and the need to increase prices as you said, if you could help us think about you know, pricing in H2 sequentially and versus last year. And whether you think that we should see some pressure on volumes as a result? Thank you.

Thank you, Elodie. If we look back at the quarter, and really at the first half of the fiscal year, we think that our people, our consultative approach to the market, the value added services, our supply chain capabilities and ability to deliver on time and in full for our customers did lead to some outsize market share gains. If you look at a market in the first half, that group, call it, in the low, maybe to mid 20s and our 27.2 organic growth in the half, we think that that gets to the - above the top end of our 300 or 400 basis points worth of outperformance that we highlighted as a mid-term target during our Capital Markets Day. We think that continues, as we stay in a place where supply chain pressures are out there and demand is supportive. So we see that playing through into the second half.

And Elodie, maybe to touch more deeply on your second question around comps and price versus volume as we go into the second half. To Kevin's point, we think the underlying demand remains very strong. Our sales momentum coming out of the first or the second quarter remains strong, as does our backlog. And we're continuing to see that sales per day dollar amount tick up as we head into the spring and summer selling season. So that gives us that confidence that we're going to have solid growth in the second half. If you look back to last year, in terms of the comps, we had about a 3% organic growth comp in the first half, that stepped up to 22% in the second half. That was a combination of both price inflation last year, but also a heavy volume, it was more volume than price last year. So as we move out of the first half of this year, into the second half, where we've had a step up in growth. If you look at, let's say a two year stack, for example, in Q1 we're running in the high 20s organically, in Q2 that stepped up into the low, low 30s. That coupled with it on the back of an increase in inflation. If you just assume that that low 30s rate continues into the second half on prior year 22% comps that would put you somewhere in the low double-digit organic growth range in the second half, which we think would be fairly realistic, again as we step in with some good sales momentum behind us.

Great. Thank you.

Thank you, Elodie.

Keith Hughes of Truist Securities is next in line. So please go ahead.

Thank you. Just kind of building up that last comment, of the sales view [ph] for the second half, and you're talking gross margin moderation. Well, that equation still allow you to grow EBITDA margins year-over-year, considering that those numbers have moved up you know, pretty substantially along with the revenue growth in the prior year, in the second half of '22?

Yeah. Keith, we absolutely expect EBITDA margin, our operating profit margin expansion for the full year, we would expect as we get into the second half, particularly as we get into Q4, and you look at the outstanding operating margins that we put up last year. You know, we put up a 10.7% operating margin in Q4 last year, that was a combination of 31.4% gross margins, in addition to good operating leverage. We expect we could see some compression on that in the second half, but would expect operating margins for the full year to absolutely stepped forward versus where we were last year.

And one of the questions you talked about the strength in non-residential and you called out Waterworks being so strong, of course, having a - as lower gross margin business. If you look at the rest of your non-residential business outside of Waterworks, how does it rank versus the average gross margin, is above or below?

So typically, what you'd see in the non-residential side of the business is slightly lower gross margins. But again, as Bill indicated, operating margins that are very much on par with the business because of a lower cost to serve. We certainly saw that play out in Q2 and half one across not only one of ours [ph] but commercial, mechanical, as well as our Fire business and our Industrial businesses.

Okay, thank you very much.

Thank you, Keith.

Thanks, Keith.

Our next question today comes from Gregor Kuglitsch of UBS. Please go ahead.

Hi, good morning. Thanks for taking my questions. So a few just maybe sorry to push you again in the margin. I mean, you explicitly called Q4 down there, should we read into that, that you're not doing that for Q3. Or is that also on the card? Obviously, the consoles [ph] are already pretty, pretty tough off to in Q3, first question. So second question then is on working capital. So can you give us sort of a sense how to best think about it from here, last year, you already put quite a lot into working cap in the second half, obviously did again, in H1. Should we expect sort of, I don't know what the best way you look at this sort of percentage of sales or whatever, and appreciate it to dynamic environment. But any help you could give us would be appreciated. Maybe a detail question, I think you had a write down to EBIT operating income this quarter. I don't know if that's, I mean, $15 million or so I think that's right, and if you could confirm, and whether that was sort of a one-off? And then finally, I think you cut your CapEx guidance. If I'm not mistaken, you could just maybe elaborate what happened there and how the rollout of the distribution centers is going? Thank you.

Yeah. Thanks, Gregor, I'll try to hit on all four of those questions. In terms of the signal on operating margin, just trying to put out there and reiterate the fact that the comps get extremely tough, particularly in Q4. In terms of will we be down year-over-year, our expectation is that there will be some compression, largely driven by gross margins. But clearly, that will depend on how the inflationary environment moves forward. And that's a bit difficult to predict as we move throughout the second half. So not giving any specific guidance on Q3 versus Q4, but just a general sense that we should expect some operating margin compression in the second half. In terms of working capital, you're correct for the last, call it four - four to five quarters, we have been investing in working capital, principally on the inventory side of the business, principally to take care of and protect our customers from a supply chain disruption perspective. And we've been very pleased with the results of that. And quite frankly, the overall return on capital that we've generated from that incremental investment. Assuming a normal environment, which is awfully hard to assume these days, in a typical growth environment, we'd expect incremental working capital in that 12% to 14% of sales range. As we grow, I would expect our working capital investment to start to normalize. But very difficult to predict, as you pointed out, it is a dynamic environment and we'll make the investments necessary to again take care of our customers and generate proper returns - proper returns on capital. Over time, again, though as the world normalizes, we'd expect to get back into that normal range. In terms of the - in terms of the intangible component, we did have a $15 million cleanup of some software assets that we pushed through in the quarter, not very material to our overall P&L, but you will see that in the financials and in the footnotes on intangible assets. And then last, but certainly not least, CapEx, we have taken that down a touch for the year. We were guiding 300 to 350, we've moved that down $250 to $300 million for the year. That's really all about timing. We are experiencing - what the world is experiencing, which is a delay in some of our projects. So nothing more to read into it than that, as Kevin outlined, we're continuing to invest in our MVC rollout. We're continuing to invest in our technology program. So we just expect the cash outflow this year to be a touch lower than we thought it would be at the beginning of the year.

Thank you very much.

Our next question today comes from Harry Goad of Berenberg. Your line is open, Harry.

Yeah. Good morning. Thank you. Thanks for taking my questions. I've got two questions, please. Firstly, just on the non-residential segment, can you provide a little bit more color around that across the different segments? And I guess I'm particularly interested in there any commentary on the recovery or not - of what are some of the weaker sub segments in the last 12 to 18 months? And then the second point, I'll come back to that point on market share gain, which continued to look very robust. I mean, at what point or rather, what do you think the triggers are, for that, for the extent of that gain to come back to the more sort of normal range that you talked about to the Capital Markets Day, which slightly less than I think this was 70% [ph] you're currently running at ? Thank you.

Thank you, Harry. And from a non-res perspective, it really is starting to become a bit more broad based in terms of how we're seeing that recovery, or that strength in the market. I spoke a bit earlier about our Waterworks business, and Bill touched on it during the initial remarks. That was strong growth from a civil infrastructure perspective. As we were doing some public works, Water and Wastewater Treatment Plant build out, and some spend with municipality. So that was good strength. But we're also seeing a substantial number of large non-residential projects. I had originally talked in past quarters about data centers, distribution, and even healthcare beginning to bounce back. We're now seeing some large projects, some onshoring of manufacturing. There are some exciting things happening on the landscape today, not the least of which is in semiconductor production here in the US and some of the things that were announced in Ohio and in Arizona. We're seeing some good investments from technology firms. In places like Idaho, we're seeing build out from an electric vehicle manufacturing perspective in places like Georgia and Illinois. So really good, strong, large, non-residential projects. And then, as we talked about earlier in a question from Kathryn around areas like knock-on commercial activity from residential build out. So although you know, there are the geopolitical aspects, inflation and interest rates, there certainly is that propensity for good non-residential construction as we go forward. In terms of the share gains, and when they start to normalize. We were the beneficiary of using the core strengths of Ferguson to get product to customers, when and where they need it, and that continues today from a supply chain perspective. But we don't see that slowing down in terms of what that market share opportunity is for us. As we go through the second half, we do focus on balance. So when we talk about 300 to 400 basis points worth about performance, that's done with balance for working capital investment, gross margin, which we believe is the best reflection of the value we provide in the marketplace, and overall cost growth. And so that balance serves us well. As we see supply chains normalize, we think we'll sit in with that 300 to 400 basis points worth of market outperformance.

Thank you very much.

Thank you, Harry.

The next question comes from Yves Bromehead from BNP Paribas. Please go ahead.

Good morning. Thank you. Just want to come back on the market share gains, are you actually able to segment the market share gains by brackets of maybe things like supply chain, logistics, but also on the asset level? Anything that could help us sort of identify what is really the key driver of that 700 basis point market share gain, will be really helpful. And then, secondly, going towards Canada, can you maybe elaborate on the outlook that you have here with regards to volumes, especially on the non-resi side, considering what's happening with the old price would be really helpful. Thank you very much.

Yeah. First of all, from a mortgage outperformance perspective, not 700 basis points, closer to just over 400 basis points of market outperformance. But when we look at how that is driven, we can't break that down into an individual component of what service is driving that outperformance. As we talked about in the Capital Markets Day, it really is a combination of - it's a suite of value added services. It is world class supply chain, global sourcing. It's our associates in the consultative aspect of how they drive the business. It's technology and tools that allow our customers to be more productive. It's a variety of those things coming together depending on the customer to drive that market outperformance.

Thank you. So you're not able to set a rule of thumb to maybe segment it in, in percentage terms with regards to each individual driver?

No, not the driver. We measure it and it's an art and science together. We measure it by customer group and by res – non-res, but not by individual drivers, like supply chain or product availability or an outside sales representative.

Okay, thank you. And maybe on Canada?

We - your last part of the question broke up. Could you repeat?

Sorry. Yeah. My second question was on Canada. I wanted to know if you could elaborate a bit on the outlook with regards to the residential, but also the non-resi in light of the current oil price environment?

Yeah, from a residential perspective, very strong performance in the first half and a non-resi industrial was about flat for us. We'd expect that to have a bit of tailwind as we move into the second half. But the real outperformance in Canada was very similar to the US, it was on the Waterworks side of the business. And we would see that similarly progressing as we move forward.

And the story in half one [ph] Yves has been very much a residential HVAC, Waterworks, core plumbing performance inside of that market.

Thanks.

And our final question today comes from Madeleine Jobber of Morgan Stanley. Your line is open.

Hi, thank you for taking my questions. I have three please. Hopefully quite brief one. Firstly, would you be able to comment on your current supply chain situation in a little bit more detail? So are there any particular product lines you're having particular issues with and how well stocked you are currently? That's first question. Secondly, on the contact structuring, you mentioned price pass through, what proportion of your contracts are cost plus versus fixed price structures? And then finally, any sort of overarching comments you have on any change in sentiments you've seen from your customers following the recent geopolitical situation? Thank you.

Okay. Thank you, Madeleine. I'll take the first crack at this. From a supply chain situation perspective, we had talked previously about, we use metrics like our top 20 DC vendors and what their inbound fill rates were. And we talked about being sub 30, at some points in, us translate that - translating that into 95% plus in stocks for our customers at the local market level, that has improved. And we highlighted that during Q1 that there were pockets of improvement happening across our product portfolio, across our vendor line. It's improved quite substantially and we're now seeing that in the mid-40s, in terms of that inbound on time in full. And more importantly, we're starting to see completion of purchase orders happen in roughly half the time that it was taking, call it half a year ago. So there's been good improvement. That improvement is still spotty. And it depends on which product category you're talking about. Still, we're seeing challenging environments for our customers around appliances in particular, and making sure that we have the entire basket of that appliance package for that customer when they need it. And so we've in fact, ramped up our inventory investment, to make sure that we can care for those customers and provide a complete package. So it really does depend on the product category, and even down to the individual SKU level as to how that supply chain is firming up. But it definitely has been improving. In terms of price pass through, we have very few cost plus environments with our customers. Most of them are fixed price. And as we've discussed on some previous calls, as we've gone through what is really a ubiquitous price inflation environment, we've taken a pricing approach such that as who has a pricing increases announced at the manufacturing level, we implement that for quoting, as well as point-of-sale. And then depending on the lead times and our ability to bring product in, we go out and work to renegotiate those price increases through from a trade professional on to the owner, or developer. And there's been some success in that, especially because of the immediate nature of some of these pieces of inflation. And then in terms of sentiment and change in sentiment for our customers, I think what we have found is across res, non-res, new construction and RMI we've seen an improvement in customer sentiment. Certainly the limited trade professional population and the lack of growth in the trade professional ranks, we have seen their backlogs grow. And so their workload and their sentiment remain strong.

Great, thank you.

Thank you, Madeleine.

We have no further questions in the queue. So I'll hand the call back over to Kevin Murphy for closing remarks.

Yes, thank you very much. And thank you to all for the time today. Just - and as we began our call today, we're very proud of the execution by our associates in the quarter and in the first half of our fiscal year. And we're very proud of the strong results for that time period. Additionally, even though we're mindful of the different geopolitical and inflationary impacts in the macro economy, we're confident in the strength of our business. We're confident in the business model going forward. And we're confident in our customer sentiment and the market supportiveness that we're going into and have to. So thank you very much for your time today. Have a great remainder of the day, remainder of the week, and please be safe. Thank you.

This concludes today's call. Thank you for joining. You may now disconnect your line.