Greetings, and welcome to the YETI Holdings’ Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tom Shaw, Vice President of Investor Relations.

Good morning, everyone, and thanks for joining us to discuss YETI Holdings’ fourth quarter and full year 2020 results. Before we begin, we’d like to remind you that some of the statements that we make today on this call, including those statements related to the impact of the COVID-19 pandemic on our business, may be considered forward-looking. And such forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. For more information, please refer to the risk factors detailed in our most recently filed Form 10-Q and the Form 8-K filed with the SEC today, along with the associated press release. We undertake no obligation to revise or update any forward-looking statements made today as a result of new information, future events, or otherwise, except as required by law. During our call today, we’ll be discussing certain non-GAAP measures, pertaining to the completed fiscal periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release issued this morning, as well as in the supplemental reconciliation, both of which are available in the Investor Relations section of the YETI website. We use non-GAAP measures as a lead in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. Today’s call will be led by Matt Reintjes, President and CEO; and Paul Carbone, CFO. Following our prepared remarks, we’ll open the call for your questions. And with that, I’ll turn the call over to Matt.

Thanks, Tom, and good morning, everyone. 2020 was an incredible year for YETI, punctuated by a very strong fourth quarter. As we look back at our original 2020 full year outlook, we exceeded the high-end of our net sales forecast and the high-end of our adjusted EPS. We’re proud of this performance and execution, given the constant series of challenges we successfully addressed throughout 2020. I would be remiss to not take a moment to acknowledge the passion and dedication of our team at YETI, plus the amazing support of our partners and customers throughout the year. At the same time, our hearts continued to go out to those within our communities that are suffering through the hardships of the ongoing social, economic and pandemic challenges. Before getting into the details of our results and our strategic priorities, I want to highlight two themes we believe are central, not only to our success in 2020, but also how we will continue to resonate with customers over the long-term. This starts with our brand’s innate ability to connect with customers in meaningful ways. For years, we’ve been further shifted to a more active lifestyle and a greater appreciation for outdoor activities and recreations. The pandemic furthered these behaviors, including a well-documented increase in vacations closer to home. As a brand that lives to deliver performance, durability and versatility across all of our products, we are positioned well at the intersection of these trends. As the world changed dramatically during the pandemic, many of the observed consumer shifts I outlined gained further traction, supporting the tremendous results we are sharing here today and building upon our legacy of growth. However, a world of distancing also meant that many other activities that high YETI relevance were curtailed or eliminated. Many events and gatherings,…

Thanks, Matt, and good morning. Before providing the full details of the quarter and fiscal year, let me begin by also adding my thanks for the incredible resolve of our team during a truly one of a kind year. Their efforts were instrumental in delivering the incredible results for the year, including 19% net sales growth, adjusted operating margin expansion of 490 basis points, 76% adjusted EPS growth and the voluntary paydown of $150 million in debt. Now onto the fourth quarter, net sales increased 26% to $375.8 million compared to $297.6 million in the prior year period. This growth was on top of the 23% increase posted in the year ago period. Results were above our expectations and reflect the continued strong demand for the brand. For the full year, net sales increased 19% to $1.09 billion, an incredible achievement while looking back at our initial full year outlook of 13% to 15% sales growth. As previously discussed and contemplated, both the fourth quarter and full year results include the impact of the 53rd week, which added approximately $7 million to net sales for both periods. By channel direct-to-consumer net sales grew 46% to $217.8 million compared to $149 million in the same period last year. Overall, DTC reached a new quarterly high of 58% of net sales for the period compared to 50% in last year’s period. DTC performance was driven by strength in both our Coolers & Equipment and Drinkware categories. We were encouraged to see all DTC channels posting at least 20% growth across yeti.com, the Amazon Marketplace, YETI Retail, and Corporate Sales. For the full year, DTC net sales increased 50% to $580.9 million, representing 53% of the overall sales mix, which increased from a 42% sales mix last year. While not an update, we…

At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question is from Sharon Zackfia with William Blair. Please proceed with your question.

Hi, good morning. So a couple of questions for Paul, and they’re semi-related. So forgive me, Tom. On the growth margin outlook, I understand the abatement of the product cost improvements. I think you experienced that well. But I’m trying to figure out what else offsets the channel mix benefit. And DTC continues to outpace wholesale, which it sounded like that was going to be the case. And then second, probably easy question is just, what do you view as the right level of leverage for the company? You have very little debt at this point. I mean, when does the Board think about returning cash to shareholders?

Hi, Sharon. Good morning. So on gross margin, as we think about it going into 2021 being flat, there is as we mentioned in the prepared remarks about reinvesting back into the product. The second piece is, while DTC will continue to outpace wholesale, there’s two real factors in there and that is number one, DTC is a higher percent. So every additional mix point gives me less on a channel mix. And then secondly, as we rebuild the wholesale channel inventories, it will be above our long-term guidance, where we said wholesale will be mid-single-digit. So that’s the other factor playing into that. And then lastly again, as I mentioned in my prepared remarks, the strength of the change in the RMB impacts or comes into factor when we are talking about product cost negotiations going forward as our supply chain team and operations team are talking with our manufacturer. So those are the pieces. And then we talked about the cadence of them, gross margin expanding in the first half of the year, in the third quarter where we’re rolling over a 59.1% gross margin from third quarter of 2020, there being some contraction and then flat in the fourth quarter. As far as leverage, we’ve talked about this often. As we think about this, we think about this holistically. As use of cash, we’re going to continue to paydown debt. We are in a net cash position. We will use cash to rebuild inventory as we go into next year, and also see what the growth in wholesale accounts receivable increase. So we’ll use some for networking capital, but we continue to talk to the Board about what is the optimal capital structure and those are ongoing conversations.

Thank you.

Our next question is with Peter Benedict with Baird. Please proceed with your question.

All right, guys. Good morning. A couple of questions. First, just I guess Paul, on the inventory rebuild. Can you give us your best guess on how you feel like that might progress? Is there a reasonable target for the end of the year, if things kind of play out as you see them right now, understanding there’s a lot of uncertainty there? That’s my first question, then I’ll have a follow-up.

Great. Good morning. So we see inventory ending getting sequentially better, although at the end of first quarter still being negative, similar to my commentary last quarter. And then we see it turning positive as we go into second quarter in the balance of the year as we roll over the significant decreases from 2020. So sitting here today, we see second through the fourth quarter as positive growth. And I would say as we think about the end of the year, Peter, and a lot of this goes into sales, et cetera, we see inventory ending the year approximately $200 million. And that actually takes us back to slightly above 2018 level. So we do expect certainly in the back half of the year to get in a much stronger inventory position.

Okay, good. That’s helpful. And then I guess maybe for Matt, nice to hear the bag innovation stepping up here in 2021. Just curious, what you learned from the prior everyday items that you guys had out there that you discontinued, and obviously you’re replacing with this new batch. How do you think about – what did you learn from that? And how do you think about sizing that opportunity? Because certainly the bag market is a large one, but just trying to understand how you guys are framing that up internally. Thanks.

Peter, good morning. There’s a couple of things as we said, we’ve been in bags since 2017. We launched our revolutionary and evolutionary Panga bags fully submersible. And those bags have been a wonderful product for YETI. And then we started to evolve from taking that the design ethos of those Panga bags made an incredible Tote Carryall bag that I’ve talked about before, only one of my favorite YETI bags and YETI products. And what we learned in those early products that led into this Crossroads collection of backpacks, duffels and wheeled luggage is the interplay between material, construction and design. And what we were really aiming for was how do we take the best materials we can find on the market, which has been a hallmark of how YETI designs products, put those into a construction that builds upon the durability and performance that YETI’s been known for and package them in a design that brings a simplicity and cleanliness of look, but with all the robustness of the construction and the materials. And our team has spent the last couple of years really searching for what we thought was YETI quality and YETI worthy, and then worked with various vendors and partners to make sure that those materials lived up to the durability and reliability and performance with an incredible design rapper. So we’re excited. We’re excited about it. We’ve talked about the bags category. In the United States and globally is very likely the largest category that we’ve operated in. So we think that there’s a lot of room to roam, a lot of room to grow. We’re going to do it in a thoughtful way. Like YETI does, we come out with a tight assortment. We put a lot of emphasis behind it and we talk to the consumer about why it should be important to them. And I think over the next couple of weeks, you’ll start to see that in a very robust comprehensive launch campaign supported by the collection that we’re putting out there.

Okay, great. Thanks so much. Look forward to seeing what’s on top. Thanks.

Thanks, Peter.

Our next question is with Randy Konik with Jefferies. Please proceed with your question.

Hi, good morning. This is Anna on the Randy. Thanks for providing an update on the DTC breakdown. Could maybe provide an update on how Corporate Sales performance has been recovering?

Good morning. So overall, while not giving the specific number as we talked about across DTC in the fourth quarter, everything was above 20%. And we have seen, as we saw in the third quarter coming into the fourth quarter as well, a nice recovery in the Corporate Sales business. Q2 was the most difficult quarter and then the business really came back in. And that part of it was supported by added capacity that we brought online over last year. So that also supported that growth both in consumer personalization and customization on the website and then also Corporate Sales.

Got it. Great. Thanks. And then picking back on – piggybacking on the previous question on the Crossroads launch, maybe could you talk about the opportunity to attract new customers, and how you’re planning on marketing accordingly? Thanks.

Yes, it’s a great question. And as we think about the continued expansion of the YETI brand, and we’ve talked in the past that we believe the brand halo is even larger than the products’ assortment we have today, which gives us we believe a lot of opportunity to expand, but also encourages us to find a disciplined way to do it. We think the Crossroads collection gives us the opportunity to speak to a wider and wider audience, not just domestically, but globally. It is as I said in the prior question is a huge global market, highly fragmented with price points all over the place. And we think that intersection between everyday use, outdoor-ready and high performance is really fitting for our brand. And so when we think about the colorways, the sizing, and even how we introduce the product and the balance between some of the traditional channels that we’ve used to launch products and some new channels. And so as we over the next couple of weeks start the beginning of our bag rollout and our bag buildup, you’re going to see what we believe is the most comprehensive YETI product launch and addressing new and expanding audiences that we’ve done our history. So we’re excited to start that process. And like many things we talked about YETI, we build into new product and we build into innovation. And this as we said in the prepared remarks, this is the build through 2021 as we build up the sustainability of this product family for YETI.

Great. Thanks so much.

Our next question is with Camilo Lyon with BTIG. Please proceed with your question.

Thanks. Good morning, everyone. A great job on a quarter and the year. On wholesale, you gave some great color on what you’re expecting from an overall basis, and clearly the restocking should help recharge that segment. Can you just update us on how you plan to restart your door expansion and maybe more specifically where you at with Lowe’s, assuming that a bunch of the – or a bulk of the growth in wholesale will come from a more restocking effort in your existing doors, but I’m curious to see where the door expansion effort lies?

Camilo, thanks. Great question. As we have shown in the past, we’re disciplined about door expansion and we’ve been much more focused over the last five years or so, and making sure we’re in the right points of distribution and that we bolster and build up our partners. The first half of this year is really going to be focused on working with our wholesale partners as they continue to evolve their omnichannel approach and take advantage of the digital evolution, while traffic is still disrupted in brick-and-mortar. So in the first half of this year, we don’t expect a meaningful door rooftop expansion. There’s always some puts and takes as doors open or doors close, but in the broad sense we wouldn’t expect door expansion to be a big part of the front half of the year. Is it going to the back half of the year? You mentioned Lowe’s, we continue a really good dialogue on Lowe’s on a paced thoughtful rollout. We said that from the very beginning. It was disrupted a bit with the pandemic. And so we’ll work with them to get back on that thoughtful way of expanding. And I think broadly, we continue to look for opportunities in wholesale, where it either brings a new buying occasion to us, a new consumer or it augments or supports our existing wholesale, and we’re going to stick true to that. But this is a year really of, as Paul mentioned, getting our inventory in the channel right, getting our merchandising right, helping our exceptional wholesale partners, really focus on their digital offerings and digital efforts as the consumer returns to more normal traffic flow.

Great. And then for Paul, just going back to the gross margin outlook, with specific focus on the product costs and the rising RMB, it would suggest that with the growth that you’re seeing the accelerated growth you’re continuing to see throughout your business that would be an offset to the negotiations and you’d have on the RMB cost front? Are we thinking about that incorrectly? It would suggest that there’s a lot of room for continued cost savings from that perspective alone, just the scale increasing you are seeing with your factory partners?

Yes. So that has always been part of our focus with our negotiations, with our manufacturing partners of – our sheer scale and growth of our business. And if you think about Drinkware, was up 19% for all of 2020. So that is the balance offset by the RMB. So this is something that, as we look into it, we believe that is an offset. We still challenge our ops teams to go and negotiate, and see if we can share-in some of that fixed cost leverage and things of that nature. The other piece is adding more into the product. We talked about the MagSlider. We talked about – we have a full-year of the Chug Cap. So these are things that full year of the Colster, the new Colster. So these are things where we have made very, very deliberate decisions to reinvest in the product to keep that differentiated product mindset and that we feel is a good use of those gross margin dollars. As I said – Matt and I said in our prepared remarks, the MagSlider lid upgrade is affecting 20% of our portfolio. Some of it like our low ball is going from a traditional cap to a MagSlider. Something like our wine is going from no cap to a MagSlider. And then we are transitioning all our MagSliders to a new composite that has recycled material in it, so that as well. So that’s our investing in the products, those are the puts and takes inside of gross margin. But I will say we still challenge our ops and – operations team and supply chain team to continue those product costs negotiations with never giving up durability or quality in the product.

Great. If I could sneak one more in, Matt when you think about the purchase rate that you’re – the repeat purchase rate you’re seeing on your DTC, can you talk about how that’s trended between your customer mix evolution between new and existing customers?

A couple of things in that regard, we continue to see, obviously our DTC business performed really well through the middle of the summer and the pandemic, and continued through the end of the year. We really continue to like the balance we’re seeing between new to yeti.com and returning customers to yeti.com. As that growth rate continue to go up we saw both of those groups continue to trend with it, so we’re seeing a really nice balance of what I would call new customer acquisition to yeti.com and existing customer repeat purchase. We are seeing positive trends in frequency. And one of the things that Paul and I both mentioned and is a big part of this year, we really started this journey in earnest in 2019 during the pandemic last year kicked it into higher gear and it’ll be a big part of 2021 is our data science and data analytics is a significant area of investment for us in talent and capital as we’ve built a large DTC business ramping our intelligence to match to that. We think there is continued opportunity in front of us as we affect conversion rates, repeat purchase rates tied between purchases. So we’re excited about what’s to come as we continue to learn more.

Thanks so much for the color. Good luck guys.

Thanks a lot.

Our next question is with Robbie Ohmes with Bank of America Merrill Lynch. Please proceed with your question.

Hello. Good morning guys, great quarter. Matt a question I get a lot is just on how much did YETI benefit from kind of the COVID-related solitary leisure trend and was that a pull forward to demand from 2021, your guidance implies probably not, but I thought your commentary at the beginning of the call was really interesting. I mean, how should we think about – how important are – did you track how much YETI lost in commuting and tailgating sports events, and backyard barbecues, and kind of compare that with what you got, maybe from COVID related business being driven for YETI?

Robbie, it’s to be able to dissect what was lost directly from what was gained is difficult, because sometimes – some of those consumers flow between those things, what I would say that we really looked at and we’ve spoken about is, pre-mid March last year, pre-pandemic our business was growing 20% plus. We had the moment in time early Q2 or late Q1 when the world was really upside down. And then what we saw from then is a reacceleration of the business. When you look at a business that exited the year with Q4 growth at 26% had 19% on the full year. We really think we saw a resumption of the demand and the growth that was happening at YETI. And while those behaviors changed and we saw that, and we think we were able to pivot our marketing messaging and our brand messaging, our relevance to both the stay-at-home when people were stuck at home and providing compelling digital content when they were there. And also supporting the solo or small group near case on leisure and so when we look at it, we like that trend a lot, but it’s a trend that we’ve been watching for years. And we’ve seen over the last five years, we believe has contributed to engagement with YETI as people get outside more and realize the health and wellness benefits of it. So we actually like both trends and while the group gatherings and backyard barbecues, obviously it had been highly disrupted. We’ve been able to pivot the business and really make sure that we’re communicating to the consumer in the way in which they can operate today. And as the world comes back to normal we’ll – whatever normal is we’ll reconnect with them in those relevant ways. So I feel good about where we are at the intersection of both those trends.

That’s great. That’s helpful. And then Paul, just a quick one for you, when you isolate D2C what is the profitability look like? How did it look overall? Was the profitability of D2C up year-over-year? How are you thinking about that for 2021? Is D2C overall profitability changing? Or is it pretty consistent and maybe do you guys see yourselves reaccelerating store growth as we get away from COVID?

Yes. So to your question, and when we talk about profitability, we talk – we think about contribution margin, because we don’t allocate all the corporate expenses just to say that. Year-over-year, if I look at yeti.com and the DTC profitability and contribution margin overall, it’s increasing and purely as we’re leveraging the strong top line, leveraging the payroll expenses in there and things of that nature. So it did increase year-over-year. And then as we’ve talked about often from a dollar perspective and this is now comparing to wholesale from a dollar per unit perspective, the profitability is significantly higher in our DTC business versus our wholesale channel.

That is great and really helpful. Thanks guys.

Thanks Robbie.

Our next question is with the Jim Duffy with Stifel. Please proceed with your question.

Thank you. Good morning guys. A really great year. Terrific execution by the team. Matt, I wanted to start with a follow-up question related to your discussion of consumer insights. Do you guys have any statistics on new consumers you’ve welcomed to the brand during 2020? And I’m curious the new customers added in 2020 looks different from prior year customers or does the data suggests it’s just kind of more of the same?

Jim, a couple of things there, we haven’t wrapped up our full analysis of our current 2020 cohort. What we have communicated in the past is that, as we tested it throughout the year, we saw pretty good consistency in the consumer between the age groups, household income, so largely consistent. We picked up a little bit on the lower or the younger age demographic, but I would say meaningfully we stayed pretty consistent. What I think is most interesting is that, as you look across our regions of growth, all of our regions showed significant growth in 2020. Growth was led by the markets where we’ve historically been the least penetrated. But even in our longest standing what we’ve referred to in the past, our heritage markets continued to grow strongly through 2020. So we liked the both the penetration we’re continuing to get in our most established markets and the reach with newer consumers or consumers that are newer to the brand. And we’ve talked about penetration in the coastal communities and we’re really seeing the effect of that with opportunities still in front of us.

Great. And then in your prepared remarks, you did a little bit more than wave your hand to ESG, I know you guys hired a new VP of CSR last June. There’s a lot that you’ve already been doing, maybe that hasn’t been advertised, any updates on the foundation of your CSR platform where we might see a formal ESG or CSR report and stated objectives for improvement.

Yes. Jim, as you said and it wasn’t actually we mentioned it in a more fulsome way. It is critically important to us. As you also said, we believe it’s been central to our brand is naturally. And with the addition of an incredibly talented VP of ESG, who’s highly experienced in building these programs. We want to make sure that when we come out that we’re – that was robust and both taking kind of command of what we have done and what where we are, and also where we want to go. And so it’s a big area of focus in 2021 to get those things lined up so that we can communicate them in a more fulsome way. But as you said, it is important to us. We don’t look at it as a function or a thing within YETI. We look at it as part and parcel to who we are as a brand and it had that level of importance and that level of focus inside our building.

Thank you.

Our next question is with Kimberly Greenberger with Morgan Stanley. Please proceed with your question.

Great. Thank you so much. Good morning. I wanted to ask about CapEx, the CapEx outlook for 2021. I’m wondering is there any distribution center CapEx included in that budget, Paul. And then as we look beyond 2021, would you expect this new higher level of CapEx to be your normal on a go-forward basis and then sort of a different, but similar question on SG&A, it sounds like there’s a little bit of SG&A deleverage in 2021. Would you expect to get back to a leveraging position starting in 2022 and beyond? Thanks so much.

Great questions, Kimberly. So I’ll start with CapEx on the $55 million to $60 million range. And about 45% of that is technology related and we’ve talked about data analytics, we’re developing a new mobile-optimized website things of that nature another 45% is really to support the product roadmap. To your direct question on 3PLs or distribution centers, we use 3PLs so we don’t have a lot of capital tied up in the 3PL. We are moving from Dallas to a new location in Memphis. We have some actually it’s an expense, a one-time charge in our outlook to actually move goods back and forth so that’s kind of the makeup. To your question of is this the new normal level? I’m not going to – I don’t want to give a long-term outlook or an updated long-term outlook. What I would say is 2020 was materially lower than our past it was $15 million. So if you look at the combination of 2020 and 2021, and you average them out, it’s more of a normalized level. So part of it is a lot lower spending in 2020 as we took actions during the COVID pandemic. From a SG&A perspective, what we’ve said for this year is we would see slight deleverage, I mean with flat gross margins in op income, approximately 20% and OpEx say 50 basis points of deleverage. And that’s really on the variable side as DTC continues to grow faster. Now, as that business gets bigger, the counter of what I was talking to Sharon about is the mix doesn’t impact as much. That’s a much smaller impact from DTC growth, 2020 is 210 basis points of deleverage. So now it’s down to, again in the zip code of about 50 basis points. Non-variable being flat and a lot of that is, we’re investing in the growth initiatives, we’re going to continue investing in data analytics, things of that nature, the product pipeline. And then also we – like most companies in the second quarter and as we went into the third quarter did a lot of cost curtailment. So we’re rolling over some of that as well when we get back to normalized spending. And that’s why we talked about OpEx growth being biggest in the second quarter and then normalizing or decreasing from there as we get to the third and fourth quarter.

Okay. That makes perfect sense. And if I could just sneak a quick one in for Matt. Now, I’m wondering if you can look at your product portfolio, which is clearly positioned to expand outside of Coolers and Drinkware. So if you take those two categories out, can you share with us the gross rate in other categories, non-Coolers, non-Drinkware. What size of the portfolio or what size of sale do those categories represent? And I’m imagining that those categories are growing faster. But I’m wondering if you can just give us a little bit of color on how that’s performing. Thanks so much.

Kimberly, couple of things, we don’t break out beyond Coolers & Equipment and Drinkware from a growth rate perspective. What I can say is, as we continue to add new planks of product families and new planks of expansion, obviously coming off of small base they have a high rate of growth. What’s been consistent at YETI though in our 15 years is, we continue to drive growth through our legacy products. And we continue to drive strong growth, both in those legacy product families but also by driving innovation to them. So you’ll continue to see in this year and have seen in the past is, we’ll drive innovation in Coolers. And our historical Coolers business will continue to drive innovation. And our Drinkware business, while we build up these other product families and so while they based off their smaller jumping off point grow quickly, we’ll also have a very strong growth and high contribution from our traditional Coolers and Drinkware business. And we’d expect that to carry through in 2021 while we build into these new product families.

Great. Thank you.

Our next question is with the Joe Altobello with Raymond James. Please proceed with your question.

Great. Thanks guys. Good morning. A couple of questions, first on your sales guidance. What’s baked in terms of when you finally put the supply chain issues behind you, and what’s the lift that you’re expecting from the retail inventory rebuild in that 15% to 17% number?

Good morning Joe. So what we’ve talked about and I think it was Peter’s question. We – from an inventory perspective, we expect Q1 again, to be negative year-over-year and then as we get into Q2 in the back half of the year to be positive. We believe that it’s going to take us at least through the first half of the year, and we’re doing this very deliberately and methodically of refilling the channel. And it’s going to take us over the first six months to really get the channel where we want it to be. We haven’t broken down or dissected how much of it is from increased inventory, but we feel good about the 15% to 17%. As we said, wholesale will grow faster than our long-term of mid-single digits, but DTC is still going to grow faster. So it is true consumer demand driving our business not just a wholesale reload.

That’s helpful, Paul, thank you. And just maybe a second follow-up in terms of advertising, maybe just, maybe I definitely noticed a lot of commercials on NFL network over the playoffs. So curious what the advertising budget looks like, maybe as a percentage of sales in 2021 versus 2020?

We did. And if you think about, what we call demand creation spending throughout the year. Again, we absolutely curtailed it in the second quarter. We moved very digitally, but we curtailed some of it as you would expect us to do and then ramp back up in Q3 and with some great exposure in Q4. We would expect that to come back to about 8%-ish of sales is what we’ve always talked about, we were a little bit under that as we finished 2020. Part of it is the strong, even though to your point we had great exposure in the Q4, the strong top line. So we ended up kind of below that percent. So we would expect that to go back to that approximately 8% in 2021.

Perfect. Thanks.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Matt Reintjes, Chief Executive Officer for closing remarks.

Thank you. And thanks everyone for joining us today. We look forward to speaking when our Q1 2021 results come in. Have a wonderful day.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.