M&A Announcement

May 13, 2021

Please note this event is being recorded. I would now like to turn the conference over to Wayne Hood, Vice President of Investor Relations. Please go ahead. Good afternoon and thank you for joining us on our conference call today announcing our agreement to acquire 100% of Spartan Services, a leading commercial flooring, specifying and distribution company headquartered in Bel Air, Maryland. Joining me on today's call is Tom Taylor, Chief Executive Officer and Trevor Lang, Executive Vice President and Chief Financial Officer. Before we get started, I'd like to take this opportunity to remind you that our remarks today will include forward looking statements reflecting management's current forecast of certain aspects of Spartan Services' future. These statements are based on current information which we have assessed, but which, by its nature, is dynamic and subject to changes. Actual results may differ materially from those contained in or implied by these forward looking statements due to risks and uncertainties associated with our business, including those we have disclosed in our most recent filings with the SEC in our annual report on Form 10 ks and our quarterly reports on Form 10 Q. Any forward looking statements that we make on this call are based on assumptions as of today, and we expressly disclaim any obligation or undertaking to update or revise any of these statements as a result of new information or future events. Before we begin, I'd like to point you to the Investor Relations section of our website, ir.porndecorrent.com, where we posted a slide deck that we'll be referring to during this call. Today's call is scheduled for approximately forty five minutes, so please limit yourself to one question to give others the opportunity to have their questions addressed. Let me now turn the call over to Tom Taylor. Thank you, Wayne, and thank you all for joining us on such short notice. I hope you had a chance to read our press release and download the slide deck from our Investor Relations website that details some of the more important aspects of our acquisition of Spartan Services. Let me begin by providing some additional details and the strategic rationale behind this exciting transaction that incrementally accelerate our growth and market share of the $13,000,000,000 total addressable commercial flooring market, which includes $2,000,000,000 in installation products. We have seen nice growth in our commercial flooring sales over the last several years. Last year, we formally assessed our growth opportunities within the commercial flooring market in a way that leverages our large warehouse stores, our core merchandising and supply chain strength and the capabilities of our regional account managers, which we refer to as RANDS. As part of this assessment, we have learned that the commercial hard surface flooring market is served by three sizable customer segments that include third party architectural and design firms or A and D, large owners, builders and developers and general contractors, installers and small owner builder developers. To resonate with the latter, we have added 24 REMS over the last several years, and they are successfully winning orders within the $6,000,000,000 commercial flooring market, focused primarily on general contractors, owners, builders and developers. We are very pleased with our market share growth and prospects of strong future growth as revenues tied to our ramps have increased six times since 2018 and tripled in fiscal twenty twenty and from 2019. We also know that there's a larger $7,000,000,000 hard surface opportunity among A and D firms and large owner builders that is complex and requires a unique set of capabilities to successfully serve. This larger segment requires prebuild consultative design support, product selection through strong specification expertise and turnkey installation coordination capabilities to name a few. Said another way, this large segment has a different value proposition and selling relationships when compared with our existing retail and RAM business models. We believe the acquisition of Spartan Services will enable us to incrementally accelerate our growth into this large and highly fragmented commercial segment by overcoming the growth barrier of being a retailer and allowing us to quickly acquire missing capabilities to serve this market while at the same time providing significant benefits to Spartan Services, which should allow them to accelerate their growth and profitability. As we have gotten to know Kevin and the Spartan Surfaces team, we also believe there is cultural alignment, and we can teach each other aspects of the commercial hard surface flooring business that makes the sum of the parts more than the whole. As we look to the future, we see three main exciting value creation opportunities for Spartan Services. First, Spartan Services has a strong culture of informed and experienced flooring consultants that have industry leading relationships, which drives top of mind awareness among architect and design end users and commercial flooring contractors. These relationships are fostered by the company's prebuild design consultation and solution oriented approach and its ability to oversee delivery and logistics in a commercial setting. These factors have led to the company's success and strong regional brand equity, particularly among the healthcare, senior living, multifamily residential, hospitality and education end markets that we can expand upon. We are excited that Spartan Surfaces' strong relationships and market approach will now enable us to interact upstream early in the project with end users that utilize in house A and D teams or no A and D team, ensuring our products are incorporated into the designs well before an installer becomes involved. Second, we believe that our access to a range of consistently high quality products and our reliable distribution and logistics capabilities across The U. S. Will serve as a key selling point for Spartan Services customers focused on reliability and near term supply. This capability will enable Spartan Services to increase its win rate in its existing markets and expand outside its core regions with the support of a supply chain powered by the strength of Floor and Decor. Spartan Services will no longer face growth headwinds from a less reliable supply chain or long lead times when bidding on projects. We have a 1,500,000 square foot distribution center in Baltimore just miles away from Spartan's headquarters, which will give Spartan's customers a level of inventory confidence that we believe is unmatched in the commercial industry. We are excited about the strength of our supply chain and our resources will also enable Spartan to accelerate its growth plans by adding flooring consultants to reach many untapped markets across The United States. Third, we expect our purchasing power will lead to significantly lower landed product costs on overlapping hard surface flooring SKUs. We believe just over half of what Spartan sells today will benefit from lower cost lower and decor sourcing. Additionally, we see an opportunity to use our significant scale and sourcing capabilities to value engineer distinct commercial products to expand Spartan's existing design library and ensure final selection into projects. We also see an opportunity to expand Spartan's expertise in tile where we can leverage our deep and existing product access. In summary, we are excited about the prospect for Spartan to incrementally accelerate growth in the fragmented commercial flooring market and create value through revenue and product cost synergies. Let me now turn the call over to Trevor, who will discuss some of the financial aspects of the transaction. Thank you, Tom. I also want to express my excitement about the growth potential that Spartan Services will bring to Floor and Decor and our shareholders. We believe it represents a low risk, asset light enabling acquisition that will quickly give us a unique set of capabilities and is synergistic with our commercial growth strategy and merchandising sourcing capabilities. It will allow us to accelerate our market share growth with a large segment of the commercial market that would have taken us an extended period with greater risks to develop organically. As detailed in Slide four, the company was founded in 2007 and has been successfully led by its founder, Kevin Jablon, who will continue to lead the company upon closing. The company has a history of strong growth with revenues growing more than 20% on a compounded annual rate basis from 2015 to 2020. Over this period, the company has been consistently profitable, and its operating margin exceeded that of Floor and Decor in fiscal twenty twenty. The company's business model requires minimal capital expenditures and working capital, which leads to a high return on invested capital. Let me briefly discuss some of the higher level financial aspects of this transaction. We expect the transaction price to be $90,000,000 $5,000,000 of which will be foreign to core stock, and the rest will be financed with our cash on hand. At closing, we will pay $67,000,000 in cash and $5,000,000 in 400 core stock, with the remaining $18,000,000 earned through fiscal year twenty twenty four based on our profit goals. While it is not expected to be material to our diluted earnings per share in fiscal twenty twenty one and 2022, we do believe it will be accretive in both years, excluding transaction and integration costs, which we intend to call out separately in our earnings release. The company will operate as a subsidiary of Foreign Cor Holdings Inc. And will continue to be led by members of Spartan's senior management team. The transaction is expected to close in the 2021. Operator, we would now like to take questions. The first question is from Michael Lasser of UBS. Please go ahead. Good evening. Thanks a lot for taking my question. Tom, when you look at the commercial opportunity, what exactly is it that you said to and the management team said, we're not getting as much traction as we would like, so we really need to pursue an m and a strategy to inflect higher within this segment. And and, b, when you look at all the the risk factors, you look at back three, four, five years from now, and it doesn't work out as well as you think it might, why would that be the case? Okay. Hey, Michael. How are you? So the first thing before before we get started, do want to introduce to everyone on the call Brian Robbins. Brian has been on our team since right after I joined the company. He's our Executive Vice President of Strategic Business Development. And so he will jump in from time to time depending on the question. So I'll I'll take the first part of that or actually, more than the first part of that. So, the first thing I would say is we've been extremely pleased with what's been going on in our commercial business. We've known it's been a big opportunity for a long time. Our RAND strategy has exceeded my expectations. In fact, we've accelerated and or continue to accelerate this year from where we had originally planned to be. So it it it this is much more of there's a segment of the commercial space that is very difficult to penetrate that we don't have the expertise and that our RAM don't have the expertise. And we looked around the industry, and we got to know Spartan and they have the expertise. And when you look at the two companies of what we can provide them and what they can provide us, this helps us go faster and helps us learn and, and we're just excited about the opportunity. We think the commercial space is is got a lot of fragmentation and a lot of the advantages that Floor and Decor has on the retail side of the business exist on the commercial side of the business. So we are, we're very excited about, about the potential. This is a look, this is a small investment. This is, you know, it's something that, we're just we're looking forward to helping them and and looking forward to them helping us. So when I look back on risk factor of say, okay, what will I look in in a few years and what what didn't work? I would say that a lot of our theory is here is that we can help Kevin and his team go faster. They've had they've been tremendous growers and have done incredibly well, but we we think we can help them go faster. We we their ability to access our supply base and utilize our supply chain, will be a competitive advantage for them. And then, our ability to help him go faster in putting sales people in markets that he's not today, we also think is a is a good advantage. So if something didn't work, I would say that, you know, we we had a a a people problem probably on the side. Not getting the right salespeople in the right markets would be where I would say the largest risk is. But Kevin's shown, that he can grow in markets outside of where he started and has done a good job, and and we think we can help him get there quicker. Thank you very much, and good luck. Thank you. The next question is from Simeon Gutman of Morgan Stanley. Please go ahead. Hey, everyone. Good afternoon. My question is if I'm a commercial project and I saw some I looked at the Spartan website, I saw high rises, gyms, hospitals, How does the process begin for me trying to find a flooring contractor? Do I work with a GC and the GC goes out and seeks who can bring in the flooring? How does the process work? And I guess, I'm trying to think how you're going to get more looks nationally for this, or is it a regional play that a foothold you can grow from? Hey, this is Brian. I can answer that question for you. Kevin's team usually will market to the A and D world, but the decision maker is always going to be the owner or the general contractor. So that's where the decision point starts. But they market to the A and D, and they become their consultant. Actually they become their expert on the flooring opportunities that they are looking for. So that's how they go to market and that's how they usually get most of their wins. Got it. And that's how they find you. Can you I guess, I don't know if this is relevant because if you bring in the scale of both companies, the gross margins will improve. But can you talk to high level the gross margin that existing in the commercial market in comparison to, I guess, the retail market or where Floor and Decor punches? Hey, Simeon. This is Trevor. So you guys can see our gross margins in our in our Qs. You know, we're in the low 40s today. The commercial industry is lower than that. We're we think it's, you know, kind of for us and our what we're seeing in our regional account managers, you know, that number is kind of in the upper thirties today. We do think, over time, that's a big part of the thesis here that we can help. First of all, access, you know, seven or 8,000 SKUs. As you guys know, we source from 220 vendors in in 24 countries. Just having access to that incredibly trend right product at a much lower cost is a huge part of this. And we think over time, this won't happen overnight, but we think over time, we could get Spartan's margins to be closer to that kind of mid to upper 30s that we're seeing in our commercial business today. The rest of that equation, though, I do do wanna point this out because it's important, is the SG and A in this industry is materially below the retail industry. And so when you look at the overall flow through, and as I mentioned in the prepared comments and we put in our deck, Spartan is a company that's a lot smaller than us, actually has a slightly higher operating margin than us today. And and so it's a it's that's why it's very accretive. And as we also mentioned, it's very asset light, but most of this stuff is bought to order. There's really not much in the way of CapEx. And so the big investment that we've made in our infrastructure and supply chain, they're gonna get the leverage that they're gonna get incredibly good looking product at a low cost. And we've done a lot of homework on this. We're very excited about it. Thank you. Good luck. The next question is from Steven Forbes of Guggenheim. Please go ahead. Good evening. Tom, Trevor, maybe just focusing here on slide number seven where it talks about the synergies, right, for with F and B's existing regional account managers. And I would also imagine there's there appears to be maybe some opportunity to improve the productivity, right, of Spartan's business development team members. So may maybe just talk through, if you can, you know, quant quantify, right, sort of the the maturation of Spartan team members versus versus the commercial Rams or or even just qualitatively just just speak to, you know, the synergy capture that you foresee. Yeah. And if I really boil this down to try and make it simple, and some of this is in the materials, We we think because of our infrastructure, our massive distribution centers, our logistics capabilities, our ability to source inventory and get it here on time, we believe we can make their sales reps more productive. And more importantly than us, Kevin believes he can make his sales reps more productive. We also think we can add more reps quicker. You guys heard us, I think, say on the last call, we're gonna add about 14 rams ourselves this year. Historically, they've added, you know, two to four rams or or reps on from Spartan. We think we can hopefully ramp that up a bit. And then there's gonna as we said, there's some margin accretion on the product just because of our buying power, buying billions of dollars versus them buying. So that's that's where the the business case simplified. As we've done a lot of due diligence and and, you know, we've working on this for, as you might expect, quite a long time, The sales rep per rep is fairly similar to ours. You hire a new rep, you know, they're hopefully doing a half a million to $700,000 in the first year. And by the time they get up to maturation, and by years three and four, you know, we're hoping those sales reps are doing 2 and a million to $3,000,000 in sales, and we see a very similar trend with our rams is what Kevin and his team sees. So yeah. Thank you. The next question is from Jonathan Mataszewski of Jefferies. I'm sorry. Please go ahead. Hey, good evening. Thanks for taking my questions and congrats on the deal. Tom, could you characterize your appetite towards future M and A beyond this transaction? Is this now part of your corporate development team playbook to continue identifying additional bolt on deals for the commercial side of the business? Thanks so much. Yes. No problem. I I would say that, it is way too early to answer that question. We felt like of that $13,000,000,000 commercial market, we could penetrate a good portion of that with our RAM strategy. But there was a void on the A and D side of the business, and this was an opportunity to buy a company that excels in that arena that gives us access to that $7,000,000,000 and that's why we did it. We have to learn more. You can't learn everything through through due through due diligence. We've got to work with Kevin and his team. We got to continue to understand his business. We have to understand how our what we bring to the table, how it helps them grow. And in time, we'll decide if there needs to be another another acquisition. But for right now, this is a this is a commercial business is very important to us. And as I said earlier, I mean, I think all of the advantages that we have on the retail side of the business, we have on the commercial side of the business. This just gets us into another segment of the market. And as we learn more, if we think we go faster if we can even go faster by bolting something else on, we'll make that decision at that time, but it's just too early for us to know that today. Makes sense. Thanks so much. Thanks. The next question is from Karen Short of Barclays. Please go ahead. Hi. This is Saad Saad Day on for Karen. How do you think about integration process, and are there any nuances to the integration that we should be aware of going forward? And can you provide some vague estimates on how to think about total dollar integration costs and transaction costs even though they'll be onetime? I can take the first part. This is Brian. I can take the first part of the integration. First and foremost, it we want it to be a separate business, and we wanna make sure that they keep our culture separate from our culture. So when we think about integration, it's gonna be a lot about the things that are materially important to us as a publicly held company. And, of course, there's a lot of stuff that we would do with compliance and and and things like that. And we hope when they where we can add value to their business, we can do that for them, but they'll be asking for that versus us requiring it. I think the biggest part of the integration is gonna be on the on the supply chain side. That's what we bring to the table, and that's what they're wanting for this. And where they if we do that successfully and leverage us, that integration will be manifesting itself into the benefits of the revenue and the gross margin we've been talking about earlier. Yes. Then on the cost side of that, because we haven't been an acquisitive company, we're bringing in a high caliber firm to help us with the PMO office. And then we've, you know, spent some work with our accountants and lawyers and and things of that nature. So we'll we'll be somewhere between a million and a million and a half in in costs. Our current intent is to call that out in our press releases for the next few quarters just because we'll incur a lot of that in Q2 and Q3. Okay. Thank you. The next question is from Peter Keith of Piper Sandler. Please go ahead. Hi, good afternoon and also my congratulations on the deal. So Spartan, it looks like they would have maybe about a 6% share of the $13,000,000,000 TAM. It sounds like they're one of the bigger operators. So who are some of the other primary competitors in the space? And do you have a sense of what their what the competitor market share is out there? Yes. So we did spend a lot of time last summer studying the space as we were having success with our rams. That's kinda how we we figured out bifurcating this market that there's probably 7,000,000,000 in this market that would be better handled through a company like Spartan. And as we were studying that with with the firm that was helping us do that, today, we see that the majority of the market is handled by the big domestic manufacturers, you know, companies you guys all know well. The other 30 to 35% is companies like Spartan that exist throughout The United States. You know, some a lot of them are a lot smaller than than them, obviously. And then there's some components that are handled by that's handled by traditional retail as well. But today, the the the lion's share of this industry is handled by the big domestic manufacturers and their sales forces. Okay. Thank you very much. The next question is from Liz Suzuki of Bank of America. Please go ahead. Great. Thanks. So does the relationship with Spartan now open up the opportunity to work with that second group of commercial market customers, the larger builders and developers? Because you've got the Ram strategy that targets the general contractors and smaller builders and now a strategy more targeted at the larger commercial customers. So just wondering if a different approach is being considered for the middle, you know, customer tier or if you can kinda fill in from either side. I don't know if a different strategy for the middle, the middle tier. Think the middle tier is gonna be handled somewhere between Spartan and and our Rams. Probably more than likely the Rams. We like what's going on with our Ram strategy. This is really to get to the really much bigger customers that depend on A and B firms to make their decisions. And we just think Spartan is the best partner that we could have to help us learn more about that space and access more of that market share. Great. And just one quick follow-up, is just will the results of Spartan as a subsidiary be presented as a separate line item or just included in the overall P and L but excluded from same store sales? I'm sorry. I missed the first part of the question. Could you repeat it? Oh, sure. Was just asking if if Spartan's results will be reported separately and going forward as, you know, once this closes? No. It's it's too small. You know, it'd be 3% of our sales. Over time, I hope it wouldn't. The the we and I obviously, I agree with the rules. As it gets close to 10% of sales, the the the accounting requirements are such that you have to disclose the segments. And so hope someday it will be disclosed separately, but for now it's not material enough to do so. Got it. Thank you. The next question is from David Bellinger of Wolfe Research. Please go ahead. Hey, guys. Sort of following up on that last one. This is a bigger picture question. So annual sales around $80,000,000 or so for Spartan here. Your organic commercial business is still small at this point. So as it builds and gains traction, how big can commercial become over time? What level of sales would you characterize as a success if we look out five years? And is there a certain tipping point you're really targeting that would unlock significant margin expansion from here? Yeah. So if you start from the macro, as we said, we think this industry is about 13,000,000,000, the commercial industry. As we've studied some of the larger competitors and some of the big domestic manufacturers, as we understand it, some of them have over 500 sales reps. As I mentioned earlier, a good sales rep, we think, can be doing $3,000,000 a year in sales. So if you had 400 of those reps doing $3,000,000 that'd be $1.2 500 reps, you know, doing 3,000,000, that'd obviously be a billion 5. We think the industry will continue to grow. And so you could see this being optimistic, you know, probably not five years from now, but you could see this this being a billion to a billion and a half business if we're if we're able to execute on those strategies, which we think, again, layers in nicely with the 400 stores. As we've said before, our 400 stores grew, you know, over 22,000,000, closer to 23,000,000, the stores that are over five years old now. So it's they they work nicely together. But that I think that's, you know, where Brian and Tom in my head is that that someday in the future, we would we would get there. I I will come back and just one thing. You know, we've been very disciplined about our growth at this company. We could have always grown fast. We could have always done more than 20% unit growth. We feel like to manage the business and to have the quality of the business we want, we put that self governor on 20%. So I'm not saying we're not gonna add more reps. We are gonna add more reps, but we wanna do it in such a way that we can teach and train and mentor and grow these people such that they have long careers. But Kevin's done an incredible job of that, and and that's important that he he sees the same way. We wanna have that measured growth. So don't think about us going to 300 reps in three years, but we will be adding many over the coming years, but we want to do it in a measured way so that we do it right. The next question is from Alex Marocca of Berenberg. Please go ahead. In the presentation, you highlighted some of Spartan's geographies that appear largely East Coast and Midwest focused. Is this an industry that allows for significant organic growth into new geographies? Or would you have to pursue a West Coast or Rocky Mountain to build a presence near the other coast? Hey. This is Alex. This is Brian. Most specifiers like Spartan are very local or regional. And I think, again, when we talk about one plus one equals three here, having Spartan powered by Floor and Decor, given our DCs and where they are nationally, a million square foot DC in Los Angeles, a million plus square foot DC soon to be in Houston, a million five square foot DC in Savannah, that allows Spartan to have a national presence, to have a national footprint. And when Trevor talks about adding salespeople to go after that, that's what Kevin and I talked about to grow him nationally and be that present with the power of Florida core behind him to allow those opportunities for those future salespeople. So we see an actual growth in the future. We'll crawl, walk, run with that, but that's our intention to do. Got it. That's helpful. And then just a clarifying point. You've been referencing $7,000,000,000 additional here, but previously, your commercial TAM was $9,000,000,000 and now you have it pegged as 13,000,000,000 So what's the difference? So when we put our market share together in our 10 k, we had historically carved out components of the commercial industry that we thought weren't accessible to us. So for example, large homebuilders was someone that we thought with our retail slash ran strategy that we wouldn't sell. There were hospitals and other, big, commercial industries that that we carved down from there. And so doing this from memory, and I may come back. But that 22,000,000,000, I think we said 16,000,000,000 was residential remodel with the remaining being commercial. And so I think the the the the difference between the 13,000,000,000 and that smaller piece that I referenced in our 22,000,000,000 to 23,000,000,000 is that we scoped out parts of the commercial industry that we thought we couldn't do before. But obviously, now with Spartan, we think we can address the whole market. Got it. Thank you. The next question is from Steven Zaccone of Citi. Please go ahead. Great. Thanks for taking my question. Most of them have been asked already, but I just was curious if you could talk a bit more about the competitive dynamics in this area of the commercial space that made you buy rather than build your own sales force over time. Is it certain industries that you just weren't in that you wanted to get bigger in? And then I assume presumably it's a very relationship business, driven business. Then, just a a brief question too. Do you ever have any plans to integrate Spartan into some of your stores just to just to build brand awareness as you go take it to some other regions? So I think there's two parts to that question. The last part is pretty easy. No. We don't plan on integrating Spartan into our stores. The the first part of the question, you know, Brian, why don't you go ahead and talk a little bit about the competitive landscape? Yeah. You you asked about They're in the health care, they're in the multifamily education and a little bit in hospitality. That's an opportunity. Hospitality is something I think does provide an opportunity for Spartan to grow into. I think our products that we have that they may not sell as much will allow them to get into that market. That's what we're hoping for. We have a portfolio of products that there's some of those things that they don't really sell. There's a couple of things that they sell that we don't sell. So I think when we sit down and try to strategize how we go to market, what we want to do, we want to enhance their ability to go into their existing industries. But we certainly think, at least I think, they have an opportunity to grow bigger hospitality that they haven't done in the past. Does that answer your question? Yes, that's perfect. Thanks for the color. The next question is from Zach Fadem of Wells Fargo. Please go ahead. Hey, guys. Good afternoon. Thanks for taking the question. So in the presentation, it looks like Spartan has been growing at a 20% plus CAGR over the last five years. And I'm curious if you could talk a bit more about the underlying drivers of of their growth and their growth strategy, particularly across new customers versus existing customers, channels, geography, etcetera. And as you think about the integration here, how do you think about the step change in the CAGR for their business? Okay. A lot of questions here. The first part I can tell you, first and foremost, one of the most appealing things to us about Spartan was the way they go to market. They're extremely about service and customer service the most of anything. I saw that being a a big win for us to see how they grow and how they do that. They have an excellent sales team. They have an excellent executive team, and they're very, very aggressive about growing. Most specifiers kinda stay in their backyard. They stay in their region or their local market. Kevin and his team have grown. They've gone out to Chicago. They've gone to other markets, which was appealing to me because it it told me that they they have that ability to do that. And I think that's what kinda made me go more for them than some other ones. So I I think that was the I I may have missed your second part of your question. No. I I I think that's that's helpful. I I I guess the second part of the question was was just on on the step change in in the CAGR going forward, but but I think that's that's good. I I I just had a follow-up question for for Trevor on, the purchase price and just why you think the the earn out strategy, was was the right way to go versus paying, you know, just just paying straight cash? Yeah. I mean, the the structure is such that, we have incentives for him to reach sales goals, gross profit goals and EBITDA goals, and we felt like it was a good alignment. We expect and hope and look forward to paying out every penny because it will be a very good deal for both of us if we are able to if we do pay out that that earn out. Got it. Appreciate the time tonight. The next question is from Joe Feldman of Telsey Advisory Group. Please go ahead. Hey, guys. Thanks for taking the question. Two two quick ones. First is, is there any seasonality to the business that we should consider? And the second one is, would you consider rebranding Spartan as foreign decor for your commercial sales force that rent the Rams as Spartan, you know, as you kinda broaden out, if you thought about that yet? Thanks. Yeah. So I'll take the first one, and then Brian can touch on there there is no see I'll let Brian touch on the seasonality. So the first first thing I would just say is that, you know, we we acquired Spartan, so that we could work together with Spartan and no desire to change their name. We want them to continue to run the excellent business that they run, and we think, that they can we can help them grow faster. And so no desire to do that. And the same thing with our on the on the other side of that equation, we're very happy with our ramp strategy. It it's worked, as I said earlier, in one of the earlier questions that we have accelerated the amount of ramps that we put in the markets and what they do, they do well. And we think the Floor and Decor brand, with them makes a lot of sense and has worked for us so far and will continue down that path. Brian, you wanna touch quickly on that now? Simple It's answer as well. There's really I have not seen any seasonality with their commercial business. Okay. Great. Thanks. Sure. And the final question today comes from Greg Melich of Evercore ISI. Please go ahead. Hi, thanks. It's maybe a follow-up on the strategy and the rollout. Is can we think Spartan as now the brand and the flag to go into commercial? Would you consider buying other commercial specialist businesses or other areas that you'd look to expand to? Yeah. I think it's kind of I said it in an earlier answer also that, it's too early to know that. We you know, this is our first acquisition. We have been very thoughtful about this. We wanted to be able to penetrate a space that we were that's a difficult space to penetrate in the commercial side of the business. But we want to learn and we're not going to go too fast. We want to make sure that we take thoughtful steps in continuing to grow this business in a nice way. And as we learn more, we may come to the conclusion that there's a that we have to do or that we should do another acquisition, but it's too early to tell. It's not We're going to take our time with this like we do everything else and make sure that we're being thoughtful in the way we move forward. This is Brian. Having said that, we're very pleased with the branding of he's got a great reputation out there. Kevin's team's got a great reputation. Spartan has a great reputation. And, again, as part of our our our requirements, what we were looking for in a company. So that's not something we're thinking about. But to Tom's point later, that could change. But right now, we we are very happy with brand and his reputation in the industry. Okay. Well, congrats and good luck. Thank you. Yeah. Just to Ben and I will be around, so will Trevor, tomorrow and next week. So if you'd like any follow-up calls, feel free to email us, and we'll schedule a call. Thanks for calling in today. Thank you, everyone. I appreciate your interest. Sorry for the short notice. Thank you. This concludes today's conference. Thank you for attending the presentation. You may now disconnect.