Good morning, everyone, and welcome to the twenty-second Annual CL King Best Ideas Conference. This is Kevin Holder, analyst here at CL King, and we're very pleased to have the management team of Snap-on with us today. Representing the company, we have Nick Pinchuk, Chairman and Chief Executive Officer, Aldo Pagliari, Chief Financial Officer, and Sara Verbskyy, Vice President of Investor Relations. For those in the audience, thank you for joining us today, and if you wish to ask a question, you can type it into the Ask a Question box at the bottom of your webcast screen. All questions will be sent to me, and I will integrate them into the discussion. With that, Nick, Aldo, and Sarah, good morning, and thank you for joining us today.
Morning. Morning, Kevin.
So, Nick, maybe to start off, can you maybe give us a brief overview of the company, your operating segments, and the key end markets that you serve?
Sure. The company started out, you know, way back in 1920 and started in an invention. We call it five do the work of 50. A guy had the idea that, you know, he'd make five handles, a T, a crank, an ellipse, and put them together with ten sockets of different dimensions and fashion them so they would snap on interchangeably. They were built of high quality. It was an innovation that changed tool sets all over the country, and he told people to call directly on mechanics and lay the tools out on green felt as if they were precious as surgeons' knives, and that business evolved into what we call today, the Tools Group. Remember, I said they were gonna call on the mechanics directly, and we do today. One of our businesses is the Snap-on Tools Group.
It represents about 40% of the business. It pursues its business by calling directly on technicians, not the shops, the technicians themselves, the people who twirl the wrenches, and those vans, I think there are about 3,400 of them in the United States, 4,800 worldwide, and they are franchised, and as I said, they have weekly routes, so they call on the same technicians every week, roughly at the same time. It's kind of a weekly route that goes through them, and that's the core of the business that we have. That's 40%, so and that's arrayed by a customer base, you know, facing that customer base, and Snap-on, in general, is arrayed on customer-facing groups, so those are mostly technicians that are involved in vehicle repair.
There's another group here, which calls on a group, a customer base, which stands right next to the technicians, has some of the same mission, the repair shop owners and managers. The repair shops, that's the facility in which the technicians work. And that business calls on those people with a different sales force because they don't buy at a weekly cadence. So they might call it, you know, like any direct and distributor sales force. They sell things like that would be, I suppose, semi-capital items for the garage. Software that runs the garage, repair information, and gets special insight into repair and garages, electronic parts, catalogs, hardware, like car lifts that, you know, you need to get underneath the car, or aligners to put the wheels in place, or tire balancers or tire changers.
And that business is about 28% of the business. And then the third big leg of our business, the Commercial and Industrial Group. And fundamentally, this is the Snap-on brand, rolling out of the vehicle repair garage to other industries, which are critical. One of the things you'll hear many times from me today is what binds all these groups together, these customer bases, and makes them our customer base, is that they are critical. That is, they're doing a task where the penalty for failure is high, and the need for repeatability and reliability justifies a Snap-on level product. So we roll the Snap-on brand out of the garage to other industries, which are critical. Things like the military, 50-caliber bullets going overhead.
I think when you got to repair your vehicle, it sounds pretty critical to me, and things like aviation, oil and gas, general industry, education, mining, places where people want to get the process going again, and they're willing to pay for something that's extraordinary. And then we have a credit company. It's a small portion of our business, about a $2 billion portfolio, but it primarily supports the tools group, the vans that call on those mechanics, and when the mechanic buys something that is big-ticket, the credit company helps in the financing of those things. You step back, and you look at this. Generally, what we found is that when we started, the whole thing was based on this idea. We're in the garage itself. We're at the workplace itself.
We observe the work, and we take that knowledge, that insight back, to create a tool which will solve some of the most thorny problems in a critical situation, and so we can do that. We can be in the workplace, and we can provide a solution, whether it's a wrench or a piece of software. Many people think we're only in vehicle repair, but that's not true. We are. We serve anybody where the task is critical and the penalty for failure is high. You step back, and you say to yourself, "Wow, these things are going." The tools group is selling to the technicians. The technicians today are cash-rich, but confidence poor, so the tools group down 7.7% the last quarter because of that uncertainty in that business, then you look at our, but the other two legs are doing pretty well.
RS & I external sales were up 4%, and the tools group was down in profitability. But if you look at the RS &I
business to the shop owners and managers, that was up externally 4%, and the profitability was 25 base, twenty-five percent, up 60 basis points year over year. And if you look at the commercial and industrial business, also up about 4% externally in their external sales, and the profitability was 16.7%, up 70 basis points. You roll it all together, the company was about flat, down 1.1% organically in the second quarter, but the profitability was 23.8%. Now, that had some a legal adjustment in it.
If you strip that out, it was 22.8%, second highest ever for the corporation, even though 40% of the business was attenuated. Earnings per share were $5.07. Take out the legal settlement, $4.91, highest ever. So basically, what you saw in the last quarter was Tools Group attenuated because of the uncertainty at the grassroots for the tax, but the other two businesses keeping it up and keeping it quite flowing.
Perfect. Thank you so much, Nick. A great overview, so I guess I wanna focus initially on the critical industries that you talked about in the CNI business. Going forward, what are your expectations for that business? And then if you can maybe detail kind of the military and aerospace industries, and specifically how you think that will, what your plans are for that going forward.
The simple thing is this: that we're less. We've come to those industries later than vehicle repair. So fundamentally, you can view Snap-on as having a strong offering in that area, but not as mature in terms of comprehension and broad. It isn't as broad as our offerings in vehicle repair. So the idea is if you look at the critical industries. We'll name some of the bigger ones. You talk about military, talk about aviation, natural resource, you know, oil and gas, and wind, and general industry, and heavy-duty equipment, education, mining. And so what we're doing is observing that work like we do all the time, our principal value-creating mechanisms, and building product lines around that.
What's happened is we're building. We have a pretty strong product line around military, look pretty good around aviation, and it kinda goes down. Our product lines are building, but they're, I think, they're strongest in the military and aviation, so they've been some of the biggest, our biggest winners. One of the things we found recently is that, boy, the more product we can put in the field, and a lot of this is customized. You know, we see a particular problem, a particular set of problems at a particular oil and gas platform or for a particular airplane, and we customize the product for that, maybe putting together a kit. Let's take the F-35 fighter, for example. You wanna repair the F-35 fighter?
We can put you right on target because we have a kit which will have the appropriate tools for that in it, and that's what we sell to the government or whoever's making the F-35 fighter when they deploy them. We also do it for the manufacturing of that fighter and a bunch of different things like that. If you're talking about aviation, the same kind of thing can talk about, like helping Boeing create more precision in its manufacturing facilities through torque wrenches and connected torque wrenches, torque wrenches, which are accurate and also can connect to document the process and ensure that it was actually done correctly.
And so you do those kind of things, and as we just expanded our buildings associated with that business, gave them more capacity, in effect, and that business responded in kind because it was up in a quarter, I think, double digits in a quarter. That particular critical industry business within CNI, it's about, you know, 40%, maybe 40% of CNI, or a little bit more, about 40% of CNI, and its profitability is strong. So what we see in that business is we're actually looking like the more product we get as we mature our product lines, the greater the business can be, the more penetration we have, and by the way, all of that is very profitable. So I see that working pretty well.
Great. Thank you for that. And maybe switching gears more to where the mechanics, can you maybe talk about the trends that you're seeing with the growth or decline in the number of mechanics?
Yeah, I mean, the thing is, this is sort of like getting to be kind of even though you wouldn't think a guy like me who says his business selling to mechanics is down 7.7% would say this kind of thing, but I'll tell you, I think we're in the golden age of vehicle repair. You know, one of the things that's happening is that. By the way, this is just vehicle repair is solid. Come hell or high water, people get their cars repaired, you know? And so we're down, and it's mostly because the technicians are getting up every day and reading bad news for breakfast in their newspapers. So they're like so many people from the, you know, from the Game of Thrones, "You know, winter is coming.
You know, I'm worried about going forward. So I'll buy something that I can pay off in fifteen weeks, but I don't wanna buy anything which I'm gonna have to pay off in weekly payments over, like, three years. So there, you can see the shift in our business, so we're pivoting to hold them. But if you go to the garages, they're doing well. By the way, they've always done well. In the great financial recession in two thousand and nine, the journal wrote an article called Economies Glum, Repair Shops Humming, and so it is. And so what's driving all of that is a couple of things. One is, cars are getting older. They're now 12.6 years old, and they're getting older every year, and the number of cars on the road are getting greater.
That's one. Cars keep changing, and they keep changing all the time. More fly-by-wire. Let's say more fly-by-wire. In the 1990s, there were two dozen trouble codes on a car. Now, there are tens of thousands. That creates a greater complexity in the car that mechanics, even an internal combustion engine, have to service. What's interesting about that, even though cars got more drive-by-wire, the demand for hand tools got stronger because the geometries inside the car required more and different hand tools every time a new model came out. This is good for us, the change in models. You've got the new powertrains, electric or super hybrids or plug-in electric vehicles, and all of those need new sets of tools or different tools.
People often say, "Well, aren't electric vehicles gonna be less?" There's no evidence for that. In fact, I think Hertz just said the maintenance of their cars on their fleet when they got rid of them was 48% higher. And part of that is because even today, only 20% of the repair procedures on a car are for the powertrain. And then, on top of it, you have the idea, we want more autonomy. More autonomy means, boy, you need a lot more devices, and the car, all that autonomy depends on a neural network of sensors around the car. Every time you bang the car, you bang the fender, you bang the bumper, you got. It's a big-time repair.
Because you not only have to replace the bumper, you gotta replace the sensors, then you gotta recalibrate them. An exercise of non-trivial nature, and we have the best hand tools, the best diagnostics for repairing the car and diagnosing all those trouble codes, and we have the best way to calibrate, best decoder ring for calibrating the sensors. So we see that as a great opportunity.
Okay, great. Thank you for that. I guess kind of going off that-
I didn't answer quite your question. And so what you see is that you're seeing it in the BLS data, where people are spending more money on repair. There are more technicians. Technicians used to grow at 1% a year, now they're growing mid-single digits. And then the technician wages are going up, thus the golden age of vehicle repair.
Yeah, thank you, Nick. Yeah, that's very helpful. I guess kind of going off that tech customer uncertainty, what would you say would be a driver to kind of change that outlook to get those technician customers to spend on your products?
Heck if I know! I don't know. You know, the thing is, the people, they, look, they get. It's interesting. What happened in the great pandemic is I believe it was already somewhat this way, that there was a financial economy and a grassroots economy. But in the pandemic, the people of the financial economy, the people of thought, were sheltering in place. The people of work were at their posts. And so this created, over those two years or wherever it was, maybe more, a distinctly different experiences between these people, and I think this has created a much different attitude.
18 months ago, when everybody on Wall Street and I was going on Squawk Box and they were saying, or Bloomberg, and they were saying, "The recession is coming, the recession is coming," the people in the garage were saying, "Things are good. Things are good, you know, there's no recession." In fact, that went for a long time. Almost immediately, when everybody, you know, the financial analysts were saying, "Well, we're gonna get a soft landing," the people switched, and part of it had to do with the bad news for breakfast. I mean, there's a war in Ukraine. It doesn't seem to be stopping. The Middle East has complicated things. The Houthis are bombing the Red Sea. We have a tit-for-tat with China.
The border has turned into an uncontrollable migration in some people's minds, and the election ain't so. If anything is driving uncertainty, you'd have to admit that this election is a doozy. And so when you look at all that stuff, people are sitting there, "Geez, I'm a little worried about the next year, not the next fifteen weeks. I'm not worried about the near term." And maybe, I think two things can happen. One is some of this stuff liquidates itself. The Middle East goes away, Ukraine goes away, the Houthis aren't bombing things anymore. We're worried about inflation stops. You know, inflation's another thing. They're worried about the inflation associated with the supply chains. And then, or the election, you know, comes out, everybody knows who wins.
But on the other hand, listening to these guys, you know, I don't think anybody knows what any of these people are gonna do anyway, you know, no matter if they get in office, you know? So I think that's gonna last for a while. Now, there's another mechanism that can happen, is they just get used to the pain, and they just say, "Okay," well, sort of like people get used to their prices. Milk is 54% above what it was in 2019. So every time people go in and look at a bottle of milk, they go, "Geez, this is very high." But after a while, you get used to the price. So maybe some of that happens to calm things down. I'm not seeing it yet, though, you know?
You'd have to admit that if you watch the election or you listen to what's happening in the Ukraine or the Middle East, nothing's happened there that makes you feel any less uncertain if you were uncertain before.
Yeah, that makes sense. Thank you for that, Nick. I guess kind of going back on, you touched on the cars becoming more complex with tech integrated into cars. So what are some of the products that Snap-on is putting out to kind of help fix the technical issues that are arising in cars with?
Oh, there's all kinds of physical products. Like, you know, for example, in GM, GM's got a couple of transmission models where you can't take apart the transmission without disassembling part of the exhaust system because of the way they built the car, you know, the way they built the car. For reasons passing-- Part of the reason is they design for everything else except repairability. By the time they've designed the car, they've created a labyrinth-type structure that's difficult to get in. So we built a small, low-profile socket that allows you to get in there and do this. Another one, and more sweeping, is like this. Consider this.... Remember I talked about the trouble codes?
Here's the evolution of car repair over the last twenty years. So it used to be that the mechanic would go in and listen to the car. "Oh, yeah, this is what's wrong." You know, or a little trial and error, you know, and so on. Senior mechanics were pretty good at this, you know. That's why you took your car to some of those people. Then we start to get more trouble codes. So what happens is then you scan. There's a process called scanning. You scan the car, and then you see what the trouble code says, what those trouble codes say. It's a kind of error fingerprint that the car leaves when you have those trouble codes, and which ones are non-nominal.
And, okay, the ability to scan has to do with. Remember, you're talking about probably 25 years' worth of cars, 25 years worth of models, plus you're talking in an independent garage, you're talking about forty different badges that could show up in that garage, like a BMW or Ford. So you have to have the decoder ring and the values for all those. We have the best database to do that. Now, it used to be that mechanics could scan, and we would help them, and the mechanic could look at the scan and say, "Ah, this is what it is." But now, the number of data points have gone like this, and really expanded. So it's much harder just to look at the fingerprint. So, by the way, the scanners aren't definitive.
The scan is not definitive. The status of the electronic codes aren't definitive, dead nuts. So you have to go into something called diagnosis. And so the standard way would be to either, you know, senior mechanic could look at it and make a deduction, or the standard way from OEMs would be to go through a decision tree. Test this, then this, then this, then this, then this, then this. Time-consuming and physical process that comes down to, "Okay, it's the mass airflow sensor." That's one way to do it. It's time-consuming, though. That diagnosis. That's not repairing a car, just finding out what's wrong. Then, or you could pay us, and we have a database based on 2.7 billion actual repairs.
The car said this, it was an Audi, you know, 2012 Audi with 85,000 miles. It'll give you a Pareto diagram. 69% of the time, it was a mass airflow sensor, 12% of the time it was the wiring harness, and so on. So you can go there, test the wiring harness, test the mass airflow sensor. If it's bad, replace it. If not, try the wiring harness. And then, if the Pareto diagram doesn't give you what's wrong, if you go through, like, three or four things on a Pareto, then we have another database, 350 billion data points, which will allow you to track down in relatively easy fashion, well, not so easy, but relatively quick fashion, those things that occur on alternate Wednesdays, in months with, that have R in them.
In other words, the unusual things that really eat up the technician's time, so those are the things that, you know, come out to match this complexity, 'cause as the car is becoming more complexity, harder and harder to scan, harder and harder to diagnose, and then the other thing, which sometimes is... I told you it's a mass airflow sensor, but sometimes that mass airflow sensor is in a tough position. They can't get it out, so we make the special tool to get it out.
Thanks for that, Nick. I guess kind of going off of that, the diagnosis and your diagnostic solutions that you offer, how are you integrating AI, and what tools are you creating?
Part of it is that database. You know, the thing is, actually, so if you think about it, the database is created, both of these, certainly the one, the two point seven billion database that tells you what's wrong with the car, you know, based on the signature. One, you have to have some pretty deep learning in trying to figure out, well, it's pretty complicated. The number of combinations are difficult, so you have to learn, otherwise, it'll take you a long time to deduce, looking at so many different possible data points, so many different possible combinations.
Secondly, you kind of need natural program languages because, which is kind of a version of AI, because when you get data, a repair event from technicians, and that's what we do, we get it from the technician. The technician said, "This was what it said, and this is what it meant." They speak a different language, and the ones in Minnesota speak a different language about the car than the ones in Louisiana. And so you have to kinda create a kind of language we would call tech to interpret the data, just to understand what they mean. And so I would say we use those kinds of things in terms of aiding ourselves in making these analysis and creating the databases that are functional.
Great, thank you for that. And I guess kind of going off that, shifting into EVs, maybe some of the tools specifically for EVs that you're building, I guess probably the database you'd say is applicable. And-
Database, one, for sure. Database just embraces cars in general, so it really makes a difference. Now, just one point I wanna make is you have to have cars on the road to have a database. And so the number of cars on the road, of EVs right now, is relatively small, and so therefore, it's harder to have a, an effective and statistically meaningful sample of all these cars. But what you do for EVs is, and we just did this, we acquired a company called Dealer-FX. And so what Dealer-FX is, we have the premier company that provides shop management for independent garages and provides them repair information. So we can see into all those independent garages.
By the way, I wanted to point out, those databases recently with the litigation we have, it confirmed that they're proprietary to Snap-on. And I want to also tell you is that the OEMs are blind to this data, because most of the events you're talking about happens after warranty in the independent garages. So that's one point. Then secondly, you come to: Well, what about electric vehicles or plug-in hybrids or new hybrids? Well, there aren't that many of them on the road, and, you know, a lot of them haven't been there that long. So what's the early warning signs? One, we collaborate with the OEMs to provide them special items that they think are needed to address the idiosyncrasies of a car.
Every time a new car comes out, like I said before, they don't really design for repairability. So by the time they design for appearance and cost and performance and reliability and safety and emissions and fuel economy, there are no degrees of freedom left over in design for repairability. So almost every new model that comes out has idiosyncratic conditions in which the dealerships need special help to repair them. So the OEMs, we collaborate with the OEMs, to provide those to the dealerships. Now, that gives us an insight into new models coming out, first of all. So it tends to lead us to understand what the idiosyncrasies of those models are. Then, we just acquired this company called DealerFX, which provides shop management and to the dealerships.
So therefore, we have a view on what's going wrong in the dealerships, which are early warnings around EV, and therefore, kinda at least looks at the beginning of the plume. It's important to understand, though, you know, a lot of things don't occur till after warranty, you know, on these cars, a lot of this bad stuff. So it's a rising view of what you need to have to service a car as the car goes into longer and longer mileage. But we're at the beginning. We have good insight right at the beginning. And so some of these things are, you know, for example, you realize you better have some insulating tools, otherwise, people could fry themselves poking around in EVs. There's a lot of voltage.
You realize that you better have special lifts because you can't lift the car up so the same way. You can't lift an electric vehicle car up the same way you do an internal combustion engine because the battery's underneath, and oftentimes you have to be able to drop the battery to get through it. It's like a solid wall, and so you have to have a different lift organization. You have to have certain protocols that will allow you to monitor the air conditioning, so the battery doesn't fry or get too hot, and your mileage goes down like a stone. So those are the kinds of things you need extra for electric vehicles, and the same kind of thing for autonomous vehicles and plug-in hybrids, and so on.
That makes sense. Thank you for that. I guess kind of changing gears towards the overall macro environment. Obviously, the Fed is talking about cutting rates throughout the second half of the year. How do you think technicians are going to react to that? And do you think there'll be improved sentiments to finance larger, more,
How do I think technicians will react to the Fed cutting rate?
Yeah. So, will you think they'll finance through your financial-
Here's my answer.
Larger-
Here's my answer. Here's my answer. They won't react. They don't care.
No?
What do they care? You know-
Okay.
You know, in some ways, remember what I said, financial economy, grassroots economy. Grassroots economy ain't paying attention to Jerome Powell. I met Jerome Powell about a year ago, you know, we were talking about this. They ain't paying attention to anything he does. And in fact, they're not being affected because it's not that they're not borrowing because they don't have the money. The garages are booming. They just think this is a, you know, bad things are gonna happen, they're gonna keep their powder dry. So they're not like ordinary consumers, I think, in fact, 'cause their balance sheets have stayed pretty good.
And by the way, I don't think anybody at the grassroots actually pays. I think the short-term effect of interest rates on the grassroots economy is a legend in the mind of the financial community.
That makes sense. Thank you for that. I guess shifting towards the raw materials, steel and copper they use in your tools, how have price fluctuations affected the cost of your products? And how has that translated-
No more.
... how much?
No more. No, no more effect. And it's been stable for more than a year now, you know. During the, you know, right after the pandemic, you know, when everything was—when they were closing the Shanghai ports and stuff like that, and you had a lot of going up and down during that period because we prioritized delivery. We were gonna deliver to our customers, and so we spent a lot of time in the spot market. And one of the good things about Snap-on is we don't depend on anything that much. We don't buy that much of any one product, and therefore, we can buy on a spot market if we had to, if supply was a problem. But that's all calmed down now. Now, I guess steel is...
You know, we buy about four different kinds of steel, and some are up versus pre-pandemic, some are down. I would call this as business as usual for that.
Yeah, thank you. So I guess kind of you talked a little bit about recent acquisitions. Maybe if you could detail Mountz, that would be a little bit. Talk a little bit about Mountz and how that has provided incremental value for you.
Mountz? What Mountz-
Yeah.
Mountz, yeah. Yeah, Mountz, California-based company that does sort of like smaller torque. We believe because of autonomy and in cars, and the general drive for more precision in a lot of different sectors, like aviation. You know, talk to Boeing if you think precision is important. And there's a need for more advanced, more accurate, and more reliable torque. And Mountz was one of the pieces of our puzzle in terms of range. So we were always a mid-range torque company.
We think we have some of the best torque products in that mid-range that can both be accurate, easy to use, and will allow you to document the torque in case you want to have the record and figure out, "Geez, did we screw up and we need to go back and re-torque?" Then we acquired a Norbar, a company called Norbar in England, which is the top-end torque, you know, up to thousands of foot-pounds. And then at the bottom end, Mountz was smaller torque, the kinds of things that isn't applied in a torque wrench would applied in a, you know, electronically controlled and tightly controlled power tool. And so that helped us fill out the bottom range. And so what you're gonna see, it's working pretty well. We're integrating it. Sales seems to be going pretty well.
But I think the real benefits are down the road when it gets fully integrated in this whole line, and we can sell a wide range to people, like in aviation or oil and gas or other places, who are looking for those kinds of things.
Thank you. Is there a kind of a pipeline that you're looking at right now for future targets?
Sure, we look-
What's that looking?
What we say at Snap-on is we have runways for growth, and we say there are four runways for growth. They are enhance the van channel, enhance with technicians, the van channel that sells to technicians, expand with repair shop owners and managers, extend to critical industries, and build in emerging markets. And the commonality between those two is it's pretty much talking about what we already did, what we already do. That is observe work, take the insights gained to create a solution, either a wrench or a piece of software, and put it out into the marketplace for technicians that solve particular problems, which they're willing to pay a premium for, because they're operating on critical tasks.
We look at and review a number of those things, probably principally to expand with repair shop owners, managers, and extend to critical industries, anything that will give us more product line. Because we've come to those customers a little later than we were before, and we could use more products to sell to them, or might give us a particular position, say, in the oil and gas industry in Australia or something like that, a presence in those places. We're always looking at it. Sometimes we might look at something very large, and we have looked at things very large, but they haven't been close enough to our core business. We're not gonna expand anything but coherently. You won't see us acquire something that you would call transformative.
You will see us acquire things that support those four runways for growth. That's how we look at it, and we constantly have a pipeline that's looking at it, but it's, you know, it's a fairly narrow thing, but we're confident we can keep building, and we have, through selective acquisition, but that's not indicative of the size we would do. We would do something really big if we thought it was right down our pipeline.
Thank you for that, Nick. And, we're kind of coming up on the final minute here. Is there any last-minute thoughts that you have or anything that we haven't touched on that you would like the audience to know?
No, look, I think the only thing I would add is that the last two quarters, we've been encouraged by, even though the tools group has been under deep duress, and the reason that is, is we see Snap-on's business as broadly rooted in the critical, and that is broadly resilient in almost any times, and so if you look at that, you'll see that the last two quarters have been demonstrations that even as the Snap-on Tools Group is attenuated, the other two business can fill in, and the overall corporation can keep performing pretty well. The last quarter, highest ever, highest ever EPS, and second highest ever OI margin, in a time in which we didn't get growth overall, and the tools group, our primary division, which people think of us as, was attenuated.
When people think of Snap-on as a one-trick pony with the vans, think again.
Thank you so much, Nick, Aldo, and Sarah, as well, for joining us today. We appreciate your participation, and thank you to the audience as well. Have a great rest of your day.