Champion Homes, Inc.

Demand is being driven by numerous factors, including favorable financing, historically low inventory levels, and a rapidly growing base of customers looking for a better alternative to site-built homes, especially first-time homebuyers. Our affordable price point during these inflationary times contributed to strong order rates that continue to outpace production. This dynamic led to backlogs growing by 169 million during the second quarter to 1.4 billion, or on average, 40 weeks of production at the end of the quarter. We anticipate continued growth of our backlog through the third quarter as post-Labor Day order rates have only accelerated into October. We delivered 6,260 homes during the quarter, an improvement of 25% from the prior year. Increased output along with price increases to cover rising material, labor, and freight costs drove revenue to $524 million in the second quarter, up 63% from the prior year. Our plant teams continue to execute amazingly well despite the volatile operating environment and continued supply chain challenges. As expected, home sales volume versus the sequential first quarter decreased slightly due to planned holiday shutdowns and material shortages. Our capacity utilization of 64% during the quarter was also affected by higher than anticipated COVID-related delays. We continue to focus on the health and safety of our employees and take the necessary actions to ensure a safe and healthy environment at all of our plants. By early September, we saw COVID and labor challenges start to moderate with the team continuing to work hard to increase output and the number of homes sold. By streamlining of our product offerings, it really helped to offset the material supply shortages. Our teams in the U.S. and Canada are also proactively working to schedule production to align with the available supply to take care of our customers. In these challenging times, our supply chain partners have done an amazing and excellent job coordinating with us so we can plan and maximize delivery to our customers. Our supply partners are giving us the confidence that material availability will be there and we will remain on track to open up one of our manufacturing facilities in Navasota, Texas by the end of our fiscal year. As we look forward, both internal and external factors are converging to create a long runway of outsized growth. Externally, demographic, economic, and migratory factors are driving the need for affordable starter homes, while the country is at a five-decade low on the supply side. Trends on inflation, immigration, and financing particularly position our homes well compared to our conventional site-built competitors. We just recently saw manufactured housing lenders extend the length of both chattel and land home loans, which helps to lower the homeowner's monthly payment at a time when they need it the most, with rising interest rates and inflationary pressures. Internally, we see the already strong long-term demand environment only enhanced by the significant investments we are making on the digital side of our business. These investments will drive customer engagement as we are improving and simplifying the buying experience. We expect the easy design, simplicity, and transparency of the purchase process will lead to higher order rates and increased production levels from a more streamlined product offering. With a number of positive tailwinds driving higher levels of demand, our focus is to efficiently increase output. In the near term, we anticipate the material availability and supply chain challenges across most building products will continue to govern production levels in the upcoming quarters as demand outpaces supply. We expect the challenges of supply chain to peak in the third quarter and early fourth quarter, followed by moderate improvement in subsequent quarters. In parallel, as supply chain improves, we are investing in automation to increase the number of homes we can produce while lowering the cost and optimizing the material we use. Our recent investments are targeted at helping the customer. Customers who today are dealing with conventional home building, which is tedious, unpredictable, and expensive. Our investments in our platform and our team will make buying a home engaging, dependable, and affordable. I will now turn the call over to Lori to discuss our quarterly financials in more detail.

Thanks, Mark, and good morning, everyone. I'll begin by reviewing our financial results for the second quarter of fiscal 2022, followed by a discussion of our balance sheet and cash flows. I will also briefly discuss our expectations for the third quarter as well as the longer term outlook. Net sales increased by 63% to $524 million in the second quarter of fiscal 2022 versus the same quarter last year. We generated revenue growth of $188 million in the U.S. factory-built housing segment, as well as growth in our Canadian factory-built housing segment of $14 million. The increase in U.S. factory-built revenue was driven by an increase in the number of homes sold and an increase in average selling price per home. The increase in the number of homes sold was 26%, or 1,213 units, for a total of 5,902 homes compared to the same quarter last year. The average selling price per U.S. home increased by 32% to $79,900 due to product mix and price increases in response to rising material, labor, and freight costs. The sequential growth in revenue in the U.S. factory built segment was 3.1% compared to the first quarter. The increase in revenue was driven by an 11.3% increase in average selling price per new home, partially offset by a 7.4% decline in the number of homes sold. The sequential decline in the number of homes sold was due to the planned holiday plant shutdowns and COVID disruptions at a few of our manufacturing plants during the month of August. Canadian revenue increased 57% to $39 million compared to last year. as the number of homes sold increased 19% to 358 units. The average home selling price in Canada of $107,500 increased 32% versus the same quarter last year, driven primarily by pricing actions enacted in response to rising material costs. Consolidated gross profit increased to $129 million, up 106% versus the prior year quarter, due to increased sales volume and higher pricing to offset inflationary input costs. Our U.S. housing segment gross margins were 24.7% of segment net sales, up 550 basis points from the second quarter last year due to improved operating efficiencies and leverage of fixed costs as we continue to see the benefit of streamlining our product offering. SG&A in the second quarter increased to $61 million from $41 million in the same period last year, primarily due to higher variable compensation, the impact of the acquisition of the Scottville operations in February 2021, and our continued investment in the customer buying experience. We expect further incremental investments in the online customer experience and systems integration through fiscal 2023. SG&A decreased 110 basis points to 11.7% of net sales compared to the same quarter last year due to increased leverage of fixed costs resulting from higher net sales. Net income for the second quarter was 51 million or 89 cents per diluted share compared to net income of 18 million or earnings per share of 31 cents during the same period last year. The increase in EPS was driven by a combination of higher revenue and improved profitability. The company's effective tax rate for the quarter was 24.4%, consistent with the period a year ago. Adjusted EBITDA for the quarter was $73 million, an increase of 153% over the same period a year ago. The adjusted EBITDA margin expanded by 490 basis points to 13.9% due to higher sales, gross margin improvement, and fixed cost leverage. The prior year's EBITDA included 2.6 million of wage subsidies provided by a Canadian government-sponsored financial assistance program that was enacted in response to the pandemic and did not reoccur in fiscal 2022. We expect inflation on building products and labor costs to remain persistent into fiscal 2023 due primarily to the widespread supply chain challenges on top of record levels of demand. We utilize several levers in response to increasing material and labor costs, including price adjustments, product standardization, raw material substitutions, and further operational improvements. Despite our efforts to continue to pass on inflation and make operational improvements, our production continues to be impacted by the availability of raw materials due to supply chain challenges, including the timeliness and cost of raw material deliveries. As of October 2nd, 2021, we had $310 million of cash and cash equivalents and generated $57 million of operating cash flows during the quarter. As a reminder, in the beginning of July, Skyline Champion entered into a $200 million revolving credit facility, replacing its existing $100 million facility. As a part of the refinancing, we paid off our outstanding revolver balance, totaling $26.9 million, using the company's cash on hand. The new credit facility expands the company's available liquidity for strategic initiatives and opportunistic acquisitions. We remain focused on executing on our growth and operational initiatives, and given our favorable liquidity position, plan to utilize our cash to reinvest in the business and to support strategic growth. I'll now turn the call back to Mark for some closing remarks.

Lori, thank you. We are pleased with our strong second quarter and year-to-date results. I'm encouraged with the solid momentum in our business despite the turbulent environment that we are operating within. Our strong backlog and investment to transform home building have us well positioned to solve the growing need for our homes. And with that, operator, you may now open the lines for Q&A.

At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while we pull for questions. Our first question comes from the line of Greg Palm with Craig Hallam. You may proceed with your question.

Yeah, great. Thanks. Good morning. And probably won't be the only one that congratulates you on the results, but pretty amazing quarter, so congrats.

Thanks, Greg. Good morning.

Just curious, given everything that's gone on in recent months, you seem to be bypassing some of the supply chain challenges better than most. But has your view of how production ramps over the coming quarters changed at all? And I guess more specifically, at what point do you think production can actually catch up with the current demand rates, I guess, at this point? What's your crystal ball tell you?

Yeah, thanks, Greg. You know, I think we're consistent with the supply chain challenges. In prior calls, we mentioned there would be kind of a step down in the third quarter of about kind of mid-single digits. I think we're on track for that in terms of unit volume just because of the supply chain challenges combined with the fact that we have our normal seasonal holiday outages. So I expect that to kind of continue. You know, there's probably a ramp into the fourth quarter and then throughout the next year as supply chain clears, but it's going to be a little bit slower maybe. I think the backlog of the supply chain is a little more strained than even we anticipated three to six months ago. So I think it'll ramp moderately, you know, coming out of the fourth quarter into next year. So I expect backlogs to build between now and the end of the calendar year. and then to kind of moderate through next year as we kind of bring on new facilities as supply chain clears.

Got it. Makes sense. And, you know, the commentary on affordability was interesting. I feel like, you know, you and others in the industry are starting to highlight this more as one that's becoming a bigger growth driver. So, Help us understand what you're seeing out there. If I heard you right, you talked about demand trends that actually re-accelerated here over the last, I guess, six or eight weeks. And I guess, you know, as you talk to dealers and other industry folks, what are you hearing from them in terms of the type of consumer that's starting to look at this type of product?

Yeah, thanks, Greg. I think, you know, there's really two to three questions in that. You know i'll take one of them, but we saw orders accelerate post Labor Day there's a normal seasonal slowdown in home buying activity. In kind of August September timeframe is people return back to school and and have the final summer vacations and what have you so as that return we saw demand starting to pick up through September and October. to stronger levels. That will slow down a little bit with the holidays coming up. Overall, I would tell you that affordability is one of the key drivers that we're seeing. Our market share of single-family completions has increased. We gained about a half a percent of the entire U.S. market year over year. If you look at quarterly reports from You know, some of our main competitors, Lennar grew units 10%, Pulte was up 9%, Meritage was up 4%, NVR was up 10%. You know, we grew in the U.S. about 25%, 26% year over year. So we're definitely gaining share of the overall site-built market. And likewise, I think for HUD code product, the HUD code MHI industry grew 13.4% during the quarter. through August, and we were growing at a pace of about 26%. So I think we're gaining share in both segments, and that's really driven, one, by affordability and financing. Financing is a key driver that we're seeing out there that's making a huge difference for people in need of good product.

Okay, that's great. I've got a bunch more, but I'll hop back in the queue for now. Thanks.

Our next question comes from the line of Daniel Moore with CJS Securities. You may proceed with your question.

Great. Good morning, Mark and Lori. Thanks for taking the questions. Let's continue to pull on that string in terms of financing. You mentioned terms are being extended, I think, for chattel and traditional mortgages. Can you give a little bit more color or detail around that?

Yeah. Good morning, Dan. The term and duration of chattel lending has increased. I think it's gone from 23-year terms to we've seen 25-year terms, so it's gone up slightly on average. Land home financing for a product has gone from 23 years to 30 years, so that's a fairly significant increase in duration of payment terms, and that's just been in the past 30, 60 days. So overall, in times where interest rates are increasing, inflationary pressures are on, increasing the duration of loans that is caused by some of the financing programs that have freed up recently, people pay their fees over another 84 months on average for a land-home deal, which can reduce their payments 15%, 20%. which is pretty significant. So I think that's going to drive additional volume vis-a-vis site builders who are seeing interest rate increases and inflationary pressures to a great degree.

Excellent. Very helpful. And then in terms of kind of piggybacking on the last question, where the increases in order rates are coming from, maybe rank order community developers, traditional retail, park models, etc.? ? And then in the past when we've been at elevated levels of backlog and we get up toward 40 weeks, we've seen folks kind of jump in line. Are you seeing just the confidence around the quality of the orders that continue to come into the backlog and into the fold as well? That would be helpful. Thanks.

Yeah, very good question. The strength of backlogs, and order cancellations have been virtually nil. So I think the strength of the orders coming in are very real, even at 40 weeks. We do have processes in place where we are reaching out to financing companies and reaching out to the dealers themselves to audit orders on a periodic basis to make sure that there's a name and financing attached to the deal to make sure it's real. So I think that audit process is a very good one. As far as where it's coming from, frankly, every channel. The retail channel and demand is strong. Traffic at the dealerships is extraordinarily strong. The REITs are looking for growth and volume over the course of the next few years. The build for rent channel and builder developer are inquiring about long-term demand. So I think park model sales are very strong. And there's usually a lag effect with park models versus the RV industry. Normally people buy RVs first. And then once they find a place to settle, they move into a park model. So there's a lag effect coming as well for park model demand. So I think all the channels right now are extraordinarily strong across the board. There's really not even a rank order because they're all jockeying for number one.

Perfect. And then I appreciate the color in terms of direction of production. Just talk about sustainability of gross margins and EBITDA margins from these levels over the next quarter or two. That'll be it for me. Thanks.

Good morning, Dan. We do feel that gross margins are sustainable, contingent upon, of course, the supply chain challenges and how much of our material we need to buy off-contract, which obviously fluctuates day to day. From an EBITDA margin perspective, we do feel with production decreasing the mid-single digits sequentially in the third quarter, we might see some deterioration in EBITDA margins just from reduced leverage of fixed costs as well as higher SG&A from our investments.

Makes sense. Thank you very much. Thanks, Jane.

Our next question comes from the line of Matt Bully with Barclays. You may proceed with your question.

Hey, morning, everyone. Thanks for taking the questions. First one on the ASP up 32%. I know you said mix was part of that, but I guess a two-parter. Was that sort of reflecting deliveries, you know, from price increases that you took earlier in the year when lumber prices were doing what they were doing? Just curious if that was part of it and what happens going forward. But then really the higher level question is, since we talked so much about affordability, just kind of how you guys are thinking about balancing price increases and affordability to your customers. Thank you.

Good morning, Matt. You know, as far as the ASP covering inflation versus mix, I would say about two-thirds of the ASP growth year over year was due to inflation coverage. and a third was due to product mix. You know, this quarter we're finally back to covering or being like for like on our material margins to last year. So we are actually covering material inflation where last quarter we saw some deterioration on our material margins. We do expect to see slight ASP growth probably next quarter, but really leveling off prior to any mixed changes. From an affordability standpoint, demand seems still very strong, so we still seem to be covering our affordability targets to our customers.

Yep, yep. Certainly doesn't seem like, based on the comments on order rates there, that it's having an issue. So thank you for that. And then second one, just on the streamlining of product, I'm just curious to what extent the kind of market-wide supply crunch is maybe allowing you to compel dealers to accept a more limited range of product offerings. And if that's the case, can that be sticky?

I think it can be sticky, Matt. Overall, the market is definitely helping us to streamline because it's a win-win. We can ramp up production faster and get products to customers quicker as we streamline our offerings. Definitely the supply chain and the missing pieces of the supply chain like paint and electrical components and appliances and fiberglass insulation are obviously contributing to that in our discussions with our customers. But I think it's a win-win because we can streamline product offering. We can deliver to the customer faster and better. And frankly, I think it is sticky because we're going more and more digital with the sales approach and customers are choosing what they want online which is usually our best-selling models and starting to move in that direction. So as we continue down the digital transformation that we are underway with, I think you'll see more and more stickiness to the product streamlining because people are choosing the products they want and they happen to pick very similar options.

No, that's great, Tyler. Thank you for that, Mark. Thanks, Lori. Good luck, guys. Thanks, Matt.

Our next question comes from the line of Mike Dahl with RBC Capital Markets. You may proceed with your question.

Thanks for taking my questions. I have a follow-up on the financing side. Those are pretty material changes that have happened, and it sounds like a short period of time. What's driving the change? Is it new players coming into the market? How would you characterize why we've seen such a change in terms of duration over the past 30, 60 days?

Yeah, good morning, Mike. I think it is due to the competitiveness of the market. There have been, over the course of a few years, more market participants entering the market. Also, too, there has been more secondary offerings. As we've mentioned over the past, let's say, 18 to 24 months, There's been secondary market offerings helping facilitate new capital entering the marketplace. And so I think both of those are giving people the confidence. It does help that there's been a significant amount of wage inflation for, I'll call it, first-time homebuyer demographics, which is also giving, I think, some confidence that market values are there. better job growth and wage inflation is putting more disposable income into people's pockets in terms of home ownership. So I think all that's contributing, but it's definitely a more competitive market, which is something we've been anticipating for a few years. We're actually just seeing those tailwinds starting to, you know, come to fruition.

Got it. Okay. That's helpful. Very interesting. My second question is really around the orders and backlogs. So I think the implied order rates seem like they'd be up something in the neighborhood of 40% year on year, and a lot of that would appear to be price, but there's maybe some unit growth. Could you help us understand kind of in order terms and looking at your backlog, breaking down what is the unit growth versus backlog? price growth. And the second part to that is, I understand kind of the audit process suggests all these orders are real production time. So very extended at 40 weeks, usually a first time buyer doesn't have nearly a year to wait for a product. So I guess, you know, how do we think about what you want to do on managing those production weeks and whether or not there's consideration where you would intentionally try to manage those order rates down a bit to help you work through the supply constraints, work through the backlog.

Yeah, good set of questions there, Mike. I think, you know, as far as order rates, you know, there is pricing dynamic and unit impact in there. We don't break those out. But, you know, I would look at it maybe on a year-to-date basis. When you look at it, we've had $1.34 billion of revenue year-to-date for the first six months, and our backlogs have grown $510 million during that time. So in essence, our backlogs have grown 50% more than our revenue base. So kind of the implied order rate, you know, And first quarter was a little stronger than second quarter. But overall, year-to-date basis, the order entry flow is coming in 50%-ish on a revenue basis higher than our sales rate, which is at all-time records. So definitely strong demand and strong favorable outlook. Right now today, as far as expediting order delivery to our customer, which is our key priority, supply chain is going to be the limiting factor for that. You know, our capacity utilization is at 64%, so we would look to ramp up volumes and bring on capacity to supply more as quickly as possible to take care of our customers. But I think people, I don't mean to say this in a negative way, but people are getting used to waiting for a car sale because there's shortage of inventory or waiting for food or other type of deliverables in today's markets. just because there's shortages in multiple channels. So I think we're trying to manage that with the customer and looking to supply as quick as possible. I don't think it's our job or intent to dissuade people from ordering homes. If they're in need of a home, we want to supply them, and we will just try to accelerate our production to get it to them faster as soon as the supply chain allows us to do so.

Okay, that helps. Thanks, Mark. Thanks, Mike.

Our next question comes from the line of Phil Ng with Jefferies. You may proceed with your question.

Hey, guys. Congrats on a really strong quarter and a challenging environment. So, Mark, you gave some great color in terms of share gain. Certainly, it makes sense. You're gaining share from the site-built homes, just given the affordability dynamic. But it sounds like you're taking share from some of your manufacturer home competitors as well. Can you give a little color on what's driving that? What's your secret sauce? And then you mentioned potentially bringing on a facility by year-end in Texas. Can you give us a little color on how much capacity could that add to your production levels? Yeah, good morning, Phil.

Thank you. The production facility, I'll start with that one. Navasota, Texas, I would look at it and take the number of plants we have today and divide it by our volume today and just apply that ratio to an additional plant. I think that's a great way to kind of give a proxy for that plant's capacity that will be coming online. As far as gaining share with our HUD code peers and manufactured oscillate peers, I think we are gaining share there, and it's really, I think, about being able to solve the supply chain issues right now today, and I think that's really driven by our people. Our secret sauce, frankly, it's our people. We've got great and amazing people, and they're solving these issues every day. They're getting creative. They're communicating how to solve those issues nationwide and even into Canada. So it's kind of this cross-border, cross-state collaboration on looking at the supply chain as a whole and recognizing the issues before they become problems so that we can solve them in advance. And I think that's helping us to accelerate our production as much as possible and deliver to the customer faster. And I think our dealers and the REITs and other people see that and they want to participate with someone who's going to take care of them.

That's great color. And then from a comparison, I mean, certainly from a backlog and visibility, it sounds like you have a lot of visibility just given how strong orders are. I guess you're starting to run into pretty difficult comps, right? I mean, you're growing north of 20% this year. When we kind of look out to fiscal 2023, what's your view of normalized growth? Do you think, given those comps, you could be up year-over-year from a shipment standpoint?

You know, I believe we can, even with the difficult comps. You know, the one key driver there is going to be supply chain. Supply chain and COVID challenges, assuming those abate, we've got the demand and the profile to accelerate production into next year. So I think we can definitely take that on. That's excellent.

And a quick one for Lori. I guess bigger picture, I think in the past you've talked about a long-term aspirational EBIT margin target of call it 10%. We're certainly well past that this past year. So once again, in a more normalized environment on the demand side, Is this level of profitability sustainable or could there be some leakage when we kind of look out?

Hi, Phil. You know, as I mentioned before, I do think we're going to see some compression in the near term in the margins as production levels decrease in the third quarter as well as the investments we're making in SG&A for the customer experience. You know, Longer term, certainly at high production levels, we are able to leverage our fixed costs. So, you know, I think they're generally sustainable at higher production levels.

A lot. Really appreciate it, guys. Thanks, Phil.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. One moment while we pull for questions. Our next question comes from Jay McCandless with Wedbush. You may proceed with your question.

Hey, good morning. Thanks for taking my questions. Just to make sure I'm understanding this, you're thinking over the next couple quarters, gross margins could stay at the level we saw in 2Q, but higher SG&A costs are what's going to crimp the EBITDA margin a little bit?

Yeah, that's correct, Jay. On the gross margin, obviously that's highly dependent on the supply chain challenges that we face going forward and how much of our material we'll have to buy off contract.

And then the second question I had, the unit volume has tracked like you expected it would after the end of fiscal 21, but pricing has certainly moved up and was just wondering if you could give us an idea with what's in the backlog that you think is going to deliver before year end where average price might shake out for the third quarter?

Sure. You know, I really think average price is going to go up sequentially only slightly. So we did see most of our price increases come through in the second quarter.

And not to...

overdo this, but historically, at least with my experience with the MH industry, when we've seen chattel lending terms relaxed or eased, from my experience, it hasn't been a great sign for the industry. Would love to hear what you're hearing from customers and street dealers especially on where some of these lending terms are. Do they feel like people are being a little too aggressive? Are you starting to see any early delinquencies? Anything you could give us there? Because I just want to be careful with this type of accelerated lending and how we think about the industry.

Yeah, that's a good question, Jay. I don't think we're anywhere close. In other words, if the prior The prior kind of wild west of financing was out there 15, 20 years ago, and that was a 10 on a scale. We were constricted to a one or a two, and I would say what's opened up is now kind of mid-range of four or five. We are nowhere near the practices and policies that were there 15, 20 years ago. It's actually far from it. They haven't gone aggressive into... credit scores, they haven't gone too aggressive into rates. It's very selective, monitoring jobs and other factors to a great degree. So I think what we're seeing is, and what we're observing is that we were so constrained from a financing perspective that given two years ago, over half of the sales were cash only sales, and now there's a little bit of financing and a little bit of credit with some minor extensions, it feels like a breath of fresh air, if you will. But to say that it's aggressive today, it's not even close. I wouldn't even say it's mid-range yet in terms of kind of where it is. I think far more conservative than traditional mortgage lending from my observations today.

That's great to hear. Well, congrats on a great quarter. Thanks for taking my question.

Thank you, Jay.

Our next question comes from the line of Greg Palm with Craig Hallam. You may proceed with your question.

Thanks. Just a couple follow-ups. I guess first on gross margin, I don't know if you can quantify – you know, any of the maybe supply chain, you know, cost impacts this quarter. Presumably there's some in there, but I guess where I'm going with this is, you know, assuming that normalizes and, you know, production increases further, there seems to be a nice runway for further gross margin expansion from these levels in fiscal 23. Is that something that you would agree with?

You know, we certainly have some fixed costs in our cost of goods sold structure, so as production increases, Greg, you know, there's potential for that. I would be cautious, though. The supply chain challenges are certainly still out there and prevalent, and as Mark noted, you know, we think it's going to be extended into, you know, our fiscal 23. Okay, fair enough. And then

On the transportation logistics side of things, you know, it seems to be coming more of an issue, widespread issue out there as well. And I'm just curious how you're viewing Starfleet and whether there's any changes in how you're utilizing that asset just given the environment we're in.

Yeah, good question, Greg. I mean, transportation's always been a critical component strategically for us. And given where the market's at, we have... made significant progress over the past few years in moving more and more of our shipments from Starfleet for our own, for MH, both ourselves and our competitors. So I think we're able to find drivers more effectively. We're able to make sure and secure for the forecast of demand that we have. And it gives us a better availability and view into the shipping world of what's happening day to day. So we have our finger on the pulse of the marketplace, I think, to a great degree. So I think it's definitely a strategic component of what we've got.

So if I'm reading you right, it sounds like more or less a competitive advantage?

Yeah, I believe so. I believe so. And I think our digital strategy, I think, can even tie in further.

Yep, yep, got it. Okay.

Thanks, and best of luck going forward. Very good.

Well, thank you, everyone, for your questions today and participating in today's call. We appreciate the time and your continued interest. We look forward to updating you on our progress on our next call. Take care and be safe.

Thank you for joining us today. This concludes today's conference. You may disconnect your lines at this time.