A.O. Smith Corp (AOS) — Q2 2021 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the A. O. Smith second quarter results conference call. I am Pat Ackerman, Senior Vice President of Investor Relations Corporate Responsibility and Sustainability and Treasurer. Joining me today are Kevin Wheeler, Chairman and Chief Executive Officer; and Chuck Lauber, Chief Financial Officer. Before we begin with Kevin's remarks, I would like to remind you that some of the comments that will be made during this conference call, including answers to your questions, will constitute forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters that we have described in this morning's press release. Also, as a courtesy to others in the question queue, please limit yourself to one question and one follow-up per turn. If you have multiple questions, please rejoin the queue. I will now turn the call over to Kevin, who will begin our prepared remarks on slide 3.

Thank you, Pat, and good morning, everybody. Our global A. O. Smith team delivered second quarter EPS of $0.73 on a 30% increase in sales, demonstrating solid execution and operational agility despite supply chain and logistic challenges along with rapidly rising material costs. I am thankful for my fellow A. O. Smith employees, who tirelessly navigated through the pandemic, followed by weather-related production disruptions and continue to navigate supply chain constraints. I appreciate the creativity and collaboration of our team to find solutions to keep our customers supplied with water heating and water treatment products. Boiler sales grew 35%, driven by strong demand as a result of completed projects carried over from 2020, as well as an active education end market. For reference, our boiler sales were down 15% in the second quarter of 2020, which was negatively impacted by the pandemic. North America water treatment grew 17%, driven by continued consumer demand for home improvement products, which provide safe drinking water in the home. Our water quality dealers performed particularly well in the quarter, and online promotional shopping days also boosted sales. Consistent with our strategy to build out distribution for North America water treatment, we acquired Master Water Conditioning Corporation. The acquisition supplements our presence in the Northeast, and we are excited to add expertise in local water conditioning and solutions in this region to our family. Our North America water treatment sales, including this acquisition, are expected to be over $200 million in 2021. Our volumes of U.S. tank residential water heaters increased in the second quarter. We believe the strong demand is a continued result of extended lead times caused by production constraints due to strain in the supply chain, buying in advance of price increases, and incremental new home construction. After our weather-related disruptions in production, which we talked about on our first quarter call, we have seen month-over-month sequential improvement, and certain of our suppliers recently noted they see moderation of demand and supply imbalances. But we remain vigilant, as the imbalances are spotty, and we expect supply chain challenges to be with us through the remainder of the year. In response to continued material and logistic cost increases, we recently announced a fourth price increase of between 10% and 12%, effective August 1. In China, sales increased over 26% in local currency, driven by growth in each of our major product categories, including electric and gas tankless water heaters and water treatment products, including commercial and replacement filters. I will now turn the call over to Chuck, who will provide more details on the second quarter, beginning on slide 4.

Thank you, Kevin. Record second quarter sales of $860 million increased 30% compared with 2020, which was negatively impacted by the pandemic. Second quarter net earnings increased 74% to $118 million or $0.73 per share compared with $68 million or $0.42 per share in 2020. Please turn to slide 5. Sales in the North America segment of $604 million increased 26% compared with the second quarter of 2020, driven by higher volumes of water heaters, boilers, and water treatment products and inflation-related price increases. Rest of the World segment sales of $263 million increased 39% from the second quarter of 2020. Growth in each of our major product categories in China contributed to local currency growth of 26% in the quarter. Currency translation of China sales favorably impacted sales by approximately $20 million. India sales more than doubled in the second quarter despite the recent surge in cases of the virus in that region. North America segment earnings of $142 million increased 34% compared with the second quarter of 2020. The impact to earnings from higher volumes and inflation-related price increases was partially offset by higher material and freight costs. As a result of these factors, segment operating margin of 23.5% improved compared with the second quarter of 2020 segment margin of 21.9%. Rest of the World segment earnings of $22 million increased significantly compared with the loss of $5.8 million in the second quarter of 2020, which was negatively impacted by shutdowns and reduced consumer spending resulting from the pandemic. In China, higher volumes and lower selling and administrative costs were partially offset by the absence of social insurance waivers, which were received in 2020. As a result, segment operating margin of 8.5% improved from a negative 3% in the second quarter of 2020. Our corporate expenses of $12 million were higher than last year, largely due to management incentives. Our effective tax rate of 21.9% was essentially the same as last year. Please turn to slide 7. Cash provided by operations of $196 million during the first half was higher than during the first half of 2020. Higher earnings in 2021 compared with the prior year were partially offset by a larger investment in working capital during the first half of 2021, compared with the same period in 2020. Our cash balances totaled $582 million at the end of June, and our net cash position was $476 million. Our leverage ratio was 5.5% as measured by total debt to total capital at the end of June. Through June 30, we repurchased approximately three million shares of common stock for a total of $198 million. Please turn to slide 8. We upgraded our 2021 EPS guidance this morning with a range of between $2.70 and $2.76 per share. The midpoint of our range represents an increase of 5% compared with our prior quarter full-year guidance. We expect cash flow from operations in 2021 to be between $500 million and $525 million compared with $560 million in 2020. We expect higher earnings in 2021 will be more than offset by higher investments in working capital than in the prior year. Our 2021 capital spending plans are between $85 million and $90 million, and our depreciation and amortization expense is expected to be approximately $80 million. Our corporate and other expenses are expected to be approximately $50 million, similar to 2020. Our effective tax rate is assumed to be approximately 23% in 2021. Average outstanding diluted shares of 160 million assumed $400 million worth of shares are repurchased in 2021. I will now turn the call over to Kevin, who will summarize our guidance assumptions beginning on slide 9.

Our businesses continue to navigate through supply chain and logistic challenges. That being said, we raised our 2021 top line growth expectation, and now project an increase of between 17% and 18% driven by strong demand and price increases implemented in response to rising material and transportation costs. Our revenue outlook for 2021 includes the following assumptions. With seven months of visibility, we've upgraded our U.S. residential water heater industry volume forecast to increase approximately 3% compared with last year. We expect continued resilient replacement demand and growth in new home construction. With our fourth price increase in the market and continued consumer demand, we no longer believe there will be channel inventory destocking in the back half of the year. We expect commercial industry water heater volumes will increase approximately 2%, as pandemic-impacted businesses reopen and new production and replacement installations come back online. We believe the demand we saw in the last few months was partially driven by pre-buy activity in advance of the price increases. In China, it is encouraging to see sales of our products continue to remain strong. Our strategy to continue to expand distribution to Tier 4 through 6 cities is on track. We see improvement in consumer trends, towards trading up for higher-priced products across all our product categories driven by differentiated new products launched in the last 12 months to 24 months. We expect year-over-year increases in local currency sales between 20% and 22% in China. We assume China currency rates will remain at current levels, adding approximately $51 million and $4 million to sales and profits over the prior year respectively. Boiler sales grew 24% in the first half of 2021. The comparison will be tougher in the back half of the year, and we expect boiler sales will grow by low double digits for the full year compared with last year. We project 13% to 14% full year sales growth in North America water treatment. We believe the megatrends of healthy and safe drinking water, as well as reduction of single-use plastic bottles will continue to drive consumer demand for our point-of-use and point-of-entry water treatment systems. We project margins in this business to grow by 100 basis points above the nearly 10% achieved in 2020. We continue to experience inflation across our supply channel, particularly steel and logistic costs. Steel has increased 23% since our third water heater price increase became effective on June 1. We announced a fourth price increase in late June on water heaters effective August 1st at the rate between 10% and 12%. We expect North America segment margin to be between 23.75% and 23%. And Rest of World segment margins to be approximately 8%. Our procurement and operation team faced continued challenges in the second quarter. And while we expect continued headwinds in supply chain and logistics throughout the remainder of the year, these challenges are moderating, and I have confidence in our team to continue to navigate through this difficult environment. That concludes our prepared remarks, and we are now available for your questions.

Thanks. Good morning, everyone.

Good morning, Bryan.

The momentum in your boiler sales is very encouraging. You called out strong trends in the education vertical. I was wondering if there's any concern about the sustainability of project activity there. Counter our read on the incremental funding that's coming through. Just looking at the 12% growth in Q1 mid-30s lift Q2, the full year guide implies quite a bit of moderation in the back half?

Well, I think we had a very strong first half of the year. And again, as we mentioned, the back half is a bit tougher comp. There are always challenges with COVID-19 and the variants out there, and of course, labor and so forth. But overall, again, job activity has remained healthy. Recent non-residential ABI data was positive in June, up I think 57% from 50%. And our July had – we had a solid July. We don't see really anything becoming an issue. But again, in this environment, there are all those things that could pop up and be a bit spotty for us.

Yeah. I mean, I guess the only other thing I would add is that, it was an easy comp in Q2 last year, and we did do a residential early buy program that we pushed back because of the pandemic last year into Q3 that got pulled into Q2, which is normal. That's the normal cadence of when we do that. And that helped a little bit on the volume.

Yeah. I appreciate the color there. And to clarify, does the outlook for 13%, 14% North American water treatment growth include Master Water contribution?

No, it's organic growth of 13% to 14%. We framed kind of the North America water treatment at around $200 million. I think before we were talking about approaching $200 million. So with the acquisition at the half year, it gets just over $200 million.

Excellent. Anything you can offer on margin contribution from that business and even more importantly, additional color on what the asset adds to technology, footprint channel presence? You mentioned expanding into the Northeast, which is important. But any other color you can offer on strategic impact would be great.

Yes, I'll take the strategic impact. This is part of our strategy to improve our footprint across North America and build up that distribution. The water quality dealer is a bit different than say our wholesale business that buys truckloads of 200 water heaters that are on a regular basis. Water quality dealers will buy pallets for and get a couple of palletable product. It's really important that we have these distribution points, and this is a start with Master Water, so that we can improve our service levels, delivering 24 hours of smaller clients and do them in an effective and productive way. So this is an important first step in kind of building out that framework that we need to be successful in the water quality side of our business.

Very helpful. Thank you.

Hey, good morning all. Nice quarter.

Good morning.

So I have a couple of questions. Hopefully, you can answer them all. I know of each of the price increases. Would you say that you're trending toward the middle, higher end of the ranges that you've given in the past?

I guess, Scott, we just kind of look at the four together. And when we accumulate the four and get to the fourth quarter, the fourth one will be effective. We'll start seeing that in the fourth quarter. We're at about a 40% increase – price increase on the water heating side.

Okay. Thank you. And then are we looking at similar type of price increases for boilers?

Not similar. Boilers are for the most part – a lot of our projects are quoted. And we are taking steps to adjust our quotes to adjust for the cost. So we have taken steps, and quite frankly, we're taking steps across globally of all of our businesses to adjust for the inflationary cost that we've been impacted by and continue to be impacted by.

Yes. I mean let me just add a little color to the water heating side because that 40% is specific to water heating. And as you know, steel is the major part of water heating cost for us. There's other costs including freight and filament and so forth, but steel is the largest part. So when we kind of look at the cadence of the cost through the year into the fourth quarter, we're going to be – and we have good visibility into the fourth quarter because as you know we've got 90 to 100-day visibility forward on what we're going to be paying for steel. Our cost Q4, year-over-year is going to be 2.5 to three times higher on just steel alone. So I just want to kind of frame that. The other businesses outside of water heating certainly have seen some cost increases, and we've got price increases at various points, but certainly the water heater side bears the brunt of that steel increase.

Hi, good morning. Thanks for taking my question.

Good morning.

So Q1 had weather issues in Ashland and Juárez on top of supply chain constraints, which limited North America water heater production and supply chain constraints lingering into Q2. How much of production levels improved? And can you quantify the percent utilization within North America water heater production capacity during the quarter?

No not specific. I would tell you that we had month-on-month improvement. And again, we have terrific suppliers that are also working very hard to raise their capacity. And the important note is we believe that's going to carry on into Q3 and Q4. So we certainly have plenty of demand. Our orders are mirroring the industry. It's just a matter of us being able to work those overtime hours and Saturdays. And we've been a bit constrained with some of the supply chain issues that we talked about. And of course, there are port issues, trucking issues that we're working through. But the takeaway is that sequential improvement, and that should carry over into the back half of the year.

Thank you. That's helpful. In 2020 the cadence of social insurance was heavy in Q2 and Q3, my understanding is that Q4 is normally the highest margin quarter for the Rest of World segment. And last year it was 11.2% margin with minimal impact from social insurance. What are the potential factors that could keep margin down year-over-year?

Yeah. This is Chuck. I mean, it's really mostly volume. We really had a strong Q4 last year. And that volume really matters, on the incremental base of the business. It really drops nicely to the bottom line. So last year, we had a very strong fourth quarter. And we called it out on our call last year. And it could have been some pent-up demand from the pandemic, not exactly sure all the drivers, but that's probably the major difference. There was some social insurance last year. And I want to say that it's small. Like you said it's probably $12 million for the year, and the bulk of that fell into Q2 and Q3. And we'll see a similar headwind in Q3 that we saw in Q2.

Hi. Good morning everyone.

Good morning.

Good morning.

So a pretty notable change in your view on the water heater shipments from down 2% now up 3% for the year. I was just wondering if you could elaborate on your earlier comments about the inventory destocking, you're not expecting that anymore and really just elaborate on what's changed since last quarter?

I'll begin by saying that we don’t frequently adjust our forecasts unless we have a clear perspective. What has changed significantly is that we did not anticipate having four price increases this year, which greatly impacts pre-buys and buying ahead. Additionally, the market remains stronger than we expected, and new home construction continues to perform well. As we compiled all this information and looked towards the second half of the year, several factors led us to revise our outlook upward by 3%.

We do not anticipate a decrease in inventories based on the order rates we have observed. Looking at the industry's full year outlook, last year was a record year for residential water heaters. An increase of 3% over a record year is significant. Historically, when we analyze the first half of the year compared to the second half, the volume percentages typically break down to 52% in the first half and 48% in the second half. Last year, it was the opposite due to production challenges in Q2, with 48% in the first half and 52% in the second half. For this year, we are returning to the usual pattern of 52-48, considering the demand levels we are witnessing. With four price increases, it is somewhat challenging to gauge total demand, but we have chosen to project a 3% increase based on the assumption that inventories will remain stable.

Okay, great. That makes sense. And then, I was curious, if you've seen any market share jostling going on just as a result of the current environment with the supply chain issues, and some of the capacity constraints you, and the other competitors of yours have had to deal with? Maybe you could just talk about kind of through your channels and at the regional level if there's what's happening with market share?

Market share is currently a bit chaotic due to various price increases in the supply chain. A.O. Smith is experiencing some lag, not because of a lack of orders or changes in our solid customer base, but rather due to constraints in our production capabilities. The Gulf freeze earlier this year didn't help the situation either. However, without significant changes in customer dynamics, we expect to capture our fair share of orders, and I believe this will eventually resolve itself over time. For now, A.O. Smith is behind, but we anticipate this will improve as we progress through the year.

Thanks. A couple of questions. First on China, I was hoping you could comment on what sell-in versus sell-through looks like? And how you're feeling about your inventory position there?

We feel very positive about our inventory situation in China. It's currently at its lowest level in five years and has significantly improved from last year. Our inventory is fresher than it's been. In terms of sales growth for the quarter, we experienced a 26% increase in organic local currency. However, we did face some challenges last year with channel inventories decreasing. Looking at sellout and demand for this quarter, we're likely seeing growth in the mid-single digits across our entire product range, which aligns with our overall 26% growth. It's important to note that last year China recovered from the pandemic earlier than North America, and that quarter included significant growth from April to June. For the rest of the year, we expect to maintain a similar growth rate in the latter half.

Can you discuss the pricing spectrum in China and how it has changed over the years? Specifically, where do you stand in comparison to the historical peak and the recent low regarding your product offerings?

Let me just frame it quarter-over-quarter comparison, because it's very similar to where we've been in the last couple of quarters. I would say what we've seen is a little bit of improvement in the higher end price on the gas tankless. And on electric heating and water treatment, it's roughly the same. So it hasn't changed a great deal. We see some indications of the higher-end premium part of the market growing, but we have not seen a great deal of change, pleased though that we've seen a little bit of movement on the gas tankless side.

Good morning.

Good morning.

You originally talked about some inventory coming out of the channel this year. Now with residential heaters expected to be up 3%, you're no longer talking about that. So just how are you thinking about ending inventory for the industry? And then how does that set up for demand in 2022?

You're talking North America?

Yeah North America.

North America residential? Well, again, we'll have to see how things play out. There are still five months left in the year. And so we've reached it as we've talked about. And we'll have to get a better view as the next few months depending on how we're producing, how people are consuming, how the economy is doing. It's hard to look into 2022 when we're in July right now. So we'll look at it closer. We'll talk more as we get closer to the end of the year. But right now, as we said, demand is up and there's a lot of good momentum in new construction. And so that plays well for the balance of the year.

Got it. And so with higher North America volumes you, obviously, implemented a number of price increases, the margin expectations are a little bit lower. So how are you thinking about matching price cost in the second half of the year? And then how are you thinking about margin improvement in 2022 just as some of these costs hopefully become less of a headwind?

Since we announced our first price increase in November last year, we have continued to experience rising costs. Each price increase we've introduced has been followed by higher steel costs and overall expenses. Looking ahead to the second half of this year and into the fourth quarter, as we begin implementing our next price increase, we are primarily matching these costs, which means we won't be able to maintain our margins during this period. This presents some challenges for us in the latter half of the year. It's too soon to make predictions about 2022 and how costs will evolve. We haven't encountered such significant cost increases before, and it's difficult to determine how long they will persist or if they will decline. There are ongoing discussions about transitory inflation, but we are not in a position to forecast when we might see any relief.

In your prepared remarks, you talked about water treatment and seeing more promotional days. And so I wonder if we could just circle back to that for a moment and just talk about the extent to which you're seeing maybe a little more in the way of expectations from some of your channel partners with respect to your level of promotional channel support?

No, I would say that our promotional channel days were largely normal. There wasn't an increase in those days, but they were quite effective. In terms of water treatment, our close rates have been high as more people view water treatment as a crucial health concern for their families. However, I want to be clear that those were regular days that simply performed better for us. This reflects the broader trend we’re observing regarding water quality and safety, which persisted into the second quarter.

I mean, water treatment has performed well. I mean it's a 17% increase quarter-over-quarter. But I just want to remind us that last year it grew by 19%. So as a part of our business last year, that actually grew in 2020 in Q2 and grew again this year. So pretty resilient still performing well.

And how much just were on water treatment? How much of that growth would be attributed to expanded distribution as opposed to just greater pull?

That's one I probably can't give you any specific. If you break down our business it has to do with we have direct-to-consumer with of course that's just an ongoing business. We have a marketplace. We've done a fairly nice job expanding our dealer network. I can't give you specifics, but that area and we called it out in our remarks has grown substantially and doing a really nice job. It has a nice backlog. But I can't give you specifics about really the number of new dealers, but going in the right direction and performing very, very well.

Good morning, everyone.

Good morning, Nathan.

Good morning.

I wanted to follow-up on the channel inventory to beat a dead horse here. You guys had expected a destock in the second half. You're now not expecting a destock in the second half. Can you talk about the inputs that go into that in terms of are you expecting higher demand, customers ordering ahead of price increases and because of supply chain challenges? And do you think the channel inventories end the year at an appropriate level or under or overstocked?

Yes, I believe you have outlined the situation for us. There is certainly an increased demand linked to the price rise, which we consistently manage in collaboration with our customers. The supply chain constraints seem to prompt people to ensure they have products available. Our forecast of a 3% increase would mark another consecutive record year. However, it's somewhat difficult to determine where we will end up regarding channel inventory. The outcome will depend a bit on new construction trends and the supply chain returning to a more normalized state.

Fair enough. And then just a follow-up on India. You've said it doubled year-over-year. Obviously, India has had its issues with COVID. Can you just give us a number relative to where it was in 2019?

In 2019, I mean it's – gosh, I don't have that in front of us right now. I'd say I'm pretty confident it's higher than 2019. But I do want to frame it a bit because typically 35% to 40% of our sales are in Q4. But we're really pleased with how the team has performed for the quarter in a really tough environment.

Yes, I would just want to add on to it. I mean, India was savaged by COVID. And our team did what they needed to do to protect our employees, but more importantly really developed a strong relationship on the online segment of the business which helped drive some of the sales we're talking about. Even in the pandemic, we introduced new products both in water treatment and in water heating that have done exceptionally well. So we're calling it out because quite frankly it's a phenomenal job by a team that really had severe headwinds throughout the second quarter and throughout the first part of the year. And we're looking for the back half to get a bit better. And again, as Chuck said, that's where we get about 50% of our sales over the last four months.

Thank you. Good morning everyone.

Good morning, Susan.

My first question is about the boiler business. You maintained your forecast of a low double-digit increase this year, yet you mentioned that sales were up about 35% in the quarter. Can you discuss your expectations for the second half of this year, the orders coming in, and how we should interpret the anticipated deceleration?

Again, as we've talked about, the back half is a more difficult comp. And as we look forward, we talked about bringing forward the early buy which was a record early buy for us from the third quarter. So there are a few items that are a headwind as we get into the second half of the year. So that's the primary reason behind it. Order bookings are good. Still seems to be pretty healthy with regards to our quoting activity. But when we put the numbers together and Chuck will maybe elaborate on them a bit more, that's how we feel it's going to play out in the second half of the year.

Yes. I would like to mention that if we consider the benchmark for 2019, we are experiencing growth in the high single digits compared to that year. This helps to provide context for our current situation, especially since 2020 faced significant disruptions in the second quarter with many jobs and production affected. To clarify, we are approximately up by 6% compared to 2019.

Okay. Okay. That's helpful. And I guess building on that too can you talk a little bit about what you're seeing on the commercial water heater side? That had obviously been a bit weaker compared to boilers. Any updates on how that's trending? Obviously, the comps are a bit easier in the back half. How should we be thinking about it?

Commercial water heaters are showing improvement as the economy reopens. We have implemented some IoT technology in our water heaters, allowing us to monitor usage, which provides us with a limited view of activity. We are observing an increase in activity, including the reopening of restaurants and investments in businesses. Overall, it's encouraging to see the commercial sector moving towards a more normal cycle of replacements and maintenance. As a result, we have raised our guidance slightly, based on these positive early trends expected to continue into the latter half of the year.

Yes, hi. Good morning and thanks for taking my call. Follow-up here had gotten cut off in the middle of my next question for you. But I maybe just wanted to go back to the pricing guys. And I have tracked with August four price increases this year. I don't quite recall the amount of the one from last year in November. Can you remind me of that one?

I think it was approaching 10%. When you get all three together, we've been kind of accumulating them as we go along.

Yes, Scott, I'd tell you that's a long time ago. Well, if you look back at it because we've been chasing these costs for a while.

Hey, good morning everybody. Wondering if – to that point on the supply chain issues expectation of 3% volume growth for the year, do you think with all the actions you're taking it sounds like things are getting better. Do you think you'll be able to grow in line with the industry and maybe make up for that in the back half of the year, or does that perhaps defer some shipments for you guys to 2022?

Yes, our expectation is to keep pace with the industry and close the gap by year-end. The orders are there, and so are our customers. It's a matter of putting in the effort, like returning to nine-hour shifts and working some Saturdays to achieve this. Our success will largely depend on our supply chain. I've spoken with many key suppliers, and they're improving and coming online more steadily. We anticipate this will extend into the second half of the year, allowing us to increase production at a significantly higher rate than in the first half.

Okay. Great. Regarding the water heater side, if I analyze the numbers, it appears that water heater sales likely grew by about 25% to 26% in the second quarter. Can you clarify whether this growth is primarily due to price increases or if it's more evenly split between price and volume? Additionally, you mentioned that pricing will reach about 40% in the fourth quarter. Should we anticipate that water heater sales will increase by around 40% in the fourth quarter, along with our expected volume changes?

Yes, let me revisit the price volume aspect of Q2. While we don’t usually provide this information, I believe it’s beneficial to share more details in this context. In Q2, looking specifically at North America, approximately 40% of the increase came from price, with the remainder attributed to volume. Thus, while the majority was volume, there was still a significant portion of about 40% that was due to price. Regarding the fourth quarter, could you clarify your question again?

You mentioned that for modeling purposes, when all four price increases are implemented, it would result in a cumulative increase of 40%. Does that mean the water heater segment of North American sales is expected to rise by 40% in the fourth quarter once those increases take effect, along with any adjustments for volume and mix?

Yes, that's roughly right. I mean the fourth price increase comes into the fourth quarter, and it's early on in the fourth quarter, but that's a good way to look at it.

Yes, I would say that plus or minus though there's going to be some drag probably with that pricing in the fourth quarter.

Thank you for joining us today. We plan to participate in two virtual conferences in the third quarter, Jefferies on August 3 next week and D.A. Davidson on September 22. Have a great day.