Emerson Electric Company (EMR) — Q2 2021 Earnings Call Transcript

Good morning, and thank you for joining us for Emerson’s second quarter earnings and conference call. Today, I’m joined by President and Chief Executive Officer, Lal Karsanbhai; Senior Executive Vice President and Chief Financial Officer, Frank Dellaquila; and Executive Vice President and Chief Operating Officer, Ram Krishnan. I encourage you to follow along the discussion with the accompanying slide presentation, which is available on our website. Please join me on Slide 2. As always, this presentation may include some forward-looking statements, which contain a degree of business risk and uncertainty. Turning to Slide 3, I’d like to briefly highlight that Emerson has been publishing a Corporate Social Responsibility report for many years now. We have renamed the report the Emerson Environmental, Social and Governance Report and are excited to highlight all of the goals, momentum and global standards that our organization is working towards. In particular, our environmental sustainability framework, greening of Emerson, by Emerson and with Emerson, captures our internal sustainability efforts, our enablement of our customers’ sustainability journeys through our products and solutions, and our collaboration efforts with various sustainability stakeholders. I encourage you to review the document next month when it is published. As always, I am available for questions. Please turn to Slide 4. I’d like to briefly mention our recent Emerson Exchange Virtual Series, which took place from November through March. Emerson Exchange is a chance for our customer base to interact with other users, industry experts and Emerson technology leaders. Despite the obvious in-person limitations of the pandemic, Emerson had a tremendously successful virtual engagement with customers, focusing on digital transformation, sustainability, technology and many other topics. This virtual framework dramatically expanded the reach of this already very popular user event. Due to the success of the hybrid format, we will likely be adopting such a format going forward. More details to follow as the time and place for the next Emerson Exchange event is finalized. Please turn to Slide 5, and I will now turn the call over to Lal Karsanbhai for opening remarks. Over to you, Lal.

Thank you, Pete, and good morning, everyone. I would like to say a few things before passing it on to Frank. Firstly, to our global team, three things. Thank you for a tremendous quarter. This was one that was delivered based on strong execution, which required agility and creativity as we jumped over a number of hurdles over the last three months. The result was top-class profit leverage of over 40% across our operations. Well done by everyone. Momentum is building, and it’s more broad today and across a large number of our markets than it was three months ago. This expansion across both platforms, as the cycle expands, will enable us to make critical technology investments, building on our strong differentiation and customer relevance. Lastly, to the teams, thank you for welcoming me during my first 90 days; your energy and passion energize me every day on the journey that we’re taking together. Secondly, I would like to recognize David Farr, whose Board service concluded today after more than 20 years. Thank you, David, for your many contributions. And last, but not least, I would like to extend a warm welcome to Jim Turley, elected by the Board of Directors yesterday to be Emerson’s new Nonexecutive Chair. Jim is a highly qualified Independent Director who is extremely passionate about people, culture and the future of Emerson. I look forward to working alongside Jim and our entire Board. Frank, over to you.

Thank you, Lal. Good morning, everybody, and thank you for joining us today. We had a strong quarter and I’d like to take you through the highlights over the next several slides. The strengthening recovery that Lal referred to in most of our end markets, combined with the benefits from our cost reset actions, drove strong operating performance and strong financial results in the second quarter. Adjusted EPS for the quarter was $0.97, ahead of our guidance midpoint of $0.89 and representing a 9% growth versus the prior year. Demand strengthened significantly with sales ahead of expectations at 2% underlying growth and March orders towards the high end of expectations at 4% underlying growth. Within that growth number for the orders, significantly Automation Solutions continues its steady improvement in both orders and sales, while Commercial & Residential Solutions continues to experience robust demand across all its lines of business and in all geographies with 11% sales growth and 21% orders growth for the trailing three months through March. The cost reset benefits for the program that we implemented almost two years ago are being realized as planned, driving adjusted segment EBIT growth of 15% and 150 basis points of increased margin at 19.1%. Additionally, cash flow continues to be strong, up 37% year-over-year with free cash flow up nearly 50%. This represents a 125% conversion of net earnings. We continue to execute on the remaining elements of our cost reset actions, with the bulk of it behind us at this point; we initiated $21 million of additional restructuring in the quarter. Please turn to the next slide for comments on the EPS. The EPS bridge operational performance was very strong in the quarter adding $0.14 to adjusted EPS. As we guided in February, stock compensation was a significant headwind in the quarter due to the mark-to-market impact, which was caused by the difference in the share price at the end of last year’s second quarter and this year’s second quarter. Of course, you’ll recall that last year, share prices in general were all severely depressed with the onset of COVID, with last year’s second quarter closing at $48 versus $90 this year. That headwind was within $0.01 of the guidance we provided in February. Tax, currency, and other miscellaneous items netted to about $0.04 of tailwind and a small impact from share repurchase. So in total, again, adjusted EPS was $0.97 versus the guided $0.89. Please go to the next slide for comments on the P&L. So as I mentioned, underlying sales growth exceeded expectations at 2% and it was 6% on a reported basis, including acquisitions and currency. Gross profit slipped just a bit, 10 basis points, mainly due to business mix, given the growth in our Commercial & Residential Solutions business. SG&A increased by 10 basis points, but the real story here is that excluding the stock compensation impact, operationally, it was down 220 basis points, indicative of the magnitude of the cost reduction activity and the flow-through of the benefits. We had very strong leverage on SG&A and the spend was actually down year-over-year when you exclude the impact of the stock compensation. Adjusted EBIT margin was 18.2%. Our effective tax rate was within a point of last year. Share count at $603 million, and again, adjusted EPS of $0.97. Please turn to the next slide. We’ll talk about earnings and cash flow. Adjusted segment EBIT increased 15%, with the margin increasing 150 basis points to 19.1%, as I said earlier. Leverage on the volume and cost reset benefits offset the material cost headwinds that we witnessed in the quarter. Again, stock compensation was nearly $100 million headwind. It was partially offset by some other corporate items. Adjusted pre-tax earnings were down 20 basis points to 17.3% again as the impact of the mark-to-market on the stock compensation flowed through. Operating cash flow was very strong, almost a record again at $807 million, up 37%. Free cash flow at $707 million was up 48%, driven by strong earnings and favorable balance sheet items. Lastly, trade working capital was down to 16.8% of sales as the impact in the distortions from the COVID-related volume decline are beginning to normalize and as the businesses did a good job managing inventory as we return to growth. Please turn to the next slide. We’ll go through Automation Solutions. Orders continue to turn upward here. We were at negative 5% on a trailing three-month basis, making good progress, and we’re on the trajectory that we’ve been mapping out for several months. Underlying sales were above expectations at negative 2%, and we’re encouraged to see the continued sequential improvement in order rates underpinning the sales. China was very strong, and favorable comparisons have contributed, but we also see good strength in discrete, clinical, and energy markets. Our demand in North America improved sequentially, but it did lag other regions. However, there are noteworthy pockets of growth, with very encouraging signs in both discrete, life science, food and beverage, and power generation. Importantly, we also continue to see increasing KOB3 activity across our process automation customer base, driven by increased SGOs and focused spending on OpEx and productivity. Margin in the platform increased 180 basis points of adjusted EBIT, 230 basis points in adjusted EBITDA, driven by the cost reset savings. The OSI integration continues to go well. The effective synergies are being realized and we are increasingly encouraged in validating the case that we made for the acquisition when we completed it last October. Backlog is roughly flat sequentially at $5.3 billion, but it is up 14% year-to-date. Please turn to the next slide and we’ll review Commercial & Residential Solutions. The story here is very, very strong growth. Orders continue to strengthen with the March underlying trailing three-month rate at 21%. The demand is primarily driven by ongoing strength in residential end markets; significantly, cold chain, professional tools, and other commercial and industrial markets are also picking up and contributing to the growth. All businesses in all regions were positive, indicative of the trend. Strong growth in China, over 50%, was attributable to commercial HVAC and cold chain demand in addition to the favorable comparisons. Europe grew 9% on the strength of continued demand for heat pumps and other energy-efficient sustainable solutions. Margins improved 40 basis points at the adjusted EBIT level. Cost reduction benefits were somewhat offset by price/cost headwinds, which we’ll discuss a little more when we cover the guidance. Commercial & Residential backlog increased almost 60% year-to-date to about $1 billion, which is about $400 million above what we would consider normal for this business. Operations are working through the significant challenges to meet strong customer demand across most of the businesses within this platform. Please go to the next slide as we discuss the updated guidance for the year. Based on the strength we see in orders and the increasing pace of business, we’re very encouraged, and we are improving our sales outlook for the year. We now expect underlying sales in the range of 3% to 6% overall, with Automation Solutions roughly flat and Commercial & Residential up in the 12% to 14% range. The stronger volume will drive improved profitability. We now expect a 17.5% adjusted EBIT margin for the entire enterprise. Cash flow was also projected higher at $3.3 billion operating cash flow and $2.7 billion of free cash flow, an increase of $150 million. Our tax, capital spending, dividend, share repurchase assumptions remain unchanged. We are raising adjusted EPS guidance by $0.20 at the midpoint from $3.70 to $3.90 and we’re tightening the range to plus or minus $0.05 from plus or minus $0.10. This increase in guidance occurs in the face of additional headwinds to profitability because we’re very encouraged by the underlying strength of the business and the read-through of the cost reset actions that the business has been diligently working on for almost two years. The additional headwinds you can see in the margin there on the right of the slide, mainly $50 million more unfavorable price cost, driven by continuing increases in raw materials costs, and about another $20 million of stock compensation expense versus what we estimated back in February. The speed and magnitude of price increases in key inputs, steel, copper, and plastic resins, is unprecedented. Operations are actively and effectively working to mitigate the margin impact through selected price and cost containment actions, and the good work that they are doing gives us the confidence to raise the guidance despite these increased headwinds. On the plus side, we expect to retain about $10 million more in the year of the COVID-related savings than we previously estimated as basic activity like travel and everything that goes with it comes back more slowly than we would have thought a couple of months ago. If you please go to the next slide, I’ll provide an update on orders. As I mentioned earlier, our underlying trailing three-month orders turned positive in the month of March with 4%. This is consistent with the upper range of the guidance that we provided in February. It’s driven by ongoing strength in Commercial & Residential Solutions as you can see at 21%, and continued significant improvement in Automation Solutions as our global markets recover, where we increasingly see improvement in our traditional process industries in North America. We expect general demand to remain strong for the balance of the year. We expect Automation Solutions markets to accelerate in the second half, while Commercial & Residential HVAC demand will taper off somewhat later in the year; however, we would expect to see some recovery in other end markets, such as commercial and professional tools, to partially offset that tapering off in Commercial & Residential. Overall, we believe we have a good outlook for the second half of the year. If you please go to the next slide, I’ll discuss the underlying sales growth outlook. Based on the pace of improvement in orders, for the second half, we anticipate growth in the high-single digits range, at about 7% to 11%, which will drive full-year growth of 3% to 6%. We expect net sales to be just a bit above $18 billion. And with that, I’ll turn the call back over to Lal, and he’ll discuss our business and end market outlook in more detail.

Thank you, Frank. I will go over a few charts with the group. We have seen increased momentum, especially regarding Automation Solutions. We experienced some lag during the recovery in the first half due to our discrete and early cycle businesses within the platform. However, as we moved through the second quarter, we observed a broader recovery in the mid-cycle aspects of this platform. We expect to return to growth in Q3, which is encouraging after five quarters of decline in this business. We also see ongoing demand in short cycles and an acceleration in the core process automation markets for the latter half of the year, leading to a sales range of 4% to 8% in the second half and flat year guidance. If you look at Page 16, I’ll provide insights into different world areas. From a KOB perspective, KOB3 has performed remarkably well, particularly in our discrete sectors. As we moved through the second quarter into our process base, we noted an increase in shutdown turnaround activity, which is up in the mid-teens for the year, and STO schedules are stable. Entering the summer and fall seasons, on-site walk-downs have risen nearly 50% year-over-year, which is also a positive sign. Long-term service agreements are up almost 40% globally. Overall, I feel more optimistic about the second half and how North America is shaping up in Automation. Moving to Chart 17, I want to highlight the success of the Commercial & Residential sector. This team is enjoying a fantastic year, benefiting from a robust residential cycle primarily driven by pre-pandemic inventory levels and pre-build activities for the cooling season, reflecting a shift towards suburban living and increased family home construction and renovation. This has led to exceptional residential strength throughout the year. I expect this momentum may slow down in the latter part of the fiscal year. However, the mid-cycle professional tools and cold chain businesses are picking up speed, offering a balanced perspective for this segment throughout 2021. I am optimistic about the later-cycle elements as well. Additionally, we are witnessing positive technological developments affecting the residential market, such as refrigerant changes and the heat pump transition in Europe, which will continue to support business growth. On Page 18, the world area perspective shows a balanced picture overall. We anticipate a strong second half, with the Commercial Industrial segment improving as the residential market starts to stabilize, as I mentioned. I believe all world areas should grow in the low double digits to mid-teens range as we enter the second half. In the Americas, we see strong residential demand in the short term, with commercial markets accelerating, especially in the cold chain segment, driven by transport and aftermarket demands, along with growing momentum in the professional channel. In Europe, the heat pump activity is expected to remain strong, coupled with a construction surge that should enhance our plumbing and electrical tools business. Lastly, in Asia, China is a key contributor to growth, driven by demands in commercial air conditioning and cold chain solutions. With that, Pete, I’ll move to Page 19, and we will proceed to Q&A.

Hi. Good morning, everyone.

Hi, John. Good morning.

Good morning.

Good morning.

Hi. So, obviously, a lot of focus will probably be on the Americas recovery. Just wanted to get your perspective on Automation Solutions - how much of this is driven by just run rating the trends you’re seeing in process against an easy comparison versus the growth you expect to see in those discrete and hybrid markets there?

Well, we’re observing good acceleration in underlying process. We went through a period of time, as you recall, of a break/fix environment with limited site access, and limited project-driven activities. That slipped. Obviously, the inoculation rates in this country have significantly helped the confidence that customers have in allowing others on-site and having their own staff, very honestly, on-site. That’s now driven an unprecedented level of activity that is incredibly encouraging and is, I think, above and beyond just the simple comparisons that we have. The discrete strength, to your point, will remain. I don’t foresee that waning at least as we proceed through the year in North America, but the real fuel there will be increased activity. We’re seeing that in the purchase order rates, and we’re tracking that in the quotation activity and in the daily booking activity in our short- to medium-cycle automation businesses.

Great. Thank you. And then, obviously, you updated your view here on inflationary pressure. Just as we think about the balance of the year, could you talk a little bit about the price/cost equation and any noticeable difference in Q3 versus Q4, and any timing of price related to that? Thank you.

I’ll comment. As Frank noted, we adjusted our guidance from a $25 million headwind to $75 million. Within what we believe we can guide overall EPS, the teams are doing a fantastic job amidst the challenges with classic resins, copper, and steel, which have been tough for us. I’d expect as capacity comes online that there will be some relief on price/cost. But again, that’s a wait and see, so we took a more conservative approach based on our market observations and discussions with the teams. Ram, any comments there?

Yeah. I think the bulk of the impact will really be in Q3 and Q4. We didn’t see much of an impact in the first half as we worked down inventory. However, we anticipate seeing the impacts from steel, copper, and resin in the second half. But as Lal mentioned, we do expect, particularly in the context of steel, for capacity to come back online. Certainly, our pricing on steel in China is better than what we see in North America. So hopefully, as we progress into the later part of the year, we’ll witness a softening in steel pricing. That’s what we have built into the plan.

Great. I’ll pass it along. Thank you.

Thanks, John.

Yeah. Thanks. Good morning, guys.

Hi, Nicole.

Good morning.

Hi, Nicole.

Hi there. So maybe we could discuss the supply chain, which has been a hot issue this quarter. Could you share what you’re seeing and if this could cap revenue upside in the second half?

Certainly, a lot of press on supply chain, primarily around inflation, but also challenges in availability and shortages. For example, you’ve probably heard about the electronics challenges regarding chip shortages. Frankly, our global teams have done a remarkable job from a standpoint of availability, whether it’s steel, plastic, or resin; we’ve been able to move to alternatives. Certainly, we’ve managed our supply of electronics coming from Asia pretty effectively as well. We are managing through the inflation side through price and productivity programs. To this point, we haven’t experienced availability challenges. Similarly, on the logistics front, our teams have efficiently locked in the needed capacity to procure material from our overseas supply chains at preferred rates. We haven’t needed to rely on the spot market yet, which is where we’re seeing a lot of that inflation. So far, I’d say we’re managing through it effectively. Additionally, our regionalization strategy, which involves having regional supply chains supporting our business, has proven to be significantly beneficial, ensuring we haven’t had to rely heavily on overseas supply chains to serve our plants.

Got it. Thanks. That’s really helpful. And then, in regards to the cadence of EPS revenue margins in Q3 versus Q4, is there anything you’d like to highlight?

Well, Nicole. Hi. This is Frank. I believe we're looking at a very strong third quarter approaching us based on the orders we see and the backlog we have available. Thus, I would contend that the third quarter will be robust, the fourth quarter will be good but have less visibility into it. This is how we see it currently, with a slight frontloading toward the third quarter.

Thanks. Good morning.

Hi, Nigel.

Very different feel to the call today. Good to hear Frank’s voice. Hi. Can you hear me okay?

Thank you. Thank you, Nigel.

So, Com & Res, good. So on Com Res, $0.11 growth, nothing to phase out; very strong orders. But the growth rates come in a little lighter than some of your OEM customers, and there’s a deceleration from Q-to-Q. It appears we have some nice acceleration coming in the back half of the year. I'm just curious about how inventory levels look in the channels and whether you saw any destocking happening during Q2.

Thanks, Nigel. Good to hear your voice as well. I think there’s a dynamic here between residential and commercial in Com & Res across the board, and that’d be our climate tools as well, which is having an impact on growth rates. We’re observing that many of our OEM customers have reported strong residential growth. While that’s in evidence for us, we have a balance in our business between cold chain and commercial applications. So I think that’s partly where you might see that discrepancy.

Great. And just a bit of a random question here, Lal. On the Emerson Exchange virtually this year, how does it play out going forward? How do you judge the engagement with customers virtually versus in-person and how do you think that evolves?

Great question, Nigel. The Exchange is a significant event for us in Automation, luckily, as you know, drawing great customer engagement throughout. We learned a lot, and we didn't have a choice as we navigated through an Exchange season in the Americas and Europe this year. However, we learned that there needs to be a balance. We want to engage with folks on the ground, and we don’t want to lose that opportunity if we can. We can also reach a much broader base of engagement with customers through a virtual platform, enabling those who may not be able to take a full day for travel or may just wish to attend a singular subject or keynote. They now have the option to dial in and engage when the presentation suits them. Therefore, I believe it’ll be about finding a balanced approach. While we aim to broaden our audience, it’s vital not to lose the original intent of that meeting. I’m excited about Exchange; our plans are to hold it in the fall. We are currently discussing between the fall and spring. Let’s see where we land.

Thanks, Lal. Best of luck.

Thanks, Nigel.

Hi. Good morning.

Good morning.

Maybe a first question on the margin outlook. You raised the EBIT margin guide to the 17.5% figure for the year as a whole. I just wanted to double-check as we think about the specific trajectory in the second half. It seems to imply a sort of mid-20%s increment on the segment level and perhaps a little lower on a total company level due to corporate aspects. I wanted to confirm if that’s roughly the right math and any difference in incremental margins in the second half for the two divisions, Automation Solutions versus Commercial & Residential.

Yeah. I mean, you’re speaking of incrementals with leverage; I think that’s in the ballpark. I would expect the incrementals to be higher in Automation Solutions. Facing the headwinds and pressures in Commercial & Residential will affect the incrementals, for sure, going forward. Nonetheless, we plan to deliver good incremental profits in the business overall and we will have leverage on those sales. However, it’s clear that those incremental levels will be constrained in the next few quarters. Hence, I suggest incrementals to be comparatively higher in Automation Solutions than in Commercial & Residential.

Thanks very much, Frank. And then maybe a broader question around Automation Solutions - top-line outlook and the end market backdrop. We’ve seen that the backlog was somewhat flattish sequentially; how do we think about that Auto Sol backlog trending from here? I understand that big projects are relatively sparse, but perhaps the KOB2 stuff is picking up. What’s your outlook on the AS backlog pace of recovery from here?

Good question, Julian. We have, at this point, year-over-year backlog in Automation, which is up 14%. Obviously, we have experienced significant shifts in the first two quarters, especially in our final control and systems divisions. The revenue growth moving forward depends on the mid-cycle measurement solutions, systems, and discrete business. Consequently, that translates into more book-to-ship activities within a quarter or a quarter and a half. I don’t foresee a substantial growth in the backlog, but we will remain within our current parameters. Therefore, expect 10% to 15% backlog growth without any additional KOB1 activity.

That’s great. Thank you.

Hi. Good morning, guys.

Good morning.

Good morning.

Encouraging comments you made on April. It must’ve been a pretty strong month. But I had a couple of completely different questions since, Lal, you’re relatively new. I mean, your compensation structure is a bit complex for your management team. Is that one of the aspects you’re planning to adjust early in your tenure?

Yes, it’s good to hear from you, and thank you. April was an encouraging month for both Automation and Commercial & Residential. In terms of the compensation structure, I have expressed my openness about the journey we’re undertaking as an organization. Compensation is a focus area, and we have a task force led by Lisa Flavin to evaluate how we compensate the executive structure and others. I see substantial opportunity there and will take our time working closely with the Board throughout the summer and into the fall.

And just as a follow-up, the heat pump market in Europe—what is the perception of your product’s technological differentiation? Could you elaborate on why you feel your offerings will prevail in the heat pump market?

I believe we’re well-positioned, given our long-standing customer base. The technological differentiation primarily revolves around sound attenuation in the heat pumps and overall efficiency. This is an area where we truly stand out compared to the market offerings and represents a significant driver for growth opportunities in Europe.

Sounds good. Good luck, guys. Thank you.

Thank you.

Hey, guys. Good morning.

Hey, Steve.

Good morning.

Good morning, Steve.

It’s unusual to be on an Emerson call in the morning. Usually, we have to wait until later. So thanks for adjusting. As I analyze your performance compared to 2019, I note that your sales in the first half are down relative to 2019, but your EPS is significantly higher. If I take the back half of 2019 on EPS and add it to what was achieved in the first half of 2021, you are already arriving at the high end of your guidance range. Sales comparisons year-over-year should be somewhat similar to down moderately compared to 2019 still. What are the main headwinds in the second half? I note price cost perhaps being a factor, not to overlook, but what else are we seeing?

Certainly, Steve. The obvious headwinds in the second half which were not present in 2019 include the price/cost and stock compensation. Together, these are significant headwinds that contribute to the current outlook, totaling around $70 million. We remain focused on providing solid guidance despite these uncertainties affecting the second half.

On the HVAC side, different players report varying results. I understand you had significant activity in the prior calendar year. How did your core U.S. residential compressor business perform this quarter?

So, Steve, we had a very strong quarter in the climate business in the U.S. Orders continued to accelerate, and backlog conversion saw sales growth in the mid-single digits. This ongoing acceleration is anticipated, particularly in Q3.

What’s the size of that business now as a percentage of CR&S? Traditionally, we viewed you as primarily a U.S. residential operator. However, given the consolidation of businesses and accelerating growth in China and Europe, where does that U.S. compressor business stand now in terms of percentage?

It's a sizable business. While we don’t typically disclose that figure in relation to the overall platform, please understand it represents a significant portion of the entire climate and CR&S platform.

Thank you very much.

Thanks, Steve.

Yes. Good morning.

Good morning, Andrew.

Good morning, Andrew.

Broadly speaking, as you engage with customers in the energy industry, how fluid are their budgets for the year? Is there any potential upside considering the increases in economic activity and the rising oil prices, or must we wait until next year to observe those changes?

Great question, Andrew. The budgets have been set based on anticipations of demand and oil prices. However, they are substantially aligned toward sustainability efforts and operational efficiency, which gives us confidence in the market’s recovery. If we see an uptick in air travel, transportation, and overall economic activity, we may observe expansions in budget allocations during the second half of the year, which would be advantageous for the Automation business, beyond our current estimates.

Fantastic. One more question on Commercial & Residential and the heat pump sector in Europe. You’ve indicated several times on this, is this part of a larger regulatory trend? What kind of visibility do you have regarding this business for the next 12 to 24 months? Is it accretive or neutral to the overall margin?

Yes, we have solid visibility in Europe as well as the heat pump opportunities in China. Our engagements with OEMs in this space have been productive, as they are traditional customers of ours. Regarding the technology highlighted by Ram, specifically efficiency and sound control, our scroll product line and comprehensive solutions position us well for this market. Therefore, I would classify the visibility as positive, and it’s generally neutral to slightly accretive to the margins. Thank you all for your questions and engagement today. I felt phenomenal about my first quarter as CEO. I appreciate the teams for their hard work and energy. I have great momentum for our organization for the second half of the year and into 2022. Thank you for your time, and talk soon.

Thank you.