Mike Halloran — Analyst, Baird
Hey, morning, everyone.
Scott Barbour — CEO and President, Advanced Drainage Systems
Hey, Mike. Morning.
Mike Halloran — Analyst, Baird
Hey. A couple of questions here. First question, maybe just how you see the end markets playing out in the back half of the year and what's embedded in your guidance. I certainly understand the unchanged end markets on a holistic basis. Does that assume normal sequentials from here? I know the original guidance assumed some deterioration in dynamics. Is that still part of the story? Maybe just a comment on what inventory looks like in the channel.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Right. Yeah. At the midpoint, Mike, when we look at 2H, we've basically implied a little bit of degradation on a year-over-year basis. Again, when you look at our first-half performance organically, it was good, up below single digits. Again, really good conversion from the company on all levels, new products, as Scott mentioned, as well as geographies. Again, as I ended my comments in the prepared script, it's demand that we see as kind of the riskiest part of the rest of the fiscal year. We've reflected such in our guide. A little conservative on that end based on where Q2 was. Again, we feel that that's prudent right now.
Mike Halloran — Analyst, Baird
The inventory piece? I'm sorry.
Scott Barbour — CEO and President, Advanced Drainage Systems
Inventory piece. So. This is Scott Barbour, Mike. And I do not think we see anything unusual from an inventory standpoint, either in our customer's inventory nor in our inventory. It is kind of sized correctly for what we call this tepid and uncertain demand picture. There is some friction out there, I call it. This government shutdown is not helping. I think that creates a little uncertainty and friction out there. People are still kind of waiting to see ultimately what happens with interest rates. I feel like. We are competing pretty well out there and winning more than our fair share in that kind of market. I think that is due to our go-to-market model, our scale, our national footprint. We can participate everywhere. This really broad portfolio of products at Infiltrator, who is definitely in the right geographies with the right product lines and the ADS side.
We're trying to be. Right, as Scott said, a little cautiously conservative around the demand side, which, as you all know, our second half of the year is the most uncertain demand environment we have because of weather and some of the focus on the northern climes.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
The other thing I'd highlight, Mike, is we've also highlighted our realignment activities as we look at the network and we optimize such. Again, really robust S&OP process. Realignment activities to make sure that we're focusing on the right growth areas. I would say the management team is focused in the right areas.
Mike Halloran — Analyst, Baird
No, that makes sense. You can certainly see the strong outperformance in the numbers. Maybe a similar question on the margin line. Just help me with the puts and takes in the back half of the year. I'm assuming there's an element of conservatism in how the margins move to the back half. Maybe walk through, Mike, how you're thinking about price cost and just bridge a little bit to the back half of the year from the front half.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Yeah, I would say price cost. We'll start with that. That seems to be the topic everybody's the most interested in. Again, no degradation assumed in price cost. I think it's important to get that out of the way. The way we've kind of set our 2H guide or implied guide is very much driven by demand and the top line. We've kind of used our 30%-40% incremental-decremental margin approach, if you will, to look at what that might mean from an EBITDA perspective. Again, volume generated as we look through price cost, manufacturing, transportation, SG&A, nothing unusual in there or something unexpected that we need to highlight or should highlight. Just demand-driven.
Mike Halloran — Analyst, Baird
Yeah. Appreciate it, Scott. Thank you.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
All right, Mike.
Matthew Bouley — Analyst, Barclays
Morning, guys. Thank you for taking the question. Really a similar line of question here around that second-half guide to start off. Just to maybe clarify one piece of it. Basically, are you actually seeing any signs of slowing as we kind of move into, let's say, October, November? Is this really just taking that kind of conservative outlook and uncertainty, government shutdown, etc., so forth, like you said, and building that into guide? Just curious if you've actually seen anything that would suggest that kind of bigger slowdown in that second half. Thank you.
Scott Barbour — CEO and President, Advanced Drainage Systems
This is Scott B., Matt. I would say that we are more conservative as we look into the second half. We feel like we performed very well in the second. If it is there, we are going to get it. We are worried about what I call this friction in the market. It is not overwhelming and evident everywhere. We do kind of sense that the slowdown, particularly around the infrastructure stuff, the government shutdown, particularly around the infrastructure stuff, is not leading to less quote or orders, but it is putting some friction into release for shipment, if you will. That is not the hugest part of our business, but we are watching that super closely. The government's been shut down for what, 40+ days or something like that. They do drive a piece of the economy. We are a bit cautious around demand.
The part I would add also on this is what we can control around our cost and what we choose to go and do around spending or initiatives. We feel very confident that we got this dialed in and we'll work hard in this second half to do that. Our concern is that demand is going to be tepid and choppy. Again, this is our most volatile demand period, this period really November through March.
Matthew Bouley — Analyst, Barclays
Okay. Perfect. Yeah. That's perfect. And appreciate the thoughts there. Secondly, on residential, the 9% growth, I guess presumably that's mostly organic, but curious if that's true. Across ADS and Infiltrator, you touched on at the top that multifamily was up and allied and lot developments kind of choppy around the country. I'm really just looking if you could expand a bit. I mean, it stands out in a tough residential backdrop to have that type of growth. Maybe if you can kind of go through the individual pieces of your residential business and expand a little bit on what's driving that growth. Thank you.
Scott Barbour — CEO and President, Advanced Drainage Systems
Yeah. I'm going to add something. Then Mike can add something. Craig Taylor from Infiltrator is here with us today, our Infiltrator President. New products, the tank products that we tooled and launched in the last two, two and a half years, Craig, the advanced treatment products, the work that he and his team are doing with Orenco on profitability, all that stuff kind of read through nicely. The multifamily, where we have very good participation in particular allied products, has done well. Mike, did you want to add something on residential?
Mike Higgins — VP of Corporate Strategy and Investor Relations, Advanced Drainage Systems
Yeah. I was just going to say, Matt, your question around there was some contribution from Orenco in the quarter. But also, if you take that out, we saw positive growth organically at ADS and Infiltrator in that residential end market for the reasons Scott just said, right? The new products, the programs that we're working with builders to drive the conversion in the land development for single-family subdivisions. We have seen, as we mentioned in the first quarter, improvement in multifamily activity in a variety of geographies. That is coming through. We can see that in the allied product sales that go into residential.
Matthew Bouley — Analyst, Barclays
Excellent. Thanks, guys. Good luck.
Scott Barbour — CEO and President, Advanced Drainage Systems
Thank you.
Jeff Hammond — Analyst, KeyBanc Capital Markets
Hey. Good morning, guys.
Scott Barbour — CEO and President, Advanced Drainage Systems
Morning.
Jeff Hammond — Analyst, KeyBanc Capital Markets
Just to stay on the outgrowth, because I think you're worried about demand, but your outgrowth has been quite exceptional. Just kind of the sustainability of the outgrowth into the second half. My other second-half question is just how we should think about first-half, second-half margin step down on the seasonality factor, given that it seems like price cost is moving much better in the right direction versus a year ago.
Scott Barbour — CEO and President, Advanced Drainage Systems
Go ahead, Scott.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Hey, Jeff. Scott C. here. Again, as we said before, I'll just reiterate it. It's very much a demand-driven outlook based on the choppiness. Again, very encouraged by what we saw in Q2. You look at the first half, however, that 5% of growth. 2% organic, 3% from Orenco. We're not seeing green shoots yet. There is a lot of reason to be cautious and build such into our outlook. It's demand-driven. When you look at the margin expectation off of that, as I said previously, it's more just looking at our 30%-40% decremental margin historical kind of performance and putting it there. Price cost stable, as I mentioned earlier. There is nothing falling off a cliff there for folks to be worried about.
If I look at manufacturing, transportation, SG&A, is there any kind of large one-time thing in there or some trend that we need to be concerned about? No. That is the way I would present it. Demand-driven with a 30%-40% decremental margin approach.
Jeff Hammond — Analyst, KeyBanc Capital Markets
Okay. And then into the second half, can you just talk about how, I guess, last year, pretty active storm dynamic and lack of this year, if there's any good or bad comp dynamics around that?
Scott Barbour — CEO and President, Advanced Drainage Systems
Yeah. I mean, I think, I mean, are you referring to kind of the back half, the last six months of the year that we're getting into?
Jeff Hammond — Analyst, KeyBanc Capital Markets
Yeah.
Scott Barbour — CEO and President, Advanced Drainage Systems
Yeah. Yeah. I mean, obviously. The biggest thing is winter, and everybody's asking kind of questions around the guide, right? Obviously, we have caution when we get into the back half of the year. We get through October, you get into November. Through March, right, 50% of the country has winter and construction activity shuts down. Last year, you saw it was a very traditional winter in the northern half of the U.S., and that impacted our business. It doesn't necessarily go away, but guys just can't work as long into the season. I think we're trying to, again, be appropriately cautious around that dynamic potentially repeating itself. Yeah, if the weather is better in the back half and it's warmer in the northern climates longer, there's a chance construction activity continues and the fourth quarter is maybe a little better than expected.
We're sitting here on November 6th, right? And so we're still, call it 60 days away from kind of what we'll know going into the fourth quarter.
Jeff Hammond — Analyst, KeyBanc Capital Markets
Yeah. I was actually referring to kind of all the hurricane activity that might have been maybe disruptive and then helpful down the road, and this year kind of being a lighter year.
Scott Barbour — CEO and President, Advanced Drainage Systems
I mean, I think when we have our second quarter, again, not having those probably played a little bit of benefit there. Again, it was pretty good weather in the second quarter, so guys could continue to work.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
We benefited from that for sure.
Jeff Hammond — Analyst, KeyBanc Capital Markets
Okay. Great. Thanks, guys.
John Lovallo — Analyst, UBS
Hey, guys. Thank you for taking my questions as well. The first one, maybe just following up on Matt's question on the Resi side. I mean, builders have clearly pulled back on starts to the right size inventory in certain markets, but community count continues to grow pretty nicely. And personally, we're fairly optimistic heading into next year. The question is, how are you thinking about the Resi builder business heading into the spring? What are you hearing from the folks on the ground?
Scott Barbour — CEO and President, Advanced Drainage Systems
I mean, I do not think we are hearing a whole lot different than kind of what you described, right? A little bit of caution, kind of favoring price over pace. With that said, there is still large opportunity for share gain for us in those markets. We have a much smaller market share there than what we would have in non-residential, for example. When you look at the performance this year, again, the programs we have with the builders promoting our conversion strategy and the ADS value proposition. When you look geographically, places like Texas, North Carolina seeing strong growth. Florida was very soft in the first quarter, but sales were essentially flat in the second quarter. That is promising there in terms of volumes, which. The volume that we are selling in there. I think our goal always is outperform the market.
We feel like we have lots of opportunity there still with the conversion strategy, the allied products. When you think about the Infiltrator and Orenco opportunities that we're promoting in that segment as well, we think we have a lot of tools to go and beat back any underperformance or weaker market performance in the macro.
John Lovallo — Analyst, UBS
Got it. Maybe on Texas specifically, I think the state just passed a $20 billion fund. About $1 billion a year to replace aging pipe. I think it starts in maybe 2027. I mean, I think you guys have historically talked about Texas as like a $390 million-$400 million pipe market. Just curious how you're thinking about this new bill. How significant of an opportunity could it be for you guys? Could it actually accelerate the adoption of plastic in the state?
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
John, this is Scott Barbour. We supported that bill. We lobbied for that bill. As you know, we're quite active in Texas. We think this is a really strong step for that state to increase their kind of economic footprint and activity. It will bring great benefit to their population, their citizens. We believe this will be a very good opportunity for us across the board, whether it's non-residential, residential, the rainwater harvesting piece. Water conservation and rainwater harvesting with a nice kind of piece of that legislation. We think this just adds—I don't know how to dimension it right now. What I do know is that more money will be spent on water infrastructure and water management in Texas with the result of this bill than before it was passed. That is a good thing for ADS and Infiltrator for sure.
John Lovallo — Analyst, UBS
Okay. Thanks very much.
Garik Shmois — Analyst, Loop Capital
Oh, hi. Thanks. I wanted to ask on price cost in the back half. I was wondering if you could speak to what you're seeing on the material cost side of the ledger and then just on pricing. It's been stable sequentially for a number of quarters here, but just given maybe the more conservative demand outlook, should we expect any change to pricing?
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Yeah, Garik, Scott C. here. Like I mentioned earlier, when you look at the implied 2H, it's a demand-driven forecast and outlook. That is what I would say there. As I mentioned before, price cost, again, largely stable. Again, that is both on the material side and the pricing side. I would say to factor such into your 2H as well. Again, manufacturing, transportation, and if I look through the other parts of gross profit and I look at the other drivers that can move that margin around, there is nothing in there or SG&A that is worth highlighting that would be a significant downdraft or trend that folks should be concerned about.
Garik Shmois — Analyst, Loop Capital
Okay. No, thanks for that. And then just on the SG&A piece, it picked up a little bit in the second quarter. It sounds like that level of inflation shouldn't continue or just any way to contextualize SG&A in the second half.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
I think on the SG&A, there was the piece that we picked up from Orenco.
Scott Barbour — CEO and President, Advanced Drainage Systems
Yeah, yeah.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
That is a year-over-year change. It is a bit higher SG&A company than the base company. We also executed a lot of costs around the transaction.
Scott Barbour — CEO and President, Advanced Drainage Systems
Yep.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
That are. It's not for free to get people in to help you work through the announcement of a large transaction like NDS. There's some accruals in there on that kind of stuff. Again, those things we can control. Around SG&A spending, price cost, our conversion, our transportation and logistics. I mean, we feel very solid where we are, what we've done, and where we are headed into the back half of this year. I say it to the team all the time. A lot of these things you see reading through are really things we started a year ago and began working on around our network, cost, equipment, focused on certain new products and things like that. I think what you see is, even though last year was not a great year, we continued to invest in those things, and they've read through.
In a pretty good fashion. That is what management is supposed to do, is invest and work for the long-term performance of the company. I feel like that is what we are doing pretty darn well right now.
Garik Shmois — Analyst, Loop Capital
No, that's for sure. Okay. Thank you very much. I'll pass it on.
Scott Barbour — CEO and President, Advanced Drainage Systems
Thanks, Garik.
Collin Verron — Analyst, DB
Good morning, though. Thank you for taking my question. I just wanted to follow up on price cost. I think last quarter, you indicated that price cost is expected to be neutral for the year. Can you just talk about what's coming in better than expected in the second quarter that got you that $30 million EBITDA tailwind?
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Yeah. Again, you're referring to the waterfall, the EBITDA bridge on a year-over-year basis. Again, pricing stable. We've been talking about it sequentially as well as year-over-year. Resin cost for sure. This year has been one of those items that's been good. Then something that we see sequentially flattening out on a procured basis. Again, we have a really good line of sight to what's on our balance sheet and what's going to be coming off over the next two to three months. Something that we constantly put in front of us. Price cost is, again, one of those items that is favorable to expectations coming into the year. I'd say the team is managing it really well on both sides.
As well as mix. I think the things that have exceeded expectations are around the material cost. Our ability to convert the product across the board, not just pipe, but at Infiltrator and our allied products. The things that we targeted for transportation and logistics, all that have exceeded our expectations as well as the mix and the organic growth of Infiltrator and the allied products over the last four or five months. Again, things we started a year ago kind of bearing down hard on.
Collin Verron — Analyst, DB
That's really helpful, color. I guess you mentioned on the transportation cost side of things that there were some of this inventory shift due to the realignment. I guess, is this expected to be ongoing? It sounds like it is just because your second half guide is mostly volume-driven. I just wanted to confirm that.
Scott Barbour — CEO and President, Advanced Drainage Systems
Let me take this one. As demand might get stronger in one geography versus another, or we announced the closure of a plant in the Northwest earlier in the calendar year, we had to move inventory to service our customers around that network. We're going to do what it takes to do that. Our logistics people are executing extremely well. We have a lot of great programs around safety and the new equipment we've added in there that are. We've done, and we will continue to do that. That's really what's strung that. I'm smiling at Cottrill because he's always busting on us on that. That's what we're going to do. I would add, because of our scale in these logistics capabilities, we can do that.
We can move this stuff around because of the size, scale, and management of that fleet. That is what you saw through there is just kind of peek a little bit. Fundamentally, the cost per unit are performing as we want. We just had to move some stuff around a little bit more than we anticipated.
Collin Verron — Analyst, DB
It's very helpful, color.
Jeff Reive — Analyst, RBC Capital Markets
Hi, good morning. Appreciate all the color thus far. At West Tech this year, you had an impressive presence showcasing both Infiltrator and Orenco. It's pretty clear how complementary those businesses are. Now that you've owned it for about a year, could you talk about how the integration is progressing, synergy capture, and where you see opportunities to drive growth or efficiencies?
Scott Barbour — CEO and President, Advanced Drainage Systems
I'm going to let Craig Taylor take that.
Craig Taylor — EVP, Advanced Drainage Systems
Yeah. The acquisition is going extremely well right now. We're starting to bring the products together that you saw at West Tech and expanding that to the Orenco dealers too. They've seen more of our Infiltrator products, and it's helped them understand what we can contribute to the market for them. On the synergies, it's on track. It's exceeding our expectations too, of what we've been doing. The commercial portion takes a little bit longer as that's winding up right now on the synergies, but it's hitting on all of the elements that we put together in the board model and our expectations going forward.
Scott Barbour — CEO and President, Advanced Drainage Systems
Yeah, it's gone very well.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Yeah, I would add that what we've seen so far is earnings growing faster than sales, which is good. The margins have improved as well. I think we're tracking very well, like Craig said, on the operating efficiencies and the synergies and improving the margin performance of that business.
Customers are really happy.
Scott Barbour — CEO and President, Advanced Drainage Systems
Yeah, a lot of activity around that. That's a good question. We appreciate it. I'd also mention the safety performance has been very good out there in Oregon. We've leaned in very hard, and the team there has grabbed it. That's been super good that we're glad to see. We reviewed a lot of this with our board yesterday. The synergy plan, which is really doing nicely in that safety performance. We're really happy. One year in, we couldn't be more pleased about where Craig and the team are with that acquisition.
Jeff Reive — Analyst, RBC Capital Markets
That's really helpful. Just to follow up on pricing, I believe your prior guide called for price down low single digits, volume up low single digits. Just kind of given the up guidance range, have your assumptions for the remainder of the year shifted at all in either price or volume?
Scott Barbour — CEO and President, Advanced Drainage Systems
No. Not on pipe. No. No. I guess that's what you're referring to is the pipe.
Jeff Reive — Analyst, RBC Capital Markets
Yes.
Scott Barbour — CEO and President, Advanced Drainage Systems
Actually, kind of honestly, the pipe is right on what we thought it was going to be. It kind of moves around a little bit by product line. We're really pleased with the superior growth of the HP product line. Overall, from a volume, pricing, mix, cost, the material cost is a bit better than we anticipated, as is the conversion cost. From just the demand and price in the market, it's really almost exactly on the plan that we thought. I think our team in the field is doing a very nice job with those product lines, as well as seizing all opportunities on the allied products. Craig's team is doing a great job in the field. We're clearly in the right geographies with the right distribution, the right product lines across the board. Again, this is we leaned in.
Over the years of beefing up in certain geographies. We leaned in with capacity. We leaned in with trucking capacity. We leaned in with new products. Think of these advanced treatment products Craig has that are doing very well. Across both Infiltrator and ADS, that's kind of working for us right now. We will continue to execute on that and invest in people and the necessary processes, systems, and equipment we need to get the job done.
Jeff Reive — Analyst, RBC Capital Markets
Great. Thank you.
Trey Grooms — Analyst, Stephens
Hey, good morning, everyone. Thanks for taking my questions. Maybe a little higher level or maybe longer-term focus questions here. Specifically with NDS, we haven't spent a whole lot of time here on that. I know you gave us some color back a few weeks ago with your conference call. You mentioned the potential for additional upside from cross-sale and maybe some other opportunities. Do you think you could go maybe into a little more detail around where you see potential revenue synergies, where they could exist? Specifically with NDS, and any way for us to think about what those potential revenue synergies could mean for enhanced top-line growth opportunities?
Scott Barbour — CEO and President, Advanced Drainage Systems
All right, Trey, I'll try to tackle this without stepping over any lines. This is Scott Barbour. Highly, highly complementary product line to our very bespoke catch basins that we call Nyloplast. NDS has by far the market-leading standard products, smaller in diameter than we do. When we get plans that show kind of the whole waterworks installation on a non-residential site, for instance, we see a lot of those products on there. We think we'll be able to package very effectively those kind of products. We run across a lot of opportunities for channel drains. They have a great product line in channel drains that we do not have today. We think both our sales force will be able to kind of sell those products.
We think in certain parts of the distribution, they're going to be able to sell more of our products, the pipe products. We think that their focus, particularly in turf and irrigation, which is kind of world-class, is going to be a strengthening of what we do, complementing and strengthening what we do at ADS. On the waterworks side, we think we'll complement and strengthen NDS. Those are the kinds of things that we're very excited about. These products really exist in an installation side by side. We're just going to get increased visibility on projects and jobs and opportunities that are going on in the market between our two sales groups, and our relationships just deepen with the addition of NDS. We're super excited about working with that team out there. That's probably about all I can say.
Trey Grooms — Analyst, Stephens
Okay. That's pretty exciting. I guess just another kind of higher-level thinking, a little longer term, you guys are putting up some really nice margins. The price-cost equation has kind of been beaten to death here. You're executing well. You've made some headway organically, clearly. Notwithstanding or just kind of setting the NDS equation or acquisition aside here, is there any way or maybe any update on how we can be thinking about longer-term margin profile of the business, given kind of some of the improvements you've made here, even organically?
Scott Barbour — CEO and President, Advanced Drainage Systems
Go ahead, Scott. See? This is a Scott Cottrill question, not a Scott Barbour question.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Yeah. Yeah.
I'll give you a couple of different ways to think about it. A, we love the DNA of the company, right? The allied and Infiltrator parts of the business grow at a much faster clip than the pipe side of the business. They have much larger adjusted gross margins. We really like that. We kind of margin and accrete up as we go over time. I would say as well, the new product introduction, the engineering technology center, the way that we deploy capital and capital allocation, really powerful. You look over the last five to six years and kind of what we've done there and how that's led to where we are. I think those are all kind of key avenues there.
I think you'll see more of our capital deployed in that innovation, as well as a bigger mix of what we spend on the CapEx side in the allied and the Infiltrator side of the house now that we've kind of caught up a little bit on the pipe side. Still some automation, productivity, and other investments we need to do there. A lot of margin accretion opportunity, both on the productivity automation side of the house, new product introduction side of the house, the growth algorithm, if you will, as well as putting this balance sheet to work through accretive acquisitions as we move forward. I see all of those as kind of a trifecta, if you will, of how we not only grow the company, but as well as accelerate that margin expansion as we go.
Do we think that this ADS is a 20-25% EBITDA margin business? We do not. Yeah. We see a lot of different reasons why we can continue to accrete that as we move forward.
Trey Grooms — Analyst, Stephens
Okay. Fair enough. Thank you for all of that. I appreciate it. Best of luck.
Scott Cottrill — EVP, CFO, and Secretary, Advanced Drainage Systems
Thank you.
Scott Barbour — CEO and President, Advanced Drainage Systems
Thank you.
Scott Barbour — CEO and President, Advanced Drainage Systems
Okay. Thank you very much. We appreciate everyone being on the call today. The quality of the questions, we kind of anticipated a lot of questions around the second half like that. I'm sure we'll get more of them as we go forward. Good quarter. Like I said earlier, this was a quarter where we really started on a year ago with all the things that we began to work on. Understanding that the demand environment was going to be a little tepid. Those things we can control, we feel good about. We'll continue to work hard on those. I think as the demand develops, we'll capture our fair share more, but we'll just have to see how it develops over time. Thank you very much, and you all have a good day.