The Middleby Corporation
Q3 2021 Earnings Call Transcript

Published: 9 Nov 2021

[Operator:]

Welcome to The Middleby Corporation third quarter conference call. With us from management are Chief Executive Officer, Tim FitzGerald; Chief Financial Officer, Bryan Mittelman; Chief Technology and Operations Officer, James Pool; and Chief Commercial Officer, Steve Spittle. The call will begin with opening comments from management, and then we will open the lines for questions. . Now I'd like to turn the call over to Tim FitzGerald for opening remarks. Please go ahead, sir.

[Tim FitzGerald:]

Great. Thank you for joining us today on our third quarter earnings call. As we begin, please note there are slides to accompany this call on the Investor page of our website. During the quarter, we continued to build upon the positive momentum across all three of our segments

[James Pool:]

Thanks, Tim. It's not every day when advancements come to grilling technology. But with 11 patents pending, I'm excited to share with you the latest development from Taylor for 2022, the Taylor NextGen Grill. This product delivers precisely on what the industry needs

[Bryan Mittelman:]

Thanks, James. And I think you forgot to mention how delicious and juicy the burgers are that we're coming off of it, but we'll save that for other times. For the third quarter, we generated record results with revenue of over $817 million and adjusted EBITDA of over $172 million. GAAP earnings per share were $3.09 and included the net benefit of $77 million from the deal termination fee we received. Adjusted EPS, which excludes the deal fee impact and also excludes amortization expense and nonoperating pension income as well as other items noted in the reconciliation at the back of our press release, was $1.92. The negative impact from acquisitions was $0.05 for the quarter. Operationally, in spite of the mounting supply chain challenges, it was another strong quarter for us. Robustness in orders persists, we again exceeded $1 billion for the quarter. For revenue, on a year-over-year basis, we grew 29% or 22% organically as we continue to benefit from improving conditions in Commercial Foodservice, which is now ahead of 2019 on an organic basis, and robust demand in Residential as well as Food Processing. And we continue to generate strong cash flows. Our profitability remains solid. We delivered 21% adjusted EBITDA overall, an increase over the prior year level. Total company adjusted EBITDA at $172 million, as I mentioned. This represents approximately 36% growth from the prior year. We are consistently growing our bottom line faster than our top line, even while we continue to make meaningful investments in technology initiatives. Commercial Foodservice revenues globally were up 32% organically and was fairly even between the North America and international markets. The adjusted EBITDA margin was 24.5%, an increase of approximately 210 basis points from the comparable prior year period. By the way, all the margin values I will discuss are on an organic basis as well, meaning excluding any acquisitions and FX impacts. In Residential, we saw revenue up 14%, with international growth at nearly 45%, including the impact of an acquisition. Strong demand persists across all our major product areas. The adjusted EBITDA margin was 21%, an increase of over 230 basis points from the comparable prior year period. In Food Processing, revenues increased approximately 1% and the adjusted EBITDA margin was 22%. Our operating cash flows were nearly $174 million. When excluding the benefit of the termination fee, net of expenses and taxes, we still generated nearly $100 million. Our free cash flows were over 90% of net income for the quarter. The current business environment is also impacting our working capital levels, which increased $80 million during the quarter. Our total leverage ratio is 2.4 times while our covenant limit is 5.5 times. We have over $2.3 billion of current borrowing capacity. We refinanced our debt last month, which provides us increased financial flexibility and extends the credit facility's maturity date out to October of 2026. The facility size has been increased from $3.1 billion to $4.5 billion, subject to an increased secured leverage covenant of 4.25 times pro forma EBITDA. Our total leverage covenant is unchanged at 5.5 times and thus would allow for up to $2.3 billion of additional borrowings currently. These are really large numbers. I'd like to talk about some smaller numbers, actually much smaller numbers that are also very important and that I found quite interesting. 199 is where I will start. You can come to the MIK and meet our cube grater, Jennifer, which means our knowledge of all things coffee is off the charts. Besides learning about our automated brewing systems from Concordia and how you will be delighted with our Synesso machines, you can learn about beans, roasting, grinding, brewing and so much more. Also, the perfect cup of coffee is brewed at 199 degrees. Getting even smaller now, 60. The countertop ventless mini combi by Blodgett is an incredible oven. Chef April will impress you with the seemingly unlimited ways this truly unique piece of equipment can make any kitchen more efficient, with a small footprint that can be placed anywhere as it is ventless. I do have a fondness for breakfast egg sandwiches, so I was amazed to learn that this powerhouse can cook 60 eggs at one time. And lastly, 2, and a brief discussion of beer. two is the number of brewing divisions we have, Ss Brewtech and Deutsche. two is also the number of canning and bottling brands we have with Wild Goose and Inline Filling solutions. But it is also interesting for another reason. At the MIK, you can meet our brewer extraordinary, Brad. Not only can you see and taste what he has concocted, but you can tap into his vessels of knowledge as he personally built systems and has run breweries. He is one more example of someone whose experience and passion will certainly impress. And one tip that I came away with, there are truly only two types of beers

[Operator:]

We have our first question coming from the line of Saree Boroditsky with Jefferies. Your line is open.

[Saree Boroditsky:]

Good morning and thanks for taking my question. So just given the strong backlog figures, could you help quantify the impact of the supply chain in the quarter on sales? And are you seeing customers place orders earlier than usual given the longer lead times?

[Tim FitzGerald:]

It's hard to quantify, honestly, I mean obviously, we're very restrained in what we can ship, how much more we can ship. I mean obviously, the backlog is up 30% more than what we're shipping. I think if we had unconstrained supply chain and labor issues, we would be shipping frankly, that much more. So I think that's probably about all I can say to quantify. I think more importantly, we're trying to build capacity as we go into next year. I mean the supply chain challenges continue to be very dynamic. We have phenomenal supply chain team around the company. They're working every day to secure availability so we can deliver to our customers, and we're trying to increase that as we move into next year.

[Saree Boroditsky:]

Great. And then you talked about some of the investments you're making in automation, especially in Commercial Foodservice. Could you quantify that spend? And how we should think about those costs going forward?

[Tim FitzGerald:]

I'll let Bryan maybe touch on that from a number standpoint. I mean I just think, as you heard in our comments, we talk about a lot, we're very committed to investing for growth in the future. I mean we're doing that with investments in technology, but certainly with our sales initiatives as well, which certainly there's a lot we're doing on the digital front as well investing in our channels and channel partners. But kind of the hands-on experience is really a critical one as well, so that's been a very significant commitment that we've made. And that's been increasing as we've been going through the year, and that's kind of fully reflected in the third quarter.

[Bryan Mittelman:]

Saree, this is Bryan. In past quarters, we have talked about a level of spending we've had on technology, including automation and that has not diminished. I also think it's important that as you think about automation, it's not just robotics and the like but it's like products that James has talked about, the NextGen Grill. It's products like the PLEXOR that we highlighted last quarter. So beyond the numbers I've talked about before, I'll call it, within our day-to-day R&D run rates, we're always developing new products. So that's why as I think you think about the spend, it's what we've quoted before plus additional amounts that, again, are embedded in what we're doing across all our businesses to bring out that new innovation. So if you follow us, again, you can -- on social media, you can see our robots in robotic solutions in action. But again, automation is more than that. It's all the things that James has really been talking about on this call and prior calls as well.

[Tim FitzGerald:]

I just -- we've referenced $5 million per quarter, $20 million plus per year of incremental R&D spend. So we do have a multimillion-dollar investment in sales initiatives as well. So I just maybe call that out because I think those are exclusive items there. So that is an investment that we, again, you'll see is running through our P&L. It's actually been building over the last couple of years as we're thinking about where we want to be in two to three years out from now.

[Saree Boroditsky:]

I appreciate the color. Thanks, guys, congratulations on the quarter.

[Tim FitzGerald:]

Thanks.

[Operator:]

Thank you. We have our next question coming from the line of Joel Tiss with BMO. Your line is open.

[Joel Tiss:]

Hey, guys. Go on good morning.

[James Pool:]

Good morning, Joe.

[Joel Tiss:]

The first one maybe is a James question, I'm not sure. But is there any way for you to give us a sense of how far away from the level of what the customers want in terms of automation? Like where is the industry or where are you guys versus what the customers are asking for? And any way to give us a sense of what your positioning, you feel like you're way ahead of everyone else or you're keeping pace? Or any characterization.

[James Pool:]

Yes. I think right now, you've got kind of two types of customers. You've got customers that are actively adopting our embedded automation today every day, the products like the PLEXOR, the products like the Taylor NextGen Grill as we see that in our backlog numbers. And then you have customers that are looking beyond embedded automation and looking for, what we'll call, kind of true robotic automation that they're looking to deploy in the kitchens. I think we are right on pace, maybe outpacing the market with our FryBot and PizzaBot solutions that we're bringing to bear on the industry for all the interrupts that we've had with our customers at the Middleby Innovation Kitchens that have seen these technologies. They seem to be in line with their expectations of what they're looking to automate within their space. It obviously impacts the different segments, slightly different, but the ones that haven't recovered as much, frankly, lead to greater pent-up demand when they do recover, which is kind of what Steve was alluding to, talking about school systems. So we feel pretty good about the trends continuing and don't really expect a disruption from an order standpoint based on COVID.

[Joel Tiss:]

And then a bigger picture question in terms of acquisitions. Are there larger acquisitions available? And then more around your focus, you're more focused on technology? Or is it still kind of building out the product lines and filling in some areas where there's exciting growth?

[Tim FitzGerald:]

Yes. I would say it's a bit of both. I mean obviously, we continue to be very active over the last several years. The company expands. We're really focused on -- continue to build on our core business to three different segments. You've seen us enter into adjacent categories such as beverage, where we built a leading platform and then we're acquiring technologies that really help us kind of advance all the companies in the group, certainly our automation division such as L2F is a great example. Powerhouse Dynamics with our Open Kitchen launch where we've kind of become the -- we're leading the IoT charge, and that's really coming across all of our brands. I mean I think those are all key areas. Investments in international is another one as well, 1/3 of our business, so that's north of $1 billion today is outside of the U.S. So that is another area of focus. So in terms of size, I mean, they're all shapes and sizes. As you can see, we do large acquisitions. We do small acquisitions. As Middleby grows, that gives us the ability to actually go after some bigger fish out there, which you've seen size of acquisitions increase over time. So there's a lot of great ideas in the pipeline that are very strategic. And certainly, the current market, we're as active as ever in terms of ideas and things that we're pursuing.

[Joel Tiss:]

That's great. And then the last one from me. Can you just give us a little characterization of some of the end markets that may be lagging? What I'm thinking in the back of my mind is more like a slingshot into 2023 and maybe like hotels, airports, cafeterias, places like that? Or is there enough sort of underperformance in some key end markets still, not from you guys, just from lack or demand still being a little bit weak that we could really see kind of longer term? What I mean, like '23 and '24, we can see those end markets come back and really, really add a lot of momentum to what you guys are already doing.

[Tim FitzGerald:]

Yes. I want to make a quick comment, and I'm going to pass it over to Steve here. Just the one comment is obviously, there's a lot of disruption and a lot of dynamics that are driving activity in the near term and as you go across the different segments that are at different stages. But I mean, I think we're pretty excited about what the outlook is over the long term. So despite the fact that we've had some pretty good orders here in the near term, I mean, there really is a lot of trends that are driving longer-term growth. Those are obviously things that we were positioning for going into COVID, which COVID is accelerating a lot of those trends. But I mean I think that really does set the backdrop for kind of a longer-term period in the commercial foodservice industry. So maybe kind of digging into some of the different segments.

[Steve Spittle:]

Yes, Joel. Yes, I would just say, again, if you think of our customers in groupings of how they've gone through the last, call it, 18 months going through COVID, the group that has certainly again done the best and continues to grow, will certainly continue to grow into next year is the QSR, fast casual, pizza, retail, C-store group. I mean that's the group that's doing record new builds on their stores right now, and they've given us a lot of visibility certainly into next year and I think have some aggressive growth plans. So that's kind of group number one, which we found before. I think the group after that, which probably is getting more into what you're referring to, Joel, you certainly are into more casual dining than independent restaurants. So I think they're certainly ahead of where they were kind of pre COVID. They're still lagging that first group. This group, I think you're seeing a lot more replacement business, right? They're not opening as many new locations. They're getting the locations that were either shut down or harder hit back up and running, and you're seeing replacement business from that segment. And then I think the last group, again, that you're probably referring to, you're into travel, leisure, healthcare, institutional segments. I think again, they're trending positive. They're just lagging those first two groups. So I would support your point of that third group certainly has runway over the next 12 to 18 months as they come back. But I really think all three segments are trending positively. It's just kind of a measure of magnitude as to where they are in that recovery cycle, if that makes sense.

[Joel Tiss:]

That's great, thank you so much.

[Steve Spittle:]

Yes. Thanks, Joe.

[Operator:]

Thank you. We have our next question coming from the line of Larry De Maria with William Blair. Your line is open.

[Larry De Maria:]

Hi thanks good morning everybody. As it relates to the $1.2 billion backlog, I know you've addressed this in prior calls, but can you discuss the timing and how long that's going to convert and if you're repricing any of it? Because obviously, you seem pretty confident that price cost gets better in 1Q, but I seem to recall, you had some orders into the spring for quite a while now, even maybe a year by the time they hit. So I'm trying to understand the confidence and obviously, the price cost is getting better and whether we repriced any of the orders out there.

[Tim FitzGerald:]

So we are not generally repricing the orders. So I mean, I think we've kind of taken the approach that we want to try to be -- do right by our customers and kind of make our way through an advantage as best we can kind of pulling the levers internally. So we're not disrupting our end users, particularly in markets such as residential, where you've got -- and consumers have been waiting for their products for a while. So hence, that is the headwind, right? I mean that is what showed up in the third quarter margins. But the price increases that we have taken, I mean, as we bleed off the backlog, it does roll on with the new pricing. So it's not like there's a magic line, right, because you've got 100 different companies within Middleby. And I think we were all fairly synchronized in pricing, but people have different backlog. So it kind of scales in, I would say, kind of an increasing basis as we start in the fourth quarter and roll through sometime in the second quarter of next year.

[Larry De Maria:]

Okay. And then secondly, I don't think this has come up before, but there's an awful lot of articles and things around the Taylor ice cream machines and reliability. Can you give us a handle on what's going on with them? And maybe how much of a positive impact to Middleby, the parts and service business of Taylor is because there seems to be a lot of reliability issues and how you're addressing all that?

[Tim FitzGerald:]

Yes. So there is a lot out there. I would say, first of all, people love their ice cream from the Taylor machine, hence one of the reasons it gets spotlighted so much. It's a very critical piece of equipment and drives a lot of revenue and returning customers to our restaurant operations. The social media is a great thing and not everything in social media is 100% newsworthy as well. So I mean, I would say that a lot of the things that you see out there are kind of hyped to a certain extent. I mean it is certainly a technical piece of equipment. We've got a great service organization that keeps the equipment up and running. There's a lot to do with cleaning cycles, which sometimes, I would say, more often than that when there's complaints out there, it's actually that the equipment is going through a cleaning cycle because as you might think about, food safety is a big element when you're dealing with a piece of equipment like that. So I think the -- we're doing a lot using technology actually with IoT and kind of our next-generation piece of equipment to ensure that equipment is being cleaned at the proper times, kind of thinking about preventive maintenance in equipment like that, so people know where we are in an operating cycle and so forth. But I mean I think it's probably a lot of the news out there is really maybe a little bit misleading. And I think we're also, at the same time, doing everything we can to make sure that our piece of equipment, which is highly core to our customers, really has the best technology in there. So it's kind of we're maximizing the uptime of that piece of equipment.

[Operator:]

Okay, thank you. We have our next question coming from the line of Jeff Hammond with KeyBanc. Your line is open.

[Jeff Hammond:]

Hey, good morning guys. Orange already. So I know you kind of were getting away from guidance, but you did kind of give us the update kind of midyear around the $730 million adjusted EBITDA. It seems like the revenues are kind of falling out in line, but there are some headwinds on the cost side, and I just don't know if you can frame or quantify those headwinds. It looks like certainly price cost is an issue. And then it looks like the corporate cost, maybe some deal costs in there are headwind as well.

[Bryan Mittelman:]

Yes. So I mean I think if you look at the EBITDA reconciliation, we have certainly identified the benefit in costs specific to the large deal that didn't happen this year. Obviously, we've posted $520 million of EBITDA year-to-date for this year, and I'll leave it up to you and other analysts and investors and the like to plot out what Q4 can look like vis-a-vis what we did in Q3. But obviously, there's -- the difference between $730 million and $520 million is $210 million. And that seems like a large number given where we currently are today. But I think, as you noted, supply chain and price costs are obviously the factors that we're actively addressing. And I think I gave some commentary as to how we think that will continue to improve starting the beginning of next year and then ramping up during the course of '22.

[Jeff Hammond:]

Okay. Very helpful. Can you give us what price was in third quarter? And then as you think of all these additional price actions, what -- based on what you've announced, what you think the wrap-around pricing is into '22?

[Tim FitzGerald:]

Yes. Steve, why don't you go ahead?

[Steve Spittle:]

Yes. So I'll just maybe highlight kind of the cadence of the pricing recently in the last few months. So again, 100 brands, but for -- so it's a little bit different across the portfolio and customer base. But for the most part, we took pricing in August across all of our brands. And then we just recently took another round of pricing that went into effect November 1. I would say from a color standpoint, the November increase was a bigger increase than the August increase. In terms of how we would think about when that pricing starts to come through, I think the way I would think about it is the August pricing that went into effect, you'd start to see come through in the first quarter. And I think the November increase that just went into effect, you would start to see come through in the second quarter, if that helps answer the question.

[Jeff Hammond:]

Okay. Yes, that's perfect. And then just on Food Processing was a lot lighter, and I just didn't know if there's anything unique there, a big shipment that got delayed or any other kind of noise around Food Processing?

[Bryan Mittelman:]

No. I wouldn't say there's any noise there. I mean we did note coming out of the Q2 release that as we looked at kind of timing of deliveries and the work that Q3 was going to see a dip, and we expect Q4 to move up from here. But the orders have been strong here. The backlog is at record level for this business as we sit here today. So we still think the outlook is very strong here. And again, the demand factors have been coming through. I think as we went back, I got to think how long we've been living through the COVID here. But if we go back six or nine months, we are certainly talking a lot about customer challenges and getting to see us and evaluate equipment and the like. That has not completely abated, especially since this really is a dynamic international business, but it has been improving. So the trends here, and again, as you can see, the orders and backlog is encouraging and positive for this business just like the other two segments.

[Jeff Hammond:]

Okay, great. I appreciate it.

[Bryan Mittelman:]

Yes.

[Operator:]

Thank you. We have our next question coming from the line of Tim Thein with Citigroup. Your line is open.

[Tim Thein:]

Thanks, good morning. Maybe just the first question is just -- pertains to kind of any ways to monitor the quality of the backlog. And I just -- maybe I was just curious as to this risk around double or triple ordering given pretty unique backdrop we're in from the standpoint of the magnitude of the price increases and the long lead times. So I'm just curious, do you think that's much of a risk that we should be thinking about? Or is it not something that's on your radar?

[Tim FitzGerald:]

If you're talking about risk of order cancellations, I don't think that is much of a risk. I think everybody is going to be battling, frankly, for supply as we go through the front of next year. So it doesn't mean that there won't be some here or there, but I mean I think, by and large, that's going to be a pretty solid background -- backlog. In terms of pricing, I mean, I think -- I mean, obviously, the quality of the pricing of the backlog is improving as we go quarter quarter-by-quarter. I think the other thing I'd just kind of throw up there, which is something that we're very focused on near term and longer term, is the quality of the mix of the backlog, right? I mean certainly, that was an area that we were focused on even coming into COVID and here through our discussion about technology and things that the customers are thinking about. Today, we're starting to see more and more development of some of these new product launches that really are addressing what I talked about

[Tim Thein:]

Yes. Yes, that's interesting, Tim. Obviously, that issue around labor cost and availability, I mean, it's coming up on every restaurant companies calls here in the quarter. But -- and looking for ways to save labor and automate. But obviously, those decisions don't get made overnight, and I would guess there can be kind of a long runway. So how do you think about -- I mean, is there a way to quantify what that opportunity could mean to either Middleby or just industry revenue potential, just assuming this issue continues and persists and you do see that greater kind of trend toward, again, automation in the kitchen? And again, I'm sure it's difficult to kind of pinpoint, but maybe you can just speak to what we're looking at or what we're kind of thinking about in terms of potential opportunities for, again, either Middleby and/or the industry?

[Tim FitzGerald:]

Yes. I mean I think this is one of the things that gets us excited, right? I mean I think we've been pushing innovation for a while and making incremental investments in it. And so that is where we see the opportunities in the industry and some of the things that are going to drive growth in the longer run. We think it is also one of the things that is going to further differentiate Middleby as we go through the next handful of years, those investments that we have made. And I think we're still at the early stages of it. I think it does take a while for customers to adopt technologies. But those decisions are now getting compressed, right? Like I mean, I think given that the dynamics that our customers are facing which are, in some ways, in crisis mode for them, right? Like if you cannot get labor, how are you going to think that's priority 1. So they're engaging different -- they're looking for different solutions, their operating models are changing, that is shortening the periods that they would typically go through to adopt technology. So I think that is kind of the period that we're in and still, I would say, at the early stages of. But I mean I think the next couple of years will be pretty exciting for us as we go through that. I would say, we talk about it a lot, the engagement that we have at the innovation center. But I mean, I think that is not us just really talking about it. I mean that has really been very hands-on. And the innovation center has really been open for a relatively short period of time, two to three quarters, and I'll just ask James to maybe give a little bit of flavor who's come through. But I mean, I think, we've been very pleased with that investment because it really is presenting an area where we can demonstrate and engage on all this. And our customers are engaging on it, right? Like we're not begging people that come in, we're pretty well booked.

[James Pool:]

Yes. I think the demand of the -- to come to the MIK is -- just exceeded everybody's expectations around the table. I think as it relates to customers that have come in, Steve rattled off the segments earlier. I think every segment that Steve rattled off from hotels to C-stores to fast casual to casual dining to fine dining have been through the doors at the MIK. We do a fairly good job of tracking the traffic through the innovation kitchens. To date, we've had probably 1,300 people through the innovation kitchens, representing about 160 different customers from mom-and-pop all the way up to the largest chains in the industry. And at the innovation kitchens, we have all of our great new automation on display in the automation pod, which is featuring the FryBot, PizzaBot, but also as we talk about how the industry is trying to solve for labor through the adaptation of automation. We have all of our great embedded automation at the innovation kitchen, which are great products because they are the higher-margin products that we are driving our customers to. And then we also have our full digital IoT complement with open kitchen on display, which is garnering a tremendous amount of traction given the ability to automate the front of the house to the middle of the house to the back of the house. So I don't want to say they're beating down our doors, but it's close to it. And so we're excited and we staffed up to manage the traffic.

[Tim Thein:]

Very good.

[Operator:]

Thank you. We have our next question coming from the line of Walt Liptak with Seaport. Your line is open.

[Walt Liptak:]

Hi, good morning guys.

[Steve Spittle:]

Good morning.

[Walt Liptak:]

I wanted to ask a follow-up on the channel inventory. It sounds like that there's not a whole lot of channel build. But fourth quarters, I think in the past had been periods where there was sort of true-up on volume discounts and rebates and things like that. I wondered if there's anything like that, like rebate payments or anything that flows through in the fourth quarter or any true-ups to get to kind of target volume levels with the channel partners.

[Steve Spittle:]

Yes. Walt, it's Steve. So yes, I would agree with you in kind of "a normal year", you would definitely see that dynamic in the fourth quarter with your channel partners chasing year-end incentives. Obviously, we are operating in a not normal dynamic. So that will not happen this year for a number of reasons. I mean there's very little inventory in the channel. So I guess let's start there. That's kind of your first question. And I just think the dynamic between order placement, lead time, supply chain when you're actually getting your equipment being so dynamic right now, that really makes that kind of fourth quarter push that you would normally see in a year pretty much go out the window at this point. And we've also been very focused, frankly, on not doing any type of discounting that we may have in the past to drive a year-end deal like that. So it's a very different year, I guess, to answer your question, but I do not see the dynamic from prior years taking place this year and probably won't be taking place for a while, if not going away for a long time.

[Walt Liptak:]

Okay. Great. And then the last one, I wonder if you could just comment on how your deal funnel is looking, how competitive is the market valuations, things like that.

[Tim FitzGerald:]

Walt, it's Tim again. So I touched on that a little bit with the question that Joel had. I mean I'd just kind of repeat, we're -- we never run out of ideas here. Our challenge is always too many ideas, so the funnel has been pretty active. There's been a lot going on just because I think a concern about taxes as well as kind of all the dynamics that are happening in all the industries, but we're pretty well positioned from a deal pipeline kind of consistent with the last 20 years and well positioned from a balance sheet standpoint as well. Obviously, Bryan talked about our financing. And certainly, we were pleased and the team did a great job of upsizing our credit facility. That gives us a little bit more dry powder as we roll into next year as well.

[Walt Liptak:]

Okay, great. Thank you.

[Tim FitzGerald:]

Thanks.

[Operator:]

That is all the questions we have today. I'd like to turn the call back over to management for any closing comments.

[A - Tim FitzGerald:]

Okay. Thanks, everybody, for joining the call today, and we look forward to speaking with you for the next quarter.

[Operator:]

This does concludes conference call. Thank you for participating. You may now disconnect.