Q4 2019 Earnings Call

Good day, and welcome to the Troy, Michigan fourth quarter and for your 2019 earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to missionary Lauterbur. Please go ahead.

Thank you and welcome to the China Corporation fourth quarter, and full year 2019, earning call participating on the holiday Air Canada, China is president and CEO and Boston Lynskey, Our Chief Financial Officer. After our prepared remarks on our 2019 resell and our 2020 outlook will open the call.

<unk> for your question.

In order to assist with the review of our results. We've included the press release inherently presentation on our company website Www Dot Hi, NASCAR Satcom under the Investor section. In addition, a replay of this call will be available later today by calling 820 311 once you would they replace.

Codell one to eight seven 708.

Before we get started I would like to remind everyone that our comments today, which are intended to supplement your understanding of China may contain forward looking statements that are inherently subject to a number of risks and uncertainty.

Please refer to our form 10-K for list the factors that could cause results to differ from those anticipating any forward looking statements.

Also we undertake no obligation to publicly update or revise any forward looking statements except as required by law. We would also direct your attention to our website were considerably more information may be yeah. I would also like to refer you to the appendix in our press release issued this morning are included as a part of this presentation, which is available on our website.

Well the reconciliations between GAAP and non-GAAP financial measures used during the conference call today, the discussion on the call regarding our financial results will be on an adjusted basis, excluding the impact, especially to at this point I'd like to turn the call over to Tom Amato try not just president and CEO huh.

Thank you Sherri good morning, Thank you for joining our fourth quarter and full year earnings call.

During the quarter for much of the second half we made excellent progress on executing against our strategy to better position try man for long term value creation.

At the end of the year, we completed the sale of our layman's business, a significant strategic step, which reduces our exposure to the oil and gas markets to less than 5% markets that have historically been more cyclical than our poor packaging and aerospace markets.

This proved to be a challenging sale process that the trimesta layman's teams worked diligently on unfortunate personally think all involved in bringing it to successful completion.

While working to de emphasize our position in the oil and gas market. We have also been executing against our strategy to build out the try mass packaging and try mass aerospace platforms through programmatic M&A leaning into markets that we believe in the long term will drive the highest value for trying to ask that shareholders.

And our packaging segment. In addition to the two acquisitions, we completed earlier in the year, We recently announced that we signed an agreement to acquire rate pack, which brings us back in box product line to Jason C and I'll cover this unique transaction in a few slides.

In our aerospace segment, we renewed our acquisition target list earlier in 2019 to focus on building out this platform as well as a result, we recently announced that we signed an agreement to acquire RC engineered products, which has a new product adjacency to our aerospace group consistent with our aerospace fastener bid.

Yes, our thing supply highly engineered products under longer term customer contracts I'll discuss this exciting acquisition in a few slides as well.

And turning to slide three try massive end market strategic repositioning is illustrated here.

Our sales when considering full run rate for the two pending acquisitions would approximate 800 million with more than 80% of our sales in the packaging and aerospace markets. More importantly, we believe this strategic shift better positions trimesta into markets with long.

Turn positive outlook trends, especially as we increase our product line breadth to capture new customers and applications.

Also 15% of our total pro forma sales, which are reported in Trimesta specialty products segment will be generated from the general industrial end market predominantly from steel cylinder sales into a variety of end market applications, including H. back construction and aerospace and defense.

Even though 2019 was an extremely challenging year for North American General industrial sales activity, we remain optimistic about the long term outlook for our steel cylinder product lines.

Well, we have taken strategic steps to focus try my best further on the packaging and aerospace markets. We also maintained a strong balance sheet something that we're committed to as part of our overarching tenet to manage our financial profile.

Turning to slide four as we've stated previously we've increased our cadence of buying back shares essentially using available treasury funds to buy try mess in fact, 2019 and 2019, we acquired 2.7% of our total shares outstanding and more recently to date in 2020, we have.

Acquired another 0.6% of our shares outstanding. This brings the total amount of repurchases of shares outstanding up to 4.3% since we started buying under this program in mid 2018.

In light of our strong balance sheet, and just over 90 million of availability under our share repurchase authorization.

Try Miss will continue to place a priority on share repurchases in tandem with M&A bolt to drive long term value for our shareholders.

Let's turn to slide five and I will further discuss our recently announced acquisitions first birthday engineered products.

Our assays the company located in Simi Valley, California that design engineers and manufacturers metallic ducting connectors and expansion join for Aerospace Air management systems.

Our assays products redirect bleed here from the turbine engine for use in flight functions such as Deicing for your own pressurization applications are say supplies and to defense business and commercial jet applications and many of our these products are engineered for specific jet applications and our sold under long.

Tracks.

We identified our say as M&A target Africa opportunity given its engineered product line and the characteristics of the aerospace or management and market generally.

Our say became available for sale, we moved expeditiously and diligently to break our say into the try mass aerospace family of businesses.

We believe the longer term growth prospects for our say, we'll be enhanced by it being part of our larger aerospace group as it has been to date, a standalone private equity owned business.

In addition, while it is not initially part of our investment thesis, we do anticipate that the nature of certain sub sub components that RC currently utilizes would fit within the manufacturing scope of our Martinique engineering business any opportunities for hours say to benefit from available machining capacity was.

In Martin neat will be further upside synergies to this transaction.

I always say generated 2019 revenues of just over 32 million and an EBITDA margin in excess of 21% our transaction prices approximately 85 million and we expect procurement in infants infrastructure synergies and enhance growth all of which would imply a forward multiple of approximately.

11 times, the trading multiple which we believe is currently in the lower to mid and valuations for aerospace aerospace engineer product companies.

Turning to slide six we also announced our agreement to acquire repack.

Right pack is comprised of certain bagging box assets and intellectual property used in North American dairy soda smoothie and wine applications. These back in box assets previously owned by D.S. Smith were required by U.S. antitrust authorities to be divested by liquid biopsy in connection with there.

Our acquisition of de estimates plastics division.

Great pack designs and manufactures injection molded closures and dispensers, which are formed into place during the back manufacturing process, therefore, creating a ready to use what holding back for rig X customers. Additionally, repacked engineers and manufacturers of filling equipment product line with certain costs.

There is utilized for their filling processes.

We will close this transaction upon completion of certain conditions to prepare ray packed for seamless separation from local box, which would include relocation a specified bagging box Assembly line molding equipment and filling equipment manufacturing lines. Among other items as agreed in the transaction agreement.

Ray pack will have standalone facilities in Indianapolis, Indiana Union City, California, and soon Woodbridge, Illinois.

Pro forma annualized sales of repack approximated 30 million with an EBITDA margin in the low double digits, but which we expect to improve upon under our ownership.

The transaction purchase price is 12 million, which is which approximates a multiple under four times. Our plan forward earnings. This valuation is reflective of the turnaround and performance actions, we need to execute going forward.

Right back has approximately 100 employees and we look forward to welcoming them to the Trimesta packaging family of businesses.

Before turning to the quarter and your unresolved. We are excited about these significant steps to strategically repositioned and concentrate try mass further in the attractive markets of packaging and aerospace.

Turning to slide seven.

Sales for the quarter were 170.9 million up slightly from the prior year quarter, driven by acquisition sales, which more than offset end market softness the currency operating profit was down as we anticipated for the quarter by 2 million to 21.2 million.

Earnings per share for the quarter were 31 cents, which was below last year, but came in at the higher end of our anticipated rate, thereby allowing us to achieve the top end of our revised full year EPS range.

Turning to slide eight sales for 2019 were 723.5 million.

Up 2.6% driven by acquisitions.

Higher organic sales in our aerospace segment were more than offset by lower sales within our specialty products businesses.

Specifically, our Aero engine business, which sells to the upstream oil and gas market and Norris cylinder, which had most of this softer sales occurring in Q4 due to we believe customer consolidations and they're cautious approach to new product purchases at the end of 2019.

In addition, we did experience lower organic sales throughout the year in certain North American packaging product line.

Sales were curtailed by tariff premiums and also capacity constraint constraints in certain food closure applications.

In the case of capacity constraints with new equipment installations organizational restructuring and training. These issues will be largely behind us as we enter Q2 2020.

Operating profit for the year was at 96.2 million down by 5.3 million as earnings from acquisitions in higher conversion within our aerospace segment were more than offset by lower sales of traditionally higher profitability products within our specialty product and packaging segments, and expedited freight costs, which Bob will discuss.

Earnings per share was $1.45 as noted which was at the higher end of our revised guidance range provided in November of a dollar to $1.45.

So before turning the call over its Bob 2019 had a mix of end market challenges. Some as noted on our last earnings call directly and indirectly related to terror and other challenges on a year to year comparison basis related to end market softness or uncertainty, resulting in lower customer spending well.

When you to stay the course with our overarching strategy. We have had to also take more tactical steps in the second half or 2019 and into 2020 as we continue to face new challenges, including now unknown secondary effects from the Corona virus outbreak.

With that I will turn the call over to Bob Bob.

Thank you Tom I will begin my remarks today on slide 10, and briefly comment on free cash flow in the strength of our balance sheet.

We generated 28.3 million a free cash flow in the fourth quarter slightly higher than the prior years quarterly amount of 26.9 million.

We finished the year with 71 million of free cash flow, which was lower than the prior year due to higher cash taxes increased capital investment in support of customer growth initiatives and higher inventory levels to help manage the impact of tear ups and plan actually floor improvements.

For the full year free cash flow conversion approximated, 100% of income 107% of income from continuing operations, which exceeded our guidance of greater than 100% of net income.

We ended the year with 172.5 million of cash on book inclusive of the net cash proceeds from the sale of layman's of approximately 111 million. In addition, as Tom noted a bit earlier, we invested 67 million in to bolt on acquisitions in the first half 2019.

As well as use 36.7 million of cash during the year to repurchase more than 1.2 million shares of our stock in a return of capital to shareholders.

As a result, we finished the year with net debt of 122.2 million in a bank leverage ratio of 1.3 times significantly below our stated overarching goal of less than two times.

Trimesta strong balance sheet, which includes more than 450 million of cash in aggregate availability under our revolving credit facility low leverage and a solid track record of free cash flow generation positions us with ample capacity and flexibility to continue to fund our balanced capital allocation priority.

Yes.

Now, let's review our segment results beginning with packaging on slide 11.

We're fourth quarter, we reported net sales of 94 million an increase of 4.3 million net about point sixmillion drag due to currency translation. This represented an increase of 4.9% versus the prior year fourth quarter and was driven by incremental sales of our plastic srl and.

Platts acquisitions.

Organic sales declined compared to Q4 2018 due to lower sales of certain beverage pump dispensers and food closure applications sold into North America as well as continued sluggish demand for industrial closure products also sold in North America, which we have experienced for much of 29 team.

Operating profit of 19.5 million declined 3.2% compared to the prior year quarter, which resulted in an operating profit.

[noise] [noise] [noise] [noise] of operating profit margin of 20.7%.

Favorable impact of incremental acquisition sales was more than offset by their margin profile, which currently runs at a lower rates than our segment average so while acquisitions, our EPS accretive an increase absolute EBITDA segment operating margin doesn't mix down by an estimated 100 basis points.

Operating margins were also impacted by a less profitable sales mix due to lower sales of the north American industrial and food and beverage on markets as well as higher costs related to production efficiency inefficiencies for certain products experiencing high demand and higher freight costs to meet customer order commitments we have.

Installed capacity and implemented corrective actions to address these issues and anticipate the financial impacts will be substantially mitigated towards the end of first quarter 2020.

Finally, our acquisitions continue to perform consistent with our investment thesis, achieving our plan sales and operating profit targets.

Turning to slide 12, I would now like to review the performance of our aerospace segment.

Net sales for the quarter increased 6.6% for 41.1 million, which kept the very solid year for this business. We continue to capitalize on strong order intake for our highly engineered fastener products leveraging the increased production throughput, resulting from our Frac factory floor investments.

Operating profit increased 14.9% to 7.4 million in operating margins improved 180 basis points to 18% as we achieved solid conversion on higher sales volumes and a more favorable product mix.

And we continue to experience robust order bookings overall in customer order backlogs remain strong.

Given solid demand for our full range of products, we remain focused on continuing to improve factory floor efficiency and anticipate making further progress in the operational performance of our standard fastener manufacturing flat.

Turning to slide 13, and continuing with review of our specialty products segment.

Overall sales in our specialty products segment.

In Q4 declined 6 million or 14.5% from 48 41.8 million to 35.8 million with almost all of that decline occurring in our industrial steel cylinder business.

Sales volumes declined versus the year ago period due to continued softness in north American industrial market as well as the ongoing impact of customer consolidation and rebalancing of asset cylinder inventories.

Sale levels were also impacted by continued weakness in north American gas and oilfield activity.

End market pressures on the underlying commodity prices.

Operating profit declined 2.8 billion compared to the priority or from 5.5 billion to 2.7 million due to lower fixed cost absorption on the sales volume declines in our industrial cylinder business as well as higher conversion costs due to smaller lot sizes, and a less favorable sales mix.

Well the challenges in these end markets persist, we will continue to closely manage our variable and fixed cost structures to optimize financial performance, while continuing to pursue market opportunities through product and process innovation.

Turning to slide 15, or there are few updates we would like to share for the upcoming here.

First in connection with our planned acquisition of RSC engineered products, we will migrate operational management responsibility of Martinique engineering into our try mass Aerospace group and include Martinique financial results as part of try mass Aerospace reportable segment.

As Tom noted earlier from an operational standpoint, we believe that our manufacturing processes within the scope of Martin makes capabilities, which will likely benefit Rs say.

Although any such potential benefits will be upside to our synergy plan by aligning these businesses organizationally together under our try mass Aerospace group, we will incentivize and drive enhanced collaboration.

With respect to the segment reporting change noted above and an 8-K filed today, we supplement only provide recast quarterly financial information for 2019 to show Trimesta segment, and total company results with Martinique as part of the Aerospace segment and without Layman's, which is now reported as discontinued ops.

Right.

Next we wanted to share certain of our 2020 business planning has some trends in light of several notable external factors, which will directly or indirectly impact our businesses for the foreseeable future.

First as noted on previous calls unlike other companies, we've experienced both direct and indirect commercial pressures related the tariffs and more recently increased import risk given the potential for supply chain disruption due to Corona virus risk as a result in 2020 in over the next few years, we will be increased.

And our investment in North American domestic capacity for certain of try that is packaging product lines. While we are still in the planning phase.

This investment committee that will require additional capital spending and to what 2020 and 2021 as we seek to localize capacity in support of key customers.

Next our 2020 plan assumes lower sales unit volumes with one of try masses largest customers L brands. As a result, there just strategic decision to de risked their supply base absent. This change the try mass packaging groups organic growth rate would likely have been twice the rate.

Currently included in our 2020 outlook.

And finally, we have assumed build rates for the 737 Mac and our 2020 plan based on the most recent forecast communicated by Boeing we estimate the reduced build rates schedule will negatively impact try masses Aerospace group annual sales approximately six to 7 million on a year over year comparable.

Basis based on our average shipset content of 20 to $25000 per aircraft, while we have already taken some actions and flexing cost for an immediate lower production rate. We're also balancing against the expectations for projected ramp up later in their overall, we anticipate the incremental margin impact on the real.

Do sales noted above will be greater than the aerospace segment average EBITDA marker.

At this point I'd like turn the call back over to Tom to share our 2020 outlook and provide his concluding remarks, Tom. Thank you, Bob let's turn to slide 16.

For 2020, our objective is to continue the momentum in each of our businesses under the try mass business model, while strategically positioning to drive further growth through innovation and capitalize on available market opportunities.

We expect annual sales growth of 9% to 11%, primarily driven by our acquisitions due to certain end market challenges Bob discussed organic growth is expected to be approximately 2%.

We are forecasting full year 2020 diluted EPS in the range of $1.50 to $1.60 per share with the midpoint, representing an increase of approximately 7% compared to 2019.

Our forecast does that include any impact from effects related to quote a virus as it is simply too early to predict secondary effects.

For example, while we are working through supply base challenges. We're also seeing an increase in quoting activity related to our hand soap and sanitizer dispensing product line and in one case actually in two cases selling out available capacity at both our Vietnam and are in.

India locations.

We're planning to shift and add more equipment in floorspace capacity in both our packaging and aerospace segments in 2020 and beyond therefore, we're planning to invest at a slightly higher rate of Capex. However, we again anticipate 2020 free cash flow conversion of greater than 100% of net income.

Turning to slide 17, we remain excited about the important strategic actions, we completed in 2019 and look forward to delivering long term value creation for our shareholders. We will continue to leverage trying to try mass business model and operate under a culture of chi's on to drive continuous improvement. We also continue doing.

Invest in new product and process innovation. For example, we have now brought online our first high volume one piece flow large cap manufacturing line in a plant that experienced compare capacity constraints last year.

We were excited to invest in this innovative processing technology and are already making plans to implement further operational excellence improvements based on what we have learned from this installation.

We also have a robust pipeline of potential transactions as we use M&A to grow trimesta packaging and aerospace segments, we believe that M&A and ongoing investment in our businesses combined with share buybacks provides a balanced approach to capital allocation.

We will continue to shape try and asked by investing in our highest return product lines of businesses to drive long term value for our shareholders given the progress Weve progress, we have made strategically and our sound financial position. We remain excited about the long term prospects for trimesta in each of our businesses with that I'll turn the call back over to Sherry.

Thank you Tom at this point and we'd like to open the call up for your question.

Thank you if you would like to ask your question. Please signaled by pressing star one on your telephone keypad, if you're using to speakerphone. Please mr. the your mute function.

Your signal to return.

Again, Please press star one to ask your question, we'll pause momentarily to allow everyone an opportunity to signal for questions.

Well take our first question from Andy Casey with Wells Fargo Securities.

Thanks, a lot good morning.

Morning, Anthony.

Few questions on the on the guidance first in aerospace what could you give us a little bit more color on the production schedule forecast for use in for the 737 Max.

Is that you know beginning in August and start to see the ramp up and then also.

On the topline can you provide some further color around the timing.

When you expect acquisition benefit from our as saying at Moneypak, meaning.

Does your guidance include our I'd say from the beginning of Q2 and Ray pack from the beginning in Q3 or is it more defined by bad.

So let me let me take those questions in reverse order on the acquisition we expect the.

Our say acquisition to close relatively soon probably in the coming weeks the rate back transaction is a little bit more challenging because there are some operational changes and equipment relocations and have to take place. That's probably a best case late Q2 sort of in that timeframe. So hopefully that.

As you some rate.

Ability to range bound how those transactions will come in on the Boeing on the Boeing ramp up its pretty slow obviously.

The progress throughout the year I don't want to give the external I don't know what a Boeing is published externally. So I don't want to give exactly what we're building too, but it's it's up.

Fairly modest build rate over the next couple of months and then slowly ramping up towards the end of the year.

Okay. Thanks for that time and then on the.

The industrial cylinder weakness.

Can you can you help us understand if it decline rate.

Related to that specific business deepened relative to past quarters, and then within that excuse me have you seen any change in channel inventory destock.

Yeah, it's great Great question, I mean that probably was the biggest surprise for us in Q4.

As you probably.

No from following that market, we've had a number of our largest customers consolidate over the past few years and what we saw when there was one consolidation.

Couple of years ago was.

I could I guess I'll call inventory rebalancing I'm not a fan of the word destocking, but.

Atari rebalancing occurred in and then things got more to a normal cadence well.

Two of our larger customers.

Combined and their their order rate.

Was down significantly in Q4 levels, we haven't seen in many quarters.

Yes, Thats, the bad news and the more positive side.

Now that we've seen them combine and are working through that we're seeing an order intake that is starting to approximate more expected levels not quite the levels, we would like but certainly not the rate we saw in Q4.

Okay. That's very helpful. And then just kind of a detailed point given that sure.

You continue the share repurchase.

You know as as indicated on slide four Im just wondering.

If you can help us with the share count that's included in the dollar $50 60 bps forecast I'm, just wondering if it anticipates incremental beyond.

You know the repo that's listed on that slide.

[noise], probably when it does it does include some anticipated additional share repurchases.

We are circa up 45.5, or 6 million shares outstanding as of the end of 19, and we'd expect that to trend down a closer to 45 million plus minus depending on timing of repurchases for the remainder of 2020.

Okay. Thank you very much.

Yes.

Thank you we'll take our next question from Steve Barker with Keybanc capital markets.

Hi, good morning.

Morning.

I know.

Predict but obviously its topical.

There been any impact on your engine manufacturing footprint, so far in terms of extended shutdowns or lower utilization rates.

Look I mean as you can imagine for several weeks we've been working on on this matter. We do have a a extended supply network that is in China as well as our own manufacturing locations, what's interesting about it.

If there's any bit of a bright spot given the nature of the crisis it occurred before and in a right in and around the Chinese new year, So we'd already stocked up many products.

Both stateside and on the water on some pieces in China. So as it started to hit it really was sort of a delay in individuals coming back to work at many of our sub suppliers in our own locations and we're now starting to see a capacity come online in some cases, it's actually surprised.

To me that it's a little bit better than I thought it would be at this point I mean, hopefully there's not some type of rebounder secondary effect that occurs but what we are getting products manufactured now in the region.

One of our sub suppliers is reported to be at call. It 70, plus percent, which is pretty good our plants are sort of north of 70%, which is pretty good and as I mentioned the inbound quote activity for us has been and we have a lot of products that go into.

Hand, cleaning washing or sanitizing applications, you could start to extend that to accompany would just bought in call tap last which makes a whole product line of motion of soap lotion dispensers.

And then additionally, the other company. We just bought makes a product lines is largely used in the detergent area and cleaning area. So you could see that people become a little bit more conscious of Washington hands, and cleaning and keeping countertops clean there could be some longer term benefit here.

We were you know we're certainly.

Living in the curtain current period of managing our supply base in our current manufacturing operations, but we're also looking at our available capacity.

To see where we can ramp up in scale up in other locations to some to take advantage of the period.

No I understood. That's good detail, thanks, and how much capacity do you expect to add back in North America for packaging and will most of that spend this year or is this a multiyear rethinking of the footprint.

Yeah, it's really a great question and.

It will be a multiyear process I mean tariffs was sort of the onset I mean, the company had been thinking about this with.

Some.

A freight strikes from or or a port strikes from a few years back.

And then what the answer the tariffs clearly we started to put some wheels in motion we've already added some capacity into the states.

But with Corona virus and some of the geopolitical issues that that have crept into our business model here, we're going to probably take more significant steps and.

You probably will involve what I call pumping out a plant as opposed to adding new manufacturing facility. So we'll take existing manufacturing will spend to add more square footage at those locations and then we're buying injection molding machines were buying presses aside we're buying.

Molds and we're buying assembly line.

That will take more than a year just given the nature of how long equipment moulds and assembly lines need to be made.

Understood. Thank you.

Moving to the model a little bit do you expect all three segments will have positive organic growth in one Q or is this a year of lower growth first half versus back half.

Well I mean first first half could be a little bit challenged.

Given some of the dynamics that we've been talking about.

But I.

I think overall with its as we're reporting that we see a positive positive upside.

Yeah, I was going to add that you know the first half of last year was was much stronger than second half, obviously, so coming off the run rates. We are in fourth quarter will yeah, we'll make that comp challenging in first quarter. No question, but I do think we see it trending positively as we move through the year.

Yes.

And Bob what do you expect to run for SGN, a on a quarterly basis, given all the portfolio.

Once.

I don't really see the SGN a are changing a lot I mean, I think were ultimately going to see leverage once we get.

While the new acquisitions folded in on that question today, but you know clearly with you know the tough year.

We will coming off of and going into 2020 were in all the the prospects of Corona virus and what that might do to this business generally.

End markets were being very very.

Cautious about increasing spend and or adding headcount.

Right.

You have that typical footnote on your free cash flow guide what special items are contemplated in that guidance or what will conversion be ex special items.

Well well ex special items that you know, it's greater than 100% typically the a the majority of the special items are our deal costs associated with with diligence and the like.

Sorry, I misspoke do you have a percentage estimates, including special items is what I meant.

No.

All right and then last one from me.

Tom it's good to see turning the portfolio over some with divestitures and acquisitions, but this is going to be another year of low single digit organic growth and plus or minus this year is going to look pretty much like the last five years in terms of absolute revenue level and operating income are you looking more sizable M&A in higher growth areas to kind of break out of this range.

Just where do you see the the best opportunities to really kind of kick started try mass.

Well.

Good question and clearly over the past.

Few weeks, given some of the dislocation and valuations.

Maybe we'll rethink some.

Some of that a bit I mean to date, we spend we've been spending our corp. Dev resort resources on looking at acquisitions that would I would call are little bit more manageable in the range of full time, where there's an adjacency there there they could tuck in well, we can manage attract them well and not disrupt our balance sheet.

And that is.

Currently our current path forward that being said you know we're looking at some valuations now that that.

Could make some companies pretty attractive we have to see if what's happening in in a publicly traded companies is affecting the private transaction world and there is one reason why I've liked the fact that we put our balance sheet and the position that we're in.

So we could make if we needed to and wanted to.

Or were willing to more sizable steps.

Understood, but I do I would also but I would also say with before a you know pulls out that point is Raul also looking at the valuation to try massive we're going to make some sizable step there right yeah got it.

Thank you as a reminder, if you would like to ask your question. Please signal by pressing star one on your telephone keypad now.

And speakers at this point, we do not have any questions in the Q.

Okay. Thank you for joining our earnings call and we look forward to updating you again next quarter. Thank you.

Thank you ladies and gentlemen, this concludes todays teleconference. You may now disconnect.

[noise].

[noise] [noise].

[noise].