Q2 2020 Forterra Inc Earnings Call
Ladies and gentlemen, please standby your conference calls scheduled to begin momentarily. Thank you for your patience and please continue to standby.
[music].
The company's Chief financial Officer with that I'll now turn the call over to Mr. Brown.
Thank you and good morning, everyone welcome to for terrorists second quarter 2020, <unk> earnings Conference call.
Similar to last quarter's call I want to apologize in advance for any technical difficulties or background sound remain counter during the call since girl and I are calling from our homes locations.
We'd like to point out the torture intends to take advantage of the safe Harbor provisions of the private Security Litigation Reform Act or 1995 as noted earnings release, you filed last night.
Please remember that our comments today may include forward looking statements, which are subject to risks uncertainties.
Actual results may differ materially from those indicated or implied by such statements.
Some of the most important risks are described the detailed the company's FCC filings, including our annual report on form 10-K, and our quarterly report on form 10-Q filed last night.
Somebody does not undertake any duty to update such forward looking statements. Additionally, we will refer to certain non-GAAP financial measures during the call, including EBITDA EBITDA margin adjusted EBITDA adjusted EBITDA margin net debt and free cash flow you can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure and other related information.
Including a discussion of why we consider these measures useful to investors and earn Jewish now I'll turn the call over to Carl.
Thanks, Charlie.
Good morning, everyone.
Appreciate you being on the call system.
Fortunately not getting any details this quarter you want to take our fellow for Karen teenage.
Through this very challenging time, they've continued to improve our safety performance metered customers needs and improve our operational administrative processes.
During the second quarter, we continue to expand gross profit margins in both our operating segments demonstrated strong working capital discipline.
Meaningfully increased operating cash flow strengthens our balance sheet and liquidity position and reported a record adjusted EBITDA in a quarter since we became a public company.
In addition, this is the second consecutive quarter of improvements in our trailing 12 months adjusted EBITDA.
She these outcomes despite the pandemics impact on shipment volumes.
Again, I like to thank our teammates for their efforts and your continued focus on five and prudent fillers health and safety.
<unk> level operational discipline enhanced commercial capabilities.
Working capital efficiency.
You know Stephens.
That's a briefly mentioned previous previously we implemented a number of hoping they accumulate procedures in order to ensure that are key members customers and vendors, we need safe within our facilities.
Those procedures appear to be working well.
During the quarter, we did experience a relatively small number of team members contracting called it had to temporary close a small number of all facilities to respond to and contain infections to ensure it didn't that transmit within a facilities.
Well, having togut infections, and certainly constrain our team member infection rate is relatively low.
And through the duration different then pandemic, we had demonstrated efforts and capability to handle situations to protect not only our teammates, but also a ability to serve our customers needs and continuously improve our business.
Switching over to the demand side, we posted 19 disruption to our shipments during the quarter, although not insignificant was less than what we had anticipated.
The residential housing market paused in April in early May, but recently homebuilders are increasing their activities again.
Most states have also started to gradually being normal economic activities.
As a result, we had a temporary delay in certain projects in our drainage business contributed to the volume declined 13% year over year.
Most of these delayed projects said we started.
Well, what a business second quarter volume remained flat compared to prior year period.
We estimate approximately 60% of our water business comes from municipal water infrastructure project.
Well covered 19 is negatively impacting the funding revenues a mini municipalities.
The stable volume highlights the critical nature of water infrastructure to ensure continuous water supply.
Let me from municipal projects is long term in nature is largely in place and committed for fiscal year 2020 spend.
Additionally, funding for municipal wondering bus Smith is primarily in the east charge for water usage and does not are dependent on general municipal revenue, which bodes well for the long term funding.
Operationally, we had improved our safety performance year to date by 20% over last year as measured by total recordable injury rate.
Yeah, we are well away from being World class a must continue to improve.
As far as costs, we had the benefit of lower steel cost center drainage business and lower scrap costs in or water business.
It was partially offset by lower production levels in temporary plant closures, leading to increased conversion clawson, both drainage and water.
Quarter to quarter or cost per unit will fluctuate, but we're on the right track as we begin our long journey to offset cost inflation with our efforts to continually improving our plant level operational disciplines.
[noise] commercially we don't seem to be turned on our investments in our sales teams since the second half of last year, both drainage and water had double digit constant improvements this quarter compared.
On the train inside the 9% year over year increase as a combination of both through pricing improvements and if that's the sales mix, which Tony will cover in more detail later.
On the waterside the 15% year over year increase is primarily result of our two price increases last year.
Our commercial excellence initiatives have continued despite the challenges created by the pandemic and our sales teams remain connected with our customers and focused on meeting their needs and exceeding your expectations.
As I discussed on our last call, we had been closely monitoring or working capital investments across all of our facilities, even before the beginning of the Pembina.
As a result, we forget improved our working capital turns during the quarter increased cash flow by more than $50 million year over year.
We not only repaid the hundred 80 million first quarter precautionary borrowing but also voluntarily prepaid 10 million of our terminal while still in the ending the quarter with more than $15 million in cash.
And no draw down on a receiving.
On our revolving credit line.
This is last year.
Same time, where we've had $17 million attached.
At the same time last year, where we've had.
70 million of cash and 39 million or they deal draw them.
Looking ahead, the ongoing pandemic still brings great uncertainties in the economy as a whole.
Her markets. We are in there is a lack of clarity regarding the impact of the pandemic on future funding.
The things that we're seeing and hearing are probably similar to what you are.
And there's a lot of speculation around what the future might look like we're not going to speculate but we'll focus on the things we control, which are the five improvement, which I outlined earlier one.
How can create hubert teammates to.
Plant level operational discipline green enhance commercial capabilities.
For working capital efficiency.
Five Regina.
By focusing on these five pillars, we intend to extend our product unit margins generate more cash.
Earnings and working capital improvement.
Continued to pay down debt reduced our leverage.
Second quarter results is another example of our execution of these pillars, even during this challenging time.
With that I'll turn it over to Charlie.
Thanks, Carl I want to Echo Carl's comments on our second quarter success and congratulate her teams.
Our progress during these times as forging a culture that will carry as Ford in good times and bad.
Towards delivering upon or five performance pillars.
In addition to the earnings performance, which I will get into shortly.
We also have completed two debt refinancing transactions.
First we amended our revolving credit facility by increasing the capacity from 300 million to 350 million and extending the maturity from next year to 2025.
Second we recently issued 500 million seem a five year senior secured notes and using the proceeds to repay a portion of our term loan effectively extending our super significant piece of our term loan from 2023 up to 2025.
Earlier in the year.
We put out our mid term leverage goal of three to three and half times at which point, our net debt to adjusted EBITDA ratio was 6.1.
<unk> decreased by 1.1 times in just six months.
As of the end of June our net leverage ratio was down to 5.0 times.
Let me now briefly review our second quarter operating.
Performance by segment, starting with drainage as Carl mentioned earlier, our drainage volume decreased by 13% year over year, largely due to certain project delays during the early stages it depends on it.
However, our gross profit increased by 6% in gross profit margin improved by more than 200 basis points year over year. Despite the volume decline.
We continue to benefit from higher average selling price part of which is driven by mix.
So maternal similar to last quarter, well the average selling price this quarter was up 9%.
Approximately 60% of this price impact is result of product and geographic mix.
Most importantly, we were able to expand the margins in this business by controlling costs, despite lower volumes, which combined with the is commercial gains resulted in higher year over year gross margin and adjusted EBITDA.
Switching over to our water segment.
That business continues to demonstrate significant growth in revenue gross margin adjusted EBITDA as as compared to last year, we were able to hold the volume flat year over year during the start of the pandemic and our backlog at the end of the quarter was much higher than last year.
On the pricing side as we had previously predicted we're seeing the second price increase we announced last October.
Which combined with the continuing effect of our first price increase with July contributed to the 15% year over year increase in average selling prices.
We've experienced higher levels of volume growth with direct customers on multiyear contract.
I'm, suggesting year over year increases in pricing or higher with our distribution partners. In addition, during the quarter. We continued to benefit from the lower scrap costs year over year, which offset inflation and other costs.
As result of these factors waters adjusted EBITDA margin improved by more than 700 basis points in the current quarter compared to last year.
Our corporate adjusted EBITDA loss was relatively consistent with our internal plan and prior year actuals, the slight increase year over year, primarily reflected our investment in our people processes and systems such as training for our Salesforce.
One of our key.
Improvement pillars.
As an additional update hearing on the merits of 100 million earn out dispute with Heidelbergcement withheld from June 23 to 25.
And a decision from the neutral accounting arbitrator is currently expected in the latter part of August this year.
In the event the arbiter works you order payment of an earn out an amount of 100 million or less and we were required to pay for Shlomo. We currently expect to have sufficient liquidity to mix.
We pulled our 2020 earnings guidance last quarter, because the uncertainty created by the pandemic and we continue to have concerns regarding the progression of the spend dynamic and its impact on our markets.
Our Q2 Rolling 12 month, adjusted EBITDA is 243 million already exceeding our prior guidance of 210 to 240 million.
Although we were pleased with our execution so far this year and cautiously optimistic about the second half. We also recognize the unprecedented uncertainties and challenges we enter customer service.
While our backlog at the end of the second quarter can generally carry us through the majority of the third quarter, we aren't and in uncharted territory.
There could be delays.
For even cancellations of projects due to could it.
There will be air pockets in certain markets caused by other issues and infrastructure funding or investment uncertainties.
As a result, we've chosen to focus on what we control the execution of our five improvement pillars, instead of providing an overly conservative guidance of a continued abundance of caution.
For cash flow purposes, we have noted in our press release that capital expenditure. This year should be between 35 and 45 million.
And we remain committed to delivering working capital improvement in the range of $20 million to $30 million.
We remain committed to driving all excess cash flow towards debt reduction and look forward to providing greater clarity about our expectations in future quarters, when the macroeconomic uncertainty has begun to food.
This concludes our prepared remarks, operator will you. Please open the line for questions.
Ladies and gentlemen.
Time.
Yeah.
So from the Q Please press the pound.
Our first question comes from.
Yes.
Hi, Thanks for taking my question first question is on the water pipe is piece, obviously a great.
Number there 50% growth.
Curious I mean.
They have speaking you'd expect to see that can do you pull through for the rest of the year.
I have a similar levels any reason why.
That may not be true that may not be clear to us on this side that's.
No. He I don't leave it there is.
I think we've said in the past I know we've said in evolves.
That weve, a very short by cycling a long sales cycle. So it takes a while for increase was actually close group. So the July includes.
So close to in the first quarter in October increase you're seeing kirker into second quarter.
That's not complete.
It doesn't own happen exactly and then in the first and second quarter. So there's no reason for a good thing those.
Prices that keen.
To get back to where we're earning a decent return or assets.
Well, we'll change.
At least change to the Navy, they're still maybe.
Potentially some slight upside.
Okay and are there.
What are your plans for future price increases as.
What we're seeing in the second quarter results are actions taken in the back half of two key 20 or what do you look at what do you expect to announce.
In the upcoming quarters.
We have been very close to their customers that will always give them 60 days notice and so.
I'll be communicating with them shortly but it would be.
Wouldn't be to think needed.
Before I go what our customers so we've not announce anything it.
To.
To be communicating to our customers on.
The first of August.
That's understood.
Understood.
In the in the back half of the year volumes.
No could be impacted by by Covina, the macro slowdown any sense of.
You know where you think your exposure is I mean is is the water pipe you know more tied to municipal you think water plate is no subject to volatility or is it mostly midrange.
I think we're not we're not really sort of giving guidance for the back half the year, but I think directionally.
What.
The first half that you will look like relative to last year sort of the last half of your will look like relative last year, we don't see.
We could be continued softness that we don't see that accelerating at all.
As compared to last year.
Having said that what we are concentrating on Italy are five recruitment holders and.
Doubling down on the intensity that we.
Go after those especially on the topic of operating disciplines commercial.
And then working cap.
I am said in his final question, if I could scrap steel prices.
Looks like the all they've been favorable tailwind for several quarters now.
Do you still foresee them being a tailwind in the upcoming quarters and that's starting to.
Field level.
There are highly volatile.
But for the for the Liberty, but I have met make a month or two and visibility and every time, we think we have more than that.
Yeah.
Get caught on alongside those assumptions, which I think leap into something that that's important that we continue to reiterate work we have made the strategic decision to decouple or pricing.
From from scratch.
And then we need to.
Progressive ligand systematically and move our prices up to point to where we are making.
Value, creating returns that exceed our cost of capital when scrap prices are the highest quarter mile level will make very good returns when they're at average levels and when they're low what was cortisol levels will make.
Really.
Hi positive returns.
So.
While we monitor that.
Very closely and I think we buy very well.
The decouple that from what are sort of our strategic intent when on the turns are.
I think what's shown so far this year.
And answer your first question, we're on a path to getting to those those levels, it's going to take us a little while longer not trying to get there one day, it's a long term game.
We are heading in that direction.
But for the foreseeable future like in next few months, which were to all the visibility we have.
It looks like scrap so to be favorable.
Thank you.
I'll get back in Q.
Thank you.
Question.
Yeah.
Good morning Gerry.
Good morning, everyone money, everyone does doesn't come on behalf of Jay you Havent can you. Please talk about audit trends in both businesses in drainage specific the what's the risk of.
Okay or the next six to 12 month five large projects completed.
We have.
Some visibility into the next three to six months based upon our backlog, but in order flows and bidding patterns.
As you said a little earlier.
Hi.
I.
I don't know I'm not sure exactly if we're all calibrated on what an air pocket.
To address what.
The air pocket, but what I can't say is that we need we lead.
So we're not giving guidance the second half the year.
Well look relative to the second half of last year like the first half of this year look relative to the first half of this year.
We sort of do have that much.
Visibility and I guess.
The better word conference.
But the macroeconomic environment such that there is uncertainty.
And because that uncertainty we've not given guidance.
Okay.
How that plays out still to be seen.
But we don't we don't see our volume.
Peak, our volumes compared to last year decreasing at an accelerating rate, while they're still soft relative to last year.
More on the drainage visits in the water business and we don't see that accelerate.
And once again, we're going be a concentrating on those the five things that we control health and safety for employees plant as love operational discipline.
Our commercial discipline enhanced commercial capabilities and they're doing with less working capital being more efficient every day on RG me I think if we focus on those things.
Has also taken themselves.
Okay. Thank you so much.
Thank you.
Okay.
Hey, guys. Thanks for taking my question just piggybacking quickly off the water average selling price question can you just clarify the double digit pricing gains we saw in the first how should we expect a similar magnitude in the second half and perhaps even into 2021.
I'm not so certain night.
Understand the question exactly but let me answer it one way and see it.
If they don't answer it properly.
Yes.
I don't think.
Well I actually I know, you're not going to see.
Another 15% on top of the 15%.
Second half what you will see if the continuing flow through.
Our announcement in.
July.
Our announcement October.
And our our execution of a price increase on extra is that we sell not the pipe itself that we had an April those continue to flow through.
And.
You will see some improvement in the second half of the here.
Versus where we are today, but there won't be.
An additional 15% on top 50%.
Okay, perfect and just second digging a little bit into the the drainage mix that.
I guess, one can you remind us which regions or products, you typically experience higher or lower average selling prices and then to how sustainable do you see this mix tailwind.
Yeah.
Sure so I'll take that down the.
The mix, let's focus on the the simple which is good for me.
We sell the pipe and pre cast products and our dreams business.
Pre cast is typically it's a custom.
Product.
And those prices are higher.
However, the margins in that business are not dissimilar.
From.
The pipe business, so we get a higher price, but we do have a higher costs I think thats used its way to think about this and probably if you look at volumes.
A little bit less pipe volume this year than last year parks are a little both businesses those.
Pieces of the business were down, but probably more decline in the pipe side. So again that influences higher price on average that's why we've been really clear pricing, which is a simple calculation is up but like I said, 60% is tied to the product mix issue.
Perfect Okay.
Ill get back into.
Next question.
Our.
Hi, Thanks for taking my questions.
Carl certainly understand not wanting to get into too much detail around guidance specifics, but.
Wanted to ask.
Slightly different way around the back half volume outlook, you've got 50% of your total business Muni.
For structure and the balance of mix of resin and Nonresi.
Okay, Bye bye and market could you give a little more color on.
Those volume declines would would you expect to be.
Better or worse.
Cross those.
By by end market.
You are on mute.
I think carlson.
Sorry, we see each other on soon but.
You too.
Let me answer Brad.
Okay.
Realizing we're not getting guidance, but just sort of broad themes.
In the shorter term.
Residential construction.
I mean that really strongly.
Municipal budgets of us and opening comments are largely in place.
Yeah.
Is there.
The commercial construction that Arclight those goes to really sort of follows the residential construction.
So if I think the second half with said before the trends or.
The volume trend or not accelerating to the downside.
What slowed us down in second quarter in drainage.
Just coming back in the third quarter, most the rushing to stuff that went on hold as being leased.
So the second half the year.
Say again that we believe the second half the year compared to the second half of last year.
Look very similar percentage basis compared to the first half of this year compared the first half of last year.
Longer term.
If you think of infrastructure spending which is half of our business and you go back to other sort of the recessionary environment.
We didn't go down even the great recession people found a way.
To pay for infrastructure.
States.
Our 30 states.
If enacted measures 30 states it put up over over 160.
Legislative proposals in this 2020 legislative session.
And for increased infrastructure spending so there's a there's a there's an absolute knowledge.
Infrastructure spending is necessity necessity that we are ready to be both in transit and water infrastructure by the American Society of Civil Engineers.
And that the especially the water side. There is 240000 water main breaks a year trillions of gallons of.
Already treated with what are.
Wasted.
In the mares.
Boston study of cities.
Let's say last year.
The measures of all of this Obama administration's around the country said, if you had a federal grant larger small what would you spend of elements first thing it's been at all.
And the number one answered by not small margin was water and water infrastructure.
So we think that the municipal spending federal spending state spending.
The funding sources come from a multitude of places, but there's an absolute need.
And that's the knowledge that theres that need historically.
That has not gone down.
Residentially, we believe that the growing trends.
Our.
More towards us.
Very good talking about moving.
Suburban versus urban.
There has been a lack of housing investment overall, we're not even back to our historical levels for new household formation based upon the population trends that I remain intact.
So we believe Residentially, we're still in that kind of very good spot.
And commercially.
What our sweet spot is is what follows housing, especially suburban housing. So what do you believe in the last mile Amazon concept or there'll be more targets and walmarts to follow those houses.
Both of those use a large amount of our products, especially in that range site.
So even if commercial spending would have been flat.
Five years.
It will be but even if it was.
The proportion of commercial spending that would be in products ambient segment that we just sort of our products would actually be greater so we think we're actually in a pretty good speaks both.
Municipal infrastructure commercially and Residentially.
Over the short term and the long term.
Okay. Thanks, that's helpful. My second question just specifically on.
Water and the pricing dynamics, recognizing that the severity intentional multiyear shift for you.
[music] establish your your value based pricing and earn a proper return. It is still is a little atypical to see this type of pricing power and in a market that is you know kind of flat to potentially down on.
Volume and and you know costs also potentially flat.
Sit down and so from a competitor of standpoint could you.
Talk at all about whether you're seeing anything differently from.
From a your from your competitors or.
You know any additional color around.
That and what gives you confidence that this can be sustained.
I really can't talk about all competitors means issue.
But what what it can say.
Yes, we do affect 2000 and.
The team.
This business had an EBITDA margin.
10%.
The downward that's not even margin that's not profit after tax margin nothing ever done.
It is a low asset turn business.
It's not high barriers to entry.
Thats very stable demand.
At the national business with.
Three players so there's a there's a decent industry structure.
And so when you have a 10% EBITDA margin go if something doesn't make any sense because those are really poor poor returns on our investment.
So what do you can only be a couple of reasons for that we that cost problem or a passion problem and the cost problem.
Wasn't hard to diagnose.
Diagnosing that cost problem.
We buy so when we buy scrap for what our conversion costs for what our technology as we didnt really caused problems.
So it had to be a push button and I think.
We had to look internally before we look externally it looked at our processes and methodologies, our philosophy strategy and tactics.
And we've dramatically change those in.
In conjunction with our customers and we we consider price increase can be successful it's people in type one.
We do not disrupt our customers business model.
Two.
Its but we don't lose our industrial positions and Threed successfully we'd actually works flows through and that by the success. So we don't want to disrupt our customer business model.
We do not want to give up share for price I mean, it's really doesn't take a whole lot of skill to raise prices in these markets here. That's the goal by the skill to cut price isn't going to March.
<unk>.
It doesn't take and skill at all.
But it also has to be successful and easily be success. These price increases and nothing Thats also because we do it up on a long hope it stuck on the news they vary.
Comprehensive.
Even methodology.
For how to do this that's work across multiple industries in multiple geographies, we're executing on that.
So now having said that this can happen at the Bakken I mean.
We think that we are of course with us direct line pipe listener, but.
We also realized that we're not going to be 50% higher than ours.
I mean, if our customers had an option.
I think it's 15% less that probably would we don't talk about our competitors where their customers. We just talked about ourselves.
But we were not losing share. So we have to assume that we are competitive price.
Thanks, Thanks, Carl nicely done I appreciate it.
Thank you.
Once again.
Number one.
<unk>.
Hey, good morning, Thank you for taking the questions I wanted to ask Scott on the cost side, you know earlier this or in the second quarter. Obviously, you guys took a lot of precautionary cost actions you know in a very uncertain time, but was there just any kind of short term or.
Or sort of onetime benefits there to the margin in Q2, just given the volumes, obviously held up a little better. While you took those actions and I guess, how would those expenses coming back into the system I now that you sort of re engaged on them kind of flow into the second half like it.
Sure Matt No. That's a great question I would focus on.
Some of the actions that we've publicly stated where we.
Limited.
Hiring.
So that wasn't benefits that'd be a small piece.
It more matched up with volume than anything else and just prudence in general. We also you know from executive team.
I could pay cut for a period of time that was reinstated and those costs are included in 2000 in the second quarter I'm, our employees hardworking employees, we deferred and there are annual increase.
That was also put back in place before the end of the second quarter and we reinstated that back to I'm sure. They didnt Miss anything it was just a timing issue out of an abundance of caution so there really aren't any major issues that.
We failed to.
We will be carried forward into Q3 as a pain and we tried very hard to make sure that we've captured all those costs in Q2, so that we had a clean second half as we started off so no I don't think there's any surprises lurking in our cost basis.
At this point.
Okay perfect that's exactly what I was looking for and then.
Secondly, just curious about you know the EBITDA came and obviously a little better versus when you guys give the preliminary results at the end of June and apologies if I missed it but it could you just explains what happened there.
So.
I think you know a.
I tend to be fairly conservative and there are certain adjustments at the end of every quarter, we have to look at whether.
Lower of cost or market and various other you know adjustments.
In our et cetera, et cetera, and we looked at all that and meet our best estimate we put out our pre released.
Obviously were.
Surprised but pleased that you know our cost came in as well as they did.
And.
Put us above our earlier guidance, but no nothing.
Unusual in that it was actually.
Very.
Good quarter as far as closing I would just brag on our team our team members didn't awesome job being able to get everything done in a very short order. This would be the earliest if whatever as ever released earnings and you know the team itself was just spectacular and getting things done from home [laughter] in this environment and getting that's great and for me.
<unk>.
And I want to brag on calling this team that is an example of our GNS effectiveness the.
We've been.
Closed or closing cycle by six days.
And they're getting better deeper information delivered at a lower cost and so starting this team has done a fantastic job.
Thanks got it okay. Thanks for the details everybody congrats on the quarter and hope everyone says well.
Okay.
Thank you.
From Josh.
So capital your line is open.
Hi, I'm just wondering if you guys could you walk us through I guess, how you balance the potential to maybe tap the bond market again against maintaining prepayable debt given your demonstrated the well.
[noise] sure Josh.
We you're right and it certainly.
[noise] is painful to pay more for the new bonds that we've issued than for the term loan that we had that we have we continue to have but.
The view was.
Out of an abundance of caution.
You know, having a huge tower sitting out there on October 2023 has just not knowing what the future may bring they felt it would be prudent to tap the bond market.
And move a bit of that debt out. It also gives us a little bit more exposure a little bit more flexibility as we continue to demonstrate our ability to reduce our leverage ratio, we can take that money.
And give ourselves a little bit the time, we'll still have the term loan we still have 600 plus million on the term loan.
And then we'll continue to work that down as well as we generate cash, but again, giving ourselves a little bit more on flexibility. The term loan has been excellent and very low cost and I would point out the yes. Our interest expense will go up this year by about $6 million in the second half related to.
You know higher interest rates on the term loan them at what point on the new bonds and we're paying on the term loan.
Got it it sounds like you guys will prepare to have as much prepayable debt as possible just one.
We still have a significant portion of prepayable debt and we will continue to.
Take that down as our cash generation allows.
Great. Thank you.
Thank you.
Sure.
Well. Thank you everyone. We appreciate your participation Nicole.
And we look forward to talk into next quarter.
Results.
Basic and.
While the best.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect.
Wonderful.
[music].