Q2 2021 Gentherm Inc Earnings Call
Hello.
And welcome to the Gen Therm, Inc. Second quarter 2021 earnings conference call and webcast at this time all participants are in a listen only mode.
If anyone should require operator assistance. Please press star zero and your telephone keypad and no question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
It's now my pleasure to turn the call over to <unk> Brentano Investor Relations and corporate Communications, Inc. Please.
Please go ahead.
Thank you and good morning, everyone and thank you for joining us today.
<unk> earnings results were released earlier this morning, and a copy of the release is available at Jos.
Yeah.
Okay.
Yeah.
Today's call will be available later today on the Investor.
And relations section of Jetblue.
Sure. This call we may make forward looking statements within the meaning of federal Securities law.
And I suspect.
And our current views with respect to future events and financial performance.
We undertake no obligation to update them and actual results may differ materially.
Please be gender earnings release, and SEC filings, including the latest 10-K and subsequent reports.
Discussion of our risk factors and other risks and uncertainties underlying such forward looking statements.
During the call we may discuss non-GAAP financial measures as defined by S. E SEC regulation G.
Reconciliations of these non-GAAP financial measures.
To the comparable GAAP financial measures are included in our earnings release or Investor presentation.
On the call with me today are Phil I alert, President and Chief Executive Officer.
And Mattel and Brewster Chief Financial Officer.
During their comments.
Phil and Matteo will be referring to a presentation deck and we have made available on our website at Genesis Dot com slash and fat.
After their prepared remarks, we will be pleased to take your questions.
Now I'd like to turn the call over to Phil.
Thank you Jamie good.
Everyone and thank you for joining us today.
I'm pleased with our continued strong execution of the gentle and team for delivering solid financial results and the second quarter.
The automotive industry continues to face significant supply disruptions, including semiconductor shortages.
Ladies and freight costs and other inflow.
Good morning, Gary Packers.
As a result light vehicle production and our key markets and the quarter was 12% lower than we provided our 2021 and guidance.
7% lower than what was expected 3 months ago, and 7% lower than the first quarter.
Nonetheless, we delivered 96% organic.
Organic revenue growth and automotive year over year, and the second quarter, excluding the impact from foreign currency translation.
This outperformed light vehicle production and our key markets by 16 percentage points.
In addition, we continued our momentum on automotive awards, securing $400 million and awards.
From global Oems with and 81% win rate and the second quarter.
And the cost front, our disciplined approach to expense management allowed us to reduce some operating expenses from first quarter levels.
And I'll set the near term material cost challenges, we're experiencing as a result of the supply disruptions.
And.
In addition, when comparing to where we were 2 years ago operating expenses and the second quarter of 2021 were 10% lower than in the same period of 2019.
Year to date in spite of the significant supply chain headwinds, we delivered adjusted EBITDA margin rate of 17, 2%.
And we generated $64 million and free cash flow the highest free cash flow level and the first half of any calendar year and company history.
And we'll provide more details on our financial results and a few minutes.
Yeah.
Now, let's turn to automotive highlights on slide 4.
And the.
And second quarter, we launched our automotive solutions on 18 different vehicles across 10 Oems include.
Including General Motors, Great Wall here, Nissan Radian Atlantis and Volkswagen.
We continue to see momentum for our Ccs product and launched on the Chevy bolt great wall and mall.
And as EQ apps and Arabian are 1 team.
Oh, the battery performance solutions front, the fastest growing product and our portfolio is our cell connecting technology.
We have both a wire based cell connecting technology, and our proprietary thin foil technology.
Our R&D team.
Mercedes and innovative and mechanical structuring process that offers increased design flexibility and some exciting opportunities for new applications.
Specifically, we're adding and embedded self censoring circuit to our proprietary and boil that could result, and a higher overall safety of lithium ion battery packs.
And apply knowing the battery state of health abnormalities and size of battery sales can be detected early.
As a result from launching our proprietary tinfoil solution and I'm pleased to share that we wanted the German innovation award from 2021 for our innovative cell connecting board and the E mobility technology category.
4 and recognizes our ultra black oil conductors for significant production and manufacturing complexity.
A simple by and very fast design process.
And a modular structure that can be adapted to almost any type of battery module.
And I'd like to congratulate our R&D team for continuing to expand just terms.
So somebody leadership.
On the customer front.
We were honored to be named a 2020 general motors supplier of the year for the second consecutive year.
And recognition of our relentless dedication to delivering exceptional customer service and innovative solutions.
The annual or highlight.
Very small percentage of global suppliers that.
Distinguished themselves by exceeding Gms requirements.
And turn providing GM customers with innovative technologies, and the highest quality and the automotive industry.
In addition, we're proud to be honest again this year by Honda as a top north American supplier.
This.
Technologists and reflects our commitment to developing innovative solutions for our customers and our team's dedication and commitment to quality innovation and operational excellence.
I'd like to thank the gentler global team for continuing to exceed customer expectations.
Now on to slide 5 to discuss automotive.
Recognize wards.
I'm very pleased to announce that we have won our first production vehicle award for climate since technology or software driven microclimate platform using an algorithm based on thermal physiology.
And you might have already seen in yesterday's press release this will be on a small volume.
The motive due 2020 for model year electric vehicle with a global automaker.
We expect content per vehicle for this particular EV to be significantly higher than vehicles with our traditional climate comfort solutions.
This is truly an important milestone and our long term strategy demonstrating the potential of our technology.
Technology has to address the growing needs of the electric vehicle market.
With the introduction of climate since we are disrupting the current thermal solutions and vehicles by significantly reducing power consumption and a crazy range.
All while providing best in class passenger comfort.
And.
And the second quarter, we continued our business award momentum from the last couple of quarters and secured $400 million and New program awards across 11 different OEM customers.
I'm proud of our global team for continuing to win over 80% of the opportunities available to us.
We want and multiple Ccs awards.
Including platform wins with the Ford expedition, Great wall have all F..7.
Lincoln Navigator, and the Hyundai and grandeur.
Which includes the Ccs active solution.
We received 15 steering wheel heater awards across 4 Oems, including multiple Cadillac SUV electric vehicles.
The Chevy Tahoe, Chevy traverse and Hummer EV.
And importantly, we want to combine steering wheel heat and hands on detection sensor award for Audi.
Moving the a 4.8 and 586.8 and <unk> 5.
It's coming from the heel of seat heater awards on the same Audi vehicles.
And <unk> that we announced last quarter.
On the battery performance solutions front, we continue to make progress and expanding our business with.
And air cooling battery thermal management award for the Keto Sportage.
Now, let's turn to slide 6 for a discussion of our medical business.
It depends.
Pandemic continues to create challenges for our medical business with COVID-19 restrictions and reduced hospital access for our sales force, especially in Canada, Europe and Latin America.
That's it hospital access is improving and the U S.
And the second quarter, we won a 3 year patient warming contract with.
Premier that also concludes ASUR, Pat and warm air filter flow products.
Premier is 1 of the largest group purchasing organizations and the United States.
It's a war and opens the door for us to potentially increase our patient temperature management and market share.
On the R&D front, we launched light control.
And all cool repeats and the U S. During the second quarter.
The other enhancing blank and for all functionality.
Hoover beat us and accessory to the blankets for all equipment.
This device allows the patient temperature data from the blankets role to be displayed on the patient monitor.
Here the data can then be imported into.
And to their medical record.
We expect this to have a significant impact on nursing and efficiency.
To summarize I'm proud of the Jiff 13 for consistently outperforming light vehicle production and key markets, we serve and securing another $400 million of New awards from automakers around the world.
<unk>, our first ever production award for climate sense.
Despite the headwinds and the global supply chain, we generated the highest level of quarterly cash flow from operations since 2018.
While the supply disruptions will remain challenging and the near term.
The momentum and new awards, winning covenant and supplier.
And reward from general Motors, and Honda, coupled with a disciplined approach to cost management position us well to continue to deliver over the long term.
With that I'll turn the call over to Matteo for a little more color on our financial results.
Okay, and <unk> and 10-Q to everyone joining the call today.
So.
So let me turn interest like 7 to focus on the items that most significantly impacted our second quarter zone.
So for the quarter revenue.
<unk> increased by 96% compared to the same period from last year from.
Primarily due to the negative impact the COVID-19, pandemic and the last year's second quarter.
And if we adjusted for the impactful effects, our overall product revenue increased by 87%.
Starting with your automotive segment revenue.
And you was 255 million more than double revenue and unit quarter last year and.
And adjusting for foreign currency translation.
Automotive.
And increased by 96% driven by higher volumes and so I just thought of the negative impact of COVID-19, and the prior year period.
And comparison according to IHS latest data.
Light vehicle production for our key market of North America, Europe, China, Japan and Korea.
Korea increased by approximately 36% over the prior year period.
As Phil mentioned earlier, we outperformed light vehicle production by 60 percentage points.
And I'm sure you do.
Geographical names.
Albeit at a more relevant way compared to the second quarter of 2019 automotive.
Revenues increased 8%.
Excluding the impact of other things and in comparison nice vehicle production decreased nearly 15% from and our second quarter of 2019 to the second quarter of 2020, 1 and our key market.
All of the automotive product lines increased significantly.
Year over year.
And as Covid negatively impacted all of the Proto labs last year I will just highlight a couple of important factors. Besides the COVID-19 recovery contributed to the revenue growth.
Ccs revenues increased due to higher volumes and take rates and doing that.
Fox and.
And Suvs for both Ford and general and worse.
Sandy's S class Mazda and several still assets models.
Seat heaters revenue increased due to higher volume with BMW Ford General Motors, Mercedes and Volkswagen.
Steering wheel heaters revenue volume increase.
Increased primarily as a result of the hands on detection enabled heaters with several VW models.
Cable revenue increased due to hydro volume with Bosch and other tier ones.
EPS revenues increased as a result of timelines rollout, although the pace award winning.
And in turmoil and solution on the C class as well as the continued success of the BMW mini and sell connector.
And then electronics.
Revenue increased due to higher volume with fourth memory seat module solution as well as the strength and ERP.
If we move to the medical segment revenue decreased approximately 7%.
Prior to the prior year period.
And let me remind you that last year's second quarter benefited from the extremely strong brackett from sales to help with temperature and management of Covid patients.
If we.
Look at the second quarter of 2019 as a pre Covid comparison.
Medical revenues increased by 10% second quarter of 2021 compared to 2019.
And revenues also increased 19% sequentially compared to the first quarter frankly.
Before moving to gross margin.
Gross margin rate for the second quarter was 29, 8%.
This compares to 19, 6% and a year ago period.
The 10 percentage point increase was driven by fixed cost leverage due to the higher volume.
Labor productivity and factory.
And positive effects, primarily due to the appreciation of the euro compared to the U S dollar.
These were partially offset by the negative impact from industry wide supply chain disruptions.
Annual customer price reductions as well as wage and material cost inflation.
We estimate the impact of the supply chain disruption in the quarter resulted in approximately 29 million and lost revenue per channel.
And $4 million in higher cost of goods sold due to higher material costs and increased premium freight.
Moving to operating expenses.
Which were $47.5 million in the quarter compared to $36.6 million in the prior year period.
The 2020, 1 second quarter amount in cash.
At $2.1 million and restructuring charges.
And this compares from last year's second quarter, when we had a credit of 0.6.
Due to a reduction in the estimate previously recognized employee separation costs.
If we adjust for restructuring and acquisition expenses in both periods.
Operating expenses were $44.6 million up from 20, $37, 2 and them in the second quarter.
The financing.
But year over year increase of approximately 20% was.
It was primarily driven by the reversal of the temporary austerity measures taken last year to mitigate the impact of the Covid pandemic.
A 1 time and incentive compensation adjustment that occurred in the price.
Quarter period and so.
The result of the Covid impact and the company's financial results.
And higher R&D expenses.
And you offset by higher other.
Yeah.
Adjusted EBITDA and the quarter was $44 million compared to breakeven in the prior year period.
And finally adjusted diluted earnings per share in the quarter was <unk> 85 per share compared to a loss of 30 cents per share in the second quarter of last year.
Our effective tax rate was 18, 8% EBITDA.
And we're the first 1.
Now moving to the balance sheet.
On slide 8.
Our cash position and the quarter was 187 million.
Up sequentially from 171 million and the prior quarter.
Sure.
Increase of $16 million was the result of 34 million and free cash flow generation, partially offset by other.
<unk> all day long.
Yeah.
And the 34 million and free cash flow generation, and the second quarter compared to $17 million and the prior year period and.
And the $17 million year over year increase was driven by higher cash flow from operating activities, partially offset by higher capital.
Net debt decreased sequentially by $29 million.
And total debt stood at 48.
We closed the second quarter net cash position of $139 million.
Based on the trailing 12 month consolidated adjusted EBITDA ended June 30, and we.
We had.
432 million remaining availability on our line of credit up from $419 million at the end of the first of all.
The total available liquidity as of June 30, it was $618 million up from 590 <unk>.
And to watch.
Now, let me turn to slide 9 for 2020.1 guidance.
Let me start by saying that the semi conductor the data and customer volume and margins continued to be extremely volatile and can.
Create significant near term challenges.
Based on our performance and the first half of 'twenty 'twenty 1.
And then other data light vehicle production forecast we.
We are updating the guidance range, we provided I think you know the.
We are now expecting product revenue to be in the range, 1 point and 1.1 to 1.17 billion based on the current and forecast customer orders and production.
And outlook for the balance of 'twenty or 'twenty 1.
And the facts remaining other current imminent.
This is based on the best information and we currently have from our customers and suppliers.
The midpoint of our guidance implies and organic growth rate of 22%.
Additionally, we now expect adjusted EBITDA margin rate to beat the range of 17% to 18%.
And our effective tax rate for 2021 to be between 20 and 22%.
We continue to expect capital expenditures to be in the range of $50 million to $60 million.
With that let me turn the call back to the operator to begin the Q&A session.
Thank you and I'll be conducting a question answer session.
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Our first question today is coming from Matt Koranda from Roth Capital Partners. Your line is now live.
Hey, guys. Good morning, Thanks for taking the questions.
I was wondering if you could start off by talking about the bookings environment. The 400 billion and awards look pretty solid for the quarter and I do.
Noticed quite a few steering wheel heaters and.
And they were called out so I just wanted to see and maybe if you could break out.
By category and what the $400 million in awards and look like between maybe steering wheel heaters.
And Ccs.
Hey, good morning, Matt Yeah, we don't really usually breakout and awards.
But I can talk a little bit about the environment certainly.
A lot more assets than last year, no doubt about it and.
We expect that to continue at a pretty good level for the remainder of the year. So.
Definitely a nice pick up and certainly quite happy about the performance.
We were able to achieve and.
And the quarter in terms of win rates and.
So still looking to execute throughout the rest of the year steering wheel wise.
We do see and.
And increase.
And and.
And interest not just from a steering wheel heat and also for our integrated H O D. A.
Handle and detect and Siri and well product as you can see with the.
Audi wins in particular.
And I will say the Ccs was it was pretty strong Ccs equated to about a third of our wins.
And the period so.
I'd say that kind of shapes up and what it's looking like.
Okay. That's helpful. Thank you and then on the climate sense win Congrats first of all and I wanted to see is it safe to say that that win is likely it with 1 of the phase III customers that you guys had talked about in prior calls.
And then on the content per vehicle on that 1.
I know you said significantly higher than Ccs, but is there any way to quantify that just a bit more.
I would assume you know typically.
I've thought of climate sense is multiples of a typical Ccs award, but any way to maybe drill down a.
A little bit on that 1 and quantified a bit more.
Yeah, what we said it's about all we will share.
Due to confidentiality. So it is a customer we worked with for a long time.
We're excited about the award is a relatively small volume.
But a great chance to prove out the technology.
<unk> on the road and we're very excited about the milestone in terms of content and it's definitely several multiples.
Or at least a few multiples above.
The current climate and comfort solutions and.
I would say kind of and lineup with what we said in the past.
Okay that makes sense and then just a couple and the outlook, maybe Matteo can handle a couple of days, but.
Notice I mean, the growth outlook for the second half that you're implying I think is somewhere in and kind of the mid to.
High single digits, just wanted to see if maybe you could help.
Split between.
And you get into and <unk>, just given the supply chain.
Disruptions and and tightness anyhow.
Any help there would be helpful.
Yes, So let me, Matt and good morning.
Let me just kind of by reiterating some of the messages and we.
Highlighted in our prepared remarks, primarily the fact that.
And 3 patients continues to be extremely fluid and things are changing.
This is really based on that day.
Based on information and we have from our customers and other suppliers.
We are.
We are seeing what we have projected is basically a slightly cooler and all.
All the current and supply chain situation.
Towards.
And that kind of the year.
And in terms of.
And when you do the sequential comparison.
And half versus first half.
And you are getting exactly today and kind of mid single digit.
Growth and the second half was from the first half.
And she will lighter than what maybe IHI sustain but this is really based on the best information and we have and we think that the.
Challenges and we have seen today will continue for quite some time. So that's kind of how we are.
And second half day yet.
Okay, and then just last 1 from me.
And so margin outlook I guess was trimmed by 50 bps at the midpoint and just wanted to see him and how much of that 50.
Is supply chain related versus other items that are that may have been trimmed.
So all of them.
And frankly, you've seen what we.
He said the impact was and the second quarter, if I just take up.
The first half just from higher cost and so in terms of how your opinion fate.
<unk> buys.
Material cost pressure, primarily copper that amounted to about 7 million gross.
Margin and in fact yesterday.
EBITDA and we are not expecting things as I said before somatic improving and the second half.
So that's pretty much the day the key driver here.
Okay, I'll jump back and do you guys. Thank you.
And I think Matt.
As a reminder, that star 1 to be placed and the question.
Thank you.
Our next question is coming from Ryan signal from Craig Hallum and your line is now live.
Great. Good morning, guys. Congrats on the nice results and.
First from a climate since award.
I just wanted to dig in and climate since that award a little bit within the $400 million of auto or 2 and.
And now he is that award in there and then secondly, any sort of R&D and SG&A and Capex considerations related to the ramp of that award and the next couple of years.
It is and the and the overall number yes and.
Yes, we will we will expect to continue to.
Slightly ramp up our investment and R&D and Capex for that program over the coming quarters.
Yeah. This is obviously our top priority now with climate as it is.
You know the best possible execution of that program. So this is our chance to get it.
And then all the road and map and mass production and.
And.
Huge priority.
And then you mentioned a small volume it's just a small volume platform or is this only going to be specced in an uncertain trims or packages for a specific vehicle.
It's a small volume platform.
Got it so you're.
With vehicle within that platform.
And that's our expectation.
Got it.
And then just going back to kind of the IHS kind of sequential first half versus second half I mean significant outperformance and the quarter relative to industry production, but a little lighter and the back half is that just a timing.
<unk>.
Difference between therm and kind of IHS production or was there something I guess specific that drove that 60 per cent outperformance and the quarter and then maybe slightly weaker and the back half relative to IHS.
Well, so let me talk a little bit first of all performance.
I think.
When you compare last from me.
Yes.
Keybanc.
And as I mentioned in my prepared remarks, and geographical mix and got us much heavier weighted from North America day.
And the impact of.
New launches and higher take rates.
And your own guidance sales.
And as Jan VW bps steel.
The other performed extremely well in terms of revenue in the quarter as we can.
Continuing to see growth.
BMW.
And the Diamond of application that I mentioned earlier, and then H O D. The hands on detection device.
Revenue.
And you positively impacting yet and.
The steering wheel heaters, so and also China and I would also add well had a nice growth for us. If you look at that you will see it when we publish the Q tomorrow, our China revenue as a percentage of the total non was almost 15%.
Second quarter, which is the highest net.
And quite some time. So these are the I would say the key drivers for the second quarter of outperformance as far as the second half as I mentioned before it's Matt.
This is really based on the information that we are receiving from our customers and suppliers and that's what drives our our profile.
Hollywood and keep it.
I think in general we see directly the headwinds of plant shutdowns.
It's definitely still happening and definitely in front of us and.
And.
I think that's what's informing that.
Yeah.
Great there just switching over.
Total allocation and the balance sheet continues to get stronger and grow cash they're generating a lot of free cash flow any change and priorities and then I guess secondly, how do you feel about kind of stock buybacks versus the M&A pipeline.
Yeah, I mean priorities still remain the same the first priority is.
Still to manage liquidity to protect for any potential volatility and.
And the economy, we still are completely out of the woods, so were still being mindful of that.
Priority for US is is inorganic growth.
So we're certainly looking at investments and acquisitions.
And at a higher level than we have and the last few years.
And.
And we think that that.
It provides a good opportunity for us to accelerate our focused growth strategy along the pillars that we have identified.
Strategically and then definitely share buybacks.
And as we deem.
And falling into the you know the right range of price and timing, we would look at that.
Along with our normal capex expansion needed for new business.
Thanks, guys. That's it from me and good luck.
Thank you thanks.
Thank you and next question is coming from Ryan.
And from Jpmorgan Your line is and I live alright.
Hi, Thanks for taking my question and I just wanted to follow up on that.
And what youre seeing relative to the semiconductor shortage situation and the second quarter I think there's a lot of call for ease and impact on customer production, but also the insight into when the customers are going.
Going down if youre getting and anymore.
Heads up and then relative to your own procurement of.
Electronic components.
And if.
And there are more available or if youre seeing any less inflationary pressure.
I didn't catch the very.
The first part of the question I think I got the gist of it so just talking about.
The situation with demand related to semiconductor shortages first.
We're still seeing significant pressure.
And the short term.
No.
And just read the news and in the last several weeks are still several plant shutdown.
And.
And based on the information we are receiving from our customers still see some headwinds no doubt about that.
And it's a very very.
Very fluid this is not something that anyone can predict.
Because as opposed to.
And reliable order reductions.
These are more and the tune of immediate cancellations now of course, we're hopeful and some of that comes back with a significant demand and the marketplace and we are seeing some signs of some easing in the back half of the year.
And the last you know the last few months of the year. So that's positive.
But again, we'll have to win.
Wait and see how that pans out when it comes to our supply of semiconductors definitely still facing challenges we have a swat team put together.
Training, a lot of resources from our purchasing and supply chain and manufacturing teams.
Just to keep our plants running with semiconductors, and we've done a good job I'm very proud of what the team.
And that's done so far.
But we still.
And we're still having to pay expedited freight.
To get material and.
Increased prices to buy on the open market and instead of through our suppliers.
And that hasn't slowed down a whole lot. So we still see the headwinds.
With that.
And your last point around inflation and I'll, let I'll look and say, we'll talk about the inflationary pressures.
Right and in terms of if I dissect the D and.
And inflationary pressure and the impact on the quarter.
1 example, a 4.
4 million and that I mentioned earlier and in terms of the impact from Costa.
So you.
And you have about a million, which is comprised of a higher premium freight and and then loss productivity due to the idea of profit shutdowns and stuff if you'll just mentioned.
And then you'll have about couple of million dollars coming from the spot buys yogurt market.
Semiconductor type of products and then the remaining million it's a raw.
Raw material inflation and plenty of and copper.
We are not expecting.
And significant improvement.
These kinds of dynamics happening in B E.
Second half of the year.
I think.
To Phil's point, we're very proud of what the team was able to accomplish and the first half of the year I believe and in steel and 30% gross margin rate and.
Despite all these challenges.
But I think these challenges.
And then expecting to be sustained for quite some time.
Okay, great. Thanks, and are you able to say whether the climate sensor award is in conjunction with Lear, with whom I know you had partnered on our go to market strategy and then separate from that are you able to say whether the customer motivation do you think was.
Driven more by the energy efficiency savings as highlighted in the press release or.
Desire to increase creature comfort for example, via net conditioning and etcetera or maybe both you know such as you might expect and a luxury vehicle.
We can't give any more details around who we're partnering with or any customer details but.
And in terms of the above.
Motivation it was a combination.
Of the VAT.
Salary and proposition of climate and certainly you know a big driver was a power consumption reduction and range extension and no question about that.
But also the idea of taking a thermal comfort to a level probably never achieved before.
And the vehicle was certainly it.
And we'll certainly be a big part of the solution.
Very helpful and thank him.
Thank you Brian I'm sorry.
Thank you, we reach and of our question and answer session I would like to turn the floor back over to Phil for any further and closing comments.
Sure Thanks, everyone for joining our call today.
And as I've consistently shared with you in the past and we remain laser focused on operational execution.
Innovation and cash flow generation I'm extremely proud of our team's agility flexibility and dedication to deliver on our commitments to all of our stakeholders in spite of the.
The significant challenges, we face and the supply chain.
While we expect continued industry headwinds and the remainder of the year the momentum in New awards, along with expanding demand for our new technologies and our continued focus on productivity really position us well to deliver significant long term shareholder value.
We appreciate your interest and support and look forward and keeping you apprised of our progress.
Thank you that does conclude today's teleconference and webcast and you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.