Q3 2021 Kadant Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Q3 2021 cadence Inc. Earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. It sounded like you do call assistance. During the conference. Please press Star Zero on you touched on the telephone.
I'd like to turn the conference over to your host Mr. Michael Mckenney Executive Vice President and Chief Financial Officer. Please go ahead Sir.
Thank you Grace.
Good morning, everyone and welcome to cadence third quarter earnings call.
With me on the call today is Jeff Powell, our President and Chief Executive Officer.
Before we begin let me read our safe Harbor statement.
Various remarks that we may make today about cadence future plans and expectations financial and operating results and prospects are forward looking statements for the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1095.
These forward looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward looking statements as a result of various important factors, including those outlined at the beginning of our slide presentation and those discussed under the heading risk factors in our annual report on form 10.
10-K for the fiscal year ended January <unk> 2021, and subsequent filings with the Securities and Exchange Commission.
In addition, any forward looking statements we make during this webcast represent our views and estimates only as of today.
While we may elect to update forward looking statements at some point in the future. We specifically disclaim any obligation to do so even if our views or estimates change.
During this webcast, we will refer to some non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles a.
A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is contained in our third quarter earnings press release, and the slides presented on the webcast and discussed in the conference call, which are available in the investors section of our website at Www Dot Cadent Dot com.
Finally, I want to note that when we refer to GAAP earnings per share or EPS and adjusted EPS on this call. We are referring to each of these measures as calculated on a diluted basis.
That I will turn the call over to Paul who will give you an update on cadence business and future prospects.
Following Jeff's remarks, I'll give an overview of our financial results for the quarter and we will then have a Q&A session, Jeff Thanks, Mike Hello, everyone.
Thank you for joining us this morning to review, our third quarter results and discuss our outlook for the remainder of the year.
We had another quarter of record revenue and bookings along with strong EBITDA margin performance and free cash flow positioning us well for a strong finish to the year I'd like to begin by reviewing our operational highlights for the third quarter.
The robust demand for aftermarket parts, a high level of capital project activity in the third quarter led to an all time high for revenue and bookings.
Our aftermarket parts and consumable business was exceptionally strong in most regions of the world.
New order activity was driven by solid demand across all of our operating segments.
In the third quarter, we announced the closing of two acquisitions.
One of our flow control segment, another in our material handling segment.
Integration of these businesses is going well and their financial results contributed to our third quarter performance.
Just after the third quarter closed we completed the acquisition of a small manufacturing business in India.
It is a well established manufacturer of engineered stock preparation equipment used to process recycled and Virgin fiber for paper packaging and tissue production.
Our acquisition of this business will create a new manufacturing base for us in India, where we have leading market position and have been active for more than 20 years.
It also provides a strategic platform to accelerate new business opportunities in the fast growing and in packaging and tissue markets.
Before moving on to our Q3 financial performance I want to comment on the global supply chain and how we are managing in this complex environment.
The headwinds found within the global supply chain continued to be a challenge pushing out expected deliveries of materials and creating a significant amount of work to keep our delivery promises to our customers.
I am pleased to say is a challenge that our operations teams around the globe are managing successfully our.
Our employees are doing a great job in navigating through a highly dynamic and uncertain environment that looks to be with us for some time.
While there is little expectation for sudden returned to normalcy I am confident we will work through these immediate supply chain challenges and continue to meet our customers' needs.
Turning now to slide six and our Q3 financial performance you can see we had significant increases across all of these financial metrics compared to Q3 of last year.
Q3 revenue was up 29% compared to the third quarter of 2020 to a record $200 million excluding the.
Acquisitions, and the favorable impact of FX revenue was up 18% compared to the same period last year.
Our aftermarket parts and consumables revenue was up 28% to a record $131 million in Q3.
The consistently high operating rates of our customers and strong end market demand contributed to our record aftermarket performance.
Solid execution contributed to boosting our adjusted EBITDA margin to 25%, which led to our excellent operating cash flow of $38 million in Q3.
All of our operating segments delivered excellent adjusted EBITA margin performance, despite the continuing inflationary pressures for materials and the ongoing supply chain constraints.
Bookings were exceptional in the quarter up 71% to a record $245 million, excluding acquisitions and FX bookings were up 57% with contributions from all three of our operating segments.
I'll review the performance of these segments next beginning with our flow control group.
Hello control segment achieved its fifth consecutive increase in quarterly revenue, reaching a record $76 million in the third quarter up 34% compared to Q3 of last year.
Aftermarket parts revenue was exceptionally strong and made up 72% of total Q3 revenue.
Bookings were also a record at $77 million up 55% compared to last year organic bookings, which excludes acquisitions and FX were.
Up 32% compared to the same period strong performance in Europe, and North America that our bookings growth in Q3.
Improved operating leverage led to record adjusted EBITDA and our adjusted EBITDA margin of 29, 1%.
While our recent acquisition of clues contributed to overall performance organic growth within our flow control group continued to demonstrate the strength of this segment.
Our industrial processing segment continued to experience strong demand with bookings nearly doubling from the same period last year to a record $119 million.
New orders for our fiber processing systems in the U S and Europe led this increase in third quarter.
Overall demand for housing in wood products remained high and our wood processing product line capitalized on strong end market demand.
Revenue in this segment increased 31% to $82 million with strong performance in aftermarket parts and capital business.
Adjusted EBITDA was up 24%, while adjusted EBITDA margin decline compared to Q3 of last year. When we received employee retention benefits related to the pandemic.
As you may have read in the press Chinese experiencing power supply issues. This has created a challenge for us with production schedules and it is uncertain how long this will impact our operations.
We're also seeing an increasing number of requests from our customers delay shipments as a managed supply chain constraints. Despite.
In spite of these headwinds we entered the quarter with another record backlog that positions us well for the remainder of the year.
Moving to our material handling segment, we experienced healthy demand for our capital equipment aftermarket parts revenue was up 17% to 42 million with parts revenue, making up 59% of total revenue in the quarter.
Bookings in this segment were up compared to the same period last year to a record $49 million in Q3.
We saw increased order activity and strong demand for high performance pillars, which contributed to our record bookings in the third quarter are.
Our recent acquisitions Bell Master is also experiencing record demand and the integration of that business and the cadence is proceeding well.
Solid execution of our Belgian businesses, including our recent acquisition helped boost adjusted EBITDA by 26% and adjusted EBITA margin by 120 basis points compared to the same period last year.
Despite the supply chain issues I mentioned earlier, we remain optimistic for improved capital investment environment as infrastructure spending and industrial man demand for raw bulk materials growth.
As we look ahead to the remainder of 2021, we continue to see signs of healthy project activity.
Our decentralized structure continues to serve us well during these rapidly evolving times allow.
Allowing us to respond quickly to local and regional developments.
Our record backlog has us well positioned for the remainder of the year, however, delays in shipments and the timing of orders have shifted some expected revenue bookings from Q4 into 2022, which Mike will comment on in his remarks.
With that I'd like to pass call over to Mike to review, our Q4 Q3 performance.
Thank you Jeff.
I'll start with some key financial metrics from our third quarter.
Consolidated gross margins were 41, 9% in the third quarter of 2021 compared to 44, 2% in the third quarter of 2020.
Our consolidated gross margins in the third quarter of 2021 were negatively affected by the amortization of acquired profit and inventory related to the <unk> and Val Master acquisitions.
Which lowered consolidated gross margins by 110 basis points.
In the third quarter of 2020.
Government assistance benefits increase consolidated gross margins by 110 basis points.
Excluding the impact from both these consolidated gross margins were approximately 43% in both periods.
Our parts and consumable revenue represented 66% of revenue in both periods.
SG&A expenses were $52 $3 million in the third quarter of 2021, an increase of $8 5 million compared to $43 9 million in the third quarter 2020.
Third quarter of 2021, SG&A includes $3 4 million in SG&A from our acquisitions.
There was an unfavorable foreign currency translation effect of <unk> 9 million in the quarter.
And a reduction in government assistant benefits of <unk> $7 million.
We also incurred acquisition related costs of $1 3 million in the third quarter of 2021 compared to <unk> 4 million in the third quarter of 2022.
The remaining increase in SG&A expenses is primarily associated with increased incentive compensation and travel related costs due to improved business conditions.
As a percentage of revenue SG&A expenses decreased to 26, 2% in the third quarter of 2021 compared to 28, 4% in the prior year period.
Our effective tax rate was 24, 6% in the third quarter of 2021.
Lower than we anticipated primarily due to tax benefits from acquisition.
<unk> related expenses employee equity awards, and the reversal of tax reserves associated with uncertain tax positions.
Our GAAP diluted EPS was $1 75 in the third quarter up 37% compared to $1 28 in the third quarter of 2020.
And our adjusted diluted EPS increased 50% to $1 97.
Adjusted EBITDA increased 36% to $40 9 million or 25% of revenue compared to $30 million or 19, 4% of revenue in the third quarter of 2020 due to strong performance in our flow control segment.
Which was up 42% with a large portion attributable to organic growth.
This is the second quarter in a row that our consolidated adjusted EBITDA as a percentage of revenue has exceeded 20%.
We expect to also achieve this for full year 2021.
Operating cash flow increased 56% to $37 9 million in the third quarter of 2021 compared to $24 4 million in the third quarter 2020.
Free cash flow increased 53% to $34 6 million in the third quarter of 2021 compared to $22 6 million in the third quarter of 2020.
We had several notable non operating sources and uses of cash in the third quarter of 2021.
We paid $141 4 million for the acquisitions of crews and Battle Master.
And we borrowed $63 $1 million related to these acquisitions.
Despite the significant acquisition activity in the quarter, we were able to utilize our strong cash flows to pay down our debt by $26 million.
We also paid $3 4 million for capital expenditures and paid a $2 9 million dividend on our common stock.
Let me turn next to our EPS results for the quarter.
In the third quarter 2021, our GAAP diluted EPS was $1 75, and after adding back acquisition related costs of 22.
Our adjusted diluted EPS was $1 96.
In the third quarter 2020, our GAAP diluted EPS was $1 28, and our adjusted diluted EPS was $1 31.
As shown in the chart the increase of <unk> 66, and adjusted diluted EPS in the third quarter of 2021 compared to the third quarter of 2020 consists of the following.
90, <unk> due to higher revenue.
<unk> from acquisitions net of interest expense on acquisition environment.
And <unk> due to lower interest expense.
These increases were partially offset by 'twenty, one due to higher operating expenses.
<unk> 15 due to a decrease in the.
Amounts received from government assistance programs.
<unk> <unk> from higher Noncontrolling interest expense and <unk> <unk> due to higher weighted average shares outstanding.
Collectively included in all the categories I, just mentioned was a favorable foreign currency translation effect of <unk> in the third quarter of 2021, comparative third quarters last year due to the weakening of the U S dollar.
Yeah.
Looking at our liquidity metrics on slide 15, our cash conversion days, which we calculate by taking days in receivables plus days in inventory and subtracting days in accounts payable.
Decreased to 113 at the end of the third quarter of 2021 compared to 140 at the end of the third quarter of 2020.
This decrease was primarily driven by a lower number of days in inventory.
Working capital as a percentage of revenue was 13, 5% in the third quarter 2021, compared to 15, 6% in the third quarter of 2020.
Our net debt that is debt less cash increased to $115 million sequentially to $231 million at the end of the third quarter of 2021.
We borrowed $63 million in the quarter to fund our acquisitions, and we were able to pay down $26 million of debt in the quarter.
Our leverage ratio calculated in accordance with our credit agreement was $1 69 at the end of the third quarter of 2021 compared to $1 71 at the end of the second quarter of 2021.
Our net interest expense decreased <unk> 3 million to $1 3 million in the third quarter 2021, compared to $1 69 in the third quarter of 2020.
At the end of the third quarter 2021, we had $105 million of borrowing capacity available under our revolving credit facility, which matures in December of 2023.
I would like to update our revenue range for the fourth quarter and full year 2021.
Although we had record bookings of $245 million in the third quarter, which is the fourth record quarter in a row.
And we ended the third quarter with a record backlog of $299 million.
Current headwinds from supply chain and logistical constraints have caused us to reduce our revenue expectations for the fourth quarter.
We now anticipate revenue of $210 million to $215 million down from $220 million to $225 million that we noted in the July call.
For the full year 2021, we now anticipate revenue of 778% to $783 million revised from $783 million to $793 million.
This change in the revenue range includes $13 million of revenue that has been moved into 2022 as a result of supply chain issues or customer requested changes to the shipping days.
In addition, the timing of capital orders also had an impact.
As Jeff mentioned.
China power supply issue, which came to light. During September has also had an impact on our production schedule.
The Chinese government has imposed varying power restrictions from time to time, which are outside of our control.
Our current revenue expectation is based on the current power use guidelines, we have been given holding throughout the quarter.
Our guideline and gross margins essentially remains the same we.
We anticipate fourth quarter gross margins will be 42%, which includes the impact of amortizing the acquired profit and inventory.
Our current estimate for the amortization of acquired profit and inventory in the fourth quarter is $2 1 million or <unk> 13 cents.
We anticipate SG&A expenses will be approximately 55% to $56 million in R&D will be a little over $3 million in the fourth quarter.
The SG&A expense includes backlog amortization of approximately $600000 or <unk>.
Yeah.
We anticipate our net interest expense will be approximately $1 4 million in the fourth quarter of 2021.
And we anticipate the tax rate for the quarter will be 27% to 28%.
We hope these directional comments are helpful. That concludes my review of the financials and I will now turn the call back over to the operator for our Q&A session operator.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your question on the telephone if a question has been answered or you wish to remove yourself from the queue. Please press the package and then that will be star then the number one.
Your first question comes from the line of Kurt Yinger from D. A Davidson your line is open.
Great, Thanks, and good morning, Jeff and Mike.
Curt Morgan Kurk, just wanted to start off on the supply chain.
With orders being pushed out do you expect that's really a Q4 type phenomenon as you get into next year and kind of get back on track and continue to grow sequentially or where do you expect that's going to remain a challenge in terms of delivering to plan in the backlog.
So as Mike mentioned, we had quite a bit of revenue that shifted from Q4 and into next year right now our thinking is that.
The first couple of quarters of next year, we're still going to see some some shipping challenges and a lot of it has to do with logistics and shipping is probably one of the biggest challenges we have but kind.
Kind of what we're hearing and what you read is that they think by by summertime. They should have this.
Kind of sorted out and so we think it's right now our expectation is going to be a first half of the year type phenomenon and we're hoping that the back half of the year things will be back to.
Somehow more.
Little more normal.
We've never dealt with this before so nobody knows for sure, but that's our sense is that things will start to sorts itself out first.
Quarter two of next year.
Got it.
I mean, we think about.
The capacity of your system and the flexibility.
That you might have I mean is.
The supply chain a limiting.
Factor to kind of revenue growth from here or is it more.
Just based on.
Yeah more of a headwind in terms of delivering to kind of scheduled out timeline, yes.
Yes, I think it's more of a delivery problems if not I don't think its going to be a revenue issue is now going to curtail revenue or expected to lose much in the way of revenue because of it. It's just taken a little longer to deliver then than we might otherwise.
Okay. Okay. That's helpful.
Alright, and then just on the margin front.
Can you just talk Directionally about how youre thinking about.
The potential kind of impact as capital, presumably increases as a proportion of revenue in.
In 2022 is that something with.
Overall volume levels being higher you think you can kind of hold in there.
<unk> 42 to 43 gross margin range, you've kind of achieved here in the second half or where could that drag be.
A real needle mover.
I don't know if it'll be a real needle mover.
But theres no question that.
That mix of capital and parts and consumables plays a part in the gross margin performance.
So I always say when were heavier capital.
That will create some pressure on gross margins, but the good news side of that is we get operating leverage on it so our operating margins will be better.
Got it Okay Alright, that's helpful. And then just last one for me as you look across your segments your different customer sets and geographies I mean, it seems like over the last quarter or two here things have been universally strong.
But I guess as you look ahead to Q4 any notable pockets.
Acceleration or deceleration or any trends you are kind of thinking about heading into 2022 that are different from what you've seen.
Over the last couple of months.
No I would say no not right now I mean, I think our customers continue to operate at.
Fairly high operating rate as you know two thirds of our business recently has been parts of consumables and they tend to go with the operating rates go and so.
Most of our customers around the around the globe are operating at very high rates demand is pretty high still and so right now.
Had kind of a broad growth across all three of our segments and we don't see any significant.
Variation from one segment to the other I think.
Everybody seems to be.
<unk> at a pretty high rate right now demand is pretty high.
Got it okay. That's good to hear well I appreciate all the color and good luck here in Q4.
Okay.
Yes.
Thank you and next we have Walter the attack from Seaport Research. Your line is open.
Hi, good morning, guys.
Hi, Barnwell.
Wanted to ask.
Just to go back to that last question about the shipping and if you could just go into a little bit more detail.
All heard about what's going on on the West Coast ports is that Youre having.
Trouble getting component parts in through the courts or is there something else going on with shipping about.
Getting products out from your factory someplace else.
Yes, I mean, it's a little bit of everything, but I would tell you that.
The bigger issue for us is getting containers and ship out of out of China.
Frankly, that's a big part of it as you know.
A large percentage of our business in China.
Sold and stays in China, but they still do manufacture.
Components for some of their sister divisions around the globe.
And right now it's shipping it's just very tough cost have gone up substantially.
Able to manage that side of it but the.
Timing the schedules are something that are somewhat out of our control. So thats what were dealing with are struggling with.
As I said.
Curt asked a question I think.
Most of the experts think that it'll start to resolve itself here over over the next several months and up in the spring time and summer.
That certainly is our hope and expectation, but that's really what it is it's getting our equipment.
Kind of shipped to customers.
Okay.
Okay I wonder if you can give us some more detail about the types of products, which segment.
Some of those delayed shipments are in.
Yes, I would say well, it's heavily probably to frankly to no surprise, it's heavily weighted in industrial processing. So of that $13 million revenue shift number that I gave 80% of that is in industrial processing and.
Hi.
Again, sticking with the $13 million, and where you kind of split that amongst the product offerings and industrial processing.
Half of that is in the stock prep product line.
And then.
30%.
<unk> is in the wood product line. So it is very heavily weighted in industrial process.
Okay got it.
Okay great.
Maybe to segue into another question is in industrial process.
Great orders there it's been really strong.
Tied to the <unk>.
<unk> built.
How's the funnel looking for.
For projects you get visibility.
On some of those projects do you think the order activity will continue into 2022.
I think demand.
It continues to be fairly strong.
After the quarter closed we booked an order on the wood processing side for I think it was that Mike $8 $8 million order we booked.
Last week.
For some new standards in the OSB market.
Which is a very one of the biggest order it's actually I think it is actually the biggest order in the <unk>.
<unk> history.
Right now demand continues to be very strong.
Lumber prices are off of their high theyre down in the $575 range still well above the historical average of about $3 75.
So they have dropped quite a bit there's still companies are still very profitable demand is very high.
They're reinvesting it back in their businesses to meet that demand.
Okay, Alright, great. Thank you for that.
And maybe just the last one for me is.
I Wonder if you could just help us go through the M&A that you completed.
And just talk about which segments those are in and.
A little bit about the fit with Covid.
Sure. So <unk>, which was based out of Germany is in the flow control group and they were as you know one of our oldest businesses. When the original business case was the doctoring blades business and close was a major competitor. So we were kind of number one and number two in the world.
In that particular market.
And so they joined Takeda and family and so we combined two of the two strongest blade suppliers in the world together. So there is tremendous as you might imagine tremendous opportunities there for product development and market penetration.
For sharing best practices for you they have very very.
Sophisticated manufacturing operations in Europe that we can leverage so it's just.
I think I mentioned when we made the acquisition. It was number are number one acquisition target for 30 years. So it was.
And so you couldn't ask for anything much better than that.
Bell Master, which was in our material handling segment again, I think I've mentioned, we've been talking to them for about five years. They are premier supplier in the U S.
Record demand as I mentioned.
A very strong business serving the <unk>.
Principally the containerboard markets with their primary going after as OCC and pre consumer.
Cardboard box plants.
And board Mills and things so again, a great fit for US as you know we have.
The largest supplier of pillars in the world.
Through our European operations combined with this and Theyre seeing for several quarters now they've seen.
Near record demand, so just a great fit for us and a market that's doing very well as as.
As the global economy shifts more and more to these renewable materials.
With fiber cellulose fiber demand for recycling that continues to go up so it's no surprise that those businesses are seeing very strong demand E. Commerce was up I think I saw it was up 14% over over the third quarter of last year.
Containerboard is forecasted to grow about four 7% a year for the next five years well above GDP.
As people migrate.
Two.
To more cellulose based packaging so.
All those things all those trends if you will drive demand for our businesses and then the last one was the acquisition of India, which we just completed recently after the quarter closed.
Again, that's a company that we've been talking about buying for many years.
And we really wanted to get our manufacturing footprint in India. We do we do business in R&D, it's not a large market for us, but it is one of the faster growing markets. We've been there for quite a while and we really wanted to get our manufacturing footprint. There. So we could expand our market penetration and our market position, there as well as understanding the cost structure and technical skills.
<unk> competencies that exist in India for manufacturing. So it was one that serves two purposes allows us to continue to deepen and broaden our market presence there, but also gives us another manufacturing base.
In a country, where we can.
Evaluate the opportunities that come along with that and that one is in our.
Our industrial processing group. So we've really made an acquisition in each of the three sectors.
With <unk> being the largest in the adult Master and then the small and the operation.
Okay, great. Thank you very much congratulations on those deals and I appreciate you running through them for us.
Sure. Thanks, a lot.
Thank you once again in order to ask a question. Please press Star then the number one on your telephone keypad again, Doug Let me start then the number one on your telephone keypad.
Paul.
Your next question comes from the line of Bobby Eubank from Chevy Chase Trust. Your line is open hi, guys.
Congrats on those acquisitions and the strong bookings.
Wish you the best without dealing with these logistical issues that you and many other companies are dealing with.
Inflation in some of the challenges of managing cost.
It's a little bit early but any kind of early reads on 2022 kind of opex increases from an organic basis. Thank you.
Oh.
Thanks for the question Bobby.
Well of course in our next call when we wrap up the year, we will give a lot of color on 2022, So I don't want to I don't want to front run that but.
I would say.
Yeah.
Hi.
We won't be surprised to see inflationary pressures continue into 2022.
But I think our folks are very in tune with their input costs and <unk>.
We're making adjustments accordingly.
Great. That's the kind of color I was looking for and I appreciate that glad that you're aware of it and watching and monitoring it and just kind of what are you seeing in the day to day challenges right now in terms of operating costs.
Well, it's certainly prices have theres two things that are happening in the of course cost are going up and and delivery times are lengthening one of the we've talked about this before one of the many pluses are highly decentralized structure is that our local operations teams on the ground can make decisions pretty quickly.
On what they're seeing so for instance, we might see delivery issues in Europe, and we might see cost issues in North America, or we might see.
Something in China, but our local teams there obviously work at every day and so they are able to respond pretty quickly.
To try to manage those cost increases and those logistic challenges and when necessary. They also can respond quickly to raise prices too to pass along those increased costs. We will always work hard not to do that because we pride ourselves in being able to continually improve the value that we deliver to our customers, but there are times when your input.
Costco up to an extent that you can offset the host through productivity or other issues in which case then you have to pass them on and so.
When required to do that we do that and like I said, it's done at the local level based on the conditions.
Our operating teams are seeing there. So we feel good that we're able to stay in front of these issues, you'll see our margin Mike mentioned, our gross margins were the same this quarter as they were a year ago.
And even though we've seen these inflationary challenges and that's because our guys manage it locally and.
In real time, so that's always served us well.
Thank you very much and best wishes.
Okay. Thank you Bobby.
Thank you once again in order to ask a question. Please press Star then the number one on your telephone keypad.
Presenters I'm showing no further questions at this time I would now like to turn the conference back to Mr. Jeff Powell, President and Chief Financial Chief Executive Officer for any closing remarks, Sir.
Thanks, Chris.
We're wrapping up the call today I just wanted to leave you with a few takeaways.
2021 is shaping up to be the best year in our history across a wide range of metrics. We made solid progress this year on our efforts to accelerate revenue growth and the acquisitions, we completed in the second half of the year.
Further contribute to this growth and our long term sustainability.
Our year to date free cash flow is at a record level and our ability to generate free cash flow remains a cornerstone of our business model.
We look forward to a strong finish in 2021.
With that we want to thank you for joining us today and please stay safe.
Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.
[music].
[music].
[music].
[music].