Q1 2022 Shyft Group Inc Earnings Call
Yes.
Good morning, and welcome to the shift groups first quarter 2022 conference call and webcast all participants will be in a listen only mode until the question and answer session of the conference call. This call is being recorded at the request of the shifts grip.
Anyone has any objection you may disconnect at this time I would now like to introduce Jeff Treichel Investor Relations for the ship great. Mr. Chaika you May proceed.
Thank you everyone and welcome to the ship groups first quarter 2022 earnings call.
Joining me on the call today are Daryl Adams, our President and Chief Executive Officer, and John do yard, our Chief Financial Officer.
For today's call. We've included a presentation deck, which will be filed with the FCC and is also available on our website at www Dot the ship group Dot Com you may download the deck from the Investor Relations section of our website to follow along with our presentation during the call.
Before we start todays call. Please turn to slide two of the presentation for our Safe Harbor statement.
You should be aware that certain statements made during todays conference call, which may include management's current outlook viewpoint predictions and projections regarding the shift group and its operations may be considered forward looking statements under the private Securities Litigation Reform Act of 1995.
Caution you that as with any prediction or projection. There are a number of factors that could cause the ship groups actual results to differ materially from the projections all known risks that management believes could materially affect the results are identified in our forms 10-K, and 10-Q filed with the SEC.
However, there may be other risks that we cannot anticipate on today's call. We will provide a business update including the ongoing impact of a variety of factors to our operations before moving on to a more detailed review of our results and our outlook for the remainder of 2022.
We will then open the line for questions I would also like to remind everyone that with the divestiture of the emergency response business on February one 2020, the revenues and expenses associated with the ER business as well as the assets and liabilities have been reclassified as discontinued operations for all periods presented.
With this reclassification of the ER business. The results discussed today will refer to continuing operations unless otherwise noted at this time I am pleased to turn the call over to Daryl for his comments beginning on slide three.
Thank you Jeff.
Good morning, everyone.
Thank you for joining us to discuss our first quarter 2022 results.
As we previously communicated conditions were challenging in the first quarter as we faced ongoing supply chain disruptions affecting the entire industry vehicle.
Vehicle industry, my apologies, including a deterioration of chassis supply in March.
Our team remained resilient and while our FBS business started the year slowly the value of our investments we made in our specialty vehicles business was clear.
As the team delivered a solid quarter.
Turning to slide four.
The need for our products continues to be unquestioned.
As we remain confident in the long term outlook for the company our strategy to focus on higher growth markets resulted in record order intake of $500 million in the quarter.
Which also increased our backlog to a record $1.3 billion up over 90% versus prior year.
We achieved revenue of $206 $9 million in the quarter with the result of pricing actions more than offsetting the decline in unit volume due to intermittent chassis supply.
Profitability was consistent with our previously communicated expectations as variability and chassis supply and OEM plant shutdowns created inefficiencies in our operations.
We continue to focus on what is in our control as evidenced by the strong performance in our specialty vehicles business.
We remain diligent in managing our operations and controlling costs in this time of uncertainty as are well position to execute when the supply chain recovers.
Please turn to slide five where I'll provide a business update.
Let me start by addressing the considerable supply chain uncertainties that have affected our entire industry. It has been well over a year. Since we started to talk about semiconductor chip shortage that has affected the vehicle industry in particular.
That shortage lingers today, and we expect these conditions to remain throughout 2022 directly impacting our production as a chassis supply that is critical to our products.
During March we saw an unexpected production disruption from a key chassis supplier.
Our ability to produce vehicles.
As we look back at the month.
We received approximately 10% of the chassis that had been scheduled for delivery just four weeks earlier overall.
Overall this chassis deficiency contributed to a slower pace of revenue growth in the quarter and will persist into the second quarter.
As I mentioned earlier, the strength of our strategy and product offerings resulted in record order intake of $500 million in the first quarter, leading to a record backlog of $1 $3 billion. We remain confident in these orders and the underlying demand for our products.
Looking at our business segments.
Fleet vehicle and services our team managed through significant challenges in the quarter due to intermittent chassis supply that negatively affected our production.
Our capacity utilization decrease.
We operated our plants in a strategic manner by flexing production to maintain our quality workforce, while trying to minimize inefficiencies.
This section.
While negative to the quarter sorry, this decision while negative for the quarter was an investment in a stability of our workforce to support our growth over the long term. We have maintained a similar approach in April knowing the team will be ready to ramp up quickly once the chassis supply improves.
In the first quarter, we continued to execute on the velocity growth strategy.
Beginning production of the velocity M. Three built Animas 80 sprinter chassis and our shot Charlotte facility.
We also formally introduced the velocity or to walk in van built on a ramp roadmaster Jesse at the N T. A workshop week in early March which was very well received we expect to begin production of the velocity or two in the second quarter.
We also commenced production at Orlando spill, Pennsylvania truck body plant in the last week of February .
Mark the culmination of the strategic transition to a larger more efficient facility that will support our growth. After two months in operation, we are already exceeding daily output and our new plant compared to the previous facility. We are excited by the opportunity.
This represents and we look to expand the business and penetrate new markets, such as the consumer leasing and rental business.
Turning to our specialty vehicle segment, the business performed extremely well as we continue to execute on our growth strategy.
We saw a strong growth and market share improvement in our motor home business as well as a solid growth in our service body business despite chassis supply constraints.
The team's efforts generated significant growth in sales and adjusted EBIT to start the year.
We continued to gain share in the motor home market, which increased to 33, 7%.
Genuine a string of sequential quarterly growth.
Overall, our target segments of the RV market remains healthy with motor home dealer inventory at historic lows, which gives us confidence that the remainder of the year.
Across our service body business, we increased share as we continue to execute on our strategy of growing our position as a national service body player.
We saw solid volume running through our G M shipped to the location.
In the light duty pickup truck market, we saw improvement in chassis availability as the quarter progressed.
Which we expect to continue in the second quarter.
As it relates to innovation, our dirt make go to market brand recently introduced the S series aluminum service body at N T E.
With a single sheet of aluminum on the outside panel to provide a smooth OEM look combined with flush amount of doors and internal hinges or best in quality fit and finish.
Please turn to slide six where I'll provide an update on our electric vehicle initiatives.
Over the past nine months, we've talked about supporting our customers' transition into electric vehicles by leveraging a half century of experience in building purpose built custom chassis and bodies at N. T. E. In early March we introduced the Blue arc EV solutions go to market brand, creating a new EV ecosystem.
It comes in three new products.
Industry first commercial grade purpose built EV chassis.
A fully re imagined all electric class III delivery walk in van.
And a portable remote control charging station.
Which we call the power of cute.
We also introduced that North America sorry.
North Carolina based random Marian dealer group will be the first dealer in the U S to sell our new all electric class read literally vehicle.
We saw a surge in interest during and after the show from potential customers for Blue arc products, ranging from last mile delivery fleet operators and long lasting customers to other emerging industries.
As soon as we're particularly impressed with the intelligent design simplicity and engineering.
This extended to their impression on the specifications equipment performance and flexibility of the chassis and body. They view the vehicle design is one that adds value and improves operators safety inefficiency.
These new products offer a variety of innovations that will mark a great advance and the commercial EV space.
The new chassis includes a modular design that will accommodate multiple weight rating.
This chassis will be highly adaptable and can accommodate last mile delivery work truck mass transit recreational vehicles and other emerging markets.
The Blue arc delivery van is 100% battery powered class III electric commercial delivery vehicle designed for high frequency last night delivery fleets and features.
Stance of cargo space lightweight design and an integrated solar roof package.
Lastly, the Blue arc RQ will provide a portable remote charging solution for a variety of commercial vehicle needs. We believe this solution will address the lack of EV infrastructure that has been a roadblock to more widespread adoption among commercial fleet operators March was a busy month for EV efforts and we are very excited.
For what the future holds in this area.
With that I'll turn the call over to John to discuss shifts financial results for the first quarter in more detail beginning on slide seven as well as provide an update on our 2022 outlook.
Thank you Daryl and good morning, everyone.
Please turn to slide eight and I'll provide an overview of our financial results for the first quarter.
As Daryl indicated the shift group had a slow start to the year given the chassis supply issues, achieving mid single digit revenue growth and near breakeven profitability.
These results remained in line with our expectations, when we announced the fourth quarter. Despite an unanticipated acceleration of chassis supply issues near the end of the quarter.
Revenue for the first quarter was $206 $9 million up four 5% from the year ago quarter.
Loss from continuing operations was minus $3.9 million compared to income from continuing operations of $11 $5 million a year ago.
Adjusted net loss was $2 $1 million compared to compared with adjusted net income of $12 8 million in the prior year.
Diluted earnings per share from continuing operations was a loss of <unk> 11 per share compared to a profit of 32 per share in the first quarter of 2021 .
Adjusted EPS from continuing operations decreased to a loss of <unk> <unk> per share from a profit of 36 per share a year ago.
First quarter adjusted EBITDA fell to a loss of $600000 from a profit of $19 $2 million, while as a percent of sales declined to minus <unk>, 3% compared to 9.7% of sales in the same period last year.
These results include EV investment of $4.4 million.
Let me now take you through the results by operating segment, beginning with fleet vehicles and services on slide nine.
As we discussed on our prior call we expected F. B S to have a slow start to the year driven by OEM shutdowns impacting chassis supply as well as our land is still plant startup.
While landfill has ramped in line with our plans chassis supply issues accelerated in March impacting our revenue and profitability further than previously expected.
The business delivered revenue of $112 $7 million compared to $123 $8 million a year ago.
Decline was primarily due to reduced production volume as a result of lower chassis supply, partially offset by higher pricing.
F. P. S. Adjusted EBITA was a loss of $900000 versus a profit of $17 $9 million a year ago.
The decrease was primarily driven by lower volume and productivity inefficiencies as a result of intermittent chassis supply material and labor cost inflation, partially offset by pricing actions and mix.
With record orders in the period F. P. S ended the quarter with a backlog of $1 1 billion a new high.
P F F. B S backlog was up 34% sequentially and nearly double last year at this time.
Please turn to slide 10 for the specialty vehicles segment overview.
The momentum that specialty vehicles experienced to end 2021 continued to start this year.
Which helped offset some of the F B S headwinds.
Sales were $94 $2 million, an increase of $21 million or 27% with strong performance in luxury motor home chassis and service truck body, driven by both higher volumes and the favorable impact of higher pricing.
Adjusted EBITDA was $10 $1 million or 10, 7% of sales compared to $7.4 million or nine 9% of sales in the same period last year, primarily driven by higher sales volume pricing actions and improved product mix, partially offset by material and labor cost inflation.
That's V backlog was up 52% to $124 million, which included 43% growth in motor home chassis backlog and a 63% increase in our service body backlog.
Please turn to liquidity and outlook update on slide 11.
Overall, our balance sheet remains strong and our liquidity is robust.
While we typically see a seasonal cash outflow in the first quarter. This was further enhanced in the quarter by chassis delays.
Cash flow from operating activities increased to an outflow of $27 $8 million from an outflow of $1.3 million in the first three months of last year.
Capex for the quarter was approximately $5 $5 million.
At the end of Q1, we had total liquidity of $276 million, which includes $3 $7 million of cash on hand.
Our current leverage ratio stands at just 0.5 times adjusted EBITDA, which provides us with ample liquidity to fund our operations and to continue to invest in our growth strategy.
We returned $28 $7 million towards shareholders in the quarter in the form of a regular dividend and the repurchase of approximately 600000 shares.
Turning to our guidance well first quarter results were soft as we anticipated chassis delays and other supply chain issues accelerated in March adversely impacting our performance for the month.
We expect that these industry wide challenges will continue in the near term requiring us to adjust our 2022 guidance.
The change in our guidance was primarily isolated to walk in van and velocity chassis supply shortages in our fts business.
The midpoint of our updated guidance represents a chassis reduction of approximately 25%.
First is our prior full year estimate.
Weighted more heavily towards the second quarter based on the OEM shutdowns, we recently experienced in March and April .
Our assumptions include sequential improvement in the second half, which is partially informed by our visibility to a significant number of OEM produced but unreleased chassis that are currently awaiting components.
We continue to monitor and support the efforts required to release these trapeze and are poised to produce when they arrive.
Based on these chassis assumptions our revised guidance is as follows.
Revenue to be in the range of $900 million to $1 $1 billion, adjusted EBITDA of $50 million to $80 million, including $30 million of EV development expenses.
Adjusted earning per share of <unk> 75 to $1 41 a share.
Overall, the long term outlook for the company remains positive driven by strong underlying market trends and robust demand and we will continue to look for opportunities to leverage our strong balance sheet and invest in our future.
Now I'll turn the call back to Daryl for closing remarks.
Thank you John Please turn to slide 12.
Our results for the quarter demonstrate the value of nimbleness and our approach toward operation and then for the tremendous effort by the entire ship team.
Despite the industry wide challenges that impacted our operations, we remain committed to innovation and meeting the evolving needs of our customers as demonstrated by our new Blue arc EV solutions, we will continue to invest in these growth initiatives as we remain confident in our long term future of the ship.
In summary, while the first quarter was soft we met our expectations, even with some unexpected disruptions and key supply chain areas.
And we remain well positioned to quickly respond with increasing production as the supply chain returns to more normal conditions with that operator, we're now ready for the Q&A portion of the call.
We will now begin the question and answer session.
The question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing a key to withdraw from the question queue. Please press Star then two.
Our first question is from Matt Koranda with Roth Capital. Please go ahead.
Hey, guys good morning.
Good morning, Mike.
So just wanted to start off with the guidance for the year and John .
It sounded like you said, just a moment ago that the.
The cut to guidance is related to chassis supply being cut by 25%.
So is that relative to your prior expectations our year over year, and then could you just talk about sort of how that fits into the 13% cut to the revenue guide at the midpoint it sounds like maybe some price offsets that but.
If you could speak to that and then the other component of chassis that wanted to cover was just what's changed over the last 30 to 60 days. It sounded like you guys are reasonably confident that you have visibility in the chassis supply.
Can you just put a finer point on sort of where youre seeing the excess sort of stress in the system in terms of chassis supply and what eroded over the last 30 days to 60 days.
Sure.
And on the first part of the question of the 25% is in relation to our prior guidance and as I mentioned in the prepared remarks, it's really isolated to our walk in van and velocity business, where you.
We saw basically from from March 1st on <unk>.
Through the middle of April essentially no deliveries, Daryl Daryl highlighted 10% of what we expected to receive at the beginning of the month and so.
You know theres, a number of issues and challenges that we continue to work with the Oems onto to release those chassis, but that's really the the.
The biggest driver here, particularly in the second quarter.
We do see production back up here in the second half of April and so we are starting to see a flow of chassis, but it is at reduced production rates right, which is where we have taken down the second half from our previous expectations as well.
Be it in second half will be better than the first half of the year.
I think as we talked about when we look at what what's out there right now.
There's approximately 2000 chassis that are just on the ground.
You know waiting for either components or waiting for delivery that are just caught up in the system and so we continue to work to try to accelerate that and get them in our production.
And into our production lines and unfortunately, there's pieces of that that are out of our control.
And and are delaying some production and the reason for the reduction in guidance.
Okay and it sounds like you.
You were telegraphing in the prepared remarks that the majority of the.
The cut to the guide should be impacting the second quarter, but just any color on sort of the cadence I noticed.
Tough to get visibility, obviously in this environment, but just to.
Just kind of level set folks in terms of expectations second quarter versus the second half of the year and we'll be ramping but just how much we'd be taken out of the second quarter versus the second half.
And so as we look at the second quarter, we will see sequential improvement from a couple of items that were.
Were headwind for us in the first quarter, which will have we will have upside back online and sell T. O will have our truck body facility that Daryl talked about back on our online and.
In April executing at a high level and so we've got some some tailwind from that but.
But as we look at the year, the second quarter is probably 20% of profitability for the year.
With a ramp into the second half I think when you look at that second half.
You know the ramp that's assumed its not anything thats necessarily heroic versus what we've been able to do historically I think you take the remaining average over those two quarters and we've we've done that level of activity or more than that level of activity.
And four out of the last six quarters and so yeah.
I think you know our expectations are based on the visibility that we have to chassis supply today.
And we do see that the impact predominantly here in the second quarter.
Sure.
Okay, Great very helpful. And then just last one from me just on the bookings front maybe.
Maybe for Darryl.
I mean still very exceptional demand when we kind of look at it on a quarter by quarter basis.
Cross both segments.
But.
At this point I guess backlogs looking a little bit stretched relative to kind of what production levels will be for the remainder of the year and so just curious if you're hearing from customers in terms of sort.
Cancellations any churn expected and the backlog in the near term, obviously people need chassis and probably can't get at many other places. So I'm just curious your thoughts on sort of the the length of the backlog and if and when that may start to impact sort of incremental demand.
Sure Matt.
I think if we go back to some of our previous calls we've talked about.
Even the competencies we've had the inability of our customers since Covid started to do a number of things due to the chassis constraints one as they they've not been able to fully replace there.
David vehicles right. So the replacement cycle is a little bit you know.
I'll say held up if you will because the chassis constraints.
If we look at.
The regular growth that they would've seen over years typically that would drive the replacement cycle is.
Increasing because of the demand on last mile delivery, then they haven't been able to really get all the vehicles they needed due.
Due to the surge in e-commerce .
Due to Covid so.
We believe the $500 million that we mentioned.
In the quarter is a record.
Is it still.
Leading us to believe that the demand is there.
We continue to see it.
And to your point right if they if they do get out of line.
Go to the back of the line because all of these customers already have chassis ordered.
So somebody backs out they're going to give it to the next man up so it is a little bit of a quandary, but I think as soon as they break loose as John mentioned right. We're not stretching the second half and we still have second shifts available at.
Most of our plants right that we can catch up faster if they can get these 2000 plus chassis.
Get components on them and get them broken loose, we can we can make that bombing them up.
It all depends on when they start slow and chassis.
We get them out we may see some.
Some churn in the backlog, but we haven't seen it yet and its been at record highs since Covid started so we're pretty positive about it.
Yes.
Okay, Great I'll leave it there guys. Thank you.
Thanks, Matt.
The next question is from Steve Dyer of Craig Hallum. Please go ahead.
Oh, Thanks, good morning, guys.
Must be the guidance for the back half of the year.
Implies that these jesse's loosen up relatively well.
Oh, let's say quickly, but when the when the when the spigot turns on they're going to flow pretty freely I guess, given how quickly things have.
We have sort of changed in the ongoing disruption I mean, what's sort of your confidence level that youre going to sort of have unabated floor chassis in the back half of the year.
Okay.
I'll start with that John and maybe you can jump in.
Steve It's it's we're seeing positive.
Attitudes comments.
And results from.
The recent shutdowns and how they're starting up.
We're seeing positive moves there.
We're very close with all the Oems on and helping them and working with them to try to.
Great.
The supply issue right, it's mainly components.
And some quality issues.
Especially like the.
The 1500, I believe plus or minus 500, okay.
Cash used for walk in banner.
Or stuck in.
Yard hole.
Due to a couple of components.
And working with them were.
We know what the reworks gonna be we think it's going to have positive.
Results. So we're seeing some of that and then that's cleaned up the yard and then the regular production with.
We're seeing them ramp up over the last few weeks with their output. So that's where we you know we have some positiveness, but look.
It could change just as fast as the change for US right. After earnings go and when we can receive any chassis and we only have the 10% for March. So you know we're hearing positive things and we're feeling that we're seeing with Jesse slogan.
And we just hope that the supply chain can continue to supply them with the high quality parts that we expect in the industry.
Got it that's helpful. Daryl thanks.
Just kind of going a different direction, you've had blue arc sort of out and about a little bit of trade shows or what are you sort of hearing qualitatively from potential.
Potential customers, there and then sort of how would you say your solution stacks up in the last year or two there has been.
A bunch of different potential competitors coming to market.
We're saying, they're coming to market with some sort of EV solution, but sort of you know what.
What's the initial feedback you're getting and then how would you say that's sort of stacks up and fits in with other competitors.
A couple of things on that Steve before I get into the feedback so far.
Remember were in class three.
Only right now.
So.
A lot of the entrants into the.
EV space or in class two.
And that's why we went into class III.
Because we didn't want to compete against their customers like Ford into the Lantus, we're coming out with their E V cargo van so.
I think that's important to note and we'd like to keep reminding.
People when they talk about E V that wouldn't class III.
That class III is the same as.
As the velocity right. So we're the only person in that space.
So if you take and I think we also talked about later next year, we'll start working on our class five and that should be do some testing late 'twenty three 'twenty four and class five and then the other pieces are cut.
Feedback so we're not out.
Selling this vehicle with a powerpoint presentation.
We know what our customers we design the vehicle for our last mile delivery customers.
And we want to have our prototypes, which we're receiving parts today.
So proof of concept was that MTA truck show.
We have a number of parts coming in to build up our prototype vehicles test vehicles that will get into testing and we wanted to make sure. The vehicle work, Steve before we take it out to our customers and asking for orders.
Because if theres some changes we have to make we have to make it because they look at us as well.
We know what their needs are.
So we don't need to give them a vehicle that doesn't function. So if you take the 50 years of US building custom chassis in the 50 years of our last mile delivery knowledge and we're very confident that the vehicle we put in front of them will be.
Exactly what they need.
And then the the range right.
I'm, probably a little bit on the high side to their needs, but when you start turning on.
<unk> and the vehicle, it's gonna drain some of the battery and that's some of the issues that you've seen from other people entering that space is.
They think the range is correct.
With the battery size, but then they come in short so.
I think you know with the team we have in the what we've seen with the vehicles so far.
Confident that as we get the prototypes in front of him let him start testing them that they will like the vehicle like they look at the rest of our vehicles.
We should see some orders start flowing.
They started to test them.
Great.
Last one for me and then I'll turn it over historically you've been.
Pretty opportunistic with some smart tuck in acquisitions.
Is that is that still sort of on the radar or is it sort of head down job one is getting our product out the door right now thanks.
Okay.
Yeah, you know I think as you Fortunately, particularly in times of uncertainty, what you're always sitting here with a strong balance sheet today, and so we're pretty comfortable from that perspective.
Our strategy continues to be to look for opportunities from an M&A perspective, I think we've been able to prove over the last number of deals that's been successful and has allowed us to continue our growth.
Trajectory, even as you look at this quarter with SP.
And so we continue to build that funnel and engage potential parties.
And so yes.
M&A continues to be.
High on our list in terms of our growth strategy.
Alright, Thanks, guys. Good luck. Thanks.
Thank you.
Yeah.
Again, if you have a question. Please press Star then one.
The next question is from Mike Schiller Ski F. D. A Davidson. Please go ahead.
Hey, good morning, guys.
Good morning.
Yeah.
Can we talk about supply chain comp question beyond just the chassis supply so maybe some more general supply chain questions.
I know you guys arent selling chassis in the Ukraine, and Russia to my knowledge some of your products or at least to my knowledge, but.
That issue has more recently caused an uptick in steel prices.
Aluminum and other materials.
Got any challenges there recently and have you had to put any extra pricing out there.
Okay.
Constantly.
Evaluating input costs and then looking at opportunities are evaluating whether we need to take pricing actions. I think we have seen you know outside of some of the commodity prices that you discussed we've we haven't seen really any further impacts coming out of that that crisis.
You know and I think that at this point extends to some of the China shutdowns as well there's been some some noise in the system in terms of part supply.
But our teams have been successful and creative in their ability to work through that until we haven't seen any any disruption from that perspective, you know that said we continue to look at price we talked about repricing the backlog multiple times, we did it in the first and the fourth quarter. We did a couple of times different parts of the business here in Q1 and will continue to evaluate.
That as as commodity prices change, but thus far we've proven to be successful and to Daryl his point, we haven't really seen any fallout as weak.
We've executed.
Excellent.
I wanted to turn to some of those class III E V that you mentioned Daryl a few minutes ago.
So for the transient I know you guys.
<unk> has been upgrading some of those to my knowledge have you had any issues with some of the earlier.
I'm on the line.
And giving you updates on there or have they been relatively smooth compared to the IC burdens, it's just a different underpinning.
That's enough Martin also.
Yeah. Thanks, Mike I appreciate the question.
Right now it's at a really slow pace, so we're not being influenced by any chassis issues.
Or component issue and I think the other piece that we're working very closely with the Lantus.
They're up fitting on their E V vehicle that will go through.
A plant down in Mexico, which is our ship through planned down there.
So we're excited about both of those.
Coming to market and I think if you're in retro stuck right you and.
I, probably talked about this couple of years ago, and it's one of the reasons why we stayed out of that class II space.
Got it.
Maybe just lastly, a quick.
Question on housekeeping wise.
The guidance include any additional share repurchases beyond what we saw in the first quarter.
What was that.
Separately.
No theres nothing additional contemplated in the guide.
All right I'll leave it there guys and I appreciate that.
Thanks.
This concludes our question and answer session I would like to turn the conference back over to Jack <unk> for closing remarks.
Thank you Kate.
We plan to participate in the Craig Hallum Conference on June 1st So we hope to see many of you there, but please keep an eye out on the upcoming events section of our website for future events with that I'd like to thank you for participating in today's call have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.