Q1 2023 HNI Corp Earnings Call
After the Speakers' remarks, there will be a question and answer session. If he would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If he would like to withdraw your question Press Star one again.
Mr. Mcfall, you may begin your conference.
Good morning, My name is Matt Mccall, and Vice President of Investor Relations and corporate development for <unk> Corporation. Thank.
Thank you for joining us to discuss our first quarter fiscal 2023 results.
With me today are Jeff Lawrence <unk>, Chairman, President and CEO , and Marshall Bridges, Senior Vice President and CFO .
Copies of our financial news release, and non-GAAP reconciliations are posted on our website.
Statements made during this call that are not strictly historical facts are forward looking statements, which are subject to known and unknown risk actual results could differ materially.
The financial news release posted on our website includes additional factors that could affect actual results. The corporation assumes no obligation to update any forward looking statements made during the call I'm now pleased to turn the call over to Jeff Lawrence or Geoff Good morning, and thank you for joining us.
Our first quarter results were better than expected, reflecting the momentum we have with our strategies our market positions and our actions to streamline our businesses.
On the call today I will highlight three key topics first our profit improvement actions in workplace furnishings continued to deliver results.
Second recent workplace furnishings demand trends are encouraging.
And third our residential building products segment is performing well despite a period of weaker demand.
Following those highlights I will provide a brief update on the Kimball International transaction.
Marshall will then review our outlook.
I will conclude with some general closing commentary before we open the call to your questions.
Yeah.
Moving to the first topic, our profit improvement actions in workplace furnishings are delivering results.
The first quarter of 2023 marked the fourth consecutive quarter of year over year profit improvement and workplace furnishings.
During the quarter multiple drivers supported our profit improvement specifically, our annual net productivity savings returned following a year of elevated investment.
Benefits from streamlining efforts and cost actions implemented in 2022 continued to deliver.
And price benefits exceeded cost inflation.
As a result, our first quarter seasonal non-GAAP operating loss and workplace furnishings narrowed by more than 40% on a year over year basis.
Segment gross margin expanded 190 basis points from the prior year period.
This was despite demand pressure associated with prior year backlog dynamics and weakening macroeconomic conditions.
While macro conditions are still uncertain, we remain confident in our ability to drive workplace furnishings profit growth in 2023 and beyond it.
It is important to note that we are not dependent on volume growth and are driving for primary profit growth actions first we continue to simplify our business focusing on our most attractive markets. The actions we took late last year.
To divest <unk> and rationalize our e-commerce offering are currently improving our profitability.
We have streamlined our cost structure, we continue to expect $25 million of our previously announced $30 million to $35 million cost savings initiative to impact workplace furnishings. This year.
Third our productivity efforts are driving profit growth.
And our future results will benefit from our ongoing operational investments and fourth price cost will continue to be a tailwind through the remainder of this year.
Moving to my second topic recent workplace furnishings demand trends are encouraging.
On our last earnings call, we discussed our expectations for soft first quarter volume.
We were projecting first quarter organic sales to decline at a high teens rate year over year, driven by the unwind of backlog in the prior year macroeconomic conditions and inconsistent office reentry patterns.
Actual results were down only 11%.
Shipments for small and medium sized businesses and to contract customers both exceeded our expectations.
Order growth was also better than expected.
Organic orders in the workplace furnishing segment grew 13% versus the same period, a year ago, reflecting improving market demand trends, our unique market positions and the benefit of pull forward activity driven by price increases implemented during the quarter.
We are encouraged by the order trends. However, we still believe we're in a period of slow improvement that is being dampened by macroeconomic uncertainty.
We believe the improving order rates reflect intermediate and long term trends related to employment growth with small to mid sized offices population shifts to secondary geographies increased.
Increased furniture events, driven by the adoption of hybrid work models and more large corporate customers ramping up their return to office plans.
These trends all align with our strong market coverage and our product and price point breadth and depth.
<unk> that will only be enhanced through our combination with Kimball international.
For my third topic, our residential building products segment is prepared for a period of weaker demand.
Consistent with our previously discussed expectations weakening macroeconomic conditions in softer housing related demand negatively impacted residential building products. During the first quarter. However, productivity savings cost reduction actions and continued price cost improvement offset nearly half of the volume related pressure.
As a result segment operating margin remained in the mid teens.
Was the 11th straight quarter with an operating margin margin in excess of 15%.
Not unexpectedly segment orders softened in the quarter as I previously mentioned, we are prepared for a slower near term demand environment.
We however remain bullish about our mid to long term growth given the housing market strong fundamentals.
Housing is under supplied demographic trends point to robust future construction growth.
And renovation activity will begin will benefit from an aging housing stock.
In addition to strong market fundamentals, we have a unique growth opportunities. We continue to invest in our initiatives aimed at expanding the market, including in the areas of category awareness new.
New product innovation, including the electric category.
Online capabilities, including tools that assist homebuyers in selecting the right fireplace for their home and the expansion of our wholly owned installing distributor footprint.
The market strong fundamentals, our unique growth opportunities and our category leading positions point to the return of strong growth beyond 2023.
Before I turn the call over to Marshall I wanted to provide an update on our combination with Kimball International.
On March eight we announced an agreement to acquire Kimball International and the transaction currently valued at approximately $455 million.
The transaction has cleared antitrust review and the vote of Kimball International shareholders is scheduled for May 31.
We expect the transaction to close in early June .
The combination creates a market leader with pro forma revenue of approximately $3 billion.
And combined EBITDA of approximately $305 million.
When including $25 million of expected synergies.
Together, we will we will be strongly positioned for post pandemic trends with an expanded presence in secondary geographies and leading positions and ancillary products.
With that Mark will now discuss our outlook for 2023 Marshall.
Thanks, Jeff.
Let's start with expected seasonality as we discussed last quarter, we expect sales and earnings seasonality during 2023 to be more in line with pre pandemic trends.
As a result, our quarterly year over year comparisons with sales and profit will be distorted specifically first half year over year comparisons will be more challenging.
Due to backlog dynamics it positively impacted both segments in the first half of 2022, and our second half comps will be less challenging, particularly in workplace furnishings, where demand slowed in the second half of 2022.
We now expect approximately 80% of our annual non-GAAP earnings per share will be generated in the second half of 2023 that compares to approximately 60% in the second half of 2022.
Let's move on to our outlook for the second quarter.
And workplace furnishings, we expect second quarter revenue to decline at a year over year rate in the mid teens.
I would like to point out that two unusual factors are contributing to that decline first we're comparing against a strong prior year result.
In the second quarter of 2022, net sales and workplace furnishings grew 18% year over year that growth rate was driven by strong activity with transactional customers.
And the final unwind of excess backlog built up during 2021.
Neither of those benefits are expected to repeat in this year's second quarter.
Second the sale of land mix with lower growth in workplace furnishings by six percentage points or $27 million in the second quarter.
Excluding that divestiture organic revenue is expected to decline at a high single digit rates.
Moving to second quarter residential building products revenue, we expect segment revenue to decline at a year over year rate in the high 20 to low 30% range.
This decline reflects both a return to normal seasonality and weakening new construction and remodel retrofit demand.
The second quarter in residential building products is typically our seasonally weakest quarter with revenue nearly 10% below first quarter levels last year, we did not see that dip as the second quarter benefited from excess backlog and strong incoming demand having that seasonal dip return is expected to drive approximately one <unk>.
Third of the second quarter revenue decline and residential building products weaker market conditions.
Our driving the other two thirds of the decline.
So in total consolidated second quarter revenue for H&R overall is expected to decline at a rate in the high teens to low twenties.
Excluding the sale of Lomax organic revenue is expected to be down.
At a mid to high teens rate in the second quarter.
We expect consolidated non-GAAP operating income in the second quarter to exceed first quarter of 2020.
<unk> 23 levels.
I would also like to note that our second quarter outlook excludes any impact from our expected closing at the Kimball International transaction.
Let's move on to our outlook for 2023 overall first off our main point is our outlook for the remainder of the year is essentially unchanged.
We expect productivity benefits reduced structural costs and improved price cost will create $85 million to $95 million of total benefit. During 2023. This will drive profit growth in workplace furnishings, despite topline pressures.
And those drivers will offset much of the negative impact from lower volume in residential building products that is being driven by the weakening housing market.
Shifting to the balance sheet, we now have our permanent financing in place for the Kimball International transaction during.
During the quarter, we replaced the initial bridge loan financing with a new term loan facility and an amendment to our revolver.
Looking forward, we expect to maintain a reasonable leverage levels, we have a history of generating strong free cash flow through a variety of economic conditions. The combination with Kimball international and will further strengthen our cash flow.
And we expect free cash flow in 2023 to benefit from a return to more normal working capital levels.
Our reasonable leverage and cash generation.
Provide flexibility for the dynamic environment and continued investments.
I'll now turn the call back over to Jeff.
Thanks Marshall in closing, we are well positioned for both the current environment and the long term.
In workplace furnishings, our profit improvement actions will continue to drive results.
Our future profit growth is not dependent on volume. However, we expect demand to eventually benefit from employment shifts population migration and the accelerated adoption of hybrid work models.
These trends all aligned with our strong market positions.
We are excited about our soon to be combination with Kimball international.
The complementary nature of the businesses will create compelling value for all of our stakeholders.
And residents of building products, while we are prepared for weak near term demand we remain focused on driving long term growth.
The high margin high return businesses possess market, leading brands unmatched product depth and price point breadth and unequaled distribution capabilities.
And its vertically integrated model and regional distribution infrastructure will continue to provide superior customer service and support for our market leadership positions. We will now open the call to your questions.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we will take our first question question from Baidu, that's at water Tower research.
Good morning, Jeff Good morning, Marshall and Matt Congratulations on good performance for them.
The first quarter.
I was most or one of the things that really raised my eyebrows was the 13% order growth in workplace furniture, which when.
When you compare that to the reports results reported by Beth MA at least so far to date in 'twenty three.
Much higher than than what the industry looks like.
Is there some explanation for that can you provide color was it because of March <unk>.
Of course March or.
Can you give us any thoughts on that.
Yes, Budd this is Jeff.
First I would say.
Pertains the best model I think what we've kind of witnessed over our years as it will bounce around a bit quarter to quarter, everyone does price increases at a different time than there is lag there. So I can't I don't get too caught up on the <unk> numbers on a point in time, but maybe over a longer term.
<unk> period, it's a little more accurate to compare I would say you know for US. We continue to we continue to see strength in the mid market and the SMB portion of the mid market.
And that that that surprised us a bit and in the contract side I think what you saw both both of those segments benefited from some price increase pull ahead, but we also were encouraged because we see customers were close to pulling the trigger and we recall a lot of customers have been sitting on the sidelines in the <unk>.
Planning planning mode.
And I think.
It forced them to make decisions and move and so from an overall industry standpoint, I think that was a that was a really good sign for us any way to see that customers were.
We're close enough and we're willing to make the investments.
Thank you.
But a little bit maybe a little further into that we've heard from others that there is a lot of activity, but it's taking longer to bring that to fruition. You also made a comment that you had pricing.
We'll forward that would imply that there were price increases that.
We're actually happening during Q otherwise the pull forward would have been ahead of that.
I have that right and you said smid and contract where about the similar rates and just want to make sure I understand why you think that might be that that way.
Sure.
But I think our price increase went into effect March one so I think it wasn't it did occur in the quarter.
I think we did see an impact from the price increase.
And how much was that Jeff or what does it what does it look like I would say.
I'd say overall, when you kind of net it all up about 50%.
We probably attribute to pull forward ahead of a price increase in that.
We got historical benchmarks, we look at and we're obviously in a bit of a unique position, but that's our best guess, 50% do you think six 5% of the Delta or thereabouts was was due to the price increase.
Yes, that's a fair fair way to say it.
Okay.
My second question here.
The again the performance in RVP currently the profit performance is certainly notable and there's demand issues in the quarter or a couple of things surprised me on that one that.
It looks like remodel retrofit was impacted more new housing construction, because I thought that would.
And what we've seen with <unk>.
On interest rates and mortgage rates job would've thought new housing would have been more impacted.
And secondly, usually at a time like this when others are.
Well, our bruised or when your bruised others are pretty much hemorrhaging sure there might be more opportunities to acquire in that do you see that.
And if there are the Kimball acquisition.
Shay my appetite might not be so good at this point in time.
Yes, but I'll, let me, let me parse that Theres a lot there I would say first of all I would start with and I always start with.
We continue to invest through through this.
And RVP and we.
We tend to find with our leading categories and leading positions investments to grow the category work out well for us and we pick up a disproportionate share on any expansion from our position. So that's that's a good thing on your on your question around R&R I think for the year I would.
Say, we still anticipate that new construction will be worse than R&R for the year and the quarter. I think we saw we have an early buy program that impacts R&R.
And the assumption we made.
It wasn't basically the trade didn't take advantage of it as much as they have in the past.
Particularly I think it's a phenomenon around lead times and are getting back to normal and not hoarding product like they were kind of gotten to a mental state of doing that for the last couple of years.
So that impacted the quarter in R&R.
And thats, a little bit distorted, but overall, we believe new construction for the year will still be now more than R&R.
Gotcha, Okay, and you had another question in there.
What was it that you havent yet.
Yes, well.
With the with the idea of others being hurt.
How is your what's your view will drop.
Pipeline of transactions or maybe potential acquisitions in that you have been mostly acquiring at least in the last couple of years.
Distribution was that something that you see continuing and are there opportunities.
Right.
Yes. Good question I think we continue and will always be on the look out in that space and I don't think our posture will change post acquisition versus what it was pre acquisition.
Okay.
Just to.
Take two more and then defer.
Yes.
If we can get walk throughs of maybe the year over year changes in gross profit from and for SG&A at Marshall can give us maybe some quantification of what the major components of change in gross margin and SG&A margin.
Yeah happy to do that but as it relates to gross profit margin. We saw about 160 basis points of headwind from volume lower volume was a negative impact.
And we were able to more than offset that with favorable price cost, which added about 130 basis points.
And the impact of our cost savings program, which added about 100 basis points, so think of that as productivity.
And then we had maybe three other categories, which added about 140 basis points collectively they included the divestiture of Lam ex some product mix and some program changes. So all in we saw 210 points of gross profit margin expansion on a non-GAAP basis.
Got you is it really an SG&A go ahead sorry.
<unk> the same way I'm, sorry, apologies, yes, yeah. This one's a little bit of a simpler story, we did see SG&A as a percent of sales increase and it really is driven by the volume decline, partially offset by our cost reduction program, which reduced SG&A.
$1 by about $5 million in the quarter.
Gotcha, Okay, I'll defer for others. Thank you for taking my questions.
Thanks Budd.
We'll move to our next question from Reuben Garner at Benchmark company.
Thank you good morning, everybody.
Good morning.
The price increase in workplace furnishings Atlanta into effect March one.
I guess, one is that something that youre seeing across.
The industry was that specific to one side of your workplace business.
Meaning that the small business channel or was that both in contract and small business and then the second part of the question is what kind of order trends look like.
Since that increase went into place in March and April if you could help with more recent term.
Yes, I think.
The price increases kind of our generic across the board.
It wasn't we look at it year over year look at cost inputs and make the best determination, but it was not specific to one category of the business.
Our one segment of the business and.
Since since the price increase I mean, what we've seen is still first of all orders throughout the quarter.
Sequentially got better.
Second of all the mid market, we still see our five week. Most recent is still up low single digits.
<unk>.
The transactional piece of the SMB, which is a small piece of our businesses continues to be weak and the contract is flattish to prior year right now.
On the recent five week average.
Maybe just to add to that.
Is your typical <unk>.
Normalization pattern see post price increase and we're also up against we're starting to get up against last year's price increases a lot of noise in the system right now so but generally speaking things have behaved like you would think they would after a price increase.
Okay, Yeah, no flat flattish.
Year over year.
Pretty encouraging I think in this environment I guess that speaks to where you guys are in the market.
Maybe on the heart.
Syed.
Can you talk to me about how we should think about margins as they progress through the year.
The productivity savings are they kind of tilted more towards one of your businesses.
The other.
I'm just asking.
Your workplace businesses.
Running flat year over year, and Theres, a little bit more pressure in harp does that allow you to get more done from a productivity standpoint in the hearth segment.
Yes.
Yes.
If you look at our cost savings program, and we're expecting to be about $35 million of benefit on the year.
That is it.
Is going to impact both.
Both segments.
And.
It's really split.
<unk>.
6% workplace and 40% residential building products and that also includes the benefit of price cost. So.
The net result of that is we're going to see workplace grow profit and margin this year and we're going to see some compression in residential building products, just maybe not as much as you might expect.
Im not sure if that answers your question.
I guess I was wondering about the progression for margins I mean, the comps are choppy.
Choppy on the top line as we go through.
Through the year do you expect the kind of margins that we saw in the first quarter.
The right way of looking at the business for the year.
Progresses.
Yes.
And residents of billing practice, we'll see margin changes more to the seasonal volume. So no first quarter is a decent quarter right remember second quarter is the seasonal trough and we build our way back up.
So youre going to see different margins by quarter No I don't think the first quarter is a great read on the rest of the year and it never is.
Okay, and I'm going to sneak one more and sorry to bounce around and go back to workplace for a second.
I think either heard or read.
The trends in SMB continued to be better than contract is that right.
Thank you for the detail on the most recent five weeks by by segment did that kind of did they look similar in the first quarter relative to each other transactional F&B and contract.
Yes, so in the first quarter SMB was up in the high teens of contracts was up in the mid teens. So they are pretty similar but the SMB was a bit stronger when you look into SMB. We saw the same pattern, we've been seeing for six to nine months, where the mid market was strong in the transactional business was weak.
On average that to be up in the high teens.
And as the transactional piece weak is that just tied to the macro uncertainty is that something <unk>.
Bigger than that.
Is that that's historically been a leading indicator for what you can expect in the other.
And the more of the project based on a go forward basis.
Yes.
I'm not sure it's a great read in given that we've had such a unique situation from the pandemic, but yes, we do believe the transactional business is being impacted by the macroeconomic conditions. It's these are like small purchases that are easy to differ when you're worried about cost.
But I'm not sure it necessarily is indicative of a future problem in the other segments right. We've got a lot of pent up demand out there from several years of employment growth.
Growing faster than the industry shipments, which seems like at some point need needs to catch up.
Okay, great. Congrats on the results guys and good luck going forward.
Thanks Robert.
We'll go next to Greg Burns with Sidoti <unk> Company.
Yes.
Good morning.
I just wanted to.
Just touch on.
<unk>.
The positive trends youre seeing in the workplace.
<unk> segment when you when you look at what's been going on more recently with.
Decisions being delayed.
Maybe.
Spending being halted maybe for macro or for other reasons.
The inflection of the change you saw this quarter, what gives you confidence that that might be more of a <unk>.
Change or a change in trend versus maybe a one off thing or you're seeing like your funnel fill your pipeline of business.
Increasing is there any kind of forward looking indicators that might give us confidence that this is maybe the beginning of an inflection in the industry.
Yes, good question, Greg I think.
Look I mean.
It is encouraging our activity levels are high it is encouraging that people got off the sidelines.
What I would say so so long term trends I think we're seeing some signs of positivity there inflection point may be a little a little muted, though I would say just given the economic cycle. We're in I think you know I think it's encouraging that even though some of the headline news is pretty pretty gloom and doom.
We saw some pretty nice activity and our customers are pretty active and I think thats indicative of just we've been in this Pat holding pattern for quite some time and people.
Although we may see some some.
Short term economic pause people are realizing that they want to move forward and they can't stay in a holding pattern forever. So I think that piece of this is is a positive and I think bodes well for the future.
Okay, and then in terms of the.
The price increase it seems like inflations kind of cooling down a little bit and you've caught up in terms of like price cost. So is that just natural.
Every year price increase that you put in like what's the rationale behind.
Raising price again here at this point and is there any risk that the market.
We won't accept.
Pricing.
Going higher from here.
Well, Greg I think the thing to recognize is the inflation hasn't gone away. It's just become reduced so we're still seeing inflation, we're expecting inflation in the neighborhood of $10 million to $20 million this year.
And we are going to offset that with pricing some of which was carryover from last year and some of which is from the new price increases.
As far as their acceptance so far we're seeing pretty pretty pretty reasonable acceptance across the board.
As you might expect given the industry conditions, Yeah, and I would say Greg that to your first part of the question. It was more we are back in line to a more normal cycle.
Price increase I mean, just.
We got we do have as Marshall said, there is still it surprised it's not it's not headline news as much. It was but we can tell you it's still out there, but with this I would say I would call. This more of a a typical.
Price increase not something that was met to catch up or plug holes, okay, alright, great. Thanks.
Yes.
We will take our next question from Steven Ramsey Thompson Research group.
Good morning, I wanted to ask a question workplace orders being strong ahead of the pricing wasn't enough pull ahead to limit the margin outlook for the rest of the year in a meaningful way.
Given you may not get full of a benefit of the pricing in the next few months.
No Stephen we don't we don't see any material impact from that I do understand your point, but it wasn't enough to make a big difference on the year and we feel confident in our profit.
Profit improvement actions are going to deliver profit growth in workplace for the year.
Okay helpful and then thinking in workplace on your.
Advantages in long term strength in the SMB vertical are you seeing an increase of competition.
In that vertical from other players.
Well Thats good question.
And Steven what I would say about that is look at that space is always competitive, but it's been competitive and it will remain competitive.
We have spent years tuning our model for that space with our selling and fulfillment capabilities.
We've been competing there for decades against the wide array big large and medium competitors.
Product specific competitors.
So I.
I wouldn't say, we've really seen anything other than business as usual and we're going to continue to invest in our model to maintain our leadership position.
Okay helpful.
Another one on workplace.
Results at Kimball.
Curious what.
What your view of their results were.
It seems like solid sales that order rates even better.
Just curious if you have a view on their results and maybe how they are read into the marketplace that youre looking at.
Okay.
I think the story is fairly similar to what we're saying Stephen we're both making good progress on the cost and margin side.
But we're not really in a position to provide additional detail on their results right now.
Okay helpful. And then last one for me thinking long term.
On the RVP segment margins were in the 18% to 19% range in 2018 through 2022.
Softer patch Navy this year, but thinking about the actions you're taking in the new products displayed at <unk> a few months ago do you think 18% to 19%.
The low area or even better when you get to the other side of 2023.
Yes, Steven if you remember our main strategy kind of Battle Cry in that segment is to maintain our strong margins.
Referring to the margins we had before this year and really drive top line growth.
And so yes, I mean, I think we can absolutely get back to where we were and more importantly drive the topline beyond where we were over over the intermediate to long term.
Okay helpful. Thank you.
We will take a follow up from Budd <unk> at water Tower research.
Yeah. Thank you for that.
Just to clarify what you were talking about with some screaming a moment ago I think if I understood Jeff right about half of the Delta between four Rvp's profit.
Performance in the first quarter was due to the profit improvement actions and that would imply I think from the 270 basis point differential between this year and last year and the operating margin for that show.
Is that the right way to understand that.
Okay.
Yes, but for the year.
We expect some pretty severe pressure on the topline and we expect to offset about half or maybe even a little more than half of that pressure with our profit improvement actions basically residential building products share of that $85 million to $95 million of profit support that we mentioned earlier.
Okay, and you did talk about 80% of the.
The profitability of the company will be in the second half of the year journey here for May.
The major difference in segment are they both in the same kind of relative positioning.
No.
And average rate to 80% of non-GAAP EPS danger in the second half of the year is.
Honestly it accounts for both segments.
We typically see more seasonality in workplace last year, 75% of workplaces non-GAAP operating income was in the second half we expect it to be more.
And the 90% plus range this year and in residence to building products is a little a little less seasonal on a first half second half basis. So they were 52% last year, we expect them to be more in the 60% range. This year.
Okay that makes sense to me.
And just talking about the Kimball acquisition to the extent you can and if you can't I understand that because it's still there but are there any surprises so far and the due diligence and do.
What about the expectation for reporting structure Ernie.
Julian the way you think you'll report segments.
Yes, Budd I mean.
No surprises I would say.
Just in response to your question, we are receiving very positive commentary from the trade and dealers confirming kind of our thesis around the transactions. So that's.
<unk> been encouraging as well on reporting we are really not in a position other than other than to say, what we've already announced which is the three primary commercial leaders.
And that business will report to me.
And that's all we've said at this point.
I was actually thinking about the accounting structure and the accounting reporting I'm, sorry, I didn't mean.
Why do you think of the organization.
Right.
John .
We now have workplace furnishings and <unk>.
Is it all going to go into RVP, you're having how do you look at that.
Yes, we will still have two segments, but that's our expectation.
The <unk> international business very very similar to our workplace furnishings business, so that would be accounted for under one segment.
Okay and final one for me.
Did you did file a new 425, this morning, and I realize that the SEC's guidance.
Specific but it looked at it if I read it right it's simply.
The same as the 8-K was there anything different in the 425 filed this morning.
<unk> requirement.
Communications group.
Having that label.
Correct anytime we mentioned or referred to.
Kimbler national in the transaction.
We have to include it in the 425 filings so even if it has a separate 8-K or other documented it has to go in the 425. So you have seen.
The press release come out.
Today and they are both forms and you've also seen some other kind of small communication items come out on the 425, none of which changed anything related to the deal.
Okay.
We will update guidance once the acquisition is done or we just wait for the for the next quarter.
I think but were contemplating having more commentary on that on our next earnings call and not having a special announcement that we will take that in consideration C suite, we need to do.
Okay, and the Q1, the <unk> accretion for that.
Our Q will be filed tomorrow.
Okay.
And Jeff Congratulations on the quarter we're in.
Thank you for taking my questions again.
No problem. Thanks Budd.
And that does conclude our question and answer session. At this time I would like to turn the conference back over to Mr. <unk>.
Lawrence <unk> for closing remarks.
Yes. Thank you I'd like to thank everybody for your interest in <unk>, joining us today on the call.
Have a great rest of your day.
That does conclude today's conference call you may now disconnect.