Park-Ohio Holdings Corp. Q1 2023 Earnings Call
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Good morning, and welcome to the Park, Ohio first quarter 2023 results conference call and webcast. At this time all participants are any listen only mode. After the presentation. The company will conduct a question and answer session. Today's conference is also being recorded if you have any objections you may disconnect at this time.
Before we get started I want to remind everyone that certain statements made today.
On today's call may be forward looking statements as defined in the private Securities Litigation Reform Act of 1995. These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected although relative.
A relevant risks and uncertainties maybe found in the earnings press release as well as in the company's 2022, 10-K, which was filed on March 16, 2023 with the SEC.
Additionally, the company May discuss adjusted EPS adjust.
Adjusted operating income and EBITDA as defined on a continuing operations or consolidated basis. These metrics are not measures of performance under generally accepted accounting principles for reconciliation of EPS to adjusted EPS operating income to adjusted operating income and net income attributable to park, Ohio common shareholders to EBITDA.
As defined please refer to the company's recent earnings release I will now turn the conference over to Mr. Matthew Crawford Chairman President and CEO . Please proceed Mr. Crawford.
Thank you very much and good morning to everyone.
To our first quarter.
2023 conference call I know, it's a busy day on the earnings side for everyone. So well jump right into the numbers, but I did want to make.
Three comments quickly first.
<unk> operations showed an all time record quarterly revenue in our consolidated numbers turning to the three segments supply technology had an all time record quarterly revenue number.
The second segment ACG had an all time quarterly record revenue.
Quarter APG. The last segment did not but showed very strong revenue improvement and record level type backlog. So.
Exciting on the revenue front to profit performances responding we highlighted the gross margin improvement I know Pat will talk about that.
Again, nice traction towards where the business should be.
As expected the many business initiatives, we've taken during the last several years are beginning to demonstrate the kind of historic or even improved earning power from across the company as.
As we wipe away some of the lingering effects of Covid as well as well as benefiting from improved operating leverage at our improved cost profile more to be done here, but nice to see some some momentum.
Thirdly, while there are plenty of questions about the economy, we continue to see strong demand and backlogs.
More importantly, though we're seeing new business opportunities, which are underpinned by significant investments in mega trends relating to onshoring infrastructure defense spending Green energy and specifically battery technologies. These will have a positive impact over the next few years and may actually provide some insulation from the traditional industrial.
Real cycles.
Again, thanks as always to our team are glad to see a little ray of Sunshine in these numbers. Thank you for all your hard work I'll turn it over to Pat.
Thank you, Matt our first quarter 2023 results reflect significant improvement in sales gross margins and operating income both year over year and sequentially across all three of our business segments. We achieved record consolidated quarterly sales from continuing operations and in both our.
Supply technologies and assembly components segments.
These results were driven by strong customer demand in each business segment improve.
Improved operating efficiencies and the positive impact of the recently completed restructuring activities in the <unk> segment.
We were able to deliver these results despite ongoing supply chain, uncertainties inflation and labor challenges, which continued to affect certain parts of our business our.
Our consolidated net sales from continuing operations were $423 million up 18% compared to $358 million in the first quarter and up 11% sequentially compared to the fourth quarter of 2022.
Our gross margins from continuing operations in the first quarter were 15, 8% compared to 14, 2% last quarter and 13, 3% a year ago, our gross margin during the quarter was the highest margin level since the fourth quarter of 2019.
Higher gross margin reflects the profit flow through from the higher sales.
Benefits from profit improvement initiatives, including product pricing.
Consolidated operating income from continuing operations was $20 2 million or.
A significant improvement over $5 4 million in the first quarter of last year and $2 6 million sequentially in the fourth quarter of 2022.
We have substantially completed our multi year restructuring and consolidation plan in our assembly components and engineered products segments.
These actions commenced in 2020, we've consolidated six facilities, which represented over 875000 square feet of manufacturing space and relocated an installed significant production assets. This was a considerable undertaking which reduced our fixed cost footprint.
We streamlined our plant operations and lowered our overall cost to make our products. The benefits from these actions will help drive improved profitability in 2023 and in future years.
SG&A expenses were $45 million compared to $40 million a year ago with the increase due to higher selling expense from the higher sales levels higher costs due to ongoing inflation and an increase in personnel costs as a percentage of our sales excluding restructuring and other special charges of approximately $2 million in Boe.
Periods SG&A was 10, 7% in the first quarter compared to 11, 2% in the prior year quarter.
Interest expense totaled $10 7 million compared to $7 1 million a year ago with $2 $6 million of the increase due to the higher interest rates and the remaining $1 million increase due to higher average borrowings year over year.
Our income tax expense was $2 6 million in the quarter for an effective income tax of 25%. This is in line with our expectations for the full year 2023.
We expect full year cash taxes to be approximately $10 million.
GAAP EPS from continued operations for the quarter was <unk> 61 per diluted share more than doubled to 30 in the first quarter of last year.
On an adjusted basis, our earnings per share from continued operations was <unk> 72, compared to <unk> 51, a year ago.
Our EBITDA as defined was $30 million in the first quarter compared to $27 6 million, a year ago and significantly higher than $10 8 million last quarter.
Excluding our aluminum products business, which is now classified as discontinued our first quarter 2023, EBITDA was approximately $32 million.
During the quarter, we generated slightly improved year over year operating cash flows and used $4 $4 million after capex, which totaled $6 million in the quarter and less the proceeds on the sale of real estate totaling $1 4 million during the quarter.
We expect.
Continued improvement in operating cash flow during two.
2023, driven by reduced working capital days on hand, and expect free cash flow for the full year to be in the range of $30 million to $40 million.
Our liquidity at the end of the first quarter was $171 million, which.
Which consisted of approximately $50 million of cash on hand, and $120 million of unused borrowing capacity under our various banking arrangements, which included $18 million of suppressed availability.
As it relates to the sale of general aluminum we received interest from improved.
Prospective buyer at the very end of last year.
While we did not reach a definitive agreement, we signed a memorandum of understanding which set the framework for a potential transaction.
These actions principally resulted in our decision to classify the businesses discontinued at year end.
We have no further update on the sale at this time.
We are pleased with the improved performance of general aluminum and excited about its long term prospects and are conducting ourselves as the long term stewards of the business Accordingly in the first quarter, we invested $8 million and supportive of the business.
Turning now to our segment results.
In supply technologies net sales were $196 million during the quarter up 16% compared to $169 million a year ago.
$181 million last quarter.
Average daily sales and our supply chain business were up 17% year over year.
Sales increase was driven by higher customer demand in most key end markets.
During the quarter the largest end market increases were power sports and heavy duty truck industrial and agricultural equipment and civilian aerospace.
In addition, our fastener manufacturing business continues to perform well and achieved sales growth of 12% over the first quarter of last year.
Operating income in this segment totaled approximately $14 million compared to $12 million a year ago.
Margins were up 10 basis points year over year as the profit flow through from higher sales levels was partially offset by higher supply chain costs, especially in North America.
We continue to focus on price action strategies in this business, which will positively affect future operating income margins along with initiatives to grow our higher margin industrial supply business.
In our assembly components segment sales for the quarter were $110 million compared to $98 million a year ago, an increase of 13% year over year.
Sales in the current quarter were higher due to volumes from business launched in the prior year and improved product pricing.
Segment operating income increased significantly to $7 3 million in the first quarter compared to a loss of $400000 a year ago.
On an adjusted basis operating income was up $1 $1 million a year ago.
The $7 $6 million in the current year.
This significant improvement year over year was driven by the profit flow through from the higher sales levels profit improvement initiatives, including product pricing and the benefits of recently completed plant consolidation actions.
We continue to focus on improving operating margins in this segment and are implementing additional price increases and operational improvements across many of our products in plants. For example, during the first quarter, we launched a new rubber mixing facility, which will increase our current mixing capacity and allow us to reduce raw material.
Cash used on certain products.
In our engineered products segment first quarter sales were $117 million of 29% compared to $91 million a year ago.
In our capital equipment business sales were up 31% compared to a year ago.
Revenues from new capital equipment, and aftermarket parts and services increased in every region, most notably in North America.
At Kings remains strong and totaled $52 million compared to a quarterly average of $50 million in 2022 or.
Our backlog as of March 31 was $175 million, an increase of 7% compared to the end of last year.
We expect consistent order levels to continue throughout the course of this year.
In our forged and machine products business sales in the quarter up 23% year over year and at their highest level since the fourth quarter of 2019.
This increase was driven by increasing customer demand in several key end markets, including rail and aerospace and defense as well as from new business awarded over the past several quarters.
During the quarter operating income in this segment was $5 million compared to $1 8 million a year ago on an adjusted basis, which excludes plant consolidation and other restructuring actions operating income was $7 million compared to $2 $4 million last year.
The profitability improvement year over year was driven by the higher sales levels product pricing initiatives and the benefits of profit improvement actions.
We continue to see business opportunities and bookings for our induction and forging equipment as a result of investments being made in support of the increased production of electrical steel used in battery technologies and in the defense end market where increases in production certain munitions are expected to occur are.
Engineered products segment should benefit from these positive trends.
And finally corporate expenses totaled $6 9 million during the quarter compared to $8 million a year ago. The decrease was driven primarily by lower professional fees in the current year.
And finally with respect to our full year 2023 guidance, we continue to expect revenue growth to be 5% to 10% year over year with a bias towards the high end of the range driven by the current strong customer demand in each segment.
We also continue to expect year over year improvement in adjusted operating income EBITDA as defined free cash flow and adjusted EPS as a result of the higher sales levels and improved operating margins in each segment.
Now I'll turn the call back over to Matt.
Great. Thanks, Pat I will open the line for any questions.
Yes.
Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing star one.
One moment, please while we poll for questions. Our first question today is coming from Steve Barger from Keybanc capital markets. Your line is now live.
Hey, good morning, guys.
You sound pretty good today is certainly better than a year ago. So congratulations on that.
Can you talk about the inventory dynamics across the portfolio.
Is there a destock if there is you would see it first in supply Tech I would think and with supply chain is improving we are hearing about destocking in some areas, but it doesn't seem indicative of a slowdown in demand. So any can you fill out how you're thinking about that.
Okay.
Steve This is Pat.
We're seeing.
Across all three of our business segments strong demand.
And we expect that to continue.
Through the second quarter.
So there is there are small.
Parts of the business that take rates are are not growing at the same pace as other end markets, but overall, we continue to.
With confidence believe.
The second quarter, we will continue at a similar pace as first quarter.
So.
Can we touch so many different end markets and many of the end markets really were in significant slowdowns.
Even throughout 2022.
Think about rail and civilian aerospace and some of those end markets that are now beginning to show some traction and we should benefit from that.
Yes, that's great.
I think you said supply tech revenue for the quarter was a record do you expect sequentially higher revenue as the year progresses, there and historically is it easier to convert prospects into customers for supply tech when things are good or when things are slowing.
Hey, Steve, It's Matt I'll try and take pieces of that.
Okay.
Hi.
It's really tough I mean, it's not lost on you what Pat our first quarter growth year over year significant significantly higher than our annual forecast.
Second quarter, which obviously, we're through April now feeling pretty good year over year. So our guidance would would lead you to believe that there are some question marks.
I want to stress what we feel is the is the installation or some of the infrastructure spending going on and so forth. So we're pretty excited about that over the next three to five years, but.
We're not immune from some of the uncertainty and we also recognize that some of the demand and build rates that our customers are forecasting could have some volatility in them.
Is that kind of atmosphere. So.
I would be we would be remiss I think too.
Suggests that we felt strongly about sequential growth until we got a clearer picture on that particularly as it relates to supply technologies that as you pointed out as the best Barometer I think for.
For sort of the current industrial environment.
Yeah, and just as you think about longer term.
In terms of conversion of prospects into customers supply Tech is there is there a specific part of the cycle that might be better than others.
Yes, that's that.
Traditionally as a solutions provider our opportunities I think are organic in the sense that we are providing somewhat solution about a problem. They have particularly around supply chain, maybe sometimes in terms of engineering or pricing. We're a solutions provider. So I would say that that can be agnostic of course co.
<unk> and supply chain really not setup, meaning.
Limited, our flexibility and our customers really defined product elsewhere, hence.
Hence the reason we are carrying so much inventory so.
As we come out of this and we're not out of it supply chains are not ideal as you know, Steve if we supply 1000 partners.
Part numbers to somewhere 999 is not good enough.
So on time delivery of 100% of the parts is important so.
I'd tell you it will be difficult to understand what.
What things look like until in terms of Onboarding business, it's going to be difficult until that gets sorted out in a meaningful way. We are landing new business. We are finding discrete opportunities to grow but to answer your question in a more macroeconomic way is going to be difficult until.
Industrial America gets pretty comfortable that they can safely change strategic suppliers.
Yes, I understand.
It does seem like operations are turning the corner a little bit conditions seem good for now I hear you on the uncertainties that are out there, but can we talk about the sales efforts. How are you directing the team across the segments to drive customer engagement and any specific stories or anecdotes you have about opportunities for new business.
<unk>.
Yes, I mean, I think I think Pat highlighted something that.
I think supply tech right now in ACG in there I think focus on development of some really exciting new products.
That really are agnostic to powertrain.
Exciting, but also for EV, but let me focus for a second on the only segment that didn't have a record which is <unk>. Despite the fact that they've got record numbers in backlog.
This is where I think the rubber hits the road on these megatrends I keep talking about.
<unk>.
The engagement I think we are seeing in our traditional forging businesses as well as our capital equipment buildings businesses are really.
We've got a lot of people knocking on our door. So engagement is really not what it's being driven at the strategic customer level, who are seeking solutions in.
In some cases for traditional product lines.
We are.
Looking at supplying product to key defense suppliers sort of tier one defense suppliers to help support initiatives to rebuild.
The capacity for our country to make missile shelves you.
You may have read a little bit about that in the Wall Street Journal way back one in that article about the facility that government runs in Scranton, Pennsylvania, There is a real scramble going on there and we're in the middle of it.
Also I think Pat mentioned very quickly.
This idea of silicon steel.
You and I have talked before Steve about how.
This country giveaway generations of steel development and leadership.
Two outside this country.
Most recently, China, and I think that Youre seeing an overhaul going on and what is it pretty well capitalized steel space now to invest in new technology high strength steels, one, but more interesting also silicon steel and silicon steels important for battery technology, because you need conductive steel.
That's what silicon helps so these are again areas, which we are right in the middle of.
So again, I think that our new sales initiatives and our customer strategy is as always on the offense, but I will tell you. Some of these things we're talking about.
You'll have some real energy coming to us from our traditional customers who are looking not just to build capacity, but find solutions for new new or old problems.
Yes, it sounds encouraging thanks.
Thank you. Your next question is coming from Dave storms from Stonegate. Your line is now live.
Perfect. Thank you Hey, Dave good morning.
Alright, great.
Just hoping we could start on the supply chain issues that you mentioned are you seeing any green shoots there or is that still pretty.
Issue perceived issue going forward.
Al.
I'll speak first and let Pat sort of clean this up.
I am not.
That means so many thing your question can be interpreted so many ways, but let me say this.
I think that we.
We have all become a lot more nimble.
The global manufacturing space in the global supply chain space at managing the challenges that I think hit us like a tidal wave in the first half 2021.
So whether it be fill rates, whether it be quality, whether that's pricing whether it would be logistics and ocean freight we've all gotten a little better smarter faster and how to deal with that so.
I think our companies included so there is certainly less noise.
In our business and in our numbers from that is it does it continuously provide a headwind on the earnings side absolutely.
So we are not out of the woods in terms of that in terms of margins I will say that I think that.
And we're not out of the woods in terms of the cost of doing things like dual sourcing our not out of the woods in terms of carrying too much inventory in certain places, but I will say that the noise levels turned down a bit because maybe because it's gotten a little better using your green shoots example may because we've all become a little better managing.
And again I don't know an area in our business has done a better job.
And particularly the people in the supply chain portion of supply technologies.
A few names come to mind that have just.
Really done a great job at keeping our customers move and so I don't know if that answers. Your question is a little bit hard to pull apart, but it is not over it's just better managed.
Yes, Dave I would add that.
Clearly the supply chain issues that were.
We're hitting us.
Years back and continue through last year have greatly improved.
But what we can control our supply chain.
But there is other.
Other suppliers that affect our customers demand that we can't control and so what I mean, but as we are seeing in certain.
Pockets of our business demand being a little lower because in take rates being a little lower because they're having other issues with other parts of their supply chain, but clearly from our viewpoint things have improved greatly lead times have come down freight costs have come down and we expect that to continue.
To improve as we as we get through the rest of 2023.
That's very helpful and exactly what I was hoping for thank you.
Matt You mentioned a couple of times.
<unk> front in your answer there what are you seeing on the pricing front now that inflation is starting to moderate a little bit and can you kind of compare that to where your price and inventory is that for your inventory prices are at.
I'll have I'll, let Pat take the inventory question, but but I would say that.
Look I mean, there is a tension in the marketplace.
Particularly for components suppliers like us.
I've mentioned on prior calls a lot of our customers were able to raise prices to their to consumers, principally instantaneously and aggressively and saw record profits.
A lot of our suppliers.
We worked with on a spot buyer short term contracted could raise prices instantaneously, so guys like us.
Got hurt and I think that we have worked for a couple of years now.
I think that our best and strategic partners have understood. It because it has impacted their own business and they have supported US I think initially it was all about raw material.
As we move forward, it's all about labor and making sure that we can we and other suppliers can get the right workforce in the right place to optimize delivery and optimize long term quality and long term support for our customers.
So I'd be lying if I said it wasn't a battle every day I think that our best customers understand that we need to support and we've worked through it and youre seeing it in the numbers.
So I think this is growingly a positive discussion Jamie Diamond talked a while back about Leighton inflation I'm not sure what you meant but I'll tell you what I think you meant I think he met those guys like out there like us who arent hole yet.
While we are in parts of our business, we have isolated cases still where we're we're under long term agreements, where we're losing money.
And we need to deal with that so we're still going after price increases now. There's also of course, the natural tension because there are some commodities that have gone down.
And our customers appropriately want want.
Some some pricing relief.
Particularly at the right time, there will be a lag we got to get through our inventory.
But that we're there for them then that's the nature of the partnership. So we are cognizant that that provides attention but.
Between what we're still trying to capture in terms of of some labor costs and some other interacts and yes, a small return on our investment so but youre right. There is there will be a natural tension as some of the underlying commodity pricing goes down.
But long term I think thats good for us too by the way.
When we saw what happened when I was doing skyrocket any other way so so that would be.
So were still fighting that battle every day, there's still attention, but it's more a case by case basis and our team has come a long way in.
In terms of recapturing our fair share it's taken a couple of years.
So that actually Bob fleets in perfectly to my last question here with all the supply chain and inflation issues a lot of your segments are still getting back to those 2018 2019 levels.
When you think about all the restructuring activities that you have been implemented.
And the increases that that has on your production capacity what kind of runway do you see beyond maybe even the 2018 19 levels, even with all the headwinds that we just discussed.
Yes, we should we should have a really good answer for that.
And we will over the next call.
I do think that.
We do feel as though we have some runway here, we do feel as though there is ongoing pressure we have discussed.
And a number of areas as it relates to our cost structure and it's still the ongoing effects of Covid and yes, we feel as though while many of our strategic partnerships are priced properly now a few arm.
So I don't not prepared to answer that question, maybe Pat wants to take a shot at it but I do think as we get a little more clarity.
We should have an answer for that but to be honest with you. We have felt as though this business would comp very well against 18 and 19 and our goal is to kind of get there now that we're getting there we kind of want to shift away. We've been so tactical it's been hard to be strategic now that we're shifting that away I think.
Candidly, we owe you an answer on that and I think as the year goes on and we get more confidence in our forecast that we'll be able to answer that.
Yes, I would add Dave that.
We saw the momentum in the first quarter around gross margins.
The gross margins and the reductions in cost that we have implemented over the last two years theyre going to have a.
Nice impact on future gross margins of the business.
And as volumes improved and absorption levels.
Become even greater.
Clearly we believe our gross margins are at a point, where they will continue to trend higher and exceed levels that were in place in 2018 and 19.
So the amount of heavy lifting that has been done by our teams really around the world.
It's really unbelievable and.
Huge accomplishment and volumes are.
Where they need to be.
So once we see the increase in the volumes around the world.
In different pockets of our business, our gross margins will continue to grow.
Dave I want to also say something I've said in the past, but I'm going to say it now.
Our gross margin as.
Always led by engineered products.
That's always been the bellwether for what we are doing our best gross margins.
And they have not returned to historic performance so.
Again, we're not prepared to sit here and give you a sense of that runway on a consolidated basis, but we can say is.
Our flagship on the margin side is still recovering.
Understood that's very helpful. Thank you.
Thank you next question is coming from <unk> <unk> from Jpmorgan. Your line is now live.
Okay. Thank you good morning.
My question. Good morning, My first question is on working capital.
As you think about the growth that you've seen this quarter and as you look forward for in terms of growth for this year, how should we think about working capital this year and how could that would be different from what we saw in terms of working capital utilization and then.
Last year.
Well.
We expect as I mentioned in.
In my prepared remarks, our working capital days to continue to decrease in the first quarter.
The majority of the business units saw a reduction in working capital days.
And obviously the growth capital complicates that calculation, just because of the working capital needed to grow the business.
So we are seeing.
Movement, there and each business unit.
Has their own initiatives to reduce working capital to harvest the cash that has been invested over the last two years.
And we are seeing tremendous progress on that front and we expect continued improvement throughout the course of the year.
We every business has a different level of working capital needed to support the growth but in general around.
Around 25 cents of every dollar growth is invested in working capital and we need to continue to bring that number down to increase our free cash flow.
And we're driven by that and our goals are around that.
So.
More improvement as expected.
A lot of effort being focused on that.
With with.
Revenue growth. This year would you expect working capital to be a use of cash neutral or positive a couple.
Coupling that improvements are you putting in place with.
Working capital needed to support the business.
I mentioned that we expect our free cash flow to be $30 million to $40 million.
That would indicate that we expect positive operating cash flow.
And very little if any need for investment in working capital beyond current levels.
Okay, Great. That's helpful and then my.
Second question is on <unk>.
The megaproject infrastructure chip.
In electric vehicles, and so forth.
Along the lines of how to model the benefits of these mega projects directly on your business.
Yes.
I'm not sure we're going to give you to help you need I think we're particularly as it relates to stimulus.
Which is significant whether it be in the battery space or the infrastructure space.
It's a little unclear.
Our defense quite candidly, it's a little unclear, how we're getting a sense of how that will seep into the economy based on some of our conversations with the large tier ones, but it's a little bit unclear, how we would consider modeling that our forecasting it other than we know and we're seeing business associated with it I will say I think we will see the most direct impact.
Initially through our equipment business in our forging business.
That's kind of where we have the most direct conversation as people are building are updating capacity or on the infrastructure side needing more rail maintenance product and things like that so so I think as you think about the direct impact I would highlight.
<unk> is an important.
Sort of a beneficiary of that in the short term and the midterm.
It's a little more difficult I think.
Ill.
Clearly.
We've talked a lot of toughest in the past the evolution to <unk> is providing us a ton of opportunity.
That's our instinct, it's a little difficult to understand how exactly those market share numbers in those in those.
Successes and failures or going to work so while we're seeing increased opportunity hard to put our finger on kind of how to model that and then the supply chain business is a little different in the sense that.
Particularly as it relates to America, a strong and growing industrial America is really good for supply technologies.
Would we expect people are customers of ours in the semiconductor industry to be a directly a direct beneficiary sure, but so we would expect all of our other customers, who I think benefit from a growing industrial.
Industrial America.
We may only be.
The manufacturing economy may only be whatever 10% of the economy. These days, but it doesn't mean it can't grow a couple of points. So I think that we are we will benefit from that generally more indirectly.
And that one is even harder I think at this point to model, what re shoring and things like that means so all positive I think in the near term I think the most tangible impact over the next 12 months will be in the <unk> business.
Thank you very much that's all I had.
Thank you.
Thank you we reached end of our question and answer session I would like to turn the floor back over for any further or closing comments.
Thank you very much.
A lot of good news today, but our work is not finished.
I did want to echo Pat's comments as it relates to the general aluminum.
As Pat updated as we do continue to have conversations with the potential buyer.
Do not feel a deal is imminent at this time, so we maintain our commitment to the business you mentioned, we invested $8 million in the quarter. We believe this is a strong attractive business.
And we've owned it for over 40 years. So we're excited to participate with that team.
At this time as well so.
Thank you very much and have a great day bye bye.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.