Q3 2023 Crane NXT Co Earnings Call
Operator: Greetings and welcome to the Crane NXY third quarter 2023 earnings call.
At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the call, please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Rima Hyder, Vice President of Investor Relations. Thank you. You may begin.
Rima Hyder: Thank you operator, and good morning everyone. I'm Rima Hyder, Vice President of Investor Relations and I want to welcome all of you to the third quarter 2023 earnings call for Crane NXT.
Rima Hyder Vice President of Investor Relations and I want to welcome all of you to the third quarter 2023 earnings call for Crane NXT.
Rima Hyder: Before we begin, the slides we will reference during this presentation can be accessed via the Investor Relations section of our website at cranenxt.com. A replay of today's call will also be available on our website.
Website at Crane NXT dotcom.
A replay of today's call will also be available on our website.
After our prepared remarks, we will open the call to analysts for questions.
Before we discuss our results, I encourage all listeners to review the legal notice on slide two, which explains the risk of forward-looking statements and the use of non-GAAP financial measures.
Additionally, we refer you to the cautionary language at the bottom of our earnings release and also in our forms 10-K and 10-Q filings pertaining to forward-looking statements.
During the call, we will also be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying slide presentation, both of which are available on our website at cranenxt.com in the Investor Relations section.
On our call this morning, we have Aaron Saak, our President and Chief Executive Officer, and Christina Christiano, our Senior Vice President and Chief Financial Officer. Now, let me turn the call over to Aaron.
Now, let me turn the call over to Aaron.
Aaron W. Saak: Thank you Rima and good morning to everyone. Yesterday, we reported our third quarter financial results, our second quarter since separation to launch Crane NXT. And I'd like to take a moment to thank all of our associates for their efforts to deliver a strong quarter, driving growth, operational excellence, and strong free cash flow generation.
Cash flow generation.
You can see the highlights of our third quarter performance on slide three. We delivered $353 million in sales with 4% core sales growth, adjusted EPS of $1.09 which was ahead of our expectations and this outperformance was driven by strong sales growth and margins in the international currency business, along with lower corporate costs.
Business, along with lower corporate costs.
Margin performance was also very strong overall with an adjusted EBITDA margin of over 29% and an adjusted operating margin of 26%, which was approximately 10 basis points higher than prior year.
Additionally, adjusted free cash flow was at $98 million, which supported an additional 125 million pay down in our term loan.
Our net leverage ratio is now at 1.3X, giving us substantial financial flexibility for M&A.
The strength of our year-to-date performance gives us confidence to raise the low end of our full year adjusted EPS guidance to a new narrowed range of $4 to $4.15. This narrowed range reflects the strength in the international currency market where we continue to gain share.
This narrowed range reflects the strength in the international currency market, where we continue to gain share.
At CPI, as we noted last quarter, we continue to see customers adjusting their inventories to reflect reduced lead times, resulting in lower orders versus prior year. As a result, we're continuing to assess demand and adjusting our inventory levels accordingly.
As a result, we're continuing to assess demand and adjusting our inventory levels accordingly.
Overall, we're on track to deliver the $1.4 billion in sales this year that we spoke about earlier with adjusted operating margins above 27% and free cash flow conversion of approximately 100%. So I'm now going to hand the call over to Christina to walk us through more of the details on our financials. Christina?
Overall, we're on track to deliver the $1.4 billion in sales this year that we spoke about earlier with adjusted operating margins above 27% and free cash flow conversion of approximately 100%.
So I'm now going to hand the call over to Christina to walk us through more of the details on our financials. Christina?
Christina Cristiano: Thank you Aaron. I would again like to thank our global Crane NXT associates for their continued focus and discipline to drive results. We appreciate your hard work.
Thank you Erin I would again like to thank our global clean NXT associates for their continued focus and discipline to drive results. We appreciate your hard work.
As Aaron mentioned, and as summarized on slide four, we had a strong quarter with core sales growth of 4%, adjusted operating margin of 26% and adjusted EPS of $1.09. We also continue to see strong free cash flow generation and are on track to achieve approximately 100% adjusted free cash flow conversion for the full year.
Year.
Overall, we are pleased with the results this quarter and the continued disciplined operating execution by both segments.
Moving to slide five, Crane payment innovations reported flat core sales. As we discussed last quarter, continued improvement in our supply chain enabled us to ship more orders out of backlog in Q2 and that impacted Q3 sales.
Despite flat core sales, adjusted segment operating margins increased 190 basis points to 29.4% as compared to last year, reflecting strong pricing, productivity, and cost savings actions, partially offset by unfavorable product mix.
From a market perspective, we are gaining share in our services business with new wins in the quarter in the retail and financial services end markets.
We continue to see solid growth opportunities in services, which drives increased recurring revenue and high share of wallet at key customers.
Looking forward, we are seeing softness in new orders across some of CPI's end markets most pronounced in retail and gaming as customers continue to adjust their inventory from COVID-19 related supply chain issues.
We expect this dynamic to continue over the next several months until our backlog normalizes to pre-pandemic levels. We believe this normalization will occur in the second quarter of 2024.
Given this dynamic, we expect sales to decline year-over-year for CPI in Q4, and we now expect CPI sales to be flat to slightly up for the full year. With our strong pricing execution and focus on productivity, we expect segment operating profit margin to be in line with our prior guidance.
With our strong pricing execution and focus on productivity, we expect segment operating profit margin to be in line with our prior guidance.
Moving to Crane currency on slide six, the quarter was ahead of our expectations with core sales growth of 12% driven by international sales. As we've noted in the past, this business is project based and revenue in any quarter depends on the timing of shipments to central banks.
Adjusted segment operating margin was very strong at 28%, but down from the prior year due to unfavorable product mix related to orders from the US government. As we discussed last quarter, we continue to see a greater mix of orders for lower denomination bank notes, which come at a lower margin. We expect this trend to continue for the balance of 2023.
In the international market, we continue to win new orders, increasing our backlog approximately 80% from the prior year. One of the drivers for the strength in international sales is our continued focus to be the technology leader in the market. Specifically, we continue to see growing customer interest in our new rapid vision technology, which was launched in Q2 and has already been selected for several new denominations.
In the international market, we continue to win new orders, increasing our backlog of approximately 80% from the prior year.
One of the drivers for the strength in international sales is our continued focus to be the technology leader in the market specifically, we continue to see growing customer interest in our new rapid vision technology, which was launched in Q2 and has already been selected for several new denomination.
As a reminder, Rapid Vision is the world's first multi-color, micro optics security feature. With its eye catching, high contrast color, it is easily authenticated and its uniquely secure infrared technology facilitates highly secure machine readability.
Moving onto our balance sheet, our adjusted free cash flow was $98 million in the quarter, providing further confidence in achieving an adjusted free cash flow conversion ratio of approximately 100% this year.
Given our strong free cash flow, we repaid another $125 million of our term loan during the third quarter, reducing net debt to adjusted EBITDA to approximately 1.3 times. We have approximately 1 billion in M&A capacity and substantial flexibility to deploy capital towards M&A.
Moving to full year guidance as Aaron mentioned, we are narrowing our adjusted EPS guidance to a range of $4 to $4.15. We believe core sales growth will be between 3% to 5% based on the strength of the currency business offset by softness in CPI as I mentioned earlier.
Additionally, we now expect non-operating expenses will be approximately $45 million, updated from our previous guidance of approximately $50 million. This decrease is driven by lower interest cost due to the pay down of debt.
All other metrics to which we previously guided for the full year of 2023 remain unchanged.
Overall, our year-to-date performance continues to support the investment thesis for Crane NXT as a premier industrial technology company with mid-single digit growth, strong operating margin, and 100% adjusted free cash flow conversion.
Let me now hand, it back to Aaron for a few closing comments.
Aaron W. Saak: Alright, thanks Christina and thanks again to everyone who is joining us this morning on our call.
In summary, we had another strong quarter where we continued to demonstrate core sales growth, excellence in operational execution, and strong free cash flow generation. We raised the low end of our adjusted EPS guidance and believe we are well-positioned to achieve our full year results within the guidance range.
Additionally, the strength of our balance sheet and our low leverage provides us with the opportunity to create further value for our shareholders through disciplined M&A diversifying the portfolio.
You know as we think about this diversification, I want to reinforce that we've launched the company from a very strong position. As shown on slide 10, NXT is an industry leader, providing trusted technology solutions to secure, detect, and authenticate what matters most to our customers. We have two market leading businesses, Crane Currency, which provides proprietary technology to secure currency and other high value physical products, and CPI, which offers detection equipment and systems, aftermarket services, all focused on detecting and authenticating payment transactions.
which provides proprietary technology to secure currency and other high value physical products, and CPI, which offers detection equipment and systems, aftermarket services, all focused on detecting and authenticating payment transactions.
As I mentioned earlier, we are on track to deliver approximately $1.4 billion in sales this year with adjusted operating margins above 27% and free cash flow conversion of approximately 100%.
Given our strong free cash flow conversion, our capital allocation strategy is first to continue to invest and grow the core business, improving operational performance by utilizing the Crane Business System or CBS.
The second priority is to pay a competitive dividend and finally, we will continue to deploy capital to M&A following the same playbook that built NXT targeting adjacent, resilient, and higher growth end markets.
As we continue to execute this strategy, over time, it will position NXT as a strong compounder creating significant shareholder value.
As part of the value creation strategy, we've set very clear goals for the business over the next five years. As shown on slide 11, building off our strong foundation, we plan to grow the business to $3 billion in revenue and grow core revenue at mid single digit plus. We will maintain adjusted EBITDA margins in the high 20% range, along with strong free cash flow conversion of approximately 100%.
As shown on slide 11 building off our strong foundation, we plan to grow the business to 3 billion in revenue and grow core revenue and mid single digit plus we will maintain adjusted EBITDA margins in the high 20% range, along with strong free cash flow conversion of approximately 100% or.
Our performance in the third quarter is another important step in our journey as a new company and it gives us confidence in achieving these longer term objectives.
Again, I'd like to say, thank you to the entire NXT team for their dedication in delivering a strong Q3. Also, thank you to everyone who took their time today to join us on this call. So with that operator, we're now ready to take our first question.
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Our first questions come from the line of Ian Zaffino with Oppenheimer. Please proceed with your questions.
Hi, great. Thank you very much. Good morning Ian. How are you?
Hi, great. Thank you very much. Good morning Ian.
Ian Zaffino: Hi, great. Thank you very much.
Aaron W. Saak: Good morning Ian.
Ian Zaffino: How are you?
Aaron W. Saak: Hey, good Ian and good to hear your voice.
Good day and good to hear your voice.
Ian Zaffino: Good, good. I wanted to ask you on the backlog, maybe you could talk about what the mix is of the backlog by vertical if you could. Haven't had a lot of change from let's say the past quarter or so and then also help us understand the destocking, what your thoughts are as far as end market destocking and the backlog and how that's going to help you basically mitigate some of the destocking on the customer end. Thanks.
I wanted to ask you on the backlog maybe you could talk about what the mix is all of the backlog.
By vertical if you could have.
I have a lot of change from let's say the past quarter or so and then also how help us understand that the destocking. What your thoughts are as far as end market Destocking and. The backlog and how that's going to help you basically mitigate some of the destocking to a customer and thanks yeah.
The backlog and how that's going to help you basically mitigate some of the destocking to a customer and thanks yeah.
Aaron W. Saak: Sure. Hey, thanks for the question Ian. So just zooming out I assume your questions both in total, but probably more specific there to CPI. Again currency backlog as we've said, it's fantastic, up close to 80% year-over-year and feel very good about that. When you look at CPI and break that down by vertical, really our comments there and how we're thinking about that are primarily around the gaming segment.
And break that down by vertical. Really our comments there and how we're thinking about that are primarily around the gaming segment.
Really our comments there and how we're thinking about that are primarily around the gaming segment.
When you think about where we're at today in the backlog, we're probably at about two times the normal backlog level and when we look at our run rate to burn that down over the next several months, that's what gets us into 2 of next year. So these are orders that were placed due to the long lead times, they go back to the really middle part of COVID and have extended as our supply chain continue to normalize over the last several months. So really this is primarily a gaming discussion and we have very good line of sight to the shipment now of that backlog to customers who still need those products and we expect that to occur kind of within what we've expected now for the last quarter or so to bring that down over the coming months.
They go back to the really middle part of Covid and have extended our supply chain.
Continue to normalize over the last several months. So really this is primarily a gaming discussion and you know we have very good line of sight to the shipment now that backlog to customers, who still need those products and we expect that to occur kind of within what we've expected now for the last quarter or so.
When you look at the other verticals, the backlogs are basically at expectation kind of where we would expect them to be under normal conditions that feels in line with what we would look at. And as we've said in our prepared remarks, Christina mentioned services continues to be a bright spot in the strength and we feel very good about that. So it really in essence is about this burn down of the gaming backlog. Hope that helps Ian.
To be a bright spot in the strength and we feel very good about that so so it really in essence, it's about this burn down of the gaming backlog hope that helps.
Ian Zaffino: That's great. And then also on the M&A side, you know that's an integral part of the story here. How are you thinking about this as maybe timing or what does the environment look like for multiples? So you're kind of expecting you guys will do something I don't know, relatively soon.
Integral part of the story here how are we thinking about this as maybe timing or we don't see environment look like multiples. So youre kind of expecting. You guys did do something I don't know relatively soon.
So youre kind of expecting. You guys did do something I don't know relatively soon.
You guys did do something I don't know relatively soon.
Aaron W. Saak: Yeah, maybe just to take the last part of your comment then on relatively soon, I would say we're very much on track to do what we laid out at our Investor Day which was to take the first several quarters post launch and operate the company very well and continue to focus on operational excellence in our core businesses; that's the first pillar of our strategy. And I think that's what we're doing here again in Q3.
I would say we're very. Much on track to do what we laid out at our Investor day of which was to take the first several quarters post launch and operate the company very well and you know.
Much on track to do what we laid out at our Investor day of which was to take the first several quarters post launch and operate the company very well and you know.
Continue to focus on operational excellence in our core businesses that's the.
First pillar of our strategy.
And I think that's what we're doing here again in Q3.
So I think as I mentioned in our second quarter earnings call, we're really looking at the first part of '24, in the middle part of '24 for the first type of M&A window to be where we would like it, if all things equal and I think we're on track for that. We feel good about the health of the funnel. We feel obviously very good about our balance sheet with $125 million pay down this quarter, which was just due to our strong free cash flow, so it puts us in a very good position with our leverage and that's what I'd be looking at sometime in '24 for our first M&A deal, and again, feel good about that.
Obviously very good about our balance sheet with $125 million pay down this quarter, which was just due to our strong free cash flow. So it puts us in a very good position with our leverage and.
And that's what I'd be looking at you know sometime in 'twenty four for our first M&A deal and again feel good about that.
Uh huh.
Operator: Thank you. Our next questions come from the line of Matt Summerville with DA Davidson. Please proceed with your questions.
Matt J. Summerville: Thanks, a couple of questions. So just going back to CPI, if we can kind of parse this out a little bit, are you actually seeing a demand issue or is this really just supply chain inventory and backlogs are all going through this normalization process? And if you could speak to the four main end market verticals from a demand standpoint that would be helpful.
How much of it are you actually seeing a demand issue or is this really just supply chain inventory and backlogs are all going through this normalization process and if you could speak to the four main end market verticals from a demand standpoint that would be helpful.
Aaron W. Saak: Sure thing, Matt. Good morning. Thanks for the question.
Let me start and I'll go through each vertical for you. So I would just put vending in financial services together and say they're performing as expected. I don't think that's the same dynamic that we're seeing in gaming and retail and that was similar to my comments to Ian's question earlier. So again, I would pull those to the side and say again, we feel very good about how those those in markets are performing both within the quarter and the outlook that we have for the rest of the year.
That we're seeing in gaming and retail and that was similar to my comments to <unk> question earlier, So again I would pull those to the side and say again, we feel very good about how those those in markets are performing both within the quarter and the outlook that we have for the rest of the year.
I think gaming is very unique in that it is really about the burn down of the backlog. When we zoom out and look at those end markets, I think we're as confident as ever that they are performing very well. You see that in the end customers, you see that in how our channel partners are performing and also our relative market share in that market continues to be very strong. So again, gaming at a high level I think again is a very strong vertical for us and we're just working through the backlog position that was built up, again, expecting that to burn down over the next two and a half quarters as I said in the earlier remarks. Not as much around order intake in kind of in market demand. So again, a unique situation in gaming.
<unk> share in that market continues to be very strong. So again gaming at a at a high level I think again is a very strong vertical for us and we're just working through the backlog position that was built up again expecting that to burn down over the next two and a half quarters as I said in the earlier remark.
Not as much around order intake in kind of in market demand. So again, a unique situation in gaming.
Not as much around order intake.
And then when you go to retail, I think that's a combination, a little more complicated with three different factors. One is inventory restocking. That's present in retail again where the channel is at a higher level of inventory than they would've been ex-COVID. We've seen some project push outs that probably speak just to demand at the end with the customer inside the channel. And then of course, I think as you know very well, Matt, we also have two of our bigger customers going through their own changes over the last several months with an intense focus on cash management for them. So I think all three of those together in different proportions are what's driving that softness in retail and we're going to continue to assess that obviously in Q4.
they would've been ex-COVID. We've seen some project push outs that probably speak just to demand at the end with the customer inside the channel. And then of course, I think as you know very well, Matt, we also have two of our bigger customers going through their own changes over the last several months with an intense focus on cash management for them. So I think all three of those together in different proportions are what's driving that softness in retail and we're going to continue to assess that obviously in Q4.
At the end. Yep. With the customer inside the channel and then of course I think as you know very well, Matt. We also have two of our bigger customers going through their own changes over the last several months with an intense focus on cash management. For them. So I think all three of those together in. In different proportions are what's driving that softness in retail and we're going to continue to assess that obviously in Q4.
Yep. With the customer inside the channel and then of course I think as you know very well, Matt. We also have two of our bigger customers going through their own changes over the last several months with an intense focus on cash management. For them. So I think all three of those together in. In different proportions are what's driving that softness in retail and we're going to continue to assess that obviously in Q4.
With the customer inside the channel and then of course I think as you know very well, Matt. We also have two of our bigger customers going through their own changes over the last several months with an intense focus on cash management. For them. So I think all three of those together in. In different proportions are what's driving that softness in retail and we're going to continue to assess that obviously in Q4.
For them. So I think all three of those together in. In different proportions are what's driving that softness in retail and we're going to continue to assess that obviously in Q4.
In different proportions are what's driving that softness in retail and we're going to continue to assess that obviously in Q4.
When you zoom out though and we talked about the tailwind of the markets, those are unchanged. Automation, labor scarcity, those continue unabated and we think that positions the retail market long term for continued growth. And we just have these a combination of factors here that we're assessing obviously both in Q3 and Q4 as we look ahead. Hopefully that helps Matt.
Those continue unabated, we think that positions the retail market long term.
For continued growth and we just have these a combination of factors here that we're assessing obviously both in Q3 and Q4 as we look ahead.
Hopefully that helps Matt.
Matt J. Summerville: Yeah, that does. And then maybe over to currency, Aaron, what are your takeaways from the FED's latest print order for calendar '24 versus trends you may have observed over the course of 2023. And to that point, does it make a difference that they're now issuing this based on a calendar year versus the government's fiscal year? Does that skew any sort of seasonality you may have had in that business?
Maybe over to currency. What are your takeaways from the Feds latest print order for calendar 'twenty four versus trends you may have observed over the course of 2023 and to that point does it make a difference that they're now issuing this based on a calendar year versus the government's fiscal year does that skew any sort of. Seasonality you may have had in that business.
What are your takeaways from the Feds latest print order for calendar 'twenty four versus trends you may have observed over the course of 2023 and to that point does it make a difference that they're now issuing this based on a calendar year versus the government's fiscal year does that skew any sort of. Seasonality you may have had in that business.
Seasonality you may have had in that business.
Aaron W. Saak: Yeah, let me start with your first question just on expectations. Being very close here with BP and the FED in our in our working relationship and with the planning for the catalyst series, I would say very much met our expectations is the bottom line Matt. If anything and I think as you saw in the report and in your write up, there's a skewing here versus the prior year to 10, 20, and 100, which is obviously a benefit for us just as you look at that increased technology that goes into each of those denomination, particularly the 100 obviously more so than the others. So on a relative basis, that's positive for us. The total demand is right at the expectation that we had. And I think it also pointed to the continued work going on with catalyst again, which we feel very good about and the continued timeline that they're executing to go into move out of pilot into production and '25 for launch in '26 so that feels pretty good overall Matt.
Let me start with your first question. Our expectations. Very close here with BP and the fed in our in our working relationship and with the planning for the catalyst series I would say very much met our expectations. Is the Bottomline Mad if anything and I think as you saw in the report and in your write up. Theres, a skewing here versus the prior year to $10 20 and 100. Which is obviously a benefit for US just as you look at that increased technology that goes into each of those denomination so, particularly the 100 odd. Obviously more so than the others. So on a relative basis, that's positive for us. The the total demand is right at the expectation of that. That we had. And I think it also pointed to the continued work going on with catalyst again, which we feel very good about. And the continued timeline that they're executing two to go into.
Our expectations.
Very close here with BP and the fed in our in our working relationship and with the planning for the catalyst series I would say very much met our expectations.
Is the Bottomline Mad if anything and I think as you saw in the report and in your write up. Theres, a skewing here versus the prior year to $10 20 and 100.
Theres, a skewing here versus the prior year to $10 20 and 100.
Which is obviously a benefit for US just as you look at that increased technology that goes into each of those denomination so, particularly the 100 odd.
Obviously more so than the others. So on a relative basis, that's positive for us. The the total demand is right at the expectation of that.
That we had.
And I think it also pointed to the continued work going on with catalyst again, which we feel very good about.
And the continued timeline that they're executing two to go into.
move out of pilot into production and '25 for launch in '26 so that feels pretty good overall Matt. Moving from the fiscal year to the calendar year, materially no impact. I think it obviously is helpful just from a planning perspective for us, that's how we think about a year. So I would call it an aid in simplification, but not a material change in any part of the business.
move out of pilot into production and '25 for launch in '26 so that feels pretty good overall Matt.
Moving from the calendar year are moving from the fiscal year to the calendar year. Materially no impact I think. It obviously is helpful. Just from a planning perspective for us that's how we think about a year. So I would call it a need and simplification, but not a material change in any part of the business.
Moving from the fiscal year to the calendar year, materially no impact. I think it obviously is helpful just from a planning perspective for us, that's how we think about a year. So I would call it an aid in simplification, but not a material change in any part of the business.
Materially no impact I think. It obviously is helpful. Just from a planning perspective for us that's how we think about a year. So I would call it a need and simplification, but not a material change in any part of the business.
It obviously is helpful. Just from a planning perspective for us that's how we think about a year. So I would call it a need and simplification, but not a material change in any part of the business.
Operator: Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad.
Sorry about that thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Operator: Our next questions come from the line of Damian Caris with UBS. Please proceed with your question.
Damian Caris: Hi, good morning, everyone.
Aaron W. Saak: Good morning Damian.
Damian Caris: So Christina gave the updated CPI guidance for the rest of the year, I'm just curious how much of a headwind you're expecting that destocking to be in the first half of 2024 and then once you do get through that in the second quarter, would you expect to sort of revert back to the mid single digit type of growth that you'd target over the longer term?
Updated CPA CPI guidance for the rest of the year. I'm just curious how much of a headwind you're expecting that destocking to be in the first half of 2024 and then once you do get through that in the second quarter or are you kind of would you expect to sort of revert back to the mid single digit type of growth. Your target over the over the longer term.
I'm just curious how much of a headwind you're expecting that destocking to be in the first half of 2024 and then once you do get through that in the second quarter or are you kind of would you expect to sort of revert back to the mid single digit type of growth. Your target over the over the longer term.
Your target over the over the longer term.
Christina Cristiano: Hey Damian. Good morning, Thanks for calling in. Yeah, so we're not giving 2024 guidance today, we're just rolling up our operating plans now so we're going to be working on that over the next several weeks and we will put out 2024 guidance in early February with our year-end earnings release.
Yes. So just on just the you know we're not giving 2024 guidance today, we're just rolling up our operating plans now so we're going to be working on that over the next several weeks in and we will put out 2020 for guidance. In early February with our year end earnings release.
In early February with our year end earnings release.
But overall, as I mentioned, for the rest of this year, we're seeing CPI will be down as compared to last year, and that's just a continuation of this softness in orders relating to the realignment primarily in gaming as Aaron said and also some project delays in retail. Despite that though, we still are on track with our margins as we said just based on overall pricing and productivity. So that's really what we're saying now for the rest of this year and more to come on next year as we roll up the operating plan.
As compared to last year, and that's just a continuation of this softness in orders relating to the realignment primarily in gaming as Aaron said and also some project delays in retail. <unk>. Fight that though we still are on track with our margins as we said just based on overall pricing and productivity. So. That's really what we're saying now for the rest of this year and more to come on next year as we roll up the operating plan.
<unk>. Fight that though we still are on track with our margins as we said just based on overall pricing and productivity. So. That's really what we're saying now for the rest of this year and more to come on next year as we roll up the operating plan.
Fight that though we still are on track with our margins as we said just based on overall pricing and productivity. So. That's really what we're saying now for the rest of this year and more to come on next year as we roll up the operating plan.
That's really what we're saying now for the rest of this year and more to come on next year as we roll up the operating plan.
Damian Caris: Okay, understood. And then I was wondering if you could maybe speak to the strength that you're seeing in international currency, perhaps a few examples that you might be able to provide of the type of projects, the type of business that you're driving. I'm curious are there any new micro optics customers, is it more redesigns or just kind of an uptick in production? Really any color that you can provide on that international strength would be appreciated.
And then I was wondering if you could maybe speak to the strength that you're seeing in international currency.
Perhaps a few examples that you might be able to provide of the of the type of.
Projects the type of.
Business that you're driving.
I'm curious are there any new micro optics customers.
It's more redesigns or just kind of an uptick in production really any color that you can provide on that international strength would be appreciated.
Christina Cristiano: Yeah, really happy to do that. There's really great strength in the orders and in the backlog we're seeing for international right now, which includes winning new denominations internationally and we're feeling really good about that for the rest of this year and also it sets us up very well for next year. So it's a combination as you mentioned of our technology sales, our overall bank note sales, and just winning share. So just feeling really good about the currency business overall.
So. It's a combination as you mentioned of of. Our technology sales, our overall bank note sales and just winning share. So just feeling really good about the currency business overall.
It's a combination as you mentioned of of. Our technology sales, our overall bank note sales and just winning share. So just feeling really good about the currency business overall.
Our technology sales, our overall bank note sales and just winning share. So just feeling really good about the currency business overall.
Damian Caris: Okay, great.
Operator: Thank you. Our next questions come from the line of Bob Labick with CJS Securities. Please proceed with your questions.
Robert James Labick: Good morning. Thanks for taking my questions.
Aaron W. Saak: Good morning Bob.
Robert James Labick: Hi, so I was having some technical difficulty there I apologize. So if you just answered this, I may have missed it. But I just wanted to ask about currency, obviously, there's a really strong backlog. Looking ahead, how does the pipeline of new bidding opportunity internationally and rebids look now versus a year ago? And what are the other opportunities there? I guess, that's part one. And then part two is, how does the catalyst serious impact '24 operating profit if at all? I know it's supposed to come out later, but how does it impact the operations in preparation?
I just wanted to. Ask about currency, obviously, the really strong backlog. Looking ahead, how does the pipeline of. New bidding opportunity internationally and Rebids. Look you know now versus a year ago and you know what are the other opportunities. There I guess, that's part one and then part two is. How does the catalyst serious impact 'twenty. 24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
Ask about currency, obviously, the really strong backlog. Looking ahead, how does the pipeline of. New bidding opportunity internationally and Rebids. Look you know now versus a year ago and you know what are the other opportunities. There I guess, that's part one and then part two is. How does the catalyst serious impact 'twenty. 24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
Looking ahead, how does the pipeline of. New bidding opportunity internationally and Rebids. Look you know now versus a year ago and you know what are the other opportunities. There I guess, that's part one and then part two is. How does the catalyst serious impact 'twenty. 24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
Looking ahead, how does the pipeline of. New bidding opportunity internationally and Rebids. Look you know now versus a year ago and you know what are the other opportunities. There I guess, that's part one and then part two is. How does the catalyst serious impact 'twenty. 24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
New bidding opportunity internationally and Rebids. Look you know now versus a year ago and you know what are the other opportunities. There I guess, that's part one and then part two is. How does the catalyst serious impact 'twenty. 24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
Look you know now versus a year ago and you know what are the other opportunities. There I guess, that's part one and then part two is. How does the catalyst serious impact 'twenty. 24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
How does the catalyst serious impact 'twenty. 24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
24. Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
Operating profit if at all I know, it's a it's supposed to come out later, but how does it impact the operations in preparation.
Aaron W. Saak: Thanks Bob. So I would say to the first question you asked, if you look out to the next year, the activity and the ability for us to continue to bid both in new denominations that are going through a redesign or with incumbent product and denominations we have is largely the same as we've seen in '23 so that gives us again, the ability to kind of continue our trajectory. And that of course, at this point, we'll be talking about projects that are really set up for bids in '24 and delivery in '25.
With incumbent product and the nominations we have is largely the same as we've seen in 'twenty three. So that gives us again, the ability to kind of continue our trajectory. And that of course at this point. We'll be talking about projects that are really set up for bids in in 'twenty, four and delivery in 'twenty five.
So that gives us again, the ability to kind of continue our trajectory. And that of course at this point. We'll be talking about projects that are really set up for bids in in 'twenty, four and delivery in 'twenty five.
And that of course at this point. We'll be talking about projects that are really set up for bids in in 'twenty, four and delivery in 'twenty five.
We'll be talking about projects that are really set up for bids in in 'twenty, four and delivery in 'twenty five.
The strength of our backlog which we're going to bring into 2024 gives us a lot of confidence for that business for next year. This is really a backlog that's at near all time highs in the international side of the business and in total. So I think that again, gives us a very firm foundation operationally for performance in '24 and the market dynamics to your question are continuing to favor more technology, more sophisticated anti counter bidding technology and high quality, beautiful designs of currency, all of which play to our strengths. So I think that's a nice tailwind for the market that we continue to believe is going to last not only in '24 but beyond.
US a very firm foundation operationally for performance in 'twenty, four and the market dynamics to your question. Our continuing. To favor more technology more sophisticated anti counter bidding technology and high quality beautiful designs of currency all of which play to our strengths. So I think that's a nice tailwind for the market that we continue to believe is going to last not only in 'twenty four but. <unk>.
Our continuing. To favor more technology more sophisticated anti counter bidding technology and high quality beautiful designs of currency all of which play to our strengths. So I think that's a nice tailwind for the market that we continue to believe is going to last not only in 'twenty four but. <unk>.
To favor more technology more sophisticated anti counter bidding technology and high quality beautiful designs of currency all of which play to our strengths. So I think that's a nice tailwind for the market that we continue to believe is going to last not only in 'twenty four but. <unk>.
<unk>.
To your last question on catalyst for the US Government series as was mentioned in the recent Waco or the annual currency order report, it remains on track. As they call out in that report they'll be looking at production in '25, launch in 26, so it's really not a material item for us in '24.
Robert James Labick: Okay, great. And then just following up on earlier comments on M&A, obviously, you mentioned the expectations to get something done potentially in '24. How has a higher interest rate environment helped or hurt your prospects and kind of what key areas are you looking for M&A targets?
Helped or hurt your prospects and kind of what key areas are you looking for M&A targets.
Aaron W. Saak: Yeah, I would answer the last part of your question first of we're still sticking right on the strategy we've talked about since March of semantically in areas around secure, detect, and authenticate technology focus that really reinforce who we are today, but give us the option to create new pillars or platforms inside the company for the future. And the funnel list has only grown, it continues to grow and we see more deals coming through every quarter. And again feel very confident about what I said earlier to Ian's question around some action in 2024.
I would answer the last part of your question first of were still sticking right on the strategy, we've talked about since March of. Semantically in areas around secure detect and authenticate technology focused. That really reinforce who we are today, but give us the option to create new pillars or platforms inside the company for the future. And the funnel that list has only grown it continues to grow and we see more deals coming through every quarter.
Semantically in areas around secure detect and authenticate technology focused. That really reinforce who we are today, but give us the option to create new pillars or platforms inside the company for the future. And the funnel that list has only grown it continues to grow and we see more deals coming through every quarter.
That really reinforce who we are today, but give us the option to create new pillars or platforms inside the company for the future. And the funnel that list has only grown it continues to grow and we see more deals coming through every quarter.
And the funnel that list has only grown it continues to grow and we see more deals coming through every quarter.
And again feel very confident about what I said earlier to Ian's question around some action in 2024. I think the interest rate environment has actually helped us given we've paid down our debt. And so our strong free cash flow is an enormous advantage for us. The low leverage now sitting at 1.3X gives us the right amount of firepower we need for the first few deals. So I think again that that has moved in our favor and we feel very good about it. If anything Bob, it takes other people out of the option to do M&A that takes a little competition off the table.
And again feel very confident about what I said earlier to Ian's question around some action in 2024.
What I said earlier two unions question around some action in 2024, I think the interest rate environment has actually helped us given we've paid down our debt. And so are our strong free cash flow is an enormous advantage for us the low leverage now sitting at one three times gives us the right amount of fire firepower, we need for the first few deals so. So I think again that that has moved in our favor and we feel very good about it if anything Bob It takes other people out of the option to do M&A that. It takes a little competition off the table.
I think the interest rate environment has actually helped us given we've paid down our debt. And so our strong free cash flow is an enormous advantage for us. The low leverage now sitting at 1.3X gives us the right amount of firepower we need for the first few deals. So I think again that that has moved in our favor and we feel very good about it. If anything Bob, it takes other people out of the option to do M&A that takes a little competition off the table.
And so are our strong free cash flow is an enormous advantage for us the low leverage now sitting at one three times gives us the right amount of fire firepower, we need for the first few deals so. So I think again that that has moved in our favor and we feel very good about it if anything Bob It takes other people out of the option to do M&A that. It takes a little competition off the table.
So I think again that that has moved in our favor and we feel very good about it if anything Bob It takes other people out of the option to do M&A that. It takes a little competition off the table.
It takes a little competition off the table.
Operator: Thank you. Our next questions come from the line of Matt Summerville with DA Davidson. Please proceed with your question.
Matt J. Summerville: Yeah, I wanted to ask a follow up on CPI and the retail sort of sluggishness. If I points of three issues, those being the OEM inventory drawdown that we're obviously aware of, we also are aware that some deployers out there, so the end users of self checkout are evaluating third party options potentially elongating the project timeline and then you also have the rates slash macro, if you had to kind of force rank those in significance relative to what you're seeing in the business Aaron, and how would you kind of think about that?
Points of three issues those being the OEM inventory drawdown.
We're obviously aware of. You also are aware that some deployed or is out there. So the end users of self checkout are evaluating third party options potentially a long gating. The project timeline and then you also have the rates slash macro if you had to kind of force rank those in significance relative to what youre seeing in the business are and how would you kind of think about that.
You also are aware that some deployed or is out there. So the end users of self checkout are evaluating third party options potentially a long gating. The project timeline and then you also have the rates slash macro if you had to kind of force rank those in significance relative to what youre seeing in the business are and how would you kind of think about that.
The project timeline and then you also have the rates slash macro if you had to kind of force rank those in significance relative to what youre seeing in the business are and how would you kind of think about that.
Aaron W. Saak: Yeah, that's a fair follow up Matt. I would say that inventory stocking issue, the draw down as you said Matt on OEMs, that's probably number one. That's where we understand from our own channel checks and understand in talking to those OEMs the position they're in, so that's number one. I think the project push outs I would put as number two or as you said is the evaluation of other options. It doesn't change the end result, Matt that we're going to go install self checkout systems, it's just created this push out by a few months from probably where both ourselves and our partners would have expected some of those installations to occur. I think those are really the two big drivers here. Again, all other things fall in comparison to those two.
So that's that's number one I think the project push outs I would put it number two or as you said at the evaluation. All of other options. It doesn't change the end result, Matt that we're going to go install self checkout systems. It's just created this push out by a few months. Probably we're. Both ourselves and our partners would have expected some of those installations to occur I think those are really the two big drivers here again. All other things fall fall in comparison to those two.
All of other options. It doesn't change the end result, Matt that we're going to go install self checkout systems. It's just created this push out by a few months. Probably we're. Both ourselves and our partners would have expected some of those installations to occur I think those are really the two big drivers here again. All other things fall fall in comparison to those two.
It doesn't change the end result, Matt that we're going to go install self checkout systems. It's just created this push out by a few months. Probably we're. Both ourselves and our partners would have expected some of those installations to occur I think those are really the two big drivers here again. All other things fall fall in comparison to those two.
Probably we're. Both ourselves and our partners would have expected some of those installations to occur I think those are really the two big drivers here again. All other things fall fall in comparison to those two.
Both ourselves and our partners would have expected some of those installations to occur I think those are really the two big drivers here again. All other things fall fall in comparison to those two.
All other things fall fall in comparison to those two.
Matt J. Summerville: Okay, and then I recollect the currency division in the first quarter of '24 taking a little more downtime up in Massachusetts for new equipment installation. One, is that still happening and is what I said I guessed accurately and two is there an impact we should think about to the P&L high level that we try and capture that?
Recollect. The currency division in the first quarter of 'twenty for taking a little more downtime up in Massachusetts for new equipment installation. One is that still happening and is what I said I guess accurate and two is there an impact we should think about to the P&L high level. We. Try and capture that.
The currency division in the first quarter of 'twenty for taking a little more downtime up in Massachusetts for new equipment installation. One is that still happening and is what I said I guess accurate and two is there an impact we should think about to the P&L high level. We. Try and capture that.
We. Try and capture that.
Try and capture that.
Christina Cristiano: Hey Matt, it's Christina. So that is correct. So as we planned there'll be downtimes just to prepare for the new series trials and testing in advance of that production in 2025 as we discussed earlier. So how you should think about it is that on the US side, we'll be down in volume and a little bit still in mix as we saw this year with the lower denomination bills until that starts to kick in and maybe follow what the new order implied which is that there'll be a more favorable mix in '24. So you can expect to see on the US side down in Q1, which is consistent with what we had this year in Q1. But this will really be offset by the strength in international currency, just like we saw this year and based on our backlog in orders we expect to continue well into next year.
Ah trials and testing in advance of that production in 2025, as we discussed earlier. So how you should think about it is that on the U S side will be.
So how you should think about it is that on the U S side will be.
We'll be down right in volume and a little bit still in mix right as we as we saw this year with the lower denomination bills until that starts to kick in and maybe follow what the new order implied which was which is that there'll be a more favorable mix in 'twenty four or so so you can expect to see on the use side down.
In Q1, which is consistent with what we had this year in Q1, but this will really be. Offset by the strength in international currency, just like we saw this year and based on our backlog and orders we expect to continue. Well into next year.
Offset by the strength in international currency, just like we saw this year and based on our backlog and orders we expect to continue. Well into next year.
Well into next year.
Operator: Thank you. Our next questions come from the line of Damian Caris with UBS. Please proceed with your question.
Damian Caris: Hey everyone, just a follow up question here on US currency. I know you can't get in the weeds on the nature of that contractual relationship, but could you give us a sense for thinking about $10 and $20 denominations versus $1 and $5 denomination kind of maybe the relative content per bill difference between the ones and fives, and the tens and twenties?
I know you can't can't get in the weeds on you. The nature of. That contractual relationship, but could you give us a sense for. I'm thinking about. 10, dollar and 20 dollar denomination.
The nature of. That contractual relationship, but could you give us a sense for. I'm thinking about. 10, dollar and 20 dollar denomination.
That contractual relationship, but could you give us a sense for. I'm thinking about. 10, dollar and 20 dollar denomination.
I'm thinking about. 10, dollar and 20 dollar denomination.
10, dollar and 20 dollar denomination.
Ah versus $1 five dollar denomination kind of maybe the relative. Contents. Per per bill difference between. London, Fives, and tens and twenties.
Contents. Per per bill difference between. London, Fives, and tens and twenties.
Per per bill difference between. London, Fives, and tens and twenties.
London, Fives, and tens and twenties.
Yeah, Damian, happy to answer that in part. As you rightfully said at the beginning, we can't get in specifically to those details of the contract with the US. Government. The best thing I can point to is what the government publishes and their cost to produce the bills that's public information that's out there for anyone to look at. Really for us the key differentiator is more at the $100 bill where our micro optics or the blue strip that we all know adds a lot of anti counterfeiting technologies to that product for the BEP. That's a significant add as you can see visually to the bill so it's a much bigger differentiator than the lower end or the lower dollar denomination bills. So I would kind of think of this as there as
Aaron W. Saak: Yeah, Damian, happy to answer that in part. As you rightfully said at the beginning, we can't get in specifically to those details of the contract with the US. Government. The best thing I can point to is what the government publishes and their cost to produce the bills that's public information that's out there for anyone to look at. Really for us the key differentiator is more at the $100 bill where our micro optics or the blue strip that we all know adds a lot of anti counterfeiting technologies to that product for the BEP. That's a significant add as you can see visually to the bill so it's a much bigger differentiator than the lower end or the lower dollar denomination bills.
That that's out there for anyone to look at. Really for US the key differentiator is more at the $100 Bill, where our micro optics or the blue strip that we all know.
Really for US the key differentiator is more at the $100 Bill, where our micro optics or the blue strip that we all know.
Adds a lot of anti counterfeiting technology to that product for the Bep. That's that's a significant add as you can see visually to the bill. So it's the it's a much bigger differentiator than the lower end or the lower dollar denomination bills. So I would kind of think of this as theirs.
So I would kind of think of this as there as really two main categories. There is the 100 and there's all other where you see this delineation. So a little bit less of an impact for us when you get into the differences between a five or a 10 as an example. But I think as you look up those public records of how much it cost for each denomination, you can assume that scales proportionately to the amount of technology that goes into those different denominations. And I think that's why we're excited about the new design in the new series right. We're working very closely with the BEP and the FED and we feel very good about that relationship. And just like the rest of our international business, every new redesign of the currency, both the United States around the world, adds on more technology. So that's why this new series is so important for us and for Crane Currency as a significant tailwind to the business really for the next decade. But as I think Bob asked, in 2024, we don't see that as a material item inside the P&L.
really two main categories. There is the 100 and there's all other where you see this delineation. So a little bit less of an impact for us when you get into the differences between a five or a 10 as an example. But I think as you look up those public records of how much it cost for each denomination, you can assume that scales proportionately to the amount of technology that goes into those different denominations. And I think that's why we're excited about the new design in the new series right. We're working very closely with the BEP and the FED and we feel very good about that relationship. And just like the rest of our international business, every new redesign of the currency, both the United States around the world, adds on more technology. So that's why this new series is so important for us and for Crane Currency as a significant tailwind to the business really for the next decade. But as I think Bob asked, in 2024, we don't see that as a material item inside the P&L.
Where do you see this delineation. So a little bit less of an impact for us when you get into the differences between a five or a 10 as an example, but I think as you look up those public records of how much it cost for each denomination you can assume that scales proportionately to the amount of technology that goes into those.
So a little bit less of an impact for us when you get into the differences between a five or a 10 as an example, but I think as you look up those public records of how much it cost for each denomination you can assume that scales proportionately to the amount of technology that goes into those.
The nominations and I think that's why we're excited about the new design in the New series right, where we're working very closely with.
The bep and the fed we feel very good about that relationship and just like the rest of our international business every new redesign of the currency both the United States around the world adds on more technology. So that's why this this new series is so important for us and for Crane currency as a significant tailwind to the business really for the next decade. But as. I think Bob basket in 2024, we don't see that as a material item inside the P&L.
So that's why this this new series is so important for us and for Crane currency as a significant tailwind to the business really for the next decade. But as. I think Bob basket in 2024, we don't see that as a material item inside the P&L.
But as. I think Bob basket in 2024, we don't see that as a material item inside the P&L.
I think Bob basket in 2024, we don't see that as a material item inside the P&L.
Damian Caris: Got it. Thanks, that's really helpful Aaron. And then just a follow up question on M&A. You mentioned earlier you really expect to execute some deals in 2024, can you just clarify so is it you're not actively pursuing any deals at the moment just kind of keeping an eye on what's out there until you are ready or are you actively looking and just don't expect anything to close anytime soon?
Really expect to execute some deals in 2024, yes clarify so you're is it you're not actively pursuing any deals at the moment just kind of keeping an eye on what's out there until you are ready or are you actively looking and just don't anything or expect anything to close anytime soon.
Aaron W. Saak: Well, I think it's a little bit of a combination of both Damian. If you look at the cycle time for a deal, it's months, it's not days or weeks. So I would say we're very active in reviewing and cultivating deals inside the market and there are some we passed on over the last several months and I mentioned that in Q2 I believe that we've been active and we passed on some. I think the key to any M&A is it's not about doing the deal, but it's doing it in a very disciplined way that adds value to the portfolio and ultimately value to the shareholder. And I think that's hard to disagree with.
In reviewing and cultivating deals inside the market and there are some we passed on over the last several several months and I mentioned that in Q2, I believe that we've been active and we passed on some I think the key to any M&A is it's not about doing the deal, but it's doing it in a very disciplined way that adds value.
Are you to the portfolio and ultimately value to the shareholder.
And I think that's hard to disagree with. So from the very beginning we've set out criteria that started with our market work to go into spaces where we could be good owners of the asset and then had very strict financial considerations around those both in revenue size, size of the deal itself in terms of enterprise value and where we can drive synergies. So that's a process I would say we're very actively pursuing and just based on what I know we're doing and what I see coming to fruition gives me confidence that we will be doing something in '24. And I think you can take to heart the deals we passed because we don't think those would've been good deals for our shareholder and we want to be prudent capital allocators here and that's our number one priority.
And I think that's hard to disagree with.
So from the very beginning we've set out criteria that started with our market work to go into spaces where we could be good owners of the asset and then had very strict financial considerations around those both in revenue size, size of the deal itself in terms of enterprise value and where we can drive synergies. So that's a process I would say we're very actively pursuing and just based on what I know we're doing and what I see coming to fruition gives me confidence that we will be doing something in '24. And I think you can take to heart the deals we passed because we don't think those would've been good deals for our shareholder and we want to be prudent capital allocators here and that's our number one priority.
Price value.
And where we can drive synergies. So that's a process I would say, we're very actively pursuing and just based on what what I know, we're doing and what I see. Coming to fruition. It gives me confidence that we will be doing something in 'twenty four. And I think you can take to heart the deals we passed because we don't think those would've been a good deals for our shareholder and we want to be prudent. Capital Allocators here and. And that's that's our number one priority.
Coming to fruition. It gives me confidence that we will be doing something in 'twenty four. And I think you can take to heart the deals we passed because we don't think those would've been a good deals for our shareholder and we want to be prudent. Capital Allocators here and. And that's that's our number one priority.
And I think you can take to heart the deals we passed because we don't think those would've been a good deals for our shareholder and we want to be prudent. Capital Allocators here and. And that's that's our number one priority.
Capital Allocators here and. And that's that's our number one priority.
And that's that's our number one priority.
Operator: Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Aaron Saak for closing remarks.
Alright, well, thank you very much. Thank you operator for handing it back over. And again, I'd just like to end the call today by thanking all of the NXT team for their efforts to produce very strong results in Q3. Earlier this month, we launched our new core values for the company and the first one is titled People Matter. And I know we cannot achieve these results without having a dedicated team around the world that makes a difference every day in serving our customers. So again, thanks to our entire team for a very strong Q3. And also thanks to everyone who joined the call today and for your questions, we appreciate those. And so with that, I hope you have a great rest of your morning, and we look forward to speaking to you again next quarter. Thank you.
Aaron W. Saak: Alright, well, thank you very much. Thank you operator for handing it back over. And again, I'd just like to end the call today by thanking all of the NXT team for their efforts to produce very strong results in Q3.
Just like to end the call today by thanking all of the NXT team for their efforts to produce very strong results in Q3. Earlier this month, we launched our new core values for the company and the first one is titled people matter.
Earlier this month, we launched our new core values for the company and the first one is titled People Matter. And I know we cannot achieve these results without having a dedicated team around the world that makes a difference every day in serving our customers. So again, thanks to our entire team for a very strong Q3. And also thanks to everyone who joined the call today and for your questions, we appreciate those. And so with that, I hope you have a great rest of your morning, and we look forward to speaking to you again next quarter. Thank you.
Earlier this month, we launched our new core values for the company and the first one is titled people matter.
And I know we cannot achieve these results without having a dedicated team around the world that makes a difference every day in serving our customers. So again, thanks to our entire team for a very strong Q3 and also thanks to everyone who joined the call today and for your questions. We appreciate those and so with that I hope you have a.
Great rest of your morning, and we look forward to speaking to you again next quarter. Thank you.
Operator: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. We appreciate your participation. I hope you enjoy the rest of your day.
I hope you enjoy the rest of your day.
Yes. Yeah.
Yeah.