Q1 2024 Enerpac Tool Group Corporation Earnings Call
Ladies and gentlemen, and thank you for standing by welcome to the <unk> tool group's first quarter fiscal 2024 earnings Conference call. As a reminder, this conference is being recorded December 20th 2023 it's now my pleasure to turn the conference over to Travis Williams direct.
Ladies and gentlemen, thank you for standing by. Welcome to the EnerPak Tool Group's first quarter fiscal 2024 earnings conference call. As a reminder, this conference is being recorded December 20th, 2020.
It's now my pleasure to turn the conference over to Travis Williams, Director of Investor Relations. Mr. Williams?
Travis Williams: <unk> of Investor Relations Mr. Williams. Please go ahead.
Thank you, operator. Good morning and thank you for joining us for Interpack Tool Group's first quarter fiscal 2024 earnings call. On the call today to present the company's results are Paul Sternlieb, President and Chief Executive Officer, and Tony Colucci, Chief Financial Officer.
Travis Williams: Thank you operator good morning.
Travis Williams: And thank you for joining us for <unk> tool group's first quarter fiscal 2024 earnings call on the call today to present, the company's results, our pulse sternly, President and Chief Executive Officer, and Tony <unk>, Chief Financial Officer, our slides and a recording of today's call will be available on <unk> website in the investors section.
Our slides and a recording of today's call will be available on the InterPAC website in the investors section.
Today's call will reference non- GAAP measures . You can find reconciliation of gap to non- GAAP measures in the press release issued yesterday.
Speaker Change: Today's call will reference non-GAAP measures you can find the reconciliation of GAAP to non-GAAP measures in the press release issued yesterday.
Our comments will also include forward-looking statements that are subject to business risk that could cause actual results to be materially different. Those risks include matters noted in our latest SEC filings. Now I will turn the call over to Paul.
Speaker Change: Comments will also include forward looking statements that are subject to business risks that could cause actual results to be materially different. Those risks include matters noted in our latest SEC filings now I'll turn the call over to Paul.
Paul: Thanks, Travis and good morning all.
Thanks Travis and good morning all. Following on the heels of EnterPak's strong financial performance in fiscal 2023, we started fiscal 2024 with another solid quarter.
Following on the heels of <unk> strong financial performance in fiscal 2023, we started in fiscal 2020 four with another solid quarter.
Paul: While we remain cautious as to how the full year will unfold given the economic and geopolitical uncertainty we are affirming our full year fiscal 2024 guidance.
While we remain cautious as to how the full year will unfold, given the economic and geopolitical uncertainty, we are affirming our full year fiscal 2024 guidance.
Our results clearly reflect the continued benefits of our Ascend Transformation Program, our four pillar growth strategy, and the changes across the organization that are making InterPAC more efficient, more productive, and easier to do business.
Paul: Our results clearly reflect the continued benefits of our sand transformation program, our four pillar growth strategy and the changes across the organization that are making air pack more efficient more productive and easier to do business with.
As you can see on slide 3, first quarter organic revenue, what we previously referred to as core revenue, was up 5.5% from the year-ago period to $142 million.
Paul: As you can see on slide three first quarter organic revenue what we previously referred to as core revenue was up five 5% from the year ago period to $142 million.
Paul: Moreover, we captured significant improvement in operating and SG&A efficiency.
Moreover, we captured significant improvement in operating and SGNA efficiency.
With that, Adjusted Event Dot expanded 31% to $35 million in the first quarter of fiscal 2024, enabling us to achieve an Adjusted Event Dot margin of 24.6%.
Paul: With that adjusted EBITDA expanded 31% to $35 million in the first quarter of fiscal 2020 for.
Paul: Enabling us to achieve an adjusted EBITDA margin of 24, 6%.
Speaker Change: I'll, let Tony will review, our first quarter performance and so on the details about the positive year over year gains then.
I'll let Tony review our first quarter performance and fill in the details about the positive year-over-year gains.
Then I will speak about geographic trends, provide some details about a few exciting areas of our growth strategy, and introduce our estimates of revenue breakdown by end market. Toey.
Speaker Change: And then I will speak about geographic trends provide some details about a few exciting areas of our growth strategy and introduce our estimates of revenue breakdown by end market Tony.
Thanks and good morning. We are now on slide four. As Paul said, Interpec enjoyed solid top-line growth and outstanding EBIT expansion in the first quarter of fiscal 2024.
Tony: Thanks, and good morning, we are now on slide four as Paul said <unk> enjoyed solid topline growth and outstanding EBIT expansion in the first quarter of fiscal 2024.
Reported revenue growth of 2% year-over-year reflected the sale of the Cortland industrial business in the fourth quarter of fiscal 2023.
Tony: Reported revenue growth of 2% year over year reflected the sale of the Courtland industrial business in the fourth quarter of fiscal 2023.
Tony: On a organic basis, which excludes the divestitures and the impact of foreign exchange revenue expanded by five 5%.
on a organic basis, which excludes the vestitures and the impact of foreign exchange, revenue expanded by five and a half percent.
Tony: For the industrial tools and service segment organic revenue growth was five 8% comprised of a four 5% increase in product revenue and a 10, 1% expansion in services. The segment enjoyed a positive contribution from price as well as volume and mix.
For the industrial tools and service segment, organic revenue growth was 5.8% comprised of a 4.5% increase in product revenue and a 10.1% expansion in services.
The segment enjoyed a positive contribution for price as well as volume and mix.
Overall, InterPEC revenue growth was slightly offset by a 2.3% decline in Cortland Biomedical. The expected decline was primarily a timing issue related to some specific customer program.
Tony: Overall <unk> revenue growth was slightly offset by a two 3% decline in Cortland biomedical.
Tony: The decline was primarily a timing issue related to some specific customer programs.
On slide 5, from a profitability standpoint, gross margins expanded 360 basis points to 52.3% in the first quarter of fiscal 2024. This was driven by the continued success of our lean initiatives, focused on operational excellence and price benefits.
Tony: On slide five from a profitability standpoint, gross margins expanded 360 basis points to 52, 3% in the first quarter of fiscal 2020 for.
Tony: This was driven by the continued success of our lean initiatives.
Tony: On operational excellence and price benefits.
Among our initiatives, we improved freight expense by optimizing routes and renegotiating rates.
Tony: Among our initiatives, we improved freight expense by optimizing routes and renegotiating rates.
Gross margins also benefited from the vestiture of the Cortland industrial business.
Tony: Gross margins also benefited from the divestiture of the Cortland industrial business.
Similarly, we continue to benefit from initiatives that improved our SGNA efficiency.
Tony: Similarly, we continue to benefit from initiatives that improved our SG&A efficiency.
SG&A expands to decline 21% year-over-year, primarily due to lower asset and charges.
Tony: SG&A expense declined 21% year over year, primarily due to lower asset charges.
Adjusted SG&A expense, which excludes ascend and other one time charges from both periods declined 5%.
adjusted SG&E expense, which excludes a SEND and other one-time charges from both periods, the client 5%.
This benefit was achieved by streamlining our organizational structure and offshoring certain finance and IT functions, along with further optimization of all back office functions.
This benefit was achieved by streamlining our organizational structure and offshoring certain finance and it functions along with further optimization of all back office functions.
On an adjusted basis, SG&A was 29% of sales, down from 31.2% of sales in the year ago period.
On an adjusted basis SG&A was 29% of sales down from 31, 2% of sales in the year ago period.
Tony: As we have said our financial framework goal is to bring our SG&A spend in line with best in class Industrials, and we continue to move in that direction.
As we have said, our financial framework goal is to bring our SG&E spend in line with best in class industrials and we continue to move in that direction.
Tony: Turning to slide six with both topline growth and margin expansion adjusted EBITDA increased 31% year over year.
Turning to slide 6, with both top-line growth and margin expansion, adjusted EBITDA increased 31 percent year-over-year. Adjusted EBITDA margins expanded 550 basis points from 19.1 percent in the first quarter of fiscal 2023 to 24.6 percent in the most recent period.
Tony: Adjusted EBITDA margins expanded 550 basis points from 19, 1% in the first quarter of fiscal 2023 to 24, 6% in the most recent period.
Tony: On a GAAP basis diluted earnings per share from continuing operations totaled <unk> 33 in the quarter.
On a gap basis, diluted earnings per share from continuing operations totaled $0.33 in the quarter. Adjusted EPS increased 34% year-over-year to $0.39.
Tony: Adjusted EPS increased 34% year over year to 39.
compared with $0.29 in the prior year.
Compared with 29 in the prior year.
This increase was primarily the result of EBIT expansion along with a lower share count and despite a higher but more normalized adjusted effective tax rate of 21.9% in the first quarter of 2024 compared with a 15.6% rate in the year-ago period.
Tony: This increase was primarily the result of EBIT expansion, along with a lower share count and despite a higher but more normalized adjusted effective tax rate of 21, 9% in the first quarter of 2024, compared with a 15, 6% rate in the year ago period.
Tony: We continue to expect expect our adjusted effective tax rate for the full year to be in the 20% to 25% range.
We continue to expect our adjusted effective tax rate for the full year to be in the 20% to 25% range.
In the first quarter of fiscal 2024, operating cash was a use of $7 million, resulting from higher ascent related cash payments and the timing of the cash bonus payments.
Tony: In the first quarter of fiscal 2020 for operating cash was a use of $7 million, resulting from higher ascend related cash payments and the timing of the cash bonus payment.
In fiscal 2023, the bonus was paid out in the second quarter.
Tony: In fiscal 2023, the bonuses paid out in the second quarter.
Tony: On slide seven as we have discussed <unk> strong liquidity and balance sheet support our capital allocation priorities, including internal investments to drive organic growth strategic acquisitions and opportunistic share repurchases at the end of the first quarter net debt was 97.
On slide seven, as we have discussed, ENERPEC's strong liquidity and balance sheet support our capital allocation priorities, including internal investments to drive organic growth, strategic acquisitions, and opportunistic share repurchase.
At the end of the first quarter, net debt was $97 million, resulting in a net debt leverage ratio of 0.9 times adjusted EBITDA. Total liquidity was approximately
Tony: Resulting in a net debt leverage ratio of 0.9 times adjusted EBITDA.
Tony: Total liquidity was approximately $500 million. Additionally.
Additionally, we have the option in the credit facility to request an M&A accordion up to $300 million.
Tony: Additionally, we have the option and the credit facility to request, an M&A accordion up to $300 million.
Tony: As previously mentioned with a full time corporate development leader in place. We are actively explore exploring acquisition targets, while adhering to our disciplined financial and strategic criteria.
As previously mentioned, with a full-time corporate development leader in place, we are actively exploring acquisition targets while adhering to our disciplined financial and strategic criteria.
Tony: During the quarter, we returned $26 million to shareholders through the repurchase of approximately 1 million shares at.
During the quarter, we returned $26 million to shareholders through the repurchase of approximately one million shares.
Tony: At quarter's end, we had about 3 million shares remaining against the 10 million share board repurchase authorization.
At quarters end, we had about 3 million shares remaining against the 10 million share board repurchase authorization. With that, let me turn
Tony: With that let me turn the call back to Paul.
Thanks, Tony. As we discussed on our year-end fiscal 2023 call, we streamlined our organization into three geographic regions. America's, EMEA, which includes Europe , Middle East, and Africa, and Asia-Pacific. The realignment has enabled some.
Paul: Thanks, Tony.
As we discussed on our year end fiscal 2023 call. We streamlined our organization into three geographic regions Americas, EMEA, which includes Europe, Middle East and Africa and Asia Pacific.
Paul: The realignment has enabled some early cost synergies, we anticipate additional cost savings as well as revenue synergies going forward.
we anticipate additional cost savings as well as revenue or synergies going forward.
In the Americas, we continue to see a neutral to cautious sentiment among our channel partners who are generally expecting low single-digit growth in calendar 2024.
In the Americas, we continue to see a neutral to cautious sentiment among our channel partners were generally expecting low single digit growth in calendar 2020 for the.
mid-single-digit organic growth experience in the first quarter was broad-based across our verticals with strength in construction, wind, and rail. Overall, we believe channel inventory is appropriate with perhaps a few
Paul: The mid single digit organic growth experienced in the first quarter was broad based across our verticals with strength in construction wind and rail overall, we believe channel inventory is appropriate with perhaps a few exceptions.
Paul: And our newly combined geographic region EMEA, we had solid topline growth in products and services, yielding organic growth in the high single digits.
In our newly combined geographic region, EMEA, we have solid top-line growth in products and services, yielding organic growth in the high single digits.
While as previously discussed, we exited certain low margin service business in the Middle East, we more than offset that with new projects.
While as previously discussed we exited certain low margin service business in the middle East, we more than offset that with new projects.
Looking forward, overall dealer sentiment is neutral to cost.
Paul: Looking forward overall dealer sentiment is neutral to cautious.
The Asia-Pacific region saw low single-digit organic growth in the quarter, but strong order growth, which should translate to solid revenue growth in subsequent periods.
Paul: The Asia Pacific region saw low single digit organic growth in the quarter, but strong order growth, which should translate to solid revenue growth in subsequent periods.
We're encouraged by the pace of investment activity and inquiries associated with infrastructure spend in Japan, power plant investment in China, and wind opportunities, especially
Paul: We're encouraged by the pace of investment activity and inquiries associated with infrastructure spend in Japan.
Our planned investment in China.
Paul: And when opportunities, especially in India.
Paul: Switching gears as you know <unk> highly diversified end market participation at stability and provides growth opportunities. We know that investors are interested in greater insight into our end market mix.
Switching gears, as you know, EnterPAC's highly diversified end-market participation at stability and provides growth opportunities.
We know that investors are interested in greater insight into our end market
To that end, we've developed our best estimate of <unk> revenue by vertical market, which we show on slide nine.
To that end, we've developed our best estimate of Interpac's revenue by vertical market, which we show on slide 9.
As you can see, oil and gas, which is primarily downstream, along with the general industrial sector, are our two largest end markets.
As you can see oil and gas, which is primarily downstream along with the general industrial sector are our two largest end markets.
As it relates to our targeted verticals, rail is included in the infrastructure category, which totals about 9% of sales in fiscal 2023.
Paul: As it relates to our targeted verticals rail is included in the infrastructure category, which total about 9% of sales in fiscal 2023.
Wind is included in the power generation sector at 10% category.
Paul: Wind is included in the power generation sector, a 10% category.
Paul: The other category includes the Companys exposure to shipbuilding automotive aerospace off highway vehicle repair military paper Inwood Marine and rescue.
The other category includes the company's exposure to shipbuilding, automotive, aerospace, off-highway vehicle repair, military, paper and wood, marine, and rescue.
Finally, I'd like to provide some color on two of our growth pillars, innovation and expansion in Asia Pacific.
Paul: Finally, I'd like to provide some color on two of our growth pillars innovation and expansion in Asia Pacific.
On the innovation front as we've mentioned over the past two years, we have reconfigured our new product development program with a disciplined process and roadmap focused on customer needs and aligned with our four key vertical markets.
On the innovation front, as we've mentioned, over the past two years, we have reconfigured our new product development program with a disciplined process and roadmap focused on customer needs and aligned with our four key vertical markets.
For example, we recently launched two new battery-powered portable pumps, rounding out AirPak's best-in-class cordless pump portfolio.
For example, we recently launched two new battery powered portable pumps rounding out <unk> best in class cordless pump portfolio.
Paul: These pumps have competitive advantages in terms of speed runtime and oil capacity. They are capable of serving applications across a wide array of end markets.
These pumps have competitive advantages in terms of speed, runtime, and oil capacity.
They are capable of serving applications across a wide array of end-marks.
with clear advantages within the emerald, rail, and wind sector.
Paul: With clear advantages within the MRO rail and wind sectors.
And we believe these battery pumps can take share from competitors and applications, where small electric or air pumps are currently being used.
And we believe these battery pumps can take share from competitors in applications where small electric or air pumps are currently being
Moreover, these products are equipped with EnterPAC Connect, allowing customers to receive detailed product information, perform firmware updates, and track service records.
Paul: Moreover, these products are equipped with <unk> connect allowing customers to receive detailed product information for firm perform firmware updates and track service Records.
Paul: In Asia Pacific as I mentioned, we're excited about infrastructure power plant and wind projects in the region.
In Asia Pacific, as I mentioned, we're excited about infrastructure, power plant, and wind projects in the region.
One of the images on the slide shows the critical role of EnerPak equipment in use at the Narita International Airport in Japan, where a 450 ton overpass road bridge was removed out of a planned runway extension.
Paul: One of the images on the slide shows the critical role a better pack equipment and used <unk> International Airport in Japan were a 450 ton overpass brokerage was removed ahead of a planned runway extension.
Lack of space prevented the use of a crane for the bridge removal. Instead, our customer used EnterPak JS500 jack-up units, mounted on self-propelled modular transporters, to remove the entire bridge overnight, thus minimizing traffic disruption on the expressway.
Paul: Lack of space prevented the use of a crane for the Bridger removal instead, our customer used enter pack J S. 500, jackup units mounted on self propelled modular transporters to remove the entire bridge overnight, thus minimizing traffic disruption on the expressway.
We're also advancing the rollout of our second brand, LARZEP, a mid-tier offering targeting a relatively untapped market segment, which we believe could be roughly on par with the size of the premium segment on a dollar basis.
Paul: We're also advancing the rollout of our second brand <unk> and.
Paul: A mid tier offering targeting a relatively untapped market segment, which we believe could be roughly on par with the size of the premium segment on a dollar basis.
To date, we've signed up several new distributors and are pleased with early order activity.
Paul: To date, we've signed up several new distributors and are pleased with early order activity.
Paul: We've also added new commercial leaders in southeast Asia to help accelerate growth.
We've also added new commercial leaders in Southeast Asia to help accelerate growth.
And we're leveraging our EnterPAC Academy in Singapore to train new distributors and customers in the region, drive demand, and build brand-loyal services.
Paul: And we're leveraging our <unk> Academy in Singapore to train new distributors and customers in the region drive demand and build brand loyalty.
as we know from our experience in other regions, providing training on our equipment is a critical component of customer engagement and penetration.
Paul: As we know from our experience in other regions, providing training on our equipment is a critical component of customer engagement and penetration.
Paul: As you can see from our performance this quarter and over the past two years <unk> is capturing consistent benefits from our <unk> transformation initiatives, our growth strategy and the programs we have implemented to enhance operating efficiencies we are confident that.
As you can see from our performance, this quarter and over the past two years, EnterPAC is capturing consistent benefits from our send transformation initiatives, our growth strategy, and the programs we've implemented to enhance operating efficiency.
we are confident that there is more to come as we work to achieve our long-term financial framework.
Paul: There is more to come as we work to achieve our long term financial framework.
Paul: Before we open the call to questions I'd like to extend my sincere thanks to our global workforce for their deep commitment to our customers and for advancing the initiatives that are making air pack, a premier industrial tools and service business now.
Before we open the call to questions, I'd like to extend my sincere thanks to our global workforce for their deep commitment to our customers and for advancing the initiatives that are making EnterPAC a premier industrial tools and service business.
Paul: Now we'd be happy to take any questions.
Speaker Change: 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 Q1 moment. Please while we poll for questions.
Thank you. Now I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to move your question from the queue. One moment please.
Our first question today is coming from Tom Hayes from CLK, your line is now live.
Speaker Change: Our first question today is coming from Tom Hayes from C. L. King Your line is now live.
Tom Hayes: Hey, good morning, guys. Thanks for taking my call and congratulations on the starts a year.
Hey, good morning guys. Thanks for taking my call and congratulations on the start of the year.
Speaker Change: Thanks, Tom Good morning, Hi, Tom Good morning, Hey, Paul I was wondering if you could give us a little bit more color or detail on the market conditions in the Americas. It sounds like Europe mid single digits for the quarter. It sounds like maybe you outperformed.
Thanks, Tom. Good morning. Hi, Tom. Hey, Paul, I was wondering if you could give us a little bit more color detail on the market conditions in the Americas. It sounds like you were up mid-single digits for the quarter. It sounds like maybe you outperformed.
the market a little bit. I think you mentioned that the expectations from some of your customers were low single-digit growth for the year. I was just wondering, any other color you can give us as
Speaker Change: The market a little bit I think you mentioned that the expectations from some of your customers who are low single digit growth for the year I was just wondering any other color you can give us.
market conditions as it's your largest region there.
Speaker Change: You know market conditions.
Your largest region there.
Sure. Yeah, I think as I mentioned in my prepared remarks, you know, what we hear from channel partners is
Speaker Change: Sure Yeah, I think as I mentioned in my prepared remarks, what we hear from channel partners is probably more of a neutral to cautious sentiment and that's really not new we've been talking about that for several quarters and we referenced that they are for their business overall generally expecting.
probably more of a neutral to cautious sentiment, and that's really not new, we've been talking about that for several quarters.
And we reference that they are, you know, for their business overall generally expected.
kind of low single digit growth in calendar 24, we did outperform that. I think the strength of our business
Speaker Change: Kind of a low single digit growth in calendar 'twenty four we did outperform that.
Speaker Change: I think the strength of our business globally.
globally, and certainly in America that is very broad based. You know, we are quite diversified in terms of end markets.
Speaker Change: Globally and certainly in Americas as that is very broad based we are quite diversified in terms of end markets and I think we're still quite bullish about what's to come yet from the infrastructure Bill still early days here in the U S. I wouldn't say, we've seen any significantly meaningful impact, but our XP.
And I think, you know, we're still quite bullish about what's to come yet from the infrastructure bill. Still early days here in the U.S. wouldn't say we've seen any significantly meaningful impact, but, you know, our expectations are that that will become a nice tailwind for us, you know, in the coming quarters and years. So I think where we remain, you know, optimistic despite some of the cautious sentiment that we hear from our channel partners.
Speaker Change: Patients are that that will become a nice tailwind for us.
Speaker Change: In the coming quarters and years. So I think we remain optimistic despite some of the cautious sentiment that we hear from our channel partners. Okay.
Okay, fabulous, and then Tony, maybe on the strong gross margin performance, certainly outpaced what I was expecting, you know, any granularity that you could provide as far as, you know, you called out several drivers of that and just, you know, any color there and then maybe just touch on the sustainability of that margin rate. Is that something that
Speaker Change: Okay Fabulous.
Speaker Change: Maybe on the on the strong gross margin performance certainly outpaced what I was expecting.
Speaker Change: Any granularity you can provide as far as you know you called out several drivers of that and just any color. There and then maybe just touch on the sustainability of that margin rate is that something that.
we should start thinking about for the balance of the year as far as, you know, margin trends, you know, certainly probably not that much of a quarter over quarter improvement. Just any thoughts you can give us on, you know, gross margin rates as they trend through the year?
Do we should we should start thinking about for the balance of the year as far as margin trends, certainly probably not that much of a quarter over quarter improvement just any thoughts you can give us on gross margin rates as they trend through the year.
Speaker Change: Sure Yeah, I mean first of all we're very happy with the performance on gross margin 360 basis points improvement there.
Sure. Yeah. I mean, first of all, we're very happy with the performance on gross margin, you know, 360 basis points improvement there. You know, I would say that pertains to several factors. You know, we certainly have the operational efficiencies that we're seeing to come through BSN and other initiatives. I also say that, you know, we've stronger mix of more profitable products that we saw here in Q1.
Speaker Change: I would say that pertains to the several factors, we certainly have the operational efficiencies that we're seeing that come through.
Speaker Change: Yes, and another initiatives I would also say that stronger mix of more profitable products that we that we saw here in Q1.
you know, gross profit will fluctuate throughout the year, you know, with different regional growth rates and mix and, you know, we, you know, but we'll also continue to see benefits through our initiatives, while we still have some investments coming through here and automation and other capacity needs as well. So, I mean, it will fluctuate up and down here throughout the years, but I would say.
Gross gross profit will fluctuate throughout the year with different regional growth rates and mix.
Speaker Change: But we will also continue to see benefits through our initiatives.
Speaker Change: While we still have some investments coming through here in automation and other capacity needs as well. So I mean, it will fluctuate up and down here throughout the years, but I would say.
Okay, maybe two more if I could. One, as I'm still kind of getting a little bit up to speed on this story, you know, is there anything that we need to kind of think about as far as seasonality as we go through the year? Has anything changed versus previous years?
Maybe two more if I could one is I'm still kind of getting a little bit up to speed on the story is there anything that we need to kind of think about it as far as seasonality as we go through the year has anything changed versus previous years.
Speaker Change: No no changes still.
No, no, no changes, you know, still, you know, kind of first half versus second half dynamic that that we that will continue to see.
Speaker Change: Kind of first half versus second half dynamic that we are that we'll continue to see.
Okay, maybe this last one for me. I appreciate it. As far as wind projects, I think you called out that that area seems to be okay, but we've seen some news stories lately pertaining specifically to offshore wind projects. I was just wondering if you could maybe talk about your exposure to offshore wind. It sounds like maybe some of those projects may be slowing or moving to kind of a pause. Is that an issue or just any color you can provide on that would be great.
Speaker Change: Okay, maybe just last one for me I appreciate it.
Speaker Change: As far as wind projects, and I think you'd called out that debt.
Speaker Change: That area seems to be okay, but we've seen some news stories lately pertaining specifically to offshore wind projects. I was just wondering if you could maybe talk about your exposure to offshore wind it sounds like maybe some of those projects may be slowing or moving to kind of a pause.
Speaker Change: Issue or just any color you can provide on that'd be great.
Yeah, sure. So as I mentioned, you know, we've broken out and provided a bit more color in terms of our exposure that we estimate by landmark.
Speaker Change: Yes, sure. So as I mentioned, we've broken out provided a bit more color in terms of our exposure that we estimate by end market.
We show power gen as a roughly 10% category for us to wind as part of that. So today wind is still a relatively small part of overall enter pack revenue, but it is, you know, obviously a meaningful and growing market in our view that still has very significant
Speaker Change: We show power Gen is roughly 10% category for us a wind as part of that so today wind is still a relatively small part of overall <unk> revenue, but it is obviously a meaningful and growing market in our view that still has very significant potential and we're still bullish on this sector, we still see plenty of <unk>.
And we're still bullish on the sector. We still see plenty of demand for installations. If it's not offshore, it's onshore. We have good, I would say, connectivity to both. So we're not overly relying on one or the other onshore versus offshore. In fact, onshore makes up the bulk of the U.S. wind power market today.
Speaker Change: <unk> for installations, if it's not offshore its onshore we have good.
Speaker Change: I would say connectivity to both so we're not overly reliant on one or the other onshore versus offshore.
Speaker Change: And in fact onshore makes up the bulk of the U S wind power market today and based on what we see from industry research and experts are.
and based on what we see from industry research and experts.
The expectation is offshore wind will ramp up again. In fact, there was a recent article published...
Speaker Change: The expectation is offshore wind will ramp up again in fact, there was a recent article published fighting some statistics from the Bureau of Labor Statistics.
fighting some statistics from the Bureau of Labor Statistics that employment of wind turbine service technicians is going to increase 45 percent over the next decade and that will be the fastest growing occupation in the U.S. So I think just another data point, you know, that gives us increasing confidence over the, you know, over the short, medium, long term about the growth in that sector just given the dynamics around the need for the shift, you know, to clean energy. And I think we're incredibly well presumed.
Speaker Change: Employment of wind turbine service technicians is going to increase 45% over the next decade and that will be not fastest growing occupation in the U S.
Speaker Change: So I think just another data point.
Speaker Change: That gives us increasing confidence over the.
Speaker Change: Over the short medium and long term about the growth in that sector, just given the dynamics around the need for the shift to clean energy and I think we're incredibly well positioned to play a meaningful part of that.
That's great. Appreciate the color. I'll jump back in the queue.
Speaker Change: Great appreciate the color I'll jump back in the queue.
Speaker Change: Thank you next question is coming from Larry de Maria from William Blair. Your line is now live.
Thank you. Next question is coming from Larry DeMaria from William Blair. Your line is now live.
Speaker Change: Okay.
Thanks. Good morning. Good morning, Larry. Hi, Larry. Hey, just maybe follow up on that in the wind. Maybe talk about the geographical opportunities. I think you mostly were referencing domestic opportunities, but what does it look like outside of the U.S.?
Speaker Change: Thanks, Good morning.
Larry: Good morning, Larry either.
Larry: Hey, just maybe follow up on that in the wins, maybe talk about the geographical opportunities I think most of them were representing.
Larry: Domestic opportunities, but are there, but what does it look like outside of the U S.
Yeah. No, thanks for the question, Larry. I think a few points I would make there. So, first off, we have broad exposure across the whole, what I would call, life cycle on wind. So, we have established good relationships with OEM, wind turbine manufacturers, and some of their key suppliers.
Speaker Change: Yeah no. Thanks for the question, Larry I think a few points I would make there so first off.
Speaker Change: We have broad exposure across the whole what I would call. It lifecycle on win so we have established good relationships with OEM wind turbine manufacturers and some of their key suppliers as well as folks that are doing installation and commissioning as well as O&M or operations and maintenance work and ultimately even.
as well as folks that are doing installation and commissioning.
as well as O&M or operations and maintenance work and ultimately you know even decommissioning older turbines. So I think we have broad exposure. We're not overly relying on any single part of that market and I would say similarly from a geographic standpoint earlier in my comments were about the U.S. but you know we have you know significance
Speaker Change: Turning older turbines. So I think we have brought exposure, we're not overly reliant on any single part of that market and I would say similarly from a geographic standpoint, yet earlier in my comments throughout the U S. But we have.
Speaker Change: Significant pipeline.
pipeline of activity that we're looking at in other markets, including in Europe and parts of Asia.
Speaker Change: Pipeline of activity that we're looking at.
Speaker Change: Markets, including in Europe, and parts of Asia. So I think we have really good broad based exposure geographically and we see increasing interest in investment activity in different parts of the world for wind again, just given the shift to clean energy.
So I think we have, you know, really good broad-based exposure geographically and we see, you know, increasing.
interest in investment activity in different parts of the world for wind. Again, just given the shift to
Speaker Change: Okay. Thanks that makes sense.
Okay, thanks. That makes sense. Second question. You talked about your growth outlook. Well, you talked about, you know, the orders and sort of how to think about, you know, I guess Europe is most cautious and there's some optimism brewing in APAC. Can you maybe drill down and give some order of magnitude on...
Speaker Change: Second question, you talked about your growth outlook.
You talked about you know the orders and sort of how to think about.
Speaker Change: Europe is.
Speaker Change: Most cautious and there's some optimism brewing in APAC.
Speaker Change: Can you maybe drill down and give some order of magnitude in terms of.
Speaker Change: Regional growth for the year.
Yeah, I mean we haven't broken it out by region. I mean you can see what the actuals are. I would say, I mean the sentiment is...
Speaker Change: Yes, I mean, we.
Speaker Change: We havent broken it out by by region. I mean, you can see what the actuals are.
Speaker Change: I would say I mean, the sentiment is.
You know, probably similar across America's and Europe , you know, sort of neutral to cautious, I think we said in terms of the channel. So, you know, I think, you know, ultimately we've affirmed our full year of guidance at this point, we don't have any reason.
Speaker Change: <unk> similar across Americas, and you're sort of neutral to cautious I think we sit in terms of the channel.
So.
Speaker Change: I think ultimately we have affirmed our full year guidance at this point, we don't have any reason to believe differently.
differently you know one quarter in I mean we're pleased that you know this quarter we delivered five-and-a-half percent organic growth you know above our two to four percent expectation
Speaker Change: One quarter in.
Speaker Change: I mean, we're pleased that this quarter, we delivered five 5% organic growth above our 2% to 4% expectation for the year, but we still have three quarters to go so.
still three quarters to go. So, you know, we'll see where dynamics take us in 2024, but I think we're just being mindful of some of that, you know, neutral, Acacia sentiment that we hear
Speaker Change: We will see whereas dynamics take us in 2024, but I think we're just being mindful of some of that.
Speaker Change: Neutral a cautious sentiment that we hear from the channel.
Speaker Change: Okay. It makes sense last question.
Okay, makes sense. Last question, you're, you know, obviously, good start to the year with what, 24.6% adjusted EBITDA margins. We're tracking in on that, on the, you know, ASCEND targets, so can you just, you know, update, how do we think about ASCEND in 24 and beyond and, you know, updates to that?
Speaker Change: Sure.
Speaker Change: Obviously, good start to the year with about 24, 6% adjusted EBITDA margins were tracking in on that.
Speaker Change: Our sand targets. So can you just.
Speaker Change: Update.
Speaker Change: How do we think about ascend in 'twenty four and beyond.
Speaker Change: Updates to update when might we get an update I guess.
Speaker Change: Yeah. So again, we're really pleased with the performance that we have here in EBITDA margins in Q1 of the 24, 6%.
Yeah, so again, you know, we're really pleased with the performance that we have here and even a margins in Q1 of the 24.6% and you know, it's we're we're tracking well in line with what we got it to for the full year, you know, perhaps a bit ahead of schedule from that perspective again, you know, well, we'll have some fluctuations here through the rest of the year in both gross margins and even a percentages with, you know, various timings that we have with.
Speaker Change: And.
Speaker Change: No.
Speaker Change: We're tracking well in line with what we guided to for the full year.
Speaker Change: <unk>.
A bit ahead of schedule from that perspective again.
Speaker Change: We'll have some fluctuations here through the rest of the year in both gross margins and EBITDA percentages with various timings that we have with with <unk>.
with benefits coming through and investments that we're making here as well, but I would say at least on track with what we were expected to be if not a bit ahead.
Speaker Change: Benefits coming through and investments that we're making here as well but.
Say at least on track with where expected to be if not a bit ahead. So.
I'm really happy to see that, you know, from an ascent perspective, there are still more initiatives that are coming through. As we mentioned last year, as we ended fiscal 23, you know, we achieved our ascent benefits a year ahead of schedule, so we're really excited about that.
Speaker Change: Really happy to see that from an ascend perspective, there is still more initiatives that are coming through as we mentioned last year.
Speaker Change: We ended fiscal 'twenty three.
Speaker Change: We achieved our ascend benefits a year ahead of schedule. So that we're really excited about that.
You know still getting not only the tailwinds from that here in FY 24, but you know new initiatives that were were executed again
Still getting not only the tailwind from that here in FY 'twenty, four but new initiatives that we're executing against.
And, you know, as we said in our last call, we're going to, you know, we're not breaking out the ascend benefits from just natural benefits as, you know, really the business has migrated into
Speaker Change: And as we as we said in our last call we're going to.
Speaker Change: We're not breaking out the benefits from just natural benefits as as.
Speaker Change: Really the business has migrated into.
Speaker Change: Just a comprehensive view at this point, so but still still improvements to come is what I'll say and in.
Just a comprehensive view at this point so but you know still still improvements to come is is what I'll say and And you know we're we're on track with what we got it Yeah, and I my only comments I would add to what Tony said is yet. We're continuing to execute a sin But I think he's right, you know it involves much more into our continuous improvement program
Speaker Change: We're on track with what we got it yeah, My only comment I would add to what Tony said as yet we're continuing to execute as soon but I think he's right.
Speaker Change: Evolve as much more into our continuous improvement program and framework. We're pleased with the progress we made but we still got a very active funnel of initiatives that were.
of the progress we made, but we still got a very active funnel of initiatives that were at various stages of maturity, so we feel good about that. And I would say likewise, you know, our guidance on, or our financial framework around targeting and adjusting to some margin of 25% by fiscal 25, that remains at this point, we've not revised that, but certainly given, you know, what we're able to deliver in Q4 last year in this Q1 gives us increasing confidence about our ability to meet or beat that framework.
Speaker Change: Various stages of maturity. So we feel good about that and I would say likewise, our guidance on our financial framework around.
Speaker Change: Targeting an adjusted EBITDA margin of 25% by fiscal 'twenty five that remains at this point, we have not revised that but certainly given what we're able to deliver in Q4 last year and this Q1 gives us increasing confidence about our ability to meet or beat that framework for fiscal 'twenty five.
Speaker Change: Okay. It sounds good. Thank you very much and good luck this year.
Speaker Change: Thank you.
Speaker Change: Thank you next question is coming from Steve Silver from Argus Research. Your line is now live.
Thank you. Next question is coming from Steve Silber from Argus Research. Her line is now live.
Steve Silver: Good morning, and thanks for taking my questions.
Good morning, and thanks for taking my questions. So the earnings presentation cites oil and gas and petrochemical as the largest areas of end market exposure for the company. I was just wondering if you could expand a little bit more on this. As you mentioned that the business operates primarily downstream compared to up and mid. I'm just curious also in terms of that market's exposure to new builds versus maintenance markets, just trying to get a sense as to how we should think about the growth in that end market broadly.
Steve Silver: The earnings presentation sites oil and gas and petrochemical as the largest areas of end market exposure for the company.
Speaker Change: Just wondering if you could if you could expand a little bit more on this.
Mentioned that the business.
Speaker Change: It's primarily downstream compared to up in mid.
Speaker Change: I'm just curious also in terms of that market's exposure to new builds versus maintenance markets, just trying to get a sense as to how we should think about the growth in that end market broadly.
Yeah, good morning, Steve. Thanks for the question. Yeah, I think certainly, you know, it is our largest market You know that has come down or say considerably from the highs of Actual in days are pretty
Speaker Change: Yes, good morning, Steve Thanks for the question yes.
Speaker Change: Yes, I think certainly it is our largest market.
Speaker Change: That has come down I would say considerably from the highs of.
Speaker Change: Actual days, our predecessor company.
You know our expectation is that will likely come down further not on an absolute dollar basis, but as a percent
Our expectation is that will likely come down further or not on an absolute dollar basis, but as a percentage over the coming years as we drive accelerated growth in our more focused verticals like infrastructure rail industrial MRO and wind.
over the coming years as we drive accelerated growth in our more focused verticals like infrastructure, rail, industrial on our own wind. But any oil and gas sector today, the majority of what we do is largely in the downstream area of that and a little bit of midstream. It's also largely tied to maintenance. So I would say the exposure to new build out and Cat-Bex.
Speaker Change: But in the oil and gas sector today. The majority of what we do is largely in the downstream area of that and a little bit of midstream. It's also largely tied to maintenance. So I would say the exposure to new build out in capex is relatively minimal.
relatively minimal there. It's not zero, obviously, but most of what we do is tied to maintenance on existing assets. So, certainly, oil and gas is a cyclical factor, but by and large, I would say that we, our exposure is the less cyclical part of that overall sector, and, you know, so we'll continue to see some fluctuations, you know, obviously given the market dynamics, but, you know, we think we're well positioned with what we do in that.
Speaker Change: Minimal there, it's not zero, obviously, but most of what we do is tied to maintenance on existing assets.
Speaker Change: Certainly oil and gas is a cyclical sector, but by and large I would say that we our exposure is the less cyclical part of that overall sector and.
Speaker Change: So we will continue to see some fluctuations.
Speaker Change: Given the market dynamics, but we think we're well positioned with what we do in that space.
That's helpful. Thanks. And one more if I may regarding the recently announced track tools rail acquisition. Can you speak to your views on the growth opportunity there and maybe perhaps what synergies you see with the core business?
Speaker Change: That's helpful. Thanks, and one more for me.
Speaker Change: Regarding the recently announced track tools rail acquisition can you speak to your views on the growth opportunity there and maybe perhaps what synergies you see with the core business.
Speaker Change: Yeah, absolutely, we're really excited to complete that acquisition.
Yeah, absolutely. We were really excited to complete that acquisition.
Speaker Change: And although it was small not material for us it is very strategic.
And although it was small, not material for us, it is very strategic. Certainly it's the first of our acquisitions that are linked towards
Certainly it's the first of our acquisitions that are linked towards of what we're doing in our focused verticals in this in this case rail and the exciting part for US is on track tools is first and most importantly, it is.
of what we're doing in our focused verticals, in this case, RAIL. The exciting part for us about track tools is, first and most importantly, it's very differentiated technology for the marketplace.
Speaker Change: Very differentiated technology from the marketplace.
that really creates some significant benefits and functionality for end users.
Speaker Change: It really creates some significant benefits and functionality.
Speaker Change: For end users in that space.
which obviously was our key interest in the acquisition. I think secondly, although it's a very relatively small brand in business today and essentially only focused in the U.S., what we're excited about is our ability, you know, to scale that globally.
Speaker Change: Which obviously was our key interest in the acquisition I think secondly, although it's a very relatively small brand in business today and essentially only focus in the U S. What we're excited about is our ability to scale that globally.
you know, given our presence really in all major markets and our existing customer relationships.
Speaker Change: Given our presence really in all major markets and our existing customer relationships and the rail sector in many of those markets and we're actively working on that as we speak. So we're excited about the commercial growth potential and frankly over time some of the cost synergies as we can drive.
in the rail sector in many of those markets and we're actively working on that as we speak so you know we're excited about the commercial growth potential and frankly over time some of the cost energies you know as we
you know, drive out, you know, some of the, you know, the overall cost of the product.
Speaker Change: Drive out.
Speaker Change: Some of the.
Speaker Change: The overall cost of the product and improve the production efficiencies.
to improve the production efficiencies over time, so it was a really exciting acquisition early days, but we're pleased with the progress.
Speaker Change: Over time so.
Speaker Change: So it was a really exciting acquisition early days, but we're pleased with the progress we're making.
Speaker Change: Okay.
Great. Thank you so much, and my congratulations on the quarter as well. Thank you very much, Steve. Thanks, Steve.
Speaker Change: Great. Thank you so much and my congratulations on the quarter as well.
Speaker Change: Thank you very much Steve Thanks, Steve.
Speaker Change: Thank you and next question today is coming from Gary <unk> from Barrington Research. Your line is now live.
Thank you. Next question today is coming from Gary Prestipino from Barrington Research.
Hi, good morning, everyone. Just a quick question on your building an acquisition pipeline. Would it be safe to say that a lot of these acquisitions are small?
Gary: Hi, Good morning, everyone. Just a quick question on your building in acquisition pipeline.
Gary: Would it be safe to say that a lot of these acquisitions are small.
Gary: Private companies that are very product specific to your markets.
Gary: Or are they really across the board in terms of the.
Gary: Kind of things Youre looking at.
Speaker Change: Yeah, Hi, Gerry so from from a size perspective, I'd say, it's a bit across the board in terms of what our funnel has and I'll go back and just say from.
Yeah, hi, Jerry. So, from a size perspective, I would say it's a bit across the board in terms of what our funnel has, you know, I'll go back and just say from, you know, what the types of companies that we're looking for are, you know, we're really just trying to stay close to our knitting here is what I was saying. We're looking for product tuck in.
Speaker Change: What the types of companies that we're looking for are we.
Speaker Change: Really just trying to stay close to our knitting here.
Speaker Change: As what I would say, we're looking for product tuck ins, we're looking for.
We're looking for targets that would help us expand in our key vertical markets that we've been discussing, and then targets that,
Speaker Change: Targets that would help us.
Speaker Change: Spanned in our key vertical markets that we've been discussing.
Speaker Change: And then.
Speaker Change: Targets that.
that help us expand our technology or innovation here as well. So I mean that's what we're focused on in terms of our targets and that's what we have in our final.
That helped us expand our technology or innovation here as well so I mean, that's what we're focused on in terms of our targets.
And Thats, what we have in our funnel.
Yeah, and I would add to that, Gary, you know, our current funnel that I would say both quality and quantity has significantly improved as we brought on a full-time corporate development leader about half a year ago now, who's, you know, fully dedicated.
And I would add to that Gary.
Gary: Our current funnel I would say both quality and quantity has significantly improved as we brought on a full time corporate development leader about half a year ago now.
Fully dedicated to that I'd.
I'd say the second thing is, you know, we have what I would classify as both small or medium and larger size.
Gary: I'd say the second thing is we have what I would classify as both both small or medium and larger size kind of deals in that funnel.
kind of deals in that funnel. So many of them, yes, could be characterized as more privately-held kinds of businesses, but we've got all different kinds in there, and we continue to...
Gary: So many of them, yes could be characterized as more privately held kinds of businesses, but we've got all different kinds in there and we continue to have good meaningful conversations as we know these things tend to be episodic and depend on asset availability. So.
You know, have good meaningful conversations as we know, you know, these things tend to be episodic and depend on asset availability. So we've got a pretty disciplined process from early stage, you know.
Gary: We've got a pretty disciplined process from early stage target identification through to outreach in cultivation, ultimately transacting and integrating deals.
outreach and cultivation, ultimately, you know, transacting and integrating.
Okay. And then just lastly on the Ascend program, that was a prior question when I think you've hit, you know, at least this quarter close to your adjusted EBITDA margin target. Going forward as you move from Ascend to maybe just, you know, continual cost control, product giving improvement, whatever.
Speaker Change: Okay and then just lastly on the <unk> program was a prior question I think you've hit it.
Speaker Change: At least this quarter close to you.
Speaker Change: Adjusted EBITDA margin target.
Speaker Change: Going forward as you move from a sense and maybe just continue with cost control.
Speaker Change: Productivity improvement whatever.
Speaker Change: What are you targeting areas that would help to drive the margin even further I mean assume that a lot of the lower hanging fruit on assembles and taken care of so what do you bank on to grow the margins going forward.
Are you targeting areas that would help to drive the margin even further? I mean, assume that a lot of the lower hanging fruit on a sender is taken care of. So what do you bank on to grow the margins going forward? Is it, you know, products, higher margin products? Are you still able, you're going to go through a program where you're going to really tightly control SG&A expenses, any vision you can give
Speaker Change: Is it.
Speaker Change: Products higher margin products.
Speaker Change: Or are you still able youre going to go through a program, where you're going to really tightly control SG&A expenses any any.
Speaker Change: Vision, you can give us on that that would be helpful.
Yeah sure I think there are a few things.
Yeah, sure. I think there are a few things, you know, from a cost of goods perspective, we still believe we have ample opportunities to drive more manufacturing productivity and efficiencies somewhat through investment, as Tony referenced earlier, in automation, other capital investments.
Cost of goods perspective, we still believe we have ample opportunities to drive more manufacturing productivity inefficiencies somewhat through investment as Tony referenced earlier and automation and other capital investments.
when we're actively exploring those. I would say, secondarily, we still believe we have opportunities in sourcing. We still have a relatively complex supply chain, and there are definitely opportunities to drive more best-cost country sourcing, more vendor consolidation, more value engineering.
Speaker Change: We are actively exploring those I would say secondarily, we still believe we have opportunities in sourcing we still have a relatively complex supply chain.
Speaker Change: And there are definitely opportunities to drive more best cost country sourcing more vendor consolidation more value engineering work, we continue to evaluate our footprint and look for opportunities there and then on the SG&A side as Tony referenced in his remarks I mean, we.
We continue to evaluate our footprints and look for opportunities there. And then on the SG&A side is Tony referenced in his remarks. I mean, we're pleased with the progress he's made and yet I would say we're still high relative to what we see as best in class industrials and think there's more opportunities over time to drive greater efficiencies there as we've been doing.
Speaker Change: We're pleased with the progress we've made and yet I would say we are still high relative to what we see is best in class Industrials I think there is more opportunities over time to drive greater efficiencies there as we've been doing so.
So, you know, and then, of course, there will be some pricing and ultimately mixed benefits.
Speaker Change: And then of course, there will be some pricing and ultimately mixed benefits, especially driven.
Especially driven, I would say, particularly by our focus on our core verticals and the work that we do in innovation. I would say, you know, generally speaking, most of our innovation, we would expect to be margin-to-creative especially.
Speaker Change: Driven I would say, particularly by our focus on our core verticals and the work that we do in innovation I would say.
Speaker Change: Generally speaking most of our innovation, we would expect to be margin accretive, especially if it is truly differentiated product in the marketplace, which is really what's in our funnel. So all of that should be favorable over time of course, some of that we may choose to reinvest to do.
if it is truly differentiated product in the marketplace, which is really what's in our funnel. So, all that should be favorable over time. Of course, some of that we may choose to reinvest, to drive accelerated organic growth. So, not all of that will drop to the bottom line, but on balance, we still see opportunities for margin expansion. Yeah, I agree. I would just add that.
Speaker Change: <unk> accelerated organic growth.
Speaker Change: So not all of that will drop to the bottom line, but on balance we still see opportunities for margin expansion.
Speaker Change: I agree and I would just add that we have.
A lot of opportunities and initiatives in our pipeline here across the board did a lot of work in the last two years, but there's still more opportunities that are there that we are driving. We really are taking this to the next level here as well in terms of the ideation that we have and just really moving to a continuous improvement type of mindset.
Speaker Change: A lot of opportunities and initiatives in our pipeline here across the board did a lot of work over the last two years, but theres still more opportunities that are there.
Speaker Change: That we are driving and we really are taking this to the next level here as well in terms of the aviation that we have and just really moving to a continuous improvement type of mindset.
Speaker Change: Okay. Thank you very much.
Speaker Change: Okay, well, thank you very much.
Speaker Change: Thank you that does conclude our question and answer session do you have any further or closing comments.
Thank you. That does conclude our question and intercession. Do you have any further closing comments?
Speaker Change: I would just like to say thanks again for joining us. This morning, as always Travis will be available to take any follow up questions are best wishes to everyone for a wonderful holiday season, and a happy new year.
I would just like to say thanks again for joining us this morning. As always, Travis will be available to take any follow-up questions. Best wishes to everyone for a wonderful holiday season and a happy new year.
Thank you, that does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you.
Speaker Change: 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.