Q3 2024 Enerpac Tool Group Corp Earnings Call
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Enerpac Tool Group's third quarter fiscal 2024 earnings conference call. As a reminder, this conference is being recorded June 25, 2024. It is now my pleasure to turn the conference over to Travis Williams, Director of Investor Relations. Please go ahead, Mr. Williams.
Ladies and gentlemen, thank you for standing by welcome to the <unk> tool group's third quarter fiscal 2024 earnings Conference call. As a reminder, this conference is being recorded June 25th 2024. It is now my pleasure to turn the conference over to Travis Williams Director of Investor Relations.
Speaker Change: Go ahead, Mr. Williams.
Travis Williams: Thank you, Operator. Good morning, and thank you for joining us for Enerpac Tool Group's third quarter fiscal 2024 earnings call. On the call today to present the company's results are Paul Sternlieb, President and Chief Executive Officer, and Shannon Burns, our Interim Principal Financial Officer. Our slides and a recording of today's call will be available on Enerpac's website in the investor section. Today's call will reference non-GAAP measures. You can find a reconciliation of GAAP to non-GAAP measures in the press release issued yesterday.
Travis Williams: Thank you operator, good morning, and thank you for joining us for <unk> tool group's third quarter fiscal 2024 earnings call on the call today to present, the company's results our pulse Stern, Lee President and Chief Executive Officer, and Shannon Burns, our interim principal financial officer, our slides in a recording of today's call will be available on <unk> website.
Travis Williams: In the investors section.
Speaker Change: Today's call will reference non-GAAP measures you can find a 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 risks that could cause actual results to be materially different. Those risks include matters noted in our latest SEC filings now I'll turn it over to Paul.
Travis Williams: Our 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 will turn it over to Paul.
Paul E. Sternlieb: Thanks, Travis, and good morning. We continue to be pleased with the strategic progress we made in the quarter, particularly our ability to capture further margin expansion as we enhance operational efficiency and SG&A productivity. While we saw sequentially slower growth in the third quarter of fiscal 2024, we believe we have continued to outpace the soft general industrial markets. Moreover, we demonstrated solid and continued progress toward our long-term financial objectives and the positioning of Enerpac as a premier industrial solutions provider.
Paul: Thanks, Travis and good morning.
Paul: We continue to be pleased with the strategic progress we made in the quarter, particularly our ability to capture further margin expansion as we enhance operational efficiency and SG&A productivity.
Mauro: While we saw a sequentially slower growth in the third quarter of fiscal 2024. We believe we have continued to outpace the soft general industrial marketplace Mauro.
Mauro: Moreover, we demonstrated solid and continued progress toward our long term financial objectives.
And the positioning of <unk> as a premier industrial solutions provider.
Paul E. Sternlieb: Let me turn the call over to Shannon to review our third quarter performance and our refined full year guidance. Then I'll speak about geographic trends, our exciting progress on innovation, and our continued growth in e-commerce. I will also provide some additional color on our targeted vertical end markets.
Let me turn the call over to Shannon to review, our third quarter performance and our refined full year guidance, then I'll speak about geographic trends are exciting progress on innovation and our continued growth in e-commerce.
Mauro: I'll also provide some additional color on our targeted vertical end markets Shannon.
Patrick Shannon Burns: Thanks, Paul.
Patrick Shannon Burns: With a more challenging industrial environment and backdrop, Enerpac still delivered modest organic revenue growth in our industrial tool and services business, or ITMS, with a 1.8% year-over-year gain in the quarter. However, product revenue growth of 1% was impacted by a shortfall in HLT revenue in the Asia-Pacific region. Service revenue, which can fluctuate quarter to quarter based on project timing, was strong and expanded 7%. As Paul will discuss, our top-line performance varied by geography.
Patrick Shannon Burns: With a more challenging industrial environment and backdrop <unk> still delivered modest organic revenue growth in our industrial tool and services business or CNS with a one 8% year over year gain in the quarter.
Speaker Change: Products revenue growth of 1% was impacted by a shortfall in <unk> revenue in the Asia Pacific region.
Speaker Change: Service revenue, which can fluctuate quarter to quarter based on project timing was strong and expanded 7%.
Speaker Change: As Paul will discuss our topline performance varied by geographic region.
Patrick Shannon Burns: IT&S growth was partially offset by a 14% year-over-year decline at Cortland Biomedical. As such, on an organic basis, which excludes divestitures and the impact of foreign exchange, overall sales increased 1.2% year-over-year. However, due to the sale of Cortland Industrial in late fiscal 2023, total net sales for the company declined 3.8% year over year.
Speaker Change: <unk> growth was partially offset by a 14% year over year decline at Cortland biomedical.
Speaker Change: Such on an organic basis, which excludes the divestitures and the impact of foreign exchange overall sales increased one 2% year over year.
Speaker Change: Due to the sale of Cortland industrial in late fiscal 2023 total net sales for the company declined three 8% year over year.
Patrick Shannon Burns: Slide 5 reflects the continued progress we've made in improving operating efficiency in SG&A products. In the third quarter, gross margins expanded 200 basis points year-over-year to 51.8%. The improvement was driven by operational benefits related to the ASCEND transformation program as well as pricing actions, a favorable sales mix, and the disposition of Cortland Industries. Looking forward, we expect to benefit from additional LEAN initiatives in our manufacturing operations, supply chain rationalization, and low-cost country sources. Similarly, we continue to benefit from initiatives that improve SG&A's efficiency. Adjusted SG&A expense, which excludes Ascend and other one-time charges for both periods, declined 6% year-over-year.
Speaker Change: Slide five reflects the continued progress we've made in improving operating efficiency in SG&A productivity.
In the third quarter gross margins expanded 200 basis points year over year to 51, 8%.
Speaker Change: The improvement was driven by operational benefits related to the ascend transformation program as well as pricing actions favorable sales mix and the disposition of Cortland industrial.
Speaker Change: Looking forward, we expect to benefit from additional lean initiatives in our manufacturing operations supply chain rationalization and low cost country sourcing.
Speaker Change: Similarly, we continue to benefit from initiatives that improved SG&A efficiency adjusted.
Adjusted SG&A expense, which excludes ascend and other one time charges from both periods declined 6% year over year.
Patrick Shannon Burns: As a percentage of sales, it improved 50 basis points to 27.0%. And we believe there are further opportunities for improvement, including additional organizational efficiencies, indirect spending rationalization, and further leveraging our shared service center operations. Turning to slide 6.
Speaker Change: As a percentage of sales improved 50 basis points to 27.0%.
And we believe there are further opportunities for improvement, including additional organizational efficiencies indirect spending rationalization and further leveraging our shared service center operations.
Turning to slide six with.
Patrick Shannon Burns: With both top-line growth and continued gains in operating efficiency and SG&A productivity, adjusted EBITDA increased 5.9% year-over-year, and adjusted even at margins improved 240 basis points from 24% to 26.4%. On a gap basis, diluted earnings per share from continuing operations totaled 41 cents in the quarter, and adjusted EPS increased 21% to 47 cents, which benefited from a lower effective tax rate and a In the third quarter of fiscal 2024, cash provided by operations was $30 million compared to $17 million in the year-ago period.
Speaker Change: With both topline growth and continued gains in operating efficiency in SG&A productivity adjusted EBITDA increased five 9% year over year.
Speaker Change: Adjusted EBITDA margins improved 240 basis points from 24% to 26, 4%.
Speaker Change: On a GAAP basis diluted earnings per share from continuing operations totaled 41 in the quarter.
Speaker Change: Adjusted EPS increased 21% to <unk> 47.
Speaker Change: Which benefited from a lower effective tax rate and a lower share count.
In the third quarter of fiscal 2024 cash provided by operations was $30 million compared to $17 million in the year ago period.
Patrick Shannon Burns: The improvement was due to higher net earnings, lower Ascend-related cash payments, and continued improvement in working capital management. As noted on slide 7, Unidate organic revenue increased 2.8% year-over-year, with IT&S ahead by 3.4%. Adjusted EBITDA is up 13%, representing a margin of 25.3%. Year-to-date, we generated free cash flow of $32 million, an increase of 66% over the year-ago period. Please keep in mind that our fourth quarter is typically our largest cash generation period. As we previously discussed, Enerpac's liquidity and balance sheet remain strong.
Speaker Change: The improvement was due to higher net earnings lower ascend related cash payments and continued improvement in working capital management.
Speaker Change: As noted on slide seven year to date organic revenue increased two 8% year over year with it had three 4%.
Speaker Change: Adjusted EBITDA is up 13%, representing a margin of 25, 3%.
Speaker Change: Year to date, we generated free cash flow of $32 million, an increase of 66% over the year ago period.
Speaker Change: Please keep in mind, our fourth quarter is typically our largest cash generation period.
Speaker Change: As we previously discussed <unk> liquidity and balance sheet remains strong.
Patrick Shannon Burns: At the end of the third quarter, net debt was $63 million, resulting in a net debt leverage ratio of 0.5 times adjusted EBITDA. Total liquidity was approximately $530 million, and the company will remain focused on a disciplined capital deployment strategy to enhance returns and create shareholder value. Moving on to guidance, with three quarters of fiscal 2024 now behind us, we have adjusted our full-year revenue guidance to reflect new FX assumptions with a roughly $5 million headwind, and we tightened the range.
Speaker Change: At the end of the third quarter net debt was $63 million, resulting in net debt leverage ratio of five times adjusted EBITDA.
Speaker Change: Liquidity was approximately $530 million.
Speaker Change: We remain focused on a disciplined capital deployment strategy to enhance returns and create shareholder value.
Patrick Shannon Burns: We now anticipate organic revenue growth of 2-3% and net sales of $585-590 million. As for Adjusted EBITDA, we have narrowed the range and raised the midpoint. We now project full-year adjusted EBITDA of $147 to $150 million, compared with the previous guidance of $142 to $152 million. The new guidance translates to an adjusted EBITDA margin of 25.1 to 25.4% for the full year. Lastly, we are expecting lower CapEx spending this year and now project CapEx of $8 million to $13 million, down from the previous guidance of $12 million to $17 million.
Speaker Change: Moving on to guidance.
Speaker Change: With three quarters of fiscal 2024 now behind US we have adjusted our full year revenue guidance to reflect new FX assumptions with a roughly $5 million headwind and we've tightened the range.
Speaker Change: We now anticipate organic revenue growth of 2% to 3% and net sales of $585 to $590 million.
Speaker Change: As for adjusted EBITDA, we have narrowed the range and raised the midpoint.
We now project full year, adjusted EBITDA of 147% to $150 million compared with the previous guidance of $142 million to $152 million.
Speaker Change: The new guidance translates to an adjusted EBITDA margin of 25, 1% to 25, 4% for the full year.
Speaker Change: Lastly, we are expecting lower capex spending this year and now project Capex of 8 million to $13 million down from the previous guidance of $12 million to $17 million.
Patrick Shannon Burns: The lower CapEx projection is driven mainly by the timing of our company's headquarter relocation to downtown Milwaukee. A significant portion of the spend is now scheduled to fall into the first half of fiscal 2025. All other guidance remains unchanged. With that, I will turn the call back to Paul.
Speaker Change: Lower Capex projection is driven mainly by the timing of our company headquarter relocations downtown Milwaukee with significant portion of the spend now scheduled to fall into the first half of fiscal 2025.
Speaker Change: All other guidance remains unchanged.
Speaker Change: With that let me turn the call back to Paul.
Paul E. Sternlieb: Thanks, Shannon. Revenue growth across our three regions was mixed. Revenue in the Americas was down in the low single digits. That said, we are very encouraged by the early benefit we are seeing from the rollout of our Enerpac Commercial Excellence, or ECX, program in the Americas. ECX gives us the tools and discipline to track activity with end users and focus on generating a solid pipeline of demand from project-specific opportunities. On a near-term basis, given the challenging industrial environment and cautious distributor sentiment, we continue to anticipate low single-digit revenue growth for the full year in America. Distributor inventory in the region is at an expected level. However, in the Asia-Pacific region, year-over-year revenue declined in the low double digits.
Paul: Thanks, Shannon revenue growth across our three regions was mixed.
Paul: Revenue in the Americas was down in the low single digits.
That said, we are very encouraged by the early benefit we're seeing from the rollout of our <unk> commercial excellence or <unk> program in the Americas.
Paul: ECS gives us the tools and discipline to track activity with end users and focus on generating a solid pipeline of demand from project specific opportunities.
Paul: On a near term basis, given the challenging industrial environment and cautious distributor sentiment. We continue to anticipate low single digit revenue growth for the full year in Americas.
Paul: Distributor inventory in the region is at expected levels.
Paul: In the Asia Pacific region year over year revenue decline in the low double digits.
Paul E. Sternlieb: While we were certainly disappointed in the performance, we continue to believe we can capture outsized growth opportunities in the region. In the third quarter, we experienced softness in the mining sector in Australia, which is one of our larger end markets in the APAC region. We also experienced weakness in our heavy lifting technology or HLT product sales, specifically the larger, more custom products. We're addressing that issue by upgrading and expanding commercial support and sales coverage in the region.
Paul: While we were certainly disappointed in the performance. We continue to believe we can capture outsized growth opportunities in the region.
Paul: In the third quarter, we experienced softness in the mining sector in Australia, which is one of our larger end markets in the APAC region. We also experienced weakness in our heavy lifting technology or <unk> product sales, specifically larger more custom products, we're addressing that issue by upgrading and expanding.
Paul: Commercial support and sales coverage in the region. We are also cultivating closer relationships with engineering and construction firms to identify and drive specification into large infrastructure projects.
Paul E. Sternlieb: We are also cultivating closer relationships with engineering and construction firms to identify and drive specifications into large infrastructure projects. Finally, we are adding new channel partners that drive increased focus on our growth vertical. From an inventory perspective in the region, we believe it is at appropriate levels, while distributor sentiment remains cautious. On a very positive note, we continue to enjoy strong performance in the EMEA region with low double-digit revenue expansion. The gains were broad-based across NMARC.
Lee: Lee we are adding new channel partners that drive increased focus on our growth verticals.
Lee: From an inventory perspective in the region. We believe it is at appropriate levels, while distributor sentiment remains cautious.
Lee: On a very positive note, we continue to enjoy strong performance in the EMEA region with low double digit revenue expansion.
Lee: The gains were broad based across end markets of note <unk> had a particularly strong quarter due to success on several large projects as in the service business. We believe distributor channel inventory in the region is at normal levels.
Paul E. Sternlieb: Of note, HLT had a particularly strong quarter due to success on several large projects, as did the service. We believe distributor channel inventory in the region is at a normal level. As Shannon noted earlier, revenue at Cortland Medical declined again in the third quarter.
Patrick Shannon Burns: As Shannon noted earlier revenue at Cortland medical declined again in the third quarter, we resumed shipments to the customer that was on hold in the second quarter and we are running at capacity to replenish that customer's inventory.
Paul E. Sternlieb: We resumed shipments to the customer that was on hold in the second quarter, and we are running at capacity to replenish that customer's inventory. On the other hand, we continue to experience softness and demand related to certain surgical procedures utilized in Cortland products. Importantly, this is not a market share issue for us, but rather driven by end market demand for our customers' products and certain medical applications. That said, we're continuing to invest in the business, both to increase capacity and to add capabilities that expand the addressable market.
Patrick Shannon Burns: On the other hand, we continue to experience softness in demand related to certain surgical procedures utilizing cortland products. Importantly, this is not a market share related issue for us, but rather driven by end market demand for our customers' products in certain medical applications that said, we're continuing to invest in the business.
Patrick Shannon Burns: Both to increase capacity and add capabilities that expand the addressable market in.
Paul E. Sternlieb: In the third quarter, we completed qualification for another orthopedic product with a planned fourth quarter launch, and we continue to see new opportunities enter the funnel, supporting our bullish mid- and long-term outlook for Cortland. As part of Enerpac's four pillar growth strategy, we have targeted four key vertical markets, rail, infrastructure, wind, and industrial MRO. I'll talk more about two of those today. On the infrastructure front, we are excited that Enerpac's hydraulic solutions have been selected as part of the Farm and Belt project. This project, which will connect Denmark to Germany, represents the largest global infrastructure project and the longest immersed tunnel spanning 11 miles of subsea construction.
Patrick Shannon Burns: In the third quarter, we completed qualification for another orthopedic product with a planned fourth quarter launch and we continue to see new opportunities enter the funnel supporting our bullish mid and long term outlook for Cortland.
Patrick Shannon Burns: Okay.
Patrick Shannon Burns: As part of <unk> four pillar growth strategy, we have targeted for key vertical markets.
Patrick Shannon Burns: Brown infrastructure wind and industrial MRO.
Patrick Shannon Burns: I'll talk more about two of those today on.
Patrick Shannon Burns: On the infrastructure front, we are excited to enter packs hydraulic solutions have been selected as part of the farm and belt project. This project, which will connect Denmark to Germany represents the largest global infrastructure project and the longest immersed tunnel spanning 11 miles of subsea construction.
Paul E. Sternlieb: I encourage you to check out a short video on YouTube about the massive scale of this project. Enerpac's hydraulic solutions were selected for a critical aspect of the construction, to precisely align the 78 concrete tunnel elements, each weighing 79,000 tons. It's yet another example of our products in mission-critical applications, applying our technology to help customers address complex challenges where safety and reliability are paramount. Regarding the wind market, we are encouraged by the new U.S. Federal Energy Regulatory Commission rules that overhaul how the electric grid is planned and funded.
Patrick Shannon Burns: <unk> I encourage you to check out a short video on Youtube about the massive scale of this project and our tax hydraulic solutions were selected for a critical aspect of the construction to precisely align the 78 concrete tunnel elements each weighing 79000 tons.
Patrick Shannon Burns: Another example of our products and mission critical applications applying our technology to help customers address complex challenges, where safety and reliability are paramount.
Regarding the wind market, we are encouraged by the new U S. Federal Energy Energy regulatory Commission rules that overhaul how the electric grid is planned and funded this change could spur thousands of miles of new high voltage power lines and make it easier to add more wind and solar energy to the grid.
Paul E. Sternlieb: This change could spur thousands of miles of new high-voltage power lines and make it easier to add more wind and solar energy to the grid, eliminating a barrier to new project development. And on the product front, one example of Enerpac's success is our Tower Flange Alignment Tool, or TFA. TFAs designed specifically for wind towers are used to mitigate the impact of misalignment of tower sections and to solve design and manufacturing errors.
Patrick Shannon Burns: Eliminating a barrier to new project development.
Patrick Shannon Burns: And on the product front. One example of <unk> success is our tower flange alignment tool or <unk>.
Patrick Shannon Burns: <unk> designed specifically for wind towers are used to mitigate the impact of misalignment of tower sections and to solve design and manufacturing errors.
Paul E. Sternlieb: Our TFAs have now been widely employed by a major wind turbine manufacturer, and in the third quarter, another major turbine OEM approved usage of Enerpac's TFAs because of their compact, integrated solution and safety. We were excited to see that just one day after this approval and the addition to their catalog, we received price inquiries from all over the world confirming this is a critical product for the installation of onshore and offshore turbines. On the innovation front, we continue to enjoy strong market reception for Enerpac's innovative new products. In April, we introduced our first battery-operated handheld torque wrench, adding an important product line to Enerpac's portfolio.
Patrick Shannon Burns: <unk> now been widely employed by a major wind turbine manufacturer and in the third quarter. Another major turbine OEM approved usage of enter tax TFA because of their contact integrated solution and safety features we were excited to see that just one day after this.
Patrick Shannon Burns: Approval and the addition to their catalog we received price inquiries from all over the world confirming this is a critical product for the installation of onshore and offshore turbines.
Patrick Shannon Burns: On the innovation front, we continue to enjoy strong market reception to <unk> innovative new products.
Patrick Shannon Burns: In April we introduced our first battery operated handheld torque wrench, adding an important product line to <unk> portfolio. Our entry into this important and growing category includes the rollout of a full range of sizes. Moreover, we've entered the market with clear competitive.
Paul E. Sternlieb: Our entry into this important and growing category includes the rollout of a full range of sizes. Moreover, we enter the market with a clear competitive advantage. Our battery-operated torque wrenches feature meticulous calibration at 60 distinct points, far beyond the standard seven points of many competing products, and an impressive plus or minus 5% torque accuracy across their entire operational range. But perhaps the most significant differentiator is our tool's ease of use. As reflected in our tagline, "Ready, Set, Torque," our products are designed for easy setup, in contrast to many competitive tools that can have rigorous configuration requirements and complex features that often make them extremely difficult to operate.
Patrick Shannon Burns: Advantages are battery operated torque wrenches feature meticulous calibration at 60 distinct points far beyond the standard seven points of many competing products and an impressive plus or minus 5% torque accuracy across their entire operational range.
Patrick Shannon Burns: But perhaps the most significant differentiator is our tools ease of use as reflected in our tagline ready set torque. Our products are designed for easy setup. In contrast to many competitive tools that can have rigorous configuration requirements and complex features that <unk>.
Patrick Shannon Burns: Often make them extremely difficult to operate.
Paul E. Sternlieb: Our array of battery-operated torque wrenches is already ramping well with broad applications across many of our end markets, including the wind sector. At the same time, the products we introduced earlier this fiscal year, including the 100-ton hydraulic block grit puller, the 40-ton hydraulic pin puller kits, and the two new battery-powered portable pumps, have been well-received by the market. Overall, we are pleased with the progress on our innovation program and the very positive reception we are seeing from customers. Finally, as we have discussed, one of Enerpac's growth pillars is digital transformation. To date, in fiscal 2024, e-commerce revenue is up 35% in the Americas.
Our array of battery operated torque wrenches is already ramping well with a broad application across many of our end markets, including the wind segment.
Patrick Shannon Burns: At the same time the products, we introduced earlier this fiscal year, including the 100 ton hydraulic block grit polar the 40 ton hydraulic pinpoint kids and the two new battery powered portable pumps have been well received by the marketplace.
Patrick Shannon Burns: Overall, we are pleased with the progress on our innovation program and the very positive reception, we're seeing from customers.
Patrick Shannon Burns: Finally, as we have discussed one of <unk> growth pillars as digital transformation two.
Patrick Shannon Burns: To date in fiscal 2020 for E. Commerce revenue was up 35% in the Americas, We continue to see strong return on advertising spend or ROE as from our investments here. We're also benefiting from our outbound targeted advertising for new products and our vertical marketing campaigns in <unk>.
Paul E. Sternlieb: We continue to see strong return on advertising spend, or ROAS, from our investments. We're also benefiting from our outbound targeted advertising for new products and our vertical marketing campaigns in rail and wind. In fact, since launching these digital campaigns, we've generated well over 20 million impressions and nearly 1,000 leads. In the third quarter, we also launched our e-commerce site, Enerp, and are now live in 18 countries. Even before promotion through our digital marketing campaign, we've seen good transaction flow from Europe.
Patrick Shannon Burns: Rail and wind in fact since launching these digital campaigns, we've generated well over 20 million impressions and nearly 1000 leads in the third quarter. We also launched our E Commerce site in Europe and are now live in 18 countries, even before promoting through our <unk>.
Patrick Shannon Burns: Digital marketing campaign, we are seeing good transaction flow from Europe.
Paul E. Sternlieb: While e-commerce still represents a relatively small portion of our overall sales, the continued strong growth is establishing a meaningful chance. Moreover, the direct connection we gain provides valuable customer insight that we incorporate into our marketing and product innovation. I'm proud of the ongoing initiatives, including product innovation, e-commerce, new commercial tools, and ongoing efficiency gains that continue to fuel Enerpac's performance and advance our long-term growth and profitability objectives, and it's our people around the globe that make it happen every day. I want to express my sincere thanks to our team for all their dedication and hard work in serving our customers every single day. With that, we'd be happy to take questions.
Patrick Shannon Burns: While e-commerce still represents a relatively small portion of our overall sales. The continued strong growth is establishing a meaningful channel. Moreover, the direct connection we gain provides valuable customer insights that we incorporate into our marketing and product innovation.
Patrick Shannon Burns: I'm proud of the ongoing initiatives, including product innovation E Commerce, new commercial tools and ongoing efficiency gains and continue to fuel <unk> performance and advance our long term growth and profitability objectives.
Patrick Shannon Burns: And it's our people around the globe that make it happen every day I want to express my sincere thanks to our team for all their dedication and hard work in serving our customers every single day with that we'd be happy to take questions.
Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Ross Sparenblatt from William Blair. Your line is open.
Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Our first question comes from the line of.
Speaker Change: Ross sparing black from William Blair. Your line is open.
Ross Sparenblatt: Good morning, gentlemen. Good morning, how are you? Not too bad. Maybe we could just start off with the price versus volume during the quarter and maybe the expectations for the outlook for the rest of the year.
Speaker Change: Hey, good morning, gentlemen.
Speaker Change: Good morning, how are you.
Speaker Change: Not too bad.
Speaker Change: Maybe can we just start off with the price versus volume during the quarter and maybe expectations for the outlook for end of the year.
Paul E. Sternlieb: Sure. Yeah, thanks for the question, Ross. Yeah, we had a mix in the quarter. I would say a combination of both price and mix. For us, volume is a little bit more challenging as a comparison because, as you may know, we sell over 30,000 SKUs. I mean, they can range in price from $50 to the low millions. So, you know, the reality is that in any given year, we don't necessarily sell the same SKUs with a lot of overlap.
Speaker Change: Sure Yes. Thanks for the question Ross, Yes, we had a mix.
Speaker Change: In the quarter I would say a combination of both price and mix for us volume is a little bit.
Speaker Change: More challenging.
Speaker Change: Comparison, because as you may know, we sell over 30000, Skus I mean, they can range in price from $50 to low millions. So the reality is that in any given year.
Speaker Change: We don't necessarily sell the theme skus with a lot of overlap some of them are more calm and some are not so volume is not always a valuable way for us to measure growth because a lot of our skus are very similar in substitutes for each other so we do talk about both price and mix, but we did have favorable mix.
Paul E. Sternlieb: Some of them are more common; some are not. Volume is not always a valuable way for us to measure growth because a lot of our SKUs are very similar and substitutes for each other. So, we do talk about both price and mix, but we did have a favorable mix in the quarter, which effectively means that we were selling more higher-ticket items in the quarter. And I think that is our expectation going forward here in Q4.
Speaker Change: In the quarter, which effectively means that we were selling more higher ticket items in the quarter and I think that is our expectation going forward here in Q4.
Paul E. Sternlieb: Okay, and then on the new products and that contribution to mix, I mean, is the expectation that these are all going to be accretive, and then maybe just help us conceptualize how this relates to, you know, a product vitality index and your overall SKU rationalization strategy?
Speaker Change: Okay, and then on the new products and that contribution to mix. I mean is the expectation that these are all going to be accretive.
Speaker Change: And then maybe just help us conceptualize how this relates to like <unk>.
Speaker Change: Product vitality index and your overall SKU rationalization strategy.
Paul E. Sternlieb: Yeah, sure. So, generally speaking, our overall product business is margin accretive to the company, and as a general rule of thumb, I'd say for the most part our innovation also tends to be margin accretive because, as I referenced in my remarks, you know, really what we're developing are very differentiated solutions that are really customer-backed from an innovation perspective, you know, identified needs or pain points or problems that we're solving for customers.
Speaker Change: Yes, sure. So generally speaking our overall product business is margin accretive to the company.
Speaker Change: And as a general rule of thumb I would say for the most part our innovation also tends to be margin accretive because as I referenced in my remarks really what we're developing a very differentiated solutions that are really customer back from innovation perspective identified needs or pain points of problems that we're solving for.
Paul E. Sternlieb: So, these are products with a real market need out there, and obviously, customers are willing to pay good value for that. So, we do see that reflected in the margin profile, and certainly, as volume picks up, we'll see volume leverage from those. You know, as far as our SKU rationalization goes, I mean, that's an ongoing process. We continue to apply an 80-20 framework to many aspects of this business, including our product lineup.
Speaker Change: Customers. So these are products with a real market need out there and obviously customers are willing to pay.
Speaker Change: Good value for that so we do see that reflected in the margin profile and certainly as the volume picks up we.
Speaker Change: We will see volume leverage from those.
Speaker Change: As far as our SKU rationalization goes I mean, that's an ongoing process. We continue to apply an 80 20 framework to many aspects of this business, including our product lineup. As you know we've taken a number of skus out over the last two years, we continue to look at that every.
Paul E. Sternlieb: As you know, we've taken a number of SKUs out over the last two years. We continue to look at that every single year, and, you know, yes, our innovation does add some SKUs, but I would say that's a relatively small portion in comparison to the roughly 30,000 that we still have in our lineup.
Speaker Change: Every single year, and yes, our innovation does add some skus, but I would say that's a relatively small portion in comparison to the roughly 30000 that we still have in our lineup.
Paul E. Sternlieb: Okay, that's very helpful. And then maybe stick with the new products and your second brand launch in the APAC region, a low double-digit decline.
Speaker Change: Okay, that's very helpful.
And then maybe sticking on the new products in your second brand launch in the APAC region low double digit decline you noted Australia mining was weaker but can you just provide any update on how the adoption of that second brand is going.
Paul E. Sternlieb: Sure, yeah, so as you know, Asia Pacific Growth, one of our key growth pillars, we still have a very firm belief in the opportunity in that region, and we continue to execute on our second brand strategy, utilizing our LARZAP brand. We continue to see good traction in terms of distributor sign-on and buy-in of the product, and good market, I would say, sentiment for our second brand strategy in Asia Pac, so we continue to execute on that.
Speaker Change: Sure, Yes, so as you know Asia Pac growth one of our key growth pillars, we still.
Speaker Change: A very firm belief in the opportunity in that region and we continue to execute on our second brand strategy utilizing our large that brand. We can see continue to see good traction in terms of.
Speaker Change: Distributor sign and sign on and buying of the product.
Speaker Change: And good market I would say sentiment for our second brand strategy in Asia Pac. So we continue to execute on that.
Paul E. Sternlieb: Despite some of the growth that we're experiencing from that second brand strategy in Asia Pac, it was really kind of overweighed by the impact that we saw from the mining sector in Australia, which is a significant part of our business in that country, and also just some of the lumpiness, as I referenced on the HLT, or Heavy Lifting Technology. You know, having said that, let me get it there.
Speaker Change: Despite some of the growth that we're experiencing from that second brand strategy in APAC. It was really over kind of overlaid by the.
Speaker Change: The impact that we saw.
Speaker Change: From the mining sector in Australia, which is a significant part of our business in that country.
Speaker Change: And also just some of the Lumpiness as I referenced on the HFC or heavy lifting technology business.
Speaker Change: Having said that I mean again as I as I referenced in my remarks.
Speaker Change: We have several key actions underway.
Speaker Change: Addressing those opportunities and really getting after what we see is more growth potential in the market there.
Paul E. Sternlieb: Yeah, and Paul, would you be willing to frame what that growth looked like for the second brand of the quarter?
And Paul would you be willing to frame what that growth looks like the second brand in the quarter.
Paul E. Sternlieb: Yeah, I mean, we haven't shared details specifically on the second brand, but you know, it's, it's obviously smaller since we're just starting out growing in that region. But we do expect, you know, it to be meaningful over time, as we have said previously. Really, the second brand strategy is focused on effectively targeting what we call the mid-tier segment of the market, which essentially is a segment that we have really never meaningfully participated in before, with Enerpac as really a premium position brand.
Paul: Yes, I mean, we haven't shared details specifically on the second brand.
But.
Paul: It's obviously a smaller since we're just starting out growing in that region, but we do expect it to be meaningful over time as we have said previously really the second brand strategy is focused at effectively targeting what we call. The mid tier segment of the market, which essentially is a segment that we've really never.
Meaningfully participated in before with inter Pac is really a premium position brand and we believe from a dollar perspective that that mid tier segment of the market is very sizeable could be potentially as large as the premium segment on a dollar basis. So we believe plenty of room for growth there.
Paul E. Sternlieb: And we believe from a dollar perspective that that mid-tier segment of the market is very sizable. It could potentially be as large as the premium segment on a dollar basis. So we have, we believe, plenty of room for growth.
Ross Sparenblatt: Thank you, guys. We'll hop back in line. Thank you.
Speaker Change: Alright, Thank you guys I'll hop back in line.
Speaker Change: Thank you.
Operator: Your next question comes from a line from Tom Hayes from CL King. Your line is open.
Speaker Change: Your next question comes from the line of Tom Hayes from C. L. King Your line is open.
Thomas Lloyd Hayes: Thanks. Good morning, Paul. Morning, Tom. Hey, I was just wondering, could you maybe discuss how you saw overall business conditions change as the quarter progressed? And, you know, were those changes generally in line with your expectations?
Speaker Change: Thanks, Hey, good morning, Paul.
Speaker Change: Tom.
Thomas Lloyd Hayes: Hey, I was just wondering could you maybe discuss how you saw overall business conditions change.
Progress and where those changes generally in line with your expectations.
Paul E. Sternlieb: Yeah, I mean, I think, you know, it's I would say as a general rule of thumb, our quarters. We tend to finish strong in our quarters, and I think we saw that in Q3.
Paul: Yes, I mean I think.
Speaker Change: I would say as a general rule of thumb, our quarters, we tend to finish strong in our quarters and I think we saw that in Q3, So I would say as per our expectations.
Paul E. Sternlieb: So I would say it is as per our expectations. I think beyond that, you know, within the quarter, any month really for us can be fairly lumpy, so it wouldn't read too much more into kind of month over month conditions. But I would say, generally speaking, it sort of played out as we expected in the quarter. And, you know, again, we went into detail on the call about the remarks around some of the regional dynamics, but, you know, we did see a kind of softer industrial macro environment.
Speaker Change: I think beyond that within the quarter or any month really for us can be fairly lumpy. So I wouldn't read too much more into kind of month over month conditions, but I would say generally speaking.
Played out as we expected in the quarter.
Paul E. Sternlieb: But I, again, would highlight that although that's the environment that we're experiencing and that we have seen, and certainly look at, you know, other kind of broader industrial peers, our belief is that our Q3 results did outperform the broader market conditions.
Speaker Change: And again, we went into detail on the call.
Speaker Change: The remarks around some of the regional dynamics, but we did see kind of softer industrial macro environment, but I again would highlight although that's the environment that we're experiencing and that we have seen and certainly look at other kind of broader industrial peers. Our belief is that our Q3 results.
Did outperform the broader market conditions.
Paul E. Sternlieb: Okay, great. I know it tends to be lumpy in nature, but was there anything really stood out as far as your service revenue? I mean, it was up nicely, you know, almost over 7% on a year-over-year basis.
Speaker Change: Okay great.
Speaker Change: I know it tends to be lumpy in nature, but it was it anything really stood out as far as your service revenue I mean, it was up nicely.
Speaker Change: Over 7% on a year over year basis.
Paul E. Sternlieb: Yeah, I mean, some of it is certainly a little bit of seasonality, but I would say, you know, we've definitely focused on two things. One is, you may recall that last year we talked about applying an 80-20 framework and kind of more selectivity to the kind of projects that we undertake in our service business and, particularly, I would say, in the Middle East region. And so, you know, a fair amount of that is behind us, but I would say, perhaps even more importantly, we've been kind of actively cultivating a fairly differentiated service business and trying to focus on some newer service lines where we've seen good growth, you know, year-to-date, and that's been playing out, as we expected, as we execute on that part of our strategy on service.
Speaker Change: Yes, I mean, some of it is certainly a little bit of seasonality, but I would say we are definitely focused on.
Speaker Change: Two things one is.
Speaker Change: You may recall that last year, we talked about applying $80 20 framework and kind of more selectivity to the kind of projects that we undertake in our service business in particular, I would say in the Middle East region.
Speaker Change: And so a fair amount of that is behind us, but I would say probably perhaps even more importantly, we've been kind of actively cultivating a fairly differentiated service business.
Speaker Change: Trying to focus on some newer service lines, where we've seen good growth.
Speaker Change: Year to date, and that's been playing out as we expected as we execute on that part of our strategy on the service business.
Paul E. Sternlieb: Okay, great. Maybe shifting gears to the margin front, you know, another great job on the quarterly gross margin. Maybe any granularity you can provide on that, kind of the drivers of that, and just maybe talk about the sustainability of the rate, because you've had a nice run this year.
Speaker Change: Okay, great maybe shifting gears to the margin front.
Speaker Change: Another great job on the quarterly on the gross margin.
Speaker Change: Any granularity you can provide on that you've had the drivers of that is maybe talk about the sustainability of that rate because <unk> had a nice nice run this year.
Paul E. Sternlieb: Yeah, thanks. We're certainly pleased with the progress and, I would say, you know, effectively ahead of schedule. I mean, certainly that's the case with the overall Ascend transformation program. Essentially, a year ahead of plan, you know, in terms of the overall impact of the program, and obviously, Ascend's been one key driver of not only the margin but the growth as well. I think on the margin it really has been driven by multiple aspects.
Speaker Change: Yes. Thanks, we're certainly pleased with the progress and I would say.
Speaker Change: Effectively ahead of plan I mean, certainly that's the case with the overall center transformation program essentially a year ahead of plan.
Speaker Change: In terms of the overall impact of the program and obviously since then one key driver enabler of not only the margin, but the growth as well I think on margin it really has been.
Speaker Change: Driven by multiple aspects I mean, you have seen gross margin improvement that's been driven by.
Paul E. Sternlieb: I mean, you have seen gross margin improvement that's been driven by, you know, efficiency and productivity initiatives in our COGS, right, in manufacturing, logistics, distribution, etc., as well as, you know, some remaining pricing benefits. And then we continue to see, you know, improvement in our overall SG&A, as Shannon referenced on the call and in her remarks as well. So I think it really is a mix, which is exactly what we targeted and expected to see.
Speaker Change: Efficiency and productivity initiatives in our in Cogs rate in manufacturing logistics distribution et cetera, as well as some remaining pricing benefit and then we've continued to see improvement in our overall SG&A as Shannon referenced on the call on the remarks as well so I think it really is.
Speaker Change: A mix, which is exactly what we targeted and expected to see.
Paul E. Sternlieb: We do expect to be able to sustain those margins and, frankly, we expect to continue to drive additional benefits over time. As Shannon mentioned in her remarks, we do see several opportunities to drive, you know, continued improvement in COGS and, frankly, in SG&A. And one of the benefits of Ascend, even though it sort of comes to an official close for us as a program at the end of this fiscal year, is that we have a very substantial active funnel of initiatives that we continue to pursue, and not nearly all of them have been executed to date. So we have a lot of great things in the pipeline remaining.
Speaker Change: We do expect to be able to sustain those margins and frankly, we expect to.
Speaker Change: <unk> to drive additional benefits over time.
Speaker Change: Shannon mentioned in their remarks, we do see several opportunities to drive continued improvement in Cogs and frankly in SG&A and one of the benefits of ascend even though it sort of comes to an official close for us as a program at the end of this fiscal.
Speaker Change: Is that we have a very substantial active funnel of initiatives that we continue to pursue and not near if not nearly all of them have been executed to date. So we have a lot of great things in the pipeline remaining and I'd just add that that continuous improvement mindset is going to be very important for us going forward in evaluating where the project.
Paul E. Sternlieb: And I just add that that continuous improvement mindset is going to be very important for us going forward and evaluating where those project opportunities are, whether it's low-cost country sourcing, as I referenced, or just how we can continue to lower indirect spending through different rationalization projects.
Speaker Change: These are whether its low cost country sourcing as I referenced or just how we can continue to.
Speaker Change: Lower our indirect spending through different rationalization projects.
Thomas Lloyd Hayes: Okay, that was great. Appreciate the call. You know, we talked last quarter about channel inventories, and I think you guys highlighted that.
Speaker Change: Okay that was great I appreciate the color.
Speaker Change: We talked last quarter on channel inventories, but I think we called out are you guys highlighted that maybe the Americas was a bit above average in APAC was there were pockets of maybe a bit heavier I was just wondering kind of where we are as we enter the third quarter.
Paul E. Sternlieb: Yeah, and I think, as we said in the remarks...
Speaker Change: Yeah, I think as we said in our remarks, indeed pretty much where we expected inventories to be effectively relatively normalized levels. I mean, we don't see anything in the data that we have access to that would indicate.
Speaker Change: Any concerns from an overall elevated perspective.
Speaker Change: In the channel at this point.
Thomas Lloyd Hayes: Okay, maybe maybe two more if I could just ask one question just for clarification. I think you mentioned Paul that you're adding new sales partners. Was that for the APAC region? I missed that part. Yes, it is. Yeah. So AsiaPAC, obviously, is part of our growth strategy, multi-pronged, including the second brand rollout that we talked about earlier. But certainly, one key aspect is either upgrading or, in some cases, adding additional distribution for coverage gaps that we have in the APAC region. Okay, and just lastly, on your new product, Rollout, especially your battery-powered tools, maybe just provide some color on customer reactions, because it seems to be pretty innovative in Thank you.
Speaker Change: Okay, maybe maybe two more if I could just one just a clarification I think you mentioned Paul that you're adding new sales partners was that for the APAC region.
Speaker Change: Yes. It is yes so.
Speaker Change: Asia Pac obviously as part of our growth strategy multi pronged, including the second brand rollout that we talked about earlier, but certainly one key aspect is either upgrading or in some cases, adding additional distribution for coverage gaps that we have in the APAC region.
Speaker Change: Okay, and then just lastly on.
Your new product Rollouts, especially your battery powered tools, maybe just.
Speaker Change: Maybe provide some.
Speaker Change: And maybe color on customer reactions, because it seems to be pretty innovative in nature. Thank you.
Paul E. Sternlieb: Yeah, absolutely, Tom. I mean, we're super pleased with the progress our teams have made. The Battery Torque Wrench is the third battery-driven product that we've launched in this fiscal year after the launch of our two battery power pumps earlier in the year. And I've obviously talked to a number of customers, both distributors and end users, who have expressed a significant amount of excitement and enthusiasm about these products. You know, I guess bear in mind, again, we're focused on, say, relatively significant differentiation, right? We're not trying to be a me-too player in these spaces.
Thomas Lloyd Hayes: Yes, absolutely Tom I mean, we're super pleased with the progress our team has made.
Thomas Lloyd Hayes: The battery torque wrench is the third battery driven product that we've launched in this fiscal year.
Thomas Lloyd Hayes: After the launch of our two battery power pumps earlier in the year.
Speaker Change: Obviously, you've talked with a number of customers both distributors and end users.
Speaker Change: Who.
Speaker Change: Expressed <unk>.
Speaker Change: Significant amount of excitement and enthusiasm about these products.
Speaker Change: I guess there in mind again, we're focused on lets say relatively significant differentiation right. We're not trying to be a me too player in these spaces. So each of these products, including the battery torque wrench have pretty significant differentiation offerings in the marketplace in our view.
Speaker Change: And the torque wrenches is no different so the call obviously I talked about some of the technical aspects, but those technical aspects are very very important for the end users that utilize the tool, particularly the accuracy of the torque and frankly the.
Paul E. Sternlieb: So, each of these products, including the Battery Torque Wrench, has pretty significant differentiation offerings in the marketplace, in our view, and the Torque Wrench is no different. So, you know, on the call, I obviously talked about some of the technical aspects, but those technical aspects are very, very important for the end users that utilize the tool, particularly the accuracy of the torque and, frankly, the, you know, simple nature of the operation of the tool.
Speaker Change: Simple nature of the operation of the tool a lot of the tools in this space can be really complex to operate.
Speaker Change: Surprisingly you don't just pick it up and pressed the button.
And so in our case that was a key focus but we've seen really good receptivity and customer response to the product launches to date.
Paul E. Sternlieb: A lot of the tools in this space can be really complex to operate. You don't just pick them up and press a button, and so, in our case, that was a key focus. But we've seen really good receptivity and customer response to the product launches.
Paul E. Sternlieb: Are those fully available now?
Speaker Change: Or are those just are.
Speaker Change: Are those fully available now.
Paul E. Sternlieb: Yes, they are. Yep. So you can buy them through our channel, all of our distribution partners, at this point globally, and we also have them available for sale on our e-commerce platform, Enerpac.com.
Yes. They are yes, so you can buy them through our channel.
Speaker Change: All of our distribution partners at this point globally and certainly we also have them available for sale on our E Commerce <unk> Dot com site.
Thomas Lloyd Hayes: Great, I appreciate the call. Thanks guys.
Speaker Change: Great appreciate the color thanks, guys.
Speaker Change: Thank you Stan.
Operator: Your next question comes from the line of Steve Silver from Argus Research. Your line is open.
Speaker Change: Your next question comes from the line of Steve Silver from Argus Research. Your line is open.
Steve Silver: Thanks, Operator, and good morning, and thanks for taking the questions. In terms of the divergence of IT&S on a regional basis, you've already discussed APAC, but on the other end, you had double-digit growth in EMEA. I was just hoping you could discuss a little bit about the drivers of that strength and whether you think that's sustainable.
Thanks, operator, and good morning, and thanks for taking the questions.
Speaker Change: In terms of the divergence of Etfs on a regional basis, you've already discussed APAC, but on the upper end you had double digit growth in EMEA.
Speaker Change: I was just hoping you could discuss a little bit about the drivers of that strength and whether you think that's sustainable.
Paul E. Sternlieb: Yeah, good morning, Steve. Thanks for the question.
Steve Silver: Yes, good morning, Steve. Thanks for the question Yeah. I think we were very pleased with the continued progress and growth that we saw in the EMEA region double digit growth.
Steve Silver: And our low double digit growth I should say and really it was very broad based across end markets.
Steve Silver: And frankly, the overall scope of the business.
Paul E. Sternlieb: Yeah, I think we were very pleased with the continued progress and growth that we saw in the EMEA region, double-digit growth, or low double-digit growth, I should say. And really, it was very broad-based across end markets and, you know, frankly, the overall scope of the business. You know, I think that that gives us increasing confidence that this is something we can continue to sustain. And it's really, I think, driven by, or benefiting from, I would say, the power of the brand in the EMEA region and the extremely strong channel partner relationships that we have.
I think that gives us increasing confidence that this is something we can continue to sustain and it's really I think driven by.
Steve Silver: Are benefiting I would say by frankly, the power of the brand in the EMEA region.
Steve Silver: The extremely strong channel partner relationships that we have and I would say we've seen really significant success to date in some of our targeted vertical market focus in fact, I mean, we talked about two of them on the call with the firm and belt projects that tunnel project in Europe and some of the early success that we've had.
Paul E. Sternlieb: And I would say we've seen really significant success to date in some of our targeted vertical market focus. In fact, I mean, we talked about two of them on the call, the Fairman Belt Project, the Tunnel Project in Europe, and some of the early success that we've had with our Tower Flange Alignment Tool in the wind sector. Those have both been, I would say, in an outsized way, obviously driven in the EMEA region, certainly the tunnel and even the Tower Flange Alignment Tool in wind. And so we continue to be pleased with the kind of broad-based performance in that region.
Steve Silver: With our tower flange alignment tool in the wind sector. Those are both in I would say in an outsized way obviously driven in.
Steve Silver: In the EMEA region, certainly the tunnel and even the.
Steve Silver: The tower French alignment tool and when so we continue to be pleased with kind of the broad based performance in that region.
Steve Silver: That's helpful, thanks. And one last question, if I can.
Steve Silver: Okay.
Paul E. Sternlieb: You've projected, I think it was 6% to 7% organic revenue CAGR growth through fiscal 26. With the softness that you're seeing in the industrial marketplace, just curious if you have any updated thinking on the prospects for achieving that objective. Yeah, sure, Steve. So at this point...
Speaker Change: That's helpful. Thanks, and then one last if I can if I can you projected I think it was 6% to 7% organic revenue CAGR growth through fiscal 'twenty six.
Speaker Change: The softness that you're seeing in the industrial marketplace. Just curious if you have any updated thinking on the prospects for achieving that objective.
Paul E. Sternlieb: Yeah, sure, Steve. So at this point, we've not made any modifications to our longer-term financial framework. You know, given that we're now in our Q4 fiscal 24, we're certainly in the planning phases as we start planning our budget for fiscal 25 and as we think about, you know, issuing guidance on our next earnings call. But at this point, there are no changes to our outlook from a growth perspective or a margin perspective. But again, we're pleased with the progress that we've made and, effectively, largely ahead of plan, particularly on the margin.
Yes sure Steve So at this point, we've not made any modifications to kind of our longer term financial framework given that we're now in our Q4 fiscal 'twenty four we're certainly in the planning phases as we.
Speaker Change: Start planning our budget for fiscal 'twenty five.
Speaker Change: And as we think about issuing guidance on our next earnings call, but at this point no changes to our outlook from a growth.
Speaker Change: Aspect of or margin perspective.
Speaker Change: But again, we're pleased with the progress that we've made.
Speaker Change: And effectively largely ahead of plan, particularly on the margin front.
Speaker Change: Okay.
Speaker Change: Great. Thanks again.
Speaker Change: Thank you.
Paul E. Sternlieb: That concludes our question and answer session. I will now turn the call back over to Paul for some final closing remarks.
Speaker Change: That concludes our question and answer session I will now turn the call back over to Paul for some final closing remarks.
Paul E. Sternlieb: Okay, well, thanks again for joining us this morning. Please note we will be participating in the Seaport Global Conference on August 21st, the Morgan Stanley Annual Laguna Conference on September 12th, and the C.L. King Best Ideas Conference on September 16th, so we hope to see you there. And, as always, Travis will be available to take any follow-up questions. Thanks, and have a great day.
Paul: Okay, well, thanks again for joining us. This morning. Please note we will be participating in the Seaport Global conference on August 21.
Paul: The Morgan Stanley Annual Laguna Conference on September 12, and the CL King Best ideas Conference on September 16th So we hope to see you there and as always Travis will be available to take any follow up questions. Thanks and have a great day.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
Speaker Change: