Q1 2025 Apogee Enterprises Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the Q1 2025 Apogee Enterprises Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again. I would now like to hand the conference over to your speaker today, Jeff Huebschen, Vice President of Investor Relations.

Speaker Change: Good day and thank you for standing by. Welcome to the Q1 2025 Apogee Enterprises Earnings Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question, please press star 1 1 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Jeff Huebschen, Vice President of Investor Relations.

Jeff Huebschen: Thank you, Josh. Good morning, everyone, and welcome to Apogee Enterprises' Fiscal 2025 First Quarter Earnings Call. With me today are Ty Silberhorn, Apogee's Chief Executive Officer, and Matt Osberg, Chief Financial Officer. I'd like to remind everyone that there are slides to accompany today's remarks.

Josh: Thank you, Josh. Good morning, everyone, and welcome to Apogee Enterprises' Fiscal 2025 First Quarter Earnings Call. With me today are Ty Silberhorn, Apogee's Chief Executive Officer, and Matt Osberg, Chief Financial Officer.

Jeff Huebschen: These are available in the Investor Relations section of Apogee's website. During this call, we will reference certain non-GAAP financial measures. Definitions of these measures and reconciliation to the nearest gap measures are provided in the earnings release and slide deck we issued this morning. I'd also like to remind everyone that our call will contain forward-looking statements. These reflect management's expectations based on currently available information, but actual results may differ materially. More information about factors that could affect Apogee's business and financial results can be found in today's press release and in our SEC filing. With that, I'll turn the call over to you, Ty.

Josh: I'd like to remind everyone that there are slides to accompany today's remarks. These are available in the Investor Relations section of Apogee's website.

Josh: During this call, we will reference certain non-GAAP financial measures. Definitions of these measures and reconciliation to the nearest GAAP measures are provided in the earnings release and slide deck we issued this morning.

Josh: I'd also like to remind everyone that our call will contain forward-looking statements. These reflect management's expectations based on currently available information.

Josh: Actual results may differ materially. More information about factors that could affect Apogee's business and financial results can be found in today's press release and in our SEC filings.

Ty R. Silberhorn: Good morning, everyone. Thanks for joining us today. We had a good start to our fiscal year with our team continuing to build on the progress we've achieved through our strategic initiatives. We drove operational execution across the business and achieved significant adjusted operating margin expansion and EPS growth. Today, I'll discuss a few highlights from the quarter and comment on how we are continuing to position the company for growth. Then Matt will provide details on the quarter and our updated outlook. As expected, we saw lower volume and revenue in both framing systems and architectural glass this quarter.

Speaker Change: With that, I'll turn the call over to you, Ty.

Ty R. Silberhorn: Good morning, everyone. Thanks for joining us today.

Ty R. Silberhorn: We had a good start to our fiscal year, with our team continuing to build on the progress we've achieved through our strategic initiatives.

Ty R. Silberhorn: We drove operational execution across the business and achieved significant adjusted operating margin expansion and EPS growth.

Ty R. Silberhorn: This was partly due to continued deceleration in some of the end markets we serve and partly due to our strategic shift away from less differentiated, lower margin products. However, even with the lower revenue, both framing and glass delivered strong profitability. Both segments improved their adjusted operating margins due in part to good cost management and productivity gains. Architectural Services was also a meaningful contributor to our year-over-year profit improvement. Services delivered double-digit sales growth and significant margin expansion compared to last year's first quarter.

Ty R. Silberhorn: Today I'll discuss a few highlights from the quarter and comment on how we are continuing to position the company for growth. Then Matt will provide details on the quarter and our updated outlook.

Matthew J. Osberg: As expected, we saw lower volume and revenue in both framing systems and architectural glass this quarter.

Matthew J. Osberg: This was partly due to continued deceleration in some of the end markets we serve and partly due to our strategic shift away from less differentiated lower margin products.

Matthew J. Osberg: Even with the lower revenue, both framing and glass delivered strong profitability.

Matthew J. Osberg: Both segments improve their adjusted operating margins due in part to good cost management and productivity gains.

Matthew J. Osberg: Architectural Services was also a meaningful contributor to our year-over-year profit improvement.

Matthew J. Osberg: Services delivered double-digit sales growth and significant margin expansion compared to last year's first quarter.

Ty R. Silberhorn: These positives enabled us to achieve an adjusted operating margin of 12.8%, the highest in our company's 75-year history. When we first embarked on our new strategic direction, we had confidence that our company could achieve operating margins above 10%. We were proud to be able to deliver margins above 10% in fiscal 24, and we expect to improve on that in fiscal 25. We remain focused on maximizing profit dollars within our segment margin target ranges. And in the first quarter, we were able to increase adjusted operating income by 26%.

Matthew J. Osberg: These positives enabled us to achieve adjusted operating margin of 12.8 percent, the highest in our company's 75-year history.

Matthew J. Osberg: When we first embarked on our new strategic direction, we had confidence that our company could achieve operating margins above 10%.

Matthew J. Osberg: We were proud to be able to deliver margins above 10% in Fiscal 24, and we expect to improve on that in Fiscal 25.

Matthew J. Osberg: We remain focused on maximizing profit dollars within our segment margin target ranges.

Matthew J. Osberg: And in the first quarter, we were able to increase Adjusted Operating Income by 26%.

Ty R. Silberhorn: With this strong earnings result, we are increasing our EPS outlook for the full year. Our performance this quarter demonstrates the sustainable operating improvements we've achieved through executing our strategy. Each of our four segments has made progress toward becoming an economic leader in the markets they serve. Our goal is to be a top margin generator in each of our target markets. To achieve this, we've established a much more competitive cost structure, and developed a relentless focus on operational execution and productivity.

Matthew J. Osberg: With this strong earnings result, we are increasing our EPS outlook for the full year.

Matthew J. Osberg: Our performance this quarter demonstrates the sustainable operating improvements we've achieved through executing our strategy.

Matthew J. Osberg: Each of our four segments has made progress toward becoming an economic leader in the markets they serve.

Matthew J. Osberg: Our goal is to be a top margin generator in each of our target markets.

Matthew J. Osberg: To achieve this, we've established a much more competitive cost structure, developed a relentless focus on operational execution and productivity,

Ty R. Silberhorn: And we've increased our mix of differentiated product and service offerings with an effort to deliver more value for our customers, allowing us to capture some of that value and allow us to gain share in our market. The recent actions of Project Fortify continue to build on this progress, further improving our cost structure and better positioning the business for long-term, more profitable growth. We've also had great success strengthening our core capabilities. The foundation of this is our Apogee Management System, or AMS, which has helped us achieve meaningful productivity improvements.

Matthew J. Osberg: And we've increased our mix of differentiated product and service offerings with an effort to deliver more value for our customers, allowing us to capture some of that value and allow us to gain share in our markets.

Matthew J. Osberg: The recent actions of Project Fortify continue to build on this progress.

Matthew J. Osberg: further improving our cost structure and better positioning the business for long-term, more profitable growth.

Matthew J. Osberg: We've also had great success strengthening our core capabilities.

Matthew J. Osberg: The foundation of this is our Apogee Management System, or AMS, which has helped us achieve meaningful productivity improvements.

Ty R. Silberhorn: We've continued our shift from a decentralized operating model, building center-led functional capabilities that better support the business. And we made significant strides in improving talent management and leadership development across. These strategic actions have laid the foundation for the profitability improvements that we are seeing. It also positions us well to integrate future acquisitions to drive both cost and growth synergy, delivering more value for our customers and our shareholders. Looking ahead to the rest of the fiscal year, we continue to see a mixed picture for our end markets, as shown on slide six. We expect continued headwinds in some construction market verticals, including office and commercial. Declines in the Architectural Billing Index point to a slowdown in construction activity.

Matthew J. Osberg: We've continued our shift from a decentralized operating model, building center-led functional capabilities that better support the business.

Matthew J. Osberg: And we made significant strides in improving talent management and leadership development across the company.

Matthew J. Osberg: These strategic actions have laid the foundation for the profitability improvements that we are achieving.

Matthew J. Osberg: It also positions us well to integrate future acquisitions to drive both cost and growth synergy, delivering more value for our customers and our shareholders.

Matthew J. Osberg: Looking ahead to the rest of the fiscal year, we continue to see a mixed picture for our end markets as shown on slide 6.

Matthew J. Osberg: We expect continued headwinds in some construction market verticals, including office and commercial.

Matthew J. Osberg: Declines in the architectural billing index point to a slowdown in construction activity.

Ty R. Silberhorn: This will likely pressure volumes and or pricing in our architectural segment. On the positive side, we anticipate continued growth in institutional and infrastructure projects supported by significant government funding. Regardless of the macro environment, our team is focused on delivering results while positioning the company for long-term growth. We are managing what we can control, working with a growth mindset, continuing to drive productivity gains, and prudently managing our costs. Our company is also positioned to gain share in our core market.

Matthew J. Osberg: This will likely pressure volumes and or pricing in our architectural segments.

Matthew J. Osberg: On the positive side, we anticipate continued growth in institutional and infrastructure projects supported by significant government funding.

Matthew J. Osberg: Regardless of the macro environment, our team is focused on delivering results while positioning the company for long-term growth.

Matthew J. Osberg: We are managing what we can control, working with a growth mindset, continuing to drive productivity gains, and prudently managing our costs.

Ty R. Silberhorn: The combination of leading brands, deep customer relationships, and differentiated offerings provides a meaningful competitive advantage. We are also making investments to accelerate our growth. This includes the capacity expansion and large-scale optical, which we expect to be completed this fiscal year and will allow LSO to expand into attractive market adjacencies. We're also investing to add capabilities in our architectural segments and to enable further geographic expansion in both framing and service. Finally, we continue to work our acquisition pipeline, evaluating opportunities that complement our strategy and would be accretive to our financial performance. With that, I will turn it over to Matt.

Matthew J. Osberg: Our company is also positioned to gain share in our core markets.

Matthew J. Osberg: The combination of leading brands, deep customer relationships, and differentiated offerings provides a meaningful competitive advantage.

Matthew J. Osberg: We are also making investments to accelerate our growth. This includes the capacity expansion and large-scale optical, which we expect to be completed this fiscal year, and will allow LSO to expand into attractive market adjacencies.

Matthew J. Osberg: We are also investing to add capabilities in our architectural segments and to enable further geographic expansion in both framing and services.

Matthew J. Osberg: Finally, we continue to work our acquisition pipeline, evaluating opportunities that complement our strategy and would be accretive to our financial performance.

Matthew J. Osberg: Thanks, Ty, and good morning, everyone. I will begin with a discussion of our first quarter results and then provide an update on our fiscal year outlook. For the first quarter, although we posted a decline in net sales, we were pleased to deliver EPS growth ahead of our expectations. As we discussed in the fourth quarter conference call, we anticipated lower sales levels in the first quarter due to softness in our end markets and as a result of the actions of Project Fortify. These factors contributed to an 8% decline in consolidated net sales driven primarily by framing and glass.

Speaker Change: With that, let me turn it over to Matt.

Matthew J. Osberg: Despite lower sales, Adjusted Operating Margin improved 350 basis points to 12.8%, driven by a more favorable mix of projects and services, favorable material costs, lower insurance-related costs, productivity gains, and lower bad debt expense. Adjusted diluted EPS grew 37% to $1.44, driven primarily by higher adjusted operating income and lower interest expense. Turning to the segment results,

Matthew J. Osberg: Thanks, Ty, and good morning, everyone. I will begin with a discussion of our first quarter results and then provide an update on our fiscal year outlook.

Matthew J. Osberg: Framing net sales declined 19%, primarily due to lower volumes and our strategic shift away from certain lower margin products as part of Project Fortify. Adjusted operating margin for framing increased 240 basis points to 14.5%, primarily driven by favorable material costs and favorable mix. Productivity Gains and Lower Bad Debt Expense, which offset the impact of lower sales volume. However, net sales in glass declined 11% primarily due to lower volume. Glass operating margin continued to exceed our expectations, improving by 270 basis points to 19.7 percent, primarily driven by productivity gains and improved pricing. Services net sales grew 11%, primarily due to a more favorable mix of projects and increased volume.

Matthew J. Osberg: For the first quarter, although we posted a decline in net sales, we were pleased to deliver EPS growth ahead of our expectations.

Matthew J. Osberg: As we discussed in the fourth quarter conference call, we anticipated lower sales levels in the first quarter due to softness in our end markets and as a result of the actions of Project Fortify.

Matthew J. Osberg: These factors contributed to an 8% decline in consolidated net sales driven primarily by framing and glass.

Matthew J. Osberg: Despite lower sales, adjusted operating margin improved 350 basis points to 12.8%, driven by a more favorable mix of projects and services.

Matthew J. Osberg: favorable material costs, lower insurance related costs, productivity gains, and lower bad debt expense.

Matthew J. Osberg: Adjusted diluted EPS grew 37% to $1.44.

Matthew J. Osberg: driven primarily by higher adjusted operating income and lower interest expense.

Matthew J. Osberg: Turning to the segment results, framing net sales declined 19% primarily due to lower volumes and our strategic shift away from certain lower margin products as part of Project Fortify.

Matthew J. Osberg: Adjusted operating margin for framing increased 240 basis points to 14.5%, primarily driven by favorable material costs, favorable mix, productivity gains, and lower bad debt expense, which offset the impact of lower sales volume.

Matthew J. Osberg: Net sales in glass declined 11% primarily due to lower volume.

Matthew J. Osberg: Glass operating margin continued to exceed our expectations, improving by 270 basis points to 19.7%, primarily driven by productivity gains and improved pricing.

Matthew J. Osberg: Services net sales grew 11% primarily due to a more favorable mix of projects and increased volume.

Matthew J. Osberg: Operating income was $5.6 million, returning to more normal profitability levels compared to the operating loss in last year's first quarter. Services backlog ended the quarter at $867 million, 7% higher than last quarter and 22% above the same quarter last year. This is the third consecutive quarter of backlog growth for services and reflects a diverse set of project wins in the health care, education, and recreation sectors.

Matthew J. Osberg: Operating income was 5.6 million dollars, returning to more normal profitability levels compared to the operating loss in last year's first quarter.

Matthew J. Osberg: Services backlog ended the quarter at $867 million.

Matthew J. Osberg: This is 7% higher than last quarter and 22% above the same quarter last year. This is the third consecutive quarter of backlog growth for services and reflects a diverse set of project wins in the healthcare, education, and recreation sectors.

Matthew J. Osberg: LSO net sales were down 6% primarily due to lower volume in our retail channel, partially offset by a more favorable mix. Operating margin declined 170 basis points to 22.9%, reflecting the impact of lower volume partially offset by cost savings and improved mix. Corporate and other expenses came in at $4.5 million, down from $7.6 million in last year's first quarter, primarily due to lower insurance-related costs. Turning to cash flow on the balance sheet, cash from operations was $5.5 million, down from $21.3 million in last year's first quarter, primarily driven by an increase in cash used for working capital.

Matthew J. Osberg: LSO net sales were down 6% primarily due to lower volume in our retail channel, partially offset by a more favorable mix.

Matthew J. Osberg: Operating margin declined 170 basis points to 22.9 percent reflecting the impact of lower volume partially offset by cost savings and improved mix.

Matthew J. Osberg: Corporate and other expenses came in at $4.5 million, down from $7.6 million in last year's first quarter, primarily due to lower insurance-related costs.

Matthew J. Osberg: Turning to cash flow in the balance sheet, cash from operations was $5.5 million, down from $21.3 million in last year's first quarter, primarily driven by an increase in cash used for working capital.

Matthew J. Osberg: As a reminder, the first quarter is typically our lowest cash flow quarter of the year due to the timing of incentive and other annual payments. Our primary uses for cash in the quarter were $15.1 million of share repurchases and $7.2 million of capital expenditures. Our balance sheet remains in a very strong position, with very low debt and no near-term maturities.

Matthew J. Osberg: As a reminder, the first quarter is typically our lowest cash flow quarter of the year due to the timing of incentive and other annual payments.

Matthew J. Osberg: Our primary uses for cash in the quarter were $15.1 million of share repurchases and $7.2 million of capital expenditures.

Matthew J. Osberg: Our balance sheet remains in a very strong position, with very low debt and no near-term maturities. We finished the quarter with a net leverage ratio of 0.2 times trailing 12-month adjusted EBITDA.

Matthew J. Osberg: We finished the quarter with a net leverage ratio of 0.2 times trailing 12-month adjusted EBITDA. Moving to our outlook for the full fiscal year, we continue to expect net sales to decline 4 to 7 percent. This range includes approximately two percentage points of decline related to fiscal 25 reverting to a 52-week year and approximately one percentage point of decline related to the actions of Project Fortify. Also, as Ty discussed, we continue to expect softening in-market demand to put pressure on volume and pricing, particularly in framing and glass.

Matthew J. Osberg: Moving to our outlook for the full fiscal year, we continue to expect net sales to decline 4 to 7 percent.

Matthew J. Osberg: This range includes approximately two percentage points of decline related to Fiscal 25 reverting to a 52-week year and approximately one percentage point of decline related to the actions of Project Fortify.

Matthew J. Osberg: Also, as Ty discussed, we continue to expect softening in-market demand to put pressure on volume and pricing, particularly in framing and glass.

Matthew J. Osberg: We expect sales declines in framing and glass to be partially offset by growth in services as we execute a strong pipeline of projects in our backlog, with sales in LSO approximately flat as retail channel headwinds offset new channel adjacency growth. We now expect full-year consolidated adjusted operating margin to improve compared to Fiscal 24, primarily driven by the strong margin performance in the first quarter. However, we expect adjusted operating margins to decline sequentially throughout the remainder of the fiscal year, primarily due to lower volumes and pricing pressure in framing and glass.

Matthew J. Osberg: We expect sales declines in framing and glass to be partially offset by growth in services as we execute a strong pipeline of projects in our backlog, with sales in LSO approximately flat as retail channel headwinds offset new channel adjacency growth.

Matthew J. Osberg: We now expect full-year consolidated adjusted operating margin to improve compared to fiscal 24, primarily driven by the strong margin performance in the first quarter.

Matthew J. Osberg: However, we expect adjusted operating margins will decline sequentially throughout the remainder of the fiscal year, primarily due to lower volumes and pricing pressure and framing in glass.

Matthew J. Osberg: At the segment level, we continue to expect framing adjusted operating margin to improve compared to fiscal 24 and be within the target range of 10 to 15 percent. We continue to expect glass operating margin to moderate compared to fiscal 24, but be towards the top end of the 10-15% target range, with margins declining sequentially throughout the rest of the year. We continue to expect services margins to improve sequentially throughout the fiscal year, moving closer to the 7-9% target range.

Matthew J. Osberg: At the segment level, we continue to expect Framing Adjusted Operating Margin to improve compared to Fiscal 24 and be within the target range of 10 to 15 percent.

Matthew J. Osberg: We continue to expect glass operating margin will moderate compared to fiscal 24, but be towards the top end of the 10 to 15 percent target range, with margins declining sequentially throughout the rest of the year.

Matthew J. Osberg: We continue to expect services margins will improve sequentially throughout the fiscal year, moving closer to the 7-9% target range.

Matthew J. Osberg: We continue to expect LSO operating margin to decline as we expand into new adjacencies and begin to depreciate capital assets for our capacity expansion, but it will remain above the 20% target range. Finally, we expect corporate and other expenses to be approximately $7 million per quarter for the rest of the fiscal year. We are increasing our outlook for Adjusted Diluted EPS to a range of $4.65 to $5, primarily reflecting our stronger-than-expected first-quarter performance.

Matthew J. Osberg: We continue to expect LSO operating margin will decline as we expand into new adjacencies and begin to depreciate the capital assets for our capacity expansion, but will remain above the 20% target range.

Matthew J. Osberg: Finally, we expect corporate and other expenses to be approximately $7 million per quarter for the rest of the fiscal year.

Matthew J. Osberg: We are increasing our outlook for adjusted diluted EPS to a range of $4.65 to $5, primarily reflecting our stronger-than-expected first quarter performance.

Matthew J. Osberg: As a reminder, we anticipate the reversion to a 52-week year will reduce adjusted diluted EPS by approximately 20%. We continue to expect an effective tax rate of approximately 24.5% and full-year capital expenditures of $40 to $50 million. We also continue to expect lower full-year cash flow from operations compared to fiscal 24 as the working capital changes that impacted the past two years normalize. In conclusion, we are proud of how our team continues to execute across the business, acting on opportunities to improve productivity and reduce costs while taking the right steps to position the company for improved long-term growth.

Matthew J. Osberg: As a reminder, we anticipate the reversion to a 52-week year will reduce adjusted diluted EPS by approximately 20 cents.

Matthew J. Osberg: We continue to expect an effective tax rate of approximately 24.5% and full year capital expenditures of $40 to $50 million.

Matthew J. Osberg: We also continue to expect lower full-year cash flow from operations compared to Fiscal 24 as the working capital changes that impacted the past two years normalizes.

Matthew J. Osberg: In conclusion, we are proud of how our team continues to execute across the business, acting on opportunities to improve productivity and reduce costs, while taking the right steps to position the company for improved long-term growth.

Matthew J. Osberg: We continue to build a stronger foundation through executing our strategy, and our healthy balance sheet enables us to invest in our business, actively seek accretive acquisition opportunities, and return cash to shareholders. With that, I'll turn it back over to Ty for some concluding remarks.

Matthew J. Osberg: We continue to build a stronger foundation through executing our strategy, and our healthy balance sheet enables us to invest in our business, actively seek accretive acquisition opportunities, and return cash to shareholders.

Speaker Change: With that, I'll turn it back over to Ty for some concluding remarks.

Ty R. Silberhorn: Let me wrap up by once again recognizing our team for another solid quarter. I'm proud of how they're navigating through challenging market environments to continue delivering improved profitability. Our results this quarter position the company for another year of adjusted operating margin expansion and adjusted EPS growth. We are focused on delivering near-term results, with our priority working to drive long-term shareholder value. With that, we are ready to take your questions. Thank you.

Ty R. Silberhorn: Thanks, Matt. Let me wrap up by once again recognizing our team for another solid quarter.

Ty R. Silberhorn: I'm proud of how they're navigating through challenging market environments to continue delivering improved profitability. Our results this quarter position the company for another year of adjusted operating margin expansion and adjusted EPS growth.

Ty R. Silberhorn: We are focused on delivering near-term results, with our priority working to drive long-term shareholder value. With that, we are ready to take your questions.

Operator: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment for questions. Our first question comes from Brent Thielman with D.A. Davidson. You may proceed.

Speaker Change: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment for questions.

Brent Edward Thielman: Hey, thanks, good morning, congrats, great quarter. Maybe just to start on services, the uplift and backlog this quarter, Ty, maybe you could just talk about to what degree you think that's influenced by market conditions or just by some of the changes you've made in your go-to-market strategy. Maybe we could just start there. Sure.

Speaker Change: Our first question comes from Brent Thielman with D.A. Davidson. You may proceed.

Brent Edward Thielman: Hey, thanks. Good morning. Congrats. Great quarter. Morning, Brendan. Yeah. Maybe just to start on services, the uplift and backlog this quarter. Ty, maybe you could just talk about to what degree you think that's influenced by...

Speaker Change: market conditions or just by some of the changes you've made in your go-to-market strategy. Maybe we could just start there.

Ty R. Silberhorn: Sure. Well, I think one thing to highlight there is that backlog growth did not include a single office project, which speaks to the diversification efforts we have. That doesn't mean there aren't office opportunities out there, like we've talked about before. There are still some great opportunities for Class A space, new construction that we see in the pipeline. But that was a big positive in terms of the team's efforts to really diversify.

Ty R. Silberhorn: Sure, well I think one thing to highlight there is that backlog growth.

Speaker Change: did not include a single office project, which speaks to the diversification efforts we have.

Speaker Change: That doesn't mean there aren't office opportunities out there like we've talked before. There's still some great opportunities for Class A space, new construction that we see in the pipeline.

Speaker Change: But that was a big, I think, positive in terms of the team's efforts to really diversify. And we also continue to pick up some projects out west, you know, which has been a thoughtful, purposeful investment.

Ty R. Silberhorn: And we also continue to pick up some projects out west, which has been a thoughtful, purposeful investment from that perspective. From an overall market perspective, our services leadership team would tell you they are seeing softness as well. So they, we believe, and they believe, we are actually taking share as a result of that, which kind of points to why we think they may show growth this year, and they're building a nice backlog that sets them up for potential growth next year.

Speaker Change: from that perspective.

Speaker Change: From an overall market perspective, our services leadership team would tell you they are seeing softness as well.

Speaker Change: So they

Speaker Change: We believe they and they believe we are actually taking share as a result of that which kind of points to

Speaker Change: while we think they may show growth this year and they're building a nice

Ty R. Silberhorn: But it is really through a share gain effort, some of that from the West, some of that from their traditional markets in the Southeast, Midwest, and Southwest, as well, that is putting a little bit of pressure on margin. So they're still showing margin improvement, and we expect that margin improvement will continue, and they will climb back into that seven to nine percent target range, but they are giving up a little bit of margin to capture that volume.

Speaker Change: backlog that sets them up for potential growth next year, but it is really through a share gain effort. Some of that from the West, some of that from their traditional markets in the Southeast, Midwest.

Speaker Change: Southwest as well, that is putting a little bit of pressure on margin. So they're still showing margin improvement and we expect that margin improvement will continue and they climb back into that seven to nine percent target range but they are giving up a little bit of margin to capture that volume.

Matthew J. Osberg: Okay, thanks, Ty. And then, yeah, to that point, the nice rebound and profitability in that business segment, maybe with the, Matt, a better start. It sounds like you have more confidence in hitting that kind of 7-9% range, but... I'm kind of taking that with what you just said, Ty, that you've got to have a little more competitive pressure in that business segment. So maybe you could just talk through what you expect for the margin profile through this year relative to your kind of target range.

Speaker Change: Okay, thanks, Ty. And then, yeah, to that point, the nice rebound in profitability in that business segment, maybe with the, Matt, with the better start.

Speaker Change: It sounds like you have more confidence in hitting that kind of seven to nine percent range, but

Speaker Change: I'm kind of taking that with what you just said, Ty, that you've got maybe a little more competitive pressure in that business segment. So maybe you could just talk through what you expect for the margin profile through this year relative to your kind of target range.

Matthew J. Osberg: Yeah, I think you're reading it right there, Brent. You know, obviously, in the first quarter we did expect them to improve significantly. They were, you know, slightly ahead of our expectations but a really strong start to the year. And as we said, we think they will improve sequentially in margin as we move forward. You know, we came into this year really excited about the pipeline that they had built, most of it from last year, and looking at some of the projects we'd be able to execute on. So, a great first quarter for them.

Speaker Change: Yeah, I think you're reading it right there, Brent. You know, obviously the first quarter, we did expect them to improve significantly. They were, you know, slightly ahead of our expectations, but a really strong start to the year. And as we said, we think they improve sequentially in margin as we move forward.

Speaker Change: You know, we came into this year really excited about the pipeline that they'd built. Most of it from last year and looking at some of the projects we'd be able to execute on.

Speaker Change: So, great first quarter for them. We do expect them to continue to improve as the year goes on and, you know, as we've talked about, that backlog we're building now is primarily looking at Fiscal 26, so trying to build a strong pipeline in that business for Fiscal 26 as well.

Matthew J. Osberg: We do expect them to continue to improve as the year goes on. And, you know, as we've talked about, that backlog we're building now is primarily looking at fiscal 26. So, trying to build a strong pipeline in that business for fiscal 26 as well.

Ty R. Silberhorn: Got it. Just last one. Still sort of surprised by the strength and glass profitability. Is there sufficient evidence in your orders that that business, you know, should see something lower in terms of margins and that these levels can't sustain?

Speaker Change: Got it. Just last one, I'm still sort of surprised by the strength and glass profitability. Is there sufficient evidence in your orders that that business...

Speaker Change: you know should see something lower in terms of margins and that these levels can't sustain.

Matthew J. Osberg: Yeah, Brent, this is one where I don't want to be right, but we do think it will moderate throughout the year. And primarily what we see is we see a lot of pricing pressure as volumes softening in. Market demand is putting pressure on volumes. We're trying to titrate our pricing, and it's getting pushed down. And so we think there is going to be some pressure on pricing that's going to push You know, consecutively, as we look at the rest of the quarters sequentially in the year, you know, there was I think what what was had that, segment ahead of our expectations in Q1 was better pricing than we expected, but looking at what we've got for the rest of the year, we do think that that's going to continue to moderate and get, you know, I'd say closer to the top end of that 10 to 15 percent margin range for the year.

Speaker Change: Yeah, Brent, this is one where I don't want to be right, but, you know, we do think it will moderate throughout the year, and primarily what we see is, you know, we see

Speaker Change: The, a lot of pricing pressure as volume softening and market demand is putting pressure on volumes, you know, we're trying to titrate our pricing and it's getting pushed down and so we think there is going to be, you know, some pressure on pricing that's going to push down margins.

Speaker Change: You know consecutively as we look at the rest of the quarters sequentially in the year You know there was I think what what was had that

Speaker Change: segment ahead of our expectations in Q1 was better pricing than we expected but looking at what we've got for the rest of the year we do think that that's going to continue to moderate and get you know I'd say closer to the top end of that 10 to 15 percent margin range for the year.

Brent Edward Thielman: Yeah, I mean, we track bid activity, Brent, so, you know, it's hard to see more than six months out for that business, but one of the things we do look at is the quoting activity and what the bid margin levels are to even stay in the game on some projects, and that's where we can see the amount of activity on bid requests as well as where they're having to price that says, hey, we're staring And if they do pick up some of that volume, it's going to be at slightly lower margin levels as we move ahead. Okay, I got it. Thanks.

Speaker Change: Yeah, I mean, we track bid activity, Brent, so...

Speaker Change: You know, it's hard to see more than six months out for that business, but one of the things we do look at is the quoting activity and what the bid margin levels are, to even stay in the game on some projects, and that's where we can see.

Speaker Change: The amount of activity on bid request as well as where they're having to price that, you know, says, hey, we're staring at some lower volumes, and if they do pick up some of that volume, it's going to be at slightly lower margin levels as we move ahead.

Brent Edward Thielman: Okay, got it. Thanks, guys. Appreciate it. I'll pass it on. Thanks.

Speaker Change: Okay, got it. Thanks guys. Appreciate it. I'll pass it on. Thanks. Thanks, Brent.

Operator: Our next question comes from Julio Romero with the Sidonian Company. You may proceed.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Julio Romero with Sidotian Company. You may proceed.

Julio Alberto Romero: Thanks. Hey, good morning, Ty, Matt, and Jeff.

Julio Alberto Romero: Thanks. Hey, good morning, Ty, Matt, and Jeff. Thanks for taking the questions.

Julio Alberto Romero: Thanks for taking the questions. Maybe to start on the guidance, appreciate all the color you gave there. You mentioned you now expect the full year adjusted operating margins at the consolidated level to be up, year-over-year, but maybe some declines sequentially at the consolidated level and also on glass. Can you maybe just speak to framing and how you expect framing margins to trend from here on a sequential basis?

Julio Alberto Romero: To start on the guidance, I appreciate all the color you gave there. You mentioned you now expect the full year adjusted operating margins at the consolidations level to be up. I appreciate that. Thank you.

Julio Alberto Romero: Year over year, but maybe some declines sequentially at the consolidated level and also on glass. Can you maybe just speak to framing and how you expect framing margins to trend from here on a sequential basis?

Matthew J. Osberg: Yeah, I think in some of my prepared remarks as well, I mean, we expect framing margins to decline sequentially as well, and it's a lot of the same story as glass. You know, we see softening in markets, more pressure on pricing that's going to push down margins as we go through the end of the year. So I'd say it's a similar story for glass and framing from a margin

Speaker Change: Yeah, I think within some of my prepared remarks as well, I mean, we expect framing margins to decline sequentially as well, and it's a lot of the same story as glass, you know, we see softening in markets, more pressure on pricing that's going to push down margins.

Speaker Change: as we go through the end of the year. So I'd say it's a similar story for glass and framing from a margin perspective.

Matthew J. Osberg: Got it. And, you know, just to stay on framing, the margins this quarter were really impressive. Any way to kind of quantify how much cost savings did you realize in framing this quarter related to Project Portify, either on a dollar perspective or on a margin perspective?

Speaker Change: Got it. And, you know, just to stay on framing, the margins this quarter were really impressive.

Speaker Change: Any way to kind of quantify how much cost savings did you realize in framing this quarter related to Project Fortify, either on a dollar perspective or on a margin perspective?

Matthew J. Osberg: Yeah, we didn't quantify it, but I would say it's in line with our expectations. You know, we outlined the savings that we expect to get from the actions we're taking there, and we are seeing the savings in line with how we have moved through the actions. We still aren't quite done with all the actions, but for the ones that we took either in the fourth quarter or early in the first quarter, we are seeing the savings float through, and I'd say it's in line with our expectations.

Speaker Change: Yeah, we didn't quantify it. I would say it's in line with what our expectations are. We outlined the savings that we expect to get from the actions we're taking there. We are seeing the savings in line with.

Speaker Change: how we have moved through the actions. We still aren't quite done with all the actions, but for the ones that we've taken either in the fourth quarter or early in the first quarter, we are seeing the savings flow through and I'd say it's in line with our expectations.

Ty R. Silberhorn: Got it. Really helpful. And then the last one for me is just if you could maybe speak to some growth plans and kind of a progress update on where that stands specifically for the framing business and maybe growing that from a geographical perspective.

Speaker Change: Got it. Really helpful. And then last one for me is just if you could maybe speak to some growth plans and kind of a progress update on where that stands for specifically to the framing business and maybe growing that from a geographical perspective.

Ty R. Silberhorn: Yeah, Julio, it's Ty. I'll take that one. So I would say we're the furthest along with the people in process investments that our services segment has made in growing west of the Rockies. And they've been picking up some projects as a result of that, and there's actually some plant expansion activity that's going on within their Texas facility to support that. And at some point, we may have to look at additional facilities further west as they continue to make inroads there. On the framing side, the team is, first and foremost, I mean, kind of lessons learned for those that have been with us on our journey.

Speaker Change: Yeah Julio, it's Ty, I'll take that one. So I would say we're furthest along with with the people in process investments that our services segment has made and in growing.

Speaker Change: West of the Rockies and they've been picking up some projects as a result of that and there's actually some plant expansion activity

Speaker Change: that's going on within their Texas facility to support that. And at some point we may have to look at additional facilities further west as they continue to

Speaker Change: make inroads there. On our framing side, the team is, first and foremost, I mean, kind of lessons learned for those that have been with us on our journey.

Ty R. Silberhorn: They're investing in what I would say are feet on the street west of the Rockies to really collect and get some good market data. We still, this business is still very fragmented as an industry. So we want good intel on what the price points are, and what the right product configurations are to offer. So we have been hiring and bringing on sales coverage, really at this point, to give us good intel. And then look at how we can quote and supply to some of that market out of our Texas operation or out of our Missouri operation.

Speaker Change: They're investing in what I would say are feet on the street west of the Rockies to really collect and get some good market data You know, we still this business is still very fragmented as an industry

Speaker Change: So we want good intel on what are the price points? What are the right product configurations to offer? So we have

Speaker Change: been hiring and bringing on sales coverage really at this point to give us good intel and then looking at how we can quote and supply to some of that market out of our Texas operation or out of our Missouri operation.

Ty R. Silberhorn: Even if initially, those are at some lower margin level to kind of give us solid confidence in what the price points are and what the right product mix is for those parts of the market. So they're in the early stages based on that info and intel that they collect over the next couple of quarters. That'll help us make some decisions about organic as well as inorganic growth. We'll continue to look at acquisition opportunities to help accelerate that. But it'll help us make some decisions on potential organic investments over the next, you know, year or two as well to really help them grow geographically.

Speaker Change: even if initially those are at some lower margin level to kind of give us solid confidence in what the price points and what the right product mix is for those parts of the market. So they're in early stages based on that info and intel that they collect over the next couple quarters.

Speaker Change: That will help us make some decisions about organic as well as inorganic. We'll continue to look at acquisition opportunities to help accelerate that.

Speaker Change: But it'll help us make some decisions on potential organic investments over the next, you know, year or two as well to really help them grow geographically beyond the Rockies.

Julio Alberto Romero: Great. Thanks very much for the call. I'll pass it on. Thank you, Julio.

Speaker Change: Great. Thanks very much for the call. I'll pass it on.

Operator: Our next question comes from John Braatz with KCCA. Please proceed.

Speaker Change: Thank you, Julio.

Speaker Change: Thank you.

Speaker Change: Our next question comes from John Braatz with KCCA. You may proceed.

Jonathan Paul Braatz: Ty, Matt, I think maybe Matt, you mentioned in your commentary that architectural framing margins improved a little bit because of the lower material cost. How do you see that going forward? Does that have some legs, and is there any benefit from lower material costs in glass?

Speaker Change: Good morning, everyone.

Jonathan Paul Braatz: Ty, Matt, I think maybe Matt, you mentioned in your commentary that architectural framing margins improved a little bit because of the lower material cost.

Jonathan Paul Braatz: How do you see that going forward? Does that have some legs? And is there any benefit from lower material costs in glass?

Matthew J. Osberg: I would say from a material cost perspective, I think there is some favorability that's baked into the forecast and our updated outlook that we gave today. I wouldn't say it's overly material, but I do see some favorability there. From a glass perspective, I would say less so. You know, I think that's more of kind of as our expectations come out. I don't think there's a big benefit to be had there.

Matthew J. Osberg: I would say from a material cost perspective, you know, I think there is some favorability that's

Matthew J. Osberg: you know, baked into the forecast and our updated outlook that we gave today. I wouldn't say it's overly material, but, you know, I do see some favorability there.

Matthew J. Osberg: From a glass perspective, I would say less so. You know, I think that's more of kind of as our expectations come out, I don't think there's a big benefit there.

Jonathan Paul Braatz: Okay, okay. Ty, how would you characterize your view of the market environment at this point versus where you were maybe three months ago at the last call? Has it worsened a little bit or weakened a little bit from

Speaker Change: Hi, how would you characterize your view of the market environment at this point?

Speaker Change: versus where you were maybe three months ago at the last call.

Speaker Change: Has it worsened a little bit or weakened a little bit from what you were thinking three months ago?

Ty R. Silberhorn: Well, John, I think we're getting some data points that I think further validate what we thought three months ago. I mean, we pointed out that we thought we would see softness in the second half from a volume perspective, and if you, again, maximize profit dollars. We might put some pressure on pricing so that you can find yourself in a position to still hang on to the most profit dollars as you can as part of that or even find a way to grow some of those profit dollars.

Speaker Change: Well Jon, I think we're getting some data points that I think further validates what we thought three months ago. I mean we pointed, we thought we would see softness in the second half.

Speaker Change: From a volume perspective and if you again to maximize profit dollars

Speaker Change: We might put some pressure on pricing so that you can find yourself in a position to still hang on to the most profit dollars as you can as part of that or even find a way to grow some of those profit dollars.

Ty R. Silberhorn: So I would say it hasn't changed dramatically. I would say we're getting data points that kind of affirm what we were thinking, even for our glass business, which, as Matt said, still continued to surprise us in terms of margin strength. But as we look at that data now, and we look at future awards, and we're starting to get some visibility now into the third quarter and a little bit of the fourth quarter margin levels, we can see that that pressure is picking up a little bit.

Speaker Change: So I would say it hasn't changed dramatically, I'd say we're getting data points that kind of affirm what we were thinking, even for our glass business, which, as Matt said, still continue to surprise us in terms of margin strength.

Speaker Change: But as we look at that data now, and we look at future awards, and we're starting to get some visibility now into third quarter.

Speaker Change: and a little bit of fourth quarter margin levels, we can see that that pressure is picking up a little bit. It will pull their margins down and you saw the volume declining. They had a revenue drop and they were able to over deliver from a margin perspective and kind of keep

Ty R. Silberhorn: It would pull their margins down, and you saw the volume declining. They had a revenue drop, and they were able to over deliver from a margin perspective and kind of, margin dollars, you know, relatively in the ballpark from where they were.

Jonathan Paul Braatz: Lastly, I know you've been working to expand into some adjacency markets in LSO. When might we begin to see some of that hit the top line? When might we see the benefit of some of these?

Speaker Change: margin dollars, you know, relatively in the ballpark from where they were.

Speaker Change: Lastly, I know you've been working to expand into some adjacency markets in LSO. When might we begin to see some of that?

Speaker Change: Let's say, hit the top line, when might we see the benefit of some of these actions?

Ty R. Silberhorn: We're actually seeing some of that come through now, manufacturing, clean room facility, some of the semiconductor build out. So we're actually seeing some wins and revenue flow through. It's small initially, but the product launches that they put in place knowing they're going to have the additional capacity coming online, they've been aggressively chasing those opportunities now on the market. It could be noisy. I mean, we do kind of the same thing.

Speaker Change: Yeah, we're actually seeing some of that come through now. They've launched an acrylic-based electrostatic. It's a bit of substrate that they can sell into.

Speaker Change: Manufacturing, clean room facilities, some of the semiconductor build out. So we're actually seeing some wins and revenue flow through. It's small initially, but the product launches that they put in place knowing they're going to have the additional capacity coming online.

Ty R. Silberhorn: We just think there's going to be some consumer softness, you know, through the count through the end of the calendar year. So it's likely, as we look at that business, you don't see much of a top line movement; you could see a little bit of margin erosion. And really, what's happening there is their framing, their core framing business, softening with some consumer spend, but they're replacing it with some of these technical glass and technical acrylic substrate applications at still very good margins.

Speaker Change: They've been aggressively chasing those opportunities now on the market. Could be noisy. I mean, we do kind of same thing. We just think there's going to be some consumer softness, you know, through the end of the calendar year. So it's likely as we look at that business.

Speaker Change: You don't see much of a top line movement, you could see a little bit of margin erosion and really what's happening there is

Speaker Change: their framing, their core framing business.

Speaker Change: You know, it's softening with some consumer spend, but they're replacing it with some of these technical glass and technical acrylic.

Ty R. Silberhorn: I mean, those would still be in the teens from an operating income perspective, but that's kind of how we're looking at the business right now for the years, kind of how we expect it to perform, which gives us legs then as we turn the page to our fiscal 26.

Speaker Change: substrate applications at still very good margins. I mean, those those would still be in the teens. Yeah, from an operating income perspective. But that's kind of how we're looking at the business right now for the years kind of how we expect it to perform, which gives us legs then as we turn the page to our fiscal 26.

Jonathan Paul Braatz: All right. All right. Thank you very much. Thanks, John.

Speaker Change: All right, thank you very much. Thanks, John . Thanks, John .

Operator: And as a reminder, to ask a question, please press star 11 on your telephone. Our next question comes from Chris Sakai with Singular Research. Okay.

Speaker Change: Thank you.

Speaker Change: And as a reminder, to ask a question, please press star 11 on your telephone. Our next question comes from Chris Sakai with Singular Research. You may proceed.

Chris Sakai: Hi, good morning. I'm in for BJ. Can you talk about your geographic expansion and large-scale optical and the updates there?

Speaker Change: Hi, good morning. I'm in for BJ. Can you talk about your...

Ty R. Silberhorn: Well, Large Scale Optical, because of the products and the differentiation they have, they are actually able to ship their products globally. So they have businesses in Asia, they have businesses in Europe. Most of the business is still predominantly in the US. I think some of these new applications that they're going after, it's really a heavy North America focus with a US emphasis. So they are set up well with the capacity, and just given the price and performance of their products, we don't really see a need at this point to invest in any additional facilities to support that broader geographic growth.

Chris Sakai: Good morning. Can you talk about your geographic expansion and large-scale optical in the update, sir?

Speaker Change: Well, Large Scale Optical, because of the products and the differentiation they have those products, they actually are able to ship their products globally. So they have business in Asia, they have business in Europe .

Speaker Change: Most of the business is still predominantly in the U.S. I think some of these...

Speaker Change: The new applications that they're going after, it's really a heavy North America focus with a U.S. emphasis. So they are set up well with the capacity and just given the price and performance of their products.

Speaker Change: that we don't really see a need at this point to, you know, invest in any additional.

Matthew J. Osberg: And Chris, this is Matt.

Matthew J. Osberg: And Chris, this is Matt. I know Ty had a comment too. So we made a comment about investing for growth in LSO, which was the capacity expansion that Ty had mentioned, which is more about getting them more just coder production capabilities. And then geographical expansion is something that we're more focused on, I would say, from a framing and services perspective. And we've made some, I'd say, more manufacturing capability investments there to be able to have them win projects that are, you know, typically farther away, you know, west of the Rockies by being able to have closer production or closer, you know, sales customer contact space.

Matthew J. Osberg: facilities to support that broader geographic growth. And Chris, this is Matt. I know Ty had a comment, too. So we made a comment about investing for growth in LSO, which was the capacity expansion that Ty had mentioned, which is more about getting them more just coder production capabilities. And then geographical expansion is something that we're more focused on, I would say, from a framing and services perspective. And we've made some...

Matthew J. Osberg: I'd say more manufacturing capability investments there to be able to have them win projects that are, you know, typically farther away, you know, west of the Rockies by being able to have closer production or closer, you know, sales customer contact spaces.

Ty R. Silberhorn: Okay, thanks. That's helpful. And then you mentioned the flight to quality in some of the markets that you serve. How is that trend still going?

Speaker Change: Okay, thanks. That's helpful. And then you mentioned the flight to quality in some of the markets that you serve. How is that trend still going?

Ty R. Silberhorn: I think we definitely are seeing that in our services segment. So that's part of their share game that we're seeing this year. And right now, they've got good momentum behind that as they go into next year.

Speaker Change: I think we definitely are seeing that in our services segment, so that's part of their...

Speaker Change: their share gain that we're seeing this year and right now they've got good momentum behind that as they go into next year.

Ty R. Silberhorn: Within the other parts of our business, service and lead times in our framing business are still going to be key, even as the market softens. So the more that we can strengthen our capabilities there, I think the better we are in terms of holding on or gaining share in that business. And then from a glass perspective, I mean, we put such a big emphasis on the premium offering, so more value-added features in each insulated glass unit that leaves our facilities, you know, the team is looking at that just with some volume softness.

Speaker Change: within the other parts of our business.

Speaker Change: You know, service and lead times in our framing business are still going to be key, even as the market softens. So the more that we can strengthen our capabilities there, I think the better we are in terms of holding on or gaining share in that business.

Speaker Change: And then from a glass perspective, I mean, we put this big emphasis on the premium offering, so more value-added features in each.

Speaker Change: insulated glass unit that leaves our facilities.

Ty R. Silberhorn: They're going to be in a little bit of a trade-off mode here of do they give a little on price or do they work with the customer instead of having three or four features on that IGU, maybe it's two or three, which will affect kind of pricing and margin, and that's kind of what we built into our assumptions for our projections for the rest of the year, but without having to kind of go all the way back down and So I would say overall, when you look across it, it's holding up at this.

Speaker Change: You know, the team is looking at that just with some of the volume, softness, they're going to be in a little bit of a trade-off mode here.

Speaker Change: Do they give a little on price or do they work with the customer instead of having three or four features on that IGU, maybe it's two or three?

Speaker Change: which will affect kind of pricing and margin and that's kind of what we built into our assumptions for our projections for the rest of the year But without having to kind of go all the way back down and chasing a lot of high volume and commodity

Speaker Change: commodity glass business. So I would say overall when you look across it, it's holding up at this point.

Chris Sakai: Okay, sounds good. And then, can you talk about capital expenditures for the rest of the year? How do you see that shaping up?

Speaker Change: Okay, sounds good. And then can you talk about capital expenditures for the rest of the year? How do you see that shaping up?

Matthew J. Osberg: Yeah, we expect those to be within a range of 40 to 50 million dollars. We're pretty in line with the spending that we expected in the first quarter consistent with what we did in the prior year. So we're seeing that come in, I would say, in line with our expectations.

Speaker Change: Yeah we expect those to be within a range of 40 to 50 million dollars. We're pretty in line with the spending that we expected in the first quarter consistent with what we've done in the prior year. So we're seeing that come in I would say in line with our expectations.

Chris Sakai: Okay, great. Thanks for the answers.

Chris Sakai: Thank you, Chris. Thanks, Chris.

Speaker Change: Okay, great. Thanks for the answers.

Ty R. Silberhorn: Thank you. I would now like to turn the call back over to CEO Ty Silberhorn for a closing remarks.

Speaker Change: Thank you, Chris. Thanks, Chris.

Speaker Change: Thank you. I would now like to turn the call back over to CEO Ty Silberhorn for closing remarks.

Ty R. Silberhorn: Well, thanks everyone for joining us today, and let me be one of the first to wish everyone a great happy and safe 4th of July. We look forward to catching up with everyone next quarter or at some of our upcoming investor conferences. Have a great rest of your day.

Ty R. Silberhorn: Well thanks everyone for joining us today and let me be maybe one of the first to wish everyone a great happy and a safe 4th of July . We look forward to catching up with everyone next quarter or at some of our upcoming investor conferences.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Ty R. Silberhorn: Have a great rest of your day.

Speaker Change: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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