Q3 2024 Enviri Corp Earnings Call
Danielle: At this time, I would like to welcome everyone to the Enviri Corporation third quarter release conference call. All lines have been placed on mute to avoid any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, press star then two on your telephone keypad.
Danielle: Also, this telephone conference presentation and accompanying webcast made on behalf of Enviri Corporation are subject to copyright by Enviri Corporation and all rights are reserved. Please note this call is being recorded. No recordings or redistributions of this telephone conference by any other party are permitted without the express written consent of Enviri Corporation. Your participation indicates your agreement.
David Martin: I would now like to introduce Dave Martin of Enviri Corporation. Mr. Martin, you may begin your call. Thank you, Danielle, and welcome to everyone joining us this morning. I'm Dave Martin, VP of Investor Relations for Enviri. With me today is Nick Grasberger, our chairman and chief executive officer, and Tom Vadaketh, our senior vice president and chief financial officer. This morning we will discuss our results for the third quarter and our outlook for the remainder of the year. We'll then take your questions.
David Martin: Before our presentation, let me mention a few items. First, our quarterly earnings release and slide presentation for this call are available on our website. Second, we will make statements today that are considered forward-looking within the meaning of the federal securities laws. These statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties that may cause actual results to differ materially from those forward-looking statements. For a discussion of such risks and uncertainties, see the risk factors section in our most recent 10-K and more recent 10-Qs. The company undertakes no obligation to revise or update any forward-looking statements.
David Martin: Lastly, on this call, we will refer to adjusted financial results that are considered non-GAAP for SEC reporting purposes. A reconciliation to GAAP results is included in our earnings release and the slide presentation.
Nick Grasberger: With that being said, I'll turn the call to Nick.
Nick Grasberger: Thank you, Dave, and good morning, everyone. Before we get into the results, I'd like to acknowledge our late colleague and friend, Maura Curry. who is the president of our HRSCO environmental segment. We unexpectedly lost Mauro near the end of this past quarter. Tomorrow be remembered for his energy and passion and his commitment to our business and to our values. We are fortunate to have a strong team across HE and at the executive level. And I will lead HE until a new president is named, which we expect to be early next year.
Nick Grasberger: Turning to the quarter, I'll make a few comments on our Q3 results and on each of our three segments. and then provide an update on our strategic plan and our business portfolios. We focus on creating shareholder value.
Nick Grasberger: Our third quarter can be characterized by four developments. Number one, another record quarter for Clean Earth in terms of EBITDA and EBITDA margin. Second, with HE, a weakening of the global steel market due to the impact of excess capacity in China and slower demand in many of our key geographies. Third, continued supply chain and operational challenges in our rail business. And fourth, the strengthening of our balance sheet through asset sales and the renewal and extensions of our revolver and other short-term credit facilities. Turning to clean earth, the business continues to exceed expectations and deliver double-digit earnings growth against challenging comparisons to last year.
Nick Grasberger: adjusted EBITDA increased over 20% versus Q3 of last year, while the EBITDA margin improved 17.5%. An increase of over 300 base points. Cash Flow Remains Strong. Pricing mix and numerous projects aimed at improving efficiency or driving the In addition to these factors moving forward, clean earth should also benefit from volume growth. link to sustainability initiatives among customers and new markets such as PFAS. We'll also benefit from upgraded and common IT systems and other technology driven initiatives as part of our One Clean Earth program.
Nick Grasberger: Parsco Environmental has faced headwinds due to a weakening steel industry in most markets. Access Capacity and Weaker Demand in China, which accounts for 50% of global steel production. has led to a flood of exports from the country, which has put pressure on some of our customers in less protected markets. Over the past six months, we've seen a handful of steel mills we support either cease or reduce production. Eventually, we expect China to reduce capacity while other countries increase protections against cheap Chinese steel. The falling steel price premium outside of China should also ease this pressure.
Nick Grasberger: potentially in the near term. Overall, we continue to see our mix of customers and contracts as positive. And we do not expect this short-term disruption to have a meaningful effect on our three-year outlook for HE that we shared a few months ago at our Analyst Day.
Nick Grasberger: Parsco Rail continues to face operational challenges related primarily to the late deliveries from key vendors. Global Shipping Disruptions, and Some Bottlenecks in Our Own Manufacturing Processes. Tom will touch on the steps we're taking to improve these operations. In addition, Hurricane Helene affected production and shipments at the end of the quarter from our primary manufacturing facility in Columbia, South Carolina. Overall, demand for our equipment, aftermarket parts and services remains healthy in all markets outside of China.
Nick Grasberger: I'm pleased with the progress we continue to make in improving our balance sheet. We've exceeded our goal of generating 50 to 75 million of proceeds from asset sales. primarily non-core business. In addition, our sizable pension fund in the UK is now fully funded and we don't believe further contributions will be needed. We've reached this milestone about a year earlier than expected. And finally, the amendment and extension of our short-term credit facilities was well-supported by our bank group and further strengthens our liquidity and debt maturity profile.
Nick Grasberger: As discussed during our analyst day last June, the board and the management team are focused on taking actions that are in the best interest of Enviri and all of our shareholders. This includes frequently evaluating all options to enhance shareholder value and narrow Enviri's valuation gap. And we are open-minded with respect to how we achieve these goals. Based on our evaluations to date, our view, our well-informed view. is that the best course of action is to continue executing on our operational plan outlined a few months ago. We are confident that meaningful organic growth and marginal improvement over the next two or three years will boost the value of both our school environmental and clean air.
Nick Grasberger: while allowing time to stabilize a real business and better position that business for sale.
Nick Grasberger: We already have actions underway to support these initiatives, and as a result, expect to yield EBITDA in excess of $400 million in 2027, with free cash flow of more than $150 million and net leverage of two and a half times. This will also provide greater strategic flexibility and optionality for value creation in the future. We expect to steadily improve free cash flow each year. Cash flow generation has been reduced the past few years by the investments made in our rail business to execute three long term contracts in Europe. This investment will decline next year, and then these contracts become a source of cash in the later half of 2026 and into 2027.
Nick Grasberger: In 2025, we expect free cash flow of between $40 and $60 million due to improved performance in rail, continued strong cash flow in HE and CE. and Lower Interest Expense and Pension Contribution.
Tom Vadaketh: I will now turn the call over to Tom. Thanks, Nick, and good morning, everyone. Overall, Q3 was a challenging quarter due to market-related, customer, supply chain, and weather-related pressures, particularly for Hosco Environmental and Roehl. The Enviri team responded to these challenges by pushing hard to close the quarter on a positive note, and I'm pleased that we delivered a justed EBITDA within our guidance range for the quarter. Now let me comment on our third quarter performance further, starting on slide four. In the third quarter, revenues totaled $574 million, down 4% on a reported basis. Revenues increased modestly on an organic basis, excluding the impacts of FX translation, recent divestitures, and the $5 million ETO-related adjustment in rail.
Tom Vadaketh: Adjusted EBITDA was $85 million, an improvement of 3% year-over-year, as reported, and little changed from our multi-year high in the second quarter. FX translation and divestitures impacted our EBITDA growth by roughly 5%. Our year-over-year earnings growth was driven by Clean Earth, which had another fantastic quarter with record quarterly earnings and margins. Relative to guidance, rail performance was below our expectations and was impacted by shipment and supply chain delays for standard equipment, lower aftermarket sales in Asia, and lower revenue recognition and profits on certain contracts due to operational bottlenecks and higher costs. Hurricane Helene, right at the end of the quarter, also impacted deliveries.
Tom Vadaketh: HE results were also slightly below our internal expectations, where we saw lower service volumes driven by our customers curtailing or slowing production in recent months, as well as delays starting new sites and contract exit costs. These weaknesses in performance were offset by Clean Earth, where we benefited from pricing, efficiency initiatives, and better overall cost performance. Our adjusted diluted loss per share was one cent for the quarter. Adjusted free cash flow for the quarter was a deficit of $34 million versus a deficit of $7 million in the prior year quarter, with the change due to the timing of working capital and capital spending.
Tom Vadaketh: Pre-cash flow was anticipated to be negative in the quarter, although it was below our expectations, mainly due to the cash impacts of the shipment and production delays in rail. We saw significant cash usage this quarter in rail, where our ETO contracts continue to consume cash. Otherwise, HE and CE generated approximately $50 million of free cash flow in the quarter, and this offset our interest costs and other corporate items. Our covenant leverage ratio remained just below four times, and our net debt was stable in the quarter. The successful sale of reed minerals offset the impact of the negative cash flow on our total debt.
Tom Vadaketh: Lastly, before moving on to segment results. I was very pleased that we extended our revolver and accounts receivable facilities at favorable terms. We will continue to have a proactive approach to deal with upcoming debt maturities. And with these two extensions, the next major maturity is not until 2027. Also, since the quarter ended, we entered into an additional floating-to-fixed interest rate swap for a portion of our term loan. The terms were attractive, and I view the swap as prudent risk management against future rate movements.
Tom Vadaketh: Please turn to slide 5 in our HE section. Segment revenues totaled $279 million, down 2% compared with the prior year quarter, net of a $6 million FX translation impact and a $15 million impact from divestiture. Adjusting for the FX impact and the sale of performics and reed minerals, organic growth for HE was 5%. Adjusted EBITDA for the quarter totaled $53 million, which was modestly lower versus the prior year, and again is net of FX and of S&P. Compared with last year, FX, divestitures, and contract exits offset the favorable impact of price, growth investments, and higher service levels in HVAC.
Tom Vadaketh: H.E. Zibitar margin was 19% in the quarter.
Tom Vadaketh: Next, please turn to slide 6 to discuss Clean Earth. For the quarter, revenues totaled $237 million, down 1% versus the prior year, with lower industrial and soil volumes mostly offset by higher prices. Hazardous Materials Revenues totaled $195 million, while Soil Dredge Revenues were $42 million for the quarter. Meanwhile, Adjusted EBITDA increased 23% to reach $42 million and CE's quarterly margin increased to 17.5%. Both of these KPIs are, again, quarterly records for CE. The increase in EBITDA was driven by price, lower incentive compensation, and lower bad debt expenses, as well as lower transportation and disposal costs that are the result of our efficiency initiatives.
Tom Vadaketh: Now please turn to slide 7 in our rail business. Rail revenues totaled $58 million, and its adjusted EBITDA was a loss of $2 million in the second quarter. Compared with the 2023 quarter, the EBITDA change is the result of lower aftermarket and contracted services volumes, as well as lower revenues from various other equipment contracts. We also incurred an FX loss of approximately $1 million linked to the Turkish lira. Contributions from Standard Equipment will modestly hire year-on-year. Both revenues and adjusted EBITDA in the quarter were impacted by Hurricane Helene right at the end of the quarter, which resulted in certain shipments being pushed to the fourth quarter.
Tom Vadaketh: I'll note that the adjusted EBITDA for the quarter excludes forward loss adjustments of $10.5 million related to our three large ETO contracts in Europe. The impact of these adjustments on revenues was approximately a reduction of $5 million in the quarter, which skews the year-on-year revenue comparison. As mentioned earlier, supply chain issues and operational bottlenecks continue to hamper rail. Fixing these issues is a top priority for the company, and we have taken action to strengthen the rail team and have launched several initiatives to improve these areas of the business. Another key priority is, of course, to continue to drive the completion of the three large ETO contracts.
Tom Vadaketh: As I mentioned earlier, the business saw significant cash usage in the quarter, stemming from delayed deliveries to customers in the base business and on certain contracts. We expect the business to be in a net cash use position for the full year in the $40 million range. We continue to see strong demand in our base business for equipment and services, and our pipeline is strong. Year-to-date bookings were over $140 million and in line with our expectations.
Tom Vadaketh: As we said at our Investor Day in June, rail... is a valuable part of our portfolio, which we expect will deliver steady earnings and cash flow in the future.
Tom Vadaketh: Now let me turn to our updated 2024 outlook on slide 8. Enviri's full year adjusted EBITDA is now expected to be within a range of $317 to $327 million, which is up 5% versus 2023. The midpoint of this range is down just over $10 million from our prior guidance, with the lower range reflecting tempered expectations for HE and RAIL, partially offset by a raised outlook for clean earth. For HE, the change reflects the impact of the re-divestiture. It also reflects lower service levels in HE as a result of reduced production and some curtailments by our steel customers in Q4.
Tom Vadaketh: This expectation reflects recent outlooks provided by the World Steel Association and others. September steel production among our customers was the lowest of the year, and we expect these production levels to be maintained for the remainder of the year. For Roehl, the change relates to some shipments being pushed into 2025 and our latest assessment of our performance on certain contracts. Our detailed segment outlook can be found in the appendix of the presentation.
Tom Vadaketh: The other item I would mention is free cash flow, where our outlook has also changed. Lower cash generation for the year reflects the reduced expectations for earnings and is also partially timing related. It reflects slower cash receipts from China, which we have flagged to you in the past, and the push out of some milestone receipts in rail. The midpoint of our free cash flow guidance is now negative $10 million. This total includes gas usage at rail, which I just mentioned a moment ago. Otherwise, we expect HE and CE will together generate approximately $200 million of cash this year, which we've said previously and which we find compelling.
Tom Vadaketh: And this almost fully offsets our interest in other cash outcomes. To be clear, we are disappointed in our 2025-2024 cash performance. As Nick said, we do expect a positive inflection in our cash generation in 2025. Our interest burden should decline as should our pension contributions and most importantly we expect real cash performance to improve as we make progress on our large ETO contract.
Tom Vadaketh: Let me conclude on slide nine with our fourth quarter guidance. Q4 Adjusted EBITDA is expected to range from $68 million to $78 million. And I would note that Q4 is traditionally a seasonally weak quarter for both HE and CE. Relative to 2023, HE Environmental EBITDA is anticipated to be lower due to FX translation impacts, contract exits, divestitures, and the less favorable services make. Clean Earth EBITDA is expected to be above the prior year quarter, with higher prices, cost improvements and lower incentive comp expected to drive earnings growth. And Rarely EBITDA is expected to increase modestly year on year, due to higher volumes and improved mix and certain contract adjustments in the prior year quarter.
Tom Vadaketh: Lastly, on Q4, I would note that free cash flow is anticipated to strengthen from Q3, as is normally the case. Cash receipt delays from Q3 will also help cash performance in the current quarter.
Operator: Thanks, and I'll now hand the call back to the operator for Q&A. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the To withdraw your question, please press star then 2.
Rob Brown: The first question comes from Rob Brown from Lake Street Capital Markets. Please go ahead. Hi, good morning. Thanks for taking my question. I guess first question is on the ability to kind of deal with lower volumes in HE, how much is that as a fixed cost?
Nick Grasberger: Yeah, hi, Rob. It's Nick. As you know, we have minimum billings and fixed fees, which provide a good bit of protection against volume declines below a certain threshold.
Nick Grasberger: But until that threshold is reached, There is some impact, and that's what we saw during the quarter, and expect to see again in Q4.
Nick Grasberger: And then, I think Tom and I both mentioned that there have been a few sites that have just simply shut down, and so the impact of that is... is in our Q3 results and guidance as well.
Nick Grasberger: Great, thank you. And then, and then on the volume growth. And that continued to grow nice.
Nick Grasberger: Yeah, in general, the health care segment has been healthy for us, seeing volume growth there. In retail, there's been a healthy amount of churn. And so that's been flat to soft.
Nick Grasberger: And then the weakest of the three has been the so-called industrial or manufacturing sector where we've seen where we've seen.
Larry Solow: Operator The next question comes from Larry Solow from CJS Securities. Please go ahead.
Larry Solow: Good morning and thanks for taking the questions and my condolences as well to Mauro Currie's family. I guess first question just on the environmental piece. Sounds like, you know, we're obviously in a period of declining global volumes. Just curious, you know, what's like your contract win, net loss, right? I know you mentioned some contract losses or that you walked away from some contracts. Yeah, just trying to figure out your ability to sort of grow revenue in this. I know you mentioned a new contract, or you had a press release, New Car Steel, just a couple weeks ago.
Larry Solow: So just curious if you can give us any color, from a global level, high level, your net win rate, and does this new contract have any, does that make sense?
Nick Grasberger: I'll respond to that in a second, Larry, but let me first just emphasize what I think the audience knows here, which is that the best way to look at the performance of H-E is on an EBITDA minus capex business. So we've softened our guidance on EBITDA, but the impact on the EBITDA minus capex is much less. You know, this is businesses. much more stable than it has been and a higher level of cash flow than we've seen for a long time. And so we are able to mitigate some of these volume declines with efficiency on capital spending.
Nick Grasberger: We've seen that in the third quarter and will in Q4 and into next year as well. In terms of revenue growth, we've commented before, and it certainly remains the case, that we have an extraordinarily healthy and lengthy pipeline of growth opportunities in HE. Our competitive position is quite strong. And since we limit our investment in growth contracts, we're really only selecting. The best opportunities that tend to be in growth markets, the terms and conditions are the best, and of course the returns are higher and the risk is lower. And we have a number of those contracts that are ramping up now.
Nick Grasberger: We'll see the benefit of those in 2025. And that will serve to mitigate some of the short-term impact that we're seeing. It's some of our system sites, but but in general.
Nick Grasberger: There's a significant geographic shift underway in our portfolio now, away from the UK and Europe. and towards growth markets, India, Turkey, Mexico, I think increasingly the U.S. given the protections we have here against low-cost imports. But this takes time, right? We've seen some of that this year. We'll see more of it next year. But in general, this geographic shift is really going to be a tailwind for the business.
Nick Grasberger: I appreciate that call. And, you know, on the positive side, Clean Earth, obviously, on relatively flat revenue and volumes, had a very nice quarter on the margin side. I know you've done a lot of initiatives over the last two years, Nick, pricing and efficiencies. I think you had updated the sort of three-year target to 17 around where we are today on the margin.
Nick Grasberger: Is there more room for upside? You know, it's pretty impressive too, this quarter, anything unusual just kind of drives I wouldn't say nothing, nothing unusual. As you know, the first four years of Clean Earth, we focused an awful lot on efficiency and cost and pricing and Leadership and structure and so forth. And we're now putting a significant effort behind driving volume growth with New leadership, new focus, kind of enhanced value propositions and so forth. So I think as we look forward. We'll start to see more volume growth drive margin expansion and EBITDA and top line growth in that.
Tom Vadaketh: And then just last question on the cash flow or the free cash flow. I appreciate sort of the early look out to next year. You know, if you look at the midpoint from this year to next year, it's a nice significant jump. I think like 60 million. I know rail is losing 40 million this year. Is the biggest piece of kind of that flip going to be that rail number goes from 40 to maybe closer to positive next year? I'm just trying to get a little better handle on that.
Tom Vadaketh: Yeah, look, we obviously will comment in more detail, you know, we're going to go through our annual planning planning cycle here momentarily. And then we'll give you guys guidance, you know, the early part, but I think of it in maybe four distinct pieces, right? So Cash pensions contributions, we expect that to be down significantly year-on-year as we go into 2025. Nick mentioned that our pension fund in the UK is now at a fully funded status. We've still got to do a little bit of work to make it happen, but I expect those contributions to be down significantly.
Tom Vadaketh: Interest costs, we expect interest payments to be down somewhat year-on-year. Those are two big chunks that already give us some pathway there. And then, indeed, on rail, we expect the rail cash performance. As I said in my comments, this year, rail is in a cash-use position in the $40 million range, so negative $40 million. I do expect that to improve significantly.
Tom Vadaketh: I can't say now it's a little too early, if you don't mind, Larry, and I'll give you more details. But whether it flips into positive, I certainly expect it to be much, much better. And then, of course, the HE and CE businesses, we expect to keep chugging along, and those will deliver a little bit extra cash as well.
Larry Solow: Great. I appreciate that call, Tom. Thank you.
Nick Grasberger: I think one important point just to add on these long-term contracts in rail. With the exception of the two large contracts in the UK and Germany. The others all flip to positive cash flow when they end next. So, that will significantly reduce the net cash outflow in rail next year. We've been investing the past couple of years about $50 million per year in cash in those contracts. And so, again, when you start to look forward, thinking our long-range plan, when that $50 million is over, and we're generating $30 to $40 million of cash flow in rail per year, plus the cash flow in HE and CE, which should continue to be strong, and interest comes down and pension.
Nick Grasberger: Now, that's why we're pretty confident we're going to get to this $150 million-plus range per year in free cash flow in a couple of years.
Operator: Got it. As a reminder, if you have a question, please press star 1.
Brian Butler: The next question comes from Brian Butler from Stiefel. Please go ahead. Good morning. Thanks for taking my question. On the rail piece, can we just go back to those ETO contracts that you've been investing in and you're getting the positive?
Tom Vadaketh: What still can remind everyone the timeline and how much cash should those ultimately generate over the next, you know, three, four years as they kind of, as they finish up, because you really should have a pretty positive inflow after, you know, multiple years of investment. Yeah, no, no doubt. So so next year on the smaller ETO contracts, I think that number is 20 to 25 million of positive next year. That will be offset by continued investment into the contracts in the UK and in Germany. But those two contracts, if you look to the latter part of 2026 into 2027, 2028, you know, collectively, those should throw off.
Tom Vadaketh: 75 million or so of free cash flow. My comment a minute ago was when we're on the other side of those, right? You know, we'll still swing from kind of minus 50 what we've been seeing in Rio the past. couple of years to kind of a plus 20 or 30. even not accounting for the positive cash flow at the end of those two large. Okay.
Tom Vadaketh: And then on the hurricane activity that got kind of pushed, can you give some color on the sales and EBITDA that ultimately got moved?
Tom Vadaketh: And is there a tailwind at some point on the cleanup side? Yeah, I think there were three or four machines that ultimately did not make it out the door or could not be picked up by the shipping, the transportation company. And I'm going to say the EBITDA impact of that was a few million, one to two million.
Tom Vadaketh: Okay, and then I guess last one, when you think of, you know, clean earth, kind of looking into 2025. I mean, it still sounds like it's pretty, pretty bullish. And, and you had the industrial softness, maybe your thoughts on, again, what, what, what that could look like? I mean, I'm not looking for guidance, per se, but, you know, the momentum that you have is that is that can that be carried into 2025? Yeah, we certainly think so.
Tom Vadaketh: And then adding to that would be an expectation for volume growth next year, which we largely did not have this year.
Tom Vadaketh: Okay, great.
Tom Vadaketh: Thanks for taking the question.
Devin Dodge: The next question comes from Devin Dodge from BMO Capital Markets. Please go ahead. Yeah, thanks. Good morning. So I just want to come back to the rail division. Another adjustment to the forward loss provision to those ETO contracts. Just can you provide some color behind the drivers of this? It's just it's a provision that's going up.
Tom Vadaketh: I'm just trying to understand if things are getting worse, or was there an assumption that things will get better in that, let's say they're coming out of Q Devin, yeah, I'll try and answer that. It's Tom here. These are very complex projects, right, and we're making engines of vehicles that no one's made before. They're highly engineered, highly customized for each customer according to the design specs that they wanted us to produce. And they're long-term in nature as well. And so the ability of any company, to be honest, to be able to very, very accurately to the nearest, you know, million, estimate the cost.
Tom Vadaketh: And so as we get closer to the end points, you know, we're getting better visibility sometimes to what it's really going to take to make these. And, and, and so there is a constant fine tuning. Now, you, we do have puts and calls, right? So sometimes we are able to reduce what we think it's going to cost. Sometimes it does not.
Tom Vadaketh: Douglas Goldstein, CFP®, Financial Planners & Investors Okay, so it's not it's not. Yeah, it's Yeah, it's not. you know, overly optimistic expectations or whatever. It's just, to me, it's just a natural. Part of this process, given that you have these very long standing contracts and you're discovering more as you go along. Okay, fair enough. Okay.
Tom Vadaketh: And then maybe just another question, likely for you, Tom, just something that stands out in that cash flow statement. So, non-controlling interest in the financial cash flows. It seems like dividends are outpacing earnings contributions pretty meaningfully this year. Just can you remind us what assets they relate to and why the gap between dividends and earnings has been more pronounced? Yeah, it's probably just timing, right? So you've got accumulated earnings over the years. And at some point, we trip into a need to distribute some of those. The main joint ventures that I can think about, of course, we have some in China, as you know, and then in Italy.
Tom Vadaketh: I look around at my colleagues to see if there's anything else that you would talk about. So I think those are the main. So it's all HE related, and what we needed to do in order to get into some of those businesses. But it's climbing, yeah.
Tom Vadaketh: Okay, thanks for that.
Unknown Executive: I'll turn it over.
David Martin: This concludes our question and answer session.
David Martin: I would like to turn the conference back over to Dave Martin for closing remarks. Thank you for joining us this morning. Feel free to contact me with any follow up questions. And as always, we appreciate your interest in the company and look forward to speaking with many of you in the coming weeks.
Unknown Executive: Take care.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Operator: You may now disconnect.