Q2 2019 Earnings Call
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I would now like to turn the conference over to Mr., Steve Rolfs. Please go ahead Sir.
Good morning, I'm, Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation, I would like to welcome all of you to Sensient conference call to discuss 2019 second quarter financial results.
I'm joined this morning by Paul Manning, Sensient, Chairman, President and Chief Executive Officer.
This morning, we released our 2019 second quarter financial results a copy of the release is now available on our website at Sensient Dot com.
During our call today, we will reference certain non-GAAP financial measures, which we believe provide investors with additional information to evaluate the company's performance and improve the comparability of results between reporting periods.
These non-GAAP financial measures remove the impact of currency movements depreciation and amortization.
Noncash stock based compensation and other items as noted in the company's filings.
non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.
A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is available on the Investor information section of our web site at Sensient Dot com and in our press release.
We encourage investors to review these reconciliations in connection with the comments we make this morning.
I would also like to remind everyone that comments made this morning, including responses to your questions May include forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Our statements may be affected by certain factors, including risks.
Which are discussed in detail in the couple of filings with the Securities and Exchange Commission.
We urge you to read sensing in its filings for a description of these factors.
Please bear these factors in mind, when you analyze our comments today.
Now, we'll hear from Paul Manning.
Thank you Steve good morning.
Sensing reported earnings per share of 81 cents in the quarter compared to earnings per share of 92 cents in last years second quarter.
As we have outlined during our last two conference calls the first half a 2019 would be challenging as a result of several factors, including de stocking and softness in several key markets higher input costs and the availability of certain raw materials.
Timing of our pricing actions and the financial impact of reducing inventory within our manufacturing facilities.
Consistent with our last call I expect results for the second half of 2019 will improve as the impact of these items subsides.
We continue to see improving conditions in some of our markets, particularly in the cosmetic makeup market and we have executed on many of our pricing actions across the company to offset raw material increases.
However, during the second quarter the impact of tariffs has begun to create an additional headwind to our business that will likely continue to impact our second half results.
Terrorists have resulted in higher cost of raw materials from China as well as from the rest of the world.
In some cases, we are not able to pass on the full impact of the terrace through pricing.
The terrorists have also impacted revenue in certain markets.
The color group continued to see strong demand for natural colors in North America, Europe , Latin America and Asia.
Natural color sales were up high single digits in the second quarter and double digits for the first half of 2019.
We also saw double digit growth in our pharmaceutical product lines during the quarter, partially driven by several XTRAC wins from our recent mott's acquisition.
This growth in food colors, and pharmaceuticals is offset by lower cosmetic makeup and ink sales.
The cosmetic makeup business continued to experience destocking in the market, but the rebound we expected in the second half of this year has begun.
Sales volume and pricing in our inks business declined as the fashion and other digital ink markets were down.
As was the case in the first quarter the color group's second quarter profit was down because of lower.
Cosmetic makeup sales.
Higher raw material costs, and the timing of our pricing actions.
The rise in input costs has begun to stabilize and the pricing we put in place throughout the quarter will allow us to deliver improved results in the second half of 2019.
We communicated that the first half of 2019 will be challenging for the color group.
And the second half results would be much improved.
At this point, we expect better topline growth in the second half of the year driven by continued success in natural colors and pharmaceuticals.
Gradual improvement in the cosmetic business and our pricing actions.
This revenue growth and a moderation in our raw material headwinds will feed an improved profit picture in the second half of the year.
Turning to the flavor and fragrance is group, we continue to experience solid sales growth in finished flavors and extracts for the quarter and first half of the year.
How are these results were offset by a continued decline in demand for certain flavor ingredient product categories, primarily those sold into the suit processed food and yogurt markets.
The group's local currency revenue was down for the quarter.
Part of this decline is attributable to very strong sales in the second quarter of last year.
But the group's current quarter results did not meet my expectations.
We are winning in the finished flavor business, but not enough to offset the declines we saw in our flavor ingredient product lines.
The group saw a higher profit growth from our natural ingredients product line in the quarter.
Gains in this business were offset by lower demand in our flavor ingredient product lines.
Higher raw material costs and the impact of lower production volumes as we continued to focus on reducing our inventory levels.
Our focus on inventory reduction contributed to a strong cash flow during the quarter.
Our commercial focus is directed towards finished flavors and extracts where we continue to build our pipeline and we are seeing new wins.
We also expect to see improving trends in certain markets such as sue.
And an improved competitive environment in our savory product lines.
I expect better second half results as our sales and finished flavors and extracts continued to grow at a mid single digit pace.
Furthermore, we have also been reducing production costs and our overall cost structure to align with the decline in our flavor ingredient sales.
These cost actions will begin to deliver results in the second half of this year.
As a company we continue to remain focused on natural colors finished flavors and extracts cosmetics and pharmaceuticals.
Where our brand continues to strengthen and we see good market dynamics and growth opportunities.
We will continue to remain focused on our pipeline of new projects cost reductions and the strong customer service.
Which will allow us to deliver improved results in the second half of the year.
Steve will now provide you with additional details on the second quarter results.
Thank you Paul sentence revenue was $339.2 million in the quarter compared to 363 million in last years second quarter.
Operating income was $47.4 million compared to $52.2 million in the comparable period last year.
Local currency adjusted EBITDA was down approximately 8% during the current quarter.
Foreign currency translation.
Both revenue and operating income by approximately 2% in the quarter.
Diluted earnings per share were 81 cents in the quarter compared to 92 cents in the comparable period in 2018.
Foreign currency translation reduced EPS by approximately one cents in the quarter.
For the first six months of 2019 revenue was $686.7 million.
Compared to $719.5 million in the first half of 2018.
Operating income was $96.8 million in the first half of this year.
Compared to a $107.9 million in the first half of 2018.
Diluted earnings per share was $1.59 in the first half of 2019 compared to a $1.81 in the first half of 2018.
Foreign.
Currency exchange rates reduced diluted earnings per share by approximately four cents in the first six months of 2019.
The Companys consolidated tax rate was 18.6% in the quarter compared to 16.1% in last year's second quarter, which reduced EPS by approximately two cents during the quarter.
For the first six months of 2019, the company's consolidated tax rate was 22.1 compared to 20.1% in the first six months of 2018.
As reported cash flow from operations for the second quarter of 2019 was $52.8 million.
Capital expenditures in the second quarter of 2019 were $8.3 million compared to $12.9 million in the second quarter of 2018.
Cash flow from operations for the first six months of 2019.
$76.2 million compared to the adjusted results of $62.9 million for the first six month 2000.
Our free cash flow in the first six months.
$59.6 million.
Compared to adjusted free cash flow of $38.9 million in the first six months of 2018.
We continue to focus on reducing our working capital, particularly inventory and we're seeing strong results.
The Companys total debt decreased $32 million during the quarter and 76 million since June of 2018.
To $677 million.
And the company's leverage is consistent with the end of last year at 2.8 times debt to EBITDA.
I expect that our leverage will continue to trend down throughout 2019, as we used free cash flow to reduce debt.
Given our first half results in the current market conditions, we now anticipate.
Our full year local currency EPS guidance to be 1% to 2% below the lower end of our previous guidance.
We now expect our full year local currency adjusted EBITDA to be slightly below last year's results.
Thank you for your time this morning.
We'll now open the call for questions.
Thank you we will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then too.
And at this time, we will pause momentarily to assemble our roster.
The first question comes today from Brett Hundley with Seaport Global Please go ahead.
Hey, good morning, guys point, Brett Congrats.
Paul It sounds like tariffs or them you know.
Driving a lot of maybe the the forward guidance production and if that's the case can you just speak a little bit more to that and maybe give us an understanding of how you viewed the tire situation previously versus what has developed in reality for you guys.
Yes. So tariffs are certainly part of the forward picture. They were certainly a bigger impact in Q2 than I think we had initially anticipated.
Terrorists have a number of impacts I mean, there's the obvious increase in certain raw materials that that one could explicitly calculate.
But I think the second factor that makes it very difficult to to oftentimes predict its impact is your ability to take pricing.
So when we have competitors for example in the United States are subject to the same tariffs you're competing on equal and ground right and you can potentially price in that context.
However, if some of your competitors and not in the U.S. and they're not subject to this tariff you're out obvious disadvantage in the marketplace and many of your competitors can attempt to take advantage of that if you are too aggressive with your pricing or your timing on your pricing is not good.
So that that can be a little bit more difficult to anticipate and also a little bit difficult to.
Make headwind in terms of covering your your input cost and therefore your margin.
You know there's other examples of tariffs where we have for example, one of our Asian businesses.
We contract with local producers those local producers had traditionally ship their products in the us well as these terrorists were implemented.
Those producers essentially that.
That production was shifted outside of China to another country that was not subject to those tariffs.
That's a contract manufacturer.
That comes as loss sales to us.
Now you can attempt to pick that up somewhere else, but that's not necessarily always a clear path. So in short there is a lot of complications that are associated with tariffs, yes, the obvious ones of 15% or 25%.
Increase in your raw material, that's very easy and very straightforward to calculate but some of these other items, whether they come in the form of it a lot of an opportunity cost.
Last ability to price consistent with how you may have traditionally priced.
Those factors may make some of that a bit ambiguous as we look at the second half of the year.
But I think Theres also the impact of Q2 that we that I would also include in terms of looking at the guidance for the year.
Okay. That's that's clear that's helpful.
And just related to that as we look forward.
Into the back half of the year.
Aside from.
Questions around tariffs and how that's going to flow through your panel.
There was also an announcement.
I think earlier this month I think it was.
Where.
A major cosmetics company.
Announced a pretty large restructuring thats, that's going to take place over the next.
A few years.
Is that expected to be disruptive for you guys at all on the color side.
Uh huh.
Yes, I will we don't need to get specifically into into which particular.
Business that would be but yes in general we are very well represented in the market and so it's often easy to conclude that.
We have a presence that is pretty broad and with most of the brands that everybody is familiar with.
So anytime there is a restructuring there is always an impact potential on our business.
However, I think in the courses over the course of a restructuring, though that's also an opportunity for us.
In as much as those are typically efforts by companies to reduce their supply base.
To go with their best and most reliable.
Providers and as much as our cosmetics business as very much focused on the service aspect of that business improving lead times and on time delivery in an industry, where those are not necessarily widely practiced.
That will bode very very well for us the other factors that our cosmetic business is very very well.
Diversified in terms of the number of products that we would sell into a makeup segment for example.
So I think those two factors would be very important for us.
But I think the bigger issue for the cosmetics business will be the continued improvement in that market and we were very.
It was very good to see much of that destocking begin to moderate.
Europe has begun its turnaround.
A little bit faster than we thought.
Asia. Unfortunately went the other way and I think most of that was related to this tariff situation.
Nevertheless between those issues and the one you just mentioned I would anticipate cosmetics as a significantly better second half than we've had in the first half and as you know that would have a very helpful impact on the bottom line for the color group.
That's good to hear.
In flavors and fragrances.
It does sound well I want to ask you.
It sounds like you had some relative disappointment.
Related to your Q2 performance and flavor ingredients and I don't know if that's something more internal for you or if it is something related to the macro but either way. It seems like that was maybe a main driver of margin weakness in Q2 at least relative to what we had modeled for that segment.
Can you just give us a quick comment on that and then maybe give a little additional color on the cost actions the related cost actions that you might have planned into the back half for the year.
And how that might be included in your guidance and then I just have one more follow up a broader follow up.
Okay. So yes, the flavor ingredients business was down.
And those tend to be higher volume, but also less defensible.
At times less sticky as a general statement. There are certainly portions of that that are actually quite compelling and good.
But but some that are a little bit more subject to competitive pressure certainly that is what we had been feeling there. So that is certainly an impact.
Number two many of those ingredients are sold into some of these markets for example, yogurt.
That we've talked about which not only has the.
The market declines associated with it.
Had some impact post our restructuring as we consolidated those businesses. So.
Much of the flavor ingredients business.
It's really those two factors now as you you think about the cost out piece as that volume declines.
As this becomes an opportunity for us to reduce many of our fixed costs in those plants.
So the metric around here is not fill up the plant.
Because somehow that is going to bring you to the promised land here the metric around here is you match your production capacity to your volume and to your expected volume.
So consistent with that logic, we've taken action a number of these plants.
Focused on flavor ingredients, and we've removed and we will continue to remove fixed costs until they're very well aligned with the market as you do that as you know there is the.
The lower absorption.
Between when the volume declines when you get those costs out there is often times a little bit of a gap and then obviously you have inventory to flow through so that was also an impact on Q2, but my reference to have improved second half would be based on the cost actions. We did take in Q2 and continue to take in Q3, we would feel those impacts.
In Q3, and even more so in Q4.
The positive news on the news that makes the most sense as far as our strategy is concerned is that we continue to grow the flavor and extract category.
For the year to date were up mid single digits, and we feel very very good about that that is the more defensible much more aligned to our strategy piece of the portfolio and we're going to continue to emphasize that and we will continue to take action in the market to moderate.
Some of these flavor ingredient.
Losses, but I think long term.
That's not really where the business is that that will be those are not high growth areas.
And so it's a matter of continuing to outpace those which I think that we can do as we start getting into the second half year.
Okay, Great and just real quick can you just give us an updated expectation on local currency sales growth rates.
By segment.
So long term or or over the horizon, certainly our expectation continues to be.
That the businesses are capable of achieving mid single digit growth.
I think that you see certainly elements of the business that are doing that I, just mentioned flavors and extracts certainly natural colors.
I think cosmetics will resume that pace as we get into the back half of this year.
But as you're looking in the restructuring for 2020 and beyond.
We very much believe and we think we can continue to do that and those categories as such that the overall corporation can certainly be approaching the mid single digit revenue growth.
With the additional costs, we've been taking out we've had a very moderate approach destination fact, SGT has been down in each of the businesses. You're also seeing that capex is down.
That is an outflow from our restructuring fewer plants heavier investments, we had fewer number of years ago.
That is put us at a really quite frankly, a new level of Capex that is that is able to sustain these businesses. So I think all those factors then.
Combined to create a scenario where mid single digit growth can can generate mid and perhaps even better profit growth from those businesses.
For the rest of this year, it's a matter of.
Continuing to move past the raw material inflation, we see signs that some of that is moderating I continue to move past the tariff and so many of my assumptions are based on the notion that.
Raw material inflationary pressures would would subside and door, we were able to get more pricing in those those categories most impacted by it.
But that would be the expectation.
As we move forward.
Thanks, so much.
Okay. Thanks, Brett.
The next question comes from Heidi Vesterinen with existing BNP Paribas. Please go ahead.
Good morning.
So first of all I'd.
Timing of pricing actions that you talked about encounters can you. Please clarify was there already some level of pricing in Q2 or is all of it coming through in Q3 onwards.
First question.
So.
Pricing is being implemented since probably.
Even late last year Q4.
It's a matter of which customers and which products and to what degree able to get that.
In some cases it may be necessary to go back to the market more than once more than just on an anniversary date for example.
But the clearest answer to question is yes, we got pricing in Q2, yes, we will get more pricing in the back half of the year.
Okay. So so you're fairly confident that maybe you see it already in your Q3 numbers that pricing should should materialize and improve your margins.
In the second half of the year is that correct.
Yes.
Okay. Thank you.
And then just to go back on your comment in your speech. So you talked about.
How each one you had seen the headwinds like the.
Softer demand and headwinds from Destocking et cetera softness in market. So can you once again go through.
Which areas you're already seeing these headwinds subsiding.
Sure. So I think the first one the first one of the of the number of headwinds we mentioned.
Was the headwinds from the cosmetic makeup market.
Owing to a barrel spike in demand about 12 to 18 months ago and now we're in sort of the recalibration of what are the real supply chain needs. There is obviously still very good growth in that market. That's a very good long term market for us.
And so that was a headwind and that impacted obviously the color group not only on a revenue from a revenue standpoint.
But from a profit in that Thats, a higher mix contributes.
Very favorably to the mix of the color group. So that was a headwind that we're already seeing that moderating.
Versus say half and half two versus say half one.
The second would be.
If you look at some of the raw materials that go into to not only color, but also into flavor.
We have already seen some of them begin to come down moderate in there.
In the inflationary pressure that that created.
So that is helpful, but raw material will continue to be a headwind and so therefore.
Pricing is very very important, but I don't believe that the raw material inflation that we've seen across the business.
Will necessarily continue in perpetuity at some point.
We've already seen indications that for example, some suppliers in China have moved to India for Vietnam or other locations not subject to a tariff.
Or other regulatorily, driven raw material inflation.
In the <unk> and the fragrance side of the business certainly there was some well publicized.
Disasters natural and otherwise that were impacting that inflationary pressure in many cases.
So we're seeing some moderation there.
In the market in the second half so those would be.
Some of the key headwinds that we saw coming in I think Steve if you want to speak to anything.
FX as well so one other head when we talked about tied to lower production levels would be our efforts to reduce inventory. So last year, we were investing in inventory and building inventory to help with service levels.
And this year, we've taken about 30 million out of our inventory thus far so those lower production levels.
Have created a little bit of a.
A profit headwind, but to Paul's point, we're also.
Taking costs out of the plan. So we will continue to focus on inventory.
But that should be offset I think by the costs, we've taken out as we get to the second half of the year.
And then as a final question Tom I think you said in the prepared remarks that part of the.
Weakness in finance was also that's very tough comparable that you hide.
We kinda observed and actually on a two year run rate you know Q2 was more or less in line with Q1, if you do that sort of two year average so as we look out into Q3, the count is a lot easier.
Can we expect quite a nice bounce back in growth as we go into the second half in the FNF business.
Well I think as we look at the second half it will be it improves situation.
For FNF.
And certainly as we go into 2020.
Our sales in flavors and extracts that category I think you are going to continue to see that mid single digit type pace.
I think thats been weve been fairly consistent at that level and I think thats one that that.
We can continue and you can continue to rely upon.
The only that the headwind there the flavor ingredients what would be the offset I don't think that headwind will be as strong in Q3 as it was in Q2.
And certainly in Q4.
As well so I think you can see some moderation in the headwind related to the flavor ingredients, but.
The metric to really continue to watch I think is going to be the flavor and extract category.
Where where we continue to see positive developments and that's very much again core to our strategy and where our efforts and focus and attention have really been.
Thank you.
Thank you Heidi.
Again, if you would like to ask a question. Please press Star then one.
The next question comes from Curt Siegmeyer with Keybanc. Please go ahead.
Hey, Steve.
Hi, Kurt.
Hey.
In flavors, you talked about some of the defensibility and competitive nature in that business. The gold mines that are struggling.
And I guess my question is would.
Exiting some of these struggling product lines be something you guys would look at at some point and if not or what would the strategic rationale be.
You know to not take a look at that in terms of customer relationships that lead to.
Other business or.
Maybe just give us a little color on your thought process there.
Yeah, well the portfolio is always evolving right, how things looked even a year ago.
May have been a little bit different.
The first evaluation to the portfolio really was the.
The origin of the restructuring programs we were identifying.
Where we had too much production capacity product lines that weren't profitable defensible, all those things not key to our strategy.
I call them legacy parts of the portfolio.
So.
As the journey continues we're always looking at the portfolio. We're always looking at parts of it that makes sense, where we have synergies between parts of the flavor group parts of the color group between flavors and colors and certainly we have a lot of those.
And.
We.
Again as the competitive situation may change.
As our success in certain categories improves and that enables us to.
To move at a certain other categories. These are always on the table and so I think that.
We'll leave that as its an ongoing part of our analysis of the of the portfolio.
Okay fair enough.
I apologize if I missed it but were you able to quantify some of the expected savings that you had talked about.
And flavors.
We did not previously quantify on but we have significant cost out actions. We have we have targets of I would say between five and $10 million of cost out.
And at the lower.
Levels of production that should.
Stabilize our margins and and.
And get US right size in terms of the volume level.
Got it that's helpful. If I could just squeeze one more in.
Paul you'd mentioned expecting a less competitive environment.
In the savory.
Segment can you maybe expand on that a little bit what why that to your expectations.
Got it and this is obviously public information now, but a producer of one of the savory ingredients.
Has exited the the the.
It's going to exit the production and sale of those products and so.
I guess that shows you a couple of things I don't know specifically their reasons for it but I think anytime a competitor exits a mark and I think that would be a positive for us.
Yes makes sense okay. Thank you.
Okay. Thanks, Kurt.
Your next question is from Mike Sison also with Keybanc. Please go ahead.
Hey, guys.
You know Paul and Mike when you think about.
Your profitability in flavors and fragrances that.
Like a pretty big dip there into Q.
And you know.
If I, if it and fee model out your guidance. It looks like you will settle in for the year somewhere around 13%. So you want with it.
Sort of talked about wanting to get that segment to 20% or its there should be a business that structurally can get there.
When you think about.
Sort of the factors that would help you get there when you need to do to get there where do you think we are at given you've had a lot of cost savings over the last couple of years and and.
Just help us maybe build that.
Profit improvement potential.
It's going to be driven by additional sales of flavor and extract additional sales of our bio nutrient products.
Additional sales coming from our.
Natural ingredients business, the onion and garlic business those will be the big profit drivers.
And.
Where the headwind on flavor ingredients plays into the profit picture is that many of these plants.
Our certainly have the capacity to handle large volumes of these items. So the ability to stabilize those parts of the business are very very important not necessarily as huge profit drivers for us, but obviously to maintain a stable production capacity.
That that can certainly help considerably not unlike the color group, where we have a number of products that have been sold for many many years provides a stable foundation. It provides a stable base of business and it's really the basis upon which you deal with many of your customers you sell kind of a range of these products and so.
The key thing to turning around the profit is yeah. The offensive side is more flavor and extract sales.
But the other piece is continuing to stabilize these flavor ingredients business and absent that taking out the fixed costs associated with them.
What would also be important.
SGN a is I think we're going to continue we have a made a level of investment in the business that would allow us to operate a much larger business it at times.
But some of the SG nave related R&D and technical and commercial it's kind of a necessary infrastructure.
To have in order to build a larger business. So we don't need to add a whole heap of SGN a as we.
Generate more revenue out of.
Flavors and extracts and bio nutrients and these other important areas.
So.
But the key thing here at this point is moderating the flavor ingredient losses.
Some of that will come from these markets right I mean yogurt has been on a a decline for about seven years now.
But certainly ice cream has stabilized considerably it's actually been growing that market has been growing.
And we have been growing in it.
I think there is some indications and some signs that the suit market may be improving.
There have been some some changes on the CPG side of the house and some added emphasis has been placed there that will be very very helpful. The exiting of a competitor from one of those categories. That's also going to be very very helpful.
So I think that.
That's the way I would see the future profit improvement on the F. in east the flavor and extract side of things.
Got it and then.
In the color side, what inning do you think or do you see with your customers in terms of.
Converting shelf space from.
Synthetic colors to natural colors. These still to the do you still think there is a long runway for growth for natural colors and in products on the shelf.
Yes.
For the first half of this year were up north of 10% on natural color sales.
In terms of the baseball innings here.
About 30% of the shelf space outside of Europe .
So I'm talking Americas, now would would be naturally colored so that would tell you that it's about the third inning.
In Europe are probably in about the seventh or eighth inning, and Asia, where probably in like the bottom of the first.
Great and then lots of growth potential there for many many many years to come.
Right.
And then.
Your balance sheet still pretty good shape any.
Yes looks like multiples out there pretty pretty rich for the FNF group, but.
Other opportunities potentially that could maybe help.
You accelerate some of the growth in flavors, particularly.
Yes, yes, there are certainly interesting smaller technology driven platforms and companies.
That that could certainly.
Play a part of the future here.
Great. Thank you.
Okay. Thanks, Mike.
The next question is a follow up question from Brett Hundley with Seaport Global. Please go ahead.
Hey, Thanks for taking the just real quick guys.
Just to be clear your new board member that you're adding will that make 11 or will that make 10 as you go into 2020, and then just any other.
Comment that you want to put around that announcement I've received a couple inbounds on it and so just wanted to give the opportunity to talk about it further here. Thanks.
Sure, Yes, so Carol will be our 11th Board member.
And this is the as I've discussed in over the years, we're always in the mode of refreshing.
The board.
So as you saw from the press release, she is the CEO of harvest in Walker.
International.
So it's a complex business, it's an international business, they manufacture and I think she has a very pragmatic.
Commercial approach to two businesses and I think it will be a very good contributor to our board.
So we are authorized I believe to have up to 12 on our board 13 in fact.
And so I think we'll continue to operate within the band that we have for the board and so Carol will start in in December and we're very much looking forward to having her on board.
Thanks, Paul.
Okay. Thanks, Brett.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to the company for any closing remarks.
Okay. Thank you everyone for your time this morning that will conclude our call today.
Thank you. The conference has now concluded. Thank you for attending today's presentation you may now disconnect.