SPX Technologies Inc

F:SPW0

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon, and welcome to the SPX Technologies Q3 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Paul Clegg, Vice President, Investor Relations and Communications. Please go ahead.

[Paul Clegg, executive]

Thank you, operator, and good afternoon, everyone. Thanks for joining us. With me on the call today are Gene Lowe, our President and Chief Executive Officer; and Mark Carano, our Chief Financial Officer.

A press release containing our third quarter results was issued today after market close. You can find the release and our earnings slide presentation as well as a link to a live webcast of this call in the Investor Relations section of our website at spx.com. I encourage you to review our disclosure and discussion of GAAP results in the press release and to follow along with the slide presentation during our prepared remarks. A replay of the webcast will be available on our website.

As a reminder, portions of our presentation and comments are forward-looking and subject to safe harbor provisions. Please also note the risk factors in our most recent SEC filings. Our comments today will largely focus on adjusted financial results and comparisons will be to the results of continuing operations only. You can find detailed reconciliations of historical adjusted figures from the respective GAAP measures in the appendix to today's presentation. Our adjusted earnings per share exclude acquisition-related costs, nonservice pension items, mark-to-market changes, amortization expense and other items.

Finally, we will be meeting with investors in various events during the fourth quarter, including at the Baird Global Industrial Conference on November 13, the Wolfe Research Conference on December 4 and the Sidoti's Small Cap Conference on December 5. And with that, I'll turn the call over to Gene.

[Eugene Lowe, executive]

Thanks, Paul. Good afternoon, everyone, and thank you for joining us. On the call today, we'll provide you with an update on our consolidated and segment results for the third quarter of 2024 and discuss our outlook for the remainder of the year.

Our Q3 results reflect solid revenue growth and substantial increases in our key profit measures. Our margin performance was strong across both segments and we continue to execute on our key value creation initiatives, including sustainability and continuation improvement. We are well positioned to achieve our full year guidance, which reflects a year-on-year increase in adjusted EBITDA of approximately 35% and an increase in adjusted EPS of 28%.

Turning to our high-level results. For the third quarter, we grew revenue by 7.8%, driven by strength in HVAC cooling. Adjusted EBITDA increased approximately 27% year-on-year with 320 basis points of margin expansion.

As always, I'd like to update you on our value creation efforts during the quarter. On the sustainability front, we recently published our annual sustainability report reflecting another year of progress across our key initiatives. In particular, we achieved a 30% reduction in carbon intensity well ahead of schedule, and introduced several new climate conscious solutions that help to reduce our customers' power usage, emissions and water usage. We also continue to see progress in our continuous improvement initiatives, including benefits from significant capital investments in equipment and processes that add to production capacity by improving throughput. We've continued to see incremental margin gains as a result of investments to improve efficiency.

And now I'll turn the call over to Mark to review our financial results.

[Mark Carano, executive]

Thanks, Gene. Our third quarter results were strong. Year-on-year, adjusted EPS grew 31% to $1.39. For the quarter, total company revenue increased 7.8% year-on-year. Organically, revenue grew 3%, while acquisitions drove an increase of 4.4%, FX was a modest tailwind. Consolidated segment income grew by $22.2 million or 24.2% to $113.8 million, while segment margin increased 310 basis points.

For the quarter, in our HVAC segment, revenues grew 15.9% year-on-year. On an organic basis, revenues increased 9%, driven by continued strength in cooling demand, while heating was similar to the prior year. The acquisition of Ingenia and our cooling platform contributed growth of 6.8%, while the FX impact was nominal.

Segment income grew by $21.7 million or 37.2% while segment margin increased 370 basis points. The increases in segment income and margin were due to operating leverage on higher organic cooling sales and the Ingenia acquisition. Segment backlog at quarter end was $438 million, up modestly from Q3.

For the quarter in the Detection & Measurement segment, revenues decreased 7% year-on-year. FX was a 0.8% tailwind. Decrease in revenue was driven largely by lower contract sales associated with the large pass-through project delivered during 2023 and into the first quarter of 2024. Excluding the pass-through project, revenue grew approximately 3%, driven by transportation and AtoN project sales. Year-on-year segment income grew $0.5 million and margin increased 190 basis points, driven by more favorable project mix. Segment income margin also continued to benefit from our efforts to enhance the efficiency of our segment structure. Segment backlog at quarter end was $193 million, down 5.8% sequentially from Q3, reflecting the timing of certain project deliveries and awards.

Turning now to our financial position at the end of the quarter. In Q3 with cash of $129 million and total debt of $738 million. Our leverage ratio is calculated under our bank credit agreement was 1.4x. We now anticipate our leverage ratio declining to 1.2x or lower by year-end, below our target range of 1.5 to 2.5x, assuming no additional capital deployment. Adjusted free cash flow for the quarter was approximately $61 million.

During the quarter, we amended our credit agreement to double the size of our revolving credit facility for $1 billion in order to better match our increased size and growth opportunities.

Moving on to our guidance. We are maintaining our full year guidance for adjusted EBITDA and adjusted EPS. We are narrowing the range of our HVAC revenue guidance to $1.365 billion to $1.385 billion, reflecting year-on-year growth of 22.5% at the midpoint. We are also slightly narrowing our range for HVAC margin guidance while maintaining the midpoint of 23.5% or 260 basis points increase year-on-year.

In D&M, based on our year-to-date performance and outlook, we are increasing our margin guidance to a range of 21.25% to 22%, raising the midpoint to approximately 21.6%. This represents a year-on-year increase of approximately 240 basis points compared with a year-on-year increase of 210 basis points previously.

In total, consolidated midpoint segment income for the company remains unchanged as a result of these adjustments. As always, you'll find modeling considerations in the appendix to our presentation.

I'll now turn the call back over to Gene for a review of our end markets and his closing comments.

[Eugene Lowe, executive]

Thanks, Mark. Current market conditions continue to support our outlook. Within our HVAC cooling platform, we continue to see strong demand for our products across several key end markets, including data centers, health care and institutional. In our HVAC heating platform, winter temperatures are a key driver of year-end demand as is typical. In our Detection & Measurement segment, we continue to experience flattish global demand in our short-cycle business with regional variations, while project orders remain healthy.

Looking ahead, we anticipate ending the year with a solid backlog position, giving us well positioned for growth in 2025.

In summary, I'm pleased with SPX's Q3 results, including significant margin expansion in both segments. We're well positioned to achieve our updated full year guidance, which implies 35% growth in adjusted EBITDA and 28% growth in adjusted EPS. We see multiple opportunities to continue growing our businesses both organically and through our attractive acquisition pipeline.

Looking ahead, I remain excited about our future. The right strategy and a highly capable, experienced team, I see significant opportunity to continue driving value for years to come. And with that, I'll turn the call back to Paul.

[Paul Clegg, executive]

Thanks, Gene. Operator, we will now go to questions.

[Operator]

[Operator Instructions] Our first question will come from Ross Sparenblek with William Blair.

[Ross Sparenblek, analyst]

Strong HVAC order growth during the quarter with the [indiscernible] index continuing to climb, and all the work you guys have done to streamline the sales process. How should we think about the sustainability of the 2024 growth rates into 2025? I mean is it a fair base case to underwrite mid-teens for cooling and still double digits for the overall business?

[Unknown Executive]

So we're on, first of all, I want to be careful. We don't get into a discussion about 2025 too early. I think we've had a strong year here with respect so far with respect to organic growth on the cooling side, we benefited from some of the acquisitions that we've done as well. Obviously, we've also done some significant throughput improvements that expanded our capacity.

Yes, I'd say largely, as we look into next year, we feel good about the strength of those markets that have benefited us this year. And we're looking at data centers and health care and institutional. And so from the cooling side, I'd say that's we still feel pretty good about where we stand.

[Ross Sparenblek, analyst]

Yes, I understood in 2025. Maybe I'm just trying to understand the timing of when we should expect order flow from recovering Dodge index to hit your books if it hasn't already, is more to come? Or is this already starting to bleed through to the numbers? .

[Unknown Executive]

Ross, I mean I'm not sure the Dodge is a perfect proxy for all of our HVAC business. About 70% of his replacement, which is not really linked to the Dodge index exactly. So you really need to be thinking about both the replacement dynamic as well as the new build. And then you think about some of these markets that Paul just mentioned, like data centers, like health care, institutional, some of the reshoring we're seeing. I mean, the thematic trends there really haven't changed. They continue to be strong markets. And we see those continuing through the fourth quarter and in the next year.

[Ross Sparenblek, analyst]

Fair enough. And maybe just on the boiler side, it was a little surprising to see flat growth just kind of given the new product launches and share gains you guys have seen there, and some of the intra-quarter read-throughs we've seen from at least the commercial side. Is there anything we should read into the fourth quarter as we look at seasonally low comp for resi?

[Eugene Lowe, executive]

Yes. I think -- I mean, Ross, it was a slower start to the heat season this year than we had initially anticipated. So that in conjunction with the fact that really the lead times in our business and our boiler business have kind of normalized. They're no longer extended. If you recall, last year, they were still at longer than normal lead times. So we're seeing the distributors at least manage their inventory levels a little more prudently than perhaps they have in the past. So really, but at the end of the day, it's largely driven by the weather dynamics, and we just haven't seen the eating season kick in yet. As you know, when it does, concerned quickly. This is an 80% replacement business. So that business will really start to ramp up once you see the weather dynamics shift.

Yes. With respect to our guide, when you think about the balance of the year, we have kind of adjusted our guide, if you will, to take into account a delayed start to the heating season.

[Paul Clegg, executive]

Yes. Well you do mention the resi versus commercial. And yes, I think we are stronger on the commercial side. I think resi, which is a much more replacement market is where we are seeing all the flatness.

[Operator]

Our next question will come from Bryan Blair with Oppenheimer.

[Bryan Blair, analyst]

I'd like to dig in on Detection & Measurement, starting with your run rate business. Just your team's perspective on sustainability of demand and perhaps near term inflection. The commentary on the slides, I may simply be reading into this too much, but flattish, you actually said in the script, [indiscernible] flattish turn to mixed global demand in terms of run rate? Is there anything that we should read into there? And in terms of regional variation, what is your team seeing currently? And then looking forward in terms of project business, you've been very consistent in citing healthy underlying demand, infrastructure spending being on the horizon? How should we think about the setup for project activity and perhaps catalysts going into 2025? .

[Eugene Lowe, executive]

Yes, Bryan, let me start it. I think that I wouldn't read anything too much into that word. I mean, I think in general, the run rate has been flattish with very, very modest growth. There's regional variation. As we know, at a company level, we're approximately 85% North America and about 15% equally split in Europe, and Asia.

I'd say the 2 areas that appear to me to be soft test would be China and Continental Europe. But I would say that our relative revenue there is fairly small. [indiscernible] in North America, U.K., Southeast Asia and some of the other regions. I would say the U.S. is holding pretty steady. And I would say, overall, we're cautiously optimistic looking into 2025. We want to be careful about not giving 2025 guidance. I would also say the project activity, as we've talked about, is healthy. And there's a lot of large projects that we're bidding on. The big thing we got to keep our eyes on [indiscernible] when those will actually come to fruition. There's some of these that are very large that could start to go in '25. There's some that could start to go in '26. So really good projects that PME really did success rates there, but we're going to have to manage and make sure that we've got a handle on the timing of the revenues of those projects.

But yes, I would say, if you look at head to '25 HVAC if we kind of say our normal business is mid-single-digit growth. I think there's more growth drivers underneath HVAC overall, whereas D&M, I would say, is probably what we're seeing a little bit lower growth as we look ahead to '25.

[Bryan Blair, analyst]

Understood. Appreciate the color. And maybe for a quick update on your M&A pipeline, how -- frame, however you may, your team's confidence in executing a deal over the coming quarters? And also, I guess, speak to the composition of your pipeline, what intrigues me is with your leverage moving below targeted range, having expanded your credit facility to $1 billion, you're going to enter 2025 with a tremendous amount of dry powder. Are there potential deals out there that would actually utilize that kind of capacity? Or is it simply flexing to the scale of current operations?

[Eugene Lowe, executive]

Yes. I think -- I think you're spot on. I think that we're obviously going [indiscernible] as you know, our business is to generate so much cash. I do think 1 thing our EBITDA has expanded somewhat, right? When we got our revolver in place, EBITDA was almost well below half of what it is today. And so part of it is just getting the appropriate size the revolver with our strategy. So we feel very good about that.

But having said that, we actually feel really good with our pipeline. And I would say the activity level is very strong on the M&A side. misses on the D&M side and as well as on the HVAC side. So there's a good level of activity. And I actually feel optimistic about what we're seeing over the next 12 months in terms of the ability to keep building out our platforms. I think [indiscernible] really good opportunities there.

Where we're seeing it, I would say, we see some very interesting opportunities on the location and inspection side, on the content side, on the transportation side, and then if you flip over to HVAC, we see some very good engineered air movement as well as some cooling intriguing opportunities in those [indiscernible] platform. So it does feel like there's a lot going on. And with our new revolver and our relatively low multiple debt-to-EBITDA ratio, you're right, we do have the dry powder to grow.

[Bryan Blair, analyst]

That's encouraging.

[Operator]

Our next question will come from Damian Karas with UBS.

[Damian Karas, analyst]

It's been a long few weeks. [indiscernible]. Maybe just a couple of follow-up questions on D&M here. I just want to make sure, first, I heard correctly that you had a single project that had a 10-point impact on the quarter and otherwise, D&M would have been up 3% organically. Did I hear correctly?

[Paul Clegg, executive]

I know what you talked about, Damian. Yes. So no, we're actually just giving you the -- this is Paul, by the way. We're giving you the math without the pass-through projects that delivered in the prior year. You may remember that in the communication technologies business, we had a large pass-through project lower than typical margin associated with it, and that delivered through last year and into the first quarter of this year. That's tended to skew our results all year. And so as we do the year-over-year comparisons, we just gave that math.

[Damian Karas, analyst]

Okay. I see. Well, let me ask you, just the margin seems pretty strong, considering sales were off 7% versus last year. So could you give us a sense like, were there some mix impacts related to that stronger margin? How much would have that been versus just kind of the operating initiatives that you've been working on?

[Unknown Executive]

Yes. Damian, I mean it's really a mix of both. We have been very intentional around the segment as we pulled it together and look for operational efficiencies and opportunities to drive margin, whether that's across sourcing, or IT, all sorts of initiatives related to bringing all these businesses together under 1 roof or 1 segment.

And then as you mentioned, we did have a favorable mix of projects in the quarter from a margin perspective. These projects, as you know, as they execute and they have a variety of margin profiles across them. And in this case, in Q3, we had a slightly higher margin profile given the mix that landed within the quarter relative to, I think, what we had initially anticipated.

[Eugene Lowe, executive]

I think the team's done a nice work driving margins, if you look at last year versus this year, the actions that they've taken on productivity, on pricing, on some different synergy areas have been very beneficial. So we've been talking about Detection and Measurement margins for a little while. Really -- it's really nice to see the progress they're making.

[Paul Clegg, executive]

Yes, I might add, you probably saw Damian, we obviously raised our midpoint guidance for D&M for the year as well, reflecting that many of those activities. So now I think the midpoint is 21.6%, which is up from 1.5%.

[Damian Karas, analyst]

Yes. Yes. No, that's great to see. And then staying on D&M, I just -- the updated guide for the year, just the range seemed pretty -- pretty wide for just 1 quarter left. Anything to read into that?

[Paul Clegg, executive]

No. Damian really, it's just the timing of -- it's just the timing of projects. And I think that's been a you've had a fair number of chunky projects this year. And as we look at the timing of those, that's caused us to have to kind of revisit which ones fall into which quarter during the year. So I think on average, we feel really good about where we are going into the fourth quarter, you'll see that the midpoint implies something in the mid-150s on revenue and a pretty healthy margin.

[Operator]

Our next question will come from Walt Liptak with Seaport Research. .

[Walter Liptak, analyst]

So I wanted to ask about an HVAC, just like the cadence of orders, it sounds like some of the data center and health care is doing fine. I wonder if you could talk about the order cadence there. And then with the boilers, the weather has clearly been a lot warmer this year and you don't have that -- the supply chain issues or whatever from last year. But what is normal for boilers? Like when do -- when do you usually start seeing your distributors starting to take up boiler inventory? .

[Paul Clegg, executive]

Yes. So this year, we typically were expecting to see some of that start in September. We did not see much of that, as Mark referred to you earlier. You did see some distributors holding off as the lead times have come down and you're more or less at just-in-time lead times. And with warm weather, there's -- this puts them in a position to be able to save a little bit on their inventory management.

Look, you should start to see that in the winter months kick in here as we roll through. At this point, you're right, it's still warm in October, and we've accounted for that in our guide for the fourth quarter. So I think we feel good about where we've set guidance based on what we know so far about the fourth quarter. If you were to look at it versus historical levels, it's one of -- we're forecasting at 1 of the lowest levels that we've seen over the last -- close to the last decade here. With the exception of last year, which was particularly weak. So we're still expecting a little bit of year-over-year growth in the fourth quarter in heating. Last year was particularly weak, you had sort of a double whammy impact of it being very warm in addition to that kind of destocking taking place in a sort of post COVID environment.

[Walter Liptak, analyst]

Okay. Great. And then the cadence of orders they look for the data center, health care?

[Eugene Lowe, executive]

Overall, we're feeling really, really good, Walt on what we're seeing there. I would say health care, the biggest opportunities there would be Ingenia, customary handling, which is really getting some nice awards, even starting to book into '26 very long lead times there. And Strobic, a portion of our EAM seeing some nice growth there. Data centers remain strong, I would say, in all 3 regions. In the U.S., some nice projects in Europe and in Asia as well. So, yes, I think the progression is good. And then I'd say more so in North America institutional still remains strong. Schools, governments, universities, things like that, a good amount of replacement activity that seems to be very healthy right now as we sit today and as we look ahead to '25.

[Walter Liptak, analyst]

Okay. Great. And then switching over to D&M. You guys called out AtoN, I can't remember if that was in a good trend in the second quarter, too. But I wonder if you could just talk about AtoN and what you're seeing there, any kind of order funnel or project visibility you might have?

[Eugene Lowe, executive]

AtoN has had a very good year. We're actually very pleased with the progression this year, both in top line growth and margin growth. We're very, very pleased. I think that there's a good chunk of that. I'd say the majority of that is run rate. So you always keeping your eye on the global run rate. That's a very global business serves Europe, Northern Europe, Southeast Asia, Canada, North America, very good presence. We're the very clear leader there, we believe, globally. So yes, we've had a really good year there. And I'd say there's nothing that signals any follow-up there.

[Operator]

Our next question will come from Steve Ferazani with Sidoti.

[Steve Ferazani, analyst]

I just wanted to check in on capacity additions. I know the plan was to -- you were in process of expanding with Ingenia, just wanted to check on where that progress is in terms of your ability to grow that business beyond, if the current market it serves?

[Eugene Lowe, executive]

Yes. I would say, Steve, it's very positive. And one of the ways you can look at it is how much you're getting out each quarter. And we've had nice expansion in Q4 and we see more expansion going into next year. It's a good situation to be in where we have a very high level of demand, and then you got to get the product out to do have to make sure. And there's a lot of -- that's a very automated, very -- a lot of robotics in there. It's really a nice business, but we're -- it's still -- it's substantially small. It's much smaller than our cooling products, but we're seeing some very nice growth there. So you will see some refract of year-over-year growth from '24 to '25 in that business.

[Steve Ferazani, analyst]

Great. And are you where you need to be with Marley now -- is that expansion all completed? Do you have plenty -- do you have room to run on that side? .

[Eugene Lowe, executive]

Yes. Actually, that's gone exceptionally well. Not only has that driven more margin and throughput, it's been very, very positive. We have brought our lead times back to very competitive levels. And actually, we believe we're at or below our 2 primary competitors there with the productivity initiatives we've put in place. So -- it's a really -- we feel really good about those investments, and it's -- you really see it pay dividends on the margin line and on the topline line, so we feel good about those that we have more runway going into '25.

[Steve Ferazani, analyst]

Excellent. You mentioned industrial reshoring again. Do you have any sense of where we are with that? And are you still seeing demand coming from additional reshoring?

[Eugene Lowe, executive]

I think that there are some projects there. And the interesting thing is once something reshores, it's not necessarily a onetime thing, right? Let's say you bring a car plant here or a semiconductor plant here, you put cooling towers on it, you put -- whatever products you put on there, those products need to be maintained on an ongoing basis and in place. And so what has happened, it's not a onetime project, you have expanded your TAM and the subsequent aftermarket OEM parts, service, et cetera, will be there. So what I would say is the -- there's still projects that we are working on. We have seen a couple that have slowed down, some associated with electric vehicles. We've seen some delays there. But those as a percentage of our overall revenue, we're relatively small in the grand context of the segment revenue. So it's been way -- you don't even see it because of the growth in some of the other areas. But there's still a good amount of activity, I would say, on that side.

[Steve Ferazani, analyst]

Excellent. Last one for me. Obviously, another very strong cash flow quarter. Is the intention still to -- until some deals come up to pay down debt in the near term?

[Unknown Executive]

Yes, Steve, I mean, that would be our intention, I think, in the near term to continue to reduce the debt that we have outstanding in the interim period before we have a transaction.

[Operator]

[Operator Instructions] Our next question will be a follow-up from Damian Karas with UBS.

[Damian Karas, analyst]

I wanted to ask you, I didn't hear the word hurricane mentioned. And I know, obviously, you guys are headquartered in the Carolinas and have some facilities kind of in the Southeast U.S. here. Just wanted to ask whether you had any impacts in the quarter from the 2 hurricanes that we've had recently. And second to that, just considering your solutions, particularly in D&M, whether you see any potential kind of uplift activity from some of the rebuild and restoration post storm?

[Unknown Executive]

Yes, Damian, we did not -- we were not impacted by the hurricane really directly, none of our facilities were. One was obviously in the line of it in Florida, where we have our [indiscernible] business, but it was not impacted. So fortunately, we did not have to deal with any issues with respect to that.

With regard to your second question, I wouldn't say that we've seen really any meaningful activity with respect to damage that was caused by the hurricane where we would have replacement activity. But it's early days, I think, on that front. So you're right, some of our solutions are clearly well positioned, whether that's on the [indiscernible] side of the business or AtoN as they work through the rebuild.

[Eugene Lowe, executive]

And I'd say the other areas, sometimes we have these weather events, you'll see the [indiscernible] a more industrial area, cooling towers, fan stacks, things like that. So -- we have -- we're working to identify how we can support. We haven't seen anything materially significant at this point in time, but we're working to support where we can.

[Damian Karas, analyst]

Got it. And I wanted to ask you about nuclear, which has become quite topical all of a sudden in the investor world. And I know that your business has had a pretty solid position in some areas of nuclear power gen. So could you maybe just -- and in fact, I think you talked about a nice cooling project last quarter. We think that you might have been involved in a nuclear plant and doing some work there. But just thinking about all of the nuclear activity we're hearing from some of these tech companies that are trying to get data center capacity built out. What is the potential opportunity there for SPX?

[Eugene Lowe, executive]

Damian, what I would say is I think it's a net benefit for our power business, for the power portion, which is not a humongous portion of our business these days, but our process cooling -- as you know, the majority of the cooling towers thus far in nuclear facilities are [indiscernible]. It's really -- and we do service work and provide OEM parts. You're right, we have -- we do some larger projects. I think net-net, the growth in data centers is really going to be burdening the grid -- you've had a grid that has for so long, you had very little growth in demand, and you actually are seeing real growth in demand. And so you have to find more capacity. New capacity takes a while to get into place. Even if you put in the fastest source, you're probably talking a couple of years for a [indiscernible] plant or a natural gas plant, nukes take much longer, but what I would say is you're going to see some more activity on working on our new plants because any time you upgrade your cooling tower, you get a lot more power out of your plant.

So I do think and we are seeing a lot of activity on some service projects. The other thing there are some small modular nuclear reactors, typically the first person they call when they're looking for a cooling tower. There's a good amount of activity there, but what I would say is that's something that's a little further out to get to the point at which the actual [indiscernible]. I would say you're probably not going to see anything material for a couple of years.

I do think it's an interesting opportunity. It will be interesting to see if it actually gets fully approved and commissioned. But if it does, we think that we're very well positioned to take advantage of that opportunity. So yes, I would say on that segment, there's a growing level of activity, and I would expect that to continue with the pressure that the utilities have to generate more [indiscernible].

[Damian Karas, analyst]

Appreciate your thoughts. Thanks a lot. Best of luck, guys.

[Operator]

This concludes our question-and-answer session. I'd like to turn the conference back over to Paul Clegg for any closing remarks.

[Paul Clegg, executive]

Thank you all for joining us, and we look forward to updating you again next quarter and seeing many of you at conferences and one-on-ones throughout the quarter.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.