Bel Fuse Inc

NASDAQ:BELFA

Earnings Call Analysis

Overview of Financial Performance

In Q3 2024, the company reported sales of $123.6 million, a decline of 22.1% year-over-year. This decrease was primarily due to significant drops in the Power and Magnetics segments. However, gross margin improved to 36.1%, up from 35% in the previous year, indicating enhanced profitability despite lower sales. The increase in margins was attributed to operational efficiencies and cost management strategies.

Segment Performance Insights

The Connectivity Solutions Group performed well, with sales growing by 7.6% to $55.7 million, driven by robust demand in aerospace and defense applications. In contrast, the Power Solutions segment saw a 35% decline in sales, totaling $48.7 million. Adjusting for seasonality and a trade-related supplier loss, the Power segment's recovery appears optimistic moving into 2025, bolstered by a expected rebound in networking and AI applications.

Cost Management and Efficiency Gains

The company realized margin improvement through facility consolidations and operational efficiencies. For instance, gross margins in the Connectivity segment climbed to 36.6%, up from 35.8% a year earlier. However, increased minimum wages in Mexico and unfavorable exchange rates slightly countered these gains. Overall, SG&A expenses rose to $26.7 million, partly due to legal costs related to the recent acquisition.

Acquisition Strategy: Enercon Technologies

The anticipated acquisition of Enercon Technologies promises to enhance the company's footprint in aerospace and defense markets. This transaction, expected to close in Q4 2024, will involve a substantial investment of $240 million in debt, raising total debt to $300 million with a blended interest rate of approximately 5.7%. The acquisition is forecasted to create significant cross-selling opportunities and expand market presence.

Guidance for Future Earnings

Looking ahead to Q4 2024, the company expects earnings to achieve between $117 million and $125 million, reflecting anticipated seasonal recovery amid market challenges. For 2025, there is a clear expectation of year-over-year growth across all segments, driven by the surge in AI and e-mobility initiatives. Notably, the Power segment's bookings doubled in Q3 compared to Q2 and are seen as a robust indicator for future performance.

Challenges and Strategic Responses

The outstanding challenges include navigating the impacts of the Boeing strike which has affected deliveries and revenues. Management expressed confidence in gradually overcoming these hurdles through strategic conversations with clients and ongoing product development initiatives. They remain optimistic about inventory levels being stabilized and anticipate a gradual recovery across all product segments.

Conclusion: A Path Forward

Overall, while the company faced challenges in Q3 2024, the improvements in margins, strategic acquisitions, and a solid outlook for growth in key markets provides a cautiously optimistic picture for investors. The focus on operational efficiency combined with new market opportunities in AI and defense makes the company a noteworthy prospect as they transition into a growth phase, emphasizing the importance of solid execution in their growth strategy.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, and welcome to the Bel Fuse Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the call over to Jean Marie Young with Third Part Advisors. (sic) [ Three Part Advisors ] Please go ahead, Ms. Jean.

[Jean Young]

Thank you, and good morning, everyone.

Before we begin, I'd like to remind everyone that during today's conference call, we will make statements relating to our business that will be considered forward-looking statements under Federal Securities laws, such as statements regarding the company's expected operating and financial performance for future periods, including guidance for future periods in 2024. These statements are based on the company's current expectations and reflect the company's views only as of today and should not be considered representative of the company's views as of any subsequent date. The company disclaims any obligation to update any forward-looking statements or outlook.

Actual results for future periods may differ materially from those projected by these forward-looking statements due to a number of risks, uncertainties, and other factors. These material risks are summarized in the press release that we issued after market close yesterday. Additional information about the material risks and other important factors that could potentially impact our financial performance and cause actual results to differ materially from our expectations is discussed in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K for the fiscal year-ended December 31, 2023, and our quarterly reports and other documents that we have filed or may file with the SEC from time to time.

We may also discuss non-GAAP results during this call, and reconciliations of our GAAP results to non-GAAP results have been included in our press release. Our press release and our SEC filings are all available at the IR section of our website.

Joining me on the call today is: Dan Bernstein, President and CEO; Farouq Tuweiq, CFO; and Lynn Hutkin, Vice President of Financial Reporting and Investor Relations.

With that, I'd like to turn the call over to Dan. Dan?

[Daniel Bernstein, executive]

Yes. Thank you, Jean, and we appreciate everyone joining our call this morning. We are pleased that our third quarter sales and gross margins each landed above the midpoint of our guidance. As anticipated, our Connectivity segment had a strong quarter, driven by robust sales into Aerospace, Defense and Space applications. And our Magnetics segment experienced incremental growth on a sequential basis from Q2 '24, which is good to see. The Power segment sales were within our expectations for the quarter, given the previously discussed seasonality in Europe and during August and the impact from trade restrictions on one of our former suppliers in China.

The only new factor which impacted revenue of our Connectivity segment was the strike at Boeing one of our aerospace customers, which slowed the value of shipments late in the third quarter. During the third quarter, we have made 2 key additions to the corporate team as we continue to add high-impact individuals. In the newly created role, Uma Pingali has joined as Global Head of Sales and Marketing, and Anubhav Gothi has joined as Global Head of Corporate Contracts.

Uma was most recently the President of Global Sales at Farnell, a premier distributor in the electronic industry. Throughout his long term tenure career, Uma has proven a track record of growing sales through a variety of efforts, including the turnaround of underperforming regions, entering new geographic markets, pursuing a tailored approach to product technology, and identifying and executing cross-selling opportunities. Uma will be responsible for creating and executing strategies that drive growth beyond the current trends, identifying areas for improvement, challenging existing processes and implementing innovative solutions to optimize sales performance.

Anubhav is a seasoned proven supply chain and procurement leader with a heavy history of securing efficiencies and short-saving outcomes for multibillion-dollar companies including CommScope, Motorola Mobility and Google. He's been tasked with developing and implementing a procurement strategy culminating robust vendor relations, negotiating contracts and championing cost effective, sustainable procurement practice on a global basis. We are very much looking forward to the contribution that each Uma and Anubhav will bring develop to position the company for a long term success.

Now I'd like to turn it over to Lynn.

[Lynn Hutkin, executive]

Thank you, Dan. From a financial perspective, in summary, we saw continued margin expansion on a lower sales base when looking at Q3 '24 versus Q3 '23. Third quarter 2024 sales came in at $123.6 million, representing a 22.1% decline from the third quarter of 2023. The sales fluctuation was driven by our Power and Magnetics segments, as we will discuss further, partially offset by growth in connectivity sales versus Q3 last year. Our gross margin increased to 36.1% in Q3 '24 from 35% in Q3 '23, and these profitability improvements were largely driven by our Magnetics and Connectivity segments.

Turning to some details at the product group level. Power Solutions and Protection sales for the quarter were $48.7 million, representing a 35% decline from Q3 last year. The decline in sales was mainly due to lower sales of our power products used in networking and consumer applications. On a positive note, we saw continued strength in sales of our rail products, which grew over 40% from Q3 '23, accounting for a $2.6 million increase in sales from Q3 '23. This segment posted a gross margin of 39.4% in the third quarter of 2024 as compared to 41.7% in the third quarter of 2023.

Turning to our Connectivity Solutions Group. Sales for Q3 '24 came in at $55.7 million, up 7.6% from Q3 '23. The main growth driver within connectivity was within the distribution channel, where sales were up $1.2 million as compared to Q3 '23. Sales into commercial air applications totaled $12.5 million for Q3 '24, an increase of $1.2 million or 10.3% from Q3 '23. Military sales amounted to $11.6 million for the quarter, a level consistent with Q3 '23. The gross margin for this group was 36.6% for the third quarter of 2024, which represents continued improvement from the 35.8% gross margin in the third quarter of 2023. This margin expansion was made possible due to the operational efficiencies achieved through facility consolidations that were completed in 2023, along with implementation of contract renewals on more balanced terms and a favorable impact of FX-related to the peso versus Q3 '23. These favorable margin factors were partially offset by minimum wage increases in Mexico that went into effect in Q1 '24.

Lastly, our Magnetic Solutions Group posted sales of $19.2 million in Q3 '24, representing a 40% decrease from Q3 '23. This reduced sales level was generally in line with expectations discussed on last quarter's earnings call and largely related to lower shipments into a large networking customer as they continue to work through inventory on hand. The gross margin for this group was 27.3% in the third quarter of 2024 as compared to 22% in the third quarter of 2023. This improvement in margin was primarily driven by lower fixed overhead costs resulting from the facility consolidations in China completed in late-2023, partially offset by unfavorable FX related to the Chinese renminbi versus Q3 '23.

R&D expenses were $5.4 million in Q3 '24, a level consistent with Q3 '23. We expect future quarters to be generally in line with Q3 '24 expense. Our selling, general and administrative expenses were $26.7 million as compared to $23.8 million in Q3 '23. Excluding the $4.2 million of legal and other costs related to the Enercon acquisition, our SG&A expenses were lower by $1.3 million as compared to Q3 '23, primarily due to lower variable expenses such as commissions and incentive compensation. Our effective tax rate for the third quarter of '24 was 27.8%, up significantly from the 18.2% of Q3 '23. There was a onetime item contained in the third quarter tax provision in the amount of $1.3 million. Excluding this item, the company's effective tax rate would have been 15.7% in the third quarter of 2024.

Turning to balance sheet and cash flow items. We ended the quarter with $163.8 million in cash and securities, an increase of $36.9 million from year end. We generated $65.7 million in cash flows from operating activities during the first 9 months of 2024 and had capital expenditures of $7.9 million. From an inventory perspective, the downward trend that we experienced over the past several quarters has continued into Q3, reflecting a $12.3 million reduction from year end. The lower inventory levels were primarily seen in the areas of raw materials and finished goods as we continue to work through our own inventory on hand.

I'll now turn the call over to Farouq for additional commentary.

[Farouq Tuweiq, executive]

Thank you, Lynn. As we are rounding the corner here on inventory in the channel and starting to see some green shoots of recovery, the team has been laser-focused on executing on operational improvements as we have been doing for the last few years. During the third quarter, we initiated the consolidation of our fuse manufacturing operations. Currently, our fuses are manufactured at a separate site in China and will be transitioned to other existing sites as a means of further reducing our operational footprint and adding efficiencies to our overhead costs. The fuse initiative is expected to result in a restructuring cost of approximately $4.2 million, of which $200,000 was incurred in the third quarter, $2.1 million is expected to be recorded in the fourth quarter of 2024 with the balance of $1.9 million expected to be incurred in 2025.

This project is scheduled for completion by the end of Q1 '25 and is expected to result in annualized cost savings of $1.5 million once complete. The previously announced restructuring project at our Glen Rock, Pennsylvania facility is progressing as planned with scheduled completion by the end of 2024, with cumulative expected annualized cost savings of $2.5 million. We've been benefiting from approximately $1.5 million of the Glen Rock cost savings throughout 2024 and expect $1 million to be incremental in 2025.

Turning to M&A, and as announced in mid-September, Bel has agreed to acquire 80% of Enercon Technologies with a path to acquire the remaining 20% by early 2027. With 100% of their sales within Aerospace and Defense end markets, the addition of Enercon accelerates our strategy of moving further into critical applications with sole -- nice sole-source positions. This creates more cohesion across our product segments and introduces exciting cross-selling opportunities. We've been working very closely with the Enercon management team since signing and are very much looking forward to collaborating with them to define our new go-to-market strategies for our combined businesses supporting the Aerospace and Defense end markets across the regions in which we collectively serve. The transaction is expected to close during the fourth quarter of this year, and we look forward to sharing additional details as we work through our post-close integration process.

Looking ahead to the fourth quarter, we're anticipating base Bel to be largely in line with Q3 '24 levels as there are some offsetting factors at play. The range noted in our earnings release of $117 million to $125 million is inclusive of some rebound in rail sales and slight recovery in networking and distribution across the business. This is offset by our normal seasonal slowdown in Q4 each year given the Golden Week holiday in China in October and other holiday closures in the U.S. and Europe later in the quarter. We were pleased that we did start to see an uptick in bookings during the third quarter.

To provide some context around what we saw, within our Power segment, Q3 '24 bookings were double of what they were in Q2 '24, representing their highest booking level since Q3 '23. Within our Magnetics segment, Q3 '24 was their highest bookings quarter since Q4 of 2022. Given our standard lead times, this increase in bookings will largely translate into higher sales going into 2025.

Looking at 2025, we've kicked off our planning for the coming year and are looking forward to it. We're early in this process against the backdrop of a few moving pieces. The overall message for next year is the expectation of year-over-year growth across all 3 segments. Our Power segment is forecasting growth to be driven by a rebound in networking, e-mobility and distribution and growth within AI-specific applications. Our Connectivity segment is projecting growth to largely be driven by the same factors as 2024, including defense applications and a growing space end market, along with distribution and networking. We think Magnetics will have the largest percentage growth based on current forecasted demand from our network and distribution customers. There are a number of factors and variables within each segment that can change these projections, but this is what we see today.

It is this new view of 2025 upon which we'll be assessing our SG&A spend and making needed adjustments to align our fixed costs with these anticipated sales levels. As a reminder, this commentary is only related to Bel's base business and does not include incremental sales related to the Enercon acquisition, which is expected, as noted, to close in the fourth quarter this year.

Shifting over to capital allocation. And as previously discussed, we'll be taking on new debt of $240 million in connection with the acquisition of Enercon, and the interest on that debt will be approximately 6.5%. This will bring our total outstanding debt to $300 million with a blended interest rate of approximately 5.7%. And in addition to our regularly dividend and continued investment in the business through CapEx, our next immediate priority from a capital allocation in the near-term will be on debt paydown to deleverage and avoid interest expense. We'll continue to assess our capital priorities as we have done on an ongoing basis. Overall, we are pleased with the progress we have made in strengthening Bel's base business over the past 4 years and are excited about the road ahead with Enercon and the new members of our corporate team. We feel this is a pivotal moment for Bel as it marks the transition from our self-help phase to a new growth phase of Bel's journey, and I could not be more excited to embark on this next chapter.

And with that, I'll turn the call back over to Dan.

[Daniel Bernstein, executive]

Thank you, Farouq. At this point, we'd like to open up the call for questions.

[Operator]

[Operator Instructions] The first question comes from the line of Bobby Brooks with Northland Capital Markets.

[Robert Brooks, analyst]

So with the Power and Protection there, obviously, was a pretty notable step down sequentially, and you guys touched on it a little bit. I know you had the supplier that you lost because of the recently enacted trade restrictions, but that was only for $3 million to $4 million of business per quarter, and we were down more like $10 million. So could you just discuss a little bit more what drove that sequential step down? And maybe compare that with what the factors you're seeing as why you see year-over-year growth in 2025?

[Lynn Hutkin, executive]

So Bobby, and are you looking at it sequentially from Q2 to Q3?

[Robert Brooks, analyst]

Yes. Yes.

[Lynn Hutkin, executive]

So the other impact -- so in addition to the supplier on the trade restrictions, the largest thing impacting Power from Q2 to Q3 is actually the seasonality that we have every year in Europe in Q3. So things like rail and e-mobility, those are all based out of our Europe segment. And those are just naturally lower in the third quarter because there are some closures at our Slovakia site for a few weeks in August each year. So that was the largest dip in addition to the CUI business that we previously discussed.

[Robert Brooks, analyst]

And then, is it just the bookings that you guys saw in September and October has given you guys that confidence that you're going to see year-over-year growth return in the Power and Protection segment?

[Farouq Tuweiq, executive]

Yes. We think that is the case, Bobby. Obviously, a fair amount of moving pieces here. But I think as we noted, we do expect a return to growth here as we just across the business, including Power, looking at inventory levels, looking at the conversations that are going on with our customers, the NPI and especially as we are coming into kind of the year-end, right, more discussions. So I'd say we're feeling better and a return to growth. Again, commentary across the business, including Power.

[Robert Brooks, analyst]

That's terrific to hear. And then maybe just an update on finding that new supplier to replace that business that was lost because of the trade restriction?

[Farouq Tuweiq, executive]

Yes. So we are in the process of identifying replacements. As we talked about, and as you know, we are in a longer design cycle business. So step one is identifying, which we have identified some replacement parts. It's going to take a little bit of time to go and have the customers requalify their designs to substitute the parts from the old vendor to the new vendor. So that's going to take some time.

And when considering the inventory in the channel, I would say that sense of urgency might not entirely be there off the bat here as folks are burning down inventory. So probably the best step for recoverability there would be something along the lines of redesigns or demand pickup within their own segments on the customer side. So that's why we think we'll recover some of that as we go through '25, but we're kind of seeing where that shakes out. But it's not going to be a quick flip to switch just because we identify as -- [ something ] as an alternative.

[Robert Brooks, analyst]

Okay. That's awesome. And then last one for me. Just trying to dig a little bit more into the strong bookings. I know back in the first quarter call, we talked or discussed about the really interesting AI opportunities for -- especially within the Power and Protection. So I was just curious if any of those bookings that you guys saw in September and October have been related to any AI orders or AI end products or maybe any other kind of emerging growth opportunities for you, whether that's e-mobility space or rail?

[Farouq Tuweiq, executive]

Yes. I think the answer in short is yes. So some of the bookings have come from AI customers. And as we also -- so we have kind of call it hard orders bookings that we got. Also, as we just look at the conversations being had in the forecast with other guys that are about to or haven't yet put bookings on the books yet. We expect that to kind of come in short order as well. So I think the answer to your question is correct.

The other one that we saw in the bookings that had a nice growth is our fuses business. And fuses generally, it's considered one of the earlier recovery items in our industry. So it is a good leader indicator. So fuses was up pretty materially for us in Q3. And I think it was roughly of 30%, 35%, I think it was up, right? So it was nice to see the fuses up, coupled with the bookings, these are good solid indicators.

[Robert Brooks, analyst]

I would completely agree with that.

[Operator]

Our next question comes from the line of Jim Ricchiuti with Needham & Co.

[James Ricchiuti, analyst]

You may have provided this detail. I apologize if you did. But I'm wondering, can you quantify the impact from the strike at Boeing in the quarter? And the follow-up to that is just whether the guidance for Q4 has taken into account the potential for a longer strike, which I guess now appears to be the case?

[Farouq Tuweiq, executive]

Yes. So we haven't quantified that, Jim. We definitely had an impact on us in terms of our amount of -- we, let's say, couldn't ship. But I would say it was nothing -- it wasn't overly material for this quarter. So I think the team did a nice job reacting to that and kind of working on other things, and other products. Heading into Q4, our guidance is reflective of, call it, the impact of the strike. I think the -- and that's kind of what we're alluding to a little bit in terms of some of the volatility around that. So we try to capture our best guess kind of base case, if you will. Obviously, we're through October here and it have an impact. So I think we really think -- we tend -- [ we had to ] take into account our guess on November and December. So I would say we're hoping for some recovery, but it's not -- we don't think it will be material in Q3, just given by the time they all come back to work, it will take a few weeks for it to get going.

[Daniel Bernstein, executive]

I would think the safe position we take the way things look, most likely, we won't see sales for Aerospace for this one customer for the rest of the year.

[James Ricchiuti, analyst]

Got it. And just on the green shoots that you guys cited in networking and industrial, is this a case of perhaps just the excess inventory being worked down enough and some restocking or -- and this may be a harder question to answer, just signs of actual improvement in some of these markets and where you think there may be some actual improvement, particularly in the industrial area?

[Farouq Tuweiq, executive]

Sorry, if I didn't understand your question, are you saying how much of the bookings is a replenishment of the actual demand growth at the customer's level?

[James Ricchiuti, analyst]

Yes. I guess what I'm saying, we've heard this a bit that in some cases, there may be inventories have been worked down and some of what we're hearing is just some natural replenishment, but not necessarily signs of actual demand driving that yet. And I don't know if that's something you've noticed or better yet. I mean if you see some -- in the industrial market because you guys sell pretty broadly, can you tell where some of these green shoots are coming from?

[Daniel Bernstein, executive]

I think-- yes, Jim, I think when we talk industrial, it's a little more harder to pick out. But for us, when we look at new growth opportunities, not replenishment opportunities, are really, the areas that we see that is we see Space, for example, where we picked up 160 customers in distribution that are buying orders today that might go in the high volume. And then with EV, we see those are new opportunities. And of course, AI, I think probably our 2 largest customers we're going to pick up next year might come from AI. So I think if you look at new creation, new demand, I would think AI, Space and EV are the driving forces of new customers that are buying from us.

[Farouq Tuweiq, executive]

And I think I agree with Dan, on the new -- some of the new customers, the wins that we're seeing are pretty good. I think on the existing customers, because remember, Jim, I think when inventory gets backed up and Dan, can correct me if I'm [ erring, ] when inventory generally gets backed up, it's not as bad of a picture from our customers' perspective, right, because they still have inventory to sell. So I think once the inventory comes down, you turn to a little more normal cadence of ordering that -- a little bit more reflective of demand. So they kind of go a little bit hand in hand. So obviously, we were down pretty decent numbers this year. And I would attribute that demand not being down that much from our customers, so to speak, but it was really kind of working down the inventory side of it.

[James Ricchiuti, analyst]

Got it. That's helpful. And just -- did you give a Commercial Space revenue number? I know it's a small part of the business, but it's obviously a growth area.

[Lynn Hutkin, executive]

Yes. So the Space revenue for Q3 was $2 million. So that brings our year-to-date up to $6.3 million.

[Operator]

Next question comes from the line of Theodore O'Neill with Litchfield Hills Research.

[Theodore O'Neill, analyst]

Congratulations on a good quarter. My first question is about Enercon Technologies. And I was wondering if you could talk a bit more about what this brings to the table in terms of products that you may not have had before in the Aerospace and Defense industry? And what their cross-selling opportunities are?

[Farouq Tuweiq, executive]

Yes. So thank you for that. So for Enercon, which for everybody's benefit, will be sitting in our -- and ultimately roll into our Power segment. Today, our Power segment does not service these end markets. So it is a new market addition, both on the Defense, Commercial Air and Emerging Space as well. So now we start creating some interesting cross-pollination between the Connectivity and the Power segment. So that's one.

Two is Enercon also opens up a couple of new markets potentially for us that we are not in today. And the other thing from a products perspective, I would say, generally, if you ask power supplies, we will say power supplies are power supplies, there's some nuances and sophistication to each of them. I would say their product set is a little bit different than ours, but also kind of the same, right? So we sell some of that product into the rail that's pretty highly sophisticated, highly custom-type of applications.

Where Enercon excels is their MOQs are one piece, right? So they're highly, highly custom. And they are -- given the conservative nature of the customer side with various regulatory requirements and manufacturing elements around product tracing and the like, they obviously have that side of it as well. So you've got to look at it while we may know the products, and we do know some of these products, it's really the ecosystem, the customer relationships, the go-to-market and the brand name that they bring is what differentiates them. So we tend to think about more of an end market expansion and some opportunity potentially for the cost side, which we [ didn't ] underwrite as part of our base case, but we think there's opportunity there. But really, it's a revenue play here.

[Daniel Bernstein, executive]

And just to add some more flavor to it. Just for example, one of the target areas that we're looking at before we acquired them was Europe, and they realized to be successful in Europe, they had to have a manufacturing base. And we have an ideal factory that can support their needs. We're going to be with them next week -- I'm sorry, in 2 weeks, for them to look at our factory and see what the possibilities are we can offer them.

Also from a -- besides cross-selling opportunities, many of our customers are the same, but we do have some customers that they sell to, that we don't sell to back and forth. But a bigger solution for us is the more we can go to any Military Aerospace customer and give them a full basket of products, the more we can build up our relationship with that customer. And now there's very few customers that can offer both Connectivity and Power supply, which takes a lot of their purchasing table. So this way, they can be with one group or one company to solve a lot of their problems going forward. So we think it's just a very exciting opportunity across the board.

[Theodore O'Neill, analyst]

Okay. Yes, makes sense. My other question is just about the rail business. Is this a highly regional business? And what region is showing the strength in rail?

[Farouq Tuweiq, executive]

I think the way you think about it is largely our manufacturing comes out of Slovakia. And the customers that we service are global. So when we talk about rail, obviously, maybe other parts of the world are working from our customers' perspective. But given our normal cadence in the European shutdown, that's why it impacts the business because our manufacturing occurs in Slovakia. That's how I [ kind of think about ] the manufacturing impact for us.

[Daniel Bernstein, executive]

We would say a good portion of our sales are European-based customers, rail customers that sell throughout the world.

[Farouq Tuweiq, executive]

Correct. Yes. So we'll kind of transact there, then they ship it around, so to speak. Yes, that's a good point.

[Operator]

Thank you. As there are no further questions at this time, ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Dan Bernstein for closing comments.

[Daniel Bernstein, executive]

Well, just once again, thank you for joining our call today, and we're looking forward to continued success, and we'll speak to you the final -- fourth quarter of next year. Have a good day.

[Operator]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

[Farouq Tuweiq, executive]

Thank you very much.