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McGrath RentCorp
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Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp Second Quarter 2020 Conference Call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] This conference call is being recorded today, Wednesday, July 29, 2020.
Before we begin, note that the matters the company management will be discussing today that are not statements of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our third quarter 2020 financial outlook as well as statements relating to the company's expectations, strategies, prospects or targets.
These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected.
Furthermore, you should notice that the full impact of the COVID-19 pandemic continues to evolve. As such, the full magnitude the pandemic will have on the company's financial condition, liquidity and future results of operations is uncertain. The following discussion by management about the company's financial condition is subject to the future effect with the COVID-19 pandemic.
In addition to the COVID-19 pandemic, important factors that could cause actual results to differ materially from the company's expectations are disclosed under Risk Factors in the company's Form 10-K and other SEC filings. Forward-looking statements are made only as of the date hereof. Expect as otherwise required by law, we assume no obligation to update any forward-looking statements. In addition to the press release issued today, the company also filed with the SEC the earnings release on Form 8-K and the Form 10-Q.
Speaking today will be Joe Hanna, Chief Executive Officer; and Keith Pratt, Chief Financial Officer.
I will now turn the call over to Mr. Hanna. Go ahead, sir.
Thank you, Catherine. Good afternoon and thank you for joining us on today's call. I will start the call with some overall remarks and comment on our second quarter 2020 performance and our look ahead. Keith will provide additional detail in his financial review and outlook comments.
The second quarter brought with it unprecedented and challenging conditions for us to navigate, through which we were able to deliver adjusted EBITDA growth of 11%. The COVID-19 pandemic resulted in some customer project work stopping, and then starting, our workforce transition to new safety and operating protocols, myriad, additional federal state, and local guidelines to follow and uncertainty at every turn. Nevertheless, we adapted quickly and deliver good results. Everyone in the company stepped up and put our customers first preparing, delivering and returning equipment throughout the quarter without missing a beat. Overall, our workforce remained safe and healthy during the quarter.
Here are some of the highlights. Mobile Modular rental revenues grew 4%. During the quarter, most of our education projects progressed on schedule and without significant disruptions. Some school districts were able to accelerate schedules due to empty campuses. We closed out a number of education, classroom sale projects at Mobile Modular and Enviroplex, which contributed to our strong quarterly profits.
In our commercial end markets despite some project shutdowns earlier in the quarter, areas opened back up and projects resumed. Our Portable Storage business grew rental revenues 3%, although, we noted softer demand for new projects during the quarter.
Turning to TRS-RenTelco, we grew rental revenues 2%. Despite business disruption from COVID-19, bookings steadily increased during the second quarter as project work gradually resumed. Most of the demand weakness was in our communications fleet as many contractors and field personnel that use our equipment stopped working. Over the course of the quarter as these contractors returned to field work, they began to place rental orders again. Rental revenue growth in the quarter came from our general purpose customers with relatively healthy demand as projects in aerospace and defense and semiconductors continued.
Adler rental revenues decreased 27%. COVID related economic disruptions and the drop in the price of oil and gas from both global overproduction and lack of demand slowed rental activity as projects were canceled or pushed out. We saw a decrease in five of our six industry sectors during the second quarter.
Downstream refining capacity utilization decreased to all time low. Rig counts dropped in the quarter as drilling operations work curtailed. Overall, a tough quarter for the business as both the pandemic and the price of oil generated headwinds for rental revenues. Despite these headwinds, the business generated healthy cash flow for the enterprise.
In looking at the demand picture for the rest of the year, much depends on our ability as a nation to get the coronavirus under control. Barring more significant impact from the pandemic at Mobile Modular, we are not expecting project disruptions in education as customers have remained steadfast in their plans, and commercially, we are seeing more stable conditions the weaker than a year ago.
Our pipeline remained strong in Enviroplex and we're expecting to close out the year with projects as planned. At TRS-RenTelco, we're hopeful that 5G field work will pick up during the second half of the year and demand for our general purpose equipment will remain steady.
At Adler, we are not expecting much uptick in rental activity until oil and gas demand improves. We are hopeful that we have troughed at Adler, but we expect market conditions will remain soft in that business for the foreseeable future.
It is important to know what we accomplished in the quarter and our ability to weather economic storms. I'm proud of our execution as we navigated an unforeseen and unprecedented economic shutdown and operated effectively. We're fortunate to have the experience leadership and employee base that we do. Their professional instincts and solid relationships were vitally important as we made necessary adjustments to support our customers, many of whom have been loyal for years.
In addition, our business demonstrated its resilience in challenging times as our strong cash flow generation enabled us to pay an increased dividend, repurchase stock and reduce debt. Finally, we delivered improved profitability on a year-over-year basis, despite one of our divisions experiencing significant headwinds.
As most are aware in today's business environment, access to capital has become more challenging for some companies and going forward it may be more difficult. In these situations, renting equipment becomes an even more attractive alternative when reduced capital budgets preclude new equipment purchases.
McGrath RentCorp is well-positioned to supply our customers and markets. Despite an uncertain economic backdrop, we are hopeful that conditions will improve as the remainder of 2020 unfolds.
Now, let me turn the call over to Keith who will take you through our financial review.
Thank you, Joe. Picking up on Joe's comments, since the COVID-19 pandemic began, our teams have done a great job in moving quickly to adapt to the new operating norms. They did all this while also delivering good second quarter results.
For the second quarter of 2020, total revenues increased 8% to $137.7 million from $127.4 million a year ago. The company's 12% operating profit increase for the quarter was driven by a $5.1 million increase in gross profit from sales revenues, partially offset by $0.8 million and $0.7 million decrease in gross profit on rental revenues and rental related services revenues, respectively. Net income increased 16% to $22.5 million from $19.5 million, and earnings per diluted share increased 16% to $0.92 from $0.79.
Now, I will break the results down by reviewing rental division operating results and performance compared to the second quarter of 2019. Mobile Modular total revenues increased $9 million or 13% to $76.8 million on higher sales and rental revenues, partly offset by lower rental related services revenues.
Rental revenues for the quarter increased 4% from a year ago, which was driven by 3% higher average equipment on rent and a 2% improvement in average monthly rental rates. Sales revenues more than doubled to $8.6 million, primarily on higher new equipment sales to educational customers.
We achieved rental revenue growth across our commercial and education markets, as well as in our portable storage business, despite the softer business conditions that Joe described. Equipment preparation costs, included in other direct costs of rental operations, decreased 13% to $12.4 million due in part to lower shipment activity levels during the quarter. As a result, rental margins increased to 61% from 56%. Average modular rental equipment for the quarter was $823 million, which was an increase of $36 million. Average fleet utilization for the second quarter decreased to 77.7% from 79.2%.
At TRS-RenTelco, total revenues increased $0.8 million or 2% to $33.1 million on higher sales and rental revenues partially offset by lower rental related services revenues. Rental revenues for the quarter increased 2%, primarily driven by 8% higher average equipment on rent, which was partly offset by 6% lower average monthly rental rates. The lower average rental rates reflect a mixed shift towards more general purpose equipment rentals that tend to have longer term transactions compared to communications equipment rentals. Rental margins decreased to 41% from 44%.
We saw growth in rental revenues from general purpose test equipment, partly offset by lower revenues from communications test equipment customers. Average electronics rental equipment for the quarter was $339 million, which was an increase of $42 million. Average utilization for the second quarter decreased to 63.9% from 67.2%.
At Adler tank rentals, total revenues decreased $7.7 million or 29% to $18.6 million on lower rental related services and sales revenues. Rental revenues for the quarter decreased 27%, primarily from 23% lower average equipment on rent and 6% lower average monthly rental rates. The rental revenue decrease reflected weaker demand caused by COVID-19 related business disruptions and the lower price of oil and gas, with five of our six end markets having lower rental revenues compared to last year second quarter.
Rental margins decreased to 51% from 58%. Adler's average rental equipment for the quarter was $315 million, which was an increase of $1 million. Average utilization for the second quarter decreased to 44.3% from 57.5%.
Moving on, the remainder of my comments will be on a total company basis. Total company equipment sales revenues increased to $30.7 million from $13.7 million a year ago. This increase was due to higher sales revenues at Mobile Modular, and Enviroplex, reflecting strong demand for education project. The timing of sales revenues can fluctuate from quarter-to-quarter and year-to-year, depending on customer requirements, availability of used equipment for sale and other factors.
With a significant number of sales project already completed during the second quarter, we currently expect total company sales revenues for the third quarter to be lower than a year ago, and total full year sales to be comparable to 2019.
Selling and administrative expenses decreased $0.3 million or 1% to $30.5 million, primarily due to lower travel and meeting costs. Interest expense was $2.2 million, a decrease of 30% as a result of 28% lower average interest rates and 3% lower average debt level. The second quarter provision for income taxes was based on an effective tax rate of 26.4% compared to 24.9% a year earlier.
Our 2020 year-to-date cash flow highlights include net cash provided by operating activities was $97.5 million, an increase of $5.5 million compared to 2019. The higher cash flows supported organic investment in the business, increased dividend payments and share repurchases, while also reducing debt. These strong cash flow characteristics demonstrate the company's resilience model during a period of economic weakness.
We invested $57.6 million for rental equipment purchases, mostly at TRS-RenTelco and Mobile Modular, and $6.9 million for property, plant and equipment purchases. Partly offsetting these investments was $21.9 million of proceeds from sales of used rental equipment.
Dividend payments to shareholders were $19.5 million. The company repurchased 280,000 shares of common stock, totaling $13.5 million or an average price of $48.24 cents per share. There were no repurchases of common stock during 2019.
Net borrowings decreased $21.3 million to $272.1 million during the first half of 2020. At quarter-end, the company had capacity to borrow an additional $259.4 million under its lines of credit. And the ratio of funded debt to the last 12 months actual adjusted EBITDA was 1.1:1.
Second quarter 2020 adjusted EBITDA increased 11% to $58.1 million compared to a year ago, and consolidated adjusted EBITDA margin was 42% compared to 41% a year ago. Our definition of adjusted EBITDA and the reconciliation of adjusted EBITDA to net income are included in the quarter's press release.
Finally, turning to our financial outlook. For the third quarter 2020, we expect total revenue between $140 million and $160 million. Adjusted EBITDA between $54 million and $64 million, gross rental equipment capital expenditures between $10 million and $15 million.
Please keep in mind the following regarding our outlook. The impact of COVID-19 on the economy and on our business is evolving and it's difficult to assess. In addition, visibility is limited at Adler tank rentals and TRS-RenTelco because of the short rental terms in both businesses.
That concludes the prepared remarks. Catherine, you may not open the lines for questions.
Thank you. [Operator Instructions]
And our first question comes from Scott Schneeberger with Oppenheimer. Your line is open.
Thanks very much. Good afternoon. The -- I guess, I'd like to start in the Modular segment please. And can we address the sales? What do you attribute the strong sales in the quarter? And is that something -- it sounds like you don't think that'll persist in third quarter. Curious how you think about it in fourth quarter where in a normal year often happens, but this is not really a normal year. So, just thoughts on that, please. Thanks.
So, Scott, this is Keith. The way I look at sales is as follows. As we always remark, it's a little hard depend on which quarter sales may land. It's driven by customer requirements, and sometimes you can run into site issues where a project -- a customer hoped to have completed in June can slide into July or a project that was expected to finish in September can slide into October. So, these are things that we just face every year. But to step back a little bit, as I tried to comment in the prepared remarks, total company sales for the year we expect to be comparable to 2019. So, really year-over-year, similar.
Enviroplex and Mobile Modular are important sources of those sales. And if we look at the sort of flow of sales for 2020, we just had a very strong second quarter. And seasonally, we typically expect that third quarter to be higher than the second quarter. We actually expect that will be the case this year, but we do not expect to be as high as the very significant sales in the third quarter of 2019. And you may recall that, Enviroplex had particularly strong concentration of its sales in the third quarter of last year. And then if you look at the fourth quarter, typically we see sales not as high as in the third quarter, so taking a step down.
So, does that help in terms of the sort of flow of sales and also acknowledging that how they actually get recognized? A lot has to do with when the customer would prefer to have the project completed. And then also the issue that you can run into site issues that can delay our revenue recognition for us, in any particular month.
Yeah. Thanks, Keith. That was very helpful color. And I guess it got at the underlying reason for my question, which was, is there anything COVID related, social distancing related that would prompt more sales this year than otherwise? And yeah, I did hear you say it would be flat year-over-year, but I remember it was big last year, as you mentioned in the second half. So -- but nothing you're seeing there where customers are opting to buy as opposed to rent. And I think Joe pointed out early on that rent makes a lot of sense when customers may be a little bit -- capital straps. But yeah, so I assume that summarized it well. Clean me up if not please.
But I guess my next question is …
I may want to add.
We're seeing in terms of those education orders.
Yeah. Scott …
That was my next question. Great. Thank you.
I would say we're not seeing any shifts in how customers are going to procure their space that they're going to need based on COVID. We're not seeing a shift to sales or a big shift to rentals in our education customer base at this point. And so, those sale projects that we recognized this quarter and that will recognize throughout the rest of the year, a lot of these have been in the works for a while now. And they're just coming to fruition at this point.
So, Joe, would you say that you are seeing the level you expected for a normal year or maybe the education rentals are higher because of COVID and social distancing, or you don't want to go that far yet?
Yeah. It's a fair question. Let me just explain a little bit of what we've been seeing with school districts. It's been only in the last few weeks that we've really started to get announcements from school districts on what their intentions are going to be for the fall semester. And I could say this summer has been marked with a lot of confusion and unclear direction regarding what school districts should do. And only in the recent past, have some of them reverse their plans based on the fact that COVID really hasn't calmed down, like everybody thought it would.
And so what we're seeing is more of the public school districts leaning more towards virtual classes or some combination of having kids back in virtual classes. And then, we're seeing on the private school side and with charter schools more of those students -- more of those schools appear that they'll have kids come back. And so, we're seeing more inquiries on classroom demand from that sector, although that's a much smaller sector than our public school district customers is.
So, I think the net out for us at this point is aside from modernization projects, which we see progressing as planned, we don't see a lot of additional demand for COVID related classroom space, but we're also not anticipating that we'll get reduced demand or returns from that. I think it looks like school districts are going to hold on to their classrooms at this point, because things are really just up in the air and they're very unknown at this point, what they're going to do. And so, they're just going to hold on to their classrooms. And so, I'd say it'll be pretty much neutral throughout the remainder of the year.
Okay. Thanks. Appreciate that. And then really same question, but for the modular -- for the commercial vertical and modular, please.
Yeah. So, in that part of the market, what we're seeing is once clients got back into the field, once shelter-in-place restrictions were lifted, many projects resumed, and we're seeing those projects continue and continue throughout the rest of the year. And so, we think that demand will be there. It won't be as strong as it was last year, but we anticipate that those projects that have been in the works are going to finish. I think the question is in future quarters, past 2020 really what's the pipeline going to look like for additional projects that are planned and that's just unknown at this point.
All right. Thanks. And what I infer from that statement is that you're really not seeing much on the return front whatsoever. Near term, the new rentals pipeline is active and fine. It's looking out three, four quarters and beyond where you're a little uncertain. Is that a fair summary?
Yeah. I think that's fair.
All right. Thanks. I'll move off. Just one or two more for me. In TRS-RenTelco, the -- you had sales elevated there as well. Curious on that. And then just kind of what you saw in each of the month and any takeaways you had from the progression of sales and rentals in the segment, how that shaped your view for the second half?
Yeah. Scott, so first thing is sales at TRS-RenTelco weren't necessarily up. And they were pretty constant from quarter-to-quarter sequentially. And so, we didn't really see a pop in sales there in that business. But I can tell you from just the demand side, with the two large segments in that business, our GP customers, general purpose, and our communications customers. The general purpose customers really held onto their equipment, and they continued to place orders. And so, we saw a reasonable amount of demand through the quarter from them. We had their technicians at our clients that took test equipment home, and we're conducting tests at their house when people were sheltered-in-place. So, things kind of kept going as aerospace and defense projects and semiconductor work, and all those things are really continuing.
When you look at the folks who are working out in the field in our communications side of the business, those are the ones that really got affected by shelter-in-place. They were all basically pulled out of the field and not working for awhile, but that started to come back as shelter-in-place restrictions were lifted, and that field work has started back up again. And we're hopeful that throughout the remainder of the year, that that work is going to continue.
From what we know at this point the large carriers are not pulling back on any of their plans to rollout 5G. And so that field work is going to need to continue as this desire for bandwidth and additional bandwidth for people to access the internet of things and online, it just doesn't stop. And so, I think that's going -- we should see reasonably healthy demand from that in the future.
Okay. Thanks. I'll just ask one more, and I'll take it over to Adler. This is -- you -- wasn't more than a year ago where the majority of your end market served were doing better year-over-year, and that seems to have reversed. Curious -- and fine if you don't want to share, but I'm curious what your remaining end market is that the one of the six steps that's still doing well.
And then is this mostly contagion affecting activity from oil and gas, or is it -- you cited COVID as well? I'm curious just to kind of get a flavor for how much of it is tied to oil prices outside of the upstream segment or end market -- how much of the others are affected by that? Thanks.
Okay. Scott, I'll take the first piece which end market showed some growth, because you're right. It was really a reversal from a year ago. We only growth in one area and it's really our catchall category or other, and our primary markets as you know we have upstream oil and gas. We have refinery, construction, environmental services and industrial services. They were all down year-over-year. The other was up. And when we dug into that -- frankly, several of the projects that gave us a little bit of growth were COVID-19 related.
We had examples where some producers of hand sanitizer product needed more tanks and equipment to do the work they were doing. We had anecdotal unusual projects, like a craft brewery that had to dispose of beer, which wasn't being consumed and our equipment helped them in that process. So, the other category was the one area that was up slightly, and some of that was COVID related.
Okay. Thanks. Appreciate that, Keith. And tragic, they had to throw it up there. I'll turn it over.
We have pictures of that, Scott. It was tragic.
That sad [indiscernible].
Thank you. And our next question comes from Sam England with Berenberg. Your line is open.
Hi, guys. Thanks for taking the questions. Just a couple for me. The first one in Adler. I was just wondering if you're thinking that's doing anything around cost-cutting in that business, or perhaps even in TRS over the second half of this year, or were you just waiting to see how demand recovers in Q3 at this stage?
Yeah. Let me address Adler. First thing I'd like to say is we run that business very, very lean. And there's not a lot of overhead or areas that we have to be able to cut costs out of that business. I will say that we have clamped down on virtually everything that we can to adjust our rate of spend in the business. And through attrition, we're operating with about 10% less personnel at this point. And so, we're at a place where we can kind of comfortably run the business and we'll just have to see what happens over the next timeframe.
As I said in my prepared comments, we think we've troughed in that business. And so, hopefully, we'll see some upside here as projects and demand for oil and gas and projects may resume at some of our clients.
Okay. Great. Thanks. And then the next one, you've seen the monthly rental rates dropping a bit in TRS and in Adler. I just wondered what the pricing strategy is heading into the second half in those two bits of business.
Yeah. Just following on -- this is Keith. I think, in Adler, new surprises for the business that is available there, particularly spot business projects that just come up in the quarter. It's very competitive. I think some of the headwinds we've described that we've seen others in the industry in the business, they're seeing the same thing. And we compete against some large players. We compete against some small players. Pricing is tending to be competitive. I would say in regions of the country that have an oil and gas presence, it's even more heightened. So that's just a reality that changes we referred to. And you see in the numbers reflect that a competitive environment with a lower level of demand.
I think it's different over at TRS. I think on a like-for-like basis, pricing is fairly stable. What we saw with our rental rate metric was a mix shift. So, as you'll recall, we saw overall rental revenue growth of 2%. If you break that out between the general purpose side of the business and the communication side, the general purpose part of the business actually grew about 12%, but the communications part dropped also by about 12%, and communications is slightly smaller part of the overall mix. But all of that mix shifting meant our weight was lower for the business as a whole, so less a sort of market price change, more just that shift between our two primary segments.
Okay. Great. And then maybe just one more around the CapEx spend for third quarter. Which -- the business is going into it. And is that ready to expand within certain geographies or that sort of classes of assets? I'm assuming it's within Mobile Modular that you're looking to expand in the third quarter.
Yeah. A good question. And I would say we're being very selective and our teams are very collaborative and try to make good choices in this environment. And just to really set the scene for you a little bit, the gross CapEx guidance that we gave in the $10 million to $15 million range, that number compares with a number in the first quarter that was $35 million and number in the second quarter, that was $22 million. And so you can see it's really coming down over the course of the year. And again, $10 million to $15 million in the third quarter.
And the business that generally see some needs for CapEx first is the electronics business. And that all relates to technology trends, new product introductions, replacing older technology with newer technology. And that may well account for half or more of what we spanned. Outside of that it will be very selective for particular product categories that are still in high demand in particular regions. But it's clearly a much lower level of gross CapEx than we would typically see.
And another thing I'll point out is if you look at us over the last few years, we've typically generated in the neighborhood of $40 million a year in proceeds from used equipment sales. So, if we're any work towards the lower end of that, $10 million to $15 million that's in the outlook, we may have a net CapEx, if you will, from a rental equipment point of view, that's zero or could even be negative under some circumstances.
Okay. Great. Thanks for much for taking the questions, and I'll pass it over.
Thank you. And our next question comes from Marc Riddick with Sidoti. Your line is open.
Hi, good evening.
Hi, Marc.
Hey, Marc.
So, I wanted to start with just a general. If you could share some general thoughts as far as the funding environment -- some of the funding environments that you're dealing with that there's sort of maybe a little bit of an update there, if there've been any changes, that we should be aware of given the general investor concerns around state and local funding potential issues going forward.
Yeah. I'm assuming you're mostly kind of concerned about how that's going to affect the education business.
Correct. Correct.
Yeah. So, let me address that. Different states fund education facility projects in different ways. In California, they're mostly funded through bonds. And in a state like Florida, they are funded through a sales tax revenues. And so, each state approaches their facilities funding differently. In California, unless the bonds are recalled or unless there is no market to sell the bonds when it comes time, actually selling those bonds and funding those projects is a really good way for districts to be able to get projects done. And so, in a state like California, we feel more comfortable that projects will continue. In other states that go on sales tax revenues, that's more of a mixed bag and that could be a little bit riskier.
I'll tell you that at this point, all districts are really concerned about right now is whether they're going to get their kids back to school or not. And if so, how they are going to do it. And as I talk to all of our folks in the field and some of our customers they -- there's -- they're not really concerned too much about the money at this point. There's not a lot of talk about the funding environment. States are counting on the fact that funding will be there, in some fashion, like in California through a federal bail out. And so they're hoping that operating funds will be there and other states are looking forward to the same thing. And school districts are just not really talking about the funding environment right now. That's just more -- how they can get their kids back to school.
So, I think there's more to learn over the next quarter or two, as we see the impact of potential shortfalls in state budgets, but it's kind of a -- just a little early to really have that nailed down at this point.
Okay. I appreciate the color on that. That's really helpful to go over. And I wanted to -- I think I saw this in the Q, I'm not positive. But it looks like Mobile Modular is about now 9% of …
Portable storage is 9% of McGrath RentCorp total.
And the commentary earlier I think you said it was up 3% on revenue?
Correct.
Rental revenue.
Rental revenue?
Yeah.
Okay. Was that primarily driven by pricing or maybe what the price volume mix was there? And if -- I know if you can share if there are any stronger industry customers that was more construction thing, or what you might be seeing there?
Yeah. I mean, it was up year-over-year. Sequentially, it was a tougher quarter compared to the first quarter. And we did see -- as we mentioned in the remarks, weaker demand conditions early in the quarter, things began to improve during the course of the second quarter. So, those were some of the dynamics at play there.
Okay. Great. And then as far as -- and you talked to the operating procedures that you went through as far as updating those to deal with the pandemic. I was wondering if you get a sense as to where you are as far as making further adjustments, or do you think you kind of where you need to be for now, or because obviously the things keep changing. But I was wondered if you could talk a little bit about that process? And if there's more to come there, or if you're comfortable with where things are right now.
Sure. Well, first thing is we follow CDC guidelines on the protocols that we need to make sure are in place in the business. And in many cases, we exceed CDC guidelines. And so, as those change, we will change along with it. I don't think that -- I'm not really anticipating a lot of additional changes at this point. I think most of this pandemic is related to -- folks just not observing social distancing while they're not at work and gatherings and things like that, that you hear about that are just keeping this virus alive. And so, I really don't see a lot of changes to our own operating protocols. I think, they're very strict at this point.
Okay. Great. Thank you very much for the color.
Yeah. Thank you.
Ladies and gentlemen, that appears to be the last question. Let me now turn the call back over to Mr. Hanna for any closing remarks.
All right. Well, I'd like to thank everyone for joining us on a call today and for your continuing interest in our company. We wish you all health and safety in the months ahead. And we look forward to speaking with you again in late October to review our third quarter results.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.