Albany International Corp

NYSE:AIN

Earnings Call Analysis

Albany International Reports Solid Growth

Albany International reported a 7.9% year-over-year increase in GAAP revenue to $281 million, with net income of $27 million, or $0.87 per share, bolstered by its recent Heimbach Group acquisition and growth in the Aerospace Engineered Composites (AEC) segment. Excluding Heimbach's effects, revenue was up by 2%, with adjusted earnings per share (EPS) at $1.02. Machine Clothing, despite a tough economic environment, particularly in Europe and China, delivered strong results with a 37% adjusted EBITDA margin. The Aerospace Composites saw a 6% growth, with a 3% rise in adjusted EBITDA. With the Heimbach integration on track and expected to benefit earnings by 2025, the company's overall outlook remains positive with a focus on continuous improvement and strategic investments for long-term profitable growth.

Top Line Growth and Market Expansion

The company reported a robust increase in GAAP revenue to $281 million, showing a healthy year-over-year growth of 7.9%. This was achieved through strategic sales growth in the Aerospace and Defense Composites (AEC) and the inclusion of Heimbach's results in the Machine Clothing (MC) segment for one month. Notably, the company emphasized steady sales growth in North American markets, which is a positive signal of regional market strength amidst a dip in sales in other global regions.

Earnings Per Share (EPS) Indicate Mixed Results

The EPS picture was mixed, as GAAP net income reached $27 million or $0.87 per share, marking a significant improvement from the same quarter last year. However, the adjusted EPS of $1.02 per share was a slight decrease from the previous quarter's $1.15 per share.

Machine Clothing and Aerospace Composites Segments Performance

The MC segment's revenue modestly declined by about 2%, but this was on a currency-neutral basis and excluded the impact of the Heimbach acquisition. Furthermore, adjusted EBITDA for this segment, again excluding Heimbach, was $56 million. On the other hand, the AEC business flourished with a 6% year-over-year revenue increase to $115 million and an adjusted EBITDA of $22 million. This growth indicates the segment's strong performance and its importance to the company's overall financial health.

Investments in LEAP and Guidance for Revenue Uplift

The company has revised its 2023 LEAP revenues higher than initially guided, while the long-term LEAP revenue target of $200 million by 2026 stands firm, indicating a confident outlook on production efficiencies and growth potential in the aerospace sector.

Gross Profits, Cost Management and Net Income

The company posted a third-quarter gross profit of $102 million, slightly up from the previous year, affected by higher input costs and lower overhead absorption in the MC segment. Nonetheless, the addition of Heimbach helped offset these challenges, and gross margin in MC was relatively stable at 50.7%. The AEC segment showed a gross profit increase of 6.2% with a gross margin of 19.7%, hinting at margin preservation in more challenging market conditions. The company's overall GAAP net income increased significantly to $27 million thanks to various efficiency measures and strategic cost management despite facing a rise in SG&A expenses, primarily due to the Heimbach acquisition related costs.

Future Outlook and Strategic Financial Positioning

The company remains in solid financial health with a strong cash position of $172 million, ample liquidity over $300 million, and a low net leverage ratio of 1.3x, which underscores the company's strategic financial planning and its ability to chase long-term growth opportunities. Additionally, the full-year guidance projects a revenue range between $1.10 billion and $1.13 billion, which is a $60 million uplift, factoring in Heimbach. The company expects adjusted EBITDA to fall between $238 million and $254 million for 2023, with capital expenditures estimated between $85 million and $95 million, and GAAP EPS in the range of $3.02 to $3.37.

Strategic Acquisitions and Segment-Specific Guidance

Following the Heimbach acquisition, MC's revenue guidance has been raised to $660 million to $670 million, expecting revenue to increase both sequentially and year-over-year. The guidance also includes a $5.5 million full-year inventory step-up related to Heimbach, expected to be finalized by year-end. Furthermore, with a $10 to $15 million upward revision in the ASC LEAP program's revenue for 2023 and a boost in production of the 787, AEC's revenue guidance also sees a positive adjustment with a new range of $440 million to $460 million.

Earnings Call Transcript 2023-Q3

[Operator]

Good day, and thank you for standing by. Welcome to Albany International Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. John Hobbs, Director of Investor Relations. Please go ahead, sir.

[John Hobbs, executive]

Well, thank you, Norma, and good morning, everyone. Welcome to Albany International's Third Quarter 2023 Conference Call. As a reminder, for those of you listening on the call, please refer to our press release issued yesterday afternoon detailing our quarterly financial results. Contained in the text of the release is a notice regarding our forward-looking statements and the use of certain non-GAAP financial measures and their associated reconciliation to GAAP.

For the purposes of this conference call, those same statements apply to our verbal remarks this morning. Today, we will make statements that are forward-looking that contain a number of risks and uncertainties, which could cause actual results to differ from those expressed or implied. For a full discussion of these risks and uncertainties, please refer to both our earnings release of November 6, 2023, as well as our SEC filings including our 10-Q.

Now I'll turn the call over to Gunnar Kleveland, our President and Chief Executive Officer, who will provide opening remarks. Gunnar?

[Gunnar Kleveland, executive]

Thank you, John. Good morning, and welcome, everyone. Thank you for joining our third quarter earnings call. I'm pleased to be here today on my first call as President and CEO of Albany International. The company has again produced very good results in the third quarter with excellent operational execution and positive free cash flow for both the quarter and on a year-to-date basis. Before we get into the details, I'd like to take a moment to acknowledge Bill Higgins' steadfast leadership of Albany as President and CEO through the past several years. While he has retired from his role, he continues to provide guidance and counsel as a member of the company's Board of Directors. My transition has proceeded smoothly, and Bill leaves a legacy of a great company with innovative proprietary technologies, businesses that are performing well and a healthy balance sheet. The business segments each have impressive product quality and exceptional customer service.

I know from experience, these elements are the foundation of excellent customer relationships, continued business opportunities and a sustainable competitive advantage. These factors weighed on my decision to join Albany. I spent my first few weeks getting more familiar with operations, traveling to numerous sites across the business, meeting with our team and having meaningful conversations at all levels of the company from the shop floor to the C-suite, really spending my time focusing on the technology, operations and getting more familiar introducing myself as well as gathering impressions from our customers and the investment community.

The company's technologies and track record of innovation really strike me as strategic assets. The same underlying weaving technology is fundamental to the company's businesses and driver of ongoing technical collaboration and [indiscernible]. Within Aerospace, to push towards lighter weight, more environmentally friendly designs is the #1 challenge to be solved for the next generation of commercial aircraft. Albany's proprietary composite technologies, such as our 3D woven composites are well positioned to play a role there. In Machine Clothing, it's clear from my conversations with -- that customers value Albany's industry-leading, product technology and technical expertise.

In an industry that places a high value on operational reliability and operating efficiency, machine clothings, custom tailor and consumable belts are a well-earned reputation, helping our customer make the most efficient use of their raw materials, energy and labor. I believe our company's culture and people are the key to success. Albany's operational metrics in safety, quality and customer service indicate to me a well-developed operational discipline. I think of continuous improvement as a lifestyle, which I also see across Albany's operations.

From my operations leadership experience, I know how important on-time delivery and quality are to manufacturing operations. Finding a supplier with the performance of Albany International is very hard. And well, as a customer, that just makes you want to give them more business. That kind of execution is a great foundation for our long-term and profitable business relationship and profitable growth. When you add the technology and innovation that we have to offer to all our customers, I think Albany International is an easy pick. Our challenge is to deliberately and strategically manage our growth while not losing sight of operational execution and capital discipline that is foundational to the business long-term success.

Now let's look at third quarter results we announced last night. The company completed the acquisition of the Heimbach Group on August 31 of this year. So the GAAP results include 1 month of Heimbach operations and, of course, expenses associated with the transaction. The details are included in our press release. Rob will review these in more detail in his remarks. Heimbach operations added nearly $16 million of revenue in the MC segment and reduced the segment's operating income by $500,000. We are reporting GAAP revenue of $281 million, up 7.9% year-over-year, driven by sales growth at AEC and 1 month of Heimbach results in MC.

GAAP net income was $27 million or $0.87 per share, up from the GAAP results of third quarter last year of $11 million or $0.34 per share, which incorporated $49 million of pension settlement charges. As expected, Heimbach was slightly dilutive to GAAP EPS for the quarter, about $0.01 per share. Excluding the impact of the Heimbach acquisition, revenue of $266 million was about $5 million or 2% higher than the third quarter of last year, driven by higher revenue at AEC. Adjusted EPS was $1.02 per share compared to $1.15 per share reported in the third quarter of last year. Adjusted EBITDA, excluding Heimbach impact, was $63 million or about 24% of sales right on the company's stated long-term target.

The Machine Clothing business continues to perform very well, particularly in light of challenging macroeconomic conditions in Europe and China. Excluding the effect of the Heimbach acquisition, Machine Clothing revenue of $151 million was about 2% lower on a currency-neutral basis, while adjusted EBITDA, again excluding the effect of the acquisition of this measure was $56 million. This translates to 37% margin. North American markets continue to report sales growth year-over-year, while sales declined in other regions of the globe. The Heimbach integration is underway and proceeding as planned. Our segment President, Daniel Halftermeyer, and his expanded team have been focusing on workforce engagement, ensuring operational stability and financial integration in these first few weeks. We have a clear line of sight into the cost savings and efficiency opportunities that the company previously announced and expect acquisition will become accretive to earnings and cash flow in 2025.

The Aerospace Composites business had a very good third quarter. Revenues of $115 million were up 6% year-over-year on a constant currency basis. Adjusted EBITDA of $22 million was up about 3%. The business is well positioned and continues to win new programs, both commercial and defense from existing and new customers. This will collectively contribute to AEC's long-term growth over the coming years. The company is executing well. It is in great financial health, and it is well positioned with unique technologies and know-how across the businesses. We are in an enviable position. We will continue pursuing continuous improvement across all of our operations. We expect to deliver the benefits of the Heimbach integration as planned. We're investing wisely today in technology development that will position the company to profitably grow well into the next decade. I'm excited about the opportunities.

And with that, I will hand the call over to Rob to review the results in more detail and provide our updated guidance for the year. Rob?

[Robert Starr, executive]

Thank you, Gunnar, and good morning, everyone. I will now turn to our third quarter results and then provide our updated outlook for the year. As Gunnar mentioned earlier, we are reporting GAAP net sales of $281 million, up 7.9% from the third quarter of last year. Excluding currency translation effects and the 1 month of Heimbach sales, revenue growth for Albany was 2% versus the prior year period. Machine Clothing net sales, excluding Heimbach, declined 1.5%.

Higher sales in packaging and tissue product lines were offset by contraction across our other product lines, most notably in pulp and engineered fabrics. Compared to a year ago, European markets are clearly softer, while Asian markets have been mixed. The North American market continues to perform well with modest growth over the prior year period. Engineered Composites net sales of $115 million grew 5.7% on a constant currency basis compared to the third quarter of 2022, driven principally by year-over-year growth on the LEAP, 787 and various space programs. This was partially offset by lower CH-53K revenues. Our CH-53K results from the prior year provided a difficult comparison for us as the last year benefited from significant amounts of nonrecurring revenue for the helicopters as transition program.

The CH-53K nonrecurring items largely concluded in second quarter of this year. So we will continue to see tough comparisons through the first half of next year. Our CH-53K program sales will grow as the program moves toward full rate production. The AEC LEAP program generated $45 million of revenue in the third quarter, nearly $5 million higher than the same period last year. We now expect full year ASC LEAP revenues to be up approximately $15 million compared to the full year 2022. 2023 LEAP revenues are higher than we had previously guided as we manage production efficiencies on the program. Our long-term LEAP revenue target of $200 million for 2026 remains intact. Third quarter gross profit for the company was $102 million, up $1.4 million or 1.3% from the same period last year.

Within MC, higher input costs and lower overhead absorption were offset by the incremental gross margin from Heimbach. Excluding Heimbach, Machine Clothing gross margin was 50.7%, very similar to the 50.8% we reported in the first 2 quarters of this year and down about 100 basis points on a year-over-year basis. At AEC, gross profit expanded $1.3 million or 6.2%. During the quarter, we recognized a net favorable change in the estimated profitability on long-term contracts of $900,000 compared to a favorable change of $2.6 million in the third quarter of last year.

AEC's gross margin was 19.7%, similar to the same period last year. Third quarter R&D spend of approximately $10 million was largely unchanged from the prior year. And excluding the Heimbach revenues, represented about 3.5% of sales. Third quarter SG&A expenses were $52 million, up $15 million from the third quarter last year. A number of factors drove the year-over-year increase. Machine Clothing SG&A increased $6.5 million, principally driven by Heimbach SG&A expenses and $2.3 million from currency translation effects. AEC SG&A was $1.9 million higher on increased incentive comp and personnel-related costs. Corporate expenses increased $6.4 million, principally due to acquisition-related expenses, CEO transition expenses, incentive compensation as well as IT investments in support of our CMMC requirements.

GAAP net income attributable to the company for the quarter was $27 million compared to nearly $11 million last year. As indicated earlier, Heimbach reduced net income by approximately $500,000. GAAP earnings per share was $0.87 in this quarter compared to $0.34 in the same period last year after adjusting for the impact of CEO transition costs, acquisition and integration costs, purchase accounting adjustments on this quarter's results and other adjustments detailed in our non-GAAP reconciliations, adjusted EPS was $1.02 this quarter compared to $1.15 last year.

Adjusted EBITDA of $64.7 million declined $3.4 million from the third quarter of '22. Machine Clothing adjusted EBITDA was $57.5 million or 34.5% of net sales. That is down about $1.5 million from $59 million in the prior year quarter. AEC adjusted EBITDA was $22.1 million or 19.3% of net sales, up about $600,000 from last year's result. During the quarter, the company generated $45 million of free cash flow, cash flow from operating activities was $59 million and capital expenditures totaled $14 million. Net cash consideration from [indiscernible] was $133 million. We remain in a strong financial position with a cash balance of $172 million and well over $300 million of additional liquidity under our committed credit facility. We closed the quarter having refinanced our credit facility for another 5 years with a maturity into 2028 and we upsized the facility to $800 million. Our net leverage at the end of the quarter was a modest 1.3x, providing us the flexibility to continue pursuing our long-term growth strategy.

I would like to now turn to our outlook for the full year. Please note that our full year guidance for the Machine Clothing segment includes 4 months of Heimbach operations. Please also note for [indiscernible] purpose, we will incur $5.5 million of inventory step-up for the full year 2023 relating to the transaction. The inventory step-up will be complete by year-end. Heimbach's estimated annual G&A, including the impact of purchase accounting will be approximately $12 million to $13 million going forward. Machine Clothing business conditions softened somewhat during the third quarter. On a constant currency basis, we experienced demand growth in packaging and tissue product lines, while the other product lines were lower. Business conditions in Europe are clearly soft relative to the past few years, while Asian markets are mixed with the Americas growing modestly. Orders at the end of the quarter were lower than they were at the same time last year. We will have a full quarter of Heimbach operations in the fourth quarter, and as a result, expect revenues to increase sequentially and year-over-year.

We are raising Machine Clothings revenue guide to a range of $660 million to $670 million, increasing approximately $50 million, including the estimated contribution from Heimbach. We continue our efforts to offset inflationary impacts through ongoing continuous improvement efforts and input cost management. As a result of the Heimbach acquisition, we are revising our adjusted EBITDA guidance range for Machine Clothing to $215 million to $225 million. As is typically the case, Machine Clothing fourth quarter revenues and EBITDA results will be modestly lower than the prior quarters.

Turning to Engineered Composites. As mentioned earlier, we expect the ASC LEAP program to generate approximately $10 million to $15 million more revenue in 2023 than we had originally guided. During the third quarter, we stepped up 787 production. Based on this, along with growth in smaller programs, we are raising our revenue guidance and now expect AEC revenue to be between $440 million and $460 million. We are narrowing our AEC full year adjusted EBITDA guidance to $85 million to $90 million. At the total company level, we are updating our 2023 full year guidance as follows; revenue between $1.10 billion and $1.13 billion, up $60 million. Our guidance includes approximately $15 million top line contribution from Heimbach, adjusted EBITDA between $238 million and $254 million, an effective income tax rate of 32% to 33%, implying an effective tax rate of approximately 28% to 30% in the fourth quarter of the year.

Depreciation and amortization, including Heimbach of approximately $75 million; capital expenditures in the range of $85 million to $95 million. GAAP earnings per share of between $3.02 and $3.37, taking into account approximately $0.16 of dilution from the Heimbach acquisition, largely the result of purchase accounting. Adjusted earnings per share between $3.35 and $3.70. The impact of Heimbach is anticipated to be negative $0.04 to $0.06 in the balance of the year. With that, let's open the call for questions. Operator?

[Operator]

[Operator Instructions] Our first question comes from the line of Peter Osterland with Truist Securities.

[Peter Osterland, analyst]

I'm on for Mike Ciarmoli this morning. So first, I just wanted to ask about the guidance around the Heimbach acquisition. With $2 million of EBITDA assumed for the year seems to imply a margin of around 4%. So I was just wondering, are there any elevated cost pressures there you call out or any seasonality that is impacting the margins in the early stages here?

[Robert Starr, executive]

Sure. Yes, Peter, this is Rob. Good to see you on the call. Yes. So as it relates to Heimbach, we definitely are seeing some level of seasonality. And as we published in our materials when we announced the acquisition, right, for the full year '22, they were running about 9% EBITDA margin. So to see the fourth quarter roughly in the range of 5% is not unexpected. And as anticipated, we're working with the team and have a number of actions to really just improve the efficiencies and the margin profile of the business.

[Peter Osterland, analyst]

Great. Makes sense. And then just a follow-up I had on the EPS guidance for the year. So the implied fourth quarter range would be $0.52 to $0.87, which just seems like a pretty wide range at this point in the year. So I was just wondering where are the biggest areas of uncertainty or risk that might drive the business towards the lower end of the range?

[Robert Starr, executive]

Yes. Peter, that's a good question. The $0.35 range is really just a function of the math. If you look at our EBITDA guide by segment, right, we have about a $10 million range for Machine Clothing, which is really also accounting for Heimbach, right? We just bought the business, so it's hard to know exactly what they'll deliver. And then it's $5 million spread. So if you add those 2, you got a $15 million spread, which is really what translates to $0.35. So in order for us to be at the low end, both segments would have to perform at the lower end of the range, which -- while the possibility is certainly not what we're working towards.

We have confidence in the operating team. I think what's more relevant here is to look at the midrange of the guide. And if you look at the midrange, we're at $0.70, and if you adjust the Heimbach impact of roughly $0.04, $0.05 in the quarter, we're pretty much right on top of what we delivered last year.

[Operator]

Our next question comes from the line of Ron Epstein with Bank of America.

[Unknown Analyst]

This is Jordan [indiscernible] on for Ron. So looking out towards next year, have you guys started to see any demand uptick from Safran for AEC?

[Gunnar Kleveland, executive]

So we're not ready to guide for 2024. We are looking at a year where we have higher LEAP revenue generation, and we expect to continue at that level.

[Unknown Analyst]

Okay. And then do you have a sense of how much they've burned through the excess inventory they've had earlier through the year?

[Gunnar Kleveland, executive]

So inventory is a -- there will be inventory at our facility, and there will be inventory at Safran and there will be inventory at GE. And it's -- there will be some buffers at each location, and I don't have the details on that.

[Robert Starr, executive]

Yes. And Jordan, just one other thing. I mean we typically go through an annual process with Safran as we start thinking about production volumes and demand levels for next year, we're not there. We don't have information for that. We'll certainly update the community as we get on our year-end call. But certainly, we're working very closely with them to make sure that the entire chain is managed appropriately so that our ultimate end customers get the product that they need to support the demand in commercial aircraft.

[Operator]

Our next question comes from the line of Pete Skibitski with Alembic Global.

[Peter Skibitski, analyst]

Maybe to start with one on Machine Clothing. You guys mentioned some of the softness in Europe and the orders were down. I just was wondering, do you guys -- I mean you are very global. Do you have a sense right now of whether the demand pull in PMC is kind of bouncing along the bottom, if you will? Or there's some concern out there, I think, that the macro is deteriorating, that maybe we'll be in a take your pick a soft landing or a harder recession next year. Do you guys have any sense of kind of the way things are shaping up for you in terms of the 3 major geographic end markets for PMC?

[Gunnar Kleveland, executive]

And it is -- if you look at the 3 markets, it's kind of interesting because in the U.S., we're seeing growth. And in Asia, we're seeing mixed markets. China seems to be up right now. And then -- but Europe is definitely down. Where that takes us through fourth quarter and into next year is not something we can predict at this point. But we're seeing also a shift in the type of product. But I would say that we should expect in the short term now to be similar growth in the U.S., soft in Europe and maybe we should look at China and see if that picks up.

[Robert Starr, executive]

Yes. And Pete, just -- I think it's important really to note that we've been very successful. I mean, if you look at overall demand across publications and some other grades, those have clearly softened and what really distinguishes our Machine Clothing business is the ability to generate a pretty consistent level of gross margin really through various different demand scenarios. So I think Daniel and his team have done a good job. So we'll manage the demand. I mean, this is one where the brand and product quality actually should hopefully provide us an advantage in a tough market.

[Peter Skibitski, analyst]

Yes. Yes, and it's cloudy out there. That's for sure. Okay. Maybe just one more for me. Just switching gears. The CH-53K, Rob, I don't know if you could share with us, maybe I missed it, what your total revenue in -- for the 53K was this quarter? And then I think -- so you'll be at 0 next year. I think you've said that before in NRE for the 53. And I'm just wondering if we should expect -- because I know Lockheed got a pretty sizable, I think, either LRIP or production contract for CH-53K. So it seems like production volume should be up for you guys next year. I'm wondering if it will all kind of equal out year-over-year if you're still determining that.

[Robert Starr, executive]

Yes. So yes, good question. And you're correct. I mean the NRE is pretty much going to run off. As we exit this year going forward, we're not expecting to see any notable NRE whatsoever. And then on a kind of full run rate operational basis, even this year, if you strip out the NRE relative to last year, we expect sales to be up on CH-53K in the mid-teens or so. So we feel really good about where the program is trending. If you were to visit our Salt Lake facility, right, we got the next -- the automation line. We just actually had a rig on cutting with Sikorsky on that line. So things are progressing really well for CH-53K. And as you said, the order book looks terrific. So this will be a good long-term program for us.

[Operator]

[Operator Instructions] Our next question comes from the line of Jack Ayers with TD Cowen.

[Jack Ayers, analyst]

And welcome, Gunnar. Great to have you. Quick question, and I hate to go back to the Q4 sort of implied guide here. And if my math is right, just AEC specifically, I mean, are we kind of thinking Q4 is going to be down sort of high single digit, low double digit sort of in the Q4 implied there with margins actually stepping up both sequentially and year-over-year? So the sales down year-over-year and sequentially, but margins up year-over-year and sequentially. I guess like what's going on there and just the wide range, is that conservatism or just other moving pieces with sort of LEAP inventory like sort of just excess? Just any color there would be helpful.

[Robert Starr, executive]

Sure. Yes. No. Jack, happy to help. So your math is correct, as we would expect. And we are probably being a bit conservative on top line at AEC, but we are going to see a couple of programs' volumes in the fourth quarter come off. So we're just trying to account for that. And as it relates to the margin, that's really a function of the shift in mix of programs that we expect during the quarter. As you can imagine, right, LEAP we're running ahead. That will kind of cool off in the fourth quarter is our expectation.

So we are expecting to see a higher employed margin. There are some programs like 787 and others, where the margin profile is much better than LEAP, and we're seeing those volumes pick up in the fourth quarter.

[Jack Ayers, analyst]

Okay. Okay. And then just one quick follow-up on Heimbach. And I appreciate sort of the moving sort of demand dynamics going on there. But Q4 implied sales of like $35 million to hit the $50 million for the year. I mean if we run rate that, that looks like we're getting to like $140 million. What -- is that the right way to think about that as we sort of roll that forward into '24, Rob?

[Robert Starr, executive]

Yes. No, yes, the math once again spot on, Jack. But no, you really shouldn't be run rating Q4 sales in Machine Clothing and at Heimbach. That is definitely seasonally, and I think it's probably even a bit more pronounced for Heimbach more seasonal in the fourth quarter. So if you look at what we delivered in '22 for what Heimbach delivered was about EUR 160 million. And we're certainly working with the team to make sure that the sales volumes stay where they need to stay.

[Operator]

I would now like to turn the conference back over to Mr. Gunnar Kleveland, President and Chief Executive Officer, for closing remarks.

[Gunnar Kleveland, executive]

All right. Thank you, Norma, and thank you, everyone, for joining us on the call today. We appreciate your continued interest in Albany International. And of course, if you have any questions, feel free to reach out to John Hobbs, our Director of Investor Relations. Thank you, and have a good day.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.