Core Molding Technologies Inc

Everyone, welcome to the Core Molding Technologies third quarter fiscal 2023 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. As a reminder, this conference call is being recorded. I will now turn the call over to Sandy Martin with three-part advisors. Please go ahead.

Thank you, and good morning, everyone. We appreciate you joining us for the Core Molding Technologies conference call to review third quarter results for 2023. Joining me on the call today are the company's president and CEO, Dave Duvall, and EVP and CFO, John Zimmer. This call is being webcast and can be accessed through coremt.com via an audio link on the investor relations events and presentations page. Today's conference call, including the Q&A session, will be recorded. Please be advised that any time sensitive information may no longer be accurate as of the date of any replay or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts including statements or expectations or future events or future financial performance or forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, by their nature, are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to the earnings press release issued today for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Core molding technologies assumes no obligation to update or revise any forward-looking statements publicly. Management will refer to non-GAAP measures, including adjusted EPS, adjusted EBITDA, free cash flow, and return on capital employed. Reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, a copy of the press release has also been submitted to the SEC on form 8K. And now, I would like to turn the call over to Dave Duvall. Dave?

Thank you, Sandy. Good morning, everyone, and thank you for joining our third quarter earnings call. Let me start today's call with a couple accomplishments during the quarter. A few weeks ago, we received the EcoVitis Bronze Award in recognition of our ongoing sustainability achievements. This award demonstrates our systematic approach to environmental stewardship, and it directly supports CORE's value proposition to our customers that are driving to accurately quantify and reduce their Scope 3 greenhouse gas emissions. We believe this is a visible reminder of our responsibility to our employees, communities, and the environment. We were also one of six finalists in the Award for Composites Excellence competition at this year's annual CAMX, for Composites and Advanced Material Expo in Atlanta. The award recognizes the unique proprietary engineering technology we use to produce one of our customers' personal watercraft hulls. It demonstrates our ability to combine different composite materials and molded-in features to optimize the design for improved performance and cost. These are important recognitions of Core Molding's strong value proposition through our technical solutions and sustainability efforts that we are continually strengthening in our organization. As always, I want to thank our hardworking team of talented people for executing Core's shared vision for growth and driving improvements in our business every single day. Our most important competitive advantage is our talented team working together in a culture that values transparency, learning, and openness to challenge. This makes a difference, and we continually and purposely drive this culture within our organization. Our team strives every day to execute the company's four strategic initiatives. One, driving revenue growth. Two, technical solution sales. Three, enhancing profitability. And four, generating cash flow. Along those lines, I'd like to report that our must-win battle to drive significant operational improvements in specific plans will be complete this year. We've achieved a 19% overall productivity improvement by October, and will achieve the targeted 20% by year end. With all facilities operating well, it now accelerates our ability to leverage a company-wide operational excellence system to scale the knowledge sharing and improvements. Just to finish up on the strategic importance of the must-win battle this year, it directly improved our gross margins, which were challenged a year ago. It provided additional capacity in those locations by improving the throughput, It put all locations at a level of performance that allows us to implement a holistic operational excellence process to better leverage our knowledge. And four, it allowed us to free up key technical resources to better execute and integrate an acquisition in 2024, which is a goal. Having the necessary technical resources in a common business excellence system will significantly improve our ability to quickly execute and efficiently integrate an acquisition. I believe this is a clear example of our organizational ability to execute our key strategic initiatives, which in turn creates improved performance across all areas of the organization. Turning to our third quarter results, as we discussed earlier this year, our 2022 third quarter product sales were up over 36% over 2021. So we anticipated that second half 2023 Product sales would likely return to historical seasonality, and they did. Although our third quarter product sales of $80.9 million were down 12.4% from prior year, this does not tell the whole story. John will add details to this in a moment, but I would like to make some initial comments. We grew gross margins by 450 basis points to 17.6% for the third quarter. representing improved gross margins despite lower fixed cost leverage. This was one of our key focus areas in 2023. And I believe this third quarter results proves that our business transformation is enhancing the strength and resiliency of the business. Our gross margin improvements this year are the direct result of purposely executing our strategy. Although revenue growth is always an important deliverable, we are also laser-focused on driving profitability through enhanced margins, operational efficiencies, and better capacity management while also winning technical solution sales for the future. We produce single-source, tooled products for our customers on multi-year production programs structured to deliver revenues, improve margins, and incremental cash flow for several years. Most of us suspected that continually rising interest rates were going to affect the demand at some point, and we believe we're well prepared to take advantage of it financially, operationally, and strategically. Specifically on sales growth, our technical solutions team signed new contracts during the first nine months of this year that will contribute annualized revenue from new and replacement work totaling approximately $50 million. with planned launches primarily in 2024 through 2026. These programs relate to new and reoccurring customers in end markets, including building products, industrial, transportation, and power sports. Full volume levels for these programs will ramp up over the next several years. We continue to see a solid pipeline of opportunities similar to the current opportunities we've signed this year, which reinforces our long-term sales growth potential. We are excited to tool and launch these programs, especially since they further expand our business into diverse and growing end markets with engineered solutions. Finally, regarding our sustainability efforts, we are currently partnering with a customer to install full regrind and material processing systems to reclaim raw material from our production process at our Matamoros, Mexico plant. This process will reduce both our waste and cost, while providing a value and reduced cost to our customer. Based on their production plans over the next several years, this will reclaim over a million pounds of raw material. We continue to work with customers to use or increase our storage or usage of recycled material or develop recyclable solutions from a conversion away from traditional materials. We have aligned our strategies to provide technical and unique solutions to customers by deploying our extensive portfolio processes. This expertise and capacity are important to our long-standing Blue Chip customers who rely on us as their single source supplier of critical components. We continue to see how sustainable solutions build long-term relationships and value for our customers, employees, and shareholders. With that, I'd now like to turn it over to John to cover the financials in more detail.

Thank you, Dave, and good morning, everyone. As we noted last quarter, a return to more historical seasonality impacted the third quarter's top line. Combining the 36.5% product revenue increase from last year with our 12.4% decline this year, product revenues are still up approximately 20% from 2021 levels. Last year, we saw customers rebuilding depleted inventories against higher demand. This year, their inventory levels are more optimal, or in certain industries, an overbuilt position, and customers are working through those inventories. Our product sales by end market this quarter include increases in medium and heavy-duty trucks, where production levels remain strong, while other sectors were down due to management of inventory levels and macroeconomic impacts. Our ongoing industry diversification efforts are working as planned as we have taken advantage of changing demand by industry and minimized the impact of any one industry to the company's overall revenue. Our trailing 12-month adjusted EBITDA through the third quarter totaled $41.8 million, another notch higher than last quarter's TTM and the highest ever in the company's history. This continues to give us further conviction that our intentional focus on operational improvement is progressing, and I want to congratulate our team on their hard work this last quarter and this year. Turning to our financial results, third quarter 2023 net sales were $86.7 million, compared to $101.6 million a year ago. Product sales were down 12.4%, largely based on our discussion around difficult comparisons coupled with a return to more historical seasonality this year. Gross profit for the third quarter rose to $15.3 million or 17.6% of sales compared to 13.3 million or 13.1% of sales in the prior year quarter. As Dave mentioned, this was a 450 basis point improvement over the prior year. During the 2023 third quarter, material cost and production efficiencies positively impacted gross margins, which were offset somewhat by foreign currency and fixed cost leverage. We continued to see the weaker U.S. dollar against the peso in the third quarter compared to last year at this time, which had a negative impact of 90 basis points on gross margin. As previously noted, we actively hedged a portion of our foreign currency exposure, but overall, we're still impacted by the stronger Mexican peso. Selling, general, and administrative expenses for the quarter were $9.4 million, compared to $8.7 million in the prior year. The increase was mostly due to a one-time press move cost of $540,000 in the third quarter of 2023, as we moved the press from our Coburg facility to our Monterey facility in preparation of new business being launched in Monterey in 2024. This increases the size of the Monterey facility to six presses, doubling the number of presses since the acquisition in 2018. The company reported operating income of $5.9 million, or 6.8% of sales, up 1.2 million, or 220 basis points, versus the operating income margin from last year. Compared to the year-ago quarter, net interest expense has decreased 63%, as this year's focus on operational improvements has generated free cash flows to allow us to eliminate borrowing on our line of credit and to earn interest income on our cash reserves. Our effective tax rate for the third quarter was 24.1%, which primarily consists of the weighted tax costs from the three tax jurisdictions where we operate. Net income was $4.4 million, or 49 cents per diluted share, versus last year's diluted EPS of 16 cents. Excluding the one-time press move costs this year and excluding our one-time loss from extinguishment of debt last year, adjusted EPS was $0.53 per diluted share this year, up from $0.35 per diluted share in the year-ago quarter. Adjusted EBITDA for the quarter was $9.8 million, or 11.3% of sales, up 300 basis points from prior year EBITDA margin of 8.3%. We are pleased with our year-over-year improvements in gross margin, operating income, EPS, and adjusted EBITDA based on our actions and strategic initiatives. Our gap to non-gap reconciliation tables can be found at the end of our press release. Now turning to results for the nine months ended September 30th. Net sales were $284 million, down 2.4% versus a year ago, and product sales were essentially flat versus the prior year period. Gross margin was $53.6 million or 18.9% of sales compared to $40.9 million or 14.1% of sales in the year-ago period. For the first nine months, margin improvements were primarily due to production efficiencies and favorable net customer pricing and raw material costs. SG&A expenses were $29.6 million compared to $25.9 million in the prior year period, largely driven by higher labor costs and bonus costs due to the company's improved performance in 2023. Operating income for the first nine months was $24 million, up 60% from 2022 levels. Net income was $18.1 million, or $2.08 per diluted share, compared to $7.4 million, or $0.87 per diluted share, in a comparable year period. Adjusted EBITDA was $35.8 million, or 12.6% of sales, compared to 25.9 million or 8.9% for the first nine months in the prior year. Looking forward to the fourth quarter, we are expecting the company's revenues to soften versus the prior year based on recent industry projections, mostly around transportation, customer forecasts, which include ongoing inventory rationalization activity, impacts from the United Auto worker strikes, which has impacted demand for in products we produce for GM and Ford, as well as the UAW strike at the Mac division of Volvo Mac, which still has not been resolved. A return to historical seasonality in the fourth quarter, similar to Q3. And finally, the impact of macroeconomic events on our customers in market demand. The company currently projects fourth quarter revenues to be down as much as 15% to 20% compared to the year-ago quarter. If we complete the fourth quarter, quarter in this range, we will end the 2023 fiscal year with revenues down 5% to 10% compared to 2022 levels. We anticipate that fourth quarter gross margins to be impacted by product mix, shifts from seasonal changes in volume, and lower fixed cost leverage, which we expect will produce a full year gross margin in the range of 17.5% to 18.5% compared to the full year 2022 gross margin of 13.9%. Turning now to the company's financial position, starting with the discussion of cash flow. The company's cash provided by operating activity was $26.1 million for the nine months ended September 30, 2023, compared to $8.5 million for the same period of 2022. Our 2023 focus on operational improvements, which has resulted in higher profitability, has also flowed through to our cash flow generation as we expected would occur. Capital expenditures for the year so far were $6.8 million, and free cash flows for the first nine months of 2023 were $19.3 million. We expect to continue to generate free cash flows for the remainder of the year, as operating cash flows should outpace capital expenditures, and working capital continues to be managed carefully. We now expect 2023, 23 capital expenditures in a range of $9 to $11 million for the year. At September 30th, the company had available liquidity of $68 million, which includes cash and cash equivalents of $18 million and $50 million available under the revolver and capital credit lines. The company's term debt was $23.3 million at the end of September, and our debt-to-trailing 12-month EBITDA ratio was 0.56 times. Our working capital continues to be well managed and netted to $49 million as of the end of September. Finally, our return on capital employed, a pre-tax return metric, was 17.2% on a trailing 12-month basis, which is above our targeted range of 14% to 16%. We are pleased with our ability to generate good returns in cash flows while maintaining a strong balance sheet and ample liquidity to fund the business and make strategic decisions. Our full attention remains on the four strategic growth initiatives that Dave mentioned earlier, And as we have talked about, all our goals, objectives, and targets flow down from there. Our operational performance enhancements are established, and we continue to work on continuous improvement initiatives. As we continue to evaluate acquisitions, we carefully consider how to diversify our customer base, augment our processes and footprint, and add capacity in a changing economic environment. Our entire team continues to focus on growth and profitability goals that build long-term shareholder value and generate cash flows. With that, I would like to turn it back to Dave for some final comments.

Thank you, John. A few comments on our outlook for 2024. Our goal is to continue to focus on revenue diversification in industries that value engineered solutions to continually enhance our margin. Based on our earlier information for 2024, we anticipate a continuation of macroeconomic headwinds, truck cyclicality, and the end of life of certain programs could negatively impact revenues compared to 2023. Industry projections for 2024 in the North American Class A truck market, which still makes up approximately half of our revenue, forecast a cyclical correction compared to 2023, with expectations for truck demand to rebound in 2025. Our diversification efforts have reduced our exposure to the truck market cycles, but with higher interest rates, we anticipate a downward impact on our customers' demand. It has to at some point. We expect to adjust our cost structure based on anticipated sales projections, consolidate operational improvements, and seek attractive acquisitions to continually support our diversified growth goals. We also want to take full advantage of various industries that require new or better solutions, including opportunities arising from government-funded infrastructure projects and government-driven sustainability strategies. We still believe in our long-term goals as we provide products and services that have growing long-term demand across many industries. We believe there will be increased demand driven by on-shoring of manufacturing, US infrastructure improvements, and overall industry growth over the next several years. As discussed last quarter, we are finalizing our acquisition strategy, timing, and M&A pipeline. Given the size of our company, it's important that we set the appropriate acquisition criteria and carefully analyze valuations against our strategic requirements. As stated earlier, we have strategically prepared our organization for growth by acquisition, and we are excited about the timing. We have communicated to investors in the past that we plan to further diversify the industries we serve, add capacity, and expand our process offerings through an acquisition while not over-leveraging the company, especially in a challenging macroeconomic environment. We will also use our capital to continue to invest in our people, operational improvements with a focus on increasing automation and technical capabilities in both sales and engineering. Our must-win battle this year has been about fixing some known challenges in core sheet molding compound plants to gain immediate margin improvements, and more importantly, to prepare the organization for the future. With the systematic improvements in place, we can now focus on scaling our operational excellence systems across all locations. This is a foundational step in increasing current machine and technical resource capacity before investing for the next level of growth. In summary, improving gross margin by 450 basis points, recording our highest historical adjusted EBITDA dollar on a TTM basis, and creating an organization that is well positioned for significant growth, we are pleased with our Q3 results and excited for the future. We believe that by continually investing in our people and relentlessly executing our strategy, we will accelerate a long-term value creation. Finally, we plan to present and host meetings with investors in Dallas on November 15th as part of the Southwest Ideas Conference. Please reach out to us or three-part advisors if you would like a follow-up call. With that, I'd like to open a line for questions. Operator?

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Once again, ladies and gentlemen, that's star then 1 if you have a question. And as a reminder, everyone, if you would like to ask a question, please press star then 1 at this time. We will pause momentarily to assemble our roster. Please stand by. And ladies and gentlemen, our first question today comes from Tim Moore with EF Hutton. Please go ahead.

Thanks. This is really helpful, your commentary. When do you think you might know the full impact of the UAW strikes on your sales? I mean, it's impressive that you can still maintain your gross margin guidance range for this year despite that drag, but do you think you won't know the full impact of late December?

Yeah, Tim, I think one of the pieces of that is to recognize that we deal on auto, but we also, the UAW is actually on strike with MAC, which is a major division of Volvo, which is one of our major customers, and so they have not settled their strike at this point, and so we're watching that. The stuff that we do in auto has been, I think, the auto guys are back to work. They're kind of ramping back up, and we did have some effect of theirs in October, and we think that that will kind of start coming back online now, but MAC has not been settled at this point.

Fair enough. In talking with Volvo, they're doing everything they can to continue producing and driving that forward. But right now, we know what the roadblock is. And until they resolve the strike, they're at a point now where they don't have engines.

Yeah. I'm just kind of curious. I mean, I try not to ask theoretical questions. But if there wasn't a UAW strike, do you think you still would have expected flat product sales for this year? And do you think you can recover some of those MAC sales in March quarter?

Yeah. Again, I think we would hope that MAC can recover those sales, you know, in the industry. And so, you know, we think that the UAW strike in Q3 – or, sorry, Q4 probably has somewhere between $2 and $4 million of sales impact on us. So, you know, again, part of that depends on when they actually settle the strike or if – Max settles the strike and timing, but, you know, we kind of estimated it was somewhere between $2 and $4 million is the impact of the UAW strike.

That's helpful. And, John, I know you mentioned on the August conference call that there was a variable compensation that caused an uptick in SG&A expense. I mean, how should we think about SG&A expense of percentage of sales going forward? You know, I know it was running 2.7% to 2.8% the past two quarters, but it's typically 9.5% to 10%.

Yeah, I think if you back out our compensation, again, this quarter, we were going to be around $8.5 million of SG&A, again, this quarter, which is consistent with the other quarters. Now, that does include the $500,000 of press move that's a one-time move to get a press down to Monterey as that plan is launched and some new programs next year. And so without that, we were probably running around $8 million of SG&A costs for the quarter versus $8.5 million for the first two quarters if you back out our bonus impact. You know, long term, you know, as we move forward, we continue to look at that. You know, we always try to target that around 10%. And so if sales are down a little bit, we try to recognize that and make adjustments to the SG&A as we go forward. But right now, we're probably running between $8 and $8.5 million a quarter is where we're at without bonus.

That's helpful. My next question is, I mean, how far along do you think you are on selling price improvement? I mean, is that those prices fully implemented as of today, or are you kind of the sixth inning on that for the company-wide?

Yeah, we still have one other contract that we're working on, and we'll finalize that this year, beginning of next year.

Okay, the rest have been pretty much implemented on a rolling basis the past few quarters.

So we've been through all the other contracts. This is the last one that we're working on right now, one of our large customers.

Great. And actually, two more questions for Dave. What would you say you're kind of in, you might be in, not to use the baseball metaphor too long, on operational efficiency improvements? I saw you edit that new board member appointment. Looks like Sal had some more operational manufacturing experience in Canada and Mexico. How far along do you think you are on the operational efficiency improvements, and when do you think they'll be done?

Yeah, so we'll be done when we talk about the must-win battle. That was the focus on the three SMC plants, really focusing on two of them majority-wise. That was predicted or forecasted 20% improvement. So we'll have that. We're at that now. So really what we're moving into is a corporate-wide continuous improvement and consolidating those. So it'll be ongoing, but it's not 20% per year per plan.

That's helpful, Collar. And then my last question is, you mentioned some commentary a little bit about this year, opening remarks about acquisitions. Just can you just remind us, you know, is still a capital allocation priority for presses equipment and what are you kind of seeing out there? Do you think you're going to have to probably do acquisitions to acquire, you know, five to seven presses or given that there's such a long wait list and not much availability for new presses?

Yeah, that's a big point relative to if you're trying to install the capacity from a greenfield site, by the time you build the site and order all the equipment, you're talking about a multiple year endeavor. So really what we're looking at is, I guess I call bolt-on or tuck-in acquisitions, anywhere up to, say, $30 million, $40 million. And it's really about what sales channels can we get, similar to what we did with the previous acquisitions, because then we're able to also cross-sell and sell multiple composites into that customer through our other processes and products.

Great. That was very helpful. Thanks a lot, Dave and John, and I'll hand it back over to the operator. Thanks, Tim.

Thank you. And our next question comes from Jeff Gagan with Global Value Investment Corp. Please go ahead.

Thank you. Good morning, guys. Appreciate your time here.

How you doing, Jeff? Hey, Jeff.

Doing well. I'm curious, what type of visibility do you have into your customers' inventory levels?

I don't know that we would say we have a direct visibility. We don't have, you know, data sets that go directly into them. And so, a lot of it is demand feedback that we're getting. They do provide us EDI data out into the future. You know, I think we've talked about that before. EDI, as you get out past a month, gets a little bit – it can change. It's not guaranteed one way or the other. And so, what we do know is that some customers during this quarter have come to us and said we got ahead of ourselves. And so – We aren't taking as much product, at least in this quarter, and maybe a little bit into the first quarter next year. Now, again, what we stay close to them is we're hoping – the nice thing is that this is a short-term issue for them. They'll get through that inventory, and they'll start taking sales again. And so it's a period of time that will work itself out. It's not that sales have gone away. It's just really a correction for a period of time – So we'll work with them and hopefully get through this and then be back going with those in the first quarter next year, sometime in the first quarter next year going into the second.

Yeah, it's a good point. When you see it, it's on the – especially when you start looking at industrial and utilities because you have such a long supply chain between inventory at our location, inventory at the job sites, and inventory at their warehouses. So I think at the end of the year, they had looked at what their inventory levels throughout that supply chain were. and had made a correction, but the business is still there. I think it's more a matter of, I don't know, adjusting their inventories at the end of the year.

All right, appreciate it. You've talked repeatedly about reducing your exposure to truck. I think the last time you reported out, that might have been 44% of revs. Where is that today, and what do you expect that trend to look like on a forward basis?

Yeah, it'll continue. I mean, it's part of the strategy. It will vary between 44% up to, say, 54% depending on the sales that we see in the other channels, especially when you start seeing personal watercraft at the beginning of the year. That picks up at the beginning of the year and trails off at the end of the year. Same with building products.

And I think, Jeff, one of the pieces of that is our long-term strategy in truck was never to get out. It was to do just profitable business. You know, I think as we came out of the turnaround, we realized that, you know, we had added on business that we just couldn't get to profitability. And we really think we've fixed the majority of that. You know, Dave mentioned we have one contract we're still working on that gets a little bit of additional pricing, hopefully, that we're actively working on right now. So long term, where we are as truck is, you know, we're bidding on new programs with truck. It's just we're we've got a different mindset than we did probably five years ago. We're looking to do profitable business with contracts that aren't one-sided and that we really think are good for both business partners. And so I think our truck business really just has changed strategy versus us totally getting out to changing strategy that we'll only do stuff that we think we can make good money on.

Thank you. With your Q4 guide of revenues down 15 to 20, John, I thought you said your fiscal year at that point down roughly 5 to 10, you anticipated maintaining your gross margin in the 17.5 to 18.5 range. What does that imply for your gross margin in Q4?

I mean, I think if you do the math, it probably puts us at a gross margin of 13 to 14%, 13.5 to 14.5%. And a little bit of that's just going to be leverage. We are starting to reduce our – we've always talked about what we can do is our variable cost is somewhere between 60%, 70% of our cost structure. And so we are able to reduce material costs very quickly. Direct labor comes next, and we've been moving very quickly on some of that. you know, taking some time off at the plants where they take a week down, those types of things, so we can reduce that cost. But the one piece that takes a little bit more of a long-term, and really we wouldn't reduce unless we think we got a long, long-term problem, is the fixed cost. And, you know, we won't adjust that very significantly because we really think, you know, long-term, the company's going to continue to grow, and we don't want to have to adjust where we have a real good seasoned workforce. And so... you know, probably lost leverage in Q4 is more the issue than anything else that's hurting the margin in Q4.

And last question, when do you anticipate providing guidance for 2024 or beyond?

Yeah, so 2024, you know, we're still getting a lot of data in. I think at, you know, at the time we released the, you know, uh first or not first quarter but our year-end uh results which would be early march we would have it if there's anything significant uh that were warranted before that we would definitely uh come back out and do a discussion in between but you know where we are right now is we have a lot of customers telling us that they uh have you know some you know they're watching the economy as much as us you know i got polaris's uh which is one of our major customers uh deck right in front of me. And they came out and said they're watching the retail demand situation going on in the United States right now or North America. So I think we will have better data by the time we do the 10K, the earnings release that you're in around March. But again, if there's something major between now and then, we would definitely come out and tell you guys.

Yeah, I appreciate that. I have to say you've done exactly what you said you intended to do with your four pillars. Your execution has been excellent. I look forward to seeing what you do when you begin making some acquisitions. So thanks for the commentary today. I thought it was very good. And good luck as you go forward.

Thanks, Jeff. Thanks.

Thank you. And, ladies and gentlemen, that's all the time we have for question and answer session today. So I'd like to turn the conference back over to the management team for any final remarks.

Thank you for joining our conference call, and we look forward to the next call in March. Thank you.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.