Park-Ohio Holdings Corp.

Good morning, and welcome to the Park, Ohio, first quarter 2023 results conference call and webcast. At this time, all participants are in listen-only mode. After the presentation, the company will conduct a question and answer session. Today's conference is also being recorded. If you have any objections, you may disconnect at this time. Before we get started, I want to remind everyone that certain statements made today on today's call may be forward-looking statements as defined in the Private Securities Allegation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A list of relevant risks and uncertainties may be found in the earnings press release as well as in the company's 2022 10-K, which was filed on March 16, 2023, with the SEC. Additionally, the company may discuss adjusted EPS, adjusted operating income, and EBITDA as defined on a continuing operations or consolidated basis. These metrics are not measures of performance under generally accepted accounting principles. For reconciliation of EPS to adjusted EPS, operating income to adjusted operating income, and net income attributable to Park Ohio Common shareholders to EBITDA as defined, please refer to the company's recent earnings release. I'll now turn the conference over to Mr. Matthew Crawford, Chairman, President, and CEO. Please proceed, Mr. Crawford.

Thank you very much, and good morning to everyone, to our first quarter a 2023 conference call. I know it's a busy day on the earnings side for everyone, so we'll jump right into the numbers. But I did want to make three comments quickly. First, continuing operations showed an all-time record quarterly revenue in our consolidated numbers. Turning to the three segments, supply technology had an all-time record quarterly revenue number. The second segment, ACG, had an all-time quarterly record revenue quarter EPG the last segment did not but showed very strong revenue improvement and record level type backlog so very exciting on the revenue front to profit performance is responding we highlighted the gross margin improvement I know Pat will talk about that again nice traction towards where the business should be as expected the many business initiatives we've taken during the last several years are beginning to demonstrate the kind of historic or even improved earning power of from across the company as we wipe away some of the lingering effects of COVID as well as benefiting from improved operating leverage and our improved cost profile. More to be done here, but nice to see some momentum. Thirdly, while there are plenty of questions about the economy, we continue to see strong demand and backlogs. More importantly, though, we're seeing new business opportunities which are underpinned by significant investments in megatrends relating to onshoring, infrastructure, defense, spending, green energy, and specifically battery technologies. These will have a positive impact over the next few years and may actually provide some insulation from the traditional industrial cycles. Again, thanks as always to our team. Glad to see a little ray of sunshine in these numbers. Thank you for all your hard work. I'll turn it over to Pat.

Thank you, Matt. Our first quarter 2023 results reflect significant improvement in sales gross margins and operating income both year over year and sequentially across all three of our business segments. We achieved record consolidated quarterly sales from continuing operations and in both our supply technologies and assembly component segments. These results were driven by strong customer demand in each business segment, improved operating efficiencies, and the positive impact of the recently completed restructuring activities in its segment. We were able to deliver these results in spite of ongoing supply chain uncertainties, inflation, and labor challenges, which continued to affect certain parts of our business. Our consolidated net sales from continuing operations were $423 million, up 18% compared to $358 million in the first quarter, and up 11% sequentially compared to the fourth quarter of 2022. Our gross margins from continuing operations in the first quarter were 15.8% compared to 14.2% last quarter and 13.3% a year ago. Our gross margin during the quarter was the highest margin level since the fourth quarter of 2019. The higher gross margin reflects the profit flow through from the higher sales and benefits from profit improvement initiatives, including product pricing. Consolidated operating income from continuing operations was $20.2 million, a significant improvement over $5.4 million in the first quarter of last year, and $2.6 million sequentially in the fourth quarter of 2022. We have substantially completed our multi-year restructuring consolidation plan in our assembly components and engineered product segments. Since these actions commenced in 2020, we have consolidated six facilities which represented over 875,000 square feet of manufacturing space and relocated and installed significant production assets. This was a considerable undertaking which reduced our fixed cost footprint, streamlined our plant operations, and lowered our overall cost to make our products. The benefits from these actions will help drive improved profitability in 2023 and in future years. SG&A expenses were $45 million compared to $40 million a year ago, with the increase due to higher selling expenses from the higher sales levels, higher costs due to ongoing inflation, and an increase in personnel costs. As a percentage of our sales, excluding restructuring and other special charges, of approximately $2 million in both periods, SG&A was 10.7% in the first quarter compared to 11.2% in the prior year quarter. Interest expense totaled $10.7 million compared to $7.1 million a year ago with $2.6 million of the increase due to the higher interest rates and the remaining million dollar increase due to higher average borrowings year over year. Our income tax expense was $2.6 million in the quarter for an effective income tax of 25%. This is in line with our expectations for the full year of 2023. We expect full-year cash taxes to be approximately $10 million. Gap EPS from continued operations for the quarter was 61 cents per diluted share, more than double the 30 cents in the first quarter of last year. On an adjusted basis, earnings per share from continued operations was 72 cents compared to 51 cents a year ago. Our EBITDA as defined was $30 million in the first quarter compared to 27.6 million a year ago. and significantly higher than $10.8 million last quarter. Excluding our aluminum products business, which is now classified as discontinued, our first quarter 2023 EBITDA was approximately $32 million. During the quarter, we generated slightly improved year-over-year operating cash flows and used $4.4 million after CapEx, which totaled $6 million in the quarter. and less the proceeds on the sale of real estate totaling $1.4 million during the quarter. We expect continued improvement in operating cash flow during 2023 driven by reduced working capital days on hand and expect free cash flow for the full year to be in the range of $30 to $40 million. Our liquidity at the end of the first quarter was $171 million, which consisted of approximately $50 million of cash on hand and $120 million of unused borrowing capacity under our various banking arrangements, which included $18 million of suppressed availability. As it relates to the sale of General Aluminum, we received interest from a prospective buyer at the very end of last year. While we did not reach a definitive agreement, we signed a memorandum of understanding which set the framework for a potential transaction. These actions principally resulted in our decision to classify the business as discontinued at year end. We have no further update on the sale at this time. We are pleased with the improved performance of General Aluminum and excited about its long-term prospects and are conducting ourselves as the long-term stewards of the business. Accordingly, in the first quarter, we invested $8 million in support of the business. Turning now to our segment results, In supply technologies, net sales were $196 million during the quarter, up 16% compared to $169 million a year ago, and $181 million last quarter. Average daily sales in our supply chain business were up 17% year over year. The sales increase was driven by higher customer demand in most key end markets. During the quarter, the largest end market increases were power sports, heavy-duty truck, industrial and agricultural equipment and civilian aerospace. In addition, our fastener manufacturing business continues to perform well and achieve sales growth of 12% over the first quarter of last year. Operating income in this segment totaled approximately $14 million compared to $12 million a year ago. Margins were up 10 basis points year over year as the profit flow through from higher sales levels was partially offset by higher supply chain costs, especially in North America. We continue to focus on price action strategies in this business, which will positively affect future operating income margins, along with initiatives to grow our higher margin industrial supply business. In our assembly component segment, sales for the quarter were $110 million compared to $98 million a year ago, and increased to 13% year over year. Sales in the current quarter were higher due to volumes from business launched in the prior year and improved product pricing. Segment operating income increased significantly to $7.3 million in the first quarter compared to a loss of $400,000 a year ago. On an adjusted basis, operating income was up $1.1 million a year ago to $7.6 million in the current year. This significant improvement year over year was driven by the profit flow through from the higher sales levels, profit improvement initiatives including product pricing, and the benefits of recently completed plant consolidation actions. We continue to focus on improving operating margins in this segment and are implementing additional price increases and operational improvements across many of our products and plants. For example, during the first quarter, We launched a new rubber mixing facility, which will increase our current mixing capacity and allow us to reduce raw material costs used on certain products. In our engineered product segment, first quarter sales were $117 million, up 29% compared to $91 million a year ago. In our capital equipment business, sales were up 31% compared to a year ago. Revenues from new capital equipment and aftermarket parts and services increased in every region, most notably in North America. Bookings remain strong and total $52 million compared to a quarterly average of $50 million in 2022. Our backlog as of March 31 was $175 million, an increase of 7% compared to the end of last year. We expect consistent order levels to continue throughout the course of this year. In our Forged and Machined Products business, sales in the quarter up 23% year over year, and at their highest level since the fourth quarter of 2019. This increase was driven by increasing customer demand in several key end markets, including rail and aerospace and defense, as well as from new business awarded over the past several quarters. During the quarter, operating income in the segment was $5 million compared to $1.8 million a year ago. On an adjusted basis, which excludes plant consolidation and other restructuring actions, Operating income was $7 million compared to $2.4 million last year. The profitability improvement year over year was driven by the higher sales levels, product pricing initiatives, and the benefits of profit improvement actions. We continue to see business opportunities and bookings for our induction and forging equipment as a result of investments being made in support of the increased production of electrical steel used in battery technologies. And in the defense end market, where increases in production of certain munitions are expected to occur. Our engineered product segment should benefit from these positive trends. And finally, corporate expenses totaled $6.9 million during the quarter. Compared to $8 million a year ago, the decrease was driven primarily by lower professional fees in the current year. And finally, with respect to our full year 2023 guidance, we continue to expect revenue growth to be 5% to 10% year-over-year with a bias towards the high end of the range driven by the current strong customer demand in each segment. We also continue to expect year-over-year improvement in adjusted operating income. EBITDA has defined free cash flow and adjusted EPS as a result of the higher sales levels and improved operating margins in each sector. I'll turn the call back over to Matt.

Great. Thanks, Pat. We'll open the line for any questions.

Thank you, and I'll be conducting your question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions. Our first question today is coming from Steve Barger from KeyBank Capital Markets. Your line is now live.

Hey, good morning, guys. You sound pretty good today. Certainly better than a year ago. So congratulations on that. Can you talk about the inventory dynamics across the portfolio? Is there a destock? If there is, you'd see it first in supply tech, I would think. And with supply chains improving, we are hearing about destocking in some areas. But it doesn't seem indicative of a slowdown in demand. So can you fill out how you're thinking about that?

Steve, this is Pat.

You know, we're seeing, you know, across all three of our business segments, you know, strong demand. And we expect that to continue at least through the second quarter. You know, so, you know, there's small parts of the business that take rates are not growing at the same pace as other end markets. But overall, we continue to see with confidence believe the second quarter will continue at a similar pace as the first quarter. So, you know, and we touched so many different end markets, and many of the end markets really were in significant slowdowns, you know, even throughout 2022. You know, when I think about rail and civilian aerospace and some of those end markets that are now beginning to show some traction, and we should benefit from that.

Yeah, that's great. You know, I think you said supply tech revenue for the quarter was a record. Do you expect sequentially higher revenue as the year progresses there? And historically, is it easier to convert prospects into customers for supply tech when things are good or when things are slowing?

Hey, Steve, it's Matt.

I'll try and take up pieces of that. It's really tough. I mean, it's not lost on you what Pat, our first quarter growth year over year significant, significantly higher than our annual forecast. The second quarter, which obviously we're through April now, feeling pretty good year over year. So, you know, our guidance would lead you to believe that there are some question marks. I want to stress what we feel is the installation or some of the infrastructure spending going on and so forth. So we're pretty excited about that over the next three to five years. But we're not immune from some of the uncertainty. And we also recognize that some of the demand and build rates that our customers are forecasting could have some volatility in them. It's that kind of atmosphere. So we would be remiss, I think, to suggest that we felt strongly about sequential growth until we got a clearer picture on that, particularly as it relates to supply technologies that

as you point out, is the best barometer, I think, for sort of the current industrial environment.

Yeah. And just as you think about longer term, in terms of conversion of prospects into customer supply tech, is there a specific part of the cycle that might be better than others?

You know, that's... You know, traditionally as a solutions provider, our opportunities, I think, are organic in the sense that we're providing someone a solution about a problem they have, particularly around supply chain, maybe sometimes in terms of engineering or pricing. You know, we're a solutions provider. So I would say that that can be agnostic. Of course, COVID and supply chain really messed that up, meaning it limited our flexibility and our customers really to find product elsewhere. Hence the reason we were carrying so much inventory. So as we come out of this, and we're not out of it, supply chains are not ideal. As you know, Steve, if we supply 1,000 part numbers to someone, 999 is not good enough. So on-time delivery of 100% of the parts is important. So I would tell you it'll be difficult to understand what – what things look like until in terms of onboarding business, it's going to be difficult until that gets sorted out in a meaningful way. We are landing new business. We are finding discrete opportunities to grow. But to answer your question in a more macroeconomic way is going to be difficult until, you know, industrial America gets pretty comfortable that they can safely change strategic suppliers.

Yep. I understand. And, you know, It does seem like operations have turned the corner a little bit. Conditions seem good for now. I hear you on the uncertainties that are out there. But can we talk about the sales efforts? How are you directing the team across the segments to drive customer engagement? And, you know, any specific stories or anecdotes you have about opportunities for new business?

Yeah, I mean, I think Pat highlighted something that – I think supply tech right now and ACG and their, I think, focus and development of some really exciting new products that really are agnostic to powertrain are exciting, but also for EV. But let me focus for a second on the only segment that didn't have a record, which is EPG, despite the fact that they've got record numbers and backlog. This is where I think the rubber hits the road on these megatrends I keep talking about. You know, the engagement I think we are seeing in our traditional forging businesses as well as our capital equipment buildings businesses are really, we got a lot of people knocking on our door. So engagement is really nice when it's being driven at the strategic customer level who are seeking solutions in some cases for traditional product lines. We are looking at supplying product to key defense suppliers, sort of tier one defense suppliers, to help support initiatives to rebuild the capacity for our country to make missile shells. You may have read a little bit about that in the Wall Street Journal way back when in that article about the facility that the government runs in Scranton, Pennsylvania. There is a real scramble going on there and we're in the middle of it. Also, I think Pat mentioned very quickly this idea of silicon steel. You and I have talked before, Steve, about how this country gave away generations of steel development and leadership to outside this country, most recently China. And I think that you're seeing an overhaul going on in what is a pretty well-capitalized steel space now to invest in new technology. High-strength steel is one, but more interesting also is silicon steel. And silicon steel is important for battery technology because you need conductive steel. And that's what silicon helps to do. So these are, again, areas which we are right in the middle of. So again, I think that our new sales initiatives and our customer strategy is always on the offense. But I will tell you, some of these things we're talking about have some real energy coming to us from our traditional customers who are looking not just to build capacity, but find solutions for new or old problems.

Yep. Sounds encouraging. Thanks. Thank you. Next question is coming from Dave Storms from Stonegate. Your line is now live. Perfect.

Thank you. Good morning. Morning, Dave. Just hoping we could start on the supply chain issues that you mentioned. Are you seeing any green shoots there, or is that still pretty – a perceived issue going forward?

I'll speak first and let Pat sort of clean this up. I'm not... That means so many things.

Your question could be interpreted so many ways, but let me say this. I think that we have all become a lot more nimble in the global manufacturing space and the global supply chain space at managing... the challenges that I think hit us like a tidal wave in the first half of 2021. So whether it be fill rates, whether it be quality, whether it be pricing, whether it be logistics and ocean freight, you know, we've all got a little better, smarter, faster on how to deal with this. So, you know, I think our companies included. So there is certainly less noise in our business and in our numbers from that. Is it, does it continuously provide a headwind on the earnings side? Absolutely. So we are not out of the woods in terms of that, in terms of margins. I will say that I think that, and we're not out of the woods in terms of the cost of doing things like dual sourcing. We're not out of the woods in terms of carrying too much inventory in certain places. But I will say that the noise levels turned down a bit because maybe because it's gotten a little better, using your green shoots example, maybe because we've all become a little better at managing it. And again, I don't know what area in our business has done a better job than particularly the people in the supply chain portion of supply technology. So a few names come to mind that have just really done a great job at keeping our customers moving. So I don't know if that answers your question. It's a little bit hard to pull apart, but it's not over. It's just better managed. Do you agree with that?

Yes, Dave. I would add that clearly the supply chain issues that we're were hitting us a few years back and continued through last year have greatly improved. But we can control our supply chain, but there's other suppliers that affect our customers' demand that we can't control. And so what I mean by that is we are seeing in certain pockets of our business demand being a little lower because intake rates being a little lower. because they're having other issues with other parts of their supply chain. But clearly, from our viewpoint, things have improved greatly. Lead times have come down. Break costs have come down. And we expect that to continue to improve as we get through the rest of 2023.

That's very helpful and exactly what I was hoping for. Thank you. Matt, you mentioned a couple times the pricing front in your answer there. What are you seeing on the price in front now that inflation is starting to moderate a little bit? And can you kind of compare that to where your price in inventory is at or your inventory prices are at?

I'll let Pat take the inventory question. But I would say that, you know, look, I mean, there is a tension in the marketplace, particularly for component suppliers like us. I've mentioned on prior calls, a lot of our customers were able to raise prices to consumers principally. instantaneously and aggressively and saw record profits. A lot of our suppliers who we work with on a spot buyer short term contract could raise prices instantaneously. So guys like us got hurt. And I think that we have worked for a couple of years now. And I think that our best and strategic partners have understood it because it's impacted their own business and they have supported us. I think initially it was all about raw material. You know, as we move forward, it's all about labor and making sure that we and other suppliers can get the right workforce in the right place to optimize delivery and optimize quality and long-term support for our customers. So I'd be lying to you if I said it wasn't a battle every day. I think that our best customers understand that we need this support, and we've worked through it, and you're seeing it in the numbers. So I think this is growingly a positive discussion. You know, Jamie Diamond talked a while back about latent inflation. I'm not sure what he meant, but I'll tell you what I think he meant. I think he meant there's guys out there like us who aren't whole yet. While we are in parts of our business, we have isolated cases still where we're under long-term agreements where we're losing money, and we need to deal with that. So we're still going after price increases. Now, there's also, of course, a natural tension because there are some commodities that have gone down, and our customers appropriately want some pricing relief, particularly at the right time. There will be a lag. We've got to get through our inventory, but we're there for them then, too. That's the nature of the partnership. We are cognizant that that provides a tension, but between what we're still trying to capture in terms of of some labor costs and some other indirects. And yes, a small return on our investment. But you're right, there will be a natural tension as some of the underlying commodity pricing goes down.

But long term, I think that's good for us too, by the way. We saw what happened when it was going skyrocketing the other way.

So we're still fighting that battle every day. There's still a tension, but it's more a case by case basis. Our team's come a long way in terms of recapturing our fair share.

It's taken a couple years.

So that actually leads in perfectly to my last question here. With all the supply chain and inflation issues, a lot of your segments are still getting back to those 2018, 2019 levels. When you think about all the restructuring activities that you've implemented and the increases that that has on your production capacity, What kind of runway do you see beyond, you know, maybe even the 2018-19 levels, even with all the headwinds that we just discussed?

Yeah, we should have a really good answer for that. And we will on the next call. To be honest with you, I do think that we do feel as though we have some runway here. We do feel as though there's ongoing pressure we've discussed. in a number of areas as it relates to our cost structure and still the ongoing effects of COVID. And yes, we feel as though while many of our strategic partnerships are priced properly now, a few aren't. So I'm not prepared to answer that question. Maybe Pat wants to take a shot at it. But I do think as we get a little more clarity, we should have an answer for that. But to be honest with you, we have felt as though this business would comp very well against 18 and 19. And our goal was to kind of get there. Now that we're getting there, we kind of want to sift away. We've been so tactical, it's been hard to be strategic. Now that we're sifting that away, I think that, you know, candidly, we owe you an answer on that. And I think as the year goes on and we get more confidence in our forecast, we'll be able to answer that better. Yeah.

I would add, Dave, that, you know, we saw the momentum in the first quarter around gross margins. The gross margins and the reductions in costs that we have implemented over the last two years are going to have a nice impact on future gross margins of the business. And as volumes improve and absorption levels become even greater, clearly we believe our gross margins are at a point where they will continue to trend higher and exceed levels that were in place in 2018 and 2019. So the amount of heavy lifting that has been done by our teams really around the world is really unbelievable and a huge accomplishment. And volumes aren't where they need to be yet. And so once we see the increase in the volumes around the world in different pockets of our business, our gross margins will continue to grow.

Dave, I want to also say something I said in the past, but I'm going to say it now. Our gross margin is always led by engineered products.

That's always been the bellwether for when we are doing our best at gross margins. And they have not returned to historic performance. So again, we're not prepared to sit here and give you a sense of that runway on a consolidated basis. What we can say is our flagship on the margin side is still recovering.

Understood. That's very helpful. Thank you.

Thank you. Next question is coming from Yilma Abadie from JP Morgan. Your line is now live.

Thank you. Good morning. My first question is on working capital. As you think about the growth that you've seen this quarter and as you look forward in terms of growth for this year, How should we think about working capital this year, and how could that be different from what we saw in terms of working capital utilization last year?

Well, we expect, as I mentioned in my prepared remarks, our working capital days to continue to decrease. In the first quarter, the majority of the business units saw a reduction in their working capital days. And obviously, the growth complicates that calculation just because of the working capital needed to grow the business. So we are seeing movement there. And each business unit has their own initiatives to reduce working capital, to harvest the cash that has been invested over the last two years. And we are seeing tremendous progress on that front. And we expect continued improvement throughout the course of the year. we every business has a different level of working capital needed to support the growth but in general you know around 25 cents of every dollar of growth is invested in working capital and we need to continue to bring that number down to increase our free cash flow and we're driven by that and our goals are around that so more improvement is expected and a lot of effort being focused on that.

With revenue growth this year, would you expect working capital to be a use of cash, neutral or positive, coupling the improvements you're putting in place with working capital needed to support the business?

I mentioned that we expect our free cash flow to be $30 to $40 million. That would indicate that we expect positive operating cash flow and very little, if any, need for investment in working capital beyond current levels.

Okay, great. That's helpful. And then my second question is on the megaproject infrastructure, chip and electric vehicles and so forth. what's sort of the best way to think about, you know, modeling the impact of these mega projects on your business, either at the segment level, any sort of portions of your business that's directly going to be impacted, any help along the lines of how to model the benefits of these mega projects directly on your business?

Yeah, I think that we're, I'm not sure we're going to give you the help you need. I think we're, particularly as it relates to stimulus, which is significant, whether it be in the battery space or the infrastructure space. I mean, it's a little unclear, or defense, quite candidly. It's a little unclear how we're getting a sense of how that will seep into the economy based on some of our conversations with the large tier ones. But it's a little bit unclear how we would consider modeling that or forecasting it, other than we know and we're seeing business associated with it. I will say I think we'll see the most direct impact initially through our equipment business and our forging business. That's kind of, you know, where we have the most direct conversation as people are building or updating capacity or on the infrastructure side, you know, needing more rail maintenance product and things like that. So I think as you think about the direct impact, I would highlight EPG as an important sort of beneficiary of that in the short term and the midterm. It's a little more difficult. I think, you know, clearly we've talked a lot about this in the past. The evolution to EV is providing us a ton of opportunity. Again, most of our products and our strategy, Yomi, as you know, is agnostic to powertrain, not all of it. But in general, what we're finding is that EV designs are leading the way. And to the extent we are not directly involved in the propulsion system, our products will come along. whether they're chassis parts or suspension parts, they'll come along. So, you know, that's our instinct. It's a little difficult to understand how exactly those market share numbers and those successes and failures DOE love are going to work. So while we're seeing increased opportunity, hard to put our finger on kind of how to model that. And then the supply chain business is a little different in the sense that, particularly the rates to America, A strong and growing industrial America is really good for supply technologies. Would we expect people like customers of ours in the semiconductor industry to be a direct beneficiary? Sure. But so we would expect all of our other customers who I think benefit from a growing industrial America. We may only be, you know, the manufacturing economy may only be whatever, 10% of the economy these days, but it doesn't mean it can't grow a couple points. So I think that we will benefit from that generally more indirectly. And that one is even harder, I think, at this point to model what reshoring and things like that means. So all positive.

I think in the near term, I think the most tangible impact of the next 12 months will be in the EPG business.

Thank you very much. That's all I had.

Thank you. Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

Great. Thank you very much. A lot of good news today, but our work is not finished. I did want to echo Pat's comments as it relates to General Aluminum. As Pat updated us, we do continue to have conversations with the potential buyer, but do not feel a deal is imminent at this time. So we maintain our commitment to the business. He mentioned we invested $8 million in the quarter. We believe this is a strong, attractive business. and we've owned it for over 40 years. So we're excited to participate with that team at this time as well. So thank you very much, and have a great day. Bye-bye.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.