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spk08: Good evening. Welcome to the Transcat Inc. Third Quarter Fiscal Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Craig Mahaly, Investor Relations for Transcat. You may begin.
spk06: Yeah, thank you. And good morning, everyone. We certainly appreciate your time today and your interest in Transcat. With me here on the call today, we have our President, Chief Executive Officer Lee Rudow, and our Chief Financial Officer, Mark Duhini. After formal remarks, we'll open the call for questions. If you don't have the news release across the wire after markets yesterday, you can find it at our website at transcat.com. The slides that accompany today's discussion are also on our website. If you would, please refer to slide two. As you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference. Those statements apply to future events, which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release, as well as with documents filed by the company with the Securities and Exchange Commission. You can find those on our website, where we regularly post information about the company, as well as on the SEC's website at sec.gov. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether a result of new information, future events, or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. I'd like to point out as well that during today's call, we will discuss certain non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation, or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release. So with that, let me turn the call over to Lee to begin the discussion. Lee?
spk03: Thanks, Greg. Good morning, everyone. Thank you for joining us on the call today. Some of you have already met with Mark, spoken with Mark, but being that this is his first earnings call with TransCAD, I'd like to introduce him before we move on to the third quarter results. Mark was named CFO in November, succeeding Mike Chitter, who retired at the end of the calendar year. The transition went very smoothly. Mark is well-versed in our business and strategy and is an excellent addition to the executive team. We anticipate Mark's extensive background in M&A and operations will be of great value in the execution and acceleration of our strategic plan, including the continued investment in technology and technology-based infrastructure. Turning to our third quarter results, we are pleased by our performance, especially given the continued adverse condition caused by the COVID-19 pandemic. The team's responsiveness and dedication throughout the pandemic has been impressive, and the business continues to effectively provide critical support and service to many essential businesses, including the research, manufacturing, and distribution of the COVID-19 vaccines. In the third quarter, we achieved consolidated top-line growth driven by 12% growth in our service segment, 5.9% of which was organic. The growth represents our 47th consecutive quarter of year-over-year service growth. That's nearly 12 years. The business continues to demonstrate resiliency, and our unique value proposition continues to resonate. Platbets.com, which we acquired in February last year, continues to perform well, and together with the recently acquired biotech services, has strengthened our life science service portfolio and geographic footprint. It is our expectation that the two complementary businesses will be integrated quickly and achieve both sales and operational synergies over the next several quarters. The service segment continues to deliver outstanding margin performance. In the quarter, gross margin increased 590 basis points and operating margin increased 570 basis points. The increase in service margin was primarily driven by higher technician productivity and operating leverage on organic service growth. Distribution revenue was down 8.6% versus prior year. We anticipate that distribution will continue to be negatively impacted by the current pandemic. Focus will remain on capitalizing on our unique position in the market by leveraging every distribution interaction and every distribution lead to organically grow our service business. On the rental front, the channel performed very well, up 12% in the third quarter. Operating income for the third quarter exceeded expectations and increased by 20% over the same prior year period. To date, in fiscal 2021, we have achieved outstanding cash generation of $15.6 million, driving the reduction of debt, supporting continued investment in technology, infrastructure, and growth opportunities. And with that, I'll turn things over to Mark.
spk02: Thanks, Lee, and good morning, everyone. It's great to be with you all today, and I hope that you are keeping safe and doing well. I'm certainly excited to have joined the TransCat team at such an exciting time in the company's history, and I look forward to contributing to our continued growth and success. I will start on slide four of the earnings deck, which provides detail regarding our revenue on a consolidated basis and by segment. Consolidated revenue of $44.1 million was up 2% from prior year, and we showed growth for the first time this fiscal year, a notable achievement given the ongoing impact of the pandemic. Turning to the segment performance, as Lee mentioned, strong service segment growth of approximately 12% was one of the highlights of the quarter, with about half of that segment's growth coming organically and the other half from acquisition growth. With regard to the acquisition growth, about $1.3 million of revenue came from Pipettes.com, and less than $1.1 million came from Biotech, a little under $100,000. As you know, Biotech closed toward the end of our fiscal quarter. I will mention that we are approaching the one-year anniversary of our acquisition of Pipettes.com, which was acquired on February 21st of last year. This will, of course, impact the level of our year-over-year acquisition growth beginning in our fiscal fourth quarter. Turning to distribution, segment sales of $19.3 million were down approximately 9% from prior year, in line with our expectations. As Lee mentioned in his opening remarks, this segment continues to be significantly impacted by the pandemic as certain end markets it participates in continue to be soft. Turning to slide five, Our consolidated gross profit was up 13% from prior year, and our gross margin expanded 250 basis points to 25.5%. Service was up an impressive 590 basis points to 27.9% on continued traction from our technician productivity initiatives, tight cost controls, operating leverage on our costs that are more fixed in nature, as well as strong performance at pipettes.com, which has a higher margin profile. Distribution segment gross margin was down 150 basis points from prior year, which reflects the lower volume and reduced co-op advertising and rebate programs as vendors continue to look for ways to lower their costs. Turning to slide six and our overall operating performance, consolidated operating income of $2.5 million was up 20% from prior year and exceeded our expectations. Service segment operating income increased over 1.5 million and 570 basis points as a significant portion of the gross profit increase fell through to operating income. Distribution operating income of 0.6 million was easily our best quarter of fiscal year 2021, but was still down a million from the prior year quarter, largely on the lower gross profit. Turning over to slide seven. Q3 net income increased 19%, and our diluted earnings per share of 23 cents were up 3 cents from prior year, a result of our strong operating performance. Our effective tax rate was just north of 23%, and we continue to expect our full fiscal year tax rate to range between 22% and 23%, which includes federal, various state, and Canadian income taxes. Slide 8. where we show our adjusted EBITDA and adjusted EBITDA margin. Among other measures, we use adjusted EBITDA, which is non-GAAP, to gauge the performance of our segments because we believe it is a good measure of our operating performance and our ability to generate cash. A reconciliation of adjusted EBITDA to operating income and net income can be found in the supplemental section of this presentation, which, as a reminder, is posted on our website. Consolidated adjusted EBITDA was up 12% in the quarter, and our adjusted EBITDA margin was 10.4%. We were particularly pleased with the service segment's 80% increase in adjusted EBITDA to 3.4 million, or 13.9% of sales. Moving to slide 9, where we provide some detail regarding our cash flow. Year-to-date net cash provided by operations nearly doubled to 15.6 million and was a function of our improved EBITDA and reductions to working capital. Year-to-date capital expenditures were $4.3 million and were largely focused on technology infrastructure, service segment capabilities, and rental pool assets. With regard to capital expenditures, we now believe our full fiscal year 2021 CapEx will be in the range of $6 million to $6.5 million which is a more narrow band versus the $5.5 million to $6.5 million range we had communicated at the end of our fiscal second quarter. Slide 10 highlights our strong balance sheet. At quarter end, we had total net debt of $23.4 million, which was down $6.4 million from fiscal 2020 year end. With this reduction, our leverage ratio also came down and was 1.24. This is calculated as the total debt at the period end divided by the trailing 12 months adjusted EBITDA, including giving credit for any acquired EBITDA. And finally, we had $26.8 million available under our revolving credit facility at the end of the quarter. Lastly, we do expect to file our Form 10-Q tonight after the market closes. And with that, I will turn it back over to you, Lee. Okay, thank you, Mark.
spk03: As we progress through the fourth quarter, And in fiscal 2022, we will continue to focus on the execution of our strategic plan. We expect the combination of mid to high single-digit organic growth and acquired growth to drive overall double-digit service growth. Consistent with our strategy, we expect the bulk of our service growth to be generated in regulated industries, including life sciences, aerospace, and defense. Throughout fiscal 2021, operational excellence and technology have helped drive significant improvement in our service gross margin. We expect the margin expansion to continue over time as we increase the level of technology, including automation, into our network of 42 calibration labs. We also expect emphasis to continue on the development and acquisition of talent across all levels of the organization to shepherd TransCat through our next phase of growth. And I will close with an update on our acquisition program. As anticipated, our M&A pipeline is very active. Our acquisition objectives are supported by a strong balance sheet and our ongoing investments in the development of integration tools. Both will enable us to execute and capitalize on an increased number of opportunities going forward. While we are seeing some upward trend in historical multiples, there is no shortage of opportunities that are within parameters we believe are competitive, accretive, and offer attractive internal return rates. As we stated in our earnings release, we expect consolidated operating income in the fourth quarter of fiscal 2021 to be similar to the fourth quarter of fiscal 2020. Our stability and strong performance in an environment that continues to be challenging reinforces our strong position in the markets we serve. Looking ahead, we believe the combination of our talented team, our strong balance sheet, and our demonstrated ability to execute our strategic plan positions TransCAD to perform well as we drive hard to the finish line in fiscal 2021 and beyond. Operator, with that we can open up the line for questions.
spk08: And at this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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 the star keys. One moment please while we poll for questions. And our first question is from Greg Palm with Craig Hallam Capital Group. Please proceed with your question.
spk01: Thanks. Morning, Lee. Hey, Mark. Congrats on the good quarter here.
spk02: Thank you.
spk01: Thanks, Greg. So maybe we start with the service segment and the return to organic growth there. You know, curious if you can maybe go into a little bit more details on the primary drivers of that. I mean, is it outsized growth in life sciences? Is it just a continued recovery elsewhere? Maybe there's some share gains in that?
spk03: Yeah, Greg, I think it's kind of a combination. So I think we saw, I would characterize it as some flow through on pent-up demand. You know, the first couple quarters in service were more flat. We knew we had a nice pipeline. We were having good conversations. So some of that flow through came about, I think, you know, general sales level activity has increased. Our pipelines are solid on the organic side of the business. And I'm not at all surprised that it just You know, in time, and in this fiscal year, we'd see some of that growth. So I think you'll see it continue for the most part and next few quarters. That's how I would characterize it.
spk01: Yeah, do you get the sense that there's still a decent chunk of pent up demand out there? And I guess what's your confidence level that you can sustain? this kind of mid to high single digit organic growth rate, even in sort of a challenging and volatile, you know, end market scenario where we're still in?
spk03: Yeah, I think it's relatively high. I mean, the one thing that, you know, leads me to make that kind of comment is we've got a number of, you know, large opportunities that have been working their way through the pipeline throughout the pandemic. while we've won a number of them, there's still sort of an interesting number of opportunities still out there. And I think we're going to win our percentage of those, and we have a high confidence level. And that, in addition to pent-up demand and in addition to just general levels of calibration picking up based upon pipeline activity, I think the combination of those three things drive our confidence level and make the statements we do around the organic growth.
spk01: Yeah, okay, good. Last one, you know, we're almost a year into this pandemic, and I'm curious, what sort of, you know, long-term trends are starting to emerge within service? You know, I'm thinking along the lines of, you know, maybe there's more pickup and delivery versus, you know, periodic on-site or in-house. So I'm just kind of curious how much of this, you know, some of these new trends, how much of that might stick, and what are the P&L implications, if anything?
spk03: I think this is an interesting question. I don't, you know, I'm not ready to come on any long-term changes as a byproduct of the pandemic. I mean, we've all learned to manage our businesses accordingly. There have been less onsites, even less pickup and delivery, more people sending stuff to us. And I think we're going to return to normal rates in time. And I also think that the one thing that we didn't see this year was the the trajectory continue on our growth in CBLs. You know, we had a two-year period, as you recall, Greg, where we landed a really healthy number of new CBLs, client-based labs, and, you know, there are larger opportunities. And while they're in the pipeline, they just virtually stopped during the pandemic. That, I would anticipate, would return at some point in the near future. And so, other than that, I think we'll the business will return to a normal state at some point. No long-term lasting effects that I would identify today.
spk01: Sure. Makes sense. All right. I'll leave it there. Thanks, and best of luck going forward.
spk03: All right.
spk01: Great. Thanks.
spk08: And our next question is from Kara Anderson with BYU Securities. Please proceed with your question.
spk00: Hi. Good morning.
spk08: Good morning, Kara. Hey, Kara.
spk00: I jumped on a little bit late, so sorry if you already discussed this, but can you talk about the nature of the biotech acquisition and how it came to be, why you saw that small attractive calibration service as one you wanted to own?
spk03: Right. Absolutely. So about a year ago, the best place to start is with pipevets.com. About a year ago, we acquired in February pipevets.com. Basically, both companies, Biotech and Pipettes, do pipettes almost, not exclusively, but it's the lion's share of the work that they produce. The difference between them and why we were interested in biotech is because Pipettes is generally a Boston-based operation that does most of its work in the New England region and does very little, if any, on-site work. So they, if people want to send pipettes from anywhere in the country, they can send them, but most of their work comes from New England. Biotech's a small company, you are right, but the entire company is based on on-site services for pipettes. So when you look at the sort of roadmap and you say, well, if we can combine the biotech on-site service with what we call the Depot, New England-based pipettes.com, you've really got a powerful combination. And that's why we talk about sales synergies and getting to them fast And there's even, you know, cost synergies in this one, you know, because you're going to combine these operations and there probably is some redundancy, you know, in the administration of the combined business. So it was small. We never would have bought it as a standalone, but as a bolt-on to pipebets.com makes a lot of sense for us.
spk00: And are there any other technical capabilities that you are looking for where you can kind of, you know, do these kind of acquisitions where you just find other ones to bolt on and you kind of just build out a, a new category, if you will?
spk03: Well, you know, one of our three drivers when we look at acquisitions in general is to increase our capabilities or bring on expertise we don't have today. That's a main driver in addition to expanding our geographic footprint and just in general, you know, bolting on operations when they're close in the vicinity of an infrastructure that we already have in place. So, yeah, there's a list, and, you know, it's too much to – It's not appropriate to go into the details in this call, but you've got disciplines and variables and parameters that we don't measure today that we actually outsource. We do about 90, 85 to 90% of our own work, but we still outsource, Kara, about 15% of that work. And all calibration companies do that. Nobody does 100% because the economies of scale and such. But, yeah, I would think that we always look at that list, you know, whether it's flow or performance. different technologies that are new that come out, we always want to look to bring them on board and make them core. And one way to do that is through acquisitions when it makes sense.
spk00: Got it. And then just one last relatable question about kind of M&A. Are you seeing a change in the size of opportunities at all?
spk03: So a part of our pipeline, which I alluded to on the call, is very robust. Part of that pipeline I would characterize as, fitting, you know, sort of our core historic pipeline, you know, our sweet spot, much of the same, if you will. And I would also say that what makes this pipeline a little bit different is we are starting to see activity levels and opportunities present themselves at sort of the next level up, you know, upstream in terms of size. So that is something we thought we would, you know, that we would encounter, and in fact we are. So it's kind of a combination of the historic, you know, sort of pipeline and trends and some new, somewhat larger opportunities as well.
spk02: Yeah, and just to add to that, I think, you know, adding Jim Jenkins, you know, four months ago to really, you know, dedicate a lot of his time to developing that pipeline and the relationships that we need to has really improved the pipeline in a lot of areas, even in the last 120 days since I've been here, Lee. Good timing with the market. Yeah.
spk03: Making that investment.
spk02: Yep.
spk00: Great. Thank you.
spk08: Thanks, Kara. And our next question is from Scott Buck with HC Wainwright. Please proceed with your question.
spk07: Hey, good morning, guys. Lee, you mentioned earlier in the call the kind of mix in the services segment between mail-in and onsite. Can you remind us what the margin differential is between some of those different components?
spk03: So the, yeah, let me address that. The largest In terms of profitability, the profile that's most attractive to us is our depot work. We call it in-house or depot, and that is when a customer, Scott, sends their equipment to us because there's very little incremental cost. Just imagine 10 units coming into a lab. You don't have to spend capital. You don't have to hire people to do it. It kind of flows through at that high incremental tech revenue. Another service level we have is pickup and delivery. And, again, that work is picked up at the customer's location, brought back to the labs, And so that does have the same profitability profile as the in-house work, except we have to go pick up and deliver. So there's a little bit different cost profile, additional increased costs to get that done, but not a lot. Then we have onsite work, where we send a crew of people and a van full of assets to a customer's location. And these are periodic onsites. It might be three technicians for a week. It might be one technician for a day. It really varies, but you have your assets sort of isolated and captive to that customer at that time, and you've got technicians out doing the work. And so that profile is a little bit more expensive, but something we're always interested in and one really important way to grow the business. Then we have client-based labs, and this is where we have our technicians, three, four, five, ten, sometimes 15 technicians that show up every day at a customer's location. That's where they work. They very rarely ever go to a TransCat core lab. And we have assets there. Sometimes it's the customer's assets. Sometimes we own the assets. And they perform the work. That's high-volume work. Many of these are, you know, high six figures into seven figures. The margin profile is a little bit less by a couple hundred basis points, but it's a very sticky part of our business. High lifetime value. In fact, to date, In the eight or nine years I've been here, we've never lost one of these client-based labs that we started. And so you've changed a little bit on margin, you know, for that stickiness over time. So those are the four main service levels and the margins associated with it.
spk07: Great. That's very helpful. Second, how do you guys think about long-term margin targets in the services segment? I know you're undergoing some technology improvements and additional automation. You know, over the next five years, can margins in this segment get to, you know, mid-30s?
spk03: Yeah, I think, you know, mid-30s is not an unreasonable target at this point. You know, we started this campaign of margin improvement and technology back when we were, I want to say it was 24% gross margin. We talked about a 2, 3 year journey, several year journey to get closer to 30%. And so we're there, right? You know, it won't be every quarter that we're 30%. We've done higher. We'll, you know, this past 2, 3, a little bit lower, but we're in that range. So I think when we look at the business and the margin profile and what we have on tap in terms of investments. I think, you know, we're thinking the same as you suggested. You know, mid-30s is not unreasonable. It's not going to happen overnight. It's not going to happen every single quarter. But I think we'll be up and to the right, you know, heading to that range over the next couple years for sure.
spk07: That's perfect, guys. Appreciate the time. Good question. Thank you.
spk08: And our next question is from Mitra Ramgopal with Sedoti. Please proceed with your question.
spk09: Yes. Hi. Good morning. Thanks for taking the questions. First, I just want to get a sense, Lee, in terms of as you talked about the investments you're making in technology, how far along are you on that front in terms of where you'd like to be? And as it relates to adding technicians, how has the market been in terms of being able to recruit without having to necessarily overpay? And is it really a reflection of the visibility or the comfort you have in the business as you look out over the next couple of years in terms of making these additions?
spk03: Well, from a technology perspective, Mitra, we've been on a three-year journey of starting from the infrastructure that really sort of lacked some of the technology advancements that we needed. And we've been you know, working day and night to catch up. And I think the team has done a really good job. We've hired some really good people who have a pretty good idea of where we are, where we need to go, and how we're going to get there. So I've been very impressed with the team effort around technology. But there's a lot to do. Yeah, we love the margin improvement. We love some of the tools that we've built for integration. But if I were to use the analogy of a baseball game, I'd say, you know, gosh, we're probably in the Fourth inning at best, you know, in technology. So a lot of upside there, and we're looking forward to it. Technician availability, well, you know, with flat organic growth for the first couple quarters, we certainly weren't aggressive about going out and getting technicians. We had the right number. We had the capacity to service that work. The pipeline is healthy. We saw organic growth in the third quarter. We anticipate organic growth for the most part going forward. So we will need to hire technicians at some point. I think that's perfectly fine. That's part of our game plan to do so. I'm not worried about the long-term organic growth potential to business so that it would hold me back from hiring. And I think we'll hire as appropriate to manage the growth. And I think The type of tools we have in technology in place today, there's a lot of data that we didn't have a couple years ago around productivity, capacity planning, and these are the tools we talk about. This is where you see the margin enhancement, but these tools also help us identify when and where to put technicians and at what time is the optimal time to do that. So that data availability has helped us make those decisions. So we have a high level of confidence we'll get it right.
spk09: Okay, thanks. And then quickly on the life science business, I just want to ring if you're seeing any heightened interests or conversations because of the pandemic, maybe driving, as you can see, development for vaccines and other things. Just curious if you're getting any tailwind out of that.
spk03: Right. It's difficult to tell because we were always life science oriented. We do business with most pharmaceutical companies and med device. That's always part of our normal business. I would say for the most, but I get what you're asking, Mitra, and I would say for the most part, The business that we, you know, the sort of stable environment in terms of revenue this year has just been core life science business. No question we're dealing with pharmaceutical companies that are involved with vaccines, but I don't think it's been all that much in terms of incremental. I think it's just the business that we do. These companies have held up. These companies have been stable and resilient, and so we've been stable and resilient. I think when COVID passes and we get beyond it, I think it's upside for our business because, you know, the general industrial market is going to open back up. So we've done really well in life sciences, but I think there's upside to the general market returning.
spk02: And I would just mention, too, you know, there's pockets within life sciences, like, for example, the pipettes.com business. That's definitely been impacted in a very favorable way over the last, you know, 11 months since we've owned them. So you have pockets of it.
spk09: Okay. No, that's great. Thank you.
spk08: Thanks, Major. And our next question is from Dick Ryan with Colliers. Please proceed with your question.
spk05: Thank you. Slightly switching to maybe distribution. Are you seeing any green shoot opportunities in that part of the business? I know oil and gas has been negatively impacted and whatever, but are you seeing any positive or any suggestions of positive momentum emerging?
spk03: Yeah, moderate at best. You know, we do see some – we do see a little bit – excuse me. We actually had a lot of back orders leaving the third quarter and entering the fourth quarter that I think will – that sort of COVID-related supply chain slowdowns. Some of that will help the fourth quarter, but your question is more about, you know, the general environment. I think there will be some pent-up demand on the industrial side for distribution, but it's not like we've seen a ton of it yet. You know, we do anticipate it coming. The business has been, you know, it's been what it's been, and that is it's off single digits now from last year, but it's stable. And, you know, we're going to continue, like I said, in the earnings call, we're going to continue to leverage those interactions. That's really what we focus on, Dick.
spk05: Okay. Maybe one Mark's direction. You know, OpEx, you probably had some savings early on with less travel and other pandemic limitations that you were able to do. Are any of these costs kind of coming back into the fold? And maybe how should we look at OpEx going into fiscal 22?
spk02: Yeah, and it's a great question. One, you know, we spent a lot of time on understanding, you know, especially as, you know, the service gross margin example, how much is sustainable and how much could potentially be, hey, you know, we're not traveling as much, you know, maybe we're not spending as much in certain areas. There's a very little, there's a little of that going on, I would say, you know, when we do start traveling again, there'll be a little bit there, but it's really not meaningful, I would say. And, you You know, so as you think into, you know, going into next year, yeah, you could see a little bit of an uptick in some of those, you know, sort of discretionary costs, travel probably being the biggest one. We get sort of a normal operating environment. But it's not something that I would highlight as a big driver of some of our operating income and gross profit improvements. That's how I would answer that.
spk05: Okay, good. Thanks, and congrats on the good execution.
spk08: Thank you. And as a reminder, if you have any questions, you may press star 1 on your telephone keypad. Doing so will ensure that you are joining the question queue. And our next question is from Chris Sakai with Singular Research. Please proceed with your question.
spk04: Hi, good morning, Lee and Mark. Just had a question on distribution gross margin. I just wanted to know if you could shed some light on there when you guys might see some improvement.
spk02: Yeah, that's a tough one to call. You know, you've got a couple of things happening there. Of course, the lower volumes, which we've talked about due to the markets, but, you know, our vendors have reduced, you know, their co-op advertising and rebate programs. So, you know, we're working closely with them. You know, that's really, when you look at the year-over-year change in margins, that's the the biggest contributor to the decline. So depending on how things progress with the pandemic, you know, it's tough for us to plan any big bounce backs in that at this point. But, you know, I know our teams on the distribution side are working closely with the vendors to see, you know, the opportunities there that would help the margins.
spk04: Okay. All right. Thanks. Thanks, Chris.
spk08: Thanks. And we have reached the end of the question and answer session, and I'll turn the call over to management for closing remarks.
spk03: Okay, well, thank you all for joining us on today's call. We appreciate your continued interest in TRANSCAT. Feel free to check in at any time with us, with me or with Mark. We look forward to talking to everybody again after the fourth quarter results come out. And, again, thanks for participating.
spk08: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
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