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spk05: Good day and welcome to the Alamo Group Incorporated first quarter 2022 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Edward Rizzuti, Vice President, General Counsel, and Secretary. Please go ahead, sir.
spk02: Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at 212-827-3746 and we will send you a release and make sure you're on the company's distribution list. There will be a replay of the call which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-888-203-1112 with the passcode 7515566. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days. On the line with me today are Jeff Leonard, President and Chief Executive Officer, Richard Worley, Executive Vice President, Chief Financial Officer and Treasurer, and Dan Malone, Executive Vice President and Chief Sustainability Officer. Management will make some opening remarks and then we'll open up the line for your questions. During the call today, management may reference certain non-GAAP numbers in their remarks. Reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release. Before turning the call over to Jeff, I'd like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the safe harbor provisions of the Private Security Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following. Market demand, COVID-19 impact, including operational and supply chain disruptions, competition, weather, seasonality, currency-related issues, geopolitical issues, and other risk factors listed from time to time in the company's SEC reports. The company does not undertake any obligation to update the information contained herein, which speaks only as of this date. I would now like to introduce Jeff Leonard. Jeff, please go ahead.
spk04: Thank you, Ed. We want to thank all of you for joining us today. Richard will begin our call with a review of our financial results for the first quarter of 2022. I will then provide more comments on the results. Following our formal remarks, we'll look forward to taking your questions. So, Richard, please go ahead.
spk03: Thanks, Jeff, and good afternoon, everyone. The Alamo Group team started 2022 with a solid first quarter performance. produced record results for the quarter driven by a continued strong demand for our products in a very challenging operating environment first quarter consolidated net sales for 2022 came in at 362 million an increase of 16 compared to 311.2 million in the first quarter of last year gross margin dollars in the quarter improved compared to the first quarter of 2021 by just over 10.2 million. However, our gross margin percent was down about 60 basis points. Freight costs on inbound inventory were up significantly as tariffs and surcharges were included in already significantly higher freight invoices. Consolidated net income for the first quarter of 2022 was $18.5 million, or $1.55 for diluted share, an increase of 5.8% versus net income of $17.5 million, or $1.47 for diluted share for the first quarter of 2021. The company completed an excise tax audit covering a five-year period that resulted in a one-time $1.3 million expense in the first quarter of 2022. Excluding this charge, adjusted net income for the quarter was $19.4 million, or $1.63 per diluted share. The vegetation management division had a strong first quarter for 2022, as markets were solid and new orders were higher than the first quarter of 2021. First quarter net sales were $221 million, an increase of 20% compared to $183.9 million for the first quarter of 2021. The division continues to see strong demand for agricultural, forestry, tree care, and governmental mowing products in North America and Europe. Margins during the first quarter of 2022 were down 145 basis points compared to the first quarter of 2021. As higher material and labor costs compressed the division's margin by 106 basis points, While the remaining 39 basis points impact resulted from a combination of lower operating efficiencies and significantly higher inbound freight costs. Despite this margin compression, income from the operations for the first quarter of 2022 was $18.3 million, up 14% compared to $16.1 million for the same period in 2021. Industrial equipment division net sales in the first quarter of 2022 were $141 million, up 11% compared to $127.3 million for the first quarter of 2021 due to a strong performance in North American excavator and vacuum truck operations, along with improved net sales in the division's other product lines. First quarter margins in the division Margin percent in the division improved by 40 basis points versus the first quarter last year due to primarily favorable product mix and improved operational efficiencies. Extended lead times for truck chassis and shortages and other component parts continue to have a significant impact on this division's operations along with higher than expected inbound freight on inventory. Income from operations in the first quarter of 2022 were $10.8 million, up 15% compared to $9.3 million for the first quarter of 2021. Still a solid performance in the division despite the ongoing issues I covered above. For the fifth quarter in a row, strong order bookings continued during the first quarter of 2022, resulting in a record backlog of just under $918 million, an increase of 103% compared to the backlog at the end of the first quarter of 2021. The backlog is also up compared to the end of 2021 by 15%. We had record new order bookings in the first quarter, which is the primary reason for the increase in backlog. However, some of the increase in our backlog was due to the ongoing supply chain issues that delayed shipments of finished products. Turning to a few additional financial items for the first quarter of 2022, our balance sheet continues to remain healthy. Receivables were almost $297 million, up 22% from a year ago from solid sales volume. Receivables are also up 25% compared to the end of 2021. Inventory is up almost $93 million compared to the Q1 of 2021 and is up 34 million compared to the end of year 2021. This is a reflection of higher work in process, material costs, inflation, as well as our efforts to support the growing demand for our products by purchasing higher levels of key components and service parts for our customers during this time of constrained supplies. Finally, the company's trailing 12-month EBITDA is $165.7 million. That's up 2% compared to the full year of 2021. For the balance of this year, we will be disciplined in controlling costs and expenses to mitigate the effects of ongoing inflationary pressures on our margins and operating performance. We will also continue to raise prices to meet the rising material and transportation costs in order to maintain target margin levels as a percent of sales. Our biggest challenge remains meeting the heightened demand for our products throughout the company given the current supply chain restraints. As we did in the first quarter of this year, the company approved a quarterly dividend of 18 cents per share for the second quarter of 2022, a 29% increase over the second quarter of 2021. One vital item to go over with you during the second quarter of this year, the company will publicly release the 2021 quarterly historical financial information for the two new divisions that we announced at the start of the fourth quarter last year for vegetation management and industrial equipment. With that, I'd like to turn the call back over to Jeff. Thank you, Richard.
spk04: First, I'd like to again thank everyone who's joined the call this afternoon. The past several months have certainly been challenging for us, but I'm very pleased with the results that our teams were able to achieve in the face of a number of formidable supply-related headwinds, including resurgent COVID-19 illness related to the Omicron variant, persistent supply chain disruptions, shortages, cost inflation, and finally the terrible war in Ukraine. Repeating the pattern of the past few quarters, the level of activity in our markets remained very strong across all of our business segments and served market areas. First quarter order bookings of $469 million were up 22% compared to the first quarter last year, and the company's order backlog increased nearly 103% to $918 million. Our vegetation management division saw its order bookings increased by more than 28% and backlog rose 97% compared to the first quarter of 2021. Prices for most agricultural commodities remained elevated in the quarter as post-pandemic economic recovery, market disruptions due to the war in Ukraine, associated international economic sanctions, and lower crop yields in several countries led prices higher. This was a mixed blessing for farmers because costs associated with fertilizers and other agrochemicals and fuel also increased. Governmental agencies continue to enjoy healthy revenues thanks largely to lingering benefits of federal government stimulus spending, rising property taxes derived from housing market strength, and rising income from user fees. They continue to invest in maintenance equipment and fleet upgrades. As a result, activity in our governmental mowing businesses remains strong in both North America and Europe. U.S. lumber prices dipped in the quarter after beginning the quarter modestly higher. However, demand for our wood recycling, tree care, and land clearing equipment remained excellent. Our backlog in this area continues to rise at a brisk pace. Demand for the company's industrial equipment from contractors and governmental agencies also remained very strong. The Industrial Equipment Division's first quarter order bookings increased almost 15% and backlog rose 116% compared to the first quarter of 2021. The Division's vacuum trucks and associated rental equipment continued to experience very strong demand. Demand for its sweepers, debris collectors, and snow removal equipment also increased, but at a more modest pace. From an operations perspective, our first quarter got off to a slow start. The Omicron variant of COVID-19 impacted our North American workforce in the early weeks of January as workers returned from the year-end holiday break. With many employees ill, productivity suffered and January sales did not meet our expectations. In February, COVID-19 similarly impacted our European teams, again constraining our capacity and resultant sales. Fortunately, in March, most of our employees were able to return to work, and we were able to add shifts and moderate overtime to regain our stride and have a solid finish to the quarter. As much as it would be nice to talk about something else on this call, the disruption and increased demand on the supply chain continues to be the most significant factor affecting company performance. As in recent quarters, chassis availability and its constraining impact on sales growth in our industrial equipment division continues to be the most persistent supply chain problem confronting us, although new problems seem to arise almost daily. While heavy and medium-duty truck chassis deliveries were initially delayed in 2021 by shortages of semiconductors, in the first quarter, shortages of items such as wiring harnesses, axles, and transmissions exacerbated the problem and delayed the hoped-for improvement in chassis availability. The tragic war in Ukraine that broke out during the quarter has further impacted truck manufacturers, as that country is a significant supplier of truck components. During the first quarter, the war began to cause more serious chassis delays in Europe, and this held back sales of our vacuum trucks in the European market. Unsurprisingly, truck manufacturers have continued to pass through cost increases and surcharges that we've had also to pass along to our customers. During the first quarter, some new problems in our supply chain emerged, and these began to affect our vegetation management division as well. This division is somewhat more dependent on mechanical components manufactured in China, and the recent COVID-19 lockdowns there have delayed anticipated shipments for us as well as for many other manufacturers. Compounding this, China's major ports are backlogged with numerous vessels waiting to berth, so it's taking somewhat longer to get goods loaded aboard a vessel, causing further extension to lead times. Inbound freight created additional costs and logistics challenges for us in the quarter. We experienced sharply higher truck transportation costs and related surcharges as a result of higher labor and fuel costs. Outbound truck shipping presented its own set of headaches. Securing trucks and drivers to load products for delivery to our customers where and when needed continued to be problematic this quarter, although we did experience some improvement in the final weeks of the quarter. Our vegetation management division experienced sharp cost increases during the quarter for both inbound logistics, surcharges, and tariffs. While outbound freight costs have also risen, we were able to pass these through to our customers. Notably, in early March, the trucking industry began to report a surprising and unexpected decline in per mile rates, and we expect this will provide some much needed shipping cost relief in the second quarter. In spite of these compounded headwinds, our production teams delivered the highest ever single quarter net sales in company history. Company net sales were 16% higher than the first quarter of 2021, with sales in the vegetation management division up 20% and industrial equipment division sales up 11%. While certainly a portion of the increase is attributable to higher prices, more than half represents real growth. And given the significant supply chain disruptions we experienced, I'm pleased that our teams accomplished this nice top-line growth during the quarter. Moving on to the operating performance of our divisions, vegetation management experienced 145 basis point erosion of margin compared to the first quarter of 2021. Material and labor cost inflation combined with higher freight costs compressed the division's margin. Expenses related to inbound freight were 101% higher relative to the first quarter of 2021, with tariffs and surcharges representing 40% of the increase. The division's ESG&A expenses declined as a percentage of sales, and this somewhat moderated the impact of the lower margin. In spite of the higher costs, operating income and vegetation management benefited from the higher sales volume and rose nearly 13% compared to the first quarter of 2021, although income as a percentage of sales declined modestly as a result of the margin compression. The Industrial Equipment Division's first quarter margin improved relative to the prior year first quarter. The improvement was the result of a combination of favorable product mix, better capacity utilization, and improved operational efficiencies. This division's ESG&A expenses as a percentage of sales were unchanged relative to the first quarter of 2021. Although the industrial equipment division's net sales growth was more modest, the top-line leverage combined with the higher margin resulted in a nearly 23% improvement in operating income. In light of the persistent Chaffee shortage that continues to slow this division's sales growth, I'm very pleased with the division's performance during the quarter. Turning now to our expectations for the second quarter, the company's operating environment continues to be extremely dynamic. We don't currently see signals from our markets that would indicate significant changes in near-term demand for our products, and dealer inventories remain historically low and aren't yet rising. We therefore expect order bookings will remain at a healthy level in the second quarter. Our backlog also remains solid. We haven't experienced significant order cancellations to date, and we don't anticipate changes in customer sentiment in the remaining weeks of the quarter. So our expectation is that the pattern of the past several quarters will continue in the second quarter. We expect that sales will continue to show solid growth, although perhaps at a slightly more modest pace than we saw in the first quarter, given what's happening in the supply chain. Margins will remain under pressure, but I'm confident that our recent pricing actions will largely keep us abreast of the inflation we're experiencing. Our teams continue to become more adept at working with the increasingly frequent supply disruptions, and I'm proud of the records they've continued to set under difficult circumstances. Finally, I expect that the additional top-line strength will sustain moderate improvement in net income in the second quarter relative to the results achieved last year. The outlook for the third quarter and the balance of 2022 is somewhat more uncertain. In addition to the inflation pressure and other headwinds we experienced in the first quarter, accelerated interest rate hikes, aggressive COVID-19 lockdowns in China, and potential impacts of the war in Ukraine on markets in Europe pose incremental risks. Rising interest rates will increase the cost of equipment financing and could potentially dampen demand among farmers, ranchers, and contractors. I'm confident that our governmental businesses will hold up well, though, and continue to show steady growth. As always, we will continue to take actions on price to defend margin and will not hesitate to adjust our internal costs should we see clear evidence of a change in customer sentiment in our markets. Given our strong order backlog, improving labor availability, and untapped internal manufacturing capacity, even a modest improvement in the supply chain will allow the company to accelerate sales growth. So while the business environment continues to be quite dynamic, I remain confident in the sustained positive development of the company for the foreseeable future. This concludes our prepared remarks. We're now ready to take your questions. Operator, please go ahead.
spk05: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, please press star 1 to ask a question. We'll pause for a quick moment to assemble the queue. All right, and our first question will come from Chris Moore with CJS Securities. Please go ahead.
spk00: Hey, good afternoon, guys. Thanks for taking a few questions. I was hoping maybe you could talk a little bit more about the – it sounds like revenue is going to be up in Q2 – about the expected cadence from where you sit today of revenue and margins for the balance of 22. I mean, for example, is it likely that, given the backlog, that revenue would grow sequentially each quarter in 22?
spk04: Yeah, I think it will continue to grow sequentially, Chris. I just don't know at what pace. I'm not really concerned. I don't want to raise that. It's just there's more risks abounding. They haven't impacted us yet materially. But, for example, I mentioned the war in Ukraine is one example. You know, late in the quarter, we had a number of trucks that were delayed very unexpectedly. There are trucks that were being supplied to us by our customers. manufactured by MAN, and MAN told us very late, hey, we source a lot of components out of Ukraine, and we can't tell you when you're going to get those chassis. We frankly didn't see that one coming, to be honest. And then both Richard and I touched on the higher shipping costs, which were certainly higher than we expected. We've been tuning up our burden on inventory as we went along, but the magnitude of the surcharge, as I mentioned, that was about 40% of the total increase in shipping. That also was a surprise to us during the quarter. But no, I still think we're going to see decent sales growth in Q2 and even beyond the rest of the year. I didn't want to signal any contraction in sales, and I was pretty careful with my wording with that. But we had a nice pace of sales growth in the first quarter, and I think as long as we don't have any more surprises, we'll see a nice pace again in the second quarter and beyond. The problem is the visibility is getting a little bit murky with all that's happening out there in the market. So all I really wanted to signal was I think the risk profile in the market generally is increasing for everybody, not just for Alamo Group, but for all manufacturers. There's just a lot of things going on right now. Of course, we've seen in the equity markets today, rising interest rates are a real factor. People are paying attention.
spk00: Absolutely. I appreciate that. That's helpful. Vegetation grew 20%, industrial 11%. Roughly, how much of that was volume in each segment?
spk04: I think if you try to peel that back and you look at vegetation management, about one-third of the total growth came from pricing. The rest of it was incremental volume. And I feel pretty comfortable with that number. In the industrial division, out of the 11%, my own estimate is about 5% of that was price. And even that came relatively late in the quarter. We had raised our prices late last year, knowing our costs were coming. So I think this quarter we actually saw some pretty decent growth. And I used a different word this quarter to describe the chassis situation. You may not have picked up on it, Chris, but I talked about it in terms of extended lead times rather than delays. Because we are starting to get chassis flowing into our businesses reliably. In other words, we get them when the manufacturers tell us we're going to get them, which is great. It's allowing us to plan our production better, and that improved our efficiencies, as I made a remark about in my comments on the call. So as long as that continues, there's no reason why our variants should suddenly jump again that I can see. So as I said, I think Q2 is going to look a lot like Q1. I just wanted to raise the specter that, you know, sort of the risk profile in the market generally is rising a bit.
spk00: Got it. And in terms, I know you raised pricing at the end of 21. Have you raised pricing again yet this year?
spk04: We have. In fact, we were given another surcharge on our truck chassis from our largest supplier, and we've had to go back to customers now and open up contracts, even on our governmental side, which is not normally an easy thing to do. But, you know, we've been very transparent about that with our customers. We've offered them the opportunity to cancel orders, and not a single customer has taken us up on it. So, yes, we are continuing to tune price right along the way. And the vegetation management group is adjusting prices constantly, both in terms of raw price and also in terms of surcharge.
spk00: Got it. Last one for me. Parts were, I think, 18.8% of Q1 versus 20.4% year over year. Given the challenge in shipping some whole goods, I would have thought that might have ticked up some. Is there any chance that parts get meaningfully above 20%, 20% at some point in 2022?
spk03: Yes, they will in the second quarter and the third quarter. That's usually our highest two quarters where we ship parts. This is Richard.
spk04: And, Chris, a big chunk of that is the incremental parts business that came with the Moorpark acquisition, and those customers run really hard in Q2 and Q3, and they're burning through wear parts. So I second what Richard just said to you.
spk00: Fair enough. I will leave it there. I appreciate it, guys.
spk04: Okay. Thanks, Chris. Appreciate it.
spk05: Up next, we will hear from Mike Schliske with DA Davidson. Please go ahead.
spk01: Hello, guys. Good afternoon. Hi, Mike. Can we start quickly with some of your margin comments from earlier? Typically, most years, just given the seasonality, Q2 is often a nicely higher margin quarter than Q1. But given the challenges of this year, could actually Q2 margins this year be down quarter over quarter?
spk03: No, Mike, this is Richard. I don't believe that. I mean, as I was just telling Chris, our parts sales increase in Q2 and Q3. So you're going to get a pickup from just that situation right there. The second thing is, I think as Jeff alluded to, is both the vegetation management, which is a little bit easier for them, are adding additional surcharges to a lot of their orders that they have in place and any new orders going forward. So we are trying to keep up pace with the additional costs, and we're hoping at the end of the day that kind of helps wash itself out. Q1 was extremely difficult. A lot of the inbound freight invoices we were getting, almost every one of them had freight surcharges and tariffs added to them that it's just, and you ask the question, you know, can you take that off? And the answer is no. And if you don't like it, go somewhere else. So, I mean, it's been very difficult to try to do this. And when you try to look at what each of the two divisions are doing, they're adding prices as soon as they possibly can to help combat some of this extra cost. And Mike, it's Jeff here.
spk04: I mean, there's another factor here that shouldn't be missed in all of this. I commented that our chassis delivery reliability was much better. You know, we're starting to get chassis when we expect them now. Not as many as we'd like, but the arrival is predictable and it's We're getting what we're told we're going to get, reliable. That's allowing us to run the factories in a much smoother fashion. That's what drove the operational efficiency higher in the industrial equipment division. And that actually started to happen sort of in the mid to second half of the quarter. So I really think we're going to have a full quarter of nice running with that. So I'm expecting the operational efficiency will continue to improve sequentially quarter over quarter. at least through Q2 and probably into Q3 as well.
spk03: Yeah, I think also too there, Mike, as long as we don't have COVID-19 breakout, we should have efficiencies just from full plant operation as well.
spk01: Got it. Thank you for that color, guys. I want to turn to your ag business, your core, you know, row crop ag business, and probably your livestock as well. You know, given that it's harder to find some raw materials, prices are awfully high if we can even get them in the first place. Do you get a sense that dealers are unwilling to order equipment or take any risk on equipment at this point? Or are they saying, I can't get the fertilizer, I better make sure I have good equipment to get the best possible yield? Are you saying something on the ag outlook here?
spk04: I understand, Mike. It's Jeff here. I think our dealers will take all the equipment we can get to them. without any hesitation at all. We have not seen any reluctance on the part of our dealer network in ag whatsoever, yes, to take equipment or to replenish orders. You know, where are we in the ag cycle? Well, I certainly think we're near the top of it. I don't want to signal anything else. And inventory levels in the ag side remain, you know, historically low. They've not tipped up at all. That's why I wanted to point that out in the call. So, I mean, our dealers are retailing equipment as fast as we deliver it to them. In the ag sector generally, I mean, I flagged a couple of things in the press release that I think everybody ought to be thinking about when they evaluate the ag markets. You've got sort of opposing forces going on in ag at a macro level at the moment. On the one hand, the war in Ukraine, particularly as it starts to spread closer to the port of Odessa, it's going to really put a crimp in global supplies of wheat and other grains. I mean, we all know that. That's coming. So for U.S. farmers, they'll be able to sell all the crops they can grow, and my guess is they're going to be in a rising price environment. That won't be an issue. But at the same time, we've got rising interest rates, which makes it harder for them to finance equipment. And so farmers are going to have to weigh how long and how far can they push the equipment they have when they're really trying to get crop yields rising. They're trying to get all the crops they can to market. So I think it'll be very interesting to see how that plays out over time. But on balance, I think it's bullish. I think out of the two factors, I mean, I think overall it's bullish for ag, and I think it may sustain this high peak in the ag market longer than we would otherwise see in a normal cycle.
spk01: Got it. Just to kind of follow up there, this might not be your purview, guys, but I know you're seeing tax supply issues on some of the truck-mounted equipment that you do. Are there any issues with getting tractors or the other appropriate prime movements for your products in the agriculture?
spk04: No, actually tractor deliveries are improving. Our lead times, you know, we buy mostly John Deere. We also buy C&H, but I think John Deere is the bigger of the two. Our John Deere tractor deliveries are improving. And I think John Deere was actually fairly bullish in their outlook going forward, Mike, from what I saw on the call. And they signaled the same thing, that they're starting to get their supply chain growing. challenges sorted out. So I'm really not concerned about that side of our business at all. And, you know, if you work behind our headquarters, I know you've seen that area back there. We've got more tractors out back than we've had for quite a while, which is nice to see. It makes me feel pretty good about that part of our business. In terms of other prime movers, you know, the situation still is kind of hit or miss place to place. I think what the whole of industry is struggling with is components that are ultimately coming out of China, in particular hydraulics and to a lesser extent pneumatics. And what I was concerned about and I remain concerned about, to be frank, is what the impact of the lockdowns in China are going to be over the next couple of quarters in terms of supplies for things like hydraulic cylinders and flow dividers and all those things that make machinery work. And when you look at the logjam in the port of Shanghai, I mean, it's staggering to see how many ships are waiting in there to load at the moment. Now, in terms of our own exports from China, which feed mainly into our ag business, we've been doing pretty well. And we've got about, oh, at least a quarter, close to two quarters worth of supply already out of China on the water. So if there is a risk to our business there, it might be a Q4 risk at the earliest. And more likely, if there's a risk, it's a 2023 risk at this point from what I can see. The suppliers that make those components for us, our driveline components for our mowers and so on, are still operating. They've not locked down and shut down. They're still operating. So our challenge is more to get the goods out of China. And part of the freight cost Richard referred to in some cases was air freight costs. We ended up flying some components out of China to make sure we could get products onto our customers.
spk01: That's great. I appreciate that. I'm going to squeeze one more in. Maybe this is for Richard. After the excise tax audit thing you had in this quarter, did you assume a higher tax rate in our models going forward, or is it really a one-time thing?
spk03: On the excise tax, that was in the other income and expense line. It won't affect the actual tax rate itself. But one thing we have done from the tax rate standpoint is we've kind of flatlined the rate itself so our tax rate is going to be roughly 25.5. It may fluctuate a couple of points here and there, minor points, for the whole entire year. Usually in the first quarter and the second quarter, we get a big credit as it relates to exercising of RSA options. So we were able to take that as a deduction on our tax rate. So by flatlining this, we pretty much take out any issues as it relates to any fluctuations.
spk01: Okay. Thanks for that, and I'll pass it along. Thank you, Michael.
spk05: As an additional reminder to the audience, if you'd like to ask a question, press star 1 on your telephone keypad. Again, that is star 1 if you would like to ask a question. And we have no further questions in the queue. I'll turn the call back over to management for closing remarks.
spk04: Okay. Thank you for joining us today. We look forward to speaking with you on our second quarter call in August, and we'll speak to you then. Thank you very much.
spk05: And once again, this concludes today's call. We thank you again for your participation, and you may now disconnect.
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