Curtiss-Wright Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Curtis Wright Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star and zero. I would now like to hand the conference over to your speaker today, Jim Ryan, Senior Director of Investor Relations. Thank you, and please go ahead, sir.

Thank you, Dede, and good morning, everyone. Welcome to Curtis Wright's second quarter 2020 earnings conference call. Joining me on the call today are Dave Adams, our Chairman and Chief Executive Officer, and Chris Farkas, our Vice President and Chief Financial Officer. Our call today is being webcast, and the press release as well as a copy of today's financial presentation is available for download through the Investor Relations section of our company website at www.curtisright.com. A replay of this webcast also can be found on the website. Please note today's discussion will include certain projections and statements that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. We detail those risks and uncertainties associated with the forward-looking statements in our public filing for the SEC. As a reminder, the company's results include an adjusted non-GAAP view that excludes first-year purchase accounting costs associated with acquisitions one-time transition costs associated with the relocation of the DRG business, restructuring costs in 2020, and a non-cash foreign currency translation loss associated with the substantial liquidation of a foreign legal entity. Reconciliations for current and prior year periods are available in the earnings release at the end of this presentation and on our website. Any references to organic growth exclude the effects of restructuring, foreign currency translation, acquisitions, and divestitures, unless otherwise noted. Now I'd like to turn the call over to Dave to get things started.

Dave? Thanks, Jim. Good morning, everyone. I'll begin today with an update of how the COVID-19 pandemic is impacting our business and then provide some highlights of our second quarter results. Chris will then provide a more detailed review of our second quarter financial performance as well as our reinstated full-year guidance. Finally, I'll return to wrap up our prepared remarks before we head into Q&A. Curtis Wright, like so many other companies, has been greatly affected by the pandemic. Throughout this challenging environment, we've maintained an unwavering commitment to keep our employees safe. We continue to follow comprehensive health and safety protocols across all of our facilities, including the necessary investments in equipment and resources to minimize disruption to our business. I'm pleased to report that all of our manufacturing sites are operational today. Further, I'm proud of our team's agility in responding to this dynamic situation. The acceleration of our initial restructuring plans and incremental austerity measures have been and will continue to be highly effective in mitigating the sharp reduction in commercial revenues. These actions, along with the strength of our defense markets, provide us the confidence to reinitiate our full year 2020 guidance. Turning to the second quarter 2020 adjusted results. Although our overall sales were down 14%, growth in our defense markets remained strong, where both customer demand and our operations were generally uninterrupted by the pandemic. However, within our commercial markets, we experienced significantly lower customer demand, as well as government-mandated factory closings, which negatively impacted our results. Overall, the commercial sales decline drove adjusted operating income and margin down 27% and 250 basis points, respectively. Adjusted diluted EPS of $1.31 was in line with our expectations, and it's expected to be the lowest quarter in 2020, followed by sequential quarterly improvement for the remainder of the year. Regarding our orders, we experienced solid growth of 3% overall, and backlog is up 1% year-to-date, providing further stability to our reinitiated guidance. Last week, we issued a press release announcing that we secured more than $220 million in new naval defense orders, 175 million of which were received in the second quarter. The growth in defense orders drove a strong book to bill of 1.4 times in defense and 1.1 times for Curtis Wright overall. Although our commercial markets were significantly challenged, we experienced some sequential improvements in both coding activities and orders as we progress deeper into the second quarter. Our guidance anticipates a slow recovery from the pandemic, and recent order patterns between April and July provide optimism for modest growth in our commercial businesses in the second half of 2020. Turning to our free cash flow. Adjusted free cash flow of $136 million increased 70% year over year due to an intense focus on working capital and reduced spending on non-essential capital expenditures. This performance drove robust adjusted free cash flow conversion of 247% and keeps us on track for a strong finish in 2020. Now I'd like to turn the call over to Chris to provide a more thorough review of our second quarter performance and outlook for 2020. Chris?

Thank you, Dave, and good morning, everyone. I'll begin with a review of our second quarter end market sales. Overall, we experienced a 5% increase in sales to our defense markets, while sales to our commercial markets declined 29% year-over-year. There are a few items that I would like to highlight on this slide. First, in naval defense, we experienced solid organic revenue growth on both the Virginia and Columbia-class submarine programs, as well as inorganic growth from the 901D acquisitions. This growth was partially offset by the timing of production within our DRG business, where we completed the transition to our new facility in the second quarter and anticipate production ramping up during the second half of this year. Shifting to the commercial markets, in commercial aerospace, our performance was impacted by customer-driven production slowdowns leading to reduced sales on all major OEM platforms. Our sales were also impacted by government-mandated shutdowns of two Curtis Wright facilities in Mexico, which have since resumed normal operations. Diving into the general industrial market, industrial vehicle sales were impacted by industry-wide reductions in demand in the on-highway market, particularly on North American Class A vehicles. In industrial pumps and valves, we experienced lower valve sales due to a pullback in industry capital expenditures on large projects, as well as reduced MRO work, quite similar to what we experienced during the last industrial recession. Next, I'll discuss the key drivers of our second quarter operating performance. In the commercial industrial segment, our results reflect unfavorable absorption on lower sales, partially offset by the benefits of our cost containment initiatives and 2020 restructuring actions. In addition, Prior year results included a $4 million one-time gain on the sale of a building, which generated a margin headwind of approximately 130 basis points. In the defense segment, adjusted operating income increased 10% on a 7% increase in sales, while adjusted operating margin improved 60 basis points. The performance reflects both savings generated from our restructuring actions, as well as a solid contribution from the 901D acquisition. In the power segment, Our results reflect unfavorable absorption on lower power generation revenues as well as the timing of naval defense revenues. Partially offsetting those declines were, again, the benefits of our restructuring actions. Next, I'll focus on our strong balance sheet where Curtis Wright remains very well positioned. We have more than sufficient liquidity and our leverage ratios remain in line with a strong investment grade rating. In mid-May, we took the opportunity to further strengthen our balance sheet by taking advantage of excellent pricing in the private placement market. On May 15th, we circled a $300 million note offering at very attractive rates near 3% for 10- and 12-year maturities. We opted for a delayed draw feature for up to three months to provide us with some additional short-term flexibility and intend to use these proceeds to support our balanced capital allocation strategy. Overall, We remain very pleased with our flexible yet conservative capital structure, which provides further confidence in our ability to successfully navigate through this downturn. As Dave outlined at the start of the call today, we are reinstating our 2020 guidance. Starting with our 2020 end market sales guidance, we now expect overall sales to decline 4% to 6%, reflecting the impact of the pandemic. In the defense markets, we expect revenue growth of 8% to 10% overall and 4% to 6% organically. This is unchanged from our prior guidance. This outlook reflects our solid backlog following strong second quarter orders and the contribution from the 901D acquisition. In aerospace defense, our guidance remains unchanged, and we expect sales growth to be driven by higher demand for actuation and flight test equipment on key programs, principally the F-35. In ground defense, we've reduced our outlook in this market as we expect delays in funding on international ground platforms. In naval defense, we've increased our outlook and continue to expect strong organic sales growth driven by the ramp-up on the CVN-80 and 81 aircraft carrier programs and higher Virginia-class submarine revenues. Moving to the commercial markets, where we now expect sales to be down 14% to 16% overall. Our updated commercial aerospace guidance is based on widespread reductions in OEM production rates by Boeing and Airbus for our actuation equipment, sensors, and surface treatment services. Next, in power generation, our updated guidance principally reflects lower international aftermarket sales, largely due to project delays. Meanwhile, domestic aftermarket sales are expected to remain flat as social distancing-related delays in maintenance are expected to be recovered in the second half of this year. Regarding the CAP 1000, although we continue to project increased revenues on the program in 2020, we're projecting a $10 million revenue shift into next year, principally due to delays caused by social distancing. In general industrial, we expect sales declines in all major categories, reflecting our views of both market-specific drivers and reductions in global economic activity. We anticipate that the second quarter revenue will be our lowest, as order trends have improved and are expected to slowly increase throughout the second half of the year. As you can see, based on the collective updates to our end market guidance, we now anticipate 50% of our overall revenues in the defense markets and 50% in the commercial markets. In the appendix of our presentation, you'll find our 2020 end market sales waterfall chart. Continuing with our adjusted financial guidance for 2020, we expect solid sales growth in our defense and power segments to be more than offset by reduced sales in our commercial industrial segment. Overall, operating income is now expected to decline 5% to 8%, while operating margin is expected to be down 30 to 50 basis points compared to 2019, despite improved profitability in the defense segment. Further, we've increased our expectations for 2020 restructuring costs due to additional actions that were implemented and accelerated in response to COVID-19. Our adjusted 2020 guidance now excludes total restructuring costs of $35 million, mostly in the commercial industrial segment, which has experienced the greatest impact from the pandemic. We now expect to achieve $40 million in annualized savings from these restructuring initiatives, half in 2020 and the remainder in 2021. As a result, we anticipate that full-year 2020 decremental margins will likely range from 20% to 25%, improving upon our prior estimate of 25% to 30%. Continuing with our outlook and starting in the commercial industrial segment, we have reduced our guidance for sales and profitability in response to end market weakness. To mitigate those declines, we've implemented deep and aggressive cost reduction measures, and we expect significant restructuring savings to benefit the second half of the year. In the defense segment, we continue to expect solid growth in aerospace and naval defense, but have trimmed our overall sales slightly due to the aforementioned reduction in ground defense. Despite that change, we are now projecting full-year segment operating income to grow 12% to 14% while operating margin is expected to increase 80 to 90 basis points to a range of 23.1 to 23.2%. Both represent increases to the guidance ranges provided earlier this year. This outlook reflects the benefits of our cost containment actions and accelerated restructuring savings that are expected to more than offset higher R&D. In the power segment, We expect strong revenue growth in naval defense, while overall power generation revenues are now expected to be down slightly, principally due to lower international aftermarket revenues. Despite the top line reduction, operating margin is expected to remain in line with our original February guidance at a range of 17.1% to 17.2%. This outlook reflects favorable absorption on a strong sequential ramp in second half sales, and the benefit of accelerated restructuring savings offset by higher R&D. Continuing with our 2020 adjusted financial outlook, please note that we made a few non-operational adjustments to our full-year guidance. Higher interest expense reflects the additional $300 million in senior notes, which will close in the third quarter. In addition, our effective tax rate guidance increased to 23.5%. This principally reflects a non-deductible and non-cash currency translation loss of $10 million taken in the second quarter related to the liquidation of a foreign legal entity. We've also lowered our full-year share count by nearly 1 million shares based on our expectations for $150 million in full-year share purchases, including the $100 million opportunistic program executed in March. As a result, We expect full-year 2020 diluted EPS guidance to range from $6.60 to $6.85. We expect sequential quarterly improvements for the remainder of 2020 and approximately 40% of our full-year adjusted diluted earnings per share to be recognized in the fourth quarter. Factors contributing to this cadence include the timing of CAP 1000 revenues in our power generation market, the sequential ramp in production at our new DRG facility, and restructuring savings weighted to the second half of this year. Of note, the CPS pattern for 2020 is quite similar to our rebound from the last industrial recession in 2016, when we also recognized 40% of our full-year earnings per share in the fourth quarter. Next, to our full-year free cash flow outlook, where we are projecting a very strong free cash flow level similar to our solid 2019 results. At the onset of the pandemic, we implemented aggressive plans to manage working capital and suspended all non-essential capital expenditures to preserve free cash flow and improve liquidity. The results to date have been very positive, and we now expect our 2020 adjusted free cash flow to range from $350 to $380 million with an expected conversion rate of approximately 130%. This is well above our initial February guide of approximately 115%. Now I'd like to turn the call back over to Dave to continue with our prepared remarks. Dave?

Thanks, Chris. As we entered 2020, we launched several company-wide restructuring initiatives, leveraging our recession playbook to address anticipated reductions in demand and drive margin expansion. As Chris reviewed earlier, we've since expanded the scope and increased the pace of our restructuring actions due to the pandemic. As a result, we expect to drive significant savings particularly within the commercial industrial segment. I'd like to share an example of one of those initiatives. We entered the year targeting restructuring actions within our commercial aerospace business. Since the onset of the pandemic, commercial aerospace demand has significantly declined. Recent industry projections have suggested that it could take several years before commercial aerospace OEMs return to previous production levels, While commercial aerospace only represents 14% of our projected 2020 sales, we are implementing additional facility consolidations and workforce reductions where necessary to align to anticipated future demand. This includes our business supporting the 737 MAX program, where we are currently performing at a steady production rate on our actuation contract through the end of 2020. Many of you have asked how our current contract will impact Kurdish Right in the coming year. We understand and recognize the delicate balance between sustaining profitable growth and satisfying customer needs, including inventory on hand. We continually work to align these two priorities. Regardless of the status of this contract, we may be faced with a headwind of up to $70 million next year. We are actively working to cover that gap through continued growth in defense revenues or potentially via acquisition. We're taking the prudent actions required to align our cost structure and position Curtis Wright for continued profitable growth. Curtis Wright remains well positioned to weather this challenging environment, and we anticipate a strong second half performance. We maintain a diversified business mix with defense markets representing 50% of our total sales, which provides both solid visibility and stability to our revenue and free cash flow. We are an agile and flexible business, and we have a strong track record of proactively driving margin improvement. In addition, we expect to generate strong free cash flow in 2020 to further support our balanced capital allocation strategy. Our balance sheet remains strong and healthy with sufficient capacity to support our acquisition pipeline. In summary, based on our restructuring actions, continued solid execution, and pursuit of new business, including M&A, We remain committed to our goal of ensuring long-term, profitable growth for our investors. At this time, I'd like to open up today's conference call for questions.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Peter Arment of Bayer. Your line is open.

Yes, good morning, David, Chris, Jim. Chris, just wanted to circle back with your comments on just the guidance for commercial industrial down 15% to 18% for the year versus what you just did in the second quarter down 27%. What are some of the drivers there that are giving you some lift in the second half?

Yeah, so, I mean, Q2 was our weakest point in the year. I mean, we were expecting this to be our lowest point of the year. As we dug into the orders, we saw that that was the case. We did experience small sequential improvements in quoting activity in order since May, which provides us with some optimism for the second half of the year. If we look at commercial aerospace, Orders reached a trough in May due to increased customer push-outs and reduced OEM production levels just basically across all platforms. In general, industrial, all major product and service categories experienced disruptions. We saw a low point in orders in April, severe reductions in Class A vehicle market with production down more than 50%. You know, valves, we saw pressure from low oil prices and the pandemic, and we reached a trough in early May, but some sequential recovery in June. So thus far, you know, in July, slight improvement in GI. You know, we typically have a slow third quarter in Europe, but despite that, you know, we're seeing improvement in our order patterns, and we're watching this cautiously. You know, on the defense side, you know, we talked a little bit in the script about the ramp up on the CAP 1000 program in the back half of the year. as well as the ramp-up in naval defense as our new DRG facility comes up to full production capacity.

Okay, that's helpful. And just, Dave, just a follow-up on your comments on M&A. You know, how are you viewing, is the process, I assume, has slowed down somewhat tied to COVID, but just maybe talk about your interest in M&A and your ability, you know, in terms of what the pipeline looks like. Thanks.

Yeah, before the pandemic, the pipeline was relatively filled. It was, you know, as it is with us, for every 10 you might get through that really make it to the finish line. And because our scrutiny is pretty heavy duty on some of these, but we did have a few that were making it fairly nicely along that process. And then, of course, the pandemic hit, and we all took a pause there to regroup, see where we're at. And It was given this fact that we've come back in and reinstated our plan and had basically the confidence that we could reinstate with the conservative manner that we run the company. We felt pretty good that, all right, this should open the door now for some of those that were underway in the past right before the COVID hit. And then we have been looking and talking since the pandemic hit everybody. We've just been keeping everything alive. So I'd say that we certainly can tell we've got the dry powder to execute on that. Now, if we can just come to grips with valuations, I think some of that is opening up in terms of visibility for us and what expectations are. The execution certainly on some of those acquisitions that we were chasing since the pandemic have given us an idea of where they are headed and how they have fared during this process. So it's great to have that sort of visibility. And from an M&A side, when you get to this kind of point where you get to look back a little bit to see how they perform under duress, that certainly either gives you a very warm feeling or it kind of puts you at a point where you can make a different decision. And I'd say so far we're feeling pretty good about feeling pretty warm about how we started it. and how we can conclude some of these. So I feel pretty good about M&A going forward. I think it's going to start opening up across the board.

Thanks for that. Thanks.

Our next question comes from Miles Walton of UBS. Your line is open.

Thanks. Good morning. Hey, Miles. Hey, Grant. Maybe first off on the power segment, I know you've got a pretty big ramp implied in the back half of the year, and you talked about F1000 as being a piece of that into the fourth quarter in particular. Could you just talk about how much of a ramp that looks like into 4Q versus sequentially from 2Q into 3Q?

Yeah, I mean, we're not going to talk about the specific, you know, numbers, miles, but, you know, we essentially, as you look at it, you know, we're going to have a very steep ramp in Q3 and Q4, You know, we're expecting $90 million of revenue on that program, you know, for the year, which is, you know, still above 2019 levels of about $80 million. But it will be a very steep ramp sequentially in Q3 and Q4 being the highest. Okay.

And then I guess from a 2021 headwind on the Cap 1000 or overall, new nuclear at this point. It sounds like now it'll be a slightly lower headwind in 21, maybe $30 or $40 million. And Dave, you called out up to $70 million or $75 million in commercial aero. Is there any other idiosyncratic things to kind of consider as you look at 21?

No, I don't think so. I think, as you pointed out, Miles, the push out here of $10 million could actually be beneficial to 2021. Um, it's, you know, still very early on for us and the budget process. And I think we were very happy that, you know, with all the information that we were able to gather here in the second quarter that we're able to offer guidance here for 2020, uh, we still have a lot of work to do and, you know, we're hoping to be able to provide a little bit more clarity on 2021 as we get closer to February.

Okay. And there's a couple more cleanups. One is on the $40 million benefit from the restructuring savings. So just so I'm clear, that's 20 million benefit to the second half, or did you benefit even here in the second quarter? And then similarly, as you look to next year, are you still picking up the benefit from underlying amortization? So if I combine the benefit from restructuring plus benefit from lower amortization, you might even, standing still on revenue, be 100 basis points margin expansion.

Yeah, for restructuring, you know, we are projecting $40 million in annualized savings right now. I would say we recognized roughly three in the second quarter, so that, you know, half of that annualized savings is going to be recognized in 2020. So you've got a lot of uplift here in the second half of the year, you know, another reason for some of the confidence that we have here in reinstating our guidance. You know, for 2021, again, probably a little too soon to comment on where we can go here, but we will see half of that annualized savings slide out into 2021. Okay.

All right. I think that's – sorry, one more. The working capital looks like you maybe had a help of $20 million versus the prior guidance. Is there anything to think about in working capital as you move into next year?

No, I don't think so. I think we're continuing to kind of drive down working capital as a percentage of sales. I mean, we've had a very strong first half in terms of collections. And the way that we're looking at our guide for the full year, 350 to 380, we are expecting some pressures in the back half of the year. And you guys know better than anyone, there's a lot of talk out there about how everyone's going to improve their cash position. So we're trying to take a little bit of a conservative position here. as we guide to the 350 to the 380, expecting that there will be some headwinds in collections. You know, as we look out into 2021, I mean, we will continue our march to top quartile, and, you know, we'll sharpen the pencil as we get deeper into the year. All right. That's great. Thanks, guys.

As a reminder, if you do have a question, please press star 1 on your telephone, and to withdraw your question, please press the pound key. One moment. We have a question from Michael Ciamoli of Truist Securities.

Hey, good morning. Thanks, guys, for taking the questions here. Nice results. Maybe to just stay on Miles' line of questioning on the margins and the restructuring, and I know you're not going to definitely speak to 21 guidance, but you've got this 737 max headwind. You framed it pretty well, Dave. I think you said $70 million. It's fair to say that with the restructuring and if we do continue to see improvements in general industrial, that you should be able to grow those margins year over year in the commercial segment. Or will that max headwind, you know, kind of prove to be something that might be a little bit of thorn in pressure margins?

I mean, as you look at it, Mike, I mean, certainly, you know, it is a headwind to the business. And, you know, as you caught in the script here, you know, we have started and, you know, we started off the year with restructuring actions, and then we've implemented additional cost containment measures. Both of those are focused on achieving margin objectives. The restructuring actions are longer-term and more permanent in nature. The cost containment is short-term and more temporary in nature. We're very focused on achieving and beating our incremental and decremental margins for the year, as it may be, and we're going to make the tough decisions balancing the cuts in investments and responses to changes in volume. A little too early for us to comment on 2021, but I can assure you that the management team is focused, and we're still driving to that 17% margin. I think we may be a little bit delayed in achieving that 17% based upon the $200 million in commercial revenue headwinds, but we're still driving towards that goal, and we'll know more later in the year. Got it.

And just as we look at commercial aerospace, you know, again, realizing it's a smaller piece of the business now, are those the margin profile on those aerospace revenues? Are they in line with the commercial segment, you know, below or above? Just trying to get a sense of, you know, how the profitability on those products look versus your general industrial and even some of the other revenues that flow through a commercial segment.

Yeah, I would say the business is probably a little bit too diverse, Mike, to be able to provide you with a specific answer as to what we're seeing there. I think the rationale here as we look ahead in 2021 is really going to be what are we going to be able to do with margins in that business and the restructuring actions that we're putting into place are to mitigate those headwinds. So you know, won't really provide any information at this point, you know, regarding, you know, differences in the two. I think it's just, you know, I look at it as one big bucket. Okay.

Even on a trailing basis, just to get a sense, like if I were to look at, you know, last year, were arrow margins sort of in line above that segment average or below the segment average?

Yeah, I wouldn't say that you can kind of pinpoint that. You know, it's, you know, product by product, program by program. Yep.

Got it. What about, can you give a little bit more color? You called out the order strength. I think you kind of in the commentary, you know, it sounded like orders bottomed in, you know, the April timeframe. You know, can you give us any more detail on maybe some of those, you know, shorter cycle orders, whether it's, you know, valve pumps, industrial controls, you know, where you saw the most strength? Was it more, you know, on the defense side? Just any more detail on the order flow?

Yeah, I mean, I would say that, you know, surface tech, as you know, is really kind of our economic dull weather. And, you know, they're pretty, you know, diverse in the markets that they participate in, the commercial markets that they participate in. And we've seen slow and steady sequential improvement since April. You know, vehicles, the low point was April as well. And we've seen some improvement there. And I think in the commercial aero side, you know, some of the OEMs, you know, while they were wrestling with their demand, they also had to consider some of the inventory changes that they were facing. And it took a little bit longer for us to see the trough and the drop on that. You know, so we saw those, you know, really hit in May. but we've seen improvement in June and then also July again. So I think valves, we saw a trough in May, but again, kind of like the commercial error orders, we've seen sequential recovery in June and then also some slight pickup here in July. So the trajectory is right, and it's providing us with some cautious optimism in our commercial markets as we enter the second half of the year.

Got it. And just on that, you mentioned that economic dull weather, surface tech and surface treatment, you know, any sense as to current capacity there? I mean, I know you've got a lot of those facilities close to customer proximities. If you had to, you know, gauge, you know, at the low point, you know, what was overall capacity and maybe where you've seen it improve to?

Yeah, I think, you know, what we're doing, Mike, with our restructuring is, you know, we're being very in cost containment. I mean, we're being very targeted. If there are, you know, temporary headwinds that those businesses are facing in the market, you know, we're adjusting the resources and the cost as appropriate. And then if we see anything that's there that's, you know, structurally more of a problem as we get, you know, long-term, That's where the restructuring is really going to kick in, the longer-term actions that are based upon more changes within our footprint.

I'd add there, Mike, that we have a very high degree of flexibility within those surface tech business units. There are 70 of them across the United States and abroad. And given the nature of that business, how they are sometimes in the shop or next door to their customer or down the street, Their profile is one of agility and a ton of flexibility to go with the ebb and flow of what's going on now. They'll flex all over the place. Sometimes we'll close the place down because there's not enough there and move it, let's say, 20 miles down the road to one of our other facilities. and work that way or vice versa. If you need to grow, then we can put on another ship very easily. So we've got that sort of ability with that business.

Got it. That's helpful. Thanks, guys. I'll jump back in the queue here. Thanks, Mike. Thanks, Mike.

Again, ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. And to withdraw your question, please press the pound key. I would now like to turn the call back to Dave Adams, Chairman and Chief Executive Officer.

Thanks, Dede. Thanks, everybody, for joining us today. Look forward to talking with you again on our third quarter 2020 earnings call. Stay safe and have a great day. Bye. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.