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spk01: Good morning and welcome to the Comfort Assistance USA second quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Julie Shafe, Chief Accounting Officer. Please go ahead.
spk00: Thanks, Kate. Good morning. Welcome to Comfort Systems USA's second quarter 2022 earnings call. Our comments today, as well as our press releases, contain forward-looking statements within the meaning of the applicable securities laws and regulations. What we will say today is based on the current plans and expectations of Comfort Systems USA. Those plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments. You can read a detailed listing and commentary concerning our specific risk factors in our most recent Form 10-K and Form 10-Q, as well as in our press release covering these earnings. A slide presentation has been provided as a companion to our remarks. The presentation is posted on the investor relations section of the company's website found at ComfortSystemsUSA.com. Joining me on the call today are Brian Lane, President and Chief Executive Officer, Trent McKenna, Chief Operating Officer, and Bill George, Chief Financial Officer. Brian will open our remarks.
spk03: All right. Thanks, Julie. Good morning, and thank you for joining us on the call today. Before we start... I want to sincerely thank our employees across the country working through so many tough challenges, including record heat, and achieving amazing results for our customers. We had a strong second quarter. Thanks to careful planning and superb execution, our teams continue to perform for our customers and our stakeholders. We earned $1.17 per share this quarter compared to $0.90 a year ago. Unprecedented market conditions resulted in same-store revenue growth of approximately 25 percent, driven by increased activity and strong markets combined with the effects of cost increases in materials, equipment, and other inputs. New work is commencing across our footprint, and our backlog and pipeline remain strong. Cash flow was also excellent this quarter. especially since we are investing capital to support our growth. During the quarter, we also amended our credit facility to increase it to $850 million and improve flexibility and cost. We want to thank our banks for recognizing the strength of our balance sheet and providing us with this additional financial flexibility. I will discuss our business and outlook shortly. But first, I will turn this call over to Bill to review our financial performance. Bill? Thanks, Brian.
spk02: It was quite a quarter for us, revenue especially. Revenue for the second quarter of 2022 was $1.02 billion, an increase of $304 million, or 43% compared to last year. This is the first time we've exceeded $1 billion in revenue for a quarter. Our recent acquisitions, contributed a total of $128 million of new quarterly revenue, and we had same-store revenue growth of $176 million. Our sharp increase in revenue was broad-based with a lot of new work starting, and we experienced inflation in equipment and materials and other inputs. As Brian mentioned, our same-store revenue increased by 25% in the second quarter, while our same-store employee headcount increased 10%. in the same period. During the second quarter last year, our revenues were negatively impacted by the air pocket from COVID. Overall, for the remainder of the year, we currently expect double-digit same-store revenue growth, probably in the range of 10% to 15%, although there are certainly more variables than usual. Gross profit was $175 million for the second quarter of 2022, a $49 million increase compared to a year ago. Same-store gross profit measured in dollars increased by 23%, very close to our same-store revenue increase. Our gross profit percentage was 17.2% this quarter compared to 17.7% for the second quarter of 2021. Our gross profit percentage in our mechanical segment for the second quarter declined from 18.4% in 2021 to 17.8% in 2022, while the margins in the electrical segment increased from 13.8% to 15.1% over the same period. The changes in gross profit percentage resulted from the evolution of our business mix. As we're doing more new construction, we're early in many of our jobs, and materials and equipment are a higher proportion of our cost of goods sold. SG&A expense for the quarter was $119 million, or 11.7% of revenue, compared to $88 million, or 12.3% of revenue, for the second quarter in 2021. Most of the dollar increases from new companies, and on a same-store basis, SG&A was up moderately, considering our growth, by $13 million. Our operating income percentage increased slightly from 5.5% to 5.6%. Our tax rate for the second quarter was 21.1%, and we continue to benefit as expected from the R&D tax credit that we finalized last quarter. After considering the above factors, net income for the second quarter of 2022 was $42 million, or $1.17 per share. That compares to net income for the second quarter of 2021 of $33 million, or $0.90 per share. EBITDA increased from $55 million in the second quarter last year to $77 million this quarter, a remarkable 41% year-over-year EBITDA increase. Free cash flow for the first six months of 2022 was $90 million, including the $33 million refund from the IRS for the RNT tax credit that we got in the first quarter. This is good cash flow as we invest in growth. Our debt at the end of June was $406 million. As Brian mentioned, we increased our credit facility to $850 million. The new facility includes improved credit costs, greater capacity, and even more favorable covenants. The amendment also adds flexibility with respect to acquisitions, dividends, and stock buybacks. We are actively repurchasing our shares. In the first six months of 2022, We have repurchased 388,000 shares for approximately $33 million. And since we began our repurchase program in 2007, we have bought back 10.1 million shares at an average price of $24.12. And that's what I got on financials, Brian.
spk03: All right. Thanks, Bill. I'm going to spend a few minutes discussing our backlog and markets, and I will comment on our outlook for the rest of 2022 and on inflation and supply chain considerations. Our backlog at the end of June was $2.81 billion. Year over year, our same-store backlog is up by $702 million, or just over 38%, with increases across most of our operations with notable strength in Texas and North Carolina. Sequentially, our same-store backlog increased 52 million. Our industrial revenue was 46% of total revenue in the first half of 2022. This sector, which includes technology, life sciences, and food processing, remains strong and is heavily represented in new backlog and in our pipeline. Institutional markets, including education, healthcare, and government, are solid and represent 32% of our revenue, consistent with last year. Finally, the commercial sector is doing well, but with our changing mix, it is now a smaller part of our business at about 22% of revenue. Year-to-date, construction was 78% of our revenue, with 48% from construction projects for new buildings, and 30% from construction projects in existing buildings. Service is 22% of our year-to-date revenue, with service projects providing 9% of our revenue, and pure service, including hourly work, providing 13% of revenue. Year-to-date service revenue is up approximately 33%, including a same-store service revenue increase of 15%. Overall, service continues to be a consistent and growing source of profit and cash flow at Comfort Systems. In all our activities, including both service and construction, we are uniquely positioned to encourage and support our customers as they seek to improve the efficiency and sustainability of their buildings and operations. And we are raising our own standards in the areas of sustainability, diversity, and governance. Inflation is widespread, and in the coming months, we expect continued challenges in the cost and availability of the inputs that we use to serve our customers. Although conditions are hard to predict in the near term, we are recognizing these challenges in our job planning and pricing. and we are working to order materials earlier than usual and seeking to collaborate with customers to share supply risks and to mitigate these challenges. We have a good pipeline of opportunities, and so far, we have been able to maintain activity levels and productivity despite supply chain challenges. We are watchful of world events and Fed tightening. However, giving ongoing demand our record backlog, and our focus in the industrial and institutional sectors. We anticipate continued strong earnings and cash flow in the coming quarters. This month marks 25 years since Comfort Systems USA was formed. As we look ahead, our priority is to preserve and grow the best workforce in our industry so we can continue our legacy of constructing, installing, maintaining, repairing, and replacing our nation's buildings, and in helping our communities achieve sustainable growth. We are optimistic about 2022 and beyond. With the highest backlog in the history of Comfort Systems USA, we will continue to invest in our workforce, technology, execution capabilities, and in our service businesses. Our skilled workforce is the heart and soul of Comfort Systems USA. We are grateful for their dedication, and we are committed to develop and reward our unmatched team members as they serve their communities. I want to end by thanking our 14,000 employees for their hard work and dedication. I'll now turn it back over to Kate for questions. Thank you.
spk01: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone song. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star, then 2. The first question is from Julio Romero of Sidoti. Please go ahead.
spk05: Hey, good morning, Brian, Bill, Julie, Trent.
spk04: Morning, morning.
spk05: Hey, so I wanted to start on the top line. You mentioned for the remainder of the year you expect same-store sales growth in the range of 10% to 15% for the remainder of the year. How much of that do you think is going to be increased activity versus cost pass-throughs?
spk02: That's a really good question. One of the reasons I mentioned our same-store headcount increase in my prepared script was because to help people dimensionalize that. So in the second quarter, our revenue was up 25% same store. Our same store headcount was up about 10%. You know, we have a big group of temp workers at any given time. That was up by a little more than 10%. So my best estimate is that in the second, you know, we don't know what would have happened without all of the craziness with supply chain. But my best estimate is that about half of our growth, same store, 25% growth, roughly half of that was just us doing more work, irrespective of inflation, and the other half was driven by inflation. For the rest of the year, I don't have a better, you know, I don't have a better estimate than that. It's hard, you know, there's a lot of moving variables right now.
spk05: No, that's fair. And you called out the variables as well. So, I mean, so I guess how would you have us think about maybe gross profit percentage in the second half of the year?
spk03: Yep. So, Julio, it's Brian. I'll give it for us and then Bill can follow on. So, I mean, if you look at where we are right today, we're really happy with our gross profit and the execution that we're getting on projects for sure. The good news for that is we're relatively still early in a lot of our jobs, so that was not really driven by any closeouts or pickups in particular. It's just good fundamental blocking and tackling that's driving that. So I think as we go through the rest of the year, I think service will maintain strength, particularly with the heat we're seeing throughout the country. We're really, you know, we're extremely busy. We're extremely busy in service. And I would anticipate that I don't know how many closeouts we'll get this year, but we will maintain our, in the range we're currently in, I think, through the end of the year. Bill, anything?
spk02: Yeah, so we were 17.2%. A year ago we were 17.7%. We think that range is good, you know, the 17% to 18% range. We've been asking ourselves that, right? It's never been a harder time to predict that. Typically, our second half gross profits are higher than our first half gross profits, but typically we're not – we have a larger proportion of our jobs that are going to be getting to close out. More of those closeouts on the job – you know, the big jobs that are really driving us are slipping into next year. So I think the best guidance we can give people is that you know, that same range, 17% to 18%. And on these revenues, obviously, that kicks out a pretty good result.
spk05: Yeah, no, that's helpful. And I guess just maybe last one for me is on the new revolver, maybe any comments on the, you know, how the increased debt facility changes anything with regards to capital structure, you know, uses of cash, etc.? ?
spk02: You know, so it's nice to have a much – it's all revolver. The flexibility that we obtained was extraordinary for things like if we chose to do big acquisitions or buybacks, we have really unprecedented flexibility to do that. Better pricing, so the pricing grid unambiguously came down, which it was already pretty low. we've moved to a net leverage ratio as opposed to a total leverage ratio, which is much more, we were already crushing, you know, our covenants were already very, very friendly, and we moved to an interest coverage ratio instead of a fixed charge ratio, both of which give us extremely good opportunity. I mean, we're really, really easy to meet covenants given how we run our business. So, I don't know, we're really thrilled. We think our timing was really good as well. We know a lot of our bankers are telling us, All the clients are in there about to do a renewal. I think we just got lucky and did it right when we should have.
spk05: Got it. Thanks for taking the questions. I'll pass it on.
spk03: Thank you.
spk01: The next question is from Brent Seelman of DA Davidson. Please go ahead.
spk04: Hey, thanks. Good morning, guys. Good morning, Brent. I guess... I guess Brian or Bill, I guess first question is just you touched on it a little bit, and it sounds like you're getting booked sort of further and further out, and I'm trying to conceptualize kind of the burn rate on this backlog right now. The other element, I guess, that's in there is sort of the inflationary component to the dollars that backlog your reports. I mean, any help in terms of how you expect to kind of burn through this backlog with these large jobs you've got?
spk03: Yeah, so I think, you know, our burn rate is going to be pretty typical. You know, our average size is still roughly 777,000, so we'll burn a large chunk of it in the next six to nine months as usual, probably about two-thirds to 70% or so. But we are, you know, obviously winning work out to 2023 with some of these larger opportunities. So I think the pace that we're burning it is good, and it's – It's a good mix for the labor and the size of our operating companies that have the work. So I think at this point, we're really happy with the burn rate as we've got it forecasted. Bill?
spk02: Right. And, you know, our backlog is going to be very big at a moment when we're on average early in jobs, right? Because that means there's more on average work left to do than usual for the number of jobs we have, right? So we keep saying that our WIP schedules are young. That's one of the reasons why we're pretty comfortable that we have the manpower to do this work. It's a pretty eye-popping increase in same-store backlogs. But there are things that are accentuating that backlog currently. The other big thing that's accentuating the size of the backlog, since it's measured in dollars, is the inflation. So when our guys in the field are looking at backlog, what they're looking at is their workers, manpower, essentially their timing. And I think they, they think they've got it exactly right. We'll see. They've got a pretty good track record. Second question.
spk04: Yeah. Maybe to follow up on that. I mean, how do you, when you're booking a billion dollars plus a quarter here, it sounds like your markets are still really strong. I mean, how do you think about how backlog sort of evolved as we moved through the rest of the year?
spk03: Well, I think, you know, if you look at how much we're burning right now, I think the backlog will probably stay pretty steady, knowing how many opportunities are out there. I don't think we'll see an increase in it. You know, we're burning, as you can tell, at an extremely high rate. I'll book the burns, you know, over one for the quarter. And I think we'll, you know, we'll hold that Brent down at least for the next couple of quarters.
spk02: We don't know when it'll happen, but there'll be a moment when material and Material costs moderate at some level, I believe, and obviously that will moderate the dollar amount of our backlog. But we think the demand for our labor is foreseeably very, very, really very, very robust, honestly. Backlog is dollar-denominated, so when you're predicting it, there are variables in there that don't really matter for how much money that we make. But they do matter for, like, sort of what our revenue, how much revenue we do. What we try to focus on is gross profit per hour worked, right?
spk03: And just to follow on that, you know, Brent, the type of work we're winning is the type of work we're good at. So it's really in our wheelhouse. So, you know, obviously the guys are doing a great job managing it and executing it.
spk04: Yeah, absolutely. Maybe just one more for me. The mechanical margins, just quarter over quarter, I guess I would have typically thought they'd pick up from the first to the second quarter. It looks like that did happen in electrical. But I guess any other cover around that in terms of the quarter over quarter decline?
spk02: So there were not meaningful job faves. No. Essentially what you had was I think people – are dealing with higher cost materials. And I think people are, I know really people are being very, very careful with how they recognize profit right now. They're really making sure that they've got the money in they need for all of the variables that are out there. And I don't know, it's perfectly healthy. The question is, is mechanical healthy? Very, very healthy. I will also say, The shift in job size and in new work is bigger in mechanical than it is in electrical. Because mechanical, our electrical division already had really a much higher proportion of their work was already what we're shifting to as a company. So there's less of a shift for them. So some of that, as always, some of that is mixed. I'm sorry if that's not super.
spk03: You know, on the electrical front, right, we really had good steady state improvement I mean, the companies that have joined us are really strong, and the work they have is work they're good at. As Bill said, it tends to be bigger, and they're just doing a really good job of doing it right now.
spk02: You know, I would say there was a lot of new construction that started being worked on in mechanical this quarter. Look at our revenue, right? Revenue up 25%. It's not because we ran an extra service call, right?
spk04: Yep. Yep. Okay. Well, I appreciate it, guys. Congrats on a strong quarter.
spk03: All right. Thanks, Brian.
spk01: The next question is from Sean Eastman of KeyBank. Please go ahead.
spk07: Hi, guys. Great update here, and thanks for taking my questions. I just wanted to round out the margin discussion. We got some good color on gross margin, but, you know, obviously the SG&A leverage in the second quarter was – quite notable. I just wondered how to think about that on the 10% to 15% organic growth in the second half, and maybe to try and push you guys a little harder. I mean, is a flat operating margin potentially in the range of expectations for the full year? Any thoughts around those last few pieces of the puzzle there would be helpful.
spk02: SG&A went from 12.3% of revenue to probably an all-time low at 11.7% of revenue. You can see we had fantastic absorption of overhead on these jobs. I have really no reason to think that won't continue. I don't think it gets a lot better because, like we said, we have tougher comparables. A year ago, we had higher revenue in the third and fourth quarter because we were coming out at It started to come out of COVID, so we had more comparable absorption. But I think my best guess, if I'm being honest, is that 11.7% is probably a good number. We'll keep the absorption we've got. It's hard to see how we get much more. Comparables are turning a little harder for us on the revenue side. We've got to pay people.
spk07: Okay, great, great. And just in terms of the updated message on the supply chain challenges, I mean, clearly persisting in terms of operating conditions. But just after experiencing some of the busier summer months, are you feeling better or worse about Comfort Systems' ability to manage through that sort of unscathed?
spk03: Well, I mean, I think right now, You know, the folks that are running this work are doing a tremendous job managing the supply chain. Sean, as you know, we've talked about, it's a day-to-day event. And if you just get a little bit more specific, if you talk about pipe valves and fittings, we're seeing stability there in terms of pricing and availability. You know, the stuff that's challenged is something that has an electronic chip in it, like a vehicle or big equipment. But You know, this is a day-to-day management process. It really hasn't slowed us down in a meaningful way anywhere. But, you know, there's no secret sauce here. It's staying close to your vendors, customers, being transparent, you know, and getting ahead of it as best we can.
spk07: Got it. Okay, and then on the industrial side, segment. You know, this has been a great growth story for a number of years now. How would you characterize, you know, just in your discussions with the customer base there, how sensitive those capital programs are going to be around the broader macro and, you know, has that industrial growth story evolved at all? I mean, You know, we've been talking about data centers for a while, pharma, food, but now we're hearing more about battery and semiconductors. I mean, is there sort of any evolution that you're seeing come through as we just think about the next couple years around this story?
spk02: You know, so those types of customers... they don't have financing problems, right? They've got all the money they need. So the question is, do they have the confidence to build? And generally speaking, I think there's really, really good reason to think that their building is going to be needed. Obviously, battery and semiconductors, right? But even data, I mean, there is, unless, you know, so far, could it happen? I guess it could. So far, there's no turn away from data. There's no turn away from catching up on the food processing side, pet food strong. So far, you know, if something's going to turn, it hasn't happened yet.
spk03: And there's no indications. We're still seeing a lot of very early us participating in these opportunities, Sean. So as far as we know right now, there is no letup.
spk02: The pharma hasn't even really kicked in yet. The battery hasn't really even kicked in yet. There's upside in hospitals. So even if there's weakness in some other areas, you can look and see where other things that you feel pretty good about.
spk03: And to add on to that, we're seeing good strength in education. Our backlog is up in education, so we're still seeing very good opportunities at the university level as well, in addition to the others you mentioned.
spk07: And then, of course, service continues to chug along with healthy growth, so maybe the takeaway is – you know, a lot of optionality around the growth profile on a go forward.
spk02: And, you know, modular is booking up pretty nice too.
spk07: Yep. All right. Good stuff, guys. Thanks for the time. All right. Take care.
spk01: The next question is from Adam Thalheimer with Thompson Davis. Please go ahead.
spk06: Hey, good morning, guys. Great quarter. Hey, thanks, Adam. Hey, Bill, can I just keep going there on the modular? What percentage of revenue is modular now, and what's the growth you see in there?
spk02: It won't be far off the 10%. I don't think I've seen that yet, but I will say that's astounding because think how much the rest of it went up, right? It's keeping pace. Right now at Comfort, how big you are as a part of Comfort is It's a matter of how fast you can grow because every other way you can look at the business is growing so fast that you can grow by 10% and shrink as a proportion of revenues. And they're keeping pace. And there's really, really good orders coming out of tech. There's some stuff in the bio space. These guys, we've added square footage. So in the modular space, both in North Carolina and Tennessee, we've added capacity. We're actively adding capacity as we speak. So, you know, they're keeping pace, and that's pretty amazing.
spk06: Okay. The 10% to 15% organic revenue growth in the back half of this year, what's your best guess on what that moderates to next year?
spk02: You're going to have to tell me what's going to happen with inflation. But let's assume inflation flattens out. My guess is it moderates to... It moderates to mid-single digits because, honestly, we can only grow our workforce so fast, right? Now, by the way, if prices start to come down, right, prices, you know, and I don't mean the floor drops out, but China's not buying as much stuff. There are reasons to think the supply chain doesn't keep gummed up forever, especially for certain very important cost items. You'll see backlog come down. You'll see revenue come down. But, of course, then we'll look like margin geniuses, right? We don't really care about revenue. We care about how much money we make, and we think we can make a lot of money as far as we can tell. Great.
spk06: Last one for me. I was trying to model electrical revenue because you had $241 million in Q2, which is a really strong number. It had to be a record. I guess that had the acquisition in there, too. But that 241, what does that go to in the back half?
spk02: If you figure that out, let me know. So here's what we have going on. We've owned a wonderful, gigantic company in Texas for a few years. And, you know, At first, they shrunk a little. They've become more profitable. They're back to really serious growth, very profitable growth. But we've bought some more electricals. And, you know, sometimes when we buy a company, there's a period of time when they historically, you know, if you look at like our seven biggest acquisitions in the last seven or eight years, five of the seven shrunk a little bit the first year or two. All of them are bigger than the day we bought them by a lot today with higher profit margins. So we've got two things going on. We've got one big company coming on strong. Brilliant. Yeah, there's a really interesting mix right now. Electrical is new for us. It's hard to predict, but I'd take the over. We're going to get growth out of electrical. The company that's growing is going to win. I'll take the over, but it's really hard to beg. There's a lot of things that can happen, but I tell you what will happen is Unless, as far as we can tell, the new higher margins are good.
spk03: Yeah, and we're really focused on that, improving margin in the electrical business, Adam. You know, so far we've been, you know, steady as she goes, but hopefully we'll keep doing that.
spk02: I'd be more comfortable predicting good to somewhat improving electrical margins than I would predicting their revenue. It's hard to predict their revenue. Their margins are well positioned.
spk06: Yeah, yep. Do you think you get to parity at some point?
spk02: I think on the construction business, we are at parity. We're pretty much there. If you take sides of jobs to sides of jobs and whatever, for electrical taken as a whole to have parity with mechanical taken as a whole, electrical has got to be doing better because mechanical has more service. But keep in mind, on the operating income line, I think we're at parity. Their GSG&A is notably less. because that service business has salesmen and commissions and thousands of transactions and billing departments and dispatchers. You know what I mean? And a mechanical service will always be bigger than an electrical service. Yeah, because it just is. Moving parts wear out, right? So I don't know that that's even a – I hope not, because here's what I hope. I hope electrical gets to where mechanical is today, but mechanical has gone farther out on the ground. Right.
spk06: Hey, and then how does the accounting work? Are you pulling less profit from the mechanical, like your large mechanical jobs just because they're so early and you have supply chain concerns?
spk02: Accounting question, I'm going to leave it for Brian. No, so a bigger job, really any job early on, what happens is you bid a job at a certain gross margin. You have a handover meeting where the guys who are going to perform the job are take ownership of the job and what the costs are. They load the job at a margin that everybody agrees is a reasonable margin to start it at. But when they do that, they leave contingency in the job early on because you straight up don't know how much it's going to rain. You don't know whether the drywall guy is going to be there. When you're ready to go, will other people be ready to go? There's many things you can't control. So early in a job, you carry more contingency. Therefore, the job... On average, for comfort, since the beginning, with no exceptions in our whole history, on average, jobs have lower margins at the beginning, and we have, on average, gain over the course of the year. We've never had a year where we didn't have net gain across our jobs. And right now, as you might imagine, people are undoubtedly being more careful than usual, but there's a reason they're being more careful. They don't know about their supply chain. Labor's tight. You know, so the answer is yes. We carry jobs carefully early on because if you don't, you only have to go out of business once and then you're gone. We've never bought a construction company that didn't have net pickup in their jobs because anybody who didn't have that would have a year when they went out of business. There you go. It's a very long answer, but of course.
spk06: But the large jobs, because you talked about starting a lot of large jobs in Q2, when do those get to the later stages?
spk03: I think some will be the fourth quarter this year, but mostly you'll see, I think, in the first early second quarter.
spk02: Throughout next year. We'll get back to a normal mix of closeouts and and younger work.
spk06: Okay. Perfect. Thanks, guys. Hopefully I'm the last one in the queue.
spk02: All right.
spk03: Take care, Adam.
spk06: Thanks.
spk01: This concludes our question and answer session. I would like to turn the conference back over to Brian Lane for closing remarks.
spk03: Okay. Thanks. In closing, I really want to thank all our diligent employees again. We really appreciate all the hard work you do. I want to thank everyone for joining the call this morning. As you can tell, we are very excited about our opportunities, and we are optimistic about the second half of this year and beyond. Hope everybody enjoys the rest of their summer. Thank you. Thanks, everybody.
spk01: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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