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spk02: Ladies and gentlemen, thank you for standing by. Our conference will be getting started momentarily. Please continue to hold. Once again, our conference will be getting started momentarily. Please continue to hold. We do thank you for your patience. Thank you. I'm just gonna call the doctor. Greetings, and welcome to the Lore Holdings, Inc. Second Quarter 2024 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone requires operator assistance, please press star zero on your telephone keypad. There will be a question and answer session following the formal presentation. You may press star one at any time to be placed in the question queue. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Ian McKillop, Investor Relations. Please go ahead, Ian.
spk09: Thank you, and welcome to the Lohr Holdings 2024 Second Quarter Earnings Conference Call. Presenting on the call this morning are Lohr's Chief Executive Officer and Executive Co-Chairman, Dirksen Charles, Executive Co-Chairman, Brett Milgram, Chief Financial Officer and Treasurer, Glenda Alessandro, as well as myself, Ian McKillop, the Director of Investor Relations. As a reminder, please visit our website at LoRaGroup.com to obtain a supplemental slide deck and call replay information. Before we begin, we at LoRa would like to remind you that the statements made during this call, which are not historical in fact, are forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, please refer to our website for the latest filings with the SEC, available at SEC.gov. We'd also like to advise you that during the course of the call, we will be referring to adjusted EBITDA, adjusted EBITDA margin, and adjusted earnings per share, each of which is a non-GAAP financial measure. Please see the tables and related footnotes in the earnings release for the presentation of the most directly comparable GAAP measure and applicable reconciliation. I will now turn the call over to Dirksen.
spk07: Thanks, Ian. Good morning to our partners, analysts, and those hearing our story for the first time. I am Dirksen Charles, founder, CEO, and co-chairman of Law. As this is our second earnings call as a public company, let me outline our approach for these calls. We believe that your time is valuable, and as such, we'll keep our remarks as brief as possible to allow the analysts the majority of the hour we have allocated to ask questions to ensure that we are focused on the things that matter to you. So let us start by reminding you all of who we are. Law is a family of companies with a very simple approach to creating shareholder value. First, we believe that by providing our business units an entrepreneurial and collaborative environment to advance their brands, we will generate above-market growth rates. Since our inception in 2012, through the end of calendar year 2023, we have grown sales and adjusted EBITDA at a compound annual growth rate of 38% and 46% respectively. We collaborate across business units by sharing best practices and ideas while assisting each other when it comes to execution. We execute along four value streams. We identify pain points within the aerospace industry and look to solve those problems through organically launching new products, which we believe over the long term will create one to three percentage points of top line growth. We focus on optimizing the way we manufacture go to market, and manage our companies to enhance productivity. Each year, we will identify initiatives that will allow us to continually improve our performance with a focus on one or two major initiatives each year that will improve margins. We also, each year across our portfolio of companies, will achieve more price than inflation. Again, margin improvements. Most importantly, we are committed to developing and improving the talent of all our employees because our success is solely a result of their dedication and commitment. To all my mates, a big, big, big thank you for your commitment and hard work. I'll now turn the call over to Brett to walk you through our key characteristics of our portfolio.
spk06: Thanks, Dirksen. Good morning, everybody. I think you all have seen this slide before, so I'll be brief here. This really just serves as a reminder of how we constructed our portfolio. And I think the big takeaway here is that we are a very diverse business that is balanced across not only products, but end markets and even customers. As I've said before in the past, we are relatively agnostic to the types of end markets we serve, or the customers we serve, or the products that are in our portfolio. But what we continue to be, and as shown by our recent acquisition with Applied Avionics, is we are extremely disciplined about the characteristics of the business model, as you see in the six bubbles down below. Every business that we acquire, make part of the LOR family, has to be AMD focused, it has to have proprietary content, It has to have an exposure to the aftermarket, and it has to engage in those niche markets where we feel we have a competitive advantage and high barriers to entry. Applied avionics, I think, is a perfect example of that. In fact, when you look at the charts above, what you'll find with applied avionics, it'll make those charts go in the direction we want in so much as applied is virtually all proprietary product. and it is about 75% aftermarket. So while those charts are based on 23 revenues, when you see those numbers at the end of 24, they'll be a little bit higher in those categories I just mentioned.
spk09: Taking a look at our products, across the 16 brands at Lohr, we go to market with over 15,000 unique and proprietary parts. with no one part making up more than approximately 3% of our overall net sales in 2023. Our parts are found across the aircraft, embedded in a multitude of systems and subsystems. The proprietary nature of our products makes them mission critical for the end customer and ties us to the overall life of the aircraft. As many of you know, the life of an aircraft can exceed 50 years and multiple operators. The design and specced-in nature of our products allows us to serve not only the original equipment manufacturer, but also the aftermarket through the many operators that aircraft sees over its lifetime. We believe that the diversity and proprietary nature of our product offering provides us with the capabilities to serve our customers in a way that is unique to Laurel. I'm now going to pass the call to Glenn to run through the financials.
spk08: Thank you, Ian. Good morning, everyone. Let me start by discussing sales by our end markets. This comparison will be on a pro forma basis as if each of our businesses were owned as of the first day of the earliest period presented. We had record sales during the second quarter of 24. In total, our sales increased to 97 million, a 17% increase as compared to the prior year period. This increase was driven by strong performances in defense, up 57%, commercial aftermarket, up 19%, and commercial OEM up 11%. The increase in total commercial aftermarket sales of 19% was primarily due to the continuing recovery in commercial air travel demand and an end to the destocking as a handful of our distributors and end customers that affected us in Q1-24. During Q2-24, we continued to see strength in our commercial aftermarket bookings. Our total commercial OEM sales increased by 11% in Q2-24 as compared to the prior year period. This increase was driven primarily by higher sales across a significant portion of the platforms we supply, including general aviation, wide-body, and narrow-body aircraft. As an improving supply chain has allowed us to deliver parts that were previously held because our customers were experiencing bottlenecks in other areas of their supply chain. The increase of 57% in our defense sales was primarily due to strong demand across multiple platforms and an increase in market share as a result of new product launches. Defense sales will continue to be lumpy given the nature of the ordering patterns of our end customers for our products. Let me recap our financial highlights for the second quarter of 24. Our net organic sales increased 17% over the prior period. Our gross profit margin for Q2 24 was slightly lower than the prior year period. This was primarily due to higher defense sales in Q2 24, which were 22% of total sales in 24 versus 18% for Q2 23. Our defense sales make a lot of money, but typically have lower margins than our more profitable commercial products. We also continued to see some dilutive effects from one of the acquisitions that we acquired in the second half of 2023, as well as costs related to the move of one of our manufacturing facilities. These items were partially offset by pricing and operating leverage. Our increase in net income of $7 million in Q2-24 versus Q2-23 is primarily due to higher operating income as well as from the lower interest expense as a result of paying down 285 million of indebtedness with the proceeds from the IPO, as well as the amendment to our credit agreement in May 2024, lowering our interest rate by 250 basis points. Adjusted EBITDA was up 7 million in Q2 24 versus the prior year. Adjusted EBITDA margins remained strong at 36%, but were lower than the prior year quarter. This was a result of the sales mix that I discussed above, the temporary dilution from one of the acquisitions completed in the second half of 23, and the continued build-out of our infrastructure to support our reporting, governance, and control needs as a newly public company. Let me turn the call back over to Dirkson to share the outlook for the remainder of the year.
spk07: Thanks, Glenn. Given the strong performance across all our end markets, as Glenn has just outlined, in addition to The strength in available seat miles, which is projected by IATA to be above 2019 levels in 2024, when combined with the challenges of the OEMs to produce new aircraft, has resulted in strong orders in our commercial aftermarket. In addition, the geopolitical instability in the world driving demand for our products sold to the defense and market is driving greater sales. combined with our continued execution of our value drivers, gives us a high degree of confidence, a high degree of confidence that we'll achieve organically mid-double-digit percentage improvement in sales across each of our end markets in 2024 on a pro forma basis. Note that these results do not include our recently announced acquisition of Applied Avionics which we expect to close in the third quarter of this year. Next slide. So calendar year 2024, we expect net sales between 374 to 378 million, up from our previous guidance of 370 to 374 million. Adjusted EBITDA between 134 and 136 million, again, up from our previous guidance, range of 132 and 134 million. Adjusted EBITDA margin, we expect to be approximately 36% for calendar year 2024, while net income, we expect to be between 28.4 and $29.6 million for the year. Adjusted EPS, between 44 cents and 46 cents per share. In addition, Capital expenditures, approximately $11 million for the year. Full year interest expense, approximately $42 million. Effective tax rate of 30%. DNA, approximately $40 million. And on non-cash stock-based compensation, about $10 million, up from $9 million from our previous guidance. Our fully diluted share count remains at approximately 91 million shares. With that, I said we'd keep it brief. So with that, Operator, let's open the line for questions. Let's dig in.
spk02: Certainly. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. One moment, please, while we poll for questions. Our first question is coming from Ken Herbert from RBC Capital Markets. Your line is now live.
spk05: Yeah, hi, good morning, everybody. Nice quarter. Thanks, Ken. Hey, Dirksen, maybe to start off, is it possible to quantify sort of the book-to-bill for commercial aftermarket in the quarter, either at the aggregate or by transport and business jets? I mean, you've called out very strong bookings a few times. I'm wondering if you can just put a finer point on that.
spk07: um so so ken if you remember the last quarter we said we had record backlog for uh commercial aftermarket i'll respond to your question in this way um we have beaten that record as we stand here today in terms of what that backlog looks like going forward so very very strong bookings during the year uh i would say this way above one right so think Between 1.1 and 1.2, I don't know the exact number off the top of my head, but very, very strong orders. So we continue to see the aftermarket orders trending strongly.
spk05: Okay, very helpful. And there's been a lot of speculation recently about strength of the aftermarket into the second half of this year and early next year with some more cautionary comments on capacity growth from some airlines. Are you seeing anything... that would give you any sort of incremental concern on the aftermarket outlook into the back half of this year, early next year, either in, you know, order activity, you know, RFQ activity within the aftermarket, or just anything else you'd call out as you think about into this year, latter part of this year?
spk07: So, Ken, we're reading the same articles. I've read the same thing. I've seen the same thing. I will tell you, for us, We have not seen anything that remotely comes close to slowing down in the commercial aftermarket. Like I said earlier, bookings are strong. The quotes, to answer your question, is a very good question. We see it's higher than it was a year ago, and the quoting activity, that is. So, no, it's blue skies.
spk05: Perfect. Thanks, Dersen. I'll pass it back there.
spk02: Thank you. Next question is coming from Sheila Kaiglu from Jefferies. Your line is now live.
spk03: Thank you, guys, and congratulations on your first Q&A sessions. So maybe if we could stick to the aftermarket, you know, I think it was 38% total, 19% organic. Is that number? You know, Dirksen, can you talk about the strategy you deployed over the last a few months in terms of changing the pricing and having more visibility there, how that contributed to that 19% organic growth? How do you kind of see that book to bill progressing? Does that give you about three to six months of visibility?
spk07: No, happy to answer the question. But I have to say, I'm not sure everybody in the room is excited about the Q&A section. as you just said, but we understand.
spk03: We're keeping it easy. We're going off of very good numbers.
spk07: Yes, yes, yes. So yeah, like I said before, we see strong aftermarket growth trends. We did, at the beginning of this year, change the way that we are going to market in terms of lead times. So previously, we had looked at lead times of two weeks or less for a lot of our commercial aftermarket products. And we saw a number of our end market customers, namely a number of distributors, use us as the warehouse to stock their inventory. So we saw orders decline. What we've seen since we've changed our strategy to requiring folks to, at a minimum, have 90-day lead times, to get the best price, if I can say it that way, is actually, it's worked wonders. We've been able to get more visibility so we can see three and four months out. That's why I was comfortable answering Ken's question earlier so strongly about we don't see any weakness, because we have the backlog in the aftermarket where we only have two weeks a year ago. We have three, four, five months look ahead in terms of the aftermarket. So that is stuck. The pricing is stuck. So it's working really, really well. Greater visibility. And one of the benefits is we are now able to level load our shop instead of guessing at what people are going to order. So it's worked wonders, both on the top line and lower cost.
spk03: Got it. No, thank you for that. And maybe if we could go to just large commercial OE, leaving out the BizJet BGA growth, I think grew 11% organically in the quarter. Correct me if I'm wrong there. And your full year guidance is mid to double digits. So how do we think about your OE assumptions, whether it's the MAX or the 787 on the Boeing platform, how you're thinking about that trending for the year? And what do they do in the quarter?
spk07: Yeah, so I guess I'll take it in this order. MAX first. We don't believe what the OEM says in terms of what their bill rates are going to be and their production rates. We think it will be significantly less, and that's what we plan for. I will tell you over the past few weeks, I have gotten information from my mates at the business units with folks, our customers, pushing out OEM Boeing-related orders, okay? That's kind of how we feel about the MAX. So we're not planning on anything turning around significantly here in the near term. With regard to Airbus, they continue to struggle with the supply chain, not as much so as on the MAX in terms of the narrow body. We actually have pretty good orders there. That's been one of the stronger uplifts in sales in the first half of the year, and we see it continuing. But beyond that, everybody else that no one ever talks about in the media, right? You know, you're talking about the embryos, the services, the diamonds, check, check, check. Those guys are killing it. We're seeing large orders on the OEM side, and that's really what's driving the double-digit growth rates for those guys. So we're issuing strong orders for those guys. So hopefully somewhere in there I answered your question.
spk03: Sure. Thank you so much.
spk02: Thank you. Next question is coming from Christine Lewag from Morgan Stanley. Your line is now live.
spk01: Hey, Dirksen, Brett, and Glenn. You know, applied avionics with the proprietary and aftermarket exposure seems like a strong fit for the portfolio. I mean, it's very clear. But with a price of, you know, $385 million, EBITDA of $21 million, it seems like, I mean, the implied multiple for the deal is 18.3, excluding tax benefits. So when you look at applied avionics today, I mean, margins are already at 52.5%. So can you talk about your return thresholds for incremental deals, the availability of assets in the pipeline, and then should we see incremental deals closing similarly priced to this one, or is this anomalous expensive asset? Thanks.
spk06: Hey, Christine, it's Brett. Let me start from the end and work back towards applying, because what we're seeing in the M&A market today is one that's really, really active, and it may not be a surprise to folks given, one, what you see in valuations generally, two, what you see in terms of performance, not only from Lord, but from, I think, the industry as a whole. And I think, three, in terms of the visibility and expectations that people in our sector have, particularly those who have aftermarket exposure, it's all very, very positive. So as a result, you are seeing some higher multiples out there And I think for us, the exercise and the trick, if you will, is to make sure that we are buying very good, very high quality assets with a lot of opportunities attached to them. And as such, we're willing to pay full multiples, but making sure we're not buying average assets at high multiples. And so what I think you can find with Applied is it's in the former category. It's a very high quality asset. Yes, your math is correct on the multiple. We tend to look at it more as a 16 times multiple with the tax benefits, which we think could be even greater than the ones we cited. But nonetheless, Applied is a business that has a great market position. It's one of three competitors in that space. We think there are lots of opportunities across all our value drivers to not only grow the business significantly, but actually to improve margins significantly. So whether it's through productivity improvements, cross-selling opportunities, the way they go to market, and or pricing, all those drivers are at play here. And so our threshold for returns has not changed. And just to repeat it, we look at every deal and say, we need to see a path to doubling the EBITDA in no more than three to five years. Well, given the multiple that we've acquired, applied for, I think the implication, without giving a projection here, is that we think we can do even better than that with applied. So applied checks all the boxes we like, all the ones that we mentioned on the slide earlier. We think this is going to be a great one for us. It fits right down the middle of the types of businesses we're trying to acquire.
spk01: That's great color. Thank you, Brett. And maybe shifting gears through the PMA portfolio, are there any pending product approvals in the next six to 12 months or increased customer acceptance that would maintain commercial aerospace aftermarket growth to grow above industry trends, which is what you've been seeing anyway? Anything to watch out for would be great. Thanks.
spk07: So the short answer to your question is yes, there are. We have a number of, I'll use this term, applications sitting on the desk of folks in the FAA for approval. They've been slow to execute because as most of you know on this call, they've been busy with Boeing and others. So it's been slow to get things done. I would have hoped that we'd have had more done today. in some of the PMA applications that we have pending. But as you know, the way we think about PMA is we want to be strategic in terms of how we're chasing it. So we're focused on things like composite brakes or steel brakes in the aftermarket on what I describe as legacy platforms. And in those areas, yes, Christine, you're 100% right. As we get those applications approved, it will continue to drive our commercial aftermarket growth rates above what I would call industry averages.
spk01: Great. Thanks, Dirksen. If I could follow up one more on that. I just want to confirm, in terms of your outlook, right, your outlook does not expect any incremental PMAs to be approved. Therefore, if you actually get these approvals to come through, these are all incremental to what you've already provided.
spk07: I love the fact that you asked very specific questions. So the answer to your question is that would be true. It would not be a material impact to the outlook, though, that you have in front of you, the approvals that are currently pending. They will drive 2025, but, you know, we're not ready to talk about that yet.
spk01: Well, great. Well, thank you very much, and I'll pass it on. Thanks.
spk02: Thank you. Thank you. As a reminder, that's star one to be placed into question queue. Our next question is coming from Jason Gursky from Citi. Your line is now live.
spk04: Hey, good morning, everybody.
spk07: Hey, Jason. Good morning.
spk04: I just wanted to ask you about LTAs and pricing negotiations that might be on the come here. We heard from some others that there are some significant LTAs rolling off that were priced prior to the pandemic and that there might be an opportunity to go get some price and, you know, kind of help compensate for the inflationary environment that we've seen here over the last few years. And I'm talking specifically LTAs, you know, on the commercial OE side of things. So I'm just kind of curious what the profile of your LTAs look like with some of your OEM customers and whether there's maybe some opportunity here for you all between now and the end of the year or maybe over the next 12 months to see some upward pricing pressure on your OE revenue streams.
spk07: Great question. You know, clearly each year we do have LTAs that come up for review, if I can, you know, say it that way. But as a reminder, long-term agreements are not a big part of our business. Ten percent-ish of our revenues, think of it that way, it's not a significant amount. It's mostly on the military side. I'll say that because you're asking about commercials, so I don't want to put a box around my answer here. But you're right. We are in discussions on a few LTAs here. And look, our LTAs typically last three to five years, right? Typically, we will have a, I'll use this term, a firm fixed price with escalation clauses, right? But over that period of time, over that period of time, three to five years, but closer to the three years than the five, costs do go up. And as is our mission, as a portfolio, we get more price and inflation. So yes, we do expect to get price here and in their term. It will impact 2025 more than 2024, given where we are in the year at this point and those negotiations. But yes, we do intend to get price on those contracts. Good question.
spk04: Great. Thanks. I don't remember exactly how you described it in your prepared remarks, but the note that I took was kind of an initiative that you have each year that you kind of have the portfolio companies working on to drive productivity or cost or whatever. So I'm just kind of curious, what is it this year? What do you think it might be in the next couple of years? I'm just kind of curious how you all – kind of approach this and what are we working on this year might be a good kind of illustrative example of what you're working on.
spk07: Yeah. So, Jason, is that always you telling me I should probably remove that from what you described as my prepared remarks? I'm just kidding.
spk04: No, no, no, not at all. I think it was interesting.
spk07: No, no, yeah. So let me give you a little bit of background on how we get to that statement, okay? Every year, and we start the process around now, we do a bottoms-up at all our businesses in terms of how we're thinking about the upcoming year, two years, five years. As part of that, everyone is required to share with us their wish list of all the things that they want to do in terms of CapEx, in terms of productivity, et cetera, et cetera, et cetera. We will go through that wish list. and identify the things that we do want to focus on. So clearly, and I know this is a favorite of Glenn's, if there's a CapEx that we can get the return back in two years or less, we'll do a billion dollars worth of debt, right? So we'll identify it in that manner based on the returns we expect to get, how quickly we can make our money back, et cetera. There are usually one or two items that will jump out at us where we go, wow, that's a great idea. And we should definitely dive in on that because the returns are higher than the rest. And we'll focus on that on all our weekly calls to make sure that we do execute. Now, the execution sometimes doesn't go as quickly as we would like. For example, this year, since you asked, this year, we moved the business from California to Ohio. And we expected certain synergies as part of that move. that would impact this year's results. It's actually taken a little bit longer to get up the learning curve now that we've moved the business in terms of manufacturing the parts that I'm thinking about. And we'll probably get those benefits as we think about into 2020, 2025 and beyond. But that's how we go about it. So every year there's usually one or two really, really good ideas that the team comes up with. This is a team sport, Jason, and The ideas are not the four of us in this room. It is from the 1,400 people that we have working with us, our mates, right? We will find one or two ideas that just drives return. Now, I just told you that we're not achieving the returns that we expected at the beginning of the year. I do want to tell you that's embedded in the outlook that we shared with you. But we will get those benefits as we think to 2025 and beyond. So stay tuned.
spk04: Right. Okay. That's good color on 25 as well. And then lastly for me, Brett, I believe in your prepared remarks you mentioned being a little bit agnostic on the M&A side of things to the end market that any of the targets might be focused on. I just want to make sure, though, or I guess it doesn't really matter what you choose to pursue as long as the financial metrics are there, but Was that a statement on end markets within aerospace and defense or were there the opportunities for you guys to move outside of aerospace? No, no, no.
spk06: Just to be clear, because I did mention when I talk about the metrics and the qualitative aspects of what we look for in acquisition, it has to be A&D focused. So when I say I'm agnostic to the end market, I'm referring to whether it's commercial or versus general aviation, versus business jet, versus military. The thing that we think about all the time from a top-down perspective is being balanced. So we don't want to have any one end market be completely disproportionate to the others, but at the same time, we don't look at that pie and say within a percentage point or two or three or five, it has to be within a particular segment. We just want to be balanced so that when any macroeconomic event may occur, we have risks and opportunities. And I think that served us really, really well during COVID.
spk04: Perfect. Okay. I'll pass the line. Appreciate the time today.
spk05: Thanks, Jason.
spk04: Thanks, Jason.
spk02: Thank you. Next question today is a follow-up from Ken Herbert from RBC Capital Markets. Your line is now live.
spk05: Yeah, hey, thanks. Dirksen, I maybe just wanted to follow up on your comment regarding expectations that new products can add sort of one to three points of organic growth each year. Are you tracking to that this year? And then I guess the second question would be, as you think about moving forward, these obviously aren't necessarily book and ship type products, but can you talk about then the setup as you think about that one to three range in the next year, and maybe any ideas of some of what you're working on without obviously giving things away, but I know you've had some nice history here when we think about froth and some other opportunities. Just any ideas to where you're investing today as you think about the new product introductions and the opportunity?
spk07: Yeah, sure, Ken. So first part of your question, are we tracking? The answer is absolutely. We're tracking to that 1% to 3% this year. As you know, but probably not everybody on the call, we do track our new business pipeline. And we track it formally. We actually have a sales team that actually have calls once a month to go through and address how we're doing against expectations around that new business. New business to us is across all of our business units, all of our brands. And not just them independently, they'll also get together and collaborate to see how they can solve pain points within the industry. For example, as you just said, short and the cockpit door barrier, which we've talked to folks about, that will drive sales in 2025 and beyond, and we'll be part of that one to three points. In terms of areas where we're looking, it's all across the board. It's everything that we do. from valves to rate control devices to restraints to whole open rods, latching mechanisms, brake steel, carbon, etc., etc., etc. Everything we touch, we're looking at investment. Now, with that said, we're disciplined. Our R&D budget is usually around 2% to 3% of sales every year, and we track that against that list of new business. So, Nobody invests in R&D unless it's tied to a return that we can see and touch. Otherwise, Glenn puts a hammer on them. So no one wants that. All right.
spk02: Thanks for all the color, Dirksen.
spk07: Thanks.
spk02: Thanks, Ken. Thanks for the question. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.
spk07: So look, this is our second call. This one, folks got a chance to ask those questions. We want to be as transparent with you guys as possible. You are our partners is the way we think about it. The one thing we'll stop short of doing is say anything that will give our competitors an advantage over us. So appreciate. Sometimes we won't answer the question fully. Now, with that said, I want to thank, thank, thank everybody for their time and listening to the call today and being our partners. And most importantly, I want to thank our mates. I mean, our mates are killing it, as you can see from the results. So thank you. Thank everyone for participating. Talk to you in 13 weeks. Thank you.
spk02: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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