Methode Electronics, Inc.

Hello, ladies and gentlemen, and welcome to the Methode Electronics second quarter fiscal year 2023 results call. At this time, all participants are placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mr. Robert Cherry, Vice President of Investor Relations. Sir, the floor is yours.

Thank you, Operator. Good morning. And welcome to Metho Electronics Fiscal 2023 Second Quarter Earnings Conference Call. For this call, we have prepared a presentation entitled Fiscal 2023 Second Quarter Financial Results, which can be viewed on the webcast of this call or found at metho.com on the Investors page. This conference call contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof, These forward-looking statements are subject to the safe harbor protection provided under the securities laws. Method owner takes no duty to update any forward-looking statement to conform this statement to actual results or changes in Method's expectations on a quarterly basis or otherwise. The forward-looking statements in this call involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in methods filings with the Securities and Exchange Commission, such as our 10-K and 10-Q reports. At this time, I'd like to turn the call over to Mr. Don Duda, President and Chief Executive Officer.

Thank you, Rob, and good morning, everyone. Thank you for joining us for our fiscal 2023 second quarter earnings conference call. I'm joined today by Ron Zumis, our Chief Financial Officer, Both Ron and I will have opening comments and then we will take your questions. Let's begin with the highlights on slide four. Our sales for the quarter were a record $316 million. This was achieved despite a significant headwind from foreign exchange, which was partially offset by strong sales in China. Lost sales due to the COVID lockdowns in China in the first quarter were recovered in the second quarter. These China sales recoveries are now behind us. Also helping to offset the foreign exchange headwind were ongoing material spot buy and premium freight cost recovery efforts. Driving our overall sales performance was a record quarter for sales in our industrial segment of over $100 million. The surge in sales was driven by power distribution solutions, both for data center and EV applications, and by commercial lighting. Some of the increase was related to the China lockdown sales shift. That aside, it is clear that we are successfully executing our strategy to grow our industrial sales and better balance the business mix between the automotive and industrial segments. In the quarter, we continue to face ongoing cost increases due to the general inflation in material and labor as well as supply chain challenges, which resulted in remedial actions such as spot buys and expedited shipping. We continue to work relentlessly with our customers to share in the absorption of these increased costs. We are gaining traction in these efforts, but our ability to pass along price increases will lag as a matter of process as long as high inflation continues. On the order front, we had another solid quarter with over $65 million in annual program awards. These programs were driven by power and lighting applications, two of our key growth opportunities. Turning to EV activity, sales in the quarter reached 20% of our consolidated total. This percentage matches our guidance for the full year. Of the total awards in the quarter, Over 80% were in EV applications, with most of them being power distribution solutions. In the quarter, we continued to reduce debt, which is at its lowest level since the Greycon acquisition in 2018. Just after the end of the second quarter, we amended our credit facility, which increased our debt capacity. This gives us additional resources and flexibility to fund inorganic growth. During the quarter, we purchased approximately $20 million of stock. As of the end of the second quarter, we now have approximately $97 million remaining in our buyback authorization. This buyback program remains a key part of our capital allocation strategy. Moving to slide five, Meadowthew had another solid quarter of business awards. The awards identified here represent some of the key wins in the quarter, and represent 66 million in annual sales at full production. As a reminder, the full launch timing of most of these programs could be anywhere in the range of one to three years from now. Also, while the majority of the dollar value of these awards are for new programs, some of these awards are for extensions or volume increases on existing programs. At the top of the list are EV programs representing most of the dollar value. The awards are mainly for power products associated with the skateboard architecture, such as bus bars for the battery, inverter, and motor, as well as products such as connectors and distribution units. The awards are also from both traditional automakers as well as EV-focused manufacturers. EV continues to be a solid growth engine for Method. In other areas, we're awarded programs for lighting and power solutions for applications in auto, data center, defense, and energy. Overall, it was a successful quarter for awards that will continue to drive organic sales growth. Furthermore, the pipeline of future awards remains robust. That said, the ongoing inflationary cost environment, geopolitical risk, and now an increased foreign currency headwind has caused us to moderate our near-term outlook. To conclude, Methyl delivered strong sales in the quarter, driven by our efforts in power and lighting solutions. Furthermore, Methyl is expecting another record year for sales and continued growth in EV applications. Lastly, we are reaffirming our three-year organic sales compounded annual growth rate target of 6%. This target demonstrates that our business model is not just healthy, but is prospering from the strategic steps that we've taken to grow the business. At this point, I'll turn the call over to Ron, who will provide more detail on our second quarter financial results and outlook for the full year. Ron. Thank you, Don.

Good morning, everyone. Second quarter net sales were a record 315.9 million compared to 295.5 million in fiscal 22, an increase of 20.4 million or 6.9% led by record sales in the industrial segment. This quarter sales were driven by strength and power distribution solutions for both data center and EV applications and by lighting solutions for commercial vehicles. The quarter also benefited from approximately $15 million of sales recovered from Q1 through the COVID lockdowns in China. As Don mentioned, the Q1 China sales recoveries are behind us. Also helping sales was 5.8 million of spot buy and premium freight cost recovery. Partially offsetting these positive factors was an unfavorable currency impact on sales of 22.2 million. Excluding the spot buy and premium freight cost recovery and foreign currency impact, sales increased by 41.2 million or 14.2 percent. EV product applications amounted to 20% of sales in the quarter. We still anticipate electric and hybrid vehicles sales to represent 20% of our full year fiscal 23 consolidated sales. Lastly on sales, the percentage of sales in the automotive and industrial segments in the quarter was 62% and 33% respectively. The industrial segment is clearly becoming more prominent to the overall company. Second quarter income from operations decreased 1.2% to $32.8 million from $33.2 million in fiscal year 22, mainly due to higher selling and administrative expenses as well as unfavorable foreign currency translation. The higher selling and administrative expenses were mainly related to lower annual performance-based compensation in the prior year. The leverage from the higher sales in the quarter was more than offset from the impact of higher expenses and currency translation. Second quarter diluted earnings per share increased 4.2% to 75 cents per diluted share from 72 cents per diluted share in the same period last fiscal year. The higher sales more than offset the negative impacts from the foreign currency translation and higher effective tax rate. In addition, Lower net interest expense contributed to the increased income before income taxes. The effective tax rate in the second quarter was 17.4 percent as compared to 16.7 percent in fiscal year 22. The increase in the effective tax rate was mainly due to a mix of jurisdictional earnings. Please turn to slide eight. Second quarter gross margins were 23.5 percent An increase of 10 basis points as compared to 23.4% in fiscal year 22. The higher sales in the quarter were the main contributing factor. Mostly offsetting the increased sales was higher materials and other inflationary costs. Also weighing on gross margin was 5.8 million in pass-through recovery sales at zero margin. Second quarter selling and administrative expenses as a percentage of sales was 11.6% compared to 10.6% in fiscal year 20, a 100 basis point increase. As I previously mentioned, the increase was mainly a factor of lower annual performance-based compensation in the prior year. Also, higher professional fees contributed to the increase. Our historical selling and administrative expense as a percentage of sales is typically in the range of 11% to 12% as it was this quarter. Second quarter operating income margin was 10.4% as compared to 11.2% in fiscal 22, an 80 basis point decrease. The higher selling and administrative expenses more than offset the leverage from the higher sales in the quarter. Over time, we expect our consistent cost recovery efforts, including price increases, will lead to improved margin performance. Please turn to slide nine. Shifting to EBITDA, a non-GAAP financial measure, second quarter EBITDA was 46.1 million versus 47.4 million in the same period last year, a 2.7 percent decrease. EBITDA was negatively impacted by higher costs due to material inflation and unfavorable foreign currency translation. The impact from these factors was partially offset by higher sales. Second quarter EBITDA margin was 14.6% versus 16% in the same period last fiscal year, a 140 basis point decrease. While our margin was down in the quarter, we clearly had the potential to leverage our higher sales trajectory over the longer term as we continue to mitigate the challenging cost environment. Please turn to slide 10. Year-to-date, we have reduced gross debt by $6.5 million, and since our acquisition of Greycon in September 2018, we have reduced gross debt by over $150 million. We ended the second quarter with $129.6 million in cash. During the quarter, we bought back shares for $19.7 million, bringing the fiscal year-to-date total to $31.6 million. Programmed to date, we have bought back 103 million of shares, leaving 97 million remaining for purchases under the Board authorization as of the end of the second quarter. Net debt, a non-GAAP financial measure, increased by 35.9 million to 74.4 million from 38.5 million at the end of fiscal 22, mainly due to the share repurchases of 31.6 million and some unfavorable working capital changes. Our debt to trailing 12-month EBITDA ratio was approximately 1.3, and our net debt trailing 12-month EBITDA ratio was approximately 0.5. We recently amended our credit facility, which increased the revolving credit commitments to $750 million from $400 million. And in addition, there's a $250 million accordion feature, which can be activated with the lender's consent. We believe The increased capacity will offer the company more flexibility from a capital allocation perspective, especially for inorganic growth initiatives. The details of the credit facility can be found in our recent 8 filing. Please turn to slide 11. Second quarter cash from operating activities was $15.4 million as compared to $27 million in fiscal year 22. The decrease of $11.6 million was primarily due to increased accounts receivable as a result of the record sales in the second quarter. Second quarter capital expenditures was $8.4 million as compared to $5.4 million in fiscal 22, an increase of $3 million. The increase was mainly a function of the lower level of spending in the prior year quarter, as the spending of this quarter was also a bit lower than anticipated. This is due to timing and not due to a concerted effort to reduce CapEx. Second three-quarter cash flow, a non-GAAP financial measure was $7 million as compared to $21.6 million in fiscal 22, a decrease of $14.6 million. The decrease was primarily the result of higher accounts receivable and higher CapEx during the quarter. We expect cash flow to improve in the remainder of fiscal year 23 Paul Minehart, As we target reduced inventory levels and other positive working capital initiatives, combined with increase net income, all while supporting increase capex. Paul Minehart, We have a strong balance sheet, and we will continue to utilize it by investing in our businesses to grow organically and by pursuing opportunities for inorganic growth. Paul Minehart, Please turn to slide 12. Regarding fiscal 23 guidance, it is based on management's best estimates and is subject to change due to a variety of factors, including the ongoing semiconductor shortages, other supply chain disruptions, inflation, economic instability in Europe, both short and long-term supply chain rationalization, successful cost recovery actions, restructuring efforts, and the ongoing impact from the COVID-19 pandemic, especially in China. While we have experienced some success in recouping cost recoveries, we expect these headwinds will be with us at least through the remainder of fiscal year 23. The expected revenue range for fiscal year 23 has been narrowed to $1,170,000,000 to $1,200,000,000. The lower end of the previous range was raised $10 million, and the upper end was reduced by $10 million, leaving the midpoint unchanged. In keeping with our historical cadence, we expect a sequential dip in 3Q sales due to seasonality, followed by a sequential increase in Q4 sales. The expected diluted earnings per share range has been updated to $2.70 to $2.90, with the lower end unchanged and the upper end reduced by 20 cents, thus reducing the midpoint by 10 cents. A key reason for the reduced Earnings per share midpoint is an increase in negative foreign currency translation, and as such, our new APS guidance range reflects the foreign currency rates as of the end of the second quarter. Also increasing uncertainty for the second half of the year are the execution of cost recovery actions as well as potentially product mix. Our other guidance assumption had been updated as follows. Our estimated annual effective tax rate is now 17% to 18% narrowed from 16% to 18%. It does not include any potential discrete tax items. We anticipate CapEx of between 40 and 45 million narrowed from the range given in the first quarter as we gain better visibility on the remainder of the year spending. Estimated depreciation and amortization expense has been lowered to 50 to 55 million from $54 to $58 million to the lower estimated CapEx for the remainder of the year. As a reminder, based on the strong bookings we have realized over the past two fiscal years, much of which is for the EV market, we previously announced a three-year organic sales compounded annual growth rate target of 6% with fiscal year 22 as the base year. The CAGR considers the anticipated roll-offs of all relevant programs and reinforces that our organic growth strategy is putting the company on a solid sales trajectory. Don, that concludes my comments.

Ron, thank you very much. We are ready to take questions.

Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset, if listening on speakerphone, to provide optimum sound quality. Please hold while we poll for questions. Thank you. Our first question is coming from Luke Young with Baird. Please go ahead.

Thank you. Good morning. Thanks for taking the questions. Don, to start, hoping you could give us your updated thoughts on the macro, especially specific to AUTO. be most interested in your updated views on China right now, a lot of the recent COVID developments there, as well as any current thinking on energy risks in Europe. And based on the prepared remarks, am I hearing that China may have impacted your thinking on the updated guidance specifically?

Let me answer that one first. It was a good quarter in China. Some of that was as catch up as Ron talked about. We are, what's the biggest risk for us? We are concerned about shutdowns in China. We have seen some of our customers slow down their releases, particularly in the data center. So we've taken that into account in our guidance, but we do see a little slowing and we are apprehensive about shutdowns. We saw that in the fourth quarter last year and the first half of the first quarter, and those were dramatic for us. And I'm pleased we did probably recover all of that, but that's probably our number one concern. As far as Europe, we're taking a little bit of a wait-and-see approach. I'm not as concerned, but we've seen softening in our e-bike business. We view that as temporary, but that came into play into our thinking and guidance. And as Ron pointed out, we did not, we lowered the high end because we just didn't think of all the factors I just talked about. We didn't think that was likely to occur, particularly also with FX affecting. And that was not taken into account when we initially gave guidance. Ron?

Yeah, no, that... Those two items are our biggest areas of concern. And, you know, obviously the dollar against the Euro, and that has weakened in the last couple of weeks. So we'll see where FX ends up the remainder of our fiscal year.

To your energy question, as far as method facilities are concerned, we're operating in Malta, we're operating in Egypt. We have a smaller facility in Belgium, but the two major facilities should not be impacted. but our customers could be impacted, which would have a direct effect on ourselves. I think we're okay. Perhaps maybe there might be an issue in Belgium, but it'll be the effect on our customers that could cause us to have issues.

Okay, great. Thanks for all that. And then second question for Ron, just regarding working capital inventory. Of course, it's been ramping the last year plus or so, but it kind of flattened out this quarter and said there's a big step up in ar tied to the higher sales can you just expand on how you're thinking about working capital into your end and into next year both you know as it relates to cash flow which i already commented on to some extent but i'm wondering maybe more importantly strategically relative to the current environment as well yeah so we clearly luke we we had a very strong quarter and uh the ar especially was negatively impacted

We expect that to turn around. I mean, if you look at the midpoint of our guidance from the revenue perspective, it's going to be a little less than where we were for this fiscal, the first half of the fiscal year. So we expect improvement in that. We are pleased to see the inventory at least tourniquet put on that, and we expect some improvement over the next six months on that perspective. though it will likely be a gradual improvement. So with more pronounced improvements as we get through some of our make where we sell strategy and localize things or nearshore things a little bit more, we would expect inventory improvement certainly in the next fiscal year as well. So we clearly haven't been up to the method historical standards in terms of how we generate cash, but we are on a trajectory to get that to be where we more have historically been.

And I think I would comment there's nothing in AR that... Oh, no, yeah. Any concerns there. And then inventory... inventory in large part is up because the products that we're keeping in inventory have gone up dramatically. I think Melvin said it was like 30.

Almost 50 or 60% of the inventory increase is due to the standard costs and things of that nature, which, you know, until the material prices go down. So what we're really focused on, what we can't control, is the logistics and how we order. So that's where the team is focusing on right now.

Okay, and then lastly, just a bigger picture question. I'm wondering if you could comment on the evolution of bus bars in terms of EV architecture and applications. In the awards this quarter, you said a bus bar is not only for battery applications but also for e-motor and inverter. I think there may have been one inverter award in the past. If I look back at your historical bookings, just wondering, is there an expanding use case for bus bars just outside of just the battery that you're seeing right now?

Well, in general, those are the three areas of the vehicle that you would see bus bars. And we've talked historically about the battery bus bars. We started to ship those quite some time ago. But we have moved into the inverters and into the motors. And if you go to our investor deck, I think there's one slide in there that shows pictures of all three. So that's The majority of our bookings have been in battery bus bars, but we are moving into those other two two areas and that would be. Natural, because if you know I have several bus bar suppliers, if your major one is the battery supplier should be able to do the others. So know that that it's a change. It doesn't represent. Huge bookings at the moment, but we anticipate those and that is one of the reasons we say well robust pipeline.

Okay, great. I'll go ahead and leave it there. Thanks for all the comments.

Thanks, Luke.

Thank you. Our next question is coming from John Franzreib with Sudoti & Company. Please go ahead.

Good morning, guys, and thanks for taking the questions, and congratulations on a good quarter. Thank you. I want to circle back to the Asia question, I guess is how I'll phrase it. Sequentially, revenues went from $30 million last quarter to roughly $45 million this quarter. is how much of that you characterize as a catch-up phrase and would you expect that business to dip again or stay at this kind of level? What are your thoughts there?

There was certainly a catch-up. The other thing we had there, John, was our power business into data centers, which is a nice business for us, kind of lumpy business. And in the first two quarters, We experienced really great sales from that, and in our guidance, we contemplated a bit of lowering or tempering and not maintaining that level in the second half of the fiscal year.

Yeah, I think really in both those areas, we achieved our full year numbers. So we are anticipating a slower third and fourth quarter there. And you take that into account, and then you take in the catch-up. So, no, I would say it's going to be down.

Okay. All right. Fair enough. And if I look at the industrial segment, and you called out, you know, that the data census we just mentioned, EV and commercial vehicles as far as the year-over-year growth, can you kind of, you know, quantify which of those three had the greatest impact year-over-year?

Sure. If we look at the segment, the power piece of it, the data center and the EV piece had the biggest growth. And then the second factor would have been our commercial vehicle lighting. And then behind that would have been our hotronic radio remote control in that order. Okay. Fair enough.

And it sounds like the M&A pipeline may have improved or changed from three months ago. Can you talk a little bit about what you're seeing out there as far as potential inorganic growth?

Sure.

I would say the pipeline stays robust. We briefed the board once a quarter on what opportunities there. Those have not. They've maintained their pace. Nothing that is eminent, but I'm not unhappy with the amount of looks that we see. The credit facility, it was expiring, so we needed to re-up that and then Ron took the opportunity to avail ourselves of more borrowing capacity if we needed it. Prices, I don't know that they've come down appreciably yet. We think they will. Perhaps private equity is a little bit on the sidelines, which gives us maybe an advantage. But we'll have to see how things pan out if we get to the point of discussions of pricing with a particular target.

Yeah, I would agree with those assessments. And getting the expanded credit facility it was a good thing for us and certainly gives us more flexibility and latitude from that part of the capital allocation strategy.

And I think that gives us an advantage. We're talking to targets down the, hey, we're ready to go if we can get to the right due diligence and the right price. So I think that's a definite advantage.

Fair enough. I guess one last question. You've been far more aggressive buying back stock than repaying debt. What are your thoughts on that on a go-forward basis? Or maybe to phrase it differently, do you have a lower share count embedded into your guidance for this year than you closed at the end of the second quarter?

John, I think it's more about timing within our strategy over the next couple of years in terms of how we foresee allocating capital. And absent an acquisition, we have been allocating more capital towards share repurchases. In terms of debt reduction, prior to the facility that we just updated on October 31st, there was a term loan aid component to that, and if we were to repay that, we would basically lose the ability to re-borrow against that. Now, under the new facility that doesn't have that component, so we'll have more flexibility without it being punitive on our ability to re-borrow. So mainly, we just continue to generate cash and allocate capital towards the sharing purchases. And we can pivot and deviate if we were to do an acquisition.

Got it. Thanks for the info. I appreciate it, guys. Thanks for taking my questions.

Thank you.

Thank you. Our next question is coming from David Kelly with Jefferies. Please go ahead.

Hey, good morning, and thanks for taking my questions. I wanted to follow up on the earlier power distribution and bus bar EV discussion. I was hoping you could talk about the bidding opportunity there versus what you're seeing with win rates with customers. Are you seeing a step up in both and thus implying some market share gains there? Yes.

We've been shipping bus bars since 2006 and Meppo's been in the bus bar business probably since the 60s maybe. So we're well versed in how to make those. That gives us a competitive advantage. We also are We are a solid tier one supplier with a great quality record. So we get, we don't always get the wins, but we get a lot of looks across the board on bus bars. And as I said earlier, moving into power distribution and the motor bus bars. So are we gaining market share? Yes. We have our threshold of pain, however. We're pretty disciplined on that. on that. We track our wins. We've talked in the past about how we look at our booking opportunities. We have embryonic. We put a percentage to it, 50%, and then we have 75%, and we track over the years. what our win rate is. And I think the last one we looked at, and this is across the board for Methodist, not just EV, the 75 percenters were in the 60-some percent rate. If we lose, we lose because we've reached a price point that we don't want to go. So, yeah, I think that's a definite market share gain for us, and we've talked about that.

Yeah, I think we've done, the team has done a great job in capitalizing being, I guess, quote unquote early mover within the space because we have such a rich history. We have the capacity in the manufacturing systems and everything on three continents to support. all of the EV in a more local manner. So we were in a good spot. And as Don mentioned, 06 with Tesla, so we've been mixing it up for quite a long time. So we've been getting some good looks with our existing relationships with the OEM, the automotive OEMs, and we've done a good job at closing business.

Okay, got it. That's really helpful. Maybe one more follow-up on the supply chain discussion that's been ongoing here. Curious if you're seeing any signs of improved visibility or incremental product availability. And I guess, you know, taking a step further, do you foresee... any opportunity for some relief from some of the spot buys into the back half of the year? Are you assuming any relief there as we think about updated full-year guidance?

I take some comfort, although it's only one quarter, in that our spot buys were lower this quarter. I would feel better at the end of this quarter if they were less than the same in the fourth. So that's only one data point. We still... We're challenged every day on supply issues. Is it less? Yes. Is it coming to an end? I'm not willing to say that yet. I think we're at least through the end of our fiscal year and there's been a lot of people that have been predicting an improvement and they've been wrong. So that's almost a non-answer, but we don't know. We can track it, but it's still difficult. And we've seen our customers continue to have issues.

Okay, got it. So just to clarify, it sounds like you're assuming some cadence of spot buys continuing into the back half of the year and guidance.

Definitely, that's fair.

Okay, yeah, okay, got it. Thanks, guys. That's really helpful. I appreciate you taking my question. Thank you.

Once again, ladies and gentlemen, if there are any remaining questions or comments, please press star one on your phone at this time. Our next question is coming from Gary Prestapino with Barrington Research. Please go ahead.

Hi, good morning, everyone. Most of the questions have been answered. I just want to get an idea. What was your share count at the end of the quarter? I got like $37.5 million out of the queue. Is that correct? Is that what you're using for EPS calculations?

At the end of this quarter, looks like 37. Yeah, that would be it. Yep. Okay. Okay. Yep.

So then the other question, a couple other questions I would have is, most of the FX headwinds are coming from the euro. Is that correct?

From the euro with the RMB secondary, yes. Okay. Euro and RMB.

But when you're producing in places like Malta and Belgium, you say you have a plant as well?

Yes.

Okay. So there's some offsets there with the expenses you're incurring in those local currencies as you translate back in the U.S. Is that correct, too?

There are, absolutely. And, you know, a lot of it is just Fortunately for us, we do a good job of making, earning a profit in our non-U.S. locations. And just from the translation to the financials from a U.S. GAAP perspective, they're worth less than they would have been with the dollar strengthening. But we absolutely do a lot of internal offsetting at each of our locations and then have a FX program that looks at everything from a consolidated basis as well. Um, when we start getting into receivables and payables and things of that nature, cross border, we, we take actions here as well. So, uh, pretty robust, um, FX management, uh, protocol.

Okay. And then lastly, in terms of, um, your end clients, your end users, I know you talked about trying to pass on price increases there. Has that become, uh, Any easier, for lack of a better word, or more acceptable? Other suppliers that I've talked to have said that they've developed a modicum of success of passing on some of these cost increases.

Oh, boy. I think if we had our salespeople in the room, they would say absolutely not. It's difficult with any customer. And we're a customer, too, to our customers. our suppliers and we're pretty tough so it it has to be a justification it takes a while um you're always walking a fine line between gee i need to book more business but i get pretty tough here on price increases so um is it easier than it was before the pandemic you know i guess you could say it is because it is customers are somewhat used to that but it's not uh uh I don't know that it's getting any easier. We're achieving some success, but, in fact, I think we've had a lot of success, but we need inflation to temper before we see the benefit of it. But I don't know.

No, I just, if you start going to the well more than once, going a second time, that part of it makes it more delicate, that's for sure. Okay, thank you. Mm-hmm.

Thank you. At this time, there appear to be no further questions in queue, so I will hand it back to Mr. Duda for any closing comments he wishes to make.

Well, thank you very much, and we'll thank everyone for listening today, and wish everyone a very safe and pleasant holiday season. Good day.

Thank you, ladies and gentlemen, and this does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day, and we thank you for your participation.