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spk00: Good day, and thank you for standing by. Welcome to the Q1 2022 Meritor, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Todd Chirillo, Senior Director of Investor Relations. Please go ahead.
spk04: Thank you, Gigi. Good morning, everyone, and welcome to Meritor's first quarter 2022 earnings call. On the call today, we have Chris Villavarayan, CEO and President, and Carl Anderson, Senior Vice President and Chief Financial Officer. The slides accompanying today's call are available at meritor.com. We'll refer to the slides in our discussion this morning. The content of this conference call, which we're recording, is the property of Meritor, Inc. It's protected by U.S. and international copyright law and may not be rebroadcast without the express written consent of Meritor. We consider your continued participation to be your consent to our recording. Our discussion may contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Let me now refer you to slide two for a more complete disclosure of the risk that could affect our results. To the extent we refer to any non-GAAP measures in our call, you'll find the reconciliation of GAAP in the slides on our website. Now, I'll turn the call over to Chris.
spk02: Good morning. Carl and I look forward to walking you through an excellent first quarter. Before I begin, I want to thank the exceptional Meritor team for their hard work and dedication to our customers. Let's turn to slide three. Overall, we're pleased with our financial performance and are off to a good start for the year. We demonstrated our ability to manage the business well through a challenging set of factors. On higher sales driven by stronger demand in most of our end global markets, adjusted EBITDA margin in the quarter was 11.5% and adjusted earnings per share was 80 cents, an increase of more than 35% year over year. We're working closely with our customers and suppliers to offset historically high freight and material costs while managing supply chain constraint and a prolonged labor shortage. We're navigating these headwinds and are confident in our full-year outlook that we're reaffirming today. In December, we introduced aggressive M2025 targets, that include growing $500 million in revenue above market with one half coming from electrification, and expanding margins to 13% while generating $600 million in free cash flow. M2025 represents Meritor's fourth M plan. Our execution of these plans have transformed the company. Since the introduction of M2016, we have increased adjusted earnings per share by more than $2 through fiscal 2021 and expect to further increase EPS by almost an additional dollar this fiscal year. We have also expanded adjusted EBITDA margin by 350 basis points. We had a very successful first quarter in terms of finalizing new business awards, some of which we announced at Investor Day. Let me briefly recap the significance of these. We have an exclusive agreement with Thomas Built Bus for Meritorious Electric Powertrain with SOP planned for 2024. With the electric school bus market expected to be one of the fastest adopting segments, in large part due to the infrastructure bill, this agreement represents a meaningful near-term opportunity to accelerate our electrification journey and expand our long-term relationship with Daimler Trucks North America. We extended our multi-year agreement with PACCAR to supply electric powertrains and full electric solutions for Kenworth and Peterbilt tractors and refuse trucks. And we added three new prototype collaborations in the quarter with two different customers, two hydrogen fuel cell applications for Hexagon and a road sweeper platform for Lectra. This makes the fifth quarter in a row that we have announced new electrification wins. In our core business, we're excited to significantly increase our on-highway presence in China. With this five-year agreement, we will supply Daimler with rear axles for the Actros. We also have a new business win with one of our largest trailer customers. This is our first five-year agreement with Wabash and is valued at more than $150 million. You can see on slide four that Meritor is differentiating itself in the industry. We believe our growing number of electrification awards is the true measure of the value our customers place on our integration capabilities and electric powertrain. In fact, our electrification revenue forecast for fiscal 2022 has increased by more than 30% since December. Slide five brings into focus all our electrification programs announced today. I want to make three important points with this slide. First, half of our production programs are in the medium duty, with accelerated adoption rate expected in this segment We anticipate that volumes on these programs will grow faster than on the heavy side, which is all growth for us. Second, we're either exclusive or standard position on all these programs. And finally, we have eight production contracts, three with large OEMs and the remainder with promising startups. We look forward to helping more customers drive to a cleaner world. On slide six, I want to emphasize the importance of the work we're doing at our innovation complex in Escondido, California. With the technical expertise inherent in this operation, we can offer complete turnkey electric vehicle solutions. In addition to the electric powertrain, Meritor can provide the PCAS or power controls and accessory subsystem. Our acquisition of Transpower gave us a wealth of experience in vehicle controls that we have strengthened since taking ownership in 2020. We're proud to be production ready for our electric powertrain and the full electric system. We're confident in our capabilities and in the important role Meritor will play as commercial vehicles transform over the next decade. This is an incredibly exciting time for us. Now, I'll turn it over to Carl. Thanks, Chris, and good morning.
spk05: On today's call, I'll review our first quarter financial results and outlook for fiscal year 2022. Overall, we delivered excellent financial performance to begin the final year of our M2022 plan. Adjusted EBITDA margin was 11.5%, and adjusted earnings per share was 80 cents. Now, let's review the details of our financial results on slide seven. Overall, revenue came in at $984 million, up 11% from the prior year. The increase was driven by higher truck production in most markets as orders remain elevated around the globe. Net income from continuing operations was $54 million compared to $32 million last year. Higher net income was driven by increased sales volumes and lower interest expense, partially offset by net steel costs. We also benefited from a $6 million settlement with an insurance carrier related to our specialist liability this quarter. On a comparative basis, you will recall last year we recognized a $6 million one-time gain from our joint venture in Brazil relating to a value-added tax credit. Adjusted EBITDA was $113 million, an increase of $11 million from last year. The growth in adjusted EBITDA was driven primarily by higher sales volumes, partially offset by net steel costs. Adjusted diluted earnings per share was 80 cents, up 21 cents from last year. And finally, free cash flow for the quarter was a use of $39 million, compared to $34 million of cash generated last year. The decrease was in line with our expectations. as we built higher inventory levels to support an anticipated strong production environment throughout the year. Additionally, incentive compensation payments were higher this year. Now I will discuss our segment results for the first quarter compared to the same period last year. Sales of commercial truck were $785 million, up nearly 14% year over year. The increase was driven by higher truck production in most global markets. Segment adjusted EBITDA for commercial truck was $69 million, up $6 million from last year. Segment adjusted EBITDA margin was 8.8%, a slight decrease of 30 basis points from a year ago. Higher sales, partially offset by net sale costs, drove an increase to adjusted EBITDA. However, adjusted EBITDA margin was lower as net sale costs impacted sales conversions. Aftermarket industrial sales were $241 million in the first quarter of fiscal year 2022, an increase of $7 million compared to the prior year. Pricing actions executed over the last year in the segment was the primary driver of the improvement in revenue. Segment adjusted EBITDA increased $3 million to $38 million, and EBITDA margin was up 80 basis points to 15.8%. The expansion and segment-adjusted EBITDA margin was driven primarily from the footprint optimization initiatives implemented after the first quarter last year. Now let's review our global production outlook on slide 8. As we saw last quarter, demand remains strong across our markets. In the North American Class 8 market, the backlog is estimated at approximately 260,000 trucks, representing nearly a full year of industry production. While we are closely monitoring constraints in the global supply chain, we are beginning to see some signs of stabilization. We are expecting supply chains to continue to improve as we progress throughout the year. As a result, we are not seeing a significant change from our November view. Therefore, we are maintaining our global production forecast for all markets. Let's turn to slide nine for an update to our fiscal year 2022 outlook. Based on first quarter results, and our expectations for the rest of the year, we are reaffirming our fiscal year 2022 guidance across all of our metrics. We expect revenue to be a range of $4.1 to $4.3 billion based on our unchanged global market assumptions. Additionally, our expectations for adjusted EBITDA margin remains between 11.5 to 12.5%. We continue to plan for pricing actions to help mitigate steel, freight, and labor cost pressures. We expect these recoveries to be more fully realized as we progress through the year. Adjusted diluted earnings per share from continuing operations remain in a range of $3.25 to $3.75. And finally, our free cash flow guidance is also unchanged with a projected range of $175 to $200 million. Our first quarter results provide a great foundation for a successful final year of M2022. We remain focused on executing this plan while simultaneously gearing up for M2025. As we approach the start of this new plan, we are forging a path with the coming electrification of the commercial vehicle industry. The road ahead is blue. Now we will take your questions.
spk00: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Sharif El Sabha from Bank of America. Your line is now open.
spk06: Hi. Good morning, guys.
spk02: Good morning. Good morning, Sharif.
spk06: So first off, congratulations. A great quarter. On the commercial truck margins, you know, the first quarter saw some headwinds from steel. looking at similar incrementals, it would suggest steel is around the $10 million to $11 million headwind to EBITDA. Is that correct? And then how would you see the cadence of those headwinds playing out quarter to quarter throughout the year?
spk05: Yeah, thanks, Sri. Yeah, for the entire quarter, steel was actually about a $24 million net headwind for us, with the vast majority of that close to $20 million really affecting the commercial truck segment. And as we look forward, we think steel will continue to be a headwind for the rest of this year, but the next big step of that probably will be in the second quarter. And then as we look forward for the second half, we do believe, based off the trend line we're seeing in steel prices, that we'll start seeing the impact really start to decline as we get into the second half.
spk06: Makes sense. And then last quarter, you mentioned it was a very difficult quarter with the sporadic shutdowns from semis and limited visibility, and you expected that to normalize in the first quarter. So have you seen sort of a normalization of those lingering shortages, and do you have better visibility based on OEMs setting their line rates?
spk02: Yes, Sharif, I'll take that one. For sure, I mean, based on, I think, where we're seeing demand, the supply chain has improved from Q4 to Q1. But to your point, it's not resolved. And I would say certainly as we see from Q1 to Q2, we do see more stabilization. And it's probably too early to declare a victory, and you do see, you know, over time this continuing to improve. But at this point, we certainly do see an improvement both from a supply chain standpoint and let's call it more from our customers. You know, customers getting far more comfortable with their ability to get chips or understand their chip supply and also forecast better. As you can also see with PACCAR's announcement and taking the number of offline trucks, they're obviously starting to get more chips in the system. So we do see that improving, but again, probably too early to declare a victory.
spk06: Understood. And just one final one. With the PACCAR partnership expansion you announced last evening, How long is that multi-year? I know it's a multi-year. Are you disclosing how long that relationship lasts? And then with regards to the integration and software aspect of that relationship, how sticky do you see that being longer term as EV adoption expands and the partnership evolves?
spk02: Well, Sharif, thanks. That's a great question that I'd love to talk to. So, In terms of the relationship that we announced, it's through 2025. But just to put it in perspective, across the two platforms on the day cab and the waste trucks, we're releasing six platforms. And to just put it in perspective, that's about somewhere between 1,500 to 1,800 components across the power electronics, so the PCAS, the battery management system, as well as the e-powertrain. So in total, you know, between the two teams, we brought 10,000 parts to production in a period of 18 to 24 months. And it's, you know, PACCAR saw how, you know, complex that process was and obviously was an integral part of working with us. And that integration ties software between, obviously, the PCAS, the battery system, the powertrain, but also their truck and all the validation that's gone through that. And we put this into production in December. So certainly they've seen the value that we've brought to the marketplace with them and provided as an extension. And it's truly a validation of the value of the Meritor proposition. So we're very proud of it.
spk06: Thanks. I'll pass it along. Thanks, Ray.
spk00: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Our next question comes from the line of Joe Spack from RBC Capital Markets. Your line is now open.
spk08: Thanks. I guess my first question is really sort of bigger picture here. If we go back to your you know, Capital Markets Day, you definitely made a point of talking about additional system design on electrification, including more software features. And I think you again highlighted that today on the full system design slide. I guess what I'm curious about is um you know how much you're going to need to spend to hire the right people and how um and your ability to attract those those those individuals because you know clearly you know there's um i think there's a limited set of people with the with the with the skill set and you're competing against, in some cases, your customers, in some cases, other end markets like electrification, et cetera, and in some cases, just for maybe even other industries. So maybe you could just talk a little bit about that and sort of how you see the cost related to that over the coming years and also your ability to get the right people you need to to execute on that plan.
spk02: Well, I think probably a good perspective to start on this, Joe, is is probably off our slide five. And if you look at the fact that we have eight production contracts, half of them coming from the medium duty space and half of them coming from the heavy space, it probably is a good starting point that the customers certainly believe that we have the right building blocks in place. So then going to that slide that, you know, the following slide on slide six that walks through what did we do across both those spaces. So let me take a minute and walk you through on the full system. So on the full system, as we did in the capital market space, we talked meeting, we talked across the three segments that we're approaching this. So when we think about heavy, which is core to Meritor, we invested in Transpower. We acquired it. and we used it as the building block to not only give us the access to test our product, but also work with customers such as PACCAR to drive that system and bring it to production. And for us to have been able to do that, the number of folks that we have already put in place in Escondido as well as in Detroit seems to have certainly supported that and is certainly working for us. So on that side, I believe that we have the right building block to approach that. On the transit space and the medium-duty space, if you notice, we made announcements with BAE to help us on the transit space, and we made announcements with Sea Electric to help us with the full system as we focused more on the AE powertrain. So that's how we focused on how we want to approach the full system capability, as well as working with our customers, some of which obviously have that system. And on the e-powertrain, we certainly believe, again, that we have the right building blocks more because of the winds across all of them. We've announced 14 winds on this side. On our motors and inverters, we work with Danfoss, which we believe is a strong partner who obviously has scales on motors. And then we are putting inverter capability internally as well as working with external parties. And, again, as this evolves, we will continue to look at M&A, but at this point, based on the validation that we're getting from the customers, we believe we have the right building blocks.
spk08: Okay. But I guess just, you know, maybe in building those building blocks or in retaining some of the talent for those building blocks, like is that proving to be, you know, uh, costly or, or how do you think about that sort of on a, on a, on a go forward basis? Because especially as you sort of try to get more into some of the software, it seems like, um, you know, that there, there could be sort of an incremental cost to your, to your, to your business. And I'm not saying there's not a return on that, but like, it seems like the cost has to come before the return.
spk02: And maybe I'll split that up in two parts, Joe, I'll answer the question on, in terms of, you know, finding the talent and retaining the talent. And maybe Carl can pick up what's the cost of it. But in terms of certainly finding the talent and returning the talent, part of it is being in Detroit. We certainly have been successful in finding that talent. Our approach with how we acquired Transpower certainly gave us a baseline of folks, and so we were able to build off that. So to this point, we don't seem to have struggled with finding people. In fact, we continue to add and grow in this area. And, you know, talking to my CTO, he certainly doesn't seem to be having a struggle just this yet. But in terms of costs,
spk05: Joe, as I mentioned in the strategy day, if I look forward from an R&D perspective, we are looking at increasing that quite substantially, probably close to 30% from what our current run rate has been. But I think the other planning assumption and how we're running the companies, we also are looking at pivoting some of our expense and costs that we support the traditional business into what we're doing on electrification. So I think it's all embedded in our planning assumptions as we look to drive to M2025. So you're absolutely right. You'll see that cost increase as relates to all the efforts we're doing there, but we're also doing a lot where we'll be reducing some of the costs on our traditional products as well.
spk08: Okay, thanks for that. And then just more near-term, I guess, can you sort of update us on steel costs and recoveries for the balance of the area? We've obviously seen at least spot steel sort of come off the highs here, but I know there can be sort of lags in both directions in terms of how close to your business. So how are you sort of thinking about steel costs and recoveries for the balance of the year? I know you didn't sort of change your guidance, but it seems like, you know, at least spot steel has sort of maybe moved versus prior.
spk05: It has. So I think from a forecast perspective, you know, we were planning, you know, this originally to have steel decline throughout the year, right, when we last spoke in November. I would say that, you know, where I see spot prices today, they are coming in a little bit lower than what we originally were planning for. But from a lag perspective, obviously steel is still a significant headwind for us this quarter, as I referenced earlier. We expect that also to happen in the second quarter, and then you'll start seeing that kind of normalize as we kind of get into the second half of our fiscal year.
spk08: To be, like, more neutral in the back half, or can it be like a year-over-year positive by the back half?
spk05: It could turn into a year-over-year positive, depending on where, you know, the spot prices kind of come to. And it does get – there is that lag effect, as you referenced before, depending on, you know, most of our contracts, somewhere it's three to six months, so it depends. But, yes, that would be our expectation at this point.
spk07: Okay.
spk08: Thank you.
spk05: Thanks, Joe.
spk00: Thank you. Our next question comes from the line of Bruce Chan from Stiefel. Your line is now open.
spk03: Hey, gents. Good morning there, and congrats on the results. Don't really want to be a wet blanket here, but wondering if you can maybe just give us some brief commentary on order cancellations. I'm sure that's not really in the picture today, but maybe you can just remind us of what kinds of deposits or contract penalties, if any, there are for cancellations. And, you know, how do you couch the risk of cancellations to earnings and margins when you think about the sensitivities that you've built into that M2025 plan?
spk02: So I think, you know, obviously maybe you're referring back to about November or December when we saw a little bit of a spike, let's call it, to 6% on cancellations on Class 8. But honestly, you know, when I look at it, Bruce, the demand is incredibly strong out there. I mean, we got 260,000 trucks in the backlog, which is almost a year. And we sit here and we look at this current market and you wonder about the challenges. But if I go back to 2018, which was preparing for the second highest market we'd ever seen in 2019, you still had regions that were going the wrong way. So we had India going the wrong way. We saw South America kind of still coming out of the recession. But at this point, when you look at 2021, you got India bouncing back from their weakest. If I go back to South America, they're running at 150,000 trucks up from 109 in that 2019, 2018, 2019 timeframe. In North America, if you look at between ACT and FTR, We're somewhere between that 285 to 290, the midpoint being 290. Our forecast is 280. And you've got yet another almost 12 months in backlog. So we see enormous demand. And I would say that the silver lining is once we figure out how to resolve some of the supply chain constraints, I do see more of a demand story. I think some of the elements of the cancellations was, frankly, you know, OEs re-slotting going forward as well as fleets just, you know, adjusting their order board because they just can't get anything in the next three to six months.
spk03: Okay, got it. That's very helpful. And obviously, the portfolio, as we get later into the plan, is looking a little bit different. It's a little bit more diversified. So maybe towards that end, and I'm not sure if I missed this earlier in your commentary, but maybe you can give some commentary on the EV revenue backlog. I think that's something that you also mentioned during the Capital Markets Day. Is that trending any differently as we sit here in February? I know it's only been a few months.
spk02: Well, I'll start off. I think we had talked about $500 million or a half a billion dollars in backlog right through to, let's call it, the capital markets day. I would say that, obviously, from what we see in forecasts, that now we're significantly heading north of that. But what we did was we switched from talking about backlogs to now driving defined revenue within the years so that, you know, just to give a better perspective of how Meritor approaches things, And so, you know, that's the one where, you know, in my prepared remarks, I talked about revenue that we planned for 2022 actually being up 30%, and our target for 2025 is $280 million, which we're, you know, as we see where the backlog is sitting, we're pretty confident we're certainly seeing a path to hit that plus thumb. As you know, we approach this pretty conservatively as Meritor.
spk03: Okay, great. That's super helpful. Thank you. You're welcome.
spk00: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Our next question comes from the line of Brian Johnson from Barclays. Your line is now open.
spk07: Yes, thank you. I want to talk a little bit more about the electrification going blue angle. You know, the first question is, can you give us any sense of the win rates on the 14XE and Paxil You know, second would be where different OEMs are on insourcing. Obviously, the German truck companies, and Daimler in particular, tended to do more both engine and axle work in-house. That's question number two. And then question number three is, you know, a pushback we get from investors is, yes, you're making progress, but what about Cummins, Eden, and Allison? They're well entrenched with the same OEMs that you serve, aren't they going to wake up one day and flex their muscle in this segment, and does that worry you as Meritor Management?
spk02: So, good morning, Brian. Love to take that question. So, I'm going to break it into three sections. I think the first part, you know, really in terms of the 14XE and the success rate on the 14XE. So, again, going back to that slide five, you know, all of that is or with the 14 XE with the exception of the MAN announcement, the Volkswagen announcement that we have. That's working off what we call an echo axle that's designed to work with a remote mount system, but with the future being on a medium-duty 12 XE. But everything that we have announced on that page is, or let's call it the 14 XE, that we're working on are all working off the 14XE. And we're super proud of that because it really shows that I think, you know, whether folks are building ground up, which are, you know, let's call it the new entrants such as Lion or Volta that have an option of building, you know, designing whatever technology they want, or the folks that are, let's call it the traditional OEs, whether it's Daimler or whether it's PACCAR, or whether it's AutoCar, they've picked the 14XE. So that's, I think, the first comment. The second question, in terms of vertical integration, I believe that there's so much opportunity here and that there's naturally going to be more competition. We're going to see more suppliers, more OEMs entering this space. But frankly, we face that today. I mean, if you think about Daimler, in North America, they still buy... 50% of their Class 8 axles from us, even though they're vertically integrated. But I see the opportunity for us to grow in this space primarily because of three reasons. The first one is, if you notice, half the wins are in the medium-duty space. We only have 15% share there. So this is pure growth from that segment as every entry that we make there. the content is three to four times more content. So with that, I mean, if you think about our axles volume and if you think about this transitioning, we're getting so much more in revenue and content as we transition here. And finally, in concept of vertical integration, I think, you know, the OEs, whether it's Daimler or as you defined it, you know, let's call it the European OEs, they certainly see value here. And with the announcement that we made both at the strategy day or today with Daimler. They're working with us on the Thomas Bell school bus, which is an exclusive agreement, and it's something that they certainly have the capability on their own, and they certainly picked us. So we're pretty confident that, you know, customers over time will see value. And in any case, across those three reasons, we see a path to continue to grow.
spk07: Okay. And, you know, any indication that the other, we know data strategy pretty well, but the other powertrain players in the North American truck space, whether you even see them in these RFP situations?
spk02: We do. As I mentioned, I think, you know, there are more competitors. But, you know, frankly, I think I look at it from what's our strength that we bring to the marketplaces. And it is really the fact that, you know, just put it in perspective, Brian, we have, you know, around the world, we're the number one commercial axle provider in North America. If you think about the fact that we have a scale of 70%, 7 out of 10 that run on our product, which if you put it in perspective is 2,000, about 1,500 to 2,000 axles. So the e-powertrains built off that scale. And frankly, we've been designing efficiency into axles for over a century. So we believe that capability will help us. Now, in terms of some of the other competitors you mentioned, I believe the technology is moving into our space. So whether it's the engine or the transmission, that technology is moving into the axle. And who better understands that for the last 100 years but us? So I think that's why we believe we have the strength here, and we certainly see that validated in terms of the customers. The customers are being methodical. They are testing, which we obviously expect them to do. They're testing many products. Obviously, there is value in some of the things that our competitors are doing, but we believe the market is so big and there's enormous opportunity here that the basket is great for all of us.
spk07: Okay, thank you, and look forward to discussing this further in Florida in a couple weeks.
spk02: Absolutely. Look forward to it, too. Thanks, Brian.
spk00: Thank you. Our next question comes from the line of Ryan Brickman from J.P. Morgan. Your line is now open.
spk01: Hi, good morning. This is Rajat Gupta for Ryan. I just had one question on incremental margins. You talked about being able to offset some of the commodities and freight pressures through price. Just curious in terms of wage inflation, it was managed pretty well in the first quarter, but on a go-forward basis, given where we are with wage inflation, do you see any change in view to your incremental margins on a go-forward basis? How do you manage that or flex that in the future? That's the only question. Thanks.
spk05: Okay, sure. Yeah, we are definitely seeing wage inflation. Primarily it's a U.S. story for us. It's obviously something that's embedded in our current forecast. And so obviously we are finding other ways to offset that as well as we think about what it means for the rest of the year. So no change in margin. Obviously we kept everything unchanged from our guide that we had back in November. So I think it's part of part of it's internal, continuing to drive internal efficiency, as well as discussions that we're having with our customers as it relates to pricing.
spk01: Understood. So going forward and beyond the current year, if this inflation does persist, do you feel like you can continue to manage that through other areas of maybe cost reductions or pricing?
spk05: Yeah, that is the plan. I think, you know, I think in addition to kind of our normal approach and strategy, I think you're going to see us, you know, obviously look to automate even further and many and most of our facilities as well as to provide other offsets for us.
spk01: Great. Thanks for the call and good luck.
spk05: Thank you.
spk00: Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Todd Sherillo for closing remarks.
spk04: Thank you for joining our call today. If you have any questions please feel free to reach out to me directly. Thank you and have a great day.
spk00: This concludes today's conference call. Thank you for participating. You may now disconnect.
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