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spk03: Greetings and welcome to the Thurmond Group Holdings second quarter fiscal 2023 earnings conference call. At this time, all participants are in the listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to our host, Yvonne Salem, Vice President and FP&A, and investor relations. Thank you. You may begin.
spk00: Thank you, Diego. Good morning, and thank you for joining today's fiscal 2023 second quarter conference call. Earlier this morning, we issued an earnings press release, which has been filed with the SEC on form 8K, and it's also available on the investor relations section of our website. Additionally, the slides for this conference call can be found in our IR website under news and events, IR calendar earnings conference call Q2 2023. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures in the tables at the end of the earnings press release. These non-GAAP measures should be considered in addition to and not as a substitute for measures of financial performance reported in accordance with GAAP. I'd like to remind you that during this call, we might make certain forward-looking statements regarding our company. Please refer to our annual report and most recent quarterly report filed with the SEC for more information regarding our forward-looking statements, including the risks and uncertainties that could impact our future results. Our actual results might differ materially from those contemplated by these forward-looking statements. and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments, or otherwise, except as might be required by law. Now, I would like to introduce Bruce Thames, our President and Chief Executive Officer, for his opening remarks.
spk02: Well, thank you, Yvonne. And good morning, everyone, and thank you for joining us today. I wanted to begin today by setting the stage with a quick overview of Thermon. As a 68-year-old company, we've been tested and proven resilient across many economic cycles. We're a world leader in providing safe, reliable, and innovative mission-critical industrial process heating solutions to customers in 85 countries from facilities on four continents. Our over 1,300 employees have an industry-leading safety record and are dedicated to creating value for our customers by executing our strategic long-term plan, which I will discuss in more detail in the next few slides. I'd also like to thank and recognize our Canadian team for being an Excellence Awardee as one of Canada's safest employers in 2022. Thank you all for your commitment to safety. Turning now to slide four, you can see our strategic pillars. In order to create value for our shareholders over the long term, we're focused on three key areas. First, profitably growing our installed base. Second, diversification, digitization, and developing markets. And third, disciplined capital allocation. We benefit from a very large global installed base which provides significant opportunity to capture recurring revenues while driving growth across our traditional end market verticals. We are driving additional growth through diversification into attractive adjacencies such as commercial, rail and transit, food and beverage, and other end markets. Our solutions also help enable the long-term transition towards sustainable energy sources. We're expanding our solutions in the area of digitization with products that utilize the industrial Internet of Things and support customer demand for productivity, reliability, efficiency, and safety enhancements. We're also seeing growth in the developing markets driven by a rising middle class, and localization has become increasingly important particularly with ongoing supply chain challenges to meet price point, lead time, and content requirements for our customers. Finally, we're committed to disciplined capital allocation with inorganic growth through bolt-on acquisitions and debt pay down to maintain balance sheet strength as our current priorities. Turning now to slide five, we are increasingly focused on enabling the transition to sustainable energy and decarbonization. As the world moved towards carbon neutrality in 2050, we are seeing a wide range of opportunities emerge. You can see here that our portfolio offers a wide variety of products and services that are critical for the transition to renewable energy sources, as well as for decarbonization efforts. Our heating applications support renewable energy sources such as wind farms, solar plants, and battery power. Our products and services also contribute to the process of decarbonization through electrification, carbon capture and storage, and recycling, amongst others. Our technology and controls in communication, high temperature, and harsh conditions make Thermon uniquely qualified for many of these applications. This year, we've secured over $16 million in orders in these applications with a growing pipeline of over 150 opportunities. Our team of technical experts are dedicated to delivering solutions that help our customers achieve their sustainability and decarbonization objectives. Moving now to slide six on our end markets in the external environment. I would like to again emphasize the progress that we've made against our end market diversification strategy. At the end of fiscal year 22, approximately 60% of our revenue came from non-oil and gas end markets compared to roughly 50% in fiscal year 21. In fiscal year 23, we're currently seeing a strong recovery in the oil and gas sector outpacing other end markets that is largely focused upon maintenance, combined with efforts to increase throughput and reliability on the installed base. However, we are also seeing continued success in our efforts to diversify and will diligently work toward our long-term goal of targeting 65 to 70 percent non-oil and gas revenue by the end of our fiscal year 2026. We continue to see strength across the majority of our other end markets, We believe that the strong maintenance environment in chemicals and petrochemicals combined with customer demand for end-use plastics enables those markets to grow over the longer term. The headwinds from margin pressures and increased European energy prices are partially offset by the cheaper and abundant feedstock here in the U.S. In the power sector, we expect growth going forward to be driven by the transition to electric power and renewable energy, along with the rise of the middle class in Asia. Several of the verticals that make up the strategic adjacencies category continue to experience growth, including renewables such as hydrogen, biofuels, and nuclear power. As mentioned earlier, we have secured over $16 million in orders this fiscal year. Overall, while we're not immune to the impacts from ongoing macroeconomic turbulence, we believe the breadth of our solutions combined with our diversification across a wide variety of both geographic and end markets, continues to serve us well. Turning now to our results for the second quarter of fiscal year 2023 on slide seven. Thermon had another quarter of outperformance driven by our team's outstanding execution, despite ongoing macroeconomic challenges, including supply chain disruptions, and softening of revenue and incoming orders in Europe. We achieved record second quarter adjusted earnings per share due to strong performance in North America, which benefited from the ongoing recovery in the oil and gas industry. We've also been able to offset increased material and transportation costs with strong price realizations while diligently managing controllable costs and continuing to make strategic investments to grow our business over the longer term. For example, the integration of our power blanket acquisition announced during the first quarter is on track and produced over $3 million of revenue during the second quarter. Revenue of $100.6 million was up 24% year-over-year. Adjusted EBITDA nearly doubled year-over-year to $22 million with a margin of 21.8% and increase of 770 basis points. Free cash flow of negative 1.3 million for the quarter was impacted by short-term investments we made in inventory to address global supply chain constraints. Nonetheless, adjusted EPS was a record 38 cents a share, an increase of more than 200% from the prior year period. While global macroeconomic turbulence is ongoing, We're raising revenue and EPS guidance for the full fiscal year, given our robust performance in the first half and a continued strong backlog in the business. On slide eight, you can see that our orders and backlog continue to remain strong. Year-over-year orders were up 3%, excluding a one-time labor contract, while bookings grew 18% on a trailing 12-month basis. Book-to-bill was 0.95 times, Our backlog of $160.8 million was up 3% year-over-year, excluding FX impacts. With that, I'd like to now turn the call over to Kevin for a more in-depth review of our financial results. Kevin?
spk04: Thank you, Bruce. Turning to revenue on page 9. First, I would note that we are very pleased with our overall performance this quarter as the Global Thermon team continued to drive profitable growth while meeting strong customer demands. Revenue in the second quarter was $101 million, up 24% versus prior year, and exceeding internal expectations. Sales growth in the Western Hemisphere was a result of continued deferred maintenance activity in upstream and downstream oil and gas and chemical and markets, and investments driven by sustained commodity prices and global demand. While maintenance spending in the oil and gas markets is growing considerably, we are still focused on executing against our long-term goal of market diversification. By the end of fiscal 26, we expect that at least 65% of total revenues will come from diversified markets other than oil and gas. We continue to see progress in those markets with rail and transit up 67% and food and beverage up 122% year over year. FX negatively impacted revenue by $3 million due to the stronger U.S. dollar, which we expect to continue to impact our business in the quarters ahead. Reported results also include the full quarter of Power Blanket financials worth $3 million in revenue. Thermon's revenue growth, excluding acquisitions and on a constant currency basis, was 24% year over year. We are pleased that our integration of the Power Blanket acquisition is progressing smoothly, with commercial integration activities completed on plan and in advance of the winter heating season. Point-in-time revenues grew 24% in the quarter and 29% in the trailing 12 months, which underscores the strength in maintenance spending across our global installed base. As a reminder, point-in-time revenues are aligned with our product or material sales, while overtime revenues, which were up 24% in the quarter and 34% on a TTM basis, are representative of project work where we have engineering and installation services. Overtime revenue growth was driven by increased activity in smaller design and supply projects, particularly in downstream oil and chemical end markets. Overtime or project revenues represented 38% of total revenue this quarter versus point in time or material revenues of 62%. Now for gross margins and SG&A on page 10. Reported gross margins in the quarter are 46% versus a reported 39% last year, with a few items we'll call out to provide context on the improved performance. In the second quarter of fiscal 23, volume contributed an increase of 630 basis points, driven by both the strong point-in-time sales in the Western Hemisphere and the mix in overtime sales towards the design and supply projects mentioned earlier. We continue to be able to manage the price-cost equation with favorable pricing impacting this quarter of 200 basis points, offset by global supply chain headwinds of 400 basis points. Operational efficiencies contribute an additional 110 basis points in the quarter. Please note that the trailing 12-month and prior year quarter data includes the impact of the large one-time labor contract we discussed on our previous calls and for which onsite work was completed in May of 2022. As a quick reminder, we deduct depreciation from the SEC-reported selling, general, and administrative expenses to arrive at the SG&A on the slide. In the quarter, SG&A was 25.2 million, or 25 percent of revenue, versus the prior year of 20.4 million, or 25 percent of revenue. On a trailing 12-month basis, SG&A was almost 90 million, or 23 percent of revenue, up from 77 million and compared to 25 percent of revenue in the prior year. demonstrating our ability to increase efficiency as we grow the business. We remain diligently focused on managing the controllable spend while continuing strategic investments in our business to drive profitable growth over the longer term, and our aggregate SG&A dollars will increase during the balance of fiscal 23 because of those factors. We've continued to proactively manage spending to ensure we are directing capital towards the highest returning investments that will help us to scale and diversify the business. With ongoing macroeconomic challenges, most notably in Europe, we want to ensure we are positioning the business for success and attractive profitability through the cycle. Moving on to page 11 for adjusted EBITDA and earnings per share. The combination of higher volumes, carefully managing the price-cost equation in a volatile environment, and continuing our pursuit of operational excellence has yielded very positive bottom-line results this quarter. This is the strength of the Thermon business model and representative of the execution we expect from the team as we deliver on our strategic objectives. Adjusted EBITDA was 21.9 million, or 22% of sales in the quarter. Adjusted EBITDA has almost doubled, up over 11 million from the prior year, along with margin expansion of 770 basis points. On a trailing 12-month basis, adjusted EBITDA is now up to $78 million, along with margins of 19.4% and expansion of 500 basis points. Power Blanket's business is quite seasonal and is not expected to meaningfully contribute to adjusted EBITDA growth until the heating season begins in third quarter. Given the strong performance in the first half of the year, we are now projecting a 300 to 400 basis point expansion in adjusted EBITDA margins from fiscal 22's 16.4%. Gap EPS in the second quarter was $0.33 per share, a significant increase compared to $0.01 per share in the prior year, and adjusted EPS was $0.38 per share versus last year's $0.12 per share. For the trailing 12-month period, GAAP EPS was $1.11, and adjusted EPS was $1.31. On page 12, we'll cover the updated balance sheet. We ended the quarter with cash at $32 million. We paid down $4.6 million of total debt during the quarter, resulting in a net debt to adjusted EBITDA ratio of 1.4 times, an improvement of 0.9 times versus the prior year. We will continue to look at additional M&A opportunities as an attractive capital allocation option, which we believe will play a key role as we continue our strategy of diversifying the business over the next few years. Working capital results were mixed as we invested in our inventory, particularly raw materials, to buffer disruptions we've seen in the global supply chain, secure supply of key raw materials, and prepare for the seasonality of our higher volume winter season. We anticipated our working capital would increase due to the robust demand and ship volumes in the quarter, and we expect inventory turns, in particular, to normalize as supply chain challenges subside and volumes increase in the second half of the year. Historically, Thermon has been able to generate positive cash flow through the cycle, and as a reminder, we had generated positive free cash flow in the previous 15 consecutive quarters. On the right side of the page, we had negative quarterly cash flow due to the strategic investments in inventory with free cash flow of negative 1.3 million in the quarter. CapEx was 2 million and predominantly focused on maintenance. We expect to deploy over 10 million in CapEx this year as we continue to invest in our strategic initiatives and conclude some maintenance activities. This quarter built upon last quarter's positive performance with significant margin expansion. While the outlook in Europe continues to be an area of concern, and supply chains are nowhere near the pre-COVID levels of cost or lead times, the Thermon team continues to execute against its short and long-term plans, and we see opportunity ahead to continue to drive strong results and create value for shareholders. Many thanks to the Thermon team for the great work and commitment that enables us to deliver for our customers, shareholders, and our communities. And with that, I'll ask Bruce to provide an update on the fiscal year 26 plan.
spk02: Kevin, thank you. I'd like you to now turn to slide 13 and our long-term revenue goals. Our goals for fiscal year 2026 remain unchanged, and we're very pleased to be progressing well toward these objectives. This chart shows the impact of COVID-19 on the business in fiscal year 21, which is the base year of our five-year strategic plan. Subsequently, we saw growth in fiscal year 22 that was driven by the early stages of recovery in our end markets and successful execution of our strategic initiatives. With our strong performance in the first half of this fiscal year, we've revised our fiscal year 23 revenue estimate to $405 million to $420 million, which will put Thermon in line with our peak revenues established in fiscal year 19 and we believe puts us on track to achieve our fiscal year 26 growth objectives. We will continue to drive execution of organic growth, strategic initiatives, and acquisitions across the entire enterprise to achieve our goals. We'll continue to place a high priority on diversifying our end market exposure, specifically targeting industrial markets outside of the oil and gas sectors to represent 65 to 70% of revenues by the end of our fiscal year 26. Last but not least, we expect operational excellence combined with leverage on our fixed costs to yield EBITDA margins in the low to mid 20% range over that same period. Turning now to slide 14 and our updated guidance for the fiscal year 2023. We are very pleased with Thermon's strong performance in the first half of this fiscal year. In spite of the number of areas of uncertainty in the current macro environment, the positive momentum we are seeing in quotations, bookings, and backlog give us confidence to raise our fiscal year 23 full-year revenue and EPS guidance. We're raising fiscal year 23 revenue to $405 million to $420 million, which represents roughly 16% growth over the prior year at the midpoint of the range. GAAP EPS guidance for the full year is being raised to $1.08 to $1.17 a share, an increase of roughly 90% at the midpoint over the prior year. We're also raising adjusted EPS guidance to $1.30 to $1.39 a share for the full year, an increase of 62% over our fiscal year 22 on top of the 150 percent growth delivered in the prior fiscal year. Finally, wrapping up on slide 15. As we've detailed today, Thermon is a world leader in providing safe, reliable, and innovative mission-critical industrial process heating solutions. This is a high-value niche market with high barriers to entry, which is a significant competitive advantage. Our outstanding global team, our diversification across a variety of end markets, our large installed base, our aftermarket business that generates recurring revenue, and our low capital intensity combine to create a business that is resilient across economic cycles. We believe that Thermon is truly well positioned to deliver profitable growth through the remainder of 23 and beyond, and to create long-term value for our shareholders. I'd like to now turn the call over to our moderator, Diego, for the Q&A portion of this call. Diego?
spk03: Thank you. And at this time, we'll be conducting our question and answer session. If you would like to ask a question, 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 would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Brian Drab with William Blair. Please state your question.
spk05: Hi. Good morning, Bruce. Hi, Kevin.
spk02: Good morning.
spk05: Good morning, Brian. Can we go back to slide 5 just for a second? you know, talk about these projects and the pipeline. First of all, can you just clarify, did you say, how much revenue did you say that you generated and over what time period related to these categories?
spk02: I had noted the bookings in slide five, so I don't have a revenue number for this quarter, but I can say that...
spk05: If you could just repeat whatever you did.
spk02: Yeah, it was 16 million in bookings year-to-date. I can tell you that's roughly equivalent to what we booked in all of last fiscal year. So we are seeing real growth here in these areas, and I think this slide is great and illustrative of all of the opportunities that we have to play in this emerging economy and really the shift in our energy markets and the march toward decarbonization in 2050.
spk05: Just to clarify, you're saying 60 or 1616?
spk02: 1616, which is roughly 8% of bookings year-to-date are tied to these areas. The other point is we've got over 150 opportunities in our pipeline now and growing.
spk05: Right, and I wanted to ask about that. It sounds like a very substantial pipeline. A couple questions on that. Are some of those projects larger projects, and then do you expect to see the same competitors when you're bidding on these projects? And I'm just thinking that typically some of the larger projects globally, you know, Thermon and Invent, and that's pretty much it. And is that going to be the same kind of situation here, or are there other competitors that you'll bump into in this space?
spk02: Well, you know, it really depends on the opportunity. Certainly when we think about certain product lines, you know, Invent is our largest competitor in our heat tracing business. But if you think about the breadth of our portfolio, whether that be process heating, immersion heating, environmental, tubing bundles, all of those things, our competitors do differ. And as you can see here, there's a pretty wide range of products and applications across all of these. So the competitive landscape will differ depending upon the opportunity.
spk04: And Brian, I would add, when you think about the size of the opportunities here, it runs the gamut. But I think I would tell you it skews towards the smaller side of things. And, you know, it's not your kind of large, big heat tracing installs. I would kind of skew you more towards maybe the process heating engineered type systems from a size standpoint. So hopefully that helps give you a little bit of context there.
spk05: Yeah, absolutely. And I guess one last question on the slide. Do you find that, you know, one of the things that kind of – I think reveals itself in this slide is that you have a broad portfolio of solutions for these different categories. And is that a competitive advantage, you know, having the broad portfolio to offer for these different verticals?
spk02: Absolutely. It gives you an ability to really bring the right solution to solve the customer's problem. It gives you different touch points within the You know, you're a customer in the organization, so without question, it really gives us a real competitive advantage as we pursue and develop these types of opportunities.
spk05: Okay, great. Yeah, it's going to be interesting to see this develop. Just shifting to margins, correct me if I wrote it down wrong, but I think you said expectation for 300 to 400 basis points increase in EBITDA margin this year is If I got that right, can you talk about what you expect for the balance of the year in terms of gross margin? And, you know, for that 300 to 400, how much comes from gross margin versus OPEX leverage?
spk04: Yeah, Brian, this is Kevin. I think when we think gross margin specifically for the back half, you know, you've got the advantage of the heating season, which generally skews a little more towards the material side of things, which is higher margins. I think when we look at the backlog, margins and backlog for the projects, I think are consistent with what we've seen in the first half of the year. So that's what's part of driving the uptick here that you're seeing year over year. And then we certainly don't have the headwind on the big contract that we had in backlog last year. So I think you put all that together, it feels like we're going to have gross margins in the range of that kind of historical, you know, call it 45% where we've seen in the past, but You know, there's obviously puts and takes with the mix, realization with projects. You know, do you get it in the year versus just out? So I think we feel pretty good about delivering that gross margin consistent with where we've seen it in the first half of the year and the back half.
spk05: Okay. The 45.7 that you did here in the second quarter is a very strong gross margin average. Do you expect to come off of that level somewhat? That's what I was wondering is that now we're going into heating season, you just put up 45.7. Could it go up from there possibly?
spk04: Yeah. Keep in mind Q1 was a little bit lower. So when we kind of mix in the year to date, gross margins, you're not near that 46% level. On a TTM basis, gross margins would be about 44% if we exclude that labor project as well. So I think the team has certainly been able to demonstrate that we can get into those mid-40s. But certainly, as you know, the mix within the mix is a factor, and certainly the timing around that can skew the margins a little bit in the back half. So I think we feel pretty good about that mid-40s range for gross margins in the second half.
spk05: So can you give that number again just to make sure I got it? You said excluding the large project, gross margin was 44% over what period?
spk04: That's a TTM number, Brian. So that's 44.1% on a trailing 12 basis. TTM, got it.
spk05: Okay. And then can I just ask one more? Can you elaborate a little bit further on Europe? Because this is obviously – I think the first question I get on Thermon from investors at the moment, you know, going into the winter here and the gas situation, and can you just talk about the different dynamics there and how that can potentially be a positive for Thermon, or is it all risk, or how do you look at that?
spk02: Yeah, Brian, well, first of all, you know, I think we kind of, let's look at short-term and then more mid-term opportunities. Really, Europe's dependence upon Russia for oil and gas, there's a lot of work that has to be done to really shift their sources of supply, and that creates opportunities for thermon, and we are seeing that particularly and kind of natural gas midstream, and it's manifesting itself in, you know, LNG liquefaction, you know, as well as LNG tankers, things like that. So those are all positives. We are seeing just the higher energy costs in Europe just having a pretty negative impact just on the, you know, the operations there. on the continent, so that's a headwind. That's all baked in and factored into the back half of our year forecast, so we feel like we've accounted for that risk in the forecast that's been provided. But certainly, we also see those higher energy costs in Europe, particularly are making other, and I'm speaking more specifically around petrochemicals, and petrochemicals, they're making other lower energy cost geographies more competitive. The U.S. is actually benefiting from that, so there's some offset, and it's part of the reason we believe we're seeing such strength in the U.S. kind of chemicals and petrochemicals sector, despite what they've seen is some margin pressure globally for various reasons. You know, there's overs and unders, and there's certainly some positives in the mid to longer term, but we see just kind of near-term weakness with, you know, the higher energy costs and, you know, just the operations there on the European continent.
spk05: Got it. All very helpful. Thank you very much.
spk03: Thank you. And our next question comes from John Bratz with Kansas City Capital. Please go ahead.
spk01: Good morning, everyone.
spk02: Good morning.
spk01: Morning, John. Bruce, in your comments, you talked about how strong this year the oil and gas market has been and a lot of deferred maintenance. What kind of legs does that have? By definition, it's deferred. They're going to get caught up. How long does that last?
spk02: Yeah, so, you know, John, as I kind of look at this, I'm kind of looking at a few different things. First and foremost, we saw just maintenance spending being deferred for a protracted period. And if we kind of go back to COVID-19, it's the first really economic downturn in which we've seen where we could not access customer facilities. So maintenance activities virtually stopped. And then before that, we actually had a period really since 2014 where and where a lot of the maintenance and underlying spending was, in my opinion, was fairly depressed. Then we also have a tighter supply environment here, which I think independent of what we could see in a potential recession, I think we're still going to see tight supply. There's not been any, when we look at the recovery, it's not in CapEx. It's really in the maintenance spending, and it's really investments in kind of de-bottlenecking and improving productivity and reliability. I think these are fairly sustainable over a significant period of time, you know, at least another 12 to potentially 24 months just in kind of catching up with a lot of this and also trying to get the most, you know, out of the assets that are in place because we're seeing capital allocation strategies really shift from, you know, big CapEx deployment by a lot of the oil and gas companies to more return to shareholders. And so a lot of what we're seeing here is investment in the current asset base to optimize throughput and ensure they're reliable going forward. Okay. All right. Thank you.
spk01: Bruce, the Inflation Reduction Act and the infrastructure bill, we keep getting indications that there's going to be a tick-up in spending in calendar 2023. We begin to see some benefits. Two questions. Number one, are you seeing or do you envision some benefit from maybe this spending trend? that maybe is coming online in 2023. And then secondly, you, like everybody else, have supply chain challenges. And this is a broad question. If you have supply chain challenges now, and we're going to see increased spending from the Inflation Reduction Act and infrastructure, will these supply chain problems persist well into 2023? How do you look at that?
spk02: Well, that's a great question. First, let's start with just the opportunities. Yes, we do believe that, you know, some of these spending bills are going to create opportunities for our business. I mean, I can look at power, particularly rail and transit, and those areas certainly we see some benefits. And, you know, those businesses are growing rapidly. you know, year over year as we look. And those are after we've had significant growth in the prior year. So, you know, power year-to-date is up 24% after 200% growth last year, and rail and transit is up almost 40%. So we see that kind of continued strength. As far as the supply chain challenges and disruptions, we are seeing an improved in a number of areas but there are still kind of a couple of acute areas where we're still having to manage through. I guess the unpredictable part here is where supply chains are linked back to China and we have the zero tolerance policies in place. You know, those shutdowns that occur really negatively impact those factories. They're hard to predict. So I think just from a supply chain challenges, it's harder to sit here and prognosticate about what might happen. I think we've made a lot of adjustments in our supply chain to have redundancy and resiliency, and all of that is having a favorable impact. We did increase our inventory levels in certain areas where we see some some challenges, so that helps us ensure security of supply for our customers. But it's a little harder or murkier to really predict, you know, how much of this will abate, you know, over the next, say, two to four quarters. Yeah, okay.
spk01: All right, understand. Thank you very much.
spk02: All right, thank you.
spk03: Thank you. There are no further questions at this time. I'll hand the floor back over to Bruce Thames for closing remarks.
spk02: All right, Diego, thank you. And thank you all for joining us on the call today. We appreciate your investment and interest in Thermon. And have a good day. Thank you. Thank you. This concludes today's conference on Parties May Disconnect. Have a great day.
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