Worthington Enterprises, Inc.

Good morning and welcome to the Worthington Industries fourth quarter fiscal 2022 earnings conference call. All participants will be able to listen only until the question and answer session of the call. This conference is being recorded at the request of Worthington Industries. If anyone objects, you may disconnect at this time. I'd like to introduce Marcus Rogi, treasurer and investor relations officer. Mr. Rogi, you may begin.

Thank you, Chris. Good morning, everyone, and welcome to Worthington Industries' fourth quarter fiscal 2022 earnings call. On our call today, we have Andy Rose, Worthington's President and Chief Executive Officer, and Joe Hayek, Worthington's Chief Financial Officer. Before we get started, I'd like to remind everyone that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risk and uncertainties that could cause actual results to differ from those suggested. We issued our earnings release yesterday after the market closed. Please refer to it for more detail on those factors that could cause actual results to differ materially. Today's call is being recorded, and a replay will be made available later on our WorthingtonIndustries.com website. At this point, I will turn the call over to Joe for a discussion of the financial results.

Thank you, Marcus, and good morning, everyone. We finished our fiscal year with a very strong quarter, reporting Q4 earnings of $1.61 a share versus $2.15 in the prior year. Excluding a small one-time restructuring gain, we generated $1.58 per share in the current quarter compared to $2.33 in Q4 of last year after adjusting for restructuring and a small gain on our investment in Nikola. In Q4, we had inventory holding losses estimated to be 42 million or 64 cents per share compared to inventory holding gains of 51 million or 71 cents per share in the prior year. An unfavorable swing, $93 million, which is $1.35 per share. Consolidated net sales in the quarter of 1.5 billion were up significantly compared to 978 million in Q4 of last year. Increase in sales is primarily due to higher steel prices, the inclusion of our most recent acquisition, and higher average selling prices in both consumer and building products. Gross profit for the quarter decreased to $168 million from $226 million in the prior year. Gross margin was 11% versus 23%, primarily due to the swing from inventory holding gains to losses, which were partially offset by margin increases in both consumer and building products. Adjusted EBITDA in Q4 was $139 million, down from $186 million in Q4 of last year, and our adjusted EBITDA for fiscal 2022 was a record $615 million. I'm going to spend a few minutes on each of the businesses. to higher average selling prices and the inclusion of both Temple Steel and Shiloh's blank light business in our results. Total ship tons were down 5% compared to last year's fourth quarter, despite those recent acquisitions, which contributed 97,000 tons during the quarter. Excluding the impact of the acquisitions, total ship tons were down 14% year-over-year, driven primarily by lower tooling volumes with mills. Direct tons in Q4 were actually up slightly year-over-year, excluding acquisition and the facility we closed in Decatur, Alabama, and were 56% in the mix compared to 48% in the prior year quarter. With the exception of the lower tolling volumes in our JVs, demand in the quarter was solid. We saw year-over-year increases in key end markets, including automotive, construction, and agriculture. While automotive volume increased from the prior year quarter, it remains below seasonal norms due to production constraints at the OEMs, and it continues to be difficult to predict when this dynamic will improve. Overall, demand across our end markets is steady, and our teams are doing a very good job winning new business as they manage through volatile steel pricing markets and challenging supply chains. In Q4, steel generated adjusted EBIT of $17 million compared to $98 million in the quarter last year. A large year-over-year decrease was driven by the inventory holding losses I mentioned earlier, estimated to be $42 million in this quarter compared to gains of $51 million last year, an unfavorable swing of $93 million. Steel prices continue to be volatile and were rising at the beginning of the quarter, but then resumed falling later in the quarter. Based on current steel pricing, we do believe that we will see modest inventory holding gains in Q1. In consumer products, net sales in Q4 were $186 million, up 18% from $157 million in the prior year quarter. Increase was driven by higher average selling prices, partially offset by an unfavorable shift in product mix. EBIT for the consumer business was a record $29 million, and EBIT margin was 15.8% in Q4, compared to $19 million and 12.1% last year. Our consumer team continues to do a people and equipment to increase production capacity to better serve our customers. In addition, we remain focused on growing the business through innovation, new product development, and acquisitions. Earlier this month, we announced the acquisition of Level 5 Tools, a market leader, offering a complete lineup of drywall tools for both pros and do-it-yourselfers. We welcome the Level 5 team to Worthington. We're very excited about this acquisition as it expands our existing portfolio of specialty tools and provides us entry into attractive new end markets. Building products generated net sales of $173 million in Q4, up 40% from $124 million in the prior year. Increase was driven by higher average selling prices and improved product mix. Building products delivered record EBIT for the quarter of $64 million, and EBIT margin was 36.8%, up from $41 million and 33.3% in Q4 of last year. Our wholly-owned building products business continued to show solid growth, more than doubling their EBIT from the prior year and on a sequential basis due to continued strong demand and favorable mix, combined with higher average selling presence. At our JVs, Tartetric's results improved by 15 million year-over-year, while Wave was down 4 million year-over-year. Wave's customers have been impacted by construction delays caused by labor availability and stretched supply chains for HVAC and other equipment, but there are early indications that those issues are improving. Tartetric and Wave contributed equity earnings of $23 million and $21 million, respectively. The building products team continues to do an excellent job serving their customers in the near term as they invest in new product development and production capacity. The business has a healthy order book, and we are optimistic about demand going forward. In sustainable energy solutions, net sales in Q4 of $41 million were in line with the prior year despite significantly lower volumes due to the divestiture at the end of Q4 last year of our LPG autogas business in Poland. Excluding the divestiture, net sales were up 20% in Q4 versus last year. The business reported an even loss of $2 million in the quarter compared to a profit of $4 million in the prior year quarter, roughly $800,000 of which was attributable to the divested business. Higher average selling prices were more than offset by mix and the impact of significantly increased input costs. Given the war in Ukraine and its impact on the European economy, input costs, freight costs, Sustainable Energy Solutions is likely to remain challenged in the near term. We are very excited about the long-term growth prospects for this business as we develop and optimize solutions that serve the rapidly expanding global hydrogen ecosystem and adjacent sustainable energy. With respect to cash flows and our balance sheet, cash flow from operations was $165 million in the quarter, and free cash flow was $142 million. We had a strong release of cash from operating working capital, primarily due to lower steel prices and reduced inventories, which added $77 million to cash flow. For the full fiscal year, cash flow from operations was $70 million, and free cash flow was an outflow of $24 million, as operating working capital increased by $258 million during the year, primarily a result of higher steel prices. We expect a substantial portion of that working quarters, assuming steel prices do not increase. During the quarter, we received $23 million in dividends from our unconsolidated JVs, invested $23 million on capital projects, paid $14 million in dividends, and spent $52 million to repurchase a million shares of our common stock. Following the Q4 purchases, we had slightly over 6 million shares remaining under our share repurchase authorization. Looking at our balance sheet and liquidity position, 68 million sequentially. Interest expense of 8 million was up slightly due to higher average debt levels. During the quarter, we established an accounts receivable securitization facility that allows us to borrow up to $175 million at favorable short-term rates, further bolstering the company's already strong liquidity position. We ended Q4 with $34 million in cash and $632 million in availability under our revolving credit facilities We believe we are well positioned heading into the new fiscal year. Yesterday, the board declared a dividend of 31 cents per share for the quarter, which is an 11% increase over last quarter and is payable in September of 2022. This marks the 12th consecutive year we've increased our dividend, and we are very pleased to be able to continue rewarding our shareholders as we deliver strong results.

At this point, I will turn it over to Ian. Thank you, Joe, and good morning, everyone. What an amazing year it has been for our company and our employees. Record earnings per share of $7.30. Record EBITDA of $615 million. General Motors Supplier of the Year. John Deere Supplier Hall of Fame for the second time. Best places to work in Central Ohio 10 years running. All of this in the face of a very tough operating environment filled with supply chain challenges, steel price volatility, and labor availability from lingering COVID challenges. I cannot say enough good things about how our employees have gone above and beyond to take care of each other and deliver for our customers, all while staying focused on implementing our value drivers of transformation, acquisitions, and innovation. We added several new companies to our mix in fiscal 22 with the acquisitions of Shiloh's Blank Light Business and Temple Steel. With these, we have successfully positioned our steel processing segment to capitalize on the rapid growth expected from electric vehicles and the build-out of the electrical grid. We can now offer our broad customer base a full complement of laser welding, light-weighting applications, and electrical steel laminations for electric vehicle motors and transformers. It is not often that you see products in the steel market that are expected to grow at double-digit rates for the foreseeable future. Our consumer products business introduced a number of new products this past year and added the innovative drywall tool brand Level 5 to its growing portfolio of tools. Today, we have 10 unique brands in the tools, outdoor living, and celebration categories, and our pipeline of innovative new products continues to expand. In building products, we are benefiting from our focus on providing solutions that save time and labor for the new construction and renovation markets. In sustainable energy solutions, many of our products already offer cleaner fuel alternatives that can bridge us to a future dominated by wind, solar, hydrogen, and hydroelectric. Overall, we are making strategic investments in propane, hydrogen, electric, and related areas to increase our exposure to markets where our products will play key roles in the energy transition. Our goal is to create sustainable products and business practices that are accretive to margins and free cash flow as these markets accelerate their growth. In-market demand remains strong across most of our products and markets, but operating challenges remain, including labor availability in some cities, continued intermittent supply chain disruptions, transportation shortages, and steel price volatility. Our commercial operations purchasing and supply chain teams have done an excellent job working together this year, overcoming constant curveballs, and deserve much credit for our record success. We continue to be bullish on the future of all of our business segments as we refine and execute more dynamic growth strategies that will continue to leverage innovation, transformation, and M&A. In the near term, higher producer prices and consumer prices combined with higher interest rates presents some risk to what otherwise would be a solid economic backdrop to start fiscal 2023. I am in my 14th year at Worthington Industries, and fiscal 22 is without question the most impressive performance I have been fortunate enough to be a part of. In the face of numerous challenges, our people went above and beyond to deliver for our customers while achieving record financial results. Every business unit is working hard, smart, and performing at very high levels. To all of our stakeholders, congratulations, and thank you for your loyalty. We'll now take questions.

And at this time, if you would like to ask a question, please press star then 1 on your telephone keypad. And we'll pause for just a moment to compile the Q&A roster. Our first question today is from Martin Englert with Seaport Research Partners. Your line is open.

Hi. Good morning, everyone. Morning, Martin. Across the cylinder segments, ASPs improved sequentially, and higher pricing was called out in the prepared remarks as well as the release. To the extent that this was pricing versus mix, can you discuss the typical duration that you price the products? I guess, how often does it typically change here?

Yeah, so, Martin, it's not cylinders anymore, obviously. It's building products and consumer products. But in Q2 and Q3 conversation that the ability and the pricing contracts in those things sometimes lag when you see inflation. we were able to in late Q2 in a couple cases, but largely in Q3, you know, we were able to kind of catch up, if you will, to where our costs were and finally be able to reset some of those contracts. And so in building products, a lot of those are kind of renew and go forward on a more short-term basis, but some of them are also annual. But, again, we don't really think – about it as higher pricing carrying the day. We honestly think about it as the products that we have, which we were able to price more appropriately given our input costs after we got into kind of calendar 2023. But Andy mentioned it. These are products that are that save people time right our foam and adhesive products when you're putting up a roof or or putting down a floor rather than nailing things into the into the ground or into different studs you save a ton of time and uh you know our smart lid technology and building products really saves time for propane distributors and everything else. And so in this market where labor is at a premium, both in availability and in cost, you know, we really think about it as the ROI for those products becomes even more visible for our customers and then the end user customers. And that's driving a lot of what we're seeing.

Thank you for that. That's helpful. Within steel processing, holding losses were $42 million for the quarter. I guess, Tim, you alluded to, I think, a modest positive gain near term, I guess. How would you define modest?

Does it mean significantly less than the losses we had this quarter?

Michael? I guess I interpreted it as you would expect a gain on the current quarter. Did I misinterpret that?

No, sorry. Yes, the size of the gain in this quarter will be – you know, a lower number, obviously, than the size of the loss. But, yeah, you're right. It'll be a modest gain for the quarter. And that's really all the visibility we typically have. At the same time, you know, the bias for steel pricing generally has returned, you know, to being that curve sloping downward, as you know.

Okay. And I guess pulling out the inventory holding gains and losses and looking at steel processing EBITDA per ton, I think was about $73 in the current quarter, which was comparable to first quarter, I believe, X gains and losses. But it's elevated. I guess I kind of think of the through cycle of around $50 a ton. I know you're Mix changed a bit with direct versus tolling, but I'm curious that, you know, $73 per ton underlying, is that something that sustains near-term or was this just a near-term, you know, mix or pricing or something that dissipates?

Yeah, it's a great question, and as you know, there are a lot of puts and takes in there. I think the business excluding FIFO ran at about a 6% EBITDA margin for 2022, and I would say that's historically normal.

Okay, so more so you're thinking on it on the percentage basis, kind of when you're looking at things through cycle. Got it. Yeah, I mean, we – go ahead. Sorry, go ahead.

So I was going to say we do – there are – we have growth on material, we have other things that are happening, and there clearly is going to be some noise if steel prices are very, very volatile. But I think that's the way that we think about it in a normalized environment.

I guess coming back to the dollars per ton, I'm not wrong in thinking, I mean, you're thinking about it on a percentage basis, but I'm not necessarily wrong in thinking about it, that it kind of mean reverts to the through cycle over time, right?

You know, Martin, this is Andy. I would say it's unclear. We've been through kind of an interesting couple of years here with respect to steel availability, steel price volatility. And so a lot of what's happened in the marketplace is I think, you know, people like us and our competitors have tried to recapture some of the costs, increased freight costs, increased labor costs, and I think that's reflected in the higher margins today. Whether that reverts back I think is, you know, a little bit unclear at this point. In many markets that's the case, but there's also been a lot of consolidation in the mill space so i think that is helping support higher prices and higher margins as well so um you know the backdrop right now is is solid and you know we'll see where it goes from here thanks that's uh helpful and if i could one last one here could just provide an update on the temple integration

how that's progressing, and then maybe a brief update on sustainable energy solutions. I know you commented that there's been some headwinds in the market, and that's probably going to remain a challenge. But I guess when we think about, you know, what's the time horizon potentially look like before that would turn positive?

So first question, Temple, the integration has been going very well. We are actually wrapping up. Kind of a revisit of kind of the strategy for that business, not because they didn't have a good strategy. They did. But I would tell you that one of the things that they faced prior to us owning them was, you know, capital constraints. And so. We don't obviously have that. And so that market is growing rapidly. It's growing globally. And so the question that we're trying to answer is, where are we going to invest to get the highest rates of return and be able to serve our customers on a global basis? So I would say we're probably as excited or more excited than we were when we acquired the business. The team is fantastic there. They continue to be very engaged. They've integrated very well into Worthington where it makes sense. You know, we're not, you know, trying to smother them, but we're trying to give them access to our resources where that makes sense, and they've taken advantage of that. So far it's been, you know, a great partnership and integration process, you know, and we look forward to kind of where it goes from here. On sustainable energy solutions, you are correct. That business is European-centric right now. We have made some investments to expand our capabilities in and around the hydrogen space there, but the The core of that business is being impacted by the European economy, the war in Ukraine. And so, short-term, it's faced some headwinds. You know, we still are very optimistic about the long-term prospects of that business. And, you know, we don't like businesses that don't make money. So, we're working hard to try and get it back to profitability, you know, sooner rather than later. But... um you know time will tell exactly how long it is before demand comes back there yeah and i know i know there we have people in europe and we we feel

for them because the situation is what it is. But it's hard to underestimate how disrupted the European economy and European freight and European supply chains and the availability and coordination as you're trying to ship things from various places to and from Europe have been and how disrupted they are. And so some of that will depend on the geopolitical situation, but Andy's right. That's a great business for us longer term. It's going to face some headwinds, certainly for the next couple quarters.

Yeah, the one thing I'll say that is a positive for the products that they make is what's happening with energy in Europe has obviously made them rethink, you know, their supply sources, and they're looking for alternatives and transitioning away from, you know, dependence on Russian oil and natural gas. And so that is actually driving a lot of activity in that business, but it doesn't necessarily mean it shows up, you know, in a quarter.

Yeah, that's more of a longer, medium-longer-term shift, but it's good to see it pivoting the other direction here. So, Thank you for all your time. Congratulations on the results, not only for the quarter, but for the year and navigating a challenging environment. Thank you, Mark.

The next question is from Phil Gibbs with KeyBank Capital Markets. Your line is open. Hey, good morning.

Morning, Phil.

When does the inventory gains and holding losses seasickness, I guess, abate. You had a big loss here. You got a modest gain next quarter. The train roll has rolled down the tracks, down 500 bucks on hot rolled in the last two months. Does that show up in Q2? Is that persistent at Q3? Where do we need to level out, I guess, for this to ease? because you're massive swings within swings, and I think you can join me in saying that you've never seen this before. So we haven't either. We're trying to figure this out.

Well, I mean, it's certainly a good question. I don't have a great answer with a lot of specificity in it. I mean, what you're seeing this quarter is actually what we talked about, a giant swing. The gains next quarter are more kind of an echo, right, from when steel prices post Russia's invasion of Ukraine bounced back up to $1,500. But, you know, then they've kind of resumed their downward bias. And so if you kind of look out into the future, once we get through – um the the curve ultimately flattening there's always a lag effect for our inventory holding gains or losses but the market would would appear right now to be relatively flat if you're just looking at the forward curve he's kind of starting in on august september into into next year whether that holds or not uh remains to be seen but we're clearly doing everything that we can to optimize our inventory positions at all times. But, you know, to a certain extent, the forward curve is going to do what it does without kind of regard for what we think or want.

And just generally on the macro side, on non-residential construction, you've obviously got some some leading indicators or some thoughts on orders at Dietrich and Wave, and that's a mix between new and MRO, and you've got some vision in some of your cylinders portfolio. So what's the latest in terms of the mosaic on the non-residential construction side with the rising rate and softening housing price environments?

Yeah, I mean, it's a little unclear. I think there are obviously some flashing yellow lights there just in terms of construction costs generally, as well as rising interest rates, which will change the economics of some of those projects. I will tell you, you know, we don't have an economics department here at Worthington that sort of does deep dives, but one of our JV partners does, Armstrong, and, you know, their outlook right now is kind of just slightly up year over year. Obviously, that's subject to change as additional economic data points come in, but, you know, there's a lot of puts and takes in commercial construction. It's not just office buildings, and so I think there is demand for other um types of buildings particularly around medical the healthcare field that is offsetting what you know you might expect would be some of the decline so you know we're cautiously optimistic things hold up and then on the capex side you've you've got uh you've got temple i think you're talking about putting in more processing capability there to uh to augment their portfolio

So what are you thinking about in terms of, I know it's a little early, but fiscal, well, I guess it isn't early anymore, fiscal 23 CapEx?

You know, we were right. We were at $94-ish million for the year. We think it'll be up modestly, you know, 10% to 20%, you know, year over year. We do have the inclusion of Temple. We honestly probably would have spent more in 2022, but for supply chain and other delays in being able to complete projects. And so our level of spend, not to a large degree, but on the margins, is going to be subject to availability of products and us being able to get that money deployed quickly. in the way and on the timeline that we want. We've got some really cool growth-oriented projects that we're excited about. And a continuation of the theme, you know, it's not really the cylinders business anymore, right? It's consumer products and building products. But in both of those businesses, trends that you saw beginning with COVID are inherent to any recession that you go into in that You're not spending money on airplanes or on a cruise ship. You're going to do more at home. You might go camping. You're going to work around your house. Then on the building product side, a lot of those products are ultimately labor savings oriented and driven. To Andy's point, we are cautiously optimistic, but feel like if there was a consumer-led recession or something like that that our we won't be immune to that, but that a lot of the places that we play are going to be a bit more insulated than some of the others that are out there.

Well, that makes sense totally. And last one for me is just on the auto side. The semi-constraints have been a big talking point for the last several months and counting. What are your customers telling you now in terms of

any of that uh dawn breaking you know perhaps as the year progresses um or 2023 thanks it's probably more a 2023 phenomenon at this point you you look at inventory on dealer lots days all of those metrics are at historic lows and it doesn't you can still drive past a car dealership and The parking lot's fairly empty, and so things are steady, but things have not begun to hockey stick back. When all of this happens, depending on the economic environment, they'll clearly have some catch-up to fill those channels, but it's very difficult to predict when that will start and how rapid it will be.

Thank you. Sure.

The next question is from John Tumazos with John Tumazos Ferry Independent Research. Your line is open.

Could you tell us a little bit about the drywall tools acquisition, the EBITDA multiple you paid, the synergies it might have? Presumably this goes in the construction segment.

So, sure, John. Level 5 actually goes into construction segment, but it's embedded in our consumer products business. Very excited about that business. Grown from the ground up by the founder and CEO. Real reputation for innovation, for cutting-edge technology, improvement in tools. I don't know how much you know about the drywall business, but there are varying types and steps you go through in drywall, and it requires, for optimal production and productivity, different types of flex points, different angles, and different types of tools. Those guys really cracked the code, have been able to take share everywhere they've gone. We paid a little north of 10 times on the EBITDA side. We are 100% excited about it because of the breadth of our consumer offerings into big box retailers and into the stores where they are. They also sell a bunch direct to consumers, so there's going to be learning both ways. For us, their CEO and team is staying and committed to the business, but we really feel like as a part of our GTI platform in consumer products, we're going to be able to do great things for them from an access perspective and as more people, either do-it-yourselfers or pros, see and understand what those products do. We think they'll be able to take share. And it also gives us entree into an entirely new sub-segment in that specialty tools business and we're excited about what's possible there too.

John, just, you know, this is one of the most exciting things going on at Worthington right now is in our consumer product space. We have developed a very strong capability of taking either under-managed brands and reinvigorating them and then driving them into our broad network of customers, or in this case, taking an emerging brand, which has a lot more penetration before it becomes mature and really helping take the business to the next level. So as we go forward, you're going to see a lot more, hopefully, of these types of either new products introduced from within Worthington or new products that we acquire and really help accelerate their growth. That's a big strategy for us. We've got an excellent team. that is really developing a great capability there. So we're excited about the prospects of this business.

So as we look at – this is in the consumer segment, then, is revenues and EBITDA. As we look to the current year, 23, over $300 million went into working capital last year. Is any of that money going to come out? Or should we expect the working capital dollars, excluding cash and debt, to be about the same as the year end?

So, yeah, John, $258 million went into working capital during 2022. We do expect a fair amount of that to come back to us in the form of cash flow, you know, unless steel prices go up again.

Of course, the cash balances fell and you've got a little bit of short-term debt. Does that mean there's going to be a pause in acquisitions? The dollars were very big last year, $384 million, $130 million in 2021. I guess 2018 was $285 million, but 2017, there weren't any acquisitions. 2019, it was 10. 2020 is 31. I'm just wondering whether we're borrowing or not.

Well, obviously, if you look at our leverage level based on, you know, trailing EBITDA, we're pretty low leverage. I don't know what the exact math is, but 1.2 or 3 times EBITDA. We have a lot of available credit. And, you know, as you were just talking with Joe, I would say we have, you know, a stash of cash in working capital that we expect to get back. So... short of steel prices reversing course and starting to go back up. The other thing I would tell you is I'm not rooting for a recession by any means. But when you see slowdowns in certain markets, you've already seen, obviously, a big blow up in terms of a lot of the the new economy stocks, but you're starting to see valuations come down, I think, in other markets too. And that's when we start to lick our chops a little bit and get excited about, you know, potentially being even more active. I mean, you got to find the right companies, you got to strike the right balance of, you know, price and you need a willing seller. So, but I think for us, We're continuing to be active and look. The last couple of years, it's been tough because valuations got really high for even basic companies. Not only were valuations high, but particularly in some of the markets that we're in, these companies had tripled earnings over three years. When you combine high multiples with earnings that have tripled over three years, you get pretty nervous in a hurry. Some of that's reversing course. Hopefully, there'll be you know, more good businesses out there for us to buy it at reasonable prices. But, you know, we paid 10 times for level five, so we're not afraid to start paying up for really good businesses.

So in two years, you've spent about $570 million in acquisitions. Is there a nervousness that that's a lot of organizational change and it's businesses you've got to manage and Sometimes you learn more after you own them than before. Is there a little bit of caution given how much you've spent, how quickly?

I don't know if it's so much the dollars, John. It's more how many businesses have we bought and how much integration is there. One of the things that has changed for us over the past several years, is the way we're integrating businesses. And the short answer is, in a lot of cases, you know, we used to pursue full integration, which, you know, pick a function, we were integrating it fully into Worthington. We're not doing that necessarily as much anymore. And that's a very conscious decision on our part, partly because we want these businesses to preserve their own growth strategies. And, you know, we don't want to metal, if you will, in terms of their path to success, because they're already good businesses and doing well. But I think also that sometimes when you do full integration, it's You know, you necessarily aren't accomplishing what you're trying to accomplish with the business. So I think it's not quite a concern at this point. But, you know, at some point, if you do too many acquisitions, it can become a burden to people managing them. But we're very cognizant of that. I think that's a lesson learned from kind of our past experiences. wave of m a that we did do too much too fast in too many places and it got away from us and now i think we're much more focused and our process is much tighter thank you thank you again if you would like to ask a question please press star then one on your telephone keypad

and it appears that we have no further questions. I'll turn it over to the presenters for any closing remarks.

All right. Well, congratulations again to all of our stakeholders, and a special thanks to our employees for a fantastic year. Everybody have a great summer, and we'll look forward to talking to you in September.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.