Ladies and gentlemen, welcome to the Second Quarter 2020 Badger Meter Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. It is now my pleasure to turn the conference over to your speaker today, Karen Bauer, Vice President of Investor Relations, Strategy and Treasurer. Please go ahead.

Good morning, and welcome to the Badger Meter second quarter 2020 earnings conference call. I hope you are all healthy and staying safe. We certainly appreciate you joining our call today. On the call with me are Ken Bockhorst, Chairman, President, and Chief Executive Officer; and Bob Wrocklage, Chief Financial Officer. The earnings release and related slide presentation are available on our website. Quickly, I'll cover the Safe Harbor, reminding you that any forward-looking statements made during this call are subject to various risks and uncertainties, the most important of which are outlined in our press release and SEC filings. On today's call, we will refer to certain non-GAAP financial metrics. Our press release and slides provide a reconciliation of the GAAP to non-GAAP financial metrics used. With that, I'll turn the call over to Ken.

Thanks, Karen, and thank you for joining our second quarter earnings call. Let me start by expressing my sincere appreciation to our global team for their extraordinary commitment during this unprecedented time. We've made every effort to keep our employees and other stakeholders safe as we've navigated the COVID-19 pandemic, and I'm very proud of the collective role our team members played in supporting our customers in the critical water industry. We continue to follow all health and safety key measures according to health organization recommendations and local government regulations. At our sites, key actions have been taken to include steps to ensure employees are practicing social distancing, onsite temperature monitoring, use of face coverings, enhanced cleaning and sanitation efforts, and staggered production schedules. All of our manufacturing and distribution locations are operational. The majority of our non-production employees continue to work from home. As you read in this morning's release, our financial results reflect the resiliency of our critical and essential product lines. The potential for order delays and operations and supply chain disruptions that I mentioned during last quarter's earnings call gradually diminished throughout the quarter. We remain encouraged by the backlog and funnel of project opportunities. Our balance sheet is in excellent shape to weather whatever lies ahead, recognizing conditions and potential business impacts are continuously evolving. Bob will walk you through the details of the quarter, and after that, I'll come back and talk further about the market outlook and what we're hearing from customers in the current environment.

Thanks, Ken, and good morning, everyone. I want to begin by stating it is incredibly difficult to quantify the specific impact of COVID-19 on our financial results in the quarter. Clearly, it was far reaching in terms of customer order patterns, supply chain logistics and capacity interruptions and ultimately costs, including the various implemented cost savings actions. So similar to the release, my comments will not include that breakdown or level of granularity. If you turn to Slide 4, you can see that total sales for the second quarter were $91.1 million compared to $103.5 million in the same period last year, a decrease of 12%. Given our sales concentration in the U.S. market, it is not surprising that the month of April marked the low point for us in terms of both orders and sales, as the vast majority of States were under government lockdown restrictions. Customers were definitely taking a pause in determining the impacts to their operations, how to operate remotely, how to continue with projects, and how long the restrictions would last. Municipal water demand began to improve to become less worse, as the lockdowns began to be lifted in mid-May and into June. In municipal water, overall sales decreased 9% with April representing the largest year-over-year decline, the sequential improvement off of that bottom to a more stabilized level as the quarter progressed. I would not characterize it as back to normal, but definitely off of the April bottom with relative consistency. In addition, backlog grew as orders exceeded sales in the quarter due to a number of factors. These included manufacturing disruptions from stay-at-home orders in the U.S. and Mexico, higher rates of intermittent employee absenteeism, and early supply chain challenges, all of which combined to limit output at certain of our manufacturing facilities. Additionally, the sequential demand ramp impacted order timing and our ability to convert orders into sales late in the quarter. On a positive note, revenue mix trends toward adoption of smart metering solutions, including BEACON service revenue along with ultrasonic meter penetration continued. In contrast, flow instrumentation sales declined 22% year-over-year, with April again representing the most difficult demand level. As expected, demand trends improved from the April low, but at a very modest pace reflective of the significantly challenged industrial markets served, and our continuing view of this product line being lower for longer compared to the more resilient municipal water trend. Operating profit as a percent of sales was 13.9%, a 60 basis point decline from the prior year 14.5%. As we discussed on our last call in mid-April, we enacted a number of temporary cost containment measures to mitigate the impact of the rapid sales decline to both profitability and cash flows. These included reductions in discretionary spending, the hiring freeze, reduced work hour furloughs, and executive salary reductions among others. While the reduced work hour and salary reductions were initially targeted for five weeks, we did extend those reductions for an additional four weeks through mid-June. The combined actions helped to contain the decremental operating margin impact from the rapid sales decline to approximately 20% in the quarter. Gross margin for the quarter was 39.3%, up 40 basis points year-over-year, despite the sales decline, and once again in the upper half of what we would call our normalized range of 36% to 40%. The implemented cost actions helped to offset lower production volumes. Additionally, positive sales mix, notably the overall trends of ultrasonic meter adoption and higher BEACON service revenues along with lower commodity costs benefited gross margins in the quarter. SEA expenses for the second quarter were $23.2 million, down $2 million year-over-year, resulting from the net benefit of the implemented cost actions, partially offset by higher investments in certain business optimization initiatives. The income tax provision in the second quarter of 2020 was 24.3%, slightly higher than the prior year's 23.8% rate. In summary, EPS was $0.33 in the second quarter of 2020, a decline of 15% from the prior year's earnings per share of $0.39. Working capital as a percent of sales was 22.9%, in line with the prior sequential quarter. Free cash flow of $20.1 million was just $700,000 below the prior year comparable quarter, despite lower earnings and was due primarily to the working capital differential between corners and deferral of our quarterly federal income tax payment under the CARES Act. We’ve continued to monitor customer cash receipts and supplier payment terms, and we have not experienced any significant collectability or other issues. We ended the quarter with approximately $85 million of cash on the balance sheet, and a net cash position of approximately $81 million. In addition, we have an untapped credit facility of $125 million. We believe we have ample liquidity to fund operations, our dividend and other capital allocation priorities under a wide range of potential economic scenarios. With that, I'll turn the call back over to Ken.

Thanks, Bob. We've participated in a number of virtual investor conferences during the quarter, so I thought I'd start by addressing the common questions and themes from those discussions. Let's start with the current environment. As we discussed in the release and in our earlier remarks, we do believe we are entering the new normal after the shock in April and early May, when most of the U.S. was shut down. While some of the municipal water activity never stopped, there was definitely a break as our customers like all of us had to figure out how to navigate the COVID-19 pandemic and the rapid pace of changing government rules and requirements globally. Once that settled a bit and gradual reopening occurred, we started to see activity improve off the April bottom. I can't say we're completely back to normal, but activity has steadied on a relative basis. Customers are requesting in-person meetings and site visits, bid tenders and awards are proceeding. Some projects have accelerated, despite others being temporarily deferred. We have not experienced any outright cancellations. As it relates to supply chain and logistics, we commented last quarter that it could potentially create operating challenges. While there was and still is a significant amount of active management, it was not a major factor. As Bob noted, we did however experience manufacturing disruptions from the stay-at-home orders in the U.S., various government mandates in Mexico related to vulnerable populations and intermittent employee absenteeism, as well as early logistics and supply chain glitches, all of which contributed to slightly lower than expected output at our manufacturing facilities. These impacts continued to lessen in severity, and we expect them to be behind us shortly, barring any new currently unforeseen developments. We've previously outlined a series of temporary cost reductions that were instituted in mid-April, and as Bob mentioned, we did extend the reduced work hour and salary reduction measures into mid-June. Not surprisingly, we continue to manage during discretionary spending action, given continuing market uncertainty. While painful in the short-term, we believe these steps were both necessary and adequate to responsibly manage the cost structure of the company during the worst of the impact. We obviously continued to stay close to the rapidly changing implications of the pandemic, and are prepared to take additional actions, if they become warranted. Turning to the outlook, while the economic environment appears more stable, there is certain market data and sentiment that points to the potential for a protracted recovery from COVID-19. This continued uncertainty could weigh on customer demand and municipal budgets moving forward. We cannot confidently predict the degree or duration of impact, so therefore, we continue to focus on the items we can control. We are actively investing in and launching new products, an example of which is our recently released E-Series ultrasonic plus meter with integrated control valve, which allows water utilities to remotely restrict the water flow. With multiple valve positions, this safe, humane and efficient solution to controlling water service and residential applications improves utility efficiency, expenses and safety. It addresses one of the two longer-term trends we believe could accelerate as a result of COVID-19, the other being accelerated AMI adoption. Our operations teams are adapting manufacturing processes to increase output while optimizing safety. We do expect to recover the majority of the backlog built in the second quarter during the third quarter. We are managing cash flow and working capital with $85 million of cash on the balance sheet, and $125 million of revolving credit available to fund capital allocation priorities, including the dividend. Finally, we continue to pursue strategic tuck-in M&A that will expand our offerings and attractive adjacencies, serving our critical and essential markets. In summary, I am pleased with the resilience of our business model and our financial performance in relation to the economic severity of this unprecedented crisis. Our organization is prepared and well-positioned to successfully manage the uncertain days ahead, remaining nimble and reactive to our market trends. With that operator, please open the line for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Nathan Jones from Stifel. Your line is open.

Good morning, everyone.

Hi, Nathan.

I'm going to start with a few questions on the margin side and expense side. With the volume decline and the friction in the system from COVID-19, the 20% decremental margin, so obviously, really good performance. There's a few things I can say that maybe your headwinds going forward that I'd like to get your thoughts on. So you had temporary cost actions in the quarter. I know some of those things have expired, and you put people back to full work weeks, so that's going to bring some expense back. Copper prices have risen pretty steeply over the last few months. Maybe you could talk about are you able to offset some of those things with price? Are there other cost actions that you're taking to offset some of the expense that's coming back in? And if there's anything you can help us with in terms of what kinds of decrementals we should be expecting going forward?

Yes. Sure, Nathan. I'll go first, and I'm sure Bob will have some things to add on this. But first and foremost, the actions that we took in the second quarter when this came on really quickly, we felt and still feel we're adequate for managing through the second quarter, and we're very pleased with the financial results. Additionally, other cost actions that we've taken, we feel are adequate for how we're viewing the near-term going through the rest of the year. We have certainly put more actions in place. On the flow side, where we expect to be lower for longer, we did go forward with what I would call small surgical cost actions there to better align with that business, but we feel generally good there. On the copper front, I think it's important to remember that as our business continues to evolve and some of the mix changes that I think most on the call are aware of, not everything we're selling anymore is so tied to copper as it used to be. So for example, there's no copper in radios, there's no copper in BEACON revenues. So we're not as dependent on it, so perhaps, maybe we didn't benefit from it as much as you thought in the past. And perhaps, it isn't going to bother us as much in the future. And from a pricing point of view, the markets are still pretty rational with what we're seeing on price. So, we're not seeing any significant issues there, and we feel like our pricing abilities remain as strong as they've been in the past to recover costs. Bob, go ahead.

Yes. I think the other thing we've seen at least in the second quarter and as we look forward is that, while there's obviously conscious cost actions that were taken, there are actually other elements, what I'll call natural cost savings that come from the environment we're in, whether that be travel and entertainment or convention expenses that are considerably lower. As we continue in this remote work arrangement and corporate travel, I think takes on a completely different form in this environment, while the conscious actions have been ceased, at least, as it relates to work hours and salary reductions. Those natural cost savings continue to accrue as we move forward, at least in some reduced capacity. As it relates to the specific question on incremental or decremental margins, I don't think anything's changed from what we've said for the last six to eight quarters, in terms of those incremental decrementals being in that 25% range. We just happen to be able to do a little bit better than that in this environment, which is obviously the mixed dynamic and margin helped us achieve that. And there are going to be outliers, obviously quarter-to-quarter, but that's the trend over time.

I think that's very helpful. Thanks. And then maybe just give us a little more detail on the cadence as you went through the quarter. I mean, I know you said April was the worst month, things got sequentially better. Is there any color you can give us on kind of where June was, and what the exit rate was as we're heading into the second quarter in each of the businesses?

Yes. So, without being too specific, if you think through how our revenue lays out, utility being such a large part, and then 98% of our utility business being U.S. focused, with 95% of all Americans on stay-at-home orders, I think it's pretty fair to just say April was really a struggle, and there was a significant step change in about mid-May, which corresponded, as you might expect, with when some of the stay-at-home orders started to expire. So the first six weeks were very depressed. The second six weeks were certainly much more encouraging.

Okay. Thanks very much. I'll pass it on.

And our next question comes from the line of Andrew Buscaglia from Berenberg. Your line is open.

Thanks for taking my question. So you guys cited in the press release some economic data and sentiment that gives you a little bit of a caution ahead, also what municipal budgets will look like. And there's kind of some discussion out there about potential lag we might be seeing here in the water industry. Can you comment on some of the data that you're looking at in the sentiment that you allude to -- I imagine, it's customer conversations and kind of tell us what your customers are thinking going forward over the next six months?

Yes. So let's start with that. With the direct customer conversations that we have, as I'm sure you can imagine, we are in constant communication with our customers about what they're seeing, not just in the short-term, but how they're thinking about budgets next year and where this is all going to fit. We're still receiving relatively positive data, where people are saying we're still going forward with our projects, anything that we're doing is more deferrals; they're not cancellations. It's encouraging that customers are talking about multi-year projects. These aren't just the turn in Q3, booking turn in Q3, Q4; people are still talking about long-term projects. We had long-term project awards in the quarter. So, from a direct talking to customers point of view, that hasn't changed since we did the virtual investor conferences or from our last call. That still feels positive. I think the reason we strike the cautious tone is right, because COVID-19 still has certainly some horns to it and causing challenges. It's unprecedented what we're seeing in terms of budgets. So, striking a cautious tone, but it's really not different than the tone that we had in Q1. I think if you reread our press release, there we also talked about COVID impact from some of the budget concerns. So, we haven't really changed more negative, and the things that we're hearing are the same. What I feel great about is, and I think we showed this in Q2, is that our organization is executing very well, and we're positioned to be able to handle whatever environment comes. We're focused on controlling what we can. And I feel great about how we did that.

In these discussions, do they bring up the upcoming U.S. election as potentially changing how they're thinking things or any hesitation ahead of that? Have you looked at that data in the past that would give you pause there?

No, we're not expecting any political issues in terms of the election having an impact on demand or not.

Okay. Just one last one. Your free cash flow has been again -- it's again, really strong. The question is, is there -- can you keep this -- you're doing free cash flow of close to $20 million a quarter, for the last six or eight quarters now. So, is there anything that would change near-term that you can't continue to deliver on that? Or do you still have more to go on the working capital management?

Yes, I think we've continued to say that year-to-date I think we're at 228% free cash flow conversion to earnings. That's elevated. To think that we're going to sustain that moving forward, I don't think is realistic. Particularly when you think about the third quarter, obviously a part of the free cash flow in the second quarter was deferral of the federal income tax installment, so that'll double up in Q3. So I would expect Q3 free cash flow conversion to be lower than what we've experienced. But I think over time, the objective is continue to convert free cash flow in excess of earnings. I still think there's runway, but yes, I think we're going to sustain at 228%, where we're at now is just not realistic.

Alright. Thank you guys.

And our next question comes from the line of Rick Eastman from Baird. Your line is open.

Yes. Good morning.

Hi, Rick.

Good morning, Rick.

Hey, just a couple of things. One is, if you play around with maybe the revenue cadence by month in the second quarter. If I were to take the third month of the quarter, say June, and I'd take my kind of revenue estimate for June, assuming you're worse, better, better type of scenario for the second quarter. If I were to take that and just forecast it into the third quarter, and quite frankly, kind of play with the seasonality, would it be kind of a reasonable assumption that unless things deteriorate from here, that the second half of the year on the utility business could be up a few percentage points? And if it's really a cadence issue and then a seasonality issue, but that's maybe how the math you suggest the back-half of the year could play out unless we have a total COVID setback? Is that reasonable?

Well, I think the biggest challenge, and you pointed that out at the end there is, so barring COVID setback, right? So take that out of the equation. I think the business as you've always known can tend to be lumpy here and there. We've set it on the virtual investor calls that we feel like heading into the second half we're back into a new normal and operating at a condition that we feel pretty comfortable with. So, I think normally how you think about a third quarter is relatively fair.

Okay. In the utility business, could you just maybe suggest how or let us know how the commercial piece of the meter business did? Was commercial better? And what I'm kind of getting at is, are you seeing any sluggishness in the commercial construction market itself impact the commercial utility meter business? Or is the weakness there more of this access issue in COVID?

I think it's more of the access issue in COVID, because we saw it at roughly the same rate as residential. I think while we're on that point, one of the things that we are excited about in that space is we continue to see adoption of our new 3 and 4-inch ultrasonic meter. So still seeing good conversion there, but in terms of revenue down at the same rate.

Okay, fair enough. And then just one last question. Again, given some of the furlough, the salary, cost savings that you generated in the second quarter, you did say you extended that, that expired. When I look at the SEA expenses going forward into the third quarter, presumably it'll stay tight the control, but I would think from a dollar perspective. Bob, could you give us some feel for -- is it a $1.5 million, is a $2 million bucks into the third quarter, where your SEA steps up given some of those very temporary cost actions that kind of match the top line in the second quarter, third quarter slightly be better? But could you just give us some sense of in absolute dollars, maybe what the magnitude of that increase in SEA would be?

Yes. So the intent wasn't to size that, not surprisingly. I will tell you that, you're exactly right, that the temporary work reduction and the salary reduction did end in June. So that obviously comes back in. In the third quarter, similar to what I said earlier, I would anticipate some of those discretionary spend items that did accrue to savings year-over-year in Q2 would continue in Q3. I guess the way I would answer the question without sizing it, Rick, is that, I would expect our SEA, even with the return to those normal conditions, to aggregate to a similar level of history as a percent of sales, as we move forward. And I think to your earlier question and the earlier questions on what does the second half look like, obviously, we think it's getting back to a more normal. That's why we did face the cost reductions the way that we did. First to right size the cost structure to the immediate onset impact and then to get back to a more normal. Obviously, to the extent that doesn't play out or to the extent these reopening setbacks continue and have a demand continuation, we'll act accordingly. It's the same comment we made in the release is to remain nimble and reactive to market trends, and we'll do the same thing on the cost side. But I wouldn't model it any differently than sort of historic SEA levels.

I would just -- more normal in terms of water. I want to reiterate, while it's certainly lower for longer. But when we're talking about more normal run-rate, so it's on the municipal water side.

Yes. And just to piggyback on to that for a second. I mean, just the last question I had was, when you look at the industrial coal business, can you give us the sense of what the impact has been to the gross profit margin line from the industrial coal business? I know, on a trailing basis, typically when industrial coal is growing, it is accretive to gross profit margin that may or may not be the case now with the utility mix. But how is that impacting? Over the first six months of the year has that been a drag on the gross profit margin line?

I would think of despite historic results, if you look over the last couple of years, the gross margin performance of the two lines of business are actually very similar. So they're right on top of each other quite frankly. And so there isn't an outsized gross margin impact as one grows or one declines. I would think of them as being more on par.

Okay. Great. Thank you, and nice work on the tactical side here with that second quarter revenue number.

A lot of dog paddling under the surface.

Yes, absolutely.

Our next question comes from the line of Ryan Connors with Boenning & Scattergood. Your line is open.

Hey, Ryan.

Thanks for taking my questions this morning.

Sure.

So, I want to actually revisit the couple questions back. On the political side, not so much from an election standpoint. But obviously, there's no debate that some of these State and locals are under some pressure. But a lot of talk about potential bail out for State and local governments, whether that comes in the form of a direct injection or an infrastructure bill. When you look at the big picture for your business heading into next year, how do you handicap that? First of all, I know you don't have a better crystal ball than anyone else. But how do you handicap that? And how important do you think that is to this continued trajectory back to normalcy getting some kind of federal support?

Well. So let's start with the infrastructure piece that you brought up first. So in general, you would always believe that an infrastructure bill in the water space would be helpful. And it is, if that infrastructure bill is clear and passed quickly and the funds are generally made available. If it drags out in some long political debates where Democrats and Republicans fight about it for a long time, people might wait given the current conditions before moving forward with spends, because they think they might get free money. So infrastructure bill is helpful, if it's executed clearly and quickly. The second piece about the infrastructure bill that we think we're uniquely positioned to take advantage of is typically an infrastructure bill emphasizes shovel ready projects. So when you think about our cellular deployed AMI infrastructure free system, nothing is more shovel ready than just buying a radio and hooking it up to a meter or replacing the meter to collect the non-revenue water, which is obviously critical to municipalities, plus putting the meter on it which then makes them more efficient and safer because they don't have to go out and read meters. So, when we talk about potential long-term tailwinds, we think of this business. We've run it as for the long-term over the five-year period. We think those are positive tailwinds for us. What we really don't want to see is a long protracted government fight over potential infrastructure.

Okay. And so in terms of -- I mean, what is your preference? Is your preference to have something funded federally or bottoms up funding from the local level? In other words, you would think that if utilities are having to pay for everything themselves, that means they're having to bill for it, which means they're having to meter for it, whereas if they're getting some kind of top-down federal or even state injection, that's less -- it maybe takes away some of the cash register type dynamic. I mean, can you just comment on your preference for government versus bottoms-up organic funding?

Well, so my first reaction to that is any funding is good. I think any way that a municipality utility funds itself is great. And if there's government injection, that's fine too. I do believe in the fundamental nature of the cash register, the capturing the non-revenue water, the efficiencies, the conservation aspects of it. So, even if it comes from a federal point of view, I don't believe that would block out the meter from still being a very extremely essential part of the distribution system.

Got it. Okay. And then my last one just is more kind of big picture in nature. I mean, you mentioned Ken, the business historically can be lumpy at times. Obviously, it's not unreasonable to think that we may have a downside lump out there somewhere in the next 12, 18 months. But yes, the company has always had a very pretty standard view on not providing guidance and so forth. I mean, with the multiple still pretty high, heading into that kind of uncertainty given historical lumpiness, is there any thought you have on how you might think about things like either interim updates in between the quarters or different ways of kind of providing updates to make sure that those lumps if and when they come aren't a total shock?

Yes. So, it's interesting. We have never provided guidance because I don't think it -- because of that uneven or lumpy nature of the business. We don't always feel like that is in the best interest of investors. I think your point makes sense, but if we hadn't done it in the past, it doesn't quite feel like the right time to do it now when things are most uncertain.

Okay. That's fair. Thanks a lot for taking my questions. Have a good one.

Yes, thanks.

Thank you.

Our next question comes from the line of Tate Sullivan from Maxim Group. Your line is open.

Hi, thank you. Thanks. Good morning. I think I missed a comment. Did you talk about recovering some of the backlog lost in 2Q and 3Q? What was that in reference?

Yes. So, some of the inefficiencies caused by particularly the shutdowns in the U.S. and Mexico, and with how I expressed the way the orders came in, second half of the quarter loaded versus the first half of the quarter, we do expect to recover that in Q3.

Okay. That's understood. And then BEACON, I think you did mention BEACON a couple of times during your remarks. But can you just update, I mean, I think it was at the end of last year, you talked about a five-year target? And can you give an update of BEACON as a percent of revenue or any other BEACON updates that you can provide?

Yes, this is something that we're extremely pleased with. If you just go back a few years ago, it was less than 1% of our revenue. Fast forward to 2019, it was 4%. We have seen significant growth in the first half of this year. So, our target is still -- my target is -- I would like it to be a minimum of 10% within five years. So, we're at 4% and trending up feeling good about it.

And then what -- can you just remind us what are the drivers of the BEACON sales? Is it usually new ultrasonic replacement meters, or what else now the expanded requests from clients?

Well, so it's AMI projects, large, medium, and small. So, it's when someone buys a meter or they already have a meter and they buy one of our ORION cellular radios. Every time they buy an ORION cellular radio, it comes with a software as a service subscription.

So it's all tied to the end point, Tate.

Okay. Thank you. And then, I don't think you commented, and I apologize if you did. You mentioned flow instrumentation, flow lower for longer. But can you comment on international? Do you see international sales weakness in line with what you saw in flow, if you can comment please?

Well, maybe we break it down into markets a little bit. So, the two markets that have been the most resilient that we are also most excited about for the long-term have been wastewater and HVAC. So whether it's global or domestic, those two have responded better than say the oil and gas or automotive or other pieces. Globally, obviously the way COVID worked, Asia has opened up sooner, Europe back on its feet, kind of or at least more so than here now. So, I mean, we've seen that same wave, but again, we will certainly point out that that will be lower for longer, and that's why we aligned our cost structure. They are on a more longer-term focus rather than how we did on utility.

The other way to say it, in the quarter the rate of decline in sales for international flow instrumentation was a little less worse than it was domestically. Still blending to that down 22%, but international was down a little bit less.

Okay. Thank you for that. Have a good rest of the day.

Alright. Thanks, Tate.

We have no further questions in queue. I'll turn the call back over to the presenters for closing remarks.

Great. Well, thanks everyone for joining our call today. For your planning purposes, our third quarter call is tentatively scheduled for Friday, October 16th. I'll be around all day to take any question, follow-up questions you might have. Have a great day. Thanks.

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