Dycom Industries Inc Q4 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the Dycom Industries Fourth Quarter Fiscal 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Steve Nielsen, President and Chief Executive Officer. Thank you. Please go ahead, sir.

Good morning, everyone. I'd like to thank you for attending this conference call to review our fourth quarter fiscal 2021 results. Going to Slide 2. During this call, we will be referring to a slide presentation, which can be found on our website's Investor Center main page. Relevant slides will be identified by number throughout our presentation. Today, we have on the call Drew DeFerrari, our Chief Financial Officer; and Ryan Urness, our General Counsel. Now, I will turn the call over to Ryan Urness.

Thank you, Steve. The statements made during this call may be forward-looking in nature and are provided pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. Forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections, including those risks described in our annual report on Form 10-K filed March 2, 2020, and our other filings with the U.S. Securities and Exchange Commission. We assume no obligation to update any forward-looking statements. Steve?

Thanks, Ryan. Now moving to Slide 4 and a review of our fourth quarter results. As we review our results, please note that in our comments today, and in the accompanying slides, we reference certain non-GAAP measures. Specifically, in accordance with our 52/53 week calendar, this quarter included a 14th week. All references to organic revenue and organic growth exclude the effect of this additional week. We refer you to the quarterly report section of our website for a reconciliation of these non-GAAP measures to their corresponding GAAP measures. To begin, I want to express my sincere hope that everyone listening to this call, as well as their families, are healthy and safe. We are living in truly unprecedented and trying times for our country. I could not be prouder of our employees as they continue to serve our customers with real fortitude in difficult times. They have my thanks. Now for the quarter. Revenue was $750.7 million, an increase of 1.8%. Organic revenue, excluding $5.7 million of storm restoration services in the quarter, declined 6.2%. As we deployed 1 gigabit wireline networks, wireless/wireline converged networks, and wireless networks, this quarter reflected an increase in demand from one of our top five customers. Adjusted gross margins were 14.3% of revenue, reflecting the continued impacts of the complexity of a large customer program. Adjusted general and administrative expenses were 8.5%, and all of these factors produced adjusted EBITDA of $45.7 million, or 6.1% of revenue and adjusted diluted loss per share of $0.07 compared to a loss of $0.23 in the year-ago quarter. Liquidity was strong as cash and availability under our credit facility was $570.5 million. Finally, during the quarter, we repurchased 1.32 million shares of our common stock for $100 million, representing just over 4.15% of common stock outstanding. Even after this substantial repurchase, notional net debt only increased by $14.6 million during the quarter. In sum, over the last four quarters, we have reduced notional net debt by over $275 million, increased availability under our credit facility by a similar amount and meaningfully reduced shares outstanding. As our most recent share repurchase authorization has been exhausted, our Board has newly authorized $150 million in share repurchases. Now going to Slide 5. Today, major industry participants are constructing or upgrading significant wireline networks across broad sections of the country. These wireline networks are generally designed to provision 1 gigabit network speeds to individual consumers and businesses, either directly or wirelessly using 5G technologies. Industry participants have stated their belief that a single high-capacity fiber network can most cost-effectively deliver services to both consumers and businesses, enabling multiple revenue streams from a single investment. This view appears to be increasing the appetite for fiber deployments, and we believe that the industry effort to deploy high-capacity fiber networks continues to meaningfully broaden our set of opportunities. Access to high-capacity telecommunications has become increasingly crucial to society in the time of the COVID-19 pandemic, especially in rural America. The wide and active participation in the recently completed FCC RDOF auction augurs well for dramatically increased rural network investment supported by private capital that in the case of at least some of the participants is expected to be significantly more than the FCC subsidy. We are providing program management, planning, engineering and design, aerial, underground and wireless construction and fulfillment services for 1 gigabit deployments. These services are being provided across the country in numerous geographical areas to multiple customers, including customers who have initiated broad fiber deployments as well as customers who will shortly resume broad deployments, and with whom order flow has recently increased markedly. These deployments include networks consisting entirely of wired network elements, as well as converged wireless/wireline multi-use networks. Fiber network deployment opportunities are increasing in rural America as new industry participants respond to emerging societal incentives. We continue to provide integrated planning, engineering and design, procurement and construction and maintenance services to several industry participants. Near term, macroeconomic effects and uncertainty may influence the execution of some customer plans. Customers continue to be focused on the possible macroeconomic effects of the pandemic on their business, with particular focus on SMB dislocations and overall consumer confidence and creditworthiness. We see some uncertainty in the overall municipal environment as authorities continue to manage the general effects of the pandemic on permitting and inspection processes. Overall, we remain confident that our scale and financial strength position us well to deliver valuable service to our customers. Moving to Slide 6. During the quarter, we experienced increased demand from one of our top five customers. Organic revenue decreased 6.2%. Our top five customers combined produced 69.4% of revenue, decreasing 15.5% organically, while all other customers increased 25.3% organically. Comcast was our largest customer at 18.8% of total revenue or $140.9 million. Comcast grew 28.8% organically. Revenue from AT&T was $126.2 million or 16.8% of revenue. AT&T was Dycom's second largest customer. Verizon was our third largest customer at 15.7% of revenue or $117.8 million. Lumen was our fourth largest customer at $100.5 million or 13.4% of revenue. And finally, revenue from Windstream was $36 million or 4.8% of revenue. Windstream was our fifth largest customer. This is the eighth consecutive quarter where all of our other customers, in aggregate, excluding the top five customers, have grown organically. In fact, our business with these customers has grown organically by double digits each of the last two quarters. Of note, fiber construction revenue from electrical utilities was $44.1 million in the quarter or 5.9% of total revenue. This activity increased organically 125% year-over-year. We have extended our geographic reach and expanded our program management and network planning services. In fact, over the last several years, we have meaningfully increased the long-term value of our maintenance and operations business, a trend which we believe will parallel our deployment of 1 gigabit wireline direct and wireless/wireline converged networks as those deployments dramatically increase the amount of outside plant network that must be extended and maintained. Now going to Slide 7. Backlog at the end of the fourth quarter was $6.81 billion versus $5.412 billion at the end of the October 2020 quarter, increasing approximately $1.4 billion. Of this backlog, approximately $2.787 billion is expected to be completed in the next 12 months. The increase in backlog reflects renewals and new awards across a significant number of customers, offset in part by adjustments resulting from further communications regarding the reprioritization and rescoping of the components of a large program and our assessment of the expected pace of another component of the same program. From AT&T, we received extensions as well as awards, expanding our covered services across a significant majority of our business. First, construction expansions in Kentucky, Tennessee, North Carolina, South Carolina, Alabama, Georgia, and Florida; second, extensions for construction and maintenance services agreements in Kentucky, Tennessee, North Carolina, South Carolina, Alabama, Georgia, and Florida; third, an extension and scope expansion for wireless services in Kentucky, South Carolina, Alabama, and Georgia; and finally, a five-year extension for locating services in California. For Comcast, engineering agreements in Michigan, Massachusetts, Pennsylvania, Maryland, Delaware, and Georgia. For Charter, construction and maintenance agreements in New York and Ohio. From Frontier, construction agreements in Connecticut and Florida, and a construction maintenance agreement in Florida. For Verizon, a construction agreement in Texas and renewal in Maryland and Virginia, and locating agreements for various customers in Maryland and New Jersey. Headcount increased during the quarter to 14,276. Now, I will turn the call over to Drew for his financial review and outlook.

Thanks, Steve, and good morning, everyone. Going to Slide 8. Contract revenues for Q4 were $750.7 million and organic revenue declined 6.2%. Q4 '21 included an additional week of operations due to the Company's 52/53 week fiscal year. Adjusted EBITDA was $45.7 million or 6.1% of revenue compared to $44.5 million or 6% of revenue in Q4 '20. Non-GAAP adjusted gross margins were at 14.3% in Q4 and increased 10 basis points from Q4 '20. Gross margins were within our range of expectations for the quarter, but approximately 80 basis points below the midpoint of our expectations. This variance reflected approximately 100 basis points of pressure from a large customer program, offset in part by approximately 20 basis points of improved performance for several other customers. G&A expense increased 25 basis points, reflecting higher performance-based compensation, offset in part by lower administrative costs compared to Q4 '20. The Q4 '21 non-GAAP effective income tax rate was 30%, including incremental tax benefits related to recent tax filings. For planning purposes for fiscal 2022, we estimate the non-GAAP effective income tax rate will be approximately 27%. Non-GAAP adjusted net loss was $0.07 per share in Q4 '21 compared to a net loss of $0.23 per share in Q4 '20. The improvement resulted from the after-tax benefits of higher adjusted EBITDA, lower depreciation, and lower interest expense. Now going to Slide 9. Our balance sheet and financial position remain strong. During Q4, we repurchased 1,324,381 shares of our common stock at an average price per share of $75.51 in the open market for $100 million. Our Board of Directors has approved a new authorization of $150 million for share repurchases through August 2022. Over the past four quarters, we have reduced notional net debt by $276.4 million. We ended the quarter with $11.8 million of cash and equivalents, $105 million of revolver borrowings, $421.9 million of term loans, and $58.3 million principal amount of convertible notes outstanding. As of Q4, our liquidity was strong at $570.5 million. Cash flows from operations were robust at $102.4 million, bringing our year-to-date operating cash flow to $381.8 million from strong conversion of earnings to cash and prudent working capital management. The combined DSOs of accounts receivable and net contract assets were at 136 days, reflecting the impact of a large customer program. We expect improvement in the DSO metric in fiscal 2022 as the impact of this large customer program declines. Capital expenditures were $20.4 million during Q4, net of disposal proceeds, and gross CapEx was $21.9 million. Looking ahead to fiscal year 2022, we expect net CapEx to range from $150 million to $160 million. In summary, we continue to maintain a strong balance sheet and strong liquidity. Going to Slide 10. As we look ahead to the first quarter of fiscal 2022, we expect our results to be impacted by the adverse winter weather conditions experienced in many regions of the country. For the quarter ending May 1, 2021, as compared sequentially to the quarter ended January 30, 2021, the Company expects contract revenues to range from in line to modestly lower and non-GAAP adjusted EBITDA as a percentage of contract revenues to range from in line to modestly higher. The Company believes the impact of the COVID-19 pandemic on its operating results, cash flows, and financial condition is uncertain, unpredictable, and could affect its ability to achieve these expected financial results. Now, I will turn the call back to Steve.

Thanks Drew. Moving to Slide 11. Within a challenged economy, we experienced strong award activity and capitalized on our significant strengths. First and foremost, we maintained significant customer presence throughout our markets. We are encouraged with the emerging breadth in our business. Our extensive market presence has allowed us to be at the forefront of evolving industry opportunities. Fiber deployments enabling new wireless technologies are underway in many regions of the country. Telephone companies are deploying fiber to the home to enable 1 gigabit high-speed connections. Increasingly, rural electric utilities are doing the same. Cable operators are deploying fiber to small and medium businesses and enterprises. A portion of these deployments are in anticipation of the customer sales process. Deployments to expand capacity as well as new build opportunities are underway. Dramatically increased speeds to consumers are being provisioned and consumer data usage is growing, particularly upstream. Customers are consolidating supply chains, creating opportunities for market share growth and increasing the long-term value of our maintenance and operations business. As our nation and industry continues to contend with the COVID-19 pandemic, we remain encouraged that our major customers are committed to multiyear capital spending initiatives. We are confident in our strategies, the prospects for our company, the capabilities of our dedicated employees, and the experience of our management team as we navigate challenging times. Now operator, we will open the call for questions.

First question comes from Adam Thalhimer with Thompson, Davis & Company. Your line is open.

Steve, the biggest question I'm getting this morning is why is the Q1 margin guidance not a little bit better now that the large customer program is coming towards the end?

Well, I think as Drew mentioned, February was not a good weather month. There are costs associated with closing out markets and collections, and we are working through that as quickly as possible.

Okay. And then, what's the correlation between CapEx and revenue because your CapEx is way up year-over-year in '22 and at the highest level in about four years. So just curious how we should read that in terms of the timing of revenue growth?

Well, we had clearly managed CapEx tightly in fiscal '21. We have a number of opportunities to grow the business and have booked new business. And so, we'll invest to support those opportunities just like we have in the past.

And then just from your prepared comments, Steve, you mentioned a large increase in order flow. I didn't quite catch that. Was that an RDOF comment or not?

Well, we won't tell you exactly which customer, Adam. But I would just say that there is a lot of industry focus on fiber to the home. So you have AT&T's announcements, Frontier, Ziply, who acquired the Northwest territories from Frontier as well as rural. And so just as an example, just in the last quarter for rural customers, we completed about 2,800 miles of fiber to the home. And then for a large customer who's just really starting up, we're holding orders for over 1,600 miles of fiber to the home with them. So, there's a lot of activity just beginning right now.

Thank you. Our next question comes from Alex Rygiel with B. Riley. Your line is open.

Drew, you mentioned that you're hopeful that DSOs improve in the calendar year. Can you help us to better understand the pace of that improvement and possibly quantify it for us?

Well, go ahead, Drew.

Yes. Alex, as I talked about in the remarks, it was impacted by the large customer program. I think if you control for that, kind of the all other was up a little bit year-over-year. But certainly, as the impact of that large program declines, we would expect it to get better.

And I think, Alex, just to add to that. So, as the pace on that program declines, we're not adding to the invested base at near the rate that we were. And so, as we work through the collection issues, we expect the balances to come down as we work our way through the year.

And so what does the time line look for the pace of those declines in those projects coming to completion?

So I would say, this year, we expect to make real progress. This is a program that's been large and complex. It's evolved a number of times. We're working hard. We'd all like it to be sooner rather than later, but we're not going to be able to commit to more precision.

And then lastly, you've made a number of favorable comments here with regards to the opportunities in rural America and private capital coming into the marketplace. How do these new customers compare to traditional telcos? Do they have internal capabilities? Or are they looking to sort of purely outsource all types of construction activities?

Yes. That's a great question, Alex. So let's talk a little bit about the work that we're doing for electrical utilities. So that was just over $44 million in the last quarter, up 125% organically year-over-year. And typically, those clients are new to the business, but they're not new to serving rural America. And so, they have ownership of poles, they have access to right-of-way, but they typically outsource the engineering, the planning, and the construction. And we're hopeful that there will be maintenance opportunities that follow behind because, in their current businesses, they don't have the skill sets to maintain telecommunications networks.

Our next question comes from Brent Thielman with D.A. Davidson. Your line is open.

Steve, I was looking just for a little more context around the FCC RDOF auction. I mean, obviously, I think it's going to be impactful for your business. But just curious in past experience, how long does it typically take your customers to really get moving to something like this where we can really see it in the numbers?

It's interesting, Brent, that some of the recipients appear to still be in the process of finalizing things. While there are ongoing developments, many recipients are entities we have worked with, either with their own resources or through funds received from the CARES Act last year. I believe part of the acceleration we experienced this quarter is not directly linked to RDOF funding since that process isn't complete yet, but rather that recipients are feeling more confident about their projects and the extent of what they intend to build based on their results in the auction. Additionally, some of the larger participants have indicated in public comments that they plan to begin operations in the latter half of the year.

Okay. That's helpful. And then, obviously, it seems like there's more discussion around the industry, order activity, awards picking up more recently. I guess I wanted to come back to some of the early-stage challenges that you all and others have talked about in the past, permitting, the local-level stuff you've got to work through. Do you think that's going to remain a hang-up to deployment here as we move through 2021? Has there been a lot of progress on that front?

So Brent, you really have to think about it in a couple of ways. To the extent that the programs are for existing customers that have an existing footprint in existing franchises, there are always challenges to large start-ups, but they're somewhat different from those that somebody would have who's starting afresh. So as a simple example, if I'm deploying aerial fiber cable and I can last it to an existing cable that the customer already owns, that's a lot quicker process to get started than if I have to secure the rights to attach to poles in an area where they don't have a franchise or in the process of getting a franchise. So I think if you look at the nature of the awards that we talked about in our comments, generally, we're building for people that are in the business already in a geography that they already serve. Or in the case of these electric utilities, they're actually pole owners. So I would not say that it's ever going to be easy. These are big undertakings. We've got to be closely monitoring developments, but I think that it's a little bit different. The other thing I would tell you is that, and good for the OEMs, there are a lot of fiber orders right now and so we're closely monitoring delivery intervals as they gear up more manufacturing capacity.

Right. Okay. I guess the last one just have to ask around the big share repo this last quarter, you obviously see a lot of value in yourselves. You've been pretty quiet on the M&A front. Can I take that as a statement, you don't see as much deal out there in other entities as much as you see in yourself right now?

We had a strong year in reducing net leverage, getting below two times. Our priority is to fund organic growth, as it creates the most value for shareholders. Once we ensure we can do that, we will consider mergers and acquisitions over share repurchases. Given the number and strategic importance of recent awards, I would prefer to have a stake in those than in entities that did not receive them.

Our next question comes from Eric Luebchow with Wells Fargo. Your line is open.

Great. So Steve, two of your largest customers, AT&T and Verizon, just spent close to $80 billion at the C-band auction. And Verizon, to us, with maybe a little bit of a surprise to the upside. So have you seen any impact from them in terms of reprioritizing or pushing out some of their capital projects as they clearly need to kind of focus on deleveraging their balance sheet in the near term?

I believe we began discussing this last summer and fall. It is evident that wireless spending has been affected, particularly with a significant auction taking place, although the extent of that impact may not have been clear at the time. As customers finalize the auction process, acquiring new spectrum will create new opportunities for our industry. However, purchasing this spectrum necessitates deployment, which entails installing new equipment at existing sites and establishing new locations. Due to the propagation characteristics, there will be an increased demand for more sites and densification of cell sites. While I'm sure they would prefer to pay less, we feel optimistic that they are willing to invest more, as it is essential for creating value through deployment.

Yes. Got it. Makes sense. Just one more for me. So it's somewhat related to RDOF. So Charter had recently announced a $5 billion broadband build-out in rural areas. And they haven't been one of your top customers. But just wondering, for such a large capital program, have you kind of engaged with them and if you see kind of additional opportunity for them in addition to Comcast, who's obviously been one of your top customers for some time?

Yes, Eric, we're not going to comment on any individual customer about current opportunities, but I would say that we are encouraged generally by the RDOF results and the information that Charter provided the market is really interesting. So the original RDOF auction had about $20 billion to be supplied as a subsidy from the FCC over 10 years. The first auction was expected to require $16 billion; then there's another $4 billion coming along. The first auction actually cleared at $9 billion, which indicates how much private capital saw the value in rural assets. And so as you highlighted, Charter for one will receive about $1.2 million in FCC subsidy, but is willing to spend kind of $3 for every $1 that they're receiving from the FCC. And while we don't have clarity from others to the extent that Charter's disclosed it, I think it is encouraging.

Thank you. Our next question comes from Noelle Dilts with Stifel. Your line is open.

First, I just had kind of a housekeeping question. Could you comment on the timing of the share repurchase in the fourth quarter and sort of how we should think about the share base moving forward into the first quarter?

Yes. No, we're not going to provide any color other than, as Drew said, it was done in the open market. We did not use an accelerated buyback. We did not do anything via tender. Drew?

Yes. And then, Noelle, just for planning purposes for the diluted share count in Q1 of fiscal '22, we're estimating 31.3 million diluted shares.

Okay. Great. And then Steve, I know for a long time, we've sort of talked about this idea that as you start to see more consistent spending out of your customer base, that's really when we could start to see margins pick up and move toward past historical peaks. It feels like we're starting to get there. So as you sort of what pass the weather impact in the first quarter and the completion of this large customer program, is there anything we should keep in mind that sort of changed relative to history? Or do you think you can get back to the kind of 12% plus margins that we were seeing and you've been closer to 13% plus that we were seeing in 2016 and 2017 calendar year?

Yes, we are not providing guidance, but there are a few interesting points highlighted by your question. This quarter marks the first time in several years that our top five customers accounted for less than 70% of total revenue, indicating a broader customer base. For instance, if you look at Frontier, Ziply, and other customers, the revenue derived from electric utilities for fiber services was about 5.9%, which would make them our fifth largest customer if aggregated. Additionally, it's important to note that our partnership with AT&T has geographically expanded since 2015 and 2016 in both wireless and wireline sectors. While we need to execute effectively, there is greater potential with this customer than there was in the past.

Thank you. Our next question comes from Jon Lopez with Vertical Group. Your line is open.

I had two. The first, I guess, is sort of a clarification, Steve. You mentioned the order flow or you had some commentary around order flow and you also had what was a pretty nice uptick in backlog. I guess the thing I want to make or just hear a little more about is, are these sort of separate events? In other words, was there a nice uptick in backlog like and there's order flow? Or was there a nice uptick in order flow and that resulted in the backlog?

Sure, Jon. Happy to clarify. So think about it this way. The backlog is the initiation of new contracts or extension or expansion of existing contracts. Order flow is what we're holding. So we have electronic connections back and forth with our customer. And this is actual orders where we have work order numbers, we have locations, we have quantities that we receive, that we have to get the material in, we have to get the cable placed, those things. But those are specific identified locations where we'll provide services underneath the contracts for which we have backlog.

Understood. Okay. My second question is about the large customer program. I felt a bit more confidence in the timing of the transition from phase one to phase two several months ago, maybe six or nine months back. In the time since, there have been some adjustments and complications. Has anything, whether due to re-scoping or otherwise, changed the expected benefits or the timeline for that transition?

Well, Jon, to clarify, we’ve only discussed the initial setup under that large customer program and the follow-up arrangement. The way Wall Street categorizes this as a transition from phase one to phase two isn’t quite aligned with how we perceive the program. What we can say, and I believe this has been clear from comments made by that particular customer, is that there seems to be a delay in the timeline for building out the program. An example I can provide you, Jon, is our extensive fiber project for a customer that began in 2003. We are still working on that project today. There have been phases of significant activity and times of slower progress, and I think that this large customer program currently reflects that situation.

I understand. That clarifies things. Apologies for the last question, but I may need to ask you to repeat something from earlier. Regarding the fiber activities for electric utilities, which accounts for a mid-single-digit percentage of your revenue, could you provide an estimate of how many customers are involved in that category? Also, is there a possibility that one, two, or three of these customers could potentially become material contributors, possibly in the low single-digit range?

Jon, it's a little early to tell. But what I would say, what we're seeing now is it's dozens of individual utilities. They don't overlap one another geographically, but they're often adjacent to one another. And so there are times, particularly if you look at the consortiums that were pulled together to bid on RDOF, where they have worked together to secure funding and to have their programs managed and built. So it's unlikely that any single customer would be a substantial or even a low single-digit. But if you might have six or eight electrical co-ops that all serve one portion of a state that if they aggregate it together, would be significant.

Thank you. Our next question comes from Alan Mitrani with Sylvan Lake Asset Management. Your line is open.

Just a couple of questions. Did I miss the split between telco and cable? Drew, did you give that?

Yes, Alan, I'll answer that. So telco is at 63.8%, cable was at 23.8%, facility locating was 7.8%, and that electrical work and other was 4.6%.

Great. Your unnamed customer has been utilizing a portion of your capacity over the last few quarters, exceeding even Charter. What concerns me is that this customer seems to fluctuate between spending and not spending at all. Is this a temporary situation, or do you believe there is a more stable program in place that we can anticipate?

I think generally, Alan, as we mentioned earlier on the call, there is significant interest in fiber to the home right now. If you focus on the rural markets, you can see the number of change of control transactions or major strategic investments in rural operators, along with large programs mentioned by companies like AT&T and Frontier. My sense is that the industry is coming together in recognizing the importance and value of this initiative. This doesn’t mean that customers won't fluctuate or reassess their strategies. However, in this particular case, that customer has been engaged for seven or eight years. My speculation is that they are now more comfortable with the business operations than they were three or four years ago.

Okay. Also, do you have the percent of the business that was wireless this quarter, what the revenue was?

Yes, it was about 6.5%, Alan. So as a percentage, it was up a little bit from last quarter, slightly down sequentially on revenue.

Okay. Lastly, regarding the challenging customer contracts that you've been dealing with for some time, that customer wants to bid on a lot of spectrum and this issue isn't going away. How can we, as shareholders, address the reality of working with them for an extended period? How can we avoid finding ourselves in a similar situation in the next 12 months or more as they start issuing many contracts to connect with the spectrum they have acquired? What insights have you gained, and how can you approach this differently?

Alan, I think what we'd say is we have learned; I don't know that we're going to talk about publicly exactly what we've learned, but we always take into account what we learn as we work through programs. And challenging programs typically create capabilities that earn a return sometimes for that customer, but oftentimes for another customer. So as challenging as that program has been, we've created more talent, better systems, more focus, and we'll be a better business because of it. It just hasn't been a lot of fun.

Okay. I wanted to thank Tim for all his work over the years. It was good to get to know him, and I wish him the best in his future endeavors.

Well, much appreciated. And he will be on his next call, which will be his last call.

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