Fox Factory Holding Corp (FOXF) Q3 2021 Earnings Call Transcript

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Fox Factory Holding Corporation’s Third Quarter 2021 Earnings Conference Call. Please note, this conference is being recorded. I’d now like to turn the conference over to your host, Vivek Bhakuni, Director of Investor Relations and Business Development. Thank you, sir. You may begin.

Thank you. Good afternoon, and welcome to Fox Factory's third quarter 2021 earnings conference call. I’m joined today by Mike Dennison, our Chief Executive Officer; and Scott Humphrey, our Chief Financial Officer and Treasurer. First, Mike will provide business updates. Then Scott will review the financial results for the quarter and the outlook, followed by closing remarks from Mike. We will then open the call up for your questions. By now, everyone should have access to the earnings release, which went out today at approximately 4:05 Eastern Time. If you have not had a chance to review the release, it’s available on the Investor Relations portion of our website at investor.ridefox.com. Please note that throughout this call, we will refer to Fox Factory as FOX or the company. Before we begin, I would like to remind everyone that the prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown uncertainties, many of which are outside the company’s control and can cause future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors and risks that could cause or contribute to such differences are detailed in the company’s latest Form 10-Q and in the Annual Report on Form 10-K filed with the Securities and Exchange Commission. Except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events, or otherwise. In addition, where appropriate in today’s prepared remarks and within our earnings release, we will refer to non-GAAP financial measures to evaluate our business as we believe these are useful metrics that better reflect the performance of our business on an ongoing basis. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are included in today’s press release, which has also been posted on our website. And with that, it is my pleasure to turn the call over to our CEO, Mike Dennison.

Thank you, Vivek, and good afternoon. We appreciate everyone taking the time to join us for today’s call. This past quarter really put our teams to the test as overall supply chain conditions remained challenging. As these macro obstacles worsened this quarter, our team continued to innovate, outpace, and outthink our peers to deliver performance-defining results just like our products. I am proud to say our strategies and our execution are rising to meet these challenges as we delivered another record of quarterly revenue performance. Delivering five consecutive record quarters in this current volatile operating environment represents what FOX stands for, a culture of innovation and commitment to delivering best-in-class products to our ever-growing base of performance-driven enthusiasts. I am also happy to report that we hosted our inaugural Investor Day in September 2021. After months of planning, our Investor Day message was well received by the investor community. Our teams came together to showcase what we do best, maximize performance. This included a morning full of results-driven and forward-looking presentations, a showroom full of vehicles and bikes equipped with our products, and a tour of our new manufacturing center in Gainesville. In the afternoon, we offered a very unique experience. Investors had the opportunity to interact with five sponsored athletes, ambassadors, and the broader management team to ride e-bikes and drive off-road vehicles to fully understand how our products dramatically improve the way enthusiasts experience their rides. As you know, we’ve had remarkable growth since our IPO in 2013, but we felt this was the perfect time to host the event to exhibit what we think is the inflection point for our next phase of growth. The vision of our management team and why we think we can achieve this new target of growth that we call FOX 2.0, achieving over $2 billion in revenue by 2025. Moving on to the Q3 numbers, we had a successful third quarter with over $347 million in sales, which is over 33% growth versus the third quarter of last year. Something I want to highlight here is that double-digit revenue growth comes against a strong comparison in Q3 of 2020, which reflected the auto OEMs coming back online from COVID shutdowns, a rebound in the economy, and an unprecedented strong surge in demand for our products across all channels. Continuing our growth analysis, this quarter also reflects approximately 6% growth on a sequential basis versus Q2 of 2021. This outstanding growth is driven by both our Specialty Sports Group and Powered Vehicles Group businesses, which grew 48% and 23%, respectively, versus the prior year period. The demand across our product categories continues to be strong with no signs of abating given our uncompromising brand and customer loyalty, complemented by the fundamental shift in consumer behavior toward a more health-conscious and outdoor lifestyle. All of our businesses performed extremely well, posting strong sales increases in the face of a challenging supply chain and an environment of increasing input costs. Our non-GAAP adjusted earnings per share increased from $1.07 in the third quarter of 2020 to $1.19 in the third quarter of 2021. I want to acknowledge our team for their phenomenal operational agility, which was required to deliver such fantastic results. Starting with the Specialty Sports Group, this was our sixth consecutive record revenue quarter. It is safe to say the primary reason we have been able to deliver such staggering numbers quarter-over-quarter is due to the SSG team’s ability to not only anticipate industry demand fluctuations but also to scale and accelerate production to meet such levels of demand while managing supply chain, inflation, and labor challenges. We continue to optimize our capacity and labor expansion plans in Taiwan as we keep a finger on the pulse of demand, which continues to stay strong. We believe we are in a strong position as we have a good view of demand throughout 2022 for both OEM and aftermarket orders. As it pertains to lead times in 2022 and 2023, we are working toward improving capacity, expanding some supply lines, and entering into additional long-term supply agreements. But talking about the current inventory levels and replenishment, my comments are similar to last quarter where the inventory levels continue to remain close to historic lows. With the current pace of industry demand, we believe it will still take eight to ten months to meet the current customer demand level and another 12 to 18 months to replenish the depleted inventory channels. Additionally, we are investing in key areas of our development process to improve our speed to market and continue to grow our service network in terms of capacity and regional coverage. As an example of our team’s ability to stay ahead of the competition, we successfully launched a new Fox AWL Fork, our first purpose-built eSUV suspension product in the exciting and rapidly growing adventure mobility category. In addition, we had another very successful quarter in the world of racing. Fox-equipped athletes dominated mountain bike races through the conclusion of the 2021 International race calendar. Highlights included Greg Minar winning in men’s and Miriam Nicole winning the women’s Downhill World Championships. In addition, David Serano and Linda claimed two medals at the Tokyo Olympics. Shifting to our Powered Vehicles Group, Q3 marked another remarkable revenue quarter led by strong sales in the powersport outfitting and automotive OEM product lines as more model year changeovers come online. The growth in these product lines is remarkable as our teams are unlocking new ways to mitigate the macroeconomic pressures we face while leveraging the power of our brand to expand our relationships in both the aftermarket and the OEM sides of the business. We are gaining confidence in our ability to continue this growth trajectory and leverage the efficiency of our new Gainesville factory, which allowed us to set unit volume production records again this quarter. Moving on to our accomplishments in the world of motorsports. At the Ultra4 Black Hills Racing Series, Von Gittin Jr. earned his first career 4,400 class win in his FOX-equipped Ford Performance Bronco. And Fox took the top three UTV spots at the Best in the Desert Vegas To Reno where our patented live valve technology earned another podium finish. In short course off-road racing, Fox racers racked up five Ultra 4 Class wins and 11 Pro class wins, and a clean sweep of all seven pro-class points championships at the Crandon World Championships over Labor Day weekend. Sweeps were the theme of the quarter and continued in Baja, where Fox took the top six spots overall and 11 class wins in total at the SCORE International Baja. To be successful in our vision, we aren’t just making investments to meet the historic level of demand. We have always said product innovation remains a key component of our growth strategy. Even in this inflationary environment, we have not taken our foot off the pedal as we increased R&D spending by nearly $4 million in the third quarter versus the prior year period. Once again, the story on the continued challenges from labor to input costs, freight, and supply chain has increased in strength from the prior quarter. Material costs have been increasing throughout the second half of the year, which has been our biggest headwind. We may begin to see some easing in the supply chain starting mid-next year, but inflationary challenges might persist longer than that. We will continue to monitor the impact of these factors on this unprecedented demand environment and, as always, remain agile and nimble, delivering solid results in the third quarter and raising our guidance to close out the year deserves to be celebrated, and I cannot thank each and every single member of our FOX family enough for helping us challenge the impossible every day. And with that, I’ll turn the call over to Scott.

Thanks, Mike. Good afternoon, everyone. I’ll begin by going over our third quarter and year-to-date financial results and then review our guidance. Sales in the third quarter of 2021 were $347.4 million, an increase of 33.3% versus sales of $260.7 million in the third quarter of 2020. Our Powered Vehicles Group delivered a 22.8% increase in sales compared to the third quarter of 2020, primarily due to increased demand in both the OEM and aftermarket channels, including strong performance in our powersports and upfitting product lines. Moving to the Specialty Sports Group: SSG delivered a 48.1% increase in sales in the quarter compared to last year, driven by continued high demand in their OEM channels. On a year-to-date basis, sales were $956.7 million versus $628.2 million in the same period last year, an increase of 52.3% and this jump in sales is driven by increased demand, primarily in the aftermarket channel, including strong performance from our upfitting product lines and the inclusion of a full year of revenue from our SCA subsidiary. Additionally, our prior year's results were impacted by production shutdowns at a majority of our PVG OEM partners due to the COVID-19 pandemic. Fox Factory’s gross margin was 33.4% in the third quarter of 2021, a 90 basis point decrease from 34.3% in the prior year period. Non-GAAP gross margin also decreased by 70 basis points to 33.8% versus Q3 of 2020. The decrease in gross margin was primarily driven by higher inflationary pressures on all fronts, including labor costs, input costs, and freight costs. This was marginally offset by favorable product and channel mix led by higher volume sales in our Specialty Sports Group and strong performance in our powersports and upfitting product lines. On a year-to-date basis, both our gross and our non-GAAP gross margins increased 120 basis points to 34% and 34.2%, respectively. The increase in gross margin was primarily due to higher volume sales in our Specialty Sports Group and strong performance of our upfitting product lines as well as favorable product and channel mix. Total operating expenses were $60.8 million or 17.5% of sales in the third quarter of 2021 compared to $43.9 million or 16.8% of sales in the third quarter of last year. The increase in operating expenses was primarily due to higher employee-related costs, higher commission costs, and investments to right-size our back office infrastructure. Looking at non-GAAP operating expenses as a percent of sales, our non-GAAP OpEx increased by 150 basis points to 15.5% compared to 14% in the prior year period. On a year-to-date basis, operating expenses were $171.2 million or 17.9% of sales compared to $129.6 million or 20.6% of sales, a decrease of 270 basis points year-over-year. Our non-GAAP operating expenses as a percent of sales decreased by 20 basis points going from $100 million and 15.9% of sales in 2020 to $150.6 million and 15.7% of sales in 2021. Focusing on OpEx in more detail, sales and marketing expenses increased approximately $3.8 million in the quarter, primarily due to higher commissions of $3 million. Research and development costs increased approximately $3.8 million primarily due to personnel investments to support future growth and product innovation. General and administrative expenses increased by approximately $9.2 million due to higher employee-related costs of $4.5 million as well as increases in various other costs as we continue to right-size our administrative support functions. On a year-to-date basis, sales and marketing spend increased by approximately $13.9 million, primarily due to commissions of $8.7 million, employee-related expenses of $3.5 million, and various other expenses. But as a percent of revenue, the spend decreased by 60 basis points versus the prior year. Research and development dollar spend increased by approximately $8.6 million due to personnel investments to support future growth and product innovation. However, again, as a percent of revenue, this decreased by 40 basis points versus the prior year. Lastly, general and administrative dollar spend increased by $16.8 million but was lower as a percent of revenue by 120 basis points versus the prior year. The increase in dollar spend is due to higher employee-related costs of $15.5 million as well as various other investments of $9.8 million as we continue to right-size our administrative support functions. These increases were partially offset by lower acquisition-related costs of $9.4 million and lower litigation expenses of $0.9 million. This year-to-date performance highlights how management is focusing on becoming more efficient while growing our revenue base. For the third quarter, our effective tax rate was 18.2%. This rate is in line with our previous long-range guidance of 15% to 19%. The increase in the rate versus the first half of 2021 is primarily due to reduced benefits from stock-based compensation. Adjusted EBITDA increased by 21.1% to $72.8 million for the third quarter of 2021 compared to $60.1 million in the same quarter last year. I want to congratulate the team on our third consecutive record quarter of EBITDA generation. However, adjusted EBITDA margin decreased by 210 basis points to 21% compared to 23.1% in the third quarter of 2020. The decrease in EBITDA margin is primarily due to higher inflationary pressures as discussed earlier, partially offset by the impact of higher sales and favorable product mix. On a year-to-date basis, adjusted EBITDA increased by 62.2% to $202.9 million, and the adjusted EBITDA margin expanded by 130 basis points to 21.2% versus the prior year period. On a GAAP basis, net income attributable to FOX in the third quarter of 2021 was $43.8 million or $1.03 per diluted share compared to $38 million or $0.90 per diluted share in the prior year period. Year-to-date, net income attributable to FOX was $126.1 million or $2.98 per diluted share compared to $58.9 million or $1.46 per diluted share in the prior year period. Non-GAAP adjusted net income was $50.5 million, an increase of approximately $5.1 million or 11% compared to $45.4 million in the third quarter of last year. We delivered $1.19 of non-GAAP adjusted earnings per diluted share in the third quarter of 2021 compared to $1.07 in the third quarter of 2020. Year-to-date, non-GAAP adjusted net income was $146 million, an increase of approximately $60.4 million or 70.6% compared to $85.6 million in the prior year period. We also delivered $3.45 of non-GAAP adjusted earnings per diluted share year-to-date compared to $2.12 in the prior year. Now focusing on our balance sheet. For the third quarter, which ended on October 1, 2021, compared to our 2020 year-end on January 1, 2021, we ended the quarter with cash on hand of $319.3 million. Accounts receivable was $159.5 million compared to $121.2 million. Inventory was $246.2 million compared to $127.1 million. Accounts payable was $156.5 million compared to $92.4 million. The increase in inventory is primarily due to additional raw material purchases to mitigate risks associated with supply chain uncertainty and higher input costs. The changes in accounts receivable and accounts payable reflect business growth as well as the timing of vendor payments. Our net property, plant and equipment increased to $183.7 million as of October 1, 2021, compared to $163.3 million at the end of 2020, reflecting capital expenditures of $40 million in the first nine months of 2021. The increase reflects investments in our manufacturing facility in Gainesville, Georgia. Goodwill increased to $299.8 million as of October 1, 2021, compared to $289.3 million as of January 1, 2021, due to our acquisition of Outside Van during the second quarter. Now turning to guidance, we are expecting to close out 2021 on a strong note. For the fourth quarter, we expect sales in the range of $315 million to $335 million and non-GAAP adjusted earnings per diluted share in the range of $0.90 to $1.10 per share. I’d also like to note that we’re not providing guidance on GAAP EPS as it cannot be provided without unreasonable efforts due to the difficulty of actually predicting the elements necessary to provide such guidance and reconciliations. For our full year tax guidance, we still expect the tax rate to be closer to the lower end of our previously provided range of 15% to 19%. With that, I would like to turn the call back over to Mike.

Thanks, Scott. Our fifth consecutive quarter of record results is continued proof of our deep consumer connections, world-class team, and strong brand momentum. The recent decline in the COVID Delta variant spread is also positive news. Across the industries we serve, demand remains very healthy. Therefore, we remain focused and confident in our long-term business outlook. We are very excited as we look forward to closing out a strong 2021 and positioning ourselves to accomplish our new multiyear goal of FOX 2.0. I would now like to open the call for questions. Operator?

We’ll take our first question from Michael Swartz with Truist Securities. Your line is open.

Thanks, maybe just to start out with on the guidance. It looks like you’re guiding for fourth quarter margins to be flattish for the third quarter. And I think, Mike, your commentary and Scott’s sounded like cost pressures got worse through the quarter. So how should I think about that being flat? Is that due to pricing? Is that due to favorable mix offsetting some of that inflationary pressure?

Yes, Mike, this is Mike. I’ll go first, and Scott can add his comments. Really, as you know, in Q3, as inflationary costs were increasing, we were also revisiting pricing and even kind of more dynamic pricing with our channels and customers to try to offset those inflationary costs. So those roll in, but there’s a natural lag, as you know, between the cost increase and sometimes when the price is catching up. And I think those prices catch up and start to balance out against the cost that we saw really grow in Q3. So we feel pretty good about that. Now that’s assuming that things continue on the current track, and I think we also be aware, inflation is not necessarily a stable environment. So we’ll have to watch it closely and see what the pricing initiatives will have to be deployed. But for right now, we feel like we have a pretty good handle on it, and that gives us confidence in that Q4 guidance.

And then just maybe with respect to the specialty sports of the bike business, obviously, a lot of pricing going through seeing it passed off from suppliers to OEMs to consumers. Can you talk about maybe how the OEMs are thinking about contenting? Is there any move to decontent to offset some of the price increases?

We haven’t seen much of that. And the reason why is we see that the consumer willing to pay the higher prices for the better equipment. So we haven’t seen any kind of decontenting so far. And in fact, it might be the opposite of that where customers are looking for those higher-end pieces of equipment and willing to pay even extra to get those. So it’s an interesting environment, but we actually see the opposite of decontenting right now.

The next question comes from Jim Duffy with Stifel. Your line is open.

Nice execution, guys, through a difficult environment. I have a question on materials and then a question on the specialty sports business. You spoke to material cost. I’m wondering, was materials availability a challenge in the third quarter as well? And do you believe you’ve solved that problem with your inventory investment?

Great question. Inventory or supply chain continuity supply challenges continue. It’s a daily battle for the team to try to make sure that we’ve got the material at the right time in the right place to deliver our products. I do think the investments we made in inventory help us considerably. I do worry about things like brownouts in China manufacturing, where they’re cutting energy back to supply those factories and supply as parts. So we have to keep a close eye on that. I think, Jim, we have to keep a close eye on magnesium supply. But so far, the teams handled them well, and we continue to be able to deliver, as you can see, the results. But I don’t think supply chain has gotten any easier. And I think it continues to be a challenge for us for probably the first half of next year from what I can see so far.

Mike, your comments suggest that maybe the challenge is greater for the Taiwan manufacturing demands on materials than for North America? Or am I misinterpreting that?

You’re misinterpreting. I was just kind of focused on SSG maybe because you mentioned it. But I think North America is a bit different. It’s a broader supply chain. It’s a little more complicated. We’ve added a lot of investment in North America to get our hands around it. So I feel pretty good about it, but I wouldn’t say that North America is in better shape than Taiwan.

Okay. And then Specialty Sports category, it sounds like demand there is such that if you can manufacture it and ship it, you can book the revenue. new high for quarterly revenue of $160 million or so. Is there anything unusual in that number related to timing between quarters? Or is that a good figure for what you believe you can build and ship in a quarter going forward?

Yes, it’s a solid figure. There weren’t any anomalies in the quarter at all. I think we’re doing a great job keeping up with our OEMs and the demand signal. I think the thing we always get to balance, Jim, is what everyone else is doing. So as much as we can build, everybody else can’t keep up with us. Bikes can’t get built. So we have to always keep an eye on that and make sure that we’re not outstretching everybody else, and that might be a bigger giving factor on supply and demand than what we can do in our factories. But yes, no, the numbers we produced this quarter were solid.

We’ll take our next question from Anna Glaessgen with Jefferies. Your line is open.

Hi, Just wanted to touch on the investments to kind of right-size infrastructure, where are we in terms of innings in these investments? And when should we see kind of the year-over-year change to gross?

Yes. Anna, this is Scott. I think we’re still putting together our outlook for next year. My guess is we’ll start to see some improvement on the OpEx side toward the end of next year. I think you’re seeing a little bit of it this year already, even though we keep telling me not to get overly excited about it. But I think we should be kind of where we need to be by, let’s call it, the middle of next year, and then we’ll start to enjoy some leverage on those numbers.

Got it. And then turning to recent acquisitions and Outside Van, we talked about how there is substantial synergy between Outside Van and SSG. Can you maybe speak to any progress in terms of capturing that and the marketing opportunity there?

Yes. I think what you’re referring to is that a lot of our Outside Van customers that we picked up in the acquisition, they are also enthusiasts on the SSG side. I think it’s a good marketing opportunity for us with our broad base of customers in the mountain biking world, if they are going to also be enthusiasts on the Outside Van side. But I think we’re still working on getting Outside Van kind of indoctrinated into our upfitting business, and we’ll be continuing to develop the marketing plan around that with them next year.

Yes. I would add, Anna, that demand for Outside Van is pretty significant. We’re still a year out. So our backlog in Outside Van is into 2023 now for people who would like to buy a van. Our biggest challenge right now is less about marketing and more about scale. We have to continue to ensure that we can get more vans produced on a daily basis. So that’s a big focus right now. I think the team is doing a great job of continuing to drive the Outside Van culture. And we’re seeing that genre of customers grow significantly. We’re just going to be able to keep up with it.

We’ll take our next question from Scott Stember with CL King. Your line is open.

Hi, good afternoon, guys and thanks for taking my questions. If that on the Powered Vehicle Side, you talked about the OEM model year changes taking place, and I guess that supply is starting to pick back up again. Are you pretty much thinking that this is at least on that side of it with regards to the Fords, the Raptor, and that type of business that this is an inflection point and that things should get better from here, obviously, could be slow, but just trying to get a sense of that?

I do think things will stabilize. We see it kind of in two sides of the powered vehicle business, both in the chassis for our PVD or our upfitting business that you’re familiar with. So in that business, we see some stabilization, which we think is really good for us, not only for this quarter, Scott, but for next year. And I do believe within our relationship with the Ford Raptor business and the models that we support, we’re seeing some stabilization, which I think, especially in next year, will be meaningful. I think there are still a few bumps in the road. And as you know, the OEMs are still struggling with parts of their supply chain issues and otherwise. But for the most part, I think we’re going to see that start to stabilize or improve.

All right. And on SSG, related to the supply chain, can you maybe talk about how much of the sales are probably being left on the table or getting pushed up to subsequent quarters because of this?

It’s actually – as you know, Scott, we’ve made the lead time statements before where lead times have moved out quite a lot from what they would normally be at, with the normal lead times for 45 to 60 days, they’re now 350 days plus. So we’re actually able to schedule our factory work and our purchase orders with our customers pretty consistently in the quarter. So we know how much we can build, we know which we will build, and we’re pretty close to delivering on that. If the world were in a better place, back to six to eight-week lead times, but I don’t see that happening anytime soon. So we’re not leaving a lot on the table, but we’re already prebooked, as you know from prior conversations, through all of 2022.

That’s all I have. Thanks.

Next question comes from Alex Perry with Bank of America. Your line is open.

Hi, thanks for taking my question and congrats on another strong quarter. Just wanted to maybe get a little bit of shaping in terms of next year, just in terms of sort of how we should think about the organic growth next year as we sort of balance the tough comparison and market growth, with backlog on both the SSG and PVG side of the business?

We haven’t guided for 2022 yet, Alex. But clearly, we think the demand signals are incredibly strong and remained strong, which means as we add capacity and build out Gainesville. We’ve added capacity throughout the year in Taiwan. I think we’re well positioned to handle that incremental growth. I think we will continue to carry backlog from quarter to quarter, especially in powered vehicles. You heard in my prior comments on the bike side of the business that we can kind of schedule into the quarter that we’ll build it. But in powered vehicles, with a lot of aftermarket demand, et cetera, that does create backlog that carries quarter to quarter, and that’s going to continue through a good chunk in next year. As I tell the team, I’d rather have backlog than be looking for backlog. So we’ll take it, we’ll do our best to continue to optimize manufacturing, and we’ll get it out. But we’re going to finish Q4 and go into next year knowing we’ve got a good book of business to drive growth on top of the 2021 numbers.

That’s really helpful. And then just a follow-up on the SSG side of the business, the inventory backlog that you cited did not change at all versus three months ago. So maybe can you comment on sort of where the channel stands in terms of rebuilding inventory levels and where the choke points in the supply chain. I think you mentioned last time that you guys were not the choke point. So just maybe a little more commentary there would be great.

I’ll take the second question first. I do believe that we’ve done a really good job of responding and reacting, which has made us very nimble in the supply chain. So we’ve been able to scale our business and not because we’re the long lead guy in the race. That said, I think the supply chain and the lead times for getting inventory back into the channels is still there. While you might see bikes starting to show up in dealer showrooms a little bit more frequently and a little bit better selection, there’s a whole system behind that from distribution to hubs, both regionally and internationally, that is still fundamentally empty. So like I said in the prepared remarks, I think you’ve got several multiple months of demand just to deliver to preorders. I think we’ve got 12 or 18 months of rebuilding of inventory that takes us clearly all the way through 2022 and beyond. And I think our partners and customers still believe that new demand, new fresh demand coming in the system carries even beyond that. I think the way we see it, we comment on the out years later, but you’ll see we think very positively about 2022 and the early part of 2023.

That’s really helpful. Best of luck going forward. Thank you.

We have no further questions at this time. I would now like to hand the call back to Mike Dennison, CEO, for any additional or closing remarks.

Thank you. And as always, we appreciate your time and attendance for today’s call, and we look forward to seeing you soon. Have a good evening. Thank you.

This does conclude today’s program. Thank you for your participation. You may disconnect at any time.