Greetings and welcome to Federal Signal Corporation First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Mr. Ian Hudson, Chief Financial Officer. Thank you, sir. You may begin.

Good morning and welcome to Federal Signal's first quarter 2021 conference call. I'm Ian Hudson, the company's Chief Financial Officer. Also with me on the call today is Jennifer Sherman, our President and Chief Executive Officer.

Thank you, Ian. It's been over a year now since the pandemic began. And while there have been many challenges along the way, I remain in awe of how our teams have responded by modifying our work practices to keep employees safe, exercising flexibility in handling uncertain market conditions, and finding new ways to serve our customers. The company continues to experience some ongoing COVID-related disruptions, but conditions are improving. Our companywide efforts to raise awareness about vaccines, assist our employees in gaining access to vaccines, and encourage participation levels are paying off, and we are pleased to report that our domestic employee vaccination rates are ahead of the national average. In fact, in Illinois, where we have three of our largest facilities and the corporate office, over 60% of our employees are now fully vaccinated. With that, we've seen an uptick in our sales resources, traveling, reinforcing our customer-centric value proposition and contributing to greater order intake. As in the last two quarters, we again saw improved demand for our products with our first-quarter order intake setting a new record for the company, surpassing the previous high by over $50 million. Our first quarter orders reflect strength in most of our end markets and growing confidence in a post-pandemic recovery, which seems to be further solidified by recent economic stimulus. That sentiment seems to be shared widely by our dealer partners and customers across most of our businesses. Demand for sewer cleaners remains strong, with first quarter orders up 30% year-over-year and almost double the amount recorded last quarter. Safe digging is also continuing to gain acceptance.

Thank you. Our first question comes from Steve Barger with KeyBanc. Please proceed with your question.

Hey, good morning everybody. This is Ken Newman on for Steve.

Okay.

Good morning, Ken.

Good morning. The first question relates to chassis production. It's clear that supply chains are tight across various industries, especially due to chip shortages. Can you help us understand the impact of chassis production on guidance? Specifically, how should we view the lead times for these supply-constrained chassis? You've mentioned that it's around 90 days for certain types, but how does that translate into potential revenue or margin effects concerning the full-year guidance?

Yes, I think there's a couple of things to keep in mind. One of the things that Mark did with our teams that has really benefited us, at the beginning, late last year, early this year, we started to order additional chassis. And one, again, we're chassis-agnostic. So, we've got a lot of different options to choose from. We were recently notified that one of our chassis suppliers is shutting down for up to 90 days. And although that was disappointing to hear, we are in a pretty good position, because of the work that we had done late last year and beginning of this year in terms of ordering additional chassis. Our teams responded by, when we got this news, we were able to go out and leverage both our dealer partners and the relationships that we have with various chassis dealers to order additional chassis. So, in terms of the impact, it's really a short-term situation at Vactor. And typically, we have a shutdown between the Christmas and New Year's holiday. They've moved that shut down forward. We're doing our physical inventory during that time period, but there will be a brief pause over the Fourth of July week that we will be shut down. Our goal is to optimize our efficiency. And then, we feel like we're in a really good position once we come out of that Fourth of July holiday that we'll be able to ramp up pretty quickly.

Yes. Ken, regarding the revenue and earnings impact, as Jennifer mentioned, it is fairly limited to that two-week period at the end of the second quarter and the beginning of the third quarter. We have done a great job securing chassis for the rest of the year. The issue is primarily at the one location we discussed, where our teams have successfully adjusted the schedule at our sweeper facility to increase production of the three-wheel Elgin lines. This is the facility where we actually produce the chassis. The flexibility of our teams has really helped us minimize the financial impact.

Yes, I guess the other thing I'd add is, you might have read that a lot of the chassis OEMs just sold out for the year. I think we're in a good competitive position because of the work that we did late last year and early this year. And we have our orders in, so we can secure those chassis that we need for 2021 and ramp production back up. So, although it was a challenging set of facts, we're in a better position than most to respond to them.

So, is it fair to assume that the entire backlog as of the end of the first quarter is expected to deliver in 2021? None of those are for 2022 delivery?

It really depends on product line. The dump trucks and trailers would be delivered in 2021. It depends on some of the sewer cleaners that could extend into 2022. And there is a continuum, depending on the various product lines.

For my follow-up, it seems you had strong orders in the quarter. Many are trying to navigate the tight supply chain. Do you have any insight into whether your customers are placing orders earlier to mitigate some of these supply chain challenges? Can you share any comments on what order inquiries have been like so far this quarter?

Sure. A couple of things, we're always looking at kind of order pull forward, we didn't see that here. So, the answer to your question is no. Another encouraging fact is that our April orders remained strong.

Yes, okay. I think when we see pull forward, Ken, it's typically somewhat limited to certain product lines. The strength in the orders that we've seen really was almost across all of our end markets for the majority of our product lines. So, it wasn't limited to any one single product line; it was strength almost across the board.

We see some really nice traction that I talked about in my prepared remarks on some of our organic growth initiatives, particularly in our dump truck and trailer business.

Right, yes. One more, if I could squeeze it in, just regarding your M&A pipeline, I know you're talking about the pipeline remaining active. It seems like you've got a lot of dry powder here in terms of availability and liquidity. Can you just talk about the opportunities in terms of deal sizes and multiples? And again, just to remind us on how you're thinking about the best returns for relative to potential targets across the portfolio?

Yes, couple of things. Our pipeline is about as full as it's ever been. So that's encouraging, particularly because we have a very detailed road map in terms of what we're interested in buying and we work those relationships. And we're starting to see, as we come out of this pandemic, that that hard work has benefited us in terms of deal size, everything from small product line acquisitions to transformational type deals. We're always looking at a number of different opportunities. On multiples, we've seen, as everybody has, if there's- multiples are going up. And again, we believe that given the position we're in, there are a lot of synergy opportunities for us to fill out our product portfolio. We talked about in the first quarter, OSW, closed-end transaction. We've done some training already on ETI and we're very encouraged by what we've seen thus far. And again, we will continue to be disciplined acquirers. And we need to, obviously, we look at a number of different factors, but we need to make sure that we always talk about does this make sense, and how does this bring value to Federal Signal shareholders. So, we're very encouraged and energized by what's in our pipeline.

Great, thanks. I'll jump back in queue.

Thanks, Ken.

Our next question comes from Mike Shlisky with Colliers Securities. Please proceed with your question.

Good morning, everyone.

Good morning, Mike.

Hey, how are you doing?

Great.

I wanted to quickly follow up on the previous question regarding the potential pull forward of orders. It seems that chassis supply was not a reason for customers to place more orders during the quarter. I'm trying to get ahead of the curve, but was there any order pull-forward from customers who were concerned about potential price increases, or was that not much of an issue?

We haven't received much feedback from our sales channels regarding our price increase due to rising commodity costs, as the increases have followed a more regular pattern this year compared to a stable commodity market. The feedback we've received has centered on a few key areas. Firstly, as we've mentioned previously, our sales team resumed field activities during the pandemic last year when it was safe, and we believe this helped us gain additional market share. Secondly, our discussions with dealers reveal a strong sense of confidence, especially concerning the availability of stimulus funds. Additionally, we've noticed an uptick in used equipment sales and rental utilization across the board. It's also important to highlight the effects of new product development, particularly in our TBEI dump truck and trailer business.

Got it. And maybe how to keep focusing on chassis supply, but I want to ask this one as well, how open are your customers or your end users to changing brands if there's going to be one brand that's not available for potentially a couple of months here? Do you get the sense that some of the RFPs or for a certain model or if you can just switch whenever you feel like it?

On the municipal side, changing the chassis brand is more difficult due to typically going through a bidding process. In contrast, the industrial side offers greater flexibility. What sets Federal Signal apart from some competitors is our rental fleet. Specifically, the chassis for the Canadian market has not been affected so far, giving us significant flexibility. In terms of production scheduling, we can incorporate some of those units, allowing for much more flexibility on the industrial side compared to the municipal side. However, with our rental fleet and strong presence in Canada, we have many options available to respond to this situation.

Got it. I think I'll just throw one more in there here. I really wanted to dig a little deeper on the safety, security business. In the quarter, you improved your margins even though sales were down. And I know that's sometimes part for the course, which is great, great work there. But I'm curious if you could give us a little more color, I'm kind of curious as to how you were able to make that happen this particular time.

Yes, Mike, the mix of businesses can influence margins at times because larger systems businesses typically have different margin profiles compared to public safety equipment, for instance. However, we've effectively managed the 80/20 principle at that location. The cost structure allows for greater revenue to create more impact since overhead mainly pertains to one primary location. Additionally, we’ve focused on insourcing, as Jennifer mentioned regarding the MicroPulse product line we launched in the first quarter. This was previously outsourced, but bringing it in-house has resulted in notable margin improvements this quarter. Going forward, we will continually assess whether it’s more advantageous for us to produce internally or source externally, and the teams have done an impressive job managing this.

Excellent, thanks so much. I'll hop back in queue.

Thank you.

Our next question comes from Felix Boeschen with Raymond James. Please proceed with your question.

Good morning.

Hey, good morning, everyone. Morning. Hey, I was curious if we could talk about the dump trailer business, sort of dump truck business a little bit more. Just first to start, I think you mentioned orders were up 28% in the quarter. I just wanted to double check, does that include the acquisition of OSW or is that kind of an organic apples to apples number we should be thinking about?

Yes, that's taking out the impact of OSW, Felix. So, obviously in our orders this year that includes the OSW numbers, but the rate that Jennifer quoted that costed out. So, that's really the organic growth rate.

Okay, awesome. And then, if you could broadly talk about what you're hearing from end customers in that business? And then similarly, I know we've talked about supply chain issues quite a bit on this call. But curious if you could touch on the overall lead time specifically in that book of the business right now.

Yes. So, couple of things. One is, as you know, we acquired that business in mid-2017. One of the first things the teams did is took a look at how do we implement kind of some of the best practices that Federal Signal had developed in new product development. And it's really just a fantastic management team. And so, we took some of the best that Federal Signal has developed and that particular management team, and really started to look at accelerating new product development. We gave some examples in my prepared remarks that's starting to benefit us and will continue to do so going forward. The second issue is capacity. So we've made some pretty significant capacity investment in the dump truck businesses at our Lake Crystal facility, at our Rugby facility. We also opened an upfitting center at High Point, North Carolina. And now, we are looking at our OSW facility and how do we leverage that facility in the group of businesses in addition to our upfitting facility that was just opened in Tempe, Arizona. So, again, it gives the teams an opportunity to optimize production at those various facilities and we've got more capacity now. So, it's always exciting when you sit and there is a theory and then you execute. And the performance has really surpassed my expectations in terms of what they've been able to do. With respect to lead times, they have extended, but given the capacity expansions that we've made and the automation investments that we've made under our ownership, right now we're at a point where we still believe that we're very competitive in the marketplace.

Okay. And then, I guess my bigger picture question as it relates to TBI and OSW is can you help us unpack the margin profile a little bit? So, I always thought of TBI as being a very high margin business, understand this year you have a slew of supply chain headwinds going on and obviously commodity cost pressures, but knowing that it is maybe a quicker lead time business, does it feel like you're able to pass on price adequately there? And then overall, I know OSW is coming off depressed 2020 COVID levels, but help us understand what this acceleration in the dump trailer business could mean to overall ESG margins is my bigger picture question?

Yes. I think, Felix, obviously, with businesses within ESG we talk about that EBITDA margin target of the 15% to 18%, which we think for a specialty vehicle company that's a pretty attractive margin profile. We have also talked about taking those up once we get through this pandemic. I would say within the portfolio of TBI businesses we have, the margin profile probably varies. I mean we're talking a little bit about different sizes of dump trucks across the portfolio. As we've talked about, I think in our year-end call, OSW right now is not currently operating within that range. But one of the filters that we apply when we look at acquisitions is asking ourselves, even if they are not currently operating within those ranges, do they have the ability to get within that range once we acquire 80/20 principles and explore some of the synergy opportunities there? So, OSW isn't there right now but I think we feel like over the course of the next two to three years, there's opportunity together. And I think that will then be the area where as we look at TBI as a platform for growth, looking at some of these companies sharing best practices across the businesses, sharing buying practices, and things of that nature. We think that's where there's going to be some potential for margin improvement, which will be one of the factors we take into account when we come up with out our revised margin target.

In the TBI Group, as Ian mentioned, there is a range influenced by both fleet orders and other factors, but we do have some very high-performing businesses with strong EBITDA margins within that product portfolio.

Got it. Very helpful. I'll leave it there.

Thanks, Felix.

Our next question comes from Walter Liptak with Seaport Global. Please proceed with your question.

Good morning, Wal.

Congratulations on a strong quarter. The main question about pent-up demand seems to have been addressed, indicating it may not exist. So, my first question is, if you had to attribute your order growth to one or two factors, is it primarily due to selling and openings, or is it something else? It doesn't appear to be a pre-buy situation. Do you believe this growth is sustainable, or should we expect a decline after an initial surge of pent-up orders?

We've been encouraged because the strong order trend has continued in April, and this positive trend is evident across the board. Additionally, we've experienced some good progress on new product development, although our businesses are subject to seasonal fluctuations that can vary from quarter to quarter. It's important to note that we did not reduce our investments in new product development during 2020 and the pandemic, and I believe we are now starting to see the benefits of that as we move through 2021.

I think the other thing that I would add, and Jennifer mentioned it, we have safe digging. We gave some statistics about the percentage of our sewer cleaners, that now includes the hydro vacuum excavation package, that's where we've been out doing demonstrations and demos are up 70% year-over-year. That is having some nice pull through, if you will, on the sewer cleaners. In that about 70% of our sewer cleaners over the course of the last two years have been sold with this hydro excavation package. So, not only do we have our TRUVAC line of products where you can use those purely for the Safe digging, we also have sewer cleaners now that have the optionality to perform that function as well. So, the continued strength in our sewer cleaner demand is encouraging, really. And it is kind of tangential to the efforts that we are having on the safe digging side.

Yes, that's great. Yes, it's good to see the TRUVAC orders picking up again because I think those were hit pretty hard during the pandemic. I guess another question would be, going back to the chassis shortages and your inventory or your own pre-buy of chassis. Are you seeing a competitive advantage? I know you guys are good at that, anticipating demand and getting your chassis slots, do you think you beat out the competitors with your chassis availability?

Yes.

Yes, I believe that while we took proactive measures, especially toward the end of last year when we began noticing these issues, we started implementing actions at that time. We collaborated with our dealers and shared insights with them about securing additional supply, urging them to do the same. Earlier, there was a question about whether we work with customers to see if they would consider switching out the chassis, and our teams are definitely addressing that. I agree with Jennifer's statement that it provides us with a competitive advantage. Considering the efforts of the team and how they have minimized the potential impact, I believe they have done an excellent job.

Okay.

As the economy opens back up and these infrastructure projects move forward, I was speaking to one of our dealers yesterday and she just explained to me how important it is to have equipment available, both for rentals, used equipment and new sales, and we've been able to respond to that demand.

I think, well, the other thing, from a competitive standpoint that we have, we also have a rental fleet that can be a temporary solution that we can offer to our customers in the event that they are unable to get the chassis. So, having the range of product offerings we have has helped us during this time.

Okay, that's great. Yes, I had another question about the rental fleet. It seems like you didn't raise guidance despite the strong orders due to concerns about deliveries in the second half of the year, but could the rental fleet potentially compensate for most or all of the production slowdowns related to chassis?

Yes. Well, just to be clear on the first part of your comment. I think our concern from the chassis supply situation is really limited to late second quarter, early third quarter, around that July 4 holiday. We are expecting for production to ramp back up. And as we go forward with the chassis that we have been able to secure and what we've been told by the chassis OEMs about how they're going to reopen again. So, I just wanted to make that point clear. On the rental side of the equation, we have seen an uptick in rental demand in April. And one of the things we mentioned, we're monitoring just the situation up in Canada with the shutdown in Ontario in particular is that that is typically a strong market for us from an aftermarket standpoint, from a rental standpoint. So, that's one area that we are monitoring. But as you said during that timeframe, could we offer rentals or used equipment sales? Could they benefit? Potentially, yes.

One advantage we have is our collaboration with dealer rental partners, which allows us to redeploy equipment in Canada to other regions if necessary.

Okay. Okay. Good point. All right, and then, Jennifer, you mentioned in the discussion about M&A that there could be something transformational. I wonder if you could tell us a little bit about what transformational means? Is it transformational because of size or is it transformational because of the type of product that you're going to be acquiring in an M&A deal?

I want to clarify that my response was regarding the types of acquisitions we have in the pipeline. We are consistently exploring various opportunities, ranging from smaller product line acquisitions around $10 million to larger transformational deals. This is an ongoing process for the company rather than being tied to any specific acquisition. Most of our deals will likely fall within the range of $50 million to $100 million, similar to MRL and OSW. A transformational acquisition could resemble the TBEI deal, which allowed us to make significant progress in a new product category. This is an example of an achievement we are proud of that has shown positive results for our shareholders.

Okay, got it. All right, thank you.

Our next question comes from Chris Moore with CJS Securities. Please proceed.

Good morning, Chris.

Good morning, Chris.

Good morning. Just on the record order is 26% year-over-year, can you talk a little bit about the mix between price and volume on that?

Yes, it's mainly driven by volume. The orders include about 25 million from the acquisition. Price typically ranges from 1% to 4% in a normal year, depending on the business. However, most of it is really volume-driven. As mentioned earlier, this applies across various product lines. Dump trucks are up more than 20% and sewer cleaners are up 30%. Aftermarket demand has also increased by over 20%. It's not just one product line; it's a broad increase across the board.

Got it. That's helpful. Thinking about steel, obviously, rapid increase, it sounds like it was more of a headache than anything for you guys in the first quarter. You talked about some unsteady price increases. So, just trying to get a sense in terms of how you view the balance now between kind of raising prices to protect margin and the current demand?

Yes, I believe the teams have good visibility regarding steel. We make about $45 million in direct steel purchases, allowing us to lock in prices. This enables the teams, especially the TBI team, to respond quickly. Another important factor for us and many companies is ensuring availability. We have successfully secured the necessary steel to meet our backlog, which has been a significant effort.

Got it. Most of my others were answered. I will leave it there. I appreciate it, guys.

Thank you.

Our next question comes from Greg Burns with Sidoti & Company. Please proceed.

Morning, Greg.

And in terms of the safe digging opportunities, it sounds like you're getting more market acceptance so there is more traction in the market. So, can you just talk about what you're hearing from customers, demand you're seeing, is it picking up because there's more understanding of what it is, is it government mandate, like what's driving the demand there?

Yes, I think it's really been a grassroots effort to educate customers about both the safety benefits and the efficiency benefits. One of the reasons that we give you the data on demonstrations is because we found that that is an important kind of leading indicator if somebody is interested in that. Again, where we were in Chicago last night, the Western suburbs, a good portion of them didn't have any type of internet access, which is even more critical today than it might have been a couple of years ago, because a construction crew cut a fiber line. So, that type of incident in many situations will lead customers to want to better understand what the alternatives are. We also believe as we move forward with the infrastructure investments that are being made by the government right now, particularly in terms of the broadband work that will also benefit sales of safe digging products. We continue to monitor legislation and legislation right now, is at a best practice stage, but that is something that increases awareness among our customer base.

Okay. When you mentioned the upfitting of the sewer cleaners with the Safe Digging package, how would that typically affect the MSR pay of the sewer cleaner when adding that package?

I asked that question recently to gain a clearer understanding. There are many features and functionalities, and the options can vary significantly. There are smaller offerings in the $10,000 to $20,000 range, and then there are much larger packages that are typically closer to the $70,000 to $100,000 range. Ultimately, it depends on the type of package you choose.

Okay. And the 70% of tax rate, do you think that's sustainable? Do you foresee like selling that much equipment to the sewer cleaners …

Yes, it has remained at that level. We reviewed it over the last couple of years, and it was similar in the first quarter.

Okay. And then, just lastly, I might have missed it, but on the TBI side of business where the customers are bringing their chassis. Has there been any issues there with the customers having availability, chassis availability?

Today, it's been pretty minimal.

Good morning, everybody. Thank you. Thank you for taking my questions. Most have actually been asked and answered, but just one real quick one here for you, I know it's still a little bit early and you made some positive comments on the OSW acquisition, closing it, and results look to be pretty good. But can you kind of just give us a little bit of an update on the integration efforts there?

Sure. As we consider acquisitions, a key factor for us is having an experienced management team. We’re pleased that the leader of that business is part of the Federal Signal family. Bob Fines, who oversees our TBI business, is actively involved in the integration process. He has visited a couple of times, along with Ian, Mark, and myself. We feel like we're developing an effective strategy based on our past successful acquisitions over the last five years. With each acquisition, we learn and improve. We recognize the importance of focusing on the critical aspects, and last week Bob, Jay, and the teams had a productive working session that yielded positive feedback. We're building the foundation this year to enhance our EBITDA margin performance and realize the synergies we discussed when we completed the deal. Although it's still early, we are pleased and have started strong.

All right, understood. And last one from me. I just wanted to make sure I heard this correctly. Just kind of the impact of the winter storms on results for the quarter, it sounded like it was minimal, if anything on results?

We lost production for a couple of days. So, I think what we are trying to indicate is although there was no structural damage, our results reflected the fact, which were very strong, reflect the fact that we lost production in several of our Southern facilities for days, and in one situation, for almost a week. So, it was a headwind to our gross margin for the quarter.

I see. Is there a way that you can quantify the impact of the quarter's results?

If you examine the gross margin, you'll notice that the lower gross margin quarter is related to several factors. In the first quarter last year, we achieved record production at our largest facility with minimal pandemic impact. This time, we experienced some unfavorable absorption effects because we were not producing during that period. That's likely the reason for the decline. It wasn't significant, but it did present a challenge to our gross margin for the quarter.

Got it. Thanks a lot, guys. Really appreciate the time.

Thank you.

Thank you.

Hey, thank you. This is Ken Newman on again. Thanks. Just one quick follow-up here, I wanted to touch back on the rental comments that you'd made. Obviously, I think I totally get the whole idea around COVID impacts in Canada. But I would think that a tighter supply chain is probably a net tailwind for fleet dynamics, right? So, for improving rental rates or fleet utilization, as well as for used equipment prices that you sell out of the fleet, so, can you just give us a little bit of color in terms of how you're thinking about forward moves and rental rates utilization and what's being sold out of the fleet this year versus being built for fleet growth?

Yes, Ken, we keep a close eye on this. We evaluate it both by product line and geographically, considering time and financial utilization. We conduct a monthly review to determine how much to expand our fleet and whether to increase sales from it. Over the past couple of quarters, we've noticed an uptick in the sales of used equipment, particularly items that are three to four years old. We've been selling more older units, mainly safe digging equipment, which has allowed us to reach customers we previously couldn't due to pricing changes. This strategy is proving effective, as the aftermarket business is helping us connect with new customers. In the last quarter, we saw an increase in used equipment sales and parts sales. Overall, aftermarket revenues grew to about 27% of our total revenues for the quarter, up from 24% last year, indicating that our efforts are paying off. It's beneficial to have alternative product options available for our customers, especially during supply chain challenges.

Yes, I believe a couple of points are significant. First, we have the capability to move our fleet as required to meet demand. Second, the preferred chassis in that fleet, the Western Star chassis, has not been affected by the semiconductor shortage so far. This situation provides us with flexibility in production scheduling and the ability to respond effectively since we have those chassis on hand.

Yes. If I think about just longer term, the ability to grow that part of the business, right. Does that require a significant amount of CapEx or how do you think about growing fleet versus growing branches to kind of improve the adoption of rental across all of your businesses?

We have strong rental partners through our TRUVAC dealer network, which allows us to ensure we have the necessary geographic coverage. We will continue to work with these partners, and in areas without a strong TRUVAC partner, we will expand our fleet to meet customer demand. Overall, we are well positioned due to these partnerships and our capability to grow in response to unmet customer needs.

Understood. Thanks for the time.

Thank you.

We have another follow-up from Walter Liptak with Seaport Global. Please proceed.

Hi, Wal.

Hey, thanks for taking this one. So, on the follow-on to the last one talking about rental and you were kind of alluding to how you use other rental partners potentially for some of your products. Are you selling yet, any of the safety machines or any other machines to the large rental companies?

No, we have no intention of doing so. Right now, we have several great rental partners who are responding very well to rental demand for this highly specialized piece of equipment.

Okay, got it. All right, thank you.

At this time, I would like to turn the call back over to Ms. Jennifer Sherman for closing comments.

Thank you. In closing, I would like to reiterate that we are confident in the long-term prospects for our businesses in our markets. Our foundation is strong and we are focused on delivering profitable long-term growth through the execution of our strategic initiatives. We would like to express our thanks to our shareholders, employees, distributors, dealers and customers for their continued support. Thank you for joining us today and we'll talk to you soon.

Thank you. You may disconnect your lines at this time. And thank you for your participation, and have a great day.