Hyster-Yale, Inc. Q1 FY2024 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the Hyster-Yale Materials Handling First Quarter 2024 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, May 8, 2024. I would now like to turn the conference over to Christina Kmetko, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for Hyster-Yale's 2024 First Quarter Earnings Call. I'm Christina Kmetko, and I'm responsible for Investor Relations. Yesterday evening, we published our first quarter 2024 results and filed our 10-Q. These documents are available on the Hyster-Yale website. We are recording this webcast, and a replay will be on our website later this afternoon. The replay will remain available for approximately 12 months. I'd like to remind you that our remarks today, including answers to any questions, will include comments related to expected future results of the company and are, therefore, forward-looking statements. Our actual results may differ materially from our forward-looking statements due to a wide range of risks and uncertainties that are described in our earnings release, 10-Q, and other SEC filings. We may not update these forward-looking statements until our next quarterly earnings conference call. Our presenters today are Al Rankin, Executive Chairman, Rajiv Prasad, President and Chief Executive Officer, and Scott Minder, our Senior Vice President, Chief Financial Officer, and Treasurer. With the formalities out of the way, let me turn the call over to Rajiv to begin.

Thanks, Christy, and good afternoon, everyone. I'll start by providing the operational perspective and some commentary on our markets. Scott will follow with the detailed financial results and the outlook. Then I'll share a few strategic project highlights. First, I'll provide some highlights from our excellent Quarter 1 2024 financial results. 2023 was an outstanding year, and we're continuing to build on those successes. For the fourth consecutive quarter, we have reported revenues of more than $1 billion. This past quarter, we had the highest reported operating profit and profit margins in the company's history, achieving an operating profit margin above 7% for the first time. Our quarterly highlights are all positive. Consolidated operating profit and net incomes are up significantly versus the prior year. We've improved operating profit margins and consolidated revenues as well. The global economy remains strong overall in the first quarter. However, political unrest around the world is causing lingering uncertainty. The latest publicly available lift truck market data indicates that Q4 2023 global bookings increased year-over-year with stronger-than-expected year-end volumes in EMEA and JAPIC markets. Those higher bookings more than offset the Americas decline. However, we estimate that Q1 2024 global lift truck bookings moderated compared to relatively strong prior year levels. In Q1, we continue to work through our extended backlog and continue to focus on booking orders with strong overall margins. This, coupled with the year-over-year market decline led to a moderate bookings decrease compared to prior year. Bookings increased 10% sequentially, led by a large order for Class 2 and Class 3 warehouse trucks in EMEA. In Quarter 1, 2024, average booking prices decreased compared to fourth quarter 2023 and prior year. This was largely due to a shift to lower-priced warehouse products, predominantly in EMEA. In line with our objectives, backlog levels decreased compared to year-end 2023 levels. Now let's talk about the outlook for our business. Looking ahead, we expect competitive dynamics to become more prevalent again in our market, particularly on products with shorter lead times. As we reduce backlog levels and improve lead times, we're committed to maintaining our targeted booking margins through new model introductions and cost decreases. We predict an upward swing in quarter-over-quarter bookings throughout 2024. This is largely due to anticipated market share gains in the Americas and EMEA and improving North American market conditions later in the year. Our shipments are expected to increase in 2024 compared to 2022 due to higher production rates, continued supply chain improvements, and the dissipation of lingering product launch issues. As production and shipment rates increase, we foresee backlog levels and lead times on many product lines reaching target levels by year-end. As expected, our $3.1 billion backlog, which is equal to approximately nine months of production, combined with new unit bookings is supporting the business through any near-term market weaknesses. Now I'll turn it over to Scott to provide some detailed financial results and outlook.

Thanks, Rajiv. I'd like to emphasize that our strong Q1 2024 results build on 2023 exceptional year-over-year improvements. The numbers speak for themselves. Consolidated revenue rose to $1.1 billion, up from just under $1 billion in Q1 2023. As Rajiv mentioned, this is the fourth consecutive quarter with revenues over $1 billion. Consolidated operating profit increased to almost $84 million compared to $41 million in Q1 2023. Our operating profit margin of 7.9% was up from 4.3% one year ago. Our Q1 2024 earnings per share increased by nearly 90% to $2.93. Let's dive into the results at our Lift Truck business. Lift truck revenues grew 6% versus the prior year due to higher average sales prices and a favorable sales mix. These improvements were partially offset by lower unit and parts volumes. Due to previously implemented price increases, average lift truck sales prices increased by 17% year-over-year and 3% sequentially. Our sales mix improved versus the prior year, mainly due to increased sales of Class 4 and 5 internal combustion engine units in the Americas. These higher capacity lift trucks generally have higher selling prices. Shipment volumes declined 8% versus prior year, driven by a 21% decline in EMEA as a result of lower production rates. America's shipments were lower mostly due to reduced shipments in Brazil. In Q1 2024, Lift Truck operating profit of $89 million increased by 87% year-over-year. Operating margins were 8.9% in the quarter, improving by 390 basis points versus the prior year. This gain was driven by higher new unit margins due to favorable price and material costs. Units sold in Q1 2024 were largely added to our backlog in late 2022 and in 2023. These units had higher prices and margins than trucks sold in Q1 2023, the latter of which entered the backlog before our price increases went into effect. Operating expenses increased in the quarter compared to prior year, mainly due to higher employee-related costs, including incentive compensation. The lift truck team remains focused on growth with disciplined execution. As a result, the business generated a 71% year-over-year incremental margin in the first quarter. Now over to Bolzoni. Bolzoni's gross profit increased while revenues decreased as a result of the planned phaseout of low-margin legacy component sales. This phaseout will continue throughout 2024. The business maintained a strong price-to-cost ratio on its core attachment products. Bolzoni's Q1 2024 operating profit decreased due to higher operating expenses. Moving to Nuvera. Nuvera's Q1 revenue decreased year-over-year due to fewer customer shipments. The first quarter's operating loss improved slightly as government funding to cover certain research and development expenses offset the impact from lower shipments. I'll explain this government funding in more detail in a moment. Before I move to our cash and balance sheet results, I'll outline the effect of taxes on our business. Our first quarter income before income taxes was $77 million, up 114% compared to the prior year. However, net income increased at a slower pace due to a significantly elevated income tax rate. The company's Q1 2024 effective income tax rate was 33%. This compared to a 24% rate in the prior year quarter. This large tax rate increase is a result of the combination of the U.S. government's current R&D capitalization requirements and the company's inability to put tax assets on its balance sheet given its U.S. valuation allowance position. Businesses that invest in R&D activities are required to capitalize these expenses and recognize them over time. This effectively increases taxable income over 5 to 15 years, depending on the circumstance over which the R&D expenses are amortized. This reduces cash available to make further R&D and capital investments. We continue to work with industry groups and elected representatives to correct the situation and to restore the incentive for companies like Hyster-Yale to make future R&D investments. Next, I'll turn to the balance sheet. Improvements in our financial results and cash generation were very significant in 2023. We expect increased momentum in this area as 2024 progresses. Given these broad business and financial improvements, our credit rating agencies, S&P and Moody's, upgraded our credit ratings in March and April, respectively. Financial leverage continued to improve in the quarter with a 4% debt reduction compared to December 31 levels. Our debt to total capital ratio of 53% improved by 200 basis points sequentially as a result of higher earnings and lower debt. Additional cash generated from operations was used to reduce debt levels in the quarter. Our unused borrowing capacity of $269 million was generally comparable to the December 31 level. Working capital improved modestly from Q4 2023 but remained above desired levels at 18.9% of sales. While we improved inventory efficiency as measured by days inventory outstanding, significant further working capital reductions largely from inventory are expected across the remainder of 2024. On an absolute basis, Q1 2024 inventory increased compared to the prior year and prior quarter. This was largely due to a higher finished goods inventory driven by trucks completed but not shipped at quarter end and extended transit times due to internal global production shipments. As we execute our strategic initiatives, we're utilizing our global production systems flexibility to manufacture trucks efficiently. Therefore, trucks coming to the U.S. from our non-U.S. facilities take longer to receive. We expect finished goods inventory to decrease in the second quarter as the Q1 shipment days are cleared. Positively, raw material and component parts inventory improved compared to the previous quarter and to Q1 2023. Looking ahead, the outlook for full year 2024 remains favorable and better than we anticipated last quarter. For the Lift Truck business, we expect continued revenue and operating profit growth in Q2 compared to the prior year. This growth is driven by an increase in expected shipments of higher-priced, higher-margin backlog units. We anticipate the potential expiration of tariff exemptions in late May 2024 to modestly temper Q2 results compared to Q1 levels. The company is actively working with federal regulators to have these exemptions extended. Full year 2024 lift truck revenues and operating profit are anticipated to increase over 2023. Our Q1 results were higher than expected, largely due to continued strong unit margins. We anticipate our strong margin trend to continue for the balance of 2024. As a result, we expect higher full year revenue and profit in the Lift Truck business compared to our prior guidance. For Bolzoni, we anticipate 2024 revenues to be comparable to 2023. Bolzoni will continue to focus on increasing production of higher-margin attachments, while it executes the planned phaseout of legacy component sales to the lift truck business. As a result, the operating profit is expected to increase modestly year-over-year, leading to higher gross profits, partly offset by increased operating expenses. To increase sales, Nuvera is focused on more global customer product demonstrations in expanding its presence in Europe and China. Booked orders from current customers are expected to boost 2024 sales above last year's levels. The benefit from these higher sales will likely be offset by increased development costs, leading to comparable year-over-year operating results. Fuel Cell customer adoption has a long sales cycle. Therefore, we expect increased 2024 demonstrations to support fuel cell engine technology adoption and revenue growth over time. To offset manufacturing costs, Nuvera was granted up to $30 million in matching funds from the U.S. Department of Energy in April. This is part of a $750 million federal government investment in dozens of hydrogen projects as part of the national clean hydrogen strategy. Also in early April, Nuvera was awarded up to $14 million of investment tax credits from the U.S. Internal Revenue Service based on future spending levels. This is part of the qualifying advanced energy project tax credit initiative funded by the Inflation Reduction Act. This program, which provides up to a 30% investment tax credit for selected clean energy manufacturing projects, is designed to support secure and resilient domestic clean energy supply chains. Nuvera anticipates using the tax credits to expand fuel cell production capacity at its Billerica, Massachusetts headquarters. At the Hyster-Yale consolidated level, we expect increased full year revenue, operating profit, and net income compared to prior year levels. As I said earlier, this outlook builds on a strong 2023 year. Due to the better-than-expected Q1 2024 results and anticipated forecast improvements in the following quarters, full year 2024 results should improve compared to our prior full year guidance. In the second quarter, we anticipate continued strong product margins from shipments of higher-margin backlog units to drive year-over-year profit growth. Q2 profits are expected to increase significantly versus prior year levels but be modestly lower than Q1 results. This decrease is largely due to the anticipated expiration of Section 301 tariff exemptions on May 31. For the full year 2024, we expect continued progress toward our 7% operating profit goal in our core Lift Truck and Attachment businesses. We started the year off with first quarter margins of 8.9% in our lift truck business and 7.9% for the consolidated company. These were well ahead of our previously expected levels. We anticipate operating profit margins to moderate somewhat over the remaining 2024 quarters because of increased material costs. This is partly due to the assumed tariff exemption expiration I mentioned earlier. We remain committed to systematic and sustainable progress toward our financial goals over time. We remain focused on improving operating cash flows by decreasing working capital through improved inventory efficiency and strong production rates. As a result, inventory levels are expected to decrease substantially in 2024. Consolidated 2024 capital expenditures are estimated to be $84 million, down modestly from our initial projection of $87 million. While we anticipate substantial investments in our business, maintaining adequate liquidity remains a priority. As a result of our efforts, we expect a significant increase in free cash flow in 2024 compared with the prior year. This would enable further financial leverage reductions. Now I'll turn the call back to Rajiv to discuss our strategic initiatives and recent progress.

Thanks, Scott. Our vision is to transform the way the world moves material from port to home by promising customers optimally designed product solutions and exceptional care. To fulfill these promises and achieve long-term growth rates, all product segments are executing established strategic initiatives and key projects. I'll share some highlights here, but you can learn more about additional strategic projects in the Q1 2024 news release and in our shortly to be released investor presentation. The lift truck business has three core strategies to transform our competitiveness, market position, and economic performance over time. The first strategy is to provide products that increase customer productivity at the lowest cost of ownership. At the heart of these initiatives are our award-winning modular, scalable lift trucks. With the March 2024 launch of the full 2x to 3x internal combustion modular scalable product line in JAPIC, these products are now produced and available in each of our major geographies that can be configured as value standard and premium trucks to fit the customer's exact specific needs. For Hyster-Yale, this modular, scalable product platform enhances multiple areas of the business, including reducing supply chain costs, improving working capital levels, and providing customers with customizable solutions. Bookings and shipments of these trucks are accelerating in EMEA and American markets where they were first launched in 2022 and 2023. We continue to capitalize on advancements in electric powertrains for applications now dominated by internal combustion engine trucks. As a result, an electrified fuel cell container handler is now operating at the Port of Los Angeles, and an electrified fuel cell reach stacker is operating at the port of Valencia in Spain. In March 2024, we agreed to supply 100 emission battery-powered terminal tractors to APM terminals at the Port of Mobile in Alabama. This was part of an electrification pilot for port equipment decarbonization. The lift truck business is also focused on applying technology advancements to operate or assist in automated product options. In March 2024, we began our first test of an internally developed automated truck at a customer location. This builds on our prior offering using third-party software. At the recent MODEX material handling trade show, we announced the stand-alone availability of our Advanced Dynamic Stability technology or ADS. ADS helps maintain overall vehicle stability and minimizes the potential for lift truck tip overs, thus addressing a key industry risk factor. The even more powerful Yale-Reliant operator-assist technology, which helps forklift operators avoid potential hazards, received global recognition by earning an honorable mention in Fast Company magazine's innovation by design awards. Bolzoni's core strategy is to be the leader in the attachment business to continue that journey in Q1 2024. The new home appliance telescopic plant for lift trucks designed to easily handle home appliances and pallet-less load in confined spaces was introduced in March. In addition, Bolzoni launched its Easy-Connect product range in February. These products feature technology to collect and analyze truck performance data. This allows customers to optimize the material handling process including maximizing warehouse space and reducing handling times. Nuvera's core strategy is to be a leader in the heavy-duty fuel cell market. Using the funds granted by the DOE and its own funding, Nuvera will develop high-volume production processes needed to scale up its next-generation fuel cell stack technology for heavy-duty vehicles. Now I'll turn the call over to our Executive Chairman, Al Rankin.

Thanks, Rajiv. Building on the robust 2023 financial results, our results were obviously very strong in the first quarter. This reflects sound performance in our core lift truck and attachment businesses and continued progress at Nuvera. To better reflect our company's business activity focus, last month, we announced new names for some of our businesses. As of May 31, the public company will be known as Hyster-Yale, Inc. The lift truck business will then take on the Hyster-Yale Materials Handling name in order to better align its name with its broad material handling capabilities, which have evolved beyond its core lift truck products. The names of the other two Hyster-Yale strategic business units, Bolzoni and Nuvera, will remain the same. We believe these changes give more clarity to our company's future evolution as three distinct but interrelated businesses with lift trucks at the core. The strategic business unit names also help underscore our commitment to each brand. Under the umbrella Hyster-Yale Inc., these business segments are positioned to deliver on the promises of their key brands: Hyster, Yale, Bolzoni, and Nuvera, to provide optimal solutions and exceptional customer care in their areas of business focus. As I reflect on our business performance and outlook, I believe our future prospects are excellent. We're in the midst of a fundamental redesign of our vehicle architecture, which is off to a strong start. Our new modular scalable designs will help us meet customer needs more effectively, operate more consistently at target margins, and improved manufacturing, and also lower inventory levels. We're a leader in on-vehicle technologies with our dynamic stability, operator assist systems, and fully automated trucks. Similarly, our initiatives at Bolzoni and Nuvera are expected to continue to position those businesses as leaders in their industries. In closing, I also note that while economic activity will vary globally and by quarter, our businesses should be stronger and better able to deal with whatever volatility occurs. Now I'd like to open the floor to questions.

Thank you. Our first question comes from the line of Chip Moore.

Congrats on the strong quarter. I wanted to ask, first, last quarter, I think we talked about maybe some larger accounts had maybe over-ordered and deferred some of their orders. Can you just give us an update there? Have you continued to see that at all? Has that normalized? Or how are those trends?

Yes, Chip, this is Rajiv. I think those have generally normalized. We haven't seen any out of the ordinary cancellations during the last quarter. So, I think those have gone back. I think it was one or two key customers that had delays and either deferred or canceled.

Got it. And then on the margin side, I think you talked about in the prepared remarks, strong margin trends continuing for the balance of the year, I think it was. Maybe just expand on that, help us think about sort of near-term mix impacts, obviously, this quarter skewing towards larger trucks. It sounds like maybe next quarter as well. Just help us think about that and lead times as well.

Yes. As we have addressed our backlog, we have noticed that our dealers typically order simpler configuration trucks, which we can produce more easily because they consist of more standard components. These simpler trucks were built and shipped during 2022 and 2023. Now, as we work through our backlog, what remains are the high-priced complex trucks that require extensive special engineering, making them more challenging to manufacture. For example, where we would usually have a manufacturing station that takes about 20 minutes, these complex trucks may require 50% more time at some stations, which impacts our volume throughput. However, their higher value has led to relatively good revenue despite lower unit numbers this quarter. These trucks also have favorable margins. In the second half of the year, we plan to focus on building these trucks primarily in the early part of the year, and by the second half, we expect to return to a more normal mix. Does that help?

Got it. Yes, that's very helpful. Could you provide an update on the modular and scalable process? What insights have you gained from the rollout of some of those products? Have you encountered any issues, and do you think it will become smoother as you expand to new lift truck classes? Also, how is the supply chain playing into this? I'd appreciate any additional information you can share.

Yes, the main issue we faced was technical problems during the rollout of the trucks, primarily related to software. We have mostly resolved those issues now, and the trucks are ramping up well. We are expanding our models. Currently, we are producing two to three-ton pneumatics, and in the coming quarters, we'll introduce cushion trucks in both two to three tons and one to two tons, along with one to two-ton pneumatics and cushions at our Craigavon plant. We will also begin manufacturing the value and standard platform in our Fuyang plant, starting with the APEC market, while the rest of the world will follow in the third quarter. We still have a significant amount of rolling out various models from that platform, which will continue through the rest of this year.

Great. Sorry, but I have one last question for you, Scott, regarding the balance sheet and inventory position. I believe you mentioned the larger finished goods inventory. It appears that may be resolved in the near term. Could you share your thoughts on how to approach inventories, especially since working capital is crucial for free cash flow this year? Thanks.

Yes, I believe we observed a slower reduction in inventory during the first quarter, mainly in finished goods, while raw materials decreased as anticipated. We expect to accelerate inventory reductions and have made significant progress towards our long-term target of 15% working capital as a percentage of sales through 2024 and into 2025. This is a positive development for the business, which should lead to higher free cash flows.

Yes. Maybe I could just provide a little bit more color to that. As you know, one of the plants that had the longest backlogs was our big truck plant in Nijmegen, and those guys are making some really good progress now. Also, Fuyang is now starting to build trucks for the other regions. So, what that does, it puts a lot of trucks on the water, and that goes into our marketing inventory as trucks that are in the shipping process. So that happened. It was better than we expected, but that does trap trucks in that category. And of course, as soon as they arrive, they are sent to their customers and invoiced. We think it will transition into receivables fairly quickly.

All right. I appreciate all the color. I'll hop back in queue. Thanks.

Our next question comes from the line of Ted Jackson.

Congratulations on a successful quarter. It's moments like this that make me regret that sell-side analysts can no longer own their own coverage. I have a few questions. Some of these have been addressed in the previous dialogue, but I'd like to discuss them further. Regarding production issues, it seems that most of these were related to the modular components, and I assume they are now starting to diminish. When can we expect these production issues to be fully resolved?

Yes, Ted, I believe that overall, the new A&N platform was satisfactory. Most of the challenges we encountered were related to the 4 to 7 ton truck, as well as some larger trucks. The primary concern was the throughput we could achieve due to the complexity of the design currently in our backlog. These are significant account trucks that include a considerable amount of additional content, which is limiting our throughput capacity.

I think another factor that you might want to think some more about is that units aren't necessarily the best indicator of what's going on in the plant. In another way, that's what Rajiv just said. And if you have fewer units going through, but they have higher revenue and very good margins, that's a full utilization of the line. And so, we're tending much more as time goes on to think of revenue throughput than individual units. Because remember, in the backlog, we have trucks that range from what to what, Rajiv?

$3,000 to $500,000.

So, it is probably not as helpful to look at the individual numbers in the backlog in terms of units as it is to understand and focus on the revenues. That's something we've got to consider, as well as you all, and we are.

Based on those discussions and the guidance provided, it seems that the production issues related to the larger trucks should be resolved as we move beyond the second quarter with your delivery.

I want to emphasize the importance of these issues. These trucks need to be produced. They are excellent trucks, and our goal is to manufacture them while taking the necessary time to do so. Rajiv accurately described the situation; there is a reduction in the number of units produced, but the revenue generated is quite strong.

Very good. I understand. I'm just trying to get to my question because it's really not about terminology. Tying into that, as you deliver that backlog, we should see gross margin in the lift truck business comparable to the first and second quarters. However, as your production mix changes, unit volume will increase, the average selling price will decrease, and we will experience, for lack of a better term, a contraction in gross margin in the second half. That's the direction I'm going. It's about the cadence of how your backlog will reflect in your financial statements and how I perceive it. That's what I'm asking.

Yes. I think we're currently considering that the second quarter will resemble the first quarter. We are still working to determine how to effectively implement the second quarter in the second half.

execute the second half.

Our customers are concerned about obtaining some of these trucks. For example, we are considering having EMEA build some trucks for North America in the second half because their lead times have improved and are now better than those in the Americas. We believe they can produce some trucks for the Americas, but we are still in the planning phase for the second half, making it challenging to provide further comments.

I think another way to think about it is that the backlog which mostly takes us through the year has pretty darn good margins.

I think you demonstrated this with this.

We did call out the negative, which, of course, is the likelihood as we see it now, the tariff exclusions will not be kept up. That will be a headwind for us in the second half. And so, it's more of those kinds of things.

One of the challenges we are facing is increased shipment and logistics costs due to the situation in the Red Sea. This has resulted in longer and more expensive transportation for our materials and trucks coming from Asia to our plants. We are working on finding the best solutions and locations for building some of the trucks. This process is quite complex, and we are doing our best to navigate through it, especially as we are experiencing growing pressure from customers to receive these trucks, which are essential for production. These trucks are not just support vehicles; they are critical components of the production process, particularly in industries like automotive, paper, and steel.

Yes, that's the case, I know. I'm going to beat the unit thing one more time and then I've got another question behind that. And so, when I think about the last call, there was, for lack of a better term, like a shortfall in terms of deliveries, and they got delivered in the first quarter. And honestly, I was kind of expecting to see growth in units, at least on a sequential basis, and I did not. And so, I want to go into units and why I want to is because if we're going to see units grow in Fiscal 2024 relative to Fiscal 2023, given where you started the first quarter, will we see meaningful unit growth in the second quarter? Because I'm trying to understand again kind of the cadence of this as we roll through the fiscal year. So that's kind of where I'm going with it is just kind of like how do I think about second quarter? And then I do actually have a much more fun question after this.

Okay. So, the way I would think about it is second quarter is going to be similar to first and then the second half, I think we'll do better on the build rates.

Okay. That was actually easy. Okay. Now here's my more fun question for you. You ready? So, you commented in the press release and in your presentation about the success you had in the EMEA with warehouse truck orders. I know from your Investor Day that you have highlighted the warehouse market as an important opportunity for longer-term growth because you are underrepresented market share in that vertical. So, when I hear that, my question is, is the success that you had in the first quarter of 2024, an early indication of success in taking market share in that segment? And what will that success as you progress through it mean to your margin structure over time?

Let's consider share as having two parts: participation and close rates. Currently, our main focus is on increasing participation. We are putting significant effort into enhancing our participation within the warehouse sector across all regions. Some engagements can quickly convert into orders, which has been the case with several major customers in EMEA. For other cases, the lead time to convert them into orders is longer. Our primary goal is to boost participation. As we increase our involvement, we will better understand how to enhance our close rates based on the feedback we receive from customers on our initial quotes. This outlines our approach to addressing the market. Does that clarify our process and strategy?

Yes, you're learning. You have to understand what the market wants so you can deliver it, and that's it. You need the experience.

Yes.

Okay. I have a couple of other questions, but I'll step out of line; I've been on for a while. Thanks.

There are no further questions at this time. I would like to turn the call back to Christina Kmetko. Ted, if you have more questions, please go ahead.

Thank you for participating in our Q&A session. A replay of our call will be available later this afternoon, and we will also post a transcript on the Investor Relations website when it is ready. If you have any follow-up questions, feel free to reach out to me. My contact information is in the press release, and I hope you enjoy the rest of your day. Now I'll turn it back to Chloe to conclude the call.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. A replay of this call will be available at 18886606345, and the passcode will be 72173. You may now disconnect. Thank you.