Lsi Industries Inc (LYTS) Q3 2020 Earnings Call Transcript

Greetings, and welcome to the LSI Industries Fiscal Third Quarter 2020 Results Conference Call. As a reminder, this conference is being recorded. On the call today are Jim Clark, President and Chief Executive Officer; and Jim Galeese, Chief Financial Officer. It is now my pleasure to introduce your host, Jim Galeese. Thank you, sir. You may begin.

Good morning, everyone. We issued a press release before the market opened this morning, detailing our fiscal third quarter results. In conjunction with this release, we also posted a conference call presentation in the Investor Relations portion of our corporate website. Information contained in this presentation will be referenced throughout today's conference call. I would like to remind you that management's commentary and responses to today's conference call may include forward-looking statements about our business outlook. Such statements involve risks and opportunities, and actual results could differ materially. I refer you to our safe harbor statement, which appears in this morning's press release as well as our most recent 10-K and 10-Q. Today's call will begin with remarks summarizing our fiscal third quarter results. At the conclusion of these prepared remarks, we will open the line for questions. With that, I'll turn the call over to LSI President and Chief Executive Officer, Jim Clark.

Thank you, Jim. Good morning, all, and thank you for taking the time to join us today. As I start today's call, I would like to address three items right up front that might help frame things up. First, I would like to acknowledge that we're in a strange time. The challenges that we're facing as a global community are of unprecedented nature. Few of us could have imagined two months ago that we would be in the middle of a global pandemic. With that in mind, I want to wish you and all your family safety from this challenge. And on behalf of LSI, I want to give thanks to the men and women that are on the front lines fighting through this. Second, I want to acknowledge the efforts of the folks at LSI that have worked tirelessly to keep our employees safe, maintain business continuity, and continue to deliver much-needed solutions to our customers. LSI was categorized as an essential services group early on. We proactively reached out to various resources to assure we could provide a safe environment for our employees and confirm with various government agencies that we are working in a safe manner and one that was consistent with changing stay-at-home orders. Throughout this trial, we have provided a number of services and products that directly address some of the challenges associated with this fight, including lighting products for temporary and permanent medical facilities and COVID-related graphics and signage for a number of our customers, including grocery, pharma, and petroleum, and we've even engaged our electronics fabrication facility in the manufacture of an experimental patient monitoring device that could prove to be a valuable tool for our medical community in the future. Lastly, I want to acknowledge and respect the situation we're in and the uncertainty of the future. We, like everyone else, have limited insight into the timing of the recovery and what those days will look like. I'm happy to say that we have a diverse set of solutions that we can offer our customers, and I believe that those solutions may create some opportunities for LSI as we move forward. I do not know whether we will experience a V-, U-, or L-shaped recovery. What I would like to say is that we are working with real-time data, and we adjust our plans as needed. We have multiple paths prepared, and we are ready to go whether we experience a delay in orders or a surge in business. None of us wishes to be in this situation, but we are ready to respond. Now jumping into the last quarter. As reported earlier today, we experienced slightly lower sales in Q3. The sales decline came from our Lighting business, which reflects our shift in strategy as we continue to move away from lower-margin commoditized solutions to higher-quality, higher-value solutions. This effort to move our business realized a 170 basis point improvement in margin for Q3. We believe this demonstrates our ability to move the business and that we still have room as we balance this transition. Last quarter, we introduced a half dozen new lighting products balanced between indoor and outdoor. These new products fill various gaps in our solution set and work across some of our most popular product families. In Q4, we will continue to introduce another six or so products, including our low-cost controls platform, to help augment our existing higher-end control solutions. We've been working on this platform for some time, and we believe that it could prove to be a differentiator by creating more value in our solutions. On the Graphics side of the business, I'm happy to say that we just passed our tenth consecutive quarter of growth, and sales for this segment increased by 10% for the quarter. Our backlog in Graphics remains very strong. And although it is anchored in our petroleum vertical, we have celebrated a number of wins in grocery, pharma, and quick-service restaurant sales, including the recent win of a $100 million multiyear project in digital graphics. This award demonstrates the confidence folks have in our solution, coupled with our ability to manage the logistics of a large project, including on-time delivery, installation, commissioning, and post-sales support. This post-sale support continues to demonstrate our ability to create a recurring revenue model, and we are looking for more and more ways to expand this. We spent the last 18 months optimizing our operational footprint and decreasing our overhead. This time last year, we exited and sold our New York facility while at the same time, we increased our space in Texas as we overhauled and optimized our Graphics business in that location. Earlier this year, we completed the sale of our North Canton facility, which supports our printed graphics and digital graphics solutions. We are actively in the process of moving to a new location just down the road, which will allow us to retain our existing workforce while optimizing our production footprint. At this point, our timing and schedule related to this move has not been impacted, and we expect to be fully moved into our new facility and operational by the end of June. Our focus moving into Q4 and into 2021 is a sharpened point on our commercial activities in Lighting. I'm happy to say that our new commercial leader, Jeff Davis, joined in January, and his influence can already be felt across the organization. Jeff, along with our field sales reps and agents, have really pressed on the accelerator, and the whole organization is responding to his engagement and processes that he's putting in place. Changes in the sales process do not take place overnight, but I'm happy with the progress I see at this point, and I'm encouraged moving into the future. In January, we had our national sales meeting, which served as a halfway point in our fiscal year. Mike Prachar, our CMO, led the meeting along with Jeff and other members of the company. The professionalism and engagement were first-rate, and I know much of that energy and training are coming to good use now. As we move forward, our company is much improved, and our commercial group is building a list of opportunities in front of them. Our balance sheet is strong. Our debt is a fraction of what it was a year ago, and our liquidity will allow us to pursue opportunities we have been eager to explore. We are not blind to the potential challenges ahead. Markets can change, but we are energized by the work we've done and the possibilities that lie ahead. With that, I'll turn it over to Jim Galeese for comments on our financials.

Thank you, Jim, and good morning, everyone. To summarize key fiscal third quarter financial statistics, net income was $1.9 million compared to a net loss of $3.2 million last year. Earnings per diluted share were $0.07 versus a loss of $0.12 in the third quarter of fiscal '19. Third quarter results include a nonrecurring $3.7 million pretax gain resulting from the sale of the North Canton, Ohio, facility and $700,000 of restructuring costs. On a non-GAAP basis, adjusted operating income was a loss of $400,000 compared to a loss of $1.9 million in the same period last year. Non-GAAP earnings per diluted share were a loss of $0.04 versus a loss of $0.08 in the third quarter last year. A complete reconciliation of third quarter GAAP and non-GAAP results is contained in our press release and 10-Q. The company generated $3.5 million of free cash flow in Q3, reducing debt to $7.1 million or 0.5 times the company's trailing 12-month adjusted EBITDA. Net debt has been reduced by $31 million since the beginning of the fiscal year. Other income and expense was flat to last year, a combination of lower interest expense combined with an increase in currency transaction expense related to the change in the peso exchange rate, the majority of which occurred in March. The President signed into law the CARES Act on March 27, 2020. The legislation includes a number of tax provisions, at least one of which will benefit LSI. The CARES Act grants taxpayers a 5-year carryback period for net operating losses arising in the tax years beginning after December 31, 2017, and before January 1, 2021. A corporation can carry back NOLs to offset pre-2018 ordinary income or capital gains thereby generating a current refund and a favorable tax differential. As a result, the company recorded a receivable of $800,000 as a result of applying the legislation. This favorably impacted current quarter tax expense by $300,000. We continue to review the act for any other potential qualification opportunities. A regular cash dividend of $0.05 per share was declared payable May 12 for shareholders of record on May 4. Moving to our two reportable segments. Lighting adjusted operating income was approximately flat to prior year, the combination of sales of $49 million, 7% below last year and a 170 basis point improvement in the gross margin rate. This reflects continued progress on shifting to higher-margin market applications, evidenced by the increase in third quarter sales of higher-margin outdoor products and decrease in select low-margin indoor products. The Lighting adjusted gross margin rate also includes the impact of structurally lower manufacturing fixed costs. The Lighting supply chain continues to function as usual, experiencing no measurable disruptions to the procurement process. Shifting to the Graphics segment. Graphics generated sales growth of 10% for the quarter. Growth was driven by the petroleum market vertical which has six major programs currently in progress, all in different stages of their lifecycle implementation. The outlook for the next several quarters for the petroleum vertical remains positive. Graphics segment adjusted operating income for the quarter was $1 million versus a loss of $900,000 in the prior year. The gross margin rate improved 310 basis points versus last year, driven by an improved cost position as programs mature along the lifecycle, volume leverage, and overall expense management. Lastly, our North Canton relocation project remains on schedule for completion in June, with no interruption to current customer service requirements.

Our first question comes from Craig Irwin with ROTH Capital Partners.

So first thing I wanted to ask about is this $100 million award from a Tier 1 quick-service restaurant customer. You mentioned in the release that it's an existing customer, and you're going to do about 6,000 locations domestically. There are very few quick-service restaurant competitors that have 6,000 locations in the U.S., so we can kind of guess who it is. But maybe can you frame up for us how this is likely to ramp over the next couple of quarters? Will it ramp quickly or incrementally? And those 6,000 locations, would you expect there potentially to be incremental sales maybe from the Lighting side or other products over the course of the next couple of years that might be additive to that $100 million?

Well, Craig, thank you for jumping on the call with us this morning. And thanks for recognizing that award. We're very happy about it. It's one that we worked on in the last year to kind of demonstrate our value and the services we could offer. I think when we initially got involved and engaged with this customer, it was from more of a product standpoint, but we were able to demonstrate to them our ability to manage the logistics associated with the distribution of the products and then the install and then from a post-sales perspective, the ability to manage the projects after. I think that as we demonstrated those through the piloting programs, they became more confident with us, and the conversation became less about price and more about performance. So aggregating all of those elements together, we were very happy to get the award. We do believe that we have opportunity in excess of just the digital menu systems. As you know, we have print in Graphic Solutions that go along and complement the digital menu systems, but we also have lighting and controls. Our approach has been if we're going to be on property, are there other things that we can do for you? The most expensive element usually is getting us on property, and then the second is any disruption or working in a way to minimize the disruption—why not take advantage of it? We've been—now that we've moved into this phase where we're working on the actual deployment schedules and the awards, we are actively engaged in each of the locations offering surveys, site surveys, and the opportunity to discuss other solutions we can offer. So I'm very encouraged by that. We don't have enough history yet to determine what that's going to look like in terms of traction, so I can't really comment on it, but we do have a very strong program around explaining those benefits and explaining the other services and products we can offer, all under the guise of the solution that not only helps them potentially improve their image and their effectiveness with their customers but also energy savings and performance related to overall Lighting.

Great. So I had no idea that you were chasing $100 million awards. That was actually a really nice positive surprise to see that press release. Can you maybe share with us if there are any other contracts? I mean, I know there are a dozen companies that have 6,000-plus locations in North America. But are there any other contracts that are north of $50 million that you're chasing or at least discussing with customers at this point, either on the identity side or on the lighting side of the business?

Well, the answer is yes. And as you know, when we first started sitting down talking, I came into this spot a little under two years ago, and the first thing we wanted to do is make sure we built that better business before we built that bigger business. It did not mean that we weren't in parallel pursuing some of these commercial opportunities and laying down the groundwork on that improved systems and operations in the background. But to be competitive, we couldn't do it at the cost structure we had. So as you see, a lot of the operational changes that have occurred over the last 1.5 years have been about rightsizing our ability to deliver a cost-effective solution. As we get engaged in projects like this, our efforts to demonstrate our ability to manage not just again the manufacturer project products but the delivery of solutions—there's multiple facets we've got going on with that from a Lighting standpoint with our agents recognizing, identifying, supporting, training, being in improved communications with our overall agents from a Lighting perspective, so that they have more confidence in us. We're delivering additional new products and improved productivity relative to cost standpoint, on-time delivery, and all of that. Then demonstrating to these large national accounts that we can work and we have the resources. I know I've mentioned it before, but it's specifically in a group we call Adapt within LSI. I know we don't disclose it publicly in terms of a reportable segment, but it's our project management capabilities. That extends across both Lighting and Graphics and is demonstrated in our petroleum successes, but it's also demonstrated in the graphics rollouts from a printed standpoint, particularly around grocery and quick-service retail, and then it's demonstrated in Lighting. Again, as you come back to national accounts, like we had a large auto parts supplier that we have a large contract with. I didn't particularly love that contract because we were in at the wrong price point, but it still demonstrated our ability to manage through deployment and make sure products arrived on time. So over the last year, we've taken a real look at those national accounts efforts and revamped our position relative to what's our back end look like, what's our capabilities for customization look like, whether it's Lighting or Graphics or both, then added some resources in our deployment and management—project management side. The last component being just the investments we're making in the commercial side now. I mentioned a little bit of it in the press release, but I'm very happy to say we've got a new commercial sales leader on board. He joined us in the last quarter. His name is Jeff Davis. I've got to tell you, he's only been with us for a short time, but his pace, cadence, and professionalism around the details have been impressive. We package all of this stuff together, and it's about confidence in these large deployments. Customers that have thousands of sites, if we’re out in deployment and we get a couple of hundred of them wrong, that's a significant impact. That's not going to happen with us. But I'm saying if they get a couple of hundred of them wrong, demonstrating the professionalism, demonstrating our ability to deliver in that area, I think we have a lot of ways to go in that, and we have some real big opportunities potentially in front of us.

Great. So I also wanted to ask about the outlook for the lighting market. I understand there's quite a lot of diversity in construction right now. Some areas are moving forward as planned, completely unchanged, particularly, I guess, the large corporates, where you have a good amount of exposure. But then there are other areas of the market that have just been shut off, particularly anything retail exposed. Can you maybe walk us through the dynamic that's going on underneath your Lighting business? I'm not asking for a forecast on this current quarter that we're in now. But how do you feel the fundamentals are working as far as the normal progress in this market versus this COVID-19 environment that everybody is trying to work through?

Yes. I mean, it's tricky to comment only in the sense that there are a lot of unknowns. I don't know the timing. I don't know if there's going to be any rebound to opening things up. Different states are going to open at different stages. I've seen some information that some of the longer tail states may not be fully opened until the end of June. Some are trying to press things even as early as the first couple of weeks of May. So I think there's a lot of variables there that I just can't comment on. What I can comment on is what we're doing in the background, and I mentioned it a few minutes ago. We sat down and said, okay, what's best case, what's worst case, and how do we adjust to respond to each of those. On our downside, if there's a downside, we're prepared to take whatever actions we need operationally, and obviously, we've implemented a lot of those just as a standard course of business right now. On the upside, what we're doing is preserving the ability to react. We had purposely made a decision in the fall of last year to build inventory in anticipation for demand this coming summer. We have that inventory available. We've had a number of calls with our agents, niche reps, specialty market folks. We've become experts at audio and video conferencing. I'm happy to say many of our partners have become very proficient at it, too. The point I'm getting to is we've laid the groundwork for whatever side this leans. If there is an uptick in business, I feel very confident that we're going to be able to respond. One of the things that we've been working on over the last year was our supply chain and diversifying and making sure that our supply chain had redundancy in it. As a U.S. manufacturer and a U.S.-based company, we've made a lot of efforts to ensure that we took a second and third look at U.S. supply chains where we could buy cost-competitively within the U.S. and dilute our concentration. I think it sets us up well to respond to whichever way this goes, Craig. If there's a surge in business, things open up a little bit quicker than we think, construction projects because of available labor pick up quicker, and they maintain their construction schedules. We'll be able to provide the product. If things push out, we haven't seen a lot of talk about cancellations. Most of the conversations have been business as usual, stay to our original commitment date or extend it a little bit, but very few on cancellation. Like I said, we're hoping that maybe with disrupted supply chains and things like that from some of our competitors, maybe it creates an opportunity for us.

And then I guess on the opportunity theme, right, net debt of $7.1 million, down $35 million year-over-year is a huge accomplishment. In this environment, a lot of the private companies we talk to say that some of their peers have a much greater appetite to sell, particularly those who have been flirting with the idea over the last couple of years. I know that you've been really internally focused on execution and fixing what you can at LSI to get the company positioned to execute and grow over the next few years as things normalize. But what's your appetite for potential accretive growth? If something came up strategically interesting, would you consider completing a transaction? Are you not interested in transactions? Are you actively looking? Any color would be helpful.

Yes. I mean, I think that as you know from prior calls, we've worked hard to have a strong balance sheet. We've also worked hard to maintain liquidity and have capital available should we want to invest in something. The answer—the short answer is yes. I do want, and so does the team want to be very opportunistic here. We are hoping, as opposed to looking at all the downside of this situation, to look at the potential opportunity and be opportunistic. I am hoping that it moves the conversation in a direction where more folks are willing to engage. As you mentioned, we have spent a lot of time focusing on the structure of the company. We are now spending a lot of time on the commercial aspect of the company. Now that we are a better company, we can be better represented in front of our customers, agents, partners. It creates that opportunity for us to start to look at those other accretive growth. We haven’t just turned this on; we've been looking at it for a few months now. So we have our list, and we're hoping that maybe this does open up an opportunity for more conversations.

Excellent. That's great to hear. Congratulations on the really impressive win with that $100 million contract and continued healthy execution. Hope everybody at LSI is healthy in this challenging environment.

Thank you. Thank you. And same to you.

Our next question comes from Amit Dayal with H.C. Wainwright.

With respect to this $100 million win, could you help us understand how this may reflect in the financials over the next sort of three calendar years? Is it 1/3, 1/3, and 1/3 roughly?

Yes. So Amit, what we know right now is that we had an initial deployment schedule. Obviously, it's a live project, and we're working through our customers, their locations, and the kind of the restrictions around it right now in some areas where construction is more restricted than others. One of the things we're dealing with right now is, obviously, in this digital menu system, many of them are for drive-through; there are some interior, but drive-through is extremely busy right now. We're working around that scheduling and managing the potential benefits of the updated system along with any disruption to the business and the resources to install it. What I can say is that the plan is within a 30-month or 31-month kind of planning cycle. It may accelerate a bit or it may be delayed, but we haven't seen any disruption to our current deployment schedule. We have had conversations that we may push things out, or we may concentrate things in an area where we can get resources and there's less restriction.

Understood. And from the commentary, it looks like you're still deploying and doing relatively well in the petroleum vertical. With what's happening in the energy markets, it doesn't seem that you're losing anything, but should we expect some push-outs and delays? How should we view the current environment in that vertical relative to the projects you have lined up and business you're pursuing in that space?

Yes. Great question. Just within the umbrella of this current challenge, COVID challenge, there's no playbook that any of us can open and say what happens next. So there are obviously lots of variations. You see oil prices crashing and you see all kinds of things happening in that sector. With that said, the conversations we've had have remained committed. This is a long cycle decision. These are multi-year projects that create a lot of momentum behind them and involve logistics, scheduling, all kinds of things. Sometimes we're simply doing a graphics update; other times we're tearing up the whole facility and putting in new tanks. Right now, as we look out over the three-plus-month period, we do not see any disruption at all with customers' appetite to remain committed. We’ve also heard discussions that say this type of imaging, bright lighting, modern imaging, and updates to the stores are even more critical when oil prices are depressed. The news we've received right now on the retail end is that there will be no change in course, and that commitment stays as it is. We've even heard some positive news that it may now be a time to accelerate some of those projects, both from a competitive standpoint and because the actual ability to implement disruption to business is minimized. We need to balance it right now, but there has been no disruption to any of our commitments extending over the last 90 days as we see it right now.

That's really interesting to hear that you have that level of traction despite what is happening at the macro level. Maybe one last one from me. The balance sheet is deleveraged. You have engaged in M&A previously. If you were to revisit those opportunities again, is there any particular vertical that interests you most at this point?

As we talk and the management team, we discuss it in two tranches or three tranches really. We talk about core, adjacent, and additive. Core being—I’m just making this up—core being a core lighting company, something that adds to our solution set and our product portfolio or something like that. Adjacent would be a technology market enabler, maybe getting into new verticals, or adding to our portfolio in terms of a solution set. The last aspect is, is there something we can do that broadens our share of wallet, and it may be a different solution set. We're looking across all three; it's a wide lens, but we want to be opportunistic like that. We hope that some of the conversations we've had will be reenergized. We hope that maybe some that hadn't considered talking with us or that we hadn't reached out to yet, that the barrier will be lower. But I do want to say this: it is definitely something we're putting time into right now.

Our next question comes from the line of Joseph Osha with JMP Securities.

Well, I'm out here in permanently shut California. So per your comments, we're one of the trailing economies, I would say. Just following on a couple of the earlier questions, not talking about the necessarily the near term, but the longer term, how do you think about positioning this business based on changes from this pandemic that might prove to be more permanent? In particular, how do you position your petroleum and your convenience store businesses?

That's a complicated question, but I’ll say this: first, through this challenge, the award of that QSR business, which is multi-site, multi-year and complex, our customers that we deal with in the petroleum space, which are also heavy logistics, and the ability to coordinate and provide services beyond just products is critical. During this challenge with COVID, we were tapped on the shoulder by a number of our customers—petroleum and grocery being the ones that come to mind—about immediately responding to COVID-related graphics, both from a print and branding standpoint, and the ability to manage some of our digital assets and update them with warnings and information related to COVID. What happened through that is we were able to demonstrate our ability to pivot and respond. I think it gained us a lot of credibility with some of these larger customers. It also attracted the attention of maybe some of the folks that are just peripherally doing business with us or haven't fully engaged with us yet. That combination of Graphics and Lighting continues to be a potential opportunity that may be leveraged in different ways or recognized in different ways than it had traditionally been. We have a very mobile society, as you know, and these solutions that we're deploying really kind of address some of that mobility. I also think that there are going to be some changes that we're going to adopt culturally as a nation about distancing and maybe less dining in, more pickup, delivery, and drive-through-type things. The solutions we've been rolling out for the past couple of years, I think, are going to really appeal in that market and appeal to what is a developing market as we move forward.

Yes. It's interesting to think about. On that note, thinking about acquisitions, which, again, this has come up here a couple of times, what stepping away from just buying another lighting company, what kind of enabling technologies do you maybe imagine plugging into your enterprise as you think about how to position yourself?

For us, if we look at adjacencies or if we look at enabling technologies, it's really things that are adjacent to the solution we offer now where the expense of being on-site and coordinating everything from construction to electrical permits and business interruptions can be minimized. While we're in there, we can offer additional services or place additional solutions in. I don't want to constrain myself in saying that I know exactly everything that we can do. I also want to be careful about stating too much about things we're looking at right now. But I think the easiest way to say it would be if there's a way we can create a greater share of wallet with those customers and show the value through minimal disruption. Those are the opportunities we're going to look at. We’re seeing things that are good; it’s something we want to tap on, but we’ve hit the accelerator a little bit on services—not just deployment, but the after sales services, the recurring revenue, the maintenance and management not just from a performance standpoint relative to whether the product is working or needs repair, but from a management standpoint regarding can we post more information, can we change price, can we put information that we didn't conceive of three months ago. All of those things are starting to be things that we can bring into the conversation.

I can say with absolute certainty that the lighting supply chain and many of our competitors that are importing products from finished goods and are heavily reliant on components from foreign sources are absolutely feeling a disruption right now. It's active every day. What we did started 18 months ago, really picked up steam about 12 months ago, was that diversification of the supply chain in advance of the concentration of imported products from China and the tariffs that were put in place. We were already a couple of steps ahead, gaining momentum on that supply chain diversification. We could never have anticipated the current situation we're in, but the work that we did to decentralize that concentration, I mean decentralizing the single-source purchasing and the concentration we had is really paying off right now. There is another aspect I think I mentioned, which was last year because we weren't as efficient as we needed to be, we had more orders come in than we could serve. Knowing that we didn't want to get into that situation again, we've undertaken many operational changes we've talked about. Obviously, they reflected in our conversations and balance sheet and in other visible ways. Last year, however, we decided to look at components, parts, pieces, and our ability to deliver and pivot quickly. We’ve built some inventory in anticipation of this year’s high season. So we have those components in-house. We're able to manage with a much greater degree of flexibility. We have subassemblies prebuilt and finished goods prebuilt. We feel we can really react, but it's all underpinned by breaking up that concentration in our supply chain and looking for multiple sources, whether domestic or global while ensuring we aren't heavily concentrated in the Far East and one country.

This is Jim Clark, and I'd just like to say, first of all, thank you again for taking the time to call in, and thank you for the questions. My closing remarks would be around many of the things we just talked about. We've been building a better business for the last 18 months. We were well positioned coming out of Q3; we had minimal impact, and we're well positioned to go into Q4 and into next year. That positioning is going to serve us well as we're in the middle of this situation with COVID, and the challenges are going to be in front of us. The thing that I would leave with each of you is that we're prepared. We've done the background work, and the infrastructure work. We're prepared, whether this creates a pressure on the business or whether it creates opportunity. We are certainly looking at how we can create those areas where there is potentially opportunity. I did like some of the questions related to M&A conversations and how those may look different. I hope they will. We're all in business, we're all in the markets. Multiples have gotten very frothy lately, and it was sometimes difficult to have conversations grounded in reality. Looking for the silver lining in the cloud, maybe there is an opportunity here that engages some additional conversation. We remain focused on employee safety. Our ability to service our customers and support the work that we put in so far is very important. I want to assure you that we have plans in place to maintain business continuity and adjust either way. Thank you again for taking the time to spend with us, and I look forward to the time when we can all meet in person again. Take care. Stay safe.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.