Earnings Call Transcript - MATW Q3 2022

Operator, Operator

Greetings, and welcome to Matthews International Third Quarter Fiscal 2022 Financial Results Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bill Wilson, Senior Director of Corporate Development. Please go ahead, sir.

Bill Wilson, Senior Director of Corporate Development

Thank you, Vikram. Good morning, everyone, and welcome to the Matthews International Third Quarter Fiscal Year 2022 Financial Results Conference Call. This is Bill Wilson, Senior Director of Corporate Development. With me today are Joe Bartolacci, President and Chief Executive Officer; and Steve Nicola, our Chief Financial Officer. Before we start, I would like to remind you that our earnings release was posted on our website, www.matw.com, in the Investors section last night. The presentation for our call can also be accessed in the Investors section of the website. In addition, as a reminder, beginning in the first quarter of fiscal 2022, the company transferred its Surfaces and engineered products businesses from the SGK Brand Solutions segment to the Industrial Technologies segment. Prior period results reflect this new segmentation. As a reminder, any forward-looking statements in connection with this discussion are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors that could cause the company's results to differ from those discussed today are set forth in the company's annual report on Form 10-K and other periodic filings with the SEC. In addition, we will be discussing non-GAAP financial metrics, and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics. In connection with any forward-looking statements and non-GAAP financial information, please read the disclaimer included in today's presentation materials located on our website. And now I'll turn the call over to Joe.

Joe Bartolacci, President and CEO

Thanks, Bill. Good morning. Our third quarter of fiscal '22 continues to present us with several challenges that we have faced throughout the year. But several new challenges accelerated quickly. Inflationary pressures in all of our businesses have impacted profitability, while supply chain issues have continued to impact our ability to control the timing of some deliveries. Additionally, during the quarter, we saw a rapid deterioration of the European market for our packaging business resulting from the progressively more challenging economic environment in that part of the world. The economic deterioration in Europe further drove the rapid decline in the euro and the U.K. pound negatively impacting our reported results. SGK was also faced with a couple of significant in-store project cancellations and delays in other projects due to supply chain challenges at our clients, or the inability of certain retailers to stock their stores, negating the need for in-store marketing. The combination of these challenges caused our SGK Brand Solutions segment to report very difficult results. Although these challenges are not the result of client losses or in any way of our making, we expect them to impact the balance of the year. Nevertheless, the remainder of our business has performed well in this difficult environment. On a constant currency basis, again, our Industrial Technology segment reported growth and remains on track to deliver a very strong year in 2022. More importantly, despite the continued positive performance, our order intake in this segment remained strong. Several significant orders in our energy business continued to progress well, while growing requests for proposals bode well for the future of this business. The recently announced acquisition of Olbrich will add nicely to this segment as they add about $20 million of energy-related orders in the previous year as well. Like us, they are seeing strong interest in their product offering which is complementary to our products, in some cases are used by the same customers. We have great hopes for this addition to our portfolio which adds significant coating line capabilities to our already proven calendaring and embossing product lines. Together, we offer several critical pieces of equipment, using the production of dry electrodes for the lithium-ion battery industry. I remind you that we are the only producers of production level equipment used in the production of dry electrode technology, a significant differentiator and in our advantage. Similarly, Olbrich, like us, is seeing strong interest in hydrogen fuel cell production level equipment. We hope to speak about the success of our combined offerings more in the quarters to come. Although we are yet unsure of how Olbrich will perform in the near term, our energy business is expected to finish the year strong as orders remain strong. Certainly, in our Product Identification and our Warehouse Automation business, we continue to see revenue and profit growth while order intake remained strong. Hardware delivery delays at several client warehouse sites slowed the installation of our automation systems, thus preventing us from having an even stronger quarter. We expect these businesses to finish the year strong as well since much of the work we perform has to be delivered by the beginning of our next quarter. Regardless of the timing of the deliveries, evidence of the quality of our automation system solution is demonstrable when you look at our client list and installed base, and we look forward to using our reputation and success to expand this business over time, thanks to the addition of the R+S Group, part of the Olbrich acquisition. R+S brings us both engineering skills and capabilities to increase our service and delivery levels here in the United States. But R+S also brings us a much sought-after presence internationally, which should help us to expand our geographic footprint there as well. In addition, R+S will expand our total addressable market further to include factory automation, where R+S has significant experience and capabilities with some of the world's largest companies. In our Memorialization segment, we continued to have strong execution at all levels, despite declining casketed deaths. Our Funeral Home Products business saw relatively consistent volumes when compared to prior years. Our revenues for this business are up over the prior year due to price increases, but profitability is down as inflationary pressures outweighed the pricing we have achieved, as anticipated. Our Cemetery Products business, however, saw strong volume increases coupled with price increases to offset the rising commodity costs. We expect this business to also finish the year strong, particularly since most of the revenue derived in this business are U.S.-based and thus not significantly impacted by currency. All in all, we are not satisfied with our performance this quarter. As I have noted, however, much of the challenges we faced are geographically concentrated and not of our making. We hope economic conditions will return to a more normal state soon. Until then, however, we remain confident in our businesses and the opportunities before us. Given the challenges in Europe, however, we believe that our full year EBITDA guidance will be between $200 million and $210 million. We hope to do better, but many things remain unclear at this time. Now let me turn it over to Steve Nicola, our CFO.

Steve Nicola, CFO

Thank you, Joe, and good morning. I'll begin the financial review with Slide 7. For the fiscal 2022 third quarter, we reported consolidated sales of $421.7 million compared to $428.4 million for the third fiscal quarter last year. As Joe just noted, European market conditions and the corresponding impact on currency rates, particularly the euro and British pound significantly affected comparability to last year. Relative to the reported decrease in consolidated sales of $6.7 million, the unfavorable impact of currency rate changes was $17.6 million. Memorialization sales were 10.2% higher for the current quarter compared with a year ago. Excluding currency impacts, fiscal 2022 third quarter sales for the Industrial Technologies segment also improved relative to a year ago. Year-to-date, these segments reported sales growth of 10.6% and 15.2% respectively over last year. On a GAAP basis, the company reported net income of $2.9 million or $0.9 per share, compared to $3.4 million or $0.10 per share for the same quarter last year. On a non-GAAP basis, adjusted EBITDA, which represents net income before interest expense, income taxes, depreciation and amortization and other adjustments, for the fiscal 2022 third quarter was $46 million, compared to $60 million last year. Lower consolidated sales for the quarter combined with the impact of higher material costs, increased labor and freight costs, and higher travel and entertainment expenses were the primary factors in the year-over-year decline. In addition, currency rate changes had an unfavorable impact of $2.5 million on consolidated adjusted EBITDA for the current quarter compared with a year ago. Adjusted earnings per share was $0.58 for the current quarter compared to $0.91 last year, primarily reflecting the reduction in adjusted EBITDA. Please see the reconciliations of adjusted EBITDA and non-GAAP adjusted earnings per share in our earnings release. Investment income for the quarter ended June 30, 2022, was $59,000 compared to $959,000 for the same quarter a year ago. Investment income primarily reflects the changes in the value of investments held in trust for certain of the company's benefit plans. Interest expense for the fiscal 2022 third quarter was $6.7 million, which was relatively consistent with the third fiscal quarter last year. Other income and deductions net for the quarter ended June 30, 2022, represented an expense of $448,000 compared with $2.4 million a year ago. The significant change primarily reflected a reduction in nonservice pension costs as a result of the settlement of the company's principal pension plan. Year-to-date, other income and deductions net for fiscal 2022 represented net expense of $31.6 million compared to $6.8 million last year. The year-to-date change primarily reflected a significant first quarter charge in the current year as a result of the settlement of the company's principal pension plan. The company's consolidated income tax expense for the quarter ended June 30, 2022, was $1 million compared to a benefit of $2.3 million a year ago. The unfavorable change primarily reflected the benefit of tax items discrete to the third quarter a year ago. For the 9 months ended June 30, 2022, the company's consolidated income taxes reflected a benefit of $2.3 million compared to expense of $2.6 million last year. The benefit for the current year primarily reflected the tax benefit of the first quarter pension cost. Please turn to Slide 8 to begin a review of our segment results. Memorialization segment sales for the fiscal 2022 third quarter were $203.2 million compared to $184.3 million a year ago, representing an increase of $18.8 million or 10.2%. The growth was primarily the result of higher cemetery memorial product sales and increased pricing to mitigate the effects of inflation. Current quarter casket unit sales volumes were relatively steady compared to a year ago and U.S. cremation equipment sales were higher. Memorialization segment adjusted EBITDA for the fiscal 2022 third quarter was $32.1 million compared to $36.4 million a year ago. The favorable effect of higher sales was offset by the significant unfavorable impacts of higher material costs, mainly steel, lumber, and bronze compared to a year ago as well as increased labor and freight costs and other inflationary cost increases. Please turn to Slide 9. Sales for the Industrial Technologies segment were $78.4 million for the fiscal 2022 third quarter compared to $81.8 million a year ago. Currency rates significantly affected comparability with last year. Relative to the reported decrease of $3.4 million in the segment sales, the unfavorable impact of currency rate changes was $5.1 million. Excluding currency, the segment sales improved from a year ago, primarily reflecting higher sales for the Warehouse Automation and Product Identification businesses. Backlogs and incoming order rates for these businesses continued to be solid through the fiscal 2022 third quarter. Year-to-date, sales for the Industrial Technologies segment were $230.9 million for June 30, 2022, compared to $200.5 million a year ago, representing an increase of 15.2%. Adjusted EBITDA for the Industrial Technologies segment was $11.8 million for the 2022 third quarter compared with $12.2 million a year ago. Currency rate changes had an unfavorable impact of $1 million on the segment's adjusted EBITDA for the current quarter. Excluding currency, the increase in Warehouse Automation and Product Identification sales and improved engineering models contributed to the current quarter adjusted EBITDA. On a year-to-date basis, adjusted EBITDA for the Industrial Technologies segment increased approximately 42% over last year. Please turn to Slide 10. Sales for the SGK Brand Solutions segment were $140.1 million for the quarter ended June 30, 2022, compared to $162.2 million a year ago. The decrease primarily reflected the unfavorable impact of currency rate changes, primarily the euro and British pound and weak market conditions in Europe. Currency rate changes had an unfavorable impact of $10.9 million on the segment's current quarter sales compared with the same quarter last year. Year-to-date sales for the segment were $440.5 million for fiscal 2022 compared to $458.6 million last year. The unfavorable impact of currency rate changes was $20.3 million on a year-to-date basis. Fiscal 2022 third quarter adjusted EBITDA for the SGK Brand Solutions segment was $14.5 million compared to $27 million a year ago. The decline primarily reflected the impact of lower sales, increased labor costs, other inflationary cost increases and higher travel and entertainment expenses. Please turn to Slide 11. Cash flow provided by operating activities for the fiscal 2022 third quarter was $11.6 million compared to $14.7 million a year ago. Cash flow provided by operating activities for the 9 months ended June 30, 2022, was $84.4 million compared to $106.9 million last year. The year-to-date change included a $36 million contribution to the company's principal pension plan during the fiscal 2022 first quarter in connection with the planned termination and settlement. Outstanding debt was $776 million at June 30, 2022, compared to $763.7 million at September 30, 2021. Net debt, which represents debt less cash at June 30, 2022, was $730.2 million and our net leverage ratio was 3.5 based on trailing 12 months adjusted EBITDA. The leverage ratio covenant in our domestic credit facility is based on net debt. The increase in debt for the current year primarily reflected the reduction in operating cash flow and the impacts of higher capital expenditures and stock repurchases. These increases were partially offset by the impact of the replacement of the company's securitization facility. In the fiscal 2022 second quarter, we replaced our existing securitization facility with a receivable purchase agreement that resulted in a corresponding reduction in our outstanding debt and trade receivables balances. Approximately 30.6 million shares were outstanding at June 30, 2022. During the fiscal 2022 third quarter, the company increased its level of share repurchase activity as a result of the stock's recent trading values. During the current quarter, the company purchased approximately 705,000 shares at a cost of $21.8 million. Year-to-date, the company has repurchased approximately 1.1 million shares at a cost of $34 million. At June 30, 2022, the company had remaining authorization of approximately 1.6 million shares under the program. Finally, the Board this week declared a quarterly dividend of $0.22 per share on the company's common stock. The dividend is payable August 22, 2022, to stockholders of record August 8, 2022. This concludes the financial review, and we will now open the call to questions.

Operator, Operator

We have a first question from the line of Daniel Moore with CJS Securities.

Daniel Moore, Analyst

Let me start with SGK Brand Solutions, maybe just talk about the cadence of obviously, a lot of headwinds and challenges this quarter. The cadence of margin recovery, how long you see that will take playing out and maybe some of the steps that you can take in the coming quarters to get back to where we were maybe a quarter or 2 ago? And a quick follow-up or 2.

Joe Bartolacci, President and CEO

Certainly. When we examine the situation at SGK, we identified two main areas causing concern. The first and most significant issue is in Europe, where we face two challenges. One is currency fluctuations, which are beyond our control, and we cannot predict when or if that will stabilize. The other issue is a noticeable decrease in volume. Importantly, we haven't lost any clients; rather, there has been a significant reduction in economic activity in that region. We do anticipate a rebound, as every client we've spoken with indicates they view this as a temporary pause that will improve when conditions get better. However, we aren't expecting this to happen next quarter. We believe it will take about 6 to 12 months to return to a more stable volume, regardless of the exchange rate at that time. In the meantime, we are implementing measures to streamline our operations in that area. I hope this quarter's results are an anomaly for Europe, but there may be some ongoing challenges next quarter as well. The second challenge pertains to our brand business and in-store marketing efforts, which are experiencing unique obstacles. Many of our large clients cannot access products for marketing, and some are unable to adequately staff their stores, which diminishes the need for in-store marketing initiatives. These challenges are specific to the current operating environment. We have longstanding relationships with these major clients, and we expect them to return once they can obtain the necessary products, potentially as soon as this quarter or the next. For example, we had a significant golf promotion planned with a large retailer, but we couldn't receive golf clubs from China, resulting in a cancellation. This situation can arise suddenly. Additionally, clients waiting for photos for e-commerce platforms have faced similar issues with product availability. Consequently, we've significantly reduced our volumes in this area. This situation is not a reflection of our business itself but rather an outcome of the current operational landscape we are navigating.

Daniel Moore, Analyst

That's really helpful. Maybe talk a little bit more about Olbrich. What you've seen since closing the acquisition and what they kind of bring to the table for you?

Joe Bartolacci, President and CEO

We have not finalized the deal yet, but we expect to close in the next few weeks following our announcement and the authorization from the European Union Trade Authority. This acquisition will significantly enhance our capabilities. Our long-term goal is to incorporate various components into our production line for dry electrode material, which can also be applied to wet electrode production. Both the United States and the European Union are focused on bringing these operations back onshore, and we believe we are positioned as a leading candidate for this, especially in comparison to Asian competitors. This acquisition will add essential coating and drying lines that we currently lack, which are crucial for the production process. As we integrate these assets into our business, we aim to grow our opportunities, whether through partnerships or acquisitions, to deliver dry electrode materials in the future. In terms of R+S, although it's a smaller division, it plays a vital role. R+S is an automation engineering group based in the Czech Republic with a presence in other countries. They bring valuable expertise that will help us improve our current energy product lines and respond to technical requests for proposals that we struggle to manage due to volume. As I mentioned earlier, this move will allow us to broaden our presence and total addressable market in Warehouse Automation and evolve into factory automation as well. Our existing Warehouse Automation business primarily serves the e-commerce market in North America, and we plan to extend our reach to Europe and other regions with R+S's support. Additionally, expanding further into factory automation in North America, leveraging R+S's capabilities, is a strategic advantage for us. While this won't happen overnight, it is a crucial part of the strategy we have needed for some time.

Daniel Moore, Analyst

Very good. Lastly, at least for the moment, just in terms of raw material costs on the Memorialization side, where are we in the process of pricing gains catching up with the raw material inflation we're seeing? And are you seeing any flattening or even declining in some of those key inputs that you described that might help margins in the coming quarters?

Joe Bartolacci, President and CEO

Let’s discuss the Memorialization margins to clarify the situation. Our Memorialization margins for the Funeral Home and Cemetery Products business, as well as architectural products, have remained around 19%. This quarter, we faced significant charges in our European incineration business related to waste-to-energy projects. These projects turned negative for us financially because once a potential loss is identified, we must acknowledge it immediately. Many of these projects are large municipal contracts that have been ongoing for a while, especially during the COVID period, and we are now experiencing the effects of commodity pressures and delays. We're currently negotiating with those municipalities. While we don't have contractual obligations ensuring payment, many have expressed a willingness to collaborate with us given the circumstances of the past few years, and we hope to recover some of these charges in the future. Can I guarantee this? No. However, I expect to see improvements in that business in the upcoming quarter and beyond, potentially bringing our overall Memorialization margin closer to the historical 20% range. In response to your question about commodity costs, we are beginning to observe a decrease in steel and copper prices, which are key components for some of our businesses. On the steel front, it takes time to see the effects, so we won't notice this in the current or next quarter. Additionally, we continue to face wage pressures, with significant turnover in some of those businesses, which we need to address. We have implemented price increases in that segment and are entering a period when there are traditionally price hikes for some of those businesses. For Cemetery Products, we've managed to cover all our material cost increases. On the Funeral Home side, we're still catching up in some areas, but on a positive note, our Funeral Home volumes remain strong compared to last year, despite a decline in debt.

Operator, Operator

Next question from the line of Liam Burke with B. Riley.

Liam Burke, Analyst

Joe, you touched on in-store display on SGK. Could you give us a sense how the rest of the domestic business for SGK is doing?

Joe Bartolacci, President and CEO

The rest of North America performed in line with our expectations, showing a modest decline compared to the previous year. Similarly, both North America and APAC experienced slight decreases. Most of these modest declines were due to the mix of projects being handled. We believe this represents a challenge in our in-store marketing efforts, with Europe being a significant factor contributing to the shortfall.

Liam Burke, Analyst

Okay. Regarding cremation, you mentioned that sales are up. Could you explain how input costs are impacting that business? It seems to be a consistent area of growth for you.

Joe Bartolacci, President and CEO

Well, it's an interesting situation in that business. We are a relatively small player when it comes to some of the components that are used in that particular business, principally burners and electronic controls. We have gone through multiple suppliers throughout the COVID period, trying to meet the demand that we have out there. Throughout that period, prices have escalated materially, and we've had obligations to kind of substitute that. At the same time, we are having COVID outages, people not coming to work as a result of that, a significant turnover. But one of the most important parts of this has been that we have had situations where we are unable to pass along the price because a well-run business like ours gets paid before we ship product in North America. A little difficult to raise your price when I've already paid for it. So that's one of the challenges we're having in North America. The U.K. side of it, I just mentioned to you, is having the challenges from a performance standpoint related to several relatively large projects. We hope those begin to turn. From a positive standpoint, the incineration business continues to get a lot of demand. And as we kind of get through this struggle that we're dealing with, which has really been lingering since COVID started in that part of the world for us, we think this business will be a nice add and continue to grow as you've seen, Liam.

Operator, Operator

We have next question from the line of Justin Bergner with Gabelli Funds.

Justin Bergner, Analyst

I guess I wanted to start and just maybe ask a little bit about the performance sequentially. I mean if I look at the performance sequentially, SGK looks a little bit down in terms of sales and a little bit up in terms of EBITDA. So what are you trying to suggest with the guidance that maybe SGK looks a little bit like this quarter, but the real weakness is going to come in the fourth quarter? And then I guess, conversely, Industrial Technologies looks kind of flattish sequentially in terms of revenue and down in terms of EBITDA. So are you suggesting there that some of the headwinds are temporary and timing related, and that's going to sort of bounce back more in the fourth quarter?

Joe Bartolacci, President and CEO

Let's break this down into two parts. Regarding SGK, we are uncertain about currency fluctuations. For instance, the euro has experienced a significant drop over the last 40 days, and it's unclear whether this trend will reverse or continue. However, we do not anticipate the situation with SGK getting worse, and we are hopeful it will improve in the upcoming quarters as we transition into the latter part of the year. On the industrial side, we analyze it in two segments: Industrial Automation and our Surfaces and Energy business, primarily concentrated in Europe. The impact of currency has negatively affected our year-over-year revenue in this sector. Looking ahead to the next quarter, we expect both Industrial Automation and the Energy business to perform well and show growth. Our guidance indicates that we foresee currency effects reducing our bottom line by approximately $5 million to $7 million. This uncertainty is a challenge, especially regarding SGK, and we don't expect to regain that momentum in the next quarter. Does that clarify things?

Justin Bergner, Analyst

Yes, that does help. Could you discuss some of the challenges you encountered in Industrial Technology during the third quarter? You mentioned experiencing some delays in the Warehouse Automation segment. The margin seemed a bit lower compared to the previous quarter.

Joe Bartolacci, President and CEO

Sure. Let's discuss the warehouse aspect. We've faced challenges on the warehouse side, including significant backlogs and many orders pending. We're aiming to deliver these this quarter. As mentioned before, if our clients cannot obtain necessary hardware like conveyors, pickers, and sorters, which are beyond our control, we are unable to install our automation systems. This situation impacted us a bit this quarter. However, based on current information, we anticipate delivering those solutions, at least partially, this quarter since most of these projects need to be finished before the Christmas season. I believe we will see an improvement year-over-year in our Industrial Automation business based on our current inventory. On the energy side, we did experience a decline this quarter, partly due to currency fluctuations, but this is more of a timing issue. These are substantial projects, and we recognize revenue and profitability based on the percentage of completion. We expect these projects to progress and improve throughout this quarter, allowing us to start reducing the backlog. We anticipate a stronger fourth quarter for this business as well.

Justin Bergner, Analyst

Okay. Great. Just finally on that, I mean the sequential revenue, I guess, Industrial Technology was flat. The sequential EBITDA was down. Was there a mix component to that or anything onetime related worth highlighting?

Joe Bartolacci, President and CEO

It was a tough quarter. It was a tough comparison from last year. Steve will have a comment to it and might give you a little bit more detail.

Steve Nicola, CFO

Yes. Justin, actually, that's the currency. Because of the mix, the currency hit us harder in adjusted EBITDA that quarter. There was a $1 million impact year-over-year, just currency related in that business. So if you put that $1 million back to the bottom line, I think you'll true up on the comparability better.

Joe Bartolacci, President and CEO

We can't overstate what is happening in Europe, both from a currency standpoint and from an economic standpoint.

Justin Bergner, Analyst

Okay. Great. And then I wanted to ask if you can provide more specific information about orders and backlogs in the Industrial Technology business. I understand you don’t disclose a backlog number, but I’m looking to get a better understanding.

Joe Bartolacci, President and CEO

I'll give you a perspective. On the Industrial Technology, the whole group, we are still sitting at 6 to 8 months' worth of backlog. I mean it is a significant backlog at this time, and orders continue to come in. On the energy side, which is the most, I would tell you, it has significant impact given the size of the potential projects, we're having difficulty keeping up with requests for proposals. I mean it's that kind of situation. Now given the size, given the scope and given the type of technology we operate in, these are not decisions that are made overnight. And I'm not going to lie to you that we might have a quarter that is comparatively significantly different than prior year, but it doesn't change the demand outlook for this particular business. We have significant interest in it. One of the reasons we acquired Olbrich is not just the complementary product line it adds, but it has the capacity to help us move through these orders more quickly than they bring.

Operator, Operator

We have next question from the line of Daniel Moore with CJS Securities.

Daniel Moore, Analyst

Yes. Just quickly, Steve, thoughts on free cash flow expectations for the remainder of this year and how you see fiscal '23 shaping up, if not specific numbers, just kind of broad strokes?

Steve Nicola, CFO

Free cash flow for the fourth quarter should be similar to last year, but we are increasing our capital expenditures this year. During the COVID period in fiscal 2020 and 2021, we focused on reducing capital and other spending. You can see this reflected in our results so far this year, and I expect it to continue into the fourth quarter. Additionally, our inventories have been growing this year, and I anticipate some continuation of that into the fourth quarter. Commodity costs are influencing inventory value, and as we recover from COVID, we are returning to more normal levels, especially in our Memorialization business. These factors, along with adjusted EBITDA, will affect operating cash flow in the fourth quarter. Regarding free cash flow, I expect us to remain active in share repurchases, but given the third quarter's results, we will likely shift our focus back to debt in the fourth quarter.

Operator, Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I'd like to turn the call back to Steve Nicola for closing remarks. Over to you, sir.

Steve Nicola, CFO

Vikram, thank you. We'd like to thank everyone for participating in the call this morning, and we look forward to our fourth quarter earnings release and conference call in November. Thank you and have a good day.

Operator, Operator

Thank you very much, sir. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.