Myr Group Inc. Q4 FY2023 Earnings Call

Good morning, everyone and welcome to the MYR Group Fourth Quarter and Full Year 2023 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to David Gutierrez of Dresner Corporate Services. Please go ahead, David.

Thank you, and good morning, everyone. I’d like to welcome you to the MYR Group conference call to discuss the company’s fourth quarter and full year results for 2023, which were reported yesterday. Joining us on today’s call are Rick Swartz, President and Chief Executive Officer; Kelly Huntington, Senior Vice President and Chief Financial Officer; Tod Cooper, Senior Vice President and Chief Operating Officer of MYR Group’s Transmission & Distribution segment; and Don Egan, Senior Vice President and Chief Operating Officer of MYR Group’s Commercial & Industrial segment. If you did not receive yesterday’s press release, please contact Dresner Corporate Services at (312) 726-3600, and we will send you a copy, or go to the MYR Group website, where a copy is available under the Investor Relations tab. Also, a webcast replay of today’s call will be available for seven days on the Investors page of the MYR Group website at myrgroup.com. Before we begin, I want to remind you that this discussion may contain forward-looking statements. Any such statements are based upon information available to MYR Group’s management as of this date, and MYR Group assumes no obligation to update any such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these statements are no guarantee of future performance. These risks and uncertainties are discussed in the company’s annual report on Form 10-K for the year ended December 31, 2023, and in yesterday’s press release. Certain non-GAAP financial information will be discussed on the call today. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in yesterday’s press release. With that said, let me turn the call over to Rick Swartz.

Thanks, David. Good morning, everyone. Welcome to our fourth quarter and full year 2023 conference call to discuss financial and operational results. I will begin by providing a summary of the fourth quarter and full year results. And then we’ll turn the call over to Kelly Huntington, our Chief Financial Officer, for a more detailed financial review. Following Kelly’s overview, Tod Cooper and Don Egan, Chief Operating Officers for our T&D and C&I segments, will provide a summary of our segment’s performance and discuss some of MYR Group’s opportunities going forward. I will then conclude today’s call with some closing remarks and open the call up for your questions. We finished 2023 with solid financial performance in the fourth quarter and full year revenues of $3.6 billion, setting a record high for the ninth consecutive year. A steady backlog of $2.51 billion reflects a healthy bidding environment and the continued investment in infrastructure to meet growing electrification demands across the US and Canada. Our accomplishments this year demonstrate the strength and expansion of deep client relationships through alliance and multiyear service agreements, while strategically pursuing and capturing new opportunities. A report from the Clean Grid Initiative in December 2023 forecasts that electricity demand will increase from 2.6% to 4.7% in the US over the next five years, with grid planners expecting a growth of 38 gigawatts through 2028, nearly double the 2022 forecast. In total, the report found that $630 billion in near-term investment will be required to meet this load growth. MYR Group will continue to serve as a strong and nimble partner for our clients as they strive to meet demands for reliable power. In our C&I segment, data centers continue to provide steady opportunities alongside our chosen core markets, including wastewater, transportation, and healthcare. The same Clean Grid Initiative report predicts that data center growth alone will exceed $150 billion through 2028 as the use of artificial intelligence increases. We continue to track these opportunities and seek to intelligently bid and execute projects to position us for future success. Grid modernization, reliability improvement, system hardening, decarbonization, and greater usage of hybrid cloud environments and artificial intelligence are the key market drivers that present opportunities for consistent success across our business. The tremendous investments being made in electrical infrastructure are encouraging and highlight why we believe our chosen markets are poised for ongoing success for many years to come. Now, Kelly will provide details on our fourth quarter and full year 2023 financial results.

Thank you, Rick and good morning, everyone. For the year ended December 31, 2023, we reached record annual revenues of $3.6 billion. Full year net income was $91 million and EBITDA was $188 million. Our fourth quarter 2023 revenues were $1 billion, a record high and an increase of 16% compared to the same period last year. Our fourth quarter T&D revenues were $592 million, a record high for our T&D segment and an increase of 15% compared to the same period last year. The breakdown of T&D revenues was $403 million for transmission, a record high, and $189 million for distribution. T&D segment revenues increased due to higher revenue on transmission projects, primarily related to higher revenue on clean energy projects as well as higher revenue on distribution projects. Work performed under Master Service Agreements continues to represent approximately 50% of our T&D revenue. C&I revenues were $413 million, a record high for our C&I segment and an increase of 18% compared to the same period last year. C&I revenues increased primarily due to higher revenue related to clean energy projects. Our gross margin was 9.7% for the fourth quarter of 2023 compared to 11.1% for the same period last year. The decrease in gross margin was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions and inclement weather experienced on certain projects. Gross margin was also negatively impacted by rising costs associated with inflation and unfavorable job closeouts. These margin decreases were partially offset by better than anticipated productivity and favorable weather on a project. T&D operating income margin was 7.2% for the fourth quarter of 2023 compared to 8% for the same period last year. The decrease was primarily due to labor and supply chain inefficiencies mainly related to clean energy projects, inclement weather, and unfavorable job closeouts. C&I operating income margin was 2.1% for the fourth quarter of 2023 compared to 3.6% for the same period last year. The decrease was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions and inflation as well as unfavorable job closeouts. These decreases were partially offset by better than anticipated productivity. Fourth quarter 2023 SG&A expenses were $60 million, an increase of $2 million compared to the same period last year. The increase was primarily due to higher employee-related expenses to support the growth in our operations and an increase in contingent compensation expense related to a prior acquisition, partially offset by a decrease in employee incentive compensation costs. Fourth quarter 2023 interest expense was $2 million, an increase of $600,000 compared to the same period last year. The increase was primarily due to higher interest rates and higher outstanding debt balances during the fourth quarter of 2023 as compared to the same period last year. Fourth quarter 2023 net income was $24 million compared to $25 million for the same period last year. Net income per diluted share of $1.43 decreased compared to $1.46 for the same period last year. Fourth quarter 2023 EBITDA was $53 million compared to $52 million for the same period last year. As of December 31, 2023, total backlog was $2.51 billion, a slight increase from the prior year. Total backlog consisted of $960 million for our T&D segment and $1.55 billion for our C&I segment. Fourth quarter 2023 operating cash flow was $43 million compared to operating cash flow of $94 million for the same period last year. The decrease in cash provided by operating activities was primarily due to the timing of billings and payments associated with project starts and completion. Fourth quarter 2023 free cash flow was $22 million compared to free cash flow of $65 million for the same period last year, reflecting the decrease in operating cash flow, partially offset by lower capital expenditure. As for liquidity and our balance sheet, we had approximately $279 million of working capital, $36 million of funded debt, and $442 million in borrowing availability under our credit facility as of December 31, 2023. We have continued to maintain a strong funded debt-to-EBITDA leverage ratio of 0.19 times as of December 31, 2023. We believe that our credit facility, strong balance sheet and future cash flow from operations will enable us to meet our working capital needs, support the organic growth of our business, pursue acquisitions, and opportunistically repurchase shares. I’ll now turn the call over to Tod Cooper, who will provide an overview of our Transmission & Distribution segment.

Thanks, Kelly and good morning, everyone. The T&D segment achieved solid fourth quarter and full year 2023 results, once again proving that our business principles of partnering closely with our clients and executing our projects safely with expected quality and on-time delivery remain intact and effective. Expanding relationships with our long-term clients through Alliance and Master Service Agreements and strategically bidding and winning work with new and existing clients helped us continue to strengthen and grow our market presence. As Rick mentioned, the Clean Grid Initiative report forecasts robust investments in the coming years, and we believe there are abundant opportunities for sustained growth in this market. Our strategic insight survey of T&D clients conducted earlier this year had 67% of the respondents planning increased new transmission build over the next five years, which validates the Clean Grid Initiative report for the growing electrification demand in the US, with 56% of our clients ranking low demand as a high-impact factor in their business' strategic direction. The solar market faced headwinds in 2023. We mentioned on our third quarter call that rising labor costs, project inefficiencies, and weather, most notably on a few solar projects, along with supply chain disruptions, affected our financial results. This is true for the fourth quarter as well, and we continue to work with our clients and project teams to advance these projects to completion. We anticipate that the majority of the field work on these projects will be completed by the beginning of the third quarter. However, our outlook for solar opportunities and our ability to execute remains positive as we see rising labor costs stabilizing and supply chain issues becoming less severe. The fourth quarter 2023 solar market insight report released by the Solar Energy Industries Association and Wood Mackenzie reported 58% growth compared to the third quarter of 2022, and their outlook remains strong for the solar market's trajectory over the next five years, forecasting an average 14% growth annually over that period. We will continue to closely monitor and strategically pursue opportunities in the solar market. Within the T&D segment, transmission, distribution, substation, and clean energy projects of varied size, complexity, and capacity continue to create a steady pipeline for work. Across the US and Canada, we have won or renewed several MSAs in 2023 and been successful at securing a nice share of lump sum transmission, substation, and distribution work. In summary, we are proud of our accomplishments in the fourth quarter and all of 2023. Our teams maintained a strong focus on safety and project execution, positioning us as a strong partner in the T&D industry into the future, and I thank them for their tremendous effort. Increased grid demand and reliability in aging electrical infrastructure, decarbonization goals, and legislative funding remain primary market drivers, and when combined with our operational excellence, position us well for long-term success in this segment. In closing, as I step down as the Chief Operating Officer of MYR Group’s Transmission & Distribution segment, I’d like to thank Rick and the entire management team for their support throughout my career as well as the thousands of employees whose hard work and dedication on all of our projects have made MYR what it is today. I look forward to supporting Rick and the team with other initiatives going forward in what remains an exciting and dynamic market. I’ll now turn the call over to Don Egan to provide an overview of our Commercial & Industrial segment.

Thanks, Tod and good morning, everyone. Our C&I segment saw steady growth, thanks to healthy bidding activity and our continued ability to safely and skillfully execute projects while leveraging our strong vendor relationships to mitigate inflationary and supply chain headwinds. Our backlog increased as we captured desirable projects in our core markets. We continue to see and track new opportunities in data centers, transportation, clean energy, and healthcare. As Rick mentioned earlier, the December 2023 Clean Grid Initiative report forecasts significant growth in data centers across the US, driven by the rise of artificial intelligence and hybrid cloud environments. The report found investments in data centers as well as new industrial and manufacturing facilities as key drivers for the significant near-term investment to meet load growth demands. With $481 billion in commitments for industrial and manufacturing facilities since 2021, in addition to the announcement of 200 manufacturing facilities this past year, data centers are forecasted to increase from 17 gigawatts to 45 gigawatts of load by 2030, according to the report. These forecasts align with the healthy activity we’ve seen with Sturgeon Electric executing and pursuing additional data center projects in Arizona and Colorado. Pharmaceutical manufacturing is another core market showing strong bidding activity across the segment that we continue to monitor and intelligently pursue. Outside of data centers and pharmaceuticals, Western Pacific continues to perform a pipeline of transportation work and monitor exciting transit opportunities in Canada. CSI is executing clean energy and commercial projects across California, while water treatment and healthcare facilities continue to offer strong opportunities throughout the C&I business. A few of our district offices were negatively impacted by long-term pre-COVID-19 projects that experienced continued inflationary and supply chain disruptions during the quarter. Most of these projects will be completed during the first half of this year, allowing us to focus and execute on our healthy backlog of projects. Through our strengths of proven preconstruction service, strong execution, and national buying power, we continue to collaborate with our clients, enabling us to secure additional work. To conclude, our chosen core markets are healthy and the strength of our current client relationships is generating additional pursuits. Our dedicated employees continue to respond to lingering challenges to the business segment with proactive and customer-facing communication that helps MYR Group maintain our leading position in the markets we serve. We are proud of their dedication, commitment to our organizational values, and the strong culture they create. Thanks, everyone for your time today. I will now turn the call back to Rick, who will provide us with some closing comments.

Thank you for those updates, Kelly, Tod, and Don. We are proud of our growth, which reflects our ongoing commitment to strong operating principles, sound business strategies, and our ability to maintain and expand long-term customer relationships across both business segments. We believe the future is promising for our industry as the demand for electrification increases, and our communities come to depend on reliable, clean energy more than ever before. Our accomplishments in 2023 are the result of our talented and dedicated employees; their commitment is admirable, and I appreciate each of them for placing tremendous care in everything they do. I would also like to thank Tod for his contributions to the company over his 33 years of service and in his tenure as COO as he transitions towards retirement, and also welcome Brian Stern as Senior Vice President and COO to our T&D segment. Finally, I thank each of you for your ongoing commitment and support to the success of our organization. I look forward to working with you going forward. Operator, we are now ready to open the call up for your comments and questions.

Thank you. As just mentioned, at this time, we’ll conduct the question-and-answer session. Our first question comes to the line of Justin Hauke with Baird. Your line is now open.

Great. Thank you. Good morning, everyone. I wanted to start with a theme that has been consistent all year, and certainly here in the fourth quarter as well, regarding your revenue for the year being extremely strong, while margins have been somewhat held back. In the quarter, you called out a 220 basis point negative gross profit revision on projects, whereas for the year it was 170 basis points. So I guess I’m just trying to understand how much of an ongoing drag some of these projects are going to be? I mean, have they completed? And are there low or zero-margin bad jobs that continue to run through? Or how should we think about that kind of drag from the profit adjustments continuing into 2024?

I would focus on the T&D side. As we mentioned last quarter, most of our challenges stem from a few solar projects in a specific region. As Tod noted, these projects are expected to be completed by the end of the second quarter or the beginning of the third quarter, with field labor issues being resolved. We will keep negotiating with customers to ensure a fair agreement in the end. However, I anticipate some margin pressures continuing in T&D. Without these issues, we would typically be operating within a margin range of 7% to 10.5%. I am confident this will be the case. These projects are slightly holding us back as they approach completion. On the C&I side, we expect to return to around a 4% operating margin by the end of the second quarter, with the hope of improving further through the year. This mainly involves resolving issues with problematic projects awarded before COVID. We did experience some margin degradation during the quarter on a couple of these projects, but we also received low-margin materials for those. By the end of the second quarter, we see monthly margins returning to the lower end of our C&I margin profile. I'll stop here and welcome any other questions you may have.

Yeah. No, that’s helpful to kind of think about the trajectory of the earnings for the year, with the margins expected to stay muted here in the first half. The second part of my question is regarding the top line and just trying to think about the growth expectations for the year. If I go back to what your backlog was at the end of 2022, it was up 40%. You grew this year’s revenue by over 20%. Obviously, that’s not a sustainable long-term growth rate. I think you’ve been pretty clear about what you can sustainably grow at. But with backlog flat now year-over-year going into 2024, how should we think about the top line trends based on the awards that you have?

I would still look at high single-digit growth for the year, probably a little heavier towards the second half of the year. I am very positive about what’s out there on the C&I side, as far as opportunities that Don discussed. And Tod talked about opportunities on the Transmission & Distribution side. In terms of the clean energy side, we will continue to be selective with what we take on. We’ve seen some competitors taking on low-margin work on that side, and we are willing to participate; we like that market, we have people prepared to execute, and we have good projects. Again, as I mention every quarter, backlog is always going to be lumpy. When you look at the opportunities out there, I believe everything in our script and what I see day-to-day indicates that the market remains very active.

Okay. Great. I’ll leave it at that. That’s helpful for just kind of modeling. So thank you very much.

Thank you.

Thank you. Our next question comes from the line of Sangita Jain with KeyBanc Capital Markets. Your line is now open.

Yeah, thank you so much for taking my question. I was just wondering if you could share more insight on the supply chain comments from your release and your prepared remarks and where those pinch points may be. I’m wondering if it’s still panels or if it’s more of a mix of plant constraints in terms of switch gears and transformers maybe, if you could provide any additional color on that?

I would say from the low side of the supply chain, it has improved. I mean they’re not getting any worse when you talk about transformers or equipment. Panels seem to be leveling out. Again, we usually don’t supply those, but they can affect the progress of our projects if the owners don’t receive them in time or if they arrive in a kind of lumpy-type delivery. So with that, I think we’re seeing improvements on that side. We’re not seeing anything worse. In some cases, our customers are releasing the material portion early now and equipment, so we can actually order that in advance of the projects and have it for on-time delivery for future work. So, not all is negative on that side, but it did have some impacts during this last quarter.

Great. Thank you. That’s helpful. And if I can follow up with one on your comment on MSA renewals and new MSAs getting signed. I was just wondering if you’re seeing any change of tone on the side of the utilities regarding their regulatory headwinds and if they are rationalizing the scopes of the MSAs in any ways?

I think they’re always looking at the MSAs. But as far as the work we have and our conversations with them, very positive that, that work is going to continue, and those trends are going to continue. We haven’t seen anybody pull back on anything. Tod, is there anything you want to add or any insight you want to provide?

No, Rick, I think you covered it. The MSAs are really about utilities today trying to lock in resources to get their work done. That continues. We’re seeing more clients use this approach. We were excited, especially in 2023 with several of ours coming up for renewal that we were able to renew. There’s more to come on that front, but we see more utilities shifting some of their work to the MSA model and staying out of the lump sum at this point, primarily due to resources.

Great. That’s really helpful. Thank you so much.

Thank you.

Thank you. Our next question comes from the line of Ati Modak with Goldman Sachs. Your line is now open.

Hi. Thank you. Good morning, team. I just wanted to understand, you mentioned some capital allocation towards M&A, but I wanted to dig into that a little bit and see if you can help us understand the nature of the opportunities you see across both segments or end markets. It seems like the competitive landscape is very fragmented on the T&D side in particular, and the market opportunity seems to have a lot of upside. I’m wondering what your appetite is to make transformative transactions to increase your footprint? Or do you think it’s more reasonable to focus on tuck-in type acquisitions?

For us, I would say both. I mean if you look at 2022, we had roughly 20% growth, about 17% of that was organic. The rest was through acquisitions. If you look at last year, we had 20% growth roughly, and it was all organic. I think we’re always looking for acquisition opportunities, but we will always be patient on that side. I think we’ve demonstrated we can grow our business organically while also pursuing acquisitions if they make sense.

Thank you for that. And then on the clean energy side, you said you’d be selective, but I’m wondering if you can talk about the nature of the projects that you’re looking at today, the customer base, the size of the projects and what we should think of as we model our numbers for 2024?

Yeah. For us, I think it’s just being selective. Again, as we go forward, it’s not that this business segment is 40% of our overall business when we look at the clean energy market, but it’s growing every day. We will continue to pursue the right opportunities and the ones that make sense. We do have a margin profile that we want to meet. As we mentioned before, we desire to maintain our top line growth, and we still see it coming in at a higher single-digit. We want to focus on bottom line growth, and this all takes that into consideration. We want to ensure that the work we take on is profitable moving forward.

Got it. Thank you. I’ll turn it over.

Thank you. Our next question comes from the line of Brian Brophy with Stifel. Your line is now open.

Thanks. Good morning. I appreciate you taking my question. Just wanted to ask about the high single-digit growth you mentioned for 2024 on the top line. Is there anything specific to call out as it relates to T&D versus C&I? Or do you expect high single-digit growth across both of them?

Right now, I would anticipate that across both segments. Barring some atypical project coming in on one side or the other, we do clean energy on both sides. That’s an example where one could come in at any time, so it really doesn’t matter where it comes from for us. I think you heard the opportunities from both Tod and Don, and those are very strong. Again, it’s always going to be lumpy on the awards and it always has been. However, when we look at the amount of activity out there, I am very positive about the level of work that’s available.

Okay, got it. And I heard from some sources that transmission may outgrow distribution in 2024, given some of the strengths on the clean energy side needing to interconnect with data centers, among other factors. Curious about your perspective on whether transmission or distribution may outgrow this year.

I don’t have any insight that one is going to outgrow the other. For us, it depends on where our customers decide to spend their capital in a given quarter or over a few quarters. The type of projects we do involve MSAs on both transmission and distribution for many of our clients. So for us, we’re not picky, and we have not heard our customers indicate that they are spending more towards distribution or transmission at this point.

Okay, thanks. I’ll pass it on.

This comes from the line of Brian Russo with Sidoti. Your line is now open.

Yeah. Hi, good morning.

Hi, Rick.

Hey, I just wanted to follow up on the transmission and distribution question. We’re hearing a lot from utilities about accelerating resiliency programs which generally receive good regulatory support. I was just wondering if you’re seeing that in terms of maybe your MSA agreements or something outside of that.

Yeah, absolutely. That’s been an ongoing trend for probably the last four or five years, where they’ve started to accelerate that. There were some supply chain impacts during COVID and thereafter with some of the equipment associated with that. We are seeing it come back in a little stronger period right now, and we’re seeing more focus on that throughout all of our MSAs for distribution and in the US and even in Canada.

Okay, great. And then just to follow up, I think last quarter, you may have mentioned that you were actively positioning to bid on some of these high voltage, multibillion-dollar transmission projects in MISO, but there’s also a lot of planning occurring all over the country: California, as far as the NYISO, SPP, and PJM. I was just wondering what stage of development you are at for some of these projects that may start construction by 2026 and come online in 2028 to 2030.

Yeah. A year ago, we were discussing these projects starting to hit the streets for bidding. Today, they are still in various stages, but some have advanced to the award stage. We're seeing a lot of activity both in bidding and projects being awarded and negotiated at the present time.

Okay, great. Then on C&I, obviously, you guys are very diversified in terms of end markets. But are there any top one or two markets driving growth more than others? Also, I’d like to hear about some longer-term emerging end markets, whether it’s manufacturing reshoring or electric vehicle infrastructure as it pertains to your utility customers.

Okay. I would answer that as it kind of depends on the geographic area. Data centers are obviously a big trend, and we’ve been discussing that for a couple of quarters. There are parts of the country that are more prone to take on data center opportunities than others, making it a big focus for us. As far as EV charging, there’s a lot of information in the news about EV infrastructure and electric vehicles; we’re still in the design phase of what that’s going to look like long-term. We’re still doing considerable work in that area and monitoring the progress going forward.

I would add that the other market out there on the transportation front is light rail; that’s a growing market in certain areas. We excel in that kind of work in some locations. We see that continuing to grow. Healthcare continues to show strong potential, as does the manufacturing side. I would consider all those among the top-tier sectors we are involved in. Regarding electric vehicles, I think we’ve always said that the expansion will be slower than anticipated. We regard it as a promising long-term sector, but I believe that in the US, 50% of vehicles will not become electric by 2027. The infrastructure will expand, but likely at a manageable rate.

All right, great. And then just lastly, any thoughts on the first quarter impact of the weather? I know you do emergency storm restoration work, but it can also sometimes displace other projects you might be working on and cause delays. What are your thoughts given the well-below-normal temperatures we saw throughout the country?

To date, there haven’t been significant storm calls. We don’t have many people out on storm. There have been a few geographical areas that have been affected by weather. However, we have also had some sites performing better than anticipated. I don’t want you to think the weather is bad everywhere; it is quite variable. But again, to date, we haven’t seen significant storm revenue.

Okay, great. Thank you very much.

Thank you. This comes from the line of Jon Braatz with KCCA. Your line is now open.

Good morning, everyone. Rick, a question for maybe you and Kelly. The outlook is very positive, with a lot of opportunities ahead. But over the last couple of years, the growth in your SG&A expenses has moderated a little bit. Do you see that continuing, or do you think you might have to reaccelerate some of those expenses as we go forward?

Yeah. Thanks for that question. If you look, we had near-record low SG&A expense as a percentage of revenue in the fourth quarter. That benefited from the extremely strong revenue we saw and higher materials in that quarter. Certainly, our goal is to grow our SG&A expenses at a slower rate than our revenue growth, and we’ve been doing a good job of achieving that over the last several quarters. However, I wouldn’t consider fourth quarter as the new norm; I would look at a longer trend line of maybe 12 to 18 months. As we continue to grow our business, we want to ensure we’re investing in our workforce and technology, really just maturing our capabilities to pursue the great organic growth opportunities we have.

Okay. And Kelly, one other question. You mentioned higher interest costs in the quarter and higher interest rates. Yet at the end of the quarter, your borrowings were sharply lower than at the end of the third quarter. Did you repay some debt at year-end, and might that account for the lower borrowings at year-end?

Yes. That’s a good way to look at it. We did see some stronger cash flow towards the end of the quarter, allowing us to pay down some more debt at that time. However, since we’re accounting for a low level of debt to begin with, it doesn’t take much of a fluctuation for that number. Certainly, year-over-year rates are considerably higher, so it ultimately ends up being a rounding area as these are pretty small numbers. We continue focused on driving operating cash flow and maintaining low debt levels in anticipation of supporting business and organic growth.

Sure. Okay. Thank you, Kelly.

Thank you. I’m showing no further questions at this time. I would now like to turn the call back to Rick Swartz for closing remarks.

To conclude, on behalf of Kelly, Tod, Don, and myself, I sincerely thank you for joining us on the call today. I don’t have anything further, and we look forward to working with you going forward and speaking with you again on our next conference call. Until then, stay safe.

Thank you. This does conclude the program. You may now disconnect.