Nn Inc Q3 FY2020 Earnings Call

Good day, and welcome to the NN Third Quarter 2020 Earnings Conference. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mark Schuermann. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thanks for joining us. I'm Mark Schuermann, Vice President Treasurer and Investor Relations. I'd like to thank you for attending today's business update. Our presenters this morning will be President and Chief Executive Officer, Warren Veltman; and Tom DeByle, Senior Vice President and Chief Financial Officer. If anyone needs a copy of the press release or the supplemental presentation, please contact Abernathy McGregor at 212-371-5999. Before we begin, I ask that you take note of the cautionary language regarding forward-looking statements contained in today's press release, supplemental presentation, and in the Risk Factors section in the company's annual report on Form 10-K for the fiscal year ended December 31, 2019, and when filed the company's quarterly report on Form 10-Q for the three quarters ended September 30, 2020. The same language applies to comments made on today's conference call, including the Q&A session as well as the live webcast. Our presentation today will contain forward-looking statements regarding sales, margins, foreign exchange rates, cash flow, tax rates, acquisitions, synergies, cash and cost savings, future operating results, performance of our worldwide markets, the impact of the coronavirus pandemic on the company's financial condition and other topics. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company's control. The presentation also includes certain non-GAAP measures as defined by SEC rules. A reconciliation of such non-GAAP measures is contained in the tables in the final section of the press release and the supplemental presentation. At this time, I will turn the call over to Warren Veltman, President and CEO.

Thanks, Mark, and good morning, everyone. As everyone is likely aware, October 6, 2020, our strategic initiative process concluded with the sale of our Life Sciences Group for $825 million, consisting of $755 million in cash and a $70 million earn-out based on 2022 performance. Our third quarter public filings for the quarter will reflect some significant changes as a result of this sale, including treating our Life Sciences Group as a discontinued operation, including all Life Sciences assets as current assets held for sale, and reporting the October debt pay down to our lenders as current maturities of long-term debt. The closure of the Life Sciences sale is more significant than the reporting changes in our Form 10-Q filing, as it represents a major transformation of NN's capital structure and substantially reduces our risk profile, providing us with a solid foundation from which to grow the business. This substantial reduction in leverage also enhances our reputation as a stable long-term supplier and provides a more secure income stream for our employees. Prior to the sale, we had an unsustainable capital structure, where NN was leveraged at over 6 times EBITDA, management had assessed that the company had substantial doubt regarding its ability to continue as a going concern, and we had to seek covenant relief from our lenders. Subsequent to this sale, we now have a more manageable capital structure with leverage below 2 times EBITDA. We no longer consider NN as a going concern and we are in compliance with the financial covenants in our credit agreement. Additionally, the company has adequate liquidity of approximately $75 million at the end of October, including $28.5 million of cash holdings and the ability to borrow on an untapped revolving credit facility. Standard & Poor's has recognized this improvement by upgrading our rating two notches to B+ and we expect an upgrade from other rating agencies as well. Obviously, we have had a tremendous focus on improving our cash flow over the last year and placing significant reductions on capital expenditures and focusing on working capital were two primary areas of focus. We will continue to focus on these areas; however, our new leverage profile allows us to view the future more optimistically and pursue growth programs that fit with our growth strategy and provide the appropriate level of return for the investment. As we move forward, we are excited about the prospect of growing the Mobile Solutions and Power Solutions Group. We have demonstrated that both groups can be profitable in a difficult economic environment and we maintain a diverse product portfolio that includes components and subassemblies for automotive, electrical, general industrial, aerospace and defense, and the medical industries. The combination of Mobile and Power capabilities in our automotive and electric space is unique and strongly positions us to participate and capitalize on innovative programs and the evolution from internal combustion engines to hybrid and full electric vehicles. We expect the momentum that we have built with our aerospace and defense customers to continue and fully utilizing the capacity we have in place for these product offerings will be a focus. Lastly, it is noteworthy that we retained within our Power Group a medical business that manufactures specialty surgical instruments for lower volume applications that complements the manufacturing expertise of our aerospace and defense business. We expect that we will continue to support and grow with these customers in the future. Turning to page 5, we have summarized some of the other key highlights of the quarter. Overall, our business rebounded from the significant impact that the COVID pandemic had on our second quarter results, with reported monthly sales increasing sequentially throughout the third quarter. Sales for the quarter were $113.8 million, down $5.6 million from a year ago, but up 44.9% from the COVID-19 impacted second quarter. The year-over-year comparison was adversely impacted by foreign currency of $2.4 million. In spite of the lower sales volume, reported EBITDA and operating margin both outpaced the results from a year ago. EBITDA was $11.4 million or 10% of sales, up $2.3 million from a year ago when EBITDA was 7.6% of sales. Reported operating loss was $1.5 million versus $1.8 million one year ago. GAAP EPS from continuing operations was a loss of $0.04 per share versus a $0.12 per share loss from a year ago. The Q3 results were negatively impacted by a $2.1 million deferred tax asset reserve due to uncertainty associated with the utilization of certain tax attribute carryforwards. Our adjusted net income from continuing operations was $0.07 per share versus $0.08 per share in the prior period. Cash flow for the quarter, including the sold Life Sciences Group, was a negative $1.4 million due primarily to working capital needs driven by significant sales increases since the second quarter. Although working capital increased in monetary terms, we generated a significant increase in working capital turns over Q2. Tom will provide more detail on this in his presentation. Page 6 of the presentation summarizes the revenue metrics for our groups. As I indicated, our consolidated sales for the third quarter were down 5.6% from a year ago. Our Power Solutions Group experienced an 8.5% year-over-year decrease in the third quarter and a 14.2% year-over-year decrease for the nine months ended September 30. Both periods were adversely impacted by the COVID pandemic. In addition, 2020 third quarter sales were positively impacted by approximately $1.9 million due to the increase in the cost of precious metals that were directly passed through to our customers. Mobile Solutions sales were down 3.7% in the third quarter from a year ago, due primarily to the COVID pandemic and decreased differences in foreign exchange rates. The 2020 year-to-date results are down 21.4% from 2019 due to the effect of COVID, especially in the second quarter of 2020. Now, I'd like to turn it over to Tom DeByle, so Tom can provide a more in-depth review of our financial performance for the quarter. Tom?

Thanks, Warren. Please turn to slide 7, which includes our third quarter results on a GAAP, non-GAAP excluding special items, and a total adjusted non-GAAP basis. Despite the sales shortfall, gross profit as a percent of sales was better than the prior year on a GAAP, non-GAAP excluding special items, and total adjusted non-GAAP basis. The improvements were driven by indirect labor reductions, cost controls, and manufacturing efficiencies. Operating income on a GAAP basis showed a 20 basis point improvement over the prior year. However, on a non-GAAP excluding special items and a total adjusted non-GAAP basis, it showed a decrease of 80 basis points and 170 basis points respectively. EBITDA for the quarter was double-digits on a reported non-GAAP excluding special items and a total adjusted non-GAAP basis. Comparing to the prior year, EBITDA on a reported basis was $11.4 million or 10% of sales versus $9.1 million or 7.6% in the prior year. EBITDA excluding special items was $11.8 million or 10.4% of sales versus $10.7 million or 8.9% in the prior year. EBITDA on a total adjusted non-GAAP basis was $14.7 million or 12.9% of sales versus $15.9 million or 13.2% in the prior year. Let's go to slide 8, which provides a detailed bridge of our reported GAAP, non-GAAP excluding special items, and total adjusted non-GAAP. The main takeaway on this slide is that our adjustments from our reported GAAP to the total adjusted non-GAAP are coming down. We have been working hard on eliminating these expenses. Let's look into more detail and focus our attention on the upper portion of the bridge. There were two tax-affected special items in Q3 2020. Severance accounted for $0.3 million and write-off of debt issuance costs was $0.1 million. The discrete tax items for the third quarter of 2020 totaled $3.7 million and related to the Cares Act of $1.9 million, changes in estimates of foreign withholding tax of $0.7 million, and $1.1 million related to the impact of the prior goodwill impairment. In the prior year's quarter, there were three tax-affected special items consisting of $0.3 million of asset write-down, Brazil $0.2 million, and severance of $0.8 million. Now let's turn our attention to the lower section of the bridge. In Q3 2020, the tax-affected non-operational adjustments relating to capacity and capabilities development, professional fees, and integration and transformation were down $1 million year-over-year. Tax-affected foreign exchange on intercompany increased year-over-year by $1 million and the change in value of preferred stock tax withholding increased by $0.1 million. Turning to slide 9. Net working capital at the end of the third quarter was $108.2 million compared with $112.6 million in the prior year, a decrease of $4.4 million. Working capital turns were 4.2 turns versus 4.3 turns in the prior year. Sequentially, working capital turns improved over the second quarter from three turns to 4.2 turns, as you can see on the graph. This slide also shows working capital turns of Mobile Solutions improving year-over-year and Power Solutions falling short of the prior year. Power Solutions shows a decrease in accounts payable in the current year compared to the prior year. The higher accounts payable in the prior year related to the build-out of our Irvine California plant and accounts payable in Q3 2019. Please turn to slide 10. Net debt at the end of the third quarter was $782.9 million versus $866.8 million in the prior year, a decrease of $83.9 million. This slide also shows pro forma net debt of $82.9 million as of October 6 after the $700 million paydown of the Term B debt. Adjusted EBITDA on a trailing 12-month basis was $42.8 million for a leverage ratio of 1.94x. During the past year, Warren and I have been working on putting in place an appropriate capital structure. We have taken a number of measures to reduce costs and improve liquidity as we eliminated the dividend, cut capital spending, and reduced fixed costs. In November 2019, we announced exploring strategic alternatives. This was a year-long process and resulted in the sale of the Life Science business. As the slide shows on a pro forma basis, we have used the proceeds from the sale of the Life Science segment to reduce debt by $700 million. We are now in a much better financial position. Slide 11 shows our free cash flow for the quarter, which still includes Life Sciences. Free cash flow was a use of cash of $1.4 million in the third quarter 2020 compared to a free cash flow of $17.5 million in the prior year. Year-to-date free cash flow shows a use of cash of $1.2 million versus the use of cash of $7.1 million in the prior year. In the fourth quarter of 2020, we will break out our free cash flow for the quarter, and it will no longer include Life Sciences in our earnings presentation. Slide 11 summarizes our capital spending, depreciation, and amortization trends. Capital expenditures were $3.1 million or 2.8% of sales for the third quarter compared to $8.1 million or 6.8% of sales in the prior year. Year-to-date capital expenditures were $14.5 million or 4.7% of sales versus $29 million or 7.6% of sales in the prior year. The company anticipates capital spending of less than $20 million for the calendar year 2020. With that, I'll turn the call back to Warren.

Thanks, Tom. We have presented additional information for each of our operating groups, starting with the Mobile Solutions group on page 14. Sales for the Mobile Solutions group were down 3.7% from a year ago. Our North American and Europe operations all continued to be hampered by COVID and reported sales of 86% to 93% of the prior year totals. South American sales were 112% of last year's sales in local currency, but only 82% in U.S. dollars, due to the weakness of the Brazilian currency. Those sales reductions were partially offset by sales from our China operations, which were up 128% from a year ago and which were largely unaffected by COVID during the third quarter. We saw margin improvement across the board in the third quarter. GAAP operating profit increased to 7% of sales, up 240 basis points from a year ago. And reported EBITDA was 18.6% of sales, an increase of 440 basis points from the 2019 third quarter. This margin improvement is due to improved variable margins, due to operating efficiencies and fixed and selling, general, and administrative cost reductions, and is in spite of the inclusion of a $1.4 million customer litigation settlement that improved last year's results. We expect to see some stability in production volumes in the fourth quarter, with sales reducing approximately 5% from Q3 due to the seasonality associated with the November and December holidays. Our fourth quarter focus in Mobile Solutions will be on capital expenditures containment, working capital management, and operating efficiency. Moving on to Power Solutions on page 15. Sales for the Power Solutions Group were off 8.5% and the lost variable margin from reduced sales contributed to lower operating profit and EBITDA from a year ago. Operating profit margin dropped 440 basis points and reported EBITDA as a percentage of sales decreased by 280 basis points. The significant increase in precious metals year-over-year contributed to a 140 basis point reduction in margin percentages, as sales and material costs both increased by the same amount, driving down margins. Additionally, product mix from 2020 was unfavorable versus 2019 and we experienced COVID-related disturbances that impacted profitability. Fixed cost reduction efforts positively impacted margins by $1 million during the quarter. In spite of the lower year-over-year margins, we are encouraged that our Power Solutions Group increased both sales and profit sequentially during the quarter. We expect that Power's Q4 sales will be a run rate similar to Q3 2020, as we expect ongoing effects from COVID and delays for certain aerospace and defense programs. Profit margins will still be impacted by the effect of the precious metal increases. Like the mobile group, our corporate focus on cash flow will dictate ongoing efforts to contain capital expenditures and improve working capital turns. Turning to page 16. With the sale of Life Sciences complete, NN has begun a new chapter as a financially strengthened organization with two focused highly complementary segments. Our improved capital structure should enhance NN's ability to capitalize on the powerful synergies of our Mobile Solutions and Power Solutions businesses to drive margin improvements, continue delevering with consistent cash flow and generate long-term shareholder value. We are encouraged by the stronger sequential growth we saw across our Mobile Solutions and Power Solutions businesses in the third quarter, driven by improved customer demand across our end markets, even amidst ongoing challenges related to the pandemic. Going forward, we remain intensely focused on streamlining our cost structure to best align with the current environment. This includes maintaining a strong discipline related to capital expenditures and continuing to manage our debt levels. Obviously, the COVID pandemic is still prevalent and may continue to create ongoing disruptions in our economy. We remain firmly committed to providing our employees with the safest working environment possible. I once again thank them for their efforts over the last eight months in complying with the rigorous requirements we have implemented to keep them safe and for safeguarding the health of their fellow employees. We monitor the situation daily and are in regular contact with our customers regarding potential disruptions in demand caused by COVID. As we have indicated previously, given the uncertain nature of how our customers and our production facilities will be impacted by COVID, it is difficult to provide longer-term guidance for sales and earnings. In my comments, I have provided Q4 sales expectations for each of the groups given our current customer schedules. Certainly, our fourth quarter demand could change, if the COVID pandemic continues to worsen or the Government imposes mandatory shutdowns. That concludes our prepared remarks, and I will now turn the call back to the operator for questions.

Thank you. We will take our first question from Daniel Moore with CJS Securities.

Good morning.

Good morning, Dan.

Good morning.

Congratulations on obviously the completing sale of Life Sciences. I'm going to ask more than one or two questions, because I think it's really important to level set kind of where we stand today. First and foremost, Mobile Solutions and Power Solutions, just to clarify, for Q4 Mobile Solutions you said revenue up about 5% sequentially and Power Solutions down about 5% year-over-year. Did I hear that right?

I don't know if I said sequentially. I said that the Mobile Solutions business was down year-over-year. And it was up sequentially that is correct.

That's for Q4. I'm just looking at the outlook, I'm sorry?

For Q4, for Q4.

I want to make sure I heard the commentary correctly.

Sure. What I said was that we expect the fourth quarter for Mobile Solutions actually to be down from Q3 about 5%.

Okay, okay. Got it. Because of the seasonality.

Because of seasonality. Yes.

And Power Solutions in the slide deck about 95% of the prior year, so down about 5% year-over-year. Is that right?

Yes, that's correct.

Got it. Okay. And Mobile Solutions in the quarter for Q3 turning backward jumped 70% sequentially, nearly flat year-over-year. Any sense for how much of that jump might have been filling depleted inventories? Or do you think that's relatively consistent with end market demand?

We think there is some inventory still going on right now. If you look at the number of days of inventory in North America, it's lower than the OEMs typically would like. So, given what we came out of in the second quarter, Dan, it's hard to determine whether it's filling demand or inventory. But at this point in time, given where the inventory levels are, our expectations at least what we're seeing in the fourth quarter is that it remains pretty stable as they try and put some of those inventory days back in place.

Can you remind us of the percentage of auto revenue as it relates to Mobile Solutions or total revenue now that we've divested Life Sciences? Also, what is the breakdown between traditional combustion engines and electric or hybrid vehicles?

The overall auto business is likely around 50% to 55% moving forward. Currently, the electric segment of the business is not very substantial, so most of our business is still in the internal combustion engine area. In terms of hybrids, approximately 20% to 25% of our auto business is in Electric Power Assisted Steering. We are present in that sector across the board. We believe that areas not likely to be negatively affected by the transition to hybrid or battery electric vehicles can be a part of all platforms.

Got it. Yes. Okay. And in Power Solutions, maybe just a general breakdown of revenue between electrical aerospace and other, and are you seeing any green shoots for electrical in particular?

Are we seeing any what?

Green shoots, just signs of more significant recovery if you will?

Yes. I mean, as we look at the Power Solutions business, we've done a lot of market research on that over the last several months. And when we look at the compounded annual growth rate for that business with a shift to smart meters and smart grids and microgrids, we see a significant amount of upside there. The same with our aerospace and defense. I would tell you aerospace and defense today, is probably 5% or 6% of our business. But we've positioned that business to be a much bigger piece of our business. Going forward, we see some significant growth there. The medical business that I talked about is another 5% or 6% of our overall business today, and we have opportunity there as well. The rest is, as we've talked about, is primarily electrical components either for the general electric space, the automotive space, or the general industrial space.

Perfect. And then one more for me and I'll pass it off. But in the press release, you stated, you're now intensely focused on streamlining cost structure to align with the current environment. Now that we've divested Life Sciences, can you elaborate on that? Are there specific projects or cost reduction initiatives you have in mind, be it in corporate or within the segments? And will you be able to maybe quantify those at some point?

Sure. Internally, we have identified several opportunities as we review our selling, general, and administrative expenses. Over the next six months, we aim to reduce our overhead structure by another $4.5 million to $5 million. In our Mobile and Power Groups, even though we have separate management teams for each, we have begun consolidating certain functions over the past nine months where we see potential synergies to lower costs. We will continue to seek these opportunities. Additionally, we are focusing on improving efficiency in our IT department. Our IT team has accomplished significant restructuring of our IT infrastructure in the last six months, which has improved our information flow, particularly in Power Solutions. We believe there is still potential for added efficiency in this area going forward.

All right. That’s great. I will pass it off, maybe jump back with a follow-up or two. Thank you so much for the color.

Next we'll go to Steve Barger with KeyBanc Capital Markets.

Hi, good morning guys. It's Ken Newman on for Steve. Thanks for the questions.

Hi, Ken.

So first, I wanted to jump back to the Mobile volumes that are coming back. I'm curious, are you seeing your customers come to you with new programs to quote? Or do you think that's going to be on hold for a while?

I think on the mobile side, we are quoting new programs. These programs are not likely to impact the fourth quarter or the first half of next year. Generally, the outlook for the OEMs and Tier 1s tends to be more long-term. However, there are some developments happening. We’ve pulled back a bit, and currently, everyone is focused on maintaining production. There are still disruptions occurring, and although it’s not constant, we do periodically experience positive COVID cases in the plant, which necessitate shutting down and disinfecting certain areas. I know that the OEMs are also facing similar challenges. Therefore, the current emphasis is on sustaining production and restoring some inventory levels.

Right. So, when I think about that and you start to look at these new quotes, can you just talk about the gating process for the types of products and contracts that you'll accept?

Sure. As we consider our long-term strategy, we will primarily focus on applications that we believe have a strong likelihood of transitioning to either hybrid or fully electric vehicles, especially if additional capital is needed. While there are some fuel system programs being discussed, we still believe that the internal combustion engine will remain relevant for quite some time. We have conducted extensive analysis on this. However, when examining the engine development plans of OEMs through 2025, we observe a notable reduction in the number of new engines being introduced compared to historical data. Nevertheless, forecasts for fuel injector production suggest that there won't be a significant decrease in volume for these applications through the end of 2026-2027. Our focus, from a long-term strategic perspective, is on diversifying into areas that will facilitate a transition to hybrid vehicles or enhance our presence in the battery and connector markets for hybrid and fully electric vehicles. We have identified vehicles with over 72 to 75 connection points, which presents a substantial opportunity for us to expand our offerings in the power sector among customers across both our Mobile and Power groups.

That's really good color. So as I look at your forward outlook for potential growth opportunities and marry that with the margin you put up for Mobile this quarter. Is it reasonable to think that single low double-digit margin is kind of a sustainable run rate going forward?

We have provided guidance aiming for an overall EBITDA margin of 16% to 18% by 2025. In the third quarter, the margins from our Mobile Group showed a positive trend due to consistent sales and the efforts of our operating team, who have streamlined the business significantly over the past eight to ten months. Their performance exceeded our expectations for the quarter. We will encourage that team to maintain this level of performance in the future.

Right. One more for me and then I'll jump back in line. For Power Solutions, you talked a little bit about the end markets there, but I am curious if you could give us the split between residential and non-residential construction? And I would be curious to hear what your customers are saying about non-residential for 2021?

I believe the residential market is quite competitive. Most of our manufacturing is focused on the smart grid, utilities, and general industrial sectors rather than residential. Looking ahead, we see significant growth opportunities. We are targeting some rates in the 5% to 9% range that we plan to pursue quite aggressively.

And next we'll go to Daniel Moore with CJS Securities.

Thank you. You talked about the cost savings initiatives. Just maybe confirm a good run rate for corporate expense and SG&A as we think about Q4 and beyond look prior to those cost savings?

So prior to those cost saves…

Go ahead.

For the fourth quarter, we plan to maintain a similar run rate for corporate expenses as we had in the third quarter. In the upcoming quarters, we will be adjusting our costs to align with the smaller company structure, which is expected to be around $500 million, growing to $600 million. This business was initially set up to support a range of $1 billion to $1.5 billion.

Got it. Please continue.

Warren, did you have other comments on that?

No, that's fine. I'm good.

Okay, perfect. And then any early indications of CapEx for 2021? Or will it be more platform and opportunity dependent?

Well, right now we're forecasting about $22 million in capital spending, which let's say $9 million to $10 million is maintenance and the rest is growth that's already been committed prior to that. So that's what we're looking at right now.

Got it. And just to clarify one more. At this stage, are strategic alternatives generally off the table? I know we're focused on operations barring someone coming to you, is it a sale of the rest of their company not your area of focus at this stage just wanted to kind of confirm where we are from a big picture perspective?

Yeah. I think the way you summarize it is accurate. We're going forward at this point in time, running the businesses looking forward to doing that. As we had indicated previously, we still have some things that we need to look at and to accomplish with our capital structure. We have preferred stock that's outstanding that we'd like to address in some way here. In addition, our current credit facility, including the revolver and the remaining portion of the Term Loan B, comes due in October of 2022. So that's another issue that we'd like to address as well. And those will be things that we'll be looking at over the next six months.

Very good. Look forward to seeing progress. Thanks again for the color.

You bet.

And next we will go to Steve Barger with KeyBanc Capital Markets.

Hey, thanks for the follow-up. Just one quick modeling question. Curious if you could just talk about expectations for quarterly interest expense since you did sell Life Sciences in October? And how we should be thinking about reductions in interest expense in 2021?

So interest expense, we're modeling in at about $4 million a quarter. So it will be about $16 million a year. That's what we're modeling in. We do have a swap that's costing us about $1.3 million this quarter each month, going until December. And then it drops down to about $900,000 next year. But we're just looking at the entire capital structure right now.

Right. And then, should we think that free cash flow will be positive in fourth quarter? And just any evolving thoughts around the capital structure and around the preferred as well would be great?

Well, from a cash flow standpoint, obviously we're going to see improvement with this lower interest expense. Right now we're not giving guidance on our cash flow at this time. So we're just going to monitor the current environment. We're moving forward. I think we'll be improving our cash flow. But I'm not going to commit that we'll be positive in our Q4.

Got it. And then as you think about opportunities for the preferred and the forward capital structure, any further commentary there?

We are planning to address our capital structure. As Warren mentioned, if we look at before March 2021, there will be an increase of $5 million on the preferred. We aim to make progress by March 2021, but there is no immediate urgency, and even after that date, we can still take our time since we are currently in a strong financial position.

I think that's a good point, Tom. That's an important takeaway. With our leverage at 1.9, excluding the preferred, we feel very positive about our position. This provides us significant flexibility during uncertain times. We are keen to observe how the situation with COVID evolves, especially with the recent increase in cases over the past month. We want to ensure that any structural decisions we make maintain our cash flexibility moving forward, in case there is a resurgence of COVID that disrupts our volumes and cash generation capabilities. We are reasonably confident that if the volumes in the auto and power sectors remain stable as they have in the third quarter, we will be able to achieve positive free cash flow in the future. This is how we are preparing the company and how we anticipate its performance.

Very helpful. Thanks guys.

Thank you.

And that does conclude today's question-and-answer session. I'll now turn the call back over to Warren Veltman for any additional or closing remarks.

Well, thank you, operator. I'd like to thank everybody for participating in the call. As I said in my comments, we're very excited about the direction of the company. I think the management team is fully engaged with providing the thought and the actions necessary to provide a return to our shareholders. And we're excited to get to work in doing that. And once again, I appreciate everybody for their time, and I hope that everybody stays healthy and safe. Have a good day. Thank you.

And that does conclude today's conference. We thank you for your participation. You may now disconnect.