Park Aerospace Corp Q1 FY2022 Earnings Call

Good morning. My name is Michelle, and I'll be your conference operator today. I would like to welcome everyone to the Park Aerospace Corp First Quarter Fiscal Year ‘22 Earnings Release Conference Call and Investor Presentation. All lines have been muted to prevent background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin.

Thank you, operator. This is Brian. Welcome, everyone, to our Q1 investor conference call. I have Matt Farabaugh, our CFO, with me as usual. We announced our earnings early this morning, and you should check that earnings release for instructions on accessing the presentation we will be discussing. It’s helpful to have the presentation in front of you, and it's also available on our website. What’s interesting about this call is that it has been less than two months since our last discussion, so there isn’t a lot of new information. However, we have provided some updates and made some changes to keep it engaging. Some slides are similar to our Q4 slides, but we felt they were necessary for context. While some of you may remember our Q4 presentation thoroughly, many may not, so we will quickly review those slides for your benefit. The presentation will take about 45 minutes, partly because we include some slides from Q4 for context. After Matt and I finish the presentation, we will open the floor for questions. Let’s move on to Slide 2, which contains our forward-looking disclaimer. If you have questions about it, just let us know. On Slide 3, we have a New Year table of contents. The first item on Slide 1 is the main presentation, while Appendix 1 contains supplemental financial information we've included for several quarters. Appendices 2 and 3 cover new environmental and community considerations and diversity within our workforce. These are statements we posted on our website, likely in early June. Since many people might not check our website regularly, we wanted to highlight these two statements for your awareness, even though we won't be discussing them during the call. If you have any questions or comments about these, feel free to reach out. Now, let’s look at Slide 4, which will take a bit more time to review. For Q1, we reported sales of $13,594,000. When we compare this to Q4, which was $14,441,000, we should remember that Q4 included $3.5 million from the essential component sales for missile programs. Essentially, we sourced this product from a supplier overseas, marked it up, and sold it to customers, but it involved minimal production and low margins. Therefore, if we want a true comparison, we should subtract the $3.5 million from Q4, bringing it to around $11 million. So, Q4 compared to Q1 shows $13.594 million versus approximately $11 million, providing a clearer picture. For gross profit, we achieved $5 million for Q1 with a gross margin of 40.3%. This is quite good as we usually prefer not to see margins below 30%. An adjusted EBITDA of $4.1 million is a notable achievement since it’s been a while since we've had EBITDA above $4 million in a quarter. Our adjusted EBITDA margin of 30.2% also stands out historically. During our May 13, 2021, Q4 investor call, we estimated our Q1 sales would be between $13.3 million and $13.8 million, and we fell right into that range, which is good. We expected adjusted EBITDA between $3.6 million and $4.1 million, and we reached the top of that range. We have a clear forecasting philosophy; we don’t provide numbers we know we can easily beat just to look good. We prefer to be honest about our projections, acknowledging the possibility of error, while giving you our best estimate of what we believe will happen. Certain factors influencing our Q4 and Q1 sales and margins include the previously mentioned $3.5 million in low-margin sales during Q4 and about $1 million in high-margin sales during Q1 from materials for missile programs. Eventually, the essential components will be utilized to produce prepreg and sold at good margins, which we expect. Q1 was positively impacted by a favorable product mix and cost factors, although we did not have any unusual items affecting our bottom line. I want to acknowledge the significant ramp-up of our GE program without adding personnel, which is impressive. While we may not see such high gross and EBITDA margins in the coming quarters, they provide insight into what is achievable. On the cost side, we plan to hire more people; however, we have faced challenges in doing so. Travel and entertainment costs will rise as restrictions ease, but we view this as a positive development. Now, let’s move on to Slide 5 for some historical context on our gross and EBITDA margins. They have not approached 40% and 30%, even during peak years like fiscal 2020. Let’s continue to Slide 6, where Matt will take over.

Sure. At the end of the quarter, our cash and marketable securities were about $117 million, which is quite similar to the amount at the end of fiscal 2021. Park invests in very liquid, high-rated U.S. treasuries, agencies, and corporate bonds. In Q1, our portfolio had a yield of 0.35%, reflecting the low rates on investments and the maturing of our longer-term investments. As these investments are reinvested, especially treasuries maturing in three years or less, the yield has generally been below 0.35%. For context, on January 1, 2020, treasury yields for one-year to three-year maturities ranged from 1.5% to 1.6%. Highly rated corporate bonds have slightly better yields, but not significantly. Last year, our investments averaged a yield of 1.76%, but for the recent trailing 12-months, the yield dropped to 0.91%. In this first fiscal quarter, our investments earned 0.35%. This indicates how rapidly rates have decreased, with one-year treasuries currently yielding under one-tenth of a percent. Consequently, net investment income will stay low until there is a recovery in short-term interest rates. Regarding the tax rate, our effective tax rate for the first quarter was 30.0%, which is higher than usual due to the write-down of deferred tax assets in Singapore that we believe will not be realized. Assuming no unusual events arise during the year, we expect the effective tax rate for the rest of the fiscal year to be closer to 27% each quarter. However, changes in federal corporate tax rates could alter this estimate, as there have been discussions about increasing the federal tax rate. Moving to depreciation, we anticipate it will rise over the remaining quarters as we roll out our expansion. For the full fiscal 2022, depreciation is expected to resemble last year's figure of approximately $1.2 million, starting low and increasing throughout the year. Next year, we will see a more noticeable increase in depreciation as all our expansion assets will be operational, resulting in a full year of depreciation for those assets. That's all from me, Brian, unless you have anything to add.

No, that's great. Okay, thanks, Matt. All right, good deal. Let's go to Slide 7. We keep moving here. This slide contains information we've shared before. One of our shareholders mentioned they missed it last quarter, so we've decided to include it again. As you know, we have zero long-term debt and have recovered another $117 million in cash. Our dividend history shows $546 million paid since fiscal 2005, and we continue to move forward. If you have any questions about the dividend history, please let us know, but we want to keep going to cover everything. Slide 8 features our top customers in alphabetical order, along with images of most of them. The first is AAE Aerospace, shown in the top right, related to the NASA Oriole program for which we supply ablative materials. Another is GKN Aerospace, pictured in the top left with the Boeing 787. GKN is a contractor, and we supply numerous programs through them; we’ve selected the Boeing 787 for this presentation, where we provide materials for structural components. Kratos is a frequent top five customer, and we usually show one of their drones, the BQM SSAT. We believe we are their primary supplier of composite materials for drone structures. Interestingly, we have Nordam in the bottom right; these are radome materials for the weather master radomes used in the 737 and 737 MAX. We also supply Nordam across multiple programs, but we highlighted the 737 MAX for a change of pace. Additionally, we’ve covered Middle River at MRAS extensively, so no need for a picture here. Now, moving on to Slide 9; these pie charts are interesting as they show Park’s estimated revenues by aerospace market segment. It appears that Q1 of fiscal ’22 is starting to resemble fiscal 2020, following a stark contrast in fiscal ’21 with significant downturns in commercial and increases in military revenue. On Slide 10, we love niche Military Aerospace Programs; this is another regular feature in our presentations and a project highlighted by our team. These programs aren’t defined by size; they’re simply noteworthy. For instance, the Raytheon MK 56 Guided Missile is a new program for us, supplying ablative materials. The Lockheed C-5 Galaxy is an enduring aircraft, and we provide materials for its various structural components. The Boeing Apache helicopter is another, with materials for secondary and primary structures. The Textron Systems Shadow, a drone, involves materials for its aircraft structures, which we’ve supported through various versions. Airbus C-295 is also notable, for which we provide materials for the interiors. Park considers radomes, rocket nozzles, and drones to be niche areas in the military segment of our business. Let’s keep moving to Slide 11; this is just a teaser for you. The launch of the James Webb Space Telescope is planned for November 2021. This program has brought us great pride and privilege, and we anticipate a more detailed discussion during our Q2 announcement since the launch is scheduled for November 2021. However, let's keep moving, as there's a lot to cover. On Slide 12, we have an update on our major expansion at our Newton, Kansas facility. The total budget is $19 million, we've spent $16.5 million, leaving $2.5 million to go. The expansion is essentially complete, with some remaining items still on the way, and we expect manufacturing trials to begin later this month. Qualification runs are anticipated to start in September of this year. However, we continue to face challenges with our supply chain for raw materials, and we need to evaluate if we have enough to start the qualification and trials on schedule. We want to avoid starting qualifications without being able to meet production needs; that would not be advisable. This is our plan, and it's also worth noting that we moved forward with this major expansion while many others were cutting back on their capital spending. It was a wise decision because if we hadn’t proceeded, especially with Airbus's updates regarding the A320neo program, we would have faced significant challenges. Remember, we will cover this in more detail later. Originally, this facility was intended as redundancy for GE programs, and without this expansion, we could have been in real trouble, especially given the timeframe needed for qualification. We are pleased that we committed to this expansion and followed through. The picture in the bottom right is Donna, welcoming us in, symbolizing the completion of the expansion. Now, moving to Slide 13, we’re reviewing slides quickly. This slide gives perspective; some of you may not remember everything we discussed during Q4. It emphasizes how higher jet fuel prices and environmental concerns are accelerating airlines' plans to replace older, less fuel-efficient single-aisle aircraft with newer, more efficient models like the A320neo family. If you observe those crude oil prices, they have been consistently rising. This increase generates a significant motivation among airlines to upgrade their fleets. At the beginning of the pandemic, when crude prices were low, the drive for upgrades was minimal. However, motivation is substantial now. China is performing well in domestic aviation, despite some setbacks due to COVID restrictions in Guangdong Province. They are nearing pre-COVID levels again, which is positive news for single-aisle aircraft demand. Domestic markets, like those in the U.S., are recovering to approximately 84% of pre-COVID levels, with full recovery expected in 2022. Some airlines predict a return to full operations by the year's end, which is good news for single-aisle aircraft sales. European domestic aviation is also gradually recovering, which is another hopeful sign for single-aisle sales. Recently, United executed a significant single-aisle order that includes both A320neo and MAX aircraft, indicating a healthy market. The single-aisle aircraft segment is currently the most promising in commercial aviation, as we see it. Moving to Slide 14, we’re continuing with this theme, now addressing two new items. The U.S. and European Union have resolved their 17-year-long trade dispute related to subsidies for Boeing and Airbus. This is noteworthy, and I find it interesting that a U.S. trade representative remarked on us coming together against a common threat — specifically China. Another surprising item is Boeing's recent statement that they do not feel rushed to develop a new single-aisle aircraft to compete with the Airbus A321XLR. We'll revisit these points throughout the presentation. On Slide 15, we review our GE Aviation Jet Engine Programs regularly. Recall that we have a firm pricing Long-Term Agreement with Middle River Aerostructure Systems, which is part of ST Engineering Aerospace. MRAS was previously a subsidiary of GE Aviation, and thus all programs flow through them. A couple of years back, GE Aviation sold MRAS to ST Engineering Aerospace, a major aerospace firm based in Singapore. Our redundant factory being constructed is nearing completion, and we’re glad we moved forward on this because failing to do so could have placed us in a tight situation. This redundancy is not just for protection, but also for capacity, given we are the sole-source provider of composite materials for engine nacelles and thrust reversers across multiple MRAS programs. The programs include A320neo, Boeing 747, Comac 919, and Bombardier Global 7500, among others. Our materials are also essential for lightning strike protection and primary structure components for the Global 7500's Passport 20 engine, though that aspect is unrelated to the MRAS agreement. The image of the Boeing 747 engine nacelles is noteworthy; it gives perspective on their size, and everything shown is produced using our materials, including structures within thrust reversers that are not visible. Moving to Slide 16, let's provide an update on GE Aviation programs. The A320neo family is significant for Park, and we’ve covered some items in previous updates. Currently, Airbus is ramping production from 40 to 43 by Q3, increasing to 45 by year-end, as confirmed by the Airbus CEO during an investor call on April 29. There is also talk of a strong ramp-up in 2022 and 2023 for single-aisle aircraft, particularly within the A320 family. Furthermore, a May 27 release from Airbus confirmed an average production of 45 A320 family aircraft per month by Q4 2021 and urged suppliers, like us, to prepare for a rate of 64 per month by Q2 2023 in anticipation of ongoing recovery. They are even looking to enable a scenario where they can reach 70 by Q1 2024, with long-term aspirations for rates as high as 75 by 2025. Achieving 75 would signify a significant increase of 21% over our long-term forecasts. It's essential to track these projections closely, as they hold substantial implications for both volume and revenue. On Slide 17, as of the end of May 2021, CFM's LEAP-1A engine holds approximately 60% of firm orders for A320neo aircraft. This information comes from Aero Engine News, and it’s clear that firm orders are substantial, not mere speculation. We calculate the previous 75 production number using this 60% order share, understanding its implications on our forecasts. Continuing on Slide 17, CFM and IndiGo, the largest airline in India, recently announced an order for the LEAP-1A engine to power an additional 310 A320neo family aircraft, making it the largest order by number of units. Even with recent challenges due to COVID in India, they are moving forward with their orders, which is good news for Park. Lastly, Airbus recently revealed it is resuming work on a new assembly line in Toulouse for A321neo aircraft, set to be operational by late 2022. This indicates they aren't just making bold statements; they are committing resources, which could prove significant as they have previously made assertive statements about not dipping below 40% in production, and they’ve maintained that promise. Now, Slide 18 introduces the A321XLR; we’ve discussed some details previously. The first test aircraft is nearing final assembly, with its first flight expected next year and service entry in 2023, making it a great interest. Many consider this aircraft a potential game-changer because it could supplant wide-body aircraft in various missions at lower costs. A critical question remains whether Boeing is relinquishing the single-aisle market segment to the A321XLR, as they have stated they are in no rush to create a competitor. This could favor Airbus and Park significantly. Slide 19 continues our updates on GE Aviation programs focusing on the Comac C919. It competes with the MAX and A320, and Comac plans to certify and deliver this aircraft before the year ends. Initially aimed at the Chinese market, they aspire to hold a global position in aviation. They want this aircraft to be recognized worldwide, needing FAA and EASA certifications. However, domestic sales will likely initiate in China. The C919 may embody a big opportunity for Park moving forward. However, one must consider how the recent peace treaty between Boeing and Airbus, aimed at addressing a "common threat," will influence Comac and its C919 program. We'll need to wait and see how this unfolds. Comac also reaffirmed plans to complete development of a domestic engine alternative to the LEAP-1C engine for the C919 by 2025. I believe certifying an engine is inherently more complex than certifying an aircraft, which is an important consideration. Moving to Slide 20, we continue discussing the Global 7500 and ARJ-21 programs. We’ve noted these programs have entered ramp mode based on the forecasts provided, and we’re beginning to see changes in order patterns for the Passport 20 engine in the Global 7500, as well as the ARJ-21, which is positive news. Going to Slide 21, Boeing announced it will cease production of the Boeing 747-8 in 2022. This iconic airplane holds a special place in aviation history. The images on this slide are from Anchorage airport, capturing moments I experienced while flying. It's important to take safety precautions when taxiing behind large aircraft like the 747. Slide 22 is a review illustrating the poor state of commercial aerospace last year. Although I won't discuss every point, last year was marked by negative sentiments and predictions of extended recovery times, with some even suggesting a doomsday scenario. Moving to Slide 23, it’s crucial to note that at Park, we did not subscribe to this doom and gloom rhetoric. We secured long-term agreements to maintain a minimum baseline of critical mass production with MRAS. If we hadn't done this, we would have faced dire consequences not only for us but for MRAS and its customers. We remained committed to keeping our team intact during widespread industry layoffs, which was vital for our future success, as we would struggle with hiring if we had downsized. Slide 24 discusses this year in review, emphasizing the mismatch between our minimum baseline production and the existing market demands, which could not sustain inventory destocking. Thus, we announced that destocking has concluded, at least for the programs we are involved in. Moving to Slide 25, in Q3 of last year, sales for GE programs were $1.8 million, increasing to $7 million in Q1, which is a remarkable fourfold growth in just two quarters—a fact that demonstrates actual success rather than forecasts. On Slide 26, we received updated long-term forecasts from MRAS reflecting similar total numbers through the end of the 2029 calendar year as pre-COVID projections. However, we believe these forecasts may not fully account for upside scenarios concerning increased production for the A320neo family and potential XLR sales opportunities. We calculate that a rate of 75 signifies a 25% increase over previous peak forecasts, raising critical questions about our manufacturing supply chain’s ability to keep pace with these growth plans. Slide 27 addresses how Park is responding to the ramp-up of GE Aviation programs. Currently, our team count sits at 105, which is perplexing given the substantial output increases since Q3. While we aimed to add personnel, hiring has proven to be extremely challenging. Thankfully, we retained all our employees and utilized our flexibility programs to accomplish our targets with fewer people, which is commendable. Slides 28 and 29 reinforce the importance of our dedicated staff, and I'm proud to share that every Park employee received a $250 bonus for their commitment during the first fiscal quarter. Moving on to Slide 29, we present our sales history and forecasts regarding the GE Aviation program. We've highlighted factors impacting Q4 and Q1, including low-margin sales in some missile programs. For Q2, our forecast was adjusted downwards from $14 million to $15 million to a new range of $13.25 million to $14.25 million, and the EBITDA forecast was similarly reduced, reflecting the GE program’s forecast decrease. We have not altered our annual forecast at this time, having no cause to do so. However, we must remain mindful of risks, particularly with international shipping and associated transport costs. We’re also aware of supply chain risks that affect both GE and Park, as well as potential cost fluctuations as we seek to hire additional staff. While Q1 presented unique challenges, we managed without incurring significant hiring or travel expenses. As for future economic uncertainties, we advocate maintaining a cautious outlook. We did not believe the dire forecasts from last year regarding the pandemic, but we remain cautious of over-optimism in the current landscape. We believe in being realistic; we don’t want to overshoot our forecasts without reasonable confidence. Moving to Slide 31, we update on acquisitions and strategic investment activities, emphasizing that while we are still exploring opportunities, we are cautious about overpaying in the current climate of cheap capital. We are strategically targeting aerospace industry segments, having identified potential companies for overtures while remaining patient. We continue our work on joint ventures and potential strategic investments in key aerospace and aircraft programs. Let’s proceed to the final slides. Living through these unusual times, we acknowledge both the pressures and the benefits of current market dynamics. At Park, we focus on moving forward and consistently delivering for our stakeholders. We emphasize our commitment to our workforce, our values, and achieving solid returns for our owners. As we conclude, I recognize our Park family’s solidarity and resilience, highlighting the remarkable individuals who make up our team. Thank you for your attention, and we're now ready to take questions.

We have a question from Brad Hathaway with Far View. Your line is open.

Hi, congrats on another very good quarter. I appreciate that you're not giving specific, long-term guidance. But I was curious in your commentary on the kind of 21% increase in Airbus versus your kind of prior long-term forecast? And I'm just curious kind of if you look, I guess, kind of business line by business line, how do you think just directionally most of what you're seeing compares to kind of what you previously thought in that forecast?

You mean like by segment, Brad, is that what you're referring to?

Yeah, I was wondering about the commercial military business?

Got it. Commercial is closely tied to the GE Aviation programs, which are key for both commercial and business aircraft, with the A320neo program being particularly influential at this moment. While other programs are also important and gaining traction, there is uncertainty around Airbus's recent statements. Some skeptics doubt their intentions, suggesting they might just want to increase supply chain capacity, but I believe we should pay attention to their messages and see how things unfold. There’s a significant financial difference based on our A320 forecasts from MRAS, which are calculated by units and content per unit, making it straightforward to determine revenue impacts. We need perspective on this. There's a mix of feelings in the market; while some are optimistic, others are more cautious. We're trying to navigate this uncertainty, recognizing both risks and opportunities. As for military, we continue to make progress and remain optimistic about our prospects in niche markets where competition is less intense and margins are good. Lastly, in the business aircraft sector, the Bombardier Global 7500 will drive much of our performance, but we are also engaged in other programs beyond GE Aviation.

Got it. Great, that's helpful. Okay, so I guess it's kind of waiting to see whether these kind of 75 in 2025 from Airbus is a real number. Can you talk about that?

Sorry.

I apologize for that.

Oh, yeah. Right. Well, we’ll wait just to follow up what you're saying. We'll wait to see what other comments come out from Airbus. And we'll just be watching what happens in the market. When you've got an IndiGo entering loads of airplanes with these LEAP engines, that's a plus, right? So, we got to watch and pay attention to pretty much everything.

And what do you think about the long-term potential for the Comac 919? I mean, how big a program could that potentially be for you?

My opinion is that it won't be the size with A320, but it could be significant potential. In the soul, we have a lot of content on those engines, and it has significant potential. Let's see what happens. We hope that they are successful in getting the airplane certified and production at least for China. We hope they're successful in certifying it. In the rest of the world, we're not sure what to make of the peace treaty between Boeing and Airbus; now that affects Comac. So, kind of a lot of things going on that are hard to judge, but in terms of even the forecast, we have to memorize significant opportunity with a 919 for Park.

Great. And then finally, I guess, on the M&A front. So, it sounds like you participated in a deal, I mean – I was curious about the strategic investment in the aerospace and aircraft programs. Can you give a little more color on what that actually means?

What we're doing in other words, Brad?

Yeah, I mean, potential things you might do when you talk about these strategic investments, as opposed to like the joint venture.

We participated in an auction about a month or two ago and made it to the second round but ultimately decided to withdraw after an internal meeting. We realized that this opportunity was a significant stretch for us. While it was related to aerospace, it was so far removed from our core business that the synergies were not apparent. We recognized that there was little connection between our operations and what was being offered. Instead, about six months ago, we chose to focus on a specific area of aerospace materials that aligns closely with composite materials, which we believed made more sense and had better technical synergies with our current work. We're exploring materials used to create composite structures for aircraft, and while I want to keep some details confidential, we approached this in a typical manner. We conducted a survey and identified around 40 to 50 potential companies and started narrowing them down, reaching out to about eight or ten. Some expressed interest in continuing the conversation, while others indicated they weren't for sale. We are dealing with two types of companies: independent ones owned by individuals and divisions of larger firms, each requiring a different approach to mergers and acquisitions. Contacting individuals often demands more sensitivity due to their personal investment in their businesses, whereas larger companies can be more straightforward. It's taking more effort since we're not reaching out to companies that are clearly seeking to sell. However, if we succeed in our outreach, I believe it will be far more beneficial for Park than just participating in a typical auction, which often involves aerospace opportunities that aren’t closely related to our parts business.

Okay, great. Thank you very much. Appreciate all the color.

Sure. Nice talking to you.

Our next question comes from Christopher Hillard with UBS. Your line is open.

Hi, it's good to speak to you all.

Hi, Chris.

It's great to see the strong profitability embedded in your outlook. Wanted to ask, as you look out maybe a little bit farther, without giving guidance per se, are there aspects or other ways in which the business has developed where you anticipate either greater efficiencies as you, for example, expand your capacity with the latest production technology, or are there areas where you see maybe the margins be a little bit more challenged because you've gone through this whole supply chain disruption, the need to maybe carry higher inventories? I'm curious if there's any developments in how you're thinking about your opportunity to capture margins in the medium term?

We don't expect any significant improvements in manufacturing efficiencies as we expand. We're already quite efficient, though I realize that's a bit risky to say since we should always be looking for ways to improve. Our cost structure is low and appropriate for our needs. While we pass on raw material price increases when possible, there are some costs we can't, like supplies, labor, and utilities. We've noticed rising costs, particularly airline travel, which is significantly more expensive than it was six months ago. Some costs will be contained, but others may not, so we need to keep an eye on this. As for inventory, we want to maintain cushion stocks but face challenges due to supply constraints. Our suppliers are only willing to provide us the amounts outlined in our forecasts, which complicates efforts to increase inventory levels. Managing inventory is a daily challenge, and while increasing our stock would not significantly raise our costs, we are uncertain about how it would impact our overall cost structure.

Okay, then maybe one more, given that your domestic manufacturer, particularly as it relates to your military business, does the desire to have more domestic production and onshoring come into play in any way with your existing portfolio of products? Or maybe how you're thinking about M&A opportunities?

Yeah, I wouldn't. I'm not sure about the M&A part of it. But I believe that the fact that we are one of two domestic manufacturers of composite materials for aerospace, it does help us in that regard. It gives us more opportunities to develop additional military business. So, we'll have to see how that plays out a little bit. There's certainly a lot of talk about it. But I think to the extent it's a factor at all, it would be a plus.

Great, thank you for your time today.

Sure, Chris. Thank you for your input.

There are no further questions. Let's turn the call back over to Brian Shore for any closing remarks.

Thank you all for your patience. This was likely the longest call we've ever conducted. As I mentioned earlier, there were a few challenges; we felt it was important to include some slides from Q4 for context, which extended the presentation time. Regardless, thank you once more for listening. We truly appreciate it. Feel free to reach out to Matt or me anytime. Wishing you a wonderful summer, and we’ll speak again soon. Have a great day.

This does conclude the program. You may now disconnect.