Earnings Call Transcript - SPXC Q4 2021

Operator, Operator

Thank you, operator and good afternoon, everyone. Thanks for joining us. With me on the call today are Gene Lowe, our President and Chief Executive Officer; and Jamie Harris, our Chief Financial Officer. A press release containing our Fourth Quarter and Full Year 2021 Results was issued today after market close. You can find the release and our earnings slide presentation as well as a link to a live webcast of this call in the Investor Relations section of our website at spx.com. I encourage you to review our disclosure and discussion of GAAP results in the press release and to follow along with the slide presentation during our prepared remarks. A replay of the webcast will be available on our website until March 2. As a reminder, portions of our presentation and comments are forward-looking and subject to safe harbor provisions. Please also note the risk factors in our most recent SEC filings, including our disclosures related to the COVID-19 pandemic. Our comments today will largely focus on adjusted financial results. You can find detailed reconciliations of historical adjusted figures to their respective GAAP measures in the appendix to today's presentation. As noted in our press release, our South African operations are now being accounted for as discontinued operations for all periods presented and are no longer part of our non-GAAP adjustments. As such, our other segment has been eliminated, bringing our GAAP reporting framework to two segments from three previously. Our adjusted results exclude non-service pension items, amortization expense, investment gains, certain discrete tax items, acquisition-related items, adjusted for certain legacy liability charges and certain other non-recurring items. Finally, we will be conducting virtual meetings with investors over the coming weeks, including at Sidoti's Spring Virtual Small Cap Conference in March. And with that, I'll turn the call over to Gene.

Gene Lowe, CEO

Thanks, Paul. Good afternoon, everyone and thank you for joining us. On the call today, we'll provide you with a brief update on our consolidated and segment results for the fourth quarter and full year 2021. We'll also provide guidance for 2022. I'll start with some of the highlights from the quarter and the year. We closed the year with solid results and the balance sheet that positions us well to achieve our growth plans. Looking back, 2021 was a transformational year for SPX Corporation. We continue to execute on our value creation roadmap and several significant accomplishments. We closed on three strategic acquisitions and completed the sale of our largest business transformer solutions. This transaction simplified and strengthened SPX and allowed us to focus on our higher-margin, higher-growth HVAC and Detection & Measurement segments. We also advanced our digital and continuous improvement initiatives, continued to invest in and develop our people and further progressed our ESG and diversity and inclusion initiatives. In 2022, we expect continued solid growth before taking into account any new capital deployment. While the current environment presents several challenges, end market demand remains strong and our team continues to execute with focus and purpose to drive success. We are well positioned to continue our value creation journey and look forward to reporting additional successes throughout the year. Turning to our results; our Q4 performance reflects strength in our Detection & Measurement segment, while our HVAC segment faced headwinds primarily related to supply chain. Despite these pressures, segment income and margin increased on a year-on-year basis and we exceeded our updated full year EPS guidance. Turning to our value creation framework. We made solid progress in 2021 on several fronts. We introduced a number of innovative solutions and continued to scale several others. In our HVAC heating platform, our Weil-McLain Ecotech premium high-efficiency boiler continues to gain market traction and was the only hydronic boiler to win a prestigious Dealer Design Award in 2021. In our HVAC cooling platform, our CoolSpec product selection tool continues to receive strong favorable customer feedback and interaction. We believe this tool is a leap forward in customer experience when assessing and selecting the proper cooling solution for their needs and better positions us to achieve basis of design with engineers. In our Detection & Measurement segment, our location and inspection platform introduced new solutions to improve efficiency and safety for our end market utility customers, including innovative approaches to resolving cross for concerns about unintended intersections between different underground utility assets as well as less invasive and safer robotic approaches to roadwork in high-traffic areas. On the inorganic front, we closed three acquisitions last year, adding approximately $120 million in run rate revenue. The integration of these three businesses is going well and we see meaningful opportunities for synergies and potential for additional investments to further strengthen and broaden our position in these attractive niche markets. 2021 is also an important year of growth for key initiatives as we made considerable strides in our continuous improvement, digital, diversity inclusion, and ESG. I feel very good about our continued progress on these fronts that are critical to building sustainable value. And now, I'll turn the call to Jamie to review our financial results.

Jamie Harris, CFO

Thanks, Gene. For the fourth quarter, adjusted EPS was $0.88. As Paul mentioned, this is the first quarter with South Africa in discontinued operations and it is no longer a part of our adjustments. In Q4, we made a decision to harmonize our accounting method for inventory to FIFO, converting the remaining businesses from LIFO. Our method is now consistent within all segments and across the company. Accordingly, we have restated prior quarters and prior years to reflect this change. In addition to the segment drivers which I will review momentarily, interest costs were lower due to lower debt balances and a lower fixed rate on our swap agreement which began in April. In the fourth quarter of 2021 and 2020, our tax revision benefited from discrete items resulting in a lower-than-normal effective tax rate in both periods. Also, this quarter, we have excluded charges resulting from revisions to long-term modeling assumptions associated with legacy asbestos liabilities and the rate at which these liabilities decline over time. These charges do not reflect in period or near-term cash uses. They reflect our best estimates of future liabilities projected out to 2057. For comparison purposes, we have also adjusted corresponding items from our 2020 results. A table with our quarterly results reflecting these changes for 2020 and 2021 is available in the appendix to our presentation. With regards to our high-level results for Q4, despite strong orders and backlog, revenue and adjusted operating income were only modestly higher compared with the prior year. Organic growth in Detection & Measurement and the benefit of acquisitions were largely offset by organic decline in HVAC. We also made P&L investments in continuous improvement in other initiatives and experienced higher corporate expense related to performance-related compensation. Reviewing our segment results. In Q4, acquisitions and strong project deliveries within our Detection & Measurement segment were the primary drivers of revenue growth. Q4 margins were up year-over-year with an increase in Detection & Measurement, partially offset by a decline in HVAC. For our HVAC segment, revenues declined 8% with an organic decline of 9%, partially offset by 0.5 month of ownership of Cincinnati Fan which we acquired on December 15. The demand for both our heating and cooling businesses remained strong as evidenced by a significant backlog, but both platforms were production constrained for the quarter. Heating revenues declined 7% against the backdrop of strong demand due largely to supply and production constraints related to the availability of certain components. Cooling revenues were down approximately 9%. During Q4, our Americas business continued to face production constraints related to supply chain and labor which were exacerbated by a rise in COVID cases. Adjusted segment income and margin decreased 4.5 basis points and 60 basis points, respectively. The decline was largely due to supply chain availability of certain component parts, cost inflation, and labor constraints. Together, these impacted productivity, shipments, and costs. Overall, demand levels remain very high for our HVAC products. Organically, backlog was up 38% compared with the prior year. Total ending backlog for HVAC was $227 million, with the most significant increases from our heating platform, particularly for boilers and the addition of Cincinnati Fan. Based on our bookings and backlog, both Heating and Cooling are well positioned for growth in 2022. Detection & Measurement, revenues were up 17% year-over-year, including an organic increase of 4.2% and a 12.8% impact from the acquisitions of Sealite and ECS. Adjusted segment income and margin grew $6.4 million and 130 basis points, respectively. The increase was largely due to higher project sales and transportation as well as the benefit of acquisitions. As we discussed last quarter, our ULC business has experienced some lower revenue near term as a result of a U.K. utility rate case. We expect revenue to improve during the second half of 2022. Despite the short-term revenue decline, we continue to see this business as a great strategic addition and among the most attractive growth opportunities over time. Organically, Detection & Measurement backlog was up 14%. The ending backlog was approximately $154 million, including the benefit of acquisitions. Overall, we believe this segment is well positioned for growth in 2022 and beyond. Turning now to our financial position at the end of the quarter. We ended the quarter with cash of $396 million which includes the impact of our purchase of Cincinnati Fan in Q4. Net of our term loan, we are in a net cash position of $150 million. Adjusted free cash flow for the full year was approximately $104 million, representing approximately 96% conversion of adjusted net income. This excludes $20 million of positive cash flow associated with South Africa which includes tax benefits realized during the year. Overall, our strong balance sheet and liquidity positions us to continue growing through organic and inorganic investments. We have a robust pipeline of acquisition opportunities, including several active prospects. While we are confident in our ability to execute on growth investments, we will monitor for significant sustained value displacement in our stock price and we will consider using our share repurchase authorization if appropriate. As a reminder, our Board has authorized stock repurchases of up to $100 million, the details of which are included in our 10-K. Regarding 2022, in HVAC, the demand outlook remains strong and we anticipate solid full-year growth. Tight labor and supply chain conditions have continued into Q1, leading us to expect flat segment income compared with the prior year first quarter. In Detection & Measurement, we are seeing strong run rate in project frontlog activity. Along with our acquisitions, we see this driving higher revenue and income for the full year. However, in Q1, we anticipate lower CommTech, ULC revenues compared to solid prior year results. In 2021, CommTech in particular, had a revenue profile that was heavily weighted in the first quarter which is atypical. We see revenue for both businesses strengthening throughout the year based on identified demand from customers. As a result, for the total company, we anticipate first quarter segment income to be approximately 20% lower than the prior year due to the high incremental margins of the Detection and Measurement project businesses. For the balance of 2022, we expect year-over-year increases in segment income. For the full year, we estimate an increase in total revenue of approximately 10% to 15% and adjusted earnings per share before capital deployment in the range of $2.50 to $2.80 per share. The midpoint of $2.65 reflects year-on-year growth of approximately 14%. In addition, there are approximately $0.11 per share of interest expense that could be eliminated if we use part of our $396 million of cash to pay off our term loan. We have purposely decided not to pay off a term loan because we expect to deploy that capital for acquisition opportunities. This $0.11 of earnings would bring our midpoint to $2.76 and we believe this is a better representation of our operational earnings power. Our full year midpoint EPS reflects overall strong demand but with supply constraints continuing in early 2022. Our range reflects various scenarios for supply chain and labor as well as the timing of project revenues in Detection & Measurement. As we progress through the year, we would expect to tighten this range. Overall, we remain excited about our business outlook moving forward. We continue to aggressively address supply challenges and believe we are winning in the marketplace with our customers. As always, you will find more details on our guidance in the appendix to today's slides. I will now turn the call back to Gene for a discussion of our end markets.

Gene Lowe, CEO

Thanks, Jamie. Overall, our end markets continue to see favorable demand trends. In HVAC, there are geographical differences, with notable strength in the Americas. In Detection & Measurement, we continue to experience strong demand for run rate products across most regions. Our project-oriented businesses are also seeing good customer activity and bookings overall, although we're encountering softer orders in our CommTech platform. In summary, we ended the year with solid earnings and a strong balance sheet that supports our growth plans. We entered 2022 as a more focused business with higher margins and growth, along with a clear plan to meet our SPX 2025 targets of around $2 billion in revenue and 18% EBITDA margins. We're making progress on our key initiatives and look forward to sharing more successes throughout the year. Current demand trends remain strong, and we're managing through supply chain, labor, and inflation challenges. We expect solid growth in 2022 before any capital deployment benefits and believe we are well-positioned to continue advancing our value creation initiatives for years to come. I'll now turn the call back over to Paul.

Operator, Operator

Thanks, Gene. Operator, we are ready to go to questions.

Operator, Operator

Our first question comes from Bryan Blair of Oppenheimer. Please go ahead with your question.

Bryan Blair, Analyst

Thank you. Good evening, everyone. You provided some valuable insights on the dynamics of Q1. How should we consider the development of supply and the labor issues in HVAC? In relation to your guidance, how would you describe the midpoint concerning those aspects as we look at the progression from Q2 to Q4?

Jamie Harris, CFO

Thank you, Bryan. This is Jamie. So far in 2022, we've noticed a moderate improvement in the supply chain. Initially, like many others across the country, we faced a significant increase in Omicron cases, leading to higher-than-usual absenteeism. However, we are seeing some improvement in labor, and supply chain dynamics are also getting better. We're actively taking steps to enhance our processes and supply chain management, which we believe will have a positive impact. As the year progresses, we expect these challenges to lessen. As we previously noted, we have a tough comparison in our CommTech business from last year and a rate case with a customer in the U.K. regarding ULC. Looking ahead to your question on guidance, if we focus on the midpoint, we anticipate a broader range than usual. We see the possibility of nice upside in the supply chain if things go well, although there are inherent risks. Overall, we believe there are more upside opportunities compared to potential downsides, and we expect continued improvement in the first half of the year. As we move into the second half of the year, we recognize a lot of opportunities, particularly in cooling, which has primarily been impacted by labor shortages. Our productivity throughput remains a concern, but we are seeing some progress, even though conditions remain challenging. COVID cases have significantly declined across the country in recent weeks. In the heating sector, we are still dealing with a substantial backlog, which we view positively as we start the year. Additionally, we are facing ongoing challenges with component parts across various businesses, though we believe those issues are improving as well.

Gene Lowe, CEO

Yes. I have a few additional comments. The supply chain is still facing some challenges, but I believe we are seeing moderate improvement. The team is managing well. As you know, our business system includes both a Supply Chain Council and a Manufacturing Council, and they have effectively implemented best practices across all our operations. We are ensuring we have strong Sales and Operations Planning processes, appropriate reorder points, safety stock, and a diverse vendor base. Additionally, we are utilizing robust analytics to assess our bill of material items and our manufacturing plans for the upcoming months, continuously monitoring what we have and what we are awaiting. We review this every day. Overall, our operations have improved significantly, and we feel optimistic about the direction we are heading. However, the supply chain situation remains challenging.

Bryan Blair, Analyst

That makes sense. I appreciate the color. To clarify on cooling. Are labor constraints isolated to process cooling or more generalized?

Gene Lowe, CEO

I'd say the biggest impact we're seeing is not really on process cooling one, what we have called HVAC cooling, our package business. And really, the main facility there in Kansas is the one that we're seeing. And I would say, last year, that had been on a negative trend over the year. I'd say, as you know, we've put in a number of countermeasures. We have a number of initiatives. And we've actually seen some nice improvement month-over-month for the past four or five months, modest. But we are seeing things going in the right direction there. So that's probably the biggest area of impact of labor that we've seen across SPX.

Bryan Blair, Analyst

Understood. And staying on HVAC, what's baked in for Cincinnati Fan revenue in year one margin? And how should we think about normalized growth rates for that business and margin potential looking out to year two, three margin?

Operator, Operator

Yes. So Bryan, this is Paul. For Cincinnati Fan, we talked about $60 million to $70 million roughly being a good starting point. But then from a revenue perspective, modeling here, I'd probably break it up evenly throughout the year. In terms of margin, we said that they would be eventually accretive to segment margin implying that they weren't currently. So you'd model something a little bit below the segment average for the year.

Bryan Blair, Analyst

Okay, that's fair. And should we think of that business as potentially another platform within HVAC? Or is it a clear enough extension of cooling that's likely where it's going to sit going forward?

Gene Lowe, CEO

Yes. Currently, we observe significant overlap with cooling, and we believe that this area has the potential to expand considerably. Each cooling tower incorporates fans, air movement, and blowers, most of which we engineer, design, and test ourselves, both for our cooling towers and for standalone sales. We are quite familiar with this technology. Furthermore, in our go-to-market strategy, both for light industrial and heavy industrial sectors, we identify real synergies. Thus, I see great growth potential in this product area. Whether we will categorize it as a separate platform is uncertain; at this time, I consider our main platforms to be heating, cooling, and four in Detection & Measurement. We do not plan to break it out separately right now, but as it develops, I wouldn’t rule out the possibility in the future.

Bryan Blair, Analyst

Got it. Good. Thanks, again.

Gene Lowe, CEO

Thanks, Bryan.

Operator, Operator

Thank you. Our next question comes from Damian Karas of UBS. Your line is open.

Damian Karas, Analyst

Hey, good evening guys. Follow-up question on HVAC. You guys aren't expecting too much margin improvement this year at the midpoint and that's right kind of 20% or so incrementals. Maybe you could just elaborate on your margin expectations for the year? Talk about kind of price cost, whether you're expecting any tailwind from lower steel prices potentially later this year, mix factors? Maybe if you could just kind of spell out the exact margin guide.

Jamie Harris, CFO

Jamie here. Let me begin with price and cost since it relates to your question about HVAC. Going back to 2021, we faced a slight challenge with price and cost. As you know, costs increased significantly late last year, and we implemented several price increases in our HVAC sector, the last of which occurred around October and took effect late in the year. This helped position us more favorably for 2022 in terms of capturing that price. However, it did have a negative impact of around 50 basis points on the overall company's price and cost. Looking ahead to 2022, we believe our pricing strategy for new business will more than offset the projected costs and allow us to recover some of the margins we lost last year. This includes both the recent price increases and those planned for 2022. Nonetheless, as we enter 2022, we have a significant backlog that incorporates some prices reflective of the late third and fourth quarters, which is still putting pressure on margins. Therefore, while we anticipate that new pricing and business will improve our position, we still need to address some margin compression from the backlog.

Damian Karas, Analyst

Okay, got it. And then I wanted to ask you about capital allocation. Jamie, you mentioned before possibly taking down your interest expense. How are you thinking about capital deployment in terms of timing, when you might pull the trigger on some buyback or some debt paydown if you haven't got any deals done? And Gene, just I know obviously you don't have a crystal ball, can't comment on timing of deal execution. But maybe you could just kind of give an update on the pipeline and gut feeling whether you think they'll be relatively more or less active this year on the acquisition front?

Gene Lowe, CEO

Damian, I'll begin with our approach to mergers and acquisitions and growth opportunities before handing it over to Jamie for a broader discussion on capital allocation. Overall, we are optimistic about our M&A efforts. We believe we are in a strong position, having completed 10 bolt-on acquisitions in the past few years that added about $350 million in revenue. Just last year, we executed three deals contributing $120 million to our revenue. As stated in our SPX 2025 plan, we aim to grow from $1.25 billion to $2 billion by 2025, with $250 million coming from organic growth and approximately $500 million from acquisitions—translating to an annual target of $125 million. We're currently running at that pace. The pipeline looks promising, with a significant amount of activity, including a good portion of proprietary opportunities. Overall, we have roughly $1 billion available for growth investments, which presents an attractive opportunity as we strive to exceed our SPX 2025 targets. Regarding pricing, it's important to note that the market remains competitive, particularly for larger opportunities in the scale, detection, and measurement sectors where we are observing high multiples. Nevertheless, we are confident in our strategy and our ability to meet our objectives. Now, I'll pass it over to Jamie to continue.

Jamie Harris, CFO

Yes, Damian, I believe Gene set the stage for our conversation well. When I joined the company, I was drawn in by our strong balance sheet and the energy surrounding growth through acquisitions and organic means. With $1 billion available, we evaluate daily how to allocate our capital effectively. As mentioned in our remarks, there is approximately $0.11 of interest in our profit and loss statement that we could eliminate if we chose to. However, we have decided not to pursue that option at this time because we believe there are significant opportunities for acquisitions. If we were to pursue a larger transaction, we would likely reevaluate our capital structure, extending it and repositioning as needed. For now, we are not opting to pay down that interest. Regarding buybacks, we definitely believe in our strong growth narrative. We sold transformers specifically to reposition the company towards higher growth and higher margin sectors, and we redirected the capital into those areas. We continuously monitor the market and our stock performance, and if we notice a disconnect in valuation from our internal assessments, we would take appropriate action. We have received authorization from the Board for $100 million that we can utilize. We are cautious not to react in a declining market, but we want to support our stock if we believe it’s undervalued. While buybacks are on our radar, our primary focus for capital allocation remains our M&A strategy.

Damian Karas, Analyst

Makes sense. Thanks for the thoughts. Good. Best of luck, guys.

Gene Lowe, CEO

Thanks, Damian.

Operator, Operator

Thank you. Our next question comes from Steve Ferazani of Sidoti. Your line is open.

Steve Ferazani, Analyst

Good evening, everyone. I wanted to follow up a little bit on the M&A questioning. Just want to ask and I know some of the previous acquisitions were on the D&M side but you've always said you'd still be looking on the HVAC side. But you noted sort of the margin profile and the growth profile improve as you make more of those D&M acquisitions. So I'm just trying to get a better sense of how and why you think Cincinnati Fan fits within sort of this progression over the next couple of years?

Gene Lowe, CEO

Steve, I think if you look at the data the 10 bolt-ons that we have done, three have been in HVAC and seven have been in D&M and we've said that these acquisitions before synergy were right around 20%. They're around 19.7% if you aggregate them all up. And we actually think we can get more margin via cost synergies predominantly but also some revenue synergies on some of these. So we actually feel like these have been very accretive to our overall margin profile. We also think they've been very accretive to our growth profile. And I actually think there's some very attractive opportunities. I don't see a lot of difference on D&M and HVAC in terms of the attractiveness of the opportunities. With regards to Cincinnati Fan, I would say that’d be modestly a little bit under our segment average for HVAC this year. I would anticipate that to be at or above the segment average next year. So we acquired Cincinnati Fan on December 15 so we’ve really started to get in there and start all of the integration processes and so forth. But I actually feel like that will end up being a very good growth area for us going forward and I’m very excited about that one in particular.

Steve Ferazani, Analyst

Great. And then, just a question on the balance sheet on working capital. Certainly know that a lot of companies have built up inventory given the supply chain constraints. Trying to think about where – how you’re thinking about inventory and working capital in general in 2022 and where you’re comfortable with given the current supply chain constraints? And is that build on inventory really related to that or is that just the dollar cost – higher dollar cost of the inventory you’re carrying?

Gene Lowe, CEO

Couple of things there, Steve. I think specifically to management of working capital, I mean it’s an initiative really we kicked off in ‘21. There’s going to be more emphasis on it in 2022 but not from a context of minimizing or lowering working capital. I would call it rightsizing working capital given the supply chain challenges are out there. A lot of times you think about managing working capital is always taking it down. We clearly want to use it effectively, and so we actually have our MBRs actually encouraged so as to loosely buying safety stock or component parts if we need to because having it and carrying the working capital is much more effective and advantageous than running out of it obviously. And so it is an initiative that we want to look at but it's more about rightsizing it given the environment we're in. What you see I think on the balance sheet is probably most reflective of two things, the higher cost of inventory generally and also the increase in inventories because of some of the acquisitions. And when you look at a period-over-period, you don't have that in the beginning balance sheet numbers.

Steve Ferazani, Analyst

Thanks everyone.

Operator, Operator

Our next question comes from Walter Liptak of Seaport. Your line is open.

Walter Liptak, Analyst

Hi, good evening, guys. So I wanted to ask about D&M. The operating margins looked really nice in that segment and the operating leverage was just terrific. I wonder if you could just talk a little bit about that margin again and was it the mix of business or was it leverage? You also had some acquisitions coming through, were they accretive to the margin?

Jamie Harris, CFO

Walter, this is Jamie. That's a great question and something we are very focused on. In this quarter, several factors contributed. Our locator business performed exceptionally well, and we also saw success in our project businesses, particularly Genfare in transportation and TCI in CommTech. We've mentioned in previous quarters that some projects were delayed, impacting the incremental margin. However, in the fourth quarter, we witnessed some of these projects materializing, which positively affected our bottom line and gross margins. Genfare had an outstanding quarter as many long-term efforts came to fruition, and the same goes for TCI. The margins reflect the effectiveness of our business model, although there can be some volatility in a specific quarter. Overall, we believe the long-term margin profiles are quite attractive.

Walter Liptak, Analyst

Okay, great. And with the backlog up 14% organically in D&M and I think there was a comment that you guys have a nice front log or business. I was wondering about the guidance around D&M's margin for the year. Is it front-loaded, back-loaded? How will the project work flow in 2022?

Operator, Operator

Walter, this is Paul. As we talked about in the prepared remarks, at least the first part of that, the first quarter obviously is going to be more of a challenge from a margin perspective given the project log that we've seen in CommTech and also because of the ULC dynamic. But as you progress throughout the year, we would expect to see those lift year-over-year. As we get to later in the year typically in our CommTech business because of budgetary cycles, that tends to be a little bit late in the year or more loaded in the year. So you would expect that to be a higher margin in the fourth quarter.

Walter Liptak, Analyst

Okay, sounds good. And I'll just ask a final one on M&A. We've seen some companies' valuations coming down here in the market with concerns about the Ukraine or supply chains or other things. How are you seeing the private company valuations? Are you starting to see valuations come down at all?

Gene Lowe, CEO

I believe that there isn't much change from week to week or month to month. We've been very cautious, and our blended price is around 10.5x before synergy. In larger deals, especially in D&M, pricing is considerably higher, reaching mid to high teens in some cases. Overall, I haven't observed significant changes. It's worth noting that if there is a reset in multiples in the public markets, it might impact private market pricing. That could occur, but we maintain a strong model and a value creation strategy without any deviations that would necessitate changes moving forward.

Walter Liptak, Analyst

Okay, great. Thanks for taking my questions.

Gene Lowe, CEO

Thanks, Walter.

Operator, Operator

Thank you. At this time, I'd like to turn the call back over to Paul Clegg for closing remarks. Sir?

Operator, Operator

Okay. Thank you all for joining us on the call today and we look forward to updating you next quarter. Please feel free to reach out to our IR team in the meantime if you have further questions.

Operator, Operator

And this concludes today's conference call. Thank you for participating. You may now disconnect.