Earnings Call Transcript - TWI Q1 2023

Operator, Operator

Good morning, everyone, and welcome to the Titan International, Inc. First Quarter 2023 Earnings Conference Call. All participants are currently in listen-only mode, and we will take your questions and comments after the presentation. I am pleased to hand the call over to Alan Snyder, Vice President of Financial Planning and Analysis for Titan. Alan, please proceed.

Alan Snyder, Vice President, Financial Planning and Analysis

Thank you, Matt. Good morning. I'd like to welcome everybody to Titan's first quarter 2023 earnings call. On the call with me today are Paul Reitz, Titan's President and CEO; and David Martin, Titan's Senior Vice President and CFO. I will begin with the reminder that the results we are about to review were presented in the earnings release issued yesterday, along with our Form 10-Q, which was also filed with the Securities and Exchange Commission. As a reminder, during this call, we will be discussing certain forward-looking information, including the Company's plans and projections for the future that involve risks, uncertainties and assumptions that could cause our actual results to differ materially from the forward-looking information. Additional information concerning factors that either individually or in the aggregate could cause actual results to differ materially from these forward-looking statements can be found within the Safe Harbor statement included in the earnings release attached to the Company's Form 8-K filed earlier, as well as our latest Form 10-K and Forms 10-Q, all of which have been filed with the SEC. In addition, today's remarks may refer to non-GAAP financial measures, which are intended to supplement, but not be a substitute for the most directly comparable GAAP measures. The earnings release, which accompanies today's call contains financial and other quantitative information to be discussed today, as well as the reconciliation of the non-GAAP measures to the most comparable GAAP measures. The Q1 earnings release is available on the Company's website, a replay of this presentation, a copy of today's transcript and the Company's latest quarterly investor presentation will all be available soon after the call on Titan's website. I would now like to turn the call over to Paul.

Paul Reitz, President and CEO

Thanks, Alan, and good morning, everyone. Over the past few years, we have discussed the strengths and the impressive performance of our global team at Titan. Our entrepreneurial spirit drives our vision, strategy, and culture, allowing us to connect strongly with our end users of off-road equipment. This connection translates into significant value for our customers as we consistently engineer and manufacture market-leading products that enhance off-road equipment performance. Our financial results for 2021, 2022, and the first quarter of 2023 demonstrate the effectiveness of our core values and our ability to meet customer needs during challenging times, leading to strong financial outcomes. Our board, employees, and I believe that Titan's foundation of plants, people, products, and entrepreneurial culture is robust. A few years ago, however, our financial performance and balance sheet were lacking. At that time, we developed and executed a strategic plan aimed at driving growth through product development, divesting certain portfolios, and reorganizing several businesses to enhance profitability and strengthen our balance sheet. Fast forward to 2023, we have successfully executed every one of these initiatives and even exceeded many of our goals. Let me elaborate on these points. First, we've not just improved our balance sheet; we've transformed it by significantly reducing net debt, effectively managing working capital, and generating strong cash flow. Our balance sheet has shifted from being a burden to an asset that we can leverage for future growth. Over the past few years, we've driven growth by introducing a number of innovative products to the market, which we showcase in our annual reports and on our website. This demonstrates how we help end users enhance their equipment performance with Titan, Goodyear, or ITM products. Our leading LSW wheel/tire assemblies continue to gain traction, and our patented Waffle Wheel is rapidly growing in Europe. Our commitment to innovation reflects the connection and trust we've established with our customers, which will be crucial for our future organic growth. We have also divested and restructured underperforming businesses to boost profitability. For instance, we improved our Australian tire and wheel business's profitability and subsequently divested it for $20 million. We closed an unprofitable OTR wheel plant, reorganized our U.S. OTR tire operations to achieve profitability, and enhanced our TTRC operations to make them attractive market assets. These strategic actions enabled us to effectively navigate the unique challenges posed by the pandemic and supply chain issues. While these challenges were unforeseen, our execution of the strategic plan allowed us to fulfill our commitments, meet global customer demands, and navigate headwinds. Most importantly, we enhanced our competitive standing during this period, gaining market share and setting new financial performance records while repositioning for long-term success. Despite these significant improvements, our stock performance has not reflected our achievements and currently trades at around 3.5 times trailing twelve months adjusted EBITDA. I recognize that stock values are determined by future performance and cash flows. However, based on our recent achievements, it's clear that Titan has built a stronger future-focused company, and we will discuss this more moving forward, which I believe will resonate with you. Now looking at our first quarter results, I'm pleased to report an adjusted EBITDA of $68 million on sales of $549 million, representing an approximate 2% increase when excluding FX and the earlier Australian divestiture. Our gross profit performance was strong, and effective management of SG&A led to solid adjusted EBITDA results. Our free cash flow was again elevated at $12 million this quarter, and we maintained impressive working capital management at 20% of sales, our long-term target set by the board. This drove our net debt down to $273 million. In simple terms, our financial performance was outstanding for this quarter, further strengthening our balance sheet, following strong 2021 and 2022 results. Our One Titan team continues to perform well, and I appreciate their hard work and commitment. Clearly, we've started the year strongly. As I mentioned last quarter and reiterate now, the overall business climate remains filled with noise. At the macro level, we are contending with inflation, consumer confidence, supply chain issues, geopolitics, among others. The most significant factor we face is how our customers are managing their supply chain inventory, which is leading them to reduce inventory levels and will affect our production in part of 2023. However, we must keep our focus on the larger picture. The large agricultural segment remains strong, fueled by healthy farm income and low grain stocks, which drive demand for new equipment along with used and new dealer inventory. ITM had its best year in 2022, and the Earthmoving and Construction segment continues to have a favorable outlook. We're entering 2023 on solid footing in these markets. The mining aftermarket is set for growth, and the non-residential construction market continues to thrive, bolstered by infrastructure investments. Looking beyond the immediate future, I want to provide clarity on who we are, what we have achieved, and where we are headed. Titan has many opportunities for growth, primarily through product development and innovation. We remain committed to innovating and delivering products that exceed the expectations of our customers and end users. Our products are crucial to the industries and customers we serve, as evidenced in recent years. Titan has shown its ability to be a reliable supplier that mitigates global supply chain risks, even amid challenging operating conditions. Our blend of product innovation, operational flexibility, and strategically positioned production facilities prepares Titan well for the future, allowing us to grow alongside our customers' evolving needs. For example, our developments in Turkey, the fifth largest agricultural market globally, include the successful launch of the Goodyear Farm Tire brand and leveraging our existing wheel plant to provide complete wheel-tire assemblies to OEMs. Titan has spent years building a strong array of brands that support our high-quality products. We view these brands as vital to our company's success and work diligently to ensure their health for the future. For instance, we've reduced our cost of quality in North America by over 60% in our tire business over the last four years, reinforcing the strength of our Goodyear and Titan brands, improving operating costs, and minimizing raw material waste, which also supports our ESG goals. In summary, our One Titan team has done an amazing job in recent years. We have met our goals, addressed challenges to serve our customers, and improved financial performance. I believe our financial results deserve a higher trading multiple than our current situation suggests. Importantly, our financial performance floor during the next downturn is higher than prior historical levels. We have fundamentally transformed our business, competitive stance, and balance sheet, making us more resilient and ready to seize opportunities during economic downturns. We will update our investor materials to reflect this and continue to communicate the positive changes at Titan that support long-term value for our customers and shareholders. Now, I will turn the call over to David.

David Martin, Senior Vice President and CFO

Thank you, Paul, and good morning, and thank you for everyone joining us today. I'm pleased to report another quarter of strong financials as we continue to benefit from the collective contributions from our One Titan team to advance our performance. I talked about this last quarter, but it is worth repeating, our team has established new standards for operations planning, financial forecasting and most importantly, discipline and focus. In the midst of volatility, that has created a stronger foundation for us as we move forward. Now let's review the key highlights for the first quarter compared to the same period last year. Sales remained at a high level at $549 million. We achieved continued improvement in profitability with gross margins of 17.4%, an increase of 180 basis points. Net income increased by 36% to $33 million, and we reported EPS of $0.50 and adjusted EPS of $0.53, increases of 35% and 20%, respectively. Adjusted EBITDA of $68 million increased 19% and was our highest first quarter performance since 2013. We continue to strengthen the balance sheet with $12 million of free cash flow, which increased our cash balances to $164 million. Notably, this was the first time since 2014 that Titan generated positive cash flow in the first quarter. Additionally, we further reduced our net debt leverage to 1x. Now let's talk about the performance at the segment level, starting with agriculture. Ag segment net sales were $306 million, which was near what we achieved last year in Q1. When you exclude the impact of unfavorable currency translation and the effect of price mix related to the steel market and freight declines that we passed to customers, we experienced slight growth from volume. We continue to see solid demand in the segment from the continued robust farming market backdrop. Our European sales were particularly strong in the segment this quarter. The Agricultural segment gross profit for the first quarter was $49 million, an increase of $1.3 million compared to the first quarter a year ago, and the gross margin increased to 16.1% versus 15.5% last year. The improvement in gross profit and margin was due to cost reduction and productivity initiatives across our global production facilities, as well as lower input costs. Again, we have expanded margins from year-to-year. Earthmoving and Construction net sales were comparable with the prior year and at a very robust level. The slight decrease in net sales was partially offset by favorable sales volume and price and product mix across the segment. The sales volume increases were primarily in Europe, North America and Latin America and were mainly due to recovery in the construction markets and strong mining commodity prices. Excluding the FX impact and the disposition of the Australian wheel business, EMC sales grew by 5%. Our ITM business had a very strong quarter and one of its best quarters in history coming from robust market conditions globally. Our gross profit in the EMC segment for the first quarter was $37 million, which represents an improvement of $6 million compared to the first quarter last year. What's more important is our gross margin reached 18.6%, which is a very strong quarter of performance for this segment. The increase in gross profit and margin was primarily driven by continued improvement in production efficiencies from the strong actions we took to improve long-term profitability levels across the business, and this came from all of our regional businesses, but most notably, ITM in Europe and Latin America. Consumer segment net sales in Q1 were slightly lower than last year. The decrease came due to the lower sales volume, mainly in Latin America and Russia. More specifically, in Latin America, demand for light utility truck tires was lower in the quarter while declines in other geographies were related to the shift in focus to Ag and EMC. Our third-party specialty custom mixing operations in the U.S. performed very well with growth of 20% year-over-year. Consumer segment gross profit for the first quarter was $9 million, an increase of 22%. Gross profit margin expanded to almost 21% compared to 16.5% last year, driven by a positive product mix, most notably the custom mix in the U.S., which carries stronger margins. Our SG&A and R&D expenses in the first quarter were $37.5 million compared to $39 million last year. That represents 6.8% of sales, and that's lower than where we were a year ago. This decrease was primarily driven by the disposition of the Australian wheel business in the first quarter of last year and strong cost control by our business. Income tax expense for the quarter was $14 million compared to $9 million last year due to higher pretax income in the countries with higher tax rates, resulting in an increase in our effective rate to almost 30% compared to 26% last year. Our strong earnings performance continues to translate to positive free cash flow. Free cash flow in the quarter was $12 million, which was our strongest first quarter free cash flow generation since 2012. The total cash grew by approximately $4 million to $164 million, while we also paid down $11 million of debt and repurchased $1.3 million of common stock during the quarter. CapEx for the first quarter was around $12 million compared to almost $8 million last year. CapEx will support our multi-year capital programs in place to manage maintenance in an organized way and to improve efficiencies with selective capacities, expansion in our global production facilities and continued tooling improvements from our product development efforts. We are on track with our full-year guidance of $55 million to $60 million in capital expenditures. As I mentioned earlier, our net debt leverage at the end of March improved to 1x trailing 12 months adjusted EBITDA, down from 1.1x at the end of last year and down from 2.6x a year ago at this time. This is incredibly important as we pursue future growth and improved returns with a stronger balance sheet. We continue to expect our financial performance to remain at a high level in 2023 due to the healthy market conditions globally across the markets we serve, particularly in large Ag. Additionally, we remain keenly focused on navigating the near-term impact stemming from the inventory adjustments within our customer base and mitigating these effects by temporarily adjusting our production schedules to align with our customers' needs. I expect that the improvements in how we manage the business will translate into continued strong performance going forward. We'll provide updated information about our forecasted performance as the inventory situation normalizes throughout the year. We also expect free cash flow to continue at a high level based on the continued expectations of strong EBITDA performance and stable working capital. Year-to-date, as of April 14, we opportunistically repurchased 310,000 shares for approximately $3.3 million under the $50 million authorization. We firmly believe our share price is deeply undervalued and does not reflect the transformative actions that we have taken significantly to increase the profitability profile of Titan and our capabilities for the future. We expect to be more aggressive with repurchases in the next quarter as cash flow remains strong, and we firmly believe in our prospects and that our stock is a good investment for the Company. For 2023, we anticipate continued cash growth with strong profitability and solid working capital management, as I've already mentioned. The question I get most often is what we expect to do with it. First, we will utilize cash for stock repurchases. There are no significant pieces of debt that we need or want to pay down this year, so we will have cash and credit availability to accomplish our growth plans, either through acquisitions, joint ventures or internal capital investments. Now to wrap up, Paul talked about this, but I just want to reinforce that our long-term demand drivers remain positive, supported by strong sector trends and key macro indicators, and we remain encouraged by the solid underlying fundamentals in our markets that we serve. So thank you for your attention today. And now I'd like to turn the call back over to Matt, our operator, for the Q&A session.

Operator, Operator

The first question comes from Steve Ferazani with Sidoti & Company.

Steve Ferazani, Analyst

Paul, David, appreciate the commentary this morning. Obviously, the surprising numbers to us with the really strong margins in EMC and consumer given that you're not getting significant growth there, it just seems obviously surprising that the margins improved as much as they did, particularly on consumer. If you can just kind of walk us through what you did there and the sustainability of those type margins?

David Martin, Senior Vice President and CFO

Yes, that is a great question. Starting with consumer, it's impacted somewhat by product mix. One notable aspect is that the custom mix I mentioned in the U.S. increased by 20% year-over-year, which significantly contributed to our earnings this quarter. While it may fluctuate, I believe we will continue to see strong margins in this segment. Moving forward, it remains a strategic initiative for us, and we are identifying promising opportunities in the market for future growth. Regarding EMC, ITM is on a positive trajectory. The momentum we've experienced since the second half of last year has carried into Q1. We see some reduction in input costs, and we have also enhanced our profitability through productivity improvements in our plants and an advantageous product mix. Overall, this quarter exceeded our expectations, and I anticipate that margins will continue to perform well this year within this segment.

Steve Ferazani, Analyst

Do you believe margin improvement is achievable even if revenue remains relatively flat this year? I understand you are not providing guidance.

David Martin, Senior Vice President and CFO

There's always going to be give and take with respect to input costs and pricing and so forth. But ultimately, yes, it's pretty sustainable at these levels.

Steve Ferazani, Analyst

Can I ask about cash flow? I mean, typically, Q1 is the weak one. We can go back for years and see its timing on receivables, but obviously, cash flow compared to the outflow last year, how are you thinking about cash conversion this year? I mean it should be much better in the remaining three quarters, fair, I mean based on previous seasonality.

David Martin, Senior Vice President and CFO

I believe the outlook is positive. Usually, in the first quarter, we're focused on building strength, and sales were relatively flat, allowing us to keep our working capital stable. There was an increase in accounts receivable this quarter, which should benefit us in Q2, and maintaining stable inventory will also work in our favor. We anticipate a significant conversion of EBITDA from this. We will monitor our inventory closely and manage it accordingly. Overall, it looks promising. Last year, we managed to grow cash even with a notable increase in working capital due to sales growth. So, with stable working capital, we expect good conversion this time around.

Steve Ferazani, Analyst

Have you ever had net leverage this low of 1x?

David Martin, Senior Vice President and CFO

I haven't been here that long, but I believe we are in a strong position for future growth and no longer have to play defense as we did in the past four years.

Steve Ferazani, Analyst

Absolutely. Update on the inventory adjustments, I know that's a concern given supply constraints that the OEMs have had, though, hopefully, that seems to be easing. We didn't see any impact or I can't see the impact in the revenue lines in terms of any significant inventory adjustments, but you're still not guiding. Are you still seeing significant risk there in the near term?

Paul Reitz, President and CEO

Yes. There are a few perspectives to consider. As mentioned, the markets are strong, and we can see that reflected in our performance. Titan has always prioritized staying close to our customers, which I believe is a key advantage for us since we engage with a diverse range of customers globally and across various applications. The operational changes that David and I have discussed today and in prior years enhance our ability to respond to market dynamics. However, we are encountering unique situations with each customer. It’s challenging to make a broad statement that universally applies. We notice that some customers are facing issues for various reasons. A simple way to explain this is that their supply chains have been ordering based on our production timelines, yet those customers haven't been meeting their own production targets, particularly over the past year. Moving forward, we are prepared to adjust as needed. Although the circumstances are not identical, they are reminiscent of past challenges, and we will remain flexible. We view any inventory concerns as a short-term issue and will respond appropriately. Overall, the markets continue to show strength. Referring to your question, Steve, when examining the Q1 results, the markets look good, though we anticipate an inventory adjustment in the near future that will affect our production schedules temporarily.

Steve Ferazani, Analyst

I mean, the reality is this just pushes along or extends the tractor replacement cycle, right, if they can't get parts and we're just pushing well into '24?

Paul Reitz, President and CEO

Exactly. I think our experience has been these cycles can be violent up or down. So having a more moderated pattern, which we've already seen and we're continuing to see, it is definitely a win in the long run.

Operator, Operator

The next question comes from the line of Kirk Ludtke with Imperial Capital.

Kirk Ludtke, Analyst

Paul, David, congratulations on another outstanding performance. Paul, you mentioned that you've implemented some structural improvements and that in a typical environment, earnings would have been higher, all else being equal. Can you quantify that? For instance, referring back to 2019, when you achieved $1.45 billion in sales and $38 million in adjusted EBITDA, what might those figures have looked like if these changes had been in effect? I understand this is a challenging question.

Paul Reitz, President and CEO

Yes, it's an important question, and I'm glad you brought it up. I focused on this topic during the call because it is significant, and we're going to dedicate considerable time to addressing it in the future. We're working on developing a clear response to your question and plan to include it in our investor materials to make it easier for investors to understand the substantial changes that have occurred. We believe, based on our historical performance during downturns, that these changes have indeed impacted the stock price and balance sheet, which we discussed earlier. At this moment, I can't provide a verbal explanation, but we are committed to creating materials that will help you and other investors better understand the response to your question. We genuinely believe that the improvements at the company are substantial enough to support better performance in future cycles.

Kirk Ludtke, Analyst

Got it, great. I think that will be very helpful. You mentioned very strong performance at both ITM and TTRC, both were

Paul Reitz, President and CEO

Yes, strong performance at ITM. We've improved the operations at TTRC, so two different things. ITM is driving strong performance, a significant part of our earthmoving construction business. TTRC was a drag on the business that we've made some structural improvements to not have it be a drag and be more of an attractive asset versus a drag on the P&L.

Kirk Ludtke, Analyst

Got it. Okay. So that's helpful to clarify that. I must have misheard that. But they were both divestiture candidates not that long ago. So I'm just curious, and I know you guys were in a much different situation back then. So are they both now core businesses?

Paul Reitz, President and CEO

TTRC is still considered for divestiture as it is not a core business for us. We will keep evaluating it as a non-core asset. In contrast, ITM is performing exceptionally well, having its best year ever. ITM produces essential products for the marketplace and is a significant part of our Earthmoving/Construction business. We have been approached regarding divestiture in the past, but the Board of Directors determined that ITM is a core business, and we will continue to invest and expand it, which we've been doing over the past few years. Therefore, ITM is a core part of our operations. We invest in it for product development and plant efficiencies, and it is well-positioned in the marketplace for future growth. We remain transparent with our shareholders about any divestiture inquiries. Our financial situation was different at that time, and I cannot speak for the Board on whether we would consider divesting if approached again, as circumstances have changed since that previous inquiry. However, I can assure you that we have since invested significantly in ITM, which we regard as a vital part of Titan alongside its management team.

Kirk Ludtke, Analyst

And then last topic, capital allocation. You mentioned that you're going to likely ramp up the share repurchases. Should we take away that cash balances above current levels or excess above $165 million?

Paul Reitz, President and CEO

You always got to be careful, we want to manage for the future and looking at the opportunities that we have. But with solid cash flow that we've seen over the last few quarters, particularly, we believe we have excess cash to invest in the business, including stock repurchases and being opportunistic there.

Kirk Ludtke, Analyst

Got it. So for the last topic, regarding the guidance or outlook for 2023, could you describe it in terms of directionality or any cadence? Is there anything specific you can share about 2023, or can you summarize your thoughts on that year?

David Martin, Senior Vice President and CFO

Yes. While the performance in Q2 last year may not be the best reference, it's important to consider the sequential data, especially regarding the inventory drawdown, which will have an impact. We're not ready to provide strong guidance on this yet, but it's a factor to keep in mind. However, I am confident that we will maintain strong margin performance as we progress, particularly as we adjust our production schedules based on current observations. We have good visibility from our customers regarding our plans for this quarter and the next, and we'll keep adjusting as necessary.

Paul Reitz, President and CEO

The markets are favorable. When you examine the fundamental commodity markets, the age of equipment, income levels in the farming sector, and the inventory needed for new and used equipment, there are numerous positive indicators, especially in large agriculture, which has always been a significant part of our business. In terms of Earthmoving and Construction, the mining sectors are strong and active. We also have a solid business in Europe, where we can customize parts from our foundry to meet aftermarket needs in mining. The construction sector shows a positive trend, and non-residential projects are performing well. Infrastructure spending is expected to increase, which will further support growth. Looking back at 2022, it was a very good year for the various sectors we serve, and things appear to be improving compared to last year. We just need to navigate through the inventory levels with our customers.

Operator, Operator

The next question is from the line of Larry De Maria with William Blair.

Larry De Maria, Analyst

I have a clarification question. The inventory destocking you mentioned last quarter and are referring to now was primarily small Ag. Is there also large Ag inventory destocking happening, or are we only discussing small Ag at this point?

Paul Reitz, President and CEO

No, I would say it's agriculture in general. What you're seeing with small Ag is more specific to inventory levels coming down at the dealer, but supply chains are getting in balance with their production schedules, which is the broader situation. Consequently, they are reducing some of their internal inventory. For the most part, large Ag still needs to increase inventory on the lots for both new and replenishment in the used sector as well. Therefore, what you're observing in large Ag is just an inventory drawdown, with internal inventory getting supply chain and production schedules aligned. However, they will need to continue to.

Larry De Maria, Analyst

Okay. And is that continuing?

Paul Reitz, President and CEO

They need to place inventory on the lots for large agriculture. For small agriculture, I believe the levels are starting to normalize, so there isn't a need to move small agriculture inventory to the dealer lots, and a similar situation is occurring. They are working to balance their supply chain and production schedules. These are two different scenarios, but they fall under the agriculture sector.

Larry De Maria, Analyst

Okay. So as supply chains sort of open up a little bit, production gets better, there's less, let's say, hoarding and need to have too much inventory, especially wheel and tires, you can work that down on the large Ag as things normalize and demand is still good, as I understand in the large Ag, if I'm getting that properly.

Paul Reitz, President and CEO

Yes, agree to that, Larry.

Larry De Maria, Analyst

I guess the second part, capital allocation. You get the buyback. It sounds like you'll be more aggressive. Are we going to do? I think you leave 47% or something or I can't remember exactly the number, but should we expect that you'll do the whole thing this year? And the flip side of that is what's the M&A pipeline like at this point?

David Martin, Senior Vice President and CFO

I'll address the stock repurchase. I don't know if it's going to mean that we're going to get that aggressive and use up our authorization. Obviously, we have to be opportunistic and based on where the stock price is and so forth. So we'll talk more about that as we go through the year. But just know that we're going to be a little bit more aggressive than what we were in the first quarter, given where the stock has continued to be.

Paul Reitz, President and CEO

We have successfully positioned the Company for growth and expansion in the M&A pipeline, but we're cautious about pursuing acquisitions solely for the sake of it. Our approach will remain strategic and patient. I believe there are growth opportunities for Titan, supported by our robust balance sheet, strong foundation, capable team, production capacity, and brands. An acquisition could greatly benefit our shareholders, but it's important to be patient and wait for the right opportunity.

Larry De Maria, Analyst

And then for the last question regarding the second quarter, following a strong first quarter, there is typically a seasonal increase in sales. Considering the inventory situation you mentioned, can we assume that the second quarter breaks the seasonal trend and sees a sequential decline, but that margins remain stable? Is that the main point? Therefore, could the second quarter represent the lowest performance for the year? Is that the right way to consider it?

David Martin, Senior Vice President and CFO

We didn't provide any specific guidance on this. However, typically sales would increase sequentially, but that won't happen this quarter. We expect margins to remain strong. I'll leave it at that.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Reitz for any closing remarks.

Paul Reitz, President and CEO

Well, I just want to say thank you, everybody, for your attention and attendance this morning. I wish you all a good day, and talk to you next quarter. Thank you.

Operator, Operator

Thank you for attending today's presentation. The conference call is now concluded.