Earnings Call Transcript - WAB Q1 2021

Operator, Operator

Good morning and welcome to Wabtec Q1 2021 Earnings Call. All participants are in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference call over to Miss Kristine Kubacki, Vice President of Investor Relations. Please go ahead.

Kristine Kubacki, Vice President Investor Relations

Thank you, operator. Good morning, everyone, and welcome to Wabtec's first quarter 2021 earnings call. With us today are President and CEO, Rafael Santana; CFO, Pat Dugan; and Senior VP of Finance, John Mastalerz.

Rafael Santana, CEO

Thanks, Kristine, and good morning, everyone. We appreciate you joining us today. Turning to slide three, we continue to see a recovery across the global freight and transit rail markets, with North American freight volumes and equipment utilization sequentially improving in the first quarter, and investments in transit infrastructure are continuing. This directional trend, along with the focus performance of our team and execution against our strategic plan, are reflected in our first quarter results. Total sales for the quarter were $1.8 billion. This was largely driven by international freight markets services and a recovery in transit, but offset by continued weakness in the North America OEM market. Adjusted operating margin was 15.1%, driven by lean initiatives, cost actions, and favorable mix from mining and modifications. Cash conversion was strong, with cash flow from operations of $292 million. Cash generation was due in large part to good working capital management, allowing us to deliver on our financial priorities, including the strategic acquisition of Nordco, which I'll touch upon more in a moment. Total multiyear backlog was $21.7 billion, up sequentially over the prior quarter, providing us better visibility into 2021 and beyond. Overall, we ended the quarter with adjusted EPS of $0.89, demonstrating that our teams are continuing to take the necessary steps to control what we can deliver long-term growth of the company and increase shareholder value. In the area of synergies, we're on track to deliver the full run rate of $250 million in synergies this year, and we have positioned the company for long-term profitable growth. In the first quarter, we exited all shared service agreements stemming from the huge transportation merger ahead of schedule. This was a tremendous execution by the team on a complex transaction.

Pat Dugan, CFO

Thanks, Rafael, and good morning everyone. We had a solid operational start to the year despite the challenges in our North America OEM markets and ongoing disruption from the pandemic. We demonstrated our ability to deliver on synergies, generate cash flow, invest for the future, and position Wabtec for profitable growth. Turning to slide four, our view of the first quarter in more detail. Sales for the first quarter were $1.8 billion, which reflects a 5% decrease versus the prior year, driven by lower North America OE freight markets as a result of the disruption caused by the pandemic. For the quarter, operating income was $192 million, and adjusted operating income was $277 million, which was down 9% year-over-year. Adjusted operating income excluded pre-tax expenses of $85 million, of which $70 million was for non-cash amortization and $15 million of restructuring and transaction costs related to the acquisition of Nordco, along with restructuring due to the 2021 locomotive volumes and restructuring in our UK operations. Adjusted operating margin was 60 basis points lower than the first quarter last year, but up 110 basis points from the fourth quarter. Versus last year, adjusted operating margin was impacted by under-absorption costs at our manufacturing facilities, stemming from fewer locomotive deliveries, as well as sales mix impacted from lower digital electronics and a higher level of transit sales. At March 31st, our multiyear backlog was $21.7 billion, up quarter-over-quarter, a rolling 12-month backlog, which is a subset of the multi-year, was $5.7 billion and continues to provide good visibility into the year. Looking at some of the detailed line items for the first quarter, adjusted SG&A declined 2% year-over-year to $224 million. This was the result of cost actions during the downturn, and excludes $11 million of restructuring and transaction expenses. SG&A expense benefited from headcount reductions and the realization of synergies.

Rafael Santana, CEO

Thanks, Pat. Turning to slide eight, let's look at some of the market dynamics by segments. Overall, we're seeing a gradual recovery across most end markets as global economic activity improves. And we're continuing to monitor the evolving COVID situation in regions like India. This aligns with what you've heard from our customers, as well. While we continue to work through the trough in the North American market, where new local orders remain stagnant, we are encouraged by the sequential improvement in freight volumes and a broad recovery across the agriculture, intermodal, and industrial markets. Locomotive parking after peaking to a record high in 2020 are improving as a result of increased freight traffic and demand stemming from weather disruptions during the quarter. We expect the demand for reliability and productivity to improve as railroads continue to recover. This will put us in a position of strength across our freight portfolio. When it comes to North America rail car build, rail cars are coming back into use; more than 20% of the North American rail car fleet remains in storage, but it’s back to pre-COVID levels. Industry orders for new rail cars remain weak, and forecast estimate the rail car build this year to be below 30,000 cars. We have a strong order pipeline internationally, and we expect long-term revenue growth in several of these markets going forward. And in mining, market conditions are also improving. Transitioning to the transit sector, ridership is uneven, but recovering as economies open up. We are watching short-term dynamics as the pandemic evolves in several geographies, including India and Europe. Overall, the long-term market drivers for passenger transport remain strong, and infrastructure spending for green initiatives continues to be a focus, especially as governments globally turn to rail for clean, safe, and efficient transport. Turning to guidance for the year, we are updating our sales guidance to $7.7 billion to $7.9 billion and updating adjusted EPS guidance to a range of $4.05 to $4.30. This largely reflects upside from the acquisition of Nordco, our operational execution to date, and visibility to backlog. Consistent with our initial forecast for 2021, with more growth weighted to the second half of the year, we expect second quarter earnings to be only slightly higher than the first quarter. This is in line with the positive and gradual trend in our freight markets. That said, we are seeing disruption from the resurgence of COVID, especially in key regions for us like India, and we will continue to take swift and necessary action as conditions evolve. Finally, we remain confident in delivering strong cash generation for the year, as well as margin expansion to prioritize cost actions. Turning to slide nine, and to conclude, I'm proud of the strong execution by the team in the first quarter, despite a challenging environment. As we go forward, we will continue to lean into the strong long-term fundamentals of the company and remain committed to executing on our strategic plan. This includes reducing costs and executing on synergies, driving margin expansion across our freight and transit segments, generating strong cash flow, and delivering long-term profitable growth. As we've said before, Wabtec's mission holds a larger purpose: to move and to improve the world. And our teams globally live up to this mission every day. After demonstrating a strong performance in 2020 and in the first quarter of 2021, I'm confident that this company will drive profitable long-term growth and be a leader in transitioning our customers and the industry to a more sustainable future. With that, I'll turn the call back to Kristine to begin the Q&A portion of our discussion.

Kristine Kubacki, Vice President Investor Relations

Thank you, Rafael. We will now move on to questions. We are now ready for our first question.

Operator, Operator

First question comes from Jerry Revich, Goldman Sachs. Please go ahead.

Unidentified Analyst, Analyst

Hi everyone, this is for Jerry Revich. With investments stepping up in the decarbonization product portfolio, I'm wondering if you can provide any details on the proportion of total R&D related to next generation fuel technologies?

Rafael Santana, CEO

We're continuing to step up investments there. And I think we've been clear around the 6% to 7% range of investments tied to the overall sales. We're very much committed to lead the path here to decarbonization. We're working on a number of areas with customers; those include really developing some of the elements of upgrade kits. We're working on several areas to introduce biofuels, renewable fuels, but also aiming towards electric. And we're also, of course, working along the lines to lead in fuel sales. That’s kind of the stairway we see in progressing through it.

Unidentified Analyst, Analyst

Great, and then, I'm just wondering if you can comment on the pace of modifications activity and sort of how that's trending in 2021, how that compares to 2020?

Rafael Santana, CEO

We've had a significant step up, healthy double-digit growth; you see that reflected in the first quarter where we have significant positive performance in that area, and we believe modifications will continue to be a growth area for us. It's clearly a pathway for us to introduce what I call upgrades into the fleet and make them more fuel-efficient, safer, and overall just more efficient.

Unidentified Analyst, Analyst

Great, thank you.

Operator, Operator

Next question is from Justin Long of Stephens. Please go ahead.

Justin Long, Analyst

Thanks, and good morning. I wanted to ask about the guidance. I was curious if you could share the revenue and EPS impact that you're baking in from the Nordco acquisition this year? And if you set that acquisition aside, can you just talk from a high level about any other changes that you've made to some of the assumptions that are underlying that 2021 guidance?

Rafael Santana, CEO

Let me start and then I'll let Pat continue, but we have narrowed the guidance. We have raised the midpoints given the strong operational strength of the year. It’s worth noting that the positives include mining execution and modernizations. We continue to see strong numbers around locomotives being on par, and we also have the acquisition of Nordco. At the same time, Justin, we continue to see supply chain headwinds, with disruptions driven by COVID. I think most impactful is the situation we currently have in India, which we're keeping an eye on, but certainly, there were wins when it comes to transportation costs and commodity prices overall, and all of that is reflected in the guidance we've provided. Overall momentum is positive, and we are continuing to see a gradual recovery across most of our end markets.

Pat Dugan, CFO

Hey, Justin. So this is Pat. Similar to what we had disclosed when we did the earnings press release on the Nordco acquisition, about $175 million of sales on an annual basis and $14 million of EBITDA on an annual basis. We bought it basically at the end of the first quarter, beginning of the second quarter, so it’s kind of pro rata for the rest of the year. The EPS impact we've talked about is around $0.06 for the full year. So that's included in the guidance and gave us a lot of the confidence, obviously, to increase the bottom end of the range, plus some of our good performance up to date.

Justin Long, Analyst

Okay, great. That's helpful. And secondly, I wanted to follow up, Rafael, on something you mentioned a couple of times on parked locomotives. Could you give us a sense for how locomotive utilization has recently trended? And what percentage of the fleet is still in storage today? And then also, as you answer that, I'm curious what percentage of that stored fleet you feel like is actually usable, because on the rail car side we always hear that we're effectively fully utilized with, call it, mid-teens, maybe low teens percentage of that fleet in storage? So we'd love to get your thoughts around that.

Rafael Santana, CEO

So just overall, the industry is not back to pre-COVID levels yet from just the locomotive parkings perspective, but we're seeing good progress, especially regarding our fleets. I think we're ahead of the overall industry, which is a positive for us when we look at our overall fleets operating globally. That's certainly a positive trend. We still have a little bit, I think last from units that were parked, what are called post-COVID. Now, when you look at the unit storage part, pre-COVID, those units – it’s a smaller number that can potentially be utilized here. So I think momentum is positive, and we're going to continue to watch that closely here, especially as we move into the second half of the year. We're especially pleased with the performance we're having with customers in terms of reliability and availability, which ultimately is really the differentiator for us to winning more share of wallet.

Justin Long, Analyst

Great, that's helpful. I appreciate the time. Thank you.

Operator, Operator

Next question from Scott Group of Wolfe Research. Please go ahead.

Scott Group, Analyst

Hey, thanks, good morning. Just going back to the guidance here. So it looks like you're assuming the second half is about 30% higher than the first half of the year from an earnings standpoint, give or take, and we don't typically see that level of seasonality. Can you just help us understand what's driving such a big ramp in the second half of the year?

Rafael Santana, CEO

Scott, I think consistent with the initial forecasts we have for 2021, we have more growth weighted to the second half of the year. I think in that regard, we're continuing to see sequential improvements in the first quarter. If you think about your orders to book-to-bill, it’s increased to 1.2; some of these are multiyear orders. While there's an impact in 2021, the impact goes beyond 2021. I think our pipeline of deals has continued to strengthen, providing good momentum coming out of last year, which was tough, and we have also good progress quarter to date. Our 12-month rolling backlog is up about 3.5%, and we've got good momentum focused on converting our pipeline of orders into this year and building forward. As for the second quarter, as previously discussed, I think we've got some elements of volatility, especially tied to COVID disruptions. We think those are very much contained into the quarter. But that’s the situation we'll continue to monitor, especially regarding India, which is an important market for us.

Scott Group, Analyst

Okay, just a follow up there. So is the second half more about transit or freight or domestic versus international? Just some additional color would be great.

Rafael Santana, CEO

I think international markets continue to be robust. If you think about it, just in terms of sales, we've grown our business more internationally than in the US. So I think largely the North American market is going to be tied to the continued un-parking of locomotives. Internationally, I think growth has been more robust in some ways. The team is very much focused on converting some of our foreign opportunities around the OE side that the team is working to convert between here second and third quarter. So those are critical elements to continue to build profitable growth.

Scott Group, Analyst

Would you say international is back at pre-COVID levels?

Rafael Santana, CEO

I'd say largely, when you think about the services. I think there's room for a lot more momentum forward. If you think about how much of our business was international last year versus now, it has gained about five basis points in terms of momentum there. So I think we're probably at a rate close to 65% in the first quarter with international, so that gives you a sense of our strength there, but also the weakness in North America.

Scott Group, Analyst

Okay, thank you. Appreciate it.

Operator, Operator

Next question is from Chris Wetherbee of Citi. Please go ahead.

Chris Wetherbee, Analyst

Hey, thanks. Good morning. I wanted to ask you about freight and maybe how we can think about it in the context of that ramp in the second half of the year. How do you think about sort of incremental margins in that business? I know you have the synergies that you're working through, but fixed costs absorption, obviously, has been one of the challenges for you as the volume and revenue dynamic has been more challenging over the course of the last several quarters. So is that something where we could see potentially some large snapback as we move into the second half of the year?

Rafael Santana, CEO

Let me answer in two ways. Number one, we are committed to improve margins on both the freight and transit sides. On the transit side, I think we've been more clear regarding what we expect that to be, and the team is certainly working towards striving for a 100 basis point improvement. We expect improvement on the freight side, and we're working through some of those dynamics here, taking the necessary actions. When it comes to the OE side, there’s probably really not much opportunity in terms of really gaining volume for the year, but there’s certainly opportunity when it comes to the service side. We also have mining really improving overall, so mining is also a positive for us this year. So that's just maybe the way to think about it.

Pat Dugan, CFO

Yes, Chris. What I keep reminding everybody is that quarter to quarter, there can be some margin impact from the timing of projects and the type of deliveries. But what you really need to look at is the full-year margin, and we talked about a transit improvement explicitly for the full company of at least a 40 basis point improvement in overall margin as we progress through the year. That’s being driven by a combination of synergies being achieved, volumes coming back, and it’s offset a little bit by some cost and absorption items and normalization of our other costs in SG&A. But that overall improvement really is a year view and should be considered.

Chris Wetherbee, Analyst

Okay, that's helpful. I appreciate that. And then, just picking up on the synergy comment, obviously you have a target for this year. As you think beyond 2021, what do you think the opportunity is? Obviously, you've had the combined company now for a period of time, had the opportunity to kind of go through and see what the opportunities are? And obviously, it has been a challenging macro backdrop, to say the least. As we go into 2022, can you give us a sense of what you think the potential sort of bigger-picture synergy opportunities might be?

Rafael Santana, CEO

I think I'll qualify those beyond this year with respect to synergies. I think we're really working hard to ensure that we progress with a lean culture approach. I think there is a lot to be done there. I think we've started in a number of key and critical sites. Think more in terms of how we consider productivity gains, how we can change some of the work around really rationalizing our footprint, doing more. I think with the acquisition of Nordco, it provides us a good opportunity to expand internationally and utilize that footprint with customers, and a volume recovery will also be positive in that regard. So it's all around productivity, efficiency, embracing a lean mindset, and ensuring that we drive productivity.

Pat Dugan, CFO

Yes, I would just add to that, we've tried to be very disciplined about how we look at synergies and communicate that, because it was such a big part of the strategic rationale behind putting the companies together. But truthfully, the DNA of the company has always been about productivity gains, lean initiatives, all the things that Rafael just referred to, so we just continuously look at how we can improve margin in future years.

Rafael Santana, CEO

Largely, if you think about our sites, there has been a focus here today, especially in 15 of them. We need to expand that to really drive a broader impact in terms of productivity moving forward.

Chris Wetherbee, Analyst

Okay, that's helpful. Thanks for the time. Appreciate it.

Operator, Operator

Thank you. Next question is from Allison Poliniak of Wells Fargo, please go ahead.

Allison Poliniak, Analyst

Hi, good morning. Just turning to the digital side, you know, kind of like your comments suggested an incredibly active market and the guidance for flattish growth certainly reflects that as well. Could you maybe help us understand the progression of digital through the year to get to that flattish? It sounds like it's going to be a significantly stronger second half for you. Is this something where the time from order to implementation is pretty short, which gives you that comfort here?

Rafael Santana, CEO

So Allison, I think we continue to see a strong commitment here from customers. We certainly saw that internationally. Our book-to-bill was strong in both the fourth quarter of last year and first quarter this year. So that just provides back into what I just said. But customers, when you look at last year, they pushed out some of those investments due to COVID. With that being said, both efficiency, productivity, and safety remain an imperative. We expect those multi-year awards to continue. The team is very focused on convertibility for the year at this point. So with the strong book-to-bill, we saw some of that impact beyond this year. So really a lot of focus on convertibility for this year. We're continuing to invest in the business, and that sector will continue to provide long-term growth for us. I think there is more an element here of delay. Also keep in mind the element of locomotive shipments. Whenever we ship locomotives into North America, that goes with a significant number of what I call digital software and hardware. With that drop, we're not seeing that. So that's another element of concern to highlight.

Allison Poliniak, Analyst

Got it. Thank you. And then just on the lines of locomotives, the flex drive, you know, that you completed the test in revenue service. You mentioned some interest in the locomotive. How should we think about those in terms of the quality of inquiries? Is this something that could be revenue generating in sort of 2022, or more of a 2023 timeframe for you?

Rafael Santana, CEO

Allison, interest is strong; we have proposals out. That would not be an impact for next year specifically, but we expect battery electric to be part of long-term growth with the company. We see a number of areas where that could be applied. So we’re having some strong discussions with customers, and this really combines with a strong focus from the ESG side. The flex drive is a very unique product to address these challenges. I do expect that momentum to continue, and we're working with customers on a number of pilots out there.

Allison Poliniak, Analyst

Great, thank you.

Operator, Operator

Thank you. The next question is from Matt Alcott of Cowen. Please go ahead.

Matt Alcott, Analyst

Good morning. Thank you. So I think your backlog increased by $80 million sequentially from December. But your 12-month backlog increased by about $186 million. So I was wondering if there was some pull forward from the out years or if you’ve had any cancellations in the years that were more than offset by new orders for the next 12 months, if that makes any sense?

Rafael Santana, CEO

Let me start with the end part of your question. We have not had cancellations yet. I think we're continuing to see momentum across both segments, be it freight or transits. Of course, there’s an element of projects in our business, which can lead to some lumpiness quarter by quarter, but momentum is good. We see that with the book-to-build in the current quarter, and we’ve also had good momentum to continue on that trend.

Pat Dugan, CFO

Yes, I would also add that there's an element of foreign exchange that impacted the backlog number. If you imagine that our international operations are more multiyear projects, the international impact can be spread out over a longer period of time. We have foreign exchange negatively affecting our backlog number by about $170 million. I think that FX impact is more overly weighted into the full number, not the 12-month number.

Matt Alcott, Analyst

That's helpful. And then just for my second question. It's been over a year now since the beginning of the pandemic, and there were a lot of concerns about the long-term prospects of transit, performance. Now, do you have any more clarity from your conversations with customers about a potential secular shift in transit long term?

Rafael Santana, CEO

We're seeing both customers and governments very committed to transit overall. So with that, just reiterating, no cancellations of orders received or projects. Moving forward, you see very much systems continue to operate. That’s reflected in the resilience of our service numbers. On top of that, I think we're continuing to see just transit be part of the solution in terms of how to decarbonize moving forward. I think there are a number of improvements being thought through, but there are strong fundamentals for that business going forward.

Matt Alcott, Analyst

Thank you very much.

Rafael Santana, CEO

Thank you.

Operator, Operator

Thank you. Next question from Ari Rosa, Bank of America. Please go ahead.

Ari Rosa, Analyst

Yes, hi. Good morning. So, you've mentioned COVID impacts in India, and obviously, we're seeing a regrettable surge in cases there. Maybe you could go into a little more detail around kind of what you're seeing there, what you think the potential impacts could be? And if you've had any discussions with customers there? I know India has been a big focus area in terms of growth. Do you see that kind of shifting the timeline there or the prospects?

Rafael Santana, CEO

Well, so first, no real shift in terms of the prospects as you look long-term. In fact, if you think about freight volumes in India, it's actually positive year-to-date. Just to give you perspective, this is really more tied to disruptions associated with lockdown, certainly impacting our suppliers, sub-suppliers, and customers as well. We're monitoring that closely at this point. We see it more as an impact potentially to the quarter, but we'll continue to monitor and take the necessary actions and report on any relevant changes.

Ari Rosa, Analyst

Got it, understood. Very helpful. And then just if we could return to kind of the North American market, maybe you could give your latest thoughts on where we are in terms of emerging from a cycle compared to past cycles. How do things look in terms of the timeline? Do you think by 2022, 2023, we could get back to kind of a more normalized rate of demand from customers? Or do you see this kind of lingering for longer?

Rafael Santana, CEO

It's good to see the momentum here as we walk into the first half of the year. We are working with customers closely and watching that momentum towards the second half of the year, which I think will be determinant in terms of how customers will think about their fleet strategies, which will include considering modernizations and certainly opportunities here for parts as they continue to consider un-parking of units and new locomotives, which is also going to be part of the discussions with customers. So I see that largely as a second half discussion based on the momentum concerning the first half of the year.

Ari Rosa, Analyst

Between locomotives and rail cars, do you typically see one piece of that business lead the other?

Rafael Santana, CEO

I think it tends to be connected, but it just could be tied to the levels of parking. If you think about freight cars, we're already back to pre-COVID levels. In terms of the overall locomotive fleet, we’re not back to pre-COVID levels yet. So there could be some elements of delays there, which are sometimes really driven by just looking at velocity and dwell times in the network, which ultimately could be determinant factors here.

Ari Rosa, Analyst

Got it. Great. Thank you for your time.

Rafael Santana, CEO

Thanks.

Operator, Operator

Thank you. Next question comes from Saree Boroditsky at Jefferies. Please, go ahead.

Saree Boroditsky, Analyst

Hi, thanks for taking the question. Locomotives were down almost 6% in the quarter and this is largely due to North American shipments. You've been positive on the long-term view of international locomotives. But just for clarity, were international locomotives also down in the quarter? And should they decline for the full year?

Rafael Santana, CEO

I think we're seeing more of growth opportunities when I think about the international markets. To your point, I think largely the impacts in the quarter were driven by a drop of 50% there. If you look at our equipment business, I think you've got to keep in mind that some of that we have been able to offset with double-digit growth in mining. So that's a positive, and I think there’s even more significant growth in our modifications business. So there are opportunities there.

Pat Dugan, CFO

So, Saree, just to specifically answer your question about the variance year-over-year: we had a large number of international locomotive shipments in Q1 of 2020, specific to the Middle East. I think we've talked about this at various times. We had an overweighting of locos in Q1 of last year versus this year. But our full year locomotive phasing for international purposes is going to be largely the same as for the full year.

Rafael Santana, CEO

And we've got long-term orders there tied to key markets, which include India, Brazil, and Kazakhstan. So that’s important to keep in mind.

Saree Boroditsky, Analyst

Great. And then could you just provide a little more color on freight margins? You've done a great job realizing synergies that are obviously being impacted by under absorption. When do you think you'd get back to 2019 levels? And what revenue do you need for that?

Pat Dugan, CFO

I think I don't know that we've talked about any kind of breakeven or kind of contribution margin impact. I think the way to look at it is that last year, the decremental margin on the lower volume was in the low 20% range. You would expect that we would have a similar kind of impact as volume recovers. But you always have to consider the mix and the timing, and projects, and how that volume comes back. Obviously services, parts, and modifications, and digital electronics tend to be positive mix. Some of the OE elements of this can be below the company average. Ultimately, what we're focused on is that as we talked about earlier on the call, is that we're achieving synergies, driving lean initiatives, productivity gains, and all the normal continuous improvement-type activities that Wabtec has always focused on.

Rafael Santana, CEO

We're committed to improving margins across Wabtec, and that includes on both segments this year, and that's really what we're driving forward into next year as well.

Saree Boroditsky, Analyst

Okay, but just given that service, parts, and modern digital are all positive to the margin mix, and you have synergies, is it fair to say that you should be able to reach 2019 margins on a lower revenue base?

Pat Dugan, CFO

I think at this point, to give that kind of guidance on when we would get back to 2019 margins is a little early. But we’re committed to driving that margin up. It’s early in 2021, and we see a lot of really good things happening with the volume recovery, and I think we've considered that in the guidance for the year.

Saree Boroditsky, Analyst

Okay. Thanks for taking my questions.

Rafael Santana, CEO

Thank you.

Pat Dugan, CFO

Thanks.

Operator, Operator

This concludes our question-and-answer session. I'd now like to turn the conference back over to Ms. Kristine Kubacki. Please go ahead.

Kristine Kubacki, Vice President Investor Relations

Thank you, Nick. Thank you for everyone's participation today. We look forward to speaking with you next quarter. Everyone, have a great day.

Operator, Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.