Alamo Group Inc. (ALG) Q2 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Alamo Group Second Quarter 2016 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Friday, August 5, 2016. I will now turn the conference over to Mr. Bob George, Vice President of Alamo Group. Please go ahead, Mr. George.

Thank you and good morning, everyone. By now, you should have received a copy of the press release, however, if anyone is missing a copy and would like to receive one, please contact us at 212-827-3746 and we will send you a release and make sure you're on the company's distribution list. There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-888-203-1112, with a passcode 5480868. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days. On the line with me today are Ron Robinson, Chief Executive Officer and President; Dan Malone, Executive Vice President and Chief Financial Officer, Richard Wehrle, Vice President, Corporate Controller and Ed Rizzuti, Vice President, General Council. Management will make some opening remarks and then we'll open up the line for your questions. Before turning the call over to Ron, I'd like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Among those factors, which could cause actual results to differ materially are the following; market demand, competition, weather, seasonality, currency related issues, and other risk factors listed from time-to-time in the company's SEC reports. The company does not undertake any obligation to update the information contained herein, which speaks only as of this date. And I would like to let you know that we are filing our 10-Q today. I would now like to introduce Ron. Ron, please go ahead.

Thank you, Bob and we want to thank all of you for joining us today. Dan Malone, our CFO, will begin our call with the review of our financial results for the second quarter of 2016. And I will then provide a few comments on the quarter's results. Following our formal remarks, we look forward to taking your questions. So Dan, please go ahead.

Thank you, Ron. Second quarter 2016 sales were $211.5 million compared to second quarter 2015 sales of $215.7 million. Our quarter-to-quarter comparison continues to be affected by reduced demand from non-governmental users of vacuum trucks, weak agricultural markets worldwide, currency translation as well as the impact of Brexit and European economic uncertainties on our businesses in the UK. Year-to-date 2016 sales were $422.5 million or nearly flat to year-to-date 2015 sales of $423.5 million, as the headwinds I mentioned were mostly offset by a stronger first quarter performance in our Industrial Division. Industrial Division’s second quarter 2016 sales of $117.1 million represented a 1.2% decrease from the prior year second quarter. Excluding an unfavorable currency translation effect of $0.6 million, sales in this division were down 0.7%, primarily due to softening vacuum truck sales to non-governmental users. Agricultural Division’s second quarter 2016 sales were $51.8 million, down 2.1% from the prior year quarter, reflecting continued weakness in demand for most agricultural equipment. Excluding unfavorable currency translations, sales were down 1.6% in this division. European Division’s second quarter 2016 sales were $42.5 million or about 3.9% lower than the second quarter of 2015. Excluding the unfavorable currency translation effect, this division’s local currency sales were down about 1.9%, quarter-to-quarter, reflecting uncertainties surrounding Brexit as well as general weakness in European and agricultural equipment markets. As I mentioned in last quarter's call, our prior year and trailing 12-month results included business acquisition costs, information systems conversion costs, restructuring costs related to our plant closure in France and purchase accounting affects due to the fair value step up of acquired inventories. In my next few comments, when I say on an adjusted basis, it simply means that the applicable prior year or trailing 12-months results excludes these costs. Despite lower sales, second quarter 2016 gross margin of $52.2 million was 3% higher than the prior year second quarter as reported and up 1.5% over the second quarter of 2015 on an adjusted basis. Our second quarter 2016 gross margin was 24.7% of net sales, which compares favorably to 23.5% of net sales for the prior year quarter as reported and 23.8% of net sales for the second quarter of 2015 on an adjusted basis. These favorable comparisons for the quarter were mostly due to continued improvement in production efficiencies and lower material cost. Second quarter 2016 operating income of $18 million was 9.8% higher than the prior year second quarter as reported and up 2.5% over the second quarter 2015 operating income on an adjusted basis. As a percent of net sales, second quarter 2016 operating income was 8.5%, which compares favorably to 7.6% of net sales for the prior year quarter as reported and 8.2% of net sales for the second quarter of 2015 on an adjusted basis. Net income for the second quarter 2016 was $10.6 million or $0.92 per diluted share, which favorably compares to second quarter 2015 net income of $9.7 million or $0.84 per diluted share as reported and prior year quarter net income of $10.5 million or $0.90 per diluted share on an adjusted basis. Second quarter net income and earnings per share comparisons reflect the improved operating results previously mentioned, partially offset by the effect of foreign exchange rate exchanges on non-operating income and expense, as well as the higher effective income tax rate caused by the general shifting of the company's earnings mix toward higher tax U.S. jurisdictions. Year-to-date 2016 net income was $19.2 million or $1.67 per diluted share, which favorably compares to prior year-to-date net income of $17.1 million or $1.49 per diluted share as reported. On an adjusted basis, year-to-date net income and EPS were essentially flat to the comparable prior year results. In the next few comments, we computed EBITDA by adding back depreciation and amortization to operating income and we computed free cash flow by subtracting net purchases of property, plant and equipment from the net cash provided by operating activities. All of the components of these calculations can be found in our 10-Q to be filed this afternoon. Second quarter 2016 EBITDA was $23.4 million, down slightly from the prior year quarter. Year-to-date 2016 EBITDA of $45 million increased 14% over the prior year-to-date result as reported and is up 5% on an adjusted basis. Trailing 12-month EBITDA of $94.2 million is up 12% over prior year. On an adjusted basis, trailing 12-months EBITDA of $97.7 million is up 8% over the comparable prior year result. As of the end of the second quarter 2016, our trailing 12-month free cash flow totaled $54.3 million, which is 104% increase over the comparable prior year result. This also represents a cash conversion rate of 120% of trailing 12-month net income. Our backlog ended the second quarter 2016 at $130 million, which is down about 20% from the prior year second quarter, primarily due to weakness in non-governmental demand for vacuum trucks, higher prior year backlogs related to new product introductions, continued softness in agricultural markets, economic uncertainties in Europe as well as currency headwinds. In summary, our second quarter 2016 results were highlighted by lower sales and backlog due to weaker market conditions and currency translation, improved earnings and free cash flow despite lower sales and continued year-over-year improvements in both gross and net operating income - net operating income margin performance. I would now like to turn the call back over to Ron.

Thank you, Dan. I would like to make a few comments about the quarter, but I think in general, we're pleased with our second quarter results. I think the kind of earnings growth we achieved despite the soft sales shows the progress we continue to make at Alamo Group. But certainly, we're concerned about the weakness in some of our market areas. For the last several years, our Industrial Division has been our strongest and really led the way and consistently grown, so on the one hand, the comparables are actually quite strong. But - and generally, our Industrial Group continues to hold up well today, even though, I think industrial activity in the U.S. is in general is slowing. Our blowers, street sweepers, snow removal and excavator products all continue to do well, but certainly, vacuum trucks demand particularly for non-governmental applications has been weak and is probably getting weaker. Our backlog dropped and backlog in our Industrial Division were mainly vacuum trucks and excavators, but it's more of the vacuum truck portion that has a concern because while excavator backlog was down some, the inquiry levels remain healthy levels and strong, which is not as much the case with the vacuum trucks. And as I mentioned, even snow removal products remain good, even though it was a fairly mild winter, except probably the airport sector snow removals, which is where we've seen some weakness in snow, but in general, our snow products are up. And as I said, street sweepers and blowers are also doing just fine. So our main concern in the division is vacuum trucks and will likely remain so for the rest of the year. In our Agricultural sector, the overall market there continues to be soft. Farm incomes are declining further this year and our sales in this market were slightly down, but I think continue to hold up much better than the market in general, and our margins in these products continue to improve, which has been a big contributor to Alamo's overall margin growth. In Europe, the general economic situation there certainly remains weak, and in spite of these actually our French operations are showing some improvement, though our UK operations, which have historically been our strongest, are down for the first half of the year, certainly, partly due to the weak economic situation and partly, we believe due to delays caused by concerns and uncertainty related to the Brexit vote, which took place in June of this year. While we certainly do not know exactly how the Brexit situation will fully play out, we feel demand for our type of products should remain fairly stable. However, there would certainly be some effects on us, such as the currency translation effects we are already experiencing due to declines in the value of the British pound, which makes our sales and earnings from their work less. There also certainly could be some longer-term effects based on the ultimate trading arrangements, established between the UK and the European Union, but this process could take several years to fully develop. And long-term, since we have manufacturing capabilities in both the UK, which will be outside the EU and France, which will still be in the EU, we do not feel we will be impacted or that this have any problems in our ability to serve our markets in Europe, whether they’re in or outside the EU. So despite the soft market conditions, which are likely to affect us for the rest of the year, we feel good about the progress we continue to make in operational improvements, which has been driving our earnings growth. Sales in the first half of 2016 were slightly down, yet net income was up over 8% in the second quarter and up over 12% for the first 6 months of 2016 compared to 2015. And as we’ve pointed out repeatedly, these improvements are not just from one area, but the result of a number of initiatives including better manufacturing efficiencies, positive purchase price variances on purchases of components, despite higher steel cost, probably even some net pricing gains of our price increases and even lower overhead cost in general. And we feel these initiatives will continue to help our results for the rest of this year and into next year. Even with sales that are probably likely to remain soft in certain areas like I said, I think generally we feel our sales holding up are reasonably well, but certainly, there is going to be a few soft areas. And as Dan pointed out, these improvements also contributed to significant growth in our free cash flow. And as a result, I think it was significant that our total debt, net of cash, was down nearly $50 million compared to the same period at the end of the second quarter of 2015, [indiscernible] we had very good conversion of cash flow into the ability to pay down debt and strengthen - further strengthen our balance sheet. So all-in-all good results for the quarter in which sales were softer than we would certainly have liked. The performance improvements we have made will continue to help us going forward, but sales will continue to be challenged in several sectors. And I can assure you that those sectors are going to be getting a lot of attention for us and certainly, in addition to our normal efficiency initiatives we're undertaking, bookings will be an important focus of us for the next - for the rest of this year. So with that, I'd like now to open up the floor for any questions you might have.

Thank you. [Operator Instructions] We will take our first from Brett Wong with Piper Jaffray.

Hey, thanks, guys. Thanks for taking my question. Just wanted to dig in a little bit on what is creating the softer non-go back truck demand and kind of how long beyond this year, as you mentioned, how long do you think that's going to persist?

Well, a hard question to answer. I mean, certainly, the last, at least five years really since about 2009, 2010 period. Vacuum truck demand for both sales and rentals has grown very healthily. I think it was, certainly the governmental portion of it has been stable and steady and going up some, but the nongovernmental portion, that used everything from construction, oilfield, mining, general industrial applications, has shown very good growth. Those are the industries that are - some of those are down, mining is down, oilfield is down, construction like you said, looks like it's weakening. And so, those are the areas that have been most affected. So like I said, we benefited from multiple years of very strong growth in that sector and so probably the industry got a little bit ahead of itself. So now that the demand down, but probably there is supply is that, there is a lot of trucks available. So I think there are two things that have to happen. Number one, a bit of overhang of trucks that has to be worked down, which will probably take us into next year. And then, we hope to have some pickup in some of those other areas, like oilfield, mining, so even construction activity I think, which is - as I said, sort of seeing some slowdowns in the U.S. as well. So I mean, I think like you said, once the little bit of the overhang, next year, I think we'll start seeing some improvement in the market, but I think it's going to take some improvement in the general economy before we're going to see why it's back to the kind of growth in the non-governmental sectors that we saw previously.

Fantastic color. And then just digging into ag margins, just wondering kind of what's driving that and the potential expansion that you see there over the next year or plus?

I think our margin expansion there, as I said, obviously it’s not being driven by volume, and what we would love. I think, if we had some volume, we could really take a lot of it to the bottom line. But I think, we're executing better, we've invested - continued to invest in our plants to put in more labor savings, invest in technology, doing more automated, having more robot welders, this type of stuff. So we've continued to invest in our plants. We've continued to invest in our products, knowing we have been bringing out a steady stream of sort of new and improved products, but those products I mean, when we improve them, we want to make the features better and everything, but we also try to improve the manufacturability of the products. So we're doing that. We're getting the benefits like we talked about some of the problems, challenges with the strong U.S. dollar, which makes our international earnings worth less when we translate them to dollars, but we're also getting pretty good benefits from the strong U.S. dollar in our purchasing, components that we source globally from like China and other places, we're able to take the stronger U.S. dollar and get favorable purchasing variances on the component inputs we're buying internationally. So and as I've said, it's not one thing, it's multiple things. I think, we're getting a little bit on pricing, since we’re sort of more of a niche product, not a commodity product and what we sell in the type of products we sell in ag, so we'll be getting a little positive on pricing on the component purchasing, and then just manufacturing efficiencies. And things have been soft, we really kept - even our overheads are down in the quarter, just because we're watching our pennies better.

[Operator Instructions] We'll go next to Michael Shlisky with Seaport Global.

I wanted to touch briefly on Brexit first, has the lower pound - the major product getting cheaper to export, any more competitive in other markets, any color there would be appreciated.

For sure they have, I mean of course, Brexit happened at the very end of the second quarter. So it wasn’t much effect in the second quarter. But certainly, as we're seeing the offset to the fact that even our earnings, sales and earnings from the UK are worth less, as the pound has continued to drop, but it has made us more competitive. And in fact, it's kind of going an interesting situation because I think with the lower pound and yet while UK is still in the EU, which is going to be at least for the next couple of years, I mean, they will not have any tariffs, so I mean, they will have a bit of an advantage in selling from a price point of view for the next few years. So we think that that's - these currencies, as I was saying, there is little bit of pluses and minuses, certainly, we're negatively affected. But that we do think it would help our sales by making us a little more competitive on sales we have from England that are exported to the continent or exported anywhere. So that's why we feel it affects to us on the Brexit, while there's certainly, will be some but we don't feel we'll be majorly impacted.

Also wanted to touch on - there is a little bit dry in Texas and other parts of southeast. Do you have any color on how your livestock related equipment is doing this year for the ranchers out there compared last year?

It seems to be holding up fairly similar, sales are slightly down in ag, but not much, and I think in general, they've held up pretty well, I actually think in general moisture has been good this year. Like I said, it was a fairly mild winter and the farmers tends to get to the field sooner, but I think even in Texas, I mean, it's not drought conditions, I mean, some places are dry, but generally range has been - moisture has been fairly good for both farmers and ranchers, pretty well around the US and certainly, including Texas as well. I mean, West Texas has been pretty dry, but West Texas is always pretty dry, half of it is desert. [Indiscernible] commenting just this week how green it is for this time of the year, because moisture seem pretty good, they’ve been holding up pretty good.

[indiscernible] two part here, you didn't mention much in your comments about M&A. Wanted to get your update on what's going on in the market, how do you feel some of the targets out there are being price today. And then, the other part of the question is, given where we're today with demand and your efforts to try to improve overall company margins, are there any product lines you might be looking to exit here, and just not delivering the cost of capital right now and might not do so I thought serious changes or are you happy with the portfolio as it stands today.

I'll take the second question first, the product line, we have nothing, last year the end of last year we announced, we closed one of our plants in France and really with that, we were kind of have been going little bit away from things like front-end loaders, I mean, we still sell them, but we don't make as many anymore. That market sort of changed as far as the OEMs have gone after that market differently than they have. So, we sort of adjusted our way, we're going after that market, but other than that, I think we pretty well like the products mix, we have and have no other thing that we're looking at exiting or changing anyway, so I think we're pretty pleased. I mean, you're right, some have performed better than others, but I think most of that is more us than the market. And on the M&A activity, as I have comment last year, I think we looked at a lot of things, but didn't do anything, because pricing to me was sort of uncomfortably high. This year, we didn't see as much activity in the first half of the year, but it does look like pricing, I won't say is favorable, but it certainly, I think improved a little, I think if anything it seems like the banks are being a little tighter on credit, which I think bodes well for some of these highly leveraged we're not seeing may be quite as many as the highly leveraged deals as we've been seeing. I think that bodes well for us. And I'm pleased that kind of right now were activity has picked up quite a bit, so we're probably looking at a variety of opportunities right now and some that are certainly, nothing eminent at all, but there are some opportunities that I think are, we're very interested in and it looks like they're doable. So I think we're optimistic that activity in that area will improve in the sound like we're looking at dozen things now and we don't need a dozen things, we just like to do one or two. So I feel a little bit more optimistic now than probably 3 or 6 months ago in that area.

One last one from me, the cash balance continues to grind higher year-over-year here, last couple of quarters. Besides M&A, do you have any thoughts about maybe paying down some debt, I'm not sure any danger but kind of any other thoughts as what you might do it with any of the cash you've been putting on your balance sheet recently.

Yes, certainly, we have been paying down debt and that's what we'll do, with the cash. I mean, one of the reasons our balances - the cash balances are going up because some of that money is offshore. And certainly, we would just - we don't want to pay a penalty to bring it back, when we think we have opportunities to invest in the markets in which it's in, most of cash, some of it is in Canada, most of it's in Europe. And we're looking at opportunities at Europe as well as in North America. So I would say cash we have, reasons not been apply to debt today is just because it's in other jurisdictions and we just leave it there. But even with that, we still have been paying down debt and that's our free cash in the US immediately we used it to pay down debt and that's we plan on doing with our excess cash to sort of an acquisition.

We’ll go next to Joe Mondillo with Sidoti & Company.

Just want to first off say that I'm on train right now, so if there is any interruption with the call, I apologize for that.

It's all right.

I just want to ask first on in terms of the margin mix of your backlog, how is the change at all has gotten - product mix has it gotten worse or better in terms of with the nongovernmental vacuum trucks been down, are those trucks, do they carry higher or lower margins?

Especially in vacuum trucks, I mean, our biggest, heaviest trucks that were used in things like oil field and refinery and all these kind of stuff, those are the ones that were our highest margin and those are the ones that are the softest right now. So if anything, our margin improvement was even despite a slight unfavorable mix, not only in vacuum trucks, but I mean, I think across the board that there was a slight unfavorable mix, probably spare parts have held up pretty good, but I mean, as a percent of sales, they haven't changed. But like I said, I think in a couple other areas some of our bigger products have actually been little bit softer. So I think we're pleased that we were able to get margin improvement even with a slightly unfavorable product mix. Dan, I don't know if you want to comment on that one further.

Yes, I don't think there has been significant change in the margin in the backlog, I think it's been fairly consistent year-to-year and certainly our operating efficiency improvements and our material cost improvements have been the real story in that margin improvement year-to-year. So if you factor those in, you could say that we have had more than adequately offset that.

And that leads me into my second question. In terms of just across-the-board in terms of your entire geographic product line, can you talk about how your pricing has transitioned, if at all and especially going to back half of the year, may be some rising raw material prices and just general outlook prices that you're seeing, given the soft demand, is that becoming any more challenging just in terms of your net pricing, how is that, is that going to get worse or better or the same in the back half the year?

We feel basically the same, our pricing is, I mean, like you said, our price increases haven’t been big, but we believe they’ve been slightly above our cost increases. And like I said, I think on the cost side we benefited by, that's where the strong dollar has helped us a little, we have seen sort of almost prices coming international source components coming down a little bit. I think, we've seen pricing there be very favorable for us, positive variances even in spite of the fact that raw steel certainly went up in the first half of the year, we didn't, you know, we seem to have a little bit of lag effect on steel, that’s the way we buy steel, so we didn't feel much price increase of steel, not much at all in the first quarter, a little bit in the second quarter and probably will actually due to the lag effect to be a little bit more in the third quarter. But then we're already seeing, I think some softening in some demand in pricing for steel, that I think so by the fourth quarter, it could actually be softening a little bit. Like I said, it's a little bit of everything, but pricing, it's not been a huge factor, it's just been slightly above our cost and we don't see that our cost or that relationship will change in the second half of the year.

If we saw an increase beyond - we are seeing kind of a softening a little bit over the last few weeks, if steel prices started going up further from where they were at the end of the quarter, we certainly, have the ability also to push surcharges into the pricing temporary, steel surcharges as one of the mechanisms that we used in the past to grow to offset that. We don't see that happening right now, but we're really seeing kind of flattening, a slight decline in the most recent steel market.

And then lastly, I was just wondering in terms of your productivity improvement, I know on the horizon you have been thinking about maybe some plant consolidation up in Milwaukee area, just wondering, if you’ve gotten any further in terms of spending with that. I think that may be a significant project down the road, do you have any other further color in terms of that or still too early?

It's two things, it's little early, but - I mean, we're actually, we're working, we're planning, that is one of our objectives as to bring all that together because of the main products there is vacuum trucks and there is slowdown vacuum trucks, probably will delay our need to do something for little bit as well.

Ron you might mention Warsaw what we're seeing there on the integration of buildings.

Well, Warsaw was last year was a leased facility, last year we bought it and we bought the building next to it and we're kind of halfway through our renovation, an upgrade of that putting in a new paint facility, kind of improving the flow to the buildings now that we got the two buildings and that is proceeding. So I meant actually, like I said, most of that heavy dollar we spent last year, but we're still continuing to invest in that and hope that will be finished probably and before the end of this year rebuilding the flow and integration and we think will start benefiting from that, late this year and all of next year. So that's still well underway, I mean like I said, earlier, we're actually continuing to invest in a plants, that's the major reorganization we want to get done and we still want to do the other one in Milwaukee but [indiscernible] softness in the market we're not in any hurry to get that one done.

[Operator Instructions] We'll go next to Eric Marshall, Hodges Capital Management.

I was wondering if you could just give me a quick understanding, the weakness in the non-governmental back truck businesses. Is that mainly tied to the energy sector?

Certainly, that is a big component of it, I mean, I think there's been a lot of grow their in the energy sector has slowed down quite a bit, but it wasn't just energy, I mean, it was also mining, and it was also general construction. And like I said, I think the problem, lot of the sectors are showing some weakness. And like I said, probably made a little bit worse by the fact that that sector had been growing so well that any slowdown was going to create a bit of an overhang of equipment in the short-term. Like energy, some of that, I mean, it hadn't stopped by any means, like I said, for instance, we're fairly active in the refineries and even though that sort of energy and the broader sense, I think the refineries have held up much better than obviously the ENT activity. So activities going on along there are - our rental in that area, while the utilization slightly down, it's still not bad level. And I guess, at the refineries are holding up pretty good, better than ENT. But I think - like I said, it's broader than that, it's just like say mining activity, coal activity in Wyoming, some of these other the coal is really down and some of these other areas are down as well. And like I said, I think we're seeing catch report, just some general industrial activity in the US is softening.

Ron, do you see overhang of used equipment impacting the lack of inquiries there in that area?

A little bit, a little bit. I think we've been pleased the one thing you see actually our rental fleet - we actually on purpose have reduced our rental fleet. And I mean we were able to reduce it fare a bit, without impacting margins or pricing or anything like that. I mean, demand is still there like I said, may not be quite as strong at is was, probably since the industry was growing so rapidly and slow down so quickly, there is a little lower hang, but like you said, I think that could be worked out like you said, that's why things are going to be slowed, have been slow and are going to stay slow for the rest of this year and probably into next year. So even without a lot of pickup in the activity, I think next second half of next year will show some decent improvement, once the overhang is going to at a more manageable level.

And then on your European Division. Did you guys forgive me, if you already mentioned, this, but, did you mention what this is would've been in constant currencies?

Dan mentioned, it, and I think it was in our press release to, wasn't it, Dan?

There is a table in our press release that shows you the impact of currency translation.

Yes, that is a second tab.

But like you said, certainly, currency translation effects have affected our results, but the Brexit and the drop in the pound the weakening pound that didn't happen to really at the end of second quarter.

And then any thoughts or targets on debt reduction here going forward absent any acquisitions?

Certainly, we haven't said, but as I just said, all of our US free cash flow goes to paying down debt and we believe certainly, our third quarter, tends to be on collections for the best due to some of our out of season programs and floor planning that are highest cash flow tends to be in the third quarter and that's when we tend to pay down the debt the most and you can we see - and that sort really cash flow for us has held up quite strong, well above last year. We think it will continue and we should see some nice pays in the third quarter. And we to go back up a little bit the other way in the fourth quarter, but I don't think much, just because we're trying to work down some inventory, while our inventory is down about $10 million, I think it needs to be down a little bit more. So, but to focus on that as well. So all-in-all, I think cash flow with think should be pretty nice for the rest of the year without an acquisition, acquisition that will be.

Eric with our EBITDA up in 90s, the cash flow that we generated over the trailing 12-months right around 50, it's going to in line with our expectations.

And with no further questions. I'd like to turn to it back to management for closing remarks.

All right. Well thank you all for joining us today. We appreciate your questions and your support and certainly, we look forward to speaking with you on our third quarter conference call in the next quarter. Thank you very much, and have a good day.

That concludes today's conference. We thank you for your participation. You may now disconnect.