Badger Meter, Inc. (BMI) Q1 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Badger Meter First Quarter 2017 Earnings Conference. At this time, all participants are in a listen-only mode to prevent background noise. [Operator Instructions] We will have a question-and-answer session later and instructions will be given at that time. And as a reminder, this conference call is being recorded. Now, I would like to welcome and turn the call to our Senior Vice President of Finance, Chief Financial Officer, Mr. Rick Johnson.

Thank you very much, [Carmen]. Good morning everyone and welcome to Badger Meter’s first quarter conference call. I want to thank all of you for joining us. As usual, I will begin by stating that we will make a number of forward-looking statements on our call today. Certain statements contained in this presentation, as well as other information provided from time-to-time by the Company or its employees may contain forward-looking statements that involve risk and uncertainties that could cause actual results to differ materially from those in these forward-looking statements. Please see yesterday’s earnings release for a list of words or expressions that identify such statements and the associated risk factors. Let me reiterate some of our guidelines. For competitive reasons, we do not comment on specific individual product line profitability other than in general terms, nor do we disclose components of cost of sales, for example, copper. More importantly, we continue our practice of not providing specific guidance on future earnings. We believe specific guidance does not serve the long-term interest of our shareholders. Now let's discuss what happen in the first quarter. Yesterday after the market closed, we released our first quarter 2017 results. I am pleased to tell you that sales, earnings and earnings per share were all first quarter record. Overall, sales for the most recent three months increased to $101.6 million, compared to $100.6 million in the first quarter of 2016. Municipal water sales represented 77.3% of sales in the first quarter this year, compared to 67.9% in the first quarter of last year. These sales increased 1.1 million or 1.4% to 78.5 million from 77.4 million last year. Municipal water sales were driven by substantially higher sales of commercial meters and several cities were completing projects during the first quarter. Overall residential sales were down slightly. However, if you look at the details, you’ll find that we had a significant order for the Middle East in the first quarter of 2016 that did not recur this year. Overall, domestic residential sales did increase quarter-over-quarter. We often describe our domestic water business is lumpy, simply because it is difficult to predict the timing of orders. I would characterize sales from the Middle East as sporadic in nature. However, we are continuing to expand opportunities there. Flow instrumentation products represented 22.7% of sales for the most recent quarter, compared to 23.1% for the first quarter of last year. These sales decreased just $60,000 to 23.1 million from 23.2 million last year. As we indicated during our last call, we believe that we have seen the bottom of the sales decline in the oil and gas business that was blown up by this quarter’s increases. Unfortunately, several large flow instrumentation product sales that occurred in the first quarter of 2016 did not recur in the first quarter of 2017. We believe these are simply a function of timing and the overall of flow instrumentation business will show modest increases for the year as a whole. Gross margin as a percent of sales was 38% in the first quarter of 2017, compared to 38.8% in the first quarter of 2016. Increased material costs in our case brass were higher in the first quarter of this year compared to last year. However, higher capacity utilization and product mix help to offset some of that impact. As we move forward, we hope that pricing will enable us to hold margins against the increasing material cost. There was no significant pricing impact in the first quarter. Selling, engineering and administration expense declined $1 million from the first quarter of last year to 25.2 million from 26.2 million. The decrease was driven principally by a lower employee compensation related expenses including staffing levels, offset somewhat by a $450,000 write-down in an investment in an emerging technology company. The provision for income taxes as a percent of earnings before taxes for the first quarter of 2017 was 34.2% compared to 36.3% in the first quarter of 2016. This quarter's tax expense is net of certain discreet credits that were recognized during the quarter. Without those credits, our effective tax rate would have been 35.6% which is still slightly lower than last year's rate. Our estimates at this time are just slightly higher foreign earnings in 2017 resulting in an overall lower tax rate. As a result of all these factors, net earnings increased to $8.7 million or $0.30 per diluted share for the first quarter of 2017 compared to $8 million or $0.28 per diluted share for the same period last year. Our balance sheet changes since the end of the year generally reflects seasonal factors for instant higher receivable balances. Cash generated from operations for the first three months of the year decline to 12.4 million from 18.2 million in the same period last year. This is due to payments made in the first quarter of this year for incentives earned in the prior year. At the end of this first quarter, our debt as a percentage of total capitalization was 12.8%. With that, I’ll turn the call over to Rich Meeusen, Badger Meter's Chairman, President and CEO, who will add some additional comments. Rich?

Thanks, Rick, and thank all of you for joining us today. My comments are going to be brief, we were pleased with our first quarter record results and we believe that we are positioned for good year. While the 1% top line growth was less than what we had expected due to the lower Middle East sales, the 9.5% bottom-line growth was very strong and we believe indicative of both our strong market position and our ongoing cost containment efforts. As Rick mentioned, domestic water meter scales increased driven by strong increases in our two flagship products, our E-series ultrasonic water meters and our ORION cellular radios. We are continued to invest in the development of these products as the market acceptance of solid-state metering and cellular technology gross. We're also seen some improvement in certain areas of our flow instrumentation business, although the overall business was still flat. In particular, our meter sold in the oil and gas markets reflected strong growth this quarter over last year confirming our reports from the field that the long away to rebound is starting to appear. With the continued strength of our core water meter business led by our induce products and some recovery in the flow instrumentation business, we are optimistic about our prospects for 2017 and beyond. And with those very brief comments, we would love to take your questions.

[Operator Instruction] And our first question is from the line of Tate Sullivan with Sidoti. Your line is now open.

Rick, can you help me, I don’t think you've touched on it in comments. How you manage inventory traditionally? And is there any seasonality in the first quarter and as a lower inventory one way you avoided higher copper price impact too? Thank you.

Well, lower, I think it's just more function of the sales, I mean it's the function of the timing of our purchases more than anything else. We generally don’t talk specific about an individual month, but the strongest month of this quarter was March. We really dipped into some of the safety stock of the inventories and actually exceeded our plan in the particular month of March. In particular casting for instance is probably one of our fastest turning items. But overall, I think you will see inventories come up later in the year, but we did very well.

I’ll add. This is Rich. I’ll also add that, that drop did bring it down below where we are comfortable. So as Rick said, we’ll be adding. Also when you ask about how we manage inventories, we don’t try to manage inventories for the cost of copper, in other words, we didn’t stock up while copper was cheap and then try to take it down, now that copper is more expensive. That was not, what was driving that. Our inventories are more managed to the needs of the business and to the expectations of the customers and being able to achieve the on-time delivery targets that we have. I will also say that as we look at 2017 and some of the new products we’re looking at and other products we’re facing out, we may have some increases in inventory, just to provide safety stock as we phase from one version of the product into another. So that’s going to happen too because we have certain customers that will say, I know you’re entering into a new product, but I kind of like the old one better, could you continue to provide me the old one while I finish out my implementation. And in those cases, we will generally go by the inventory and stock it, so that is there for that customer as a customer service. So you can, I think expect inventories come back up in future quarters.

And I just hope that you keep manufacturing now listening to this conversation.

Yes, I hope that we want to beat your manufacturing…

We'll keep down. We prefer to keep it down.

Right.

Thank you. And our next question is from the line of Richard Eastman with Robert W Baird. Your line is open.

Rich, could you maybe just comment, with your commentary there where Rick comment about March being the strongest quarter. I would kind of presume that might be the case normally with normal seasonality. But is the business as attractive through the first quarter and here into second quarter? But the feel is that we’re tracking seasonally just in municipal side of the business? Or is there any inflection there uptake, down take softness? Doesn’t sound like it, but maybe give us your thought there?

This is Rick. Let me just comment first, I mean, for those who live in Wisconsin here, I hope you enjoyed our Kentucky winter. So your question is that, is the weather playing any impact that we pull anything follow from Q2? That question remains on answered right now because it's too early in for second quarter to really make that determination, it’s a possibility. But also, I think we’re seeing -- we're seeing strong motors continue into the second quarter, but it's still early.

Right, and I'll also say Rich, we did not make any efforts to pull orders up from the second or into the first. As Rick said, you may have had customers who and we've seen this cycle before, started need replacements, northern customers starting need a replacement little early because the weather was pretty nice. And so we -- there may have been some of that impact, but I would also say, he mentioned the March as an unusually strong month in relation to inventory coming way down lower than what we expected. Part of that was because we did have some supply interruption in February from a plastic supplier in fact from one of the world’s largest plastic suppliers.

Who shall remain...

Who shall remain nameless, but you could probably do some research and find out, they shut down some automotive. So, it did have some effect on us. We guys completely call up by the end of March. So, there were some February sales that were delayed in the March, but I think that impact did drive down safety stock a little more than what we wanted to and that’s really what he was referring to.

And it was [Multiple Speakers].

I see.

It was a brief interruption.

It was about one week interruption.

Sure, understand. Rick, would -- are these BEACON deployment issues, has that loan normalized -- I know it's being more on the customer side, but is it kind of normalized?

Yes, it has normalized, we feel we are now at a back log level that is manageable and it's where it should be -- it's where the -- when the customers say please install BEACON, they know there is going to be a period of time for us to integrated to their billing provider. But we part up with a lot of the customers who were grossly delayed and we are now down to -- that’s been normal four to eight weeks that might take to get somebody on to the system, assuming their software supplier is -- their billing supplier is corporative. I mean we have a few steps gone away out because they are buying their billing software from a 2% shop and the two people took an extended vacation. So, I was shocked to find out how many billing software vendors there are in the water meter space, in the water utility space. I was just surprised that there is a huge number of very small one. And we are chipping way it and we obviously triage we went at the largest one first. We got a lot of those on board, but I would not say -- I would say that we are not seeing a hold up in our BEACON rollouts due to this issue anymore. It's now part of our ongoing process.

Okay I understand. And then Rich, I wanted to ask you we have talked about ORION cellular now for number of quarters about how fast grower, there are some other vendors in this space that at least speak to offering or will offer cellular radio. Can you just give us a quick picture of how this is impacting the market place? I mean our AMI deployments now from an end point standpoint, has the cost come down since you don’t need what dedicated backhaul? Or how is it impacting the industry?

Well, let's that backup just second for the sake of everybody who might not be as knowledge about this as you. Obviously, we and all of our competitors offer the drive by meter reading technology that we have been offering for decades. We all offer fixed network technology. There is a lot of variety in that, some of them have like a Sensus where it is one very powerful expensive device for the way up on a tower in the middle of the city and it can read the whole city. Other approaches like Badger and some of our other competitors are numerous smaller devices that are put up on telephone poles or buildings that read the city. So different approaches to fix now, but we have all that fixed network solutions. There were also mesh solutions out there. We chose not to offer mesh solution. We chose not to go that way because we don’t think mesh is the right solution for water. Mesh is very popular in electric because the electric meters are located above ground and therefore to have a one electric meter talk to another is pretty simple. When you get into water, having the one water meter talk to another, you are going up from a pit or basement across the lawn and back down into a pit or basement and it becomes very difficult. So, we chose not to go mesh and there are some competitors although with mesh technology. Finally, the technology that we introduced that we’re seeing very strong growth on. In fact, it was over 30% growth this quarter over the first quarter of last year on our ORION technology, is the ORION cellular. We are the only ones out there really with a reasonable residential solution, okay. We have some small competitive who have commercial solutions, for the commercial applications, but we’re talking about a 20-year residential meter, a cellular radio that can go in a basement or pit and for 20 years transmit its reading. We like that solution because it is only for structure. When you say, has cost come down? The answer is no because frankly the radios cost we're seeing whether you're using a fixed network or cellular. However with fixed network, you’ve got the cost of all the towers and the collectors with cellular you’ve got some monthly fees. So, the costs are very competitive across this, it’s really a matter of performance and what you’re looking for in a lot out of bodies like maintaining the prices up on towers, cellular eliminates all of that headache. Now let’s go onto and I know I’m going to long vintage here but…

I’m glad ask for a short answer. I know it was a good question because it..

So, now let's go onto another thing you mentioned, which is, we always knew when came out with cellular several years ago. There are competitors would not just seat by and watch us, take a segment of the market without competing. We also believe, we had a several year leap, on our competitors and we are now hearing that some competitors are planning to introduce cellular possibly yet this year, okay. So, we know they’re coming. We’re going to be very interested to see what kind of battery life they have. We’re going to be interested to see how often they’re able to translate and how well their system works. But we do feel like we’ve been in the market, we’ve been the only ones in the market with this technology for several years, it’s very proven for us and that gives us a very strong first mover advantage on that. I will also say that one of our competitors has used an argument to try and sell against us by saying Badger is selling 3G Networks and we will be coming out with an LTE Network. So what you really want to do is to wait for our LTE, when we eventually come up with that. Now our answer is, well of course, we’re also going to be coming out with LTE. We’re working on that and we will be introducing that shortly. That is just a normal evolution of cellular products as tower evolves, this evolves. And we have no indication that the 3G Networks are going to be ripped down anytime soon. Yes, for voice going away, but not necessarily for data. So, we believe that we’re going to be able to continue to support those customers and to offer the LTE product that our competitors are touting as that’s the new solution. To be it’s just the next generation, it’s not that radical. So, that’s a long answer to your question, but I hope you had addressed it.

Is the cellular -- your cellular sales, ORION cellular sales today or in this first quarter where they have of your ORION sales whether that could?

Well, wait a minute. I am looking and I was just handed my little recap here. The cellular sales were, yes, when we talk about ORION for the quarter, they were not half. They were above 30% to 40% in that range.

Thank you. And next question comes from the line of Chip Moore with Canaccord. Your line is now open.

You called out some momentum with the solid-state product in the press release and if you can talk a little bit about penetration trends there. And then you think that’s mostly with existing customers or could you be taking some share versus competitors?

Well, I believe on the cellular, we are taking some share. There are customers -- I am sorry -- I thought your question was about the cellular. I still have Rick Eastman's cellular questions stuck at my head. I am sorry for that. With the E-series right now there are really only two companies offering solid-state metering and it is Badger Meter and Sensus. My VP of Sales is making a really nasty face at me right now because obviously there must be somebody else out there with -- it's coming, okay, all right. Let me put it this way, for the past several years there are only been two companies. Okay, she is smiling now, I am speaking correctly. We should really do these calls by video conference. You people would really enjoy this. Watching how I could beat up in this room. So for last several years there have been really only two companies in North America selling solid-state meter and it's Badger Meter and Sensus. We chose to go with an ultrasonic technology. Sensus chose to go with a magnetic technology, okay. Now, we were told that a third company Neptune who is the third big player in our market will be coming out or has come out recently with their own ultrasonic product. Now frankly, we view that as kind of a positive because first off, it does support our position that ultrasonic is a better technology since the other competitor has chosen ultrasonic and magnetic, so that’s a good thing. However, both Sensus and Badger do have a lead in the market. We think we believe we've taken market share by being one of the two companies in that position and that’s been helping us.

And Kamstrup it's a big player.

Right, there is a European company name Kamstrup that has started selling an ultrasonic meter into the U.S. also although they really have a very small market share at this point, but they are also trying to sell that. So my point being, it does seem the ultrasonic is becoming more the standard is our now industry rather than Sensus has magnetic technology. The other thing I’ll say quite openly is that I am excited to be in the ultrasonic business and not the magnetic business for these applications because as I look out over the next 5 or 10 years, I make the point that ultrasonic meters are -- the cost of an ultrasonic meter is primarily related to electronic boards and components whereas the cost of a magnetic meter is related to coils of copper wire and magnetic resonance materials. And when I think about what will probably happen with input cost, over the next 5 or 10 years, if history has taught us anything is that electronic boards tend to decrease in value -- decrease in cost overtime whereas copper coils and resistance material that’s a harder thing to control the cost front. So, I think we chosen a good horse here. I think ultrasonic is working very well for us. We have got hundreds of thousands in the field. They are performing very, very well. The customers like them and I think our first mover in the ultrasonic space has not only gained this market share but it's going to continue to do so in the future.

Okay great. And maybe if we move over to oil and gas, just how much were those sort of year-over-year headwinds and I guess what you are seeing into April here that it sounds like you are little more confident in the outlook there?

Yes and I am not going into the percentage increases in each product line. I’ll just say that the oil and gas for the first quarter of this year over the first quarter of last year, those products were up and it was a low single-digit type increased and low double-digit type increased. I’m sorry, low-double-digits type increase. And thus far, I think we’re still seeing the order input coming in, so I think we’re starting -- I feel like we’re starting to finally see this long awaited recovery in oil and gas. Oil prices are not where they once were, but they're a little bit better than they have bottomed out and I think a lot of the producers are getting back into action.

Okay, that’s fair. And just lastly on the M&A pipeline, I think you talked about being in talk with a few distributors last quarter just any update there? Thanks guys.

Yes. And obviously you guys have gotten me in a talkative mood today, so this is really good for you. But I’m getting a lot of it's already looks around the table here. So on the M&A side.

Ticking it doesn’t help.

Right, on the M&A side, we do have a couple distributors that we are talking too, that we are trying to bring those home, and we’ll pretty excited about that. I think there is a good opportunity that we might be able to close a couple of those this year. And we are also continuing to look at both small flow instrumentation acquisition that we can do of different metering technologies or different niches within those technologies. And also of this technology acquisitions that we’re always looking for, that will give us some competitive average in the marketplace. So we are working on all of those.

Thank you. And our next question is from the line of Ryan Connors with Boenning & Scattergood. Your line is now open.

So I thought I'd take advantage of your loquacious mood to kind of a get your take on a couple of bigger picture issues as it relates to the competitive environment. First off you know…

Now, I’m not going to give you, yes/no, answers you know.

Right. So you've talked to earlier about some of the -- there is a street product line so forth, but if we look at bigger picture of innovation. Couple of years ago, you talk a lot about your technology double leap where you left you leapt have ahead of the curve in terms of technology. And now you’re talking about other folks kind of playing catch-up introducing cellular and so forth, and also if you look at some of the talk and some of the big competitors, it seems like R&D budgets are sort of going to go higher industry-wide. So, what’s your strategic view of how you’re managing R&D spend and just strategically thinking about innovation? How do you make the next technology double leap or can’t it be done again?

Yes, next question. No. Ryan, first off, I think you've painted a good picture there that we did get a technology leadership, when we came out with ORION cellular, when we came out with E-series and it is our goal to maintain that leadership. And obviously, we had smart competitors they don’t sit around and do nothing. They have R&D budgets, they’re investing and they’re working on things and they’re not going to want to play catch-up forever, they’re going to want to try and lead ahead. The way I look at our technology in the water metering space is in three groups. I look at the meters, I look at the radios and I look at the software. And when we talk about the radios, we have the cellular radio. I believe, we are the technology leader there. I believe our competitors may try to come out with cellular. I think they’re going to struggle to match our technology because our technology was many years in the making and we bought AquaCUE five years ago, okay four years ago and AquaCUE had already been working on this technology for almost -- for over five years. So that was about a decade of development work to get that cellular radio in place. So for our competitors to jump -- try to jump ahead with and only a couple years, that’s a top one. So I am going to be very interested to see what they do come out with, what their cost structure is and what their performance on the product is. So I think -- and beside that we continue to invest because AquaCUE has, which we now call Badger Meter at Silicon Valley, it's out in Los Gatos has become our technology center. We've added engineers there and we have been able to continue to improve the product and we are coming out with the new LTE version, and I believe we are going to be able to stay ahead there. On the software, there again the people in our California subsidiary has all of the software programmers, they have done an excellent job. We believe the BEACON software is industry leading. We are always adding to it. We believe EyeOnWater is the best consumer interface that you can find in the market, but we are continually improving that free download app that the consumers use. So and I am making this point that we are in a very strong position on the radios and we are in a very strong position on the software that leads the meters. Now with the meters, we did introduce the E-series five years ago, six years ago whatever it was five or six years ago. And we haven't done a lot with it since then. We have migrated to the other sizes, we have made some improvements. We have been able to reduce cost on it, but we are looking at the development and the introduction of the next version of E-series whether we do that with partners or with ourselves or how we do that is all being examined. But we are working on that and we are planning to introduce new versions that we believe will keep us ahead on the technology curve and so that’s our focus.

Got it. Now separate kind of dynamic of the competitor situation Rich, you've traditionally been a player largely North America. My understanding is that it's always been that because you specialized a positive displacement which wasn’t used elsewhere, that was -- that your sort of maybe not walled off, but it made international more difficult market. Now, I know you make some in-roads some in the Middle East, but a lot of talk lately has been that the big projects pipeline on some of these very large water deals will be outside the North America. So what's your view on -- is there a vision to maybe take Badger more aggressively in some of those international markets? Or do you think you will remain largely North America company with notwithstanding the Middle East penetration?

I think you've portrayed this correctly. In the world of mechanical meters, there was a technology barrier to entry for the foreign companies into the U.S. and there was a technology barrier of entry for us to leave North America. Once, we move over to electronic metering that barrier went down and so now you see companies like Kamstrup in Germany trying to sell electronic meters here in the U.S. You see Badger Meter pursuing electronic meters in the Middle East and there are other opportunities for us that we are looking at. However, you have to realize that technology was one of three areas to entry that existed. The other two barriers to entry I would say were brand and channels. Yes, these companies can come over here, but they are an unknown brand in our market. And for us to go over there, we are an unknown brand in there market. And as I always say, you and I could develop a new cola in our basement tonight, but are we really going to take on Coke and Pepsi tomorrow. It’s very challenging to be a new brand when all of the other companies are over 100 years old in the market. On the channels the problem you have is, channels are little easier in Europe, the Middle East. France has four water utilities. The Middle East each of the emirates has a water utility. And so they are large accounts that you can try to sell into. You come to the United States, we have 52,000 water utilities. That make that’s a very big challenge from a channel point of view. Are you really going to just start knocking on doors and believe you’re going to make in-roads into 52,000 water utilities against companies that have been in the market and doing this for 100 years? So, I believe we still have a barrier entry for the companies coming here and trying to address the channels. The other part of your question is, okay, as there are large cities around the world that are now open to electronic metering, will Badger Meter be a play there? Yes, we want to, we will attempt to. We open an office in the Middle East. We have people there. We’ve recently opened an office in Poland. So, we are selecting certain areas where we believe this opportunity and we’re going to be going after then.

[Operator Instructions] And our next question is from the line of Tate Sullivan with Sidot. Please go ahead.

Thanks for taking my follow-up. And I’m just referring on back to some of your previous comments until your last slide that I can slide deck on comp converting to connectivity been about 56% this year according to IHS. Out of the connectivity meters, I mean, there is most of it radio currently in terms of the guys in a truck driving by the meters and getting the signal by radio?

Most of what's in the ground now because on average, it’s seven to eight years old, is still drive by, okay. More, in recent years more AMI and obviously more cellular have been sold.

I mean we’ve been selling drive by for over two decades. We’ve only been selling fixed networks for about the last eight years or so and cellular just recently. So clearly, the bulk of what’s in the ground is dry by. And also I don’t want to miss the fact that over 40% of the meters in America, still read by some of these walking door-to-door. You don’t see that the electric, because the electric utilities were much faster to adapt some sort of technology, but still the water utilities are very conservative is lower to change, the sales cycle is very long with those.

Particularly in North America, the other thing is when we talk about solid-state meter, the electronic meters. There are 15% to 20% of sales right now, so you still have the natural barriers to entry were 80% plus our sales still mechanical meter. So that there others are still going to be around for one.

About longer term, I mean getting away from quarterly consideration. I mean where do you see the connectivity going for cellular as a percent of the totaling 10-15 years?

Well, IHS had some projections. Yes, IHS had some projection in their report. They were looking at over the next five years pretty strong double digit growth among the cellular compared to lower single digit growth among the mechanical.

And our next question is a follow-up from Richard Eastman with Robert W. Baird. Your line is now open.

It's probably a key to cutting off the call when I get back in the queue. But just a quick question Rick.

I cannot believe that I didn’t answer every possible question you had, which had a long rambling explanation I gave you, but go ahead.

I feel I let you go run for another cup of coffee. Just on this SMEGA expense, I just wanted to be clarify maybe Rick had made the comment a couple of things, the SMEGA was down a $1 million year-over-year, and I think you also suggested that absorbed a write-off, a tech write-off, so…

150,000, Rich.

So, the operating expense was actually about a 1.5 million?

Yes, correct.

And could you just maybe kind of talk to where the staffing reductions or which business or what's kind of trigger that?

We had an early retirement program last year in…

Okay.

In [Ellen], Tulsa, I am giving an idea…

In our flow instrumentation.

Our flow instrumentation side of the business.

Yes.

It wasn’t that anybody was terminated but obviously when those people retire, we simply didn’t replace them, okay.

Okay, I understand.

And we redefined incentive plans and done a number of other things to help reduce the overall compensation cost.

Okay I understand. And that was all done at yearend, so now this is the carry forward savings?

Correct.

And ladies and gentlemen, this concludes our Q&A for today. I’ll like to turn the call to our CEO, Rich Meeusen for final remarks.

So, they all telling me I should be very short in my -- very brief in my final remarks because they are really worried about how talkative I am today. But all I’ll say is, we were very pleased with this quarter. It was a strong quarter and as we look forward to the rest of the year, we are pretty optimistic about what we see. I think we are well positioned in a strong market and we have great opportunities going forward. So, I really appreciate your listening today and being with us, and I want to thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. And you may all disconnect. Have a wonderful day.