Kaiser Aluminum Corporation (KALU) Q2 2023 Earnings Report, Transcript and Summary

Greetings and welcome to the Kaiser Aluminum Corporation Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, Kim Orlando with ADDO Investor Relations. Thank you, Kim. You may begin.

Thank you. Good afternoon, everyone. And welcome to Kaiser Aluminum second quarter 2023 earnings conference call. If you have not seen a copy of our earnings release, please visit the Investor Relations page on our website at kaiseraluminum.com. We have also posted a PDF version of the slide presentation for this call. Joining me on the call today are President and Chief Executive Officer, Keith Harvey, and Executive Vice President and Chief Financial Officer, Neal West. Before we begin, I'd like to refer you to the first three slides of our presentation and remind you that the statements made by management and the information contained in this presentation that constitute forward-looking statements are based on management's current expectations. For a summary of specific risk factors that could cause results to differ materially from the forward-looking statements, please refer to the company's earnings release and reports filed with the Securities and Exchange Commission, including the company's annual report on Form 10-K for the full year ended December 31, 2022. The company undertakes no duty to update any forward-looking statements to conform the statement to actual results or changes in the company's expectations. In addition, we have included non-GAAP financial information in our discussion. Reconciliations to the most comparable GAAP financial measures are included in the earnings release and in the appendix of the presentation. Reconciliations of certain forward-looking non-GAAP financial measures to comparable GAAP financial measures are not provided because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted or provided without unreasonable efforts. Any reference to EBITDA in our discussion today means adjusted EBITDA, which excludes non-run rate items for which we have provided reconciliations in the appendix. At the conclusion of the company's presentation, we will open the call for questions. I would now like to turn the call over to Keith Harvey. Keith?

Thanks, Kim. And thank you all for joining us for a review of our second quarter 2023 results. Turning to slide 6. Our relentless focus on operational execution, along with the stabilization of our business as demand in key markets continues to rebound, fueled stronger-than-expected second quarter results. Our second quarter adjusted EBITDA increased 36% over the first quarter of 2023 to approximately $64 million due mainly to our strong focus on reducing costs across our platform through lower spending, favorable energy costs in the quarter, improved efficiencies across all plants, and rising aerospace demand. As a result, our EBITDA margin improved 410 basis points sequentially over the first quarter 2023 results to 16.8%. Now turning to slide 7. The demand environment for the second quarter was mixed, but was overall within our expectations. Aerospace demand continued its strong steady recovery towards pre-pandemic levels, with both shipments and conversion revenue exceeding our outlook. As a reminder, we benefited from a strong mix of products and the accompanying pricing during the first quarter. Our momentum continued into the second quarter, facilitated by our ability to flex our available capacity due to softening general engineering demand to satisfy strengthening aerospace demand. We remain well positioned to service the aerospace market with strong customer relationships and multi-year pricing in place for the majority of our associated products. In packaging, we experienced ongoing destocking with beverage customers during the second quarter, as higher costs continued to impact consumer purchasing behavior ahead of the highly anticipated summer promotional activity. That said, shipments in the quarter exceeded our expectations as our operations continued to stabilize with conversion revenues slightly down due to a mix shift in products shipped. Turning to slide 8. In general engineering, the slowdown in semiconductor plate and other general engineering long products persisted into the second quarter with shipments and conversion revenue flat with first quarter as distributor inventories began to normalize and align with current demand. Importantly, pricing has remained elevated by historical standards, reflecting the recognition our customers place on the value we provide them for our unique Kaiser Select products and superior customer service standards. And finally, automotive demand continues its slow, steady upward trajectory as the industry recovers from various supply chain related challenges. Shipments were relatively flat versus the prior quarter, in line with our expectations, with conversion revenue down slightly as pricing reflected a slightly lower price mix shipped in the quarter. Turning to slide 9. I'd now like to turn to a brief update on our packaging business at the Warrick facility as our operations continue to stabilize and recover from the various challenges we faced in 2022. Importantly, we successfully negotiated a new mutually beneficial four-year labor agreement, effective May 15, with approximately 850 United Steelworkers represented employees at Warrick. We believe the contributions from our Warrick employees will be instrumental in the achievement of our longer term growth objectives for the packaging business as we continue to execute on our strategic plan. Our roll coat capacity expansion project, which is expected to convert roughly 25% of our current output to higher margin coated products, remains on track to be fully operational by mid to late 2024. As we've stated previously, we expect to enhance our margins significantly as this new investment comes online, and we have already secured substantial new commitments in anticipation of its qualification and production commencement. Additionally, increasing our use of recycled materials as a percentage of raw materials at Warrick remains a longer term focus as we seek to increase the inherent sustainability of our packaging products. We are continuing to evaluate methods to enhance the recyclable content of our products, and are very pleased with our progress on this front so far. As evidenced by our efforts in 2023, our long term view on our packaging business remains optimistic, given our ability to effectively compete in a niche market, guided by our focus on coated packaging products, the significant investments we're making in the business, our inventory normalization strategy, and the continued secular shift to aluminum as a substrate of choice in the North American beverage and food industry. In summary, the conclusion of the second quarter marked a strong first half and 2023 as we work diligently to stabilize our operations, following the significant challenges we navigated last year. I'd like to commend our strong team at Kaiser for their unwavering dedication to executing our strategic plan and working safely. Underlying demand and pricing have been holding up well aside from short term destocking trends, continued macroeconomic uncertainty and the current inflationary environment, and looming recessionary concerns. Nevertheless, our niche position in the markets we serve, coupled with strong secular growth prospects, helps ensure we are well positioned to grow longer term. We remain very bullish on the aero and high strength market, in particular, with the recovery outpacing our initial expectations and remain intently focused on cost reduction efforts, the efficiency improvements and continued commercial actions to improve our margins for the company as a whole. I'll now turn the call over to Neal for a more detailed analysis on the quarter. Neal?

Thank you, Keith. Good morning, everyone. I'll begin on slide 11 with an overview of conversion revenue. Conversion revenue for the second quarter 2023 was $379 million, an increase of $27 million or 8% compared to the prior-year period. Looking at each of our end markets in detail, aero and high strength conversion revenue totaled $131 million in the second quarter 2023, reflecting a 48% improvement on the 32% increase in shipments over the prior-year quarter and a 7% improvement on a 10% increased shipments over the first quarter of 2023. The improvement in conversion revenue over both periods is directly correlated to the strengthening demand we've been experiencing, most notably in the commercial aerospace on higher pricing levels with our shipments exceeding our expectations. Packaging conversion revenue was $134 million in the second quarter, down 8% year-over-year, due to a 9% reduction in shipments resulting predominantly from destocking in the beverage can markets. On a sequential basis, second quarter conversion revenue was flat on a 6% increase in shipments over the first quarter of 2023. While shipments exceeded our expectations for the quarter, the mix was more weighted towards lower revenue body stock versus coated products. General engineering conversion revenue for the second quarter was $81 million, down 9% year-over-year due to a 30% reduction in shipments, which was partially offset by improved pricing. While the year-over-year results were impacted by destocking at the service centers for our plate and rod and bar products in the first half of 2023, pricing continues to remain at a healthy level. Sequentially, our second quarter 2023 conversion revenue and shipments were relatively on par with the first quarter's results. Automotive conversion revenue was $30 million, up 23% over the second quarter of 2022, driven by a 16% increase in shipments coupled with higher pricing. Second quarter 2023 conversion revenue declined 3% on relatively flat shipments over first quarter of 2023 due primarily to product mix. Additional details on conversion revenue and shipments by end market applications can be found in the appendix of this presentation. Now moving to slide 12. Reported operating income for the second quarter 2023 was $36 million. After adjusting for corporate restructuring costs and other non-run rate items of $1 million, adjusted operating income was $37 million, up $33 million year-over-year and up $17 million sequentially. Our effective tax rate for the second quarter 2023 was 14% compared to 23% in the prior-year period due to discrete items taken during the quarter. For the full year 2023, and over the long term, we continue to expect our effective tax rate before discrete items to be in the low to mid 20% range under current tax regulations. We anticipate that our 2023 cash taxes or foreign and state taxes will be $2 million to $3 million, with no US federal cash tax until we consume our federal NOLS, which at year-end 2022 were $161 million. Reported net income for the second quarter of 2023 was $18 million or $1.14 per diluted share compared to a net loss of $14 million or a loss of $0.87 per diluted share in the prior-year quarter. After adjusting for a total of $3 million of pre-tax non-run rate items, including the aforementioned operating non-run rate items, adjusted net income for the second quarter 2023 was $20 million or $1.26 per adjusted diluted share compared to an adjusted net loss of $8 million or a loss of $0.51 per adjusted diluted share in the prior-year quarter. Now turning to slide 13, adjusted EBITDA for the second quarter 2023 was $64 million, up approximately $33 million from the prior-year quarter and up $17 million sequentially. Adjusted EBITDA as a percentage of conversion revenue was 16.8% in the second quarter 2023, an improvement approximately 790 basis points from the second quarter of 2022 and 410 basis points over the first quarter of 2023. On a year-over-year basis, the improvements in adjusted EBITDA was primarily the results of our stabilizing operations following the significant supply chain issues we experienced at our Warrick rolling mill last year, in addition to improved pricing to capture the higher cost of alloys and other inflationary costs, with a higher mix of aerospace products shipments. As a reminder, our second quarter 2022 results included incremental costs of approximately $17 million resulting from two main issues – the declaration of force majeure by our primary magnesium supplier at the time, US Magnesium, and the resulting failure to provide us with contracted volumes; and two, the performance of the Alcoa Warrick smelter. Each required us replace shortfalls in contracted volumes with higher cost magnesium and metal units. In addition to reducing a large portion of these lingering supply chain issues, our second quarter 2023 adjusted EBITDA benefited both year-over-year and quarter-over-quarter from a higher mix of aerospace shipments, improved operating efficiencies and lower energy, freight and major maintenance costs, which were partially offset by higher employee-related costs. Now turning to a discussion on our balance sheet and cash flow. As of June 30, 2023, total cash of approximately $20 million and approximately $538 million of borrowing availability on our revolving credit facility provided a total liquidity of approximately $558 million. There were $15 million of outstanding borrowings under our revolving credit facility as of June 30th as we continue to invest in our growth capital projects, most notably the roll coat capacity improvement project in packaging, as well as to meet our working capital requirements. We believe our total liquidity position remains strong, and we continue to work towards our previously discussed inventory overhang, primarily resulting from the 2022 supply chain issues at our Warrick operation. We expect our efforts will serve as a source of cash in the second half of 2023. As reminder, our senior notes interest costs are fixed at $48 million annually, and we have no debt maturing until 2028. As of June 30, 2023, our net debt leverage ratio improved to 6.2 times from 7.8 times at the end of the prior quarter. We continue to target a leverage ratio of 2 to 2.5 times. In regard to our capital allocation strategy, we remain focused on supporting Kaiser's growth in 2023, while continuing to return cash to our stockholders through quarterly cash dividends. On July 13, we announced that our Board of Directors declared a quarterly dividend of $0.77 per common share, reinforcing the confidence our board and management have in our long term strategy for profitable growth and increasing stockholder value. For the full year of 2023, we continue to expect our capital expenditures to be in the range of $170 million to $190 million, with the majority dedicated to growth activities. Now before I turn the call back over to Keith, I'd like to formally welcome and introduce Kaiser's new Vice President and Chief Accounting Officer, Vijai Narayan, who assumed the role effective June 7. Vijai has previously served as our VP of Finance since joining the company in November 2022, and has been an integral part of our corporate accounting team and headquarters transition. We thank our former CAO, Jennifer Huey, for her nine years of dedicated service to the company and for assisting Vijai through this orderly transition. And now, I'll turn the call back over to Keith to discuss our outlook. Keith?

Thanks, Neal. Now I'll turn to our outlook for the third quarter of 2023. Beginning with aerospace on slide 15, the strong momentum we've been experiencing in aero and high strength shipments is expected to continue into the third quarter. As a result, we now believe the recovery in commercial aerospace should approach pre-pandemic levels by the end of this year, an improvement over our previous timeline given ongoing demand strength in our space. Build rate increases for single aisle and widebody jets are being planned for this year as supply chains continue to improve. Airline passenger miles continued to increase and declarations by the air framers support a stronger 2023. As such, we expect that both our third quarter shipments and conversion revenue will sequentially improve by approximately 2% to 4% versus a very strong second quarter 2023. In addition, underlying demand for business jet, defense and space-related sales is anticipated to remain strong. As I highlighted earlier, our unique ability to flex available capacity out of our Trentwood rolling mill to accommodate increasing market demand enables us to operate from a position of strength well into the future with further potential upside should market forces dictate the need for incremental investments in our capacity. Turning to packaging now on slide 16. Looking ahead into the third quarter of 2023, we expect third quarter shipments to improve 1% to 2% compared to the second quarter 2023 as we now anticipate destocking will continue in the third quarter. Conversion revenue is expected to be flat since we expect a weaker-than-normal coated mix as customers adjust volume in light of continued destocking, but look to achieve contractual volume minimums. We do not anticipate these lower levels of demand carrying into 2024, but we'll continue to assess the situation. Longer term, we believe our refined strategy, coupled with our strong customer relationships with multi-year contracts and targeted growth investment in the new roll coat line, will support margin improvement and continued long term growth. Now turning to general engineering on slide 17. We expect shipments and conversion revenue for general engineering products in the third quarter to decline from the second quarter on continued destocking activity, as well as the associated seasonal decline typical of the third quarter. Shipments are expected to decline approximately 7% to 10%, with conversion revenue down approximately 10% to 15%, given reduced demand for semiconductor in the current environment that has perpetuated the softening in our plate and rod and bar products as distributors continued to align their inventories with current sales levels and import plate availability continues to increase. Importantly, the available capacity at our Trentwood operation where our general engineering products are manufactured has opened up additional capacity to service the resurgence in aerospace activity. Short term hurdles aside, our longer term outlook for the general engineering business remains solid, given the reshoring of certain manufacturing industries back to North America. We believe our prominent position in the market due to our broad product offering, including our highly differentiated Kaiser Select products and strong long term customer relationships, ensures we are well positioned to service this market once a recovery is underway. Next, I'll turn to automotive on slide 18. Higher build rates for trucks and light vehicles in North America has fueled the modest recovery in the automotive market so far this year. That being said, we expect shipments and conversion revenue to decline by approximately 3% to 5% due to typical seasonal trends. Currently, we expect automotive to continue to recover into 2024. Now turning to slide 19. In summary, we're pleased with our performance and the strides we have made in 2023 to execute in the current demand environment. As a reminder, in an effort to minimize the impact of 2022 supply disruptions on our packaging customers, we purchased higher cost metal units in the second half of last year. These purchases, along with reduced sales in the second half of 2022, led to a higher-than-anticipated metal inventory imbalance at the end of 2022 that we are continuing to work through. Accordingly, we expect this inventory imbalance and the resulting higher costs associated with those purchases to normalize by the end of this year. Additionally, we remain highly focused on managing elements within our control, including pursuing cost reductions, improving manufacturing efficiencies as our operations stabilize, and continuing commercial actions to improve our margins. That said, we anticipate higher major maintenance and other costs to continue in the third quarter, along with continued destocking trends in general engineering and packaging. As a result, we are anticipating downward pressure on our adjusted EBITDA in the second half of 2023 and expect our third quarter 2023 EBITDA and margins to be in line with our first quarter 2023 results. Importantly, our strong market position as a key supplier in diverse end markets, multi-year contracts with key strategic partners, strong liquidity position and the variable nature of our cost structure positions us well to execute our model throughout periods of market cyclicality and/or recessionary periods. From a capital allocation standpoint, we are committed to managing our leverage ratios and continuing to deliver solid returns for the benefit of all stakeholders. Now turning to slide 21 and a summary of today's remarks. We look forward to continuing to yield positive results from focused execution against our strategic plan to reinvigorate profitable growth in 2023. Beyond this year, our long term strategy for sustainable and increasingly profitable growth remains intact. We continue to believe that our business is capable of achieving conversion revenue of approximately $2 billion and an EBITDA margin on conversion revenue in the mid to high 20% range, following the key investments we're making now and those we have planned in the near future based on solid macroeconomic conditions. With that, I will now open the call to any questions you may have. Operator?

[Operator Instructions]. Our first question is from Timna Tanners with Wolfe Research.

I wanted to explore a little bit more some of the end market commentary, if we could. On the GE segment, general engineering, how much more can you shift to aerospace? Just how fluid is that? And can you talk a little bit more about the imports and what's going on with that?

The outlook we have for the end markets is that, as you stated in the comments, that we still see some destocking, especially in plate to continue into the third quarter and seasonal slowness in the fourth quarter, most likely. And all of that is basically we have a large amount of that that we're able to shift over into aerospace plate. So, we have considerable capacity. We don't put out numbers, but it's a considerable opportunity to increase additional aerospace and we fully expect that to occur in the second half. With regard to the imports, the rise on the imports, we are definitely seeing more imports, especially on the plate side of the business. We are expecting further price compression from those imports as they have come in with very aggressive pricing. However, we are in some pretty strong markets where the Kaiser Select products are preferred by our customers. So while we're not ignoring the compression, we believe we're going to be able to sustain much better than what they're offering. So, we anticipate that that's coming on due to some slowness in Europe markets and perhaps others. They're seeing some Chinese imports it pickups. But I think we're pretty well positioned with our distributor supply base to really manage all that throughput and improve looking into 2024 when semiconductor is expected to return in earnest.

Regarding the packaging and the automotive end markets, in packaging, the last quarter you'd mentioned some seasonal strength usually into the summer, but we haven't really seen much of it and you're not guiding to much of it. So that's still destocking? I know another competitor talks about maybe an end of destocking. Not sure if that's the same market. So that's the packaging question. Any impact from the potential strike in automotive that would affect you or any thoughts on that would be great.

On the automotive side, as we've led here, slow recovery, it's usually dependent upon which platform you're on. But of course, if there is a general strike, it looks like it could be broad based. So I'm sure we would be impacted as with others. But we're hearing nothing from our end customers at this point, Timna, but we're watching. With regard to packaging, yes, as we expected from the last quarter, Q3 is generally the strongest period of time, but as we've stated in our in our comments, we didn't see that manifest itself. So, that destocking is absolutely continuing. We think it's going to continue through the balance of the year, quite frankly. There will be reasoning to why we have a little bit of improvement in shipments. As we've stated in the past, there are minimums and supply commitments that we have with customers that we would expect to hold up through the fourth quarter. So while we continue to expect destocking will continue, we actually think that our shipments should hold firm, as we've alluded to in our comments.

Our next question is from Josh Sullivan with The Benchmark Company.

On aerospace, at what point does the growth of the large commercial aerospace side overtake some of the strength you've seen in defense, space and business jet? And then in those non-large commercial aerospace verticals, is there any reason to think that those would cycle off?

Not at this time. Everything is headed up. We're continuing to have a good conversation with our end customers on all products that we provide. And we're looking for continued growth in this area. The one thing for us at Kaiser will be when does the general engineering demand come back. Couple that with the strong aerospace demand which will lead us to make a determination if and when we launch into our phase 7 investment. And we have that on the shelf. We are talking with customers about timing. But meanwhile, in the interim, we expect that continued strong growth to be recognized here due to that softness in general engineering. But for right now, if you look at everything, including space, business jet, commercial large jet, it's all up. And the backlogs are continuing to expand. We're seeing build rate increases from all customers come across the transom here. So we're just preparing for full speed growth and how fast we can manage that growth. Part of that might not be in our control. They have other supply chain issues. They continue to really challenge – are challenged with. So, it's not all on us. But right now, we're gearing all of our assets to look at formidable growth coming up in the next several years.

I guess on the general engineering side, you made some comments about the semiconductor market. Are the domestic investments in New York State and elsewhere, they're pretty sizable, is that going to be a driver for your general engineering market?

Oh, absolutely. We've had ongoing discussions with a number of our end customers and our service center base on the long-term outlook for this business. Quite frankly – and these are all to be determined, but they're talking a magnitude of double the requirements that they've had in the previous couple of years. So we're seeing this as a very strong outlet and opportunity for us going forward. And again, we have a preferred product in that category, so we're going to have to make a determination here how we service both a strong and – a stronger emerging general industrial, especially the semiconductor side, as well as the growing aerospace market. Good problems to have. And we think full recovery in semiconductor could be second half of next year or into 2025. But our customers have convinced us that that's going to be a very strong market for us, and we need to prepare for continued growth beyond what we experienced over the last several quarters.

Just on sort of some of the incremental costs here in the second half, what's structural, what's transitory? How should we think of those?

There's really three major things that are impacting the third quarter for us. One, we do expect higher cost in the quarter. Those are going to be around major maintenance in metal and other costs that we have planned in the quarter that we know they're coming at us. We've also called out the continued destocking. So, that's going to be down for us as we go forward. And then, it's the typical seasonality. So, how much is transit? How much is embedded there? Look, I think we're over the hump on all these challenges, with some exceptions. We talked about the metal overhang that's continuing on to the end of the year. And that's being pushed out due to the destocking that's taking place in packaging. So it's just taking us longer to pass through that metal. But I fully believe that we're starting – unless there's some large macroeconomic issue, and we're still mindful of a potential recession out there, we're always prepared to manage through that. But as the markets continued with the strength and the rebuild, destocking continues to get over with, we think it's really strong outlook for 2024. And we'll get more into that when we talk in February for the year-end results. But I think we're starting to get into some typical seasonality type things. We feel our businesses have begun to stabilize. We still have more work to do. But we're starting to see some of this more calmness and normal operating start to impact us. And if our markets continue to present themselves as we've laid out here, we think it's some pretty clear selling ahead. So, again, barring any recessionary issues that may come our way. So, I think third quarter is pretty much, in my opinion, it's more of a normal type expectation. And as we get in second half, it's generally slightly slower than the first half typically. And then 2024, right now, we'll get more into that, but it feels like things are improving.

Maybe just one last one. Can you make any comments on the secondary recycling market in packaging? How has that behaved during this destocking period as you look to add more recyclable material? Has it opened up any opportunities?

Josh, on that front, we've seen a lot of in the marketplace, a lot in the aluminum space, there's been a lot of announcements on recycling facilities being launched, and all those. And then you look at geography. You look at those things where some of these secondary players are. We think those may present some opportunities for us. Certainly, they're going to be playing in our playbook. The industry, and Kaiser is not indifferent from the industry, we're trying to move away from prime products and pure metal, high metal purity type products. We're trying to move to secondary. Recyclability is the key. That's the way we're heading. We're driving all of our business, but especially the packaging business. Our end customers are expecting us to do that. It's in alignment with what we went in to do on sustainability. And from a financial perspective, it's in alignment with where we want to go. So you're going to see more and more play on the recycle centers. And I think secondary will also have a major play in all of this that we're all trying to achieve.

Our next question is from Bill Peterson with J.P. Morgan.

I wanted to talk about the new roll coat expansion. I want to see, just confirm it's on time for mid to late 2024. I think you've spoken in the past about the potential for inflationary risk for the cost outlook of $150 million. I guess can you give us any additional color on potential overages versus initial investment and where the project stands?

The project is still on time. We're still looking for the second half for the qualification to begin and we expect to have those in place by the end of 2024. That's on there. When we alluded to the rising cost of that above, I don't have a number to present to you, but certainly a higher inflationary cost, as well as some design changes that we implemented as we learned more about some of our customer demands. So, we've made some changes to what the original charter for that business was. We'll give a little more detail to that as those become more certain to us as to what they are, and most likely, we'll do that in the February timeframe. I might also add that we intend to have an investor conference sometime early next year, which we intend to go into the packaging, the new roll coat, and all those opportunities and things there. So we'll have more detail for you at that time.

I guess on packaging, you noted that, obviously, destocking is especially pronounced in the beverage side and the mix reflects less coated, while food stocks remain stable. I guess, can you describe what's driving that demand dynamic? And how should we think about that over the next few quarters, the mix within the packaging segment?

What we've got from a Kaiser situation, Bill, is that we have continued to see destocking, as we stated. But we also have, with a number of – not the majority of – our customers, we have commitments, volume commitments that we're trying to navigate with them. And as we try to navigate through some of that, we've had to vary some of our typical product mix in order to achieve some of the volume commitments that we've been at. We don't expect those to be, any mix shift to be permanently in place. We fully expect coated products to continue to grow inside our company long term, especially as the roll coat 4 comes along. So roll coat will be the predominant mix of what we produce out of the Warrick facility. And what you're seeing in the third quarter and perhaps in our last quarter, you're just seeing us maneuvering through some of the volume commitments by the customers.

There are no further questions at this time. I'd like to hand the floor back over to Keith Harvey for closing comments.

Okay. Well, thank you for being with us today. And I look forward to updating you on our third quarter 2023 results in October. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.