Kimball Electronics, Inc. (KE) Q4 2022 Earnings Report, Transcript and Summary

Good morning. And ladies and gentlemen, and welcome to the Kimball Electronics Fourth Quarter Fiscal 2022 Earnings Conference Call. My name is Darius, and I will be the facilitator for today’s call. All lines have been placed in a listening only mode to prevent any background noise. After the completion of the prepared remarks from Kimball Electronics leadership team, there will be a question-and-answer period. [Operator Instructions] Today’s call August 5, 2022 is being recorded. A replay of the call will be available on the Investor Relations page of the Kimball Electronics website. At this time, I would now like to turn the call over to Andy Regrut, Vice President, Investor Relations. Mr. Regrut, you may begin.

Thank you, Darius, and good morning everyone. Welcome to our fourth quarter conference call. With me here today is Don Charron, our Chairman and CEO; and Jana Croom, Chief Financial Officer. We issued a press release yesterday afternoon with our results for the fourth quarter and full fiscal year ended June 30, 2022. To accompany today’s call, a presentation has been posted to the Investor Relations page on our company website. Before we get started, I’d like to remind you that we will be making forward-looking statements that involve risk and uncertainty and are subject to our safe harbor provisions as stated in our press release and SEC filings and that actual results can differ materially from the forward-looking statements. All commentary today is focused on adjusted non-GAAP results. Reconciliations of GAAP to non-GAAP amounts are available in our press release. This morning, Don will start the call with a few opening comments, Jana will review the financial results for the quarter and guidance for fiscal 2023, and Don will complete our prepared remarks before taking your questions. I’ll now turn the call over to Don.

Thanks, Andy. And good morning everyone. I’m very pleased with Q4 and the full fiscal year 2022 results. For the second consecutive quarter, net sales reached an all-time high for the company and operating income margin exceeded 5%. These results were in line with the guidance we provided in May and required highest levels of partnership across the value chain including our global organization; our customers; the OEMs; and our suppliers. In total, fiscal 2022 was very much the bifurcated year we expected with a strong second half driving annual revenue to record levels. The world continues to experience unprecedented events and circumstances and the lockdowns associated with China’s zero tolerance policy on COVID-19 have been a reminder of how unpredictable the current environment can be. It seems we are adjusting to a new normal way of living working and interacting with one another. Our company is embracing this ever changing landscape with commitment and results engaging in customer collaboration at levels even higher than our award winning norm. These strong customer partnerships have produced several business wins along with expansions of our existing programs which have a poise for growth into the future. In fact, our backlog of open orders now exceeds $1 billion. As a result, our guidance reflects the strength continuing with double-digit sales increases and operating margin improvement in fiscal 2023. We will experience a quarterly step-up in performance over the course of the year. Due to new and existing programs ramping up volumes, steadily improving leverage of our completed facility expansions and the continued ease of global supply chain constraints. Turning back to the results for fiscal 2022. Net sales in Q4 were $373 million, a 13% increase compared to the fourth quarter last year. This results could have been better. As foreign exchange rates had relatively large impact on net sales in the period compared to Q4 of last year, a 3% unfavorable impact. Similar to Q3, the topline growth in the fourth quarter was driven by all four of the vertical markets we serve. Net sales in automotive, our largest business were a $152 million. This represents a 7% increase compared to Q4 last year and 41% of total company sales in the quarter. It also completes a record year for the automotive vertical market with total annual sales topping $580 million which is up 6% from last year. Our success in this vertical market is a result of supporting programs including the ramp-up of new product introduction; in electronic power steering; automated driver assistance; passenger safety systems; vehicle mobility management; and electronic breaking; including redundant breaking systems and self-driving set up for both EVs that is Electric Vehicles and those powered by internal combustion engine. Net sales in medical were a $114 million, a 34% increase compared to Q4 last year and 30% of total company sale. This was our best performing business in the quarter and capped off a year where the medical industry continues to recover and normalize from the pandemic. In total, our sales in the medical vertical market grew 2% in fiscal year 2022 to $392 million with applications supporting sleep therapy and respiratory care; image guided therapy; in vitro diagnostics; drug delivery systems; AEDs; and patient monitoring equipment. Industrial had a best ever quarter in Q4 with sales totaling $88 million, a 2% increase over the fourth quarter last year. This record performance was driven by products for climate control. It also completes a year where sales in the industrial vertical exceeded $300 million or 5% of our last year. And finally, net sales and public safety were $14 million, a 33% increase compared to the fourth quarter of last year with the growth driven by thermal imaging, first responder electronics, and the production of security access products. This vertical market finished fiscal year 2022 with $50 million in revenue, a 4% increase year-over-year. So, in summary, another excellent quarter of record setting topline growth and operating margin in excess of 5%. As I noted a moment ago, net sales were adversely effected by the strengthening of the U.S. dollar. Foreign currency also unfavorably impacted earnings in the quarter. We estimate $0.12 per deluded share in non-operating expense in our provision for income taxes. I will now turn the call over to Jana to provide more insight on this impact while reviewing he financial results for the fourth quarter. She will also detail our guidance for fiscal year 2023. Jana?

Thank you. And good morning everyone. As Don highlighted, total net sales on our fourth quarter were $373 million, an all-time quarterly high for our company. For what he didn’t mention was that this level of sales was 1.5% higher than the previous record which was last quarter, so a very encouraging time. The growth margin rates in Q4 was 9.2%, a 50 basis point decrease compared to the same period last year was still a very strong result of facing several headwinds in the quarter with low absorption in our facility in China which was most directly impacted by the lockdown from the zero tolerance policy on COVID-19, the ramp-up of our facility expansion in Mexico as well as general inflation. Adjusted selling and administrative expenses in the first fourth quarter was $14.8 million compared to $13.8 million in Q4 last year with the increase in absolute dollars resulting from higher salary and related payroll cost and stock-based compensation. When measured as a percent of sales however adjusted selling and administrative expenses were 4%, a 20 basis point improvement compared to Q4 last year, was well a bonus cost in fiscal ‘22 primarily accounting for the difference. Adjusted operating income for the fourth quarter as $19.4 million, a 5.2% of net sales which compares to last year’s Q4 adjusted results of $18 million or 5.5% of net sales. Other income and expense was expense of $5.3 million in the quarter versus income of $400,000 in Q4 of fiscal 2021, with a change resulting from higher interest expense this year due to record levels in inventory and the foreign exchange impact that Don noted. This occurred primarily due to the strengthening of the U.S. dollar compared to the Euro and China’s Yen. Effective tax rate in Q4 was approximately 35.1% compared to 17.6% in the fourth quarter last year. The increase resulted from foreign exchange re-measurement and non-deductible executive compensation expense associated with Section 162(m). Additionally, the prior year Q4 benefitted from a reversal in sale tax valuation allowance. We’re expecting effective tax rate in fiscal 2023 to be in the mid-20% range similar with our historical trends. Net income in the fourth quarter of fiscal 2022 was $9.9 million or $0.40 per deluded share compared to adjusted net income in Q4 last year, a $14.7 million or $0.58 per deluded share. With the decline predominantly driven by below the line item such as the higher other income and expense and effective tax rate I just mentioned. Turning now to the balance sheet. Cash and cash equivalence at June 30, 2022, were $49.9 million in cash flow provided by operating activities in the quarter was $1.5 million. For the full-year, we used $83 million of cash from operations. Cash conversion days in Q4 were 91 days, up from 64 days in the fourth quarter of last year. All three of these results that is cash from operations in the quarter full-year and CCD were driven by an increase in inventory which is up a $195 million from a year ago and $57 million from last quarter. We continue to have a dollar of inventory waiting on a dime, so to speak. Materials that are needed and available today are being purchased so that we can go customer orders when parts impacted by the component shortages are received. We expect inventory levels to normalize as the part shortage situation improved and the backlog of open orders has worked down. This has reflected in our guidance of a fair start fiscal 2023. Capital expenditures in the fourth quarter were $25 million, largely in support of our facilities expansion in Mexico and Poland as well as new business awards. For fiscal year 2022, CapEx totaled $75 million which was at the midpoint of our updated guidance for the year. Borrowings on our credit facilities at June 30, 2022, were a $180.6 million compared to $66 million a year ago and a $137 million at the end of Q3. Our short-term liquidity available represented cash and cash equivalence was the unused amount of our credit facility totaled a $178.6 million at June 30, 2022. During the fourth quarter, we invested $4.2 million to repurchase 225,000 shares at an average price of $18.77. This October 2015, under our board authorized share repurchased program, a total of $88.8 million has been returned to our share owners by purchasing 5.8 million shares of common stock. We have $11.2 million remaining on the repurchase program. So in summary, fiscal 2022 was a good year for our company with record results on the topline and a strong funnel of new business increasing our backlog of open orders. We executed the capital deployment strategy that included investing in future growth with expansions of multiple facility, returning cash to share owners in the form of stock repurchases and supporting our customers with strategic inventory builds to mitigate part shortages. Even though the increases adversely impacted certain financial metrics including cash flow, CCD and ROIC. We fully expect improvement in these areas as conditions normalize in the global supply chain. As Don noted, we are providing guidance for fiscal year 2023 with net sales estimated to be in the range of $1.6 billion to $1.7 billion, a 19% to 26% increase year-over-year. Operating margin is expected to be in the range of 4.6% to 5.2% and capital expenditures totaling $80 million to $100 million which includes equipment and the facility expansion in Mexico, the expansion in Poland, and capital deployment to support a healthy funnel of new product introduction and the addition of equipment with leading edge technologies and capabilities. So, with that, I’ll now turn the call back over to Don.

Thanks, Jana. Before we open the line for questions, I’d like to share a few thoughts in closing. We are very proud of our accomplishments in fiscal year 2022 and we believe the Company is ideally positioned for growth in fiscal year 2023 and the years to follow. As an EDA company, we are incented to make investments that drive shareholder value with recurrence that exceed our weighted average cost of capital by a targeted amount. I am pleased to announce that one such investment in our facility expansion in Mexico is complete with the ribbon cutting ceremony to celebrate the new footprint, plan for August 11. Similar to the construction recently completed in Thailand, this expansion was on budget and on time and doubles our capacity in Mexico. We also recently broke down on our facility expansion in Poland which will increase existing productions were footed by approximately 40%. This project is on schedule for completion roughly a year from now in early fiscal year 2024. Each of these facility expansions aligning our production capacity with our customers grow as we take aim at the $2 billion annual revenue milestone. Our strategy as a premier multi-faceted manufacturing solutions provider, focuses on application which involve high levels of complexity, quality, reliability and customer service. We try to be a supplier choice and in past year approximately 80% of our revenue came from customers we’ve done business with for over 10 years. As part of our strategic plan, we’ve identified mega trends in vertical markets which fuel our growth with our diversification objective for each vertical, automotive, medical, and industrial, represent 1/3rd of the total company. This will be achieved with higher rates of growth in medical and industrial when compared to automotive which is quite a goal considering the promising growth opportunity we have in the automotive vertical market with the electrification of vehicle. Electronic is being added on an increasing rate and advanced technologies and expanded operating systems that requires stringent production standards in compliance with industry leveraged certification, all of which aligned very well with our core competencies and manufacturing capability. In addition, over the last couple of years, consumer demand has outpaced supply, making it difficult to some to purchase a new vehicle. As a result, the average age of cars and trucks in the U.S. has now had an all-time high approximately 12.5 years. We see this as a leading indicator for the consumer demand trend to continue as purchases replaced vehicles increases. Our expertise in chassis control may also benefit as autonomous driving and overall vehicle connectivity increase in popularity and adoption. The industry mega trends in medical suggest it’s an opportunity to our growth as well, as the population continues to age and accessibility and affordability to healthcare increases. Also, the movement towards smaller device sizes with high levels of precision accuracy and connected drug delivery systems bored well for our company. Our new business development efforts have a heavy lean toward medical with significant focus in this vertical market. In addition, our manufacturing facility in Indianapolis recently MedAccred Injection Molding Accreditation. This designation identifies and verifies compliance with critical manufacturing process requirements and puts Kimball medical solution in a group of select injection molders that have been endorsed to serve the medical industry. Finally, industrial which we refer to our finance Green and claim has an excellent setup for growth. The consumer trends which are raising awareness on the consumption of natural resources with the objective of increasing conservation of water, gas, and electricity, provide a path for the applications we support. For example, OEMs of climate control systems are looking to increase efficiency in their units and the electronic controls that they design and that we manufacture can improve when and how long their products operate which optimizes energy efficiency and overall performance. We see a synergistic opportunity to combine our public safety vertical and to industrial for operating and reporting purposes going forward. In total, each of these vertical markets is critical toward achieving the double-digit topline growth in our guidance for fiscal year 2023 and the longer-term target of $2 billion in annual revenue. Also, some of you may notice that Mike Morales will not be asking any questions on our earnings call today. That is because he joined our organization as Director of Corporate Development this month, reporting directly to Jana. We are excited to have him as part of the Kimball team. And finally, at the center of our success is the Kimball family worldwide. I’d like to thank them for their dedication and support throughout fiscal year 2022 and look forward to their partnership in the upcoming year. I would now like to open the lines for questions. Darius, do we have any analyst with questions in the queue?

[Operator Instructions] The first question comes from Anja Soderstrom from Sidoti. Please go ahead.

Hi, everyone, and congratulations on another outstanding quarter, and congratulations on the new hire. I wanted to start off with asking about the pass through and a price increases, are you able to pass this through to your customers right on the components?

Yes, that’s right Anja. We have very strong working relationships with our customers. And as we have come across, for example, increases in material prices or premiums that we have to pay, or any extraordinary costs, like logistics, freight costs, etc, we are able to pass the majority of those on to our customers in the selling prices.

And does that show up in your revenue so to the extent you’re not able to add any profit on that where you want to everything normalized without having sort of maybe an even more positive effect on your margins?

It would be small Anja but yes, that would show up in our revenue. It would also show up in our margin as well to some extent that I think you use the word the frame markup on the increases that we’re passing on, that wouldn’t be the sort of normal way we would do business. The understanding we would have with our customers would be to pass through the actual cost impact. So yes, it would have just a very slight delusionary effect on margin.

And then in terms of medical, what are you seeing there in terms of the catch up on the left is there and what does the backlog look like in medical?

It’s very strong as well. And what we have been predicted, and what the industry has been predicting is the sort of return of a lot of those elective or scheduled procedures. And, of course, our sales have increased as a result as well. We are constrained there also with shortages, unfortunately, not just limited to some of the other areas that we may maybe talk about more frequently, like our automotive vertical, but that we are also constrained there in terms of being able to catch up all the backlog, but it’s steadily improving.

And what are you seeing in terms of the supply chains? It’s sort of slightly moving towards more positive territory, or is it still a long way to go?

I would say for our end market verticals and the component technology and categories that are most often used in those products for our end market verticals I would say it’s improving, but very slowly. I think as you know, we don’t do anything in the consumer electronics space, for example. I mean, clearly there, it’s much better, it’s different, it’s much better. And it’s not only caught up and maybe flipped to a unit surplus situation. But the technologies and the component categories that are often designed into what we do for our customers and our end market verticals. Still trying to catch up and it’s still pretty sluggish.

And what is the situation in Europe now? Is that opening up a little bit more after the COVID lockdowns and maybe picking up there? What are you seeing in Europe?

Yes, well, it’s pretty steady for us there as well, in our two facilities there. And as you know, most of what we produce there stays in the European Union. We’re watching that very carefully because it seems like it could slow down quicker each and every month as we get new inputs from our customers there. We are studying those very carefully because, yes, it seems like things are still not quite like they weren’t before COVID. And I think maybe the sort of recessionary or global recessionary fears might be a bit greater there here as we sort of ended our fiscal year and go into July and August. It’s difficult to get a read this time of year, as you know, Anja, July and August is a sort of a slowdown period in Europe anyway, but we’re anxiously waiting for things to for everyone to get back from their vacations and see how things look as we go into September, October and November.

Next question comes from Jaeson Schmidt from Lake Street Capital Markets. Please go ahead.

Hey guys thanks for taking my questions. And I also want to echo my congratulations on a strong finish to the year. Just a clarification I know you called out some FX headwinds to sales in June. But how much revenue could you not ship because of supply concerns?

Yes, hard to put an exact number there Jason, in terms of what it could have been, and we had all the parts that we needed to shift. But I think the way we want you to think about it is the fact that when you go back to the full year guidance that we issued a year ago at the start of fiscal year 2022, we guided between 1.4 billion and 1.5 billion. Obviously, we ended 50 million below the low end of that guidance. So as we said in the last call, we would at least feel like if we had the components we needed, we’d be at the upper end of that guidance and maybe even better. So we think there’s at least 150 million probably the numbers a bit bigger of backlog that we should have already shipped during the fiscal year. Obviously, making that all up in one quarter, it would be extremely difficult because we lost it steadily over the course of the fiscal year of 2022. But that’s how we want you to look at what didn’t ship. We were just looking at order backlog and what our customers asked for from us and again, on both existing programs and new programs are launching. Yes, we could easily say we’d be at the upper end of our guidance that we gave at the beginning of last fiscal year. I will say for the guidance that we provided for fiscal year 2023 we’ve taken what we learned from fiscal year 2022. we continue to studied component availability, especially the component of availability that matters most to us, and our customers and the markets we serve. And we try our best to factor that into the full year guidance. And so we are still going to be restricted constrained in terms of what we can build in fiscal year ‘23. It’s obviously improving, because we’re projecting a pretty significant increase in output year-over-year as we contemplate a year that would, would provide top line growth of 19% to 26%. But I guess the key point there is that’s fantastic. You could say growth and recovery, but it’s still that our fiscal year ‘23 will still be constrained by the availability of material.

No that’s certainly helpful color and acknowledging sorry, that you just noted taking scrubbing that kind of look pretty well, are you at all concerned or are you baking in the potential for any de-commits?

We have been working very closely with our customers to dial in sort of their outlook into our outlook as carefully as we can, and making sure it’s aligned. And we have those conversations with those customers, each and every month, as we go through the sales and operations planning process. And we don’t, we haven’t seen a lot of de-commits, or let’s say customers pulling demand down or out. Again, that’s pretty fluid as the whole world sort of looks at what the economic growth, the global economic growth will look like as we finish this calendar year and go into calendar 2023. But I feel comfortable that we have ourselves in a great position with our customers to put into our demand profiles, the best look that they have, in terms of what their demand is going to be. And they’re also by the way working on their inventory levels, getting those buffers back in place catching up, because they don’t like operating as thinly as we are operating right now in terms of overall availability. I mean, we are literally some cases, shipping by air from our facility and maybe one of our customers is shipping by air to their customer. And so it’s really impactful to all of us to be in this moment. So, I suspect that we’ll have a buffer at a period of time to rebuild up the inventory in the supply chain from anything really big happening and sort of global economic outlook of growth.

That makes sense. And then just the last one for me and I’ll jump back into queue. Just following up on the question, I’m sorry, the medical and how that is reflected in the pipeline. I mean, at a high level, if we think about that billion dollars plus in your pipeline, does it break down between the segments pretty similar to what you saw in this past fiscal year?

Yes, I think that’s fair. I think that fair assessment directionally correct. I mean, when we look at where we stand today across all the verticals and obviously, we’re providing a big growth number in our guidance. But when we look across our verticals, the consolidated, the guidance for consolidated growth is not that different by vertical. Now that answers your question. Does that help?

No, it does. That’s perfect. Thanks a lot, guys.

The next question comes from Robert K. Shapiro from Singular Research. Please go ahead.

Hi, thanks for taking my question. My first question is the sales expectation of 19% to 26% increase for next year, is on top of this past quarter, there was an all time high in sales. So can you talk about how the environment that gives you such confidence that you can handle such a sales increase during this quarter during this year?

That’s a really good question. We talked about it in a couple of our previous calls about getting our footprint in place, including people, resources, processes and capital equipment. In most cases, at least a year ahead of starting production, it’s just sort of the nature of the beast, in terms of the verticals we serve, and the expectations of the customers to have that capacity in place validated and ready to go and then ramping it up over a period of time. So you could argue in many ways that most of the resources that we need to produce the revenue we just guided to for fiscal year 2023 are already in place. And we’ve been putting them in place steadily throughout fiscal year 2022 and as we talked in webcast here today, this idea of sort of a stair step year where we start Q1 with ramping up many of those new lines. And by the end of the fiscal year in Q4 many of those same lines be running at rate. So that’s really what we face. So the confidence level, then is pretty high for us in the sense that we’ve been working really hard to get those resources in place and we believe we got them in place. As I said, we still got to see an improving material availability market. And we’ve got those constraints factored into our guidance. So obviously, the fact that I’m saying we’re constrained still by material and guiding to 19% to 26% growth, yes, if we didn’t have any material issues, our number would be bigger. And that’s a challenge. I mean, that’s a challenge for our facilities around the world. And we’ll have many lines running at full capacity or near full capacity. And we got a many of our customers are counting on us to get to those rates. It’s absolutely imperative for them to achieve their business plans as well.

During 2022 sales increased quarter-over, over the four quarters. So, is there seasonality in your business that we should account for in 2023, or should we assume sales to be kind of similar in each of the quarters?

Yes that’s a really hard question to answer Rob, in the sense that we’ve been constrained in so many areas that if there was seasonality, it would be replaced by availability, if that makes sense. We haven’t really had customers ask us to do anything but produced everything we can. And that’s been more of the norm. We’ve been guided by so many materials shortages, that literally if, for example you know or maybe you heard today that we have a pretty big business in climate control with a lot of the large customers sort of that are in that value chain, both tiered suppliers that are providing systems to the brands that you would know very well like train and carrier and name these types of people. And so their businesses tend to have seasonality. They sell a lot more air conditioners when it’s really hot out for example, and they sell a lot more furnaces when it’s cold out and so those climate control customers would typically we would say have some seasonality as a result, but what we’ve seen with the power shortage situation, much of that seasonality is just well, we just can’t see it now because we’re asked to build everything we can based on availability of components. I mean, I think it’s something we’ll come back to and look at once the value chain in some of the markets we serve sort of yes, gets back to some sort of new normal.

Rob, I would add that as you’re building out your model for fiscal year 2023. I wouldn’t think so much about seasonality. But I would think about the fact that as we’re opening up, particularly the New Mexico facility as Thailand, which opened in January, ramp up to full speed, you would expect sequential growth and revenue as we have more new product introductions, and we get ramping up that Don referred to of all of those new products, and so, not so much seasonality, but definitely stair steps sequential growth quarter-over-quarter.

Your next question comes from Hendi Susanto from Gabelli Funds. Please go ahead.

Good morning, Don, and Jana. Don, I would like to request more insight into the step up from 1.3 billion to 1.6 billion to 1.7 billion. Kimball Electronics has significantly invested in capacity expansion. So in terms of where the incremental revenue, like 300 million to 400 million come from, like which production capacity across Thailand, Mexico and Poland, can you help us sharing more colors on that?

Yes, I can Hendi and yes, for sure the expansion sort of telegraph that we have a lot of going into that far, those parts of our footprint. So Thailand, Mexico, and Poland all previously announced expansions. Two of them were taken out, already taken off, you can see on. So those we got a lot of business pointed towards that part of our footprint. And the growth is significant there. But I would also say that we’ve been very successful growing, where we’ve not announced expansions, and maybe the way to say that have not yet announced expansion. First of all, we’ve been very successful growing in all the regions of the world that our supply chains feed into. So Europe, North America, China, China for China, have all been successful for us from a business development perspective. And so as we look at the growth that we’ve guided for 2023, fiscal year 2023, it is very well spread across the regions we support, and really across our entire footprint.

I see. And then Don furthermore, with the 80 million to 100 million of CapEx investment in the current fiscal year. How close is Kimball Electronics powered the 2 billion revenue goal and I’m wondering like 80 million to 100 million of CapEx like how much capacity in terms of dollars of revenue that is associated with the, like the say, like a midpoint of 90 million of CapEx?

Yes. So I mean, as we talked about in the script today, Hendi that we’ve got our sights set on a 2 billion annual revenue goal. And with the CapEx that we’ve had the last couple of years and the CapEx we’re guiding to for this year, as we exit fiscal year 2023, we think we’ll have the footprint to approach that annual revenue number both on facility standpoint, and also approaching it from an equipment standpoint as well.

And then one question for Jana. Depreciation will go up because of CapEx investment. How will that affect gross margin and operating margin for the next one or two, two years?

Yes. So what I would say is, I would plan for the CapEx the higher level of CapEx to have roughly 10, year depreciable life, I think that’s probably pretty standard for our industry. But what you should also expect is increased revenue over time associated with that CapEx investment such that over the longer term, you’re going to be able to maintain that gross margin rate. So there should be a little bit of a differential that you’re going to see in the beginning is that capital starts to earn its value. But that’s just the temporary difference between capital deployment timing and revenue coming through and as we sort of cycle through that’s going to normalize and I would expect our gross margin rates to hold in very nicely.

[Operator Instructions] It appears you have no questions at this moment. So I’m going to hand it back to Don for any final remarks.

Thank you, everyone. That brings us to the end of today’s call. We appreciate your interest and look forward to speaking with you in the near future. If you have any questions in the interim, please feel free to reach out to Andy. Have a good day.

At this time, listeners may simply hang up to disconnect from the call. Thank you and have a nice day.