LSI Industries Inc. (LYTS) Q2 2024 Earnings Report, Transcript and Summary

Greetings, and welcome to LSI Industries' Fiscal Second Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jim Galeese. Thank you. You may begin.

Good morning, everyone, and thank you for joining. We issued a press release before the market opened this morning, detailing our fiscal '24 second quarter results. In addition to this release, we posted a conference call presentation in the Investor Relations section of our corporate website. Information contained in this presentation will be referenced throughout today's conference call, included are certain non-GAAP measures for improved transparency of our operating results. A complete reconciliation of GAAP and non-GAAP results is contained in our press release and 10-Q. Please note that management's commentary and responses to today's questions on today's conference call may include forward-looking statements about our business outlook. Such statements involve risks and opportunities and actual results could differ materially. I refer you to our safe harbor statement, which appears in this morning's press release as well as our most recent 10-K and 10-Q. Today's call will begin with remarks summarizing our fiscal second quarter results. At the conclusion of these prepared remarks, we will open the line for questions. With that, I'll turn the call over to LSI President and Chief Executive Officer, Jim Clark.

Thank you, Jim, and good morning all. Thank you for joining us on today's call. As noted in our press release issued earlier today, LSI continues to perform well and in line with our expectations despite some temporary headwinds in our grocery vertical. In our Lighting segment, sales were down 3% for the quarter on prior year sales, while gross margin improved meaningfully to 35%. This performance both in sales and margin reflects our continued ability to manage the business and take share even while we are in a challenging year-over-year comparison and general business environment. Our quote and order activity remains high, up almost 10% from last year while our conversion rate from quote to sales remains extended but stable. While the broader lighting market in many of our competitors have struggled to maintain top-line momentum, LSI has been successful in finding and creating opportunities for growth and we remain focused on profitable sales. In our Display Solutions segment, the headwinds in the grocery vertical have had broader impact as they have challenged momentum in our graphics, standalone displays and refrigerated products. This impact is more apparent when compared to our lighting segment. As we noted a few months back, we recently awarded a significant win in our Display Solutions Group in the refueling space with 1,325 sites set to span three years and another award that will include more than 7,000 locations averaging 700 to 1000 sites per year. This project will span considerably longer. Our normal flow of business in this space and the overall refueling vertical feels very robust right now. In addition to these recent project wins, we are currently engaged with two major C-store customers who are multi-site testing our refrigerated product in a number of locations. In fact, a recent article published in last month's Wall Street Journal underlines our thesis of continued growth in this segment and the solutions approach offered by LSI fits very well. The article is titled Gas with a Side of Pizza and it goes to underline the opportunity, the investment in the higher margin sales that accompany a traditional gas station by engaging in-store sales. We are very experienced and recognized in this space as a high quality solutions provider and we're confident we will have continued notable wins. Addressing the slowdown in the grocery vertical specifically, I would like to note that two of the largest grocery chains in the U.S. are currently engaged in a proposed merger. This merger has been under an extended federal regulatory review process and has caused a temporary slowdown across the entire grocery vertical as companies within this sector await the results of the review and the possible changes to the competitive landscape. Although it's impossible to see what the future will hold in this space and the timing associated with the approval process, we anticipate that there will be continued growth and pent-up demand as the merger process moves forward. While we are disappointed with the time this process is taking, we believe that whether the merger occurs or fails to move forward, it will likely generate significant opportunity for additional business as the landscape continues to evolve and change. These changes that help our customers engage and retain customers fit very well with the products and services LSI offers, and we will be prepared to serve this market now and into the future. On the new products front, LSI continues to set the bar in new product introductions and innovation. Staying on pace with our 20 plus new product introductions or product revisions each of the last five years, I'm proud to say that, our new R-290 environmentally sustainable refrigerated product was DoE or Department of Energy certified and UL approved earlier this month and our first article has already shipped to one of our customers. Interest in this product is very high and we anticipate continued growth with this solutions as customers test the effectiveness with R-290 in their own store environment. Turning to our Lighting segment. We recently introduced two completely new lighting products, including our linear aerial outdoor lighting product and our new Peak Series High Bay light, which is a modular product that includes a rotatable light engine and lens that can be rotated 180 degrees in fixed 30 degree increments. These products not only expand our broad solution set, but allow our customers and agents to access unique lighting solutions that showcase their properties and their business. Next week, LSI will be hosting our National Sales Conference. This annual meeting provides an elevated forum for our sales, marketing, engineering and product development teams to meet, discuss, debate and create opportunities. This is a real learning experience for our team and our company and we always gain momentum coming off of this conference. I'm proud of the work the team is doing and I feel we have a lot of opportunities in front of us. There is no question the impact across the entirety of our grocery vertical is causing some headwinds, but I feel the team has pivoted quite effectively to offset a majority of those headwinds and we are enthusiastic about the possible tailwinds we could experience, as this process works its way to conclusion. We have the capabilities and the capacity to respond and we are excited about the ongoing improvements to our business and the possibilities that lie ahead. With that, I will turn the call back over to Jim Galeese for a deeper look at our overall financial performance. Jim?

Thank you, Jim. Our fiscal second quarter results reflect ongoing strong execution in key vertical markets, while managing the expected temporary demand disruption in the grocery vertical. We maintained a steadfast focus on quality of earnings, including successfully managing selling price and product cost. These efforts generated a year-over-year 240 basis point improvement in gross margin and an adjusted EBITDA margin of 10.1% equal to prior year on lower sales. This resulted in adjusted earnings per share of $0.21 for the second quarter and for the first half of the fiscal year, earnings per share were $0.50 equal to the prior year first half. The business again generated over $7 million of free cash flow in the quarter, further reducing debt now under $19 million and lower the TTM ratio of adjusted EBITDA to net debt to 0.4x. Our cash flow and debt position support our capital allocation priorities and provides the balance sheet optionality for future investments. One of those priorities includes investing in profitable organic growth. Investment in critical capital programs was over $3 million for the first half of for fiscal year. Investments were spread across both lighting and display solutions and included key machinery and tooling to support new products, increased operating capacity, throughput and productivity. In addition, we remain committed to a balanced approach for driving shareholder value, announcing a quarterly cash dividend of $0.05 per share to be paid on February 13th for shareholders of record February 5th. Now, a few comments on segment performance. Momentum continues in our Lighting segment. Operating income increased 28% year-over-year on sales of $65 million or 3% below last year. We continue to outperform the broader market further improving our share position. The lighting gross margin rate improved significantly, increasing 440 basis points to 35% with multiple items contributing to the rate expansion. Items include a higher value mix, stable pricing, moderately lower material input costs, value engineering and manufacturing productivity. Lighting orders for the quarter were 10% above prior year. Increasing the backlog as we enter fiscal Q3. Quote activity remains favorable as our key verticals continue to generate higher activity rates than the broader non-resi construction market. Our team has done an effective job managing the timing variability in the quote-to-order conversion cycle, constructing our supply chain and production planning to allow for fluctuating demand patterns. We expect lighting momentum to continue in the second half of the fiscal year. Moving to Display Solutions, second quarter performance reflects the disruption in project activity throughout the grocery vertical. We continue to work closely with our customers on project timing with several large projects in turnkey position waiting on release. We use this disruption period to prepare for the return to normal demand activity. Relocation and startup of our new refrigeration production facility is complete and operational. And as Jim mentioned, we received final UL approval on the new environmentally friendly R-290 display case. The first customer unit shipped last week. Our backlog in the refueling C-store vertical has increased significantly in the last several quarters. In fiscal Q2, a large oil company awarded LSI the brand refresh program for over 1,300 locations. Program is structured for LSI to be the turnkey provider responsible for site planning through installation. We're seeing an increasing trend in programs requesting or requiring turnkey solutions, as customers recognize the value of our comprehensive solution capabilities. Looking forward, we expect Q3 Display Solutions sales to increase modestly from Q2 levels, performance will vary by vertical with refueling graphics increasing as site release activity begins on several major programs. Refueling activity is projected to remain strong throughout calendar year '24 and '25. As project release activity begins to occur, grocery sales will increase somewhat sequentially in Q3 from Q2, but remain below prior year. Grocery project activity is expected to accelerate in the fourth quarter and into fiscal '25. Our focus and priorities for Q3 remain the same, advancing our strategic growth initiatives, exhibit smart, disciplined, business execution and effectively managing cash debt and capital allocation. The underlying trend for our target markets remain positive and we are confident in our plans moving forward. I will now return the call back to the moderator for the question-and-answer session.

[Operator Instructions] Our first question comes from Aaron Spychalla with Craig-Hallum Capital Group.

First, for me on, C-stores, good commentary on the move to fresh food that's happening there and initial progress on the cross-selling. Can you just talk about, maybe how big that opportunity can be with those initial customers and over time as we look out a couple of years?

I believe the speakers were disconnected. I think they're dialing back in now. Okay. Bear with us, and we will get the conference back. Get them back on. I believe our speakers are live. Please proceed.

Apologies everyone.

Okay. Aaron, you can continue.

Appreciate the commentary on the move to fresh foods in that industry and initial progress on the cross-selling. Can you just talk about how big that opportunity could be for you, as we look out a couple of years? And then just separately on the 7,500 site awarded, I saw mention of that being 3.5 years instead of 4.5 years before. Can you just kind of talk about shortening refresh cycles there and if that project has started yet and just maybe some more details there?

Yes, absolutely. Thank you for joining. Thanks for the call, and apologies to everyone on the line for the technical issue. We see the opportunity in terms of the expansion in cross-selling, particularly in grocery, C-store environment and a few others, quick-serve retail, with the combination of our graphics, lighting, display and refrigerated display solutions, as being very big. I mean, I don't know how to quantify it or qualify it bigger than that, but we are talking about markets that are annually in the billions of dollars. By every measure, we're still on aggregate a small player. Not that there's necessarily a larger player than us with the aggregated solution that we offer, it's just that the market opportunity is very big. I don't know how to quantify it over that, except to say again that it's in the billions of dollars. In terms of the cycle time, in the projects we've won, there are two projects. I'll just take a second to mention them specifically. There is the 1,300 location project, which is a refresh and that is scheduled and we have a firm commitment on a three year span. There is a second project which is over 7,000 locations and the goal is to get it done in 3.5 years, but factoring in some of the material challenges and some of the customer zone challenges and realistically kind of trying to set a goalpost for that. We think it's going to be in excess of, it will likely be 700 to 1000 sites a year. And so it puts us in excess of five to seven years to get that done, but as we're in the project, I think we'll have more updates maybe annually or in a couple of quarters, we'll get a better feel for the customer's ability to move forward. We think we can easily double the current number within our existing footprint and within our existing system. But again, it requires the cooperation of the customer and the sites to be available and all those type of things. So, it's good news. I think that we'll find out more in terms of the timing as we move forward.

And then just on grocery, your commentary on an increase slight in the third quarter, but accelerating into 4Q in 2025. Can you just talk a little bit about how much of this is coming from the new R-290 offering versus just overall activity starting to recover? And then just maybe thoughts on how big the two large customers are as a part of this recovery?

Yes. So number one, let me just talk on the headwinds we're facing, the temporary slowdown in the grocery vertical, if you will. It doesn’t -- it isn't specifically related to one or two customers. It's really broad across the market that we serve. And I believe the reason being that should this FTC related review and etcetera continue to drag on. The uncertainty about who, from a competitor standpoint, who are you competing against. Are you competing against one of the newly merged stores? Are you competing against your known competitor? Are you possibly buying a location that they're exiting? Are you competing against a location where they will exit completely? So, I think the impact or we believe the impact is much broader than just one or two customers. It's across a segment as the entire segment looks to see who will my competition be and how will I have to compete against them and where will I have to invest to compete against this new entity or the momentum that they're likely to drive in this sector. So, right now for us the delays are strictly regulatory related and the progress on that is we just don't have a crystal ball to see where that ends up happening. With that said though, whether things move forward or whether things move forward or whether they don't, we believe that, there is pent-up demand and there is pent-up opportunity. We have -- we are hopeful that regardless of the progress on this that things will continue to shake loose in the third quarter here, which we are already in, but certainly into the fourth quarter. Any of the timing on those things could be disrupted. In terms of R-290 versus our traditional solutions, right now everything is based on the traditional solution. Any changeover to R-290 are conversations that are going on now, and we anticipate that we have shipped these products, there is high interest in them, but we expect that the adoption rate certainly could take the better part of the year. I think most of our customers will look to experiment with the product, make sure that it performs to the expectations that where marketing it will perform to, we are very confident it will. But I think that in a solid process, they will take and they will slowly put this out into the field and see how it performs, provide feedback and then continue to move forward to that. So I wouldn't suspect that over the next year, this year, this calendar year 2024, in any of our calls, we are going to be talking about a big momentum shift. But, we will be supplying more and more of that product as we move forward.

Our next question comes from Amit Dayal with H.C. Wainwright.

With respect to this C-store investments and upgrades you are anticipating, Jim, do we have the products and offerings in place already to meet this type of demand or is that something you will be working on? Any insight on what kind of investments will be required to meet this potential cycle of upgrades?

Absolutely, Amit. Thank you for joining. Thanks for the question. We certainly have the capacity, the skill and the experience to do it. As we talked about on other calls, this is our normal kind of course of business. We typically get involved. We are putting anywhere from 9 to 18 to 24 months of pre-planning of test systems back and forth, changes to what the actual products are going to be delivered and what they are going to look like. When a contract award is given, it's not uncommon for us to be looking at anywhere from 18 to 36 to 60 months or longer project depending on the number of sites. We feel very confident that, we have not only these two opportunities and they will fit very well into our current production schedule, but that we also have additional capabilities and plans to scale up, as we move forward. So within our current infrastructure, we have the plans -- we have the capacity to handle this plus more to provide in our normal customers or another opportunity and we have the plans, which are not excessively capital-intensive to scale up beyond that. The only change that we have made to accommodate for these two large projects is, we are in a facility right now that allows us some expansion and we took on another, what was it, 12,000, 15,000 square feet, Jim?

Yes.

15,000 square feet. Just to give us a little bit more running room, but we could have done it within the space that we had.

And are you already seeing some of this in your other segments like QSRs, etcetera? I mean, it looks like you are benefiting from these types of investments by your customers already, right? Or maybe you will in the future?

Yes, we are absolutely benefiting from the changes that are going on in the market, these competitive forces. As we have talked about often, we believe the sectors we are in, grocery being a very strong sector, the C-store sector. I talked about it a little bit in my comments earlier about a great Wall Street Journal article published last month. December 16th, it's called Gas with a Side of Pizza. It just talks about that in-store transaction and how well we're set up to deliver on those requirements. And it spans across the entire offering that we have: lighting, graphics, standalone displays, refrigerated displays, digital graphics, these are all key elements to that expansion and one that are really driving margin improvement for our customers not just in the petroleum space but in the grocery space, in the QSR space. So, although grocery is temporarily disrupted right now, we still feel all of our original thesis is sound and it's not going to be -- it's a temporary pause. It's not anything structural to this market. And we believe it could really be a boom to going forward. And I want to underline, we have the capacity to be able to respond to it and we have the plans to be able to respond with additional capabilities if we need to.

Just one last question for me. The quality of earnings improvement on that front, is this here to stay or do you expect some variance from these levels going forward depending on how the marketing sales and other overhead needs develop to you as you scale your businesses?

Yes. I mean you folks have been following us for a while. A lot of the people on this call have been following us for a while. We have plans to continue to get incremental improvements out of the business. I would define it as saying we still have a lot of runway left in front of us. We've talked about this on prior calls that there is still just environmentally out of our control, but general environmentally opportunities, supply chain is -- we've always been able to manage the supply chain very well, and we've had a lot of advantages that we have been able to extract from that and will continue to. But as that continues to improve outside of our control, that's going to benefit us. Stable labor and workforce that has continued to benefit us. Customer projects that have been on hold or deferred, those will continue to benefit us. We think, we have a lot of runway left for continued improvement on the margins. And like I said in last quarter's call, remember, our EBITDA was 12.2% for the quarter and we do have some efficiencies that we're able to gain through our peak seasons versus our slower seasons. Q2 and Q3 are slower seasons. It's seasonally affected cold weather, weather in general, that type of thing. Construction slows down, remodels slow down. So our efficiency and our ability to manage margin is a little bit more impacted. But you can see that, even in our slower quarters here, Q2, Q3, we are into Q3 now, but Q2, we are still able to extract those opportunities and extract improvements. I think there is still a lot of runway left in front of us.

Amit, Jim Galeese here. Just to build on what Jim said, what gives us confidence is, the improvement is not being driven by one certain item, but there is multiple factors contributing both from a commercial lever as well as the operational lever. Commercially, starting with where we play and then our ability to effectively price manage our projects. And then secondly, operationally sourcing from supply chain, Jim mentioned with material input costs, the impact of new products, design savings, labor productivity. So we track all of those very closely and there is a lot of greens. It gives us confidence that, our improvements, which now have been improving quarter-on-quarter for quite some time, we are confident in our ability to sustain that and build on that because of the multiple levers contributing to the improvement.

Our next question is from Leanne Hayden with Canaccord Genuity.

Hi, everyone. This is Leanne Hayden on for George Gianarikas. Just a couple of questions from me. Can you just discuss any bottlenecks you might see in the supply chain, for example, permitting or equipment like transformers or any potential bottlenecks you might be seeing?

Yes. Leanne, thanks for calling and tell George we missed them. I will say that, supply chain has become very predictable for us now or much more predictable, I should say. Issues like permits and other suppliers are still variable and still exist out there. I'm sure there is nobody on this call that doesn't follow the industrial markets that understand the challenges around switchgear and things like that. None of those canceled projects, so to speak. They just disrupt the timing of them. And I think where we are right now is, we are just comfortably in that uncomfortable spot. Although those disruptions still occur, I would say, they are much more stable and they are more reflective of the pace of the business we have now. So I don't want to say that, there isn't any impact from them and I don't want to say that, somebody couldn't give us a surprise. But I would like to say that, within that environment, we are very comfortable now. It's just a protracted in a longer environment. But it doesn't result in massive disruption to project schedules, as it had in the past and it doesn't disrupt the customer's commitment moving forward.

And then I believe this was touched on briefly in transcript, but could you share or update us on your thoughts around M&A and how the target pipeline is looking at? Have your accretion parameters changed at all? Any updates in that realm would be great.

Yes. I mean it's frustrating to me that I can't disclose everything that we are engaged in or talking about or that we came close to or any of that type of thing. But I would categorize it as this. We are very actively involved. We have looked at a number of projects. We want to make sure they are good fits, from a business perspective obviously and a cultural perspective which we highly value here and anything we are looking at in terms of an acquisition. We are in a very good position financially as you noted. As you've all probably noted, our leverage ratio now is 0.4. We're in a very good position there. We have very good financial partners. And we have discussed and we have plans, if we needed to do something that required beyond our current access. So, all of those things are lining up. In general, I feel the market is more active right now in terms of potential opportunities. I think that a lot of the pricing, the expectations from sellers is better normalized, if you will. But the competition is still very fierce. Financial buyers are still out there. They are still willing to accelerate the multiples paid and things like that. So, we find ourselves in a very competitive a process, but we find that we're engaged in more opportunities now. So, net on net, I would say we are very encouraged and I am very hopeful that we will be able to advance something certainly within the next year, if not sooner.

Our next question is from Rick Fearon with Accretive Capital Partners.

Hi, Jim and Jim, and congrats on another solid quarter. Yes, just a really impressive uptick in your gross margin and I know improvement in that scale doesn't come easily. So, just interested in hearing what some of the levers may have been to achieve this increase, especially on the Lighting side?

Yes. I mean, I think that some of the things, well, first of all, Rick, thanks for joining. Thanks for the question. I think some of the things we've talked about in the past are still the levers we're able to pull. And if I were to kind of try to paint a picture, those levers that we're pulling, we've pulled them a quarter of the way, two-thirds of the way. We still have room in them. But chiefly, it's manufacturing efficiency improvements and ongoing improvements in our manufacturing efficiency. Supply chain, we've got a very good team relative to supply chain. It's not just about pricing, it's about being good partners to our suppliers that supply us, being predictable. Giving them the forecast that we stay on and they have been reliable suppliers. When you do that, you are no longer expediting things. You are not pulling the lever for contingencies. You are not disrupting your manufacturing process that is expensive. So, I want to say there's simple, well grounded, basic kind of levers of running a good business, and our team is just good at doing that. We think that we still have levers to pull and room within the levers we're pulling.

And as I know you're well aware, LSI's longstanding customer, Burger King just announced the acquisition of their largest franchisee, Carrols Restaurant Group. And in the announcement, they also talked about remodeling over 1,000 franchise stores over the next five years. And so, can't help but think there's some opportunity there. I was just interested in your perspective on this as well as really any other QSR activity that might be on the horizon?

Yes, I don't have, I'm aware of that transaction and congratulations to them. I'm sure that given the pace at which they're making changes within their system, they will benefit from it and we will benefit from it. I will say that, it's a great partnership. We really respect the way they run their business and the plans they have in mind and their execution matches up very well with ours. And that's why I think we have become such strong partners with them. And I will say, it’s the exact same thing that attracts a number of the potential customers or a number of newer customers we are dealing with. That very high say do ratio, right? We are not super flashy, although I think some of our solutions are. We’re not -- we don't over commit. We sit down and have realistic conversations with them and other partners in that space, and I think we have gotten real value out of that. The customers have gotten real value out of that, because they know what to expect. We deliver and we say we are going to do. And it fits very well within that structure of that environment because it's very hard to come in and make those changes without potentially disrupting their normal flow of business and we have earned the reputation of being able to do that. And I think that our customer is responding very well to it. So I'm very excited what we will see, what will happen there. I would suspect that, we are right there in that planning process.

Yes. It really speaks volumes to have a customer like Burger King and such strong customers like Burger King on the QSR side. And so, you guys are obviously doing things right to keep them happy. Yes, my only other question really, sort of follow-up on one of the other questions relates to your strong balance sheet. You have once again reproduced with the methodical debt reduction, great work on that front. And so, yes, here we are with have some, I'm sure, exciting opportunities that are coming across the desk. And just wondered if you could provide any color on valuations. Like, it sounds like, it is more of a buyer's market than it has been, but curious if that's consistent with what you are seeing.

Yes, I mean, I'm not sure I'm willing to jump on. It's completely a buyer's market, but it has changed, right? So it has changed a bit. I still think there is great respect for the businesses that are currently for sale and they want to get maximum value whether they are financially-owned or independently individually or corporate-owned or whatever it is. So the pricing is obviously pricing and valuations still remain a key element. I would say, overall in perspective, inflation has hit the valuations also. But we feel very encouraged that, the conversations are much more meaningful now. They are much more balanced. It's kind of the best analog I can give it. It's kind of like the real estate market. A couple of years back, properties that were up for sale, agents were saying, submit your best and final no home inspection. All bids are due by 3 PM, that type of thing. And much like that in the M&A environment, we feel that, the conversations are much more meaningful. They are much more future oriented. They are proud of the accomplishments they have had, where the business is, or they are aware of where the business is. But they are much more willing to talk about put future opportunities in wide and support their valuations and that's what we enjoy in those conversations. And as you know, most of the people on this call know, we also highly value cultural fit right? There are businesses we would like to be involved in, but we sit down and we realize -- we're just not a good fit. We see things differently. We value things differently. And although the business might fit well in our plan, if we have to go in and change course of that business, we know that the value is just not there for us. So, it's a funny shaped little door. We continue to be very disciplined in what we look at, and but we are excited and we do think that there's opportunity on the horizon for us.

That discipline on the culture side I'm sure saves a lot of headaches. So, you proved yourself at JSI and wonderful acquisition and look forward to hearing more about the next to come. But thanks for the perspective and all your nice work.

Thank you.

We have reached the end of the question-and-answer section. I'd now like to turn the call back over to Jim Clark for concluding remarks.

I don't think there's any question. If you heard our comments, you read our press release, we're certainly facing some headwinds, but I think that we have done an exceptional job of demonstrating our ability to challenge that those headwinds and be ready and be prepared for what the future is going to hold. Our expectation is regardless of what happens with some of the current FTC reviews and things that are out with some of our customers, there's a good opportunity, a great opportunity in front of us either direction. We also believe that we have a lot of runway left in just our core businesses, our platform, our investment thesis. We covered a lot on today's call. Margin performance, we still believe we have room to manage that and room to grow, and even with these headwinds we're able to demonstrate that. Q2 and Q3 historically are slower quarters, and you combine a couple of these challenges and you see it looks disproportional, but it's not. We don't see anything that is systemic or causes concern for any type of long-term trends or anything. And I'd just like to leave everybody on the call saying that we're excited about what we see in the future. We're excited about the movement forward in the market, we're excited about potential on the M&A front. We're excited about other opportunities we have in terms of the way we manage and run our business. So, we come off of this quarter, excited for the next and the ones after that and we appreciate the time you all take to spend a few minutes with us and learn a little bit more about the company. With that, I will say thank you and goodbye.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.