Stoneridge, Inc. (SRI) Q1 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Stoneridge First Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. After speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Ms. Kelly Harvey, Director of Investor Relations. Please go ahead.

Good morning, everyone. And thank you for joining us to discuss our first quarter results. The release and accompanying presentation was filed with the SEC yesterday evening and is posted on our website at stoneridge.com in the Investors section under Webcasts & Presentations. Joining me on today's call are Jon DeGaynor, our President and Chief Executive Officer; and Bob Krakowiak, our Chief Financial Officer. Before we begin, I need to inform you that certain statements today may be forward-looking statements. Forward-looking statements include statements that are not historical in nature and include information concerning our future results or plans. Although we believe that such statements are based upon reasonable assumptions, you should understand that these statements are subject to risks and uncertainties, and actual results may differ materially. Additional information about such factors and uncertainties that could cause actual results to differ may be found in our 10-Q, which has been filed with the Securities and Exchange Commission under the heading Forward-Looking Statements. During today's call, we will also be referring to certain non-GAAP financial measures. Please see the appendix for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. After Jon and Bob have finished their formal remarks, we will then open up the call to questions. I would ask you that you please keep your question to a single follow-up. With that, I will turn the call over to Jon.

Thanks, Kelly, and congratulations on the new job. Welcome to this call and good morning, everyone. Let me begin on Page 3. In the first quarter, we continue to navigate through the challenges presented from the global COVID-19 pandemic and subsequent supply chain disruptions. We delivered strong financial performance, exceeding our previously outlined expectations from both revenue and earnings perspective. Our first quarter adjusted sales of $192.8 million exceeded our previous expectations of approximately $180 million and resulted in an adjusted gross margin of 24.2%, translating to an adjusted operating margin of 1.8%. Adjusted EPS for the quarter was $0.06, which also exceeded our previously outlined expectations of a breakeven quarter. Most importantly, we continue to focus on controlling the variables that we could control and limiting the impact of externalities. During the quarter, we continued the transformation of the Company entering into an agreement to divest and complete the exit of our soot sensor business. This is yet another transaction that will allow us to focus our resources on the technology platforms that will drive future growth. We continue to make progress with our MirrorEye platform, preparing for OEM launches later in 2021 and expanding our retrofit programs as demonstrated by our recent public announcements that two fleets, Maverick and Montgomery, intend to install MirrorEye on 100% of their new trucks going forward. Additionally, this morning, I'm proud to announce that we are expanding our partnership with PACCAR and is supporting the launch of their new heavy- and medium-duty trucks with the launch of our fully digital driver information system. Finally, this morning, we adjusted our full year guidance to reflect certain macroeconomic factors that we will discuss in more detail later in the call. We are maintaining our revenue guidance despite production headwinds primarily due to revenue outperformance in the first quarter and the expectation that our product portfolio will continue to outperform the market. Page 4 summarizes our key financial metrics relative to prior quarters, excluding the divested soot sensor business in all periods. During the quarter, we continued to see some volatility in production volumes in our passenger vehicle end markets. However, these headwinds were more than offset by strong performance in our commercial vehicle end markets and the favorable impact of foreign currency. This resulted in an adjusted revenue growth of 1.3% relative to the fourth quarter of 2020 and 5.1% versus the prior year. During the first quarter, we continued to navigate the global pandemic and related supply chain challenges, which contributed to adjusted gross margin and operating margin declines of 210 and 190 basis points, respectively, relative to the fourth quarter of 2020. The first quarter included $2.7 million of incremental costs specifically related to temporary supply chain issues. These costs reduced gross and operating margin by 140 basis points. It is important to note that this is approximately $1 million above the guidance we gave on our fourth quarter call as supply chain dynamics have deteriorated since that call. I will provide some additional color on the relative impact that these externalities had on our operating performance on the next page. During the first quarter, operating expenses remained consistent with our prior expectations, a trend which we expect to continue for the remainder of the year. While we expect additional headwinds related to external factors for the remainder of the year, we also expect that our facilities will continue to execute at a high level and limit controllable costs. Turning to Slide 5. I'd like to provide a more detailed update on the specific supply chain disruptions impacting our business and our current view of the financial impact of these disruptions for the remainder of the year. In summary, the supply chain disruptions we discussed during our fourth quarter call have become incrementally more challenging. There have been several events that occurred since the last call that have tightened supply of key components, including a fire at one of the largest semiconductor manufacturers in Japan, a freeze in the Southern U.S. creating additional material shortages and supply chain turbulence and the disruption at the Suez Canal. In addition, inflation and commodity prices has continued to accelerate -- is continuing to accelerate. Semiconductors, resin and copper are among the largest impacted areas due to shortages and rising costs. To combat the price increases and shortages, we are committed to doing everything in our power to work to offset these incremental costs. We are actively negotiating these incremental costs with our suppliers, developing strategies to cover these impacts when markets return to a more normalized state and are working with our customers regarding cost recovery. As discussed on our fourth quarter call, several of our OEM passenger car customers reduced production schedules in the first quarter. Based on our primary platform exposures, the overall impact on our revenue so far has been limited. Forecasted production levels have started to adjust for the expectation that not all of the reduced schedules will be able to be made up in 2021, which we will discuss in further detail later in this call. That said, we are not seeing and do not expect the same type of reduced production schedules in our commercial vehicle end markets, and we do not expect a significant impact on commercial vehicle revenue in 2021. Similarly, our off-highway business remains strong, which is a trend that we expect to continue for the balance of the year. While we do not expect a significant revenue impact, we expect incremental material costs and increased expediting and premium freight costs as a result of the current market conditions. While we expect those costs to be temporary, we have updated our expectations of these incremental costs from $2.5 million for the full year to approximately $5 million to $5.5 million for the full year. To date, we have already incurred $2.7 million of incremental cost. We expect additional costs of just over $1 million in the second quarter and up to an additional $1.5 million of incremental costs in the second half of the year. We continue to monitor the global supply chain and the impact on our OEM customers to ensure we respond efficiently and effectively to any disruptions. As it relates to current production volume expectations, Slide 6 outlines the most recent IHS and LMC information for our OEM end markets for 2021 as well as for the second through fourth quarters of the year. As a result of the global supply chain disruptions, passenger car forecasts have declined, while commercial vehicle forecasts remained relatively stable or have improved. This results in a forecasted decline of approximately 1% in our weighted average end markets for the full year 2021 relative to our previously provided guidance. Despite this decline, we are maintaining our revenue guidance primarily due to our outperformance in the first quarter and the expectation that our product portfolio will continue to outperform the market. Bob will provide further detail on our revenue guidance later in the call. Turning to Page 7. In summary, our performance in the first quarter demonstrates our ability to execute despite the many challenges we still face as a result of the global health crisis and the cascading impact it has had on global supply chains. We remain committed to delivering on our strategic priorities and continuously improving the business to drive strong financial performance and stable long-term profitable growth. We remain focused on our MirrorEye retrofit and prewire opportunities as well as our first two OEM program launches later this year. At Stoneridge, we will continue to execute on the things that we can control and respond effectively and efficiently to a challenging environment. We will maintain our focus on our long-term strategy, driving continuous improvement and refining our capabilities to deliver shareholder value. With that, I'll turn it over to Bob to discuss our financial results in more detail.

Thanks, Jon. Turning to Slide 9. Adjusted sales in the first quarter, excluding divested product lines, were approximately $190 million, an increase of 1.3% relative to the prior quarter. Adjusted operating income, excluding divested product lines, was $3 million or 1.6% of adjusted sales, which was a decrease of 190 basis points versus the prior quarter. The reduction in margin performance is primarily due to supply chain and commodity price headwinds negatively impacting operating margin by approximately 140 basis points. I will provide additional detail on segment performance and a brief discussion on our 2021 outlook for each segment on the subsequent slides. As Jon discussed earlier in the call, we are maintaining our revenue guidance with a midpoint of $780 million for the full year as we expect that production headwinds based on current IHS and LMC forecasts will be approximately offset by our first quarter performance as well as the expectation that our product portfolio will continue to outperform the market. Additionally, this morning, we are reducing our full year 2021 adjusted EPS guidance by $0.13 to a midpoint of $0.55, primarily due to externalities and an unfavorable product mix for the remainder of the year. I will discuss these drivers in more detail later in the call. Page 10 summarizes our key financial metrics, specific to Control Devices. Control Devices first quarter adjusted sales, excluding the divested soot sensor business, were approximately $98 million, which was in line with Q4 2020 adjusted sales. Adjusted sales increased by 1.8% compared to Q1 2020, primarily due to higher sales in our China end markets due to the shutdowns related to the COVID-19 pandemic. Adjusted operating income, excluding the divested business, was $10.8 million for the quarter or 11.1% of adjusted sales. Adjusted operating income decreased 140 basis points versus the fourth quarter of 2020, driven by lower gross margin primarily due to increased material, labor and expediting costs due to the temporary global supply chain-related issues resulting from the global pandemic. Adjusted operating income increased by 70 basis points versus the first quarter of 2020 primarily due to fixed overhead leverage offsetting the increase in engineering costs. As discussed earlier in the call, we continue to transform our manufacturing footprint and product portfolio to align with future growth opportunities. In the first quarter of 2021, we divested the soot sensor business and expect to complete the sales transition and exit by the end of this year. While we expect continued strong revenue performance, we also expect continued supply chain challenges to impact Control Devices for the balance of the year. We are working with our suppliers and customers to offset those incremental costs and drive margin improvement for the segment as we continue to focus on leveraging our existing cost structure to expand margin with revenue growth. Page 11 summarizes our key financial metrics specific to Electronics. Electronics first quarter sales were approximately $89 million, an increase of 5.6% versus the fourth quarter of 2020, which was primarily driven by higher sales in our off-highway vehicle end market as well as favorable foreign currency exchange rates. Adjusted operating income decreased by approximately $5 million relative to the fourth quarter of 2020, a decrease of 590 basis points primarily due to material cost headwinds and commodity price increases as a result of continued supply chain issues, unfavorable product mix as well as expected higher engineering costs related to advanced program development and program launches as we have outlined on prior calls. We continue to expect strong revenue growth in 2021 due to increased demand in our commercial vehicle and off-highway end markets as well as the launch and ramp-up of several large programs, including our first OEM MirrorEye program in the second half of this year. While sales are expected to shift from a weakening passenger car market to strengthening commercial vehicle end markets, we are forecasting a headwind in product mix primarily in the Electronics segment for the remainder of the year. That said, operating income is expected to improve with revenue growth despite supply chain-related cost headwinds, unfavorable product mix and the continued and necessary investments in engineering resources. Page 12 summarizes our key financial metrics specific to Stoneridge Brazil. Stoneridge Brazil's first quarter sales decreased by $1.9 million or approximately 14% relative to the fourth quarter of 2020 as a result of the challenging macroeconomic market conditions in Brazil resulting from the pandemic as well as unfavorable foreign exchange rates. During the quarter, adjusted gross margin improved by 200 basis points compared to the fourth quarter of 2020 due to lower material costs despite global supply chain disruption headwinds negatively impacting gross margin by 190 basis points. Adjusted operating income declined by $100,000 relative to the fourth quarter primarily due to lower SG&A leverage from reduced sales, offset by lower direct material costs. Despite continued macroeconomic challenges in Brazil, we expect revenue and operating margin to remain approximately flat in 2021 relative to last year. We will continue to utilize our local engineering resources to support our global Electronics business and remain focused on the ramp-up of local OEM business to offset historical economic headwinds. Page 13 summarizes our updated full year adjusted earnings per share guidance for 2021. On our fourth quarter call, we provided full year adjusted EPS guidance of $0.60 to $0.75. In March of 2021, we entered into an agreement with Standard Motor Products to sell the commercial vehicle soot sensor assets and ongoing production. We will support the transition to SMP through a contract manufacturing agreement and service agreement for the commercial vehicle products through the transition of the physical assets. We will retain product manufacturing for the passenger car product line and the assets will be sold to SMP at the end of our negotiated manufacturing obligations, which we expect to include -- to conclude by the end of this year. We expect the transition of all assets to be complete by the end of 2021. We have adjusted our 2021 guidance to exclude the net impact of the divestiture and exit of the soot sensor business. The divested commercial vehicle product lines have a significantly lower gross margin than the overall company. The passenger car product line will remain in our 2021 guidance, and reported results will include the remaining product line results as we ramp down that business in 2021. As a result of the acceleration in production to meet our obligation for passenger car products, we expect increased revenue related to this product line for the remainder of this year as well as incremental contribution margin in line with historical expectations for this product line of approximately 25%. We do not expect the net impact of the remaining business and the divested product -- production lines to significantly impact revenue or adjusted EPS for the remainder of the year. As discussed previously, first quarter adjusted EPS contributed $0.06 of outperformance versus the previous breakeven expectation for the quarter. We are expecting $0.07 to $0.08 of unfavorable product mix for the remainder of the year relative to prior year expectations. As discussed in detail earlier in the call, we are expecting temporary but incremental and continued supply chain headwinds for the remainder of the year. Currently, this is forecasted to negatively impact full year adjusted earnings per share by $0.07 to $0.08. As Jon outlined in his comments, we expect to continue our planned investments in engineering resources to support product development and future program launches, but we'll carefully monitor our operating expenses to ensure we are not only positioned for growth but structured for current and future market conditions. Finally, current foreign exchange forecasts suggest a small headwind for the remainder of 2021 relative to our prior outlook. As a result of these primarily external factors, we're reducing our full year adjusted EPS guidance by $0.13 to a midpoint of $0.55. From a timing perspective, we expect second quarter revenue and earnings performance to be slightly less than the first quarter as reductions in production forecasts will impact our top and bottom lines. As discussed earlier in our call, we expect temporary incremental supply chain costs of $5 million to $5.5 million for the full year, with approximately 3/4 of the impact occurring in the first half of the year and the balance in the second half. This results in adjusted EPS more heavily weighted towards the back half of this year. Turning to Page 14. Net debt increased by approximately $28 million in the first quarter, resulting in net debt of $98 million or 2.9x trailing 12-month adjusted EBITDA. Our cash flow performance during the quarter is consistent with historical seasonality. We expect our net debt profile to return to a more normalized level of less than 2x net debt to trailing 12-month EBITDA by the end of this year. Stoneridge remains well positioned with relatively low leverage and significant available capital. Moving to Slide 15. In closing, I want to reiterate that we are pleased with our performance during the first quarter despite the continued macroeconomic challenges. That said, we expect continued and significant temporary supply chain headwinds related to the global pandemic, and we'll continue to respond decisively as the macroeconomic environment evolves. Stoneridge is committed to driving shareholder value, and that focus remains at the forefront of all of our strategic initiatives. With that, I will open up the call to your questions.

[Operator Instructions] Your first question comes from the line of George Sellers from Stephens Inc.

Congrats on the quarter. So just to start, you have the change in forecast versus what they originally were on the previous call. Could you give us the updated year-over-year expectations for the IHS and LMC forecast?

Sure, George. I'd be happy to do that, and thanks for the question. Thanks for joining us this morning. So the current forecast that we put together with respect to our outlook is based upon the April 2021 IHS and the Q1 2021 LMC. And I'll go through the five primary markets that impact us and what the current projections are. So we'll start with IHS for passenger car for North America. So IHS passenger car North America for last year was 13 million. This year is now 15.7 million, so an increase of a little over 20%. And then next year is 16.9 million. And that accounts for about 40% of last year's sales for Stoneridge. So moving to Europe. Europe, pass car is about 5% of our sales. Last year, that was 16.6 million units. This year, the current forecast is 18.6 million. So that's up a little over 12%. And then 20.1 million next year, up 7.7% next year. And then China pass car was 23.3 million units last year; going to 24.6 million this year, so up 5.5%; and going to 26.1 million units next year, up 5.8%. And then looking at pass -- at the commercial vehicle, the Q1 LMC assumptions for North America -- and let me add that China accounts for about 8% of our sales last year. So if you -- the China passenger car. So moving to commercial vehicle. For North America, that's about 8% of our sales. That was 450,000 units in 2020; going to 567,000 units, so up 26% this year; going to 614,000 units next year, which is up 8.3%. So Western Europe, which is about 19.5% of our sales, last year was 318,000 units; this year going to 367,000, so up 15.5%; next year, going to 420,000, so up another 14.5% as well. And those are the five primary end markets for -- on the OEM side.

Great. That's helpful. And then turning to maybe a more broad topic. There's obviously been a lot of discussion around autonomous trucking and electric vehicles more generally. Could you sort of give us an update on where you see some of the risks and then also the opportunities for Stoneridge at the book of business today and also what you have in the backlog? That would be great.

George, thanks for the question. And we talk fairly regularly about the -- we're -- our product portfolio, 100% of our Electronics business is drivetrain agnostic. And overall, 75% to 80% of Stoneridge is drivetrain agnostic. So as you look at whether it's a pass car or commercial vehicle transformation from internal combustion to electric vehicle, it doesn't have a material risk for us. And it's one of the reasons, as you look at a portfolio rotation like we did with soot, why things that are specifically associated with one internal combustion technology, why we would move out of that to position ourselves for the future. So with regard to move to vehicle electrification, whether it's in pass car or commercial vehicle, we're excited about that, and we believe that our technologies, both in Control Devices and Electronics, are completely applied. From an autonomous standpoint on commercial vehicles, we look at it as vehicle automation before autonomy. And our platform with MirrorEye connectivity and the other technologies that we already provide in the space gives us the opportunity to work with the OEs to help them as they're driving both vehicle automation and ultimately to autonomy. We've said many times that MirrorEye gives us -- puts us with a seat at the table as they're developing their future architecture. And this is one of the reasons why we're so excited about MirrorEye and what it means as a platform going forward.

Your next question comes from the line of Scott Stember from CL King.

Can you give a little more granularity into the product mix that you expect for the balance of the year, the incremental costs? $0.07 to $0.08 seems like a lot of this is due to that dip.

Yes. Scott, thanks for the question. I'd be happy to do that. So if you look at -- so first of all, if you look at the latest forecast assumptions for the remainder of the year, I did reference on the call and the latest IHS, LMC forecasts, we are expecting some unfavorable product mix in electronics. If you look within the Stoneridge Electronics business, the businesses have different margin profiles. The existing vision and safety business and the aftermarket connectivity business have a relatively higher margin. And if you look at really what's happening in the space right now with the shutdowns that are being announced on the passenger car side, not really impacting the commercial vehicle side of the business, so net-net, with our product portfolio exposure, it's neutral to revenue, but there's been -- there's really been a shift from passenger car to commercial vehicle OEM, and that basically -- that's basically the exercise.

Okay. And on MirrorEye, obviously, you guys have some very good news during the quarter about a couple of fleets wanting to put their entire fleets on this. Can you talk about how that -- are we talking through prewired? Are we talking through original and aftermarket at the same time? And could you just also give us an updated -- within your guidance, how much MirrorEye revenue will come through this year?

So Scott, all of the decisions and all of the fleet decisions that we're talking about right now are for prewired. So it's them buying new trucks prewired, and then we do a retrofit because of the NTSA regulations. So there isn't -- there is not yet an OE option until the OE programs launch at the end of this year where somebody can buy one directly from -- as an OE order. But what you're seeing is customers see the value equation, and they're making their commitments -- the fleet customers are making their commitments, which is driving the OEs to look at how to support their fleets. It's driving ways to make the installation process more efficient. And ultimately, it will change the take rate in some of our OE assumptions. With regard to guidance, there's no OE revenue in our -- or limited OE revenue in our guidance for 2021. As we said, the first OE program launches at the end of the year.

Okay. Got it. And just lastly, for modeling purposes, you guys made comments about the back half of the year being better than the first half of the year. But could you give us some context or a way of viewing how Q2 should measure up maybe versus Q1?

Yes. So I talked a little bit about it on my comments. Scott, thanks for the question. So what you're going to see is the supply chain disruptions that we've emphasized during our comments this morning, they're going to be more geared towards the second quarter than they are towards the balance of the year based on what we're seeing right now. So I referenced in my comments that we expect a little bit of improvement versus our first quarter performance and the second quarter. But the majority of the improvement, we're going to see in the second half of the year.

Okay. That's very helpful.

So basically -- my comments were basically slightly lower Q2, and then basically, we'll see the improvement in the second half.

Slightly lower Q2 versus Q1? Okay.

Yes. That's correct.

[Operator Instructions] Your next question is from the line of Gary Prestopino from Barrington.

Can you give me the breakdown again of the percentage of vehicles that are coming from each of the regions of the world as it relates to Stoneridge?

Sure. Yes. So the percentage of -- so the percentage of our sales in 2020, so for North America, passenger cars is 40% of our sales. European passenger car is about 5%. China passenger car is 8%. And then North America commercial vehicle is 8%. And Western Europe commercial vehicle is 19.5%, last year's actuals.

Okay. Yes. All right. So if I have this right here, it looks like LMC and IHS were anticipating in passenger vehicles a 13.4% increase when you released Q4 numbers and that skinnied down to about an 11% increase in vehicles. So it looks like there -- it's about 1.1 million less vehicles worldwide.

That's correct, Gary. Yes, that's right.

Okay. All right. And then in terms of what's going on in the markets now, you're starting to see a lot more costs or higher expenses for what you're doing. Do you have the ability to increase price to offset that -- these cost increases that you're seeing right now?

So Gary, it's Jon. We are working both with our suppliers to push off some of the prices. We're certainly working on trying to drive efficiencies. And in many situations, we're talking with our customers. We are under -- in most situations other than in our aftermarket spaces, we're under long-term contracts. So it's not an automatic pass-through. But these are very specific times, and we're looking at -- in very special times, we're looking at all three ways to look at offsetting those costs while, at the same time, continue to serve our customers.

And Gary, I would just tell you, one thing that's really important to understand, these incremental costs that we're incurring, we absolutely view them as just being transitory in nature until we get to the point where the -- both the resin manufacturers and the semiconductor manufacturers are back up to the normalized capacity levels as a result of the pandemic.

No, I understand that, but a lot of prognosticators are now calling for inflation is going to increase, and I want to get an idea of what ability you do have to increase pricing. And I think I just -- I got my answer there. Okay. In terms of this Maverick and Montgomery, these are for new trucks every year. Do you -- can you guys give us a range of what you think these companies add as far as new trucks on replacements every year?

Yes. Scott -- Gary, sorry. I can't answer the question specifically for them as to how many trucks they buy. But the way to think about it is for these advanced fleets, they refresh their fleet on a 4- to five-year cycle. So depending on the fleet size, divide that by four or five and you get a sense for how many they're buying. So it's -- I think the most important thing is the recognition that we have fleets, and more and more so every day, who are comfortable with the technology and they're saying, "We're going 100% across the board with this." They see the value equation. They see the safety impact. They see what it means from a driver retention perspective. And they're making a commitment to that. And that's a validation of what we've been saying on these calls and what we've been saying to our investors for a couple of years. It's happening now.

Right. Yes. I can go to their websites and just look to see and get an idea of their fleet. I just wanted to get an idea about the refresh, so that's very helpful. And then lastly, again, I want to just go back to this product mix in electronics. I'm trying to understand. Bob, I know you talked about it on an earlier question, but is this -- you're doing product for passenger cars and commercial vehicles in electronics, and you're seeing -- because of the slowdown in production in passenger cars, you've seen a shift to commercial, which has a lower margin.

No, Gary, let me clarify that. So it's not passenger car electronics and commercial vehicle electronics. It's just our overall passenger car portfolio versus our electronics portfolio. So if you think about the fact -- if you think about the announcements that have been made, they've mostly impacted the passenger car OEMs. The commercial vehicle OEMs continue to run, and our outlook for -- on the commercial vehicle side continues to remain very strong. So when you look at our overall revenue guide, our revenue guide remained flat, but we've seen a balanced move from the -- from passenger cars to commercial vehicles. And then just based upon that mix, based upon the IHS and the LMC forecasts and the awarded business that we have, how that blends out, that's basically the impact.

Okay. But again, maybe I'm not -- I'm confusing things here. But you're talking about an unfavorable product mix headwind in electronics, all right?

No.

So what is typically is going on there?

Yes, Gary, it's Jon. It's overall Stoneridge. So when we talk about pass car, we're really talking about the Control Devices business. Commercial vehicle is largely the electronics business. So it's overall Stoneridge and the product mix that impacts what's selling based on our end markets.

Yes, we're saying it specifically. When we say electronics, we're not talking about broadly electronic -- we're talking about our electronics segment basically when we're referencing that, Gary, just to make sure you understand that.

With no further questions in the queue, I would now like to turn the conference back over to Mr. Jon DeGaynor for any additional or closing remarks. Sir?

Thank you all for your participation in today's call. In closing, I can assure you that our company is committed to continuing to drive shareholder value through strong operating results, profitable new business and focused deployment of our available resources. This management team will respond efficiently and effectively to manage and control the variables that we can impact and continue to drive strong financial performance. We're confident that our actions will result in continued success for 2021 and beyond, and we look forward to talking to you in the next call.

This concludes today's conference call. Thank you for participating. You may now disconnect.