Methode Electronics Inc
NYSE:MEI
Methode Electronics Inc
NYSE:MEI
Price:
12.22 USD
0.74%
Market Closed
Updated:
Apr 28, 2024
Section:
Earnings Call Analysis
Summary
Q1-2024
Q1-2024
Company Faces Earnings Challenge; Guidance Adjusted
In the latest quarter, net sales rose modestly by 2.6% to $289.7 million, largely due to an acquisition, while organic sales actually dipped by 1.5%. Looking forward, the company projects Q2 fiscal '24 sales of $285-$295 million with an EPS impact of approximately $0.15 from ongoing transitions, mirroring Q1's influence. Full-year sales guidance was nudged down by $15 million at the midpoint, attributing to softer sensor sales in H2. The fiscal '24 expected income tax rate is between 14-16%, with capital expenditures anticipated in the range of $60-$70 million, and depreciation plus amortization estimated between $55-$70 million.
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Greetings and welcome to the Methode Electronics First Quarter Fiscal 2024 Results Call. At this time, all participants are on a listen-only mode, and a question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.
I will now turn the conference over to your host, Mr. Robert Cherry, VP of Investor Relations. Sir, you may begin.
Thank you, operator. Good morning, and welcome to Methode Electronics' fiscal 2024 first-quarter earnings conference call. For this call, we have prepared a presentation entitled Fiscal 2024 first quarter financial results, which can be viewed on the webcast of this call or found at methode.com on the Investors page.
This conference call contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the Safe Harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode's expectations on a quarterly basis or otherwise. Forward-looking statements in this conference call involve a number of risks and uncertainties.
The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission, such as our 10-K and 10-Q reports.
At this time, I'd like to turn the call over to Mr. Don Duda, President and Chief Executive Officer.
Thank you, Rob, and good morning, everyone. Thank you for joining us for our fiscal 2024 first-quarter earnings conference call. I'm joined today by Ron Tsoumas, our Chief Financial Officer. Both Ron and I will have opening comments and then we will take your questions.
Let's begin on slide four. Our sales for the quarter were a solid $290 million. They were up 3% compared to the prior year, mainly due to $21 million in sales from the acquisition of Nordic Lights. Excluding Nordic Lights, foreign exchange, and a significant drop in customer-reimbursed material spot buy and premium freight cost recovery, sales were down 2%. The decrease was mainly due to lower sales in our auto segment, which was partially offset by higher sales in the industrial segment driven by lighting solutions for commercial vehicles.
With the addition of working lives from Nordic and the ongoing contribution from our existing interior and exterior lighting solutions for commercial vehicles and automotive, Methode is clearly building a lighting solutions franchise that complements our growing business and power distribution solutions.
In the quarter, we experienced very unmethylated, like, operational challenges. Operational inefficiencies in our North American auto operations are caused mainly by salary personnel turnover, poor operational decisions, and vendor issues, which led to subsequent production planning deficiencies. There's some turn at a domino effect leading to inventory shortages, unreimbursed spot purchases, and premium freight, and some delayed shipments.
While the full picture is nuanced, I can share with you the essence of what occurred. Our Monterrey operation has historically manufactured with a low mix and a high volume of products. Recently, the operation has transitioned into a mode of higher mix and lower volume. This transition combined with the aforementioned issues led to the exposure of late operating inefficiencies that our early warning system detected but we failed to mitigate also very on Methode.
In a lean manufacturing environment, a delay and visibility of a problem can ultimately generate significant costs in the form of premium freight and spot buying, both necessary to immediately address material shortages and maintain customer delivery integrity.
In auto, delivering an addition to quality is absolutely paramount to both maintaining and obtaining new business. These operational challenges had approximately $0.15 impact on our first quarter earnings relative to our expectations. We also had accelerated expenses related to the numerous program launches.
I can confidently tell you these operational challenges have been identified and corrective action plans are already in place, including the hiring of former seasoned planners in the U.S. However, the residual effects are expected to impact our second quarter to approximately the same degree, and along with a significant weakening of the e-bike market, the primary drivers to our lowering earnings guidance for the full-year.
As I've said, this was very unmethylated and I have been and will continue to be personally involved with the efforts to correct the situation. On that you have my personal commitment as the CEO and as a shareholder, we will fix this.
Moving to orders. We had a solid quarter with over $70 million in annual program awards. These programs were once again led by electric vehicle programs. Turning to Medical. After pursuing multiple strategic avenues for Dabir including everything from a formal sales process to the continued operation of the business, it became abundantly clear that a discontinuation was the best financial path forward.
I want to thank the Dabir and Methode employees associated with the business for all their efforts as well as the customers who provided the opportunity to market the Dabir product. Turning back to EV activity. Sales in the quarter were 22% of our consolidated total. In new awards, we won over $30 million in annual EV programs for fiscal 2024, activity will be strong, but we'll still be very dependent on OEM take rates as well as the timing of program roll-offs.
In the quarter, we had an increase in debt, which is driven by an investment in working capital to support our sales and program launches while our debt and consequently our leverage has increased, it is still relatively low. As such, we are very comfortable with our flexibility for capital deployment, whether it's for internal investments, share buybacks, or additional acquisitions. As is typical in our first quarter due to payments for year-end items with negative cash flow in the quarter, however, we fully expect to return to positive free cash flow in the second quarter and have meaningful positive free cash flow for the full year.
Moving to slide five. The awards identified here represent some of the key wins in the quarter and represent $70 million in annual sales at full production. As a reminder, the launch timing of most of these programs could be anywhere in the range of one to three years from now. The awards are mainly for power products associated with the EV skateboard architecture, the awards also continue to be weighted towards the United States where EV quoting activity continues to be strong. In other areas, we are awarded programs for lighting solutions in auto and sensor solutions and e-bikes although not launching until fiscal 2026.
Turning to slide six. In summary, sales in the quarter continued to be solid including for EV applications. The Nordic Lights integration is progressing well and we expect to own 100% of the shares by the end of the second quarter. The program awards pipeline continues to be healthy, especially in EV. Lastly, the quarter included unacceptable laps in operational efficiency, my immediate focus as well as the entire management team's focus is on correcting those inefficiencies. As I have stated the operational issues have been identified and corrective actions are underway. We will also continue to have a heavy focus on executing our new program launches.
Turning to our outlook. Due to program roll-offs and the expected weakness in key markets especially e-bikes, we continue to expect low organic sales in fiscal 2024. In addition, we will be making significant investments and launching over 20 new programs. These investments include significant tooling and increased staffing to ensure a successful 2025. This activity along with multiple years of strong awards is expected to enable us to not only replace the sunsetting programs but to organically grow the business 12% from fiscal 2024 to fiscal 2025. Our view on fiscal 2025 has not changed. This guidance demonstrates that our business model is healthy and is positioned to prosper from the strategic direction that we have taken into lighting and power solutions to grow the business.
Before I conclude, I would like to address the recent announcement of my retirement. Leading Methode has been a tremendous personal and professional journey for me and I am incredibly proud of all our team achieved to grow the company. Having served 19 years as CEO, it is simply time for me to step down and enable the next successful stage of the Methode journey to begin.
I am extremely confident that the company will continue to flourish given the exceptional team in place and a solid strategy that is positioned for growth. I truly believe that Methode's brightest days are still ahead. Meanwhile, I will continue to actively lead the company until a successor has been named and then we'll work with the new CEO through an extended transition period, which is expected to conclude sometime in fiscal 2025.
At this point, I will turn the call over to Ron who will provide more detail on our first quarter financial results, as well as more details on our outlook. Ron?
Thank you, Don, and good morning, everyone. Please turn to slide eight. First quarter net sales were $289.7 million compared to $282.4 million in fiscal '23, an increase of 2.6%. This quarter's sales included $21.2 million from the Nordic Lights acquisition and $0.5 million from favorable currency translation. Partially offsetting those positive impacts was $10.4 million lower in spot buy and premium freight cost recovery.
Excluding Nordic Lights, foreign currency in a year-over-year cost recovery impacts sales decreased by 1.5%. In addition to Nordic Lights, this quarter's ongoing strength lighting solutions for commercial vehicles, but it also saw the continuation of a large program roll-off in North America.
First quarter income from operations decreased 82.6% to $3.8 million from $21.8 million in fiscal '23 mainly due to operational efficiencies, higher S&A expenses, and unfavorable product sales mix. Adjusting for net acquisition costs of $0.8 million related to Nordic Lights and restructuring costs related to the exit from Dabir of $0.7 million, our non-GAAP adjusted income from operations decreased 75.7% to $5.3 million from $21.8 million in fiscal '23.
Please turn to slide nine. First quarter diluted earnings per share decreased 96.6% to $0.02 per share from $0.58 per diluted share in the same period last fiscal year. The EPS was negatively impacted from the operational inefficiencies, unfavorable product sales mix, higher professional fees, the absence of government assistance, and higher net interest expense. Adjusting for net acquisition costs of $0.6 million and restructuring costs of $0.5 million, our non-GAAP adjusted diluted EPS decreased 89.7% to $0.06 from $0.58 per share in fiscal '23.
Shifting to EBITDA, a non-GAAP financial measure, first quarter EBITDA was $17.8 million versus $38.2 million in the same period last fiscal year, a 53.4% decrease. EBITDA was negatively impacted by the higher operational costs, unfavorable sales mix, higher SG&A expenses, and the absence of government assistance.
The contribution from Nordic Lights helped to partially offset the decrease. Adjusting for acquisition costs of $0.8 million and restructuring costs of 0.7%, our adjusted EBITDA decreased 49.5% to $19.3 million from $38.2 million in fiscal '23.
Please turn to slide 10. We increased gross debt by $32.2 million in the quarter, mainly due to working capital investments and higher CapEx both to support sales and new program launches. We ended the quarter with $147.9 million in cash, down $9.1 million from the end of last fiscal year. Net debt a non-GAAP financial measure increased by $41.3 million to $191.1 million for the quarter from $149.8 million at the end of fiscal '23. Again, the main driver of the increase was working capital and CapEx. Our debt to trailing 12-month EBITDA ratio was approximately 2.7 times, our net debt to trailing 12-month EBITDA ratio was approximately 1.5 times.
Please turn to slide 11. First quarter net cash from operating activities wasn't an outflow of $5.6 million as compared to an inflow as compared to $12.7 million in fiscal '23. The decrease of $18.3 million was primarily due to lower net income in the quarter. First quarter capital expenditure was $13.8 million as compared to $9.6 million in fiscal '23, an increase of $4.2 million. The increase was mainly a function of investments to support new product launches and was in keeping with our guidance.
First quarter free cash flow a non-GAAP financial measure was a negative $19.4 million as compared to a positive $3.1 million in fiscal '23, a decrease of $22.5 million. This decrease again was primarily due to reduce net income and increase CapEx.
Please turn to slide 12. Regarding forward-looking guidance, it is based on management's best estimates and subject to change due to a variety of factors as noted on this slide. The operational inefficiencies experienced in the first quarter will carry over to the second quarter. The impact on EPS in the first quarter was approximately $0.15 and we expect a similar impact on EPS in the second quarter.
In addition, we expect to experience a decrease in sales volume relative to our original expectation and increased legal and professional fees. Given the short headwind, we are providing guidance for the second quarter. The expected net sales range for fiscal '24 second quarter is $285 million to $295 million. The expected diluted earnings per share range is $0.08 to $0.13. Adjusting for $0.04 of costs related to the Dabir exit, we expected adjusted diluted earnings per share is $0.12 to $0.17.
Turning to the full year, the expected net sales range for fiscal '24 is $1,140 million to $1,180 million. Full-year sales guidance was decreased by $15 million at the midpoint, mainly due to the softening of sensor sales in the second half of the fiscal year. The expected diluted earnings per share range of $0.80 to $1 down from a previous range of $1.55 to $1.75. The drop is predominantly related to the operational inefficiencies in North America and auto being experienced in the first and second quarters and a significant slowdown in our sensor business in the second half of the fiscal year. Our sensor business enjoys gross margins well above the consolidated level.
Adjusting for $0.06 of costs related to the Dabir exit and $0.02 related to the Nordic Lights acquisition, the expected adjusted diluted earnings per share range is $0.88 to $1.08. The fiscal '24 guidance assumes an income tax rate of 14% to 16% with no discrete tax benefits or expenses. It assumes CapEx of $60 million to $70 million and assumes depreciation and amortization of between $55 million and $60 million.
Looking ahead to fiscal '25, the expected net sales remains unchanged at $1,250 million to $1,350 million. The midpoint of that range represents $0.12 organic sales growth from the midpoint of the fiscal year '24 net sales guidance range. The expected range of income from operations as a percentage of net sales in fiscal '25 is also unchanged at 11% to 12%. The fiscal year '25 income tax rate is expected to be between 20% and 22% with no discrete tax benefits or expenses.
Don, that concludes my comments.
Ron, thank you very much. Operator, we are prepared to take questions now.
Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is coming from Luke Junk with Baird. Your line is live.
Hi, good morning. Thanks for taking the questions. I want to start this morning with the labor and vendor issues in auto that you saw. What I'm just wondering is to what extent you had a line of sight or not, when you last gave guidance in late June and more specifically how that lines up with what you're now anticipating in the business, especially your confidence that the corrective actions you've taken will be a sufficient offset in the second half, what would be the risks that is not the case further the action doesn't have the expected benefit? Thank you.
Okay. Through the first two months of the quarter, we were pretty much on track. Now, when we go back and do a postmortem on it where there are the issues? Yes. The magnitude of the inbound and outbound freight really didn't become apparent until July and once you start to air freight product, the costs go up dramatically. And that's really -- when I look at the miss, that's the main driver of it.
Confidence, we know this will go into the second quarter. We've dropped the inventory levels, we need to replenish some of that. So, we're going to still have some premium freight more inbound and outbound this time. What's my confidence level? Hi, I wouldn't have said what I said in my prepared remarks if I didn't feel confident, we could fix that. It's very on Methode, it's disturbing to me, but we're pretty seasoned management team, the plant, let's call it a transition to going from high-volume to low mix, center consoles which they did very well producing. To a high mix, lower volume, and had some issues with that coupled with employee turnover some voluntary and some involuntary. And so, some decision-making that we're correcting. I am confident of that. We're known for our operational excellence. So, this one is -- we will replace for me. But we will correct that I'm confident. We've had some corporate people down there that are seasoned ops guys and we know what the fix is.
Thanks for that, Don. Second, hoping you could comment on where price cost is in the business today some incremental inflation was mentioned in the release. And just the status or tone of your conversations with customers recovery is fairly modest here in the first quarter, should we expect that to accelerate as we go through the balance of the fiscal year?
That's always a double-edged sword for us. We've had some -- very difficult stressful discussions with our customers. And some of this is not with us but some of this has been in the past where the automakers have been getting even tougher on price concessions. So, that is going to be a struggle going forward.
Now where we've turned our attention to is our PPV or Purchase Price Variance which for the last couple of years has been negative. We feel that with our growth, we can put pressure on our suppliers or get other suppliers although I will tell you one of the issues we had in our Monterrey plant was we did change the supplier and had an issue, also that has to be done carefully.
We'll continue to pressure customers for price increases, but I'm not going to destroy the relationship. We're -- auto and while we've diversified, there's only so many automakers and so we tread lightly there, although again I think our team has done a good job of pushing it. But I think our attention in terms of gross margin will be in factory efficiencies and improving that and with putting more pressure on our vendors. I see that as a better avenue than taking a customer in relation to the bank and being put our new product coal, I don't think that long term, I don't think that will help Methode. And we will get as we launch these programs, particularly in Monterrey, we're going to get more overhead coverage that will also help us going forward.
Ronald will give you the...
I think from the procurement side, we're going to -- even though we've had some supply and have to do premium that was more of our missteps in anything, I think you're going to see a pivot of an emphasis on procuring supply which was challenging over the past couple of years, that stablize and now, I think you're going to see us pivot more towards getting that positive PPV and getting that back to more historical standards.
We didn't build it into this year's guidance. We've had all of our teams look at the areas that we can economize on purchasing and we put one of our season VPs on it. And so, what I've seen on paper, as they come to fruition. But that gives me confidence as we go into '25, we're going to see some -- we'll definitely will see improvement, not just from the overhead coverage but from PPV.
And again we're going to be a little more cautious on vendor changes because that causes the problem.
And then for my last question, just the bigger picture hoping you could expand on the implications of the decision to wind down the Dabir business, specifically, if you have any interest in medical going forward overall, and to what extent [Indiscernible] costs in the P&L. Thank you.
That decision was one of the tougher ones I've made in my career. It's -- the amount of orders that we received from customers, one of -- no one was going to be discontinued is an indication that it was well received. It was just very difficult for us to scale. It definitely helps people, it saves money. But it is difficult to scale and expensive to scale. And we did look at maybe we should look to the outside for funding. But when I look at that it was, that's probably where -- not where we should be spending our time now.
We had three areas that we concentrated on medical, EV, and sensors until the three of them very well. Medical didn't -- I think management team wise, time to concentrate on those two other areas, and we continue to book business in those areas. We did a formal sales process I mean I don't want to go into too much detail, but I think there were -- user sent out to 70 companies and I think we have 30 returns on it. And there were no -- in the end, no one was interested in the business and some of that I think is the scale and hospitals are struggling. So, bottom line, it was time to discontinue the business.
Got it. That's all helpful. Thank you. I'll leave it there.
Yes. I think, Luke if I could have seen our way to breakeven, would taken a different approach, but literally it will take us another five years. And again I don't think that's where Methode should be polishing its assets.
Thank you. Our next question is coming from John Franzreb with Sidoti and Company. Your line is live.
Good morning, guys, and thanks for taking the questions. I wanted to go back to the EPS revision, you pulled it down more than the implied $0.15 last quarter and expected this quarter from the production and labor disruptions, what is the balance of you pulling down that number?
The lower EPS, and operational efficiencies, and product mix are the two main drivers...
Are you taking about full-year or a quarter?
Full year.
Okay.
Yes. Yes. So, the operational inefficiencies look at $0.30 right product mix, largely due to the...
E-bike.
…sensors and data centers and lower organic volume in total. Those are the main drivers.
Those three areas are by far are most profitable products. The e-bike market, our customer, although maybe a week ago, the best two weeks ago, said that there's still going to be over-inventoried for the duration of the year and then going into next year as well. And then we've studied the e-bike market and we concluded that but -- and at that point with the change in their forecast, we have no choice but to bring down our estimate again very profitable and effective EPS. Now, do we expect that to return? Yes. I mean e-bikes are very popular but there was a spike during COVID and every shortage is always followed by a surplus. And that's what our customers are seeing and we had to react to that.
Okay. Just a couple of things based on your answers. Can you give us context of how much revenue e-bikes contributed on a quarterly peak and what they are contributing today?
We've -- quarter-over-quarter.
No. Just in general. At its height, what was e-bike revenue quarterly contribution?
From its peak.
50%.
So, that's significant.
Okay. And do you think you can...
In the second half.
In the second-half.
And do you think a sustainable revenue in 2025 would be about what for e-bikes?
40-ish.
Okay. Alright. Just wondering, I was just trying to bracket that all...
I'm sorry, say that again, please?
I'm just trying to -- I'm just trying to get the context of that business and how it's impacting everything. And you also mentioned data centers is one of the reasons just you're pulling down the guidance, has datacenters weakened from you from last quarter, because most of the companies I follow in the datacenter market actually posting relatively good results. And actually your guidance for the next year or so is actually fairly positive, there seems to be a disconnect with what you're seeing in data centers or other companies [Multiple Speakers]
Our major customer there John has told us that they're over-inventoried. So, it's not the market and we've got one very major customer that has told us they are over-inventoried.
Okay. Okay, all right. And switching off that on the SG&A expenses, I know you said these other fees in there, what would be a normalized SG&A run rate for the second half of the fiscal year, what would you expect it to be like?
We would expect it to be less than 17.3%, well, I'll leave out the amortization 15.4% experienced in the quarter, but it will be higher in the second half of the year as compared to prior years being in -- without amortization in a 11% to 12% range. So, somewhere in between there depending.
Okay. And that reflects Nordic, I'm assuming, right?
Pardon me. Yes. The first quarter numbers of 17.3% and 15.4% without amortization at all in Nordic Lights, correct.
Right, right, right. Okay. Okay. That's all I had, I'm going to jump back with the queue and let somebody else ask the questions. Thank you, guys.
Thank you.
[Operator Instructions] Our next question is coming from Gary Prestopino with Barrington Research. Your line is live.
Hi, good morning, everyone.
Good morning.
I want to drill down on what you were talking about in your Monterrey, Mexico facility. You were basically producing center consoles they are right, that was one of the bigger products. And I think that business has gone away because the model is going away. Is that correct? Don?
Right. Center consoles are really not using the vehicles anymore. At least, the vehicles that we are on pickup trucks and SUVs are more discrete touchscreens. So, that product went end of life, not only from us but this is not used in auto.
Okay.
They also have a lead frame for transmissions that was very high volume for them as well and that also has I don't know that has gone totally end of life, but that is significantly down. Those products have been replaced by a number of smaller volumes and I don't when I say smaller volumes, still 300,000 to 400,000 units. It is not a 1 million, that's why we're talking about the transition here. Your systems have to be -- when you have a number of products going through the plant, your systems need to be quite good.
Okay. So, this is Monterrey, Mexico, was there a Mexican national running that plant? Or did you have someone from the U.S. doing that?
What we've done and because of the launches and the transition, we brought in, probably our most seasoned operations later to oversee the plant, and then he will train other individuals to run the plant. So, he is not a small -- he is not U.S., but he is essentially, and so [Multiple Speakers]
I'm sorry.
I'm sorry. That also gives me confidence that these issues will be behind us.
Well, I guess the question I would have is that out of the plant, can you replace the sales that you've lost from these programs that are going end of life or slowing down to the point where you get some kind of equilibrium or even growth by the progress or whatever we got producing on smaller volume?
Yes. The business -- a lot of the EV business that has been won, is launching out of Monterrey. And the individual, as I said, those are -- we're seeing the plant now has made those products in the past. So, I'm very confident that they're going to see an uptick in their business. And I know I'm not happy with what happened obviously but I'd much rather have it happen now than when we are cranking up production in 2025. But that -- so that plant is -- will have more volume through than it had even in the center console days.
Okay. But a lot of the...
I don't like the pain here, but one of the concerns I had even from day one when we booked the center console business that we were going to be dependent upon one large automaker and we saw that in our Qs and Ks through the years. And what I like that program to continue, of course, but it didn't and we're transitioning again to a lower volume, higher mix. I think that gives us a better diversification and yes, we've had a blip, I'll deal with that. But I will sleep better knowing that we're dependent upon a number of customers, not just one major one. And again if that customer came and gave us a $100 million worth of business, I take it but there's some pain, but I do like the fact that we would be diversified and I think that makes us more superior.
Right. But I guess the last question I would have in that regard is that most of what happened there was really an operational issue in terms of just the efficiencies at the plant caused by the shift from high volume to low volume mix, I mean that's kind of the sense that I have. It wasn't -- the biggest issue was that it wasn't the fact that the sales weren't where you thought they were going to big?
No. Not at all. I take a little comfort and then we had good sales and cost us a lot to ship those. But ours is not a sales issue, ours is an execution issue that is internal we did to ourselves that we can fix. I can, e-bike -- what I like to sell more sensors in the e-bike of course, but I can't do anything about that. But I can do something about the factory. So, I do take -- I don't think comfort is the right word John but I only one it comes to mind.
All right, thank you very much.
Thank you.
Thank you. Our next question is coming from John Franzreb with Sidoti and Company. Your line is live.
Yes, I think we kind of avoid touching on the Class A truck market today. It seems that ACT has been narrowing expectations of the depth and duration of the potential downturn in the Class A trucks. What are your thoughts about that market, are you more bullish or bearish -- its current ACT trends, can you just talk to that a little bit?
We've -- I can't say we've seen an increase but it hasn't decreased more than bottomed as ACT had predicted. I'm not comfortable saying that it's not going to go down. I think they said like 1% now, something like that. So, I mean, our view is it will dip below the average line but maybe recover faster, which gives me additional comfort for '25. So, I'm not quite there yet, but I'm less concerned than it was a quarter ago if that helps.
Yes. It actually does. It makes sense to me. Okay, all right, thank you. Thanks for taking my question.
And Gary, I need to apologize, I called you john at the close of your questions. I apologize.
It's okay.
Thank you. We have reached the end of our question-and-answer session. So, I will now hand it back to Mr. Duda for any closing remarks.
Well, thank you operator, and will thank everyone for joining us today. Good day.
Thank you. This concludes today's conference and you may disconnect your lines at this time. We thank you for your participation.