Diebold Nixdorf, Incorporated
Q2 2020 Earnings Call Transcript

Published: 30 Jul 2020

[Operator:]

Good day, and welcome to the Diebold Nixdorf-hosted Second Quarter 2020 Earnings Call. At this time, I would like to turn the conference over to Mr. Steve Virostek. Please go ahead.

[Stephen Virostek:]

Thank you, Olivia, and welcome, everyone, to Diebold Nixdorf's second quarter earnings call for 2020. Joining me today are Gerrard Schmid, President and Chief Executive Officer; and Jeff Rutherford, our Chief Financial Officer. For the benefit of all of our listeners, we've posted slides to the Investor Relations page of dieboldnixdorf.com, which will accompany our prepared remarks. And later this afternoon, a replay of our webcast will be made available on the same IR website. Slide 2 of today's presentation contains a reminder that our comments will include non-GAAP financial information, which, we believe, is helpful in assessing the company's performance. In the supplemental schedules of our slides and the earnings release, we have reconciled each non-GAAP metric to its most directly comparable GAAP metric. On Slide 3, we remind all participants that certain comments may be characterized as forward-looking statements and that there are a number of factors, which could cause actual results to differ materially from these statements. Additional information on these factors can be found in the company's SEC filings. Participants should be mindful that our forward-looking information is current as of today, and subsequent events may render this information to be out of date. And now I'll pass the mic over to Gerrard.

[Gerrard Schmid:]

Good morning, everyone. To support our recent debt refinancing, we pre-released results for April and May, a few weeks back, and today's comments will build on those. Our June results reinforce a solid quarter despite revenue headwinds, primarily from COVID-19. On Slide 3, I'll make a few comments regarding our midyear update. Our business showed strong resiliency this quarter, reinforcing the operating rigor and transformational work done to strengthen the company. Second quarter financial results were very good, especially when considering the widespread lockdowns from the COVID-19 pandemic and significant disruptions to economic activity. In this challenging environment, I'm extremely pleased to say that our operations were not impacted in a material way, and our profits were materially higher year-over-year, led by substantial gains in margins. And despite difficult conditions, especially in April and early May, customer orders for our solutions continued with only modest year-over-year declines. Additionally, our visibility into booking levels for the second half have strengthened over the past several weeks. We are performing well in delivering essential services to our banking and retail customers. And of course, we're continually reviewing and modifying our practices to ensure that we protect the health and well-being of our employees against the backdrop of complex and different government approaches globally. The cadence of business activity improved as the second quarter progressed, and we experienced a steady rebound in self-service transactions to the point where a number of markets have returned to pre-COVID levels. And we remain focused on executing our DN Now transformation initiatives and incremental cost actions. Our results underpinned a successful capital raise and debt refinancing transaction in July. We issued $1.1 billion of secured notes to the U.S. and European investors, and both offerings were oversubscribed. Jeff will take you through the detailed benefits of these transactions. However, the key takeaway is that we've extended our maturities by 3 years to create greater financial flexibility, while reducing our cash interest expense for 2020 and improving our tax efficiency longer term. With the refinancing now complete, our priorities are focused on completing our DN Now transformation and concentrating efforts on growth opportunities, while sustaining the resiliency of our workforce. At the top of Slide 4, we reintroduced our framework for discussing the expected impact of the pandemic on our 2020 results. This was shared on our prior earnings call. We set an expectation for mild impacts to services and software revenue with more significant headwinds to product revenue, and we expect that Q2 results would bear a disproportionate impact. Additionally, we signaled our confidence that gross margins would be improving as a result of our DN Now initiatives and incremental cost actions. Our second quarter results, shown at the bottom of the slide, were squarely aligned with this framework. Excluding the impact of currency and divestiture-related activities, service revenue declined 11.8%; product revenue declined 30.7%; and software revenue grew 2.6%. Our services and products revenue reflect significant installation delays resulting from the temporary closure of bank branches and retail stores in April and May, noticeable, especially in Europe. As we move through May and into June, installations increased nicely with far fewer delays. Software revenue growth in the quarter reflects solid demand for our software professional services activities. Turning to gross margins, our performance was strong and we're modestly better than our expectations. Our gross services margin improved significantly by 470 basis points to 30.7% in the quarter, due to our continued services modernization activities as well as reduced costs from lower spare parts utilization and lower labor costs in some markets. Products gross margin increased in the quarter by 250 basis points versus the prior year, despite the drop in revenue. This highlights the substantial progress we've made in shifting to a more variable cost structure as well as a beneficial mix of higher-margin products. Software margins expanded by 940 basis points versus the prior year, reflecting strong performance from our software excellence program as well as a favorable mix shift. Our non-GAAP operating profit growth and operating margin expansion were both very strong for the second quarter. OP increased by $24 million year-over-year to $98 million, an increase of 32%, and the company's OP margin was the best ever 11% for the quarter, a significant increase of 460 basis points versus the prior year. Our strong performance illustrates how our DN Now transformation initiatives are hitting their stride and that both our business and our employees are exemplifying a high degree of resiliency in this challenging environment. As a result, we are reiterating our 2020 outlook for revenue and adjusted EBITDA and increasing our free cash flow outlook to a range of $20 million to $30 million. Slide 5 illustrates weekly transaction data for more than 50,000 ATMs located in more than 20 different countries. While there is no doubt that the government quarantines in March and April had a dampening effect on cash transactions, by June, we saw transaction levels improve in most countries to pre-COVID levels, as these economies reopen for business. Equally important is that third-party research expects cash withdrawals to recover from 2020 levels and grow 2% annually through 2025. The continued growth of cash over the long term is a favorable indicator for our banking solutions. New business in the quarter was resilient as we experienced modest declines in Eurasia Banking and retail orders and a much more mild impact in the Americas. Key wins in the quarter included initial orders for our next-generation DN Series ATMs at a top 10 and a top 25 financial institutions in the United States. In Egypt, we sold a bundle of 350 DN Series with remote monitoring and cash deposit software. While the sales funnel for DN Series is building nicely, COVID-19 has slowed down some of the certification work occurring in customer labs. We are continuing to scale our certification activities and have increased the number of customer projects from 240 at the beginning of the year to 400 by the end of March and 475 as of today. On the Retail side of our business, we were pleased to win a 3-year contract for managed services and products contract with A.S. Watson, one of the world's largest health and beauty retailers, in support of the company's digital transformation strategy. We also secured a new $17 million managed services contract to expand self-checkout solutions at one of Europe's largest home furnishing retailers. Continued business wins like these provide confidence in the long-term strategic importance of self-service solutions. On Slide 6, we highlight key components of our value-creation journey. Starting on the left side, our initiatives to drive operating margin expansion as we've articulated in the past, are well underway and include services modernization, software excellence, simplifying the product portfolio and manufacturing footprint, harvesting G&A efficiencies and transforming and digitizing our back-office functions of IT, HR and finance. Over the past 18 months, we've demonstrated how these initiatives are driving higher profits and cash flow, even as we've experienced challenging business conditions due to COVID. So far, we have realized about 60% of the DN Now targeted savings of $470 million. And our team remains keenly focused on realizing the remaining $190 million of savings between now and the end of 2021. Our cash payments for restructuring and DN Now transformation actions are tracking to about $100 million for 2020, and we expect total program payments will be substantially complete by year-end. So that we will be realizing a higher conversion rate of adjusted EBITDA to free cash flow starting in 2021. Moving to the middle of the page. We continue to optimize the company's capital structure. Since Q3 of 2018, we have reduced our leverage from 6.5x to the mid-4s, and we remain focused on achieving our long-term target of 3x net debt-to-adjusted EBITDA. As previously mentioned, we've extended over $1 billion of maturities from 2022 out to 2025. Our recent refinancing included euro-denominated debt, which improves our tax efficiency through improved deductibility of interest, which lowers our medium-term cash tax payments. Coupled with our cash on hand, we believe, the company has sufficient liquidity to complete our DN Now transformation and increasingly differentiate our solutions and pursue growth opportunities. Going forward, we will continue to monitor the capital markets for additional opportunities to further optimize our capital structure. Looking forward into 2021, we are very focused on the differentiation and enhancements we're making to our offerings to meet evolving customer demands. Within services, we have largely completed the work to eliminate lower margin services contracts, and we're focusing on leveraging our market-leading product-related services, our IoT-enabled AllConnect Data Engine and our managed services capabilities to grow services revenues. For products, we are well equipped to gain share at attractive economics with our DN Series and self-checkout solutions. Industry-wide self-checkout penetration remains in the mid- to low single digits in our key markets, and there is significant runway in front of us for growth. To this point, the company shipped more self-checkout units in the first half of 2020 than we did in all of 2019. We're also looking to build on the recent software success as we see opportunities to increase our share of wallet with our Vynamic software offering. Key opportunities include our multi-vendor software for ATM, our cloud-native debit platform, marketing, cash management and forecasting modules. In the near term, we continue to monitor the evolution of COVID-19 across the globe, and while there may be some further country-specific contractions in business activity, our outlook contemplates a gradual recovery of economic activity through the end of the year. We're confident in the resilience of our model, and anticipate somewhat stronger top line momentum in 2021 and remain confident in our ability to create value for investors over the long term. With that, I'll hand the call over to Jeff Rutherford.

[Jeffrey Rutherford:]

Thank you, Gerrard, and good morning, everyone. During my prepared remarks today, my comments will focus on non-GAAP metrics, unless otherwise noted. On Slide 7, we provide a table, which explains our year-over-year revenue performance for the second quarter. Revenue of $890 million was impacted by the COVID-19 pandemic, foreign currency and actions we have taken to drive higher-quality revenue. Specifically, the company experienced unplanned revenue delays of approximately $108 million during the quarter, which is primarily the result of delays in product installations from the pandemic. We did not experience any material cancellations and fully expect this revenue will be recognized in future periods. The economic disruption of COVID further strengthened the U.S. dollar, which resulted in unplanned foreign currency headwinds of approximately $39 million in the quarter. Other factors were in line with our pre-COVID plan and included approximately $75 million for nonrecurring volume in the prior year period, partially offset by incremental business in the current period. Approximately $23 million from noncore divestitures and approximately $15 million from our proactive efforts to reduce low-margin business. Our efforts to reduce low-margin business have been underway for several quarters and primarily involves our services contracts. We have reached a point where the vast majority of these actions are behind us. And we expect this will be less of a factor during the second half of 2020. On the right of this slide, we show the significant gross margin expansion from our DN Now initiatives, 500 basis points more than the prior year period. Our best ever gross margins of 29.6% were made possible by significant gains across all 3 business lines

[Operator:]

[Operator Instructions]. We will now take our first question from Matt Summerville with D.A. Davidson.

[Matt Summerville:]

A couple of questions. First, with respect to DN Series, can you talk a little bit more granular in terms of where you're at with the certification and sales process? In other words, when do out-the-door volumes really begin to ramp up for that new product line?

[Gerrard Schmid:]

Thanks for the question. So just as a reminder for the benefit of everyone, what we commented on this quarter has been the really remarkable and steady improvement in the number of certification projects underway, which really reflect longer-term market demand for the product. We also mentioned that some customers have difficulty accessing their own customer labs, which has slowed down certifications by about 3 months in some markets. Prior to COVID, our view was that we're going to start to ship more meaningful volumes out the door in Q4. And I think in light of COVID, we're now looking at early into 2021 to start seeing those volumes pick up. And that's not to say that volume isn't going out the door, but just given the pacing of certifications, we're more likely to see a much more material uptick in early 2021.

[Matt Summerville:]

Got it. And then with respect to some of the more temporary benefit you're seeing to service gross margin, I think, for the quarter, it was up 470 basis points, if I'm not mistaken. How much of that improvement would you say is sort of temporary? In other words, what is the kind of the current normalized run rate of services profitability?

[Jeffrey Rutherford:]

Yes, Matt, this is Jeff. We believe that it's approximately 200 basis points above what we would consider normal and what we would internally model.

[Matt Summerville:]

Got it. And then -- and maybe just one final and then I'll get back in queue. You talked about self-checkout shipments being up in the first half of the year more than they were for all of '19. What sort of momentum do you still have in that business in the back half? And are you seeing incremental interest being borne out of COVID, as retailers look to move to -- increasingly to more low-touch type of environments?

[Gerrard Schmid:]

Yes. Matt, we've seen a very, very sustained momentum as we move into H2, and we would be very surprised if the momentum we saw in H1 doesn't carry through to H2. So quite frankly, the overall volume expectations that we're looking at now for this year are pretty close to pre-COVID levels, which is a reflection of the market really showing strength and interest in our self-checkout devices. As I've mentioned, when we did our debt roadshow, we're starting to see a material pickup in interest in European markets that were perhaps lagging other European markets for self-checkout, in particular, large-population markets like Germany that have historically lagged markets, like the U.K. are showing extremely heightened interest in self-checkout. So we would say that, that points to a very, very strong period of momentum for us in self-checkout as we move into 2021 as well.

[Operator:]

Our next question comes from Paul Coster with JPMorgan.

[Paul Chung:]

This is Paul Chung, on for Coster. So first up, just what's been the feedback on demand at some of the regional banks in the U.S.? Are you seeing any different behavior from the regionals kind of relative to the Tier 1s? And are they seeking some of these contactless-type functionality as well? Then I have a follow-up.

[Gerrard Schmid:]

Paul, yes, sure. So the regional banks have actually been pretty steady in terms of their behaviors all the way through COVID. You would have heard me talk about order entry being much, much more mild in terms of the declination in the Americas, and that was certainly reinforced by some ongoing solid order activity from the regional banks. So they've been really quite robust. And in terms of their appetite and interest in contactless solutions, I wouldn't describe their behaviors as being profoundly different from what we're seeing from the Tier 1 global banks. We are rolling out anti-microbial solutions to enhance the cleaning of machines. There's enhanced interest in mobile pre-staging and withdrawal of cash from machines. But that's been a pretty consistent trend, and we've just seen heightened interest from, quite frankly, banks of all sizes for solutions like that.

[Paul Chung:]

Got you. And then just on free cash flow, where do you see more opportunities on maybe some working cap conversion? Looks like you have a $20 million drag this year. Your near peer has been pretty aggressive on the AR collections. Can you do the same there? Or was that more kind of a benefit for you in 2019?

[Jeffrey Rutherford:]

Yes. That's a good question. Let me cover all of free cash flow. I'll start with working capital. We harvested $110 million of cash out of working capital in 2019. We've hit pretty much a plateau relative to inventory. We take inventory down much further than it currently is at, we could affect service levels. And obviously, we want to be sensitive to that. Payables, we always have opportunity, right? And receivables, we always have opportunity. So going forward, we believe, we're going to be able to harvest working capital dollars, but it's not going to be anything as significant as what we saw in 2019. Our working capital is too efficient to believe that we're going to harvest anything to that level. When we get back to the growth of the model as we transition in 2021, right, we're going to see some probably use and then our expectations would be to be flat working capital. The real opportunities in our free cash flow conversion is to get through the restructuring transformation. As we talked about on the call, that'll be approximately $100 million of spend in 2020. We do have some supplemental information in the deck that will explain the reconciliation between the cost of restructuring, transformation and the spend, but it will be $100 million. And then our expectation and our target for 2021, we have to get through our filing process, but we're targeting $25 million. And then the cash will be done for the DN Now initiatives that we currently have. Cash taxes is an opportunity. We're inefficient relative to cash taxes. We talked about it on the call. I'll tell you that our tax deductibility efficiency, the ability to utilize interest against the operating profit in 2019 was less than 50%. You can do the math if you assume that we can get closer to 100% in interest deductibility efficiency at even a low tax rate of 25%, you can see that we could impact cash taxes, $20 million. Now we're going to be tax -- consolidated tax income starting next year. So there will be some increase in cash taxes just because of the continued expansion of the operating profit of the company. And then CapEx is always going to be around -- on a stable basis, around $20 million to $25 million, right? And then the last thing -- and that would be before any projects relative to our ERP, internal systems expansions and implementations to the cloud and so forth. And then that leaves interest. There's a path with EBITDA growth in our internal models, that with the reduction in the payments for transformation and restructuring, eliminate that, get cash taxes where they need to be, there is a path with breakeven working capital to get the model to a -- approaching a 50% EBITDA-to-free cash flow conversion.

[Operator:]

We will move to our next question, and that comes from Kartik Mehta with Northcoast Research.

[Kartik Mehta:]

Gerrard, I'm wondering, if you look at the geographies, the U.S., Asia, Europe, if you're seeing any difference in demand on the banking side, and obviously, retail, you're more tied to Europe. So maybe if there's any differences in demand in Europe as well for the retail side.

[Gerrard Schmid:]

Q2 was interesting for us because from a revenue perspective, Eurasia Banking was much, much more impacted by COVID and Americas Banking, and from an order entry perspective, we saw more modest declines in Eurasia and much more mild declines in the Americas. So for that particular quarter, slightly lower demand in Eurasia. However, I don't think that's indicative of what we're seeing more structurally. If you go back to Q1, we saw extremely high demand in Eurasia Banking. And as we look out and look at our sales pipeline for the back half of the year, both Americas Banking and Eurasia Banking is showing some nice improvements, and we'll start to see some sequential improvements in revenue growth. On the Retail side, as you rightly quoted, we've got more exposure to Europe than anywhere else in the world. And as we've commented in the past, we're seeing very, very strong demand for self-checkout with moderating demand on the point-of-sale side of things.

[Kartik Mehta:]

And then, Jeff, I guess, what's the next step for the -- on your debt side? Obviously, extending the maturities really is helpful, kind of, gives you some room to breathe. I'm wondering maybe the next steps on the debt.

[Jeffrey Rutherford:]

Kartik, the next step on capital structure, right -- and by the way, all options are on the table, right? But we really need to continue to perform relative to operations. And then our opportunities will expand. We already talked about the continued expansion in operating profit and the continuing expansion of cash flow and the free cash flow conversion from EBITDA. But we will monitor all capital structures or markets. And we are not committed to anything right now relative to capital structure. What I will say is where we're at right now isn't our optimal capital structure, right? Our -- based on our current EBITDA, debt is high, we're probably -- I think everyone would admit that we are a turn high relative to debt-to-EBITDA. We need to address that either through operations or some other means. So we'll continue to monitor capital structure in markets, but we're not -- obviously, we're not going to commit to anything today. But you can be assured that we're continually monitoring that. What we have done, and we said this during our non-deal roadshow and the deal roadshow on the refinancing. What we have done is give ourselves the flexibility to get through the DN Now transformation in 2021. We now have the space that we aren't worried about debt maturities in 2022 become current in 2021. So it gives us all kinds of options. But the real focus of the company is to continue to operate. And then all the opportunities to address our -- what we would all admit is a deficient capital structure, we'll open up to us.

[Operator:]

Our next question comes from Jeff Harlib with Barclays.

[Jeffrey Harlib:]

So for the COVID delays and the deferrals, as you look across the company, do you see those -- any visibility on those being implemented in the next quarter or 2 quarters from now? Or is it still unclear? How does that factor into your revenue expectations?

[Gerrard Schmid:]

Yes. Jeff, as Jeff commented, we haven't seen any cancellations of orders. So what we're starting to see is an uptick in installation activity. Obviously, that's counterbalanced by some ongoing conservatism from some of our other customers that might have been placing orders in Q3. So our expectation is that under the assumption that the world continues to steadily improve, we'll start to see a steady sequential increase in revenues. But we're not expecting a rapid snapback or a sudden surge of incremental revenues, but more of a steady improvement over the next few quarters.

[Jeffrey Harlib:]

Okay. And sort of independent of COVID or once we get through COVID, how do you see the upgrade cycle as you look at Banking Americas, Banking Europe with respect to Win 10 upgrades and also on the retail side, where I know, there have been some upgrades over the last couple of years?

[Gerrard Schmid:]

Yes. So if you go back and look at the commentary from Q1, we saw very, very strong order activity in Eurasia, which was reflective of what we saw as strengthening end market demand on the banking side of things, given that Eurasia was lagging the Americas from a Win 10 perspective. However, we're still seeing decent order activity from the regional banks and banks in Latin America, as evidenced by the order activity we saw in Q2. So as I've said on multiple occasions, we are not of the view that Win 10 by itself causes a material surge or a material drop in demand. It will ebb and flow somewhat, but there's much more fundamental reasons for upgrade cycles in the banking segment, driven by increasing shifts towards cash recycling capability, driven by increasing shifts towards software upgrades in the contactless space. So Win 10 is a -- it's a much more modest factor. On the Retail side, there have been a number of upgrades. But quite frankly, we think that, that is an opportunity for us, not a threat as more upgrades come due in Europe. We think that there will be a fairly material upgrade cycle in front of us in self-checkout, in particular, plus growth and increased penetration. So we think that those industry dynamics are attractive over the next several quarters.

[Jeffrey Harlib:]

Okay. And last for me, just on the DN Now initiatives. What are the initiatives that are still sort of ahead of you looking into the second half and into '21? I know you talked about Accenture is one. What else are you looking to do to complete the initiative?

[Gerrard Schmid:]

Yes. I mean, if you look at the sequencing of how we executed our DN Now program from 2018 through till now, the early wins came to us through material improvements in net working capital. We then spent a lot of time focusing on gross profits and gross margin initiatives, for example, services modernization work and our manufacturing footprint. And 2020 is primarily a year that's been heavily focused, but not exclusively focused on G&A efficiencies. So we're right in the midst of some fairly profound improvements in our G&A cost base, led by our finance transformation. So those are in-flight and will largely be complete through the back end of 2020. As we look into 2021, there is a fairly substantial transformation in-flight regarding our HR function as well as our IT systems with Accenture.

[Operator:]

Our next question comes from Rob Jost with Invesco.

[Robert Jost:]

I wanted -- you've talked a bit about self-checkout strength. But thinking about the point-of-sale as well, some of the retail, and I think you're exposed more to the bigger retail customers. I've seen a lot of strength in this COVID era. Are you seeing any strength in point-of-sale at this point? Or is it still that kind of declining environment that you talked about in the past?

[Gerrard Schmid:]

So Rob, point-of-sale over the past several years has shown modest top line strength. We saw a little bit of a weakening in Q1, and that certainly played itself out in Q2. So I think we're still in the COVID-induced weakness period for point-of-sale. I think it's too soon to say how we feel about point-of-sale. And as we look into 2021, there may still be a little bit of softness there. But as I said, that's been nicely offset by what we're seeing in self-checkout. And I think that's, quite frankly, driven more by strong consumer preferences for contactless, touchless solutions, where I'd far rather interact with a self-checkout device than a teller-assisted point of sale.

[Robert Jost:]

Okay. Great. And my follow-up is on the software margins. You called out a few reasons why they were up. They were up very substantially. Kind of similar to the question you got on the services, where how much of this should we think about as a more normalized gross margin given all the improvements you've done with the DN Now?

[Gerrard Schmid:]

Yes. The gross margin improvement in the software is not tied so much to COVID. It's actually through -- we had some change in management, and we are doing a much better job, in particular relative to professional services and utilization of technicians. We still think that we are a little above what we would internally model, and we've talked about 100 to 150 basis points above our current modeling level for software.

[Operator:]

Our final question comes from Barry Haimes with Sage Asset Management.

[Barry Haimes:]

I have one question on the DN Now savings. You talked about the run rate now and the remainder over the next 18 months. But if we look on a year-over-year basis, '21 versus '20, how much incremental savings will there be in '21? And then at the end of '21, while you'll be essentially complete, you'll have carryover '22. So same question, incremental save '22 versus '21? That would be very helpful to get a flavor for that.

[Jeffrey Rutherford:]

Yes. And what we've said is we've targeted $470 million of savings. And we realized $175 million in 2019, and we've talked about $130 million in 2020, which leaves $165 million for 2021. But we've also talked about publicly when we came out with the April and May results, and we talked about $100 million of incremental benefits and we talked about $50 million of those being nonrecurring. So essentially, we've added $50 million into 2020. We haven't called it that, but what it would do is take 2020 to $180 million. We are working internally on our 2021 modeling. And the question is when are we going to -- not if, when we're going to take up our targeted savings for DN Now. And so essentially, we're sticking with 2021 of $165 million. And so we're still calling that incremental $50 million in 2020, incremental savings we haven't attributed to DN Now. But we'll have a further update on the full range of the DN Now savings. And let's -- I'll just say it now, it's not -- if we take it up, it's one we take it up officially. And I guess I just did that by $50 million. So we're looking at something over $50 million -- I'm sorry, $500 million in total savings for DN Now.

[Barry Haimes:]

Okay. And just to clarify to make sure I understand the $175 million for '19; $130 million, '20; and $160 million...

[Jeffrey Rutherford:]

$130 million plus $50 million of incremental.

[Barry Haimes:]

Right. But those are end of year run rates as opposed to actually...

[Jeffrey Rutherford:]

No, no, that's...

[Barry Haimes:]

Of savings in those years.

[Jeffrey Rutherford:]

Those are actual savings. Those are actual savings in those years.

[Operator:]

That concludes today's question-and-answer session. Mr. Virostek, at this time, I will turn the conference back to you for any closing remarks.

[Stephen Virostek:]

Yes. I just want to thank everyone for participating in today's call. If you do have follow-up questions, please feel free to reach out to me via phone or email. Thanks so much, and have a great day.

[Operator:]

Thank you all for your attention. This concludes today's conference. You may now disconnect.