Houston Wire & Cable Company
Q3 2019 Earnings Call Transcript

Published: 12 Nov 2019

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to Houston Wire & Cable Company's Third Quarter 2019 Earnings Conference Call. My name is Sydney and I will be your operator for today.Joining us on the call today are Jim Pokluda, President and Chief Executive Officer; and Chris Micklas, Vice President and Chief Financial Officer. Today's call is being recorded for replay purposes and all participants are in a listen-only mode. At the end of the financial discussion, we will conduct a question-and-answer session and instructions will be given at that time.Comments during today's call may include forward-looking statements. Any such statements are based on assumptions that the company believes are reasonable, but subject to risk factors that are summarized in press releases and SEC filings. Forward-looking statements are not guarantees and actual results could differ materially from what is indicated in such statements. Any forward-looking statements speak only as of the date of this call and the company undertakes no obligation to publicly update such statements. If you did not receive a copy of the earnings press release that was distributed earlier this morning, a copy can be found under the Investor Relations page of the company's website at www.houwire.com.At this time, I would like to turn the call over to Jim Pokluda, President and Chief Executive Officer. Please begin when you are ready.

[Jim Pokluda:]

Thank you, Sydney. Good morning, everyone, and thank you for joining us on our call today. I'll begin with a brief update of our third quarter results, and then I'll pass the call over to Chris, who will discuss our financial performance in greater detail and also provide updates on recent accomplishments. As a reminder, today I'll be referring to revenue results that have been adjusted to reflect the third quarter's aggregate reduction in the price of metals. As I mentioned during the second quarter earnings release call, we experienced a mid-summer slowdown that negatively impacted customer demand and sales. We felt the effects of this pull back in the latter part of Q2 and the early part of Q3. Market conditions and customer demand began to improve in August and September, but we were unable to offset the pressures from the beginning of the quarter, and overall Q3 revenue declined approximately 3% versus the prior year period. On a sequential basis versus the second quarter of 2019, sales grew approximately 1%.Gross margin was 22.8%, which was down versus the prior year, but not unexpected given the industrial slowdown most companies in our industry are experiencing. For the entire year to date period, gross margin remains slightly above prior year at 23.9%. Operating expenses, excluding one-time expenses due to the closure of the Attleboro, Massachusetts Vertex facility, decreased 18 basis points versus the prior year period. In just a moment, Chris will provide greater detail on the costs associated with this transaction. Net income adjusted to exclude costs associated with the Attleboro lease termination was $1.1 million. We estimate the sales results in our core business, which services maintenance repair and operations demand, decreased approximately 4% from the prior year quarter, and were up sequentially. The sequential growth was primarily driven by increased activity in certain industrial regions and the reduction of supply chain disruptions from the trade war with China that has been negatively affecting inventory levels and sales of fastener products. We estimate that project sales generated from oil and gas, utility power generation and industrial manufacturing end markets decreased approximately 1% versus the prior year period and improved 12% sequentially versus Q2 of this year.Finally, as we move further into the final quarter of the year, the improved levels of business activity experienced in August and September have continued through today. We are encouraged by this trend, although on a year-over-year basis, the overall operating environment remains more challenging. Accordingly with the long view in mind, we are laser focused on the items within our control, and top priorities remain delivering best-in-class customer service, executing prudent expense management, driving operational excellence and reducing debt.With that, I will now turn the call over to Chris for a more detailed analysis of our third quarter results, as well as an update on progress made in other areas of our business. Chris?

[Chris Micklas:]

Thanks, Jim, and good morning. Today throughout my prepared remarks, I will cover the third quarter 2019 results and would first like to cover the Attleboro lease termination as it impacts many of the metrics to be discussed.As I mentioned on the second quarter earnings call in July, we agreed with our landlord to modify the terms of the lease agreements at Vertex's Massachusetts facility. This includes early termination of the lease on November 30 and subleasing a portion of the space until the end of November. In connection with these changes, we agreed to pay the landlord approximately $2.5 million. After considering all accounting impacts in non-recurring expenses associated with this agreement, we had charges of $2.2 million to operating expense in the quarter. These charges reduced our earnings by $0.11 per share. However, the long-term value of this agreement is a net savings of approximately $4 million in future rent, property taxes, insurance, utilities and anticipated maintenance. Additionally, we are now freed up to strategically locate our facilities along improved transportation corridors and closer to our customers. We are on plan to operate before year-end new facilities in Chicago and Edison, New Jersey. The net result of combining the Attleboro savings and the additional cost of the new facilities is an annual operating savings of approximately $1 million.In the third quarter 2019, HWC had a net loss of $721,000 or a loss of $0.04 per share. Adjusting for Attleboro, we earned $1.1 million or $0.06 per share. Sales for the quarter were $85.4 million, a decrease of 5.2% from the third quarter of 2018 with metals negatively impacting the results by approximately 2%. The margins were 22.8%, a decrease of 100 basis points from the prior year. Operating expenses after adjusting for Attleboro were down $1.1 million or 5.8% as we managed salaries and commissions in line with the sales decline. Additionally, our other operating expenses, which were down 8.1%, benefited approximately 4.5% from the non-recurrence of prior year warehouse moves.Interest expense in the third quarter was $812,000, which is up $73,000 from the prior year with the average debt of $78 million up $1.1 million from the third quarter of 2018. The average interest rate was 4%, a 20 basis point increase from the same period in 2018. Finally on the income statement, our tax rate was 19.8% and reflects the impacts of the Attleboro charge. Absent this charge, our tax rate would have been within our communicated range of 26% to 28%. The prior year tax rate of negative 6.4 was impacted by the release of our valuation allowance.Turning our attention to the balance sheet cash flow and liquidity, during the third quarter of 2019, we used $2.8 million operations and our working capital was $133.4 million at the end of the quarter. The use of cash in the quarter was mainly a result of payment for an opportunistic inventory buy at the end of the second quarter. Although we were able to sell a majority of the items purchased, our inventory remained high as we worked to rebuild Vertex's inventory, which has been impacted by disruptions caused by the ongoing tariff and trade negotiations and their warehouse restructure and activities. We continue to manage these disruptions and changes in supply lines, and believe our inventories will remain at similar levels throughout year end. However, we anticipate that during the first quarter of 2020 we will be able to monetize these excess inventories and our inventories will return to the levels demonstrated in the past.Cash paid for capital expenditures during the quarter was $867,000, and year to date is $1.7 million. Dispense for the quarter was elevated above normal levels, mainly because of a $284,000 in information systems as we successfully implemented a new ERP system and infrastructure projects. These information system changes are part of our digital plan, which is aimed at improving operational efficiencies and customer service. As I previously mentioned, we anticipate about $2 million in total CapEx for the full year, and we believe that we will finish the year slightly above that $2 million level. We remain in compliance with the covenants of our $100 million asset-based credit facility. At the end of the quarter, we had $20.3 million in available capacity. During the third quarter, we repurchased $1.1 million of stock or 235,000 shares. This represents 1.4% of the shares outstanding. Currently, the program has $8.1 million available to repurchase outstanding shares of common stock from time to time depending on market conditions, trading activity, business conditions and other factors.In closing, I would like to reiterate that despite some market challenges which have the effect of pressuring our sales, we were able to continue our operational improvements in several areas, in particular, fixing Vertex's distribution network, cutting operation expenses and implementing several business process improvement projects, most notably our new ERP system. The top priorities remain executing on our growth and operating plan, driving profitable growth and using lean techniques to drive out waste, disciplined expense management and improving shareholder return through retirement of debt and repurchasing our shares. In conclusion, concludes my prepared remarks, and I'll turn the call back over to the operator.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Damon Benedict with Nierenberg Investment. Please proceed with your question.

[Damon Benedict:]

Good morning, Jim. Good morning, Chris. How are you?

[Jim Pokluda:]

Fine. Good morning, Damon.

[Chris Micklas:]

Good morning, Damon.

[Damon Benedict:]

So some tough end markets obviously in oil and gas right now and not too surprising to see a down 3% year-over-year revenue decline X metals given that. Could you refresh us on the areas of exposure you've got in upstream, midstream, downstream oil and gas in markets and where you're seeing most of that year-over-year revenue headwind right now?

[Jim Pokluda:]

Sure, Damon. And likely, you will be our only caller, so please just feel free I think to pass questions as we go along here. Unlike 2018, the summer doldrums kicked in this year and as I mentioned in my prepared remarks, towards the end of Q2 and the early part of Q3, we experienced an unexpected slowdown in industrial markets overall but primarily in oil and gas, and primarily in the upstream and midstream oil transportation and storage infrastructure. Those trends have largely reversed now, beginning in the middle to latter part of Q3. To answer your question specifically though, during that doldrum period, several things converged, one of which I don't like to say but it's the truth, the vacation season was a headwind. Sourcing pipe in the midstream transportation infrastructure was another problem and CapEx slowed down due to the pull back in price of oil, which is especially frustrating because as you know the pipeline infrastructure out of the Permian is woefully underdeveloped. Nonetheless, we had a pullback in that period. It was in the pipeline infrastructure, transportation infrastructure and the support units that go along that. So pumping stations, compressor stations, metering stations, et cetera. That's really in our wheelhouse for specialty wiring cable products. Fortunately, that trend reversed in August of this year and we had a good September and so far through–good September, good October and so far through November significantly up versus the summer period. With respect to other investments in industrial, approximately 20% of our sales comes from projects, and that's a derivative of CapEx. So when markets get a little skittish, we're worried about what may happen with interest rates, trade wars, Capitol Hill. They tend to procrastinate CapEx spend. It's important to note this though.As I mentioned this on the last call as well. They're just procrastinating it, pushing it to the right a little bit. I've not seen any material jobs being cancelled. Why? Because they're too far into it. As I said also earlier, it takes a long time to license, approve and fund these projects. So depending on what's going on in the present day, you may see some malaise with respect to actually pulling the trigger to get this work going. We're beginning to enter the seasonally slow period of the year, which is always a little bit frustrating, but we are encouraged that despite mark headwinds and an industrial economy that it's still above the line but on the downward slope of the economic cycle slowing down. We have to be mindful that things may slow later in the quarter. Overall though, I will report that voice of customer book to bill ratio project pipeline activity overall is still pretty good. And oil and gas is pretty good to very good. It's just that during this past summer, it wasn't as extraordinary as it was in 2018 and the effect of that is seen in our results.

[Damon Benedict:]

Okay, makes sense. And on the bright side, if you look at sequentially Q3's year-over-year result was down three versus Q3 down seven I think, so directionally things got better even though it was a tough quarter and sounds like there's the potential for things to get a little better from here in Q4.

[Jim Pokluda:]

Well, yes. Project business sequentially was up significantly 12%, which is always encouraging because sequential results are a good indicator of market strength. On a two-year stack Q3 over Q3, we're up approximately 6%. So that's also encouraging as well. The reality of a small business and a business who's revenues and profitability can swing quite a bit based on project activity is that moves are often not linear, somewhat choppy. We are happy to see the sequential growth. As I said before, we're mindful that Q4 tends to be seasonally slow. Ultimately though, I'm encouraged that the voice of customer and the value proposition remains very leverageable and very much in demand. We don't like to see projects pushed out, but they're going to happen. They're in process. And evidence of that was at least last quarter nice sequential growth.

[Damon Benedict:]

Great. And can you remind us -- I think you'd said before roughly 30% of your business is direct into energy and markets, and maybe 50% more indirectly. Is that still the right sort of mix there?

[Jim Pokluda:]

It is. If you -- literally exactly as you said

[Damon Benedict:]

Okay. And maybe you could tell us a little more about what you're seeing outside of oil and gas in the general industrial side.

[Jim Pokluda:]

Sure. Well general industrial I think most would say has slowed on a year-over-year basis, and we use industrial as a pretty big catch all that includes oil and gas, industrial manufacturing, general manufacturing, even mining and minerals and pulp and paper. It's fair to say that business activity overall in industrial is down slightly year-over-year. Other end markets though that include non-residential construction or commercial construction remain quite good. I know that single-family housing starts are down. Multifamily are about flat. We felt a little bit of that effect, but commercial construction remains quite good, as do our sales to those end markets.

[Damon Benedict:]

Okay, great. And on gross margin, maybe a question for Chris. Can you help us understand the roughly 100 basis point year-over-year decline? Maybe separate how much of that was copper and metals deflation and inventory accounting driven versus competitive pricing in the market or just cost deleveraging from lower volumes or what the various drivers were there.

[Jim Pokluda:]

Damon, let me take a cut at that and Chris may chime in from time to time. You're right, overall, it's 100 basis point -- exactly 100 basis point decline quarter to quarter, and there are a lot of moving parts there. And I'll try and dissect them by product category. Fasteners for example are largely imported from overseas markets, Asia primarily. As are certain of our wiring, cable steel products, which both product categories probably have been highly impacted by tariffs. We're doing the best we can to pass those price increases along. But man, it's tricky Damon, because there is a lot of product -- there was a lot of product still in the channel costed at the all level and the pricing discipline by some others in the marketplace was not good. So although we feel like we did a good job re-matrixing prices and passing these increases along, that didn't materialize equally as well in the broad marketplace with our competitors. So the bottom line is with certain product categories, steel, wire, rope and fasteners, there was a lot of pricing pressure.On top of that, particularly in steel, there's been a significant amount of deflation in the price per pound of the metal. So as a distributor, you can imagine the pressures that applies because when you have inventories costed at the higher level and the spot market price reduces, it can be a bit of a burden for a few quarters until you cycle out the old product and average cost in the new product. So pricing pressures there. In the other end markets, particularly oil and gas when they slowed down, price reductions were necessary in order to remain competitive. So that was another headwind. On the side of the equation, we made advances with fabrication of certain products, heavy lift swings services or fees that came from engineering services, rentals to help offset some of these margin declines. But they weren't enough to offset it in its entirety.And then, of course, you had some metals deflation, which we've already talked about, in copper particularly that accounted for -- well all in, all metals combination of about 2% quarter over quarter. Pricing is a real tricky thing and when markets slow down you have to be responsive in the interest of retaining share. If it's necessary to cut the price in certain areas, we will do that. There comes a point when you say no. I think that it'll flatten out from here and we won't see much further decline relative to what we did in Q3. That gives me some peace of mind. And most recently, it looks like we're making some advances with the trade weighted average rate; so that would be nice as well.Chris, do you have anything else you'd like to add to that?

[Chris Micklas:]

No, that's good. It's consistent with what I had. I just wanted to make sure we got it out.

[Jim Pokluda:]

Okay. All right. Super. Damon, I hope that helps. But I'm happy to take any follow ons to that question because there are a lot of moving parts to that question.

[Damon Benedict:]

Yes. No, it's very helpful. And particularly good to hear that much of the competitive price pressure is just a slower reaction to tariffs compared to you guys and that's the type of thing that'll just -- that'll take care of itself over time as your competitors realize they need to do something.

[Jim Pokluda:]

Yes, either intentionally or they'll run out of the cheap stuff and they'll have to do the right thing.

[Damon Benedict:]

Great. So on the operating expense line excluding Attleboro; another quarter of great cost control. Impressive you were able to reduce expenses in line with revenue. And that's been multi-year record of good execution in our opinion on that front. So could you tell us a little bit about the sources of cost savings this quarter and frame it within your longer term effort?

[Jim Pokluda:]

Damon, I'll just identify a few broad areas and Chris will be able to provide additional detail beyond it. Thank you for recognizing that. Certainly, there were some reductions due to variable comp, but it's a far bigger story than that. Our execution of lean and lean processes and controls have been very successful. It's an exciting initiative for our company and there are real gains that are coming from it. Chris and his team lead that. Productivity improvements have also been very noticeable. Cuts per hour, lines per hour, pounds shipped per hour at certain of our distribution centers are up remarkably year-over-year, which has allowed us to operate more efficiently. Those gains are evident in the numbers as well. Chris, anything else you'd like to add to that?

[Chris Micklas:]

Yes. I was just going to say -- Damon, what we're doing is we're using a lot of analysis to study better ways to do things, and this is why I'm particularly proud that we've been able to change the ERP system to be able to get a new system going that's more modern and allows us more flexibility because our desire is to use the data to drive decision making. So we're using lean take techniques and looking at just wasted time and wasted effort and working to eliminate those particular activities out in the shop so that we can take out anything that's non-value added. So that was the part that drove the variable piece I'm going to call it of our labor is actually down quite a bit. So when I mentioned that salaries are down in line with sales, well that's actually better because the sales was the gross sales, not the net sales, and we've been able to reduce our staffing and organize better around getting product out the door.So to me, the success here is that every time we do something now we're looking at it and training people and looking at it to reduce any wasted energy getting it out the door so we can provide the best customer service with the least amount of effort doing it.

[Jim Pokluda:]

Damon, I'll just add one more comment there that this should not be taken lightly. This exit from the lease in Attleboro, Massachusetts has been an enormous undertaking. It's a very large facility. It's where formerly we housed the majority of our fastener products. Moving that product to new regional geographies to better support customer demand and round out mix and optimized mix to service regional in customer demand is something that's very exciting. Our new facility in Chicago -- we're literally in the process of moving there as we speak today. We'll be done very soon, followed by a transfer of product and implementation of systems in Edison, New Jersey, where we have formerly not had a footprint. We're really excited about this. These will be state of the art facilities with state of the art material storage and material handling, highly talented and qualified labor, and we're doing it all with a smaller footprint and saving a lot of money

[Damon Benedict:]

Right. Well, $1 million annualized versus $2 million out the door up front, we take a 50% return any day so sounds like a no brainer.

[Jim Pokluda:]

Even I can do that math, Damon.

[Damon Benedict:]

Back to the ERP for a moment. You mentioned some customer service improvements as well on top of the operational side. So can you tell us a little more about the digital customer interfacing sort of improvement you'll see?

[Jim Pokluda:]

Yes and no. So at the highest level, the objective is to think about how to use digital technologies to enable an advanced enterprise strategy. That's a pretty nice statement. And there's about 2 two months of conversation that can come behind that. We have tons of data. We have a great ERP system that's now updated to the most recent platform. The challenge is to extract that data intelligently to get us to the next steps with our customer service strategy, business development strategy. It's an enabling agent. And there's just a wealth of things we can do in the interest of confidentiality and for competitive purposes. I think it's probably best not to get too much into the weeds other than just say we've converted the system. We have a lot of very smart people on the team that know what to do and how to do it. And we have a plan -- a well-architected plan that identifies priorities that are currently underway.Our customers will see the manifestation of that work over the next year, it's a journey as you know, not a destination. But you have to have the appropriate foundation, the infrastructure, the cornerstones in place to be able to do any of this. You have to have the desire. You have to have the systems. You have to have the talent and the human capital to do it and the passion. We have all of that so we're very excited about this. There's lots of work to do and we'll never be done.

[Damon Benedict:]

Taking it back up a level, big picture. Jim, you've spoken before on these calls about the long term earning history of the business and the fact that the company has generated more than $1 of earnings per share in years past. I know it's been a while since we've seen that level and there have been some changes in the markets you serve like utilities moving away from coal toward natural gas and the lower product intensity that results from that. But you've also made great progress on cost structure. You've developed new areas for growth like aluminum, for instance. It shrunk the share count by 5% or 10%, since last time you earned $1. And I think you've said in the past that netting all of the various headwinds, tailwinds changes that nothing structural is so different in your business that it would prevent you from reaching $1 in earnings per share again sometime in the future. So I'd love to hear you refresh us on the pathway from where we are now running it $0.40 to $0.50 a share if I look at year-to-date or past 6 quarters or so to getting back to that dollar plus in earnings power.

[Jim Pokluda:]

Another big question. We have a multi-year plan which gets us there. And there are multiple levers that we will execute to do that. Let's try and dissect them. Sales, as you mentioned, and mix around sales today isn't what it was in 2006 when we were selling the coal-fired power plants. The important thing though is that the value proposition and miscues in the mix that we deliver through the value proposition applied to multiple end markets in multiple geographies. So although we're not building coal-fired power plants, at least in utility, we're still scrubbing and putting environmental compliance devices on the existing fleet and the coal-fired at the natural gas-fired plants that we're building today.Wind and solar consume our products, not to the extent that coal would so we have to find new markets and we have. If you look at the industrial landscape today versus 10 years ago, very few people even knew what fracking was in 2006. I know it's been around for decades, but the average guy on the street didn't know that. Today, the U.S. is the largest oil producer in the world and the supply stack and the hydrocarbon resources get better and better every day. So it's our view that although we're disappointed that coal is gone, fracking is big, oil independence is critical to our future and the natural resource available is not going to go away. So sales are one lever.OpEx is another lever. Today we're running at slightly over 20% OpEx to sales. The good thing about this business is that when the top line increases, we realize a tremendous amount of pull through leverage, and you've seen that. Most in the industry would say anything above 50% is good and last year, we're in the mid-70s. So to the extent that we can improve the top line, we'll realize a lot of leverage on the OpEx line and as that ratio improves, initially falling below 20% and gets into the range of where we were formerly, 18%, 19% there will be a lot of EPS availability that comes from that.Gross Margin improvement is another objective. Although recently market headwinds have pressured that. That doesn't mean that we can't improve in certain areas of our business. So we talked -- I talked a little bit about the fabrication end of our business and services around services that come with the fabrication of products or rentals, actual fabrication of rentals and engineering services, high profit revenue streams. When trade war disruptions work their way through the system, I expect to see a lift in product margins for both fasteners and bulk steel wire rope. As we make these improvements in our business, we'll be able to retire debt and that's the key component of our strategy. So right now our leverage is a little high but over the next several years, we have a well-architected plan to bring that down to a point where we land in an area of 2.5 to 3 debt by EBITDA -- debt divided by EBITDA. When we do that and coincidentally repurchase shares, the combined effect of all this improve utilization of working capital sales to working capital ratios, debt to EBITDA, reduce share count, top line growth will all contribute to making this company far more profitable than it is today.You've asked a really big question and I've tried to give you a high level response to help set up some bumper rails. The important thing to take away from this is that we have a plan. It's a plan that gets us to what you're describing over the next couple of years. And in my view, at least, it doesn't require any remarkable things to occur in the marketplace. Other -- what we need to do is incrementally attack the components that can help us, top line expense management, gross margin optimization, debt reduction, share repurchase, and the combined effect of all that takes us to a very nice place.

[Damon Benedict:]

Wonderful, fully agree. And the last time you were in that sort of place, the stock prices were in the teens so clearly plenty of upside for investors with the patience to wait for you to execute on it. One more just on the new product area and revenue growth. I think a couple of years ago you had invested in some new experienced talent and charged those folks with finding some avenues for growth, new categories. Can you catch us up on where that stands and what progress has been made there?

[Jim Pokluda:]

Yes, but I want to be careful and not get too far out over our SKIs here. We have multiple product categories so again, this would be quite a long answer. I'll do my best just to address a few items for each one of them because everyone's different. Certain of our product categories require sales excellence more on the business development side which would be outside sales, for example, simply acquiring new customers. We already have the products they need. We just need talent to go get a new customer. We've made investments there. Other product categories, one can realize immediate leverage through application engineering expertise that sits on the desk. So we have a business development unit that recruits at the college level and trains sales candidates for a period of time and we move them out into the field and application engineers sales positions. That's working.Other product categories actually require new vendors and new SKIs themselves. So we have expanded supply lines overseas, made new vendor relationships, enhanced old vendor relationships, invested in people to help us develop the supply and distribution logistics infrastructure. That's paid off. With respect to new product development, we've had a very high concentration of customers in the general industrial marketplace. And that's wonderful when industrial is doing well but it leaves you pretty exposed when it's not. So commercial end markets, construction end markets, as you know, have been quite good for the past several years. You remember this. There was a time when living in the city was kind of taboo, and now living in the suburbs you feel kind of like a loner. Spend a lot of huge movement nationally for communal development in urban areas and the restaurants and the shops and the stores and the entertainment venues that come with that. That's been driving a commercial construction.And we've added to the skill sets and product category managers that can help us in those areas. Those products require new suppliers, different distribution and logistics, service platform and a slightly different type of sales force. And we've made investments in all those. So again, for competitive purposes, I wouldn't want to get too specific with you here but the message we want to leave you with is we're not standing still. You've got to continuously challenge the status quo and look for new market opportunities and new customers and the service platform and value proposition to support that. And we've been doing that actively for the past 8 years.

[Damon Benedict:]

I'll leave it just with a comment. So by my math your quarter ending tangible book value is $4.30 per share. And as I look at small and micro-cap equity universe, it's pretty hard to find good companies with solid histories of profitability well run and executing well at a discount to tangible book. So looking at that on the downside support and the potential for $1 in earning power again at some point with the $4 stock we like our investment odds here. So, thank you for everything you're doing and nice to see you restart the share repurchase, 6-ish percent annualized pace to start. So it's a nice healthy rate and we think you're doing the right thing for long term shareholders. So appreciate all the hard work.

[Jim Pokluda:]

Well, thank you very much for that, Damon. I've enjoyed visiting with you today. Chris has enjoyed visiting with you today. And now we're going to go back to work.

[Operator:]

[Operator Instructions] This concludes our Q&A session. I will now turn the call back to Jim Pokluda for any closing remarks.

[Jim Pokluda:]

Thanks, Sydney, and thanks to our valued team members for their continued hard work and dedication to the company. To our shareholders, we appreciate you joining us on our call today and we look forward to the success in the period ahead. Good day, everyone.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.