REV Group, Inc.
Q2 2021 Earnings Call Transcript

Published: 8 Jun 2021

[Operator:]

Greetings. Welcome to the REV Group Second Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Drew Konop, Vice President of Investor Relations and Corporate Development. Thank you. You may begin.

[Drew Konop:]

Thank you, Sherry. Good morning, and thanks for joining us. Last night we issued our second quarter fiscal 2021 Results. A copy of the release is available on our website at investors.revgroup.com. Today's call is being webcast and a slide presentation, which includes a reconciliation of non-GAAP to GAAP financial measures, is available on our website. Please refer now to Slide 2 of that presentation.

[Rod Rushing:]

Thank you, Drew and good morning to everyone joining us on today’s call. I will begin with an overview of the quarter’s consolidated performance and then move to commercial, financial and operating highlights achieved within the quarter before turning it over to Mark for detailed segment financials. We are pleased to report our best second quarter adjusted EBITDA results since our IPO in 2017 and our best adjusted EBITDA margin performance for the third quarter of fiscal 2018. I would add that we were able to deliver these results we're faced with continuing challenges in our supply chain and labor related constraints. Within the quarter, we successfully mitigated shortages of supplies, such as microchips, chassis sub components, and the availability of qualified labor in many of our businesses. Our proforma reflects the commitment of our employees to serve our customers and communities, while improving their productivity enabling us to mitigate these impacts and challenges. Second quarter net sales of $644 million increased 18% over last year's quarter, as last year's quarter was impacted by reduced production stemming from the onset of the pandemic, excluding the divestiture of the two shuttle businesses; sales increased 26% organically versus the prior year. The quarter sales were driven by increases in Fire & Emergency and recreation segments. Fire & Emergency sales reflect our improved line rates combined with our available backlog and was in line with our expectations for the quarter. Recreation sales exceeded expectations and benefited from recent dealer signings that yielded market share gains. We also realized the combined benefit of price realization and increased line rate execution. F&E and RV performance enabled us to offset top line softness in the school bus end market and labor constraints in our municipal transit bus that affected our production. The quarter also had a strong order intake to match the sales performance with book-to-bill of 1.5 and we exited the second quarter with a record backlog of $2.3 billion.

[Mark Skonieczny:]

Thanks, Rod, and good morning everyone. I'd like to begin by addressing some common challenges that have surfaced as a pandemic begins to fade. Almost universally, companies have seen increased demand following a relatively long period of reduced output. Competition for raw materials has contributed to an inflationary environment with high prices for commodities such as metals, lumber, and foam. Not only did costs go up, but the availability of many of our required components went down. For instance, recreation markets have seen shortages of small picket items such as awnings, furniture generators that can limit the completion of a shippable unit. Shortages of semiconductors have slowed or stopped production of chassis and smaller components such as diesel exhaust fuel tanks. Fortunately, our financial results demonstrate that within the second quarter, REV was largely able to mitigate the short term impacts of both inflation and part shortages. Since arriving, I've been speaking about inefficiencies on the balance sheet, particularly an inventory. Within the quarter as we executed our plan to reduce and improve the quality of inventory, it benefited both the top and bottom line. First by locating or substituting stock parts for others that were in short supply, we're able to produce ship and revenue our vehicles. Second, those stock parts often have been purchased prior to the onset of inflation, providing a margin benefit do the lower cost basis. As we continue to improve our quality of inventory and led to the second half, realizing incremental benefits will become more challenging. In this environment supplier to put manufacturers on allocations, making alternative sourcing a necessity. Our supply chain team has done an excellent job of locating required parts, finding alternatives and mitigating supplier price increase over the past several months. However, as during our third quarter, the environment has remained challenging with increased inflationary pressures and reduced availability and supply for component parts and chassis.

[Rod Rushing:]

Thanks, Mark. We were pleased with the progress we've made in the last year. And the evidence of this progress is demonstrated through a strong start to the year. This reflects the efforts of our leadership team. But most importantly, the work of our talent employees in our manufacturing facilities. We have continued to impress throughout a very, very difficult year. And I cannot begin to tell you how much we appreciate and respect their efforts, not simply because that without their efforts, we'd not have made the progress that we've achieved and the results that we presented today. But more importantly because they play such an important role as essential workers, providing our first responders with vehicles to serve those most in need, as well as the many other purposes that our products provide to the citizens of our nation. Finally, I would like to take the opportunity to invite all active-duty first responders to our Third Annual REV Group Grand Prix in Elkhart Lake, Wisconsin from June 17 to June 20. This is the third year we have teamed up with Road America to pay tribute to our first responders by offering free entry to the NTT IndyCar Series event. As a manufacturer of fire and emergency vehicles, REV Group has always recognized and respected the commitment of our first responders to the safety and welfare of others before their own. This past year, first responders have been relentlessly working on the frontlines. So now more than ever, we are delighted that the REV Group Grand Prix provides us a platform to honor and share our appreciation for the dedicated people who place top priority on serving our communities each day. Thank you again for joining our call today. And now operator, we would now like to open up the call for questions.

[Operator:]

Our first question is from Jamie Cook with Credit Suisse. Please proceed.

[Unidentified Analyst:]

Hi. This is on for Jamie. Our first question is on the orders that they were strong across segments. But are you seeing customers wanting to place orders early for 2022, because of concerns on the supply chain? And if so, in which segments are we seeing them? And how would you approach pricing on those orders? And then a follow-up is on RVs. The demand environment is very strong, and you have been gaining market share. But do you have any plans to expand capacity as we look forward? And then on the margin front, if you could provide an updated expectation for the full year? That would be great. Thank you.

[Rod Rushing:]

So, let's kind of break the question down. If you wouldn't mind, could you repeat the first question? And then, we'll look for each question.

[Unidentified Analyst:]

Yes. So for the orders, we were just wondering if you're seeing customers wanting to place orders early for 2022, because of concerns on the supply chain?

[Rod Rushing:]

I don't think we have -- we've seen much messaging of orders coming in early because of supply chain. I think there might perhaps be some of that in RV just related to getting in line for the extraordinary demand that we're seeing. There has been -- obviously, always you see orders move around when you announce price increases to the channel. So there has been some of that. But that's kind of quarter-to-quarter more than current to year period. So I don't -- I think probably in RV, there's people ordering to get in line for to reserve positions to replenish backlog or inventories. But I don't think we're seeing broad movements related specifically to supply chain issues that we're experiencing. And your second question, please?

[Unidentified Analyst:]

I guess is on RVs. So, because of the strong demand environment are you give any plans like expand capacity as we look forward? And also, like, what you expect the margins for the full-year?

[Rod Rushing:]

Yes. I'll speak to the capacity. We are evaluating all of our facilities and less about kind of the view of historic demand, because we've really been focused on the peak and trough of this business to make sure we're focused on improving the margin performance for the eventuality of a slowdown that will come at some point. That we don't foresee now. But we're working hard to evaluate breakeven and optimize our margins to have a good peak to trough performance. So part of that was what we've done here is, we'd actually conduct some share and we expect our situation to improve as the market slows relative to other declines we've seen historically. And so, we are evaluating business-by-business where what that might imply to capacity requirements not only to meet some of the demand we're seeing now, but more -- reflects more to share position changes as the market maybe contracts in the months or quarters ahead. That we don't see now. I'll be honest. We don't see that now. We continue to see incredible demand and margin historically low inventory levels. But we're keenly focused on making sure that we're operating in a way that keeps us focused on the eventual downturns we optimize our margins in that situation. And Mark, you might want to comment on the margins for the pull-forward .

[Mark Skonieczny:]

Yes. The outlook, as I mentioned in my prepared remarks, with the mix of Class A picking up in the second half, we'd still expect to be in the high single digits in the second half and then for the full year. So, a little bit of dropped from Q2, but ultimately in the high single digits, which is consistent with our previous guidance there as well. So we feel pretty good about there. But as you know, Class A dilute it to the profile of the other business. So as volumes pick up there, and we're able to get more throughput there, it'll be diluted in Q3 and Q4. But ultimately, be in that high single digits for the year.

[Rod Rushing:]

And I believe you've had one final question that as well?

[Unidentified Analyst:]

No. This is all covered. Thank you so much.

[Rod Rushing:]

Okay. Thank you.

[Mark Skonieczny:]

Thank you.

[Operator:]

Our next question is from Mig Dobre with Robert W. Baird. Please proceed.

[Mig Dobre:]

Yes. Good morning, everyone. I also have several questions. But I think I'm going to break mine upfront. So, to follow-up on this Class A discussion here, can you maybe remind us what the margin differential is relative to segment average? And I'm sort of curious how you think about the margin potential of this business going forward. It's finally starting to see some momentum in the Class A market. How are you planning for this business over the next, call it, 12, 24 months?

[Rod Rushing:]

Yes. I would say, Mig, as you always say, look at the industry, it's always at mid single digits, right? We always said, its five to eight, six -- five to seven, six to eight sort of business, where as you know, our other businesses are some of our best performing, which are double digit, right, double digit margin businesses. So when we're talking about dilution, we're talking about executing at the industry norm, which we believe is a six to eight type number five to seven. How we want to thread the needle there on that business. But we continue to see accretion there as we talked about last few quarters going from the last -- over the last couple of years here to actually performing well and executing and obviously, we're getting benefit from not only operational improvements we're making there, but also the leverage on the volume that we're seeing.

[Mig Dobre:]

Okay. And then, maybe if we kind of look at your guidance, you've increased your EBITDA midpoint by $12.5 million. And I'm just sort of trying to understand how the quarter itself and what you've seen in a quarter has kind of shaped your view of the year here. I recognized that you're not providing quarterly guidance. But obviously, you've had good performance relative to what we were forecasting and we're consensus was trying to understand how the quarter played out relative to your expectations. And if essentially, this guidance raises, primarily a factor of the quarter itself? Or if there are other moving pieces as we think about the back half of the year, again, relative to your initial expectations that we need to be aware of?

[Mark Skonieczny:]

Yes. I think, just to clarify, Mig, it was a 22.5 feet from midpoint, because we're up at 152.5 versus 130. So when you look at that, obviously, it is a bit tough. I guess your consensus of $31 million to $32 million. But our expectations, again, was the throughput was very encouraging, as Rod referred to in the Recreation Segment. So we're able to get a lot more units and our expectations, especially in the in the B's and C's, so they continue to operate at capacity and do things there. From that perspective, we did see some improvement, our California operation, which we had -- where it has been coming in the quarter given the labor constraints. So we're seeing those pickups or they're starting to operate at more of their normative level entering Q3. But our largest challenge we look at the full quarter here is now the availability of chassis, which we pointed out with JEB business is heavily reliant on getting chassis, especially, not as much in Class A, but in our B's and C's, making sure that we have the chassis availability there. So, maintaining that throughput will be a challenge in Q3 and Q4. But we obviously looked at from -- on a day to day basis from that perspective. So when you think about our full year, it was a reflection of the -- go into your consensus numbers, which were essentially on our expectations to 130 previously. That $22 million was a reflection of the beat there, and then also some upside in Q3 and Q4 from what we've originally expected.

[Mig Dobre:]

Okay. And then maybe last question from me is, when we're kind of looking at your fiscal 2023 targets in the light of the updated guidance here for fiscal 2021. I'm curious if you think at this point, we should adjust our expectations a little bit for the achievement of those fiscal 2023 targets. I mean, at least to me, it seems like we could be seeing 2023 done in 2022. Can you maybe comment on that? And at what point in the year should we be expecting some, maybe adjustments or tweaks to that 2023 target guidance? Thank you.

[Mark Skonieczny:]

Yes. So I think, Mig, from that perspective, obviously, the 180 was the midpoint of the range that we're talking about. I think in Investor Day, we laid out and I think we had some feedback there, that effectively to get to the 180, we were having to do things that within our four walls. But we do have additional upside to the extent that we grow higher than market and then we also perform more on the longer tail projects like RV and platform that we pulled out. So at this point, existing the year, I still think we're intact to deliver near the bottom end of those ranges with the extension of margin expansion that we sort of talked about the 30 or 40 basis points that we would expect to see over the next couple of years would get us more to the mid to top end of that range. So we're still feeling comfortable there. But obviously as we move through this year, and then into next year, we'll be looking at those targets. But right now, we feel comfortable at with that range. The midpoint that was reflected there in the range that gives you some opportunity to go above. We feel comfortable that that's sort of where we should stay right now.

[Mig Dobre:]

Okay. Thank you.

[Operator:]

Our next question is from Jerry Revich with Goldman Sachs. Please proceed.

[Jerry Revich:]

Yes. Hi. Good morning, everyone, and congratulations on the strong performance.

[Mark Skonieczny:]

Thanks, Jerry.

[Jerry Revich:]

Can we just revisit the discussion we had at the Analyst Day about your approach to the supply chain under the prior management team during a period of chassis shortages. There were significant cost overruns and really significant shortages flowing through the factories. And obviously, you folks are managing much better in this shortage environment. Can you just frame for us with the benefit of this quarter in the books and compare and contrast the different approach to the procurement, because obviously, the results in a pretty similar environment are pretty meaningfully different here?

[Rod Rushing:]

Yes. I can't -- again, I always say this. But I can't speak in great detail in terms of how it was manage in the past. So the issues that were faced in the past. I mean, the issues we're facing now are very public with related to chassis and through the chip shortage and the shutdown of the OEMs on the chassis side. So we're managing through that with close contact with those OEMs. We're benefiting from some inventory positions that we've had to keep our plants operational and keep us on tact to where we're going to go against our guidance.

[.:]

I think that our supply -- I think our team, the maturity that they've had is pretty extraordinary. We're actually spending equal amount of time on the efficiencies of those chassis pools to make sure that we optimize what we have. That we don't have chassis that we don't have demand for. I think we're being much tighter in the months -- in the quarters and months ahead of us around how we think about? What we want to get allocation for? And this one we built around making sure that we optimize those inventory levels. So we have the right chassis at the right time. And we don't have too many sets in the pool. Mark can probably comment on that more specifically. But it's more of a forward thinking probably across business unit, across segments, thinking about what our needs are related to these commercial chassis and then forward engagement from our team much more proactively with their supply chain partners to make sure that we're managing that. So we don't have issues where we can't produce product that becomes a barrier for us in hitting our targets. And right now, like I said, I think we're in a good spot against what we've given guidance for today were not only for the balance of this year to go deliver against those targets, but get based on the conversations we're having with our suppliers on that end. But again, it is a very challenging time that everyone's facing in the industry around chassis supply. And Mark, do you have anything to add to that?

[Mark Skonieczny:]

And Jerry, I would just add. As I've mentioned in the Investor Day as we talked, disciplines we have on our inventory management and how we're tracking inventory which includes chassis and all the components, the manufacturing floors, visibility to what inventory they have on hand and when they can start a job and what's there. And like I said in my prepared remarks, our qualities a lot better, but also our manufacturing planning as Rod referred to, we have a lot more visibility to when we can start a job. What inventory we have on hand. And then likewise the ops team is working with engineering to understand to the extent we have a part that is missing. Is there a substitute that we can go to the customer and actually discuss substituting parts, so they can revenue the product and deliver it to them, right, because our customers are dealing with same thing. They want the product as well. So, as I said in my prepared remarks, we have a dual benefit here of sort of the actions we kicked off last year where were -- which run related to the shortages. But just making sure we have a good quality of inventory. And as Rod said on the chassis pool, we're looking for not only getting more chassis, but do we have the right chassis and allocating them properly and addressing them with our customer base. So, we feel pretty good as all the way through and not only supply chain, but operations, all the way to engineering.

[Jerry Revich:]

Thank you. And then, on price cost based on the qualitative comments. It sounds like price cost was a year-over-year tailwind in the quarter. Can you just confirm and maybe quantify that for us? And can you talk about what does your guidance anticipate for the year-over-year price costs in the back half of the year?

[Rod Rushing:]

Yes. I would say we were able to mostly offset and we were able to offset inflation through savings as well as the price realization, we've talked about that before. Obviously, the Recreation Group is definitely taking price. I think, they are across the industry. We're getting ahead of inflation with the price increases. Our longer backlog businesses were been able to offset the inflation through purchasing initiatives that Rob and his team have kicked off. So we feel pretty good there. When we talk about inflationary pressures, we're probably talking in the neighborhood of $5 million that we see in the outward quarters that is ahead of us that we have to address. Our bigger challenge is not the inflation, but just making sure we have the products that and the components, so we can actually revenue our products. If you look at the back half, we probably have about $600 million -- 625 million of sales that are dependent on getting chassis to deliver. So, that's probably a bigger challenge than it is on the inflationary front and our ability to offset that. So, to the extent we have components that we feel pretty good, like Rod said, delivering our guidance and entering that mid range that we provided.

[Jerry Revich:]

Okay. And you know there's optimism about those chip shortage potentially alleviating heading into your end. When you folks look at the supply chain challenges that you're managing in the back half of the year, what's the relative complexity compared to the quarter we just went through? How do you see that dynamic playing out?

[Rod Rushing:]

Yes. It's a lot more complex entering the quarters, because as we mentioned, we had -- we fortunately had quite a bit of chassis entering the quarter, and we're still able to batch build in a lot of our locations as we talked about previously. And then, as we existed quarter, it became harder to actually batch build. So it was more of taking the mix that you actually had within your back -- what I would say backlog of sales, but also your backlog of chassis or the chassis that we had available to us. So, it became more of -- here's the units we have that we can produce on versus at the beginning of the quarter it was more of, you know, we have 10 orders for this chassis. So let's all produce those units all at once here through a line. We got the efficiencies there. But our visibility now is more of, we need to replenish that chassis pool such that we can get to that efficiency level in the back half. But I agree with you, Jerry, we are seeing promising signs here. So it's more of a shorter near term challenge as we manage the mix of our chassis supply. And then, we're hoping just like everyone else, that the announcements that have been made by the OEs holds and that we're starting to see those chassis come back online. And we do have the appropriate allocations from them.

[Mark Skonieczny:]

I just want to make one comment. We've worked obviously, as I mentioned earlier, very closely with the OEMs around the chassis. And as long as these the OEMs launch and approximate their day to ramp then we're going to be in a good position for the balance of the fiscal year. And we're working closely with them. And have no indication that that won't happen. And so we're -- we feel pretty solid about where we are. But we -- it's something we have to manage every single day and we're going we're doing that.

[Jerry Revich:]

Appreciate the discussion. Thank you.

[Rod Rushing:]

Thanks, Jerry.

[Operator:]

Our next question is from Joel Tiss with BMO Capital Markets. Please proceed.

[Joel Tiss:]

Hey, guys. How's it going?

[Rod Rushing:]

Fine Joel.

[Joel Tiss:]

Can you talk a little bit about sort of the industry inventories and the Recreation industry just to give us a sense of where we are? How much needs to be rebuilt?

[Rod Rushing:]

Yes. Our view of the inventory, I think when you look at from an average inventory level, across the blended average inventory across all segments, they're about 60% of a normal inventory level right now, which on a forward basis might mean to replenish those back to a historical average, you're looking at six to nine months worth of demand fulfillment. I think that's -- those are proximate, because you got to go into the details segment by segment. But on a slowdown, I think you're looking at a considerable lead time to replenish inventories to what might be considered historical average. That's all, Joel.

[Joel Tiss:]

Can you give us any sense of how you're thinking about the margins of your backlog? Is it highly dependent on sort of all these fires you're fighting and better productivity in the factories and chips and chassis and everything? Or is there a little better certainty? I mean, you don't have to share with us the answer. But just sort of internally, you feel a little more confident about what's in the backlog in terms of pricing and margins?

[Mark Skonieczny:]

Yes. I think -- I'd want to think about price. And I think that's kind of a question about price costs in your backlog and how it's going to flow through. Before the exhibited total, we were putting a lot of effort of focusing on the health of our backlog relative to how we price and cost into that backlog. So there's a lot of effort around optimizing our cost position that's standing up a centralized purchasing organization to go after opportunities even in an inflationary environment, we see opportunity, because of maybe things that we didn't do in the past. But also, as we've talked about, we have aggressively pursued price adjustment to our businesses going forward. But also, in some cases, surcharges and prices for backlog based businesses. So, we're not getting into looking at 2022 yet, but certainly looking at the balance a year we're in a good position there to deliver against the guidance we've provided. And I think the actions we're taking both on a cost basis and a price basis to make sure we're in a position where we have positive price cost, that we're going to be in a good shape there. It's work everyday. And obviously, when inflationary issues are going up fast, you got to be on your toes to get to take care of that. But our team is fully aligned to manage that understand the implications of not doing, and we're certainly on top of that.

[Joel Tiss:]

And then, my next question is, if -- we're talking a lot about sort of your execution, operational excellence, fighting some of the fires that are out there currently, different franchises that you guys have kind of inherited. Can we just take a minute and go through some of those franchises and where you feel like you're the leader? Seems like fire and ambulance, you're kind of clearly the leader, but some of the other areas maybe a little a little harder for us on the outside to decipher met your competitive positioning? Thank you. And then I'm done.

[Rod Rushing:]

Yes. Thank you. So there's -- for the businesses with this much complexity and different in markets, there's -- it's really a business unit by business unit discussion. I think generally, with some exceptions, we're in a top three position in almost every single product segment, product category that we have. There are a few exceptions within RV, and that really gets in those sub segments if you will. We have businesses, there are leaders, we have businesses that at one point were a leader that were focused on getting those back to leadership positions. Transit is probably a business where I -- you could look at that and say that, from a share position, we're not a leader. But I look at that and look at the actions that we're taking as an incredible opportunity for growth for us, because our business performance there is just so strong, from how we execute and operate and deliver and our customer satisfaction levels. So in that business where we're maybe subscale relative to competitors and subscale relative on share that it's a high performing business for us that does a very good job executing. I think that it speaks to a growth opportunity for us. So it's a very detailed question. But fire and emergency, we're clearly in a leadership position. And then, RV, it's segment-by-segment and then commercial, we have some variation. Our Type A School Bus is a leader in that industry and our sweeper business and threewheel is a leader, fourwheel, we're not a leader. So it breaks down very differently depending on which business you're talking about. But I would say this, we are really focused on execution operations and aligning these businesses with around the commonality. We can go, scale and get leveraged improve. But we're also really focused on commercial. Because I think that if we can build the commercial excellence capability here that we have a great opportunity to grow these businesses above market growth, both organically and inorganically to drive growth that will be from our Investor Day presentation to creative to the outlets that we gave. So we're pretty excited about what's ahead of us there.

[Joel Tiss:]

That's great. Thank you so much.

[Operator:]

And we do have a follow up question from Mig Dobre with Robert W. Baird. Please proceed.

[Mig Dobre:]

Yes. Thanks for taking a follow up. I just wanted a little clarification on the fire business. You talked about strong order growth. But I'm wondering if we're looking sort of on an apples-to-apples basis, kind of adjusting for the acquisition that you made there, and we're kind of comparing demand to say, pre COVID levels. Can you give us a sense for where order intake? Where demand seems to be? And I'm kind of curious, the expectation here was that, given a COVID disruption, we could be seeing the fire market maybe a little more disrupted as we think into -- even into 2022. How has your view of demand of this market change over the past, call it, three to six months?

[Rod Rushing:]

Well, I would say this. Mig, it's a good question. I don't have the data in front of me to kind of have a comparative analysis to carve out performance pre-acquisition. I could talk -- but I can talk specifically to what we're seeing in the market and how we feel our competitive position is relative to market demand. I mean, our order intake the past five, six months has been at record levels, even if you pull out some of the businesses that has been acquired the businesses. The orders have been really, really strong. And in the forward demand that we see, the work we're doing with our channel partners, we see that continuing. We are going to go through a period of time here where orders maybe seasonally trough a bit over the next month or two. But when we think about market activity and market share and our position, we feel very good about position of each of our brands, and then more importantly, our ability to execute -- our improved ability to execute over the past 12 months, improving lead times and delivery against that backlog. So while we continue to build backlog and reduce lead times, it's a great situation, because we're converting much better. But I think that, there was some softness, perhaps in our share position going back over the last year, probably pre-entering the fiscal quarter of this year. But the last six to seven months, we've seen really positive momentum from an order rate basis. And I think it's a market, but also I think it's a shared take back that -- to get us back where we need to be. And I think it's mostly attributed to the commercial excellence work we're doing, being more proactive with our dealer base, but also honestly, what we've done to improve our performance for our customers in terms of operations. So that's where we're at. But we -- I think we see that nothing that would suggest that the fire market is softening. We think it's really pretty healthier going forward based on what we're seeing in our pipelines and conversations with the market.

[Mig Dobre:]

Appreciate the color. Thank you.

[Operator:]

We have reached the end of our question and answer session. I would like to turn the conference back over to Rod for closing statements.

[Rod Rushing:]

Yes. So thank everyone for joining. And also, thank you for the very thoughtful questions. Obviously, in closing and a recap, we're very pleased with the progress we've made over the last year when you think about coming through a very difficult challenging time of a transformation and a turnaround in the context of a global pandemic and be able to put the results on the paper that we put on it in terms of maintaining revenues and margin expansion. And again, I really -- we've asked a lot of this team to think differently and to do things differently. And our employees have just done a great job responding. Our employees, our manufacturing facilities have continued to work hard and do what we've asked and do things differently. And -- but we couldn't speak more -- be more appreciative of what they've done. So with that, we're going to close. We're hard working on the next quarter. And we really appreciate your attendance and your thoughtful questions today. Thank you.

[Operator:]

Thank you. This does conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.