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Edited Transcript of LYTS earnings conference call or presentation 6-Nov-19 4:00pm GMT

Q1 2020 LSI Industries Inc Earnings Call

CINCINNATI Nov 16, 2019 (Thomson StreetEvents) -- Edited Transcript of LSI Industries Inc earnings conference call or presentation Wednesday, November 6, 2019 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James A. Clark

LSI Industries Inc. - CEO, President & Director

* James E. Galeese

LSI Industries Inc. - CFO & Executive VP

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Conference Call Participants

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* Craig Edward Irwin

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Joseph Amil Osha

JMP Securities LLC, Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Greetings, and welcome to the LSI Industries Fiscal First Quarter 2020 Results Conference Call. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jim Galeese, Chief Financial Officer. Thank you, sir. You may begin.

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James E. Galeese, LSI Industries Inc. - CFO & Executive VP [2]

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Good morning, everyone. We issued a press release before the market opened this morning detailing our fiscal first quarter results. In conjunction with the release, we also posted a conference call presentation in the Investor Relations portion of our corporate website at www.lsi-industries.com. Information contained in this presentation will be referenced throughout today's conference call. I would like to remind you that management's commentary and the responses to questions on today's conference call may include forward-looking statements about our business outlook. Such statements involve risks and opportunities and actual results could differ materially.

I refer you to our safe harbor statement, which appears in this morning's press release as well as our most recent 10-K, and 10-Q. Today's call will begin with remarks summarizing our fiscal first quarter results. At the conclusion of these prepared remarks, we will open the line for questions.

With that, I will turn the call over to Jim Clark.

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James A. Clark, LSI Industries Inc. - CEO, President & Director [3]

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Jim, thank you. Good morning, everyone. This week marks my 1-year anniversary with LSI. As I look back, I can see the effects of the changes we've made throughout the last year, and I'm encouraged that there is a cultural shift occurring and steady progress is being made. This quarter demonstrates to our employees, our agents, our partners and customers and investors that LSI's best days are ahead of us. Looking at results for Q1 fiscal year 2020, we reported sales of $88.7 million. This represents an increase of 4% over our prior year, but more importantly, these results are a strong indicator that the changes we're making in our sales process and sales organization holds great potential for the future.

Continuing with comments on our commercial effort, I'm happy to say we've now filled all our regional sales positions, and we are one step closer to filling our Head of Sales position. As I mentioned in previous calls, we've been working hard to build out our sales team and increase our customer contact over the last year. Simply put, the work around our sales team is bearing fruit, however, we are aware we still have a ways to go.

In October, LSI attended the Petroleum Equipment Institute, PEI, and the National Association of Convenience Stores, NACS, annual trade show in Atlanta, Georgia. This is their industry's largest trade show in North America and the pace of activity is high. I had the opportunity to meet and talk with the number of our petroleum-oriented Lighting and Graphics customers. We had very constructive and positive conversations and all indications are that we should continue to see growth in this segment. You may have seen a press release from us last month as we celebrated our 500 petro-oriented install in Mexico. We have good momentum in this segment, and we expect more.

On the road, I also had the opportunity to visit with several of our independent niche-oriented agents. These are folks that are on the front lines of our vertical sales effort, and they openly shared their frustrations, their open projects and suggestions on what we can do better. There is opportunity here, and we will be meeting with them again over the next few months to increase the strength of our connection. They present a strong competitive advantage, and we will continue to work closely with them.

Also go back to October, I had to visit -- the opportunity to visit with one of our larger grocery and pharma customers. We've been working with this customer for decades. The projects had slowed over the last few years and work that was available was being split between multiple suppliers. They shared that they're planning some big updates over the next year, and if things stay consistent with the direction of our conversations, we should see a marked increase in this segment in calendar year 2020. Actions always speak louder than words, but I felt encouraged coming out of our meeting.

Lastly, regarding our commercial effort, I want to mention that we had very positive momentum in our outdoor lighting segment last quarter. We remain and will stay committed to bringing a full lighting solution to our customers, including our complete suite of indoor products, but outdoor sales do give us a competitive advantage and differentiate us as a manufacturer.

Let me switch and comment on product development and engineering. Last month, we held an offsite meeting focused around innovation. It include members from engineering, marketing, product management and sales team and was focused on our short-, mid- and long-term plans. The goal was to think inside the box, embracing a constrained look at where our greatest opportunities may lie right now. I'm pleased to say that it was very productive meeting, and we added another tool and process to our list of possibilities. The team took a different angle of attack thinking about everything from performance-based product improvements to SKU rationalization, cost-out initiatives and new products. I'll have more to say about this in the future, but I'm happy to report that we're on the front [end] of steady stream of innovation, incremental product improvements and broader solutions, which are tied into specific vertical markets.

On the operations front, our team has several continuing initiatives focused on quality, lean processes and on-time delivery. One of the projects I'm most excited by is a full-view study they've been conducting over the last 2 months looking at the life cycle of an order from initial quote to order entry, scheduling and commitment, parts availability, manufacturing, shipping and final installation by the customer. This full view is being documented and shared so that it can be studied end-to-end with the goal of increasing and understanding what happens when, who is involved, and how problems can be avoided.

We've already discovered a lot, and we are confident that there are several areas of improvement, all within our grasp and with the goal of providing better customer service, reduced errors and lower cost. A couple of other notes. The closing of the New Windsor location was completed in August and the proceeds were received. I'm happy to say this project, along with good cash flow and balance sheet management, has reduced outstanding net debt by almost 50% in the last year to $21.6 million and our net debt to adjusted EBITDA ratio stands at 1.7x.

This is important because it gives us plenty of dry powder and financial flexibility to be opportunistic and as our overall operation and organizational maturity continues to improve, the scope of what's possible continues to expand. We are continuing our evaluations of options related to our North Canton facility, but our goal is a footprint reduction of 70% or more. This is an effect of changes in technology and project work produced in North Canton. We simply do not need the space we currently have, and this is a great opportunity to improve our overall operations while reducing cost.

I'll have more to share next quarter. Looking forward, the lighting market remains volatile, and I expect those conditions will continue through our fiscal second quarter. I also believe that during this period of transition, LSI remains a proven, stable source for innovation, high-performance lighting and graphics solutions with expert support and service. We still have work to do, but our first quarter results prove that with the right focus, planning and execution, we can profitably grow our business.

With that, I will turn it back over to Jim Galeese for a deeper look at our financials.

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James E. Galeese, LSI Industries Inc. - CFO & Executive VP [4]

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Thank you, Jim. Let me start by briefly summarizing key financial statistics. Total first quarter sales increased 4% to $88.7 million, with both the Lighting and Graphics segments generating growth. Net income was $4.5 million. Earnings per diluted share were $0.17 and EBITDA was $9.2 million. As published, first quarter results include a $4.8 million pretax gain on sale resulting from the sale of the New Windsor facility as well as restructuring charges of $200,000. On a non-GAAP basis, adjusted net income was $1 million, adjusted EPS $0.04 per share and adjusted EBITDA $4.7 million. A complete reconciliation of first quarter GAAP and non-GAAP results is contained in our press release and 10-Q.

The business generated over $18 million of free cash flow in Q1 including $6.4 million in cash flow from operations, over $12 million in proceeds from the facility sale with approximately $400,000 in capital expenditures. Working capital decreased $10 million or 14% from prior year with improvements realized in both dollars and days of working capital. Inventory, as a component of working capital, decreased 13%, reflecting the results of manufacturing and sourcing process improvement being implemented. Net debt outstanding has been reduced over $20 million or 49% over the last 12 months.

As Jim mentioned, net debt now stands at $21.6 million with a debt to adjusted EBITDA leverage ratio of 1.7x. A regular cash dividend of $0.05 per share was declared payable November 26 for shareholders of record on November 18.

Next, I'll briefly comment on performance of our 2 reportable segments, starting with Lighting. Sales of $63 million was 3% above last year. Outdoor product sales were particularly strong, increasing 12% with growth achieved in target verticals, including retail parking, automotive, petroleum and C-store. Lighting adjusted gross margin improved 140 basis points to 27.6%. Several items contributed to the improved margin rate, including price, where we continue to realize several points in the price increase, a favorable mix of vertical market applications and the initial cost savings from the New Windsor closure. Adjusted operating income of $4.5 million increased 11% on a comparable basis, excluding the onetime favorable adjustment included in prior year results. First quarter Lighting adjusted EBITDA was $6.3 million or 10% of sales.

Shifting to Graphics. Graphics sales growth continued in the first quarter, increasing 8%. Growth was driven by multiple verticals, including petroleum, QSR and grocery. Momentum remains strong for the petroleum Graphics segment with a significant backlog of development work for potential customer programs. Graphics segment operating income improved sequentially from Q4, but was below prior year. Income was impacted by the mix of new and early-stage petroleum projects, improved inventory levels and the impact of lower absorption and development work for potential future projects. Graphics adjusted EBITDA was $4.7 million (sic) [$1.457 million] or 5% of sales.

I'll now return the call back to the moderator.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Craig Irwin with ROTH Capital Partners.

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Craig Edward Irwin, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [2]

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So Graphics seem to outperform quite nicely in the quarter. We talked previously about this segment being flattish this year really on the headwinds you're seeing on certain customers going to digital signage. Can you talk a little bit more about what gave us the 8.4% growth in the quarter? I know there's always pluses and minuses in there. Did we have less of an impact from the digital signage this quarter? Is the outlook for growth in this business possibly improving for this year?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [3]

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Craig, Jim Clark here. Thanks for joining in. On the Graphics side, we've talked about it a few times, but there's kind of 3 pieces to Graphics, if you think about it, our petroleum Graphics, our petroleum-related Graphics are what we call branded Graphics and then our digital Graphics. Petroleum, we've been in a number of early-stage large projects and those continued. On the branded Graphics, if you will, from a print standpoint, we were up almost double digit, but on the digital, we were up strong double digit. Like you said, there is some puts and takes and mixes, but all 3 of them remain pretty strong.

And I mentioned in my comments just a few minutes ago that I just came back from the PEI, the Petroleum Equipment Institute trade show and NACS trade show, which are the -- very large trade show. I had the opportunity to meet with a number of our petroleum customers, and I could tell you that at least from what they're saying -- gosh, their commitment to continue to kind of refresh and reimage their locations and the work that we've been doing and their satisfaction level was very high. So I got to you tell you I came away from the performance this quarter and the meetings I've been to, including one of our large grocery and pharma customers, I'm very encouraged for the remainder of the year and into the next year, I'm bullish.

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Craig Edward Irwin, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [4]

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That's good to hear. So there's one thing that kind of surprised me in your results is the free cash flow, take out New Windsor, right, the facility sale in the quarter. $6 million versus your net income of $4.5 million, so you're continuing to squeeze the balance sheet even in a quarter where you're exiting a facility. That's not a common thing to see. Can you maybe describe for us what [works for you] in the quarter? And if there's an opportunity now to continue to maybe squeeze the balance sheet for a little bit more cash.

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James A. Clark, LSI Industries Inc. - CEO, President & Director [5]

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Well I mean as you just brought up, it was, I think a pretty good accomplishment by the team to be able to generate that cash in the midst of those other changes. So I'm certainly not saying there isn't room for us to do more. I mentioned the North Canton facility, it's a longer project. It may not materialize for a quarter or 3. But yes, there are still somethings for us to do from an operations standpoint. But I wouldn't expect to see the kind of movement that we've been able to make in the last couple of quarters. I think there was some low-hanging fruit there that we were able to go after, may be not everybody saw it, but I think the team, we were able to get to it. But as I'm making that comment, I also want to say that we've got a few other things we're looking at. So I don't want to commit to anything right now, but I will say that I will continue a good operational cadence and look for those opportunities.

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Craig Edward Irwin, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [6]

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That's good to hear. So it looks like the business is pretty well stabilized right here. I mean we're looking for some [gentle] improvement this year and hopefully, the environment stays accommodative. But can you talk about sort of what's next up for you on the operational side? It looks like your heavy lifting for the phase that's been executed, is essentially done. Is the focus now on margins or growth or potential other avenues to enhance shareholder returns?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [7]

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I think it's a combination of pulling all of those levers, Craig, and I will say that, just in answer to the question we just had, I think there's still some room for us operationally, and we'll execute against that. And I'll continue to keep the whole investment community informed of that. I've always said since I got here and, again, when I say I, I speak of us as a team. We have some commercial opportunities here and I think that you used the right word, kind of, stability right now.

I think we've got a good platform to operate off of now. And our focus is going to be on the commercial side. It has been. We've been putting a lot of time in commercially. I've mentioned that we filled out the sales team, but I think we can move faster now commercially, and I'm excited about that possibility. And it takes a while for new sales talent to get in the groove and learn our customers and our products and rhythm of the company. But a lot of our effort is going to be on the commercial side now. And that is not just top line, it's obviously margin.

And I want to add one last comment in respect to that. I have talked about where we want to focus our time. We do have a very robust indoor product line. We'll continue to invest in that, and we'll continue to have it available. So we will have great indoor product solutions. But I think we really differentiate ourselves on the outdoor. LSI is synonymous with that. They've got a great reputation in outdoor performance and outdoor products. And I want to see us be leading with the outdoor as a general rule. And I think that you'll see that occur over calendar year 2020, because we're 2 months away from here moving into 2020, but over the next year, you'll continue to see those improvements.

And I will be -- we will be trading off some quality -- lower-quality business for some higher-quality business. And sometimes when that happens, you're going to have a little headwind on -- may be on the top line, but I'm not suggesting we're going to have a top line headwind, I'm just saying that when you trade-off that business, sometimes you're making the decision to accept some volume for some higher quality of earnings.

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Craig Edward Irwin, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [8]

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So your comment about outdoor is interesting given that the leader in outdoor is in process of being bought by a competitor, being sold by the conglomerate and bought by another large lighting company. Do you see any specific opportunities that you can outline for us on this call? Many years ago, LSI was targeting the -- all the orphaned distributors from Juno when Acuity swallowed Juno, lot of those distributors got fired and it was a great opportunity for LSI to go and scoop up some revenue with product that was made here for those customers. Do you see any specific opportunities? Or is this something I guess competitive, and you probably don't want to discuss on the call? Or how do you look at the fresh opportunities in outdoor?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [9]

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I mean I think that there's 2 pages to that story, one is just our own discipline and execution, it's our continuing commitment to the product development and delivering the best solutions. LSI really made their name in outdoor, and I still think that we have some of the best -- the very best outdoor products and solutions that are available there. But anytime, there's a disruption in the industry like what's potentially going on right now, I think that many of our agents and our customers kind of look around and they say, who is truly committed, who's going to provide a stable platform? Who can I pick up the phone and know that I'm going to be to get a hold of the same folks today as I do tomorrow, including the senior management team? So yes, I think there's some latent and inherent opportunity in there, and we'll certainly be looking to talk to as many folks as we can and leverage that the best we can.

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Craig Edward Irwin, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [10]

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Great. And then last question, if I may. Atlas versus the core legacy LSI products, can you comment about whether or not we're seeing similar growth rates, if one of them is outperforming the other, if there still is an opportunity to take LSI product and put it through the Atlas channel and maybe use the Atlas manufacturing approach for incremental products at LSI? Do you see synergies from this going forward? I don't know there's a bunch of questions in there, but if you could provide any color?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [11]

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I look at Atlas as a stand-alone business in the stock and flow side right now. And I think they perform best when they do that. We certainly share synergies: purchasing volume, pricing agreements, things like that. But I think they are best served, they know what they're -- they know where they do well. And we know where they do well and they know where we do well. And in the real -- although there's some back-office stuff, the real opportunity is to make sure that we are in a constant state of complementing each other and not fighting each other. We don't want to be trading business across lines and I don't think we've done that. But overall, I like the cadence we have and I like the -- the market they go after is slightly different than the market LSI goes after and I like that from a commercial standpoint. On the back-end, we certainly trade all of our ideas, we work collaboratively together, we look for the synergies from sourcing and that type of thing. So I'm happy with that. Certainly, I'll look to turn that dial a few more notches, every year if I can, but I'm happy where they are right now.

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Operator [12]

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Our next question comes from Joseph Osha with JMP Securities.

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Joseph Amil Osha, JMP Securities LLC, Research Division - MD & Senior Research Analyst [13]

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So Craig hit some of what I was interested in and I do want to come back to this issue of working capital. You've generated a lot of improvement, which is excellent. Just looking at Slide 8, it kind of seems to me like $62 million in working capital for a company generating $90 million in revenue per quarter is probably pretty efficient. So I'm wondering you've made a lot of headway. But eyeballing this it would seem to me like that probably most of those improvements are in the rearview mirror. Is that true or do you think there's more there?

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James E. Galeese, LSI Industries Inc. - CFO & Executive VP [14]

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Joe, Jim Galeese here. We've recognized 6, 9 months ago that we were not as efficient as we needed to be in our working capital and most notably, inventory and inventory management. And so as Jim mentioned earlier and as we've outlined in the press release, we've been hard at work on a number of initiatives to improve that. And great progress has been made by Mike Beck, our leader of our operations team and the rest of the sourcing and supply chain organization. So for our working capital, in terms of dollars and our key metrics there is days for us to be in the low-60s, our target is, I think, we can get to the mid-50s or so if we're really clicking on all cylinders. So there's a bit left there. But the key about the improvement is just not seeing it statistically, it's the actions, the initiatives behind it that made it happen and how that makes your business better, how we get product out a factory faster, on time, to the level of expectation to our customers. So we feel good about the improvements, and we have a bit of opportunity still left there, Joe.

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James A. Clark, LSI Industries Inc. - CEO, President & Director [15]

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Joe, it's Jim Clark here. And I'd second that. The story is not finished being -- is not finished. And I do think that we'll continue to have opportunity.

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Joseph Amil Osha, JMP Securities LLC, Research Division - MD & Senior Research Analyst [16]

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Okay. Looking at another part of the balance sheet, so you're down to 1.7x debt to EBITDA, good for you. I'm curious as to whether there is a target there necessarily? And also whether as the business begins to show more stable behavior, which it absolutely has, whether there's any opportunity to look at different ways to approach financing that debt?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [17]

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Well, it is funny we were just -- we've had a number of conversations about this. We do have good strong financial partner. We're always -- we're operating in a good rhythm as we've just been talking about. We're looking at all those levers. I don't -- we don't reserve any lever and, say, let's not touch that one. What we might say is let's not touch that one right now. I can't say that we have anything in mind immediately, maybe by the end of the year, but certainly is on our radar. The other thing I've mentioned in the comments was where we are right now gives us a lot of financial flexibility and gives us an opportunity to look at some different things and to look at things differently. So those are all on the table right now. And I feel like we're in a good spot. I feel like we've got a good opportunity to breathe and to look at things, and we've still got some plans and momentum that will carry us through.

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Joseph Amil Osha, JMP Securities LLC, Research Division - MD & Senior Research Analyst [18]

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So there's not, I mean -- okay. So there is not a hard goal to say we wanted to take this down to 1x debt to EBITDA. You might imagine -- I mean it's a big top line business. It's not obviously not huge yet in the EBITDA level. I don't know if you could go to the Term B market or something like that? Or is it the case that you're happy enough with your existing line of credit?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [19]

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I'd say right now, the simple answer is we're happy enough. We are happy. You know good financial partners are -- when you have a good financial partner you want to be fair on both sides of the equation, right?

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Joseph Amil Osha, JMP Securities LLC, Research Division - MD & Senior Research Analyst [20]

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Yes. Yes. Yes. You mentioned indoors. It's interesting to me sort of looking at the competitive environment from 2 standpoints. On the one hand you could say you've got the [Eaton trade, the Cree trade, the G-Trade,] maybe they're going to be in some disarray in outdoor, you wonder what's happening with [indiscernible], for example. On the other hand, maybe some of these areas where the big companies are competitive in were -- not necessarily a core focus for you guys like indoor. I'm just wondering why at this point in time you would want to necessarily continue to spend much time on the indoor portfolio versus really, really hammering this area of strength you have in outdoor? And just curious about how you view that also in the context of, again, all these businesses trading and what -- how that's manifesting in the competitive environment?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [21]

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Well, Joe, what I'm attempting to say is it's not binary, right? I mean we have -- when we look at our entire product line, we have a solution set that serves our vertical markets very well, right? So in those vertical markets, we want to be able to come into a customer and start on the outside, but follow the project through all the way into the inside. What I don't want to happen is to put -- is to reverse those, where we're starting with a very large indoor product and minimizing maybe our outdoor exposure. It doesn't mean that we won't do it, I'm just saying that I'd like to see balance between the 2. We have a very good portfolio and very good solution set for indoor. I think we can compete and we do compete very well. It's just that, as you mentioned at the top of your -- question and the comment, is that outdoor drives a higher quality of earning for us. So if I had my choice, I'd rather see it 60% outdoor, 40% indoor than the other way around.

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Joseph Amil Osha, JMP Securities LLC, Research Division - MD & Senior Research Analyst [22]

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And so you almost view it as outdoor or may be even Graphics kind of pulling some indoor business along with it. Is that a good way to think about it?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [23]

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Yes. Absolutely. We look at our retrofit business, we look at C-stores, we look at our vertical markets, we look at auto dealerships, we look at a whole bunch of different vertical markets and they have complex solutions and we want to be able to make sure we maintain the ability to deliver that whole suite. And I think may be the best way to articulate it is -- we can certainly say indoor and outdoor, but I think the best way to articulate it is being domain experts in our vertical markets. When we focus on our vertical markets, we bring a credibility and a differentiation, and we are recognized as the experts instead of just a commoditized lighting supplier. Yes, I have everything, but I'm not an expert in any of it, as opposed to LSI, we have a solution set that's oriented to the key vertical markets we play in, and we're able to do many other markets because of that, but we bring a lot of expertise in the verticals that we focus on.

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Joseph Amil Osha, JMP Securities LLC, Research Division - MD & Senior Research Analyst [24]

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Okay. And then the last one from me. Just looking at Graphics, I was reading an interesting article the other day talking about some of the improvements in targeting and content that big information platforms like Google and so forth are actually bringing to outdoor advertising. It was pretty interesting. And I'm just wondering whether some of your customers or potential customers, who haven't necessarily invested in advanced outdoor Graphics might sort of be looking at that more now given some of the content that they could potentially put out there and get paid for?

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James A. Clark, LSI Industries Inc. - CEO, President & Director [25]

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I've talked about this before in terms of our Graphics. Because of our -- because of the history we have in the Graphics and every -- spanning everything from print with very advanced materials all the way into digital, we get a seat at the table often. We are recognized in -- and I think we are under-recognized in our services capability. Many of our customers are very happy to have us at the table because we're adaptable in terms of the solution, but we have the skillset in terms of the deployment and the ability to reach across the United States or into Mexico or whatever it is and make sure that the project is managed correctly, the materials arrive on time, that permits are done correctly, that business case and business interruption is factored into it. That depth of experience we have is extensive.

The technology that's coming into it right now, adapting, adjusting pricing on the fly, looking at temperatures outside and favoring hot drinks over cold drinks on cold days and things like that. We're able to roll with that technology capability, but it's all that foundational stuff, the ability to deploy those solutions, the ability to manage those installs, the ability to adapt the overall solution, that's what our customers really recognize LSI when we're at the table. We'll keep those technology -- we'll stay ahead of that technology curve. We'll stay in partner. We are not going to try to compete with Google, we're going to try to be a partner, if not necessarily a partner with Google, by the way, just a partner with their technology.

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Operator [26]

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We have reached the end of our question-and-answer session. So I'd like to pass the floor back over to Mr. Clark for any additional concluding comments.

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James A. Clark, LSI Industries Inc. - CEO, President & Director [27]

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I just want to say thank you, again, for your time and the attention. I think that this quarter represents what's possible at LSI, and I think it was well-articulated through the call today that it's about stability and it's about a platform being able to operate off of. I think we have a lot of levers left to pull. We have a lot of opportunity left in the business. I thank the partners, the customers, the investors and our own employees here for their continued commitment. Have a good afternoon, everyone.

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Operator [28]

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Ladies and gentlemen, this does conclude today's teleconference. Again, we thank you for your participation and you may disconnect your lines at this time.