Q2 2023 Simpson Manufacturing Co Inc Earnings Call
Participants
Brian J. Magstadt; CFO & Treasurer; Simpson Manufacturing Co., Inc.
Michael L. Olosky; CEO, President & Director; Simpson Manufacturing Co., Inc.
Daniel Joseph Moore; MD of Research; CJS Securities, Inc.
Julio Alberto Romero; Equity Analyst; Sidoti & Company, LLC
Kurt Willem Yinger; VP & Research Analyst; D.A. Davidson & Co., Research Division
Timothy Ronald Wojs; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division
Kimberly Orlando; SVP; ADDO Investor Relations
Presentation
Operator
Greetings, and welcome to the Simpson Manufacturing Co., Second Quarter 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando, with ADDO Investor Relations. Thank you. Ms. Orlando, you may begin.
Kimberly Orlando
Good afternoon, ladies and gentlemen, and welcome to Simpson Manufacturing Company's Second Quarter 2023 Earnings Conference Call. Any statements made on this call that are not statements of historical facts are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may vary materially from those expressed or implied by the forward-looking statements.
We encourage you to read the risks described in the company's public filings and reports, which are available on the SEC's or the company's corporate website. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that we make here today, whether as a result of new information, future events or otherwise.
Please note that the company's earnings press release was issued today at approximately 4:15 p.m. Eastern Time. The earnings press release is available on the Investor Relations page of the company's website at ir.simpsonmfg.com. Today's call is being webcast, and a replay will also be available on the Investor Relations page of the company's website.
Now I would like to turn the conference over to Mike Olosky, Simpson's President and Chief Executive Officer.
Michael L. Olosky
Thanks, Kim. Good afternoon, everyone, and thank you for joining today's call. With me today is Brian Magstadt, our Chief Financial Officer. My remarks today will provide an overview of our financial results, key growth initiatives and capital allocation priorities. Brian will then talk you through our Q2 financials and our fiscal 2023 outlook in greater detail.
If you look at the solid performance in a difficult operating environment with second quarter net sales of $597.6 million which is an increase of 0.7% over Q2 2022. North American volumes increased 2.3% leading to a growth in net sales of 2% year-over-year to $465.5 million.
To further break down our performance, National Retail showed double-digit improvements year-over-year from a volume standpoint due to our business model and an improving market environment. We have dedicated teams working with our National Retail customers that provide training and merchandising support.
In our Residential market, while our volumes were down in the low single-digit range, we experienced notable strength in the Midwest and Northeast regions of the U.S. over the prior year with sales in the Southeast region holding relatively flat in a challenging market. Multifamily continues to be an area of strength. In addition, sales in the West recovered nicely following the significant precipitation that led to materially softer sales in the first quarter of 2023.
While 2023 housing starts will finish below 2022 levels, the market continues to improve relative to our earlier outlook, in part due to a high share of new single-family home sales as a percentage of all single-family sales. We continue to believe in the sustainable strength of the housing market in the mid- to long term given the shortage of new housing. We are confident key attributes of our business model will help stem some of the short-term downward pressure given.
First, our increasing diverse portfolio of products and software and a commitment to developing complete solutions to the markets we serve; second, our long-standing reputation, relationships and engagement with engineers, building officials and contractors to design safer, stronger structures and improve construction practices. Third, a dedication to innovation, extensive product engineering and rigorous research and testing in our 9 state-of-the-art labs.
Fourth, best-in-class field support, technical expertise, digital tools and training to make it easy to select, specify, install and purchase our products. Fifth, industry-leading product availability and delivery standards on our vast product offering across multiple distribution channels with typical delivery within 24 to 48 hours. And sixth, a deep commitment to trade education and partnering with organizations that provide training and create opportunities to attract more people to the construction industry and alleviate labor shortages.
Turning to Europe. Our second quarter sales totaled $127.8 million, down 4.1% year-over-year on lower volumes. ETANCO continues to perform well in a challenging market with relatively flat sales. Our business associated with the residential housing market was down modestly due to lower housing starts. We continue to believe in the longer-term potential of the European market, given the ongoing housing shortage, increasing use of wood construction and new regulations that drive new applications and specifications.
Our consolidated gross margin for the second quarter improved to 48.1%, primarily reflecting lower raw material costs, partially offset by higher costs in our production facilities. Brian will further elaborate on the key drivers of our margin performance shortly. I'll now turn to an update on our key growth initiatives within our 5 end-use markets, which help fuel our ambition to be the partner of choice.
Residential. Beginning with our residential market, our long-standing relationships and high service levels resulted in many new customer wins with both single-family and multifamily builders and our channel customers that serve them. As a reminder, we have 26 of the top 30 U.S. homebuilders along with several hundred smaller regional builders on our program that specify our connector products and other solutions.
Commercial. In the commercial market, our solutions are specified for the first ventilated facade application on a building in New York City, demonstrating the early implementation of energy conservation regulations by several cities and states in the U.S. that are similar to those adopted in Europe. The facade will be built with products already available in the U.S., highlighting the future opportunity to roll out the ETANCO product line in the U.S.
OEM. In the OEM market to further support the Mass Timber initiative, our team designed, manufactured and installed many critical connections in the construction of 112-foot wood building that was used for the world's tallest shake table test.
The building suffered no significant damage after withstanding 100 large-scale earthquakes. It's another example of our rigorous research and testing effort that is consistent with our mission to build safer stronger structures.
National retail. Within the national retail space, we have successfully expanded our product line and off-shelf merchandising efforts with the home center channel, which has resulted in improved sales volume. Our Outdoor Accents decorative hardware line has been a strong contributor to our success with double-digit sales growth year-over-year in 2023 versus last year.
Building Technology. And finally, in building technology, we continue successfully converting new component manufacturers over to Simpson's truss software, truss plate and connectors solution set. The software critical to this market segment has improved substantially over the last couple of years. Our strong business model has also helped us become the partner of choice for several new customers.
We are pleased with the traction we've made on our growth initiatives to date as we seek to extend our mission to help people design and build safer stronger structures into new applications. Throughout all of our operating segments, we believe our ambition to outperform the U.S. housing market will be supported by our comprehensive strategies specific to each market segment and product line.
Turning now to capital allocation. Our priorities remain centered on growth opportunities, both organically and through M&A, returning value to our stockholders via quarterly dividends and opportunistic share repurchases and paying down the debt we incurred to finance the acquisition of the ETANCO.
As it pertains to organic growth, we've been making key investments to not only strengthen our business model, but to also expand our operations in order to enhance our manufacturing capacity and supply chain efficiencies and uphold our best-in-class customer service standards. To that end, we have identified a new greenfield opportunity to replace our facility in Gallatin, Tennessee.
In addition, we are continuing to evaluate potential M&A opportunities to accelerate traction on our key growth initiatives, the majority of which are smaller opportunities to expand our product line or solution set and help us achieve better manufacturing and supply chain efficiencies.
In summary, we remain focused on our company ambitions, which include strengthening our values based culture, being the partner of choice, being an innovation leader in the markets we operate, continuing above-market growth relative to U.S. housing starts, continuing to expand our operating income margin to remain in the top quartile of our proxy peers and continuing to expand our ROIC within the top quartile of our proxy peers.
Before I conclude, I'd also like to highlight that as part of our customer-centric approach to be their best vendor. We are thrilled to have achieved a very positive response on our internally conducted customer satisfaction survey. We are generally thankful for the recognition of the everyday efforts we put in to provide them with the exceptional service they deserve. This further validates the superior level of service we provide across all of our branches and inspires us to continue to work harder to raise the bar.
With that, I would like to turn the call over to Brian, who will discuss our second quarter financial results in greater detail.
Brian J. Magstadt
Thank you, Mike, and good afternoon, everyone. I'm pleased to discuss our second quarter financial results with you today. Before I begin, I'd like to mention that unless otherwise stated, all financial measures discussed in my prepared remarks refer to the second quarter of 2023, and all comparisons will be year-over-year comparisons versus the second quarter of 2022.
Now turning to our second quarter results. As Mike highlighted, our consolidated net sales increased 0.7% to $597.6 million, within the North America segment, net sales increased 2% to $465.5 million primarily due to higher sales volumes. And in Europe, net sales decreased 4.1% to $127.8 million, primarily due to lower sales volumes. Wood construction products represented 86.2% of our total second quarter sales compared to 86.7% and concrete construction products were 13.6% of total sales, up from 13.2%.
In North America, wood product volume was up 2.4% and concrete product volume was up 1.6%. Consolidated gross profit increased 10.8% to $287.5 million, which resulted in a gross margin of 48.1% compared to 43.7% last year. On a segment basis, our gross margin in North America increased to 51.2% compared to 48%, primarily due to lower raw material costs, which were partially offset by higher factory and tooling costs as a percentage of net sales.
Our gross margin in Europe increased to 37.4% from 29.3%, also primarily due to lower raw material costs as a percentage of net sales. As you -- and as you may recall, our raw material costs in the prior year period included a $9.2 million inventory fair value adjustment for the acquisition of ETANCO, representing 6.9 percentage points of Europe gross margin. From a product perspective, our second quarter gross margin on wood products was 48.4% compared to 43.7% in the prior year quarter, almost 45.9% for concrete products compared to 43.2% in the prior year quarter.
Now turning to our second quarter costs and operating expenses. Total operating expenses were $140.7 million, an increase of $20.3 million or approximately 16.9% driven primarily by increased personnel costs to support our growth as well as higher variable compensation. As a percentage of net sales, total operating expenses were 23.6% compared to 20.3%.
Our second quarter research and development and engineering expenses increased 27.1% to $21.5 million, primarily due to higher personnel costs in pursuit of our future revenue-generating opportunities aligned with our strategic growth initiatives. Selling expenses increased 11.9% to $50.4 million, primarily due to increased personnel and commissions in North America.
And on a segment basis, Selling expenses in North America were up 15.6%, and in Europe, they were up 2.1%. General and administrative expenses increased 17.7% to $68.8 million, primarily due to professional fees, personnel costs and variable compensation. Integration expenses associated with ETANCO were down $4 million. As a result, our consolidated income from operations totaled $145 million, a meaningful increase of 9% from $133.1 million.
In North America, income from operations increased 4.5% to $143.4 million, primarily due to higher gross profit, partly offset by increased personnel and variable compensation as well as professional fees. In Europe, income from operations was $14 million compared to $5.6 million, primarily due to higher gross profit and lower year-over-year acquisition and integration costs, which were partially offset by higher variable compensation.
On a consolidated basis, our operating income margin was 24.3%, an increase of 184 basis points from 22.4%. Our effective tax rate decreased to 25% from 26%. Accordingly, net income totaled $107.2 million or $2.50 per fully diluted share, which is inclusive of $0.7 million of net interest expense. This compares to $93.6 million or $2.16 per fully diluted share.
Now turning to our balance sheet and cash flow. Our balance sheet remained healthy with cash and cash equivalents totaling $408 million at June 30, 2023, up $155.4 million from our balance at March 31, 2023. Our debt balance was approximately $566.8 million, net of capitalized finance costs and our net debt balance was only $158.8 million. We have $300 million remaining available for borrowing on our primary line of credit.
Our inventory position at June 30, 2023, was $522.2 million, which was down $54.3 million compared to our balance at March 31, 2023. Our focus on effective inventory management remains paramount to ensure the strong levels of service and on-time delivery standards that our customers depend on in the current uncertain economic environment. During the second quarter, we generated cash flow from operations of approximately $194 million compared to $93.8 million.
We invested approximately $21 million for capital expenditures and paid $11.1 million in dividends to our stockholders. While we did not repurchase any shares of our common stock, we continue to evaluate opportunistic share repurchases as part of our capital allocation strategy.
Next, I'd like to discuss our 2023 financial outlook. Based on business trends and conditions as of today, July 24, we are updating certain elements of our guidance for the full year ending December 31, 2023, as follows. We now expect our operating margin to be in the range of 20.5% to 21.5%.
Key assumptions include lower U.S. housing starts impacting our top line, albeit at a lesser rate of decline versus our initial expectations earlier in the year; higher overall gross margin compared to 2022; increased operating expenses, we believe are necessary to position the company to make meaningful share gains in our markets and growth initiatives; and $6 million to $8 million in expected total integration and costs associated with ETANCO.
We are continuing to make progress on our integration efforts for ETANCO in order to realize previously identified offensive and defensive synergies in the years ahead, subject to macroeconomic changes, which will delay the realization of some of the offensive synergies.
Next, our 2023 effective tax rate is expected to be in the range of 25% to 26%, including both federal and state income tax rates and again, assuming no tax law changes are enacted. Lastly, we now expect capital expenditures to be in the range of $105 million to $115 million. In summary, we were very pleased with our financial performance in the second quarter amidst the ongoing challenging macroeconomic environment.
We remain focused on executing our growth initiatives and integrating the ETANCO acquisition while being mindful of expense and inventory management as we look to grow our share. Thanks again to our team at Simpson for the continued strong performance and to all our stakeholders for your continued support of the company.
With that, I'd like to turn the call over to the operator to begin the Q&A session. Operator?
Question and Answer Session
Operator
(Operator Instructions) And our first question is from Daniel Moore with CJS Securities.
Daniel Joseph Moore
Congrats on, obviously, another strong quarter. Maybe to start with North America, margins continue to outperform expectations. If we look at the outperformance in the quarter as well as the upward revision in guidance for the full year, how much of it reflects stronger volumes than you expected -- than expected versus maybe lower input costs versus what was embedded previously in your guide?
Michael L. Olosky
So Dan, thanks for the question. so North America overall revenue for us was up 2%. Volume impact, 2.4%, so 0.4% basically downward pricing pressure. When we look at North America as a whole, we've got -- we're pretty excited that 4 out of our 5 market segments all had positive development in terms of revenue and volume. Our Midwest and Northeast regions are having very good growth again, especially considering a difficult market. Southeast also flat in a difficult market. So we're pretty happy with that. And the Western part of the U.S. is recovering.
And then when you look at some other individual spots in there, we're pretty happy with how multifamily continues to grow for us this year.
Brian J. Magstadt
And I would add that volumes were greater than where we were Three months ago based on the things that Mike had just talked about. And the less negative, if you will -- or slightly better outlook for housing compared to where we were at the beginning of the year. So we definitely saw as compared to prior guidance, better volumes in North America.
Daniel Joseph Moore
That's helpful. And a quick follow-up. Obviously, over the last several years, done an excellent job of driving down OpEx as a percentage of revenue and tick a little bit back higher back from the sort of low 20s into the mid-20s with ETANCO and is working its way back down. Just where do you see that metric in 2 to 3 years once full synergies are achieved, so remind us and maybe what your kind of longer-term targets look like?
Michael L. Olosky
Yes. So Dan, we're going to continue to invest in our growth initiatives because we need the sales people, engineering people and other team members to realize those. So we'll continue to invest in it. That also helps us continue to provide great service as far as the metrics go, Brian?
Brian J. Magstadt
And from a OpEx as a percent of revenue, seeing where we are from a revenue perspective today, the guide that we have increased slightly for the balance of this year would indicate a run rate little bit higher than where we were this time last year or for the balance of the year. And then going forward we're in a scenario where, again, all things being equal, relatively flattish from a percent of revenue perspective.
Daniel Joseph Moore
Understood. Last one for me, and I'll jump out. Just getting a sense of the cadence going into Q3. North America volume is up a little over 2% for the quarter. How has that trended thus far in Q3 from what we've seen quarter-to-date?
Brian J. Magstadt
So as we're looking at July and just as a reminder, July last year was somewhat soft. And we're around that, again, so far in the first few weeks of the month. A couple of the interesting things there with July with the holiday falling on -- July 4 holiday falling on a Tuesday, we think we've got -- not we think, we've got 1 less selling day in July. And then also that activity, that first week, a little softer than normal due to, I think, a lot of people in the industry taking that whole week off. again, due to the timing of the July 4 holiday here.
Operator
Our next question is from Tim Wojs with Baird.
Timothy Ronald Wojs
Maybe just to start off on the revenue line. I know that you may be expecting starts activity to be less bad than maybe you thought 6 months ago or 3 months ago. I guess as you kind of think about the overall kind of revenue number for 2023? I mean even with the starts seemingly kind of down in the second quarter for you guys, you still posted revenue growth. So I guess my question is, even if starts are less bad than they were before, I mean is it possible you can grow the top line organically in '23?
Brian J. Magstadt
Well, from a -- just to remember to level set, '23 has got the full 4 quarters of ETANCO versus '22 only having the 3 quarters company-wise -- company-wide. And then -- but taking that out of the equation I'd see pull that up. It's going to be relatively flat on a like-for-like basis. When we take the ETANCO extra quarter into consideration, which would be up compared to where we were entering the year.
Timothy Ronald Wojs
Yes. Okay. And is there a difference there, like retail and some of the growth drivers? I think that would be, I guess, more positive than I think I would have expected just given what starts are or kind of that even year-to-date.
Michael L. Olosky
Yes, Tim, let me go back to the market. So when we were budgeting for this year, we were thinking the residential starts would be definitely more than 10% down. Now we're thinking based on everything we reheard from our customers, it's going to be 10-ish maybe right around that 10% down. So again, less bad. On the national retail home center story, we are also expecting that to be a negative market. But with the lower lumber costs, a lot of projects that have been sitting on the side are coming in. So we actually expect that market to be -- market again positive.
And then the strategies we have to drive growth in the National Retail segment, we're pretty excited about and we think that's helping us drive above-market growth in that area. And then if you look at the other market segments that we're in, OEM, albeit still small, we're still driving a big growth in that segment, volume and revenue perspective. And on the commercial side, we still think we're in good shape on that area as well. So add it all up, the market is getting better than we had budgeted. And we think the strategies that we have in place are delivering.
Timothy Ronald Wojs
Yes. Understood. And then maybe just on the margin line. I think last quarter, Brian, you talked about kind of EBIT margins being kind of flat year-over-year in Q2 and Q3 and then maybe being down a little bit in the fourth quarter. I guess, how are you thinking about the back half margins now? Because I think if I kind of assume they're flattish in Q3 and Q4 for the rest of the year, I'm kind of at or maybe even above the updated EBIT guidance.
Brian J. Magstadt
Yes. So from an operating income perspective, Q3 pretty comparable to prior year. And then I would think Q4, let's see, again is fairly comparable.
Timothy Ronald Wojs
Okay. Okay, good. And then just the last one on the Galveston or the Tennessee facility. Can you just kind of step back and kind of give us some kind of color on why you're kind of replacing that facility and what kind of the benefits to Simpson would be? And then also maybe just kind of the total capital outlay for that?
Michael L. Olosky
Yes. So the fasteners business, Tim, has been a big growth driver for us. We continue to expand the top line and the margins in area. We think we've got a differentiated product offering. And right now, we make some of our products in our Gallatin facility today, and we import some of our products for that area as well. So the focus here is we want to localize more of our fasteners production. We also want to vertically integrate more of our fastener production. We think that will better help us serve and support our customers.
And then if you go back to some of our growth initiatives like Mass Timber, those tend to be projects you either get it or you don't. And if you get it, and you need to be able to respond quickly. So having production in the U.S., we believe will help us better respond to our customers in those areas as well.
Brian J. Magstadt
So yes. And the total project cost or the fine-tuning numbers and it depends on land development, how far or long a piece of property may be versus how quickly it can be developed on. About $100 million net of selling our existing facility. We're a bit landlocked in our current site there. And to Mike's point, being able to in-source more of the activities around getting raw wire into finished good, we're going to be able to have on-site there. So $100 million, and the outlay would be mostly '24 and forward, '24, '25, a little bit this year. We would presume that we're finding land, maybe starting to get that ready to build on. But the bulk of our spend would be in the next couple of years.
Timothy Ronald Wojs
Okay. Got you. And where is Columbus at?
Brian J. Magstadt
Columbus is still pretty early from an improvement perspective. We acquired adjacent land there that needed to be graded and we're continuing to work that. So we've not spent a lot of money on that one yet. Still has been going through a lot of the permitting process, approval process. The land is getting ready to be able to get foundations in and get walls up and the like. So still pretty early in that process as well, although we would expect through the balance of this year to be able to see some pretty good improvement in the project phases for that facility.
Operator
Our next question is from Kurt Yinger with D.A. Davidson.
Kurt Willem Yinger
Great. Mike and Brian, two quick ones for me. I guess, first, I would just love to hear kind of your latest thinking on pricing environment and pricing risk. Are there any areas where you're getting more pushback from customers? Or the competitive environment is getting to a point where you're having to make any concessions or not so much?
Michael L. Olosky
So Kurt, we are actively managing and monitoring our pricing on a regular basis. But really, the emphasis on us is more in our business model, and that's making sure that we're investing in products that deliver value for our customers, driving innovation, providing exceptional service, doing the training and all the things associated with that business model. We believe that, that business model helps us have a modest premium, key word here, again, modest, and we're actively monitoring that pricing as we speak.
Kurt Willem Yinger
Got it. Okay. And then second, can you just talk a little bit more about the component manufacturer wins? I mean, presumably, that's a tailwind to the trust plate business. And I'd just love to hear what's kind of changed from a software perspective that's maybe helped catalyze that?
Michael L. Olosky
Yes. So we're talking specifically about the truss market. And here, we've been spending a lot of time and effort over the last 3 years to really develop our software into a -- one fully integrated program that's easy to use and hits our customers' needs. We've made a lot of progress Kurt, we think there's still some room for improvement. And we're now coupling that development efforts in the software with everything we -- everything else we do from a business model perspective, meaning making sure we're providing great service and support to our customers.
And so we have been picking up truss customers over the last couple of years, in part because we believe one of our competitors had some significant delivery problems. They ended up putting customers out of allocations and they did that in a growing market. That obviously had an impact. And I think we've had several customers approach as a result of that.
And so now we're taking a very measured and conscious approach with how we onboard our new customers. We want to make sure that goes very well going forward with them. So we think that's also going to be a nice growth driver for us. And everything that we've been doing in that area in the last couple of years has been working out very well according to how we planned it.
Kurt Willem Yinger
Got it. And then just quickly, I mean, is the software piece of it now, I guess, capable of fully supporting the full suite of products like wall panels and things like that. If I'm remembering correctly, at least that was kind of a hindrance in the past. Is that still the case or no?
Michael L. Olosky
So we do have a couple of gaps, and there are some areas we're working on it. So the customers that we're working with, we're doing basically a [fit] analysis with them, trying to make sure we understand what they need and what we're capable of doing. And we're customizing and develop the software to make sure we hit the need. We aren't exactly where we want to be to date, but we do have, I believe, very good plans to get done.
Kurt Willem Yinger
Got it. Appreciate all the details, and good luck here in the second half, guys.
Operator
Our next question is from Julio Romero with Sidoti & Company.
Julio Alberto Romero
Okay. Mike and Brian, could you talk about the trend on North American volumes throughout April, May and June? And was it a gradual improvement throughout the quarter or more of a sharper step up in June?
Michael L. Olosky
So we -- June was a real nice month for us. I mean, each month got better in the second quarter.
Julio Alberto Romero
Got you. And has the magnitude of the improvement in June, maybe changed any behaviors either from your customers or competitors at all?
Michael L. Olosky
No. I mean we continue to think again that the market is improving, and we're hearing from a lot of our customers that their business is getting better. And at the same time, we continue to pick up new applications and new customers. And I think the combination of that is reason why you see the numbers develop the way they've developed versus the market.
Julio Alberto Romero
Got it. If we could talk about maybe steel for a second, I think steel prices have kind of inflected downward since your last call in April. If you could just maybe talk about the impact of that on your cost of sales expectations for the back half of the year?
Brian J. Magstadt
Julio, it's Brian. So part of our operating margin guidance for the year incorporates where we see material is a large component of cost of sales and as consistent, we don't disclose how much material or steel is as a percent of cost of sales, but it is the largest component of that. And we feel it's -- it should be pretty consistent on a go-forward basis based on the steel markets where we're purchasing where we are positioned with inventory and the volume assumptions that we have for the back half of the year on how much we're going to consume of that.
Julio Alberto Romero
Got it. That's helpful. And then just last one for me would be just on the CapEx guide. Just talk about the step-up in the guide. And is that related to the Tennessee facility or any other kind of capital projects?
Brian J. Magstadt
Mostly due to the Tennessee facility. So we still have a fair amount of spend for this year that we anticipate for the Ohio expansion. And then some spend for the fastener factory and land acquisition and some associated costs for that.
Operator
Thank you. We have reached the end of our question-and-answer session. And with that, this concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.
