Q4 2023 HNI Corp Earnings Call
Participants
Matt McCall; VP of IR & Corporate Development; HNI Corporation
Jeffrey Lorenger; Chairman, President & CEO; HNI Corporation
Marshall Bridges; Senior VP & CFO; HNI Corporation
Reuben Garner; Analyst; The Benchmark Company, LLC
Gregory Burns; Analyst; Sidoti & Company, LLC
Steven Ramsey; Analyst; Thompson Research Group, LLC
Budd Bugatch; Analyst; Water Tower Research LLC
Presentation
Operator
Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the HNI Corporation fourth quarter and year ended fiscal 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star one. Again, I would now like to turn the conference over to Mr. McCall.
Please go ahead, sir.
Matt McCall
Thank you. Good morning. My name is Matt McCall. I'm Vice President, Investor Relations and Corporate Development for HNI Corporation.
Thank you for joining us to discuss our fourth quarter and year end fiscal 2023 results. With me today are Jeff larger, Chairman, President and CEO, and Marshall Bridges, Senior Vice President and CFO. Copies of our financial news release and non-GAAP reconciliations are posted on our website. Statements made during this call that are not strictly historical facts are forward-looking statements, which are subject to known and unknown risks. Actual results could differ materially from the financial news release posted on our website includes additional factors that could affect actual results Corporation assumes no obligation to update any forward-looking statements made during the call. I now please turn the call over to Jeff Lawrence or Geoff.
Jeffrey Lorenger
I think that Good morning, and thank you for joining us. Our members continued to deliver outstanding results and had a strong finish to the year. For the fourth quarter, non-GAAP earnings per share increased 56% versus the prior year period. This was despite a 6% year over year organic revenue decline during the quarter, which was primarily driven by continued housing market weakness. Overall, 2023 was an outstanding year for HNI. During the year, we completed the largest acquisition in our company's history with the addition of Kimball International to the agent family and delivered on our plan to improve margins without the benefit of top-line support.
Entering 2023, we anticipated a challenging demand year and we built a plan to deliver earnings growth in the face of these challenges, we also generated significant cash flows to strengthen our business and provide returns to shareholders. This resulted in 2023 non-GAAP EPS that increased by more than 20% year over year despite an organic revenue decline. This was on top of 35% non-GAAP EPS growth in the prior year. With our strong cash flow, we rapidly reduced debt following the acquisition of Kimball International and finished the year with a gross leverage ratio under two times. I'm extremely proud of the efforts our members put forward during the past year our plan delivered excellent results. And despite the uneven macroenvironment, we exited 2023, a fundamentally stronger company.
On the call today, I will highlight four key topics. First, we delivered another quarter of significant margin expansion in Workplace Furnishings, and we expect continued year-over-year profit and margin improvement from here.
Second, the integration and synergy capture associated with the acquisition of Kimball International are both ahead of schedule, and we now expect total associated synergies to be $10 million higher than the initial projection. The addition of KI. is providing significant value creation to our shareholders.
Third, we expanded margins in residential building products despite top line pressure from ongoing housing market weakness and order trends improved during the quarter. And fourth, we strengthened our already strong balance sheet and our gross leverage ratio was back below two times only two quarters following the completion of the Kimball International acquisition. Following those highlights, Marshall will review our outlook. I will conclude with some general closing comments before we open the call to your questions.
Moving to the first topic, we delivered another strong quarter of significant margin expansion in Workplace Furnishings. When excluding KI. results, fourth quarter non-GAAP operating profit margin for legacy H. and I. Workplace Furnishings was 7.2%. This represents an expansion of 480 basis points year over year and was the seventh straight quarter of year-over-year operating margin improvement as our profit transformation initiatives continue to drive results. Looking forward, we expect continued year-over-year profit and margin improvement from here. As a reminder, our legacy Workplace Furnishings product transformation plan consists of four primary actions. First, we are driving increased productivity. Our focus on lean cost reduction and better efficiencies helped drive our profit growth in 2023, while funding operational investments primarily in our new facility in Mexico.
Looking forward, our investments will help drive outsized productivity benefits as they mature over the next couple of years and add to our continued lean efforts.
Second, price cost improvement continues to benefit our profitability. Our pricing strength continued to support profitability in the fourth quarter, and we expect continued net benefit in 2024 from pricing actions announced within the past 12 months.
Third, we have streamlined our cost structure. We previously announced a $30 million corporate-wide cost savings program. However, we far exceeded this target and that as of the end of 2023, the programs run rate savings was $50 million across the corporation with half of that total contributing to our Workplace Furnishings margin expansion in 2023.
And finally, we continue to simplify our business as we focus our efforts on the most attractive markets. We divested Poppin. We divested our China business and we rationalized our e-commerce offering all in. We continue to see opportunity for margin upside in Workplace Furnishings. I will remind you our profit transformation plan does not require volume growth. However, we continue to see encouraging trends related to future Workplace Furnishings demand, particularly given our unique market position in the near term. Demand remains choppy, but is stable within a range consistent with our commentary last quarter.
Looking further out, we continue to see growth in the small to medium sized customer segment where we have an unmatched competitive position. Legacy SMB orders grew 6% organically year over year in the fourth quarter and were up 8% in 2023. Overall, in general, this segment has benefited from healthy dynamics. Small and midsized firms have accounted for nearly 85% of all post pandemic hiring the segment has also benefited from population shifts to smaller secondary metros, where office visits are nearly back to pre-pandemic levels. We believe this segment will continue to outperform.
Switching to contract trends improved in the quarter and we are seeing encouraging signals. Orders from legacy contract customers were down 2% for the year, but were approximately flat in the fourth quarter on a year-over-year basis. The full year results are consistent with lower return office rates in the larger markets and the lagging hiring activity by large companies I just mentioned encouragingly, some return to office metrics continue to tick up and have reached post pandemic highs in recent weeks. This, along with the predicted acceleration of lease expirations and the need for companies to adapt their spaces for hybrid work support and projected increase in furniture events and should bode well for contract demand patterns going forward. Orders for KII.'s Workplace and Health business also increased in the mid-single digit pace at a mid-single digit pace on a year-over-year basis. We continue to be encouraged by the complementary nature and attractive post pandemic positioning of KI.'s offerings across all of our major workplace brands. Year-over-year order trends were uneven during the quarter, but were strongest and grew in December and Q1 2024 to date has seen a continuation of these trends generally positive, but still choppy.
Moving to my second topic. Both the integration and synergy capture associated with the acquisition of Kimball International are ahead of schedule. KI. added approximately $0.07 to non-GAAP EPS in the quarter and delivered a strong non-GAAP operating profit margin of 10.7%. In addition, we now expect to achieve total annual cost synergies of $35 million. This is up from previous expectations of at least $25 million, and the $25 million run rate is now expected to be achieved in 2024. This is well ahead of the initially the initial communicated time line. The increase is primarily tied to higher than anticipated procurement savings, Kimball International, as complementary from a product market and cultural perspective. And the addition of its brands strengthens our Workplace Furnishings exposure to several important trends and markets, namely ancillary products, secondary geographies, health care and hospitality. Each provides new opportunities for profit growth and our confidence in the combination stated strategic and financial benefits continues to accelerate.
My third topic is we expanded margins to near record levels in our Residential Building Products business. Despite continued strict cyclical top line pressure segment, non-GAAP operating margin in the fourth quarter improved to more than 22%. This represents a 240 basis point improvement from levels reported in the year ago period. As our recent cost reduction actions continued to support profitability, we delivered margin improvement despite a 13% year over year revenue decline as housing market weakness continued to pressure demand trends in the quarter. Importantly, housing macro backdrop continued to improve in the fourth quarter, specifically as it pertains to single-family construction year over year. Single-family permits and starts showed healthy growth in the fourth quarter, which supports further new construction improvement in 2024 for remodel retrofit demand remained soft, however, the declines are moderating. Overall segment order trends improved during the quarter. Fourth quarter orders were 3% below year-ago levels. This represents an improvement compared to rates seen in the third quarter of minus 18% and in the first half and segment orders declined 29% year over year. Despite the near-term headwinds, we are bullish on the intermediate to long-term dynamics for the segment. Demand fundamentals remain strong. Us housing is undersupplied. Demographic trends point to robust future construction growth and renovation activity will benefit from an aging housing stock and increasing housing turnover.
In addition to the solid long-term market fundamentals, we have unique growth opportunities and continue to invest in the areas of category awareness, new product innovation, online capabilities in the expansion of our wholly-owned installing distributor footprint.
In summary, order trends improved during the quarter and the intermediate to long-term demand dynamics remain encouraging for the segment.
Finally, my fourth key point in the quarter, we further strengthened our already strong balance sheet. We repaid $73 million of debt in the fourth quarter and $162 million in the second half of 2023. As a result, we ended the fourth quarter with $436 million in total debt and a gross leverage ratio of 1.9 times. Our gross leverage ratio is back below 2 times or two quarters following the acquisition of Kimball International speaks to the strong cash flow characteristics of our company and continues to provide us with substantial financial flexibility following those 22 summary comments, I will now turn the call over to Marshall to discuss our outlook for 2020. For Marshall.
Marshall Bridges
Thanks, Jeff. Let's start with our demand outlook. We expect 2024 organic revenue to grow at a low single digit rate in both Workplace Furnishings and residential building products in Workplace Furnishings. This outlook assumes demand conditions remain generally in line with those experienced in the second half of 2023 and Residential Building Products, we expect growth in new construction to be partially offset by softness in remodel retrofit.
Shifting to the impact of Kimball International, we expect KI. to add $215 million to $225 million of incremental revenue to 2024 that will occur in the first half. We also expect Kimball International to be solidly accretive to earnings from an overall earnings perspective in 2024, non-GAAP EPS is expected to increase solidly year over year, primarily driven by continued margin expansion in Workplace Furnishings and the full year benefit of accretion from KI. for the first quarter of 2024. We expect non-GAAP earnings per share to increase year over year with margin expansion and accretion from similar national more than offsetting macro-driven top line pressure.
A few details on our first quarter outlook. We expect first quarter Workplace Furnishings organic revenue to be down in the low single digits versus the same quarter of 2023. Although growth in our fourth quarter orders would point to modest first quarter top line growth in the segments, we are seeing a higher mix of project business seeking delivery after the first quarter. This is a headwind for the first quarter, but it does support our positive full year outlook. For the first quarter, we expect Kimball International to add $125 million to $130 million of revenue. And in Residential Building Products, we expect first quarter revenue to be down in the low to mid 10s year over year. This primarily reflects the impact from unwinding the elevated backlog in the year ago period.
Shifting to the balance sheet, we expect to further deleverage on and improve our already strong balance sheet during 2020 for low leverage and consistent cash flow generation and provide substantial capacity for capital deployment. Our current priorities for cash deployment are reinvesting in the business, funding dividends and pursuing share buybacks and M&A opportunities.
I'll now turn the call back over to Jeff.
Jeffrey Lorenger
Thanks Marshall before we open the call to your questions. I wanted to take a moment to highlight a few of our accomplishments over the past couple of years from a profitability perspective for the corporation. Overall, our strategies have driven non-GAAP earnings per share growth in excess of 60% and non-GAAP operating margin expansion of more than 270 basis points over this two year period, despite the consistently turbulent less than supportive macro backdrop in Workplace Furnishings, specifically, our product transformation initiatives and the addition of KI. have expanded margins more than 600 basis points and segment operating profit has grown $110 million, more than 750% from 2021 levels. And we expect continued year-over-year profit and margin improvement in coming quarters. In addition, the integration and accretion from Kimball International are ahead of schedule, and our synergy expectations are now $10 million higher. Our confidence in the combination of strategic and financial benefits continues to accelerate.
And finally, in Residential Building Products, we quickly adjusted our cost structure to respond to the housing reset in 2023. As a result, despite the macro-driven top line pressure. Our operating profit margin in the fourth quarter expanded to near record levels while we continue to invest in our growth strategies, leading brands and operating platforms, I know although the near-term dynamics remain leading indicators are improving, and we are uniquely positioned to drive high-margin growth as housing stabilizes.
In summary, we remain committed to our core strategies of continuing to expand margins in Workplace Furnishings and drive long-term high-margin revenue growth and residential building products.
I want to thank all HNI members. Our strong results in 2023 reflect their collective effort focus and dedication to our stakeholders. We will now open the call to your questions.
Question and Answer Session
Operator
At this time, I would like to remind everyone in order to ask a question simply press star, then the number one on your telephone keypad. Your first question is from the line of Reuben Garner with The Benchmark Company. Please go ahead.
Reuben Garner
Thank you. Good morning, everybody. More your final on maybe Pulsar, thanks for the color on 2024 for a lot of moving pieces with Philip Campbell at the savings there, organic growth and kind of from the productivity and savings initiatives you had kind of carrying over from last year. Can you kind of help us put all that together?
Marshall and I in a bridge and I know you said earnings growth, EPS growth to go solidly in 2014, kind of Southwest South remains in mass casino, be helpful here.
Marshall Bridges
So yes, look, we've been I think when we say solidly, we're expecting EPS growth in the high single digits to low 10s. And our objective there would be to have our third consecutive year of double digit EPS growth. The two big drivers of that growth are the continued margin expansion in the legacy Workplace Furnishings, and we'll say that's roughly half of it. The other half is the continued accretion from us getting a full year from the KI. So those are the two major drivers. We also will see some benefit from improved profitability in residential building products.
Reuben Garner
Sorry, I was on mute? And is there any remaining savings or price cost benefits that helped you guys in 23?
The carryover from the first part of 24?
Marshall Bridges
Absolutely. The major driver of the continued profit growth in legacy Workplace Furnishings is the productivity and price cost. That's our major major profit levers there. So we are expecting this to be favorable for the year. And certainly that's a little bit disproportionate to the first half as well.
Reuben Garner
And then a couple of questions on the Residential Building Products segment. The outlook there is very encouraging particularly given the start to the year. And I just kind of want to so to clarify, maybe if you could kind of break down your end market expectations within that low single digit growth framework. And just to be clear that, that kind of points to a high single digit growth framework in Q2, three and four, can you kind of walk us walk us through how you how do you get to those kind of assumptions?
Marshall Bridges
Yes, we're expecting new construction to be up in the mid-single digits for the year and then remodel retrofit, we're expecting to be flattish. And so that's where we get to the low-single digit growth on average for the year. But you're right, we've been we do expect growth to improve through the year. We're going to start off a little bit slower due to that year-over-year comp issue that we alluded to on the call on remodel retrofit. We do expect to get better through the year. One of the one of the items that we're going to benefit from is we had some trade inventory destocking in 2023, which won't repeat in 2024 for us, as we start to anniversary that later in the year, the comps get easier and the growth will improve. And we think new construction is going to mean a pretty solid all year. So the change in that trajectory is really driven by remodel retrofit, getting less bad, certainly get a little better in the back half.
Reuben Garner
Okay. Thanks. And I'm going to sneak one more in on the residential segment. The margin performance in the fourth quarter, anything kind of onetime there? Obviously, pretty big number is that something we can kind of look for going forward or you go back to your historical ways that kind of reinvesting more of that profit to generate growth?
Jeffrey Lorenger
Yes, we will. I take there's no there's nothing extraordinary in the fourth quarter for say. Q4 is always traditionally been a strong quarter for us and usually is our highest margin quarter historically. And we were still investing, you know, in the fourth quarter anyway, but we're always expanding looking to expand that. But I think, you know, it'll go back probably to a normal pattern where the fourth quarter will remain high on. I don't see any reason we can't achieve those margins down the road the fourth quarter.
Reuben Garner
Great. Thanks, guys. Congrats on the strong close of the year and good luck in 24.
Jeffrey Lorenger
Thanks.
Operator
Your next question is from the line of Greg Burns with Sidoti & Company. Please go ahead.
Gregory Burns
Morning, um, the a really nice job on the margins in the residential buildings product side of the business. As we look into next year, firming up and your revenue starts to come, revenue growth starts to reaccelerate there. Are these margin levels something you could sustain? Do you intend to give a little bit back to support growth? How should we think about margins on that side of the business going forward.
Marshall Bridges
And our goal there, Greg, is to hold margins in the high 10s and drive the growth that we believe is that this undertaking has just kind of mentioned in our prior answer, there's a seasonality to the margins in that business. Q4 is usually the highest and for the year, we'll be in that high 10s level on. So I think the margins are relatively where we want them to be that it may go up or down a little bit from here, but we're really trying to drive growth. So there's nothing unusual in the Q4 number. That's that's right in line of where we want to be on a seasonal perspective.
Gregory Burns
And then on the the in the office market on the contract side of the business, are you seeing how are your conversations going with with customers there? Are you seeing any pickup in tender activity there relative to maybe project pipeline or just the conversations in general that you're having with those customers are, are you are you getting a sense that maybe and they might be more intend to spend on upgrading their offices or anything there that might come, get that market that part of the market on one pad?
Jeffrey Lorenger
Yes. So yes, we are seeing it stabilize a bit, and we're seeing some positive signs for improvement there Greg, I think it's still choppy. However, small project business has strengthened on pure metrics are encouraging, particularly with small projects, which would suggest people are starting to do not just day-to-day stuff, but you know of some refreshes on, you know, I will say as an aside, we see strength in education and state local health care hospitality, those subsegments we have exposure to are all showing strength. And the other thing that I think we're kind of we have our eye on and we're talking to customers about is this whole leasing dynamic with Tom, I know there's a lot of, you know, speculation out there on the CRE side of things, but we really are looking at furniture events and what's been happening is a lot of people have been kicking.
The can and I think orders have been opened and letting people kick the can, but that's kind of stopping now and people are having to pull a trigger. And it's whether it's moving from a B or C to an A. space, it's a furniture event. So we believe in the mid term that is going to start to generate more demand in that contract space as well because in that that plays that plays to our strength and it plays to a positive outlook in that space, albeit it will be a slow grind to be my guess. But I do believe that's going to start to unlock some demand in that space.
Gregory Burns
Okay. Great. Thank you.
Operator
Your next question is from the line of Steven Ramsey with Thompson Research Group.
Please go ahead.
Steven Ramsey
Say good morning. Wanted to continue that line of thought you've got similar dynamics with leasing in the workplace side and then existing home sales, it slowing down repair and remodel. So maybe to focus on the existing home sales, how does that impact are ready building product demand for you guys historically? Or maybe how you see it shaping up in the near term?
Jeffrey Lorenger
Yes, you know, Steve, that's a good question. I think look we need. It's a similar dynamic. You are right, people remodel some kind of once they move, but you know, so that that is definitely having an impact on some of the R&R business. So, you know, I think we continue to look at that space. We see upside there as things will start to unlock some down the road, but it clearly has a clearly has an impact.
Now. We have a lot of efforts focused on that space as well to drive, you know, activity. We've got some some efforts in the area of digital campaigns to drive awareness of what's possible with some of our inserts and, you know, exploring possibilities of replacement for people who decided maybe to stay in place. As you know, because they can't find a home. So we're working leverage that way as well.
Steven Ramsey
Okay. That's helpful. And then thinking about residential product margin target at the high 10s combined with the growth you expect this year, that does seem to imply more dollars of investment into that segment for growth yet some natural constraints on R&R as you just talked about curious where the investment dollars are going aside from campaigns that's leading more to gaining share in new construction or if it's driving our in our in to slow backdrop.
Jeffrey Lorenger
It's some of both. I mean, we're investing in product platforms, updating product platforms, modernizing product platforms. We've got investments in electric category of all, in addition to consumer awareness, homeowner, homebuyer awareness relative to the digital efforts that we have ongoing.
Steven Ramsey
Okay. That's helpful. Moving to the workplace environment of the second half, it stays I guess you're saying S&P keeps outperforming contract to the same degree or is there a potential that it closes the gap or widen further?
Jeffrey Lorenger
Look, I mean that's, you know, our best guess at this point is it will continue to outperform by several percentage points. Um, you know, I don't I don't have a reason to think it's going to accelerate or decelerate. I think it probably kind of maintains it's our best guess our best assumption at this point is it's going to maintain what has been doing a, you know, last 12 months.
Steven Ramsey
Okay, that's helpful. Thank you.
Jeffrey Lorenger
Thanks.
Operator
Your next question is from the line of Budd Bugatch with Water Tower Research. Please go ahead.
Budd Bugatch
Good morning, and thank you for taking my questions and congratulations on an outstanding quarter. And I guess the question I have is we've come from all out of a couple of years of really unusual events and the impact of the typical seasonality of your earnings and revenues are we back to a period where we see the normal kind of earnings? Seasonality were mostly one-third in the first half? And second for ST-Ericsson second half, how do you see that, Marshall?
Marshall Bridges
Yes, but we actually believe we're back to the normal seasonality. I think the acquisition side, we were there in 2023, but 2020 through 2022 we had abnormal seasonality. So anytime you're comparing against those years, there's some there's some noise, but we're back to being clean now, both 2023 and 2024 should follow the normal seasonal pattern. As you said, you have roughly 30% of the profit in the first half, 70% in the back half kind of kind of range.
Budd Bugatch
And you've come out of those periods stronger than other new went into it from your balance sheet is pretty good at right now. What do you see going forward in terms of the longer term now after KI. and go the in the leasing events that I think Jeff alluded to accelerating, maybe furniture events. Do you see anything strategically with some that you'd like comment on.
Marshall Bridges
And we see lots of runway on the path we're on right now. We're driving profit expansion, margin expansion in Workplace Furnishings, driving the benefits of the integration with KII. and driving top line growth in the high margin Residential Building Products segment. So no, we're not we feel like we got a lot of runways. What we have right now and not necessarily feeling we need to add anything at this moment.
Jeffrey Lorenger
Yes, I think that's right. But I think we believe we've got a lot. Our teams are kind of our focus. We got plowing the ground. We've got a lot of dry powder we'll get, but we are investing in the business and on integrating KI. So there, but that's all good.
Budd Bugatch
And operationally you where you want to be and what are the things? I'll point out area that I was thinking about was geographically with KIYO., Rob, you still are you guys overweighted into the rural markets of Asia? I think you alluded to Marshall, if businesses start to be a little firmer on their requirement for people to be back in the office, you see a way to gain some strength in the more metro markets?
Jeffrey Lorenger
Yes, but I mean, look, we still participate there and we have a nice chunk of business there on the contract side, it's just we have the we have some of the other stuff as well. So that's why we're that's why we talked about it. We're focused on that area. It's been a big piece of our business, and we do believe we're competing well on, you know, for what's happening now. And we will compete and we'll compete well going forward. So we will we will benefit as that as those furniture events unlock in major metros.
Budd Bugatch
Okay. And last for me or anything on the cost side that you're seeing maybe a little worrisome out there? I know people have talked a lot about at least for the residential side. What's going on in some of the canals and the waterways issues. Are you seeing anything on costs that might be a little bit concerning?
Marshall Bridges
Yes, for the year, but we do expect to see some inflation primarily from wages, the normal normal merit cycle, we are seeing a little bit of freight pressure. That is definitely an issue at the moment. And the commodities are pretty stable, even maybe a little deflationary in the first part of the year, and we expect to offset that inflationary pressure with price realizations. So we do expect a favorable price cost again in 2024 and roughly speaking in the $10 million range.
Budd Bugatch
All right.
Well, thank you very much and congratulations and best of luck for the balance of this year.
Jeffrey Lorenger
Thank you, Budd.
Operator
Your next question is a follow-up from Steven Ramsey with Thompson Research Group. Please go ahead.
Steven Ramsey
Just wanted to circle back to something you just talked about, Marshall, with the runway of drivers helping earnings growth in 2024, how much of these carry into 2025? Clearly, there's a Broadway array have good things happening across both segments. So curious how you think about some of the drivers beyond the next 12 months?
Marshall Bridges
Yes, Stephen, we certainly got a lot of runway, particularly in the productivity side of things. You know, I think Jeff mentioned in his comments that we made some operational investments in 2023, primarily in that new facility in Mexico, and that's actually a headwind to our 2023 profitability of about $15 million, all the investments total and including Mexico. And as those investments mature and begin to generate a return in 25 and 26 and a little bit in 24, they'll pay off in the $10 million to $15 million range. So that's a pretty big swing of at least $25 million from where we are right now. So that's indicative of the type of runway we've got in front of us to keep driving profit growth with not a lot of help from volume.
Jeffrey Lorenger
Yes, Stephen, as we said, I mean, we can continue. We're working continue to expand margins while volume growth. I mean, we obviously are doing everything we can to capture as much volume as we can. But we have plans in place that we're looking at margin expansion in Workplace Furnishings and profit growth, you know, visibility into 24 and 25.
Steven Ramsey
Okay. That's very helpful. Thank you.
Operator
And at this time, there appear to be no further questions. I would now turn the call back to Mr. Loranger for any closing remarks.
Jeffrey Lorenger
Great. Thanks, everybody, for joining us today and taking the time to have a great day.
Operator
Thank you all for joining today's call. We appreciate your participation. You may now disconnect.
