AZZ [AZZ] Conference call transcript for 2023 q4
2024-01-10 13:18:04
Fiscal: 2024 q3
Operator: Good morning, and welcome to the AZZ Inc. Third Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sandy Martin, of Three Part Advisors. Please go ahead.
Sandy Martin: Thank you, operator. Good morning, and thank you for joining us today to review AZZ's financial results for the fiscal 2024 third quarter which ended November 30, 2023. Joining the call today are Tom Ferguson, President and Chief Executive Officer; Philip Schlom, Chief Financial Officer; and David Nark, Senior Vice President of Marketing, Communications and Investor Relations. After today's prepared remarks, we will open the call for questions. Please note, the live webcast for today's call, which can be found at www.azz.com/investor-events. Before we begin, I would like to remind everyone that our discussion today will include forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements by their nature are uncertain and outside of the company's control. Except for actual results, our comments containing forward-looking statements may involve risks and uncertainties, some of which are detailed from time to time in documents followed by AZZ with the Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year. These statements are not guarantees of future performance, therefore undue reliance should not be placed upon them. Actual results could differ materially from these expectations. In addition, today's call will discuss non-GAAP financial measures. Non-GAAP financial measures should be considered as a supplement to and not a substitute for GAAP financial measures. We refer you to the reconciliations from GAAP to non-GAAP measure included in today's earnings press release. I would now like to turn the call over to Tom Ferguson. Tom?
Tom Ferguson: Thank you, Sandy. Good morning, and thank you for joining us to review our fiscal 2024 third quarter results. Today I'll start by covering company highlights for the quarter before passing it over to Philip to discuss AZZ's detailed financial results and our balance sheet. Then Dave will provide industry commentary on our end markets. And I will conclude our presentation by covering our sustainability efforts and AZZ's full year outlook before opening the line for questions. AZZ is North America's market leader in hot dip galvanizing and cold coating solutions, leveraging our scale and strategic footprint to better serve customers with excellence and expertise. Our leadership has been focused on strong execution this year, and I am pleased to report that the segments have performed exceptionally well through the third quarter. These results are a testament to the strength of our company, talented teams, effective strategic plan, and ongoing commitment to operational excellence. Collectively, these attributes contribute to our ability to provide valuable, differentiated solutions and services to our customers. Turning to our results, total sales for the quarter were $382 million, up 2.2%. Momentum continued for Metal Coatings with third quarter sales of $163 million, up 3.1% versus last year's quarter. Precoats Metals also grew during the quarter to $218 million, up 1.6% from a year ago. We grew sales organically and improved profitability in the quarter. And I am pleased to report that we continued to effectively secure market share without sacrificing our value pricing discipline. We increased adjusted earnings per share for the quarter by 53% to $1.19, and grew adjusted EBITDA by 23% to $86 million versus prior year. This led to strong cash from operations for the quarter of $63 million. As a result, EBITDA margins were 30% for Metal Coatings and 18.4% for Precoat Metals during the quarter, both within the stated targeted ranges for each segment. In short, our dedication to delivering best-in-class customer service and ongoing enhancements in operations led to increased sales, improved profitability, and significant cash flow this quarter. We continue to develop and enhance our operational technologies, which sets us apart from the competition. Our Digital Galvanizing System or DGS is AZZ's proprietary technology that connects our 41 galvanizing facilities to the company's ERP system and provides real-time visibility and order tracking to allow superior customer service. Similarly, in Precoat's 13 facilities, [indiscernible] tracks customers' inventory and provides real-time access to project scheduling. These advanced platforms along with our outstanding teams focused on providing excellent service, position AZZ as a highly differentiated Metal Coatings provider to customers throughout North America. As Philip will discuss more in a moment, we are strengthening the balance sheet and plan to continue to deploy capital carefully. We have worked diligently to reduce debt, improve our leverage ratio, and reprice our term loan at Revolver to lower interest costs, which continues to reinforce our decision to self-fund the Greenfield Precoat Metals facility in Washington, Missouri, instead of going with a sale-leaseback. We are highly focused on long-term value creation through our sustainable solutions. We believe that by continually investing in our people and relentlessly executing our strategy, we will accelerate AZZ's value creation and ensure sustainability. Our strategic transformation over the last 18 months has been a catalyst for generating significantly higher run rate EBITDA and cash flow. We will continue to scale our business through both organic and inorganic growth, leveraging our highly differentiated value proposition to customers as we create long-term value for our shareholders. With that, I'll turn it over to Philip.
Philip Schlom: Thanks, Tom. Good morning, and thank you for participating in our third quarter update. All numbers referenced today are results from our continuing operations. As Tom mentioned, we reported fiscal year 2024 third quarter sales of $381.6 million compared to $373.3 million in last year's third quarter. Total sales increased by 2.2% from a year ago on higher Metal Coatings sales of 3.1% and Precoat sales up 1.6%. Third quarter gross profit was $88.1 million, or 23.1% of sales, compared to $73.1 million, or 19.6% of sales in the prior year's same quarter. The 350 basis point improvement in gross margin was a result of lower zinc and overhead costs and an accounting reclassification to corporate of intangible assets amortization, partially offset by increased labor costs. Selling, general and administrative expenses were $35.3 million in the third quarter, which included a $4.5 million legal accrual related to a long outstanding commercial dispute with a Metal Coatings customer. Excluding the third quarter legal accrual, SG&A expenses for the fiscal 2024 third quarter would have been $30.8 million, or 8.1% of sales, compared to $27.7 million, or 7.4% of sales in the prior year. We reported third quarter adjusted EBITDA of $86.4 million or 22.6% of sales, compared with $68.9 million, or 18.5% of sales last year. This 410 basis point improvement in adjusted EBITDA margin was primarily driven by favorable mix and improved operational efficiencies in both of our segments. Interest expense for the third quarter was $26 million compared to $26 million in the prior year, mostly due to lower outstanding debt and the effect of our repricing of the term loan in August. In a moment, I will discuss the recent repricing of our Revolver. Income tax expense was $8.8 million, which reflects an effective tax rate of 24.6% in the quarter, compared to 11.7% in the third quarter of the prior year. The prior year was favorably impacted by recognizing tax basis differences related to the AVAIL joint venture that were not repeated in the current quarter. We expect full year fiscal 2024 effective tax rate to be around 23%, with the longer term tax rate expected to remain in the 24% range. Adjusted net income for the third quarter was $34.8 million compared to $19.5 million in the prior year, up 78.3%. As Tom mentioned, our adjusted diluted earnings per share of $1.19 was 52.6% above the adjusted diluted earnings of $0.78 reported in the prior year's same quarter. Since the preferred convertible shares are dilutive in the current quarter, the preferred dividends are added back to the earnings for the company's computation of EPS. Under a full conversion assumption for the preferred convertible shares, weighted average shares outstanding in the quarter and for the nine months are approximately 29.3 million shares. Turning to our financial position and balance sheet. For the first nine months of the year, we generated strong cash from operations of $180.9 million and free cash flow of $114 million. Free cash flows computed based on cash from operations, less capital expenditures, and was more than double from a year ago on improved segment performance with higher sales and improved EBITDA dollars and margins, and we benefited from our focus on working capital reduction. Capital expenditures for the first nine months were $66.9 million, including typical safety, maintenance, and gross spending, as well as about $34 million related to the new Greenfield Coil Coating Plant under construction in Washington, Missouri. The building construction is near completion, and we are beginning to receive equipment scheduled to be installed in the upcoming months. Our construction progress remains on target, and we will continue to provide progress updates each quarter. Our full year forecast 2024 capital expenditure is approximately $119 million. I'm sorry, our full year fiscal 2024 capital expenditures projection, including $70 million for our new plant, are expected to be $119 million. And heavier spending will continue through the first quarter of fiscal year 2025 as we receive, install, and ready the facility for operational testing later next year. During the third quarter, we further reduced our debt by $25 million. Through the first three quarters, we paid down $85 million of debt within our previously communicated targeted debt reduction estimate of $75 million to $100 million. As Tom noted, strong operational performance and focused working capital management allowed us to reduce our net debt to leverage ratio to 3.1 times, closer to achieving our target of 3.0 times or lower. In addition to repricing our Term Loan B during our second quarter of the fiscal year, we also successfully repriced our $400 million senior security revolver last month. The most recent repricing reduced our interest rate margin across all leverage-based pricing tiers from a fixed SOFR plus 425 to our current effective rate of SOFR plus 300 basis points, and we also were able to remove the existing credit spread adjustment of 10 basis points. We will see a benefit going forward of lower interest costs through the maturity of our facility and plan to balance borrowings between the term loan and revolving credit facility to minimize interest costs. We have no maturities of debt until 2027. We remain confident in our ability to generate positive cash flows and support our growth plans while continuing to strengthen our balance sheet and reduce debt and leverage. As a reminder, we are in a three-year swap arrangement that fixes roughly half of the variable rate debt, and that arrangement expires in September 2025. During the first nine months of the fiscal year, we paid cash dividends to common shareholders of $12.8 million and also paid $10.8 million in dividends to our Series A preferred holders. We made no share repurchases during the quarter or year-to-date as debt reduction continues to be our top priority. Before turning it over to David, I want to provide an update on two matters. Number one, equity and earnings of our unconsolidated subsidiaries for the current quarter increased to $8.7 million compared to $1.0 million in the prior year quarter. The increase is primarily due to higher earnings from the AVAIL of JV, a release of a reserve for liquidated damages on a large project they had, and three months of equity and earnings in the current quarter compared to only one month in the prior year third quarter. We do not expect to see near-term earnings levels this high during our fourth quarter or into fiscal year 2025. Lastly, earlier this morning, the company filed a Form S3 registration statement with the Securities and Exchange Commission as a universal shelf registration that will provide future funding options to the company. Coming out of our annual strategic planning sessions earlier this year, we determined that a universal shelf registration is both prudent and good housekeeping for a business our size. With that, I'd like to turn the call over to Dave.
David Nark: Thank you, Philip. Good morning, everyone. As Tom covered, our strategic growth plan includes a combination of organic and inorganic expansion throughout North America. We plan to utilize our large footprint to leverage market-leading positions in both segments. AZZ's trusted business partnership within our nationwide network is built on a growing base of over 3,000 customers, many of whom are longstanding blue chip customers. Additionally, we continue to attract and retain customers based on our deep technical expertise, customer-centric technologies, superior customer service, and highly specialized solutions and services. Metal Coatings benefited this quarter from continued strength in transmission and distribution, as well as bridge and highway projects. Precoat Metal sales performance has recently trended better than the market, and our growing volumes continue to improve from intentional conversion selling, mix, and value pricing. Secular growth trends, including plastics to aluminum conversions, are important for Precoat, coupled with the team's ability to convert captive paint lines inside other companies. Tom sometimes refers to this as our de-verticalization sales strategy, which is a growth area for AZZ as companies decide to cut costs or outsource their roll-coating needs. We expect transmission and distribution to continue to be strong in the coming months and are seeing continued evidence of infrastructure spending, including work on data centers and microchip plants. We continue to see long-term secular tailwinds associated with infrastructure projects tied to the AIIJA and CHIPS Acts, which we expect to positively impact our results in calendar 2024. Although solar and renewables end markets have recently weakened, we are seeing pockets of regional strength across the U.S. for these projects. Finally, although our business this year has seen softer demand in HVAC and transportation, appliances and residential construction end markets are returning. Non-residential construction continues to perform well with strength in warehousing, manufacturing, and agriculture. We are also optimistic by the long-term expectations for manufacturing reshoring and the positive transition to pre-painted steel and aluminum. And, as I mentioned, we are seeing the gradual movement in the container category from plastics to aluminum throughout North America. Our Metal Coatings and Precoat Metals teams continue to make progress on market share gains and hot-dip galvanizing, as well as pre-painted coil projects with key customers. With that, I'd like to turn it back over to Tom.
Tom Ferguson: Thanks, Dave. One of the most rewarding aspects of being a part of AZZ is the opportunity to work with over 3,900 incredibly talented people who strive to do the right thing for our employees, customers, partners, and communities where we live and work. We were recently recognized on Newsweek's 2024 America's Most Responsible Companies list based on our company-wide sustainability and ESG efforts. We are grateful that this is the second year AZZ was named among this prestigious list of companies. Collectively, our business segments provide sustainable, unmatched Metal Coatings solutions that enhance the longevity and appearance of buildings, products, and infrastructure that are essential to everyday life. Our solutions and services are synonymous with sustainability. Regarding our business outlook in the fourth quarter ending in February, our fabrication customers continue to cite project backlogs and critical markets that Dave just discussed. Labor availability and employee turnover have both improved from a year ago. We continue to execute on our working capital initiatives and now are well-positioned to adjust inventories of paint and zinc when demand shifts, whether due to our growth initiatives or other micro or macroeconomic impacts. As Philip mentioned, the construction of our Greenfield aluminum coil coating facility in Missouri is progressing. The building is substantially completed and equipment has begun to arrive and be installed in the facility. We remain excited about the growth opportunity this investment creates. We continue to anticipate a stronger fourth quarter compared to Q4 last year. Our Metal Coatings and Precoat teams have demonstrated their ability to drive operational efficiencies and sustain margins with superior quality and service levels. We are narrowing and somewhat revising up our fiscal 2024 sales guidance of $1.45 billion to $1.55 billion, adjusted EBITDA guidance of $315 million to $335 million, and adjusted EPS guidance of $4.15 to $4.35. And our capital expenditures for fiscal 2024 are estimated to be $119 million, which includes about $70 million this year related to the Washington, Missouri Greenfield plan. Although interest rates have increased this year and interest expense ran significantly higher than we planned, we were able to pay down debt, reprice our term and revolving debt, and offset the EPS impact with incremental equity and earnings from our minority interest in the AVAIL joint venture and focused operating performance from our business groups. We plan to provide our fiscal year 2025 guidance in a few weeks for the new year that begins March 1. As always, I want to thank our hardworking and highly talented team who execute AZZ's shared vision of growth, profitability, and operational improvements every day. Our mission is to create value in a culture where people can grow and TRAITS really matter. TRAITS is an acronym for trust, respect, accountability, integrity, teamwork, and sustainability. These are AZZ's core behavioral values that continue to shape our future successes. Now, operator, please open up the call for questions.
Operator: [Operator Instructions] And our first question comes from Lucas Pipes of B. Riley Security. Please go ahead.
Lucas Pipes: Thank you very much, operator. Good morning, everyone. My first question is on the leverage. You're within a stone's throw of your prior leverage target of three times. Is there a desire to reduce leverage beyond, lower than three times, or do you think that kind of what you had outlined previously still stands today? Thank you very much.
Tom Ferguson: Yes, Lucas, good morning. I think, you know, 2.5 to 3 times is our long-term target. So due to this great performance of our teams, focusing on working capital and some of the other initiatives we've had going, we've been able to pay down debt quicker than even we'd hoped a little bit. We're going to stay focused on that through the first quarter or through the fourth quarter of this year. We do have a board meeting coming up next week to get our budgets for next year approved where we'll talk more about capital deployment strategies and get our CapEx approved and things like that So right now our focus is continuing to pay down debt this year. We still think we've got some that we can do. So I'd say, but artificially, we're not really trying to drive towards that 2.5, 2.75 times right now. We do not have any acquisitions in the pipeline, so we don't have that as a cash need at the moment. But as we look at some opportunities for investments next year, I'd like to delay that until we discuss it with our Board first.
Lucas Pipes: Very helpful. Thank you. And then I want to ask about the guidance for fiscal '24. On the sales side, increase the lower end of the range. But when I kind of look at year-to-date performance versus your full year target, low end 279 million for the fiscal fourth quarter up to like roughly flat at the high end, 379 million of sales. What would it take to come in at the low end? Is that a really conservative look here, or how would you frame that up? Thanks.
Tom Ferguson: Yes, that's a very good catch, Lucas. I think that probably is very much so on the low end. We're going to track much better than that. We're not tracking to the high end either, which I guess is why it's a range. I feel good. We're not chasing business over aggressively right now. There is some price sensitivity out there, so we're trying to keep our powder dry and let the folks focus on the business that's attractive to us, taking good care of our customers, and keep from chasing business below price levels that we want to go after. So we're maintaining that discipline, which is why we set the range. But, yes, 279 is definitely below what we would say we're going to have any shot at getting to.
Lucas Pipes: That's helpful. Thank you. Then a quick follow-up. I appreciate you'll issue guidance in a few weeks or so, but in terms of kind of the big trends that you're seeing heading into your next fiscal year, would you anticipate a slowdown when it comes to Chips and Science Act, for example, or infrastructure, or do you think those key markets will still, on the construction side, will still be kind of trending higher year-on-year? And then, of course, you have organic and inorganic growth opportunities that you outlined in your prepared remarks. So just trying to get a little bit of a flavor as to what would be potentially tracking positive versus where you might anticipate a little bit more softness in your next fiscal year. Thank you very much.
Tom Ferguson: Yes, Lucas, this is Dave. I think what you'll see there, we continue to see positive signs. Our Metal Coatings business in particular is galvanizing a lot of steel for new chip plants and utility T&D projects, bridge and highway, and some solar for quite some time. So we think that's going to continue. We also think that the impact of government spending is going to result in multi-year demand for our solutions on both sides of the house, particularly those focused on critical infrastructure and energy transition initiatives. So we feel pretty good about the macro.
David Nark: Well, and I'd add in that, you know, on the Precoat side, I think both their organic growth initiatives and as well as I think residential construction is probably bottom, so hopefully that starts to trend up. Commercial construction is looking okay. So I feel pretty good about the early part of the year, and as we get into it, the nice part is particularly for Precoat Metals, once those volumes start to pick up, we get some really, really good flow through pretty quickly as you start to - as we come off the bottom, so to speak, because as we said last time we're down 10% to 12% on volume, depending on which market it happens to be, which is we're outperforming the market itself, but still we're tracking to where we should have improvement next year. We have not built - well, I shouldn't say that - we have not put our - of course, not put our guidance out, and these will all be good discussions about how aggressive we want to be next year and how we continue to maintain that focus on our value pricing and maintain that discipline. So I feel pretty good about the first part of the year, and then the outlook just gets a little fuzzier as I look into fiscal '25.
Lucas Pipes: I appreciate the color. Thank you very much for all the details and insights, and continue best of luck.
Operator: The next question comes from John Franzreb of Sidoti & Company. Please go ahead.
John Franzreb: Good morning, guys, and congratulations on a very good quarter. I'd actually like to start with the guidance. I'm curious whether you've started to include JV income in the forward guidance for fiscal 2024, or are you still excluding it in that outlook?
Philip Schlom: On the guidance, we have - as we go forward, we will include that in our 2025 guidance. For the Q4, we've included the realized results through the three quarters, but no fourth quarter guidance.
Tom Ferguson: I'll tell you, John, part of our issue is we're one month in arrears, and they're on a calendar year, so we actually have a board meeting with them coming up fairly soon, too, where we'll get a better feel for how the first part of their calendar year is looking.
John Franzreb: Just curious. I'm curious. I assume your negotiations with the zinc supplies for 2024 are now done. Can you update us with any changes in the pricing outlook, especially with the premiums being such a variable last year? How does that look for the year ahead?
Tom Ferguson: Yes, the premiums have come down. So, yes, we've gone through the kickoff of the year negotiations and completed those. So we feel good. One, we feel supply is more secure, which is why we've been able to adjust some of the on-yard inventories. So that's one good thing. Two is the premiums are down, I think, about $0.10. So that's upside as that starts to flow through our kettles, and, of course, the rest is tied to LME.
John Franzreb: Got it. And regarding Precoat, where do we stand on the pricing realization curve? You had some this quarter, you had some last quarter. Is all the low-hanging fruit gone, or is there still available pricing to be realized there?
Tom Ferguson: Yes, I think, when we're talking about value pricing, part of it is the mix we focus on and the opportunities that we pursue that tend to be both attractive in terms of long-standing customers and, two, in terms of margin generated on some of those projects. So I'd say we're still we're probably in the mid-innings compared to where we're at on the Metal Coatings side. So there's still some room. Kurt and the team, they're highly focused on growing their business profitably, and we feel like we're having really, really good discussions on that topic now.
John Franzreb: Right. That's great news. And one last question. I'll get back into queue. Regarding the Washington facility, should we anticipate startup costs as we start thinking about the revenue recognition and the timing of everything in late 2025, early 2026, or is that a booked revenue that will be immaterial?
David Nark: At this point, it will be a booked revenue that's immaterial. We will continue to finish the plant on the schedule that we have laid out there, and then we have to get FDA testing so as we can finish the construction in calendar '24, we'll start testing the facility. There may be some low revenues associated with that, but it's immaterial at this point.
John Franzreb: Great. Thanks for taking my questions, and congratulations again.
Tom Ferguson: Thanks, John.
Operator: [Operator Instructions] And our next question will come from Adam Thalhimer of Thompson Davis & Co. Please go ahead.
Adam Thalhimer: Hi, good morning, guys. Great quarter.
Tom Ferguson: Thanks, Adam.
Adam Thalhimer: Quick one on the AVAIL JV. Are we at the point where we should start baking in just a little bit of income every quarter, like maybe something in the million-dollar range?
Tom Ferguson: Yes, we're to that point. Their accounting and all that is stabilized as they've completed their opening books. And I think we will include and give more color, both quantitatively and qualitatively, as we put out the fiscal 2025 guidance. It's coincidentally, so we've got our Board meeting and then their Board meeting, and then hopefully we'll be able to put some guidance out and give some specific color around what to expect from AVAIL. They basically, we completed the transaction into September in '22. They went through a full year. I feel real good about it. They're performing well, and so I am looking forward to be able to have you all include some of that in each quarter.
Adam Thalhimer: Okay. And then, Philip, you referenced a favorable mix in Q3, I think in both segments. I was just curious kind of what that was and if that continues into Q4.
Philip Schlom: The mix is really related to the different products that we're servicing our customers with, and I think it will continue into the fourth quarter. When you look at our Q3 last year, we had production issues, supply chain issues, and we spent a lot of the fourth quarter into the first quarter last year improving that. I think you'll see that in the Q4, over Q4 change, that we've really improved the operational efficiencies of these businesses.
Adam Thalhimer: Okay. Lastly, are you guys anticipating additional debt pay down in Q4?
Tom Ferguson: We should have some additional debt pay down in Q4.
Adam Thalhimer: Okay. All right. Great.
Philip Schlom: Although there will be a little pressure. All right. Sorry, there will be a little pressure.
Adam Thalhimer: I think it is a seasonally slower quarter for cash flow.
Philip Schlom: Yes, it's a seasonally slower, and then we've got the [Deja Blue] project funding in Q4 and Q1 that were more of the equipment's arriving. But we have done really well with $85 million in debt reduction through the first three quarters, and we are hopeful and focused on trying to reduce that further in Q4.
Adam Thalhimer: Great. Okay. Perfect. Thanks, guys.
Operator: The next question comes from Jon Braatz of Kansas City Capital. Please go ahead.
Jon Braatz: Good morning, everyone. Tom, I guess one of my questions is if you had the opportunity and at the right price, would you have any interest in selling your 40% interest in your subsidiary or your venture?
Tom Ferguson: Yes, I think that's - first I'll say I like the AVAIL team. But, yes, it's an investment that - and we sold it to investors. They've got some transaction date in their mind, and as they continue to hopefully grow and improve the business. But, yes, it's an investment for us. We like the people over there. But, yes, if we get the opportunity to do that, absolutely. We consider it both strategically and tactically as we have these discussions with our Board.
Jon Braatz: Okay. Okay. And also, Tom, you mentioned that you're seeing some - in the Metal Coatings business some price sensitivity out there. Relative maybe to where it was last quarter, has there been any movement in that price sensitivity, getting worse, getting better? Any thoughts on that?
Tom Ferguson: I think one of the things that happens to us, we come in as winter months hit and the construction slows down and infrastructure projects slow down, I think we always kind of sense that there's more price sensitivity. Quite frankly, I'm not so sure that what we're just feeling is the normal volume fall off as we get into winter months and slower construction, because it hasn't worsened and really hasn't changed much since our last comments. And a lot of it does boil down to what's the mix of activity. I don't necessarily want to call out which pieces of our business are more profitable and alienate customers. But let's just say when that mix shifts and we move off of some of the stuff that's a little lower priced - not that we have bad business, by the way. So we do see the price move with that. So I have to say we're holding our price points and our price multipliers very carefully and then following the mix. So we have not seen any worsening of the signs and we haven't really seen any worsening of volumes, but we're just coming through the holidays. So our folks actually had a few days off for a change, which was probably nice for them, and hopefully they're all rejuvenated as we fit the new year.
Jon Braatz: Okay. All right. Thank you, Tom.
Tom Ferguson: All right. Thanks.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Tom Ferguson for any closing remarks.
Tom Ferguson: Thank you, operator. Thank you all for your time today. I really look forward to updating you on our fourth quarter and full year results in a few months and issuing fiscal 2025 guidance. So thank you for your time.
Operator: The conference is now concluded. Thank you for attending today's presentation and you may now disconnect.
