Core Molding Technologies, Inc. (AMEX:CMT) Q3 2023 Earnings Call Transcript

Core Molding Technologies, Inc. (AMEX:CMT) Q3 2023 Earnings Call Transcript November 7, 2023

Core Molding Technologies, Inc. misses on earnings expectations. Reported EPS is $0.53 EPS, expectations were $0.56.

Operator: Good morning, everyone. Welcome to the Core Molding Technologies Third Quarter Fiscal 2023 Financial Results Conference Call. [Operator Instructions]. I will now turn the call over to Sandy Martin with Three Part Advisors. Please go ahead.

Sandy Martin: Thank you, and good morning, everyone. We appreciate you joining us for the Core Molding’s Technologies conference call to review third quarter results for 2023. Joining me on the call today are the Company’s President and CEO, Dave Duvall; and EVP and CFO, John Zimmer. This call is also being webcast and can be accessed through coremt.com via audio link on the Investor Relations events and presentations page. Today’s conference call, including the Q&A session, will be recorded. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay or transcript reading. I would also like to remind you that the statements made in today’s discussion that are not historical fact, including statements or expectations or future events or future financial performance, are forward-looking statements and are made pursuant to 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. Actual results may differ materially from those expressed or implied. Please refer to the earnings press release issued today for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company’s filings with the Securities and Exchange Commission. Core Molding Technologies assumes no obligation to update or revise any forward-looking statements publicly. Management will refer to non-GAAP measures, including adjusted EPS, adjusted EBITDA, free cash flow, and return on capital employed. Reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, a copy of the press release has also been submitted to the SEC on Form 8-K.

And now, I would like to turn the call over to Dave Duvall. Dave?

Dave Duvall: Thank you, Sandy. Good morning, everyone and thank you for joining our third quarter earnings call. Let me start today’s call with a couple of accomplishments during the quarter. A few weeks ago, we received the EcoVadis Bronze Award in recognition of our ongoing sustainability achievements. This award demonstrates our systematic approach to environmental stewardship and it directly supports Core’s value proposition to our customers that are driving to accurately quantify and reduce their Scope 3 greenhouse gas emissions. We believe this is a visible reminder of our responsibility for our employees, communities and the environment. We were also one of six finalists in the award for composites excellence competition at this year’s annual CAMX or Composites and Advanced Materials Expo in Atlanta.

The award recognizes the unique proprietary engineering technology we used to produce one of our customers’ personal watercraft tools. It demonstrates our ability to combine different composite materials and molded in features to optimize the design for improved performance and cost. These are important recognitions of Core Molding’s strong value proposition through our technical solutions and sustainability efforts that we are continually strengthening in our organization. As always, I want to thank our hard-working team of talented people for executing Core shared vision for growth and driving improvements in our business every single day. Our most important competitive advantages our talented teams working together and a culture that values transparency, learning and openness to challenge.

This makes a difference and we continually and purposely drive this culture within our organization. Our team strives every day to execute the company’s four strategic initiatives one; driving revenue growth; two, technical solutions sales; three, enhancing profitability and four; generating cash flow. Along those lines I’d like to report that our must-win battle to drive significant operational improvements in specific plants will be complete this year. We’ve achieved 19% overall productivity improvement by October and we’ll achieve the targeted 20% by year end. With all facilities operating well, it now accelerates our ability to leverage a company-wide operational excellence system to scale the knowledge sharing and improvements. Just to finish up on the strategic importance of the must-win battle this year, it directly improved our gross margins which were challenged a year ago.

It provided additional capacity in those locations by improving the throughput. It put all locations at a level performance and allows us to implement a holistic operational excellence process to better leverage our knowledge and four, it allows us to free up key technical resources to better execute and integrate an acquisition in 2024, which is a goal. Having the necessary technical resources in a common business excellent system will significantly improve our ability to quickly execute and efficiently integrate an acquisition. I believe this is a clear example of our organizational ability to execute our key strategic initiatives, which in turn creates improved performance across all areas of the organization. Turning to our third-quarter results.

As we discussed earlier this year, our 2022 third-quarter product sales are up over 36% over 2021. So we anticipated that second half 2023 product sales would likely return to historical seasonality and they did. Although our third-quarter product sales of $80.9 million were down 12.4% from prior year, this does not tell the whole story. John will add details to this in a moment, but I would like to make some initial comments. We grew gross margins by 450 basis points to 17.6% for the third quarter, representing improved gross margins despite lower fixed-cost leverage. This was one of our key focus areas in 2023. And I believe this third-quarter results proves that our business transformation is enhancing the strength and resiliency of the business.

Our gross margin improvements this year are the direct result of purposely executing our strategy. Although revenue growth is always an important deliverable, we are also laser-focused on driving profitability through enhanced margins operational efficiencies and better capacity management, while also winning technical solutions sales for the future. We produce single source tool products for our customers on multiyear production programs, structured to deliver revenues, improved margins and the incremental cash flow for several years. Most of us suspected that continually rising interest rates were going to affect the demand at some point and we believe we’re well prepared to take advantage of it financially, operationally and strategically.

Specifically on sales growth, our technical solutions team signed new contracts during the first nine months of this year that will contribute annualized revenue from new and replacement work, totaling approximately $50 million, with planned launches primarily in 2024 through 2026. These programs relate to new and reoccurring customers in end markets, including building products, industrial transportation and powersports. Full volume levels for these programs will ramp up over the next several years. We continue to see a solid pipeline of opportunities similar to the current opportunities we signed this year, which reinforces our long-term sales growth potential. We are excited to talk and launch these programs especially since they further expand our business into diverse and growing end markets with engineered solutions.

Finally, regarding our sustainability efforts, we are currently partnering with the customer to install full regrind and material processing systems to reclaim raw material from our production process at our Matamoros Mexico plant. This process will reduce both our waste and cost, while providing a value and reduce cost to our customer. Based on our production plans over the next several years, this will reclaim over a million pounds of raw materials. We continue to work with customers to use or increase our usage of recycled material or developed recyclable solutions from a conversion away from traditional materials. We have aligned our strategies to provide technical and unique solutions to customers by deploying our extensive portfolio of processes.

This expertise and capacity are important to our long-standing blue-chip customers, who rely on us as their single source supplier of critical components. We continue to see how sustainable solutions build long-term relationships and value for our customers, employees and shareholders. With that, I’d now like to turn it over to John to cover the financials in more detail.

John Zimmer: Thank you, Dave, and good morning everyone. As we noted last quarter return to more historical seasonality impacted the third quarter’s top line, combining the 36.5% product revenue increase from last year with our 12.4% decline this year product revenues are still up approximately 20% from 2021 levels. Last year, we saw customers rebuilding depleted inventories against higher demand and this year their inventory levels are more optimal or in certain industries and overbuilt position and customers are working through those inventories. Our product sales by end market this quarter include increases in medium- and heavy-duty trucks where production levels remained strong while other sectors were down due to management of inventory levels and macro-economic impact.

Our ongoing industry diversification efforts are working as planned as we have taken advantage of changing demand by industry and minimize the impact of any one industry to the company’s overall revenue. Our trailing 12 month adjusted EBITDA through the third quarter totaled $41.8 million another notch higher than last quarter’s TTM and the highest ever in the company’s history. This continues to give us further conviction that our intentional focus on operational improvement is progressing. I want to congratulate our team on their hard work this last quarter and this year. Turning to our financial results. Third-quarter 2023 net sales were $86.7 million compared to $101.6 million a year ago. Product sales were down 12.4%, largely based on our discussion around difficult comparisons coupled with a return to more historical seasonality this year.

A closeup of a large sheet of aluminum being shaped and molded in a modern factory.

Gross profit for the third quarter rose to $15.3 million or 17.6% of sales compared to $13.3 million or 13.1% of sales in the prior year quarter. As Dave mentioned this was a 450-basis point improvement over the prior year. During the 2023 third quarter material cost and production efficiencies positively impacted gross margins which were offset somewhat by foreign currency and fixed-cost leverage. We continue to see the weaker US dollar against the peso in the third quarter compared to last year at this time which had a negative impact of 90 basis points on gross margin. As previously noted, we actively hedge a portion of our foreign currency exposure but overall we’re still impacted by the stronger Mexican peso. Selling, general and administrative expenses for the quarter was $9.4 million, compared to $8.7 million in the prior year.

The increase was mostly due to a one-time press move costs of $540,000 in the third quarter of 2023 as we move depressed from our Cobourg facility to our Monterrey facility in preparation of new business being launched in Monterrey in 2024. This increases the size of the Monterrey facility to six presses doubling the number of presses since the acquisition in 2018. Company reported operating income of $5.9 million or 6.8% of sales up $1.2 million or 220 basis points versus the operating income margin from last year. Compared to the year ago quarter, net interest expense has decreased 63% as this year’s focus on operational improvements has generated free cash flows to allow us to eliminate borrowing on our line of credit and to earn interest income on our cash reserves.

Our effective tax rate for the third quarter was 24.1%, which primarily consists of the weighted tax costs from the three tax jurisdictions where we operate. Net income was $4.4 million or $0.49 per diluted share versus last year’s diluted EPS of $0.16. Excluding the one-time press move costs this year and excluding our one-time loss from extinguishment of debt last year adjusted EPS was $0.53 per diluted share this year, up from $0.35 per diluted share in the year ago quarter. Adjusted EBITDA for the quarter was $9.8 million, or 11.3% of sales up 300 basis points from prior year EBITDA margin of 8.3%. We are pleased with our year-over-year improvements in gross margin, operating income, EPS and adjusted EBITDA based on our actions and strategic initiatives.

Our GAAP to non-GAAP reconciliation payables can be found at the end of our press release. Now, turning to results for the nine months ended September 30. Net sales were $284 million, down 2.4% versus a year ago. And product sales were essentially flat versus the prior year period. Gross margin was $53.6 million or 18.9% of sales compared to $40.9 million or 14.1% of sales in the year ago period. For the first nine months, margin improvements were primarily due to production efficiencies and favorable net customer pricing and raw material costs. SG&A expenses were $29.6 million compared to $25.9 million in the prior year period, largely driven by higher labor costs and bonus costs due to the company’s improved performance in 2023. Operating income for the first nine months was $24 million, up 60% from 2022 levels.

Net income was $18.1 million or $2.8 per diluted share compared to $7.4 million or $0.87 per diluted share in the comparable year period. Adjusted EBITDA was $35.8 million or 12.6% of sales compared to $25.9 million or 8.9% for the first nine months in the prior year. Looking forward to the fourth quarter, we are expecting the company’s revenues to soften versus the prior year, based on recent industrial industry projections mostly around transportation; customer forecasts, which includes ongoing inventory rationalization activity; impacts from the United Auto Workers strikes, which has impacted demand for end products we produce for GM and Ford as well as the UAW strike at the Mack division of Volvo Mack, which still has not been resolved.

A return to historical seasonality in the fourth quarter similar to Q3, and finally the impact of macroeconomic events on our customers’ end market demand. Company currently projects fourth-quarter revenues to be down as much as 15% to 20% compared to the year ago quarter. If we complete the fourth quarter in this range, we went into 2023 fiscal year with revenues down 5% to 10% compared to 2022 levels. We anticipate that fourth-quarter gross margins to be impacted by product mix, shifts from seasonal changes in volume and lower fixed cost leverage, which we expect will produce a full year gross margin in the range of a range of 17.5% to 18.5% compared to the full year 2022 gross margin of 13.9%. Turning now to the company’s financial position, starting with the discussion of cash flow.

The company’s cash provided by operating activity was $26.1 million for the nine months ended September 30 2023 compared to $8.5 million for the same period of 2022. Our 2023 focus on operational improvements, which has resulted in higher profitability, has also flowed through to our cash flow generation, as we expected would occur. Capital expenditures for the year, so far were $6.8 million and free cash flows for the first nine months of 2023 were $19.3 million. We expect to continue to generate free cash flows for the remainder of the year, as operating cash flow should outpace capital expenditures and working capital continues to be managed carefully. We now expect 2023 capital expenditures in a range of $9 million to $11 million for the year.

At September 30, the company had available liquidity of $68 million, which includes cash and cash equivalents of $18 million and $50 million available under the revolver and capital credit lines. The company’s term debt was $23.3 million, at the end of September and our debt to trailing 12 months EBITDA ratio was 0.56 times. Our working capital continues to be well-managed and netted to $49 million as of the end of September. Finally, our return on capital employed a pre-tax return metric was 17.2% on a trailing 12-month basis, which is above our targeted range of 14% to 16%. We are pleased with our ability to generate good returns and cash flows while maintaining a strong balance sheet and ample liquidity to fund the business and make strategic decisions.

Our full attention remains on the four strategic growth initiatives that Dave mentioned earlier, and as we have talked about all our goals objectives and targets slowed down from there. Our operational performance enhancements are established and we continue to work on continuous improvement initiatives. As we continue to evaluate acquisitions, we carefully consider how to diversify our customer base, augment our processes and footprint and add capacity in a changing economic environment. Our entire team continues to focus on growth and profitability goals that build long-term shareholder value and generate cash flows. With that, I would like to turn it back to Dave for some final comments.

Dave Duvall: Thank you, John. Few comments on our outlook for 2024. Our goal is to continue to focus on revenue diversification in industries that value engineered solutions to continually enhance our margin. Based on our earlier information for 2024, we anticipate a continuation of macroeconomic headwinds, truck cyclicality and the end-of-life of certain programs could negatively impact revenues compared to 2023. Industry projections for 2024 in the North American Class 9 truck market, which still makes up approximately half of our revenue, forecast a cyclical correction compared to 2023 with the expectations for truck demand to rebound in 2025. Our diversification efforts have reduced our exposure to the truck market cycles, but with higher interest rates we anticipate a downward impact on our customers’ demand.

It has to at some point. We expect to adjust our cost structure based on anticipated sales projections, consolidate operational improvements and seek attractive acquisitions to continually support our diversified growth goals. We also want to take full advantage of various industries that require new or better solutions, including opportunities arising from government funded infrastructure projects and government driven sustainability strategies. We still believe in our long-term goals as we provide products and services that have growing long-term demand across many industries. We believe there will be increased demand driven by onshoring of manufacturing, US infrastructure improvements, and overall industry growth over the next several years.

As discussed last quarter, we are finalizing our acquisition strategy, timing and M&A pipeline. Given the size of our company, it’s important that we set the appropriate acquisition criteria and carefully analyze valuations against our strategic requirements. As stated earlier, we have strategically prepared our organization for growth by acquisition and we are excited about the timing. We have communicated to investors in the past that we plan to further diversify the industries we serve, add capacity and expand our process offerings through an acquisition, while not overleveraging the company especially in a challenging macro-economic environment. We will also use our capital to continue to invest in our people, operational improvements with a focus on increasing automation and technical capabilities in both sales and engineering.

Our must-win battle this year has been about fixing some known challenges in Core’s sheet molding compound plants to gain immediate margin improvements and more importantly to prepare the organization for the future. With the systematic improvements in place, we can now focus on scaling our operational excellence systems across all locations. This is a foundational step in increasing current machine and technical resource capacity before investing for the next level of growth. In summary, improving gross margin by 450 basis points, recording our highest historical adjusted EBITDA dollar on a TTM basis and creating an organization that is well-positioned for significant growth, we are pleased with our Q3 results and excited for the future. We believe that by continually investing in our people and relentlessly executing our strategy, we will accelerate a long-term value creation.

Finally, we plan to present and host meetings with investors in Dallas on November 15th as part of the Southwest IDEAS Conference. Please reach out to us or Three Part Advisors if you would like a follow-up call. With that, I’d like to open our line for questions. Operator?

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Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And ladies and gentlemen, our first question today comes from Tim Moore with EF Hutton. Please go ahead.

Tim Moore: Thanks. That’s really helpful your commentary. When do you think you might know the full impact of the UAW strikes on your sales? It’s impressive that you can still maintain your gross margin guidance range for this year despite that drag. But do you think you all know the full impact of late December?

John Zimmer: Yes. Tim I think one of the pieces of that is to recognize that — we deal in auto but we also have the UAW is actually on strike with Mack, which is a major division of Volvo which is one of our major customers. And so they have not it settled their strike at this point. And so we’re watching that. The stuff that we do in auto has been the auto guys are back to work. They’re building ramping back up, but we did have some effect of theirs in October. And we think that that will start coming back online now. But really Mack has not been settled at this point.

Tim Moore: Fair enough.

Dave Duvall: In talking with Volvo they’re doing everything they can to continue producing and driving that forward. But right now we know what the roadblock is and until they resolve the strike there at a point now where they don’t have ended up.

Tim Moore: Yes. Just curious I tried to ask theoretical questions but if there wasn’t a UAW strike do you think you still would have expected flat product sales for this year? And do you think you can recover some of those Mack sales in March quarter?

John Zimmer: Yeah. Again I think we would hope that our Mack and recover those sales in the industry. And so we think that the UAW strike in Q4 probably has somewhere between $2 million and $4 million of sales impact on us. So, again, part of that depends on when they actually settle the strike or if Mack sales strike and timing. But we estimate it was somewhere between $2 million and $4 million as the impact of the UAW strike.

Tim Moore: That’s helpful. And then John I know you mentioned on the August conference call that there was the variable compensation that cause an uptick in SG&A expense. How should we think about SG&A expense as a percentage of sales going forward? I know it was running 2.7% to 2.8% the past two quarters but it’s typically 9.5% to 10%.

John Zimmer: Yes, I think if you back out our compensation again this quarter, we were going to be around $8.5 million of SG&A again this quarter, which is consistent with the other quarters. Now, that does include the $500,000 of press move that’s a one-time move to get a press down to Monterrey is that planned launch in some new programs next year. And so without that we were probably running around $8 million of SG&A costs for the quarter versus $8.5 million for the first two quarters if you back out our bonus impact. Long-term as we move forward we continue to look at that. We always tried to target that around 10%. And so if sales are down a little bit we try to recognize that make adjustments to the SG&A as we go forward. But right now we’re probably running between $8 million and $8.5 million a quarter is where we’re at without bonus.

Tim Moore: That’s helpful. My next question is how far along do you think you are on selling price improvement? Is that those prices fully implemented as of today or you sixth inning on that for the company-wide?

Dave Duvall: Yes, we still have one other contract that we’re working on. We’ll finalize that this year beginning of next year.

Tim Moore: Okay. The rest have been pretty much implemented on a rolling basis the past few quarters.

Dave Duvall: So, we’ve been through all the other contracts. This is the last one that we’re working on right now one of our large customers.

Tim Moore: Great. And actually two more questions for Dave. What would you say you’re kind of anything you might be in use the base format for too long? On the operational and efficiency improvements I saw you added a new board member appointment. Looks like sell ads more operational manufacturing experience in Canada Mexico. But how far along do you think you are on the operational efficiency improvements? And when you think you’ll be done?

Dave Duvall: Yes. So, we’ll be done when we talk about the must-win battle. That was the focus on the three SMC plants really focusing on two of them majority wise that was predicted or forecasted 20% improvement. So, we’ll have that. We’re at that now. So, really what we’re moving into is a corporate-wide continuous improvement and consolidating those. So it will be ongoing. But it’s not 20% per year per plan.

Tim Moore: No. That’s helpful color. And then my last question is you mentioned some commentary a little bit about this in your opening remarks about, acquisitions. Can you just remind us is still a capital allocation priority for process equipment? And what do you seeing out there? Do you think you’re going to have to probably do acquisitions to acquire five to seven presses? Or given that there’s such a long wait list and not much availability for new presses?

Dave Duvall: Yeah. That’s a big point relative to if you’re trying to install the capacity from a greenfield site, by the time you build the site and order all the equipment. You’re talking about a multiple year endeavor. So really what we’re looking at is I call bolt-on or tuck-in acquisitions anywhere up to say $30 million $40 million. And it’s really about what sales channels can we get similar to what we did with the previous acquisitions, because then we’re able to also cross-sell and sell multiple composites into that customer, through our other processes and products.

Tim Moore: Great. That’s very helpful. Thanks a lot Dave and John. And I’ll hand it back over to the operator.

Dave Duvall: Thanks Tim.

John Zimmer: Thanks Tim.

Operator: Thank you. And our next question comes from Jeff Geygan with Global Value Investment Corp. Please go ahead.

Jeff Geygan: Thank you. Good morning, guys. Appreciate your time here.

Dave Duvall: How are you doing Jeff?

John Zimmer: Hi Jeff.

Jeff Geygan: Doing well. I’m curious, what type of visibility do you have into your customers inventory levels?

John Zimmer: I don’t know — we would say we have a direct visibility. We don’t have a data set to go directly into. And so a lot of it is demand feedback that we’re getting. They do provide us EDI data out into the future. And I think we’ve talked about that before EDI. As you get out past a month gets a little bit — it can change. It’s not guaranteed one way or the other. And so, what we do know is that some customers during this quarter have come to us and said, we got ahead of ourselves. And so, we aren’t taken as much product at least in this quarter and maybe a little bit into the first quarter next year. Now, again, what we stay close to home is we’re hoping — the nice thing is that this is a short-term issue for them.

They’ll get through that inventory. And they’ll start taking sales again. And so it’s a period of time that will work itself out. It’s not the sales have gone away is to really a correction for a period of time. And so we’ll work with them and hopefully get through this. And then you’ll be back on with a lot of [indiscernible] in the first quarter next year sometime in the first quarter next year going into the second.

Dave Duvall: Yeah. It’s a good point. When you see it, it’s on the — especially when you start looking at industrial and utilities because you have such a long supply chain between inventory at our location inventory at the job sites and inventories in our warehouses. So I think at the end of the year, they had looked at what their inventory levels throughout that supply chain and made a correction. But the business is still there. I think it’s more a matter of adjusting their inventories at the end of the year.

Jeff Geygan: All right. Appreciate it. You’ve talked repeatedly about reducing your exposure to truck. I think last time we reported out that might have been 44% of revs. Where it’s at today? And what do you expect that trend to look like on a forward basis?

Dave Duvall: Yeah. It will continue. It’s part of the strategy. It will vary between 44%, up to say 54% depending on the sales that we see in the other channels, especially when you start seeing personal watercraft, at the beginning of the year. That picks up. At the beginning of the year and trails off, at the end of the year same with building products.

John Zimmer: And I think Jeff one of the pieces of that is our long-term strategy in truck was never to get out. It was to do just profitable business. As we came out of the turnaround, we realized that we had added on business that we just couldn’t get to profitability. And we really think we’ve fixed the majority of that. Dave mentioned, we have one contract that we’re still working on. It gets a little bit of additional pricing. Hopefully that was actively working on right now. So long-term where we are as truck is we’re bidding on new programs with truck. It’s just we’ve got a different mindset than we did probably five years ago. We’re looking to do profitable business with contracts that aren’t one-sided that we really think are good for both business partners. And so I think our truck business truly just has changed strategy versus us totally getting out a change in strategy there. We’ll only do stuff that we think we can make good money on.

Jeff Geygan: Thank you. With your Q4 guide of revenues down 15% to 20%. John I thought you said your fiscal year at that point down roughly 5% to 10%. You anticipate maintaining your gross margins in the 17.5% to 18.5% range. What does that imply for your gross margin in Q2?

John Zimmer: I mean, I think, if you do the math it probably puts us at a gross margin of 13% to 14% 13.5% to 14.5%. And a little bit of that’s just going to be leverage. We are starting to reduce our — we’ve always talked about what we can do is our variable cost is somewhere between 60%, 70% of our cost structure. And so we are able to reduce material price and material cost very quickly. Direct labor comes next and we’ve been moving very quickly on some of that taking some time off at the plants where they take a week down and those types of things so we can reduce that cost. But the one piece that takes a little bit more of a long-term and really we wouldn’t reduce unless we think we got a long-term problem is the fixed cost.

And we will adjust that very significantly because we really think long-term the company is going to continue to grow. We don’t want to have to adjust where we have a real good seasoned workforce. So probably lost leverage in Q4 is more of the issue than anything else. That’s certainly the margin in Q4.

Jeff Geygan: And last question. When do you anticipate providing guidance for 2024 beyond?

John Zimmer: Yeah. So 2024, yeah, we’re still getting a lot of data. I think at the time we release the first — not first quarter, but our year end results which would be early March we would have it. If there’s anything significant that would warrant it before that we would definitely come back out and do a discussion in between. But where we are right now we have a lot of customers telling us that they have — they’re watching the economy as much as us. I got Polaris which is one of our major customers deck right in front of me. They came out and said they’re watching the retail demand situation going on in the United States right now in North America. So I think we will have better data by the time we do the 10-K the earnings release at year end around March. But again if there’s something major between now and then we would definitely come out and tell you guys.

Jeff Geygan: Yeah. I appreciate that. I have to say you’ve done exactly what you’ve said you intend to do with your four pillars. Your execution has been excellent. I look forward to seeing what you do when you begin making some acquisitions. So thanks for the commentary today I thought it was very good and good luck as you go forward.

John Zimmer: Thanks, Jeff.

Dave Duvall: Thanks.

Operator: Thank you. And ladies and gentlemen that’s all the time we have for question-and-answer session today. So I’d like to turn the conference back over to the management team for any final remarks.

Dave Duvall: Yes. Thank you for joining our conference call and we look forward to the next call in March. Thank you.

Operator: Thank you, sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.