Crane NXT Co (CXT) 2024 Q2 法說會逐字稿

Good day, and welcome to the Crane company second quarter 2024 earnings call. (Operator Instructions) Please be advised that today's conference is being recorded on and again, the conference over to to your speaker today, Christina Cristiano, Chief Financial Officer. Please go ahead.

Thank you, operator, and good morning, everyone. I want to welcome you all to the second quarter 2024 earnings call for Crane NXT.

Before we begin the slides, we will reference during this presentation can be accessed via the Investor Relations section of our website at cranenxt.com. A replay of today's call will also be available on our website.

Before we discuss our results, I encourage all listeners to review the legal notice on slide 2, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, we refer you to the cautionary language at the bottom of our earnings release and in our Form 10-K and 10-Q filings pertaining to the forward looking statements during the call, we will also be using non-GAAP numbers which are reconciled to the comparable GAAP numbers in the tables at the end of our press release and accompanying slide presentation, both of which are available on our website at cranenxt.com in the Investor Relations section.

With me today is Aaron Saak, our President and Chief Executive Officer. On our call this morning, we will discuss our financial results, provide an update on the upside acquisition, and update our 2024 guidance. After our prepared remarks, we will open the call to analysts for questions.

Now, let me turn the call over to Aaron.

Thank you, Christina, and good morning. We appreciate everyone joining the call today to discuss our second quarter of 2024 results. Before we begin, I'd like to take this opportunity to thank our NXT associates around the world for their efforts to deliver solid performance this quarter.

Our second quarter performance was in line with our expectations. Sales increased 5% over the prior year, reaching $371 million, driven by the acquisition of offset. I'm very pleased with the operational performance of offset and the progress we're making with integrating the business in the NXT.

Over the past three months, we've been meeting with many of our customers in response to the acquisition has been very positive. We have clear line of sight to achieving the commercial and operational synergies that we identified. When we announced the acquisition, we've hit the ground running to generate a funnel of new opportune cities with our market leading portfolio of online and physical authentication technologies and started implementing the continuous improvement fundamentals of the Crane Business System.

We continue to be very excited about offset and what it means for Crane NXT in executing our strategy of providing trusted technology solutions that secure, detect and authenticate our customers' most valuable assets. In Q2 Crane Currency, continue to win new orders, ending the quarter with a record high backlog. We also expanded share with existing customers by issuing 11 new denominations with micro optics technology. Given the strong backlog and visibility into the timing of shipments were raising our full year core sales growth for currency to 3% to 5%.

Additionally, CPI had year-over-year core sales growth for the first time in four quarters. Inventories in the gaming vertical have normalized and the other verticals within CPI continued to perform as expected, growing at mid-single digits. Finally, we continue to have a very active M&A pipeline. We ended the quarter with net debt to EBITDA ratio of approximately 1.8 times, positioning us well to further expand and diversify our portfolio with ample in M&A capacity. In summary, our year-to-date performance and outlook gives us confidence to narrow our adjusted EPS guidance to $4.20 to $4.35.

Moving to slide 4. In connection with the acquisition of offset, we updated our reportable segments to better align our strategy of expanding our portfolio of market-leading technologies that secure, detect and authenticate. The security and authentication technology segment consists of the offset and Crane Currency business. In the CPI segment. We're seeing continued strength in many end markets includes vending for our strong performance reflects new wins with existing customers and productivity initiatives that are improving margins.

Additionally, in our services business, we continue to expand our offerings and acquire new customers with several new wins in the quarter, driving growth in recurring revenue. I'm also excited that Michael Mahan joined us this quarter as the new President of CPI. In this role, Michael is responsible for driving the CPI growth strategy, accelerating innovation and leveraging the Crane business system to drive continuous improvement and operational excellence. Michael is quickly acclimating to Crane NXT visiting customers and traveling to our CPI sites around the world to meet our associates. I'm happy to have him on our team.

As mentioned in the announcement of Michael joining Kurt Gallo will be retiring in early 2025 after 16 years with the company, I'd like to personally think Kurt for a service and leadership over these many years. Overall, I'm incredibly excited about the future Crane NXT., the portfolio building and the leadership team we're putting in place. We are well on track to deliver our financial targets this year. For operating from a position of strength as we continue to execute our strategy to further expand and diversify our portfolio and drive shareholder value.

I'm now going to hand the call over to Christina to walk us through our second quarter financial performance as well as provide more details on our updated 2024 guidance.

Thank you, Aaron, and good morning again. I would also like to express appreciation to our global associates for their strong execution this quarter. Starting on slide 5 as Aaron mentioned, our second quarter results were in line with our expectations. Sales grew approximately 5%, reflecting the acquisition of offsets security and core sales growth of approximately 1% year-over-year, driven by growth at CPI. Adjusted segment operating margin of 27% reflects dilution from the outset acquisition and an unfavorable product mix year-over-year.

Adjusted free cash flow was impacted by higher CapEx related to our continued investments in the US bank note redesign program as we discussed last quarter. Finally, adjusted EPS of [$1.06] puts us on track with our full year guidance.

Moving to our segments CPI reported core sales growth of 1% in the second quarter, reflecting mid-single digit growth across all end markets outside of gaming. Adjusted segment operating margin contracted 110 basis points year-over-year to 30%, reflecting unfavourable product mix due to lower gaming sales, partially offset by strong pricing, execution and productivity initiatives. Looking across our markets, gaming performed as expected in the quarter with customers continuing to draw down on inventory overstock.

Gaming backlog has now returned to normal levels, and we are encouraged by the new orders we are seeing from our OEM customers, which we expect to continue for the rest of the year. Outside of gaming our other end markets are growing as anticipated, and we continue to expect full year revenue growth in the non-gaming verticals to be in the mid single digits. Based on our backlog and the timing of new gaming orders. We expect CPI for the remainder of the year to be slightly more weighted toward the fourth quarter.

Moving to security and authentication technologies on slide 7, sales grew 16%, reflecting the uptick acquisition with core sales up slightly as higher US sales offset lower international volumes, which were impacted by the timing of shipments. Adjusted segment operating margin was 23% in the quarter, reflecting dilution from the outset acquisition and unfavourable mix and currency related to production of more lower denomination US notes in preparation for the next equipment upgrade cycle.

As a reminder, this year, we took some of our US paper making equipment offline during the first quarter for upgrades to accommodate the new designs and technology for the US banknotes series that commences in 2026. The first upgrade cycle went very well and we resumed production on schedule. We will have another upgrade cycle beginning in the fourth quarter of this year, which will continue into the first quarter of 2025. Upsets performance in the quarter was as expected, and we are on track to achieve the full year targets we communicated last quarter.

As we look ahead to 2025 and beyond, we continue to see significant opportunities for margin expansion at upset using our proven Crane business system to drive productivity improvements in supply chain and manufacturing processes. Overall, we have very high confidence in our full year projections for security and authentication technologies.

Our international currency backlog is up approximately 65% year-over-year, and we now expect currency core sales growth of 3% to 5%, up from our prior range of 2% to 3%. Looking ahead, we have high visibility into the timing of our shipments and expect segment revenue to be slightly higher in the fourth quarter versus the third quarter.

Moving to our balance sheet on slide 8, our net leverage ratio was approximately 1.8 times at the end of the second quarter, reflecting additional borrowings on our revolver to fund at the outset acquisition. Our substantial free cash flow generation allows us to continue to focus on investing in organic growth and paying down debt while maintaining flexibility to deploy capital for future strategic M&A. Turning to our 2024 guidance, on slide 9 based on our performance in the quarter and confidence in our outlook, we are narrowing our adjusted EPS guidance to a range of $4.20 to $4.35. In addition, given our strong currency backlog, we now expect currency core sales growth of 3% to 5%. The rest of our guidance remains unchanged.

Now let me turn the call back to Aaron for closing remarks.

Thanks, Christina. In conclusion throughout the second quarter, we continued executing our strategy and delivered another strong quarter in line with our expectations. Based on our performance, we raised the midpoint of our full year adjusted EPS guidance, and we're confident in our outlook. Strategic priorities remain unchanged and we believe they will create long-term shareholder value. We're investing in our core businesses, driving productivity through CBS and building a strong M&A pipeline to diversify and expand the portfolio.

With this focus I'm confident, we'll achieve our vision of growing Crane NXT to $3 billion in revenue over the next five years. So with that, I'd like to thank you for your time this morning. And I'd also again like to thank our associates around the world for their commitment to delivering value to our customers and all of our stakeholders.

With that, operator, we're ready to take our first question.

(Operator Instructions)

Matt Summerville, D.A. Davidson.

Thanks. Morning. On maybe maybe first, let's talk about the currency side of the business. I mean the thing that probably stuck out the most to me was that the backlog there took a major step function up in the quarter beyond well beyond last year's record level. Can you maybe talk I'll call it a little bit, Aaron and Christina as to the drivers there, how much of that is the market versus market share versus timing of new denominational [introduction projections]? And what does this mean in terms of early in early read on visibility to '25 in that business?

Yes. Well, thanks for the question, Matt. Good morning. Well, I think you're right. We're really encouraged here by the backlog in currency and the line of sight, and it really gives us here in '24. That's very helpful for us. In terms of timing and understanding the cadence of the second half, that's what gave us confidence to raise the sales guidance of 3% to 5%.

To answer your question on know, the market, I don't think there's a real fundamental change in the market. You know, it's lumpy in terms of tendering and we feel very confident in our positioning with the market-leading technologies. So I think this is just a continuation of our strength in the market.

And as you know as well, Matt, some of these tenders come in and they're for multiple years, and that's what you also see reflected in the backlog. So while we have very good visibility in the backlog, some of those tenders are going to stay off foreseen oh 6 to 24 months in our backlog as we move to production. So again, a lot of confidence for the second half of the year, a lot of visibility to it, and that's what led to our raise of the sales guidance. I think it's probably premature to talk about '25 at this point in time.

Then maybe. Go over to CPI for a moment, didn't tighten the guidance range there. And maybe curious as to have maybe a little more detail on what you're seeing in the four main verticals that I want you to definitely touch on retail, the performance in that business up mid single digits during the period. And kind of that outlook for the year sort of goes against at least directionally where there's some of the major OEMs are talking about their business, noting one of which is sort of shifting their manufacturing strategy. So any perspective you may have on how that impacts or not CXT that would be helpful. Thank you.

Yes, sure. Sure. Matt well again CPI., as Christina mentioned before, just as expected in Q2 from our perspective, gaming continued the burn-down of the backlog again we have very line of sight to our inventory positions at our various customers are what let me take a moment just to talk about the re retail, and then I'll hand it over to Christina to talk about the other end markets.

All of you know, for US retail, we actually saw growth through the first half of the year, and we believe very strongly the long-term macro trends in retail are still in place, which is driven by labour scarcity and the drive for retailers to implement more automation for their own efficiency and productivity. So we think that's unchanged.

Now just a reminder, I as I know you know Matt. But but but to others, we really go to market in the retail through two channels. That includes the OEM channel of some of the names of like an NCR, but I believe you're alluding to given their announcements and also direct with retailers in the custom self checkout.

So in terms of the OEM channel, we have seen a slowdown in the first part of 2024, and we expect some softness there continue for us. That's really been offset, though, as retailers are looking more at their own customization and configuring the systems differently and doing it themselves. And we've seen continued investment on the customer scope side of the market as they're moving away from standardized form factors.

So when you put those two balance, again, we've seen growth in the first half of the year. We think the long-term trends are in place, but we do see a different channel mix that's playing out in the markets and that's globally. So maybe with that Christina, and I'll hand it to you to talk about the other verticals.

Yes. Thanks, Aaron. And as Aaron said earlier, outside of gaming, we saw the other verticals growing at mid-single digits, and we expect that to continue does in particular strength in gaming, our SME lending, which has performed consistently well since COVID, and also just highlight our services business, which continues to perform well in driving recurring revenue and a very high attach rate.

Now in gaming, we're encouraged by the orders we saw in Q2 from some of our OEMs, not a significant change to what we were expecting, but a slightly higher Q2. And that's more of a phasing impact of an impact on the full year. But overall, we had communicated. So while we're encouraged by what we saw in Q2, we left the overall sales guidance unchanged for CPI, and we believe that's prudent and appropriately risk-adjusted.

Great. Thank you, guys.

Rob Labick, CJS Securities.

Good morning. Thanks for taking my question.

Good morning, Rob.

So you start you alluded to this a little bit. We could dig in a little more on the upside integration process gives us a sense of where you stand and integration. Any surprises. You've seen good or bad, maybe some color on customer reactions and then the opportunities for synergies, both cost and revenue synergies looking ahead.

Yes. Thanks, Rob. And as I said in my prepared remarks, you know, we're very encouraged with the acquisition and it's performing and the integration is going as planned. We're on track to that $82 million range for revenue in 2024. And I'd just reiterate the strong positive response we've had from our customers. You know, now we're in that phase, call it 100 days in post acquisition to really meeting with customers building out the funnel of opportunities for both new wins, but also share of wallet expansion with micro-optics in just a reminder that sales cycle is anywhere from nine to 18 months as customers have to go in and update their designs and then go through a launch and qualification process.

So I would say it's going just as planned with a lot of healthy excitement and I think more to come as we announced in the quarters ahead of some wins. And on the our operational side, again, CBS such a core part of our disciplined operating process. We are heavily involved in offset deploying resources in training and starting to implement many of the actions that we had line of sight to as part of our investment thesis. So again, I feel very confident in the line of sight to the 8 million of synergies we promised by 2026 and confident we're going to get there Rob.

Okay. Super. I appreciate that color. And then kind of sticking with up second, your M&A there and have true end market, sports media, consumer, industrial, financial services, et cetera, but there's others pharma, food and beverage and many more in authentication. And so are those other markets organic expansions are? Is that part of the M&A focus? How should we think about the future M&A as it relates to what you already have with offset and how it all fit?

Yes, Bob , hey, I think you're thinking about this exactly the right way is how we're thinking about it. You know, our immediate focus here just to reiterate, is to successfully integrate and operate offset. That is the focus of the team . But with that said, we have a very strong funnel of it. M&A opportunities. We're continuing to cultivate. I feel very, very confident with the leverage sitting at 1.8 as we exited this quarter, that gives us ample capacity, and we want to continue a really disciplined process around that M&A.

And I think to your comments on our focus is, again, how we're thinking about it. We see this as a large $3 billion TAM all in the security and authentication space. It's fragmented with positive growth dynamics of mid-single digit to mid-single digit plus. And we see these opportunities for both bolt-ons of new tech technology into the core as well as enhancing our exposure to different vertical markets, just a few of which you named, whether that's consumer farmer governments.

So that's exactly where part of our M&A funnel is focused and we feel again, confident we are we're in a very good addition to take action. Again doing what we said we were going to do with one to two acquisitions a year.

Super. Thank you so much.

Thanks, Rob.

Damian Karas, UBS.

Hey, Good morning, everyone. It's nice to hear. You have been outperforming some of the US market trends, especially in CPI. I was wondering if you could maybe give us a sense of the progression of orders for the CPI segment through the second quarter and into July, quantify what the order run rate in a lot on a dollar basis is has looked like. I guess if I'm just looking at the backlog and the sales numbers in the second quarter, I'm coming to something like maybe in the low $200 millions. Does that sound about right?

I think you're thinking about it in the right geography there, Damian, again, if I'm thinking about gaming, the entire backlog of CPI., as Christina mentioned, has gotten back to where we would say are close to normal levels, right? There's always going to be some fluctuations quarter to quarter, but we're in the zone of where we think it's normalized. And in gaming, some of the OEMs have returned to ordering again that feels exactly in line with what we expected given the visibility into the backlog or excuse me, into their inventory levels.

And now we have this line of sight to the rest of the year to your question that we see continuing to progress with orders slightly skewed again to Q4 of. So I think the way you're thinking about that is directionally correct.

Okay, that's helpful. And then in the currency business, I'm presuming it for the US kind of the high water marks the third quarter and then at some of the international project activity that's going to drive kind of like the sequential improvement in the fourth quarter.

And then I just wanted to ask on that. So that equipment upgrades is going to kind of happened for Q2 and then into early next year. Is that that's going to be kind of like the last equipment upgrade and then and then start thinking about kind of sort of a pickup in the on the new design, the new denomination later next year for the US business. Just want to make sure I kind of thinking about that, that's the right way.

Yes. What don't I take the first part, and I'll hand it over to Christina for the second part of your question. So as we just think about the phasing of revenue for currency in the second half of the year, again, the build of this backlog has given us a lot of confidence from the line of sight to the shipment schedule. And that's why we have the confidence to raise the sales forecast. I think when you when you think about the phasing, it's going to be slightly higher in Q4 than in Q3. So we'll see in terms of customer request, ship dates. So again, pretty high level of confidence on that as it relates to the US upgrade cycle and kind of the phasing as we go forward. Christina, I'll let you comment.

Yes, just to answer the specific question . So this cycle that I will start in Q4 and will continue into Q1 of next year in the last one. And it supports than the entire new series. And we're on track with that, that program to kick off as planned. And that was aligned with our guidance and our target expectations for the full year. So no change coming from that, that product into production stoppage. It's already factored in.

I'd just add, Damian, on the 2025 and beyond and the new series design announcements, as we've always said, we have to allow the BEP and the Treasury to make those announcements. Obviously, we feel very, very good about our relationship with them, but there will be making those announcements likely in '25 on the our actual phasing of the design of the new currency.

Terrific, it's really helpful. Thanks. Thanks I'll pass it on.

Bobby Brooks, Northland Capital Markets.

Good morning, guys. Thanks for taking my question. My first question, you guys give a little bit of color on, you know, market share on the market share trends that you've seen in CPI and those of, you know, you're kind of the year should position in both Europe, specifically [Vandy], how to continue to stay strong. But I'm just kind of curious if you've got double click come on and just get a little bit more granular. Obviously, there is some normalizations within gaming given your competitor regaining a key certifications. So maybe that shows like market share shift in there, but that's just more silver normalization. But I'm just kind of curious about your view on that and just kind of maybe breaking it down by segment within CPI. and maybe the best way is just to help mitigate compared to compare and contrast those market share trends you see with and CPI now versus what you're seeing maybe a year ago.

Well, hey, think thanks for that question, Bobby. I think it doesn't make sense. We'll go kind of vertical by vertical for you. So in gaming, you know, maybe I'll go back more than a year. We had a really fantastic position in the market that was enhanced over the past few years as one of our competitors struggled. We believe we maintain that share and continue to be the provider of choice. So again, with high visibility into the major OEMs to buy our products and casinos that specifies those products, we feel very good. So I wouldn't say there's necessarily a share shift that's occurred other than we've maintained and continue to be the market leader in the gaming vertical with good line of sight to how we think those orders are going to play out for the rest of the year.

If I go to vending again, we define that market from our perspective is vending machines, not Convenience Retail broadly. We don't include micro markets. As an example. In our TAM, we're really talking about vending machines in that form factor and and the payments and telemetry and remote services that come along with with that type of piece of equipment. So inside that market, again, we see it growing coming back off these COVID lows.

Again, we've always had a very robust share in that market. We believe we've maintained that and continue to introduce new features, both in cold vending in dry good vending, but also in coffee, where we have a very strong offering, particularly in Europe that we see growing and implemented more here in the United States . So for from how we define this market and where we play and how we expect to win, we feel very good. So maybe I'll pause there. Christine, if you want to take the other verticals.

Yes. sure, will I mean, you spoke a little bit about on about retail earlier. And so I don't know that we need to talk too much more deeply into that. But I'll say we're off to a good start this year. The firm first half of the year as compared to last year is doing very well. And that's largely related to custom retail projects that we're working directly with either integrators or directly with our third party customers last year we're now seeing coming through, and that's that's off to a good start again for the full year Expect saying mid single digit growth there. And just overall, our services business, which supports several other verticals, has been very strong, had some solid new wins in the quarter, and we expect that to continue growing at mid-single digits as well.

Got it. That you guys have sort of color. And then just I don't want to follow back up on Matt's question earlier there and just more so looking at in terms of sequential view. So 100, yes, on 100 plus million sequential increase in the security and authentication backlog, could you just maybe flesh out how much of that was acquired backlog from offset? And then what was the international currency, make sure that I know you've talked about it being a record high. And then maybe just any is that sequential backlog? Was there any benefit from new business from upside that you guys as well, one since taking ownership or any interesting new product concept, Product Authentication ones mixed into that?

Yes, I'll take that one Bobby. And you know, of course, I'll just say great execution by our currency team where we continue to win in the international currency market analysis led us to increase our sales guidance for currency for the full year on. In terms of the breakdown of the of the backlog, the majority of it is related to on current interest national currency. And you know, it's part of our disclosures. You'll see uptake is approximately [30 million] of the backlog at the end of the quarter. This quarter as Aaron said earlier, we had several new multiyear orders, which will begin shipping this year, but that'll that inflates that's really the primary driver of the inflation of backlog over last year. And that will stay in the backlog now through 25 and some going into 2026. So overall, again, to strengthen our backlog gives us high confidence in the full year targets.

Got it. And then just one clarifying question. So I know you guys talked for you guys talk about winning 10 to 15 new international denominations year in the prepared remarks. I think Aaron mentioned you've issued 11 new micro-optics denominations this year. So I just wanted to clarify that it is that 11 number, is that new international denomination wins? Or is that something different? And and if it's something different and how many international denomination wins that you've gotten thus far this year?

Thanks, Bobby. Let me clarify that. What I would say overall, we remain very encouraged by both the win wins year to date of also the funnel that we have in progress for micro-optics being considered in the design of new currencies. So year to date through the first half, we've had five new denominations. one that puts us, I think, very well on track for our target of 10 to 15, not only given the five we've won. But what we see in the funnel, the 11 new denominations that went into production were previously one, but the other I'm actually going in to production in this quarter. So just to provide a little more nuance on that definition.

Perfect. Really appreciate guys and as in congratulations on the great quarter. I'll return back to the queue.

Thanks, Bobby.

Ian Zaffino, Oppenheimer.

Hey, Good morning. This is [Isaac Sellh] on for Ian. I think most have been answered at this point, but just to follow up on offset, I think you've previously noted object to be accretive to earnings next year. If you're able to maybe you could just provide further details on the timing of that, that sort of the cadence of profitability and margins between the core currency business and [Oxitec] heading into next year.

Sure. So I think because as weak as you reiterated, we did say would be accretive starting next year. Obviously, I don't want to start to talk about 2025 guidance at this point in time. So I will defer for that. But I think the key message here for us is that we've been encouraged already in the first hundred days of how the businesses performing in the integration going.

You know, part of our investment thesis or a big part of that thesis is that we will walk up mid 10s level to the 20s over the next few years, and that's driven both by the growth of the business. But the synergies that we see and again, our confidence in the line of sight to those synergies is very high. And that's going to drive the accretive EPS impact. And we will start to see that in '25. But I could I just ask, you know, we'll cover that as we do 2025 guidance.

Okay, understood. And then as a follow-up on M&A, could you just comment on the environment what you're seeing is sort of core or adjacent markets that you're targeting to reach that long-term target? And then as far as liquidity, do you feel that you have enough firepower to get a good-sized deal done or wood energy and large be funded by additional capital? Thanks.

Yes. Well, just in terms of the market, I would say it is largely unchanged from the last few quarters. From our perspective, we have a healthy funnel. We continue to prosecute and cultivated in. Again, I feel very confident we will be on track to do the one to two acquisitions every calendar year. As we said at the time, we launched the company of all in those same themes with a very disciplined approach that I think is the key and Hallmark to our M&A like we executed with [Ops].

Second, like we've executed in the past, which starts with the market, reviewing the company and making sure we can get the right value valuation in a double digit void that simply put. That's how we're going about it. I think liquidity feels good to me 1.8 times again, we're looking at deals in that $100 million to call it, $500 million range of revenue. We think we have ample firepower for those deals and we want to be a compounder. So we want to keep this up on a pragmatic and continuous basis.

And so that's what I would envision you'll be seeing from us is a continuation of it M&A flow in deals. We can get our hands around drive rigor, drive the CBS discipline and generate returns for shareholders. And so I would not see us doing anything other than paying that through our own free cash flow and leverage. No, no equity or any other more exotic means.

Okay, great. That's helpful. Thank you so much.

Thank you. I'm not showing any more questions in the queue. I would now like to turn it back to Aaron Saak for any closing remarks.

All right. Thank you very much. Operator. Well, Q2 was another solid performance for Crane NXT., and I gave us confidence to narrow our adjusted EPS guidance for the full year. And I especially like to thank all of our associates for their hard work, their dedication and our focus on serving our customers. It was evident in Q2 that it's with our people. Also, I'd like to thank everyone who joined the call today and for your questions. We very much appreciate them.

So I hope you all have a great rest of your week, and thank you for your time this morning.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.