Hillenbrand Inc (HI) 2014 Q2 法說會逐字稿

Good morning, everyone, and welcome to Hillenbrand's earnings teleconference for the second quarter of fiscal 2014. A replay of this call will be available until midnight eastern time Tuesday, May 20th, 2014, by dialing 1-855-859-2056 toll free in the United States and Canada, or 1-404-537-3406 internationally, and using the conference ID number 30133997. This Webcast will be archived on the Company's Web site at www.hillenbrand.com through June 6th, 2014.

If you ask a question during today's call, it will be included in any future use of this recording. Also note that any recording, transcript or other transmission of the text or audio is not permitted without Hillenbrand's written consent.

At this time, it's my pleasure to turn the conference over to Joe Raver, Hillenbrand president and chief executive officer. Mr. Raver, please go ahead.

Thank you, [Laurel], and good morning, everyone. I appreciate you joining us this morning for our discussion of Hillenbrand's results for the second quarter of fiscal 2014, which just ended this past March 31st. I'm joined in the prepared remarks portion of the call today by Elizabeth Dreyer, our chief accounting officer and interim CFO.

Chris Gordon, director of investor relations is also with us here today. And then during the Q&A portion of the call, we'll be joined by Thomas Kehl, president of Coperion, and Kim Ryan, president of Batesville.

Prior to getting started, I'd like to briefly remind you that during the call, we may use certain forward-looking statements that are subject to the safe harbor provisions of the securities laws. These statements are not guarantees of future performance, and our actual results could differ materially.

Also during the course of this call, we'll be discussing certain non-GAAP operating performance measures. I really encourage you to take a look at our 10Q, which can be found at our Web site, for a deeper discussion of forward looking statements, the risk factors that could impact our actual results, and more information on our use of non-GAAP operating measures, and the reconciliation to GAAP financial measures.

Before we get into the results and segment performance discussion, I want to take a few seconds to remind you of our overall strategy. If you've followed us for a while, then you know we have a pretty straightforward strategy. That is, to leverage the strong financial foundation of Batesville, acquire good businesses in growing markets, and make them better to the application of lean talent development and strategy management.

As we've executed this strategy over the past several years, we've completed a number of acquisitions that have transformed Hillenbrand into a global, diversified industrial company, and today we participate in a number of large and growing end markets all around the world. Our largest and most recent acquisition, Coperion, is now operating effectively within the Hillenbrand infrastructure, and is progressing nicely with the subsequent integration of K-Tron.

Now let me turn to the results for the second quarter. I'll talk mostly about how we performed compared to expectations, and Elizabeth will spend more time discussing results compared to prior year.

As you saw in the release last night, revenue for the quarter was relatively flat and lower than we expected. I'll get into a bit more detail in a second, but on a high level, on the process equipment group side of the business, orders were strong as indicated by our record level backlog. However, the timing of large orders drove lower than expected revenue.

And on the Batesville side of the business, the burial casket market was down more than we had expected. Despite lower than expected volumes, our margins were in line with expectations and adjusted EPS was higher than we anticipated due to other income gains that will be covered in more detail later in our prepared remarks. Now let me turn the discussion to segment performance, and continue with the process equipment group.

As you know, our strategy in this segment is to expand globally, penetrate underserved end markets, and grow on the top and bottom line by applying lean in all aspects of this business. The global expansion efforts are going well.

(Inaudible) are both leveraging Coperion facilities in India and Russia to warehouse parts, and they're booking some nice orders in these locations. Coperion and K-Tron are working well together in North America, where the petrochemical and polyolefin markets are strong. Europe's economy has been steady the last couple of quarters, with some improvement in bookings there, mainly driven by Germany. And like everyone else, we're seeing some slowdown in China.

Just a quick note about the conflict between Russia and the Ukraine; we're monitoring the situation from a few different perspectives, including making sure that we're in compliance with all U.S. and E.U. sanctions. We're assessing the impact on large projects in the region, and generally we're monitoring the impact on the regional economies there. Revenue in the process equipment group was up about five% compared to the prior year, but as I mentioned earlier, it was lower than we expected due to the timing of large orders.

You can see by the sizable increase in backlog that we ultimately received a number of large orders during the quarter, particularly from North American shale gas projects, but they were later than planned, and therefore generated less revenue during the quarter. As a reminder, we use percentage of completion accounting for these types of orders, so the timing of orders can have a large impact on revenue. Despite lower than expected volumes, gross margin percentages were in line with expectations, and we continue to focus on operational improvements to drive bottom line performance.

As we look out to the remainder of the year, overall market conditions are positive, and while our ability to continue to close large orders over the last two quarters will have an influence on year-end results, we believe that we're pretty well positioned for the back half of the year, given our record backlog.

Let me now turn to more detail to the Batesville segment, where a record high number of North American deaths last year made for a very tough comparison for the current year. You may remember from our last call that we expected Batesville's performance in the second quarter to be lower on a year over year basis, driven by a declining burial rate and lower deaths compared to last year.

Well, this came to pass, and based on other public reports, we believe the market was down even more than we had expected the last time we talked. Consequently, revenue for Batesville was down about eight% for the quarter on a year over year basis.

While Q2 is historically Batesville's largest quarter, year over year performance can vary significantly depending on the severity of the flu and pneumonia season. Here in North America, the flu season was fairly active this year.

However, it primarily affected the younger population, and therefore led to fewer deaths. Although we can't control the number of deaths in a quarter, we can control our actions internally and in the marketplace. Despite lower volumes, Batesville delivered an adjusted gross margin of 40% this quarter.

This was the result of great work by the Batesville team and again demonstrates the value of lean initiatives across the Company. As a reminder, Batesville is a business that requires a relatively low CapEx investment, and with a management team focused on managing working capital, Batesville continues to consistently generate significant cash to support the execution of the Hillenbrand strategy.

I'll close my comments about the Batesville business by reminding you that the longer term trends for Batesville, so that health care continues to improve and people are living longer. The demographics of an aging generation of baby boomers are expected to be a positive factor in the future, however, it continues to be impossible to predict with any measure of certainty, what's in store for the North American death rate in the near to medium term.

Batesville will continue its execution of lean, and aggressively right-size the organization, while at the same time, staying flexible enough to meet their customers' changing needs. Looking forward, we anticipate burial volumes to stabilize during the second half of the fiscal year, which will produce more consistent year over year results. We also expect Batesville to continue generating strong cash flow and solid finance results.

Now I'll turn the call over to Elizabeth Dreyer, our interim CFO, for a bit more financial detail. Elizabeth?

Thank you, Joe. As we reported in our filings yesterday, consolidated revenue of $397 million for the second quarter was relatively flat year over year, with five% growth generated by the process equipment group and an eight% decrease for Batesville.

Adjusted EBITDA grew eight% to $69 million, with about $2 million of that increase coming from the process equipment group, and about $11 million coming from other income gains in the quarter that I will discuss a bit later. These gains in the process equipment growth EBITDA growth more than offset the impact of lower volumes in the Batesville segment.

The process equipment group delivered $240 million of revenue in the quarter, representing five% growth, or three% growth on a constant currency basis. Given our purchase of Coperion in December 2012, this was the first quarter where we had a prior year comparison that had a full three months of operations. Looking at the businesses that comprised this group, we saw growth across the board.

As Joe mentioned earlier, our order backlog at the end of the quarter reached an all-time high of $717 million, representing a $106 million sequential increase over the first quarter, and a $173 million increase over the prior year.

Orders were strong across the group this quarter, but in particular at Coperion. Given the visibility into revenue provided by our order backlog, we continue to expect the process equipment group to deliver mid-single digit organic revenue growth this year.

During our last couple of earnings calls, we shared with you that we expect process equipment group revenue to be the highest in the fourth quarter this year, and I want to confirm that this is still our expectation based on our projections.

Remember that this business is comprised of large systems, equipment, replacement parts, components and service. Future revenue for this group can be heavily influenced by the timing of order placements, in particular, the timing of when large systems bookings are finalized are very much driven by customer requirements, and can shift both forward and backwards.

Turning now to Batesville, revenue for the quarter was $157 million, down about eight% from the prior year, or seven% on a constant currency basis. The decrease was due to lower burial volumes driven by significantly fewer North American deaths compared to the prior year.

Hillenbrand's consolidated growth margin dollars increased by nearly nine million, but were relatively flat on an adjusted basis. To the percentage of revenue, adjusted gross margin was 36%, which was consistent with the prior year.

Despite the volume decline of Batesville in the prior quarter, the team delivered a strong 40% adjusted gross margin to 30 basis points below last year during the very high volume quarter. The process equipment group's adjusted gross margin was consistent with the prior year at 33%.

As I mentioned earlier, there were three events this quarter that resulted in nearly $11 million of other income gains. Two of these events related to investments we received at the time of our spend from our former parent company.

First, we had a $5 million gain from our exercise of warrants related to Forethought, a company that was acquired by a third party in January. We discussed this during our last earnings call, and shared that the gain was expected at the time we established guidance, and is included in our estimated earnings range.

The second item was a $3 million gain related to our limited partnership investments. Although this quarter we experienced a gain, we have also had similar-sized losses in the past. We have consistently accounted for these gains and losses over the years, and have not adjusted for them in the calculation of adjusted net income.

Currently, we have about $12 million of limited partnership investments remaining in our portfolio, compared to the nearly $30 million that we started with at the time of the spend from our former parent company. The last item was a $3 million gain related to a payment received in connection with a cancellation of a service agreement with one of our customers at Batesville.

Turning to our tax rate, our second quarter adjusted effective tax rate was 29.3%, which was consistent with last year. Operating cash flow was $82 million for the first half of the year, more than four times higher than the same period last year.

The increase was due to higher net income and significant improvement in working capital, particularly at Coperion. During the quarter, we returned over $12 million to Hillenbrand shareholders in the form of quarterly dividends. As we disclosed in our 10Q filed yesterday, we bought back about 527,000 shares of our common stock during the quarter, for about $17 million. As we have discussed in the past, we repurchase shares from time to time, principally to offset the dilutive effect of equity compensation.

Looking at our bottom line results for the quarter, net income increased 160% to $33 million over the prior year, resulting in diluted earnings per share of 51 cents. The increase was driven by lower acquisition and integration costs related to Coperion in the current year.

On an adjusted basis, net income increased 12% to $34 million, resulting in adjusted diluted earnings per share of 54 cents. The increase was driven by the gains discussed earlier, and increased profitability in the process equipment group, which more than offset the impact of lower volumes at Batesville.

Adjusted EBITDA is an important measure we use to monitor our ongoing operating performance since it removes the impact of amortization and interest, which naturally result from our acquisition strategy. Adjusted EBITDA increased 8% to $69 million over the second quarter of the prior year. Adjusted EBITDA as a percentage of revenue increased by 130 basis points to 17%. Our overall adjusted EBITDA percentage is expected to increase over time as the integration of Coperion continues, and the results of fully implementing lean are realized.

Turning to guidance, we are affirming our full year 2014 guidance. We continue to expect revenue of approximately $1.7 billion for the year, and given current exchange rates, minimal translation impact to revenue when compared to 2013.

Revenue from the process equipment group is expected to be approximately $1.1 billion, and Batesville is anticipated to deliver approximately $600 million in revenue. As we shared with you in November, adjusted EPS is expected to range from $2 to $2.10 and we continue to expect the fourth quarter to be our largest quarter of the year.

Now I'll turn the call back to Joe for his concluding remarks.

Thanks, Elizabeth. As I said earlier, we are encouraged by our strong backlog, and despite lower than expected revenue, gross margin and cash generation were strong for the quarter. As we look forward to the second half of the year, we expect to see the burial market return to a more normal level, and we remain focused on closing additional large orders in the process equipment group.

Our management team remains committed to the long-term strategy that transformed Hillenbrand into a global diversified industrial company, and as prudent stewards of shareholders' money, we continue to seek opportunities to grow the business both organically and through acquisitions.

Our goal is to increase revenue and profitability, and our focus continues to be on strong cash generation that improves our balance sheet, provides an attractive dividend, and enables us to execute our strategy. We remain committed to providing meaningful value to our shareholders.

This concludes our prepared remarks.

For today's Q&A session, we're joined by Batesville president Kim Ryan, and Coperion president Thomas Kehl. We're ready to take your questions. Laurel, would you please open the lines?

Thank you. (Operator Instructions). Your first question comes from the line of Daniel Moore with CJS Securities. Your line is open.

Good morning, thanks for taking the questions.

Hi, Dan, good morning.

Can you perhaps elaborate a little bit, Joe, on the increase in backlog? Obviously you mentioned North American shale gas, petrochemicals, polyolefin; how much of the roughly 100 million increase in backlog came from those types of projects, and what were, you know, some of the other drivers of increased backlog in the quarter?

Sure. We have - we've had a really strong backlog performance across all the businesses, all the lines of business. So it's not just in one area, the process equipment group. Clearly, the big - you know, the big jump is due to some of the larger projects that Coperion booked, but generally demand is pretty solid across the - across the entire group.

We - we don't break it out by specific - I mean, we don't provide that amount of detail, by specific projects, but - but we did close a number of good-sized projects in Coperion which led to a good chunk of the increase. But again, it's up across the board.

And as we look forward, are there any, you know, obviously there's been sort of lumpiness over the last year or so in frack sand and some others. Are there any pieces of the process equipment business that you know are - you expect to continue to be a drag, or are you seeing growth as we go forward across the board, as you mentioned?

We've seen pretty good growth across the board. Interestingly, frack sand, while it's not nearly what it was, we actually have had some - you know, that market has actually picked up a little bit as natural gas prices have gone up a bit.

So it's been pretty good across the board. Because of the size of the Coperion projects, though, we will still - we will still see lumpiness. I mean, as you saw this quarter, with a big increase compared to the last quarter, so we'll still see some lumpiness just because those projects are so - are so big relative to what - what I guess historically the process equipment group, the kinds of projects we've booked prior to the Coperion acquisition.

Okay, and then any color on how much of the $700 million plus in backlog you would expect to flow into revenue for the remainder of this year?

You know, that's a - that's a good question. So in the - in the non-Coperion businesses, it depends on the project, but typically a chunk of that backlog flows through in a couple quarters, so we'll see, you know, quite a bit of the non-Coperion backlog hit this year. On the Coperion side, it's a slightly different story in the sense that we use, for the big projects, we use percentage of completion accounting.

And so we start to see that backlog come into revenue pretty quickly, you know, almost immediately after it's booked. We start to see that revenue come into backlog, so a good chunk of that revenue comes - or backlog comes into revenue this year as well, as they work on those projects.

And I don't have the specifics of exactly how much that backlog works through in the current year, but because of the large projects being on percentage of completion accounting, it's a good chunk of that backlog works through this - in a few quarters.

And in the past, you talked a little bit about, you know, some of these larger polyolefin projects obviously still being there, but being pushed out a little bit. Is there anything you can point to specifically that is accelerating the process, or is it just a function of timing and, you know, the trends are kind of similar to where they were six or twelve months ago?

I think the trends are pretty similar to where they were the last time we talked, and I think the last time we talked, we had expected to close some of these a bit earlier, and then we saw a big slug of them come here in the second quarter. And they're still, as we've talked in the past, there are a number of projects still out there.

The only other comment I would make on backlog, while we're talking about it, is that the margins - we look at the gross margins inside the backlog, and they're really consistent with what expectations are. So that's a positive sign in the sense that the backlog is not only growing, but it's - it's growing with the kind of margins that we expected it to grow with.

Very helpful. Elizabeth, you talked about each of the gains. Can you -- I just want to clarify that the - the LP related gain is excluded from your full-year guidance, is that correct?

Right, those LP investments that we inherited from our former parent company, they're passive investments, so we were notified of gains or losses, so that was not included in our guidance. But it is included in our results from both an adjusted basis and a GAAP basis.

Okay, so it's included in your adjusted results, and will be ...

It is.

It wasn't projected, but it will be included when you, you know - that won't be excluded when you report your sort of full-year adjusted numbers.

That's exactly right.

Okay, same holds for EBITDA. And then last question, you know, given the increase in backlog, given, you know, five or six cents of sort of incremental gains relative to what you had expected, you know is the higher end of the range of guidance still more achievable, or just too early to tell at this stage?

I think we're - you know, right kind of keep in the range of $2 to $2.10. Clearly, the second quarter was not what we expected in terms of revenue. We had lower revenues than we had expected the last time we talked, largely because of the timing of those big projects, and subsequently, you know, we had hoped for higher EPS this quarter. We got the benefit of a couple of one-time gains that we did not expect, so I think that's how I'd think about the model - of your model going forward.

Okay, I'll jump back in queue. Thanks again.

Your next question comes from the line of [John Franzreb] with (Inaudible). Your line is open.

Yes, just a - just a clarification. Your guidance - your EPS guidance includes or doesn't include the - all the one-time gains that you recorded in this quarter?

So the - when we affirm guidance, it's included - those results are included in our affirmation of guidance.

Okay.

The LP gains, as an example - so the Forethought - the Forethought gain was, we considered that when we set guidance.

Right.

LP gains - the LP gains, we don't - we always plan for zero on those, and then they either go up or they go down. We include them in our adjusted results, but we did not consider that when it comes to guidance. So that would - that would be a benefit in our reported results, that we did not have built into our guidance, did not expect at the beginning of the year.

But now it's part of.

It's part of - it's part of our adjusted earnings, or EBITDA going forward.

Got it. Okay, so ...

Is that clear?

Yes, I think I got it. So, Joe, that kind of suggests that the margin profile that you originally were anticipating, isn't playing out in process that you thought in the beginning of the year. What part of the margin profile isn't performing up to your original expectations?

So I don't think that's exactly right. It's - as you can see in the quarter, we were down, you know, compared to what we expected, pretty significantly on the revenue side, on the process equipment group.

And if you would just kind of let that flow through at a normal EBITDA margin, you would - you would see that we're - from a margin perspective - you know, we're in line with what we expected on the margin side.

The process equipment group, gross margin percentage, was up about 50 basis points on a year over year basis. And so margins are where we - you know, where we expect them. It's really the - it's the revenue miss that we experienced here in the second quarter that's driving the impact.

But Joe, you haven't changed your revenue expectation for the full year on process.

That's right, so if you think about our guidance on the revenue, from a revenue perspective, we guide to just about $1.7 billion, and so you know, there's a - there's obviously a range in there, and so we still believe we'll be in that $1.7 billion range.

Right, that was just that you're about $6 million shy on the - on the op income side. OK, we can take this off line.

Yes, yes, but we - we expect to be in the range of $2 to $2.10, and margins are in line with expectations. So maybe we need to take this off line to make sure we're - we're talking about the same thing.

Okay, one other question; two questions, actually. The seasonality - we'll call it a significant seasonality - that was seen in process, where most of the revenue falls into the fourth quarter, is that something we should expect on an ongoing basis in future years, or is that a one-time event that we're seeing here in 2014?

All right, John, there are two things that play into that. One is the timing of projects, and how they fall, and then the second is, you know, some significant part of that is driven by compensation systems, and people trying to hit numbers for the year.

And so, we've seen that historically in all the businesses. We've seen the fourth quarter and increase in the fourth quarter, but that isn't a guarantee that it'll happen that way in the future. We do expect the fourth quarter to be our largest quarter this year, and again it's driven by two things.

It is the timing of projects, but it's also - it's our fiscal year end, and as sales teams and operational teams, you know, look at hitting the year, there just tends to be this natural flow of more volume into that fourth quarter.

Okay, the percentage of spare parts, after-market parts that was part of process in this current quarter, how did that compare versus a year ago?

I don't have the detail in front of me in terms of the percentage of parts and service revenue as a percentage of the entire revenue of the process equipment group.

It's right around 30% on the parts and service.

Yes, John, I'll tell you, there was nothing unusual during the quarter that comes to mind. We had - it's probably a bit higher, because part of the revenue shortfall that we expected, it's really - that's on the capital side of the business, the project side of the business.

It's probably up a little bit, and that'll move around a bit, because the service revenues are pretty steady. And then again, you get, on the capital equipment side, it goes up and down a little bit. But it's probably - I think it's right around there in the 30% range, but we'll check that number and get back to you.

Okay, and just one last question, we'll call it a housekeeping item. Are there any other non-recurring items we need to anticipate in this quarter - coming quarter - or for that matter, the balance of the fiscal year?

No, not that I'm aware of.

Promise?

We're - we are always - there's always the option that we would have LP gains and losses. If you look back over our history, they've been - you know, we've suffered our fair share of gains and losses, so that's always something that could occur in the last half of the year.

Can you just give me a context of the size of the losses you've had in prior years?

If I recall, I think it was up to $5 million of a loss.

Okay.

And that's about the largest that we had.

Yes, but remember, I don't know exactly when that happened, but we used to have about - these things kind of rolled off over time, so we used to have about twice as many.

Right.

Or, twice as much value in the LPs as we do today. They'll continue to wind down over the - over the next few years.

Okay, thank you very much, thanks for taking my questions.

Your next question comes from the line of Steve O'Neill with Hilliard-Lyons. Your line is open.

Thank you, my question was answered.

All right, thanks, Steve.

(Operator Instructions)

Your next question comes from the line of Clint Fendley, with NewBridge Group. Please go ahead.

Thank you. Good morning, everyone.

Good morning, Clint.

First question, just wondering with Kim, obviously there were some tough comps for the quarter. I know some of the other service providers have seen some spikes in the cremation rate during the quarter. Is that something that you guys have visibility into, given some of your options products?

It is - it is, Clint. We - we can see that the cremation rate is slightly higher than we experienced in prior year, about 30 basis points higher, running year to date, than what we had seen in prior year, and that coupled with you know a down death market, or a down burial market, obviously those two things created pressure for all the providers.

And, Kim, part of the gross margin impact in the quarter was due to your supply chain cost reduction initiatives. Could you just provide any color on that, and what stage you guys are at on those initiatives?

Sure. As you - you know, as you know, you've been familiar with us for a very long time. We have both manufacturing initiatives, as well as distribution initiatives that get rolled up in those supply chain efficiencies.

We've had a number of ongoing initiatives around distribution efficiencies; things like where our warehouses are located, footprint inventory levels, how we run our fleet in terms of the delivery mechanisms, and we've seen - we've had an ongoing project, we're in about year two of that project, that has affected about 20 of our service centers in terms of how we have been able to increase efficiency in those - in those service centers, and how we deliver - that's delivered great value for us.

In addition to that, we've seen improvement in our performance, both in our Chihuahua manufacturing facility, as well as our Manchester manufacturing facility. Manchester has been the largest contributor on that, and they are our largest steel casket manufacturing plant, located in Tennessee, and we've seen some really nice year over year improvements in efficiency and consistency out of that manufacturing facility this year.

Great, thanks, Kim.

Last question here, for Elizabeth. I'm wondering, on a $5.2 million gain on Forethought, how many other outstanding warrants do you guys have related to this?

None. So that was the last remaining investment we had related to Forethought. If you recall, a couple years ago, we collected on the note. This was the warrant, and then we don't have anything further from Forethought.

Excellent, thank you.

Your next question comes from the line of Daniel Moore with CJS Securities. Your line is open.

Thank you again. Just wondering, trends monthly in the - as far as Batesville is concerned, what you're seeing in April, if you're seeing that normalization already?

Dan, it's Kim. We are not yet seeing the market come back from a year over year standpoint. You know, we've been tracking this stuff for probably 30 years, so typically when you see a tough first half, you'll see the second half bounce back a bit.

We haven't seen that. We've seen it come up some from what we saw in Q1 and Q2, but not back to normal year over year levels of - exactly. So - so over time, it all works out to that normal kind of two%. We're expecting that it will continue to normalize over the back half of the year, you know, so we continue to expect that.

April wasn't the silver bullet but it, you know, kind of bounced back up over the top, but it's certainly on a trend that is coming back up, and we're expecting to see more normal year over year results, you know, compared to what we have seen for the last 30 years, as this continues to roll through the year.

Very helpful. And then lastly, Joe, just wondering, any update, you know obviously you would have announced it, but in terms of the progress on the search for the permanent CFO?

Well, as we talked about last time, we've retained a very well-known search firm to help us. We've seen a number of really great candidates, and it's a very high priority of mine to fill that position. So as soon as we have some concrete news on that, we'll certainly let you know. And I'm looking forward to the day that we - that we can let you know.

Indeed, appreciate it very much.

Thanks, Dan.

Your next question comes from the line of Rich Glass, with Deutsche Bank. Please go ahead.

Hi, guys. Following up on Dan's question there, at least can you give us any timing? Would you expect it to be this quarter, in terms of the CFO search reaching some sort of conclusion?

As I, you know, said earlier, we are active in the search. We have a number of good candidates. I think of these a little bit - sometimes this is a little bit like selling a house. You know, it takes the right buyer and seller to come together on a single day, and it can happen really fast, and sometimes it can take a little while.

But this is such a critical position that I want to make sure that we get this right, and get the best candidate we can get. Elizabeth is doing a great job on an interim basis, she and her team, and so again, we'll make sure that we get the right candidate in place. We feel like we've got a really good team in place right now, and we're covering the situation quite well. So as I've said earlier, as soon as we have something to tell you, we will - we will certainly let you know.

Yes, I appreciate that, but you guys need to buy the house already. I mean, this has been going on for a little bit longer than it seems for most public companies. I'm not sure exactly why it takes so long. Following up on the process equipment group, can you talk about the linearity of that quarter and what April looked like?

From a ...

Top line, whatever you want to talk about.

You know, I think from a top line perspective, we're up. From a revenue perspective, as we look at April, you know, it's built into guidance as you know, kind of as we expect it to be, as we look forward. So I guess if the question is, were there any, you know, big surprises in April from a top line perspective, we haven't seen any big surprises consistent with what we're expecting going forward.

(Operator Instructions).

There are no further questions. I'd like to turn the call back to Joe Raver for concluding remarks.

Thank you, and I'd like to thank everyone for joining us on our call today. If you have further questions, you can contact Chris Gordon, our director of investor relations, and we look forward to speaking to you again when we discuss third quarter results in August. Thank you, everyone, have a good day.

This concludes today's conference call. You may now disconnect.