Thermon Group Holdings Inc (THR) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Thermon Q1 2014 earnings conference call. At this time called all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Sarah Alexander, Director of Investor Relations. Please, begin.

Thank you, Latoya.

Good morning and thank you for joining us for today's earnings conference call. We issued an earnings press release this morning, which has been filed with the SEC on Form 8-K and is also available on the investor relations section of our website at www.thermon.com. A replay of today's call will be available on our website after the conclusion of this call. This broadcast is the property of Thermon. Any redistribution, retransmission or rebroadcast in any form without the expressed written consent of the Company is prohibited.

During this call, our comments may include forward-looking statements. These forward-looking statement are subject to risks and uncertainties and our actual results may differ materially from the views expressed today. Some of these risks have been set forth in the press release and in our annual report on Form 10-K that was filed with the SEC in June 2013.

We also would like to advise you that all forward-looking statements made on today's call are intended to fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may include, among others, our outlook for future performance and revenue growth, leverage ratios, acquisitions and various other aspects of our Business. During the call, we will also discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures in the tables at the end of the earnings press release. These non-GAAP measures should be considered in addition to and not as a substitute for income from operations, net income, net income per share and other measures of financial performance reported in accordance with GAAP.

Now it is my pleasure to turn the call over to Rodney Bingham, our President and Chief Executive Officer.

Thank you Sarah.

Good morning, everyone. Thank you for joining our conference call today and your continued interest in Thermon. Today, we have two of our senior vice presidents joining me on this earnings call. Jay Peterson, our CFO, will follow me and present the financial details of FY 2014's first quarter. George Alexander, our Executive Vice President of Global Sales will assist in the Q&A session by answering questions that pertain to global market segments and our industry tends.

For those of you who are not familiar with Thermon, we are a leading global provider of thermal solutions. We serve the oil, gas, chemical and power generation industries. Our heat tracing systems provide freeze protection and temperature control for piping, vessels and instrumentation. These mission-critical systems ensure the continuous and safe operation of industrial facilities. While Jay will discuss the financial details in a moment, I would like to take this opportunity to touch on some highlights.

Q1 of our fiscal year 2014 produced some very solid results for us. During are last earnings call, we stated that historically are Q1 revenues were typically the lowest of a fiscal year. We believe that the trend will hold true for this year as we build momentum throughout the fiscal year. In fact, I believe this Q1 was the second largest in our history. Gross margin for the quarter was at 47%, which is up 2 percentage points over the previous two quarters. MRO/UE sales were at 61% for the quarter, which is above our historical average of 60% of revenue. It was also an increase over the 57% split with greenfield projects that we achieved in the prior quarter.

Another positive indicator was our earnings, which was posted at an adjusted EPS of $0.23. Our backlog also remained strong at just over $92 million. All in all, it was a good quarter for us to build on as we move towards the upcoming heating system and grow our Business for the fourth consecutive year. Our global footprint continues to be a key component of our strategy to provide value to our international customers and penetrate our target end markets, which are oil, gas, power and chemical.

In addition to the ongoing capital investment in the emerging markets, we are also seeing a rebound in the petrochemical and power generation sectors that are directly related to the shale oil and gas developments in the United States. Our revenue from Canadian oil sands continues to show growth for this year, even in the face of a slowdown in capital spendings for the large upgraders. Conventional methods of extraction, though, remain very active, as well as MRO sales associated with the recently completed Mega projects. Thermon's pipeline is very robust with over 500 project opportunities and over $900 million in estimated of value. Emerging markets such as Latin America, Europe, and Asia-Pacific also continue to see growth in mining, oil and gas. We are also expecting an increase in MRO revenue due to our larger install base.

Our Management team would like to thank our employees throughout the global organization for their hard work and dedication. We would also like to thank our customers, investors and advisors for their support and confidence in us. Thank you, again, for joining us today.

I will now turn over our presentation to Jay Peterson, our CFO, who will address the details of our financial performance for Q1.

Thank you, Rodney.

Good morning. This morning I will discuss our first-quarter results starting with top-line revenue. Our revenue this past quarter amounted to $65.6 million, a decrease of 3% relative to the prior year's quarter. Note that Q1 is typically are lowest quarter. We are not in the heating season and we anticipate revenue to grow throughout the balance of the year.

Orders for the quarter totaled $63 million, relative to $67 million in Q1 of last year. Our backlog of orders ended June at $92 million, down slightly from March of 2013. Relative to the end of Q1 fiscal year '13, our backlog decreased by 21% from $117 million. The reduction was due to the high level of greenfield revenues over the past 12 months. Also recall that only 40% of our business is ever resident in our backlog.

In terms of gross margins, margin dollars this past quarter totaled $31 million. Relative to Q4 of fiscal year '13, our margins increased by 275 basis points to 47.3%. This margin increase was due to the higher mix of MRO/UE at 61% of revenues, whereas greenfield revenues totaled 39%.

Let me turn to operating expense and headcount. Core operating expenses for the quarter, that is SG&A, and this excludes depreciation and amortization and any transaction related expenses, totaled $15.4 million this last quarter. That was flat with the prior year. Our operating expense as a percent of revenue in the quarter was a competitive 23%. Again, that excludes depreciation and amortization. The number of full-time employees at the end of June was 814, up from the 772 as of one year ago. Note that over 95% of these additions were in production, sales, research and development, and engineering and related directly to managing are growing business.

Let me now turn to below the line, specifically, recent activities in our bond refinancing for taxes. First off, we refinanced our 9.5% long-term bonds with a variable banknote currently at an interest rate of 3.6%. This refinancing will add in excess of $0.14 a share in earnings over the next 12 months. The rate will vary depending on our leverage ratios, however, the rate will not fluctuate with any movement in LIBOR. Due to, in part, the refinancing of our long-term debt, we believe that we will generate sufficient cash flows in the United States to support future US operations and debt obligations. This will allow our non-US affiliates to use their cash flows to fund our strategic objective of international expansion.

Therefore, we believe we are now back to a permanent, reinvestment position in the US, reducing our tax rate from the mid 30%s down to the high 20%s. This will save the Company in excess of $1 million a year in taxes.

In terms of earnings, GAAP net income for the quarter totaled a loss of $6.9 million. The loss was due to a one-time charge of $19.5 million resulting from the recent refinancing of our long-term bonds. Excluding this charge, our adjusted EPS totaled $0.23 this past quarter. A table explaining this adjustment can be found in our earnings press release from earlier this morning. Our adjusted EBITDA totaled $16 million this past quarter, down from the prior-year performance of $18 million. EBITDA as a percent of revenue was a healthy 24% in Q1.

Let me now conclude with the balance sheet. Our cash balance grew to a record level of over $45 million in Q1, an increase of 233% year on year. Leverage on a net-debt basis at the end of June was at a record low of 1.2, down from approximately 4x in calendar year 2010. We are positioned to end the year at less than 1.

Lastly, our Business continues to be highly capital efficient. This last quarter, CapEx amounted to a total of approximately $600,000, less than 1% of our quarterly revenue.

I would now like to turn the call back over to Latoya.

(Operator Instructions) Jeff Hammond, KeyBanc Capital.

Just on gross margins, how are you thinking about mix through the rest of the year? How sustainable are the margins we just saw in the first quarter?

Jeff, this is Jay. We were, obviously, very happy with our margins in Q1. We had a very mix of greenfield and the mix within MRO was strong. However, going forward, we are planning, again, the 45% number. If you look over our last 10 plus years, our average has been 45%. We will endeavor to do better than that, but right now we are planning at 45%.

Okay. As you look at your mid single-digit growth for the year, though, how are you thinking about MRO growth versus greenfield growth? Is that both growing similarly? Or, is greenfield slow because you have a tougher comp there?

This is George, Jeff. Our heating season is approaching, so we do anticipate growth and an up-tick in our MRO business. Because our install base has been growing over the last five, six years, we are forecasting and do believe our MRO business will increase. We are still modeling a 60/40 split as far as MRO and greenfield. To date, we are not seeing a significant change in that percentage mix.

Okay, great. Just a couple of clean-up items. What is the tax rate you are looking for, for the year? What is the interest expense we should model on a quarterly go-forward basis?

The tax rate, Jeff, will fluctuate a little bit over the year. I would plan at the 28% range.

Okay, and interest expense?

Interest expense, right now, I would plan a balance at -- I would be conservative, $135 million at 3.62%.

Okay can't great. I will get back in the queue, guys.

And it should come in slightly under that as we amortise a bit over the year.

Charley Brady, BMO Capital Markets.

The morning call guys this is Andrew Breichmanas for Charley Brady. In your press release you mentioned some weakness in Europe, I was wondering what part of Europe was weak? What percentage of revenues is that, and what end markets in Europe are weak, as well?

This is George. Our performance in Europe was a little weak and it wasn't concentrated in any one geography. It was affected in several of the areas. Our business is focused heavily in both the oil and gas industry, upstream and downstream. Again, in a couple of areas we had some pretty tough comps as it relates to Q1 of fiscal year '13. Again, we are expecting and forecasting a strong second half performance in Europe. We do see positive signs there. Quoting activity is up, so we are expecting a rebound in the second half of the year.

Okay, great. In terms of your backlog, understanding that it is mostly greenfield, just wondering, is the margin level on that going to get any better or worse?

I think it is remaining pretty consistent. There are some differences across the globe in terms of margin production. Again, our Greenfield business is remaining consistent in terms of margin production, we are not seeing any significant erosion at this point.

All right. One last question. Have you guys been seeing any impact from raw material costs? Either positively or negatively?

We have seen a slight positive impact due to a reduction in copper. Although call that is a rather small component. Also, some of our polymer raw material prices have gone down slightly.

All right. Great. Thanks call guys.

Scott Graham, Jefferies.

I was wondering what you guys are thinking about on the rest of the year's sales forecast? The orders are year-over-year down and the sales are down. You kind of start a little bit in the hole. How do you see the order progression? I know that you are expecting sort of mid single, I think from what your customers are telling you, quoting activity and what have you. We have seen that before.

What makes it feel a little bit different as we -- a couple of quarters ago we were expecting something did not actually come through, but you seem to be a little bit more upbeat on supporting are mid single-digit organic sales guidance? I am wondering how you get there? What are the indicators that are telling you, with first quarter now behind us with the sales decline, what changes? What are the tenets of your view? Even if you could, maybe you could, by region?

Scott, this is George. One of the things that we use for our projections and forecast is the schedules that we build into our greenfield projects. That comes from our backlog. That is a component of the forecast that we have going forward and the basis for why we are still comfortable with our mid single-digit growth guidance.

In addition to that, again, just repeating a little bit here, the significant portion of our Business that comes from the heating season, that comes from preventive maintenance, and the business that is directly related to our install base, the feedback we are getting from our channels, our direct sales force, is that we are still very excited about this coming year. We are active.

This is the time of the year where we have to be front and center and be prepared. We are, we think, with our inventory levels are positioned well. Our pipeline is full and we are excited about the opportunities coming up in the heating season. Again, in all regions, we are expecting a strong second half of the year, pretty much across the board. Then, just one other area, by region, as Rodney mentioned in his opening remarks, we are seeing a significant up-tick in activity in the US markets. That is different this year from last year.

Okay. So, I think what I hear you saying, George, is that the second quarter could be a little slower than the mid-single digit that you are projecting for the full year, but after that it should be a second-half loaded sales orientation?

I think that is a fare characterization, Scott. Yes.

Okay. I have two other questions. Number one is a question I often ask. Priority for uses of cash, we haven't seen anything on the M&A side. Are you contemplating the implementation of a dividend? Secondly, along these same lines, Ametek purchased one of your competitors earlier this week in an announcement. I was wondering what your thoughts on -- was that an asset of interest?

Okay. Scott, it is Rodney. In terms of acquisitions, as we continue to generate cash, before we are still reinvesting in our business model and we are going to continue doing that because we believe the global footprint is one of the dominant tenets of our plan. We plan on continuing to do that. As we continue to generate cash above that, our priority for mergers and acquisitions is ratcheted up a bit.

We're continuing to look at that because the only other use of the cash, immediately, would be to pay down debt. With the new refinancing, that is not really the best option. Are dividends an option? Yes, it could be. At this point, we're still looking at reinvesting. Strategic acquisitions, again, based on technology and geography that we think would fit Thermon. We are looking for good acquisitions, but obviously, we're looking for good acquisitions that fit our model.

I think the other thing you brought up was the Ametek purchase. We saw that yesterday, and haven't had any time to digest it at this point.

Very good. Thank you all.

Ian Drab, William Blair.

Hi, it's Brian Drab. Two quick items to start off. FX impact in the first quarter, Jay?

It was a negligible impact, Brian. From a revenue perspective maybe $100, 000. No impact to earnings.

Okay. I may have missed this, but the geographic breakdown? I know we'll get that in the Q, but at least percentage of revenue from Canada?

Bear with me one second.

Sure. Thanks, Jay.

I believe Canada was about $26 million, $25 million in the quarter. Canada did grow this last quarter.

Can you give any other specifics, as long as I made you turn to that page, regarding the geographic breakdown?

Sure. The US also grew slightly to $20.7 million. Europe was down 25% to $13.1 million. As George mentioned, we do see a rebound in Europe in the second half of the year. Lastly, Asia-Pacific was down to $7 million. In the prior period, it was $8.5 million. Recall, we had an outstanding year in Asia PAC last year, specifically Korea had just a banner year last year with a very difficult comp.

Okay. Canada, safe to say, was up slightly or modestly?

3% to 4%. No, I'm sorry. They were up 16% year on year, with a very difficult comp in the prior year. So, Canada is doing quite well and we believe will continue to do quite well for the balance of the year.

Okay. Then, George, you mentioned that you're seeing a significant up-tick in the US market. Is that driven by particular end market, maybe petrochem? Can you talk about that?

Yes. It is driven by the activity from the shale oil and gas activity that is pushing some petrochemical activity. We are seeing a lot of activity as far as new projects, particularly along the Gulf Coast. In addition to that, we are also seeing a significant up-tick in the power industry conversion of simple-cycle gas-fired power plants to combined-cycle units, as well as a continuing move to gas from coal.

Okay. Great. Thanks. It looks like free cash flow is a little over $5 million in the first quarter. We're there any cash costs associated with the bond redemption, Jay?

Yes there were. We ended up sourcing out of our treasury about $3 million or so for the various and sundry expenses.

Okay. So, excluding that, free cash flow would've been about $8 million, $8.5 million in the quarter? Is that right?

I would have to double check that, Brian.

Okay.

We did in fact use $3 million of our own cash through that process.

Okay. I was just doing the $0.17 in the press release times the 32 million shares.

Yes.

$5.5 million and then adding back about $3 million. Then, the last figure I heard from you regarding the size of the project pipeline was in April and you said $1.16 billion. Where does that stand today?

A little over $900 million, $920 million estimated value.

Okay. The decline from $1.16 billion is related to -- can you talk about that?

Sure. Some of it is us scrubbing and cleaning the data to a formalized sales reporting system out of CRM package that has allowed us to scrub our numbers a little bit. Some of it is just the nature of the business. That is a snapshot in time of what we do. As jobs are lost or as jobs awarded then that number goes down.

When they are posted either through internal sales input or external publications, they are added to that pipeline. As before, we updated it on a quarter to a semiannual basis. Today, it is going live and it is a dynamic number accurate, basically to the day. That package cleaned up some data, but basically, it is just some projects have been added, some of been dropped off.

Does that bother you, Rodney, when you saw the $1.16 billion revised downward after you implemented the new system? I guess there was some double counting, if you're saying scrubbing the data results was at least part of the reason?

I don't think the double counting. Some of it were projects that hadn't been awarded, that we had not captured since the last update. Your first question is, did it bother me? No, because I feel like that we are still on target for what we were going to do. I feel like the data is much more accurate today than it was a year or so ago.

Brian, one other comment there. We are also focused on continuing to be more active in mining the information that is out there, relative to new projects. We are very confident in the fact that that number is dynamic. We are focusing in the emerging markets. We don't kid ourselves. We don't know everything that is out there, but we are putting more and more assets behind ensuring that we have the information in our system and that we are tracking it in an aggressive way.

Okay. I wanted to ask about the Suncor project that was pushed out about six months. Can you remind me, is that in your expectation -- is revenue from that Suncor project, in the oil sands, in your expectation for the mid single-digit revenue growth this year?

No.

Is in your expectation for growth in fiscal 2015 in Canada, to be better than the growth in fiscal 2014?

It is in our pipeline. Yes.

Okay. Have you won that business at this point? Or, any more clarity on that project?

That business has not been awarded yet. No.

Okay. Thank you very much.

Jon Braatz, Kansas City Capital.

Rodney, your cash flow is building. You touched a little bit on potential use of cash flow. Internally speaking, your CapEx this quarter was $600,000 you said. Are there some projects that you're looking internally with high ROIs that could accelerate your CapEx? Are there things you can do within, in terms of using that cash?

Currently, we mentioned, I think in previous, we're looking at some capacity expansion for some of our product lines. Those decisions we will be making, literally, in the next 30 to 45 days. In terms of that, and let Jay finish out the rest of your question.

Yes. Recall call we expanded our wire plant about 18 months ago. Since that point in time, we have seen a certain modest mix change where our two bundle products are selling at 20% growth rates or so. That is new news relative to when we expanded the wire plant. We might have to spend a modest amount, say $3 million or so, plus or minus, to expand that operation. We are really at the point where we are studying it and just want to make certain that this growth rate is sustainable and will continue in the future, before we expend that money.

Okay. Anything beyond that then? Any additional expansions?

At this point, no.

Okay. Okay. Jay, you talked about your rate on your debt, not a function of LIBOR but the leverage ratio, assuming your leverage ratios do improve. Is there any substantial reduction in that interest rate?

Yes. We think we could knock 50 basis points of that 3.62% over the next, let's say, two years or so.

Okay.

But, yes it is significant.

Okay. Great. Lastly, I saw that your share count in the first quarter was down 600,000, 700,000 from the fourth quarter. Why was that?

That had to do with, from a GAAP perspective, we were showing a loss position. We do not show the common share equivalents.

Okay. That's right. Thank you very much.

Rich Wesolowski, of Sidoti & Co.

Canada, taking a very long view here backwards, posted a mid 30%s operating margin the past couple of years. Great number. The prior three years, it was around 25% on average. I'm wondering, as you look ahead, not maybe to this year but just the next two years, three years, should either one of these be viewed as an outlier as your pegging profitability in Canada?

We have experienced the benefits of scale in Canada over the last year or so. I don't view their current performance as being an outlier. They will have deviations, period to period, based on gross margins. I don't view it to be dramatically different, where they had been at over the last year or so.

Great. There's been a lot of discussion around the oil sands and shifting from the past more mines toward SAGD in situ production. I'm hoping you could clear the air and dive a little bit into how much of your production will be divvied to a SAGD project versus a mine project of a similar size?

This is George. The conventional methods don't attract as much spend on a per project basis as the upgraders do. The number of sites for well pads in the SAGD process is significant. We are pretty bullish on our position with the customers that are actively expanding in those areas with the SAGD processes. It is true that it takes more of those projects to come up with the same spend in a given time period, but there is a lot of them out there.

Great. Okay. I understood a portion of your MRO sales are influenced by how harsh the prior winter was in your customers' facilities. I'm curious, if that will be, in your view, a positive or negative as we head into this year's winter season?

We're hoping for record cold temperatures early. (laughter) That always helps. Again, yes. It is true. If we are coming off of a particularly harsh winter, which we are in parts of Europe, so that should magnify the attention to the heating season.

Also, to be fair. For instance in Canada, it really doesn't matter whether the winter is harsh or not. We do the freeze protection and the need for heat tracing is there when it is 0 or minus 20 or minus 40 or minus 60. It is really, in the very cold climates, it's not as much of an impact. In the US, for example, if we have brown outs in Texas again because of freezing temperatures for four or five days, that would enhance our business, more than likely enhance our business opportunity.

Right. Thanks for that. Lastly, I know its a little bit smaller side of your Business, but I haven't heard about the environmental gas sampling side in a while. I was hoping you could relay any happenings there?

Sure. The relates partly to the activity in the in the Combined-cycle Power Plant business. That opportunity, a big part of that opportunity is the emissions monitoring that is required. The number of new builds in that area is certainly enhancing our to Tube Trace sales, which is directed at the sims or emissions monitoring markets. Of course, the Process Analytical is related to pretty much all of our downstream activities. Emissions monitoring continues to be very much a focus for us as well as the process instrumentation market segment. It is growing in both the downstream oil and gas as well as chemical and power.

Great. I appreciate your time. Best of luck the rest of the year.

Thanks, Rich.

AJ Strasser, Cooper Creek Partners.

Thanks for taking my question. Can you help us think about when you expect the story to resume growth. Maybe you can talk about it geographically? What are some of the issues, I guess specifically was Europe that caused some of the growth decline year over year in Q1? Is it fair to say that Q2 could be done year over year, but we should expect the back half to pick up from there? Just help us maybe think about how much of the mid single-digit growth is back-half loaded? That would be appreciated.

This is George. Specifically, in Europe, again, our Q1 in Europe wasn't one particular area that was off. We had a slower than expected Q1 in several areas. We also, though, had, again, in some of those areas, a very tough comp from prior Q1 because of the cycle of projects. This happens fairly often in the areas that have high concentration of EPC contracts because by definition, that is greenfield projects. Greenfield projects cycle up and down.

For the same reason in reverse is why we are bullish about the second half of the year, is the greenfield projects that we are involved in Europe are scheduled to be invoicing and shipping in the second half of the year. As I mentioned earlier, they are coming off of a pretty tough winter in Europe last year. We are expecting a strong MRO year in the second half of the year, as well.

Could you help us think about whether or not we should have the same growth profile in Q2 as Q1?

From a guidance standpoint, I think we are sticking with our mid single-digit growth for the year. Again, I think the strongest part of our of revenue will come in the second half of the year.

This is Rodney. Which is historically, that's how Thermon's fiscal years generally play out.

Sure. You guys weren't the only ones, I mean Pentair had a difficult quarter, I think, in their comparable business in Q1, as well. Have you guys seen any type of pricing dynamic changes at all in the last few quarters?

Nothing that I would say is consistent or out of the ordinary. Again, greenfield projects are competitively bid. Most of the time those are won or lost based on the value package, not the unit rate that you quote.

All right. Thanks for taking my question and good luck.

Thank you.

(Operator Instructions)

Jeff Hammond, KeyBank Capital.

A couple of quick follow ups. Canada, there seems to be this divergence between slower upgraders, slower CapEx and just some consternation that you guys continue to see growth. I am just wondering, is that project timing for you? Is that share gain? How should we think about that divergence?

Jeff, this is George. We are pretty bullish on our market share in Canada. We have done well there. We think we will continue with that strong position. Again, a lot of that is driven by who is spending the money where. Fortunately, in the conventional methods of extraction, many of our loyal and good customers are continuing with their investment plans. That is what gives us the confidence in what we see in the future.

Okay. Great. Do you have a free cash flow assumption for the year? How are you thinking about free cash flow? Then, you mentioned, Jay, kind of dropping below 1 time net debt to EBITDA, what do you guys view as your optimal leverage structure, if you were to be able to do deals? What do you think is the right number for debt to EBITDA?

Yes, Jeff, I think we are comfortable going up to 3x from a net debt-to- EBITDA perspective. Not certain we would do that with our initial deal, though, because we don't have a history of doing acquisitions, and doing a sizable initial acquisition might put some integration risk back on the Company. It would be likely that are first deal or so would be on the smaller sides.

From a free cash flow perspective, I think our ability to get down below 1 is very likely, very doable. From a key free cash flow perspective, historically, irrespective of any charges, our earnings per share, from a cash flow basis, have exceeded our GAAP earnings. We don't see any reason why that would change for this coming year.

Okay, great. You mentioned -- and maybe I missed this part. You mentioned M&A as the preferred spend. Can you just talk about what is in the pipeline? It seems the prior few calls it had been pretty quiet, but what are you seeing just from a pipeline standpoint?

Jeff, this is Rodney. We are continuing to, again, stay narrowly focused in our wheelhouse area and still concentrating on acquisitions that enhance our technology or increase, from a geographical standpoint, market share and our install base. We are continuing to look in that. We have some things on the stove. At this point, we are really not at liberty to talk much more than -- at this time about what current projects we are working on. At the next earnings call, we will probably have to more information for you.

Okay, great. Thanks, guys.

There are no further questions at this time. I would like to turn the call back over for closing remarks.

This is Rodney Bingham. Again, Thermon's looking forward again to another growth year. We look at building on this quarter and moving forward. Thank everybody for their interest in Thermon, and have a nice day.

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.