Thermon Group Holdings Inc (THR) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Thermon Q3 2015 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

(Operator Instructions)

I would now like to introduce your host to today's conference call, Ms. Sarah Alexander. You may begin, ma'am.

Thank you. Good morning and thank you for joining us for today's earnings conference call. We issued a 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 express written consent of the Company is prohibited.

During this call, our comments may include forward-looking statements. These forward-looking statements 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 May.

We would also 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 measures of financial performance in accordance with GAAP.

And now it's 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 and your continued interesting in Thermon. Today, we have two of our senior vice presidents joining me on this earning call. Jay Peterson, our CFO, will follow me and present the financial details of our FY 2015 third quarter. George Alexander, our Executive Vice President of Global Sales, will assist in the Q&A session.

While Jay will discuss the financial details in a moment, I would like to go over some of the highlights of our third quarter. As noted in the press release, we are quite pleased with the Q3 results. Our revenues of almost $88 million was a historical record for Thermon.

Our revenue grew 23% over prior year. Our revenue mix for the quarter was 67% MRO/UE and 33% greenfield.

The resulting product mix produced gross margins that were 52% of sales. This strong margin quarter was driven by favorable product mix in the revenues from the USA and Canadian business units.

Our EPS grew to $0.48 per share, which is up 29% year-over-year. Our backlog was approximately $97 million at the end of Q3, this was an increase of $6 million over the prior year's Q3.

Purchase orders received were almost $82 million with the increase over prior year primarily attributable to increased activity in the USA and the Asia-Pacific regions. Thermon's updated pipeline of future projects increased to 578 identified opportunities for heat tracing with an estimated total value of $1.1 billion. Foreign exchange rates, negatively impacted our revenue by $4.4 million, now this was primarily attributable to the depreciation of the Canadian dollar and the Euro against the US dollar.

Based on a positive momentum stemming from our year-to-date results, we believe that our FY 2015 revenue will increase 9% to 10% over prior year. We are currently in the middle of our budgeting process for fiscal year 2016, and we will provide more specific guidance on this on our next earnings call in May.

We have continued to look for opportunities where we can leverage our leadership position in providing thermal management solutions in global energy and industrial markets. We recently announced the acquisition of Unitemp, which will increase our global footprint for providing products and services on the African continent.

Our M&A pipeline is building and we are continuing to evaluate several more attractive opportunities. Our plan is to complete a second transaction within the next 6 to 12 months.

Our new warehouse and tube bundle plant are under construction and scheduled to be completed this spring. Our expanded control panel facility is now fully operational and has increased our panel production capacity by 70% to 80%.

Before I turn the call over to Jay, I would like to quickly address the macro issue that I am sure is on everyone's mind, and that is the current oil prices. We believe that the global demand for energy will increase over the next several decades, and we believe that our customers will continue to make investments to support the future increase and demand for energy.

We cannot predict with any certainty how long current oil prices will stay, however, we've been in this business for a long time and we've weathered many cycles, and our business model is built to accommodate these fluctuations. In short, we are closely monitoring the potential impact of the current price of oil on our business.

Our management team would like to thank our employees throughout our global organization for their hard work and dedication. We would also like to thank our customers, investors, and advisors for their support and confidence.

Thank you once again for joining us today. Now, Jay Peterson, our CFO, will address the details of our financial performance for Q3.

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 a record level of $87.6 million, an increase of 23% relative to the prior year's quarter.

Orders for the quarter totaled $81.9 million relative to $70.1 million in Q3 of last year, a growth rate of 17%. Main drivers to order growth were the US growing orders by 67% and Asia-Pac by 37%.

Our backlog of orders ended December at $97 million, net 7% higher than December of 2000 of the prior year. On a pro forma basis, excluding the impact of the Curl Lake Project, our backlog grew 15% year-on-year. Also our backlog was negatively impacted by $5 million year-on-year due to currency and recall that only typically about 40% of our orders are ever resident in our backlog.

In terms of gross margins, margin dollars this past quarter totaled a record $46 million and compared to Q3 of fiscal year 2014, our margins increased by 150 basis points to 52%. This margin increase was due to the high mix of MRO/UE at 67% of revenues whereas greenfield totaled 33%.

Greenfield revenue grew 70% this past quarter with all geographies, except Europe, growing greenfield revenues in the high double digits. And MRO/UE grew 8% this last quarter against a very difficult comp due to our ever-increasing install base.

Turning to OpEx and head count. Core operating expenses for the quarter, that is SG&A, excluding D&A and transaction-related expenses, totaled $18.8 million, an increase of 27% over Q3 fiscal year 2014. And spending, excluding our incentive accrual, actually grew only 5% year-on-year, net growth is to support our growing revenue.

Our operating expense as a percent of revenue this past quarter was 21%, again excluding depreciation and amortization. The number of full-time employees at the end of December was 887, up 4% from the head count of one year ago.

Now, in terms of interest expense and taxes, our interest expense totaled $978,000 this last year versus $1.23 million a year ago, and that's a decrease of 21%. Our effective tax rate for the quarter was 28.5%.

In terms of earnings, GAAP net income for the quarter totaled a record $15.6 million versus $12.6 million in Q3 of the prior year. GAAP EPS totaled $0.48 versus $0.39 in Q3 of 2014. And the combined effects of FX translation and transaction impacts reduced our EPS by $0.03 in Q3.

Our adjusted EBITDA totaled $27.2 million this past quarter, ahead from the prior year performance of $21.9 million. And EBITDA as a percent of revenue was a healthy 31% in this quarter.

In terms of balance sheet, our cash balance ended at $90.3 million, and that's an increase of 34% year-on-year. Leverage at the end of December on a net debt basis was at a record low of 0.2X, down from approximately 4X in 2010, and the business continues to be highly capital efficient.

Year-to-date CapEx amounted to a total of $4.3 million, that includes both expansion and sustaining capital, or approximately 2% of revenue, and our conversion ratio was 95%. Lastly, our return on equity on an EBITDA basis was 40% for the quarter.

And I would now like to turn the call back to our moderator for our Q&A session.

(Operator Instructions)

Our first question comes from Scott Graham with Jefferies.

Good morning. Very nice quarter, guys.

Good morning, Scott.

I was hoping you could give us a little bit more detail on your oil and gas exposure. Obviously, you don't have a ton of upstream. But you do have a fair amount in the sands; and I think that's what people, including myself, are wondering about. If oil and gas is roughly 60% of your sales, could you kind of tell us how that breaks down geographically? And within the geographies, what is upstream within there?

Hi, Scott. This is George.

I think what we report is our oil and gas being about 45% of our business. And that admittedly doesn't count the revenue that goes through distribution that we can't really earmark.

But in that 45%, the revenue that we have in Canada is largely associated with the sands. And we do categorize that as upstream, as we've reported in previous calls. Most of that these days are in the SAGD environment as opposed to the upgrader or mining environment.

Conversely, in the US, most of our revenue is in the downstream sector focused in the refining petrochemical arena. We did get some bump from the shale oil and gas play in the US, but that wasn't significant in terms of total revenue. So a rough estimate globally is that our oil and gas of 45% is split about 50/50 between upstream and downstream.

Right, but that would also -- this 45%, I guess I'm a little curious on that because I've seen you publish handouts at 60%. But let's go with the 45%. But there's a non-US and non-Canada piece to oil and gas, right?

Yes, there certainly is. The Middle East, the global EPC business comes from Korea, and again, much of our business in Europe is also related to the downstream aspect of oil and gas.

Right. Of the 45%, George, are you saying that the US and Canada comprise how much of that 45%?

Well, the US and Canada comprise about two-thirds of our global revenue. Without having those specific numbers in front of me, as far as oil and gas, I would imagine that that percentage is close.

I got you. And then the one-third of oil and gas that is not North America, is that mostly downstream, or is that upstream as well?

It's mostly downstream. There is some upstream, for instance in Russia; but most of it is downstream. And then the other significant portion of our revenue that we don't categorize in terms of end markets is the revenue that goes through distribution channels. We do know that a significant percentage of that 20% of our revenue, one, it is directed at the MRO portion of our business. But we do know that some portion of that goes to the oil and gas sector, both upstream and downstream.

So it's entirely possible that this 20% that's distribution, that kind of bridges the gap between the number that I've seen of 60% and 45%. So a lot of that distribution, in other words, is oil and gas, yes?

I believe that is correct. But, again, we don't categorize the distribution part of our revenue because honestly we don't track that in terms of net (multiple speakers); we can't. But, yes, I would agree with that, Scott. I think you're right.

Okay, but that is mostly MRO within that piece. That's interesting. I didn't know that. Okay. Great.

The other question I had was on the gross margin where with you guys it's becoming a matter of how high is high. The percentage of MRO declined on a year-over-year basis; yet the margin went up. And you said explicitly in your press release that it was equipment mix. Can you talk a little bit to that because when the MRO percentage declines, that usually is a gross margin pressure; yet your margin was up again. So could you help us understand what the equipment mix meant to the gross margin this quarter?

Yes, Scott. There are several things that are all working in our favor at present. We did have a favorable mix, and let me give a little details on that.

Over the last several years, there have been many initiatives to add efficiencies into the Company. And this past quarter, we realized cost reductions in our cable manufacturing operations. We also have invested in project management capabilities over the last 18 months. We're better at managing projects today than we were, let's say, a year-and-a-half ago.

We also, about 9 or 12 months ago, made some investments in our panel shop fabrication in terms of bringing more talented people into that process and adding process efficiencies. Lastly, we have been able to hold prices in the marketplace. And when you meld all those different dynamics together, we've been able to see an increase in our gross margins.

So if your MRO sales as a percent of total were higher than your OE, would the gross margin have theoretically been higher?

Yes.

Yes.

At 60% this quarter.

Wow. Okay. Great. That's all I had. Thank you.

Thank you, Scott.

Our next question comes from Charley Brady with BMO Capital.

Actually, Patrick who is standing in for Charley Brady. How are you doing?

Good. How are you?

Thanks for taking my question; very good quarter. I want to touch on greenfield for one second. It says a 70% increase year over year. Are there any large projects in there that might have driven that up? That?s a pretty significant increase for the quarter?

This is George.

There are some projects in that, obviously, that are above $1 million because that is how we define greenfield; but there is not any mega projects in that. So one of the good news stories here is that we've been able to make up the difference of not having a mega project in our performance data with more smaller projects, which are generally more profitable than a mega project.

The other thing I think you have to take into account is that we did have an easy comp on greenfield. So to outperform that comp was not terribly difficult. The MRO comp, on the other hand, was tough; but it also outperformed our expectations.

Got it. Got it. And for the quarter, was there material contribution on the revenue side of Unitemp?

No, there was not. Zero.

Okay. Going back to the last quarter, I think you mentioned that at $70 per barrel is really the threshold that makes most of your projects economical. Has that dynamic changed, given the sudden drop in oil and now that we are closer to the $50 per barrel mark, what kind of actions are you taking to reconcile pursuing these projects to keep an active pipeline versus actually understating and keeping the economics of it?

Patrick, this is George again. We're staying very close to our customers as it relates to what they're saying about their capital budgets. And the good news is that most of our customers, their business plan models their investments over a long period of time -- over years, not months. And I think the general consensus is that the prices that we're seeing right now are not sustainable because of the growing demand for energy in the global market.

As Rodney said in his script, we can't predict how long. But our customers are telling us that their business plans are modeled over a long period of time. And they're not going to change their plans, their long-term plans, based on a momentary or shortchange in the performance of the price of oil.

But we are keenly aware of the fact that there are some pressures being put on capital budgets. And particularly the longer-term outlook for capital spends are going to be cautious until this trend starts to go up again.

Right. And just the project management sort of efficiency scales that you have been just talking about. Has that compressed that $70 barrel threshold a bit for you, or is that still a target that you are still holding onto in terms of comp?

I'm sorry, Patrick. Could you repeat the question? You kind of broke up on us on the telephone line.

No problem. You just mentioned in an earlier question and answer that you have been doing very well in terms of project management efficiencies. In terms of those types of cost reduction measurements, has that sort of compressed that $70 per barrel threshold that makes your projects economical a bit? Or is that still a figure that you are comfortable with?

I think if you look at certain cost initiatives and project management capabilities that we have today that we didn't have two years ago, that would reduce that number. But I can't tell you exactly what that number would be, Patrick.

Okay. That's fair. And I know you might not disclose order growth for MRO/greenfield. Can you maybe give a little color there in terms of the growth of this quarter for the MRO and greenfield?

That is something we do not track, Patrick. But I can tell you that if you look at our current backlog, the orders pertaining to MRO are de minimis, okay? It's almost better to track the revenue growth of MRO and greenfield in that virtually all of our backlog is, in fact, greenfield.

Got it. And just one very last one, if I may. Any color on Russia since last quarter? Is it still pretty weak? Is it still more politically relate ? more politically driven?

Yes, Patrick. This is George.

We are still seeing some headwinds in Russia, primarily FX headwinds. And then obviously the local economy in Russia is still struggling, and the price of oil and the sanctions are contributing to that.

We believe that there is still significant growth opportunity in Russia. But we have certainly tempered our expectations for the moment because of the headwinds that we're seeing there. But we still believe over the longer term, Russia represents a significant growth opportunity for us. But we will have to exercise some level of patience there until the environment becomes more positive.

Thank you so much for taking my questions.

Our next question comes from Brian Drab with William Blair.

Good morning. Congratulations on a great quarter.

Thanks, Brian.

First question is just on the guidance and what it implies for the fourth quarter. Your revenue guidance, I believe, implies you're around $68 million or $70 million in revenue for the fourth quarter. Historically, we've seen -- the last couple of years we have seen 5% or 7% sequential decline from the third quarter to the fourth quarter. And the 68% to 70% implies more a 20% to 22% sequential decline.

Can you comment on that? Are you being conservative, or did some business get pulled into the third quarter from the fourth? Can you just comment on that, please?

This is George.

The level of MRO growth that we saw in Q3 was, as I said, it outperformed our own expectations. So we believe that's going to be a tough comp going into Q4. And the seasonality of our business is something that is not unusual. And the level of change from Q3 to Q4 can vary; not only as a result of some of the capital pressures that are out there, but also the mix of business between greenfield and MRO.

We do think in Q4 that we're going to have a higher mix of greenfield compared to MRO.

Okay.

We are still expecting growth the Q4 of this year over last year.

Okay. I guess would you be -- how do I phrase this -- would you be shocked though if you saw the more typical seasonality in the end and there is a little more conservatism in that number? Or is there something in the backlog in orders that is driving you to model this down that significantly sequentially?

Is the third quarter sort of an anomaly in your mind at this point? Or you just kind of wait and see if the world continues to work this favorably for you?

Well, yes. Q3 was a very strong quarter for us in the MRO segment of our business. And so as a result of that, we would expect a larger-than-normal drop off in Q4 because we're not going to see that level of MRO in Q4.

Okay. Okay. And then if we could maybe break down a little bit more of the 17% order growth that you saw in the third quarter. You commented that you had strong growth in the US.

Can you give us a little more granularity in terms of order growth within the different product segments and then also within the different geographies? And if I can tack on one more thought there, what you're seeing in the petrochem market and if you're getting any benefits from the beginnings of the petrochem build?

Let me answer the last one first. As far as the petrochem build is concerned, yes, we are seeing benefit from that. That's a key part of the growth activity that we see in the US. And the order rate was up in the US; it was also up in Asia. Both of those areas had strong order growth.

And then your third -- you had three questions. What was the third one?

Yes. You started to comment on and in particular the product segment. I guess I am wondering, what is the main driver here -- the petrochem SAGD projects? How is power gen doing? How is the order growth in each of these product segments?

All of those markets are doing well. The main driver in Q3 was MRO. And in all of those end market sectors, we had strong performance as far as MRO was concerned.

Okay. And then maybe just one quick one probably for Jay.

Can you remind me what percentage of your cost of goods is raw materials? And within raw materials, what portion of that is accounted for by petroleum-based products, plastics?

Yes. Rough numbers, Brian, the overhead and actual labor for our cable operations is approximately 10%. The balance is material cost, and the great driver of material cost is for products that are related to polymers.

Okay. So I think you may have touched on this earlier in the Q&A. But that has been or was a pretty good tailwind for you in terms of gross margin in the quarter? And can you quantify that at all? Or will it be going forward, I guess, given we just saw the drop recently in the price of oil?

I would say right now, due to the inventories we had, it's a rather modest impact on margins in Q3. And it could add some favorable nature going forward, but I don't have the exact numbers.

All right. Great. Thanks.

Thank you.

Our next question comes from Kathryn Thompson with Thompson Research.

Obviously, there's been a lot of focus on the impact to your Company when oil prices drop. But could you also maybe clarify a little bit more about Thermon's natural hedge when you see a decline in oil prices, particularly to your power and chemical businesses? Thank you.

Yes, Kathryn. We do have a natural hedge, and we have seen an increase in activity in the power industry. There's a good bit of activity that's resulting in MRO and retrofit business in the power industry. The petrochemical and chemistry industry, especially in the US and the Middle East, is quite active and strong. We haven't seen yet any evidence of that weakening for sure. And we actually believe that it may actually be is gaining some momentum going forward.

And we're also pleasantly surprised at the strength of our business in Canada. Even though that is largely connected to the oil sands business, it's held up quite well in this environment.

And are the margins on the hedge portion of business, how do they compare to your other portion of your business or maybe your core business? Help me to understand; are they equal, higher, or lower relatively speaking?

They're comparable.

And I may have missed this, but did you break out gross margins by segments for the quarter?

By geographic segments?

More by your MRO versus greenfield.

Yes, I've got those here. Greenfield margins for the quarter -- this is for the quarter -- were 36%. MRO/UE margins for the quarter were 60%.

Great. Thank you so much.

Thank you, Kathryn.

(Operator Instructions)

Our next question comes from Jeff Hammond with KeyBanc.

Good morning.

Good morning, Jeffrey.

All right. So, I think you gave us US and Asia-Pac order rates. Can you give us EMEA and Canada for the quarter?

Sure. For Canada, they were down slightly; and Europe was down as well.

And was that driven by Russia weakness?

Yes, as well as FX, yes.

Okay. And then just on the margins -- good color there, Jay, on the split. It seems like these margin improvements are structural and sustainable. Is that fair to say? Maybe we should start thinking of moving away from the 45%?

There is some sustainability to these improvements and these efficiencies. And as we go through our budget process that we are about halfway through for next fiscal year, we'll be able to comprehend and communicate those new gross margin directions in Q4 on our next earnings call.

Okay. Okay, great. Then as you talk to your Canadian customers, what they're saying prospectively? We're seeing a lot of CapEx cuts -- order magnitude 25% to 50% up in the oil sands. And how you've seen past cycles play out with respect to some of this SAGD business?

Yes. Jeff, we have seen certainly some capital budgets that are impacting the projects, again, that primarily are longer-term. So far, we haven't seen any CapEx -- very little activity in terms of CapEx budgets that impact the projects that are under way.

So are we going to see the impact six months to a year from now due to the delay or pullback of capital budgets in the longer term? That is a possibility because certainly that's going on; you read the same articles we read. But we haven't seen an impact on the projects that are on our radar screen certainly for the near term, and the near term being the next 6 to 12 months.

Okay. Thanks.

Our next question comes from Scott Graham with Jefferies.

Just a couple of follow-ups here. The 70% increase in greenfield, I understand was an easy comp; but that is still a pretty big number. How is that on a shipment basis -- kind of how did that progress through the quarter? And in fact, was there anything at the end of the quarter, when oil prices were really struggling, where maybe there were some pushouts or what have you?

I am just trying to get a sense of the tone of business shipment-wise in the beginning of the quarter versus the end of the quarter on that piece of your business.

Yes. We didn't see any more slippage than typical in past quarters. We always have that dynamic.

In terms of the geographies, we nearly doubled greenfield in the US, at 95% growth. We had exponential growth in Asia-Pac against a very, very small comp. And Canada grew 76% in terms of greenfield activity for the quarter. And we didn't really see any skew from the beginning of the quarter to the end of the quarter. It was pretty much level loaded.

Interesting. Thank you.

As you think about your fiscal next year, in truth, is there any reason to believe why your SAGD sales -- your sand sales, which is mostly SAGD -- any reason to believe why that won't decline 30% to 40%? Is there anything that mitigates that in that portion of your business?

Well, Scott, again, the projects that are on our radar screen that we're tracking for the short term, we're not getting any feedback yet that those capital spends are being pushed out or delayed. The longer term beyond this next fiscal year, certainly we're seeing pushouts for projects that are not yet started.

Remember, we're on the tail end of the process. And we're not saying it's impossible because we understand the volatility that exists in the marketplace. But our customers, so far, have not told us that the projects that we are tracking and that we're looking at that they are being delayed or pushed out.

Fair enough. Fair enough.

This is a question for Jay. You have built your SG&A level a little bit in the last couple of years as you have built out the infrastructure and made some of these investments. What you're doing is obviously working. The question now is that if the sales start to go in the other direction, for some of the things that we all know about and have discussed, what are the levers that you can pull on the SG&A line to protect your earnings?

Yes. Good question, Scott. We look at that quite closely. At present, year-to-date, 64% of our total operating expense is related to compensation. That includes salaries, stock comp, contractors and incentives. So it's 64%.

So if we were to see a dramatic drop in demand or a protracted decrease in orders, that would be the primary lever that we would have to manage our spending and profitability.

Understood.

And I do promise this is my very last question. The MRO number this quarter, taking it in the context of the last year because it was a tough comp, although last year benefited from an easy comp in 2003 -- if you sort of stacked them up, it's still on an MRO basis, a fairly tough comp. You kind of did an 8% on what I would argue would be a stack comp of about 10%. And you have done 15% and 10% in the first two quarters of the year.

What has changed in the dynamic of the MRO business where you guys are growing that not at the typical rate of production, but actually three or four turns on top of that? What has changed in that business where your MRO business sales are just running at this near 10% level? And is that a sustainable situation? And by that I mean maybe not a 10. But obviously as capital spending comes off -- and I'm not talking about the upstream. But in the downstream and the mid stream, as capital spending comes off in these areas, one would think that MRO would need to replace some of that.

So in that sort of context and framework, where can you sustain -- why is MRO running at the level that it's running? And how sustainable is this, particularly if you start to get some shutdowns and otherwise in the next, let's say, 18 months?

Scott, one of the areas that we have noticed a significant increase in the MRO sector is our revenue that goes through distribution. And as we talked earlier, we don't know exactly where that's ending up from a market sector perspective. But we acknowledge that a lot of it probably is in the oil and gas; and a lot of it is in the downstream sector of oil and gas, which is still very, very active. The other thing that we talk about all the time is the effect of our growing install base. As we see significant growth in our overall revenue, that's creating a larger install base. And that is in and of itself driving MRO growth.

Now, will significantly restrained capital budgets affect that in the future? It's possible, yes. But again, as we've talked about, with heat tracing, keeping materials from freezing in pipes is not an arbitrary process. You can't put it off for a year because if the material freezes, you can't pump. You can't get anything out of the pipe, and you get damage control. So it's not like painting or cosmetic improvements in the plant. It has to be done if you're going to continue operations.

Are you suggesting, George, that your MRO sales in oil and gas can stay up in a weakened CapEx environment?

Well, the portion of our MRO/UE, the UE portion of our business could be impacted by, again, significantly restrained or reduced capital spending budgets. But the MRO portion of our business, I believe, is sustainable. And like you say, unless there are plants that are shut down or mothballed or taken out of commission.

Great. Thanks a lot.

Thank you.

I'm not showing any further questions at this time. I'd like to turn the conference back over to our host.

Again, thank you for your interest in Thermon. We look forward to our next earnings call. And everybody have a nice day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.