CVGI - NASDAQ

Good morning, ladies and gentlemen, and welcome to the CVG's Third Quarter 2023 Earnings Conference Call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Andy Cheung, Chief Financial Officer. Please go ahead.

Thank you, operator, and welcome, everyone, to our conference call. Joining me on the call today is Bob Griffin, Chairman of the Board and Interim President and CEO of CVG. This morning, we will provide a brief company update as well as commentary regarding our third quarter 2023 results. After which, we will open the call for questions. As a reminder, this conference call is being webcast in the Q3, 2023 earnings call presentation, which we will refer to during this call is available on our website. Both may contain forward-looking statements, including, but not limited to, expectations for future periods regarding market trends, cost-saving initiatives and new product initiatives, among others. Actual results may differ from anticipated results, because of certain risks and uncertainties. These risks and uncertainties may include, but are not limited to, economic conditions in the markets in which CVG operates, fluctuations in the production volumes of vehicles for which CVG is a supplier, financial confidence, compliance and liquidity, risks associated with conducting business in foreign countries and currencies and other risks as detailed in our SEC filings. I will now turn the call over to Bob to provide a company update.

Thank you, Andy, and good morning, everyone. I would like to kick-off today's call by thanking and celebrating all of the CVG team members across the company for their ongoing commitment to delivering on our strategic initiatives. Their efforts are clearly evident in the results we've delivered, not only this quarter, but over the last few quarters. These results provide further evidence of the progress we've been made growing and diversifying our revenue streams, optimizing our cost structure and increasing our margins, with the goal of becoming a larger, more profitable company. We remain excited about CVG's future, supported by the strength and depth of our organization and leadership teams. Our team continued to successfully drive strong performance, while delivering on the company's strategic goals, resulting in significantly improved profitability year-over-year. The year-to-date results, along with our ongoing cost discipline, gives us confidence that 2023 will show strong year-over-year margin improvements, and we believe we will have a record revenue year, subject to the resolution of the UAW strike at one of our customers. Andy and I will cover this in more detail. Our strong balance sheet, our culture of winning new business and our strong leadership team all position us well to achieve our long-term revenue and margin targets. Before turning to the details of the quarter, I want to highlight the election of Melanie Cook to the Board of Directors in September. Melanie brings a wealth of operating experience and expertise across a variety of business areas, including serving most recently as Chief Operating Officer of GE Appliances from 2017 until her retirement in 2021. Melanie also served on the Board of Directors of a leading appliance manufacturer based in Mexico from 2019 to 2021. She possesses nearly 30 years of global experience, including business unit leadership roles with full P&L responsibility, product life cycle management, digitization, supply chain, sourcing and finance. We're excited to have Melanie join the Board, and CVG will definitely benefit from her skills and perspective. Finally - a brief update on our ongoing CEO search. The Board continues to work with a leading independent search firm to identify the right leader to continue driving our business strategy and culture. This is one of the most important jobs of any board, and ours is a disciplined process involving all seven of our Directors. We're making progress, meeting with qualified candidates, and we remain within the standard time line for these types of searches. The Board and I will share more with you once the search process concludes, and we will continue working with the management team to drive a seamless transition with no disruption to our business and strategy. Now I'd like to turn your attention to the supplemental earnings presentation, starting on Slide 3. Once again, our team delivered good results in the third quarter, highlighted by net sales of $247 million and adjusted EBITDA of $16.6 million, which is up 16% year-over-year. Our adjusted EBITDA margin of 6.7% continues our solid year-over-year improvement, and we continue to win and integrate new business, optimize costs and improve profitability. Our continued focus on margins helped drive $0.22 of adjusted earnings per share in the quarter, a substantial improvement over the prior year. We also drove strong free cash flow in the quarter, bringing us to $15 million in free cash flow generated year-to-date. The strong cash flow allowed us, to paydown debt in the quarter, which, along with the strong EBITDA generation, brings our net leverage ratio down to 1.5 times. We continued our strong pace of winning new business with approximately $140 million of wins year-to-date on a fully ramped basis. These wins continue to be focused within our Electrical Systems segment and coincide nicely, with the initial start-up of our two plants in Mexico and Morocco, which are focused on meeting the demand growth in Electrical Systems. Turning to Slide 4. Consistent with prior quarters, our demand and market outlook remain positive for the balance of this year, subject to the resolution of the UAW strike I mentioned earlier. ACT continues to project a strong build year for Class 8 truck builds with volumes projected up roughly 7% in 2023. These forecasts have been echoed recently by the OEMs. Looking beyond 2023, ACT is forecasting 2024 Class 8 truck builds, to decline approximately 18% in 2024, before rebounding 15% in 2025. Volumes in 2026 are expected to further increase another 19% ahead of the EPA mandate going into effect in 2027. Across the four-year period of 2024 through 2027, ACT is projecting Class 8 truck builds to average 297,000 units, a level that is consistent with strong performance and profitability for CVG. Furthermore, as new business wins continue, to shift our mix away from the heavy-duty truck market, we expect the cyclicality of this market, to have less of an impact on our future financial results. For medium-duty trucks, forecasts call for a 10% increase in 2023, and we continue to see strong growth, broadly in the connectivity systems, a key driver to our new business wins outlook. As we look to our remaining end markets, the global commercial and automotive vehicle wire harness market is growing around 5% annually. Additionally, we see attractive commercial vehicle aftermarket growth, up 4% per year out through at least 2027 despite a modest slowdown in the back half of 2023. In global earthmoving equipment, after a slight retracement in 2023, we see strong growth ahead in the 4% to 5% range per year going forward. Turning to Slide 5. New business wins are core to our culture at CVG, and we continue to add additional customers and platforms. As I mentioned, year-to-date, we've added approximately $140 million in new wins with roughly 75% of these wins within our Electrical Systems business. These wins span 50 different customers totaling over 70 awards across multiple different platforms and end markets. Our strategy calls for continued diversification of these new business wins, which is a key driver in transforming the revenue mix, reducing the cyclicality of the business has experienced in the past and will help improve the profitability of CVG in the future. Turning to Slide 6. We added this slide to give you a better perspective of our global electrical systems manufacturing footprint. Last quarter, we gave you an update on our new electrical systems plants in Mexico and Morocco. We're excited to report that our Aldama facility in Mexico started production in the third quarter and Morocco is up and running in the fourth quarter. These expansions are key to growing our Electrical Systems business globally and are positioned to be cost competitive and provide outstanding service to our customers. In addition, we are concluding our evaluation of an additional Moroccan location, providing for anticipated growth in supply chain optimization. We have a dedicated staff with the expertise in opening - new electrical systems facilities as we position ourselves to go forward. Now turning to Slide 7. We have three key elements to our strategy to transform our business. First, we are focused on making Electrical Systems our largest business by continuing to win new electrical business across multiple end markets and diversifying our product portfolio. Additionally, we're working to increase the design and engineering content offering in our products. Secondly, we're focused on diversifying our vehicle platforms toward higher growth markets while simultaneously reducing our exposure to the cyclical Class 8 truck market. As an example, we were recently certified to supply products into the aircraft end market. Lastly, as we focus on winning new business, we are selectively targeting new customers globally as evidenced by the number of new customers won this year. This fundamental business transformation is expected to make CVG a larger, stronger and more profitable company in the coming years. Now turning to Slide 8. As I already mentioned in my opening remarks, our team continued to execute our profitable growth strategy, during the quarter. We continue pacing ahead of targets on new business wins, putting us on track to achieve our goal of $150 million of new business wins in 2023. These wins continue to drive the transformation in our revenue mix toward Electrical Systems, while simultaneously diversifying our customer base and product portfolio. As we've stated many times, Electrical Systems is a key growth area for CVG. On our existing portfolio of businesses, we remain focused on optimizing our footprint and cost structure to improve profitability. We're also heavily focused on reducing working capital, increasing cash flows and paying down debt. The improved cash flow generation and lower net leverage increase our optionality to fund growth and pursue bolt-on M&A in the future. The continued momentum in our new business wins, alongside our strong underlying base business keeps us firmly on track to deliver long-term improvements in our business. Turning to Slide 9. We believe we have the right strategy in place to continue driving shareholder value creation. CVG remains fully committed to our strategy to optimize our existing businesses, drive organic growth and strategically allocate capital. We are pleased to have one business in the electrification market. We have a strong portfolio of businesses, and we are focused on optimizing our cost structure of each business to improve profitability. Our new business wins demonstrate our ability to win in diverse markets globally, which helps diversify our customer roster, expand our product lineup and reduce cyclicality. Our business is positioned to generate strong cash flow over the coming years, and we expect to maintain a balanced capital allocation approach to reinvest in our business to drive growth, pay down debt and pursue attractive inorganic growth opportunities, all with the goal of creating additional value for our shareholders. Turning to Slide 10. And before I turn the call back over to Andy, I'll share a few thoughts on the remainder of 2023. Industry forecast for the remainder of the year shows slightly lower North American truck builds - for the fourth quarter versus last year. Additionally, we're closely monitoring the UAW labor negotiations at one of our OEM truck customers. Overall, we expect 2023 to show solid demand and revenue for the full year, and we continue to win new business at a strong pace, with a win centered on our Electrical Systems segment. Importantly, we continue to expect significant year-over-year margin expansion driven by improved pricing, contribution from new business and benefits from our cost reduction program. We also expect to see a continued strengthening of our balance sheet this year. Our focus on working capital optimization is paying off, helping drive strong free cash flow and debt paydown. We expect to pay down debt further in the fourth quarter, and the lower debt levels, combined with stronger year-over-year EBITDA generation, are expected to drive our leverage lower as we exit 2023, compared to where we started the year. And with that, I'd like to turn the call back to Andy for a more detailed review of our financial results.

Thanks, Bob. If you are following along in the presentation, please turn to Slide 12. Third quarter 2020 revenue was $246.7 million, as compared to $251.4 million in the prior year period. The decrease in revenues is due primarily to higher revenues in the prior year as a result of a significant COVID backlog in Asia Pacific within our Vehicle Solutions business, partially offset by growth in the Electrical Systems business. Foreign currency translation also favorably impacted third quarter 2023 revenues by $2 million or 0.8%. The company reported consolidated operating income of $12.4 million for the third quarter of 2023, compared to income of $9.5 million in the prior year period. The increase was driven by higher gross margins, improved pricing, partially offset by higher SG&A. The third quarter of 2023, adjusted operating income was $12.5 million, compared to $10.6 million in the prior year. Adjusted EBITDA was $16.6 million for the third quarter, up 16% year-over-year compared to $14.3 million in the prior year. Adjusted EBITDA margins were 6.7% and expansion of 100 basis points, as compared to adjusted EBITDA margins of 5.7% in the third quarter of 2022. Interest expense was $2.6 million as compared to $2.8 million in the third quarter of 2022. The decrease in interest expense was primarily related to lower average debt balances during the respective periods, partially offset by higher interest rates on variable rate debt. Net income for the quarter was $7.3 million or $0.22 per diluted share, as compared to net income of $3.6 million or $0.11 per diluted share in the prior year period. Moving to the segment results on this slide. In our Vehicle Solutions segment, third quarter revenues decreased 6% to $145.4 million, compared to the year ago quarter due primarily to the previous year benefiting from a significant post-COVID backlog in Asia Pacific. Operating income for the third quarter increased 13% to $10.9 million, compared to operating income of $9.6 million in the prior year period, primarily driven by increased pricing and lower material and freight costs. Our Electrical Systems segment achieved revenues of $53.9 million, an increase of 17%, as compared to the year ago third quarter, resulting from increased sales volume, including the impact of new customers, increased pricing and favorable foreign exchange. Operating income and adjusted operating income were $5.9 million, an increase of 14% compared to the adjusted operating income in the third quarter of 2022, driven by increased sales volume and improved pricing. Our Aftermarket & Accessories segment revenues decreased 7% to $34.4 million, compared to the year ago quarter, primarily resulting from decreased sales volume. Operating income and adjusted operating income were $4.5 million, a decrease of 17%, compared to adjusted operating income of $5.4 million in the prior year period. The decrease is primarily attributable to the reduced volume offset by increased pricing. Our Industrial Automation segment produced third quarter revenues of $13 million, a decrease of 8%, as compared to $14.1 million in the third quarter of 2022 due to lower demand levels. Adjusted operating income was $0.8 million, an increase, compared to the adjusted operating loss of $0.7 million in the year ago quarter, primarily attributable to the liquidation of certain excess inventory that was previously partially reserved. Highlighted on Slide 13, our key financial trends and metrics for our business. During the quarter, we were able to sustain the strong year-over-year financial performance as evidenced by improved EBITDA and margin versus the prior year, driven by a strong focus on price realization and cost reduction. As highlighted on the bottom right chart, we continue to paydown debt during the quarter, which combined with our improving profitability served to significantly reduce our net leverage to 1.5 times. We also expect that our net leverage will decline further in 2023 as our strategy continues to deliver strong financial results. We remain committed to our financial priorities for fiscal 2023, which are to drive additional cost savings to generate higher profitability, generate free cash flow and invest in our growing business platforms. These efforts give us comfort in our 2023 near-term financial targets, as Bob already alluded to. Specifically, we believe we are well on track to deliver record revenues in 2023, along with significant year-over-year margin expansion. That concludes my financial overview. I will now turn the call back over to the operator to open the lineup for questions.

Thank you. [Operator Instructions]. Your first question comes from Joe Gomes from NOBLE Capital. Please go ahead.

Good morning. Thanks for taking my questions.

Good morning, Joe.

Good morning.

I wanted to start on the revenue. We've got a lot of the new contracts at least in the first half of the year, the truck builds were pretty good. But it's been down sequentially in the first three quarters of this year. It sounds like Q4 might be pretty challenged in and of itself. And just wondering - where you guys are looking at revenues and when - are the - all these new contracts are really going to start impacting that top line, to try and take down some of the cyclicality in the Class 8 bills?

Yes, thanks Joe. As we mentioned in the earlier part of the year, we expect that our second half of the business is going to slow a little bit. So Q3 actually come in quite in line with our anticipation. Sequentially, as you can see, we have some decline in our vehicle solution business. That's a twofold. One is the Class 8 production overall in the market, production was down by about 3% to 4% from Q2 to Q3. And also, in Europe, we see a little bit more extended shutdown with our customers this year. Some of them are planned, some of them are unplanned. So they contributed to the sequential slowdown, not too far from our anticipation as we expected. To your point about future growth of our platform and new contracts, you can see our electrical business growing nicely, 17% year-over-year, and we'll continue to see those ramp of the business. While the timing of the ramp is largely dependent on the customer as well. So as you can see, the two new plants, is now up and running. So, we are ready to capture those new platforms and grow with the customers. So, we kind of - are seeing things that are in line with our anticipation early in the year.

Thank you for that. And on the aftermarket, it's kind of little surprising to see that decline both sequentially and year-over-year. Maybe you can give us a little bit more. You got the new website up and running earlier this year. You had some big hopes for that in growth for this year. And maybe you can give us a little more color on what's going on in the aftermarket side?

Yes, that's right. It's a good question, Joe. The aftermarket, this quarter has some decline as well. It's mostly related to the aftermarket sits here in North America. We lost a bit of volume there this year. To your point about the e-commerce initiative, as we mentioned last quarter, it didn't ramp as fast as we wanted to. So, we're adjusting our different channels and working for different strategies. It's still early days. In this e-commerce channel, we are still working on different initiatives. We've got some backlog last year will help us. That's why this year, you see a little decline year-over-year as we move up for those backlogs earlier in the year that slowed the demand a little bit. So as you mentioned, we're still working through it. We will continue to look at this segment as an attractive growth segment. So, we are - keep working it.

Okay. One more, if I may. Pardon me, on the two new plants, maybe a little more color on how they are ramping up, compared to your expectations. And you mentioned already looking at potentially another site in Morocco. What capital expense would that entail and the timing on that?

So from a capital expenditure, Joe, this year, we guided in around the $25 million range plus/minus. We already have that included in our range for these two facilities. Going forward, you'll continue to see that our CapEx will be around that 2.5% to 3.5% range as well. So also included those expansion that we are working through right now. As Bob mentioned, we are in the evaluation stage of another facility in Morocco. So, this will help us capture the new wins and the ramp of the future growth. So, this is all part of the plan and pretty consistent, with what we communicated before from a CapEx standpoint.

I would just chime in. This is Bob. I'd just chime in on it, because I think it's an excellent questions. In addition to evaluating the benefits of a second plant in Morocco, we are also, at the same time, completing our business plan for expansion in Europe, which feeds into that and involves the hiring of a number of professionals, to complete the management structure there. So, we're quite committed to growing the Electrical Systems business in the European markets, and that will feed into that capital expenditure decision.

Okay. Great. Thanks for taking my questions. I'll get back in queue.

Thanks, Joe.

Your next question comes from John Franzreb from Sidoti. Please go ahead.

Good morning, guys. And Thanks for taking the questions. I just want to go back to the previous question. I think he's right to suggest that the new Moroccan plant when that comes on board kind of layers on top of some of that new business wins expectations. So maybe you could provide some clarity of, if you're looking at adding a new Morocco plant now, when would you like to have it up and running?

John, in our past experience, it will take a little bit over a year for us to get that up and running and then roughly a few more quarters to get that to fully ramp revenues.

Thanks, Andy. That scales it properly. I appreciate that. And going back to your expectations on the Class 8 truck market in the near term in the December quarter, is that different than what it was, say, three months ago?

No, not so much. As you look back into history, sequentially, the Q4 quarter is always seasonally just a smaller quarter. We don't expect major changes this year. And as Bob mentioned, the only one wild card right now for us, is one of the truck customers is actually working for a UAW strike, and there's a little bit of a difficult-to-predict situation. But other than that, overall, I think the market is in line with prior year seasonality.

Okay. So a year ago's fourth quarter, was there still benefits from Asian COVID demand that we should not expect in this year's fourth quarter?

No, there was really a one quarter mostly Q3 impact. You probably remember China was the last country to have the COVID lockdown opened up, there was really at the end of Q2 and then when that opened up, it brings some additional backlog opportunities a year ago. So that will gradually level out. We don't see that being a significant factor in the future.

Got it. And on the third quarter, the Industrial Automation business had a bang out quarter, compared to the prior two or three. Was there something pulled forward? Can you just talk to why it was so much stronger than the previous three quarters?

You're right. So, we actually mentioned that in our earnings release, the industrial automation business this quarter benefited from some sales of inventory that we have previously accumulated. You probably remember back about a year ago, we had a very significant warehouse business that is actually going through a fairly significant decline in that market. And we did roll off some inventory at that time, team worked really hard trying to find way to liquidate and get some value out of those inventory, and we were able to pull that together in Q3. So it's helped that business in the quarter.

Got it. And just one last question. I'll get back in the queue. It's November, so I assume that you have some visibility into at least how the first quarter of the year is going to kind of play out. And you referenced, Bob you referenced that ACT is talking about 18% drop in the Class 8 truck market. What is your booking profile kind of look like? Does it really kind of drop off in the fourth quarter? Or is it maybe something that's the second half of the year, kind of a thing - we should be thinking about you versus ACT? Just any color will be helpful?

Yes, so I'll say this, John. Whatever you see in the ACT quarterly look of next year's volume, we are kind of seeing the similar demand level right now. So Q1 is still holding pretty well. If you look at ACT, Q1 is still a pretty strong bill and then gradually over the rest of 2024, the number is coming down. So that's the ACT forecast right now. Frankly, maybe there's some impact, because of the strike. We also are not seeing full visibility at this point. We believe that, the customer is going to give us more clarity once the strike is over resolved. I think we'll be in a better position on next earnings call to talk about 2024.

Okay. Andy, thank you very much. I'll get back in the queue.

Thank you.

[Operator Instructions]. Your next question comes from Gary Prestopino from Barrington Research. Please go ahead.

Hi. Good morning, everyone.

Good morning, Gary.

A couple of questions here. Cost reduction programs, are you still on track to deliver $30 million this year? That's what the number was in Q2. So I just want to get an idea if that's still on track?

Yes. We are still on track to get cost reduction program targets. As you can see, the margin improvement year-over-year. That's part of that cost reduction program. You can also see that, as we mentioned in the past, we were able to use the cost reduction to offset quite a bit of the inflation is still happening, particularly in the emerging market wage rate. So, we are still on track, and we're happy with what we are doing. Overall, we are executing around 400 projects across all our facilities. Most of them have impact in '23. Some of them will have a benefit in '24. So still ongoing, still part of our culture, continue to executing on that.

Okay. And just going over my notes from last quarter, you said you're going to add $150 million in new business wins, which you probably should get to since you've done $140 million year-to-date. Are you still confident in the target of $100 million in new wins per year next year and in 2025?

Well, as you can see, every year, the business outlook is a little bit lumpy. So, the team definitely did a great job this year coming out from the beginning of the year, and we are on track to that $150 million target. We're pretty happy with the performance. Next year, it's a little early to tell is the customer sourcing schedules and other factors that may affect it. I think we talked about that in the past the near-term annual target, we expect about $100 million. So that should still be our pretty good estimates for next few years.

Okay. And then just with this Class 8 truck build, it looks like there's a delta from the projection from Q2 of anywhere from down 3,000 to down 12,000 versus the numbers that are now being projected. Is most of that expected to fall in Q4? Or - did most of that really fall in Q3?

I think we would say both. We already see Q3 actually came down, compared to Q2 when you look about the sequential performance of the market. Q3 was down about 3%, and the ACT numbers suggesting that about 6% down sequentially is Q4. So that's what we are seeing. I think that's what the market is adjusting as well.

And then I think, just there was a mention that - does ACT have anything out there? Or - did you give some thoughts on what you think it will be in 2024?

Yes, so as I mentioned earlier, the ACT's outlook for '24 is that Q1 is still holding pretty strong and then we'll start to see some drop-off from Q2 to Q4. But overall, they were suggesting the market will be down between 15% to 20%. So, the number is still changing every time they come up with new outlook, but that's the range that they've been publishing.

That's 15% to 20% off of 2003 or 2004, on units?

Correct. That's right.

Okay. Thank you.

And your next question comes from Steven Martin from Slater. Please go ahead.

Yes guys. Couple questions. The Electrical Systems margin was down a little, is that due to the startup of the new plants? And when would we expect those to not negatively impact margins?

Yes. Good morning, Steve. Yes, you're absolutely right. So with bank a little bit here this quarter, the main reason is additional labor costs and overhead costs, because now we have two extra facilities. And as you can see, when the volume ramp back up, or we'll gain some leverage there. I'll call it maybe a couple of quarters, then we'll see the full efficiency back. That's what we are anticipating. The timing can be a little bit less predictable, depends on the customers' schedules on when do they launch new products and things like that, but that's what I would expect at this point.

All right. And on the aftermarket, I guess we visited two years ago before your time, and there was a lot of emphasis on aftermarket. And last year, you talked - all this year, you've talked about building inventory and reorienting your plants for aftermarket. When should we expect to see aftermarket positive on a year-over-year basis?

So, you're right. So, we have work to do in aftermarket. So, we'll say that. I think the team working really hard, trying different channels, things [ph] with the e-commerce is not going as fast. You probably also seen that in our recent announcements, we have made some leadership change in that business. We brought in a seasoned leader. So, we're going to be re-ramping the business. So, I'll tell you that we're looking at it really hard. And hopefully, our new leadership, is going to benefit the segments. I'll come back maybe next quarter, with little bit more details about how we are going to address that and improve that business.

Okay. The next question is on your debt level. Can you give - if all things were equal and interest rates didn't change and your debt level net of cash, is where it is today, what your interest expense would look like if you didn't reduce any more debt?

Well, if we don't reduce more debt, we're roughly flat. Our interest rate is actually pretty stable at this point. You probably remember we said that we have an interest rate swap for that we put in last year that helped us offset some of the rate increases. That's where we are right now. And as you can see, we keep generating free cash flow here for the short-term, I would say you will continue to see us paying down debt and interest expense absolute dollar-wise, you'll continue to see a decline.

Okay. Are you now in the lowest pricing tier on your credit agreement?

Not yet. Not yet.

So, if you were to cross into that lower pricing care, you might even see a little more change in spread?

Yes, it will. But as you see in our filing is not that significant, right. It's 25 bps per tier so.

Okay.

I would say our paying down debt is probably driving more of the benefit in expense.

All right. Thank you very much.

Thank you, Steve.

Your next question comes from John Franzreb from Sidoti. Please go ahead.

It looks like you eliminated the 2027 bridge slide. Are you backing off that expectation? Or what is the reason for not including it in this presentation?

No, we are not, John. So, we'll continue to look at our alternatives certain target as our long-term goal. There's no change to that. We just feel like it's a long-term target. We didn't need to do it every quarter in our earnings call. So, in other investor presentation, we'll probably spend more time talking about long-term, but we want to spend more time talking about the quarter in the near term. So, with no change in our long-term target.

Fair enough, Andy. Thanks for that clarification. Thank you.

Absolutely.

And there are no further questions at this time. I will turn the call back over to Mr. Griffin for closing remarks.

Thank you, operator, and thank you, everybody, for joining today's call. I'm proud of our achievements and the performance for the quarter. However, I'm even more excited for the opportunities that lie ahead for CVG. We remain encouraged by our business outlook and we look forward to continuing to execute our long-term growth strategy. Have a great day.