DXPE - NASDAQ

Thank you for standing by, and welcome to the DXP Enterprises First Quarter Earnings Call. [Operator Instructions] a reminder that this conference is being recorded. Now I would like to turn the call over to Kent Yee, Chief Financial Officer. Kent, please go ahead.

Thank you. This is Kent Yee, and welcome to DXP's Q1 2024 Conference Call to discuss our results for the first quarter ending March 31, 2024. Joining me today is our Chairman and CEO, David Little. Before we get started, I want to remind you that today's call is being webcast and recorded and includes forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. A detailed discussion of the many factors that we believe may have a material effect on our business on an ongoing basis are contained in our SEC filings. However, DXP assumes no obligation to update that information as a result of new information or future events. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our earnings press release. The press release and in the accompanying investor presentation are now available on our website at ir.dxpe.com. I will now turn the call over to David Little, our Chairman and CEO, to provide his thoughts and a summary of our first quarter performance and financial results.

Good morning, and thank you, Kent, and thanks to everyone for joining us today on our Fiscal 2024, First Quarter Conference Call. We are off to a great start in 2024. We remain highly focused on providing expertise. Our customers have come to expect from DXP and finding ways to help them manage their supply channel increase our uptime, increase productivity, achieve their ESG objectives and successfully run their operations. Many customers, especially those in industrial, energy and utility space continue to see solid end market demand for their products. DXP remains committed to our overall focus of being customer-driven experts to keep their operations running and their people safe. This consistent approach has fueled our financial results. First quarter adjusted EBITDA of $40.3 million and adjusted diluted earnings per share of $0.74 was supported by sequential sales growth of 1.4%. Thanks to the efforts of all our DXP people across the company, as we continue to build on positive financial results in fiscal 2023. And driving further operational improvements while performing for our customers. I personally want to thank all our DXP stakeholders, in particular, all our DXP people for their determination and hard work as we continue to grow and improve the business. We are encouraged by our results and remain focused on growing our business organically and inorganically in fiscal year 2024. I will begin today with some perspective on our first quarter and thoughts on the remainder of 2024. Kent will then take you through the key financial details after my remarks. After his prepared comments, we will open for Q&A. Overall, we are pleased with our first quarter results. Our first quarter highlights good execution and a number of normalized trends across DXP with a lot of effort now focused on capturing additional market share versus managing and working through inflation. We also experienced inorganic growth by continued execution of our acquisition strategy to accelerate our end market diversification efforts. We closed 3 great acquisitions in the first quarter, including the addition of an industrial and steel company, Pro-Seal and 2 additional DXP Water acquisitions, Hennesy mechanical sales and Kappe Associates. To our new DXP people, welcome to DXP and it's great to have you as a part of DXP. That said, we are building a more resilient, diversified business that can generate solid performance and uncertain economic conditions. And as we discussed last year, we believe you are seeing and continue to see evidence of these efforts in Q1. DXP's broad-based industrial end markets, which is 75% of our business today continues to show resilience primarily due to price increases and DXP -- and in DXP's case, continued growth in demand and market share. The ISM PMI manufacturing index, which gives us an indication of how DXP's broad industrial markets will perform, moved from 49.1% reading in January to a 50.3% reading in March. This trend is technically moving from contraction to growing territory. But in April, we began -- we went back to a reading of 49.2%. We continue to believe in today's inflationary environment, this slight contraction is getting offset by price increases, still moving through the supply channel. And in DXP's case, continued growth in demand because of the markets we serve and our growth strategies. We will continue to monitor as we move through 2024. Oil and gas, which is the remaining 25% of DXP has shown consistent demand through 2023. And the early parts of 2024, and we anticipate growth in the future. Given the geopolitical circumstances and the overall relative strength in prices, most of our business in oil and gas is tied closer to actual production and increases in capital budgets. We continue to experience a pickup in sales activity in Q1, which reflects the increase in backlog we continue to see. Regarding broader demand, underlying trends remaining consistent with the fourth quarter and trends were the strongest in March as is typical with sales per business day, going from $5.9 million per day in January to $7.5 million per day in March. Total DXP sales for Q1 increased 1.4% sequentially and are $412.6 million or an average of $6.6 million per business day for the first quarter. Thank you to the 2,920 DX people for your hard work and dedication. In terms of Q1 financial results, Innovative Pumping Solutions led the way, growing sales 3.2% sequentially and 21% year-over-year followed by service centers growing 1.1% sequentially, and then Supply Chain Services also growing sales 1.1% sequentially. In terms of IPS Innovative Pumping Solutions, our Q1 average IPS energy backlog continues to stay ahead of all averages going back to 2015 with the exception of 2018 average. Our start in 2024 had meaningful bookings in the months of February and March. And this signals to us that we should have strong energy product revenues over the next 9 to 15 months. We are continuing to get bookings. And as we mentioned earlier, we were likely in the front end of a good cycle on energy-related project work that we look forward to as we move through 2024. Service centers keep essential customers running with MROP, maintenance, repair, operating, production, products and services necessary for the customer to stay in business. The diversity of the end markets and our MRO nature within service centers allows us to continue to experience balanced sales growth through the first quarter. Regions that experienced sequential as well as year-over-year sales growth included South Atlantic, the North Central. Additionally, Canadian rotating equipment and steel division from a geographic and product perspective experience sequential and year-over-year sales growth also on notable regions that contributed during the quarter, included Southwest, South Central and South Rockies. Supply Chain Services increased 1.1% sequentially and experienced a 7.6% decline year-over-year, primarily due to some facility closures with our customers as well as the streamlining and efficiency we brought to our new diversified chemical customer we added last year. We mentioned this in Q3 of last year, and we will look for these -- we will look for customer additions as well as to continue manage procurement products and managing inflation. But both year-over-year and sequential growth will flatten until we start ramping new customers. That said, demand for SCS services that's increasing because of the proven technology and efficiencies they perform for all their individual customers. But the sales cycle can be protracted. And as we look to our CSC leaders to add new customers as we move forward in 2024. DXP's overall gross profit margins for the quarter were 30%, a 55 basis point improvement over Q1 of 2023. A special thanks to our DXP people who have stayed on top of supplier product increases and increased labor costs and overall efficiencies. Overall, DXP produced EBITDA of $40.3 million and EBITDA as a percent of sales of 9.8%, which is below our stated goal of 10% plus. Regarding capital allocations, we continue to make strategic investments to fuel growth and diversity the diversified DXP through acquisitions, while opportunistically repurchasing shares. By balancing these two approaches are pursuing both, we are driving long-term value for our shareholders. During this quarter, we purchased 326,000 shares amounting to $16.8 million. We produced over $24.1 million in free cash flow, a solid start to the year and a good benchmark for our expectations going forward. Let me conclude my remarks by saying that I am encouraged with our continued sequential improvement in sales and profitability, I believe DXP is well positioned. We continue to make progress on our growth strategies and our commitments to customers is stronger than ever. We are complementing these efforts with a focus on improving efficiency while making strategic investments in the business. We are driving growth and improvements at DXP, and we look forward to navigating and working through fiscal 2024. Finally, I would like to thank our DXP People for a great quarter and a positive start to the beginning of 2024. We are excited for what is next. With that, I will now turn it back to Kent to review the financials in more detail.

Thank you, David. And thank you to everyone for joining us for our review of our first quarter 2024 financial results. Q1 financial performance reflects DXP's ability to continue to successfully navigate through the market and execute and create value for all our stakeholders. We have been successful in transforming and diversifying DXP thus far. But we still have progress to make. We have been successful in navigating the inflation pressures. We have been successful in building DXP into becoming the best solution for the industrial customers' needs, and we will be successful in continuing to grow sales and earnings and becoming a distributor dedicated to the highest quality of customer service through product [Technical Difficulty]. Increased 1.4% sequentially. [indiscernible] points. Acquisitions that have been with DXP for less than a year contributed $11.8 million in sales during the quarter. Average daily sales for the first quarter were $6.6 million per day versus $6.7 million per day in Q4 '23 and $6.6 million per day in Q1 '23. Adjusting for acquisitions, average daily sales were $6.4 million per day for the first quarter of 2024 versus $6.3 million per day during the first quarter of 2023. That said, the average daily sales trends during the quarter went from $5.9 million per day in January to $7.5 million per day in March, reflecting a typical quarter-end push as we closed out the first quarter. In terms of our business segments, Innovative Pumping Solutions grew 3.2% sequentially and 21% year-over-year. This was followed by service centers growing 1.1% sequentially and sales declining 5.7% year-over-year. Supply Chain Services grew 1.1% sequentially and declined 7.6% year-over-year. In terms of our service centers, Regions within our Service Center business segment, which experienced sequential as well as year-over-year sales growth include the South Atlantic and North Central. From a product and geographic perspective, our Canadian rotating equipment and steel division also experienced sequential and year-over-year sales growth. Other notable regions that contributed during the quarter include the Southwest, South Central and South Rocky regions. In terms of Innovative Pumping Solutions, we continue to experience increases in the energy-related backlog. Our Q1 energy-related average backlog grew 2.7% over our Q4 average backlog and continues to be ahead of all our averages except 2018 and 2019. The conclusion continues to remain that we are trending meaningfully above all notable sales levels, and we are moving towards 2018 and 2019 levels based upon where our backlog stands today. We have been experiencing strong organic sales growth within IPS and we expect that to continue throughout 2024. We also see strength in our IPS water backlog as it continues to grow due to a combination of organic and acquisition addition. Our IPS Water backlog grew 11.8% over our Q4 ending backlog, excluding our two most recent water acquisitions. Supply Chain Services performance primarily reflects a 1.1% increase sequentially and a decline year-over-year, which we mentioned in our Q4 and Q3 earnings call, but it's primarily due to some facility closures with existing customers as well as the streamlining and efficiencies we brought to our new customers. As David mentioned, we will look for new customer additions as we move through 2024. Turning to our gross margins. DXP's total gross margins were 30%, a 55 basis point improvement over Q1 2023. This improvement is attributed to consistency in margins within Service Centers and Innovative Pumping Solutions and the contribution from acquisitions and a higher overall relative gross margin versus our base DXP business. That said, from a segment mix sales contribution, service centers contributed 69.9%, Supply Chain Services, 15% and Innovative Pumping Solutions was 15.1%. In terms of operating income, Combined, all 3 business segments increased 16 basis points sequentially in business segment operating income margins are $1.3 million versus Q4 2023. This was primarily driven by improvements in operating income margins within service centers and supply chain services. The improvement in service centers reflects the impact of acquisitions at a high relative operating income margin. Total DXP operating income was $29.1 million in Q1 2024. Our SG&A for the quarter increased $5.1 million from Q1 2023 and $1.9 million from Q4, 2023 to $94.8 million -- I mean, excuse me, $94.8 million. The increase reflects normal seasonal amounts in terms of payroll taxes, insurance and other administrative items as well as the growth in the business and associated incentive compensation and DXP investing in its people through merit and pay raises. SG&A as a percentage of sales increased to 183 basis points year-over-year to 22.9% -- 22.96% of sales. Turning to EBITDA. Q1, 2024 adjusted EBITDA was $40.3 million. Adjusted EBITDA margins were 9.8%. It is worth noting that this is slightly below our recent 10%-plus trends and reflects normal financial seasonality associated with higher payroll taxes, insurance and associated items. Additionally, it reflects some unique onetime items associated with acquisitions and excess legal expense. We still continue to expect to benefit from the fixed cost SG&A leverage we experienced as we grow sales and anticipate this will pick up as we move through fiscal 2024. In terms of EPS, our net income for Q1 was $11.3 million. Our earnings per diluted share for Q1, 2024 was $0.67 per share versus $0.95 per share last year, conservatively adjusting for some of the onetime items just previously mentioned, earnings per diluted share for Q1, 2024 was $0.74 per share. Turning to the balance sheet and cash flow. In terms of working capital, our working capital decreased $3.2 million from December to $268.9 million. As a percentage of sales, this amounted to 16.1%. That is 3 consecutive quarters of working capital creating cash for DXP. Or a source of cash of $38.1 million in a decline as a percentage of sales. In terms of cash, we had $139.7 million in cash on the balance sheet as of March 31. This is a decrease of $33.1 million -- $33.4 million, excuse me, compared to the end of Q4 and reflects the 3 acquisitions we closed during the quarter, Hennesy, Kappe and Pro-Seal as well as $16.8 million in share repurchases. In terms of CapEx, CapEx in the first quarter was $2.9 million or a decrease of $2.3 million compared to Q4, 2023. And a $910,000 decrease versus Q1 of 2023. Last year, CapEx increased versus 2022. And like this time last year, we continue to expect CapEx to pick up in 2024 versus 2023. We are continuing to make investments in our business, software, our facilities and operations for our employees. As we move forward, we will continue to invest in the business as we focus on growth. And will communicate these investments as appropriate. Turning to free cash flow. Free cash flow for the first quarter was $24.1 million or an increase of 6.4% versus Q1 2023. This primarily reflects improvements in profitability along with the reduction in receivable days and continued management of our project work, which we have highlighted in the past has required investments in inventory, product and cost in excess of billings. That said, we continue to focus on tightly managing this aspect of our business from a cash flow perspective and look to align billings with the investments. Return on invested capital, or ROIC, at the end of the first quarter was 36.3% and should continue to improve as we drive margins and operating leverage and improve our run rate EBITDA. As of March 31, our fixed coverage ratio was 2.3:1 and our secured leverage ratio was 2.3:1 with a covenant EBITDA for the last 12 months of $179.3 million. Total debt outstanding on March 31 was $547.3 million. In terms of liquidity, as of the first quarter, we were undrawn on our ABL with $3.1 million in letters of credit with $131.9 million of availability and liquidity of $271.6 million, including $139.7 million in cash. DXP is poised to execute on our outlook strategy. We anticipate closing another acquisition before quarter end. In terms of acquisitions, we closed on 3 acquisitions during the quarter, Hennesy mechanical sales, Kappe and Associates and Pro-Seal. We look forward to them fully reporting with us for the second quarter of 2024. Hennesy and Kappe provides DXP with leading platforms within the municipal industrial water and wastewater industries and Pro-Seal provides DXP with a leading rotating equipment and steel provider in Michigan and Alaska. Welcome to DXP Hennesy, Kappe and Pro-Seal. DXP's acquisition pipeline continues to remain active and the market continues to present compelling opportunity. As we discussed during the Q4 earnings call, we anticipated closing 3 acquisitions before midyear and we have accomplished that goal as of Q1, and we have a letter of intent and plan on closing another acquisition before the second quarter ends bringing that to a total of 4 acquisitions by the end of the second quarter. That said, we remain comfortable with our ability to execute on our pipeline and valuations continue to remain reasonable. Regarding capital allocation, we repurchased or returned $16.8 million to shareholders via share repurchases in Q1. As previously mentioned, we will continue to be opportunistic as we move through 2024 and support our shareholders as we move through cycles. In summary, our resilient and critical and MRO supply chain solutions, combined with our project capabilities and exposure to the sustainable secular trends, including water and wastewater and various energy markets will drive our future sales and profitability. Heading into 2024, we refreshed our balance sheet which has allowed us to continue to invest in the business both organically and through acquisitions, while also returning capital to shareholders. We are excited about the future. We will keep our eyes focused on those things. We can control in the body is ahead of us. We are excited because there is still substantial value embedded in DXP. We look forward with great confidence to the future of sustained growth and market performance. I will now turn the call over for questions.

[Operator Instructions] Your first question comes from the line of Cole Couzens from Stephens.

Just wanted to start here on ADS trends. If you mind, can you walk through kind of what you're seeing quarter-to-date in April and early May on both an organic and an organic basis?

What I'll do is Cole, I'll walk you through kind of the quarter and through April, I don't have a view given we're only 9 days into May and a fair amount of our sales per business day usually come between the mid to the back end of the month. So I wouldn't want to forecast anything there. But -- and then I'll get to your second half of your question, which was kind of the trends maybe on an organic versus acquisition basis, if you will. Going back from January sales per business day were $5.9 million. February was $6.3 million. And then March, as I mentioned in the script, was $7.5 million. April was $6.8 million per day. So April is up 2.7% year-over-year on a comparative basis. Excluding, if you will, some of our recent acquisitions, meaning Pro-Seal, Kappe, Hennesy, Alliance, BordaValve and Reardon the trend on sales per business day was $5.8 million in January, $6.2 million in February, $7.2 million in March and then $6.4 million in April.

And how much of that is -- is that pretty reflective of typical seasonality in your view?

Yes. I think what we saw, if you were to look at the time frame last year, you always get a quarter in push in March. And so we experienced that again this year. And then as we jumped into April, right, we kind of trend above, I'll call it, that Q1 average as we move into Q2. And so that we're following that, not in the same quantum as last year, but we are still growing year-over-year from a sales per business day perspective.

And do you mind reminding us how many selling days you're assuming here in 2Q and maybe for the remainder of the year as well?

Yes. So we had 63 selling days, obviously, in Q1, which, by the way, was one less day than this time last year. So on a comparative basis, you do need to factor that in just in terms of the performance year-over-year. And then your second question, just kind of for Q2. Q2, we're forecasting 64 days for Q2 with 22 already happening in April. For the year, it's usually around 252 days. I have literally put pen to pad, but it's usually the days usually fall out between 252 and 253.

Okay. And then last one on revenue. I think it was down a little bit year-over-year. What are some of the underlying end markets or product categories that were softer here on a year-over-year basis? And then on a sequential basis, it seems like demand is broadly consistent with the first quarter. But is there anything notable in any market or product category that's changed versus last quarter?

Yes. And I don't know if David has any insights here, but from my perspective, kind of what we did see was typical, we do have project work, which we talk about pretty frequently in our Innovative Pumping Solutions segment. And so I think it's always hard to time absolutely when some of those jobs will ship. And once again, our backlog is pretty robust. So I think I don't know if it's necessarily in market-driven is where I'm getting that so much is some projects whether water, wastewater, I call it our energy-related didn't quite shift the year-end, and so some of those will happen. Now once again, not to get into the details, but some of that's on percentage of completion and some of that is just the project work hasn't started. But I don't know if David has any insights there.

Well, there's not a deviation around product categories, other words, pumps were consistent. Safety was consistent, middle working actually up a little bit. But it was pretty much pretty consistent across the board on product category.

Okay. That's helpful. And then across each of the 3 segments, as we kind of move into 2Q here, just directionally kind of how are you guys expecting revenue to progress on a sequential basis from here?

So just quickly, it's almost every quarter that the first quarter and then the second quarter is better than the first quarter and the third quarter is better than the second quarter. So from a -- that almost happens invariably unless there's a big swing in days or something happens every time. So I don't know if that's totally your question, but I do want to point that out.

I would call -- I was just going to say I agree with David. We formally obviously, as everyone knows, we don't necessarily give guidance. That said, I think I think the trends we see, right, if you go back to the sales per business day, January was up year-over-year, 4.5%. February was up 1.9% year-over-year. March was technically down slightly 5%, but then April we're back 2.7%. I guess the point being is, I think if you kind of blend that a little bit together, what you're seeing is that on a year-over-year basis, we're trending in the, I'll call it, in the 1.5% to 2% a range from an actual performance basis. And I think all things being equal, as we look to the year, we don't see any big shifts. Once again, we're acquisitive. That's always the comment. We're in the business of buying businesses and growing DXP but we can't time those things and we announce those when appropriate.

A little color on what I said, I can took a broader picture. But on what I've said is part of that is just simply our manufacturers trying to ship everything towards the end of the quarter because we're all disciplined around quarters. And so everybody is shipping things. And so we actually do quite a bit of business in the last 2 days of a month. And then the last 2 days of the quarter gets a little crazy, too. So I'd just give you a reason for it.

Yes, that's helpful. And then just in terms of EBITDA margin, I know you guys kind of acknowledged this, but 10% to the goal in our view, you're kind of in that range in Q1 and I know there's some seasonality impacting it in Q1. But going forward here in Q2, do you guys think that 10% level is attainable? Or should it move higher or lower for any reason?

Yes. We definitely think the 10% call is attainable. You hit it spot on. There was some seasonality in just some onetime unique cost, which we conservatively and I've emphasized conservatively included as add back to adjusted EBITDA and that put us at 9.8%. That said, as we move into Q2, Q3 and Q4, 10% definitely attainable given our mix today. And we would see that materializing.

And to expand on that a little bit, given your mix, is most of that going to be on the gross margin line I think you've seen some good improvement there? Or do you think you to drive leverage as well?

Yes. I mean, hey, we've had consistent 30%-plus gross margins here more recently, and that's definitely contributed to the lift in EBITDA margins, but we also get the operating leverage as we grow the business and grow sales per my comments in my script. But -- and I think we'll continue to see that once again, we expect to continue to get some sales growth. And with that, you get some operating leverage out of the system. The wins that are always challenging for everybody, not needing to us is there's not just inflation. Inflation from a product perspective is good for DXP, but -- from a people perspective, we've got to work through that as Merit and pay raise has come through the system. And we've done a good job thus far of managing that. But those pressures have been pretty consistent over the last 6 to 12 to 9 months very easily.

I'll add to that a little bit. There's a big push to get incremental gross profit margins up. And so not only to pass on inflation and cost of product going up, but actually to get a little more for ourselves because our people cost is going up and et cetera, things are going up. So we're pushing the value. And then consistent with that on capital allocation is we're doing our acquisitions and air compressors and water have higher gross profit margins and higher EBITDA margins. So that's healthy.

Got it. And I'll come back to capital allocation in a little bit. And -- but just higher level too, I think you guys have more recently last quarter and I think this quarter in the press release, you guys talked about some growth initiatives here. Can you walk through what exactly those are and maybe what inning we're in? And if everything goes right and you can execute the playbook kind of what you hope to achieve by executing that?

Well, that's an interesting question. I'm not 100% sure I want to tell the world what I'm doing to grow sales. Being quite honest. And so we don't talk about that. I think some things that are just obvious we'll talk about a little bit, and that's a team of people that are trying to capture national accounts on the rotating equipment side of our business. Every motion, AIT, people like that do national accounts on bearings and power transmission. So we're in that process of doing that from a pump or rotating equipment scenario. That's working for us. Sometimes, it doesn't always lead to a 100% national account. But in every case, it's creating incremental business for us. We're also -- again, I'm not going to tell you what, but we're adding product and product capabilities and that's incrementally working and it's something that is consistent with the same customer, the same product. It's an attachment to that product. And so it's being readily accepted by our existing sales force. And so there's not really a lot of expense added to doing it. And so that is incrementally helping us. And then we're all the time supply chain services is a really long sale. But when you get one, it's $50 million or $60 million. So it's a large sale. So they don't happen every day. It's a very lumpy business in that sense. But -- so we're always pushing integrated supply through our supply chain service offering. And we've had a little [indiscernible]. We've got a lot of opportunities on the table. And we hope to get some of those closed and if they are, they're pretty significant. And then -- we're just always fighting the B2B channel and spend a lot of money on content development, et cetera, don't play ourselves as in each commerce company or a productivity company designed to help it make it easier for our customers to do business with us. So that's always in the works getting something.

I mean Yes. The only thing I'd add there, Cole, is then obviously, we complement that organic growth with acquisitions. And so I think when it comes to answering your question around our growth initiatives. We do think for strategic reasons kind of here. We disclosed less the world's guidance. Copy caddish is the best way to put it. And so we strategically take the position of yes, articulating that we're always focused on growth. We view ourselves as a growth company. And we always have organic plans if people know DXP, we also do that through acquisitions with absolute disclosure given other strategics private equity, et cetera. I think David hit it right on the nose. So.

Great. That's good color and completely understand there. And lastly, just to circle up on capital allocation. You all have done a good job executing on some deals here and it sounds like there's more in the pipeline. Is there any more color you can provide kind of on what those deals look like I know you mentioned earlier in the call that kind of some of your diversification efforts have reaped a lot of benefits. So just any color in terms of size or end market would be appreciated?

Yes, yes. So I'll start with the latter. From an end markets perspective, everyone knows, we've had a real push on water wastewater. So I'll call it really very likely towards more Q3, Q4, we'll have 1 to 2 on the water, wastewater side continue to close. And then kind of one of our more recent themes is we found some nice, I'll call it, down the fairway rotating equipment focused industrial type distributors. So the one likely to close before the end of Q2, it follows in that path. It will be just a nice tuck-in acquisition. We probably won't have a lot of fanfare around that one just because it's very similar to like a Pro-Seal just in terms of relative size -- closer to our average acquisition size of $25 million to $35 million in revenue, but they have very nice profitability. So they've got 10% plus EBITDA margins. And so we'll just kind of move forward with that. And people will see -- start to see that early in our results in Q2, but then as we move into Q3 and Q4. So that's what I would say just in terms of kind of the acquisition focus and what people will see over the short to medium term.

Okay. Great. I appreciate the time, guys. Thanks.