Kevin Inda - Vice President, Investor Relations John Engquist - Chief Executive Officer Leslie Magee - Chief Financial Officer and Secretary Bradley Barber - President and Chief Operating Officer.

Neil Frohnapple - Buckingham Research Seth Weber - RBC Capital Markets Ross Gilardi - Bank of America Steven Ramsey - Thompson Research Group Stanley Elliott - Stifel Steven Fisher - UBS.

Good morning and welcome to the H&E Equipment Services Fourth Quarter 2017 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Mr. Kevin Inda, Vice President of Investor Relations. Please go ahead, sir..

Thank you, Evan. And welcome to H&E Equipment Services conference call to review the company's results for the fourth quarter and year ended December 31, 2017, which were released earlier this morning. The format for today's call includes the slide presentation, which is posted on our website at www.he-equipment.com. Please proceed to Slide 2.

Conducting the call today will be John Engquist, Chief Executive Officer; Brad Barber, President and Chief Operating Officer; and Leslie Magee, Chief Financial Officer and Secretary. Please proceed to Slide 3.

During today's call, we will refer to certain non-GAAP financial measures and we have reconciled these measures to GAAP figures in our earnings release, which is available on our website. Before we start, let me offer the cautionary note that this call contains forward-looking statements within the meaning of the federal securities laws.

Statements about our beliefs and expectations and statements containing words such as may, could, believe, expect, anticipate and similar expressions constitute forward-looking statements.

Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement.

A summary of these uncertainties is included in the Safe Harbor statement contained in the company slide presentation for today's call and also included in the risks described in the risk factors in the company's most recent annual reports on Form 10-K and other periodic reports.

Investors, potential investors and other listeners are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

The company does not undertake to publicly update or revise any forward-looking statements after the date of this conference call. With that stated, I will now turn the call over to John Engquist..

Thank you, Kevin and good morning everyone. Welcome to H&E Equipment Services fourth quarter 2017 earnings call. On the call with me today are Leslie Magee, our Chief Financial Officer; Brad Barber, our President and Chief Operating Officer; and Kevin Inda, our Vice President of Investor Relations.

I will direct my comments this morning to our fourth quarter results, our business and overall market conditions, and then Leslie will review our financial results for the quarter and year. When Leslie finishes, I will close with a few brief comments, after which we will be happy to take your questions. Please proceed to Slide 6.

The fourth quarter was exceptionally strong for both our rental and distribution business delivering solid results. The momentum we experienced during the third quarter in the non-residential construction market continued during the fourth quarter. As a result, total revenues increased 20.6% or $50.3 million to $294.7 million in the fourth quarter.

Margin were 34.3% compared to 34.6% a year ago, due to revenue mix. Adjusted EBITDA grew 15% to $90.7 million compared to $78.9 million a year ago. For the fourth quarter, we generated net income of $85.9 million or $2.40 per diluted share compared to $12.4 million or $0.35 per diluted share a year ago.

We've recorded a significant onetime tax benefit in the fourth quarter resulting from the recent tax legislation. Let me make a few brief comments about our distribution business specifically new equipment sales which delivered a 65.9% or $29.6 million increase in total revenues compared to the fourth quarter a year ago.

The increase was primarily attributed to nearly a 100% or $19.7 million increase in new crane sales. While we are extremely pleased with almost $40 million in crime sales during the fourth quarter. We don't believe this is indicative of a total recovery in the crane market rather largely driven by year end purchasing decisions.

However, we do expect better demand for new cranes in 2018 compared to last year. The increase in new equipment sales was also driven by solid demand for earthmoving equipment which increased 28.5% or $4.8 million. Please proceed to Slide 7.

With time utilization up 390 basis points to 74.2% for the quarter, we believe there is no debate regarding the positive trends in the non-residential construction market. AWP time utilization for the quarter was 76.6%. Demands for cranes increased and our crane fleet was highly utilized to 77.2%.

Dollar utilization grew to 36.2% from 34.3% a year ago and we achieved positive rates for the third consecutive quarter of 1% year-over-year and six tens of a percent sequentially. As a result, rental revenues increased 10.9% to $127.7 million and rental growth increased 1% from 47.7% a year ago. Proceed to Slide 8 please.

This slide illustrates our expanding nationwide footprint, various regions, branch locations and 18 Greenfield sites that we've opened since the beginning of 2013. In November, we opened a new branch in Lynnwood, Washington.

We are executing on our strategy of expanding our business through acquisitions with the acquisition of CEC which was completed in January and our recently announced acquisition of Rental Inc. which we expect to close late in the first quarter, early in the second quarter.

The map to fix branches in the Denver area we acquired through CEC bringing our branch count to six in Colorado. The Rental Inc.

acquisition will give us five additional branches located in Opelika and Dothan Alabama and Fort Walton Beach, Panama City and Tallahassee, Florida which we expect will significantly improve our ability to serve customers in South Alabama, the Florida Panhandle and Western Georgia, all of which we believe are expansion of recovering markets.

CEC and Rental Inc. represent the types of well-run companies we intend to pursue. We believe they complement our existing business, broaden our geographic footprint and increase our density in existing markets. We are also continuing to expand through our Greenfield and warm start program. Proceed to Slide 9 please.

One of the key takeaways on this slide continues to be our end user markets with more than 60% representing non-residential construction customers. As you can see, the industrial segment is not a material driver of our overall business. Fleet mix and age are also competitive advantages.

Higher returns are driven by large AWP fleet which was highly utilized at 76.6% combined with positive rental pricing. With one of the youngest fleets in the industry at 34.6 months, we can easily age our fleet. Lastly, energy related activity continues to improve as a result of significantly higher oil prices from a year ago.

The majority of our oil and gas exposure continues to be in the Gulf Coast region at 81% with Texas alone representing 79% of the Gulf Coast region.

In addition to the high levels of exploration activity and increases in production, additional pipeline capacity is required to transport oil and gas to refineries resulting in a recent surge of pipeline projects. Proceed to Slide 10 please. Down on this slide should come with no surprised anyone on this call.

Overall market indicators and conditions are some of the most positive our industry has seen in several years. Leading industry indicators like the Dodge Momentum Index and the ABI forecast solid growth in 2018. The economy is strong.

We also believe recently approve tax plan should encourage additional corporate investment in any significant infrastructure bill with future extend the cycle. At this time, I am going to turn the call over to Leslie for the financial results..

Good morning, everyone, and thank you, John. I'll begin on Slide 12 to discuss our financials in greater detail. Our fourth quarter results were solid as we successfully capitalized on the strong demand in our end user market.

For a high level overview, our total revenues increased 20.6% or $50.3 in the fourth quarter compared to the same period a year ago to $294.7 million driven primarily the strength in both our rental and distribution business. Gross profit increased 19.2% or $16.2 million to $100.9 million from $84.6 million a year ago.

Margins were 34.2% compared to 34.6% a year ago, primarily as a result of significantly higher but lower margin new equipment sales. Although the revenue shift impact a consolidated gross margins, all operating segments with the exception of used equipment sales generated higher gross margins.

Let me now provide more detail underlying the 20.6% topline revenue growth beginning with rental revenues. Rental revenues increased 10.9% to $127.7 million. And as John pointed out, physical utilization increased 390 basis points with average time utilization based on OEC at 74.2% for the quarter compared to 70.3% a year ago.

Demand for AWP was exceptionally strong at 76.6% of OEC, up from 73.1% a year ago. In fact time utilization increased for all product lines with cranes up 940 basis points, earthmoving up 130 basis points, lift trucks up 290 basis points and general equipment up 740 basis points compared to year ago.

Rental rates improved again this quarter 1% year-over-year and 0.6% sequentially with strong utilization and rates, our dollar returns increased to 36.2% versus 34.3% last year. New equipment sales increased 65.9% or $29.6 million to $74.4 million with improved demand in all product lines.

The improvement in new equipment sales was largely due to higher new crane sales which increased 99.4% or $19.7 million to $39.6 million and sales of new earthmoving equipment which increased 28.5% or $4.8 million during the quarter. We believe demand for new equipment increase significantly in part due to year end purchasing patterns.

Used equipment sales increased 28.8% or $7.2 million to $32.1 million largely as a result of higher used AWP and earthmoving sales. Sales from our rental fleets comprised 93% of total used equipment sales this quarter compared to 89% a year ago.

Our parts and service segments delivered $42.1 million in revenue on a combined basis, down 1.1% from a year ago. I'll now move on to a brief discuss of gross profit and margin. Our total gross profit for the quarter was $100.9 million compared to $84.6 million a year ago, an increase of 19.2% on a 20.6% increase in revenues.

Our consolidated margins were 34.2% compared to 34.6% a year ago, driven by solid margin performance across all segments. For gross margin detailed by segment, our rental gross margins for the quarter were 51% compared 47.7% last year, primarily due to strong utilization and positive rate.

Margin on new equipment sales were 11% for the fourth quarter compared to 9.9% a year ago, largely due to higher margin by new crane and earthmoving sales. Used equipment sales gross margins were 31% compared to 31.9% last year and margin on pure rental fleet-only sales were 32.5% compared with 34.1% a year ago.

Parts and service gross margins on a combined basis were 42.4% compared to 41.5% a year ago as a result of higher margins in those segments. Slide 13 please. Income from operations for the fourth quarter 2017 increased 34.8% to $40.3 million or 13.7% of revenues compared to $29.9 million or 12.2% revenues a year ago.

The increase in income from operations is primarily a result of higher rental revenues and equipment sales, strong gross margins and solid operating leverage compared to a year ago. SG&A expenses were 20.5% of revenue this quarter compared to 22.8% a year ago. Proceed to Slide 14.

Net income was $84.9 million or $2.40 per diluted share in the fourth quarter compared to $12.4 million of $0.35 per diluted share in the same period a year ago. Our effected tax rate decline to a negative 211.7% compared to 26.3% a year ago.

We've recorded income tax benefit of approximately $58.4 million during the current quarter compared to income tax expense of approximately $4.4 million a year ago.

With the recently enacted Tax Cuts and Job Acts, we re-measured our differed tax assets and liabilities resulting from the decrease in the corporate federal income tax rate from 35% to 21%. This is the onetime benefit. Please move to Slide 15.

Adjusted EBITDA was $90.7 million in the fourth quarter compared to $78.9 million a year ago and margins were 30.8% compared to 32.3% a year ago, a decrease of a 150 points, primarily due to significantly higher but lower margin new equipment sales. Next Slide 16. SG&A was $60.5 million, $4.7 million or 8.5% increase over the same period last year.

SG&A as a percentage of revenue was 20.5% this quarter compared to 22.8% a year ago. The net increase was largely due to higher labor and benefit cost. Our branch expansion cost increased $0.9 million compared to a year ago. Next on Slide 17.

Our gross fleet capital expenditures during the fourth quarter was $51.3 million including non-cash transfers from inventory and our net rental fleet capital expenditures for the quarter was $21.5 million. Gross PP&E CapEx for the quarter was $6.5 million and net was $5.8 million. Our average fleet age as of December 31st was 34.6 months.

Cash flow for the fourth quarter was $43.4 compared to $57.6 million a year ago. We've included a free cash flow GAAP reconciliation in the appendix at the end of the presentation accompanying that. Next on Slide 18.

At the end of the fourth quarter, the size of our rental fleet based on OEC was $1.4 billion, a 5.2% or $68.9 million increased from year ago. Average dollar utilization was 36.2% compared to 34.3% a year ago. Proceed to Slide 19, please.

In late November, we closed on an add-on offering of $200 million an aggregate principal amount of our 5.58 senior notes due in 2025, which under the same term as $750 million aggregate principal amount of 5.58 senior notes that we issued in August of 2017. The $200 million add-on offering price that 104.25% of par value.

In late December, we increased the size of our ABL facility from $602.5 million to $750 million. And at end of the fourth quarter, we had no outstanding balance under the amended ABL facility and therefore we had $742.3 million of availability at quarter end which is net of $7.7 million of outstanding letters of credit.

As a result, we believe our balance sheets is strong and our capital structure supports our growth strategy. Proceed to Slide 20, please. Let we quickly review our full-year 2017 results which we believe reflects solid execution and increased demand in our end user market.

Our total revenues increased 5.3% or $51.9 million to $1billion in 2017 from $978.1 million in 2016. Growth profit increased 7.2% or $24.3 million to $359.9 million from $335.6 million in 2016. On average, 2017 rental rates increased 0.2% compared to 2016. And in 2017, time utilization based on OEC was 72.1% compared to 69.7% a year ago.

Our income from operations in 2017 increased 24.5% to $137.9 million, or 13.4% of revenues, compared to $110.8 million, or 11.3% of revenues a year ago, but included $5.8 million of merger breakup fee proceeds, net of merger costs. Excluding these proceeds, income from operations increased 19.3% to $132.1 million or 12.8% of revenues.

Net income was $109.7 million, or $3.07 per diluted share, compared to net income of $37.2 million, or $1.05 per diluted share in 2016. Net income was positively impacted by the onetime benefit due to re-measuring our deferred tax assets and liabilities resulting from the passage of the Tax Cuts and Job Actin December 2017.

For the full-year our effective tax rate decreased to a negative 84.8% from 37% a year ago. Adjusted net income was $124.4 million, or $3.48 per diluted share excluding the merger breakup fee proceeds, net of merger costs, as well as the loss on early extinguishment of debt in the third quarter of 2017.

Adjusted EBITDA for 2017 increased 8.2% to $327.1 million from $302.3 million in 2016. Adjusted EBITDA as a percentage of revenues was 31.8% compared with 30.9% in 2016. We generated $73.1 million in free cash during the year and we also continued our dividend payment each quarter with total dividend paid of $1.10 per common share during 2016.

And at this time, I am going to turn the call back to John..

Thank you, Leslie. Please proceed to Slide 22. To conclude, we delivered very strong results for the fourth quarter and it was a very positive year overall for our business highlighted by continued strength in our rental business and improving trends in our distribution business.

Many key indicators are pointing towards continuing strength in non-residential construction markets in 2018. We have our quickly executed on our stated growth strategy and we intend to continue to pursue additional complimentary acquisitions.

Lastly, we paid our fourteenth consecutive quarterly cash dividend on December 11, and paid total dividend of $0.10 per share for the year. As always, future dividends are subject to board review and approval each quarter. At this time, we'd like to take a few questions. Operator, please provide instructions..

Absolutely. [Operator Instructions] Our first question comes from Neil Frohnapple from Buckingham Research. Please go ahead..

Hi, good morning. Congrats on a great quarter, guys..

Thank you, Neil..

First, can you provide more granularity on the significant increase in the crane business during the fourth quarter? You mentioned year on purchasing decisions, so is there any way to sort of strip that out and give us a sense of underlying performance? And then I guess as a follow-up, can you provide commentary and I guess recent quoting in order activity for cranes as a lead indicator for your expectation of higher 2018 sales for this business?.

Yeah, look, I think the last call or two, we have indicated that we've had more quoting activity and we've seen more interest on the crane side. As we said, we're not prepared to say the purchasing we saw in the fourth quarter is indicative of a full bond recovery in market.

We're just we're not there yet, with that said we're we certainly believe demand in 2018 is going to be better than demand in 2017 and so that's kind of where we are Neil..

Okay.

And then I guess some of that quoting activity John, is that broad base by geographic region and product line or is it's still limited to certain product categories within cranes?.

Yeah. There's probably still weightiness in the rough terrain markets, we saw a real strength in all-terrain markets some color crane activity, but really strength in the all-terrain markets..

Okay. Got it. And then one final one for me. You posted higher than anticipated incremental gross equipment rental margins in the quarter and I think for the full-year about 60% despite rental rates only being up modestly for the full-year.

So could you talk about incremental gross margins for 2018 given a more positive run for rate environment? And I guess if you could discuss sort of excluding the acquisition which would presumably weigh on the full growth? Thank you..

Hi, Neil. We're expecting kind of more normalized rental margin going forward just really if you look at utilization and fleet growth and that's really what we're expecting moving forward.

And in the fourth quarter, they bumped up pretty good because a result that higher than expected fleet utilization, the strong fleet growth and then offset rates were piece of that as well..

Okay.

And lastly, what would you characterize as more of a normalized rental?.

Normalized incremental rental growth margin rates are about 50% range..

Great. Thank you..

Sure..

Next question comes from Seth Weber from RBC Capital Markets. Please go ahead..

Hey, good morning..

Hey, Seth. Good morning, Seth..

Morning. I wanted to - couple of questions, I wanted to ask about the acquisitions. You're bringing on about $120 million of acquired fleet, it looks like which is about half of what your CapEx was in 2017.

So how should we think about that, is that going to come in - are you going to buy less new equipment in 2018 because your acquiring this fleet or do you expect to sell some of that fleet? And then secondly, I think it's about $70 million of acquired revenue.

Can you give us any indication of where the EBITDA margins for these acquired companies are running whether they're kind of consistent with margins above, below, any help there? Thanks..

Yeah. They're certainly consistent, the margins were HNE [ph] margins and CEC margins are higher because of revenue mix. There are purer rental play and they've got exceptionally high margins because it's pure rental. Rental Inc. has a small distribution component which is a drag on their margins, so their margins are more similar to ours.

Seth we're going to grow our core rental fleet pre-acquisition, we're going to spend some growth capital more than we did last year. I don't want to give you CapEx guidance because we don't do that but we plan to grow our fleet this year more than we did last year and that's prior to acquisitions..

Okay. That's helpful, John, thanks.

So I mean will you be selling any of the acquired fleet or you're just going to try and fold that into the fleet mix at this point?.

We'll fold it into the fleet mix and probably grow their fleet..

Okay. That's very helpful. Thank you. And then just following-up on the prior question on the crane business, I think I asked this question last quarter, but I'm really just wrestling with the lack of growth in the - and the disconnect between the parts and service not growing and crane demand increasing.

To me that just seems like that there's disconnect there, and I'm wondering if you have any opinion on what's going on and when you might expect to see the parts service business improve..

And Brad probably can give you better color than I can. I think it's a timing issue. We're just not getting those major rebuild jobs that we really like, it's a big driver of our parts and service business and there is the crane end markets continue to improve, I anticipate that's going to come..

Yeah. So I couldn't really add. I agree. Look, our opportunities on service parts as John stated, the large portion of those dollars traditionally come through crawler crane rebuilds and that still remains soft.

John spoke a while ago that 80 that really been the brighter spot of were the brightest spot in Q4 is probably more of the brightest spot we continuously quote activity. So until we see a broader recovery on crawler cranes, I think we're going to continue to face headwinds on parts and service growth..

Okay, guys, I'll get back in queue. Thank you..

Thanks, Seth..

Thank you..

Next question comes from Ross Gilardi from Bank of America. Please go ahead..

Hey, good morning, guys..

Good morning..

I just want to ask you about pricing, I mean clearly you saw some counter seasonal price increase in the fourth quarter, has that continued into the first six weeks of 2018?.

It have and it's our expectation that will see positive pricing throughout the year. It's everybody running high utilization levels in the supply and demand is working in our favor. So yeah, we're in a solid environment push pricing..

And then cranes, you characterize the strength is due to year-end buying, was that a comment on tax related buying and are you seeing the same type of dynamic play out all with earthmoving and an aerials?.

Well, no one really own aerials anymore, that's a pure rental item. But yeah, we had a really strong earthmoving quarter. I think what it tells you is that our customers are making money and I think they did some year-end tax buying..

Got it.

And then what are you seeing from your equipment suppliers on pricing, are they are pushing price to offset steel and are they getting price?.

So Ross, this is Bradley. In various, generally speaking we've seen 1%, 2% price increase, we've had certain manufacturers be as high as 3% and probably half of our manufactories were realizing no increases year-over-year. So it spans, it's not been so much around steel, that's a more current event.

And I would tell you that we got our orders in the queue very early with advanced purchase orders and part of that negotiation was to make sure we could secure 2017 pricing and we were fairly successful in doing so..

Okay.

If you got if you actually got the order because clearly a lot of the equipment suppliers saw very strong pickup in the backlog in the fourth quarter, so if you saying if you got the order in before calendar 2018 began you actually got the 2017 pricing?.

Well, it's always an individual negotiation but I would tell you that we were very responsive and I think it's going to pay - I think it's going to pay a dividend to us in terms in the form of no to very small price increase..

Got it. Thanks very much, guys..

Yes, thank you..

Next question comes from Catherine Thompson from Thompson Research Group. Please go ahead..

Good morning. This is Steven Ramsey on for Catherine.

I was curious to get your thoughts on the specialty side of equipment rental with lots of players being excited about that particular segment of the market, is this an area you are focused on with green fields or acquisitions?.

It is not. We feel like we've got lots of room to grow our core business. And when you go after the specialty rental business as you pay a very high multiples and when you bring them into your when you integrate them in your business had multiple tends to get a margin high.

So we've got a lot of room to grow our core business and that's where we're going to do..

Excellent, and then thinking about energy markets improving, oil and gas markets improving.

Are you seeing any aggressive shift back to those markets from competitors and rentals or are you moving back into those geographies aggressively with fleet?.

We are moving back into the shale plays where we have a big presence like the Eagle Ford and the Permian. We moved a lot of fleet back in there. Those shale plays are as active as they've ever been and just a really, really strong environment. Midland would be a good example.

I mean we've got as much fleet in that market is ever had and we're running in the mid-80s on utilization..

Steve, and I'd also add, our competitors are doing the same thing. But I would say there was taken a rational approach. And generally speaking, we achieve our highest rates companywide in the oil fields sector. So I don't think we're dissimilar to our competitor.

So ramping it up, it's going well, high utilization, really good rates and I think our performance would be indicative of the same way our competitors of performing very rationally getting nice returns..

Excellent. Thank you..

Next question comes from Stanley Elliott from Stifel. Please go ahead..

Hey, guys. Good morning and thank you for taking my question. Quick question, when we think about rental rate, we are seeing some nice improvement here over the back part of the year.

If we were to just say kind of holding that constant looking into 2018, is there a way to kind of categorize what that carry over rate might end up being?.

We don't traditionally provide that level. Look it, it would it would certainly be at some level positive. And as John stated earlier, with current year utilization running, currently it's running ahead of the prior year already. We continue to see opportunity to increase rental rates, but we don't provide that calculation..

Yeah and that's fair.

And then when thinking about kind of the M&A opportunities on a go forward basis, with the right number that you all can kind of handle at a given time given that the leverage rate is low and it looks like that the market is accelerating?.

We're pretty confident, we can do two to three acquisitions a year for the next three years and keep our leverage very low and we're very comfortable with two to three year..

And then lastly, you mentioned kind of the cranes and earthmoving.

Are you seeing a pickup in road construction activity, as we're starting to kind of look forward to 2018 building season?.

Yeah, it depends on a market. I do think there's been some pickup in activity there. That's not a big driver of our business. I mean we get benefit, but I tell you the demand we're seeing in the nonresidential construction markets is very, very broad based.

So I wouldn't say that the highway stuff is a big driver of our business, we get some benefit, but the demand is very, very broad based..

Great, guys. Thank you very much and congratulations..

Thank you..

Thank you..

[Operator Instructions] Our next question comes from Steven Fisher from UBS. Please go ahead..

Thanks, good morning. Wondering if you could just talk about the difference between the 300 to 400 basis point improvements in time utilization with the just under 200 basis point improvement in dollar utilization.

Is that different related to mix of utilization smaller equipment verses less or better utilization in larger equipment?.

It's always impacted by mix. I mean in many times, we talk about the economic headwinds as John said in this prepared statements, you know we have a very young rental fleet, so foreseeably our average OEC is slightly higher than some of the older rental fleet.

And I give you that example to say that is always mix related age of products, mix of products. But I would say that across the board, we've been happy with both utilization and the rate improvement. If there is one product I would call out, we've called out before it was cranes from a disappointment from a pure rental standpoint.

But I would also add cranes at a highest sequential rate improvement in Q4. So they are kind of across the board, we are seeing continued strength..

Okay. And I think John mentioned, there was some strength in colors in the quarter, what was driving that strength..

The customers that we sell to in Q4 are typical types of customers, folks that work both in industry and in energy and then infrastructure. And some of colors went to the larger regional crane rental houses who traditionally uses our products..

Got it, thanks a lot..

Thank you..

Our next question comes from Seth Weber from RBC Capital Markets. Please go ahead..

Hi, thanks for talking a follow-up.

Just Leslie, I am sorry I missed it but did you give any colors to what you the tax rate will be going forward?.

No, we didn't talk about it. We're estimating 26% to 28% effective tax rate moving forward over the next couple of years..

Okay, thanks.

And then just the slight decline in used equipment sales margin, is that just a function of mix of channel or is there something unusual there?.

It's mix. That was purely mix..

Thank you very much, guys..

Thank you..

At this time, I would like to turn the conference back to John Engquist for any additional or closing remarks..

Now, I appreciate everybody being on the call. I think we are in solid environment. 2018 is going to be nice for us. And we look forward to talking to everybody in our next call. Thank you for participating today..

This does conclude our conference for today. Thank you again for your participation. You may disconnect..