Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2019 Interface Inc. Earnings Conference Call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question-and-answer session.

[Operator Instructions] I'd now like to hand the conference over to your speaker today, Christine Needles, Corporate Communications. Please go ahead..

Good morning, and welcome to Interface's conference call regarding fourth quarter and full year 2019 results, hosted by Dan Hendrix, Chairman and CEO; and Bruce Hausman, Vice President and CFO.

During today's conference call, any management comments regarding Interface's business, which are not historical information are forward-looking statements within the meaning of the Securities Act of 1933 as amended and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995.

Forward-looking statements include statements regarding the intent, belief or current expectations of our management team, as well as the assumptions on which such statements are based.

Any forward-looking statements are not guarantees of future performance and involve a number of risk and uncertainties that could cause actual results to differ materially from any such statements, including risks and uncertainties associated with the economic conditions in the commercial interiors industry and risk related to losses, investigations or similar legal proceeding that we're subject to from time-to-time, as well as the risks and uncertainties discussed under the heading Risk Factors in Item 1A of the company's Annual Report on Form 10-K for the fiscal year ended December 30, 2018 and as updated by the additional risk factor included in part two item 1A of the quarterly report on Form 10-Q for the quarter ended September 29, 2019, which has been filed with the Securities and Exchange Commission.

We direct all listeners to those documents. The company assumes no responsibility to update or revise forward-looking statements made during this call and cautions listeners not to place undue reliance on any such forward-looking statements. Management's remarks during this call also refer to certain non-GAAP measures.

The most comparable GAAP measures, as well as a reconciliation of the non-GAAP measures to the most comparable GAAP measures is contained in the company's earnings release and Form 8-K furnished with the SEC yesterday, which explains why Interface believes presentations of these non-GAAP measures provides useful information to investors, as well as any additional material purposes for which Interface uses these non-GAAP measures each of which can be accessed in the Investor Relations section of the company's website, www.interface.com.

Lastly, this call is being recorded and broadcasted for Interface. It contains copyrighted material and may not be rerecorded or rebroadcasted without Interface's expressed permission. Your participation on the call confirms your consent to the company's taping and broadcasting of it.

Now, I'd like to turn the call over to Dan Hendrix, Chairman and CEO..

Thank you. Good morning everyone and thanks for joining our call today. I joined interface 37 years ago with leading the company as CEO from 2001 to 2017 and our CFO for 15 years before that. I continue to be involved with the company as the Board Chairman, and very fortunate now to have the opportunity service again, while we search for a successor.

Our search for new a CEO will be a thoughtful progress, one that will allow us to focus on executing our financial, operational and sustainability goals. Over the past several years, we've made exciting progress across the business and become a much stronger organization as a result.

We're continue to run the strategy that we've been successfully executing for the last three years focused on growing the top-line, taking market share, of the margin, our SG&A and we will continue to execute on the important initiatives that we put in place in response to the changing market.

Our [indiscernible] sales managers meetings with our teams in the Americas and Europe, and I cannot be more optimistic about the future of this company. It is a really great time to be an Interface.

Our new leader in America someone who is well known and well respected by our team, Jim Poppens was integral in the restructuring and commercial success of our core business, and instrumental in driving our global marketing initiatives. We expect a seamless transition and a strong momentum with this welcome change.

In Europe, I believe we have the strongest sales and leadership teams in that region than we've ever had in the history of the company. I feel strongly that this is a growth region for us, particularly in the UK where Brexit uncertainty is lifting and our sales team is positioned for success.

We're executing on industry leading innovations, we're investing approximately $50 million over three years in manufacturing, including tufting technology that will give us a new design capability in a vacuum system to further separate us in the marketplace.

But before I talk about what's ahead, let me first share with you the results of our fourth quarter and full year 2019. We delivered another solid quarter with net sales up 1% versus the fourth quarter last year and organic sales up 2% in a full year 2019 with net sales up 14% and organic sales up 2% versus the prior year.

Fourth quarter GAAP EPS was up 155% versus Q4 last year while adjusted EPS was up 12% versus the fourth quarter last year. GAAP earnings per share for the full year 2019 was up 60% versus 2018 and its exit earnings per share was up 7% versus the prior year.

I want to thank the entire Interface team for a strong finish to the year and your steadfast commitment to delivering on our strategic and financial goals. Our core carpet tile business had a solid fourth quarter contributing equally to organic growth with our spanning resilient business. Carpet tile remains a solid foundation for the company.

Our resilient business continues to be a key driver of growth. LVT had another strong quarter and we expand our product offerings to reach new market opportunities in this high growth category. Our higher margin.

3 millimeter LVT products are meeting customer needs in the healthcare and multifamily and tender improvements segments and providing a new cross selling opportunity. We're on track to reach $100 million run rate in LVG in the first half of 2020 exceeding our initial expectations and taking share in this fast growing commercial flooring category.

Our other business has a solid fourth quarter also exceeding our growth expectations for the year and I'm pleased with the progress we've made on integrating Nora into the operations and the sales organization.

We're continuing to strengthen our cross selling efforts and joint marketing efforts as we expand opportunities across our product categories and segments, particularly in healthcare and education.

By expanding our product portfolio beyond South surface, we had increased our addressable market and position our sales team to bring a variety of solutions to our customers and meet their diverse flooring needs across a wide range of market segments. From our manufacturing standpoint, activity initiatives are generating our target results.

GAAP first margin was 40% in the fourth quarter where the adjusted gross margin at 40.4% up 80 basis points versus Q4 adjusted gross margin last year.

SG&A expenses were around the expectations during the quarter allowing us to deliver GAAP operating income of 28 million in the fourth quarter or 8.2% of net sales and adjusted operating income of 42 million or 12.2 as a percentage of sales.

This is gratifying performance, especially considering we had a $4 million negative translation currency, impact in operating income for the year. Now I'll turn it over to Bruce for more detailed discussion of our fourth quarter and year results. .

Thank you Dan and good morning everyone. Fourth quarter net sales were 339 million up 1% over the prior year period. Currency translation had a negative impact on fourth quarter net sales, of 5 million or 150 basis points year over year.

In organic sales were up 2% which was in line with our expectations, our legacy Interface business in the Americas had a strong finish to the year up 4% compared to the fourth quarter last year with continued strong growth in LVT and solid carpet tile sales, legacy Interface sales in EMEA were up 1% in local currency but down 2% in U.S dollars due to currency headwinds driven by the Euro to USD and pound Sterling to USD exchange rates versus prior year.

Legacy Interface sales in Asia Pacific were up 2% in local currency compared to fourth quarter of last year but were flat in US dollars is largely due to the Australian dollar to USD exchange rate versus last year. In our global market segments fourth quarter growth was driven by office education and health care.

Fourth quarter gross profit margin was 40% up 390 basis points versus fourth quarter gross profit margin last year.

Adjusted gross profit margin was 40.4% which is an 80 basis point improvement over adjusted gross profit margin last year, we're realizing the productivity savings of our Troupe County optimization initiatives in the Americas, which we completed at the end of 2019.

SG&A expenses were 95 million in the fourth quarter or 28.1% of sales, which were in line with our expectations. As part of our previously announced restructuring plan, we recorded a 9 million restructuring charge in the fourth quarter.

The charges comprised of 8.8 million of severance charges in connection with the reduction of approximately 105 positions, primarily in our EAAA business. And a $200,000 charge early termination of two office leases in Shanghai and in the UK.

These charges were offset by a reversal of certain 2018 restructuring accruals of $1.7 million for net restructuring charge of $7.3 million. We expect this restructuring plan to yield annualized savings of approximately $6 million to be realized across fiscal years 2020 and 2021.

In addition, we recorded a noncash charge of $5 million in the fourth quarter related to adjusting the carrying value of certain insurance related assets. Operating income was $28 million for the fourth quarter compared to $4 million in the prior year period. Adjusted operating income was $42 million in Q4 2019, compared to $37 million last year.

And fourth quarter net income was $16 million or $0.28 per diluted share up 155% compare to net income of $6 million or $0.11 per diluted share last year. Adjusted net income was $27 million or $0.46 per diluted share in Q4 2019 compared to $24 million or $0.41 per diluted share last year representing 12% growth.

Adjusted EBITDA was $54 million in Q4, which was approximately the same as Q4 last year. Now looking at full year results, net sales were $1.3 billion in 2019 up 14% compared to $1.2 billion in 2018.

Organic sales were up 2% for the year, gross margin was 39.1% of 2019 and adjusted gross margin was 39.6%, which was up 90 basis points versus adjusted gross margin last year. SG&A expenses were $382 million or 28.4% of sales, compared to SG&A expenses of $327 million or 27.8% of sales last year.

And full year operating income was $131 million in 2019 compared to $76 million in 2018. Adjusted operating income was $150 million in 2019 up 12% versus adjusted operating income of $134 million last year. Net income was $79 million or $1.34 per share in 2019 compared with $50 million or $0.84 per share in 2018.

And adjusted net income was $93 million or $1.59 per share in 2019, compared with adjusted net income of $89 million or $1.49 per share of 2018, which represents the 7% year-over-year growth in adjusted earnings per share. Now moving over to balance sheet and cash flows.

Our balance sheet is strong and we remain committed to a disciplined deleveraging plan. We generated $17 million of cash via working capital in the fourth quarter and reduced total debt by $30 million. While ending the year of $81 million of cash on hand and $596 million of gross debt. Net debt or gross debt minus cash on hand was $515 million.

Our liquidity also remains very strong with $277 million of borrowing availability under our revolving credit facility at the end of the year. Adjusted EBITDA was $200 million at the end of 2019, resulting in a leverage ratio at the end of the year of 2.6 times, which is calculated as net debt divided by adjusted EBITDA.

Please note that some of these are non-GAAP measures. So as a reminder please refer to our reconciliation tables in our press release to reconcile GAAP to non-GAAP measures.

Interest expense was $5 million in the fourth quarter compared with $6 million in Q4 of last year and full year interest expense was $26 million in 2019 versus $15 million last year. Depreciation and amortization was $45 million for the year compared to $39 million last year.

And as anticipated, capital expenditures were $75 million in 2019 to $55 million last year. In addition to the increased investments we've made to optimize our Americas manufacturing operations, we're making exciting new investments in our technology that Dan would like to share with you.

Dan?.

Thanks Bruce. As we progress in the 2020 my focus is really on driving the top-line and grow sales, reducing SG&A as percentage of sales and paying down debt. We have a robust pipeline of new product design and innovations in both the hard and soft flooring categories.

New cutting edge testing technology allows us to design products with dynamic highlights and pattern luminescent of hand woven and flat weave rugs. We have renewed focus on key strategic growth opportunities, including segment penetration, particularly in healthcare and education, and diversified pricing strategy.

We are accelerating cross selling opportunities across our product portfolio and across market segments, and we remain focused on driving productivity in the selling system.

Now as we think about the outlook for the full year 2020 and continue to build on our strategic agenda we are targeting to achieve organic sales growth of 2% to 4% and adjusted earnings per share of $1.60 to $1.70 in 2020. Capital expenditures are forecasted at $50 million to $60 million for the year.

Our 2020 effective tax rate is anticipated to be approximately 28% and our diluted share count is anticipated to be approximately 59.5 million shares. Also note that 2020 is a 53rd week fiscal year for Interface with the extra week reflected in the first quarter.

With regard to China, and the coronavirus crisis, we typically close our manufacturing facility and local offices in China for an extended New Year holiday in accordance of government requirements lasting from January 24 through February 9.

During this time, our manufacturing facility in Thailand absorbed the production required to service customers normally supplied from our China facility.

While manufacturing operations have resumed production limitations on movement in the region are expected to be temporary the sales and supply chain disruption and related financial impact will continue to evolve.

The impact is already evident in our year to date Asia-Pacific orders resolved, and we anticipate that our Asia business could experience sales decline as much as 10% to 20% below plan for the first half of the year.

The health and safety of our colleagues and their families is utmost importance, we will continue to monitor the situation and provide an update on the outlook of our next earnings call. Thank you again to the Global Interface team for another solid quarter and strong finish to 2019.

And thank you to our customers and shareholders who continue to support Interface and our climate take back mission. Before we get into Q&A, I know you're lucky to have questions about the lawsuit that was filed by former CEO. We have no comments as this pending litigation beyond the current statement that was issued on February 17.

With that, I'll open up for questions..

Thank you. [Operator Instructions] Our first question today comes from Kathryn Thompson from Thompson Research Group. Please go ahead..

Hey good morning. This is actually a Brian Biros on for Kathryn. Thank you for taking my questions. I guess we start on the corona impacts. You called out in the press release and also the prepared remarks.

And I guess if you may provide more color on is impact only been seen in the Asian region or is it any impact in the other regions for you guys? And is that copper tile facility in China, you mentioned is that back to full operations or is this open but still not 100% back yet?.

Hey, Brian. This is Bruce Hausman, good morning. So the impact is only being seen in Asia right now. And the planet that we have in China is backup and running. And I guess what I was just told to say and the Coronavirus issue is that it is evolving every single day, as you know, from the front page of the newspaper.

But so far, so good, we have not had any impact in our supply chain. And so far, so good, we think we're hopeful that for the full year, we can recover the impact that we're seeing.

However, the first half, as we mentioned, we could see an impact on the top-line of 10% to 20% of the Asian operations, and Asia's about 200 million in revenue just to quantify that for you just put some bands around it..

I have a quick follow up. I think 50 million in CapEx, you guys mentioned for 2019 through 2021 spend on the manufacturing innovations.

You gave some color in the prepared remarks? Can everything just help us think about kind of what the benefits are for that going forward? And whether that's mostly a margin savings play? Or maybe there's some revenue add there from the products more environmentally friendly or something, or that opens up new end markets or customers.

Maybe some clarity on what that looks like going forward impact to Interface? That would be helpful..

This is Dan. We are investing in a backing system that will give us the lowest carbon footprint product in our industry. Climate change is a really big deal to our customer base, particularly in users in our design group. They're starting to measure specifications with carbon in the spec.

And so it is innovation and it will actually grow the top-line with specs that will hold. [indiscernible] came out with a C3 which they actually calculates carbon embedded carbon in their buildings. So I think we're way ahead of the game here.

We already had a lowest carbon products, this will give us actually and we hope to get to negative carbon products eventually. And then on the testing side, it's a product technology called true test. And it gives you a design and the style is not in the marketplace today.

I don't know, if you remember when we introduced tapestry in the day, this is similar to that technology a lot more exciting. So these investments really aren't on the gross profit line, they're actually going out and getting sales..

Our next question comes from Michael Wood from Nomura Instinet. .

First question, I just wanted to see if you could provide some color on your gross margin outlook and SG&A within guidance.

And on SG&A in particular, how should we think about first quarter comparisons given that large investment that elevated SG&A in 1Q '19?.

Hey Mike, this is Bruce Hausman. So as you can see from our press release. We're providing guidance for full year, top-line 2% to 4%, we're providing EPS guidance of $1.60 to $1.70. And we're providing CapEx guidance as well as tax rates. And so in this end share counts.

What we're not doing is we're not breaking that down by quarter and we're not necessarily breaking it down by components of the income statement, gross profit versus SG&A. We're really focused on making sure we hit the top-line number and making certain that we hit the bottom-line number without trying to break apart the pieces. .

One of the things Mike is that I think our SG&A as a percentage of sales is too high. We need to grow into our SG&A number and we need to reduce those percentage. We create a lot of muscle this company which I'm excited to actually get back in here and run a company with muscle we created through a lot of investments.

But we need to grow the top line and look at wide spaces within the new LVT rubber markets that we have cross selling opportunities with our modular carpet business. But I think, we're going to try and focus on improving the top line in this company and taking share.

We've never really gone after a dealer market, particularly United States that I think we really need to go after and focus on. So, I'm actually focused on running the plan that we have, it's a great strategic plan that we put in place the last three years. We've built a lot of muscle on the selling organization.

We just need to get productivity out of our selling group. And I think we're going to focus on design as well as a company because I think design is how you drive specs as well. So to me, it's really about driving operating income line and driving the top line and growing into our SG&A..

Okay. And in fourth quarter you didn't see any acceleration organic sales, despite the fact that you had that large project that was creating an unfavorable headwind in the prior quarters.

Can you just talk about what kind of offset that in fourth quarter in terms of your core organic growth was it Asia weakness that you saw or something else that took away?.

Yes. Mike, this is Bruce, just to clarify. We actually did have a headwind in Q4 related to that large order that we were, that was lapping as a comparable from the year 2018. So, similar to the Q2 and Q3, there was a headwind that we saw in Q4 it just wasn't quite as large. But we did come in right where we thought we would.

We came in 2% organic growth was which is exactly where we thought we would come into the quarter..

Can you, finally talk about, we drove the higher tax rate. I'm sorry. .

Go ahead. Sorry. .

I just want to ask within your guidance, just you're guidance to a pretty high tax rate versus what you had in '19 and prior years. I appreciate those other comments you had Dan on organic sales within the tax rate question? Thank you..

Sorry Mike.

Are you asking about the 2019 tax rate or are you asking about the 2020 guidance tax rate?.

2020, you're guiding to 28%, if I'm not mistaken, and I think you ended an adjusted effective around 23 for 2019.

So just wondering why the big increase?.

Yes, so it's a good question. You might remember we had a couple of pickups in 2019, like one was related to the Bentley Prince treat business that is a discontinued operation. And we've talked about that in the prior quarter. So that was a onetime pickup that does not recur in 2020.

And the other thing that we're seeing, just like every other global company is just some erosion of the tax reform benefits around the global intangible tax, the so called guilty tax, and also the [indiscernible] tax.

We're seeing some erosion in some of those components, as tax reform sort of continues to bake into the income statement and continue to get clarified around the world..

Our next question comes from to Keith Hughes from SunTrust. .

Thank you. Questions on Nora.

How would Nora do in the quarter year-over-year?.

Keith, it's Bruce. Nora continues to stay on track with our acquisition model and our expectations that we had when we announced the deal. We just continue to be so pleased with the progress around that acquisition and the pace of integration.

And we're continuing to methodically integrate that business, so that we're one company with three product lines. And so right on target….

Keith this is Dan. I'd also say that, as I get out and go to various businesses, and I'm actually headed to sales market across the Northeast. The cross selling opportunities between Nora and Interface are really exciting to me. We've never been really strong in healthcare on the larger carpet side and they're very strong in healthcare.

So I think we're going to focus on the education part and the healthcare part for cross selling. And in the outlined markets, we're also given ourselves to all three products. So I think the cross selling, we haven't realized that, because I think we can. But I'm excited about that opportunity for us. .

And you have talked in the numbers about resilient half the organic growth being out of resilient. I've seen LVT was up stronger down in the quarter.

Is that fair to say?.

We continue to see fantastic momentum in LVT. And we're right on track Keith to where we had anticipated in order to be $100 million business run rate in 2020, which is absolutely fantastic with accretive margins. .

And you gave some revenue guidance in that release.

Did that assume this decline in Asia that you talked about earlier? It's like, what you're talking about?.

Well, I would say that despite what's going on with Asia and the declining sales we're up 4% in orders. Today, this quarter, so I'm excited about the other markets, Europe and United States and Americas. .

And I guess finally, the question on our carpet tile. Is that gives us a little bit which is gives us about where this industry is at this point.

Do you have feels like some share gain here? Do you have any feel what markets you're investing in carpet tile North America?.

Well, I would say that we are actually investing and I don't know if you remember we did the non-office segments, but we're actually going after the education, hospitality and healthcare markets with magic carpet and with the resilient part of our business. And as we've never really gone into lower product categories.

We've actually forfeited that market and I think we're determined to figure out how to sell into that market particularly United States. .

Our next question comes from John Baugh from Stifel..

Let's jump right in. I wanted to maybe discuss a 2% to 4% organic growth guide for '20.

Could you provide any color, because there's a little bit of an acceleration where we just completed, where that would either come from geographically or product wise?.

I think I'm excited about the European business, which is kind of lot of people are excited about Europe. We've invested in a lot of what I call commercial leaders. We have 5 new commercial leaders in Europe. And I just think we're poised to take shares in the European market and also capitalize on the fact we've got hard surfaces now there.

And I think the U.S. has got pretty good momentum going, as well, particularly with the Nora integration of cross selling. We built a lot of muscle the last two to three years in sales tools and productivity tools. We put in sales force, we've put in interface advance, and I think we're ready to capitalize on some of that.

So I think it's U.S., I think, it's Europe as well. .

And then what if anything is going on with LVT sales around the world? You mentioned the 100 million I assume that's consolidated.

What are you seeing around the globe in that product category?.

John, this is Bruce Hausman. The sales just continued to accelerate. And we can we have not seen any stopping in terms of the momentum with that product line globally, which is great..

Yes, I would say that we adopted that earlier in the United States and Europe was following the U.S. from adoption standpoint and Asia is next to come. So I think Europe is going to see some pretty good LVT growth as well in revenue. .

And is there any change in the, go ahead. .

No, no, We introduced that first the United States then Europe and then Asia, so you got adoption there. The U.S. should be ahead of everybody else as they got it first. .

Understood.

And then is there any margin profile change in LVT business?.

John, this is Bruce. So, as we mentioned last quarter, we launched some 3 millimeter LVT that actually comes at a slightly higher margin than some of our previous product lines.

So not only are you seeing, are we able to, are we bringing additional LVT products to market, but we continue to be able to bring it to market at very competitive and at strong margins. .

And then lastly, just to clarify, you used to give out sort of a backlog number we just see that I guess you're not doing that. But you did comment I think your orders were up 4%. Is that a consolidated comment and what period is this sort of? Thank you. .

John it's Bruce. So the 4% number is year-to-date quarter are up total company.

We don't provide backlog it's you guys have heard me talk about this previously, I don't it's not necessarily indicative of future, just sort of you snap the line you look at your backlog, which is why we don't necessarily talk about, it's one component of many components about where that future of revenue growth is going to come from..

Our next question comes from David MacGregor from Longbow Research. .

I guess, just we're on orders. A lot of talk on the last quarter's call about orders and, the observation was made that orders had become increasingly choppy.

So I thought we'd start with If you could update us on cadence within the quarter how order had locked and if you saw that, sort of the velocity of the orders seems to be picking up a little bit, but has it stabilized in terms of the flow or is still very choppy? And just talk a little bit about what you're seeing in terms of the quality of the order book?.

David, this is Bruce. I think that was the word, I think I was the one who said the word choppy and I think that people read too much into that. When you look recently, things bounce around. It's just been a smooth progression throughout the quarter, the way I would sort of describe it.

And I think, looking at 4% that's a good number for us, year-to-date. .

And one thing, it was in the script, but we had a sales meeting in the United States as one of the best sales meetings I've probably ever attended. And then I went to management meeting at the top 125 in Europe and those two groups are very optimistic about what's going on in their geographical regions.

And pretty excited about going out and be able to grow the top-line. So that's, that sort of gives me a little bit of encouragement about the first. We haven't been at 4% in orders. That's a good time for us. .

And the observation I think, Bruce, you made the call that 4% was across your company, Is there much disparity in that number if you look at region-by-region?.

We don't normally give out order growth rates on a geographic basis. However, given all the sensitivity around coronavirus, this quarter I'd like to just tell you that orders are down 8% year-to-date in Asia. But for total company they are up 4%, which obviously means that they're, we're seeing strong order growth in Europe and in Americas..

And expect that in Asia. You talk about price points, and it sounds like an exciting opportunity, but frankly so opportunity we're talking about for over a year now.

Just update us in terms of sort of metric you're using in terms of specifying wins that both hard and soft content, or what's the metric you're using on that? And could you update us on that?.

Well, to me, we really hadn't been focused on cross selling even focus on how to actually get Nora settled into the Interface culture and vice versa. And it takes a while to get the cross selling, actually get the people identified, get the products identified, getting the markets identified.

And me stepping in here in the last six weeks, I think we finally got all right, we got the people identified. They're going to actually carry the three products. So I'd say that, we always had a cross selling opportunity, but I think we're able to execute it better now, given that we've had 18 months to get it going. .

And just one question for me on the carbon products initiative.

I think the conversation has been around 15 million to 20 million of cost reductions overlapping '20 and '21, is it still 15 million to 20 million, is that still a good number to use?.

Well, based on the carbon negative side of the equation, that one is closer to 10. I'm not familiar with the other 5 million where that comes from, except we've got a lot of improvement in manufacturing that we're targeting. So that whole pipeline is probably more like 15 million..

This is Bruce, just to clarify. That's the kind of savings that bleeds in not just this year, but it bleeds into into next year. .

I think you indicated that last quarter as well. One more like just on the balance sheet. You thought, you could get it down to 2.0 times by the end of '20.

Is that still the goal?.

You talked about net debt to EBITDA growth?.

Right..

That is, we say this. We are very, very focused on continuing to deleverage the Company. So we're super we're right on track with where we said we would be being at 2.6, as we ended up this quarter, which is fantastic. And we're going to continue focusing on deleveraging. We do have a goal of getting down to 2.0 by the end of this year.

But I just wanted to say, for everybody's benefit that deleveraging the balance sheet is a very, very key focus for us..

Yes, I want to echo that..

And I'm showing no further questions in queue at this time. I'll turn the call back for closing remarks..

Well, thank you all for listen the call. It's good to be back for me in this role, and I'm looking forward to having this great year. And I'll talk to you next quarter. Thanks..

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..