Good morning, everyone, and welcome to Hillenbrand's Earnings Teleconference for the First Quarter of Fiscal 2019. A replay of this call will be available until midnight, Eastern Time, February 13, 2019, by dialing 1 (800) 585-8367 toll free in the United States and Canada or 1 (416) 621-4642 internationally and use the conference ID number 3896285.

This webcast will be archived on the company's website at http://ir.hillenbrand.com through March 1, 2019. If you ask a question during today's call, it will be included in any future use of this recording. Also note that any recording, transcript or other transmission of the text or audio is not permitted without Hillenbrand's written consent.

At this time, it's my pleasure to turn the conference call over to Rich Dudley, Director of Investor Relations. Mr. Dudley, please go ahead..

Thank you, operator. Good morning, everyone, and welcome to Hillenbrand's first quarter fiscal 2019 conference call. I'm joined by our President and CEO, Joe Raver; along with our Senior Vice President and CFO, Kristina Cerniglia. During today's call, we'll discuss the first quarter financial results and discuss the outlook for our businesses.

After that, we'll open the call up for Q&A. Before we get to the results, let me remind you that our comments may contain certain forward-looking statements that are subject to the safe harbor provisions of the securities laws. These statements are not guarantees of future performance, and our actual results could differ materially.

Also during the course of this call, we will be discussing certain non-GAAP operating performance measures. I encourage you to take a look at our 10-K and 10-Q, which can be found at our website, for a deeper discussion of forward-looking statements and the risk factors that could impact our actual results.

For more information on our use of non-GAAP operating measures and the reconciliation to GAAP financial measures, please refer to our most recent 10-Q and the slides presented with this call. Now, I'll turn the call over to Joe..

Thanks, Rich, and good morning everyone. As you saw in our press release last night, we're off to a good start in fiscal year 2019 with solid first quarter results driven by continued strength in our plastics and aftermarket’s parts and service businesses. Total revenue was up 3% and the Process Equipment Group delivered 7% growth year-over-year.

Process Equipment Group orders were strong and backlog was up 16% sequentially, extending our run of sequential backlog growth to nine consecutive quarters. We generated strong cash in the quarter resulting in free cash flow greater than 100% of net income.

In addition, we completed the acquisition of a small screening company that fits very nicely into our Rotex business. Turning to the Process Equipment Group, our objectives are to strengthen our existing platform in plastics and to grow our processed food and pharmaceuticals, separation and flow control businesses to achieve market leading positions.

In that vein, I want to provide a little more detail about the acquisition I mentioned earlier. During the quarter, we acquired BM&M Screening Solutions for $26 million. BM&M is a North American manufacturer of gyratory screeners serving a variety of the industries including forest products and agriculture.

The business was founded in 1968 and is headquartered in Canada. We’ll operate BM&M as a part of Rotex. Although small, this tuck-in acquisition is well aligned with our strategy to build out a separation platform. We see potential to expand the business globally as we integrate new products offerings, sales and manufacturing capabilities.

We expect BM&M to generate revenue of $14 million and EBITDA of $3 million on an annualized basis. We anticipate the acquisition will be accretive to adjusted earnings per share by about $0.02 for fiscal 2019. The integration is going as expected and we're excited to have the BM&M team as part of the Hillenbrand family.

Moving to segment performance and outlook. Plastics business is the largest part of the Process Equipment Group and they continued to be our strongest performing business in the first quarter leading the way both in terms of revenue growth and order intake.

Story is similar to what we've seen over the past few quarters with robust demand for large systems, particularly in North America and Asia. Our teams have done excellent work to bring innovative end to end solutions to our customers to address increasingly large and complex projects around the world.

These are advantages that we believe give us a unique value proposition and help make us a partner of choice. Our customers care about system uptime and productivity and Coperion extruders and material handling systems are unsurpassed in these areas.

We continue to bring new ideas and product enhancements to reduce plant investments, optimize efficiency and reduce lifecycle costs for our customers in the polyolefin industry. The pipeline for large new systems projects remains healthy.

We believe that's a sign of confidence that the overall demand for plastics and the need for capacity will continue to increase. And we think we are well positioned to take advantage of this strong demand. As we've discussed, these large projects have a high proportion of pass-through content and tend to come with lower margins.

We expect to see some continued margin pressure in the near-term as they make up a higher proportion of our business mix. At the same time, the strong growth we've generated in these systems bodes well for future parts and service revenue, which is one of the most profitable areas of our business.

We continue to see the benefits of winning past projects in our results. Our parts and service business has continued to grow and we saw a relatively strong year-over-year results in this area this quarter.

Demand for engineered plastics remained solid, although some areas of consumer spending such as automotive seem to be slowing and we've seen some softening of demand in China. Processed food and pharmaceutical applications continue to be a priority for us and we experienced modest growth this quarter.

We've seen continued investment in processed food and we maintain a positive market outlook going forward. The pharmaceutical side has been a bit lumpier based on the timing of some larger projects. These larger systems projects are often designed to help customers transition from batch to continuous processing.

We remain confident in the long-term growth of both the pharmaceutical and processed food parts of our business. Performance of the other Process Equipment Group businesses was consistent with our expectations and relatively flat overall compared to last year's first quarter.

Capital sales of separation equipment used to process proppants were down compared to last year as we expected. We partially offset that decrease with a robust increase in the sales of aftermarket parts and service and modest growth in capital sales and other end markets.

In flow control, we saw some softening in demand in mining and European industrial markets and investment by North American municipalities continues to be constrained. On the other hand, U.S. industrial water and wastewater applications remain strong. Now let me briefly comment on Batesville.

Our strategy for the Batesville business is to build on our leadership position and leverage elements of the Hillenbrand operating model to provide earnings, cash flow and talent to fuel Hillenbrand's growth and continued transformation. Batesville’s revenue was down 4% for the quarter on lower burial sales and margins were down slightly.

Operationally, the business ran well in the first quarter, but as expected cost inflation continued to be a headwind.

Batesville team continues to work relentlessly to take additional costs out of the business every year, focused on maintaining a lean and flexible organization to better serve our customers to continue to generate strong financial results for our shareholders.

The team is also focused on identifying opportunities that create real value for customers, including innovative uses of technology.

As an example, Batesville recently developed a mobile app designed to facilitate communication between the funeral director, the family and the family support network to provide resources and information for the funeral arrangement process.

Innovations like this help foster deeper relationships with our customers and provide us insight into their needs. This insight in turn helps Batesville design industry leading products and services that help funeral homes to better serve the needs of their client families.

I'll close my comments about Batesville by reminding you of the longer term industry trends. We expect that the long-term demand outlook for burial caskets will continue to be challenged despite higher projected death from the aging generation of baby boomers, primarily due to the increase in the cremation rate.

Funeral practices continue to evolve, Batesville intense remain lean and flexible to better serve our customers and to generate strong financial results for our shareholders. Before I turn the call over to Kristina, let me briefly comment on M&A.

We remain focused on building platforms to develop scale and enhance leadership positions in our targeted markets of plastics, food and pharmaceuticals, separation and flow control.

As I said earlier, we're pleased with the BM&M acquisition and we continue to evaluate additional opportunities for strategic acquisitions that we believe can accelerate our profitable growth strategies. We have a strong balance sheet that gives us a lot of flexibility to execute our strategy.

We remain committed to a disciplined approach to ensure the investments we make align with our strategy and create value for our shareholders. With that, let me turn the call over to Kristina for a bit more detail on the financial results for the quarter.

Kristina?.

Thanks, Joe, and good morning everyone. We delivered solid first quarter results and we remain on track to achieve our full year target. We reported total revenue of $410 million in the first quarter representing growth of 3% year-over-year including a 2% currency headwind.

Results were driven by the Process Equipment Group where we grew 7% offset in part by a 4% decline in Batesville revenue.

Adjusted EBITDA decreased 2% year-over-year to $64 million and adjusted EBITDA margin decreased 80 basis points to 15.6% primarily driven by cost inflation and product mix, which were partially offset by pricing and productivity improvement. GAAP net income increased 56% to $28 million, or $0.45 per share.

The increase in net income was primarily due to a lower effective tax rate of 33.3% compared to 55.4% in fiscal 2018. The decrease in the effective tax rate was largely result of the impact of the Tax Cuts and Jobs Act of 2017 in which we recognized a one-time tax expense on unremitted foreign earnings last year.

On an adjusted basis, the effective tax rate for the quarter was 29.1%. The higher adjusted rate was primarily the result of an increase in the reserve for uncertain tax positions and contributed to a 9% decrease in adjusted net income to $31 million or $0.49 per share.

We generated operating cash flow of $36 million, an increase of $9 million, or 32%. Free cash flow was 110% of net income for the quarter. The timing of large projects was a big factor in this quarter’s strong cash performance. These projects can have a significant effect on working capital balances in any one quarter.

And with the strong growth we've experienced in backlog, we expect working capital to fluctuate over the next several quarters. With that said, we continue to focus on improving processes to manage working capital more efficiently. Our capital allocation priorities are to invest in organic growth initiatives and strategic acquisitions.

In this quarter, we invested approximately $26 million of cash in the acquisition of BM&M to accelerate profitable growth. During the quarter we also returned $13 million to our shareholders in the form of cash dividends. In December, the Board approved a new share repurchase program of up to $200 million.

The main objective of our share repurchase activity, remains to offset dilution introduced by equity incentive compensation plan. We expect to continue to buy shares in fiscal 2019 and may increase the rate opportunistically depending on alternative investment opportunities.

Turning to the next slide, let me cover segment performance beginning with the Process Equipment Group. First, let me comment briefly on the effects of the BM&M acquisition on first quarter results.

Given the size of the business and timing of the acquisition during the quarter, we only recognized about $700,000 of revenue for the quarter and the bottom line impact was not significant. These numbers are included in my commentary.

Process Equipment Group revenue increased 7% to $282 million, with growth primarily driven by continued strong demand for large plastics projects and increased demand for aftermarket parts and service. Parts and service revenue was up 9% year-over-year, continuing our trend of above market growth that we’ve delivered over the past several quarters.

Foreign currency translation was a 3% headwind in the quarter on total revenue. Adjusted EBITDA margin of 16.4% decrease to 90 basis points. As expected, given the backlog of lower margin large projects, the proportion of revenue from these projects resulted in pressure to margins this quarter.

Additionally, we've faced some headwinds from cost inflation and tariffs. We anticipate offsetting the majority of the tariff impacts through pricing and surcharges. The lower margin in the quarter also reflects a onetime strategic project investment to build out our global procurement initiative.

We generated strong order intake in the quarter, which contributed to our ninth consecutive quarter of backlog expansion, growing $132 million or 16% sequentially over the fourth quarter of 2018 to $946 million. That represents growth of 33% over last year's first quarter. Excluding the foreign currency impact, backlog grew 38% year-over-year.

Again, large plastics extrusion and material handling system accounted for the majority of the increase. Customers continue to place orders with us well in advance of planned delivery dates for these projects to ensure they are placed in line. And more than 20% of the backlog is expected to convert to revenue beyond the next 12 months.

While we don't expect to recognize revenue for some of these projects this fiscal year, we're pleased with the continued momentum they give us. As Joe said, our growing installed base of these large systems reinforces our strategy to drive growth in our highly profitable parts and service business.

Moving to the Batesville business, revenue of $128 million decreased 4% compared to the prior year. The decline was primarily the result of lower demand for burial caskets in connection with the continued increase in the estimated cremation rate. Adjusted EBITDA margin of 20.9% was 10 basis points lower than the prior year.

Batesville has faced cost inflation, especially in commodities like steel and wood. Last year our steel contracts helped insulate us from a portion of the significant increase in market pricing. As we've entered into new contracts, our costs are expected to more closely align with the market.

Batesville’s manufacturing operations have run more efficiently compared to last year helping to offset some of the impact of these higher costs.

The Batesville team continues to leverage the Hillenbrand operating model to manage the business as efficiently as possible to maximize profitability and free cash flow in the face of challenging industry dynamics. With that, let me turn to our outlook for the rest of fiscal 2019.

We are reaffirming our guidance for top line growth and earnings for the year. As a reminder, we expect consolidated revenue growth of 1% to 3%, including an estimated 2% foreign currency headwind. We're forecasting Process Equipment Group revenue to increase 3% to 5% including an estimated 3% FX headwind.

As we consider timing, in the Process Equipment Group, large projects are expected to continue to drive growth and we continue to forecast lower sales of equipment for proppants in the second quarter. As a result of this mix, we anticipate Process Equipment Group margins will remain lower year-over-year in the second quarter.

We are forecasting margins to improve in the second half of the fiscal year, due in part to benefits from our global procurement initiative and continued price realization, keeping us within our targeted range for EBITDA margin expansion of 30 to 60 basis points for the full year in the Process Equipment Group.

Batesville sales are projected to decrease 1% to 3% for the full year. We anticipate being at the low end of this range, given indications for a less severe flu season this year compared to last, which we believe will result in a slightly steeper decline in the second quarter.

We continue to expect Batesville’s margins to be down about 90 basis points, to approximately 21% for the full year. GAAP EPS for 2019 is projected to be $2.40 to $2.55 and adjusted earnings per share for 2019 is projected to be $2.45 to $2.60.

The adjusted EPS range reflects earnings growth of 1% to 7% and reflects a negative foreign currency impact of approximately 2%. We now anticipate our adjusted effective tax rates to be at the high end of our previously communicated guidance of 25% to 26% for the year.

The BM&M acquisition is expected to contribute revenue of about $14 million and EBITDA of $3 million on an annual basis. We expect it to be accretive to fiscal 2019 earnings per share by $0.02. We're not updating guidance as a result of this transaction.

In summary, we're confident we can build on a solid start to fiscal year to meet our commitments as we strive to drive profitable growth for Hillenbrand. At this time, I will turn the call back to Joe..

Thanks Kristina. We started the year with strong momentum in our plastics business, and we expect that to continue over the next few quarters. Other industrial markets are relatively stable. And Batesville is operating well, despite the industry dynamics it faces. We have clear long-term strategic initiatives.

We've been executing against these and we're pleased with the results we are seeing. We continue to leverage the Hillenbrand operating model to drive the business forward and move us closer to our objective of establishing Hillenbrand as a world-class, diversified industrial company in the eyes of our customers, our employees and our shareholders.

That concludes our prepared remarks. We're ready to take your questions.

Operator, would you please open the line?.

Thank you. [Operator Instructions] Our first question comes from the line of Daniel Moore with CJS Securities. Your line is open..

Joe, Kristina, good morning. Thanks for taking the questions. Wanted to start with Process Equipment Group, continue to see good trends there. Just maybe update us, is it still largely Asia and combined with North America, where are you seeing the incremental demand? Number one.

And number two, is it largely market growth or are you winning perhaps an increased share of RFPs as well?.

Hi Dan, it's Joe. I think you have it right. So we've seen, as you know, strong demand in North America, particularly for polyethylene production and we continue to see that. And we continue to do well in North America with the large polyolefin projects.

And then as you know, China is a big consumer of base resins and China is adding quite a bit of capacity, both polyethylene and polypropylene. And so that is the other area that we're seeing capacity increases and where our backlog is growing. Related to are we growing share? There are just a few of these projects that sort of happened every year.

So it's just a handful. It's not like there are hundreds there, sort of single, double digits in terms of the number of projects, low double digits. And so we really have to look over a longer timeframe to see if we're winning share, or not winning share.

But what I would say is we've had some really nice innovations in the way we engineer the systems, as well as the products that we produce and use in the systems are proprietary equipment.

So we feel like we are certainly winning our fair share and perhaps even more than our fair share given some of the innovations that the team has undertaken and the strength of our, I guess winning the projects, because you can see all the projects. So we do feel good about where we are in terms of our market position..

Got it, helpful. And then saw a nice uptick in parts and service, which obviously is typically higher margin. I know that's been a focal point for you. Is that – is there something anomalous in the quarter, or you see that being a little bit more of a trend.

And if you have, roughly what percentage parts and maintenance, parts and services was it a peg for the quarter, that would be great?.

Sure Dan. So as you know we had a very strong quarter for parts and revenue up about 9%. I would tell you we've been very focused on growing parts and service, but the first quarter I would tell you that last year we had an easier comp.

So as we head into the rest of the year our comps are a little more difficult from a spare parts and service perspective. So we don't expect to see that high level of growth on a go forward basis. I think you can expect to see mid-single-digit growth in that area. As it relates to percentage, it’s roughly about 35% of our revenue for PEG..

Got it, helpful..

And I would just add one more thing. As you noted, the margin is far better on those spare parts..

Yes, perfect. Lastly, just shifting gears to the BM&M acquisition. Maybe a little bit of color on sourcing where you – how you found it, how it came together. Any kind of expected growth and any potential synergies you might describe and are there more opportunities like this out there? That's my, my last five-part question. Thank you..

No, no that's a great question. And this is really – it's a small deal, but this is sort of right in our wheelhouse in the kind of deals that we’d like to do from a tuck in perspective going forward. Obviously we'd like to do more substantial deals, but from a tuck in perspective it really fits our model very well.

It's a complementary product line to the Rotex business. So it brings us new technology and exposure to some new end markets where they're very successful primarily in forest products and then agriculture and nuts and things of that nature. So it's really well aligned.

If you look at the plant, it's a similar kind of plant and the equipment is very similar. In fact, we expect to use their plant capacity to help Rotex. And then so that's an area of synergy for us. And then the other piece of this is it's largely a North American business, mostly the U.S. and Canada. As you know Rotex does business more globally.

And so we believe that will over time have the opportunity to grow the business perhaps more than it would on its own based on using our manufacturing service and selling network around the world.

So, again, it's a really good fit for us and really close to what the Rotex business does and we think we can reduce costs and grow the top-line of this business..

Got it. Appreciate it. I will jump back in queue..

All right, thanks, Dan..

[Operator Instructions] Our next question comes from the line of John Franzreb with Sidoti and Company. Your line is open..

Good morning everyone..

Hi, John..

Hi, John..

Okay. Joe, how unusual is it to have such long lead times in these plastic jobs? It sounds like some of these orders may be extending beyond 2020.

Can you kind of give us some color on that? And can they be canceled or not, how firm are they?.

Yes, so I think that is a little unusual. It's probably been a decade since we've seen lead times this long and that was prior to us owning the business at Coperion. So there is very strong demand over the – and so the whole supply chain is kind of pushing out in terms of orders.

And so in the last downturn, so when you think of what happened in like 2009, 2010 after the economy – the worldwide economy dropped, I don't think any of those projects actually canceled because we're relatively late in the cycle. So by the time they're ordering equipment from us, they've committed to the project. They put capital into the project.

And so they would continue to finish the project. And then of course we're slow going into a downturn, but then we’re slow coming out because it takes time for the projects to get back on the board and then us to order and – get orders and then deliver equipment. So these are relatively long lead times.

I think there is just a tiny bit that goes into 2021, most of it's in this year and 2020, but we would not expect those projects to cancel. But it's really hard to tell until something happens, but historically we haven't seen project canceled with long lead times, even in severe downturns..

Got it, got it. And you kind of reinforce the idea that due to mix and pass-throughs that this would be margin pressure from these projects possibly offset by what you're doing in your aftermarket parts business.

Can you kind of tell us what kind of net margin pressure you would think would happen over the long-term as result of that kind of mix shifts in the next year or so?.

John, I think the way I would think about it is, we've guided to about 30 basis points to 60 basis points of EBITDA margin expansion and within that guide includes the mixed pressure that we're feeling from these large projects as well as the mixed pressure from the lack of proppants orders.

So remember the other pressure point for us as it relates to mix is these large – these proppants orders. So that is being offset by continued pricing and procurement. And that's really how we get to our 30 basis points to 60 basis points of EBITDA margin expansion..

Okay, great, great.

And can you just talk a little bit about the pricing strategy that you're putting in place and the current success rate, maybe an update on that?.

Sure. So I think – we think about pricing in a few different ways. In terms of strategic pricing, we have what we believe there is a pretty good methodology and for large projects for example.

We really work the whole project and understand strategically where we're positioned the value that we add and try to be as effective as we can in pricing to optimize margin.

And so from a large project, we have a pretty sophisticated pricing methodology that looks not just purely a price, but also as you know they're big working capital implications for these large projects and so we're also making sure that we're thinking about terms and conditions in that whole mix.

And then on the parts and service side, which is probably the other big driver, you know there's different kinds of parts and services and again it’s – the competitive environment some things are a bit more commodity like, some are much more highly engineered and we tend to do better on more highly engineered kinds of parts and service than we do where we're competing against say local job shops, who are building pieces of equipment or parts that are more readily available and more commodity like.

So that's kind of our normal pricing sort of thoughts. And then we have the sort of the unusual sort of environment right now with inflation and tariffs. And so that's the other piece that we put into this making sure that we're staying ahead of commodity costs increases as they come into play.

And as we've discussed before, we'd price for a large project. We will go ahead and place the order for the large components of those large projects.

So think of a big motor, or big gearbox, a significant portion of the cost of those large projects and get that price locked in as best we can when we sign the agreement with the customer so that we don't have to get upside down in terms of inflation and the price that we've charged..

Alright, got it. And just one last question in regards to the flu season, you mentioned earlier it started off – well it's been a healthy flu season for everybody.

And in light of maybe the strong backlog, should we – when we think about second quarter results, are we looking for a meaningfully down number, or just a marginally down number on a year-over-year basis as far as earnings?.

Yes. So on a consolidated basis; I would say we're going to be marginally down on a year-over-year basis, because of the couple of things that you just mentioned, right, the mixed pressure on the process side and a steeper decline in the Batesville volume as result of a lesser flu season..

Yes, 2018 was a pretty solid flu season and if you go out like to the CDC website and take a look at the charts for 2018 and 2019, you can see a significant increase in 2018 and then a relatively, as you said, light flu season this year in 2019 thus far..

Yes, I was just wondering that because if I remember correctly a year ago you also had some production disruptions in Batesville. That I'm assuming aren't going to happen again in this year. So I just wanted to get that all kind of context..

Yes, that's a great point. So we will see some benefit from not having that repeat.

I will tell you though, this year though we're facing a commodity, that's the other big piece is from a commodity side if you remember last year, we were somewhat protected from the big increase in steel prices that occurred during the year because we do longer-term contracts.

We are now pretty much at market rates as we've just renegotiated those contracts and they come into play starting – started at the beginning of the calendar year of 2019. So the sort of the challenge at Batesville shifted a little bit. The volume challenge is still there. Operationally, we're much better positioned than we were last year.

This year, however, we have a commodity cost increase that has been and is expected to be sort of more difficult from a year-over-year perspective..

Great. Thanks a lot Joe. I'll get back in the queue..

Thanks John..

Our next question comes from the line of Daniel Moore with CJS Securities. Your line is open..

Thanks. Last follow-up, it looks like just from capital allocation perspective, it doesn't look like, at least Kristina alluded to buying a lot of stock in the December quarter despite the increase in the authorization, leverage still at one times even after the BM&M.

So, Kristina you alluded to it, but the expectation to be a little bit more aggressive either around current levels or in fiscal 2019 in general?.

So yes Dan as it relates to the capital allocation, I think, we mentioned that we got approval from our board, $200 million to repurchase shares in December. We're well positioned to purchase some shares. We're going to do it on an opportunistic basis and it really again depends on what's in our pipeline from an M&A perspective.

So we're being cautious, but we will be opportunistic, if we can be and when we can be..

Understood, I appreciate the color..

Thanks Dan..

And our next question comes from line of John Franzreb with Sidoti and Company. Your line is open..

Yes, I guess just a little bit of an update on what you’re seeing in the pump and valve side of the business, any change in municipal spending, any kind of chatter that gives you confidence or worry in the year ahead?.

Yes, so from the pump and valve side let me just talk about maybe two different areas. The first is, I think, in North America – well generally we're seeing strength on the industrial side of both of those businesses compared to the municipal side.

So particularly in North America, we're seeing strengths particularly in valves, industrial water and wastewater. It's been more modest on the municipal side, there are – that market continues to be somewhat constrained. We expect and have seen some signs that that market will begin to get some better growth as we move forward.

But there has been quite a bit written about [indiscernible] EPA, inspections, less consent decrees from the EPA that drives some of these larger projects. We see it's a little lumpy on the mining side, so our pumps are very good for mining.

And we’ve seen success in mining, but we've also – that's a little bit lumpier, but over the long run we still feel really good about both of those businesses, both on the industrial side and the municipal side, as well as in mining.

So relatively modest sort of growth in those businesses thus far this year, and as we look forward, we expect for the next few quarters relatively modest growth in those businesses..

Joe, did the government shutdown hurt the businesses at all?.

It's interesting, that's a great question. We've been looking for issues related to the government shutdown. I don't think it really impacts our business a lot. So we haven't felt it in any part of our business at this stage. No..

Okay, great. I guess that's it. That's all I've got. Thank you guys, thanks for taking my questions..

Yes, thanks John. A - Kristina Cerniglia Thanks John..

There are no further questions at this time. I'll turn the call back over to you..

Thanks, operator. And I'd like to thank everyone for joining the call today. Have a great day. And we look forward to speaking with you again in May as we report our fiscal second quarter results..

This concludes today's conference call and you may now disconnect..