Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Kadant Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mike McKenney, Executive and Vice President and CFO. Thank you.

Please go ahead, sir..

Thank you, Gigi. Good morning, everyone, and welcome to Kadant's Fourth Quarter and Full Year 2020 Earnings Call. With me on the call today is Jeff Powell, our President and Chief Executive Officer. Before we begin, let me read our safe harbor statement.

Various remarks that we may make today about Kadant's future plans and expectations, financial and operating results and prospects are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those outlined at the beginning of our slide presentation and those discussed under the heading Risk Factors in our annual report on Form 10-K for the fiscal year ended December 28, 2020, and subsequent filings with the Securities and Exchange Commission.

In addition, any forward-looking statements we make during this webcast represent our views and estimates only as of today. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views or estimates change.

During this webcast, we'll refer to some non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles.

A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure is contained in our fourth quarter and full year earnings press release and the slides presented on the webcast and discussed in the conference call, which are available in the Investors section of our website at www.kadant.com.

Finally, I wanted to note that when we refer to GAAP earnings per share or EPS and adjusted EPS on this call, we are referring to each of these measures as calculated on a diluted basis. With that, I'll turn the call over to Jeff Powell, who will give you an update on Kadant's business and future prospects.

Following the remarks, I will give an overview of our financial results for the quarter and the year, and we will then have a Q&A session.

Jeff?.

Thanks, Mike. Hello, everyone. Thank you for joining us this morning to review our fourth quarter and full year results and discuss our business outlook for 2021. I'll begin by discussing our operational highlights and our fourth quarter financial results. The fourth quarter was a solid finish to a challenging year.

Despite the uncertainties brought about by the pandemic, we had a solid execution during the quarter and generated strong cash flow while safeguarding our employees. Strong capital project activity across all our operating segments and robust demand for our Parts & Consumables led to record bookings and cash flow in the fourth quarter.

I'll provide more details about this activity when I discuss the results of our operating segments. Our balance sheet remains healthy and our liquidity position has strengthened throughout the year. Robust cash flows have always been a strength of Kadant, and we expect this will continue as economies recover from the effects of the pandemic.

Turning now to our Q4 performance. We achieved a notable turnaround from the prior quarter's weak business levels. Our Q4 bookings were a record $197 million, up 23% compared to the prior year, with our Industrial Processing segment driving this growth.

Strong demand led to a 9% sequential increase in Parts & Consumables revenue, which made up 67% of total Q4 revenue. Total revenue was down 8% compared to the fourth quarter of 2019. We were particularly pleased that our adjusted EBITDA margin increased to 19.1%, and our free cash flow was up 7% to a record $38 million in the fourth quarter.

Overall, the quarter was better-than-expected and I'm pleased with how our employees delivered these solid operating results. While 2019 was a record year on many fronts, and we began 2020 with positive momentum, no one could have anticipated the full impact that the pandemic would have on the world and the global economies.

Full year revenue declined 10% to $635 million, while our bottom line performance benefited from a favorable product mix along with cost containment measures and government systems programs. Cash flow from operations strengthened throughout the year, and free cash flow was near a record $85 million for the full year 2020.

Our diluted EPS was $4.77 and on an adjusted basis, declined 7% to $5 compared to our record of $5.36 per share in 2019. Our workforce around the globe deserves a tremendous amount of credit for these results as they adapted to a new way of work and performed exceptionally well under very challenging circumstances.

I'm extremely proud of our talent and dedicated employees for the work they've done and continue to do to serve our customers. Next, I'd like to review the performance of our 3 operating segments.

Our Flow Control segment benefited from a rebound in capital project activity in the fourth quarter, which led to bookings increasing nearly 9% compared to the prior year period. Our quarterly bookings performance moved in the right direction as the year progressed and positions us well for a solid start to 2021.

Our Parts & Consumables revenue was up 5% sequentially and made up 68% of total Q4 revenue.

As many of you know, our aftermarket parts business has a more favorable margin profile compared to capital business, and the product mix combined with improved operating leverage led to a 13% increase in adjusted EBITDA compared to Q4 of 2019 and represented 26% of revenue.

Looking ahead, we expect the first quarter of 2021 to show stability in terms of both capital project bookings and demand for Parts & Consumables. We believe market conditions are improving and will continue to strengthen as the COVID-19 vaccine becomes more widely available and businesses are permitted to fully reopen.

Turning now to our Industrial Processing segment. We continue to experience strong demand for our wood processing equipment and also for our stock prep equipment, with capital bookings in this segment more than doubling compared to the prior year. This demand was largely driven by two factors. One was a robust U.S.

housing market, which saw single-family homebuilding, the largest share of the housing market, increased 12% in December. The other was a significant increase in our stock prep capital project activity in China and North America, which more than doubled compared to the prior year.

Revenue in this segment declined 13% to $69 million year-over-year, but increased 11% sequentially. Parts & Consumables revenue was up 12% compared to the same period last year, and made up 70% of total revenue in the fourth quarter. A favorable product mix and good execution led to a 250-basis point improvement in our adjusted EBITDA margin.

While government systems programs were significantly reduced in the fourth quarter, we did have some remaining benefit that helped allow us to retain our talented workforce. In our Material Handling segment, we continue to see relatively stable yet moderate order activity.

Revenue was down 7% to $39 million, and Parts & Consumables revenue in the fourth quarter made up 58% of total revenue. Capital bookings in our Material Handling segment increased 23% compared to the same period last year and were up 18% sequentially.

We are encouraged to see our customers showing increased confidence in the economic outlook by awarding us these larger capital orders. As in all other segments, we are seeing increasing market activity. Looking ahead to 2021, we believe this segment will continue to strengthen throughout the year.

As we look ahead to the first quarter of 2021 and the full year, we are seeing signs of increased project activity and expect industrial production to continue its modest rebound. Our strong cash flows combined with a strengthening balance sheet have us well positioned to capitalize on opportunities that may emerge with the improving global economy.

While we are hopeful the worst of the pandemic is behind us, there is still a great amount of uncertainty, particularly in Europe, regarding how economies will respond to pandemic given the unevenness in the vaccine distribution.

This uncertainty limits our ability to forecast the timing of orders and as a result, we will not be providing guidance at this time. I would like to pass the call over to Mike for a review of our Q4 performance.

Mike?.

$1.87 from lower revenue and $0.05 from higher weighted average shares outstanding.

These decreases were partially offset by $0.45 from lower operating expenses, $0.39 from government assistance programs, $0.35 due to lower interest expense, $0.33 from higher gross margins, $0.03 from the operating results of our acquisition and $0.01 from a lower recurring tax rate.

Collectively, included in all the categories I just mentioned, was an unfavorable foreign currency translation effect of $0.04 in 2020 compared to 2019. Now let's turn to our liquidity metrics, starting on Slide 18.

Cash conversion days measure, calculated by taking days in receivables plus days in inventory and subtracting days in accounts payable, was 125 at the end of the fourth quarter of 2020, down from 140 at the end of the third quarter of 2020, but up from 104 days in the fourth quarter of 2019.

The increase in cash conversion days from the prior year was driven by a higher number of days in inventory and lower number of days in accounts payable due to a number of factors, including delays in capital project deliveries, weakness in capital project activity and delays in maintenance spending by our customers.

As I've noted on past calls this year, our subsidiaries managed their inventory supply to ensure that critical components are available for our customers as needed and the timing of these purchases has been difficult to predict in the current environment.

Working capital as a percentage of revenue was 14.2% in the fourth quarter of 2020 compared to 15.6% in the third quarter of 2020 and 12.2% in the fourth quarter of 2019. Net debt, that is debt less cash, at the end of 2020 was $166.8 million compared to $232.8 million at the end of 2019.

We were able to lower our net debt by $66 million due to the excellent free cash flow generated in 2020. Our interest expense decreased 42% or $5.4 million to $7.4 million in 2020 compared to $12.8 million in 2019 due to our ability to successfully leverage cash generated around the world to pay down debt and lower interest rates.

Our leverage ratio calculated defined in our credit agreement was 1.61 at the end of the fourth quarter of 2020, down from 2.03 in the fourth quarter of 2019, as we continue to make excellent progress in paying down debt. Regarding guidance, our current environment continues to make forecasting difficult.

Given the current uncertainty, we'll not be providing formal guidance at this time for 2021. We will reevaluate providing guidance as we progress through the year. While we are not providing guidance, I would like to provide a few directional comments on our outlook for 2020.

We had a significant increase in demand for our Parts & Consumables and especially our capital products in the fourth quarter, and we anticipate an overall increase in bookings in 2021. We currently anticipate an overall increase in revenue of 9% to 12%, with stronger performance in the second half of the year.

We anticipate the first quarter will be our weakest quarter and the fourth quarter will be our strongest. I would caution here that this is predicated on the COVID-19 vaccination rollout improving business conditions in the second half of 2021. We also anticipate the mix will be weighted more towards capital in 2020.

Excluding the government assistance programs, our gross margins came in at 43.1% in 2020. For 2021, despite the heavier mix towards capital, we anticipate gross margins will be close to this level. As a percentage of revenue, we anticipate SG&A will be approximately 27% to 28%, while the percentage of R&D expense will be the same as 2020.

Overall, we expect minimal benefit from government assistance programs in 2021 compared to the $0.39 we received in 2020. We expect our recurring tax rate will be approximately 27% to 28% in 2021.

Our recurring tax rate in the first quarter of 2021 may be lower than the remaining quarters as we anticipate receiving a tax benefit from the vesting of equity awards. We anticipate CapEx spending in 2021 will be approximately 2% of revenue. In addition, we expect depreciation and amortization will be approximately $30 million to $31 million in 2021.

We hope these directional comments will help provide insight into how we see our current business environment. That concludes my review of the financials, and I will now turn the call back over to the operator for our Q&A session.

Operator?.

[Operator Instructions] Our first question comes from the line of John Franzreb from Sidoti..

Thanks for the color. I'd like to start with Industrial Processing orders.

Just talk a little bit about it on a relative basis maybe back to the 2018 time frame when things were stronger in the housing market and how it looks today on a comparative basis, and maybe the sustainability that you're hearing from the customer base for the balance of the year?.

Yes. So as you'll recall, John, '18 was a record year for us in that segment. And we really expected things to quiet down a little bit in '19 and '20 as the industry has kind of absorbed all the new equipment and the new capacity that they were bringing online.

But of course, the pandemic really changed kind of the way, I think, we look at our homes, and now they've become more than just a home, they've become our workplace, our entertainment place or dining and everything else. So obviously, housing has been quite strong, and our business has experienced very, very strong demand as the year progressed.

And I would say that's continued into the first several weeks of the New Year here, very strong in that market. So if you look at the -- what the experts are forecasting, in addition to the social shift associated with the pandemic, the millennials are really now starting to hit that age where they're buying homes.

And the millennials are a very, very large group. And so most of the experts predict that for the next several years. I mean there certainly will be, I think, some ups and downs, but assuming interest rates stay at a reasonable level, I think experts are predicting that next several years, housing demand will be very strong.

And the problem we're really facing is a lack of availability, a lack of supply. Land is hard to get in many parts of the country. And frankly, labor is hard to get for building homes. So I think the big challenge is supply, not demand..

Got it. Got it. And just to shift a little bit. I [Technical Difficulty] make everything that you sell. I want to talk a little bit about raw materials. How are input costs on the commodity side looking for you? And then maybe if you want to think about it also as far as the materials segment is concerned.

Does the outlook for that business finally kind of turned the corner with a better commodity environment? With that, I'll get back in the queue..

Yes. You broke up a little bit, but I think you were asking about how are maybe our input costs are being affected by commodities. And our principal commodity that we buy is sheet steel, primarily stainless, some carbon steel, but mainly sheet steel. And certainly that's gone up in price.

And if you look at that as a percentage of our overall cost, though, it's still not -- it's not huge. And so we do implement price increases as need be to offset the cost of our raw materials. But we manufacture a very large percentage of the content that we supply is manufactured from -- we don't have a tremendous amount of buyouts.

And so when we get an increase in the price of steel, we're forced to pass that on to our customers, and we typically do that. I think you -- I think the second question maybe was around the Material Handling segment, but I wasn't sure, because you were breaking up a little bit there.

But yes, that segment probably was impacted the most from the pandemic and that some of our customers were not deemed as essential, and so they were shut down. And so that market, I would say, has been a little slower to recover and certainly did not benefit from the pandemic the way many of the markets did.

That being said, we have -- infrastructure needs are still obviously there, and there's a lot of talk. I know, certainly, with the new administration about the next stimulus bill being an infrastructure bill. I think they met with the head of many of the labor unions actually yesterday, the President did, to talk about the need for infrastructure.

So we certainly believe and expect that there will be increased investment in infrastructure going forward, along with, of course, the demand that's associated with the housing increase in the U.S. So we do think that market conditions will improve for that segment going forward..

Our next question comes from the line of Chris Howe from Barrington Research..

So a great quarter from a free cash flow perspective and through the pandemic in this fiscal year, you were able to post adjusted EBITDA improvement over the prior fiscal year. You mentioned some directional comments and outlook about Q4 being the strongest quarter.

As we get closer to that time, whether it's Q4 or another quarter, can you talk about your expectations for margin improvement as revenues and the top line increase back to a normal and better than normal level?.

Yes. Chris, I think our expectation is, as we get growth in the top line, we're going to be able to leverage our operating costs, specifically SG&A better, and that will contribute to improving EBITDA margins..

Okay. On that same topic, if we look at the different segments, adjusted EBITDA for Material Handling came in at 18.3%, most heavily impacted by the pandemic.

I would assume on as infrastructure spending gets underway, we're not sure of the dynamics or the certainty of how that will impact the segment, but it should be a benefit, nonetheless, and the pandemic being put behind us, I would assume there's some opportunity for segment-specific margin accretion in Material Handling?.

Yes. We would agree with that, Chris..

Okay. And then lastly, perhaps an update, you mentioned stock prep capital equipment orders in China are going well. Can you comment on outside of China and as it relates to our dialogue -- our historical dialogue as it relates to the fiber shortage in that region, and a current update on that would be helpful..

Sure. So I think, obviously, everybody is aware now that as of the first of the year, the import ban is in place. So there's no wastepaper being imported into China.

And so for the last few years, they've been working on other supply options, including processing the waste paper in countries in Southeast Asia, as well as processing it in the United States and bringing it in. And they're also starting to embed some investments in actually virgin pulp mills in China to provide some fiber there.

And I would say all 3 of those are still occurring. And I don't think that they have yet sorted out. I think it's going to be a combination of all 3, and they've not sorted out which one will emerge as the leader.

Kind of as we have discussed before, the Southeast Asia countries are asking the same questions that China did, why would we want to bring all that waste into our country, and have you do minimal processing and ship the pulp to Mainland China. And so I think they're continuing to negotiate and to evaluate those countries as options.

There are companies in the U.S. that are building facilities to process the waste paper and send the fiber to China, in addition to the Chinese companies or Chinese customers actually making investments here. I think I mentioned before that our customers have found -- our Chinese customers have found doing business in the U.S.

is quite different from China in the form of regulations and cost and timing to get things done. So they haven't been real pleased with that, which is, in some cases, altered some of their plans. They are looking for some other alternatives.

So it's one of these things where they are still, I think, experimenting with a lot of different sources to get the fiber. In some cases, they're importing fiber, in other cases they are actually importing containerboard.

So it's still unclear, and I think it will be -- I think I mentioned last year that we thought it would take a few years to really stabilize. And I think that's probably still the case..

[Operator Instructions] Our next question comes from the line of Kurt Yinger from D.A. Davidson..

I just wanted to start off on the strength in capital equipment bookings. I mean realizing it's impossible to quantify, how do you think about the Q4 result in terms of pent-up demand after a challenging year? And as we look into the first part of 2021, I mean, it sounds like the markets are generally improving and activity is increasing.

Should we be looking at sequential improvements off this high watermark here in Q4 or maybe year-over-year growth in terms of, I guess, registering that improvement?.

Kurt, I would say we are definitely looking at year-over-year growth, not sequential. That was -- the fourth quarter was a record for us. We had a number of large orders that we booked, but we did see also very good kind of, I would say, base level capital business starting to return.

So I don't think we'll see sequential improvement, but we are expecting year-over-year improvement..

I think you remember, we announced a couple of quite large orders that don't happen every quarter. So I think that we'll see those on occasion, but they won't be every quarter. And that's really helped the Q4 with 2 very large projects..

Right, right. Okay. That makes sense. And turning to the revenue outlook.

Could you just talk a little bit about the underlying assumptions there in terms of growth in parts versus capital equipment? And whether there's any FX tailwinds assumed in that 9% to 12% range?.

Yes. Well, as you saw from what we've reported and probably many, the dollar weakened through 2020. So we've factored that into our outlook for 2021. So I think that will be a tailwind for us. And in regards to the parts and capital, I think we're looking at really more capital strength.

We -- actually, the Parts & Consumables business was quite good for us in 2019. So I think that's kind of a -- excuse me, 2020. So I think the growth on that will be lower. It's really going to be in the capital business, where we'll see the higher growth rate..

Okay. Got it. That's helpful. And you obviously had the benefit from a higher proportion of Parts revenue on the gross margin front, but you also talked about improving gross margins on that Parts business.

And I was wondering what was really driving that and whether that was something that you could kind of sustain going forward?.

I do think those margins achieved on the Parts & Consumables are sustainable. And it's -- the increase really has been driven by price increases and product mix within the Parts & Consumables revenue stream..

Okay..

We also -- I think you remember, we have a couple of internal initiatives going on that we're trying to use to drive our cost down everywhere. So we improve our margin in our businesses. And as we continue to roll out those programs and implement them in additional divisions, we start to see some pickup from that..

Got it. All right. And last one for me.

You touched on it a bit in the segment commentary, but I was hoping you can maybe walk us through and maybe you rank from end market and geographic perspective, where you're seeing the most strength versus where activity is still subdued or you're not seeing that same type of sequential improvement?.

Well, I think without question, right now, the Wood Processing side in North America as well as Europe is really strong, almost back at historic levels or in some cases, maybe exceeding historic levels. So that's clearly our, I would say, our strongest piece. We had nice growth really in all geographic areas in the fourth quarter.

And so we were -- sequentially as well as year-on-year in many cases. So we were quite pleased with that. So it's not one really doesn't stand out.

I think they're all improving with the notable exception being that the Wood Processing piece, in particular, I think, supporting the North American housing market is really getting back to, like at historic levels, a bit of a surprise, I think, to everybody. That's one of the reasons that lumber prices are right now at record highs.

So I think the forest products companies didn't -- weren't able to forecast this demand either. And so they really didn't have the -- they didn't really have their production ready to meet this demand. And so they're trying to play catch-up now and bringing mills back up, adding shifts, hiring people to try to meet the demand.

These record prices really, I don't think are sustainable for that long. I mean, they're really quite high. And so we expect that we'll see more capacity being brought online to -- and with that, you'll see prices probably start to moderate a little bit more, although still probably remain at very strong levels.

But the housing one -- every business, I think, has been improving through the course of the year, but the Wood Processing really stands out..

Our next question comes from the line of Walt Liptak from Seaport..

I wanted to do a follow-on on the last one about the strong housing market and wood process.

The -- do you have a read on what amount of capacity is being added in 2021? And is there a funnel of projects that still are going to come up during this year?.

Yes. I think there's still some idle -- a few idle facilities out there that we believe will probably come online. We can't -- some of them we can't disclose what's going on, but we do believe that there's some idle capacity will come online. And we also believe there's the potential for actually some -- for some new mills to come online.

On the lumber side -- dimensional lumber side, there's a fair amount of capacity that's been ordered over the last few years, and that is coming online and will continue to come online. On the OSB side, there hasn't been as many new sites planned or brought online in the last couple of years, but OSB is at record levels right now.

And so I think whatever idle capacity is left out there, we would -- we think is a good chance you'll see that start to come back online. And even possibly some new facilities if demand kind of continues at the current level. So we do expect to see that some additional capacity coming online..

Okay. Great. In the other parts of the process, the OCC and paperboard, prices are up in 2021.

Is there new capacity that's in the funnel? Or is it still too early for capacity to get added there?.

Well, in China, we remember, we announced a big order in the fourth quarter. We're still surprised that how many projects are in the discussion stages in China. It's -- they just never cease to amaze us with their ability to bring more and more capacity online and absorb it. And then there's talk about some more conversions in North America.

There's no question that the pandemic and the growth at the at-home markets have benefited and have grown quite a bit. The retailer is -- that growth has accelerated this year, and experts are forecasting that's something that will probably remain after the pandemic goes away.

So there's definitely demand for packaging and discussions about more conversions coming online to meet that demand..

Our next question comes from the line of Bill Hyler from WDH Capital..

Also congrats from making that Newsweek Responsible company list for ESG performance in 2021. I thought that was good..

We're actually quite -- we didn't discuss that today, but we got a couple of sustainability awards in the last couple of months that we're quite pleased with. The people are -- and industries are starting to recognize kind of what we do in our focus..

Yes, definitely. Okay. Yes, great, interesting fourth quarter. I know you addressed these strong capital bookings, but I was hoping you get a little more color on that. $197 million, which I assume, is a record for the company historically.

And it looks like 39% or $77 million came from capital projects and that's important, because that fuels your Parts & Consumables growth long term. So it's a great thing to see.

Can you provide any regional color on the bookings? It looks like a lot of it came from the Industrial Processing business, which I guess is mostly recycled paper, paperboard, timber.

Was there any specific areas of strength that you can highlight?.

Well, I would say, you're right, Bill. The largest component of that $197 million and the growth was in Industrial Processing. And we had -- there's 2 product families in that. Both of those product families were very strong. Stock prep being the stronger of the two in the fourth quarter and then Wood also being a very strong for capital bookings..

Stock prep is our paper recycling piece..

Right..

And then I would say we had good activity in our Flow Control business also, but that was really predominantly driven on the Parts & Consumables side..

Okay. And maybe one follow-up on a different topic. With the balance sheet strength you're seeing in the last few years, free cash flow growing. Maybe a little commentary on what the potential acquisition market looks like out there. I know multiples are very high or have been very high, and that's always an issue.

But how is the -- at least the flow, are you guys seeing potential opportunities out there that least you're investigating?.

Yes. I would say our business development group spends most of their time focusing on that. Right now, they're telling us that activity level probably is the highest it's been in recent memory. So as you would expect, there was kind of essentially very little deal transactions that occurred last year, so you've got kind of that backlog, if you will.

And in addition to companies wanting to disrupt the balance sheet and companies just kind of refocusing on the strategies, yes, the deal activity level is very, very strong right now. And as you pointed out, the challenge is always to find one that first fits our strategic criteria.

It's a good fit for cadence and then also one that we think is properly valued. And so that's always the ultimate challenge we have in looking at opportunities. But the number of opportunities out there that we're looking at is at a very, very high level..

Our next question comes from the line of Bobby Eubank from Chevy..

Congrats on a strong quarter. You mentioned kind of discussions around kind of bookings, and I think the word discussion with clients or customers came up several times.

How would you characterize the momentum of bookings continuing into Q1 and kind of converting some of those discussions into actual bookings?.

You want to take it?.

Well, Bobby, the fourth quarter was a record as we were happy to report at this point going into the first quarter that we've continued to see good strength in the order flow front. Again, as we discussed earlier, we don't think sequentially, we're going to be up because we had some very large projects that don't tend to reoccur quarter-to-quarter.

But we have seen very good activity in the first quarter thus far..

That's great. And if I can follow-up on Bill's question on the M&A market.

Is there any particular segment that you would see more likely to see activity in 2021 in kind of converting some of the things that you've been looking at for the last couple of years and actually sign contracts?.

So we tend to look at acquisitions in all 3 of our operating segments. And I would say, as we've said, any given time, we might be having some type of discussions with a couple of hundred companies out there and that very quickly narrows down to a select group that we think are a good strategic fit for us, and that might be available.

So I would say we're looking at and normally are looking at opportunities in all 3 of our core segments. So some of our -- for instance, in our Wood Processing side, we have extremely high market share. Our businesses there have anywhere from 70% to 90% market share.

And so just by pure math, you have fewer opportunities there, then you would say that I wouldn't say the Material Handling sector where maybe we've got 40% to 60% market share. So the numbers vary depending on kind of what the remaining competition looks like.

But that being said, we normally are looking at opportunities in all 3 of our core segments..

At this time, I'm showing no further questions. I would like to turn the call back over to Jeff Powell, President and CEO, for closing remarks..

Thank you. Before wrapping up the call today, I wanted just to leave you with a few takeaways. First, the health and well-being of our employees was our top priority in 2020, and it will continue to be our top priority as we work through the pandemic.

As we look ahead and beyond the immediate health crisis, we will focus on meeting our customers' needs as we seek to accelerate revenue growth in our core markets. Our financial health is excellent, and our liquidity position is stronger today than it was when the crisis began, with a debt leverage ratio now at 1.61.

Our ability to generate strong free cash flow remains a cornerstone of our business model, and we expect to continuing to reopening of the economies around the world and look forward to a stronger 2021. With that, we want to thank you for joining us today, and please stay safe..

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