Loar Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 13, 2024

There are 9 speakers on the call.

Operator

Greetings and welcome to the LoRa Holdings Inc. 2nd Quarter 2024 Earnings Conference Call and Webcast.

Operator

At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Ian McKillop, Investor Relations. Please go ahead, Ian.

Speaker 1

Thank you, and welcome to the LoRa Holdings 20 24 Second Quarter Earnings Conference Call. Presenting on the call this morning are LoRa's Chief Executive and Executive Co Chairman, Dierks and Charles Executive Co Chairman, Brett Milgram Chief Financial Officer and Treasurer, Glenn D'Alessandro as well as myself, Ian McKillip, the Director of Investor Relations. As a reminder, please visit our website at luergroup.com to obtain a supplemental slide deck and call replay information. Before we begin, we at Lor would like to remind you that the statements made during this call, which are not historical in fact, are forward looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward looking statements, please refer to our website or the latest filings with the SEC available at sec.gov.

Speaker 1

We'd also like to advise you that during the course of the call, we will be referring to adjusted EBITDA, adjusted EBITDA margin and adjusted earnings per share, each of which is a non GAAP financial measure. Please see the tables and related footnotes in the earnings release for the presentation of the most directly comparable GAAP measure and applicable reconciliations. I will now turn the call over to Derksen.

Speaker 2

Thanks, Ian. Good morning to our partners, analysts and those hearing our story for the first time. I am Dirksen Charles, Founder, CEO and Co Chairman of Law. As this is our 2nd earnings call as a public company, let me outline our approach for these calls. We believe that your time is valuable.

Speaker 2

And as such, we'll keep our remarks as brief as possible to allow the analysts the majority of the hour we have allocated to ask questions to ensure that we are focused on the things that matter to you. So let us start by reminding you all of who we are. We're as a family of companies with a very simple approach to creating shareholder value. First, we believe that by providing our business units on entrepreneurial and collaborative environment to advance their brands, we will generate above market growth rates. Since our inception in 2012 through the end of calendar year 20 23, we have grown sales and adjusted EBITDA at a compound annual growth rate of 38% 46% respectively.

Speaker 2

We collaborate across business units by sharing best practices and ideas, while assisting each other when it comes to execution. We execute along 4 value streams. We identify pain points within the aerospace industry and look to solve those problems through organically launching new products, which we believe over the long term will create 1 to 3 percentage points of top line growth. We focus on optimizing the way we manufacture, go to market and manage our companies to enhance productivity. Each year we will identify initiatives that will allow us to continually improve our performance with a focus on 1 or 2 major initiatives each year that will improve margins.

Speaker 2

We also each year across our portfolio of companies will achieve more price than inflation, again, margin improvement. Most importantly, we are committed to developing and improving the talent of all our employees because our success is solely a result of their dedication and commitment. To all my mates, a big, big, big thank for your commitment and hard work. I'll now turn the call over to Brett to walk you through our key characteristics of our portfolio.

Speaker 3

Thanks, Derksen. Good morning, everybody. I think you all have seen this slide before, so I'll be brief here. This really just serves as a reminder how we constructed our portfolio. And I think the big takeaway here is that we are a very diverse business that is balanced across not only products, but end markets and even customers.

Speaker 3

As I've said before in the past, we are relatively agnostic to the types of end markets we serve or the customers we serve or the products that are in our portfolio. But what we continue to be and as shown by our recent acquisition with Applied Avionics is we are extremely disciplined about the characteristics of the business model as you see in the 6 bubbles down below. Every business that we acquire, make part of the Loar family has to be A and D focused, it has to have proprietary content, it has to have an exposure to the aftermarket and has to engage in those niche markets where we feel we have a competitive advantage and high barriers to entry. Applied avionics, I think is a perfect example of that. In fact, when you look at the charts above, what you'll find with Applied Avionics, it will make those charts go in the direction we want in so much as Applied is virtually all proprietary product and is about 75% aftermarket.

Speaker 3

So while those slides or those charts are based on 'twenty three revenues, when you see those numbers at the end of 'twenty four, it'll be a little bit higher in those categories I just mentioned.

Speaker 1

Taking a look at our products, across the 16 brands at LoRa, we go to market with over 15,000 unique and proprietary parts with no one part making up more than 3% of our overall net sales in 2023. Our parts are found across the aircraft embedded in a multitude of systems and subsystems. The proprietary nature of our products makes them mission critical for the end customer and ties us to the overall life of the aircraft. As many of you know, the life of an aircraft can exceed 50 years and multiple operators. The design and inspect in nature of our products allows us to serve not only the original equipment manufacturer, but also the aftermarket through the many operators that aircraft seats over its lifetime.

Speaker 1

We believe that the diversity and proprietary nature of our product offering provides us with the capabilities to serve our customers in a way that is unique to Loyola. I'm now going to pass the call to Rick Glenn

Speaker 2

to run through the financials.

Speaker 4

Thank you, Ian. Good morning, everyone. Let me start by discussing sales by our end markets. This comparison will be on a pro form a basis as if each of our businesses were owned as of the first day of the earliest period presented. We had record sales during the Q2 of 'twenty four.

Speaker 4

In total, our sales increased to $97,000,000 a 17% increase as compared to the prior year period. This increase was driven by strong performances in defense, up 57%, commercial aftermarket, up 19 percent and commercial OEM up 11%. The increase in total commercial aftermarket sales of 19% was primarily due to the continuing recovery in commercial air travel demand and an end to the destocking as a handful of our distributors and end customers that affected us in Q1 'twenty four. During Q2 'twenty four, we continued to see strength in our commercial aftermarket bookings. Our total commercial OEM sales increased by 11 percent in Q2 'twenty four as compared to the prior year period.

Speaker 4

This increase was driven primarily by higher sales across a significant portion of the platforms we supply, including general aviation, wide body and narrow body aircraft, as an improving supply chain has allowed us to deliver parts that were previously held because of our customers were experiencing bottlenecks in other areas of their supply chain. The increase of 57% in our defense sales was primarily due to strong demand across multiple platforms and an increase in market share as a result of new product launches. Defense sales will continue to be lumpy given the nature of the ordering patterns of our end customers for our products. Let me recap our financial highlights for the Q2 of 'twenty four. Our net organic sales increased 17% over the prior period.

Speaker 4

Our gross profit margin for Q2 'twenty four was slightly lower than the prior year period. This was primarily due to higher defense sales in q22224, which were 22% of total sales in 2024 versus 18% for Q22223. Our defense sales make a lot of money, but typically have lower margins than our more profitable commercial products. We also continue to see some dilutive effects from one of the acquisitions that we acquired in the second half of twenty twenty three, as well as costs related to the move of 1 of our manufacturing facilities. These items were partially offset by pricing and operating leverage.

Speaker 4

Our increase in net income of $7,000,000 in Q2 'twenty four versus Q2 'twenty three is primarily due to higher operating income as well as from the lower interest expense as a result of paying down $285,000,000 of indebtedness with the proceeds from the IPO as well as the amendment to our credit agreement in May 2024, lowering our interest rate by 2 50 basis points. Adjusted EBITDA was $7,000,000 in Q2 'twenty four versus the prior year. Adjusted EBITDA margins remained strong at 36%, but were lower than the prior year quarter. This was a result of the sales mix that I discussed above, the temporary dilution from one of the acquisitions completed in the second half of 'twenty three and the continued build out of our infrastructure to support our reporting, governance and control needs as a newly public company. Let me turn the call back over to Derikson to share the outlook for the remainder of the year.

Speaker 2

Thanks, Glenn. Given the strong performance across all our end markets as Glenn has just outlined, in addition to the strength in available seat miles, which is projected by IATA to be above 2019 levels in 2024 when combined with the challenges of the OEMs to produce new aircraft has resulted in strong orders in our commercial aftermarket. The world driving demand for our products sold to the defense end market is driving greater sales. Combined with our continued execution of our that we'll achieve organically mid double digit percentage improvement, that we'll achieve organically mid double digit percentage improvement in sales across each of our end markets in 2024 on a pro form a basis. Note that these results do not include our recently announced acquisition of Applied Avionics, which we expect to close in the Q3 of this year.

Speaker 2

Next slide. For calendar year 2024, we expect net sales between $374,000,000 to $378,000,000 up from our previous guidance of $370,000,000 to $374,000,000 adjusted EBITDA between $134,000,000 and $136,000,000 dollars again up from our previous guidance range of $132,000,000 $134,000,000 Adjusted EBITDA margin we expect to be approximately 30 6 percent for calendar 2024, while net income, we expect to be between 28.4 $29,600,000 for the year. Adjusted EPS between $0.44 $0.46 per share. In addition, capital expenditures approximately $11,000,000 for the year, full year interest expense approximately $42,000,000 effective tax rate of 30%, D and A approximately 40,000,000 and our non cash stock based compensation about $10,000,000 up from 9,000,000 from our previous guidance. Our fully diluted share count remains at approximately 91,000,000 shares.

Speaker 2

With that, I said we'd keep it brief. So with that, operator, let's open the line for questions. Let's dig in.

Operator

Certainly. We'll now be conducting a question and answer session. Our first question is coming from Ken Herbert from RBC Capital Markets. Your line is now live.

Speaker 5

Hi, good morning everybody. Nice quarter.

Speaker 2

Thanks Ken.

Speaker 5

Hey, Derksen. Maybe to start off, is it either at the aggregate or by transport and business jets? I mean, you've called out very strong bookings a few times. I'm wondering if you can just put a finer point on that.

Speaker 2

So Ken, if you remember the last quarter, we said we had record backlog for commercial aftermarket. I'll respond to your question in this way. We have beaten that record as we stand here today in terms of what that backlog looks like going forward. So very, very strong bookings during the year. I would say this way above 1, right.

Speaker 2

So think between 1.1 and 1.2, I don't know the exact number off the top of my head, but very, very strong orders. So we continue to see the aftermarket orders trending strongly.

Speaker 5

Okay, very helpful. And there's been a lot of speculation recently about strength of the aftermarket into the second half of this year and early next year with some more cautionary comments on capacity growth from some airlines. Are you seeing anything that would give you any sort of incremental concern on the aftermarket outlook into the back half of this year, early next year, either in order activity, RFQ activity within the aftermarket? Is there anything else you'd call out as you think about into this year, latter part of this year?

Speaker 2

So Ken, we're reading the same articles. I've read the same thing. I've seen the same thing. I will tell you for us, we have not seen anything that remotely comes close to slowing down in the commercial aftermarket. Like I said earlier, bookings are strong.

Speaker 2

The quotes to answer your question is very good question. We see it's higher than it was a year ago and the quoting activity that is. So no, we it's blue skies.

Speaker 5

Perfect. Thanks, Durgesh, and I'll pass it back there.

Operator

Thank you. Next question is coming from Sheila Kahyaoglu from Jefferies. Your line is now live.

Speaker 6

Thank you, guys, and congratulations on your first Q and A session. So maybe if we could stick to the aftermarket, I think it was 38% total, 19% organic is that number? Derksen, how can you talk about the strategy you deployed over the last few months in terms of changing the pricing and having more visibility there? How that contributed to that 19% organic growth? How you kind of see that book to bill progressing, does that give you about 3 to 6 months of visibility?

Speaker 2

No, to answer the question. But I have to say, I'm not sure everybody in the room is excited about the Q and A section, as you just said, but we we understand

Speaker 6

We're keeping it easy. We're going off of very good numbers. So

Speaker 2

Yes, yes, yes. So, yes, like I said before, we see strong aftermarket growth trends. We did at the beginning of this year change the way that we are going to market in terms of lead times. So previously, we had looked at lead times of 2 weeks or less for a lot of our commercial aftermarket products. And we saw a number of our end market customers namely a number of distributors use us as the warehouse to stock their inventory.

Speaker 2

So we saw orders decline. What we've seen since we've changed our strategy to requiring folks to at a minimum have 90 day lead times to get the best price if I can say that way is actually it's worked wonders. We've been able to get more visibility, so we can see 3 4 months out. That's why I was comfortable answering Ken's question earlier so strongly about we don't see any weakness, because we have the backlog in the aftermarket where we only have 2 weeks a year ago. We have 3, 4, 5 months look ahead in terms of the aftermarket.

Speaker 2

So that is stuck, the pricing is stuck. So it's working really, really well, greater visibility. And one of the benefits is we are now able to level load our shop instead of guessing at what people are going to order. So it's what wonders both on the top line and lower cost.

Speaker 6

Got it. Thank you for that. And maybe if we could go to just large commercial OE, leaving out the bizjet BGA growth, I think grew 11% organically in the quarter, correct me if I'm wrong there, and your full year guidance is mid to double digits. So how do we think about your OE assumptions, whether it's the MAX or the 787 on the Boeing platform, how you're thinking about that trending for the year and what did they do in the quarter?

Speaker 2

Yes. So I guess I'll take it in this order. Max first, we don't believe what the OEM says in terms of what their bill rates are going to be and their production rates. We think it will be significantly less and that's what we plan for. I will tell you over the past few weeks, I have gotten information from my mates at the business units with folks, our customers pushing out OEM, Boeing related orders.

Speaker 2

Okay. So that's kind of how we feel about the MAX. So we're not planning on anything turning around significantly here in the near term. With regard to Airbus, they continue to struggle with the supply chain, not as much so as on the MAX in terms of the narrow body. We actually have pretty good orders there.

Speaker 2

That's been one of the stronger uplifts in sales in first half of the year and we see it continuing. But beyond that, the everybody else that no one ever talks about in the media, right. You're talking about the Embraer's, the services, the diamonds, check, check, check. Those guys are killing it. We're seeing large orders on the OEM side and that's really what's driving the double digit growth rates for those guys.

Speaker 2

So we're issuing strong orders for those guys. So hopefully somewhere in there I answered your question.

Speaker 6

Sure. Thank you so much.

Operator

Thank you. Next question is coming from Kristine Liwag from Morgan Stanley. Your line is now live.

Speaker 7

Hey, Derksen, Brett and Applied Evionics with the proprietary and aftermarket exposure seems like a strong fit for the portfolio, I mean, it's very clear. But with the price of $385,000,000 EBITDA of $21,000,000 it seems like I mean the implied multiple for the deal is $18,300,000 excluding tax benefits. So when you look at Applied Avionics today, I mean margins are already at 52.5%. So can you talk about your return thresholds for incremental deals, the availability of assets in the pipeline? And then should we see incremental deals closing similarly priced to this one?

Speaker 7

Or is this because

Speaker 2

what we're seeing in the

Speaker 3

M and A market today is one that's really, really because what we're seeing in the M and A market today is one that's really, really active. And it may not be a surprise to folks given, 1, what you see in valuations generally 2, what you see in terms of performance, not only from more, but from the, I think, the industry as a whole. And I think, 3, in terms of the visibility and expectations that people in our sector have, particularly those who have aftermarket exposure, it's all very, very positive. So as a result, you are seeing some higher multiples out there. And I think for us, the exercise and the trick, if you will, is to make sure that we are buying very good, very high quality assets with a lot of opportunities attached to them.

Speaker 3

And as such, we're willing to pay for multiples, but making sure we're not buying average assets at high multiples. And so what I think you can find with Applied is it's in the former category. It's a very high quality asset. Yes, your math is correct on the multiple. We tend to look at it more as a 16 times multiple with the tax benefits, which we think could be even greater than the ones we cited.

Speaker 3

But nonetheless, applied is a business that has a great market position. It's one of 3 competitors in that space. We think there are lots of opportunities across all of our value drivers to not only grow the business significantly, but actually to improve margins significantly. So whether it's through productivity improvements, cross selling opportunities, the way they go to market and or pricing, all those drivers are at play here. And so our threshold for returns has not changed.

Speaker 3

And just to repeat it, we look at every deal and say, we need to see a path to doubling the EBITDA in no more than 3 to 5 years. Well, given the multiple that we've acquired applied for, I think the implication without giving a projection here is that we think we can do even better than that with applied. So Applied checks all the boxes we like, all the ones that we mentioned on the slide earlier. We think this is going to be a great one for us. It fits right down the middle of the types of businesses we're trying to acquire.

Speaker 7

That's great color. Thank you, Brett. And maybe shifting gears to the PMA portfolio. Are there any pending product approvals in the next 6 to 12 months or increased customer acceptance that would maintain commercial aerospace aftermarket growth to grow above industry trends, which is what you've been seeing anyway? Anything to watch out for would be great.

Speaker 7

Thanks.

Speaker 2

So the short answer to your question is yes, there are. We have a number of, I'll use this term, applications sitting on the desk of folks at the FAA for approval. They've been slow to execute because as most of you know on this call they've been busy with Boeing and others. So it's been slow to get things done. I would have hoped that we'd have had more done today in some of the PMA applications that we have pending.

Speaker 2

But as you know, the way we think about PMA is we want to be strategic in terms of how we're chasing it. So we're focused on things like, brakes, composite brakes or steel brakes in the aftermarket on the what I described as legacy platforms. And in those areas, yes, Christine, you're 100 percent right. As we get those applications approved, it will continue to drive our commercial aftermarket growth rates above what I would call industry averages.

Speaker 7

Great. Thanks, Dierksen. If I could follow-up one more on that. I just want to confirm, in terms of your outlook, right, your outlook does not expect any incremental PMAs to be approved. Therefore, if you actually get these approvals to come through, these are all incremental to what you've already provided.

Speaker 2

I love the fact that you asked very specific questions. So the answer to your question is that would be true. It would not be a material impact to the outlook though that you have in front of you, the approvals that are currently pending, they will drive 2025, but we're not ready to talk about that yet.

Speaker 7

Well, great. Well, thank you very much and I'll pass it on. Thanks.

Speaker 2

Thank you. Thank you.

Operator

Our next question is coming from Jason Gursky from Citi. Your line is now live.

Speaker 8

Hey, good morning, everybody.

Speaker 2

Hey, Jason. Good morning.

Operator

Hey, I just wanted

Speaker 8

to ask you about LTAs and pricing negotiations that might be on the come here. We heard from some others that there are some significant LTAs rolling off that were priced prior to the pandemic and that there might be an opportunity to go get some price and kind of help compensate for the inflationary environment that we've seen here over the last few years. And I'm talking specifically LTAs on the commercial OE side of things. So I'm just kind of curious what your what the profile of your LTAs look like with some of your OEM customers and whether there's maybe some opportunity here for you all between now and the end of the year or maybe over the next 12 months to see some upward pricing pressure on your OE revenue streams?

Speaker 2

Great question. Clearly, each year we do have LTAs that come up for review, if I can say it that way. But as a reminder, long term agreements are not a big part of our business. 10% -ish of our revenues, Think of it that way. So not a significant amount.

Speaker 2

It's mostly on the military side. I'll say that because you're asking about commercial. So I don't want to put a box around my answer here. But you're right, we are in discussions on a few LTAs here. And look, our LTAs typically last 3 to 5 years, right.

Speaker 2

Typically, we will have a I'll use this term, a firm fixed price escalation clauses, right. But over that period of time, over that period of time, 3 to 5 years, but closer to the 3 years and the 5, costs do go up. And as is our mission, as a portfolio we get more price and inflation. So yes, we do expect to get price here in the near term. It will impact 2025 more than 2024 given where we are in the year at this point and those negotiations.

Speaker 2

But yes, we do intend to get price on those contracts. Good question. Great. Thanks. And

Speaker 8

then I don't remember exactly how you described it in your prepared remarks,

Speaker 2

but

Speaker 8

the note that I took was kind of an initiative that you have each year that you kind of have the portfolio companies working on to drive productivity or cost or whatever. So I'm just kind of curious, what is it this year? What do you think it might be in the next just kind of curious how you all kind of approach this. And what are we working on this year might be a good kind of illustrative example of what you're working on?

Speaker 2

Yes. So Jason, is that a way of you telling me I should probably remove that from what you described as my prepared remarks? I'm just kidding.

Speaker 3

No, no, no, not at all.

Speaker 8

I think it was interesting.

Speaker 2

No, no, yes. So let me give you a little bit of background and how we get to that statement, okay. Every year and we start the process around now, we do a bottoms up at all our businesses in terms of how we're thinking about the upcoming year, 2 years, 5 years, okay. As part of that, everyone is required to share with us their wish list of all the things that they want to do in terms of CapEx, in terms of productivity, etcetera, etcetera, etcetera. We will go through that wish list and identify the things that we do want to focus on.

Speaker 2

So clearly, and I know this is a favorite of Glenn's. If there's a CapEx that we can get the return back in 2 years or less, we'll do $1,000,000,000 worth of that, right. So we'll identify it in that manner based on the returns we expect to get, how quickly we can make our money back, etcetera. They are usually 1 or 2 items that will jump out at us where we go, wow, that's a great idea. And we should definitely dive in on that because the returns are higher than the rest and we'll focus on that on all our weekly calls to make sure that we do execute.

Speaker 2

Now, the execution sometimes doesn't go as quickly as we would like. For example, this year, since you asked, this year, we moved the business from California to Ohio and we expected certain synergies as part of that move that would impact this year's results. It's actually taken a little bit longer to get up the learning curve now that we've moved the business in terms of manufacturing the parts that I'm thinking about and we'll probably get those benefits as we think about into 2020, 2025 and beyond But that's how we go about it. So every year there's usually 1 or 2 really, really good ideas that the team comes up with. This is a team sport, Jason, and the ideas are not the 4 of us in this room.

Speaker 2

It is from the 1400 people that we have working with us, our mates, right. We will find 1 or 2 ideas that just drives return. Now, I just told you that we're not achieving the returns that we expected at the beginning of the year. I do want to tell you that's embedded in the outlook that we shared with you. But we will get those benefits as we think to 2025 and beyond.

Speaker 2

So stay tuned.

Speaker 8

All right. Okay. That's good color on 20 5 as well. And then lastly for me, Brett, I believe in your prepared remarks you mentioned being a little bit agnostic on the M and A side of things to the end market that any of the targets might be focused on. I just want to make sure though or I don't I guess it doesn't really matter what you choose to pursue as long as the financial metrics are there.

Speaker 8

But was that a statement on end markets within aerospace and defense? Or where there be opportunities for you guys to move outside of aerospace?

Speaker 3

No, no, no. Just to be clear, because I did mention when I talk about the metrics and the qualitative aspects of what we look for in acquisition, it has to be A and D focused. So when I say I'm agnostic to the end market, I'm referring to whether it's commercial versus general aviation versus business jet versus military. The thing that we think about all the time from a top down perspective is being balanced. So we don't want to have any one end market be completely disproportionate to the others.

Speaker 3

But at the same time, we don't look at that pie and say within a percentage point or 2 or 3 or 5, it has to be within a particular segment. We just want to be balanced, so that when any macroeconomic event may occur, we have risks and opportunities.

Speaker 2

And I

Speaker 3

think that served us really, really well during COVID.

Speaker 8

Perfect. Okay. I'll pass the line. Appreciate the time today.

Speaker 2

Thanks, Jason. Thanks, Jason.

Operator

Thank you. Next question today is a follow-up from Ken Herbert from RBC Capital Markets. Your line is now live.

Speaker 5

Yes. Hey, thanks. Derksen, I maybe just wanted to follow-up on your comment regarding expectations that new products can add sort of 1 to 3 points of organic growth each year. Are you tracking to that this year? And then I guess the second question would be as you think about moving forward, these obviously aren't necessarily book and ship type products, but can you talk about then the setup as you think about that 1% to 3% range into next year and maybe any ideas of some of what you're working on without obviously giving things away.

Speaker 5

I know you've had some nice history here when we think about broth and some other opportunities. Just any ideas to where you're investing today as you think about the new product introductions and the opportunity?

Speaker 2

Yes, sure, Ken. So first part of your question, are we tracking? The answer is absolutely. We're tracking to that 1% to 3% this year. As you know, but probably not everybody on the call, we do track our new business pipeline And we track it formally.

Speaker 2

We actually have our sales team to actually have calls once a month to go through and address how we're doing against New business to us is across all of our business units, all of our brands and not just them independently, they also get together and collaborate to see how they can solve pain points within the industry. For example, as you just said short and the cockpit door barrier which we've talked to folks about that will drive sales in 2025 and beyond and will be part of that 1 to 3 points. In terms of areas where we're looking, it's all across the board. It's everything that we do, from valves to rate control devices, to restraints, to hold open rods, latching mechanisms, break steel, carbon, etcetera, etcetera, etcetera, everything we touch, we're looking at investment. Now with that said, we're disciplined.

Speaker 2

Our R and D budget is usually around 2% to 3% of sales every year. And we track that against that list of new business. So nobody invests in R and D unless it's tied to a return that we can see and touch. Otherwise, Glenn puts a hammer on them. So no one wants that.

Speaker 5

All right. Thanks for all the color, Doerksen.

Speaker 2

Thanks, Ken. Thanks for the question.

Operator

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Speaker 2

So look, this is our second call. This one, folks got a chance to ask those questions. We want to be as transparent with you guys as possible. You are our partners the way we think about it. The one thing we'll stop short of doing is say anything that will give our competitors an advantage over us.

Speaker 2

So appreciate sometimes we won't answer the question fully. Now with that said, I want to thank everybody for their time listening to the call today and being our partners. And most importantly, I want to thank our mates. I mean, our mates are killing it, as you can see from the results. So thank you.

Speaker 2

Thank you everyone for participating. Talk to you in 13 weeks. Thank you.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

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