XPEL Technologies' (XPLT) CEO Ryan Pape on Q4 2016 Results - Earnings Call Transcript

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XPEL Technologies Corp. (OTC:XPLT) Q4 2016 Results Earnings Conference Call March 28, 2017 11:00 AM ET

Executives

Jennifer Belodeau - IR, Institutional Marketing Services

Ryan Pape - President and CEO

Barry Wood - CFO

Analysts

Alan Weber - Robotti Advisors

Operator

Greetings, and welcome to the XPEL Technologies Fourth Quarter 2016 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Jennifer Belodeau with Institutional Marketing Services. Thank you. You may begin.

Jennifer Belodeau

Good morning, and welcome to our conference call to discuss XPEL Technologies financial results for 2016. On the call today, Ryan Pape, XPEL’s President and Chief Executive Officer; and Barry Wood, XPEL’s Chief Financial Officer, will provide an overview of the business operations and review the company’s financial results. Immediately after the prepared comments, we’ll take questions from our call participants.

I’ll take a moment now to read the safe harbor statement. During the course of this call, we will make certain forward-looking statements regarding XPEL Technologies Corp. and its business, which may include, but are not limited to, anticipated use of proceeds from capital transactions, expansion into new markets and execution of the company’s growth strategy. Often, but not always, forward-looking statements can be identified by the use of the words such as plans, is expected, expects, scheduled, intends, contemplates, anticipates, believes, proposes or variations, including negative variations, of such words and phrases or state that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Such statements are based on the current expectations of the management of XPEL.

The forward-looking events and circumstances discussed in this call may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, performance and acceptance of the company’s products, economic factors, competition, the equity markets generally and many other factors beyond the control of XPEL.

Although XPEL has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made, and XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

With that out of the way, I will turn the call over to Ryan.

Ryan Pape

Good morning, and welcome to our fourth quarter and year-end conference call. I think all of you would agree, it’s been quite a year. Overall, I’m pleased with our 2016 results. We posted record revenue for the year of $51.8 million, which was an increase over the prior year of just under 25%. Meanwhile, EBITDA grew about 24%. So we had strong growth occur despite some challenges, both with supply and otherwise, that we experienced in the second half of the year related to enhancements in the product and enhancements in manufacturing that inhibited our revenue growth a bit.

For our window film product line, which was launched in November of 2015, ultimately that grew to represent just under 7% of our total revenue mix for the year. So I think this demonstrates our ability to drive new products and services into this channel, which, as many of you know, up until the launch of that product line, we’ve not done so far. So we’re pleased with that. We have a long way to go, but we’re pleased with the progress we’ve made so far. And we’re continuing to execute relative to that window film line by adding products. And we continue to invest in software and pattern system, which is like paint protection creates efficiency for the installers, minimizes waste, and hence, should serve as a good differentiator for us going forward as well.

So for the fourth quarter revenues grew 18.6% to $13.2 million. Barry will get into more detail on this later. Q4 is historically our lowest quarter from a bottom line perspective due to certain backend loaded costs. I think way more significantly, our Q4 bottom line for last year represents legal costs of about $500,000 in the quarter, the majority of which were related to the 3M lawsuit. So clearly, given our announcement last week, these costs will not continue as we move forward out of Q1.

On operational front, we continue to focus on our core Get Close to the Customer strategy. As we’ve discussed on previous calls, it manifests itself in several ways. We locate inventory closer to our customer, which helps them manage their business and helps them manage their cash flow. We provide direct marketing support to our customers. We control the brand throughout the distribution chain. So one way that we execute on this strategy, among many, is to seek out and acquire well-run installation businesses in key markets where we may not have a significant presence or the market is really fragmented or otherwise under penetrated. This, in turn, allows us to better organize the delivery model for our products and services in those markets and to provide better support for our existing customers and to better capitalize on the market opportunities.

So we had a great example of that with the acquisition of Pro-Tect Film during the fourth quarter of last year. Now Pro-Tect is a leading installer of paint protection and other films in the Las Vegas area. So not only was that business extremely well run and really a standout-type business in its class and ultimately accretive, but it affords us the opportunity to start to diversify our product mix outside of automotive and into commercial and residential window and security film market. Pro-Tect was a leader of that in the Las Vegas metro. And then for certain things are doing really a leader nationally. And that was part of the reason that, that acquisition was really strategic to us, even more so than just rolling up the installation capacity. So we view this as a natural area of evolution and our strategy to diversify. It complements our core products and services. Even though it extends beyond automotive, there’s a lot of logical overlap with many of our customers. So we have really significant plans to do some things in this area that will come out in the coming months.

And in addition to that, Pro-Tect was related to Proform, which was really the second-leading database of paint protection film designs. And it existed under agreement, sort of living side by side in our software, and we were also able to change the nature of that agreement at the end of the year where that will be fully integrated. And we’ve picked up a couple extra employees that were doing that. So now, without question, I think we’ve consolidated the second-best library of designs into the best. So that was a great strategic move for us.

So in addition to everything else we’ve been doing, we kind of continued to focus on the internal plumbing, if you will, of the company and make sure that we’re equipped to scale and grow. So one of the things that we did is we earned our ISO 9001 certification at the end of last year. So this was a lot of cost and management time but really reflects our underlying commitment to quality and a push towards never-ending efficiency. And we’ve got certain customers that, as we move forward, are going to require these type of things. So we’ve made a really concerted effort to get that in place last year, amongst all the other efforts, and we’re pleased to say that that’s done, and we’ll live by those principles going forward.

Internationally, I still see strong demand in Canada and Europe, in particular. We added Netherlands office during the third quarter of the year. And we announced that Tim Hartt, who’s presently XPEL’s Chief Operating Officer and one of the founders, would relocate to Europe to become our Managing Director. He’s really been there since the beginning of the year as that relocation is happening and really hit the ground running. So we see it as great market opportunity for us. I think that Tim would relocate now after all these years with the company. He just actually hit his 20th year anniversary. And that he would do that now I think really speaks to where we think we are in the overall evolution of the business, which is we got a long way to go. So Europe is highly under penetrated on all the product lines. Tim moving shows our commitment to growth and that we think there’s tremendous upside there. So we’re very excited about that, really seeing that team gel across the UK and Netherlands operation.

Finally, I’ll just say a word about the 3M settlement. While the terms of the settlement are confidential, I can tell you that we do not expect the settlement to have a material impact on the business. And I’m very pleased to put this behind us and get back to putting 100% of our focus on growing the business and bringing value to our customers. As these things go, ultimately the settlement came together very quickly coming up on some deadlines and so we are happy to get that done.

So I’m very excited, along with the team, about the opportunities that lie ahead. I think as we continue to do acquisitions that we’ve done, we just bring incredible resources and incredible knowledge and industry knowledge that will really serve us well across everything we want to do. I think the whole team here, we look at the Pro-Tect acquisition. We’ve just added some really, really good people, and they’ve come to serve a much larger purpose than just the operation that we acquired. So there’s much more to that strategy than just doing that.

So with that, I’ll turn it over to Barry to do a dive into the numbers, and then we’ll regroup for Q&A. Barry?

Barry Wood

Thanks, Ryan. Good morning, everyone. Consistent with past calls, we’ll state certain key measurements on a constant currency basis. Constant currency numbers are calculated by taking our 2016 numbers and restating them using prior periods of exchange rates. And just as a reminder, our constant currency numbers are a non-IFRS measure.

For the quarter, revenues increased 18.6% to 13.2 million and 19.5% to 13.4 million on a constant currency basis. While the majority of this growth relates to our core PPF product lines, I will point out that our Q4 tint revenue doubled versus prior quarter. As Ryan alluded to in his comments, we continue to see some challenges, supply challenges during the quarter, which did have an impact on our growth. On a year-to-date basis, revenues increased 24.8% to 51.8 million and 26.1% to 52 million on a constant currency basis. Again, the majority of our growth continues to come from the PPF and window product -- window film product lines.

As Ryan mentioned, we are excited about our domestic and international growth opportunities and even our ability to bring new products to market as we go forward, especially with sort of the security film market. Gross margin for the quarter declined 23.9% versus 25.2% in the prior year quarter, while year-to-date gross margin declined to 27.1% versus 29.7% in the prior year period.

As mentioned during our previous calls, effective at the beginning of this year, we began allocating more personnel costs out of SG&A into COGS to better reflect the increased dedication of certain employees to the installation business. We just thought that was just a -- made lot more sense in terms of presentation. So if we normalize for the effect of this change in the allocation methodology, gross margin for the quarter would have been 26.2% and 29.1% on a year-to-date basis, reflecting only a slight degradation in gross margins, due mainly to customer and product mix.

I will also note that we anticipated introducing price increases into certain markets during the year but were unable to because of the inventory constraints we experienced and then also obviously the optics of the 3M lawsuit. We’ll continue to evaluate that opportunity as we go forward here into 2017.

On the SG&A front. SG&A expenses for the quarter grew 26.7% to 3.4 million versus prior year period. For the year, SG&A expenses grew 10.8% to 10.8 million versus the prior year period. And again, if we normalize for the effect of the cost allocation change I mentioned earlier, SG&A expenses for the quarter grew 38.5% versus prior year quarter and 22.1% for the year versus prior year. The normalized increases in SG&A for the quarter and for the year were due to mainly three areas. One was the increase in personnel costs we added to support the growth in the business, and we now have right at about 110 full-time equivalent employees. Second issue was the increases in insurance, occupancy and IT-related costs, again to support the ongoing growth of the business; and three, increases in professional fees due mainly to increases in legal costs. We incurred $500,000 in legal fees during the quarter, which was a $400,000 increase versus the prior year quarter. This increase was solely due to the 3M litigation. I will also note, we incurred legal costs for the year of just under $1 million, a 227% increase over prior year. We’ll continue to see high legal costs in Q1 of 2017. After which, we expect to be back to the happy place in terms of legal fees.

Obviously, the aforementioned legal fees had a substantial impact on fourth quarter EBITDA, which was 93,000 for the quarter. We did post strong EBITDA growth for the year of 23.7% to 4.4 million despite these high legal costs, which speaks, I think, to the good health of the business. Our fourth quarter EBITDA, as Ryan mentioned earlier, is typically our lowest EBITDA quarter due to certain costs being back-end loaded, such as expenses related to SEMA, which is our largest show of the year, as well as some other year-end related items. Clearly though, our legal expenses were the big story here, both in Q4 and in all of 2016.

Net income before income taxes for the year was $3 million, representing a 24.5% increase over prior year, while net income for the year was 2.2 million, representing a 47.1% increase versus prior year. For the fourth quarter, we posted a net loss before income taxes of right at about 250,000 and an after-tax net loss of 22,000. Again, I refer you back to the extraordinary legal expenses we incurred in Q4 and during 2016. Also, we did see a nice improvement in our effective tax rate due to continued execution on our transfer pricing strategies as well as some favorable tax positioning relative to our Canadian acquisition.

On the cash flow front, the company continues and did generate strong operating cash flow in 2016, right at about $2.9 million. Our liquidity ratios are continue, remained very strong, and our debt-to-equity ratio for the year declined to 48% versus 72% at the end of last year.

Also, as many of you already know, in January of this year, we announced our intention to issue by way of a non-brokered private placement up to 2,097,903 common shares at a price of US$1.43 per share. The private placement is now closed, and we were very pleased with the results, where we ended up being approximately 87% subscribed. And as we previously announced, we intend to use these proceeds for future acquisitions, capital expenditures and other general corporate expenses.

From my chair, I think we’re -- the company is well capitalized to execute on its strategies as we go forward, and we’ll continue to focus on driving efficiencies in our processes, and most importantly, continuing to provide outstanding value for our customers.

And with that, operator, we’ll now open the call up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from [Bryce Thomas] with North Grove Asset Management. [Ph] Please proceed. Your line is live.

Unidentified Analyst

Could you provide a bit more color as to how your brand is building and being received internationally, particularly in Europe?

Ryan Pape

Sure. I think that the brand is being received very well. I think as we’ve stated before, in terms of market development, Europe feels a number of years behind the US, in terms of consumer acceptance and awareness. So we’re very much doing a lot of the things in Europe that we’ve done in the US before, obviously making adjustments to that strategy where the market is sort of fundamentally different. But overall, it seems that by doing and running the same playbook in many ways, we’re starting to build that awareness and going through the process of bringing in more installers and customers and putting them through our training and putting them through sort of the same sales funnel that we have in the US. So I think that in Europe, we’re starting to see that, and I think it’s playing out very well.

Operator

Our next question comes from Alan Weber with Robotti Advisors. Please proceed.

Alan Weber

Will you talk about the window and non auto? Can you just talk about kind of what you see in terms of how you think about it, if you look out 2, 3, 4, 5 years, whatever?

Ryan Pape

Sure, Alan. Thanks for the question. I think that when you look at what we want to do as a company, we want to find ways to leverage everything we have. So whether that’s leveraging film technology, leveraging software, leveraging the brand or leveraging the customer base ultimately to build a business with more legs that’s more well-rounded, that’s not exposed just to one industry or one set of cycles. And I think that when we look at where we are and where the opportunities are, there’s substantial opportunity around residential and commercial window film outside of automotive that it’s a very large business and a established business and a very large market size, and it seems to suffer from a lot of the same problems that maybe the paint protection film business did historically, which is everyone’s focused on product, product, product. And no one’s focused on the channel and development and all the other things that need to happen. So we look at that as a logical extension to the business, both because it allows us to leverage the brand, leverage the product. And then we already have a lot of customers that are in that space. If you’re a customer of ours and a line of your business is automotive window film, it’s very likely that you may have a part of your business is doing residential and commercial as well. So we see it as a real logical extension. And provided that we can execute well and bring value and do things in a differentiated way than maybe, say, other people do in the market, I think over a couple of years, it could be a substantial portion of the business.

Alan Weber

Okay, great. And did you say I may have understood. In the acquisition you did in Las Vegas, did you say you bought their library? I kind of misunderstood that.

Ryan Pape

Yes. And I think it probably makes sense because it was actually two separate arrangements. So the Pro-Tect acquisition was a standalone business that installed automotive and residential and commercial products. Related to that, we had an ongoing license agreement with Proform, which was a separate company but related. And that license agreement was modified around the same time that will allow us to better integrate that library. So there are common people involved in both businesses, but they were in fact separate. But we did make adjustments or did the acquisition and made adjustment to the other agreement around the same time.

Operator

Your next question comes from Jason Hershman. [Ph]

Unidentified Analyst

A few questions for you this morning. I was wondering if you could provide a little bit more color on how the business is going on in Asia and particularly in China?

Ryan Pape

Overall, I would say the business in China has been good, and it seems to be accelerating, looking at sort of their forecast for this year. It’s a very competitive market. There are some unique dynamics. And for us, a lot of that tends to be lower margin business, so there’s a lot of factors going on there. But based on what we’re seeing in terms of what’s forecast for them for this year, it looks like that business will be accelerating quite nicely.

Unidentified Analyst

Okay. And just I appreciate the additional color on the trends of pricing and taxes. Is it fair to expect this sort of lower tax rate to continue into 2017, maybe into 2018, absent any federal income tax changes or by the Trump administration?

Barry Wood

It should be stable around where we’re at right now, Jason. We would expect it to do that, absent obviously, taxes is always a moving target, and we’re managing not only U.S. but international taxes as well. But that would be my expectation.

Unidentified Analyst

Sure. And last question I have today is that is there any expectations you have for, say, gross margins on a constant currency basis in 2017 versus 2016? Should we expect them to stay roughly the same on a constant currency basis?

Ryan Pape

I think, Jason, that when you if you assume that all sort of facets of the business remain the same, I would say that’s a fair assumption. The challenge is what we’ve seen historically is that the mix and where we see growth and which customers or parts of the world are growing. And a lot of times, it’s which customers, in particular which customers are growing, that could drive the gross margin differently.

Just because at the end of the day, there’s a significant gross margin difference amongst our customers if they’re in a redistribution-type business versus an end user. And so I think what we’ve seen a little bit last year was that the larger customers tended to grow more or grow faster than the smaller customers, which meant ultimately that your lower-margin sales were growing faster than your higher-margin sales. I don’t know that that’s really an indicator of anything other than that’s what happened or that there’s the concept here that once the customers get to a certain scale, they can actually grow faster. But below that, growth is tougher for them. I’m not sure. So I think that’s what drives the overall gross margin more than anything is that mix of who’s growing and at what rate. So if we could control that, I think it’s easier to predict what happens with gross margins. But at the end of the day, I don’t know that we can, depending on who does what.

Operator

Our next question comes from Adam Goldstein. [Ph]

Unidentified Analyst

So the first question I have is about the private placement that you guys did. That kind of surprised me, and I think there hasn’t been new shares issued in at least 4 years. And I mean, the company has grown, has been able to grow very, very rapidly without having to issue new shares. So can you maybe give some more explanation as to why now new shares were, new share issuance was required to continue growth?

Ryan Pape

Sure. I think it’s really twofold. One would be when you see like the Pro-Tect acquisition and some of our comments earlier, we see an opportunity to do more things like this and intend to do more. Pro-Tect, a bit of an anomaly, just in terms of size and deal size and whatnot, but we knew that it will take some amount of capital to continue doing those things and to invest in some of the new products we want to do. And the vast majority of that, we would believe that the current scale of what we’re doing that you could cash flow that from operations with no problem.

However, when you’re faced with substantial legal fees at the same time, which, based on the numbers, I’m sure you can tell they did accelerate at the end of the year, not clear that they would have continued at that rate or not, just depending on what happened. But when you look at that as a possibility, we really had to consider that for the first time that, that litigation could actually get in the way of the core strategy of the business. And we’ve been clear to say before that, that wasn’t happening. And we also weren’t content to potentially wait a year or 2 years to resume execution on some of these strategies. So it was at that point that the board decided to ensure our ability to continue to do these things that we needed to, we need to raise capital, to do that in light of accelerating legal fees.

And I think also, candidly, there was an opportunity for the company to demonstrate that it could raise capital to cover legal fees. And I think that, that probably in the litigation context sends a good message.

Unidentified Analyst

That’s quite interesting. Okay, no that helps. So is it fair to say then, I mean, that’s kind of what I suspected that it was related to the litigation. Is it fair to say that’s not going to be the plan to the future, like continued share issuance in order to grow?

Ryan Pape

Yes. I think you’ve seen from us incredible discipline on that. We have a lot of insider ownership throughout the company, so everyone is extremely mindful of that share structure and the simplicity of the structure and the relatively undiluted nature of that. So I think we’re all in 100% alignment that we want to be really smart about that. So absent the litigation, would we have done a private placement at the price we did? No. I mean, I think that you can safely say that. So does that mean that there’s no opportunity to raise capital going forward to accelerate the development and growth of the business? No. There might be. But I think you will see that done, if it’s done, in a way, certainly, in keeping with kind of how we’ve operated the business. And absent specific opportunities or specific plan, I wouldn’t expect to see a lot of raises done just to sort of fund the business, which we’ve never done before.

Unidentified Analyst

Okay, great. That helps. Now I know you’re saying that the settlement with 3M was confidential, but I guess I’m kind of surprised. You’re saying that it will have no material effect on the business. That, to me, sounds like an incredibly good settlement. I almost can’t understand it. I mean, even on gross margins, we’re not going to see a hit? Or -- also, I think Barry mentioned something about the -- I didn’t quite catch it, the optics of the settlement might cause price increases. I don’t know if I misheard him.

Ryan Pape

Yes. I think what Barry was referring to is that we had intended to increase prices, our sales prices to certain customers in certain markets last year. And a combination of issues with supply and delays of supply and the optics of having that lawsuit looming made us decide not to go forward with those price increases. In other words, it was important to us not to show the customer that we have to raise prices because of the lawsuit because that would drive a lot of questions that we didn’t think were appropriate. So that’s, I think, what Barry was referring to.

Unidentified Analyst

Okay. But for the other part of my question, are you saying that we’re not going to see a gross margin hit due to some royalty payments or other such thing?

Ryan Pape

Yes. I think -- I mean, I’ve really said what I can say on it, which is the agreement is confidential, and we don’t expect a material impact to the business as a result. And that’s really about all I can say.

Unidentified Analyst

Okay. And then the last question is, so the supply challenges, these are still ongoing, like even in Q4?

Ryan Pape

Well, I think to some extent, yes. I would say that one of the challenge of this business is that, from a raw material standpoint, manufacturing quality standpoint, you’re rarely at 100% ever. I mean, that’s just sort of the fundamental piece of the business. But as we went through last year, we still had some delays and some quality issues into fourth quarter and a little bit into first quarter, too. So while I wouldn’t say there’s supply interruption at this point. Clearly, if you look at the balance sheet and ending inventory, I mean, I think we increased inventory maybe $1 million plus over the prior end of year. So I wouldn’t say there’s supply interruption. But what we’ve done is, with our partner on that product, we’ve gone and increased capacity tremendously. So we have roughly three times the capacity at our disposal. We’ve made changes to try and improve the product. There’s some pain that went along with that, far more pain than we wanted. And then we’ve also done this to position for sort of a next-generation product, which we’re testing with customers now and would expect to continue to roll out throughout this year. So you do all those things and you do them at once, sometimes you’ve got to make decisions to go fast, and it just created more pain, sometimes in fits and starts, than you’d like. But ultimately, that’s what you got to do to grow the business and evolve the business.

Operator

Our next question comes from Salem Noujaim. [Ph] Please proceed.

UnidentifiedAnalyst

Congrats on the settlement. Have a few questions related to acquisitions mostly. Just for your Pro-Tect acquisition, first, were you the incumbent provider of PPF to that business?

Ryan Pape

We were not.

UnidentifiedAnalyst

Okay. And can you share what the pro forma impact will be on revenue and EBITDA for that business when it’s fully rolled into XPEL? Just trying to understand how do you look at valuation for these small businesses?

Ryan Pape

Yes. So we’re not breaking out the financials for these businesses individually. I think they’re all relatively small. I think when you look at how we look at it in terms of valuation, I mean, we’re sort of at a max of 3 times to 4 times EBITDA was a max we would really consider paying for these types of businesses. And then depending on where they fit on the continuum of revenue and the sort of scale of the operations, we will really look to go down from there, depending on circumstances. So that kind of gives you a sense of how we look at it. In general, I would say that, as I’ve said earlier, Pro-Tect, for the type of business it was and the operation is really a standout in its class. So within that range, that moves us to the higher end of that range. But that doesn’t necessarily mean that we view all businesses like the Pro-Tect business the same way. I think that’s kind of where you cap out valuation-wise in terms of what we’re looking when we look at these things.

UnidentifiedAnalyst

All right, beautiful. And now that you have some fresh capital to deploy into acquisitions, can you share some general comments about your opportunity, your pipeline? Do you have anything coming up in terms of acquisitions, similar acquisitions to Pro-Tect?

Ryan Pape

Well, I think our approach with acquisitions is 100% in keeping with that Get Close to the Customer mantra that we have. And I think that we’ve seen that play out over time really quite a bit from the Canadian acquisition, which was certainly the largest; to the UK businesses that we bought, which were smaller; to the Netherlands operation, which was a distributor that was smaller; to Pro-Tect; and that type of thing. So anything along that continuum is certainly fair game and in keeping with our strategy, and there’s no shortage of those type of opportunities. The key is making sure that they could be acquired at attractive multiples that we could integrate them very well, and that they’re a good fit overall. And that the business, the scope of the business and our infrastructure and our ability to manage those type of things exist. But I would say when you look at Pro-Tect, when you look at what we’ve done prior, those are all sort of where our strategy is, and that really hasn’t changed or deviated from that much.

UnidentifiedAnalyst

Okay. And final question. Post lawsuit, post settlement, are you planning a PR strategy to educate your customers on the implication? Obviously, everything is confidential. But is there a strategy to go out and talk to your customers and tell them nothing is happening here? Nothing’s going to change.

Ryan Pape

No. There is not. I think our customers, in large part, in terms of existing customers, I think moved on from this a long time ago. And I think there’s little to be gained by talking about it further. The best we can do is focus internally on the business, making the business better and serving the customers better. And I’ll say that in the Pro-Tect business in Las Vegas, 3M is a partner of ours with that business. And so that’s fine, and there’s no reason to drag it out and talk about it. That’s done, and we’re moving on. And there is plenty of work for us to do on our own operations and with our customers to better serve them that I think they would tell us, "Hey, shut up. Stop talking about that and do a better job of serving me," and our answer would be, "Okay, we’ll do it."

Operator

We’ve now reached the end of our Q&A session. I would like to turn the floor back over to Ryan Pape at this time.

Ryan Pape

Yes. I’ll just thank everybody for participating on this call and for the questions, and we look forward to speaking with you next quarter.

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