EVERTEC's (EVTC) CEO Morgan Schuessler on Q1 2018 Results - Earnings Call Transcript

EVERTEC (NYSE:EVTC) Q1 2018 Earnings Conference Call May 1, 2018 4:30 PM ET

Executives

Kay Sharpton - Vice President of Investor Relations

Morgan Schuessler - President and Chief Executive Officer

Peter Smith - Executive Vice President and Chief Financial Officer

Analysts

Robert Napoli - William Blair & Company, LLC

James Schneider - Goldman Sachs

George Mihalos - Cowen Inc.

Vasundhara Govil - Morgan Stanley

Operator

Good afternoon, everyone, and welcome to the EVERTEC's First Quarter 2018 Earnings Conference Call. Today's conference call is being recorded. At this time, I would like to turn the call over to Kay Sharpton, Vice President of Investor Relations. Please go ahead.

Kay Sharpton

Thank you and good afternoon. With me today are Mac Schuessler, our President and Chief Executive Officer; and Peter Smith, our Chief Financial Officer.

A replay of this call will be available until Tuesday, May 8. Access information for the replay is listed in today's financial release, which is available on our website under Investor Relations section of evertecinc.com. For those listening to the replay, this call was held on May 1.

Please note, there is a presentation that accompanies this conference call, and it is accessible in the Investor Relations section of our website.

Before we begin, I'd like to remind everyone that this call may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements about our expectations for future performance are subject to known and unknown risks and uncertainties. EVERTEC cautions that these statements are not guarantees of future performance.

All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statements to reflect the events that occur after this call. Please refer to the company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements.

During today's call, management will provide certain information that will constitute non-GAAP financial measures under SEC rules, such as adjusted EBITDA, adjusted net income, adjusted earnings per common share. Reconciliation to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides.

I'll now hand the call over to Mac.

Morgan Schuessler

Thanks, Kay, and good afternoon, everyone. It's a pleasure to speak with you today. We're very pleased that our results for the first quarter of 2018 exceeded our expectations. We benefited from Puerto Rico's increased rebuilding and recovering activity, which drove increased sales volume and margin growth progressively over the quarter.

Beginning on Slide 4, I'll cover some of the quarter's financial highlights and provide you with an update on recent developments. Total revenue was $110 million, an increase of 9% compared to 2017, which was stronger than anticipated due to increased sales volume driven by a significant increase in the average ticket and an improved net revenue mix.

Additionally, our initiatives to manage expenses helped us to deliver adjusted EBITDA of $54 million, up 10% over the prior year; adjusted earnings per common share was $0.47, an increase of 4% compared to last year. We generated significant operating cash flow in the quarter of more than $30 million or $5 million above last year. Given the quarter results and our expectations for the remainder of the year, we are increasing our guidance for the full year.

Before I provide more specific updates for our business, I'd like to give you some additional comments on Puerto Rico on Slide 5. Power distribution is at approximately 95%. We are encouraged that we have seen improvement in our merchant base from our last call with a rebound in our local and smaller merchants, which has positively impacted our spread. We have approximately 12% of our merchants still not processing transactions compared to normal levels and we remain focused on getting every merchant we can back in business.

Regarding relief funds for Puerto Rico, on April 10, the U.S. Department of Housing and Urban Development announced that $18 billion was earmarked for Puerto Rico for it to address seriously damaged housing, businesses and infrastructure, including updates to the power grid. This grant, the largest ever received by Puerto Rico is also the largest grant ever made by HUD.

The timing of the distribution of the funds is unclear and it may take six months or more for initial distributions. With these funds, FEMA funding and other private sources, the current PROMESA plan estimates Puerto Rico could receive a total of $62 million in support, which is meaningful given the GDP of approximately $100 billion.

We believe that we are benefitting from the initial release of private insurance payments, which per the PROMESA plan should be approximately $8 billion in total. Additionally, we believe that loan moratoriums offered by the Puerto Rican banks that ended in the first quarter also helps spending. And thus far, we have not experienced any negative impacts from the termination of these programs.

Regarding the fiscal plan, it was certified by the PROMESA board in late April and includes a 10% reduction in public pensions, as well as other reductions in government spending. The Governor and the Puerto Rico legislator are not yet in agreement with these reductions and certain labor reform measures. It remains unclear how and when these reforms and austerity plans will be implemented or what's the impact on Puerto Rico's economy, consumer spending or immigration could be.

We believe that federal relief funds and insurance proceeds once ultimately received will provide spending stimulus to the economy and benefit EVERTEC. However, government austerity could potentially offset this benefit over time. In the end it is paramount that Puerto Rico's private sector grows and provides improved long-term sustainable employment.

Turning to our business update on Slide 6. First, we were pleased with the stronger-than-expected revenue in the quarter in Puerto Rico, which grew approximately 2%. We experienced a 2% decline in transaction volumes. However, average ticket continued to be significantly above the prior year, improved 9%. Merchant mix significantly improved over the quarter as smaller merchants gained market share and processed more volume.

Second, we have continued our focus on commercializing our products, given our PayGroup acquisition. We have completed our rebranding and we are educating our clients on our solutions. We also recently completed an enhancement of our website that now features our service offerings by country.

Third, Latin America revenue, including the impact of the PayGroup acquisition was up year-over-year more than 55% as we anticipated. Excluding the acquisition, revenue was up high-single-digits despite the impact of client migrations. We now expect that client migration to be in a range of $46 million in 2018, given some additional updates from clients related to delays on their deconversions.

Although we continue to execute well and these are strong results as compared to our expectations, the environment in Puerto Rico still presents multiple uncertainties, including the fragility of the power grid, the lack of agreement between PROMESA and the government, ambiguity on migration, as well as the timing of relief funds. As such, given the totality of these uncertainties our board chose to continue the dividend suspension at this time.

That said, with our strong results in Q1, along with our expectations for the remainder of the year, we have provided a significant increase in our guidance range and Peter will provide further details. With that, I will now turn the call over to Peter.

Peter Smith

Thank you, Mac, and good afternoon, everyone. I will now provide a review of our first quarter 2018 results. Turning to Slide 8, you will see the consolidated first quarter 2018 results. Total revenue for the first quarter of 2018 was $110.3 million, up 9% compared to $101.3 million in the prior year.

Our sales volume grew unexpectedly in the second half of the quarter, finishing in March at an elevated level across all merchant payment categories. Consequently, revenue significantly exceeded our expectation. We also effectively contained expenses in the quarter. This combination produced results that far surpassed our initial projections.

That said I will provide further details when I review the segment results in a moment. Adjusted EBITDA for the quarter was $54 million, an increase of 10% from $49.2 million in the prior year. Adjusted EBITDA margin was 48.9% and this represents a 40 basis point increase in our adjusted EBITDA margin compared to the prior year. This improvement in year-over-year margin is primarily related to the strong sales volume and includes the lower margin contribution from PayGroup.

We executed on our plan cost initiatives and benefitted from the timing delay of certain expenses as well. Adjusted net income in the quarter was $34.6 million, an increase of 5% as compared to the prior year and the increase primarily reflects the higher adjusted EBITDA, offset by higher interest as well as a higher tax rate as compared to last year. The effective tax rate in the quarter of 13.8% included a discrete tax item of approximately $500,000 that contributed to an increase in the rate.

Given the slightly higher tax rate in Q1, our expectation for the full year is now a range of 12% to 13%. Adjusted EPS grew 4%, reflecting a slightly higher share count compared to the prior year. Moving to Slide 9, I'll now cover our segment results, starting with merchant acquiring.

In the first quarter, merchant acquiring net revenue increased 4% year-over-year to approximately $23.4 million. The revenue increase was due to increased volumes driven by the high average ticket, which contributed to a higher net revenue margin, in spite of lower transactions versus last year.

As compared to our estimates, we experienced higher than anticipated sales volume progressively over the quarter. During the quarter, our year-over-year sales volumes grew 2.5% in January to slightly more in the first half of February, all the way to a significantly higher 14% in March, resulting in just over 7% volume growth. Also, our net revenue spread, although down year-over-year approximately 5% was stronger than we had projected and it too grew steadily through the quarter.

Our spread improved significantly in the second half of the quarter and the reason for the increase is two-fold. The impact of the higher average ticket, which we experienced across our merchant payment categories. And secondly, our core Puerto Rico small merchant base volume grew as more merchants came back online.

For a bit more background on our merchant mix and to better put this improved mix in context, our merchant mix is composed of small merchants, larger Puerto Rican merchants such as supermarkets and gas stations, large U.S. based national retailers and acquired transactions made on electronic benefit cards or EBT cards.

Prior to the hurricanes between 65% to 70% of sales volume pertained to card transactions made to Puerto Rican merchants, large and small. The remaining approximately 30% to 35% of sales volumes reflected card payment transactions made to U.S. national retailers and/or EBT cards, both of which contribute a lower net revenue margin.

In the hurricane aftermath that are low point, sales volumes shifted to a larger Puerto Rican merchants and approximately 50% of volume was processed by national retailers are on EBT cards, all of which drove an approximately 20% decline in our net revenue spread. In the second half of the first quarter, our merchant sales volume distribution recovered to a mix approaching pre-hurricane levels.

Net results of the improved volumes in mix led to the significant improve net revenue margin in the first quarter and overall growth of 4% in the segment. Our forecasting environment post-Hurricane Maria continues to be dynamic. And hopefully, this additional information provides helpful insight into the unexpected revenue improvement we experienced in the second half of the quarter.

Adjusted EBITDA for the segment was $10.9 million and adjusted EBITDA margin was 46.4%, up approximately 300 basis points as compared to last year, primarily due to the increased sales volumes and the improved margin contribution from the increased average ticket.

On Slide 10, you will see the results of the Payment Services, Puerto Rico and Caribbean segment. Revenue for the segment in the first quarter was $27.2 million, up approximately 3% as compared to last year. As Mac referenced transactions in the quarter were approximately 2% lower than the prior year and the revenue increase was driven primarily from new ATH network and processing fees, and service revenues for point-of-sale terminals and ATMs.

Adjusted EBITDA for the segment was $17.3 million and adjusted EBITDA margin was 63.7%, up approximately 20 basis points as compared to last year, primarily due to the increased revenue as well as reduced operating expenses.

On Slide 11, you will see the results for the Payment Services Latin America segment. Revenue for the segment in the first quarter was $20.4 million, up approximately 57% as compared to last year. This growth was driven primarily by the PayGroup acquisition, included nonrecurring license revenue of approximately $300,000, excluding PayGroup revenue growth was high-single-digit.

Adjusted EBITDA for the segment was $7 million and adjusted EBITDA margin was 34.3%, down approximately 780 basis points as compared to last year, primarily due to the lower margin PayGroup revenue contribution. The margin was stronger than we estimated largely due to expense containment and the favorable timing of certain revenue and expense items. We now anticipate that the margins in the LatAm segment will be in the mid-20s for the full year, which reflects the updated customer attrition impact in 2018.

On Slide 12, you will find the results for the Business Solutions segment. Business Solutions revenue in the first quarter was even with last year at $47.9 million. We continue to benefit from increased Popular revenues. However, this increase was offset by lower IT consulting revenues and an increase in deferred revenue.

Adjusted EBITDA for the segment was $23.2 million and adjusted EBITDA margin was 48.3%, up approximately 150 basis points as compared to last year, primarily due to cost management initiatives as well as the nonrecurring fee of approximately $300,000.

Moving on to Slide 13, you will see a summary of our Corporate and Other expense. Our first quarter expense was $4.4 million, a year-over-year reduction of 18%. As a percent of total revenue, Corporate and Other expense was 3.9% and 130 basis points below the prior year. The decline reflects our expense initiatives as well as some timing delays and significant expenses in the prior year. We continue to anticipate our Corporate and Other expenses to be flat year-over-year on the full-year basis.

Moving on to our year-to-date cash flow overview on Slide 14. Our beginning cash balance was $60 million, including restricted cash of $10 million. Net cash provided by operating activities was approximately $30 million or $5 million increase as compared to prior year. Capital expenditures year-to-date were approximately $9 million. Next, we paid approximately $5 million in principal debt payments and reduced approximately $12 million in short-term borrowings, resulting in a total net debt decrease of approximately $17 million.

Although, we did not repurchase any stock this quarter, we had approximately $72 million available for future use under the company's share repurchase program. Our ending cash balance as of March 31 was $64 million and this included $11 million of restricted cash.

Moving to Slide 15, you will find a summary of our debt as of March 31, 2018. Our quarter ending net debt addition was approximately $554 million comprised of the $53 million of unrestricted cash and approximately $608 million of total short-term borrowings and long-term debt. Our weighted average interest rate was approximately 4.3%. Our net debt to trailing 12-month adjusted EBITDA was 3.2 times, reflecting the credit agreement, which limits the cash supplied in the net debt calculation to $25 million.

As of March 31, total liquidity, which excludes restricted cash and includes the available borrowing capacity under our existing revolver, was $149 million. In April, we paid off our 2018 Term Loan A of $26 million with the mix of cash and a revolver debt drop. And as of the end of April, our long-term borrowings were approximately $582 million and revolver debt was approximately $23 million.

As a reminder, our revolving loan facility reduced from $100 million to $65 million in accordance with terms and conditions of the credit facility. Our current plan is to use Q2 cash flow to reduce the revolver balance, as we continue to monitor the recovery in Puerto Rico. We continue to make progress on our Puerto Rican government receivable as well, which was approximately $9.4 million on March 31, and is down approximately $2.4 million from the balance of the end of 2017.

Given that we continue to work with our client in the normal course and have reduced our receivables significantly or by roughly half since the end of 2016, we plan to discontinue reporting on this receivable on a quarterly basis.

Moving to Slide 16. I will now provide an update on our 2018 guidance. We are raising our revenue guidance for the year to a range of $430 million to $440 million, representing a range of 6% to 8% over last year. The increase in the revenue range reflects our strong Q1 results and improved projection of revenue volumes throughout the remainder of the year. April's year-over-year sales volume growth was slightly lower than March. And transaction volumes approximated March levels, and we continue to see a high average ticket.

We have projected this trend to continue, but modestly decelerate out of caution for the uncertainties that we referenced. We now project the Merchant segment revenues to grow mid-single-digits. Our Payment Services, Puerto Rico and Caribbean segment revenue is now anticipated to grow low-single-digits, similarly reflecting the continuation of these trends and assumptions.

We maintain our guidance of low to mid single-digit growth for the Business Solutions segment, and as I mentioned earlier improved our Latin American segment margin outlook. Regarding overall margin, we now anticipate that our adjusted EBITDA margin will be in the range of 43% to 45% for the year.

Margins for the remainder of the year are anticipated to be lower than the first quarter, primarily driven by an assumed lower net revenue mix and other projected incremental expenses that were not incurred in the first quarter. Our adjusted earnings per common share outlook has been increased due to $1.51 to $1.66, which represents a range of 3% to 13% as compared to $1.47 in 2017.

In summary, we benefited from the stronger than anticipated Puerto Rico sales volumes in the back half of the quarter, we executed on our cost initiatives, and we continue to make progress on our Latin American growth plans. While, we managed through the uncertainties in Puerto Rico, we are encouraged by our performance thus far and look forward to updating you on our progress throughout the year.

We will now open the call for questions. Operator, please go ahead and open the line.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Bob Napoli of William Blair. Please go ahead.

Robert Napoli

Thank you. And congratulations on a really nice rebound, great to see that.

Morgan Schuessler

Hi, Bob.

Robert Napoli

Just the guidance - I missed the guidance for the merchant acquiring segment, looking at the growth of merchant acquiring for the year.

Peter Smith

Yeah, hi, Bob. It's Peter.

Robert Napoli

Hi, Peter.

Peter Smith

We said it would be mid-single-digits. What we projected is a modest decline from this level that we had in the first quarter as we do see some uncertainty there. We had the really impressive rise in our average ticket. But it's unclear whether that will sustain for the rest of the year. So just out of caution we backed it off a little bit and that arrives at mid-single-digits for the full year.

Robert Napoli

So you're - I mean, and that's kind of the basic theory that you have throughout your guidance. But isn't it as likely that you get - that you maintain or even with the recovery funds coming in, that could even improve?

Peter Smith

Well, we're obviously hopeful for that. At this point, as we look at the relief funds, we think it's been predominately insurance payments that have come in, as well as the Q1 moratorium with the banks. And the federal funding which has been approved is still unclear with respect to the timing that's coming on. And then the uncertainties that we're addressing here are specifically the timing of the relief funds itself, the immigration that we expect to occur in the summer, which is the traditional pattern, and then just this elevated spending in terms of the increased ticket just because we hadn't experienced that before.

Morgan Schuessler

And, Bob, this is Mac. So as Peter said, there are puts and takes. Again, immigration this summer, the predictability about that people will continue to migrate off the island as school ends, as they make decisions. And the second thing is austerity has not started with the government. So as the government looks at austerity measures and businesses look at rightsizing, it's hard to predict that. But there are puts and takes to the year. But in the forecast we try to bake those in.

Robert Napoli

What is PayGroup growing at if you compared it on a pro-forma basis?

Peter Smith

We're not going to be breaking that out. We really combine the business. Bob, but you can more or less derive it if you just look at the high-single-digits that we called out for our organic growth and then look at the segment.

Robert Napoli

Okay, all right. And then, I guess, with the recovery and your balance sheet and your leverage all of the sudden looking very healthy, are you back in the M&A market?

Morgan Schuessler

So, Bob, this is Mac. I mean, as we said earlier, I mean, we're really, really focused on getting PayGroup integrated well. But we are actively always looking at opportunities in Latin America and we'll continue to do that.

Robert Napoli

Great. Thank you very much. I appreciate it.

Morgan Schuessler

Thanks, Bob.

Operator

Our next question comes from James Schneider of Goldman Sachs. Please go ahead.

James Schneider

Good afternoon. Thanks for taking my question. Maybe could you give us a little bit of color in terms of the outperformance you're seeing in the payment segment? That's obviously very good to see. Can you give us any kind of sense, either on payments or merchant acquiring? How much is due to just the organic recovery effort on the island, people rebuilding themselves, and how much kind of incremental contribution there might be attributed to external recovery or release efforts?

Morgan Schuessler

I mean, I think that's very difficult for us to isolate. But we are saying broad-based increase in spending and moving more back to our small and local merchants, which is encouraging, because that means it's reactivating the economy. And then I'll let Peter answer any…

Peter Smith

I think Mac summarized it well. We have seen spending in categories such as home construction and things of that nature that are obviously elevated and isolated with respect to the recovery. But it pretty much has been broad-based. What was surprising was just it increased substantially in the second half of the quarter and continued through in large part in April.

James Schneider

I understand. And then just in terms of the margin cadence we expect through the year. I understand there are some deconversion impact as you get to the end of the year and some - obviously some incremental expenses that you bring on, given how rationalized they've been over the past couple of quarters for obvious reasons. But is there potential upside to margins to the extent revenues are better than you would expect or would you look to potentially flow through incremental kind of investments and expenses in new proximate and like to the extent things are better?

Peter Smith

We're committed to our plans with respect to initiatives that we have under way on expenses in terms of development and other product and sales activities. We have done a great job containing our expenses across the entire company. And to the extent revenues do surpass what we've guided to, we would expect to see margins improve. But we're very, very excited about our performance this quarter and it really was two-fold. It was the revenue. But then again we've done a good job containing our expenses as a team here.

James Schneider

That's good. And then just finally, can you maybe just comment looking back at the acquisitions you've done, Processa, Accuprint, PayGroup, et cetera, and how they've kind of performed relative to your internal plan? How would you kind of score them like any that stand out more than others in terms of over underperformance?

Morgan Schuessler

Yeah, so maybe take a look at FirstBank, Accuprint, Processa and PayGroup, we've been pleased with all the acquisitions. PayGroup, we closed more recently. As we talked about on the last call, we've been able to win some significant business and retain some business, because of that acquisition. So we feel like the underlying performance of the businesses, but strategically, those have changed the company and those have changed the company particularly outside of Puerto Rico.

James Schneider

Thank you very much.

Operator

Our next question comes from George Mihalos of Cowen & Company. Please go ahead.

George Mihalos

Great. Good afternoon, guys, and congrats on the quarter. Just wanted to dovetail a bit on Bob's question. If we look historically outside of 2017, usually revenue tends to ramp from the first quarter on, at least for the most part. And I think, if we just kind of hold steady the $110 million that you did, that gets us to the high-end of the guidance. What sort of in the back half of the year that can cause you to come in lower? Is that just the de-conversion of some of the portfolios or something else that's worth calling out?

Peter Smith

Hi, George, it's Peter. I think, it's important to note that the first thing is that we are still operating in a natural disaster recovery environment, so it's quite unpredictable. Our transactions are a little lower than the prior year. We've seen this elevated spend in the ticket and it really took off in the second half of the quarter and had sustained slightly down for March and April.

So as we look out, there's that unpredictability. We don't fully understand the impact of the moratorium that it could have on Q1, as I explained, the fiscal actions that may take place and the timing of those and the extent of the immigration. So with all that taken into consideration, we've been a bit cautious as we've looked out. We do also have the attrition from Latin America in the second half, which is also impacting us. So that is the - those are the variables that we considered as we projected out for the full year.

Morgan Schuessler

Yeah. And George, let me just add. I mean, part of this is timing. So if you think about it, we're six months after the hurricane and only a fourth of the interest proceeds have been distributed based on what people looked at. I think some of the federal funding has taken time to get approved, and it still hasn't really flowed through the system, because they're trying to put processes and agreements in place and trying to - because we had some very high average ticket, which was unusual, because it is based on these types of events.

So timing that, given that it hasn't been released yet against the immigration, against some budget cuts by the government, because they've kind of made some significant cuts to pensions that could weigh on the end of next year and trying to time those against each other are complex. And then, again you layer on to your point, the migrations on the LatAm business. But this is our best forecast given the information we have right now.

Peter Smith

Right. Just another way of thinking that, it could very well sustain, George, if in fact, the insurance payments are the primary driver and that sustains through the year and people continue to rebuild and spend money, but it's just unclear at this point. And we thought it would be just prudent to be a little cautious, and that's what we did.

George Mihalos

Okay. Thank you.

Morgan Schuessler

Thanks, George.

Operator

[Operator Instructions] Our next question comes from Vasu Govil of Morgan Stanley. Please go ahead.

Vasundhara Govil

Hi, thanks for taking my questions, and congratulations on a great quarter. Just a couple of things, on the spreads outside of just the mix changes, was there any pricing that you guys were able to take during the quarter that might have helped?

Peter Smith

We'd be - the only change versus our assumption with respect to pricing was an encouraging ability of our merchants to sustain in business. So we've still been charging merchants for their terminals and fixed fees that we do in an ordinary course. And we've been a bit surprised that they've sustained even though they are not processing transactions. Other than that, we did not do anything other than all the hard work we've put in to get our merchants back online, and that's the primary driver for the improvement.

Vasundhara Govil

Got it. And I think last quarter, you guys have said that you were assuming in the guide that about half of the SMBs that were out of business would come back. Have you made any changes to those expectations given what you've seen in the quarter?

Peter Smith

No. We have not. We've seen an encouraging, as I just referenced, resilience of these merchants to continue paying us. But the assumption that half of them will not get back in business is still in place in our projections.

Vasundhara Govil

Got it. And then, I think you referenced the austerity measures a few time. Do we have any idea of when these austerity measures have to be put into place? Like does the government have a timeline when they will announce some of these things?

Peter Smith

Well, they should take place with respect to the upcoming fiscal 2019 plan, which - the first draft of which is due to the fiscal control board this Friday. And that will be our first information on it. The fiscal plan was certified. But at this time, the government and the fiscal board are in disagreement over certain conditions of the fiscal plan such as pension reform and labor reform. And so, those matters need to be reconciled and then ultimately put into a fiscal budget for next year, and that's when we'll have insight.

Vasundhara Govil

Understood, and just the very last one. I know that the governor had earlier announced some proposal for labor reforms in Puerto Rico. Any update on that and when do we find out if the approval was approved or not - the proposal was approved or not?

Morgan Schuessler

Yeah, I think some of the encouraging news we'd heard is PRAPA [ph] being privatized and then some of the labor reform. Again, I think to Peter's point, they're still back and forth between PROMESA and the government, and what will actually the two parties agree upon. And that's part of the ambiguity around when the positive reforms will take effect, but also some of the austerity. So I think it's still TBD.

Vasundhara Govil

Got it. Thank you very much.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mac Schuessler for any closing remarks.

Morgan Schuessler

So, again, thank you for joining us on the call today. It's been a good start to the year. And we look forward to talking to you throughout the remaining quarters. Thank you and have a good night.

Operator

The conference has concluded. Thank you for attending today's presentation. You may now disconnect.