Earnings Call: Q3 2021

Oct 21, 2021

Welcome to the Q3 2021 Earnings Conference Call. My name is Jenny. I'll be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I will now turn the call over to Melinda Ellsworth. You may begin. Thank you. Good afternoon, everyone, and welcome to Kaiser Aluminum's 3rd Quarter and First 9 Months 2021 Earnings Conference Call. If you've not seen a copy of our earnings release, Please visit the Investor Relations page on our website at kaiseraluminum.com. We have also posted a PDF version of the slide presentation for this call. Joining me on the call today are President and Chief Executive Officer, Keith Harvey Executive Vice President and Chief Financial Officer, Neil West and Vice President and Chief Accounting Officer, Jennifer Huey. Before we begin, I'd like to refer you to the first three slides of our presentation And to remind you that the statements made by management and the information contained in this presentation that constitute forward looking statements are based on management's current expectations. For a summary of specific risk factors that could cause results to differ materially From those expressed in the forward looking statements, please refer to the company's earnings release and reports filed with the Securities and Exchange Commission, including the company's annual report on Form 10 ks for the full years ended December 31, 2020, and Form 10 Q for the quarters ended March 31, 2021 June 30, 2021 and September 30, 2021. The company undertakes no duty to update any forward looking Statements to conform the statement to actual results or changes in the company's expectations. In addition, we've included non GAAP financial information in our discussion. Reconciliations to the most comparable GAAP financial measures are included in the earnings release and in the appendix of the presentation. Reconciliations of certain forward looking non GAAP financial measures to comparable GAAP measures are not provided because certain items required for Such reconciliations are outside of our control and or cannot be reasonably predicted or provided without unreasonable effort. Any reference in our discussion today to EBITDA means adjusted EBITDA, which excludes non run rate items for which we've provided reconciliations in the appendix. At the conclusion of the company's presentation, we will open the call for questions. I would now like to turn the call over to Keith Sarvi. Keith? Thanks, Melinda, and thank you for joining us in a review of our Q3 2021 results. I want to begin by acknowledging and thanking the Kaiser team who continue to execute on our strategies to position us for long term growth while working safely and diligently during the quarter to meet customer requirements in the face of increasingly dynamic market conditions and a very challenging operating environment. As we discussed during our Q2 earnings call, We entered the Q3 aggressively addressing labor challenges in several of our locations and working to mitigate the impact of inflationary costs as we prepare to continue to meet improving demand. While demand remained robust during the quarter, Adverse conditions impacting operations proved to be even more challenging than we anticipated. In particular, continued challenges in the labor market, rapidly rising material and other inflationary costs, as well as supply chain issues, reduced efficiencies in our facilities and contributed to results that fell well short of our expectations going into the quarter. We've made significant progress addressing our labor challenges, enabling an increase in output and efficiencies in our operations as of the late Q3. However, we expect these other transitory issues to persist at least through the end of the year. Supply chain disruptions and labor inefficiencies in the quarter accounted for approximately $8,000,000 of negative impact to EBITDA. These headwinds included delayed shipments and plant inefficiencies resulting from the disruptions. Higher per unit costs for raw material, labor and other manufacturing costs negatively impacted the quarter an additional $5,000,000 These costs were partially offset by lower G and A incentives and other costs in the quarter by approximately $5,000,000 Collectively, these costs led to a further EBITDA margin compression of approximately 200 basis points in the Q3 results as compared to the Q2. We are aggressively passing through these additional costs through price increases where we can in our transactional businesses and through the terms of our supply agreements. While these increases and adjustments provide a pathway to mitigate our exposure to these additional costs, There is generally a lag effect before these higher costs can be reflected in increased prices. Looking now at each of our end markets and turning to Slide 7 in the presentation. Our aerospace and high strength shipments in the first half of twenty twenty one were up 31% from the second half of twenty twenty, and we expect shipments will continue to increase in the second half of twenty twenty one compared to the first half of the year. Although we are pleased to see the recovery in the aero and high strength underway, the challenging operating environment impacted Our ability to meet demand in the Q3. Earlier in the year, we projected our aero and high strength value added revenue Would be down approximately 5% to 8% year over year compared to the 2020 results. We now expect value added revenue for Aerospace will be down approximately 10% to 15% year over year, slightly worse than initially anticipated or 35% to 40% down from our record year in 2019. This slight decline in our projected value added revenue Is attributed primarily to staffing challenges and supply chain issues I previously noted, which created inefficiencies at our facilities and resulted in increased lead times and some shipment delays. Turning to Slide 8. With respect to our automotive markets, the expected recovery did not occur in the Q3 due to the continuing global impact of insufficient supply of semiconductor ships. Shipments and value added revenue for the quarter declined by 17% and 15%, respectively, from the Q2. The updated IHS industry forecast North America vehicle builds has declined from 16,300,000 vehicles to 13 point 0 vehicles for the year due specifically to the chip shortage. While auto value added revenue is a smaller portion of our overall portfolio. Our automotive facilities have been fully staffed for the better part of 2021 in anticipation of meeting previously forecasted strong customer demand. And while we have been able to pivot and divert a good deal of this capacity to meet the strong general engineering demand, the higher staffing levels negatively impacted our manufacturing cost and hampered the efficient operation of those facilities, which support the automotive market. Our current outlook for full year 2021 has automotive value added revenue now up 15% to 20% year over year compared to our outlook in the first half of the year when we had anticipated year over year growth in our automotive applications of 35% to 45% increase. Although current OEM production has been significantly curtailed, The automotive programs we support remain in place and are moving to the right until our customers return to normal operations. Now turning to Slide 9. On a more positive note, general engineering demand continues to be robust and we are well positioned to continue to capture these opportunities in both long and flat rolled products. We initially anticipated value added revenue would be up 10% to 15% year over year compared to 2020. However, with continued strength in demand, we are now on pace for a greater than 25% increase of value added revenue year over year due to heavy restocking and reassuring of OEM supply chains and strength of our Kaiser Select products. Shipments and value added revenue were down slightly from the 2nd quarter due partly to labor inefficiencies at the beginning of the quarter and larger amount than normal of in transit material at the end of the quarter, which we could not recognize from an accounting perspective. Demand for these products remain very strong through the entire quarter and is continuing into the Q4. Turning now to Slide 10. The addition of packaging to our portfolio with our acquisition of the Warwick Rolling Mill continues to demonstrate strong strategic growth opportunities beyond what we had anticipated at the time of the acquisition as demand for our packaging products continues to increase. We remain confident in our ability to deliver significant margin expansion and long term profitability in this business. During the Q3, however, our performance was negatively impacted by supply chain issues and labor inefficiencies, which resulted in lower planned volume output and higher material and operating costs representing approximately $9,000,000 of the total cost impact to EBITDA mentioned in my earlier comments. We faced a myriad of challenges in the quarter, including higher staffing and training, unplanned outages at 1 of our outside converters, 2 unplanned power outages at the site and metal supply disruptions from one of our sources. We anticipate some of these supply chain issues will continue into the 4th quarter as we continue to execute countermeasures to mitigate the impact of the business. With continued strength in demand, our outlook for packaging Value added revenue for the full year 2021 currently remains in the $375,000,000 to $400,000,000 range. We continue to make good progress integrating Morrick into the company and are on track to exit most of the transition service agreements by the end of 2021 with 1 or 2 potential IT related transition service agreements running into the Q1 of next year. Turning now to Slide 11. Summarizing our outlook for the Q4 2021, we anticipate total consolidated value added revenue will be up in the low single digits from the 3rd quarter results With adjusted EBITDA margin similar to the Q3, recognizing that continuing uncertainty remains around some material costs and ongoing supply chain disruptions likely through the balance of the year. Magnesium in particular has recently emerged as Headwind for us in the Q4 and we have included the expected impact of those headwinds in our 4th quarter outlook. However, the situation remains fluid. The recent force majeure declaration from 1 of the domestic magnesium suppliers due to an equipment failure and worsening industry supply issues with production from China together could further impact our 4th quarter results. We are working with our suppliers to better understand the situation as well as discussing with our customers potential supply and cost implications associated with these interruptions for the balance of the quarter and potentially beyond the quarter. I'll now turn the call over to Neil to provide more color on our earnings for the quarter, and I'll be back to discuss our outlook for our markets and opportunities later in the presentation. Neil? Thank you, Keith. Good morning, everyone. Turning to Slide 13, Value added revenue for the Q3 of 2021 of $305,000,000 increased $151,000,000 or 98% compared to the prior year period, reflecting $126,000,000 of value added revenue from the addition of our packaging business, which was completed at the end of the Q1. Continued strength and underlying demand for our general engineering applications contributed $20,000,000 of year over year increase, While aero high strength improved approximately $8,000,000 partially offset by a $3,000,000 decline in value added revenue for our automotive applications due to the ongoing impact of the semiconductor chip shortages of North America vehicle production as Keith mentioned. As a reminder, the Q3 of 2020 results for ARO Highstring included approximately $15,000,000 of additional revenue related to the modifications of 2020 customer declarations under multiyear contracts. On a quarterly sequential basis, 3rd quarter 2021 value added revenue declined approximately $13,000,000 from the Q2 of 2021, driven by labor and supply chain challenges that impacted our ability to produce to demand, as Keith noted, and the continued impact of the chip Value added revenue of $795,000,000 for the 1st 9 months of 2021 Increased $249,000,000 or 46% compared to the 1st 9 months of 2020, primarily reflecting $258,000,000 of value added revenue contributed from the Warwick acquisition. Demand for our general engineering applications have remained strong and continue to improve from 2020, increasing $46,000,000 year over year, While value added revenue for our automotive applications increased $16,000,000 reflecting new program launches and recovery from the COVID-nineteen related supply chain curtailments that occurred in the Q2 of 2020. Value added revenue for our aero high strength applications declined $73,000,000 from the 1st 9 months of 2020 as the impact of COVID-nineteen pandemic impacted commercial aerospace demand, while demand for our defense applications has remained strong. Additional detail on value added revenue and shipments by end market applications can be found in the appendix of this presentation. Turning to Slide 14. Adjusted EBITDA for the Q3 of 2021 increased $19,000,000 compared to the prior year quarter, reflecting the addition of packaging and improvement in our aerospace high strength and general engineering applications as previously noted, offset by the higher costs and inefficiencies. As a reminder, the Q3 2020 adjusted EBITDA includes Previously noted $15,000,000 revenue related to the modifications to customer declarations. 3rd quarter 2021 EBITDA margins of 15.5% declined from 20.4% in the prior year period, reflecting the impact of the higher unit costs, Labor inefficiencies and supply chain disruptions as previously quantified by Keith. On a sequential basis, 3rd quarter 2021 EBITDA of $50,000,000 declined $8,000,000 from the Q2 of 2021, impacted by the costs and inefficiencies as discussed. Adjusted EBITDA for the 1st 9 months of 2021 was $147,000,000 and an increase of $21,000,000 up 17% compared to the 1st 9 months of 2020. The increase reflects the higher value added revenue as discussed, offset by higher costs across our platform, specifically freight, labor, benefit and incentives and other manufacturing costs, In addition to approximately $1,500,000 of redundant overhead costs as we continue to incorporate Warrick operations into our systems. For the 1st 9 months of 2021, our EBITDA margin of 18.4% compared to 23% adjusted EBITDA margin for the 1st 9 months of 2020, which reflected a record Q1 2020 pre COVID adjusted EBITDA margin of 27.4 percent and the benefit of the additional $15,000,000 related to modification to customer declarations in the Q3 of 2020 as previously noted. As Keith discussed, our operations and commercial teams are working diligently to identify and pass through inflationary costs in our transactional through price increases and to our contract customers through provisions included in our supply agreements. We are also working with our vendors to minimize disruptions in our supply channels to stabilize costs and ensure supply. As an example, we have increased our order lead times and minimum reorder points and are in the process of qualifying additional suppliers to further mitigate the In addition, while we have significantly improved our staffing levels, we will continue to incur some additional labor costs Manufacturing inefficiencies into the Q4 as we train, integrate new staff into our workforce. Moving on to Slide 15. Reported operating income for the Q3 2021 was $20,000,000 Adjusting for $6,000,000 of non run rate charges, including $1,000,000 of additional work integration costs related to professional services And $3,000,000 of non cash purchase accounting hedging related charges, adjusted operating income was $26,000,000 Up 37% from the $19,000,000 in the prior year Q3, primarily due to the increase in EBITDA as previously discussed. In addition, operating income includes $13,000,000 of incremental depreciation and amortization charges, primarily reflecting the impact of purchase accounting and the inclusion of the work operation. Reported net loss for the Q3 of 2021 was approximately $2,000,000 compared to $400,000 of net income in the prior year quarter. Adjusting for the non run rate items noted above, adjusted net income for the Q3 of 2021 was approximately $9,000,000 compared to adjusted net income of $6,000,000 in the prior year quarter. For the Q3 of 2021, we recorded a tax expense of approximately $8,000,000 reflecting the impact of required tax adjustments. For the full year 2021 and over the longer term, we continue to believe our annual effective tax rate before discrete items We'll be in the low to mid-twenty percent range under the current tax regulations. We anticipate that our cash tax rate We'll remain in the low single digits until we consume our federal NOLs, which as of year end 2020 were approximately $95,000,000 As reported earnings per diluted share were a loss of $0.14 in the Q3 2021 compared to earnings per diluted share of $0.02 in the prior quarter. Adjusting for the non run rate items, adjusted earnings per diluted share This was $0.57 for the Q3 of 2021 compared to the adjusted earnings per diluted share of $0.39 for the Q3 of 2020. As of September 30, cash of approximately $296,000,000 and more than $367,000,000 of borrowing availability in our The revolving credit facility provided total liquidity of approximately $663,000,000 There were no borrowings on our revolving credit facility during the quarter and the facility remains undrawn. We have lowered our planned capital spending for the Full year of 2021 to approximately $70,000,000 to $80,000,000 due to supply chain challenges and the timing of certain projects. Our integration of work back office and IT support operations continues as planned and we continue to work with Alcoa to exit several Transition support agreements or TSAs by year end. Higher overhead costs associated with the TSAs, while also ramping up our staffing and other fees To be prepared for the handoff, we'll continue to effectively exit of these TSAs. In addition To some higher corporate overhead costs as previously noted, we anticipate an additional approximately $4,000,000 to $5,000,000 of non run rate charges Related to professional support services and non cash purchase accounting related hedging charges to also occur through the end of this year. And now, I'll turn the call back over to Keith to discuss our 2021 and beyond business outlook. Keith? Thanks, Neil. Turning to Slide 17 and the deck. Looking forward, we continue to remain very optimistic about the long term potential for our portfolio of businesses focused on aerospace, packaging, automotive and general engineering and believe they provide a strong platform for investment and continued growth. There is an increasing clarity for improving demand for aerospace and high strength products, and we expect demand in 2022 to be significantly above 2021 levels as we have now received declarations and forecasts for next year's requirements from our customers. Our contracts are being extended into the back half of the decade and we are gaining a better understanding of future requirements needed by the large commercial airframers over the next several years. Once we have a better understanding of the total requirements of our aerospace and general engineering customers, We will determine when we launch the Phase 7 expansion at Trentwood discussed during our Q2 earnings call. Included in our outlook is the expectation that we will be in a destocking environment for our products in the large commercial jet supply chain for at least the next year or so as the markets continue to recover back to the 2019 levels. That said, we continue to anticipate a return to record 2019 demand levels for our products in the 2023 to 2024 timeframe. Our confidence in our market position and the strength of our contracts Provide the strong support for our outlook. The diversity of our participation in military, Business Jet and Other Industrial categories has also aided in the recovery and confidence in our outlook. Military aerospace demand remains as expected and has continued to provide a solid foundation for aerospace plate demand for us. And business jet demand for our products is recovering faster than large commercial jets, and we expect demand in these markets to return to 2019 levels sooner than the 2023 2024 period. We are engaged in discussions with our automotive customers on a regular basis to assess the temporary production cuts As I previously noted, IHS forecast North American build rates for 2021 We'll be down approximately 20% from their prior forecast for the full year. The programs we support remain intact, Long term demand remains strong and we can expect a rebound in bill rates once bottlenecks in the supply of critical components to become alleviated. Current IHS forecasts show build rates growing to 15,200,000 vehicles in 2022 and over 17,000,000 vehicles now in 2023. In the interim, We will continue to operate as we have historically, flexing our operations with changes in the market environment, Pivoting where we can shift additional production to meet general engineering demand or adjusting our production and operations to the lower levels of demand. Given the labor challenges we've had in 2021, we're more inclined to shift production at the automotive facilities to meet strong demand For our general engineering products where possible in order to retain our skilled employee base and to ensure supplier readiness when automotive build rates begin to ramp up. Our automotive mix remains strong and our contracts ensure our supplier position once The chip supply disruption abates. In particular, interest from our customers on EV development continues to be a major initiative as demand for our long products in these vehicles is expected to be high. We are working on multiple new EV programs, utilizing our products in chassis and structural, safety and crash management and battery tray systems and anticipate this will contribute to further growth in the years ahead. In general engineering, We expect demand for our products to remain strong well into 2022. Our mills have extended lead times for these products, and we have been negotiating 2022 supply positions with our service center customers. We expect Restocking to continue into early next year as our customers continue to experience heavy demand. We also expect these strong markets to support additional price increases, which will allow us to further offset some of the higher costs As we stated earlier, with the planned capacity expansion project at our Trentwick facility, We will be well positioned to support increased general engineering levels and expected demand as commercial aerospace recovers in the next several years. Finally, in packaging, the market through 2025 appears to be growing at an even faster pace, 5% to 7% versus our previous 3% to 5% outlook, and customers remain concerned regarding the availability of domestic supply. Over 75% of new drinks introduced since 2020 utilized an aluminum container. And aluminum remains the material of choice of consumers, in part due to its infinite recyclability. Can makers are importing billions of empty cans to meet North American demand with no signs that this will end anytime soon. Warwick's outlook for 2022 is very strong. And as we continue to talk with customers and assess demand growth, We are confident that the Warwick acquisition will exceed our expectations. As we discussed during our Q2 earnings call, We are proceeding with the $150,000,000 investment in a new roll coat line, which will allow us to shift a larger portion of our mix towards higher margin coated products as the equipment becomes operational in early 2024. We have been successful in securing new long term contracts with our customers for the new rollcoat capacity for 2024 and beyond at improved margins, further supporting the investment and outlook for our packaging business. Turning to Slide 19 and a summary of today's discussion. As we look forward, notwithstanding near term challenges, Our view of the longer term potential for this platform remains intact and we are excited about the opportunities ahead. We will continue to manage our business as we have consistently done, execute our strategy, Flex our operations as business conditions change and deploy our capital thoughtfully to ensure that our CapEx Decisions are aligned with anticipated demand across our end markets. Our approach Has allowed us to create significant value over the long term, steadily increase dividends and maintain financial flexibility, which is a cornerstone of our business model. I'll now open the call for questions. Thank There will be a delay before the first question is announced. And our first question comes from Emily Kang from Goldman Sachs. Please go ahead. Good morning, Case and Neil. Thanks for taking the time today. My first question is just around some of the supply chain issues that you've been flagging. Are they specifically related to silicon and magnesium shortages or is there anything else there? And then in relation to that, What assumption in the supply chain issues alleviating are you baking into the assumptions that value added revenue is going to be higher quarter over quarter in the mid single digits. Okay. Yes. Good morning, Emily. Thank you. Well, for the Q3 impact, the supply chain disruptions really we've been referencing did not entail magnesium or silicon shortages or disruptions. They were really around the metal supply and power outages I mentioned At our Warwick facility, the chip shortage which impacted the fab auto plants, there was actually a Strike it for Rio Tinto Kitimat in British Columbia, which impacted some of our supply at Trentwood facility. And then we've dealt with a number of issues, still dealing with the Delta variant. So we had absenteeism and quarantining, which continued well into the Q3. One of our largest challenges for the quarter and I referred to it multiple times was our labor inefficiencies. And those inefficiencies were around areas and we discussed that somewhat in the Q2. During the quarter, we hired Approximately 273 new employees and about 80% of those were hourly. So we had roughly 8% to 10% Our workforce during the quarter that were training on new jobs. That led to quite a number of inefficiencies and output challenges for the quarter for us. With respect to the second part of your question, We believe we continue to aggressively pass through costs and increases due to the inflationary rises that we've seen. Those haven't all hit the ground yet, so to speak. There are already announced increases that will be in effect for the Q1 Of next year beginning. So yes, we do continue to expect expansion in our value added revenue per pound as we go forward. We have just been inundated with a number of these costs and interruptions In the Q3. And so, we're seeing some of that, but we expect that to continue as we go out into 2022. Got it. That's really helpful color. And then maybe just as a follow-up, you mentioned that some of these costs can be passed through via higher pricing. Does that include the likes of some of the labor costs and even some of the supply chain issues, all of that Can we pass through even some of the raw material costs including magnesium and silicon as well? I'll leave it at that. Thank you. Yes. We Certainly. Yes, we our intent our commercial and manufacturing teams work closely together in analyzing and understanding what cost and how those should be passed forward. We focus on our margins very carefully and we're actively underway in moving those Forward. Considering the mag shortages and issues that have been well in the news lately here, We have anticipated some of those in the Q4, as I mentioned in my discussion points. There is a there's been a confluence of factors around MAG, especially as we enter into the 4th quarter. We've had those ongoing challenges, especially in China, around the supply of mag. Domestically, we had a source Declare force majeure late in Q3, which really would start begin to impacting us in the Q4. So those highlights some of the areas that we've already had discussion with. We are discussing with our customers about pass through of those costs. We have that type language in our contracts to do that. Some of those you can pass through that cost On a cost per cost basis, others contain formulas of which we can pass those costs through over time. However, due to the immediacy and the urgency of the event, we are discussing with our customers The availability and the cost of those issues and are planning accordingly going into 2022. Great. That's helpful. Thank you. Our next question comes from Josh Sullivan from The Benchmark. Please go ahead. Hey, good afternoon. Hey, Josh. Just on the aerospace declarations that you've received for 2022, can you just expand a little bit on those? Did they come this quarter? Were they ahead of Expectations, just a little more color on that would be great. Sure. Now, we as we've talked in the earlier calls of the year, We have been in discussion about how do we manage through and we knew that the OEMs have been concerned, long concerned about What the COVID impact and the other delays that have occurred, what that means to their supply base. So we've been having meaningful discussions through the balance of the year about what that means for us not only this year, but in 2022 all the way through towards the end of the decade. So we have a lot more clarity now and it gives us a lot more confidence in declaring that we're on the path to our outlook towards the full recovery as measured by 2019 standards through the 2023 2024. So we have confidence that now with more visibility, 2022 will be a significant demand over what we've enjoyed in 2021. So, and we'll be talking more in February about what that dramatically means for the for 2022. But Our outlook right now has it continuing to grow more favorable as we have been discussing. And then just what is the domestic magnesium supplier telling you guys about how it might how long it might take them to repair their equipment and maybe get mag flowing? Well, we're currently working through the situation now. We understand that there was An issue around some of their equipment. We don't have a lot of details at this point and we're obviously seeking to better Understand the underlying cause and the appropriately timeliness of the repair of this equipment. We feel we're covered through in the Q4, unless something else takes place. We do have an allocation from that supplier, which we can bank on and we've also supplemented Our other needs with other supply at this point. Going into 2022, we have a pretty good outlook. We feel we're covered in the majority of our businesses for next year, with Possibly an exception there at Wharick. Wharick also has an allocation from the supplier, but they're a significant supplier to us And especially at Wharf. So we'll be dealing with this supplier and looking at others and talking with our Customers about the impacts, if any, as we go forward on 2022. Does that help? Yes, it does. Yes. And then just on the Kaiser Select products, does that use any more or less allylane agents, magnesium or silicon, the non Kaiser Select aluminum products? No, they do not. What we do there, it's more process Development work that goes on there, Josh, that's what differentiates those products. It's how they react and how well they machine. But from that perspective, in the 2000 and 7000 series alloys, which are typically the aerospace, You've got more around a 1% or so mag content. So there's less impact From what you might experience on 5,000 series, which is what we do a good bit at the for all the end and tab And food can products at work. Got it. And then just one last one on the automotive demand dynamics, the semi shortages. Are there any noticeable differences between which products the automotive OEMs are accepting versus what maybe they're saying to hold off on So the shortage clears up a little bit. Well, as you can imagine, it's their hottest selling vehicles and the ones that are most profitable Tend to get the nod on the priority for the products. So, we know what platforms we're on in each of our products And we're heavily on the truck, light truck side of the vehicle. So we will see Movement there over time. We see various weekly releases accordingly, but even those have been disrupted during the shortage. So when their highest margin products are on delay, you know they're having problems gaining supply. So, but we do watch that and we know the platforms accordingly. But right now, it appears to go across all the platforms On an irregular basis. Got it. Thank you for the time. Thanks, Josh. We have no further questions at this time. I will turn the call over to CEO, Keith Hardie. Thank you, Jamie. All right. Thank you for your time and interest in Kysor Aluminum, and I look forward to updating you on our Q4 and full year results for 2021 as well as our outlook and plans for 2022 during our call in February of 2022. Have a good day. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.