Greetings, and welcome to the Transcat third quarter fiscal year 2023 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Tom Barbato, Chief Financial Officer for Transcat. Thank you. You may begin.
Thank you, Melissa. Good morning, everyone. We appreciate your time and your interest in Transcat. With me here on the call today is our President and CEO, Lee Rudow, and our Chief Operating Officer, Mark Doheny. We'll begin the call with some prepared remarks, then we'll open up the call for questions. Our earnings release crossed the wire after markets closed yesterday. Both the earnings release and the slides that we will reference during our prepared remarks can be found on our website, transcat.com in the Investor Relations section. If you would please refer to slide two. As you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference.
These statements apply to future events which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release as well as in the documents filed by the company with the SEC. You can find those on our website, where we regularly post information about the company as well as on the SEC's website at sec.gov. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether as a result of new information, future events, or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. Additionally, during today's call, we will discuss certain non-GAAP measures which we believe will be useful in evaluating our performance.
You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We've provided reconciliations of non-GAAP to compared GAAP measures in the tables accompanying their earnings release. I'll turn the call over to Lee.
Thank you, Tom. Good morning, everyone. Thank you for joining us on the call today. Yesterday, Transcat announced excellent financial results for our fiscal third quarter. We experienced broad-based strength across our portfolio of services that drove 19% service revenue growth, expanded gross margins, and provided strong EBITDA growth of more than 20%. We are particularly pleased with our organic service growth of 12%. Organic growth has now been in the high single digits or better for the last eight quarters, despite COVID-related impacts, inflationary pressure, and economic uncertainty. This consistent performance demonstrates the resiliency of our business model, which inherently performs well through various economic cycles.
We continue to execute well in the highly regulated life science space as well as the aerospace and defense markets, where the cost of failure is high and the revenue streams are recurring when we meet the rigorous and ongoing needs of our customers. In the third quarter, consolidated revenue increased 13% to $57.4 million. Consolidated gross margin expanded 180 basis points to 28.6% and was driven by margin expansion in both our distribution and service segments. Adjusted EBITDA, a very important metric for us given our level of acquisitive growth, as I just mentioned, grew 20% from the prior year third quarter to $6.6 million. Our service segment continues to perform at a high level and recorded its 55th straight quarter of year-over-year revenue growth.
Expanding our addressable markets has been an instrumental driver of our consistent growth. We continue to make proactive investments to drive differentiation and position Transcat to make meaningful share gains in the regulated markets we serve. A great example of this is the NEXA Enterprise Asset Management platform. NEXA's suite of services, which includes asset and data analytics, computerized maintenance management, compliance, quality, and validation, now positions Transcat in both the U.S. and Ireland to service mission-critical global manufacturers. Revenue synergies between NEXA and Transcat continues to be outstanding and reinforces our sustainable longer-term competitive advantage. From a margin perspective in the third quarter, we reported service gross margins of 30%, which is up 30 basis points from the third quarter of fiscal 2022.
Moving on to our distribution segment, demand remained strong as revenue grew 4% to $21.4 million, despite extended vendor lead times driven by high-end electronic chip shortages that continue to make it challenging to convert some open customer orders. Distribution gross margin expanded 370 basis points year-over-year to 26.2% as we continue to see growth in our high- margin rental business and the benefit from the strategic buys that we executed earlier in the year. Acquisitions are an important part of Transcat's long-term growth strategy, and we acquired two companies at the beginning of the third quarter. e2b calibration, located in Cleveland, Ohio, specializes in calibration services related to the aviation industry. We believe that we can leverage Transcat's current infrastructure and significant geographic footprint to further accelerate the growth in e2b's capabilities across North America.
In addition, we are nicely positioned to capitalize on the life science market in the greater Cleveland area. In the first quarter since the acquisition, performance and integration activities have gone very well, and we expect this to continue. Complete Calibrations established our first calibration footprint in Ireland. Complete Calibrations is a small but strategic acquisition for Transcat. The acquisition establishes a local presence in Ireland, a country with a robust life science market. Secondly, Complete Calibrations offers Transcat a foray into calibration robotics that we believe over the longer term will be another differentiator for Transcat. Our third quarter results were strong across our portfolio of businesses and channels. Our balance sheet remains strong and supportive of our acquisition strategy with a leverage ratio of 1.66 x.
In the third quarter year to date, we generated $6.8 million of free cash flow. With that, I'll turn things over to Tom Barbato for a deeper look into the third quarter financial performance. Tom.
Thanks, Lee. I'll start on slide four of the earnings deck, which provides detail regarding our revenue on a consolidated basis and by segment for the third quarter. Consolidated revenue of $57.4 million was up 12% versus the prior year, driven primarily by strength in our services segment. Service segment revenue growth remained very strong at 19%, with 12% of the growth coming organically and the other roughly 7% from acquisition. Turning to distribution, revenue of $21.4 million was up 3.7% versus the prior year. We continue to see strong demand for our products, which is reflected in our open order backlog of $9.5 million, which is up 7% versus the third quarter of the prior year.
Turning to slide five, our consolidated gross profit of $16.4 million was up 20% from the prior year, and our gross margin expanded 180 basis points to 28.6%. Service gross margin improved 30 basis points from the prior year. Distribution segment gross margin of 26.2% was up 370 basis points from the prior year, a continued strength in our rental business in a favorable sales mix. Turning to slide 6, Q3 net income of $1.6 million was flat to prior year, and our diluted earnings per share of $0.21 and adjusted diluted earnings per share of $0.35 were also essentially flat.
In comparing diluted earnings per share and adjusted diluted earnings per share to the third quarter of the prior year, it is important to note that increased interest expense negatively impacted both EPS metrics by approximately $0.05 per share. We expect our full year fiscal 2023 tax rate to be in the range of 21%-23%. Flipping to slide seven, where we show our Adjusted EBITDA and Adjusted EBITDA margin. We use Adjusted EBITDA, which is a non-GAAP measure to gauge the performance of our segments because we believe it is the best measure of our operating performance and ability to generate cash.
Additionally, as we continue to execute on our acquisition strategy, this metric becomes even more important to highlight as it does adjust for one-time deal related transaction costs, as well as the increased level of non-cash expenses that will hit our income statement from acquisition purchase accounting. With that in mind, consolidated Adjusted EBITDA of $6.6 million was up 20% from the prior year. As always, a reconciliation of Adjusted EBITDA to operating income and net income can be found in the supplemental section of this presentation. Moving to slide eight, cash flow from operations was in line with expectations for the quarter.
Year to date capital expenditures through the end of the third quarter were $7.1 million, compared to $5.9 million year to date in the prior year, continued to be centered around service segment capabilities and technology, including automation and future growth projects. Slide nine highlights our strong balance sheet. At quarter end, we had total debt of $49.2 million with a leverage ratio of 1.66x. We had $37.8 million available from our revolving credit facility. We expect to file our 10-Q after the market closes tomorrow. I'll turn it back to you, Lee.
Thank you, Tom. Turning to the fourth quarter and the fiscal 2024 year ahead, we are well-positioned for continued revenue and margin growth. We also expect the strength of our value proposition to increase as we further develop our recently expanded addressable markets. Fiscal 2023, we continued to make great progress in that respect as both NEXA and our Pipettes business have performed very well. Serving highly regulated end markets with our unique differentiated value proposition makes our business model inherently durable, and we expect demand for our services to remain strong despite the economic uncertainty that lies ahead. In fact, differentiation is the key to our strategy. Along with strong execution, differentiation will secure our competitive advantage and foster our ability to gain market share in the industries we serve.
Strong organic growth remains at the heart of our strategy. In the year ahead, we expect growth to remain in the high single-digit range. We continue to identify and pursue strategic acquisition opportunities that will expand our addressable markets and geographic footprint, as well as leverage our current infrastructure with bolt-on opportunities. Ultimately, all these drivers are designed to increase the trajectory of our business. Our balance sheet remains strong and is supportive of our very active M&A pipeline. We'll continue to leverage continuous process improvement, automation, and now robotics with the addition of Complete Calibrations in Ireland to generate sustainable margin improvement in the future. We believe Transcat's future looks bright and that we will continue to outperform in the years ahead. With that operator, we can open the line for questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Greg Palm with Craig-Hallum Capital Group. Please proceed with your question.
Hey. Morning, everyone. Thanks for taking the questions here.
Good morning, Greg.
Hey, Greg.
I wanted to start with service growth. You saw a nice acceleration there, up 12% on an organic basis. I'm curious if you can maybe pinpoint, I don't know, areas of outperformance relative to prior quarters, whether that's an end market standpoint, maybe it's increased synergy contribution from NEXA, now that that's lapped 1+ year . Just wanna get some broader thoughts on that.
Hey, Greg. Basically, it's a combination of all those things and probably some others as well. You know, we did lap the year with NEXA, so their growth which has been impressive, is kinda towards our organic numbers. Across our channels and our businesses, really, the company, as we said in our stated remarks, performed well across the board. That was encouraging. We saw strong retention. We saw growth in different businesses, including NEXA. Really kind of broad-based strength in the quarter.
Okay. Okay, good. I didn't hear much in the way of CBLs, and I'm wondering if you can give us an update there on, you know, pipeline, you know, what, some of the recent activity. I'm also curious if there's any way you can quantify the gross margin headwind associated with that, just for us to compare that on a year-over-year basis.
I would say that when we look at our growth, CBLs it has, for many years, save the COVID years, been a contributing factor. We did land some CBLs in the beginning of the year that were new, that were incremental, you know, coming out of COVID, which is good to see. We anticipate it'll always be a part, a factor, you know, in our growth. Nothing out of the usual. You know, no high percentage or concentration of our growth would I attribute to CBLs. As far as the CBLs, the two or three that we had sort of mentioned and guided towards in the beginning of the year, you know, they take a couple of quarters to normalize.
During that period of time, when you land several in one quarter, there's a bit of a drag, and that drag did exist. We'll probably see ourselves coming out of that a little bit more in the fourth quarter and as we enter the first quarter. That's normal. You know, we're not going to guide towards, you know, exactly what the number of associated, you know, sort of basis points would be, but it's a typical two- to three-quarter drag, and you should see us starting to come out of the ones at least that we landed in the first quarter as we close out the year. Yeah, I appreciate the question.
Okay. Makes sense. I guess just last one. You know, distribution margin was strong. It sounded like some or most of that is attributable to rental, maybe mix as well. Can you give us a update on where, you know, rental is, you know, from a contribution standpoint? You know, growth. Just be curious to get a little bit more detail on the strength there.
I would just say, Greg, I would characterize it as, you know, rentals and the impact of the strategic buys that Lee referenced kinda probably contributed fairly equally to the performance in the quarter. As I mentioned on the last call is, you know, those strategic buys are gonna kinda dry up on us at some point here in the, you know, as we approach the end of the year and into, you know, early fiscal 2024. You know, we expect that, you know, the growth in rental business will continue to offset those impacts. You know, I view the margin in the, you know, in the quarter as, you know, kind of on the robust side and, you know, we would see that normalize a little bit going forward.
Okay. Great. All right. Appreciate all the color. Best of luck going forward. Thanks.
Thanks, Greg.
Thank you. Our next question comes from line of Scott Buck with H.C. Wainwright. Please proceed with your question.
Hi. Good morning, guys. Thanks for the time. Piggybacking a little bit on Greg's last question on the rental business. I'm curious, are you seeing cannibalization there from sales with the increased rentals, or are they, you know, entirely separate from one another?
Generally, Scott, they're separate. We're not seeing cannibalization. I mean, I'm not saying it's never occurred, but I'm not seeing any numbers that would lead me to point in that direction. I think when we look at our value proposition, you know, distribution has its place, and I think there's a discrete place for rentals. Rentals, if anything, is strategically a bridge between services and distribution. It's kind of a service in and of itself. We have not seen cannibalization, that's a good thing for the business. It's been incremental from our, you know, in that respect.
Thanks. That's helpful, Lee. Can you tell us what, you know, kind of CapEx expectations are for calendar 2023 in the rental business, and if there's any meaningful change from, you know, a year ago?
Yeah. Not, not a meaningful change. You know, the, the rental pool is kind of a dynamic, you know, population of equipment. You know, something in the $2 million-$3 million range is what we would expect, you know, to be at this year and would see, you know, in the, in the near future as well going forward.
Okay, that's helpful. Tom, generally, how should we be thinking about OpEx growth from here? Is there any, you know, significant hiring you guys need to do on the corporate side or anything like that that would, you know, drive a meaningful increase there?
No. you know, I think the goal, you know, longer term is obviously to start seeing some leverage from a, from an OpEx standpoint. you know, I think that's a reasonable expectation and a reasonable way to think about it going forward. It's not, you know, gonna happen overnight, but, you know, as we think of our longer term plan, that's certainly what we're shooting for.
Great. Just last one from me? When you look at some of the efficiency gains on the service side, how far are you through those programs? You know, when should we expect kind of the all the fruit of that labor to be into the growth margin?
Scott, this is Lee. You know, we still see ourselves more towards the beginning, I would characterize than the end, you know, in that margin enhancement journey. I mean, we started out in the low 24s on the service side. We've got it to the low 30s now. You know, between automation, some robotics, we're putting a lot of sort of enhanced processes in place that are showing good early signs in terms of improving efficiency and productivity. I would say, you know, I'm not gonna put an exact timetable on it in this call, but like we've talked about in the past, we see this company, the next stage for us in the mid-30s, and I think that's achievable in a reasonable amount of time. Our initiatives that we have in place should get us there.
You know, beyond that, you know, we'll continue to work on process. We'll continue to see what percentage of the business can be automated. It's not like it's over in the mid-30s, but, you know, I think it's premature to get into too much detail. The next stop is the mid-30s, and we think we're gonna get there, and, we've got good plans in place to do just that.
Great. Well, I appreciate the additional color, guys. Congrats on the quarter.
Okay.
Thanks, Scott.
Thank you. Our next question comes from line of Gerard Sweeney with Roth Capital Partners. Please proceed with your question.
Yeah. Good morning. Thanks for taking my call.
Good morning, Jerry Sweeney.
Two questions. I'm gonna start with maybe just NEXA. I know you and you just discussed a part of the strong growth we're seeing, but I'm just curious, very complementary business, how much of an opportunity is there for cross-selling or how big of a opportunity does NEXA open up for growth?
We think it's substantial. We've been with NEXA for about, what, 16, 17 months now, coming up on a year and a half. You know, right out of the gate, we were able to sit at the same table, if you will, both Transcat and NEXA with certain strategic customers of ours. The combined pitch, the value proposition that we were communicating resonated really well. We even had some early wins, you know, literally a quarter after the acquisition took place. We've seen that continue throughout the subsequent three or four quarters.
When we look at our pipeline now and we look at how we're managing that relationship, how we're managing the synergies, which obviously are getting better and better, as we get to work with each other, I think there's a lot of upside there. I think our sales team thinks that, the NEXA team thinks that. That goes both ways, which is actually kind of interesting. They have picked up business by virtue of our customers and vice versa. Substantial would be the word I would use over time. It's a great question, and we're encouraged by it, by the read since the acquisition.
Would you say pipeline continues to expand? Is that a... As you're-?
Yeah.
digging deeper and deeper?
I think that's reasonable.
Got it. Second question, just a little bit more further out on the curve. Obviously, Complete Calibrations. I think it's your first lab, we'll say, in Europe. Is this a toe hold? Are you looking at other opportunities in Europe? I know Ireland has a lot of life sciences, maybe mainland or any thoughts on that?
Well, it's interesting. You know, when you think about the calibration lab that we bought in Ireland, you know, I would characterize it two ways. There's two things going on in Ireland. One is calibration. Yes, we have a foothold that we're gonna build a lab. We will have a lab there. We will go after calibration business in Ireland. When you have the calibration services, you have to think of that as almost a local business. Calibration in lab can service Ireland pretty well. Not to say we couldn't service outside of Ireland from Ireland, generally speaking, you think of that as a local business. We have 40-50 employees in Ireland working on the NEXA side of the business.
You know, we could always call it professional services, where, you know, they're doing the consulting work and some of the things we alluded to in the script. That's not calibration services. What's interesting about that particular channel, Gerard, is that you can expand further out beyond the borders of Ireland fairly easily.
I see. Yeah.
Most of that work is done in front of a computer. You know, you do a site visit, and then most of your work can be done anywhere. I see that platform in particular being able to expand at a faster rate and at a greater rate than the calibration lab, which, yes, we're in Ireland, and we plan on developing our cal business there. I look at it both ways.
Understood. I got it. I appreciate it. Thanks for your time. Congrats on a nice quarter.
Yeah, no problem. Take care.
Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from line of Mitra Ramgopal with Sidoti & Company. Please proceed with your question.
Yes. Hi, good morning. Thanks for taking the questions. First, just a couple on the acquisition front. Lee, obviously in the
It's a big part of the growth strategy, but as you look, in terms of an environment with rising interest rates, how comfortable are you in terms of levering the balance sheet up or being aggressive on the M&A front and while trying to balance accretion from any transaction you might consider doing?
Right. Well, it's an interesting question. I mean, typically, you know, our line as it stands today allows us to lever up to about 3 x. You know, we've always been more comfortable in the mid-twos. There have been times in the last five to seven years when we've lingered more around 2.7, I think at one point. You know, we're at 1.6 now. Anywhere in that range, Mitra, I think we're comfortable. We have a shelf in place. You know, depending on our strategy and how well we execute it and the changes in the market, the availability of these acquisitions, I think there's a variety of ways to get them done, even using stock as currency.
I mean, there's just different methods that we talk about, and we'd use them and deploy any of those if it made sense. I think we're well-capitalized in that sense. As far as the market and acquisitions, yeah, It's fairly dynamic for us and, you know, we're kind of doing our thing. You know, no issues.
I would just add that, you know, assuming we continue to make good decisions on acquisitions and we're adding, you know, businesses that are contributing well from a profitability standpoint, you know, that mitigates the impact from a leverage standpoint as well, and I think we've demonstrated the ability to do that consistently over time.
Thank you. Exactly.
Okay. No, thanks for that. Just trying to get maybe some color on, if you look at acquisitions like Tangent, obviously it got you into some new geographies or new markets, Indianapolis and Huntsville. Just curious if maybe a year later, have you been able to really benefit from that new geography in terms of growing the local business beyond what-
Right.
You might have expected?
Yeah. You know, the best way to answer that, Mitra, is to start off by talking about discipline. You know, we are a disciplined buyer of companies in our business space. By the time we make a decision to say, You know, whether it's a small company, mid-size or a little bit on the larger size for us, they have to fit our strategy. They have to satisfy our drivers. So we kind of get a pretty good feel upfront what degree of success we're gonna have. You know, We just have to execute well. We've got a great track record here of doing well in that respect. So I just wanted to make that general comment.
When we look at Alliance in, in Ohio, we look at, you know, Tangent with the two territories that brought us and e2b in Cleveland, you know, all these deals have done, you know, rather well for us. I mean, you know, not all of them are exactly the same, but I would, I would characterize them, generally as good to very good to excellent deals. You'd see a NEXA at the top, excellent, and you'd see a Tangent, for example, I would call a good deal. There's a few in between. They've satisfied the drivers. We've done well executing. We've done well with the integration. It's always our plan. It's always our idea to, part of our plan to integrate, and so we're really satisfied, and we're gonna keep this going.
We've got a great track record and a great team working on this. Yes, we're satisfied with the results, and, we expect it to continue.
Okay, great. Then finally, I don't know, Lee, if you could provide maybe some color also on the Canadian market in terms of what you're seeing there and the potential opportunities for further growth?
You know, we have three labs in Canada, Ottawa, Toronto and Montreal. Generally speaking, I think Canada's had a really good year. Coming out of COVID, I think, we've been pleased they've hit their numbers that we've set as expectations. They've actually exceeded them in some cases. I would expect, you know, looking at their pipelines and the general environment there, that that will continue. There's no reason to believe that it won't at this point. Yeah, Canada's had a good year for us.
We mentioned, Lee, this is Mark Doheny, at the end of last year, we invested in a new Toronto lab.
Correct.
That really expands our capabilities and capacity. That's going well and probably helping that area up there, which is very attractive.
Very good.
Okay. No, that's helpful. Then maybe finally, as you're weighing down fiscal 2023 and look out to fiscal 2024, given obviously it's a dynamic environment right now, what do you see, you know, if you have any, maybe a potential big or a headwind for you, that, you know, we should be more cognizant of?
you know, we're always thinking about the economy. You know, we think about interest rates and inflation and, you know, eventually, you'll see the impact of rising interest rates on the economy in general. You know, as I said before, in the past, as we demonstrated in the past, which is probably more important even than what I say, is that we have a nice business in terms of being, you know, recession-resistant is probably the best way to characterize it. You know, our service business, is driven by that regulation. These services have to take place regardless, generally speaking, of the economy. I think, you know, the economy will be a headwind, but I think we're well-positioned.
I would say this: we're better positioned today than even five years ago or seven years ago, you know, because our value proposition has gotten stronger. The rental business, I think, is a favorable, you know, attribute, you know, in terms of uncertainty for the distribution segment. We didn't used to have that. Now we do. I think even our service business has gotten more into life sciences. Life sciences tend to hold up well. For a variety of reasons, I like where we are. Nothing's perfect, nothing's totally recession-proof, but we're in a really good position, I think, relative to others, you know, in our industry.
I think the NEXA value proposition strengthens as the-
Correct.
you know, economic uncertainty grows as well. That's something we didn't have, you know, even two years ago.
That's correct. Combination of all these things, Mitra.
Great. No, sounds great. Again, thanks for taking the questions and nice quarter.
Our pleasure. Thank you.
Thank you. Our next question comes from line of Ted Jackson with Northland Securities. Please proceed with your question.
Thank you. Good morning. Almost all my questions have been asked, so I'm just gonna ask perhaps on the Pipettes business, 'cause it's a business I know you all are excited about and see great growth. If you could just provide a little color around it in terms of, you know, growth trends you're seeing, kinda, you know, where that business is going. you know, just, you know, basically just kinda fill in some blanks in terms of like How much is it contributing to your business? What's the growth profile for it, and how do you see it going forward? Thanks.
No problem. We love the Pipettes business for probably a couple reasons that stand out. It's a life science-oriented business, which is, you know, where we tend to focus a lot of our time for all the reasons that we stated, Ted. The business is a recurring revenue stream, and, you know, we do a nice job. It's got nice margins and nice growth potential. Today, we run our main operation out of the New England area. As we speak, you know, we're opening up a West Coast facility. It's our goal to do that, and we're working on it so that, you know, even though the business doesn't necessarily have to be local, it's nice to have something in the general region.
The reason why it's in our plans to do that is because we see growth opportunities with this business. Pipettes in general tend to be a nice kind of bridge between, you know, normal calibration in life sciences. Kind of the base work and additional opportunities are brought via Pipettes. Lots of reasons, good attributes, good margins. The business is really well-run. We started through an acquisition. That would be an example of extending our addressable markets, that's come to fruition really well. We'll continue to develop that business for sure.
Is that a business that you'll grow, you know, per se, organically, kinda bringing it along? Or is it a business as you look at your M&A funnel that you're, you know, actively pursuing building onto?
I think you'll see both.
Okay. Thanks, very nice solid quarter. Look forward to the next quarter as well.
Take care, Ted.
Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Rudow for any final comments.
Okay. Well, thank you. Thank you all for joining us on the call today. We appreciate your continued interest in Transcat. We will be participating in the 35th Annual Roth Conference. I think that's March 13th and March 14th out at Dana Point. We'll be there presenting, so feel free to check in on us at any time. Otherwise, we look forward to talking to you all again after the fourth quarter results come out, and thanks for participating on the call today. Take care.
Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you.