Mueller Water Products - Earnings Call - Q1 2017

Transcript

Speaker 0

Welcome and thank you for standing by. All participants will be in listen only mode until the question and answer portion. This call is being recorded. If you have any objections, you may disconnect at this point. I would like to turn the call over to Ms.

Marti Zakas. Ma'am, you may begin.

Speaker 1

Good morning, everyone. Welcome to Mueller Water Products twenty seventeen first quarter conference call. We issued our press release reporting results of operations for the quarter ended December 3136, yesterday afternoon. A copy of it is available on our website, muellerwaterproducts.com. Discussing the first quarter's results this morning are Scott Hall, our President and CEO and Evan Hart, our CFO.

This morning's call is being recorded and webcast live on the Internet. We have also posted slides on our website to help illustrate the quarter's results as well as to address forward looking statements and our non GAAP disclosure requirements. At this time, please refer to Slide two. This slide identifies certain non GAAP financial measures referenced in our press release, on our slides and on this call and discloses the reasons why we believe that these measures provide useful information to investors. Reconciliations between GAAP and non GAAP financial measures are included in the supplemental information within our press release and on our website.

Slide three addresses forward looking statements made on this call. This slide includes cautionary information identifying important factors that could cause actual results to differ materially from those included in forward looking statements as well as specific examples of forward looking statements. Please review Slides two and three in their entirety. We sold our Anvil business in January 2017. As a result, Anvil's operating results for all prior periods have been reclassified as discontinued operations.

This quarter's earnings release contains reclassified 2016 results for the first quarter. We will make available to you the reclassified results for the remaining quarters of 2016 and the full year by February 15. During this call, all references to a specific year or quarter, unless specified otherwise, refer to our fiscal year, which ends on September 30. A replay of this morning's call will be available for thirty days after the call at 886039. The archived webcast and corresponding slides will be available for at least ninety days in the Investor Relations section of our website.

In addition, we will furnish a copy of our prepared remarks on Form eight ks later this morning. I am now pleased to introduce you to Scott Hall, our new President and Chief Executive Officer.

Speaker 2

Thanks, Myrtie. First off, please allow me a couple of minutes to talk to you all about Mueller Water Products and why I thought it would be a great opportunity to join a great team. I've watched Mueller Water Products in the water infrastructure space for some time and I believe that the company is uniquely positioned with its strong customer presence and distributor relationships to drive impressive long term growth. I believe over the last several years, the Mueller Water Products team has strengthened the balance sheet through a combination of manufacturing excellence and strategic divestitures it has positioned the company for a future with the financial flexibility and resources to be a force in the water infrastructure market. In particular, the Anvil sale takes our net debt position to near zero, which gives us tremendous flexibility to pursue acquisitions and invest in organic development opportunities.

That flexibility, when combined with the backdrop of an old leaky infrastructure in municipalities, the realities of water scarcity and the monitoring imperatives from both water security and water quality points of view makes the water space one of the great market growth opportunities on the investment horizon. I believe Mueller Water Products brands, products, channel presence, relationships and strategy all lend themselves to this company at this time being a great opportunity for me personally and for our shareholders. I have been encouraged by what I have found during my first two weeks. There is a solid team in place and the purpose and mission of the team is customer and product focused, both necessary for future sales success. The Singer acquisition is a clear signal from the Board and the team that they support expanding the product offering through both a robust product development process and through acquisitions.

Finally, let me say, I'm looking forward to meeting and working with you all. I believe that we have in front of us a great growth opportunity and I look forward to talking with you and sharing a very compelling growth story. Now on to the quarter. Before I hand it off to Evan, we are pleased to report on a good quarter highlighted by solid execution by

Speaker 3

our manufacturing team delivering year over year margin improvement at Mueller Co. And by our sales team delivering impressive growth at Mueller Technologies. The end result, we delivered a solid quarter with 3% overall top line growth and 25% adjusted operating income improvement. For more color and detail on the quarter, let me turn it over to Evan. Thanks, Scott, and good morning, everyone.

I'll first review our first quarter consolidated financial results and then discuss segment performance. As a reminder, I will only be discussing results from continuing operations. Increased shipment volumes at both Mueller Company and Mueller Technologies delivered net sales for the twenty seventeen first quarter of $167,200,000 an increase of $4,100,000 or 2.5% from twenty sixteen first quarter net sales of $163,100,000 Next, gross profit improved at both Mueller Company and Mueller Technologies and was $51,700,000 for the twenty seventeen first quarter compared with $47,600,000 for the twenty sixteen first quarter. Gross margin increased 170 basis points to 30.9% in the twenty seventeen first quarter from 29.2% in the twenty sixteen first quarter. Selling, general and administrative expenses were higher year over year due primarily to personnel related expenses.

Selling, general and administrative expenses were $36,500,000 in the twenty seventeen first quarter compared with $35,400,000 in the twenty sixteen first quarter. SG and A expenses as a percent of net sales were 21.8% essentially flat with 21.7% of net sales in the prior year. Adjusted operating income for the twenty seventeen first quarter increased $3,000,000 to $15,200,000 compared with $12,200,000 for the twenty sixteen first quarter. Mueller Company improved its operating performance by $2,200,000 or 9.2% and Mueller Technologies improved by $1,100,000 or about 33%. Adjusted EBITDA for the twenty seventeen first quarter increased to $25,500,000 compared with $21,800,000 for the twenty sixteen first quarter.

For the trailing twelve months, adjusted EBITDA was $159,900,000 or 19.9% of net sales. Interest expense net for the twenty seventeen first quarter increased $300,000 to $6,400,000 compared with $6,100,000 for the twenty sixteen first quarter. Income tax expense for the twenty seventeen first quarter of $2,100,000 was 28% of income before income taxes, which is fairly comparable to 24.5% last year. Adjusted income from continuing operations per diluted share increased to $04 for the twenty seventeen first quarter compared with $03 in the twenty sixteen first quarter. I'll now move on to segment performance beginning with Mueller Company.

Net sales for the twenty seventeen first quarter increased 1.1% compared with the twenty sixteen first quarter. Domestic sales growth was partially offset by lower sales outside The United States. We experienced strong improvement in adjusted operating income largely due to higher volume, operating efficiencies and other manufacturing cost savings. Adjusted operating income for the twenty seventeen first quarter increased 9.2 to $26,200,000 compared with $24,000,000 for the twenty sixteen first quarter. Adjusted operating margin for the twenty seventeen first quarter improved 130 basis points to 17.9% as compared with 16.6% for the twenty sixteen first quarter.

Adjusted EBITDA for the twenty seventeen first quarter increased to $35,200,000 compared with $32,400,000 for the twenty sixteen first quarter and adjusted EBITDA margin for the quarter increased 170 basis points to 24.1% from 22.4% last year. And Amular Technologies, net sales for the twenty seventeen first quarter increased 13.6% to $20,900,000 compared with $18,400,000 for the twenty sixteen first quarter, primarily due to higher AMI shipments. Operating performance at Mueller Technologies improved again this quarter by $1,100,000 Adjusted operating loss for the twenty seventeen first quarter was $2,200,000 compared with a loss of $3,300,000 for the twenty sixteen first quarter. Adjusted operating performance improved at both Mueller Systems and Echologics largely due to higher shipment volumes and lower SG and A expenses. Now turning to a discussion of Mueller Water Products liquidity.

Free cash flow which is cash flows from operating activities of continuing operations less capital expenditures was negative $24,100,000 for the twenty seventeen first quarter compared with negative $13,000,000 for the twenty sixteen first quarter. Although free cash flow was lower this quarter largely due to tax payments in the quarter, we expect full year free cash flow to be higher than adjusted income from continuing operations in 2017. At December 3136, total debt was comprised of $482,300,000 senior secured term loan due November 2021 and $1,300,000 of other. The term loan accrues interest at a floating rate equal to LIBOR subject to a floor of 75 basis points plus a margin of three twenty five basis points. Subsequent to the sale of Anvil, net debt is near zero and our excess availability under the ABL agreement was about 91,000,000 I'll now turn the call back to Scott.

Speaker 2

Thanks, Evan. I'd like to provide a few additional comments on our twenty seventeen first quarter results and end markets and then discuss our outlook for the second quarter and full year. First, Mueller Company. As Evan mentioned, we again delivered excellent operating performance at Mueller Company. Operating efficiencies and productivity improvements drove 130 basis point improvement in adjusted operating margin in the first quarter.

Looking at our latest twelve months, Mueller Company's adjusted EBITDA margin was 27.8% or 130 basis point improvement from the prior trailing twelve month period. Mueller Company's first quarter domestic net sales grew a modest 2% primarily due to a less favorable mix of products And we also believe that the new administration's promise to increase funding for infrastructure has impacted the timing of municipal spending in some parts of the country. As we look at our municipal and residential end markets, all indications to us are that the fundamentals for a healthy demand environment remain very good. At Mueller Technologies, the first quarter's 14% net sales growth was driven by increased AMI shipments at Mueller Systems. AMI shipments now represent about half of Mueller Systems' net sales.

Both Mueller Systems and Echologics continue to win new business. At the end of the first quarter, Mueller Systems backlog was up $10,400,000 or about 70% from the prior year due to AMI bookings. As a reminder, larger AMI projects are often deployed over several years. Echologics added $5,100,000 of projects under contract, an increase of $1,400,000 compared with the first quarter last year. Mueller Technologies adjusted operating loss of $2,200,000 for the first quarter was an improvement of $1,100,000 from the prior year due to higher shipment volumes, a more favorable mix and some cost savings.

I will now discuss our outlook for the twenty seventeen second quarter and begin with Mueller Company. Mueller Company announced valve and hydro price increases for both The U. S. And Canadian markets. The 7% increase in The U.

S. Is effective for orders placed after February 17 and the 10% increase in Canada is effective for orders placed after February 1. Last year in The U. S, we saw a significant pull forward of orders ahead of the price increase and we shipped a large number of these orders in the second quarter. This year, we anticipate a similar pull forward of orders and about the same number of shipments.

As we explained in last year's second quarter call, shipments are restricted by distributor inventory limits and we expect distribution to carry about the same amount of inventory as last year. With this in mind, we expect Mueller Company's percentage sales growth to be in the low single digits. We also expect Mueller Company's adjusted operating income and margin to again improve year over year due to higher volumes and cost savings. At Mueller Technologies, net sales for the second quarter is expected to be up about 15% compared with the prior year, primarily from growth in AMI systems and fixed leak detection projects. We expect Mueller Technologies second quarter adjusted operating performance to again improve year over year with expected increases in shipments, favorable product mix and ongoing cost savings.

We expect that this performance improvement will be comparable to first quarter performance. We expect 2017 full year net sales growth at Mueller Company to be in the mid single digits, driven primarily by increased domestic shipments of valves, hydrants and brass products. We expect 2017 adjusted operating income and adjusted operating margin to improve commensurate with the organic sales growth. We expect the net sales growth at Mueller Technologies to be about 15% compared with last year. We expect operating results to continue to benefit from both increased sales of higher margin products and cost savings.

We expect adjusted operating performance at Mueller Technologies to improve about $10,000,000 on a year over year basis. For Mueller Water Products as a whole for the full year, we continue to expect both residential construction and municipal spending to drive higher demand for our products and services. Consequently, we have not changed our full year outlook for Mueller Water Products. We expect net sales percentage growth in the mid single digits. Other full year key variables include corporate expenses, which are as expected to be 33,000,000 to $36,000,000 depreciation and amortization, is expected to be $42,000,000 to $44,000,000 and interest expense, which is expected to be $24,000,000 to $26,000,000 We expect our adjusted effective income tax rate to be around 36% and capital expenditures to be between 30,000,000 and $34,000,000 for the full year.

Finally, we expect 2017 free cash flow to be driven by improved operating results and an improvement in working capital. Our target is for free cash flow to exceed adjusted income from continuing operations. On Monday this week, we announced that we agreed to acquire Singer Valve, a manufacturer of automatic control valves for approximately $26,000,000 Singer Valve offers engineered products for pressure management within Waterworks. It also manufactures similar valves used in industrial, commercial and fire protection applications. Once the transaction has closed, Singer Valve will become part of Mueller Company.

This acquisition is an example of a small strategic transaction that allows us to expand our position as a leading water infrastructure company. We think there is a great opportunity for growth, especially in the areas of pressure monitoring, pressure management and non revenue water remediation. The addition of Singer Valve broadens our portfolio of products and enhances the value we offer our customers, especially in the areas of managing pressure and extending the life of water assets. Singer had net sales of approximately $15,000,000 in calendar twenty sixteen. The transaction is expected to close during our second quarter and is not expected to be significant to EPS in 2017.

As we noted on our press release on the divestiture of Anvil, we are now a pure play water infrastructure company that is positioned to take advantage of significant opportunities in the industry. We intend to deliver superior long term value to stockholders through investing organically in our business, whether in product development or capital equipment, making acquisitions in adjacent areas to our core business, which provide either channel, technology or product line expansion and by returning capital directly to stockholders. As an example of returning capital directly to stockholders, in conjunction with the sale of Anvil, we increased our quarterly dividend by 33% to $04 a share. Additionally, I am pleased to announce today that we have entered into an agreement with a financial institution to repurchase $50,000,000 of our common shares under an accelerated stock buyback program, which we expect to complete by the end of the third quarter. Focusing on water infrastructure, water security and water asset management provides a myriad of opportunities.

And whether it is new customers or new products, the opportunity set is compelling. To realize our growth opportunities, we will be concentrating on three key initiatives: accelerating product development and innovation driving manufacturing excellence and expanding our portfolio in the water industry to address aging water infrastructure and help municipalities operate more efficiently. Mueller has a long history of innovation. We are looking to continue that history, not only in Mueller Technologies as we have been doing, but also in Mueller Company. We are investing in research and development with the expectation that we will increase our pipeline of new products and bring those products to market much faster than we have in the past.

We will also continue to build on our strong lean manufacturing culture that has helped drive operating efficiencies and productivity improvements while being focused on the safety of our employees. In particular, each business will be expected to provide margin expansion for manufacturing efficiencies going forward. We have an established track record for generating meaningful free cash flow with a target of free cash flow exceeding our adjusted income from continuing operations, with our free cash flow generation capabilities and the proceeds from the divestiture of Anvil, we have the opportunity to implement various capital allocation initiatives. And I think the accelerated share repurchase program, the acquisition of Singer and the increase in our dividend demonstrate our ability to effectively deploy capital. Going forward, our capital allocation strategy will be focused on strengthening as a pure play water infrastructure company and adding long term value for our stockholders.

And with that, as my summary, I'd like to open it up for questions.

Speaker 0

Thank you. Our first question is from Mr. Seth Weber from RBC Capital Markets. Your line is open.

Speaker 4

Hey, good morning and welcome, Scott.

Speaker 2

Thank you. Good morning.

Speaker 4

Just want Scott, I wanted to get your view on the Technologies business, in particular, how you're thinking about balancing growing that business, growing the top line versus attaining some sort of profitability level because that's been an area where it's been hard to handicap, and I think people would like to see some traction towards profitability there. So maybe just your big picture view on how you think about that business?

Speaker 2

Okay. Well, let me start by answering somewhat philosophically in that my experience with technology businesses is that you have to put meaningful amounts of investment upfront into the research and development to make sure you have some basis for differentiation. I don't want to get myself into a box because I haven't been there yet. But I also suspect that bleeds over into how they think about manufacturing, how they think about their cost structure on the plant floor. I mean, the reality is, is we're manufacturing meters.

And at the same time, we're manufacturing meters. We need to continue to invest in kind of the higher tech side of it, whether it be in the software side or certainly the leak detection side at Echologics. And so they're two very different cultures. And so what I will be looking for is I'll be looking for the base core manufacturing in meters to start to drive margin expansion through productivity projects by looking at the materials they're using, by looking at their labor content, by looking at their insourcing versus outsourcing activities and start to get meaningful productivity there. And at the same time, Brian, take the parts of the business that I think, we can differentiate ourselves on and continue to invest in them.

I like to say to people, go down the road five years in the technology business, kind of look back, tell me what you're known for. Tell me how you're differentiated. Why do people buy your meters or your solutions instead of someone else's? Whatever those reasons are, you need to hold those at your core. You need to do those in house.

You need to make investments in those. And the other things are kind of context and make sure you're not confusing the two. As for the second part of your question, Seth, I was pleased it's only been two weeks. I was pleased to see the $1,100,000 of improvement. But my expectation with Keith and his team is that we will be breakeven or slightly positive by the end of this year.

Obviously, we would like it to be positive, but I don't want to have people go in and just start cutting expenses to make it profitable while it's still in this nascent development stage. I hope that answers the question.

Speaker 4

Yes, that's very helpful. Thank you for all that color. I appreciate that. And then maybe just one for Evan. How are you thinking about material cost environment, rising input costs?

Is that baked into your margin guidance for the year? And I gather from your commentary about the first quarter profitability at Mueller, you didn't mention pricing. You sort of talked about volumes and efficiencies. Are you able to offset through a higher material cost with pricing in the current environment? Thank you.

Speaker 3

Thanks, Seth. And as you know, about 50% of our cost of goods sold is raw materials and purchased components. And in 2016, we did have a nice tailwind from scrap steel and brass ingot costs. When I look at forecast out for the balance of our fiscal twenty seventeen and calendar 2017, scrap steel and brass ingot are expected to rise 7%, 8%. And so we have incorporated that in our guidance as we look forward.

And as you know, we have announced a price increase, as we mentioned in our prepared remarks, on our brass I mean, our valve and the hydro products. So that should more than offset, we think, any expansion in raw material cost.

Speaker 2

Also think it will give us good support for the price increase as we start to see the upward pressure.

Speaker 0

Sure. Sure.

Speaker 4

Okay. Thank you very

Speaker 5

much and good luck, Scott.

Speaker 2

Thank you very much.

Speaker 0

Our next question is from Jim Ginikuros from Oppenheimer. Your line is open.

Speaker 6

Hi, good morning.

Speaker 2

Good morning.

Speaker 6

And welcome again, Scott. I'm looking forward to working with you as well.

Speaker 5

On

Speaker 6

the lower sales outside The U. S, can you remind us of sources of weakness specifically there? And when you lap those, meaning when should we be incorporating the notion of easier comps?

Speaker 3

When we look at sales outside of The United States, we do have some international shipments in our mural company business into Middle East, where American standards are utilized in the oil fields. I would say that's probably the biggest area and where we saw a little bit of softness. And I think as we look out to the balance of fiscal 'seventeen, I think we'll see that weakness moderate a bit when we look at our comps compared to

Speaker 2

the previous year. So I think overall, we've seen the weakness in the international markets, as we said, in The Middle East. But really, when you take outside of Canada, the international sales are relatively small. And the impact in the quarter was relatively de minimis as well, I would say. I think the comp question actually gets to what has been a heating up municipal market and the year over year increases have been relatively modest after what was a pretty good increase in municipality spending last year.

Speaker 6

Got it. And Canada specifically, I mean that how should we be thinking? Mean, it's been weak for several quarters now. I mean, is that on a comp basis, is that flattening out? Or are you still seeing a negative progression there?

Speaker 2

Sales were down in the quarter, close to 5% year over year. And I can tell you that the economy is so oil driven that municipal spending, it's almost the manufacturing sector is relatively small in Canada now. And so as goes the oil sands and the Newfoundland and Labrador offshore oil, Sable Island oil, basically goes the economy. And I think it's flattening out. We believe it's flattening out because we've started to see some recovery in the oil sector and in the energy sector.

And that will be good for municipalities and industry pulp and paper and the like to start the investment cycle again. If we see the energy sector soften again and you see that oil price drop back into the 40s, I think it will continue to be soft and I think the comps will continue to be difficult.

Speaker 6

Got it. Appreciate that. One follow-up, if I may, on the muni side. I mean, you guys are signaling, obviously, North America all in, in Mueller Co, strong solid tailwinds. How would you describe the spending environment, I guess, over the last few months versus what you're expecting in the next few months?

And did you see a pause or relative pause, just given the new administration and uncertainties there? Or no, pretty steady as she goes?

Speaker 2

Well, I think we were expecting more uplift through our Q1. I think the election kind of froze some municipal spending because certainly there was a lot of discussion around infrastructure spending. I'll be frank, don't think Mr. Ryan helped us yesterday by saying they were going to push the infrastructure bill out into the spring, because I think there are some municipalities that are wondering, is this going to be a step change in the funds available to municipalities for clean drinking water? Or is it just going to be an incremental increase over what has been in the federal programs in the past?

If it's going to be a step change, I think there is a lot of people that are pausing to see whether they would qualify and should they make their plans based on their current bond offering mentality or will there be more assistance from the federal government. And so I think that there has been a pause in Q2 somewhat. I kind of expect municipality in Q2 now to look similar to what it looked like in Q1, because there are some, let's call it a pause, your word a pause going on in the market in the muni space. I do believe though that the fundamentals about the lead content in water, the leaking infrastructure, the non rev situation that many of the especially Northeastern and Midwestern large communities are facing dictate that we're going to have to face into this problem as a country sooner rather than later. So while it may pause it for Q1 and Q2, everything I look at would indicate Q3, Q4 and beyond should be good healthy spending environments in our space.

Speaker 0

Thank you. Thank you. Our next question is from Mr. Joe Giordano from Cowen and Company. Your line is open.

Speaker 7

Hey guys, this is Tristan for Joe in today. Hope all is well. Scott, had just a question for you to start. What are the top two or three things that excite you about Mueller and then perhaps one thing that you would like to change or improve?

Speaker 2

Well, I'm going to kind of duck your second question because it's been two weeks. Really what I want to do on the change improve front is, I want to get out into Chattanooga, I want to go to Albertville, I want to get to Cleveland, I want to get to all of our facilities including Toronto. And I want to meet people and I want to see what we do well. And it's the part I'm the most excited about, to be quite honest with you. So I'm if you know anything about my background, I've been making stuff for thirty something years and it excites me.

I used to joke, I love the smell of cutting oil in the morning, machine shops and forges and foundries. And so that's what I want to get. When we get there, I'm sure we'll find areas for improvement. And I'm looking forward to working with Greg Rogowski and Keith Belknap on setting the priorities for those manufacturing facilities. I'm looking forward to engaging with the customers.

I've known Mueller for many, many years. It's such a great brand, iconic brand in the industry. I think every city I've ever lived in has Mueller fire hydrants and gate valves. I knew it and I knew the space somewhat. So that excited me.

Think, though, the thing that I want to say that excites me the most is I think this team did a great job in the last ten years, taking a heavily levered company, delevering it, driving great EBITDAs and they got the manufacturing cash flows. And now we're at a point, we're at a nexus, I believe, where we have to stop thinking about the debt reduction and all of that and start finding now that we no longer have Anvil, we're in the water space, we've got an iconic brand, how do we grow from here? And how do we become extraordinarily successful in a space that I think has tons of growth left in it. So that is probably what excites me the most.

Speaker 7

Thanks. And then if I can just squeeze just a quick second one on capital deployment. Is there a market or specific technology that you would like to focus on? I know you talked before about treatment. Is that still an option?

Speaker 2

Yes. I think that we're going to be spending some time in the coming months looking at the three big segments, if you will. I think that whether it's drinking water, wastewater, sewage, water reclamation, water scarcity as a and water reclamation as it relates to water scarcity, I think are going to be huge investment opportunities for the world in general. And I want to get our strategic thinking aligned with where we think the largest growth opportunities are going to be both in the short term, medium term and long term. I think we're very North American centric.

So I want to understand is that by design, is that by something that was just circumstance and is that appropriate for us going forward. So when you think about the strategic implications of what's happening in Water and then what's happening from a geographic basis, those are areas that I think that Greg and Keith and I will sit down and kind of hammer out the strategic framework for how we want to think about those things. And I expect to have that kind of in that May, June timeframe completed so that we're in alignment of how we're going to go forward.

Speaker 7

Well, thank you and welcome and good luck.

Speaker 2

Thank you.

Speaker 0

Our next question is from Mr. Ryan Connors from Boenning and Scattergood. Your line is open.

Speaker 5

Great. Thanks for taking my question. I wanted to get continue on the theme of capital deployment, Scott. My question is, why rush the buyback? I mean, it seems like, as you said, you're kind of joining the company at a potential inflection point.

You've got a considerable war chest. Does the fact that the buyback is going to be accelerated, I mean, I recognize the desire to make a statement of value in the stock. But does that suggest that you want to do bolt on deals rather than something transformational? I mean, certainly there are assets of scale out there where you could put that whole war chest to work if they were to come to market. So can you just give us your thoughts on the buyback versus capital deployment and size of deals, whether you would be willing to go out and do something fairly sizable?

Speaker 2

Well, let me say the buyback, the dividend increase and the Springer Valve acquisition were all Springer Valve acquisition were all kind of meant to display to the market that we when we see opportunities and we see ways to create value for the shareholder, we're going to take them. And I don't want to be just like hoarding the cash if we haven't got something better to do with it. Obviously, we have to return it to the shareholder. With that said, absolutely transformational acquisitions are in the wheelhouse. Absolutely bolt ons are something we're going to look at.

I started the twenty third, I think the Board meeting was the twenty fifth where we approved a bunch of these things. And I am completely comfortable that our war chest after $50,000,000 of the $250,000,000 repurchase authorization leaves us with more than enough cash and a strong enough future cash flow earnings that we could do something transformational. So I thought it was a token at 50,000,000 but it preserved our powder to do something big if that's what we choose to do. But acquisitions for the sake of acquisitions, we're not going to do that. We want to, as I said earlier, provide outstanding long term value to our shareholders.

Speaker 5

Got it. Understood. Well, thanks so much and good luck.

Speaker 2

Thank you very much.

Speaker 0

Thank you.

Speaker 2

Well, thank you very much and I look forward to meeting you over the coming weeks and months and look forward to talking with you. We'll say goodbye for now. Thanks.

Speaker 0

Thank you. That concludes today's conference. Thank you for participating.