NN (NNBR) Q2 2019 Earnings Call Transcript

NNBR earnings call for the period ending June 30, 2019.

Motley Fool Transcribing
Motley Fool Transcribing
Aug 9, 2019 at 11:23PM
Industrials
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NN (NASDAQ:NNBR)
Q2 2019 Earnings Call
Aug 09, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and welcome to the NN, Incorporated second-quarter earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark Schuermann, VP, treasurer and head of investor relations. Please go ahead, sir.

Mark Schuermann -- Vice President, Treasurer and Head of Investor Relations

Thank you, operator. Good morning, everyone, and thanks for joining us. I'm Mark Schuermann, VP, treasurer and investor relations. I'd like to welcome you to NN's second-quarter 2019 earnings conference call.

Our presenter this morning is president and chief executive officer, Rich Holder. Also attending the call is Robbie Atkinson, EVP, life sciences. If anyone needs a copy of the press release or the supplemental presentation, please contact Abernathy MacGregor at (212) 371-5999, and they will be happy to send you a copy. Before I begin, I'll ask that you take note of the cautionary language regarding forward-looking statements contained in today's press release, supplemental presentation and in the Risk Factors section of this company's 10-K for the year ended December 31, 2018. The same language applies to the comments made on today's conference call including the Q&A session, as well as the live webcast. Our presentation today will contain forward-looking statements regarding sales, margins, foreign exchange rates, cash flow, tax rate, acquisitions, synergies, future operating results, performance of our worldwide markets and other topics.

These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company's control. The presentation also includes certain non-GAAP measures as defined by the SEC rules. A reconciliation of such non-GAAP measures is contained in the tables in the final section of the press release and the supplemental presentation. First, we'll give an update and overview of the second quarter, and Rich will provide commentary on the business and discuss results. And afterwards, we'll open the line for questions. With that said, Rich, I'll turn the call over to you.

Rich Holder -- President and Chief Executive Officer

Thanks, Mark, and welcome to the organization. As usual, I'll go through the highlights, walk through the second quarter, we'll give some guide and we will then open the lines for questions. So let's just jump right into Page 3, second-quarter highlights. Sales in the second quarter was $221.7 million. We experienced sales growth of $25.3 million, almost entirely driven by the life sciences group.

Acquisitions contributed $19.5 million in the quarter. Adjusted EBITDA of $39.6 million as our operating performance was in line with our expectations, and our acquisition integrations and synergy capture continued to either be on track or slightly ahead. The adjusted operating margin decreased 20 basis points to 12.4% compared to the prior year as we continue to be impacted by slowing global vehicle market. Life sciences margins conversely expanded 60 basis points on a comparative basis. Adjusted diluted EPS of $0.25, let me spend a little time on this. Our EPS was impacted by about $0.04 in the quarter.

We elected to repay some of our foreign debt, which we felt was a more appropriate and efficient use of cash but effectively accretive and effective tax rate issue for us within the year relative to cash repatriation and such. And so we anticipate the impact to be a $0.06 to $0.10 impact over the course of the year, but it was a wise move to do around relative to our leverage and relative to our use of cash overseas. On a cash flow basis, free cash flows for Q2 was a use of $7.8 million, which was better than expected. As you know, our typical high watermark for cash usage is usually the second quarter, and generally, we generate cash for the remainder of the year. So we view the fact that we used $7.8 million better than planned as a positive condition. As we move on to Page 4.

Again, net sales of $222 million, 12.9% growth compared to prior year. EPS of $0.25 compared to $0.38. Of course, we had the issuance of 14.4 million shares in Q3 of last year. Our gross margin is up, so 26.2% versus 24.3%.

This is almost entirely around the continued synergy realization within the life sciences business, as well as significant cost-reduction issues that we're taking within the mobile solutions business, and we'll talk to that a little bit more as we go on. SG&A was flat to 2018. As we move on to Page 5, adjusted operating margin, 12.4% versus 12.6% in Q2 of 2018. I think it's important to note that, again, the life sciences margin expanded by some 60 basis points, but was almost entirely offset by the decremental associated with the mobile solutions business given the slowing end markets. All in all, when you take it all together, I think it's still a very credible operating performance for the quarter for the enterprise. EBITDA margin of 17.9% for the quarter and our outstanding senior debt and leverage at 5.1, which is flat to Q2. Again, as I remind you, seasonality typically dictates that second quarter is our high watermark for cash usage and, therefore, for leverage.

And so we're very pleased that we're able to keep our leverage condition flat, and of course, we expect now to begin to bring that leverage down through H2. As we move over to Page 6, a little bit more about the businesses. Life sciences sales of $91 million, organic growth of 25% on a year-over-year comparative basis. Let's just be clear, we are now rounding the part of the year where it is a like-to-like comparison because we've now owned all the businesses for going on 12 months. And so when we speak about organic growth, it is truly in the, I'll say, the normal definition of organic.

And so this is -- we continue to outperform in the life sciences business relative to growth. Integration and synergy capture is either on plan or slightly ahead of plan, and so that's a very positive move, and you see that reflected in the operating margin of 22.4%, better than expected. And our outperformance in the business is largely driven by our success in the orthopedics market. And so the business is doing well. As we move on to mobile solutions. As is usually the case, it's a tale of two worlds almost.

Mobile solutions is subject to some significant headwinds in the global vehicle market. Sales was $79 million for the quarter versus $88 million last year and operating margin of 7.2% versus 11.1% last year. We have executed some significant cost-reduction initiatives in this group. We are ensuring that we are appropriately rightsized within the organization, and we do expect margins to improve through H2.

I'll talk a little bit more about the conditions of all the businesses going forward shortly. As we go to Page 8, power solutions sales effectively flat. Operating margin at 19.6%, which was in line with our expectation. I spoke to you last couple of quarters that we had been impacted by a customer supply chain issue. That issue has been abated.

We did take the effect of that issue one month into the quarter. And for the remaining two months of the quarter, it's been abated. And as we look out into the year, we expect that condition to be completely resolved. And so it now becomes a non-issue going forward. So as we go to the summary of the quarter, $221.7 million in sales for the quarter, $25.3 million sales growth driven by life sciences, EBITDA of $39.6 million, adjusted operating margin of 12.4%, adjusted diluted EPS of $0.25 and our leverage is better than expectation for the second quarter. So what I'd like to do now, which is we've kind of done the last couple of years, is to take a minute and sort of revisit the assumptions that we built the plan on and give the initial guidance on and see where we are relative to that and give you kind of our outlook on the second half of the year. So if you go to Page 10, I'll walk you through that business by business and then the overall company.

So as we start in life sciences, we initially felt that, as we came into '19, we'd have a solid macro backdrop. We anticipated a 12% to 15% organic growth. And of course, we felt that our synergy capture and our integration efforts would be appropriate and would drive further margin expansion. We are, in fact, seeing all of those things taking place.

We see continued strength in the broader end markets, not only orthopedics, but some of the other end markets that we are participating in. Our organic growth is expected to be at or above our initial assumptions. And our synergy captures will even meet or exceed the plan in 2019. So again, a good story for our life sciences business, primarily our late-cycle business. As we flip the script to our early cycle business, our initial assumption in Mobile was that we would grow between 1% and 3%, largely on the back of the continued CAFE adoption and with new programs coming online and reaching production levels.

We expected our adjusted operating margins to normalize in the second half of the year, and the business performed appropriately. As we look forward, we see significant weakness in the global vehicle market. And I will tell you, the market was trending down, as I'm sure everyone knows, but this latest round of geopolitical strike has caused an even greater rapid deceleration in the market especially in the Chinese market, which is affecting our JV and our WOFE in a significant way. The new programs that we will launch in Europe are, in fact, being launched, so we are reaping the benefit of no longer having to incur those costs. But they're being launched.

That's severely reduced volume, even less than we originally expected. And so as we look at the business now, we think, for the year, that business will probably experience between a 7% and 10% retraction in the top line, largely driven by the Chinese market, which is down in the, right now, 17% to 18%. As we move over to power solutions, power solutions is largely where we thought it would be net of the supply customer disruption that took place earlier this year. So we -- that reduction is -- or that customer disruption has been resolved. The new programs are being launched on schedule.

And so we're adjusting our year-over-year growth from -- down from 6% to 8% to 5% to 7% simply on the back of assuming that we are not going to make up for that customer disruption that took place early in the year. So when you net all that together for the entire business, I think our top-line growth is going to continue to be driven by life sciences, obviously, and we'll be sort of around, in general, where we thought we would be. We have launched a significant amount of cost reductions within the enterprise especially focused on making sure that the mobile solutions business is rightsized, and we have -- we can drive an appropriate decremental as we go through that business. And our leverage is fundamentally in line with our expectations at this point. So let me just take a minute. In case it's not incredibly obvious to everyone listening, this is an organization that is laser-focused on delevering the business.

We understand the importance of it. We understand that everyone is paying attention to this. And to that end, we have launched a number of initiatives. And so we are reviewing all of our non-core assets up to and including our real estate holdings for appropriate actions to be able to accelerate on delevering.

In fact, just yesterday, we signed the agreement to sell our prior corporate headquarters in Johnson City. And so sometime in the third quarter, that cash will be finding its way to -- into the enterprise and helping in delevering effort. Beyond that, we have some $20 million to $30 million in opportunities within the enterprise to drive cash that we are actively pursuing and we'll continue to pursue for the balance of the year. It's important for me to point these out because these are largely nonoperational cash issues. And so as we migrate it to sort of a pure operations, free cash definition, you will not see these numbers reflected in our free cash, right? And so I think it's important, and we will make note of these things as we go forward so you can tie it all together.

But fundamentally, these are on the non-op line. So I think it's important to understand that. With all that said, let's move over to guidance on Page 12. I think with the macro backdrop that we see particularly in the global vehicle market and with the level of uncertainties around some of the trade issues that are going on and the tariff issues that are going on, we just absolutely felt that the prudent thing to do was to, in fact, revise our guidance. And so we're taking our net sales from what was $870 million to $890 million to $860 million to $870 million, almost entirely on the back of what's going on in the global vehicle market.

We're maintaining our operating margin, largely on the back of the cost-reduction works that we're doing and the rightsizing works that we're doing. We feel pretty confident that our margins will be in the zone. Our EBITDA goes from $166 million to $174 million to $158 million to $165 million. Again, the margins are going to stay in line. EPS, mainly on the tax impact in a large way goes from $1.10 to $1.30 to $1 to $1.15.

And free cash, again, goes from $40 million to $50 million to $30 million to $40 million, but again, let me remind you, there is a number of cash issues that will go toward leverage and the like that are not showing up in this free cash number because our definition is cash from our -- we have an operational definition of free cash. So if we can move forward to Page 13. In the third quarter, we expect sales to be between $217 million and $222 million and EBITDA to be between $40 million and $44 million. With that, we will move to open the line for questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Steve Barger from KeyBanc Capital Markets. Please go ahead, sir. Your line is open.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Hey, good morning, everyone. First question's on the guidance. At the midpoint, the revenue guide came down $15 million. EBITDA came down $8.5 million, neither of which is too surprising, I think, given mobile trends. But can you talk about how that reduction flows through to the $10 million lower free cash flow? Shouldn't working cap be a benefit with lower growth to some degree?

Robbie Atkinson -- Executive Vice President, Life Sciences

Yes. Steve, this is Robbie. Yes, so I think what you'll see in our free cash flow guidance is we wanted to make sure that we took into account all of the actions that would need to be done in order to achieve those cost reductions inside of that. So there could be some onetime costs related to cost-reduction initiatives that are in there as well, so we allowed a little room for those things.

You are correct that the company will be focused on working capital as a benefit in the second half. We think that's true. And then we also think that the engine that will help drive to the top end of the guidance on cash flow will be capex as we think our capex spending this year will be less than originally anticipated as well.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Got it. That's great. Did you say how much you'll generate from the Johnson City building and how much of the $20 million to $30 million in non-operating cash flow could be generated in the back half?

Robbie Atkinson -- Executive Vice President, Life Sciences

Yes. So the Johnson City building will sell for between $4 million and $5 million. I don't have the exact number for it. I think it's $4.2 million.

That will happen in the third quarter. And then the other opportunities are around our real estate portfolio. We're reviewing that. All of that $20 million to $30 million would be in the back half.

You'll note when the Q comes out later today that in the first half, we had $10 million of positive items on the investment line, which is where that would show up that we've already taken action on. So if you look at it for the entire year, if we're able to make something or if we have something that makes sense of the real estate portfolio, you could see something closer to $50 million in total actions taken this year to help make sure they were accelerating or deleveraging profile.

Steve Barger -- KeyBanc Capital Markets -- Analyst

That's great. And can you talk about the capex cycle in life sciences? Where are you in terms of the equipment upgrades? And can you talk about what's been added in terms of dollars you can ship per quarter in terms of order to shipment times? Because obviously, a really nice growth rate in margin there. I want to see if you can still continue to accelerate that.

Robbie Atkinson -- Executive Vice President, Life Sciences

Yes. It's a good question, Steve. So we have made a lot of progress. As you know, you were there, we put a lot of automation in our case and tray business, which is an area where we've had a lot of focus on making sure that we can bring our lead times in as appropriate.

We've done things to create capacity inside our implant and instrumentation business. We're focused on our med surg business in the Northeast around how we create more capacity around our surgical staple business with our customers. And so we are doing a lot of things across the portfolio. We would still expect capex inside of life sciences in 2019 to be slightly elevated relative to sort of the ongoing sort of 5% of sales view that we would have. We think it's probably more like 6% or 7% this year.

But if you look at what we're doing, I think you can see the benefits of it in our margin expansion and then in our revenue expansion. And we would -- and I think it shows, Steve, to your point. And if you look at where we were last quarter, we had a greater than $200 million backlog. We've been able to bring that down to just under $200 million, so we've made $10 million or $12 million progress in the second quarter while maintaining our order book and order pattern so that we're seeing the consistent type of order entry that we want to see on a go-forward basis. So we're really pleased with the progress we made, and we think, obviously, as we look forward into 2020, that we're going to have the capacity in place and the ability to continue to meet our customers' demands while pulling down our backlog.

Steve Barger -- KeyBanc Capital Markets -- Analyst

That is great. And last question for me. Just broadly speaking, any changes to the trend to outsourced manufacturing in the space? And are you seeing competitors come in? Or just any market backdrop you can give us.

Robbie Atkinson -- Executive Vice President, Life Sciences

Yes. So I think if you look at our customers' behavior, they clearly are looking at how they shrink their supply chain, and that obviously benefits us as one of the largest and one of the few global suppliers that they have. Also, with our ability to design and develop product for them, we've benefited a lot from our ability to design, both from an OEM perspective and put product in the marketplace for them, help them get that to market, as well as in terms of our design for manufacture capability. So I think our customers' behavior continues to move in a way that benefits us. From a competitive standpoint, yes, I think everybody is looking at the marketplace as an opportunity.

The challenge that people run into is that it really is a difficult market to get into. The requirements around regulatory compliance and others really create pretty significant barriers to entry. And so we continue to see the same competitors as strategic competitors to us, to our clients and really not a lot of new competitors coming in that have the type of scale and design capabilities that would create a different environment for us than the one that already exists.

Steve Barger -- KeyBanc Capital Markets -- Analyst

That's great. Thanks for the time.

Robbie Atkinson -- Executive Vice President, Life Sciences

Absolutely.

Operator

Thank you. Our next question comes from Daniel Moore from CJS Securities. Please go ahead. Your line is open.

Daniel Moore -- CJS Securities -- Analyst

Good morning, Rich, Robbie. Thanks for taking the time. Starting with life sciences, is the -- very helpful color on the backlog and how you're working through it. The 25% organic growth, is that all end-market growth? Is there some level of inventory build with new products from new customers? Maybe just help -- any color on that would be helpful.

Robbie Atkinson -- Executive Vice President, Life Sciences

Yes. So Dan, good morning. I mean, I think, look, the end market is growing in the high single digits if you were to look at it across the board. We don't really see a lot of turbulence in that number.

We think it's going to be pretty static throughout the remainder of the year. I think if you look at our growth beyond that, it's really driven by a couple of things. It's driven by our sales team, which is, I believe, we have the best sales team in the industry, really driving our unfair share of wins in terms of how we compete against our competitors and doing that using the full breadth of services of the portfolio that we've put together. And so that's really what's driving a lot of that outgrowth. Our customers certainly have launched programs this year.

So if you look at the large joint market, there are a number of new products coming to market this year, and we were able to win and be on those platforms. And so we're certainly benefiting from those volumes. And I think if you were to ask me if 25% is a sustainable growth rate forever, I think the answer would be no. But we're really pleased with it, and it is enhanced by those product launches.

And so we're outperforming our marketplace, and we're proud of that. But it really is on the backs of working strategically with our customers and making sure we get on the right platforms as they go to market.

Daniel Moore -- CJS Securities -- Analyst

That's perfect. Then you answered the question that maybe I didn't ask with perfect clarity. And then just shifting to mobile solutions. Obviously, this is huge assumptions embedded in this, but if the market kind of stabilizes around the current run rate in terms of global build rates, what would that imply for a range of top-line growth for your business for next year and to 2020 given the platforms are ramping up? And what kind of operating margin range would you think would be reasonable? I know you don't want to get into 2020 guide, but just trying to get a sense for once we get through the decrementals, if we leveled off at these build rates, what that picture could look like.

Rich Holder -- President and Chief Executive Officer

Yes. To your point, there's a lot of assumptions in there. I would tell you, if we saw stability around the build rates, inclusive of the new platforms that are coming online or have come online, certainly, it would be my assumption that our margin profile would certainly return to normal in '20. Candidly, we would have already taken out the appropriate level of structural cost and the like, and so it would be a significantly different profile to the business as we go forward.

So we'd be much better to do that. The other thing is we have had a few wins in the general industrial market that also sort of tucks into that business that comes online in 2020. So I would tell you, if we were to stop and we would be flat from where we are today, that business next year would probably grow probably 2 points, maybe a little bit more, depending on how successful we are with some of these industrial programs.

Daniel Moore -- CJS Securities -- Analyst

Very helpful. And lastly, as we look to 2020 as well, just based on the current portfolio and market conditions, how much remaining restructuring or integration expense would you expect to incur? Just trying to get a sense for how we might close the gap -- how much we might close the gap between kind of your adjusted numbers and GAAP numbers, obviously, ex amortization next year.

Rich Holder -- President and Chief Executive Officer

Yes. And so when you look at '20, there is very little. There is some remaining acquisition and integration costs around life sciences. I would tell you, for the entire year, it's probably a number around between $5 million and $10 million max.

Beyond that and ex amortization, that gap is effectively closed.

Daniel Moore -- CJS Securities -- Analyst

Very helpful. Thanks for the color and best of luck in the back half.

Operator

Thank you. [Operator instructions] We will now take our next question. It comes from Rob Brown from Lake Street Capital Markets. Please go ahead, sir. Your line is open.

Rob Brown -- Lake Street Capital Markets -- Analyst

Good morning. I just wanted to dig into the cost-reduction flex just a little bit more. How long -- what's the timing on that? And how long does it take for you to get that fully realized?

Rich Holder -- President and Chief Executive Officer

Well, we have a number of actions. There are actions that, candidly, will be realized within the quarter. There are further actions that will be realized within the entire half. And candidly, we're putting some actions in place that will be rightsizing the business for 2020.

So it spans the entire half and into next year.

Robbie Atkinson -- Executive Vice President, Life Sciences

Yes. Just to reiterate what Rich said, I think it's important to note that this is not just about the second half of the year. This is about making sure that our portfolio and our costs within the portfolio align with the environment that we're operating within. So it's cost reductions beyond the end of the year.

Rob Brown -- Lake Street Capital Markets -- Analyst

OK. Good. And then what's your current capex expectation for 2019?

Robbie Atkinson -- Executive Vice President, Life Sciences

Yes. So I think if you look at from where we are from a capex perspective, we would expect capex to be in that $40 million to $45 million range for 2019.

Rob Brown -- Lake Street Capital Markets -- Analyst

OK. Good. And then switching to life sciences. You've gotten some revenue synergies that you've talked about, but what would you say in terms of getting that effort put in place in terms of using the rest of the business to drive growth there? Is there more to go? Or do you feel like you've got that machine running now?

Robbie Atkinson -- Executive Vice President, Life Sciences

Well, we're running well, but there's a lot of work left to be done. I mean we are still a couple of points away from our long-term target that we laid out last year of 24% to 26% operating profit, which would translate to about 30% EBITDA. This quarter, we were 22.5%. I think for the year, we'll be around 21.5% or 22% maybe operating profit. So we've still got some room to go on the portfolio in terms of making sure that we've realized all the efficiencies that we need to realize.

We're on track and in some places, ahead of plan in terms of those cost-reduction initiatives. And clearly, the sales synergies are additive to the plan, and we're really pleased with how we're performing there. But we are still very, very focused on getting our cost structure right across that portfolio and then really just getting under way. There are a ton of opportunities that we're really just getting under way on in terms of how we work together with our partners in mobile solutions and power solutions on creating devices and sub-assemblies that meet our customers' needs and help them in places where they need our assistance in bringing product to market.

Operator

Thank you. As there are no further questions in the phone...

Rich Holder -- President and Chief Executive Officer

Steve just came back up.

Operator

We do have one follow-up question from Steve Barger if you wish to take it.

Rich Holder -- President and Chief Executive Officer

Yes.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Thank you. Yes. I just want to go back to mobile. Just to make sure I heard you right.

You can flex the cost structure fast enough to see a margin increase in the back half. Is that your view?

Rich Holder -- President and Chief Executive Officer

Yes. I think we'll be, at the very least, flat to better than where we are today. That is certainly what we think we can pull up. I would say this, that's barring any further degradation in the end market.

I've got to put that caveat in there.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Understood. But your guidance of down 7% and 10%, it sounds like the rate of decline in the back half will be a little less severe than the first half. Is that a function of easier comps? Or do you see some stabilization?

Rich Holder -- President and Chief Executive Officer

Yes. I think that's more a function of -- I think it's a function of both. I think we are hearing from our customers that there should be some stabilization. I think a lot of the data out there is saying that the market is nearing the bottom, barring any geopolitical issues.

So between that and our ability to sort of move on these cost issues, we think H2 will be a little bit less choppy than H1. Keep in mind, in H1, it's a really, really tough comp, right? H1 in this business, Q1 in this business last year was a record-setting quarter. It was $94 million or something like that. Q2 was pretty close. It was $88 million, $89 million.

So yes, H1 was very definitely tough comps.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Yes. In the past, we talked theoretically about what would happen to adoption rates for CAFE standard products if auto production slowed. And now that we're here, what are the customers saying? And what do you think the OEMs will do given the environment that we're in?

Rich Holder -- President and Chief Executive Officer

Yes. So I think what we're seeing is an acceleration -- a slight acceleration of the adoption rate. But the problem is they're launching the platform, but it's not coming with any substantive volume, right? And so we're not seeing that pop that we'd hope or we'd like to have seen. So they're sort of making up for the inventory difference, if you will, by slowing of the new platform and killing off the old platform.

So the adoption story continues to hold. The volume story is a bit shaky. Now there are different issues in different markets. You look at a market like China, what they have done is substantially accelerated the adoption story, but what that has done is, in large part, almost brought the normal production cycle of the cars that are being built now, brought that almost to a halt, right? I say that a little bit for effect. But it's really come down substantially because now folks know that there is a new emission standard that is coming.

It's very near. The adoption is there. And so the sales of the cars sitting on the lots now go real negative, real fast or they're highly discounted.

Steve Barger -- KeyBanc Capital Markets -- Analyst

I understand. So you're saying they're clearing out the inventory of the old models to get ready for the adoption of the new?

Rich Holder -- President and Chief Executive Officer

Right. And then adjusting the inventory using a decline or diminished volume for the new.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Understood. And last question for me. To the extent that you can talk about it, any update on the CFO search?

Rich Holder -- President and Chief Executive Officer

Yes. Look, we are hoping that we are in our final throes. We're very happy with the candidates that we have. We've down selected, and we are very hopeful that we could conclude this in short order.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Short order, meaning potentially in 3Q?

Rich Holder -- President and Chief Executive Officer

That would be our -- certainly in the back half of the year.

Steve Barger -- KeyBanc Capital Markets -- Analyst

That's great. Thanks very much, gentlemen.

Rich Holder -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Well, as there are no further questions in the phone queue at this time, I would like to hand the call back over to you, Mr. Holder, for any additional or closing remarks.

Rich Holder -- President and Chief Executive Officer

OK. Thanks, operator. With that, we will bring the call to a close. Thanks for joining us.

And as usual, if you need any further information, feel free to reach out to Mark at investor relations and/or Abernathy MacGregor. Thanks so much, and have a good weekend.

Operator

[Operator signoff]

Duration: 37 minutes

Call participants:

Mark Schuermann -- Vice President, Treasurer and Head of Investor Relations

Rich Holder -- President and Chief Executive Officer

Steve Barger -- KeyBanc Capital Markets -- Analyst

Robbie Atkinson -- Executive Vice President, Life Sciences

Daniel Moore -- CJS Securities -- Analyst

Rob Brown -- Lake Street Capital Markets -- Analyst

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