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Standard Motor Products (NYSE:SMP)
Q1 2020 Earnings Call
Apr 29, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to the Standard Motor Products First Quarter Earnings call. [Operator Instructions]

And it's my pleasure to turn the conference over to Executive Chairman, Larry Sills. Please go ahead.

Lawrence I. Sills -- Executive Chairman of the Board

Good morning, everybody, and welcome to Standard Motor Products first quarter conference call, which will include an update on the COVID pandemic and our actions regarding that. We thank you for attending. Here representing the company are Eric Sills, Chief Executive Officer; Jim Burke, Chief Operating Officer; Nathan Iles, Chief Financial Officer; and myself, Larry Sills, Executive Chairman. As befits the current situation, we are all operating remotely. So lets hope everything works smoothly. Agenda for today. Nathan will begin with the forward-looking statements.

Eric will then discuss the COVID pandemic and how its affecting us and what we're doing about it. Jim will give an update on the operations. Nathan will then review the first quarter results, and Eric will summarize and finally, we'll open for Q&A. So with that, let's get started, and I'll turn it over to Nathan. Thank you.

Nathan R. Iles -- Chief Financial Officer

Thank you, Larry. Before we begin this morning, I'd like to remind everyone that some of the material we will be discussing today may include forward-looking statements regarding our business and expected financial results. When we use words like anticipate, believe, estimate or expect, these are generally forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they are based on information currently available to us and certain assumptions made by us, and we cannot assure you that they will prove correct.

You should also read our filings with the Securities and Exchange Commission for a discussion of the risks and uncertainties that could cause our actual results to differ from our forward-looking statements. I'll now turn the call over to Eric.

Eric P. Sills -- Director, Chief Executive Officer and President

Thank you, Nathan, and good morning, everybody, and appreciate you taking the time to join us today. So our call this morning will not follow the usual flow. It's important that we spend more time talking to the impact that the coronavirus crisis is having and the measures we are taking to manage our way through it. We'll then turn to a discussion of the first quarter results. Again, I wish to emphasize that we have entered the situation extremely healthy. We have a very strong balance sheet with low debt and ample liquidity. We have a 100-year history of stability based on a foundation of conservative cash management and this will serve us well as we navigate through the current situation. As you know, the auto care industry is deemed essential, first by federal guidelines and then echoed throughout the various states and municipalities, and we are essential. The foundation of our country's infrastructure is transportation, both of people and of goods. And although mobility may be reduced in a crisis such as this, it is no less essential. First responders rely on their vehicles to provide their invaluable services, medical professionals to get to their jobs and the design deliveries are made in an environment where so many are confined to their homes. This requires the entire supply chain to operate effectively from the repair shops to the part stores and distributors up to the manufacturers who supply them with their critical parts needs.

Therefore, in order to perform at our usual high level, our primary concern is for the safety and welfare of our employees. Jim Burke will speak of the specific actions we've taken, but we are pleased to see that they have proven effective. We have very few employees who have tested positive and have no reason to believe any of them contracted the virus at work. I've never been more proud of SMP employees than I am right now. All our people have risen to the challenge, have contributed far more than I could expect and have done so in a very intense situation. For this reason, I am reassured that once this temporary situation is behind us, we will be stronger than ever. And this must be the emphasis. This is a temporary situation. And although it's difficult to predict how long it will last, at some point, it will end. Therefore, the emergency actions we are putting in place are designed to be temporary as well and will not impact the longer-term objectives of the company.

But we did need to put in place various measures to reduce costs, preserve cash and ensure adequate liquidity. The larger ones among these are as follows. All senior executives have volunteered for reductions in pay for the balance of the year. Salaries for the top executives are being reduced by 25% and the next tier of executives by 10%. Our Board of Directors have also agreed to a 25% reduction in their fees. From a cash perspective, we have temporarily ceased our share repurchase program. Additionally, the Board has voted to temporarily suspend the dividend starting with the June one payout. This was a difficult decision. We have enjoyed 11 straight years of dividend increases coming out of the great recession, and that remains a key part of how we return value to shareholders.

However, out of an abundance of caution, we felt this was the prudent course. We will revisit our stance in the quarters to follow. We also elected to draw down much but not all of our revolvers simply as an insurance policy. As you'd expect, we've also cut back on much of our discretionary spending. When I hand it over to Jim, who will address how we are handling temporary reductions in headcount in our plants to accommodate reduced requirements. But for now, we have chosen not to cut into our professional workforce. Again, this is a temporary situation, and we feel that it would be an error in the long run to lose our talented base of employees. It's important to note that we have performed significant stress analysis on our financials to determine what type of a downturn we can withstand. We have modeled various scenarios, and we are pleased to see that due to our historic conservative financial management practices and entering the crisis with a very healthy balance sheet, we can withstand quite a bit. This, again, is why we took prudent conservation measures, but nothing that will affect our long-term plan.

So what have we seen in terms of business impacts? Nathan will review the first quarter, but the impact of the coronavirus began at the tail end, and the trend has obviously continued. Customer orders from us have been down substantially from around 30% to 40% in April. But as we monitor the weekly POS, we are pleased to see that their sell-through was down only around 20% to 25% at its lowest point. We believe the difference between purchases and POS is the result of planned inventory reduction at our customers as they look to rightsize their inventory. This will balance over time. We have now also seen some encouraging things in their POS.

It got to it below very quickly, but then stabilized there for a few weeks. And over the most recent couple of weeks, we have seen a fairly significant sequential rebound, and this is now being reflected in their orders to us. So while it is far too early to call this a trend or to suggest the worst is definitively behind us, we remain confident that we have the wherewithal to manage through this. Before turning it over to Jim, I would like to mention what we are doing to help with relief. We are pleased to have been able to repurpose an automotive heat exchanger to be used as a critical component on a ventilator. In our Poland facility, we are 3D printing face shields for our local hospital, and we are asking all of our employees to find ways to volunteer. Lastly, I just wish to talk a bit about the future. The business world is in no doubt in crisis, and our industry is no exception. However, the auto care industry is extremely resilient and tends to outperform in economic downturns. The market we serve has not changed. It has merely been idled.

And cars are still out there and are essential to how our country operates. It's predicted that the economic impact on Americans will lead to a reduction in new car purchases. This tends to benefit our industry as people need to keep their older vehicles operating. The majority of what SMP produces is nondiscretionary, especially within Engine Management. Our parts are required for the safe and proper functioning of vehicles. Therefore, the moves we are making in the short-term are tactical to deal with the current situation. Meanwhile, our business strategy remains unchanged. It will be as applicable and relevant once the market recovers as it was before the crisis began. For all of these reasons, SMP's leadership team remains very confident that we will emerge from this crisis as we have from every crisis over our 100-year history, stronger than ever and able to deliver shareholder value. And this is due to the thousands of SMP employees whose tireless dedication have gotten us where we are and whom I can't thank enough. And with that, I will turn it over to Jim.

James J. Burke -- Chief Operating Officer

Okay. Thank you, Eric. And I plan to provide some highlights on employee and facility safety, our global supply chain and production planning in light of lower customer orders. To put this in perspective, SMP has 19 locations and approximately 4,500 employees. On behalf of the entire management team, I want to thank our wonderful employees who have been conscientious and cooperative during these difficult times. While managing through this pandemic, which is temporary, we are fortunate to have a seasoned management team and long-tenured workforce.

Our SMP culture reflects a reciprocal relationship with the company caring for its employees and our employees contributing to the health of our company. We are also managing through this process with a very healthy and unleveraged balance sheet, a reflection of our key strategic values. First, to ensure employee and facility safety, we implemented the following protocols: employee daily temperature checks before entering our facilities, social distancing, cleaning and hygiene expansion efforts throughout the day, deep cleaning and disinfection measures on weekends and for any incident reported, mandatory use of protective matching gloves, staggered and flexible shift changes to reduce density, and remote working efforts for administrative functions in addition to engineering, purchasing, demand planning and our sales force. To date, across all our facilities, we have only had six positive reported cases. And thankfully, all are recovering and out of danger.

Next, to return to our next, turning to our global supply chain. We have not had any significant disruptions. Our initial concerns were with our three JVs in China following the outbreak in Wuhan. I'm pleased to report our JVs and other Asian suppliers fully recovered while we maintained high fill rates with our customers. Our supply chain management team did an excellent job working with our suppliers to plan and prioritize our needs during this restock process. The last area I wish to highlight are our efforts to make managed spending and balance our production planning in light of lower customer orders. These efforts included reducing discretionary expenses and conserving cash. Since we deem this pandemic temporary, we are cutting costs that will not have any long-term negative impacts on our business. We plan to fully fund continuous improvement projects and capex spending to increase our in-house manufacturing. We reduced our temporary flex workforce from temp agencies in the area of manufacturing and distribution to match customer orders and reduce costs. In addition, we were able to close four manufacturing facilities over a 2-week period to further balance manufacturing requirements.

However, despite these efforts to date, first, we are expecting production to launch and following our solid numbers. Our operational teams are finalizing plans this week for production requirements. We will also consider the latest news on improved customer POS sales in the last week and implement appropriate action plans next week. To summarize, I believe the key takeaways are we are starting from a position of strength with a very healthy unlevered balance sheet. We have a seasoned and long-tenured management team. While sales remain pressured in the near term, our industry fundamentals are sound and stable. Operating margins will also be pressured in the short term from manufacturing underabsorption and SG&A deleverage. But we fully expect to take the adequate steps necessary and be prepared for an expected full recovery.

We are all focused on the challenges at hand and expect to weather the storm, service our customers and be a leader in our Engine Management and Temperature Control categories. Thank you for your attention, and I'll turn the call over to Nathan.

Nathan R. Iles -- Chief Financial Officer

All right. Thank you, Jim. Before I go through the numbers, I would also like to thank the entire SMP family for their hard work and dedication. Our employees are the source of our strength and stability, and we greatly appreciate their contributions in the midst of this extremely difficult environment. Looking now to the P&L. Consolidated net sales in Q1 of 2020 were $254.3 million, down $29.5 million or 10.4% versus Q1 last year. As discussed in prior quarters, we acquired the Pollak business from Stoneridge on April 1, 2019. Incremental sales from the Pollak acquisition were $9.5 million in Q1 of 2020, and excluding these sales from our consolidated sales, our net sales were $244.8 million, down $38.9 million or 13.7%. Looking at it by segment now, Engine Management net sales in Q1, excluding Pollak and wire and cable sales were $155.1 million, down $21 million or 11.9%. As you may remember from our calls last year, Engine Management sales in Q1 of 2019 were 9.3% higher mainly as a result of large pipeline orders and customer orders which were higher than the POS sales the customers experienced. As expected, in Q1 of 2020, these pipeline orders did not recur, and we saw customer orders come back in line with their sales. And while these two items were the primary contributors to our lower sales level, we were further impacted by the COVID-19 pandemic in the last two weeks of March.

Temperature Control net sales in Q1 of 2020 were $51.4 million, down $17.5 million or 25.4%. Net sales in this segment last year were impacted by very high preseason orders as customer inventory levels heading into 2019 were lower than usual. Coming into 2020, customer inventories were at more normal levels, and therefore, we expected lower sales, as noted on our last call. As always, in the segment, the early part of the year is largely preseason orders, which can fall in either the first or second quarter, and therefore, the first quarter for Temperature Control is typically not indicative of how the year will turn out.

Looking at gross margins now. Consolidated gross margin in Q1 of 2020 was 27.7% versus 27.5% last year, up 0.2 points. By segment, Engine Management gross margin in Q1 of 2020 was 28.2% versus 28% last year with the improvement driven mainly by our continuous cost reduction efforts. Temperature Control gross margin of 23.5% in Q1 of 2020 was exactly flat with last year. While we are very pleased that both divisions maintained gross margin percentages at previous levels despite the lower sales, we do expect margins to decline in the near term, as Jim noted earlier, as lower sales related to COVID-19 will bring our margins down. Consolidated SG&A expenses in Q1 of 2020 were $55.9 million, down $4.1 million from Q1 last year. The lower SG&A expenses primarily reflect lower distribution costs and lower accounts receivable factoring costs given our lower overall sales volumes, partially offset by incremental expenses related to our Pollak acquisition.

Consolidated operating income before restructuring and integration expenses and other income net in Q1 of 2020 was $14.5 million or 5.7% of net sales, down 0.6 points over Q1 2019. As we note on our GAAP to non-GAAP reconciliation of operating income, our performance resulted in Q1 2020 diluted earnings per share of $0.43 versus $0.57 last year. The decrease in our first quarter operating profit was impacted by lower sales in both the Engine Management and Temperature Control divisions, partly offset by lower SG&A expenses across the company. Looking at the balance sheet now. Accounts receivable were $165.7 million, up $30.2 million from December 2019, but down $8.5 million from March 2019. The increase over year-end reflects seasonal patterns in our business, while the decline from Q1 2019 reflects lower sales versus the prior year. Inventory levels finished the quarter at $370.9 million, up $2.7 million from December 2019 and up $5.7 million from March last year.

The increase from year-end again reflects the seasonal nature of the business, while the impact versus Q1 last year primarily reflects the impact on inventory levels from the Pollak acquisition. Our cash flow statement reflects a $32.8 million use of cash in operations in the first quarter of 2020 as compared to a $26.7 million use of cash last year. Our seasonal working capital needs drives the use of cash from operations early in the year, and in normal times is generally followed by positive cash flows from operations for the balance of the year. During the quarter, we made investments of $4.4 million of capital expenditures and financing activities included $5.6 million in dividends paid following our fourth quarter 2019 performance as well as $8.7 million of repurchases of our common stock. Financing activity also included $52.5 million of increased borrowings used primarily to fund our working capital requirements but also our other investing and financing activities. Lastly, let me turn to the COVID-19 pandemic. While our company is strong and entered the current crisis in a very healthy position, there remains tremendous uncertainty from the shutdown of economic activity across the U.S. As the crisis unfolded and we began to see headwinds in front of us, we took several precautionary measures to increase our cash position and make sure we have ample liquidity.

As Eric noted previously, we temporarily suspended share repurchases and dividend payments, and our Board and top executives will take pay reductions for the balance of the year. Further, as a precautionary measure and to preserve financial flexibility, we drew down $75 million from our revolving credit facility on April 15 and hold that balance in cash. Following this drawdown, our total indebtedness under the facility is approximately $191 million, and we have an additional $27 million of availability remaining. As we are holding the drawdown in cash, our overall debt leverage remains very low. As we evaluate our liquidity and use of capital moving forward, we'll continue to prioritize maintaining our strong financial position. We have a long history of conservatively managing our balance sheet and will continue to take prudent steps to ensure the long-term health and stability of our company. Thank you for your attention. And I'll now turn it back to Eric to wrap up.

Eric P. Sills -- Director, Chief Executive Officer and President

Thank you, Nathan. And so to summarize before opening it up to questions, here are the key takeaways we want to leave you with. First, we entered the situation very healthy, able to withstand an extended period of difficulty; second, out of prudence, we are making short-term surgical moves to cut cost and conserve cash, all without harming our long-term strategic goals; and finally, all this is built on the fact that our basic industry fundamentals remain intact, making this a temporary situation.

In time, the market will bounce back, and we will be there to service it as strong as ever as we have for the last 100 years. And with that, I will turn it over to the moderator, and we will open it up for your questions.

Questions and Answers:

Operator

[Operator Instructions] We'll go first today to Scott Stember. You lines open.

Scott Stember -- CL King -- Analyst

Morning and thanks for taking my questions guys. Can you just tell us on the Engine Management segment before the, I guess, the impact of COVID started hitting. What was your sell-through rates at POS looking like, again, in Engine Management?

Eric P. Sills -- Director, Chief Executive Officer and President

Well, Scott, this is Eric. In the first couple of months, we're hovering at slightly positive. It was a very low single digits. And then what we saw in the first half of March, we began to see a bit of a recovery, and I think you're seeing something similar to what the public distributors are saying. And then for the last two weeks, it fell off a cliff. So again, started out pretty slow, started to pick up in the beginning of March and then it dropped off.

Scott Stember -- CL King -- Analyst

Great. And just following up on your comments about, I guess, recent days, I guess, you were talking about or is it the last week you were talking about POS seemingly picking up again. Are we talking about POS being up year-over-year? Or just being less down than the 20% to 25%?

Eric P. Sills -- Director, Chief Executive Officer and President

What we saw, and it's been for the last two weeks and I need to preface this by saying we're basing this on some of our larger customers as which tends to be directional, but it's not based on the entirety of our testing or aftermarket customer base.

But what we saw is really about three weeks of it really being down in the 20s, down in the 20s. And then for the past two weeks, it moved at least 10 points each week over the last 2. I'm talking about Engine Management, which is really the driver at this point. Wire and cable, saw some similar trends, although actually outperformed a little bit. And Temperature Control, I think April, it's still semi irrelevant to what's happening in the marketplace until the summer begins.

Scott Stember -- CL King -- Analyst

So when you say it moved 10 points, you're talking about 10 points, and then an incremental 10 points with that insinuating that we're flattish now?

Eric P. Sills -- Director, Chief Executive Officer and President

Last week was flattish.

Scott Stember -- CL King -- Analyst

Okay. Great. All right. And I know you guys obviously are doing a lot of things to curb expenses and so forth. But just remind us of your ability or your inherent model before the moves that you're making, your ability to flex up and flex down with sales, your cost and your fixed cost. And maybe just talk about your how much of your costs are fixed versus variable?

James J. Burke -- Chief Operating Officer

Scott, this is Jim Burke. Again, within cost of sales, as a general rule, what I usually look at there is tend to say that the material cost, many times, will make up 65%, 70% that's truly variable while the balance is half, 50-50 between variable and fixed costs. Within our SG&A, as a general rule, I would say the majority of it were probably in the 75% to 80% quasi fixed area that's there. And the truly variable items, as that's where we classify our distribution expenses, so we have some picking and packing labor, we have freight out, and we have where we record our draft fees. Those items would be the variable items in the SG&A area.

Scott Stember -- CL King -- Analyst

Got it. And just last question on your revolver. Can you just tell us what the covenants are, if any? And just talk about the liquidity one more time.

Lawrence I. Sills -- Executive Chairman of the Board

Yes. So Scott, at least we have ample liquidity. It's our credit facility. I think you can classify it a typical asset-backed facility. Within with regard to any covenants that are out there, it's a springing covenant based on certain levers in the facility.

We're nowhere close to being near any covenants like that.

Scott Stember -- CL King -- Analyst

Alright, that's all I have. Thanks, guys

Lawrence I. Sills -- Executive Chairman of the Board

Thank you Scott.

Operator

We'll take our next question from Daniel Imbro. Please go ahead.

Daniel Imbro -- Stephens -- Analyst

Hey, good morning, guys. It's taking our questions.

James J. Burke -- Chief Operating Officer

Morning.

Daniel Imbro -- Stephens -- Analyst

Wanted to start on the April commentary you just kind of touched on. Some of these things are improving, but curious, can you give us a sense of where inventory levels are? Just trying to think through if sales do stay pressured for longer, how much longer your sales can maybe underperform POS before customers have to start repurchasing again?

Eric P. Sills -- Director, Chief Executive Officer and President

This is Eric, Daniel, and it's a great question. Our visibility into our customers' inventory is a few weeks dated. So we're really looking a few weeks back, and therefore, we have to back into the numbers by looking at POS versus purchases. So we do believe they are bringing it down to where they want and some of the early indications that we're getting from the account is that now they're going to begin getting back to ordering more what they're selling.

But again, that's very early indications.

Daniel Imbro -- Stephens -- Analyst

That's helpful. And then a follow-up on that. Are you noticing any noticeable sales discrepancies by channel? Or are the are you seeing the smaller customers dial back purchases to manage cash more than your large customers? Or any noticeable change in the marketplace that you're seeing from a customer level?

Eric P. Sills -- Director, Chief Executive Officer and President

So we don't get into the details of the different segments with the different customers. You're seeing a little bit of variability, account by account, which is partly going to be based on geography as well as their own internal strategies. We don't get into the specifics of different accounts, but you're going to see a little bit of variation customer to customer.

Daniel Imbro -- Stephens -- Analyst

Got it. And then Nathan, maybe moving to some of the financials. On the Engine Management side, really impressed by the operating margin leverage despite the sales decline.

Can you provide some more color on kind of what drove the strength, both gross margin and SG&A? And then how sustainable you think some of those factors are as we hopefully see sales recover in the coming quarters?

Nathan R. Iles -- Chief Financial Officer

Yes. Well, I think just with regard to the gross margins, as I noted in my comments, the strength is really just from continuous cost reduction efforts. We have these programs going on year after year, and that helps us improve our margins in normal times. Like I said, we will see sales decline. You've heard the numbers that Eric and Jim talked about as far as what we think we see in sales declines, and so that will drive the margins down in the near term. If you go back to SG&A, Jim kind of threw out there the fixed cost numbers, if you will, distribution costs and receivable factoring costs will flex down, that 75%, 80% of that cost is fixed.

Daniel Imbro -- Stephens -- Analyst

Got it. And then last one for me. Jim, I think you mentioned you're temporarily closing the manufacturing facilities to match your costs. As you think about the recovery, how difficult is it to reopen those facilities? Or in past cycles, when you had to close them down and reopen them, were there typically incremental inefficiencies that come up? Or do you expect that to be a pretty smooth shutdown and reopening process?

James J. Burke -- Chief Operating Officer

All right. Okay. Daniel, generally, very smooth. It we would have a skeleton crew that comes in before the relaunching of the full day that's coming in. So that goes very smooth there. One of the things I just want to follow-up on the margins and refresh everybody that's on the call. There's a lag between our production variances and how it rolls through to the P&L. So our margins held up pretty well in the first quarter. But really toward the end of the second quarter and as we're reducing production levels and what we went through on the variable and fixed costs, we'll start to see those impacts in Q2 and Q3 as we go forward there.

And then as you're asking, when we recover, there'll be a lag for that coming through to the margin. So kind of think of it as like a rolling quarter like three months to that to roll through.

Daniel Imbro -- Stephens -- Analyst

Very helpful. Best of luck, guys.

James J. Burke -- Chief Operating Officer

Thank you, sir.

Operator

[Operator Instructions] We'll go next to Bret Jordan. Please go ahead.

Bret Jordan -- Jefferies -- Analyst

Hey, good morning guys. I guess, could we talk a little bit about supply chain outside of China? I guess, there's been some, I guess, difference in how Mexico is treating manufacturing as an essential or nonessential business. And I guess, could you give us an update there? And is that situation relatively stable now as far as Mexico shutting or not shutting production?

James J. Burke -- Chief Operating Officer

Right. Bret, it's Jim Burke. And a very good question. And we monitor it every day. We've been defined as an essential business, but there appears to be a disparity between the federal level and the state level, and it's a fluid situation. We believe we have good defenses there. But back over the holidays, we thought it was prudent to close down.

I mentioned we had four facilities that closed for two weeks, balancing our manufacturing requirements. During that situation, we closed our Mexico plants for two weeks that are there. We feel we have the adequate documentation in there as an essential business. Some other manufacturers been closed, but they reopened. And it's a tentative situation.

But at this point, we continue to remain open. And what I would say is our inventory levels, and we've looked at this with our inventory levels, we feel even if there was a short-term disruption again, we think we'd be able to maintain the pretty strong fill rates during that period and then hopefully be able to return and reopen strong.

Bret Jordan -- Jefferies -- Analyst

Okay, great. thanks.And I guess the question as far as your the retailers' inventory intentions, I think you were talking about them working balances down. Obviously, we haven't seen any shock like this ever before. Do you see them meaningfully changing their inventory balances and how they're managing their working capital and running at leaner levels going forward? Or do you think this is going to remain a relatively inventory-intensive retail industry?

Eric P. Sills -- Director, Chief Executive Officer and President

I think it's this is Eric, Bret. I think it's going to continue to be inventory intensive. I believe that the accounts and each one of them is making their own decisions, obviously. But I think that they are would have reduced some of their inventory, not so much reduced it, but reduced their purchases because their own inventories were going up as their sales dropped. And then they needed to bring it back down to where they wanted it. I still see this, especially even in our categories, to be lines that need inventory debt deployed, and so we're not expecting any substantial changes there.

Bret Jordan -- Jefferies -- Analyst

Right. Thank you.

Operator

[Operator Instructions] It appears we have no further questions. I'll now return the floor to our presenters for any final comments.

Eric P. Sills -- Director, Chief Executive Officer and President

Well, I believe that concludes our first quarter presentation, and thank you all very much for attending.

Nathan R. Iles -- Chief Financial Officer

Thank you.

James J. Burke -- Chief Operating Officer

Okay. Thank you.

Lawrence I. Sills -- Executive Chairman of the Board

Thank you.

Operator

[Operator Closing Remarks]

Duration: 34 minutes

Call participants:

Lawrence I. Sills -- Executive Chairman of the Board

Nathan R. Iles -- Chief Financial Officer

Eric P. Sills -- Director, Chief Executive Officer and President

James J. Burke -- Chief Operating Officer

Scott Stember -- CL King -- Analyst

Daniel Imbro -- Stephens -- Analyst

Bret Jordan -- Jefferies -- Analyst

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