Ladies and gentlemen, welcome to the Second Quarter 2019 Badger Meter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded July 18, 2019 at 11:00 A.M. Eastern time. It is now my pleasure to turn the conference over to Karen Bauer, Director of Investor Relations and Corporate Strategy. Please go ahead, Ms. Bauer.

Good morning, and welcome to the Badger Meter second quarter 2019 earnings call. On the call with me today are Ken Bockhorst, President and Chief Executive Officer; and Bob Wrocklage, Chief Financial Officer. The earnings release and related slide presentation are available on our website. Quickly, I will cover the Safe Harbor reminding you that any forward-looking statements made during this call are subject to various risks and uncertainties, the most important of which are outlined in our press release and SEC filings. Finally, please note that on today’s call, we will refer to certain non-GAAP financial metrics. Our slides provide a reconciliation of the non-GAAP to GAAP financial metrics used. With that, I’ll turn the call over to Ken.

Thanks, Karen, and thanks for joining our second quarter earnings call today. So while our sales performance this quarter reflected the impact of innovation delays, similar to what we’ve encountered historically, I’m pleased with our results on a number of fronts and remain encouraged by the funnel of opportunities as we look forward. For example, we generated solid gross profit margin improvement again this quarter, the fourth consecutive quarter with year-over-year gains. Our SEA spend was well managed and we’re able to reduce overall working capital and generate strong free cash flow in the quarter. Bob will walk you through the details of the quarter, and after that, I’ll come back and talk about a few key strategic initiatives and our outlook.

Thanks, Ken, and good morning, everyone. As you can see on Slide 4, our overall financial results were mixed with lower sales, but modestly improved operating margins and robust cash flow. Sales for the second quarter were $103.5 million, compared to $113.6 million in the same period last year. The municipal water sales declined 9.6%. Excluding the large Middle East order in the prior year, sales were down approximately 7%. The lower volumes are reflective of deferred orders for newer technology products, including the ORION LTE-M radio endpoints. In addition, our large diameter three- and four-inch E-Series commercial meters, which we originally expected to be shippable early this year, continued advanced testing and will not be available until later in the year. Sales mix remained positive with increased sales of Ultrasonic meters and meters with radios, as well as increased BEACON service revenue year-over-year. Flow instrumentation sales were down 6.6% year-over-year, with lower volumes experienced across an array of industrial end markets. Operating profit as a percent of sales was 14.5%, a 10-basis-point improvement over the prior year results, despite the lower volumes. Gross margin for the quarter was 38.9%, again in the upper half of what we would call our historic normalized range of 36% to 40% and 240 basis points above the prior year. In order of magnitude, favorable product mix was the primary driver with a higher proportion of Ultrasonic meters, meters with radios, and BEACON service revenue, as well as favorable regional mix. In addition, we experienced favorable net pricing as brass input costs remained lower year-over-year. The first half copper benefit is anticipated to level out as we get to the back-half of the year as current copper pricing is at parity with second-half 2018 input costs. SEA expenses in the second quarter were $25.2…

Hey, thanks, Bob. I want to spend just a few minutes on the innovation pause. This is something that we’ve encountered before to varying degrees. For example, back in the second quarter of 2017, we’re nearing launch of the LTE cellular radio, which was an advancement from the 3G radio that preceded it. Customers treated the upgrade like you potentially would when you need a new cellphone. You likely would not have bought a new iPhone last summer knowing that the iPhone XS will be coming out in the fall. And that contemplates, say, a two-year – two or three-year investment cycle versus the 15 to 20 years that our utility customers are contemplating. To further the example moving from 3G to LTE was meaningful, but the move today from LTE to LTE-M is much more significant. The added features and benefits from utilizing the low power, wide area network are understood and valued by our customers, so the incentive to wait, while also pilot testing the solution prior to broader system-wide deployment is greater. Turning to our commercial meters. While I’m disappointed in the delay of the three and four-inch E-Series meters with D-Flow Technology, we are being prudent and advancing the testing and launch process meticulously. Quality is a hallmark of our products and solutions, and it’s not a coincidence that it comes before delivery in the SQDC or safety, quality, delivery and cost metrics that we manage by. Looking ahead, the meaningful wins we announced earlier this year, which were slated to begin shipping in spring and summer, are now expected to begin towards the end of the third and into the fourth quarters. As we remind investors, contract wins do not necessarily determine order rates and shipment timing and our customer-centric mindset puts their requirements as top priority. These examples reinforce why Badger Meter remains long-term focused and does not attempt to provide quarterly guidance. Finally, turning to Slide 6. As we move into the back half of the year, we remain encouraged by the quote activity, opportunity funnel, and backlog to support our growth plans. In addition, I remained positive on municipal spending trends and our competitive share and positioning. Q3 will again have a Middle East difficult comparison and the innovation pause will be more of a dial than an on-off switch. Execution on our strategic initiatives continues. We’ve made several organizational structure changes in functional areas to better leverage resources and best practices across regions and product lines. We’re revamping our product development phase gate and project management process. We’re deploying working capital management actions that increase turns, while also improve our environmental footprint. And we continue to garner ideas for and dialogue with potential acquisition candidates. In closing, I want to thank our employees across the globe for their customer-focused efforts and commitment. With that, operator, please open the line for questions.

Thank you. [Operator Instructions] Your first question comes from the line of Chip Moore with Canaccord Genuity. Your line is open.

Good morning. Thanks.

Good morning, Chip.

Hey, good morning, Ken, Bob and Karen.

Good morning.

Hey, maybe you can expand on your – can you hear me all right?

Yes, we gotcha.

Oh, great. Great. So maybe you can expand on your comments on the innovation pause being more of a dial than an on-off switch? If we take into account the E-Series delays in addition to the pause we’re seeing on LTE-M, how best we can think about that, at least in the back-half of the year on earlier comps?

Yes. So, Chip, in the back-half of the year, we do expect to return back to growth mode. But what I don’t want to do is imply that it’s stacking, right, where – what moved out of Q1, Q2 is just going to naturally land on top of Q3 or Q4. So, we’re very confident. We have specific targets of customers that are piloting these that we’re very confident they are going to move forward with. I just would caution you that it’s not a stack borrowing Q3 and Q4.

Understood. That makes sense, Ken. And we didn’t talk a lot on the industrial side, but you called out some weakness there that was sort of broad-based we can expand on whether you’re deemphasizing some markets or things have worsened a little bit like we’ve seen sort of in the broader or macro and your outlook on the industrial side?

Yes. So on the industrial side, there’s a little bit of the law of small numbers, right? So remember, that’s a relatively small part of our business. So, it’s easy to have those numbers move one way or another pretty quickly. That’s also part of our business that has more of our international exposure. So, just in general, we’re seeing a little bit more noise market wise there. But I still feel confident about our ability to work our channel and still feel relatively good about our prospects there going forward, even with some of the global noise.

But to your point on end markets, Chip, yes, we clearly continue to execute the strategy of focusing on the four key verticals that we’ve talked about and that remains the focus.

Got it. And maybe one last one if I may, international, I guess, particularly Middle East. We still have some tough comps, but how do you think about the multi-year potential there and traction in those type of markets?

Yes. So, we feel good about the long-term Middle East opportunity. So, we never expected that it would just be a continual same year quarter-over-quarter growth. They’re going through a three- to five-year deployment in the GCC smart meters. So, we had a good win last year that was primarily second quarter, third quarter. We’re still optimistic about the future, but I can’t say, predict when that next order comes.

And I guess perhaps just to quantify that, I think, on the last call and consistent with what we experienced in the quarter, the hurdle rate or the amount to overcome for the second quarter was just north of $2 million. And for the third quarter looking forward, that hurdle is roughly $3 million.

Got it. That’s very helpful. I’ll pass it on to someone else. Thanks a lot, guys.

All right. Thanks, Chip.

Your next question comes from the line of Ryan Connors with Boenning & Scattergood. Your line is open.

Great. Thanks for taking my question.

Yes. Good morning, Ryan.

Good morning. So yes, I wonder – I want to focus a little more on the cost side. I wonder if you can give us a little more granularity around the margin drivers in the quarter, very strong gross margin performance, especially in light of the softer top line. So maybe, Bob, if you can just give us more of the puts and takes about that as it relates to raw materials and mix and sort of what the relative importance was there?

Yes. So again, we try not to and have not historically commented on individual components, but I’ll try to give you color to sort of frame out the magnitude. So primary, again, of the drivers, the largest driver in the quarter of the 240-basis-point expansion and gross margin is mix. And so that, I would break that into really two elements. The first is product mix. So where we – while we were down overall, where we did see growth was in higher margin profile products, like Ultrasonic meters, meters with radios, and then certainly BEACON software-as-a-service, so those tend to be above line average. So, you see some margin accretion from that. The second piece of mix is really regional mix. So, while we had to overcome a tough comp with $2 million of Middle East sales a year ago, as everyone knows, those were below line average sales, and so that didn’t recur. So, that’s kind of a mixed story. Within the cost bucket or price cost bucket, certainly we’ve got an element of our business albeit small that is linked to list pricing. On the water utility side, about 25% of our businesses is through external distribution, which has a closer tie to list pricing. And again, we’ve done a price increase on January 1st in that line of business. And then on the flow instrumentation side, we’ve done a price increase in October of last year. So, you see small amounts of price that’s naturally coming through as a result of those, but really it’s on the cost side not necessarily the price equation, but the cost side copper, PAM. Again, if you just look at copper as a proxy for our input, kind of in the 280 range now versus a year ago being $3.10, $3.15. So that’s the cost on that. But the other important piece is, while we did see order deferrals related to the launch of LTE-M, we did launch the LTE-M. And so that radio, as we’ve talked about historically has a lower cost position. And so, while the volume is – wasn’t as high as we would have liked, we did reap a cost benefit from that improved cost position. So when you add all those together, that’s really what’s driving kind of the different components of our gross margin improvement year-over-year.

That’s great detail. Thanks. Very helpful there. My other side, just as you go down the income statement, the SG&A line as well, very strong cost control, basically flat year-over-year it seems. So is that just a function of the lower sales and the selling aspect of SG&A, or – and hence, we would expect that to flex back up as we get a sequential improvement in the top line or some of that savings on SG&A going to be – we’re going to keep some of that?

Yes. So again, I think the phenomenon you’re seeing there, I would say, there’s nothing that’s a real outlier, per se, in terms of being extremely variable or tied to cost reduction other than the things you’d naturally expect. The peace that’s influencing that is, again, the executive and overlap costs. If you recall, we talked about in the past, having multiple executives in positions a year ago and then that going away in this year. And so that piece will certainly continue. But yes, very pleased with the cost management exercises and the cost management initiatives in the quarter, and we would expect that to continue in the second-half.

Okay. And then one last one for me. Just on this issue of technology and the roll outs and the pilots, I mean, obviously, the pilot projects moving ahead successfully is a great sign. Can you just educate us a little bit on that decision process by the customer, when and how those turned into full blown roll outs and how we know about that to gauge it? I mean, will you be putting out announcing wins of a certain size? How can we kind of just gauge that intra-quarter, that progress from pilot into hopefully full-blown roll outs in some of those cases?

Sure. Yes, let me give it a shot. It’s pretty difficult, Ryan, as you can imagine. So as you saw earlier in the year, we did announce a couple of larger city wins and we’ll continue to do that. But I wouldn’t call that a habit. It’s significant one-off type decisions on whether or not we announced it. But we have pilots going on in many cities of all sizes, right? So it would be very difficult to be able to give you quarterly type updates on how that’s going. But how the decision is being made, right, is cities are looking at going from the traditional meter to the meter, plus the radio, plus the software-as-a-package and a lot of implications in that. We see now legal gets more involved in some of the discussions and the upfront roll outs. People are looking to integrate billing systems. And it’s just – it’s a bit of a more complicated transaction for the customer perhaps than it was because of all the aspects they have to pull together. So part of what happened in Q2 here is that, when customers are going through that, right, they don’t buy the radio, but at the same time, they don’t buy the meter. They don’t do the BEACON engagement. And that’s where we kind of get into this what we’re calling this innovation pause. So we’ve had no issues that we’ve heard from customers in terms of any quality problems, concerns. Bob and I were on a customer tour during the quarter. We were out at the ACE show. We recently participated in the National Conference of Mayors. And we’re getting a tremendous amount of feedback that’s very positive on our product offering and services. So that’s where some of our optimism – a large part of our optimism is coming from, frankly, and why we feel like we’re going to be returning to growth and doing really well with the roll out. Long answer, not sure, I answered your question. But I think it’s kind of a multi variable situation.

Yes. No, that is helpful. Thanks for your time this morning.

Sure. Thank you.

Your next question comes from the line of Richard Eastman with Robert W. Baird. Your line is open.

Yes. Good morning.

Hey, good morning, Rich.

Good morning. Just a quick, maybe stat, if you would, but the utility business. What percentage of revenue was the utility business in the quarter? I’m pegging at about 77% of total revs. Is that a…?

Yes. I don’t have it in front of me. But that’s reasonable and pretty consistent with where it normally is. Yes.

Okay. And then the muni, the commercial piece of the muni or utility business, how did the commercial piece do here?

Yes.

And we didn’t get – go ahead.

Yes. So commercial, so if you take the line average of what we’re down, residential was down slightly more than line average and commercial is actually down slightly less. So what I think about that, Rick, is that even though I’m disappointed that we didn’t get to shipping three and four-inch Ultrasonics in second quarter like I was expecting. We’re still selling a lot of mechanical commercial meters. So we’re down slightly. But it – I think it shows, again, the product breath and quality of being able to offer mechanical and Ultrasonic is really the winning play for us. So it was down slightly, but certainly not out of line.

Okay. And would you consider the market to have been down, I mean, the commercial market? I mean, just given non-res construction and the commercial construction marketplace? Is that – does that surprise you at all or…?

Well. So that’s a tricky question. I think – I don’t – I wouldn’t comment. I guess on whether or not, I think it’s down. I think it’s just okay.

Okay. Okay, all right. Hey, and then just to circle back for a second. The projects that we won earlier in the year, the two that were in a little higher profile. And then the one that we won here, we stumbled into in the second quarter, Elizabeth City. I’m just curious, the delays on those projects. Is that – is – was that at all weather related, or is this just the process of munis getting funding and starting the projects? I mean, what actually do you think kind of caused the delays there?

Yes. So I think you’re specifically talking for us about Aurora and Columbia. And part of it is just that it’s a pretty complex, as I was mentioning a little bit before, right? So they’re doing pretty significant pilot testing on a large number of units, making sure that their system works correctly and making sure that they have their billing integrations there. There’s a build up of meters and radios that goes in the front of that. And what we’re going to see is, one of those projects will begin to see some installation and some revenue during Q3, and then the other will begin during Q4. So it’s just the natural state of, again, a more complex integration and when people used to buy meters and just put them in the ground.

Yes. Okay. All right. And then was it referenced earlier to your calls? I think the reference was that only 25% of your utility business goes through distribution. And I’m curious that, that must be independent distribution. So you’re kind of pulling from that number the distributors that have been purchased by Badger. Is that – how to reconcile that number?

That’s correct.

Correct. Yes.

Yes. Okay. Okay. And then maybe my last question just around the seasonality, in your third quarter typically sequentially from the second to the third, your sales, you kind of hit a little bit of a summer low. And they’re typically down kind of low single-digit sequentially. And when I’m listening to, I know, we’ve got the Mid East Conference is slightly tougher in the third. And some of these delays, you talked about some of the projects starting up maybe later in the third, if not fourth. So is – should we just be thinking about the same seasonal softness off of this lower revenue second quarter play out into the third? Is that how – is that kind of how the tone of the market is when you take out some of this noise around delays and project-driven revenue? It feels, yes, we kind of were light in the second quarter revenue, but seasonally here into the third quarter, it’s probably very seasonal pattern?

Yes. So there’s a multitude of factors and it starts to break down by regionally, right? So if you talk about the two projects that we’re referencing, it’s in areas that when they’re starting, the weather isn’t necessarily bad, right? So they can work there. You go out to the East Coast and you have a lot of budgets that, the fiscal year starts in July, so they tend to pick up in Q3. And so, again, multi variable problem. But I think, this year, just because of some of the deferments, we’re going to have a little bit of a different profile than we would have had in the past. But the general thinking that you’re applying to it, I think, holds true. But we see direct line-of-sight to some smaller, mid-size type opportunities that we think we’ll return to growth with.

Yes. Okay. And just maybe the last question, sorry, I’m taking a lot of your time here. But my last question, just as around, in this E meter market, going back to last fall and we saw that American Water Works Association kind of put out some E meters specs, if you will. But is there any – have you noticed any change around the number of bidders on some of these projects, or it – from the Elizabeth City contract that you – that we bumped into, it look like there’s no degradation in pricing by endpoint. But just any competitive noise in the E meter market that was triggered maybe by AWWA, kind of just supporting some regs there?

Yes, so a little bit about that. So first off, let me just say that, we have a very robust competitive review process. So we know who the other players are in the rest of the world that might think about trying to come here. So this isn’t new news to us that people would try to come here. So that’s one. And then two, we are at ACE, so anyone who was at ACE saw all the booths of all the little guys that say, they’re going to come over here also, right? So we know who the competitors are. We know who’s on all the bids that are there. Frankly, we still feel very strong whether the AWWA guidelines support Ultrasonic or not. 85% of our revenue is still mechanical. 15% of – I’m sorry, 85% of our units are still mechanical. 15% of our Ultrasonics are still – 15% of the units are Ultrasonic. Coming in with a partial line against really strong competitors who’ve been here 100 years trying to sell the 50,000 municipalities. Yes, that’s a long pot, right? So we’re aware of them. We know who they are. We know how to fight against them. I would say thus far, they’re not making much of an impact, but they’re trying hard.

Okay. Yes. No, that’s fair enough. Okay. All right. Well, great. Thank you very much.

Yes. Thanks, Rick.

Your next question comes from the line of Nathan Jones from Stifel. Your line is open.

Good morning, everyone.

Good morning, Nathan.

Just a couple of clarification to you. You talked about growth in the third quarter, growth in the back-half. Are you talking specifically about domestic municipal, or is that inclusive of the headwinds that you’ve got from the Middle East?

Yes, great. Yes.

Is it inclusive of the flow instrumentation business as well?

Yes. So great question, yes. Thanks for asking for the clarity on that. I’m speaking that the majority of the optimism is around domestic utility, right? So the choppiness on the Middle East order, I just don’t have the visibility. So talking about the returning to growth there and still feeling like, yes, on the flow instrumentation business, we’ll be able to get back into a growth mode in the second-half.

Okay. So we shouldn’t necessarily expect that total municipal or a business to be – to show positive growth in this quarter with that headwind from the Middle East?

Yes. I mean, just frankly, we don’t have the order yet from the Middle East. So the ability to turn it and do something meaningful in that market this year, would be difficult.

Then maybe just a bit more of a clarification on flow instrumentation. I mean, you’re selling into a bunch of markets there that have been pretty weak. The macro data has not been, I wouldn’t say that constructive here over the last few months, a of couple quarters. What gives you the confidence that you can return to growth there aside from an easier comparison?

Yes. So – and when we look at the channel opportunities we have, they’re still huge markets and we’re still very small, right? So I think that we can still find some pockets of opportunity in there. Our team’s working really hard at building out the channels in the for target markets that we talk about being oil and gas, chem., petrochem, wastewater and HVAC. So, yes, you’re right. I mean, the market and the data don’t look great in that space. But we’re feeling good about the activities that we’re taking to return to some growth there.

Okay. Then maybe just a couple of follow-up questions on the shift to LTE-M. Could you mind us when that hit the market?

Yes. So we officially launched it in March and began shipping in April.

Would you – why didn’t we say some of this kind of innovation pause then in the first quarter of 2019 or fourth quarter of 2018? If folks knew that those kinds of meters are going to be coming out and hitting the market towards the end of the first quarter of this year. I would have expected to see more of an impact on the business a little earlier than just the second quarter?

Well, we did talk about that briefly on the last call. And we did have I mean, frankly, I’m not going to name names, but we have a really good customer that’s been with us a long time that’s going to convert that intended to go in Q1, but still didn’t in Q2, because they’re piloting. So there is some of that in the Q4 and Q1, but…

And I think if you go back and read the first quarter transcript, there was a theme in our first quarter results, specifically. So it isn’t necessarily something that’s just hitting now. It’s something we’ve had line-of-sight to, quite frankly, for the last five to six months and has been talked about.

Okay, that’s helpful. Then maybe you could comment on what gives you the confidence that this kind of pause is going to end, or has ended and we actually get back to growth in the third quarter?

Well, so the two projects that we spoke about previously, that start to take off in Q3 and Q4. Some specific cities that we’ve been working with, that we know that we’re very close at getting over the initial phase and into the order state. And the thing to remember is, while the percentage – I understand that the tone of the questions from the percentage of the down year-over-year. But when you look at the funnel and the way that we’re seeing these, a couple of these are sizes that just a couple of cities can close that gap, right, and we have some of those types of opportunities in the funnel.

Fair enough. Do you think that there will still be an impact from these kinds of deferred purchases that are going on in the third quarter, but you’ve got enough in the funnel to get over the hump and still get to growth? Or do you think that this kind of the drag that you’re seeing from these deferred orders will – is actually out of the picture here?

Yes. So this is, yes, very similar to the point I made in the opening comments of. We have enough in the funnel that we feel pretty good, but there might be some that’s still away. So this is the more of a dial and not a stack bar or an on-off switch, right? So some are going to come in, but we feel really good about the funnel and the opportunity to get that growth.

So it should build up for me then I guess is kind of what you’re saying?

Yes.

All right. Thanks very much for the clarification. I appreciate it.

Thanks.

[Operator Instructions] Your next question comes from the line of Andrew Buscaglia with Berenberg. Your line is open.

Hey, guys, thanks for taking the question.

Sure.

So yes, not to beat dead horse here. But on that – on the – yes, the order push out. So I’m just trying to understand that you mentioned things won’t stack in the back-half. So it sounds like you have some expectations for Q3 and Q4. What’s the flow through? But I’m trying to understand there, why wouldn’t there be some sort of incremental, I guess, bump?

Yes. So, again, back to the total amount that are in the funnel, we fully expect that some of those based on the feedback from the sales team and directly that those are going to start to flip through. What – this business can tend to be uneven by nature and customers make decisions sometimes that, that maybe it doesn’t happen as quick as we’d like. So what I don’t want you to take away from this call is that, everything that we’re saying that was differed from quarters one and two is just going to add on top to whatever we expected from Q3.

Okay.

I think the other challenges, Andrew is, obviously, we’ve got line-of-sight to a relatively short cycle backlog. We know these two key projects that we’ve been talking about and how those layer in. What we’re talking about on the rest of the business, right, is 15, 20, 25 opportunities that which – the question is they’re trying to get us to predict to a month, and that’s just very difficult to do, which is only reinforces our ongoing concept of – it’s a choppy business. And unfortunately, that really gets it – makes it difficult to make these predictions quarter-to-quarter. So I think we think about longer periods of time. If we make that longer period of time, the second-half, I think that’s where the confidence from our commentary comes from. But it is difficult to sort of earmark or pigeonhole that into a specific quarter. So we want to make sure we’re not losing sight of that, but also trying to provide enough clarity without giving guidance. We don’t give guidance.

Yes. Okay, make sense. Okay. And you’re starting to build some cash here and you had a really strong quarter for free cash flow conversions. Curious if you could give us an update on what you – what your use of cash will be over the next six months? Do you think – does anything change in light of that are kind of disappointing in Q2, or is M&A still a priority for you guys?

Yes. So our cash priorities remain the same. So we’re going to continue to invest in internal R&D to maintain our innovation lead in the industry. We are going to continue to fund and increase dividends at the rate of earnings increase, and M&A is a strategically important pillar for us. So those are the three priorities for us. Those don’t change just because we’ve turned into a net cash position.

Yes. Okay. All right. Thanks, guys.

Your next question comes from the line of Richard Eastman with Robert W. Baird. Your line is open.

Ken, sorry about that.

You’re back. That’s okay.

Just one more thought just around the – what is the kind of the health of the acquisition funnel that you have, either number of opportunities, or just steps forward on any – anything in particular? What does that look like here year-to-date?

Yes. So the health of the funnel, Rick, is solid, and we are talking to companies that are in the strategic lane ways that we’ve talked about previously. I think the thing that I would just tell you is that, we are – sorry, the lights are flickering. So if the power goes out, it’s not that we try to avoid you, Rick.

I’m about five miles from you, my lights are fine.

Okay. So the funnel is active. The funnel feels pretty good. But we are just being very strategic and methodical and making sure that the cash that we deploy are things that are going to fit into our strategic lane ways that we know we can sell through the channels that we have or lead to that global expansion. So the funnel feels good. And – but as I’ve said on previous quarters, I don’t want you to walk away thinking something’s imminent.

Okay. Okay, but there’s opportunities there and some things are moving forward?

Correct?

Fair enough.

Yes, yes.

Okay, great. Thank you.

All right. Thanks.

There are no further questions at this time. I turn the call back over to Ms. Bauer.

Well, thanks, everyone, for joining our call today. For your planning purposes, our third quarter 2019 call is tentatively scheduled for Thursday, October 17. I’ll be around all day to pick up any follow-up questions you may have. Have a great day.

This concludes today’s conference call. You may now disconnect.