Ladies and gentlemen, thank you for standing by. Welcome to Actuant Corporation's Fourth Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded, Wednesday, September 26, 2018. It is now my pleasure to turn the conference over to Mr. Fabrizio Rasetti, EVP, General Counsel. Please go ahead, Mr. Rasetti.

Thank you, operator. Good morning and thank you for joining us for Actuant's fourth quarter 2018 earnings conference call. On the call today to present the company's results are Randy Baker, Actuant's President and Chief Executive Officer; and Rick Dillon, Actuant's Chief Financial Officer. Our earnings release and slide presentation for today's call are available on our website at actuant.com in the Investors section. We are also reporting this call and we will archive it on our website. Please go to Slide 2. During today's call, we will reference non-GAAP measures such as adjusted profit margins and adjusted earnings. You can find a reconciliation of non-GAAP measures to GAAP in the schedules to this morning's release. We also would like to remind you that we’ll be making some statements in today's call and presentation that are not historical facts and are considering forward-looking statements. We are making those statements pursuant to the Safe Harbor provisions of federal securities law. Please see our SEC filings for the risks and other factors that may cause actual results to differ materially from anticipated results or other forward-looking statements. Finally, consistent with how we have conducted our prior calls, we ask that you follow our one question one follow-up practice in order to keep today's call to an hour and also allow us to address questions from as many participants as possible. Thank you in advance for your cooperation. I'll now turn the call over to Randy.

Thanks, Fab. And good morning, everybody. We are going to start today on Slide 3. As you read in today's press release, Actuant delivered a solid fourth quarter and full year results. Our year-over-year performance improved in all the areas. In the quarter EPS grew by more than 100%, core sales increased by 10% and we expanded margins by 65%. Cash flow was also very positive in the quarter and marked the 18th consecutive year of conversion of plus 100%. So now let's turn over to Slide 4. As we came into the fiscal year, we were in early innings of creating a more efficient company and reinvigorating our organic growth. Over the past two fiscal years, we've invested in our operations, restructured our commercial processes and significantly stepped-up our new product development activity. We also began a strategic review of our portfolio and repositioned our businesses. We have made significant progress and has led us to results we reported today. Our global teams have done an excellent job of focusing on our sales, our operations and supporting our customers and the results followed. And now turning over to Slide 5, I was also very pleased with our share expansion and the continued introduction of new products. Enerpac introduced 12 new tools in the quarter which brings our 2018 total to 30. This has been a primary area of investments and we are now seeing the fruits of our hard work. Secondly, Hydratight increased sales by 7% in the quarter which was the first positive result in many months. And finally, our new engineered components business launched an additional six new product platforms, which was a direct result of our effort to improve OEM support. Our ultimate goal of achieving a 10% contribution from new products is now well within…

Thanks, Randy. And good morning, everyone. First let’s go through the one-timers that are excluded from the adjusted operating results this quarter on Slide 6. As Randy noted, we are actively pursuing the divestiture of Cortland Fibron. And as a result, we've taken an impairment charge based on our expectations of the fair value of the business today. The $45 million charge includes the following: The non-cash charges related to the write-down of the assets to their estimated realizable value and a $35 million accounting charge to recognize the cumulative translation adjustments from currency since the date of the acquisition. We will update these estimates when we finalize the divestiture. On the balance sheet, you'll see both current assets held for sale and current liabilities held for sale. We also took an impairment charge on our concrete tensioning business of approximately $24 million. Prolonged operating inefficiencies and a resulting loss of margin share drove the write-down of goodwill and other intangible assets of the business as part of our annual review process. We recorded a tax benefit this quarter from the unanticipated release of evaluation reserve on net operating losses, given our improved profitability. This benefit was partially offset by $2 million adjustment for tax reform. The adjustment for tax reflects the legislative clarifications received during the quarter. 2018 was really about adjusting our balance sheet for the impacts of reform. The revaluation of our deferred tax liabilities resulted in a gain that essentially offsetted the estimated impact of the total charge write-down of deferred assets based on what we know today. The real impact of reform on our financial statement tax provision and cash taxes will be in 2019, as we discussed, we will discuss later. While we don’t anticipate significant balance sheet adjustments, we will obviously respond as…

Thanks, Rick. Turning over to Slide 14, we believe 2018 was a turning point for Actuant. As you can see our core sales -- our sales grew by 8% exceeding our 2018 original guide. EBITDA improved by 19% and EPS increased by 31%. Overall, our operating leverage increased to 26%, which is in the range of our objectives. The bottom-line, the backdrop of positive market condition, coupled with our organic growth have set a positive trajectory for the sales and earnings. So turning over to Slide 15, as I discussed earlier, the fourth quarter was very dynamic in terms of new product launches. Enerpac introductions included a major improvement in our bolting pump product line and a new line of handheld electric tools. The new pumps included an advancement in pressuring tool and operating range, which gives Enerpac a distinct competitive advantage. Product development coupled with our recent acquisitions has expanded our product line by more than 100 tools. Engineered Components & Systems also introduced many new products in the year, which played a very important role in our [Technical Difficulty]. Our success in developing new product applications for OEMs has resulted in sustained growth above market rates. So now turning over to Slide 16. The macroeconomic factors affecting our business continue to be positive. General economic lead indicators such as GDP, commercial and general construction, industrial productivity continue to strengthen. On the tool and services front our dealers are reporting good. Retail activity in almost all vertical markets are reporting growth. Additionally, service maintenance is improving oil and gas, renewable energy and in nuclear. Oil prices have fluctuated between $60 and $70 a barrel, which is fueling a more positive maintenance spending environment. Off-highway mobile equipment is also strengthening and all of our major OEM customers are experiencing good…

So, starting with tariffs on Slide 19. We have already felt the impact of the Section 232 tariffs and the first wave of Section 301. We have been proactively working with our customers on pricing actions, but those actions come through differently in each of our segments given the nature of each business. Price increases initiated, they have been part of what we would call our normal pricing rhythm in response to rising commodity, labor, freight and tariffs announced in fiscal 2018. In the tools businesses, we have implemented two price increases, one in January and one effective September 1st. In the ECS business our price actions are negotiated on a contract-by-contract basis and the process was substantially complete for all of our large OEMs during our fiscal 2018. The new tariffs which went into effect on September 24th will create a significant headwind based on our initial assessment without consideration of any pricing or surcharge action, the income impact there could be in the range of $3 million to $4 million. This includes the implemented 10% and the expected 25% hike. We will continue to refine our estimates and work through our mitigation actions and will provide an update on our first quarter call in December. If we turn to taxes on Slide 20, as Randy noted, we expect the 2019 effective tax rate to be approximately 20% for the fiscal year. This is also the rate that we should be using for modeling purposes in the near-term. The increase in the rate is directly attributable to the new incremental minimum tax on foreign earnings and limiting of foreign tax credit usage as a result of reform. We will continue to evaluate the new tax rules in future guidance as received. We will also continue to execute tax planning…

Thanks, Rick. As you can see we remain optimistic about 2019 and beyond. We have taken actions to position the company for success and as we progress through 2019 our priorities remain consistent. We intend to grow at a rate greater than market. We drive incremental profitability at our stated range 35% to 45% for Industrial Tools & Services and 20% to 30% on Engineered Components & Systems. Lastly, we discipline -- our disciplined capital allocation to drive superior returns to our shareholders. We believe we are on the right path and we appreciate the support of our employees, our shareholders, our customers and our suppliers. With that, operator, we will turn it back over to you for Q&A.

[Operator Instructions]. Our first question comes from the line of Jeff Hammond with KeyBanc Capital. Please go ahead.

So just on the bridge. It seems like if I'm doing the math correct the base business incrementals are kind of 20% to 25% versus kind of what you were talking about. And then you had a number of headwinds kind of heavy lift kind of concrete tensioning, some warranty would seemingly go away and I don't see that kind of an offset. So I just want to see how you're thinking about those within the context of incrementals?

So Jeff, if you go back to our EBITDA targets of $155 million, $165 million and you do the math based on those incrementals would be an implied plus 30%. So we pegged it a little higher than our stated range of 25% to 30% for the consolidated and the reason for that is that those one-timers we just mentioned are not going to repeat. And particularly if you recall, our first quarter of last year, we had significant costs and those costs carried into second quarter. So that's why we are pushing the business to have a little higher incremental operating leverage going into '19 because we think it can handle it.

Okay. And then I know you said you are going to give the segment detail here upcoming but can you just give us what the EBITDA margins are of the two segments for fiscal '18? And then, kind of how you're thinking about what the long-term EBITDA margin opportunities are for each of those segments?

So when you look at EBITDA margins for year-over-year under the new segments, when looking at those margins in that for Industrial Tools & Services in the low to mid 50s, plan to ‘18 or top end to the guide to ‘18 and low to -- or mid 20s to high or low 30s for EC&S. And so those are kind of the blended margins. And keep in mind as Randy mentioned the margin profile of these two segments shifts. And the inclusion of Cortland and PHI with the legacy Engineered Solutions brings back incremental margin or the EBITDA actual margin up, and then similar but to a lesser degree for Industrial Tools & Service business a little bit of creep in the margin. And so when you think about the incrementals, it's in 20% to 25% range for ITS and incrementals for EC&S in the 9% to 10% range.

Our next question comes from the line of Scott Graham with BMO Capital Markets. Please go ahead.

Several questions for you. First one is may be just more accounting than anything Rick. The sizes of the charges taken this quarter relative to the sizes of the business kind of outsized, could you just sketch a couple of things out there for us?

Sure. On the Fibron piece, the -- it all ties back to what the purchase price of -- at the time we acquired the business. So the goodwill and the intangibles are reflective of what was the purchase almost at the peak which makes it a much higher purchase price. So I think that's what you are seeing the 30 some million of CTA that is what I call the accounting noise but it is the cumulative translation of the results, the balance sheet of the operations since that time. But in terms of the PHI impairment and the Fibron impairment, the size of the impairment is really reflective of the -- Fibron is purely how much we pay for the operation given current fair value and it was at a much higher price, PHI similar scenario but does not include the accounting piece.

Yes, got it. Randy, I'm sure you are shaking your head at those too, anyway. The tariffs of $3 million to $4 million, is that a grossed up number or is that net of pricing?

That's gross that assumes no pricing. If you think about our pricing we took in 2018 and September 1st here for Industrial, all of that pricing was to cover known tariffs and commodity, freight and labor activity. This new announcement here in mid-September, we've taken no price to directly cover that. And so, while our guidance does have some price reading through, it doesn't reflect this $3 million to $4 million which would be a gross call it worse case scenario.

And that's the number that we’ve calculated to figure out what type of pricing we do need to push to the market to cover it.

That's helpful. How did you exit this fiscal year as you have -- are you pricing plus 1, 1.5, what's the exit rate for the company?

Our price realization.

Realization kind of in that 1, 1.5 range as we exit. When you think about the majority of our pricing certainly on Engineered Solutions business and really this September 1st pricing for Industrial, that's majority of that pricing was to cover known cost increases and so that puts us like I said back into a normal 1%, 2% pricing rhythm we would get on an annual basis.

Our next question comes from the line of Charley Brady with SunTrust Robinson Humphrey. Please go ahead.

This is actually Patrick Wu standing in for Charley. Thanks for taking my question. Just wanted to -- just follow-up on the previous question on pricing. And as I look at Engineered Solutions, can you sort of update sort of the year-over-year margin improvements for us in terms of volume mix and price? And it sounds like you guys are able to successfully push through most of the pricing that you guys wanted to, it is a normal pricing. But are you hearing -- are you putting in any escalation clauses that are used for the system expectations with your customers in case tariff situation sort of worsens a little bit more or if inflation continues to ramp up. Can you give us some color on that?

Sure. When you think about the OEM contracts first, each contract, each platform is different, some have escalating clauses. There is some very complicated cost of inflationary clauses within the contract. And so from an ECS perspective you are really going contract-by-contract and our ability on events like this surcharge tariffs to go back, in some cases it is still subject to negotiation. So when you look at year-over-year for ECS it’s really a story of volume [Technical Difficulty] favorable for us. We got several new product launches coming out that will assist volumes to get market improvement as well across all of those verticals. And so, all of that is really driving our activity. We got significant productivity baked into the plan and that's some of the one-timers as you saw last year with warranty issues, labor efficiencies as we had the flood of volume, those things leveling out from a profitability perspective. Pricing is really offsetting tariffs, known tariffs as of the end of 2018.

And just quickly on I guess new products and you guys have done a pretty solid job that rolling those out in fiscal '18. It sounds like you know there’s going to be some ramp up cost in the near term for that. How should we think about new product development going into next fiscal year? Are you guys continuing to accelerate that? Or should that be moderating somewhat versus '18 levels?

Well, we have a base level of [SAE] expense associated with our propelling out. If we do add any incremental costs in there, it will be an opportunity to bring in a new product idea. What we have budgeted right now and what we have on our new product development streams are covered in terms of our outlook for next year and reflected in our guidance. So we are not saying that another incremental ramp up -- and Rick and I are watching of the new products or new platform launches what are the incremental revenues coming off of because there is a justification process that has to continue to happen so that we [Technical Difficulty] how much we are getting back from that investment. So we’re managing it quite tightly and I think our engineers are feeling the freedom to be creative now, but we also want to have a controlled ramp-up and launch pattern for our new products.

Our next question comes from the line of Ann Duignan with JP Morgan. Please go ahead.

Randy, could you talk a little bit about your revenue guidance, first in the context for each of your segments, core revenues coming better than expected in Q4 but your guide going forward being very conservative, particularly in Industrial Tools & Service where you say you’re going to outgrow the end markets and yet the guidance is for 3% to 5%, it doesn’t seem like that outgrows if anything we're seeing out there. So can you just talk about where was the surprise in Q4 and how conservative is the guide you are giving today?

Ann, you can well imagine, I look at all of our 14 vertical markets that we serve for industrial tools and I look at each individual growth rates and how fast did they grow last year and at what point do we anniversary those growth rates. So on the 3% to 5% consolidated and the 3% to 5% for industrial tool particularly we feel that that is an estimate that's realistic and it's supported by all the major vertical markets now. What we saw was a heavy ramp-up over the last couple of years and as we anniversary particularly in the first and second quarters of last year when we came to full stride there was a double-digit growth rate. So to compound that again and say again that we would either have high single-digit or a low double-digit growth rate on industrial tool sales I think would be somewhat too optimistic and we're trying to be conservative relative to what would pricing do with the tariffs and will there be any tempering in the marketplace. So I personally believe a 3% to 5% ramp-up on a year-over-year basis isn’t a range that's not extraordinarily aggressive but it's realistic given the market conditions.

And what would have to happen for to be on -- at the 3% -- what would have to happen for to be at the 3% to 5%?

So to jump to the higher range. Largely I think if you look at the various vertical markets we do participate in, some of them are getting to a mature level. So if you look backwards in time, aerospace really started growing double-digit growth all the way back into '17. So that's a very mature market and then certainly mining is on -- it's still on the major demand, I think there is a lot of tools and equipments being taken into the mines and that certainly has some upside to it but just only one market of the 14 its selling. So I think if we were going come to a very top end or be at the top end of our guide, we would have to see some fundamental changes in the commercial construction, residential construction markets, and particularly in Europe, Europe has definitely tempered a bit overtime where we were in the high double-digits to low -- the mid double-digit growth rates, it has tempered back and the same with Asia Pacific. So you need to see the European market and the Asian market really continuing to hit on a double-digit market growth to support that level. But Ann we are watching very closely in terms of what type of revenue, and type of growth we are getting every single month.

Our next question comes from the line of Mig Dobre with Baird. Please go ahead.

Joe Grabowski on for Mig this morning. I wanted to start out asking about incremental margins in Industrial. They are about 23% for the second quarter in a row. If Industrial Tools are 35% to 45%, obviously the smaller businesses are continuing to provide a drag on incremental margins. So what's the outlook for the next few quarters? When do those drag start to normalize and maybe even turn to tailwinds?

If you just talk about the -- you have heavy lift which we believe a majority of that is behind us, in fact the impact of large products -- projects rather was negligible in the quarter. So standard projects go lower and our standard tools still keep us from a segment perspective in that incremental zone that we would like to see. When you look at Cortland, the other -- I'm sorry, so from a tools perspective that is what we expect to see going forward in those incrementals. Now getting into the new segment structure, when we look at 2019, similar product related margins or energy products as we have in our legacy Enerpac segment type products and then on the service, we do see service grow and some improving market conditions. So those margins will blend nicely into what Randy had given as our normal incrementals would be like there in the midpoint of that range. The drags in the Energy segment slightly lower margin would be Cortland and that’s on lower volume but you see that improving softness get improvement in the fourth quarter. And when you think about going forward ex-Fibron, even with Fibron, because of the rebound in the market those margins come with -- those sales come with large margins. So that is actually part of the view again of the standard view of ECS going forward and it helps list that ECS margin from the low to mid teens up into the 20s when you add in the Cortland business and the PHI business. PHI loss in share, we do expect some of those to regain some share and a little bit of market growth in 2019. The margins will be still in that low to mid teen zone if we are able to get back some share as forecasted.

And then my follow-up question would be fourth quarter guidance. The EBITDA guidance is pretty consistent with our expectations but the EPS guidance was a little bit below where we were. Looking just at the midpoint it looks like EBITDA guidance is up 50% but EPS guidance is only up about 20%. It looks like the tax rates are comparable year-over-year. So is it something below EBITDA that's impacting EPS in the first quarter?

Nothing below EBITDA impacting it. The year-over-year should be driven -- you have a little bit of mix impacting overall EBITDA margins but the guide is driven off of the tax rate and the flow. So I don't know the disconnect with the amount of exit.

[Operator Instructions]. Our next question comes from the line of Justin Bergner with Gabelli and Co. Please go ahead.

First off on the subject of capital allocation, is the goal to still focus bolt-on acquisitions going forward. Would you buy back as if you don’t find such deals and is there any benefit from balance sheet in your guidance?

So our primary objective is still to find good acquisitions now whether it's a bolt-on or a larger more meaningful acquisition, we believe in the tools sector that is well it's in the bandwidth of the company. So we've spent the last two years preparing ourselves to handle lager acquisitions if they were available. From the perspective of share buybacks if we track that, that certainly is in our capital allocation strategy and priority. When the opportunistic price is there, we will get into the market and buy shares. But -- it's the priorities have always been pretty clear. Number one is invest in ourselves which we've been doing. Number two is making good acquisitions and support the tool and service strategy. And number three, share buybacks and debt reduction, now from a balance sheet perspective I will let Rick cover that.

Sure. There is no plan at this point to buyback shares when you look at what we have before us, the debt structure is in good shape. We will likely just as normal course, just normal course given the maturities restructure our debt but it will come out with the similar variable. So from a balance sheet perspective certainly at this leverage we feel pretty good. It does give us the capital to really focus on acquisitions and those acquisitions could be bolt-on, could be large and more meaningful. We obviously have a strategy to set 50% of our growth will come from M&A. So as we sit here today we think we can execute that strategy which does not include the share buyback.

So just to follow-up there then the EPS guide assumes that the $80 million to $85 million of free cash to pay down debt or build up this cash?

Yes.

Our next question comes from the line of Seth Weber with RBC Capital Markets. Please go ahead.

Just have actually a few clarifications, if I could. Rick, on the free cash flow guidance for the year, can you just tell us what that $10 million or other positive contribution of free cash flow guidance is meant to be?

Sure. You're trying to the -- walk back to GAAP?

It's on the last page of the press release, I think, yes.

Right, what we typically do is we know EBITDA, we know CapEx and there usually are bunch of other items that come through impacting cash flow from operations, things like taxes, incentive comp, interest expense, all of those things come through. And so the $10 million is kind of our other that we know will have an impact on cash flows. The overall number we do the bottoms up build and trying to reconcile to the GAAP number which shows cash flow from operations and the standalone item. So it’s just our walk back.

And then in the prepared remarks, I think I don't know if it was Randy you mentioned sort of launch costs could be a headwind going forward. Is that an incremental headwind or that's just sort of your normal cost of doing business? I'm just trying to understand do you think these launch costs are going to get more -- to be a bigger headwind going forward versus what we've seen?

No, I think, look two things, in 2019 we have more new product coming than we did -- certainly than we did in '18. And as Randy described it’s more than we have historically had. But launch costs are consistent with all new product kick offs similar to what we saw both in ITS and what we saw in prior years with Engineered Solutions as we brought on new platform. So I don’t think they are incremental headwinds. I think when you look at the guidance and the volume of new products that’s in our 3% to 5% growth that NPD helps us outpace the market, those costs remain, as I think the comment was, the margin incrementals on those specific items may not be exactly at that run rate but certainly factored into our overall guidance.

Okay. And then -- just sorry, just going back -- I'm sorry, if I missed this. But was there something in the Energy mix this quarter, fourth quarter margin versus the third quarter margin? And I'm just trying to understand is this a business that should do on an EBIT basis high single-digits going forward or is this kind of a mid single-digit business in aggregate today as you are thinking about next year?

I think we view Energy as it’s presented historically would be in that low double high single range going forward, absent large projects and there was no significant mix if you will in Q4. It was more so just the rebound and the efficiencies created by due our service organization and our product sales but no real mix contributed to those numbers.

Next we have a follow-up from the line of Scott Graham with BMO Capital Markets. Please go ahead.

Yes, I had questions on mix for all three segments. You answered several of them. But I did want to maybe just revisit Industrial where on a sales basis, how does heavy lifting end up in 2018 as a percent of the total in the old segment format here?

Yes, it would be about a 10% or 12% of the total. It's roughly about $40 million business and it would track in -- we've got -- you can see in our fourth quarter we got the business profitable and then our objective is to get that as a normalize heavy equipment type company which would be operating profits in the teens. So it's not a big contributor. We think that a lot of the standardized products can be even more profitable as we go forward, but we've done a lot in the third quarter and starting in the second quarter completely restructured that business and to make it a profitable entity.

Understood. And at that level of percent of sales, I guess, I'm wondering why mix was negative in the segment? Does that suggest that the tools sales were mix negative?

There’s two things going on. The percent of sales is lumpy on a quarterly basis. And so it’s the jolts of heavy lift in the quarter. We also have significant bolt-in year-over-year growth and that comes and again off slightly lower gross margin than at the enormous set of tools. So those two combined are really the mix issue within the Industrial piece.

Our next question is a follow-up as well coming from the line of Justin Bergner with Gabelli and Co. Please go ahead.

Thanks. A couple of quick ones here. So the $3 million to $4 million tariff impact per Section 301 list 3 that assumes that the 10% kicks up to 25% at January 1st. And there's no pricing vis-à-vis any of those tariffs for the 12 month period?

Yes.

Okay. Second clarification on the tax side, is the 20% also sort of an indication of cash tax rate going forward, more or less?

Assuming no change, yes. But keep in mind there is a lag on the rate and cash impact. So payments this year won't equal to 20% rate but it will be a blend if you will of prior rate and the current rate.

Okay, great. And then just lastly. On the M&A side of things I realized concrete tensioning sort of wasn't an acquisition done by the current management team, but there were sort of higher hopes for how it would perform. Any lessons learned from that deal in terms of what went wrong and how that informs future M&A decisions?

Well, I'm not going to critique prior management but I will say that our strategy going forward on any M&A activity has to be clarity on trying to dominate share space within the tool and/or service sector. So as we've got our build out to five vertical markets that are associated with our targeted tool companies, that's where our M&A dollar is going. It will be broken into two buckets; large, transformational style acquisitions; and smaller, more tuck-in, which are really a supplemental activity to R&D. And you saw that in some of my prepared comments that the smaller acquisitions although they don’t move the revenue needle as much as we would like but you get an injection of tools in your catalog that are then marketed through the vast number of Enerpac dealers globally. And so you can take a regional small company and give them breadth of our entire distribution channel. And it is a great supplement to the R&D and in fact it's a very efficient way to bring new products to the market quickly and get a nice revenue pop. So that sort of things to be thinking about from our M&A activity. If we made in acquisition you can be very sure that it was in the tools space.

Our next question is also a follow-up from the line of Mig Dobre with Baird. Please go ahead.

Hi, guys. Joe Grabowski again. Thanks for taking my follow-up. Just a quick question on the tax rate. If it’s 10% to 15% in Q1 and 20% for the full year, any initial thoughts on cadence kind of Q2, Q3, Q4, is it sort of a calendar year issue or is that tax rate is lower in Q1 or kind of how that flows through for the year?

It is quite lumpy throughout the year and it has been in the past. It’s more of a function of how some of the planning items come through and less of taking a 20% and [Technical Difficulty] so there will be this movement if you will throughout the year. We also have front half of the year lower earnings so that’s going to give you and actually a higher percent at the end of it will be 20. And then we again have back half of the year, that’s a highest year so you’re going to have a lower rate in the back half. But there is no specific cadence. It’s definitely going to be as lumpy as it has been historically.

And there are no additional questions at this time gentlemen. I'll turn the presentation back to you.

Okay. Well, thank you very much and thank you everybody for your interest in the company. And we will talk to you at our first quarter earnings call. Thank you very much.