Feb 7, 2018
Executives
Lisa Weeks – Vice President-Strategy and Investor Relations Paul Tufano – President and Chief Executive Officer Roop Lakkaraju – Chief Financial Officer
Analysts
Jim Suva – Citi Mitch Steves – RBC Capital Markets
Operator
Good day, ladies and gentlemen, and welcome to the Benchmark Electronics Fourth Quarter 2017 Earnings Conference Call. At this time all participants are in a listen only mode.
[Operator Instructions] Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today’s conference is being recorded.
I’d now like to introduce your host for today’s conference, Ms. Lisa Weeks, VP of Strategy and Investor Relations.
Ma’am, please go ahead.
Lisa Weeks
Thank you, operator, and thanks, everyone, for joining us today for Benchmark’s fourth quarter and full year 2017 earnings call. With me this afternoon, I have Paul Tufano, CEO and President; and Roop Lakkaraju, CFO.
Paul will provide introductory comments, and Roop will provide a detailed review of our fourth quarter financial results and first quarter outlook. We will conclude our call with a question-and-answer session.
After the market close today, we issued an earnings release highlighting our financial performance for the fourth quarter and 2017, and we have prepared a presentation that we will reference on this call. The press release and presentation are available online under the Investor Relations section of our website at www.bench.com.
This call is being webcast live, and a replay will be available online following the call. Please take a moment to turn to Slide 2 in the presentation where we will discuss forward-looking statements.
During our call, we will discuss forward-looking information. As a reminder, any of today’s remarks that are not statements of historical facts are forward-looking statements, which involve risks and uncertainties described in our press releases and SEC filings.
Actual results may differ materially from these statements, and Benchmark undertakes no obligation to update any forward-looking statements. The company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release as well as in the appendix of the presentation.
I will now turn the call over to our CEO, Paul Tufano.
Paul Tufano
Thank you, Lisa, and good afternoon, and thank you for joining our fourth quarter earnings call. I’m extremely pleased by our fourth quarter performance and the progress we have made in 2017.
Once again, we met or exceeded our commitment. Our revenue grew 7% year-over-year.
This was the first year of revenue growth since 2014. And more importantly, in our high-value markets, three of our four segments achieved or nearly achieved our 10% year-over-year revenue growth goal.
With both A&D and Medical approaching 10% with our Test & Instrumentation group exceeding it by 42% year-over-year. If you look at our traditional markets, we had surprisingly strong strength in Computing, which was up 22% year-over-year and 46% in the fourth quarter.
This was driven by a surprising strength in legacy storage products. Our gross margins for the full year continue to expand.
From the cash cycle days, we did a good job of posting 66 days – cycle days for the full year of 2018, that’s 18 days below the average. And in the fourth quarter, we did 16 cash conversion cycle days, an improvement of 14 days from the year-ago period.
Our operating cash flow was $146 million for the full year. This was at the high end of our guidance of $125 million to $150 million provided a year ago at this time.
And our return on invested capital was 10.5%, a 210 basis point improvement year-over-year. Turning to the next page, Slide number 5.
As we have been saying all year long, revenue growth is essential for us to achieve our financial model objectives and bookings drive revenue growth. I am extremely pleased that in the fourth quarter, we once again able to deliver bookings in excess of $150 million.
But just as important as achieving the $150 million in the second half of the year, it’s the mix of our bookings. For the full year of 2017, 66% of our bookings were in high-value segments and 34% in the traditional market.
And our bookings continue to be leading-edge technology and rich in complexity. For the fourth quarter, we saw additional bookings in the microwave area in telco as well as in tech and optical transport.
In Industrial, we saw a win in the LIDAR area. And we saw additional wins in semi-cap for machine interfaces.
This is complementing some of the wins we had for the full year in smart cities, robotics and energy management, in the A&D space in terms of munitions and comms and avionics, in the Medical space in oncology and intermodality; and in telco, our next-generation satellites and free space optics. If I turn to Slide number 6, I’d like to give you an update – to the progress to our second half waypoints.
Earlier in 2017 we relayed our business model and our waypoint for 2017, and so it’s only appropriate that we give you a report card in our progress. If you look at our bookings, as we just discussed, our bookings were at target or exceeded target at $150 million.
Our high-value market segment mix was met at about 65%, greater than 65%. Clearly, the growth we saw in Computing put this number down, but if you look at the average, it’s approximately 65%.
Our gross margins were primarily met, Roop will discuss this later, adjusting for upside in compute. We would have been at this waypoint, if not above it.
SG&A as a percent of revenue, quite honestly, still need some work. While we had some strong revenue in the fourth quarter, dropped to below 5%, we will need to continue to grow the revenue to get towards that metric.
In our profit per square foot, we were shy. To remind you, this symmetric I use internally to understand the optimization of our factory per square footage.
And it’s a simple metric of total profit divided by total square footage. Over the course of the year, our profit was about flat both for the full year and the fourth quarter.
The reason for the follow-up is the increase of square footage. We have square footage increases for two reasons.
We’ve increased capacity with certain additional revenue opportunities, especially in precision technology. And in other areas, we have bubbled square footage as we’re transitioning out of older space.
If I look to the next slide, Slide 7, as I said before I’m extremely pleased with the progress we made this year. But more importantly, I’m excited by our prospects for 2018 and beyond.
If you remember correctly, we had characterized 2017 as a year of transition, a year of repositioning and realignment in the company. And we had three goals for 2017.
The first was to enhance our customer value proposition. The second was to drive revenue growth at the appropriate mix and profitability.
And the third was to improve our level of execution and speed. And we implemented three initiatives that we have been talking about for the majority of this year.
I’d like to give you a little color on what we have achieved in these three areas. First, that our business development groups, our go-to-market sales teams are fully staffed and two-thirds of the leadership of this group has been refreshed.
As we saw in the previous slide, our bookings growth has improved sequentially. We booked on average $120 million one rate in 2016, to about $150 million in 2017.
More importantly, the quality of these bookings have improved. 66% are in high-value segments, 34% in traditional.
Within traditional, the majority of the bookings were in next-gen telco. And the character of these bookings are technically rich with high degrees of complexity where we can provide greater engineering capability and value.
As it relates to engineering, we continue to expand our engineering skills and capabilities. During 2017, we increased our engineering service headcount by almost 10%.
And more importantly, we added key skills in the areas of fluidics, electronics, optical to be more value-added and more important to our customers. During the year, we won over 60 engineering projects.
We also expanded our solutions and technology building blocks. As we’ve previously discussed, we’ve established two new design centers here in Phoenix, one for RF and high-speed designs.
That center is being staffed now and coming to online. And our goals for that group were threefold.
First, to expand our legacy business in filters and associated components, moving into high-end applications, particularly in the defense community. Second, to promote LCP technology and grow LCP substrates and components in 2018 and beyond.
The third is to provide customized RF assemblies primarily targeting the defense community. We’ve also made good progress in our IoT design center.
Here, our goal is very simple: We want to be the leader in IoT data collection solutions, from center to beacon to microgateways for the collection of data. We want to couple that hardware with software for cross-element coordination and connectivity to larger network gateways.
Our target markets are in industrial and defense application, and we are currently quoting a number of activities in both these areas. A derivative of our aspirations in IoT is in Medical IoT, where we were very extremely pleased with the selection by Qualcomm of Benchmark to be their design partner of choice for the design and commercialization of a wearable biometric sensor.
And finally, as it relates to our network optimization and enhanced execution, good progress was made in these areas, as reflected by our gross margin expansion and our cash cycle day improvements. But more importantly, I am pleased with the additional focus and discipline the organization has demonstrated and our seamless relocation to our new corporate headquarters here in Scottsville.
As I look at 2018, we must leverage the work that we did in 2017. 2018 will be the year to refine and optimize our investments.
I am more excited today about the prospects of Benchmark than I was a year ago, and I believe the progress we make in 2018 will shape the trajectory for 2019 and beyond. And my optimism is predicated on market trends that I see favoring the company going forward, and I’d like to take a few minutes to talk about those market trends.
If you turn to Slide 8. I believe that there are three market trends that will provide substantial opportunities for us going forward.
The first of these is obviously demand for higher-quality but more affordable health care. With an aging population that desires extended life and, more importantly, better quality of life, there will be a thrust to focus on advanced treatment therapies with both patient monitoring, effective pharmaceutical delivery and performance-based management.
This will consume a substantial part of GDP going forward. The second trend that I am extremely excited by is the deployment of 5G technology.
Not just 5G itself, but more importantly, the impact of higher-frequency requirements on the marketplace and what that higher bandwidth and speed will mean. As we think about this going forward, we believe that this will allow for significant enhancements and applications going forward, be they smart cities or IoT projects, asset tracking or autonomous driving.
But in addition to those applications, we see a convergence or a confluence of defense and commercial technology. Today, defense applications are the only ones that are greater than 10 gigahertz in frequency, but they’re heavy and costly.
As the commercial telco organizations attempt to go beyond 2 gigahertz, they will struggle to retain acceptable performance and cost. We believe there’s an opportunity for new technologies, new components, newest manufacturing processes to address this issue, and we’re positioning Benchmark to be in the forefront of that.
In addition to these applications, data – the increased data and the processing of that data will be significant in years to come. We believe that this will drive additional semiconductor capacity and, therefore, more semi cap equipment.
And more importantly, infrastructure and cloud investment, be it in active antennas, backhaul or data center application. And finally, the third trend that we see is the modernization and refurbishment of the military and what will be increased defense spending.
This will be across all platforms, land, sea and air, in the area of munitions, advanced electronic warfare and soldier mobility and lethality. Turning to Slide 9.
We have been positioning Benchmark in 2017 to take advantage of these market trends. We have the scale in each of them to be meaningful, and more importantly, we have the technologies and the capabilities to meaningfully support customers in these areas.
In the area of affordable health care, our heritage is a – is as a medical company. Benchmark was spun out of a medical company 40 years ago, and consequently, we have a strong record in medical devices and, more importantly, a strong record in FDA compliance and regulatory knowledge.
We have proven design skills in medical devices design, both in renal and diabetic as well as cardiac products. We’ve invested in medical reference platforms in 2017, in infusion pumps, in in-vitro diagnostic capabilities.
And with our recently announced Qualcomm partnership, we believe that we will be at the forefront of medical IoT and outcomes-based medicine. In the area of 5G and higher-frequency requirements, we have strong capabilities to leverage in this space.
As it relates to applications, especially smart cities, we are exceptionally positioned in camera technology and optical alignment. Our investment in our front-end IoT design center here in Phoenix should allow us to capture the IoT trend as it moves forward.
And our investments in RF components, LCP technology, in RF subassembly design should prove extremely effective in both military as well as commercial applications. And we are expanding our microelectronics capabilities to allow us to support higher order manufacturing and, more importantly, reposition for mixed SMT, micro-e requirements in the future.
And lastly, as it relates to the modernization in the military, we have a strong presence in this space, almost $400 million of revenue this year. And if you look at that revenue, two-thirds of it is defense-related, where we have almost a 50% exposure to aircraft, 25% to munitions and missiles, 13% to communications and 12% to ground vehicles.
And as we continue to invest, we are investing in expanding our capabilities and secure our defense engineering capability; as well as the areas of RF and high-speed design for advanced electronic warfare. So I feel very confident about our ability to intercept these market trends and grow the company at the right mix with the right profitability.
And with that as a lead-in, let us turn to Slide 10. This is our target business model, just to refresh you.
We presented this, I believe, a year ago at the fourth quarter call. Our goal is to have non-GAAP operating margins of greater than 5% and ROIC greater than 12%.
To do that, we believe we need revenue in the $2.8 billion, $3.2 billion range; gross margins approaching 10%; and OpEx below 5%. As we did last year, turning to Slide 11, we will provide you waypoints for our second half of 2018 as it relates to how we will make progress to that model.
This year, we expect our second half bookings waypoint to be $200 million per quarter, an increase of $15 million from the second half of 2017 as we move to higher bookings in 2019 and beyond. Our high-value market revenue mix, we hope to get to 67%, up 200 basis points from our second half waypoint.
Gross margins, we hope to improve to 9.7%, up from the 9.5% waypoint we showed you this year. We still hope to get gross – OpEx expense on either of our basis, around 50 basis points, 500 basis points, 5%, excuse me, and our profit per square foot at $29.
During the course of 2018, we will provide as we have in the past, quarterly updates at these waypoints. Turning to Slide 12.
With the passage of the 2017 tax reform act this past December, access to foreign cash on an ongoing basis is now possible. Consequently, the question of capital allocation in our strategy is on top of mind.
We have discussed this with many of you over the past several weeks and the past several quarters. And I’d like to just talk about and refresh you with our strategy, which is unchanged.
Our capital allocation principles. Our first in ROIC is the key determinant of all that we give.
And our first priority is to invest in the business for organic growth. So that we can expand margins and expand the top line.
Secondly, it is to grow the business through accretive M&A. On this point, I have been very clear, I do not believe in large transformational M&A nor in M&A to acquire customers of revenue.
My preference is for closing the quarter both on M&A which expands our technical capability. In the absence of opportunities within the first and second area, I believe we should return excess capital – or excess cash to shareholders.
In so doing, we should do it in a manner that is advantageous to the majority of our shareholders. Over the past seven years, we have allocated our capital return as follows: about 33% of capital expenditures; 34% for M&A; and 33% for share repurchase, which is approximately 40% – 48% of our free cash flow.
In the fourth quarter, we repurchased $23 million of our stock and we have continued to purchase through a 10b5 plan, throughout and during the first quarter. As of yesterday, our year-to-date 2018 purchases totaled approximately $15 million.
I now would like to turn the call over to Roop Lakkaraju, our new CFO. Roop has been with us since early January, and previously was the CFO of Maana, which was an enterprise software company.
I have known Roop for over 10 years, and he was previously my head of finance and Interim CFO when we were both at Solectron. It is a great pleasure to have them as part of the Benchmark here.
I would now turn the call over to Roop, who will provide you with some color on our financials. Roop?
Roop Lakkaraju
Thank you, Paul, and good afternoon, everyone. I’ll start on Slide 14 with a recap of our fourth quarter 2017 financial summary.
Revenues of $680 million exceeded our guidance of $590 million to $610 million and we’re up 12% year-over-year and 13% sequentially. This marks the fourth straight quarter of year-over-year revenue growth.
The increase in year-over-year revenues was driven by growth in our higher value markets in Computing. Our Q4 non-GAAP operating margin was 4.2%, which was a 10 basis point improvement sequentially from Q3.
Non-GAAP EPS of $0.49 was above our guidance of $0.34 to $0.38 as a result of higher-than-expected revenues, improved revenue mix, better absorption and a lower tax rate. Our GAAP loss for the quarter was $1.54 and includes a $98 million tax expense or $1.95 per share related to the effects of the 2017 Tax Reform Act.
Our GAAP results also included $3.1 million of restructuring and other costs, $230,000 recovery from the sales inventory that was written down in Q1 due to our customer insolvency. For the quarter, our ROIC was 10.5%, up 60 basis points sequentially and 210 basis points year-over-year.
Please turn to Slide 15 for our revenue by market segment. Industrial revenues were up 6% quarter-over-quarter from improved demand across several customers and down 4% year-over-year.
Aerospace and Defense revenues for the fourth quarter were up 2% quarter-over-quarter but declined 4% year-over-year from program qualification and demand time delays from certain customers. Medical revenues were up 3% sequentially and 20% year-over-year due to strength with certain customers and program ramps from new and existing customers.
Test & Instrumentation revenues were up 8% sequentially in the fourth quarter and increased 46% year-over-year as a result of strong demand in our precision machining area, serving the semi-capital equipment market. Overall, the higher value market grew 4% sequentially and 10% year-over-year, and represented 63% of our fourth quarter revenue.
Turning now to our traditional markets. Computing was up 40% sequentially and 46% year-over-year, driven primarily by demand for legacy storage products.
Telco was up 11% sequentially due to demand increases from existing customers in a new program ramps, but down 20% year-over-year. Our traditional markets, which represented 37% of fourth quarter revenues, were up 16% year-over-year and 30% sequentially, driven by the crank in Computing.
Our top 10 customers represented 49% of sales for the fourth quarter. Please turn to Slide 17 for a discussion of non-GAAP key business trends.
Gross margin for the fourth quarter was 9.1%, a 40 basis point year-over-year and 30 basis point quarter-over-quarter decrease. The upside mentioned for legacy storage products in Q4, which were below our average gross margins by downward pressure on our Q4 gross margins, and if not for this upside, our Q4 gross margin would have been sequentially higher and above our waypoint of 9.5% for second half 2017.
Non-GAAP operating margin was up 10 basis points quarter-over-quarter and down 60 basis points from last year due to impact of the upside from the legacy storage products, in addition to our investments in engineering capabilities and solutions. Note that we had $3.1 million in the restructuring for Q4 and we expect to incur additional restructuring charges of approximately $2 million to $2.5 million in Q1 2018.
Our SG&A was 4.9% compared to 5.3% in Q3 due to the higher revenues in Q4. Turning to Slide 18 for an overview of our 2018 projected quarterly SG&A run rate.
From our Q4 2017 run rate, we will continue to add engineering and technology capabilities to support extending our value proposition for customers and we continue to invest in variable reward programs for our employees. It is our goal that the SG&A run rate will level off by the end of Q2 2018.
Now turning to Slide 19 for an overview of 2017 financial summary as compared to 2016. Revenues were $2.47 billion for 2017, compared to $2.13 billion for 2016, a year-over-year increase of 7%.
Gross margin increased 10 basis points year-over-year. Our SG&A as a percent of revenue increased to 5.2%, a 30% basis point increase as a function of our continued investment in engineering capabilities and solution.
Non-GAAP operating income declined by 20 basis points year-over-year, non-GAAP EPS increased 11% to $1.61, and our ROIC increased 210 basis points to 10.5%. Please turn to Slide 20 for an annual view of revenue by market sector.
Overall, higher value markets grew 8% year-over-year. In Test & Instrumentation, we saw growth of 42% year-over-year as a result of demand from semi-cap equipment customers.
Aerospace and Defense sector grew 10% year-over-year due to increased defense spend supporting new and existing programs. The Medical sector grew 9% year-over-year due to the new program ramps and increased demand across our top customers.
The Industrial sector saw a decline of 8% year-over-year due to softer demand across the broader sector. Revenues in the traditional markets were up 4% from 2016.
We saw stronger-than-expected demand in Computing in the second half, which offset continued declines in Telco. We do expect to see growth in Telco in 2018 based on ramp from 2017 new bookings.
For the full year 2017, the higher value markets were 66% of revenue, in line with our target. For the year, we had two customers with revenues over 10%: IBM at 11.5%; and Applied Materials at 10%.
Turning to Slide 21, where I will provide a few updates on cash flow and working capital highlights. We generated $56 million in cash from operations for the quarter and $146 million for 2017.
Free cash flows were $39 million for the fourth quarter and $91 million for full year 2017. Our cash balance was $743 million at December 31, with $69 million available in the U.S.
Inventory at December 31 was $397 million, a decrease of $25 million from September 30. Our accounts receivable balance was $437 million, an increase of $25 million from September 30.
Payables were up $28 million quarter-over-quarter. Please turn to Slide 22 to review our cash conversions cycle performance.
Our cash conversion cycle is 60 days for Q4 which is a 14-day improvement compared to the fourth quarter of 2016, and exceeded our target of 70 days exiting 2017. Our ongoing cash conversion cycle days will continue to range between 73 days and 68 days to support our long-term revenue growth.
Turning to Slide 23 for a summary of expected U.S. tax reform impact to Benchmark.
As highlighted by Paul, during the fourth quarter, we recorded an estimated tax charge of $98 million or $0.95 per share related to the 2017 Tax Reform Act. The expense consist of an estimated $102 million mandatory repatriation tax charge on undistributed foreign earnings or transition toll tax; an estimated $4 million tax credit for adjustments to our U.S.
deferred tax assets and liabilities. Our preliminary estimate of the transition toll tax and remeasurement of our deferred tax assets and liabilities is subject to finalization of our analysis related to certain matters such as developing interpretations of the provisions of the 2017 Tax Reform Act, changes to certain estimates and amounts related to the earnings and profits of certain subsidiaries and the filing of our tax returns.
U.S. Treasury regulations administrative interpretations or court decisions interpreting the 2017 Tax Reform Act may require further adjustments and some changes in our estimate.
The final determination of the transition toll tax and the remeasurement of our deferred assets and liabilities will be completed as additional information becomes available, but no later than one-year from the enactment of the 2017 Tax Reform Act. We’re currently evaluating various scenarios for our foreign cash and our need for that cash as a result of the U.S.
tax reform. In the event we do repatriate cash, applicable foreign withholding taxes and additional U.S.
federal and state taxes may apply. The non-GAAP effective tax rate for 2018 is expected to range from 16% to 18%.
This effective tax rate range incorporates the effect from the global intangible low-taxed income, or GILTI, tax, which we estimate will increase our effective tax rate by approximately 3% to 4%. Please turn to Slide 24 for a review of our first quarter 2018 guidance.
We expect revenue to range from $585 million to $605 million. Our non-GAAP diluted earnings per share are expected to range $0.34 to $0.38.
Implied in this guidance is a 3.6% to 3.9% operating margin range. The guidance provided does exclude the impact of amortization of intangible assets and estimated restructuring changes.
For sequential modeling information for the first quarter, please turn to Slide 25. We expect Industrial revenues to be down 10% in Q1, which is reflective of ongoing lack of end market growth with our large Industrial customers.
Aerospace and Defense is expected to be up mid-single digits in Q1 based on increased demand across multiple platforms and programs, primarily in ruggedized communication devices and RF components. We expect Medical revenues to be down mid-single digits on moderated demand outlook from our customers and a product transition with one of our customers.
In Test & Instrumentation, the strong demand we saw in the past three quarters will continue in Q1, and we expect Test & Instrumentation to be up mid-single digits. Turning now to the traditional markets.
We expect Computing revenues to decline sequentially by greater than 40% based on current customer forecast after stronger-than-expected demand for legacy storage product in the fourth quarter. Telco revenue should be down low single digits.
Interest expense is expected to be $2.5 million and the effective tax rate is expected to be 18%. The expected weighted average shares for Q1 2018 are 49.3 million.
I’ll turn the call back to Paul for some closing comments.
Paul Tufano
Thank you, Roop. In closing, I am extremely pleased by our progress in 2017, and more so, I’m excited by our opportunities in 2018.
We’d like to thank all the Benchmark employees for their contributions and hard work this past year. Operator, we’ll now open the line for questions.
Operator
[Operator Instructions] Our first question comes from the line of Jim Suva with Citi. Your line is now open.
Jim Suva
Thank you very much, Paul. And it’s great to see you and your team there executing.
If I understand it correctly, the upside was due to legacy storage, which in turn created pressure on gross margins, and without that, gross margins, would’ve been more healthy. Is that correct?
And then my follow-up, when you said legacy storage, I guess I’ve been in this business a really, really long time, are you talking legacy as in enterprise spinning disks legacy or like pay-to-take storage legacy?
Paul Tufano
Okay, Jim, you’re right in your assumption. We saw the upside in legacy storage.
We – as Roop indicated, because those margins are below the corporate average, it did put pressure on our overall reported margins. Now this is enterprise storage.
It is not spinning disk, it is more storage substitute and control units.
Jim Suva
Great. Okay.
And then going forward, with the changes in tax law, whether it be depreciation or spending and such, have you seen any changes in behavior compared to seasonality?
Paul Tufano
Jim, it’s too early to tell. I think that most people are assessing the impact of the tax law and what that might mean for their businesses, both from an investment and a growth standpoint.
So I really can’t answer that question with any color right now.
Jim Suva
Got it. Thanks so much for the color and additional details.
I appreciate it.
Operator
Our next question comes from the line of Mitch Steves with RBC Capital Markets. Your line is now open.
Mitch Steves
Hey, guys. Thanks for taking my question.
So first, I just want to clarify to make sure, the Test & Instrumentation for semi-cap falls into safe to assume that was the recent why it was up 46%?
Paul Tufano
Yes, that’s predominantly semi-cap equipment.
Mitch Steves
Right. I mean, and it’s almost entirely aimed at 10% versus the 14% for the total segment?
Paul Tufano
We are really fortunate to have a wide assortment of the customers in the semi-cap space. Quite honestly, we count most every one of the major players as a customer.
Mitch Steves
Okay, okay, got it. Kind of following to Jim’s comment about the Computing segment and the storage piece.
So is it down sequentially materially because of the timing of the legacy storage shipments? Or is the net of it higher than you guys expected?
Paul Tufano
So if you look at the fourth quarter we’re computing in total, you could see it’s a massive quarter. I mean, it was a 47% growth, which, quite honestly, is contrary to what that fourth quarter looks like going back two to four years.
So given that strength, it is unclear – obviously, on a year-over-year – on a quarter-to-quarter basis, you’d see a natural decline because fourth quarter and first quarter is always down. How much of that fourth quarter strength might possibly have been pull-ahead, we don’t know.
Mitch Steves
Okay. Got it.
Thank you very much.
Operator
I’m not showing any further questions in queue at this time. I’d like to turn the call back to Ms.
Weeks for any closing remarks.
Lisa Weeks
Yes. Thank you, everyone, for joining our call today.
We will be available after this call to answer questions, and have a wonderful day. Thank you.
Operator
Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program, and you may now disconnect.
Everyone, have a great day.