ARC Document Solutions Inc (ARC) 2006 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter 2006 American Reprographics Company earnings conference call.

[OPERATOR INSTRUCTIONS]

I would now like to turn the presentation over to your host for today's conference, Mr. David Stickney, vice president of corporate communications. Please go ahead, sir.

Thank you, Jackie. I'd like to welcome everyone to our second quarter 2006 earnings call. Mohan Chandramohan, our chairman and chief executive officer, is with me today, as is Suri Suriyakumar, our president and chief operating officer, and Mark Legg, our chief financial officer.

Earlier today the company issued a release reporting financial results for the second quarter of 2006 ending June 30, 2006. You can access this release and other previous releases from the investor relations section of our website at www.e-arc.com.

Before we begin, here are a few items for everyone's reference. First, we have arranged for a taped replay of this call, which will be available about an hour after its conclusion. It will be accessible for seven days after the call. The dial-in number for this replay is in our press release. Secondly, this call is webcast live. A replay of the webcast will be available for 90 days from the investors relations section of American Reprographics Company's website at e-arc.com.

Before we begin, I'm required to make a brief statement regarding forward-looking remarks and the use of non-GAAP financial measures. This call contains forward-looking statements that fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of the company, including the company's 2006 financial outlook. Such statements are only predictions and actual results may differ materially as a result of risks and uncertainties that pertain to our business. These risks are highlighted in our quarterly and annual SEC filings. The forward-looking statements contained in this call are based on information as of August 3rd, 2006 and, except as required by law, American Reprographics Company undertakes no obligation to update or revise any of these forward-looking statements. This call will also contain references to certain non-GAAP measures. The reconciliation of these non-GAAP measures is set forth in today's press release reporting our financial results for the first quarter of 2006.

With that out of the way, I'll turn the call over to our Chairman and CEO, Mohan Chandramohan.

Thank you, David. Good afternoon and thank you for joining us today.

I will begin with an overview of our financial performance for the quarter and some details regarding our outlook for the remainder of the year. Following that, Suri will provide some insight into operations for the quarter and Mark will discuss the details as reported on our financial statements. We will take your questions after that.

To begin with, we are happy to report another successful quarter for the company. [inaudible] reported sales for the second quarter of 151.5 million compared to 125.6 million in the second quarter of 2005, a 20.6% increase year-over-year. Our gross margin for the second quarter was 43.4%, which compares to 42.7% for the same period in 2005. Our EBITDA margin for the quarter was 26%, which compares to 23.7% in the second quarter of 2005. Earnings per share for the second quarter of 2006 were $0.36. In April we completed a second [restock] offering to facilitate the sale of shares owned by our financial sponsors. Absent the administrative costs and legal fees we incurred for that offering, our earnings per share were $0.37.

In view of the current trends in the construction market in general and non-residential construction in particular, we have decided to revise our forecast for 2006. Our previous outlook for 2006 revenues was 560 to 565 million and estimated EPS was at $1.21 to $1.24. Our updated 2006 revenue forecast is 585 million to 595 million and we anticipate earnings per share will be in the range of $1.27 to $1.30.

Let me elaborate a bit on how we arrived at this conclusion and offer some insight into the way we gauge our market. First, we consider reputable third party sources for insight into the construction industry. Our preferred source in this case is FMI Corporation. FMI continues to project the compounded growth rate greater than 8% in non-residential construction spending through 2009. Anecdotal evidence from the different regions of the country gives us confidence in these projections.

Second, we look at -- we look to our customers. Today we continue to see optimism in developers, architects and construction companies. They continue to hire and their pipeline of upcoming projects remains full. This type of early information on our customers' pipeline combined with the generally long cycle of construction offers good visibility into industry conditions for up to 12 months.

Third, we consider our recently completed acquisitions and their effect on our performance going forward. Year to date, our acquisition activity has provided us new opportunities in both new and existing markets and is a significant contributor to our continued optimism. Taken together, those three elements inform our annual outlook and deliver a conservative forecast that is weighted toward what we know, with less emphasis given to what we or others believe or hope for.

Strategically, our focus for the year remains on top line growth and in increasing our footprint. We continue to stretch for our growth targets in digital services and onsite services, accelerating the progress of our premier accounts initiative and building on our lead in technology.

Most of you know that our market mix can be broken out as 65% non-residential construction, 15% residential construction, with the additional 20% coming from [non-AEC] business. This combination, with its emphasis remaining strongly on non-residential construction, remained fairly constant in the second quarter. And as mentioned earlier, we expect continued growth in non-residential construction for the foreseeable future.

Our operating footprint also continues to grow. To date in 2006 we have expanded our presence through acquisitions and new branch openings in a number of markets across the U.S. ARC arrived in areas such as Vancouver, Pittsburgh and northern Kentucky for the first time. At the same time, areas where we had a small presence will bolster the additional locations in Toronto, Phoenix, Miami, St. Louis, Kansas City and others.

Our acquisition of Reliable Graphics a few weeks ago is a great example where we have been able to establish market leadership in the San Fernando and Santa Clarita Valley areas in California, areas where our otherwise strong presence in the state has not been felt.

ARC's profits have always been impressive, but our focus is not only strong profits but also on strong revenue growth. As I have mentioned numerous times at investor conferences over the past year, our goal is to increase our investment in revenue growth initiatives once we feel the strong and sustainable base of profitability has been established. We believe that a base of profitability has, in fact, been established.

As a result, we will be deploying resources in a measured and calculated way to our premier accounts sales unit and into our technology products, primarily sub-hub. Over the next six months we expect to invest 2 to $2.5 million into personnel, technology and sales and marketing efforts to create the infrastructure we need to aggressively move these two revenue growth initiatives forward. We have already seen early signs of success in premier accounts as it landed its tenth client. Given the number of proposal requests premier accounts is receiving and our growing confidence in creating the programs and contracts to address them, we believe this measured infusion of capital can support a larger, more productive team, which in turn will lead to increased sales. Suri will give you more details in just a few minutes.

Sub-hub on the other hand allows us to address a larger pool of customers in the form of subcontractors and the people who manage them. Its importance as a business development tool is beginning to be felt throughout the company. Again, we feel that increasing the financial support towards marketing and technology development efforts will increase our ability to develop new markets for our products and services.

Sub-hub provides a value added communication service to our customers and with the new general contractor workflow module, scheduled to come online later this year, we are giving our customers more and more ways to work with their documents and more reasons to come to us for their document management and distribution needs.

This concludes my overview of the company as a whole. I will now hand the call over to Suri to give you an idea of how business was in the field during the second quarter. Suri?

Thank you, Mohan, and good afternoon, everyone.

Let me begin by adding some key information on our footprint. During the second quarter we added locations in six different markets. Consistent with our goal to create the number one or two position in the top 50 metro markets in the U.S., we gained a leadership position in Miami, Florida with T-Square. We reinforced our position in Phoenix, Arizona by adding to our [inaudible - highly accented language] network there and we extended our [inaudible] northeast presence into Pittsburgh [inaudible - highly accented language] expanded into Fresno, California. [inaudible] did the same in northern Kentucky and we added a second location in Austin, Texas as part of our [U.S.] southern division.

As noted in our press release today and in Mohan's comments earlier, Reliable Graphics has also joined the ARC family. This is, of course, a third quarter acquisition and notable for its impressive sales of approximately 19 million per year and its excellent reputation in the area of Southern California. Please keep in mind that while we always are exploring and expanding into new markets, we also regularly review our existing footprint for redundancies, demographic shifts and continued efficiency gains. As a result, the number of our operating locations may vary during any particular period, though the number of markets we address stays relatively constant.

While we are on the topic of our expanding operation, our facilities management network grew in the second quarter by 144 contracts. To help put this number in perspective, we reported 88 new onsite services contracts in the second quarter of 2005. Our expanding presence in new markets as well as the obvious advantage and the convenience these services represent, continue to drive growth in this area.

As we have noted in the earlier calls, we would like to see more than a quarter of the revenues generated by onsite services and our digital services by the end of 2007. For the second quarter, we are well on our way towards achieving that goal with the digital services revenue comprising 5% of total revenue and onsite services revenue at 16.3%.

The [Peer Group], our wholly owned trade association for independent reprographers continue to attract new members with nine reprographic companies joining the organization in the second quarter. All told, Peer membership was at 129 members as of the end of June. As a reminder, each new member represents at least one new [inaudible - highly accented language] [placement], which serves to support our drive toward making our technology an industry standard. I should also note, while we are on the topic, that two of our recent acquisitions were former Peer members who had been exposed to ARC best practices [inaudible] opportunities and our vision for the future.

During the first quarter in May I outlined some specific plans for our premier account initiative. Premier accounts, as you may recall, is our national account strategy and consolidates the power and the reach of ARC's many different locations, technology solutions and services for our larger customers. It offers these benefits in a single package, frequently on a single contract, to customers whose business operations span the large geographical territories and sometimes the entire country.

Earlier this year we identified the need to build a deeper organization inside the company to engage the sizeable sales opportunities premier accounts contracts represent. Given the typically long and arduous sales cycles for these types of accounts, the pool of prospects we could address with our previous team was smaller than we preferred and our growth was, therefore, somewhat limited.

Today I'm pleased that premier accounts has made great strides in building a deeper and more dedicated team of sales executives at the corporate level and has significantly strengthened its presence in the field through the company's operating divisions. A dedicated premier accounts representative has been added to the team, along with the support personnel, and the third senior rep will join us later this year.

We have more than doubled the size of our prospects there and I am in discussions with some of the largest construction companies in the U.S. as well as successful and well-known midsize and regional companies. We expect concrete results from these discussions in the last two quarters of this year.

Stantech is an early customer win from this expanded organization. We secured their contract in the second quarter. Founded in 1954, Stantech provides design and consulting services to more than 6,000 people in 80-plus locations. Its size and scope dovetail with the [inaudible] operations and we are real proud to serve them.

Overall, ARC sales volume continues to grow nicely without aggressively pursuing increased pricing power. Given our success, we feel there is no reason to risk losing volume by offering local competition an opportunity to undercut us. Thus, we plan to stay the course regarding pricing toward the remainder of the year.

Finally, as noted in our press release earlier today, the decision in the previously disclosed Louis Frey bankruptcy litigation went against us. At this point, the judge in the case has determined that damages of approximately 11.1 million, exclusive of prejudgment interest, should be awarded to the plaintiff. The company and its advisors are reviewing the accounting treatment for various components of this case. ARC may be required to take charge -- take a charge in the second quarter of 2006. The company will provide updated financial information, if appropriate, when a determination is made.

I have been intimately involved with this case from its inception and I can say without reservation that we think the decision is completely wrong. In spite of the judge's opinion, overwhelming evidence was in our favor during the trial, which I personally attended. Our position is meritorious and we will fight vigorously to reverse the decision on appeal. For those of you who would like more information, I recommend you to our SEC filings over the past five quarters where we have disclosed and described this case.

Those are the key points of our operations for the second quarter. So without further ado, I'll turn this presentation over to Mark Legg, our chief financial officer. Mark?

Thank you, Suri, and good afternoon, everyone. I will start the financial review today with our second quarter results of operations.

As Mohan mentioned earlier, revenue for the second quarter of 2006 was 151.5 million as compared to 125.6 million reported in the same period of 2005, an increase of 20.6%. Segmented by our three primary product lines, revenue in the second quarter was as follows, reprographic services were 114.7 million, onsite services or facilities management came in at 24.7 million, while equipment and supplies finished the quarter at 12.1 million. Reprographic services and facilities management grew at 21.1% and 17.1% respectively, while equipment and supply sales grew at 23.5%.

Revenues by geographic region were as follows, Southern California came in at 44.4 million, Northern California was 25.6 million, the Pacific Northwest reached 8.9 million, our southern region, which extends from Florida to Las Vegas, was 30.9 million, the Midwest delivered 20.6 million, and our northeast division came in at 21.1 million. It's important to note that once again all regions showed an increase over the same period last year.

Gross margin for the second quarter was 43.4%. This compares to 42.7% for the same period in 2005, or an increase of 70 basis points. This increase was driven by various factors, including the increase in digital services and facilities management revenue that carry higher gross margins than our traditional business. Additionally, as our production centers continue to increase capacity utilization, they become more cost effective.

Our SG&A expenses came in at 33.1 million during the second quarter 2006 as compared to 28.1 million for the same quarter of 2005. This increase is the result of acquisitions activity, the cost of our secondary stock offering and additional SG&A associated with our strategic initiatives. Additionally, we incurred increased legal costs related to the Louis Frey litigation.

Operating income in the second quarter of 2006 came in at 31.8 million, or 21% of revenue. This compared to 25.1 million, or 20% of revenue, during the same quarter of 2005. Interest expense in the second quarter of 2006 was 4.7 million compared to 6.2 million in the second quarter of 2005, the reduction being due to reduced interest costs as a result of our refinancing completed in December 2005.

Net income for the second quarter 2006 was 16.6 million, or $0.36 per share fully diluted. This compares to net income for the second quarter of 2005 of 11.4 million, or $0.25 per diluted share. Cash flow from operations in the second quarter of 2006 came in at 27.2 million compared to 22 million in the second quarter of 2005. This increase was primarily due to increased earnings of the company compared to last year.

This concludes our financial discussion and at this point I will turn the call back to Mohan for the question and answer session. Mohan?

Thanks, Mark. As usual, I will take your questions and, where necessary, I will direct them to my fellow officers, Suri and Mark. So I'd like to turn this back to the operator for the Q&A. Operator?

[OPERATOR INSTRUCTIONS]

And your first question will come from the line of Michael Fox from JP Morgan. You may go ahead, Michael.

Good afternoon, guys, and congratulations on another strong quarter.

Thank you, Michael.

Thank you.

Can you update us on the acquisitions that you've made to date, what they are as an impact to '06 and what will be left over as an impact on '07?

Yes, the acquisitions that we've done so far, Michael, are [Questron], [Blue] out of Kansas City, [inaudible] out of Phoenix, Arizona, T-Square Express out of Miami, and most recently [Glibel Graphics] from the San Fernando Valley in California. The total impact for the year based on acquisitions that have already been done before that I mentioned, they would result in approximately an 8.6% growth and the remaining growth will come from organic growth of approximately 12%. We are projecting a little over 20% growth for the full year, 20.4% to be exact. So that's how that breaks down.

In terms of what the carry-over into 2007 from this, it's approximately about $22 million.

Okay. And then can you tell us the impact from acquisitions in the quarter and what the organic growth was?

For the quarter, total growth, as we mentioned a little while ago, was 20.64 to be exact, of which 9.3% came from acquisition growth and 11.34% came from organic growth.

Okay, great. And then can you give us an idea of what the margin impact could be as far as for the remainder of the year given that it seems like the environment remains very strong, especially for non-residential construction, but you're going to increase some investments for further growth initiatives...

Yes.

...so can we expect similar trends in the back half of the year for operating and EBITDA margins or do you think it'll be maybe a little bit less?

Our goal is to, as I have said many times, goal is to get to about 24% EBITDA margins. And as I've said, on a year to date basis we are there, we exceeded that in the quarter. But what we want to also focus on is strong sales growth, which is the reason why we'll be increasing investments. A 24% EBITDA is something that you can expect.

Okay. And then one just last one. Can you talk about the acquisition pipeline, do you still have a lot of companies out there that you're speaking to and the size of some of them?

Our acquisition pipeline today is more than twice what it was the same time last year so it's pretty strong and there are number of companies that we are presently seriously engaged in discussing possible -- a possible transaction.

In terms of the size of the company, I would not like to discuss them right now. It would be too premature for us to do that. Having said that, in terms of the number of companies that the total revenues that they represent, it's more than twice what it was this time last year.

Okay, great. Thanks a lot. I appreciate it.

Thanks, Mike.

And your next question comes from the line of Matt Litfin from William Blair & Co. You may go ahead, Matt.

Yes, let me add my congratulations on the quarter as well.

Thanks, Matt.

I know that typically the EBITDA margins at acquisitions are far lower than yours and given that Reliable is one of the more sizeable companies in the industry, is it also true that their margins would be quite a bit lower than yours?

No, they are -- they would be the exception.

Okay. I guess a follow-up to that, Mohan, is you've said in the past you can normally get typically, I think, 5 margin points in the first year of an acquisition.

Yes.

Is that something you're looking at here or is this already at a profitability level that would preclude you from -- ?

It is definitely something that we will strive to achieve there as well.

Okay. I also wondered if someone could offer out the dollar amount that the secondary cost you in the quarter. I know it was a penny a share...

Yes.

...anybody have an exact number?

Yes, approximately $750,000. Much of it was the legal fees and the fees paid to the accountants.

Great, okay. Thanks so much.

Thank you.

Your next question comes from the line of Al Kabili. You may proceed, Al.

Good afternoon, guys.

Hello, Al.

Hi. A question on the non-AEC end markets. I was wondering if you could just talk through some of the growth initiatives there and your -- any success you're having in expanding outside of the AEC?

Al, we like that 80/20 mix that we believe is the optimum mix where it doesn't dilute our focus on emerging opportunities within AEC, while at the same time allowing us to diversify adequately. But having said that, as we grow, we've maintained that 20% and we primarily target education, software, retail, entertainment and other applications, completely outside of AEC.

And in terms of initiatives, we continue to expand into large and small format color as well as small format high-speed reproduction work. So that's our -- those are the areas that are applicable in the non-AEC component.

Okay. And then also talking about the residential end markets and while that is only 15% of your overall revenues, if that were to significantly decline that could perhaps cause some impact on the overall growth rate and wondering what you're seeing in residential right now and what the outlook is there for you?

The outlook for residential is definitely one that is going down. But having said that, as you know, the residential component has been growing for five years straight and we never felt the boom from that. It was at 15% consistently throughout that expansion and since we didn't feel it as it was on its way up, we believe we will not feel it as it goes down.

Okay. Could you tell us right now, is that growing at about the overall growth rate of the overall company right now, the residential part?

The residential part during the time when -- the 2001 to 2003 timeframe, when non-residential construction turned down significantly by, I believe, 15%, the non-residential outlays or the residential component moved up to about 16%. So it didn't move much, like I said.

Okay, great. And then last question on he premier accounts, sounds like an interesting opportunity to increase investment there. Could you help us with a little bit of what a typical size would be on the premier account when you add one?

Roughly at least $1 million in annual revenues up to any number. But it should be at least about $1 million in size for us to target that at the premier accounts target.

Okay, great. Thanks a lot, guys, and congratulations.

Thank you.

And your next question comes from the line of Mike Schneider from Robert Baird. You may proceed, Mike.

Hi, guys, congratulations.

Thanks, Mike.

Maybe we should start first just with the premier accounts, since we're on that topic. What do you estimate your opportunity set is, that is how many -- how many premier accounts are there in the U.S.? And then if it's an existing account that you intend to just roll out across the region, how does the margin profile of that account change when you put it into the status of premier accounting for the additional revenue.

Okay. In terms of the target list, there are a number of targets. For instance, there is the list of companies under the Engineering News Report Index that are -- it's the ENR 500, I believe, which implies there are at least a minimum of 500 large companies. So we -- that would be our primary list from which we will target our candidates.

Secondly, yes, we also use the premier accounts effort to expand our business with companies we're already doing business with. Naturally we will have to give them a better deal in order to get the whole business, but it gives us tremendous opportunities to sell them other services, value added services, one of which is our OneView tool that allows our customers to view all their projects from a single portal. Things like that will allow us to garner higher prices in the long term.

So the goal is when we go after one of these accounts, is on the base business we might give them a better price, but it also allows us to expand our overall revenues more than the increased revenues that we would expect to get [some of that] because of the additional services that we are able to offer them.

Can you give us a sense, Mohan, on that ENR 500, what amount of revenue is attributable to that list today and what you view as their total spend on reprographics?

Yes. I can tell you I've looked at the top 20 names on that list and we have about four of them. So it's -- if you were to use that as a sample, then that would be about 20% of the business.

And...

Or 20% of the names.

Right.

But it's -- the real number is much less than that.

Because you're not capturing the total spend.

That is correct.

Okay. And then just on expenses in the quarter, you mentioned secondary expenses as 750. What amount was also spent kind of over and above your expectations on the lawsuit this quarter?

We probably spent about $1 million in legal expenses. But again -- let me take that back. It's not all attributable to the second quarter. I would say about $0.5 million in the second quarter.

Okay. And what else? The revenue guidance for the second half of the year, I'm trying to reconcile your bullishness on the non-res cycle and your growth initiatives with the revenue guidance for the second half. And by that I mean if you look at first half revenue, you've done, call it 292 million, and if you add in, say, a half a year of Reliable, half the revenue, you would have done about 301, 302 million in the first half, yet that is the high end of the guidance for the second half of about 303 million. So I guess I just would like you to reconcile, or maybe it's just conservatism, as to why you would expect basically second half revenue to equal first half revenue given the momentum you've got and presumably additional acquisitions.

Yes, there is some seasonality also. It basically boils down to the number of days. And typically the third -- the fourth quarter and also the third quarter this year have fewer number of days than in the first half of the year. So that is primarily the reason.

And the other reason, Mike, is we do not count anything that is not known as of today because projected acquisitions are not in those numbers. And as I said in the -- in my scripted message a little while ago, we like to only talk about what we know and we like to stay conservative.

Fair enough. Thank you again.

You're welcome.

Thank you. And your next question is a follow-up question from Matt Litfin. You may proceed, Matt.

Yes, hi. I wanted to know if -- I noticed that there are a couple of other groups that have done a few small acquisitions in the industry, so I was interested in your comments about what you're seeing in acquisition pricing in the reprographics industry?

Acquisition pricing hasn't -- you know, hasn't changed. Others buying smaller companies is that's not a new phenomenon. That's an ongoing occurrence [inaudible]. You have small companies buying other smaller companies regionally and then that's been a constant in our industry. So that's nothing new, Matt.

Would you say that it is generally true that the bigger the target, the higher the multiple of EBITDA or is it fairly even across everything from a $20 million business down to a $2 million business?

No, I wouldn't say that. In fact, we did say that the multiples range anywhere between 3.5 and 5.5. So the bigger companies would garner the higher multiples.

Okay, great. Thank you so much.

Thank you.

And you have a follow-up question from Mike Schneider. You may proceed, Mike.

Mohan, maybe you could just address these growth initiatives of premier accounts and step-ups. I'm curious if, as you've progressed through the year, you've actually increased the budget for those initiatives and those expenses or is this something that was already built into your budget, say, back in the fourth quarter?

No, these are increases over what was projected earlier. And some of these expenses, Mike, are transitory expenses related to launch, marketing and promo, organizational costs, that kind of stuff. And as we said earlier, once you get to a desired level of profitability, sustainable strong level of profitability, we will have to spend money on these new initiatives, particularly as technology begins to gain traction in our industry. We want to make sure that we are building brand recognition in the business.

So what is spent today in premier accounts and sub-hub may be spent on some other initiative next year. So as we launch these things, we will have startup costs, infrastructure related costs, launch costs and organizational costs and once we do that, those costs will settle back down to the normal expenses. And then based on our profitability, we will deploy the excess resources to other areas as we push on a number of initiatives to grow as top line.

And what dollar amount do these initiatives actually account for and vis-a-vis the original budget?

Well, sub-hub is definitely not a profit center. It is a value added tool that we offer our clients to gain more business.

I guess what I mean is by what amount did you increase the budget for these items to launch these two growth initiatives?

The -- it's about $2.5 million for the last six months, which are baked into the numbers, baked into the outlook that we put up.

Okay, so that somewhat addresses my issue about conservatism because that is obviously accounted for in the new guidance. Your guidance went up.

That is correct.

Okay. And then just the -- Mark, I apologize for the specific question, but the secondary fees of 750,000 this quarter, what was the number last quarter, just so we get the total expense?

Mark, do you have that number handy?

Yes, the amount in the first quarter was fairly small, maybe 50,000 of the -- was in the first quarter and approximately 730,000 to 750,000 in the second quarter.

Okay. And then final question, could you break down the organic growth by segment, just so we get a sense of how the acquisitions split out between the repro and the equipment sales?

Mike, we don't have that in front of us at present. Mark can -- well, Mark will be happy to work on that and give it to you.

Okay. Thank you again.

You're welcome.

And you have a follow-up question from Al Kabili. You may proceed, Al.

Hi, guys. Just a quick follow-up, if you could please tell us at the end of the quarter how many branches you had?

Yes. Give me one second, please. I should have that number handy here. We had approximately 223 locations at the end of the quarter.

Okay, great. Thank you.

You're welcome.

At this time there are no further questions so I'll turn it back to management for closing comments.

Thank you, Operator. We'd like to thank everyone for attending our earnings call and have a great evening. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude today's presentation. You may now disconnect and have a wonderful day.