ATS Corp (ATS) 2018 Q2 法說會逐字稿

(Operator Instructions).

I'd now like to turn the call over to Stewart McCuaig, Vice President, General Counsel of ATS.

Thanks, operator, and good morning, everyone. Your main hosts today are Andrew Hider, Chief Executive Officer of ATS; and Maria Perrella, Chief Financial Officer.

Before we begin, I'm required to provide the following statement respecting forward-looking information, which is made on behalf of ATS and all of its representatives on this call. The oral statements made on this call will contain forward-looking information. The actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information.

Additional information about the factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in ATS' filings with Canadian Provincial Securities regulators.

Now it's my pleasure to turn the call over to Andrew.

Thank you, Stewart. Good morning, ladies and gentlemen, and thank you for joining us.

Our second quarter performance featured growth in revenues and margin improvement on both a year-over-year and sequential basis. The bookings were lower, which I'll expand on in a few minutes. We've advanced the rollout of our ATS business model or ABM. While it is early days, we are making progress towards adoption across the business.

This morning, I'm going to speak to you about our Q2 financial value drivers, our outlook, operational improvements we are making, and progress on our ABM. Maria will then provide some more detail on our Q2 financials.

Starting with the financial value drivers -- Q2 bookings were CAD257 million, down 3% from Q1 and 11% from last year, due to lower bookings in life sciences. Despite the Q2 decline in bookings, our life sciences funnel remains strong. This is a core market for ATS and one where our offerings and customer value proposition are well aligned.

Bookings in our other markets all grew both sequentially and on a year-over-year basis. Our goal is to drive year-over-year bookings growth, despite some variability on a quarterly basis due to our project-based business. Revenues were CAD275 million, up 13% over last year and up 4% over Q1. Our Q2 adjusted EBIT margin was 10.5%, up on both a year-over-year and sequential basis.

On after-sales services -- this is the second quarter in a row where we grew versus prior year performance in both revenue and bookings. The growth we have generated over the first half of the year reflects the value we can deliver to our customers and after-sales services.

That said, we have more work to do. We have identified areas for improvement, such as processes related to our spare parts supply that are intended to accelerate momentum of after-sales services.

Moving to our outlook -- order backlog was CAD648 million, down slightly from Q2 last year. This puts us in a strong position for the balance of fiscal 2018. As I noted, our life sciences funnel continues to be strong. We are seeing good opportunities in both medical devices and pharmaceuticals. This is an attractive market for us, as it offers solid industry fundamentals, positive market dynamics and opportunities to utilize ATS technology innovations.

The transportation funnel is solid, particularly in EV technologies. We are seeing considerable opportunity in the EV market, which is growing and now accounts for over half of our transportation funnel. We are well positioned, as this is an area where we have experience and a track record of delivering value. Our niche position in energy continues to positively contribute to our business, and we have opportunities for which we are uniquely qualified and positioned.

From an operations standpoint, over the past two quarters, we executed a thorough review of our global operations, capabilities and leadership. As a result of this review, we've announced a restructuring today that will result in the closure of one division in Southeast Asia, a business line rationalization at one of our European divisions, and other leadership and management changes throughout the organization. In total, approximately 3% of our workforce is affected. This decision is designed to improve our cost structure, enhance our capacity utilization, realign resources to areas of the business where we expect to grow, and improve the effectiveness of our management.

Importantly, there'll be no disruption for our customers. The restructuring plan has been initiated and will be completed over the next 3 to 4 months at a cost in the range of CAD9 million to CAD10 million. I am confident that these changes will improve our operations and enable us to deliver increased value to our customers and shareholders.

Moving to our strategy -- as I discussed on our last call, we have developed the framework for three-part value-creation strategy: build, grow and expand. As a reminder, build means build on the foundation of ATS. We are focused on improving our core and taking our performance to the next level. Grow means growing organically through the development and implementation of growth tools under our ATS business model. And expand means broadening our reach by entering new markets and business platforms, expanding our service offerings, driving innovation, making it a part of our everyday life, and making strategic and disciplined acquisitions that strengthen our business.

Critical to the success of each part of our strategy will be the ATS business model, or ABM. The ABM is a set of tools that enable us to pursue our strategy, evolve, drive continuous improvement and outpace the markets we choose to participate in. In September, we appointed a global director to lead our ABM. His mandate is to provide leadership in the implementation of our ABM globally in order to direct positive and sustainable results.

I am pleased with the progress we are making on the initial rollout and adoption of the ABM. We have focused our efforts on the deployment of initial tools to standardize problem solving and continuous improvement processes. The ABM will be one of our competitive advantages and how we meet the needs of our customers and drive sustainable, long-term value for our shareholders. We are in the initial stages of deploying the ABM, and it will evolve as we move forward and implement additional tools to drive increased business performance.

Moving to acquisitions -- M&A is an important element of our strategy. We remain active on this front. And going forward, I will update you as events warrant. As I have noted previously, timing will be variable, and we will not acquire for the sake of acquiring. Our approach to deploying our balance sheet will be disciplined and strategic.

In summary -- our second quarter performance reflected increased revenues and margins. We have good order backlog and a strong balance sheet. I am pleased with the progress we have made to date and the rollout of the ABM. We have a solid foundation and a clear strategic framework, with the goal of creating long-term sustainable shareholder value. As I noted, we're at the beginning stages of this journey. And we'll remain focused on running our business while making and realizing upon improvements in the quarters and years ahead.

Now I will turn the call over to Maria.

Thank you, Andrew.

With the exception of bookings, our Q2 performance measured through our financial value driver improved both sequentially quarter-over-quarter and as compared to Q2 last year. On a year-to-date basis, similar results were achieved.

This morning, I will discuss results for the quarter and our balance sheet. I'll start with operating results.

Q2 bookings of CAD257 million were down from Q1 bookings of CAD266 million and, last year, Q2's bookings of CAD289 million. On a year-to-date basis, bookings of CAD523 million were 1% lower than prior year bookings of CAD528 million due primarily to life sciences. We generated CAD275 million of revenues in Q2, an increase over last year's Q2 revenues of CAD243 million and Q1 revenues of CAD264 million. The growth was primarily due to our record order backlog of CAD683 million at the start of the quarter, which included a number of large programs that entered into the assembly and build stages in Q2, resulting in higher revenues.

With revenue recorded to date of CAD539 million, up from CAD508 million year-to-date in fiscal 2017 and CAD648 million of period-end backlog we are in a good position to exceed fiscal '17 revenues, and therefore generate year-over-year organic growth. As a reminder, our ending backlog at Q2 last year of CAD654 million included CAD70 million related to an order that was put on hold and subsequently canceled by our customer.

Based on the composition of our backlog at the end of Q2 and our estimates of in-quarter orders, which are booked and converted to revenue in the same quarter, Q3 fiscal '18 revenues are estimated to be in the 40% to 45% range of backlog. Our goal is to drive year-over-year revenue growth. However, we do expect to see some volatility on a quarterly basis due to our project-based business.

We improved our Q2 gross margin to 25.8%, compared to 25.3% in Q1 and 25% in Q2 last year. As noted last quarter, we work to continuously manage our programs, capacity and third-party material costs in order to drive improved program margins.

Moving to SG&A -- on an adjusted basis, excluding amortization of acquisition-related intangibles, Q2's SG&A of CAD40.3 million was approximately CAD4 million higher than prior year Q2 SG&A. SG&A has increased over prior year due primarily to increased employee costs and professional fees. Compared to Q1, SG&A has increased by approximately CAD1 million due primarily to professional fees. In both Q1 and Q2, our higher gross margins more than offset higher SG&A expenses. We expect our SG&A to be in the range of CAD40 million going forward.

Q2 adjusted earnings from operations of CAD28.8 million were 10.5% of revenue, up from CAD26.3 million or 10% of revenue in Q1. Our margins have improved over the last four quarters, from 9.2% of revenues in Q2 last year to this quarter's 10.5%.

On a year-to-date basis, adjusted earnings of CAD55.1 million or 10.2% of revenue have increased by 10% over the corresponding period last year, where we generated adjusted earnings of CAD50.2 million. Subsequent to quarter-end and as Andrew discussed, we have undertaken a restructuring. We expect the majority of the estimated CAD9 million to CAD10 million of cost to be recorded in our Q3 results. We estimate this restructuring to have a payback of approximately 18 to 24 months.

Moving to the balance sheet -- our working capital as a percentage of revenue remained low in Q2, at 8.4%. This compares to 10% in Q1 and 11.5% at the end of Q2 last year. The improvement is due to a mix of contracts and end markets and more favorable payment terms that we've negotiated. We do expect an increase going forward, but we still target to be below 15%.

In Q2, we generated cash from operations of CAD38 million, compared to Q1, where we used cash from operations of CAD3.4 million. On a net debt or net cash basis, we improved from a net debt position of CAD41 million at the end of Q1 to a CAD500,000 net cash position at the end of Q2.

Although we have quarter-over-quarter variability due to the size of our programs and significant milestone payments, we have generated good cash flows as demonstrated by our results. 2 years ago, we had net debt of CAD233 million, which decreased to CAD101 million at the end of Q2 last year, and it is now CAD0.

We continue to have strong liquidity, with cash on hand of CAD306 million and a credit facility of which approximately CAD648 million is unused. Our capital structure also includes a fixed-interest $250 million bond that matures in 2023.

Over the last four quarters, EPS has grown from CAD0.07 to CAD0.08 to CAD0.12 and now CAD0.15 this quarter. On an adjusted earnings per share basis, we generated CAD0.18 in Q2, up from CAD0.13 in Q2 last year and up from CAD0.16 in Q1. The increases reflected higher revenues and improved operating margins.

Our effective tax rate was 22% in the quarter, down from 24% in Q1. On a year-to-date basis, the effective tax rate of 23% was the same for both fiscal '18 and '17. Going forward, our effective tax rate is expected to continue to be in the range of 25% of pretax earnings.

In summary -- revenue, earnings, cash generation and working capital as a percentage of revenue have all shown sequential improvements. Bookings were lower. However, a backlog of CAD648 million positions us well for the balance of the year. We are focused on the implementation of the ABM and on achieving continuous improvements in program management, supply chain and utilization of our global footprint to drive margin improvements going forward. Q3 restructuring activity is expected to also positively impact results starting in calendar 2018. We have a strong balance sheet with available credit which will support our objective of profitable growth.

Now we'd like to open the call to your questions. Operator, could you please provide instructions to our listeners? Thank you.

(Operator Instructions). Our first question comes from the line of Mark Neville with Scotiabank. Please go ahead.

Just first on the restructuring, Andrew, you mentioned some leadership and management changes. And maybe, just if you can give us a little more color or details around that?

From a just general policy perspective, we don't provide detail of who the impacted individuals are. That said, the focus has been wrapped around how do we streamline our process and continue to drive bringing value to our customers and to our shareholders. And the leadership changes were aligned around streamlining our internal process to be able to execute on delivering value to both our shareholders and to our customers.

Okay. Were these changes, I mean, were they internal, or just people brought in externally? You don't have to mention names, but just on the leadership side?

These were internal.

Okay. And just in terms of bookings, again, down a bit this quarter. But your [cons that have] been constructive than they have, or at least as positive as they've been. So I guess, am I reading into that correctly? And just maybe some general comments on your funnel, or what you're seeing?

Mark, as we look, and as you know, we're a project-based business. And when we look at our leading and lagging indicators, the funnel becomes a very important piece of that discussion. And our funnel remains very solid for the space, especially in life sciences. And as you're aware, we had a strong quarter one. But also, based on the size and nature of our projects, it aligns around our customers' CapEx. We have a solid funnel, we're confident in the space, and we're confident in our ability to execute on them.

Okay, that's helpful. And maybe just one last one, on margins -- some nice sequential improvement, some year-over-year improvements, I guess, noticeably in gross margin. At this point, is that more mix or just revenue base, or you think the new business model and some of the processes you're trying to drive are starting to have an effect already?

I'll talk about what it's due to. In Q2, the increase in margin's due to two things. It's improved program execution, and also we're getting the benefit of better utilization as we increased our revenues by about CAD10 million. On the improved program execution -- as we've said, that was something that we had started to focus on, or we spoke of, a few years ago; we had some issues. And we looked at what we could do to improve. With the introduction of the ABM, there's, I'd say, a more structured approach to it. And because we look at things on a month-to-month basis, there's more focus to ensure that we are improving as we go over some, say, quarter-over-quarter or year-over-year.

Okay. Thanks, I'll get back in the queue.

Thank you, Mark.

Your next question comes from the line of Cherilyn Radbourne with TD Securities. Please go ahead.

Wanted to pick up on the discussion about electric vehicles, which you highlighted, comprise about a half of your transportation funnel currently. Can you just talk about what aspects of automating the production of electric vehicles ATS is involved in? Is it the batteries, is it the whole vehicle? Can you give us some color there?

Certainly. So first, to start, it's greater than 50% of our funnel now. And we've had some wins in this space, especially in Q2. The area that we're seeing -- and batteries is one aspect. We're also in the manufacturing and the full assembly of the vehicles themselves. So we would like to call it EVX, which means we're in the build of the vehicles as well as the battery assembly. So we're seeing both. And we're well positioned in this space to provide high level of value to our customers.

Great. And then separately, I wanted to ask about the continued progression of the service business. In terms of the growth in revenue and bookings that you mentioned again this quarter, is that growth related to new systems that you're delivering currently, or to sales that you're making at customers with existing systems sold in prior periods?

The growth would be due to both. So new customers, new offerings, and also providing offerings to existing customers including after-sales parts and service.

I see, okay. That's my two. Thank you.

You're welcome.

Thank you, Cherilyn.

Your next question comes from the line of David Tyerman with Cormark Securities. Please go ahead.

My first question on the orders -- so the order flows in the last year have averaged about CAD280 million per quarter, but the last couple quarters have come in a bit lower than that. Can you give us any sense of, is the CAD280 million a better kind of number that you think you can run rate, obviously, at a different level each quarter, but in the sort of area code or something a bit lower than that, a better number to be thinking of?

We don't provide that level of detail. What I would say, though, is we'd like to be there. And where we've averaged in and around the CAD280 million mark is where we've had larger wins in the quarter. And I believe I spoke about this last quarter also. But prior to Q1 fiscal '18, in each of the quarters where we had CAD280 million plus, we had some large orders that were in the CAD30 million and CAD40 million range. In Q1, when I talked about the makeup of bookings, and where we got to CAD266 million, I said that there wasn't any one order that was greater than CAD10 million. But we were able to get to that level of bookings. In Q2, we have a bit of a different mix also happening, where we do have a couple of larger orders. And as Andrew said, we're a little bit lighter on the life sciences bookings. But we do know that in our funnel we have many large opportunities in the CAD20 million, CAD30 million, CAD40 million range across all of our segments. So it's a matter of when those come in. And if we do, then we see getting to CAD280 million.

Okay. That's very helpful, thank you. And then, Andrew, you mentioned on the after-market operations -- sorry, after-market services side, some optimism there. So I was just wondering what you're doing and what kind of expectations we should have for how this would affect the financials of the company.

So I referenced both some of the performance as well as some of the areas of focus. And I will say we have a lot of work to do in this area of the business. And one of them I talked about in spare parts. This is more an alignment around a standard process for spare parts offerings and having that become more across ATS, and looking at every division that does it, and having it follow the standardized process. It was a (inaudible). We looked at the ways we were doing business, and it's that constant improvement. I've stated publicly the announcement of where we want to get this business to, between the 20% to 30% of our total revenue. And our mission is to keep driving this business in that direction. It does not happen overnight. And we've got some low-hanging fruit that we're constantly driving to improve, and improve our process throughout the corporation.

Great, thank you.

Your next question comes from the line of Justin Keywood with GMP Securities. Please go ahead.

I had a follow-up question on the bookings. In the outlook section, there's a commentary on the pursuit of large enterprise orders. I'm wondering if this is a greater pursuit than in the past. And is this leading to the longer sales cycles, where these opportunities are maybe showing up in backlog but not bookings? Or is there another way to look at this?

I don't think anything has changed from in the past. As we've said in the past, we go after small bookings or machines that are in the CAD1 million range, programs that could be in the CAD5 million to CAD10 million range, and then enterprise programs which are CAD20 million plus. And just because something is CAD20 million plus, it doesn't mean it's an enterprise program. So I'd say our funnel is a good mix of all of these things. And when we look at what's in our funnel today, and we compare it to last quarter or a year ago, we have the same type of mix, where we do have larger dollar opportunities and these enterprise programs. And these enterprise programs also come from exiting customers, which is good to see. But also we have some opportunities from brand new customers, which is also important to us.

Okay, thank you, that's helpful. And then, for acquisition pursuits, there's obviously been some recent news on higher transaction multiples in the industry. Are you seeing this for the similar targets that you're pursuing? And does this affect your acquisition criteria at all going forward?

Justin, you've seen the announcement (inaudible). Certainly, the multiples are relatively high in certain areas, and we're seeing that as well. That said, we've implemented a process around our M&A approach. And it starts with our KPIs or key performance indicators, and aligning them around leading and lagging indicators for this pursuit. It has become a review in which we go through the details around are we hitting our internal targets on pursuit, and ensuring that funnel continues to grow in the areas we want it to grow. But again, we are disciplined in our approach and deployment of capital. And so the opportunities are still there. We need to make sure the ROIC matters to our business and make sure that the strategic value of the asset that we would acquire aligns with where we want to go as a corporation. So to summarize, funnel remains solid. We've implemented KPIs around this process. But we are going to be disciplined in the deployment of capital, and we're going to be mindful that the ROIC is also an area that we need to drive within our corporation.

Okay, that's good to hear.

And, sorry, I would just add on the ROIC -- so we see the same things that you do. And where we had a certain target in mind in terms of how quickly we could get the ROIC we wanted, we know now, based on the multiples, we're willing to accept a longer timeframe.

I would agree.

And if I could just follow on that -- is there an opportunity to maybe divest a non-strategic asset, just given the higher multiple environment you're seeing?

Justin, we're always assessing our business and looking at what the right fit is for our corporation. We believe we've got the right fit for strategic growth and driving penetration within our space. But again, we're always looking at our corporation to ensure we've got the right level of value to our shareholders and we can provide the right level of service and value to our customers.

Thank you for taking my questions.

Appreciate it.

(Operator Instructions). Your next question comes from the line of David Tyerman with Cormark Securities. Please go ahead.

Yes, just a couple of follow-ups. So you mentioned ROIC target. Do you have a number you can share with us that you're targeting?

We target to be greater than our weighted average cost of capital. And we know that right now, as of today, we're not there. And when we look at our acquisitions, we have the same target, then, for that acquisition itself.

Okay. And what would you estimate your [WA cap] right now (inaudible)?

It's about 9.5%. And I know there's different ways of calculating things.

Yes, no, that's why I asked. Okay. Second question -- the EVs that were mentioned as being part of the funnel in the transport area -- so I'm just wondering, do you see this as a bigger opportunity than the regular transport? Because I would think they're assembled more or less similarly to regular vehicles, you've been in that business a long time. Obviously batteries is a new opportunity. But I'm just wondering, how much more opportunity is this in the regular areas that you've been in? Or is this just substation of EV for internal combustion?

So let's start with the facts, and then we'll go into the market dynamics. Fact is it's greater than 50% of our funnel. So by looking at that, and looking at where we're going, it inherently leads to it's going to be a growth area. Second, the dynamics of the market are that businesses and our customers are driving to expand and build capacity in this space. And when they're looking at that and driving model changes, it's an attractive area for ATS, one where we can provide value to the customers and be able to provide a level of service that aligns well with our core offerings. And so whether it's -- and you can read the articles, whether it's 20%, 40%, we're not going to argue the number on double-digit, but it's an attractive area for our corporation, and one we believe we're well suited to provide the value to our customers. And it aligns well with what their needs are.

Okay. But I'm just wondering, Andrew, is this just taking from one pocket and putting it into the other? Or is the pie getting bigger in some way? And if so, why?

There's a little bit of -- there's absolutely a little bit of taking from one pocket and going to the other. There's no question in that. That said, as you read [with our]customers, they're also trying to figure out how they can penetrate the EV space as well as offer current products into the market. And when they have model changes, it's still an opportunity to automate on that model change.

Okay, good enough. And then, just final question -- on the macro, the global economy does seem to be improving right now. I'm wondering -- and you're in a sector that's traditionally considered to be late cycle -- are you seeing a better overall set of opportunities right now? Or is it pretty much what you've been seeing for quite a while?

From a macro perspective, we would state we're seeing it to be slightly better. And again, I've stated this in area of funnel discussion, our funnel remains healthy, and in our discussions with customers, to ensure we understand our CapEx spend, we believe that the market is going to continue to be a healthy market, especially the markets we play in today. Automation is a very broad market. We would then dissect that down to the specific areas we play in. And those over the short and midterm look positive.

Okay. Great, thank you.

You bet.

Your next question comes from the line of Cherilyn Radbourne with TD Securities. Please go ahead.

A couple of follow-ups from me. In terms of the restructuring that's been announced, that sounds more kind of all-encompassing than some of the more targeted restructuring that ATS has done in the past. Is there any more color you can provide relative to the facility that's being closed, the business line that you're exiting, and whether the 3% of the workforce that's going to be affected by the leadership changes is up and down the organization, or focused on particular levels?

I'll answer the last part of the question, then I'll go backwards, if that's all right. To start, closing of a plant is a larger portion of that, a re-rationalization of product line, and moving out is a larger portion of that. That said, it was a holistic view on ATS, and a view that we have been working on for a period of time to say this is exactly the areas where we need to align around to streamline our process, to enable the highest level of value to both our customers and our shareholders. And when we went through that process, these were the outcomes of that. Is there more work to do on improving our process? Absolutely. But closing a facility certainly is a big decision. We are committed to this region, and we are having service and sales support. But when we looked at the work that was being done, our ability to do capacity planning was better utilized putting it in another facility, and then providing that level of value to customers.

I see.

And on the workforce, Cherilyn, you asked if the 3% reduction was focused on particular levels in up and down. I think that's how you said it. I'd say it was across all levels. The 3% reduction had divisions involved, which would be people in our cost of sales or direct people, indirect and SG&A. And then, in the leadership, that would be SG&A people also.

Okay. And then, my other question was, do you think that this is disruptive in such a way that it would impede your ability to pursue M&A at the same time? Or does the organization have enough capability that you could execute on this and still work on M&A in parallel?

We can work on M&A in parallel. It will not slow down our process in the M&A activity.

Great. Thank you for the time this morning.

You bet. Thank you, Cherilyn.

(Operator Instructions). Your next question comes from the line of Robert Caldwell with Richardson GMP. Your line is open, please go ahead.

Andrew, the province of Ontario as well as Ontario [highdrove] is speaking very broadly and clearly about the refurbishment of both the Darlington and the Bruce. And of course, ATS are quite clearly a partner in that process. I'm wondering if we'd have a little update. I think the your report this morning was relatively quiet on that topic. Perhaps a little update would be helpful.

Absolutely. So as we've discussed in the past -- and I'm going to be a bit more broad, then I'm going to narrow it down -- this market is an area where our technology and capability aligns well. So in the CANDU refurbishment process, ATS -- it's a niche, but ATS is a very, very solid position where our value we can offer to customers aligns very well with the needs of the customers. Second, if you've read in the article, we've also gone through now an expansion of our facility here at Cambridge, where we're going to be aligning with Bruce to offer additional services in the space. So it's a niche piece, it's an attractive niche for our organization. It's one that we continue to see benefit. As a matter of fact, we had a fairly decent-size order in that space: in Q2, roughly around CAD20 million to CAD25 million. And it's one that we are going to continue to provide the value to our customers and be able to offer in the CANDU reactor refurbishment process, and continue to establish ourselves. Did that answer your question, Robert?

Yes, that's very, very helpful, Andrew. Another question, if I may -- since you arrived in March, I'm just curious as to how many customers of ATS you've had the opportunity to call on personally.

It's less than 20, greater than 15. And it's part of my standard process. But when I call on customers, I could also be calling on multiple divisions of one customer. And it's one of those areas that we're going to stay close on. And when I go visit facilities in Germany or in other parts of the world, part of my standard process is going to be visiting with customers to listen and understand the value we bring, how we continue to drive continuous improvement in our corporation and in our business.

Good. Well, that's an excellent idea, keep it up.

Thank you. Appreciate it.

Thanks for answering the questions.

I will now turn the call back over to Mr. Hider for closing remarks.

Thanks, operator.

Thank you, everyone, for joining us today. We look forward to reporting our third quarter results in February. Have a safe day.

This does conclude today's conference. You may now disconnect.