AZZ Inc (AZZ) 2016 Q4 法說會逐字稿

Good morning and welcome to the AZZ Inc. fourth-quarter and fiscal year 2016 financial results conference call. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded.

I would now like to turn the conference over to Joe Dorame of Lytham Partners.

Thank you Denise. Good morning and thank you for joining us today to review the financial results of AZZ Inc. for the fourth quarter and fiscal year ended 2016. As Denise indicated, my name is Joe Dorame. I'm with Lytham Partners, and we are the investor relations consulting firm for AZZ Inc.

With us on the call representing the Company are Mr. Tom Ferguson, Chief Executive Officer, and Mr. Paul Fehlman, Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session.

If anyone participating on today's call does not have a full-text copy of the press release, you can retrieve it from the Company's website at AZZ.com, or numerous financial websites.

Before we begin with prepared remarks, I would like to remind everyone certain statements made by the management team of AZZ during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed from time to time in documents filed by AZZ with the United States Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended February 29, 2016. Those risks and uncertainties include but are not limited to changes in customer demand and response to products and services offered by the Company, including demand by the electrical power generation markets, electrical transmission and distribution markets, the industrial markets and the hot dipped galvanizing markets, prices and raw material costs, including zinc and natural gas which are used in the hot dipped galvanizing process, changes in the economic conditions of the various markets the Company serves, foreign and domestic, customer requested delays of shipments, acquisition opportunities, currency exchange rates, adequate financing and availability of experienced management employees to implement the Company's growth strategies. The Company can give no assurance that such forward-looking statements will prove to be correct. These statements are based on information as of the date hereof and AZZ assumes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

With that said, let me turn the call over to Mr. Tom Ferguson, Chief Executive Officer of AZZ. Tom?

Thank you Joe. Good morning to all of you on today's call and we thank you for your continued interest in AZZ. I'm quite pleased with our record financial performance for fiscal 2016 and also that AZZ has now completed its 29th consecutive year of profitability.

Topline revenue was up 10.6% over fiscal year 2015 and we achieved over 22% growth in EPS on an adjusted basis, or 17% on a GAAP basis, as compared to the prior fiscal year.

We had a couple of nonrecurring expenses during fiscal year 2016 and chose to resolve a commercial lawsuit in Q4 to ensure it was not a distraction as we entered fiscal year 2017. We have also taken steps to improve our process discipline to reduce the likelihood of these types of issues occurring in the future.

Our energy segment did quite well for the year in spite of headwinds from the oil and gas market that impacted a couple of our businesses. I would like to congratulate the WSI team for managing a large volume of projects in an efficient and timely manner while improving focus on our operational excellence standards.

Our galvanizing business faced some challenges due to the pricing pressure along the Gulf Coast, but made significant progress on improving the acquired US galvanizing margins and is positioned well going into fiscal year 2017. We recently had a successful grand opening of our new galvanizing plant near Reno, Nevada and had a great turnout for the official ribbon cutting. With Reno and the addition of Alpha Galvanizing in Nebraska, we now have 43 sites in the US and Canada. Additionally, we continue to make progress on several technology and operational improvement initiatives that we believe will drive future organic growth and value in our galvanizing business.

Fiscal year 2016 was a solid year as we drove market share in our galvanizing and energy businesses in spite of some of the market headwinds due to the lower oil prices. So for the full year, the energy segment generated 51% growth in operating income and over 9% growth year over year in sales in spite of a weak set of market conditions overall. So quite frankly, it's a pretty impressive story and I believe we can still do much more.

Our WSI specialty welding business continues to improve its operational performance and has regained business with many former high-profile refining customers. While refinery utilization rates remain relatively high and customers are managing their expenses tightly, we have benefited from market share gains as our business development efforts have gained traction. This has resulted in continuing to win back former customers and growing in several international markets. With improved efficiencies and operating margins, a stable leadership team and good technology and field performance, we anticipate this business will continue to perform well into fiscal year 2017.

The overall results for our legacy electrical platform met our expectations for the year with some businesses doing well, including substantial gains in backlog, and a couple continuing to be affected by the current state of the upstream oil and gas market. The legacy electrical platform, as with galvanizing, has a stable leadership team, solid operating performance and good dish technology. The exposure to lower oil prices is relatively small for this platform and primarily impacts our API tubular and hazardous tubing lighting businesses, which in the aggregate represent less than 5% of AZZ's overall energy segment revenue.

Within electrical, we are pleased with the performance in our enclosure switchgear and bus businesses. The acquisition of PEI as we enter fiscal year 2017 will allow us to leverage the combined product portfolio of enclosures across a broader market area. PEI expands our offering in enclosures from both a geographic and product perspective since they have some offerings that go beyond what we traditionally have made.

Electrical utility spending in the US was stable and we benefited from strong international opportunities. We are seeing inquiry growth on domestic utility infrastructure investments and we remain focused on establishing international joint ventures to provide broader market access.

We continue to drive for operational efficiencies and customer service as well. While we are in the early innings on some of these initiatives, we believe they will provide organic growth beyond fiscal year 2017.

Our NLI nuclear business is continuing focus on more normal maintenance opportunities instead of new projects, and it did finally shift the balance of the long-delayed Westinghouse nuclear project orders during the fourth quarter. We now have a normal backlog and anticipate increasing operating margins as the business continues to drive operational efficiencies.

Our Galvanizing Services segment margins have been impacted by the sluggish US manufacturing activity by the recently acquired US galvanizing plants whose margins are still ramping up to AZZ historical levels. It's important to note we are gaining strength in other sectors, including bridge and highway and electric utilities, to help offset some of the current headwinds. We have a fairly high concentration of galvanized capacity along the US Gulf Coast, and because of that, we have seen some pressure on prices in that area.

The higher volume of refinery and petrochemical projects has not materialized to any great extent. Zinc prices continue to remain low while -- which has put some pressure on our pricing. The galvanizing team is driving productivity and efficiency, which are tied directly to their incentive payouts to offset these margin impacts as much as possible.

Our new incentive programs that tie performance with pay helped us drive positive results for fiscal year 2016. These programs are designed predominantly around performance and operating income, cash flow, return on assets, productivity and safety. Every employee is now a participant in our incentive program, which ensures focus on profitability drivers as we enter fiscal 2017.

Additionally, we will continue to focus on enhancing key operational fundamentals, including our tax and capital efficiency, but believe our tax rate will now normalize at around 32%. I am pleased with our progress and believe we have the leadership team, products and services and balance sheet to generate above-market results for a long time. We have taken steps necessary to reconfigure our businesses over the past 12 to 18 months that established a basis for a very solid fiscal year 2017.

I believe AZZ is well-positioned to continue to expand our market share in galvanizing and energy and confident in our ability to grow our businesses profitably. As a result, we are setting EPS guidance for fiscal year 2017 in the range of $3.15 to $3.45 per diluted share and the revenue range to $930 million to $970 million. This guidance is what we have recently published.

Now, I'd like to turn it over to Paul Fehlman to cover the financial highlights.

Thanks Tom. For fiscal year 2016, we reported record net sales of $903.2 million, an increase of $86.5 million, or 10.6%, over the prior year. Net income for fiscal 2016 was $76.8 million, an increase of $11.8 million, or 18.2%, over the prior year. Reported EPS grew 17.5% to $2.96, and our backlog finished at $334.5 million, up 0.6% versus last year. On an adjusted basis, EPS was $3.08, which Tom has already discussed and as outlined in the press release in the cash reconciliation table.

Gross margins grew to 25.5% from 25.2% year-over-year, and SG&A fell 11 -- fell to 11.9% from 12.1% year-over-year, driving an operating margin of 13.5% compared to 13.1% in fiscal 2015.

We were also successful in two areas of focus for the year, taxes and cash. Our tax rate fell from 27.9% in fiscal 2015 to 26.4% in fiscal 2016, and we posted 21.5% growth in cash flow from operations year-over-year, up $25.4 million to $143.6 million.

As for our full-year segment results, fiscal 2016 revenues in our energy segment were up 9.3% to $500.8 million compared to the prior year while operating income grew 51% to $58.5 million compared to the prior year. In our Galvanizing Services segment, full-year revenues grew 12.3% to $402.4 million compared to the prior year, while operating income rose 7% to $94.8 million compared to the prior year.

Looking at the fourth-quarter fiscal 2016 performance, on a consolidated basis, we reported revenues of $217.6 million, net income of $16.1 million, and reported EPS of $0.62 as compared to $182.3 million in revenues, $16.3 million in net income, and reported EPS of $0.63 in the same quarter last year. As noted earlier, the fourth-quarter fiscal 2016 EPS was negatively affected by $0.10 from those two nonrecurring events which are outlined in the reconciliation table in the press release issued earlier this morning. Without these charges, the adjusted EPS for the fourth quarter would have been $0.72.

The fourth-quarter book-to-bill ratio on a consolidated basis of 1.05 drove backlog up to $334.5 million. We expect to ship out of this backlog 31.8% outside of the US.

As for our segments in the fourth quarter, revenues for the energy segment increased to $117 million as compared to $97.2 million in the same quarter last year, an increase of 20.4%. Operating income from energy increased 29.2% to $12.7 million compared to $9.8 million in the same period last year, giving us operating margins for the fourth quarter of 10.8% for the quarter as compared to 10.1% in the prior-year period. Revenues for Galvanizing for the fourth quarter were $100.6 million compared to the $85.1 million in the same period last year, an increase of 18.2%.

Operating income was $23.1 million as compared to $20.3 million in the prior period, an increase of 13.5%. Operating margins for the fourth quarter were 22.9% compared to 23.9% in the same period last year, and were up sequentially from 22.8% in the third quarter of fiscal 2016.

We continue to believe that our ability to generate cash and our strong balance sheet are two of our core strengths. When coupled with the access to liquidity under our existing bank agreements, we can support growing our operating platform.

During fiscal 2016, we used our cash to purchase US Galvanizing and Alpha Galvanizing. We built the cash balance to purchase Power Electronics during the first days of fiscal 2017 and we finished our new Greenfield galvanizing site in Reno. We also continued to invest in organic growth initiatives, pay down debt and pay a quarterly dividend to our shareholders.

I am pleased with the continued progress we have made this year on key fundamentals like cash flow generation, working capital management, SG&A cost control, tax efficiency, and creating a much greater focus on returns on capital deployed.

For fiscal 2017, we expect to continue to focus on driving results on capital, cost control and cash generation, and we expect to achieve an effective tax rate closer to 32% for the year, although there may be some variances between quarters.

With that, I'll turn it back to Tom for concluding remarks. Tom?

Thanks Paul. The key takeaways I'd like to leave you with are these. We have a solid balance sheet and strong cash flows, a great portfolio of products and services, a great leadership team and outstanding personnel. We have significant international growth opportunities and we will continue to focus on growing our galvanizing business, both organically and through targeted acquisitions. We will continue to expand the presence of our electrical businesses internationally, both directly and through joint ventures. We are now benefiting from our accelerated emphasis on operational excellence and customer service at both WSI and NLI. While we've made significant progress over the past few quarters, we still believe we have great upside going forward into fiscal year 2017.

I will remind everybody that we are not a quarter-over-quarter business due to the impact of refinery turnaround and power plant outage cycles, as well as the dependence of some of our businesses on large projects. We anticipate a solid first quarter and fiscal year 2017 but have a fairly tough compare due to the great results in fiscal year 2016's first quarter. We will continue to leverage our expertise as a solutions leader in protecting metal and electrical systems that drive infrastructure and with a good pipeline of acquisition targets, we are looking forward to continued growth in our businesses and greater impact from our new growth strategies for the balance of fiscal year 2017 and beyond.

So now we will open it up for questions.

(Operator Instructions). Schon Williams, BB&T Capital.

Hi, good morning. Tom, I wonder if we could maybe take kind of a longer-term perspective here and I'd like you to maybe address kind of the margin outlook on both of these segments. You guys have done a good job of at least stabilizing operating margins within the energy segment, but obviously, versus historical standards, still several hundred basis points below where the Company has been, and then even within galvanizing, still several hundred basis points below where you were a couple of years and almost 600 basis points below where you were at the peak. So I wonder if you could just talk a little bit about what is still a headwind for you? What's kind of moving in the right direction? And then what's the opportunity as you look kind of two to three years out here?

I think, on the galvanizing side, we anticipate margins going back to our historical levels towards the latter part of the year. We are seeing good improvement in the acquired US Galvanizing assets, but they are still not quite to our norms. So we've still got some work to do there, but we are seeing progress quarter-over-quarter, and feel pretty good about getting to back up north of 25% as we get to the end of the year. And then beyond, I think that's our target, we want to balance -- we want to kind of maintain that kind of level of margin in galvanizing, but focus on growth and be able to grow it faster than we historically have. So -- but with that kind of 25%-ish margin profile.

Then I think, on the energy side, as we've talked, we will continue to focus on getting WSI to double-digit operating margins on a consistent basis, including the purchase price headwinds for both them and NLI. We acquired PEI at probably a little bit lower margin than our normal electrical businesses, but we see a line of sight to getting those up to our normal levels, once again towards the latter part of the year as we leverage our sales assets and customer service assets, as well as some of our back-office infrastructure. But that was a great business and a good example of something that's accretive to us, provides growth, provides the opportunity to drive some margin synergies as we get into it.

So I'd say the electrical -- I think we kind of sit around 15-ish% and north of that as we go forward. We are investing internationally in some of that as we put infrastructure in place, it impacts our margins from an expense standpoint with the benefit of the lower cost local operations benefiting us in the outer years. So I don't know if Paul wants to add something to that.

Yes, I would say we still have a ways to go. Obviously, the PPA has created a headwind, as you've observed, from the two large acquisitions made a few years ago that continue to linger with us. And so on a comp basis, maybe that's not quite the same as you were looking at a few years ago. But I think Tom has covered the main points. As well, we will continue to refine the portfolio, tune it the way that we think strategically we want to go into the future, and that may have some impact on margins as well.

That's a helpful overview. I appreciate it. As my follow-up question, I'd like to maybe address some of the guidance. I thought the revenue guidance was maybe a tad bit conservative. Given that you've got kind of two acquisitions kind of falling into this year now, you've got the start up at Reno and I understand that's just one site, but that will be a tailwind. I kind of thought, look, kind of the midpoint of guidance in my mind, it seems like that should be achievable just using kind of where we exited the year plus the acquisition. So I'm trying to get a sense of do you consider the legacy businesses to be kind of flat on an organic basis? Am I looking that incorrectly or -- and where do you see more strength I guess between the two different businesses? Which ones should be outperforming as we move forward in the next couple of months here?

I think there's a couple of things to keep in mind. One, NLI, we did finally shift that Westinghouse backlog, so you've got $25 million of stuff that we won't have year-over-year. So that -- to me, that kind of creates a headwind on the energy side.

WSI, the focus is not so much now on continued growth. We had good growth year-over-year. But the focus on margins now, let's get that up in the 12%-ish range, and continue to drive towards that and not let the margins decline on that piece of the business where we've made outstanding progress.

Then the legacy electrical. With some of the spend we are seeing, could we have additional upside, particularly as we leverage the newly acquired PEI assets? Yes, we probably can. Just a little cautious given we are not seeing an outstanding economic picture for manufacturing particularly and we talk about it probably too often. But along the Gulf Coast for galvanizing, we still worry about the longer-term impact of low oil prices on the economy in Texas, Oklahoma, Louisiana. So while we feel well-positioned and we've been able to sustain our volumes and margins, we have had some pricing pressure. So we are trying not to sacrifice price just to get volume.

So lots of different pieces just in the aggregate. If we see any kind of an economic uptick along the Gulf as the quarters go on, we will probably get more confident that we could drive more revenue.

All right. That's a Very helpful overview. I'll get back into queue here.

John Franzreb, Sidoti and Company.

Good morning guys. Just to piggyback on that last question, how much trailing 12-month revenue contribution is coming from PEI and Alpha?

(technical difficulty) contribution revenue is coming from PEI and Alpha. PEI is (technical difficulty) full year and we have stated what their revenue was in the business, and so you would expect that much for this year.

We did get nine months out of US Galvanizing, so you are picking up three months worth here year-over-year. And we pick up Alpha Galvanizing, which is actually smaller than the average galvanizer that, with our average galvanizing business, we had one month of that last year, so you'll pick up 11 months of that. But again it's smaller than the prior -- I'm sorry, than the other galvanizers. So while I won't give you exact numbers, that should probably put you in the ballpark.

Okay.

I will give you a little more color on that. I think we've talked about how on the electrical side, several of our businesses have been pretty much full, so enclosures for instance and some of the bust facilities. So we didn't have -- and we aren't increasing the capacity other than through operational efficiencies and trying to debottleneck some things. So we are kind of counting on flattish revenues in those legacy electrical businesses. And the tubular business held up last year during the first part of the year, and then it was impacted by the much -- to the dramatic slowdown in rig activity. So that -- so when you look at the electrical side in the aggregate, it's pretty flattish and galvanizing is benefiting from Alpha and having the additional three months of US galv, but the headwinds on NLI from not having the project backlog.

Okay. Regarding I guess there are some cautionary statements about reading too much into Q2 due to the tough comp. Are your expectations that the maintenance schedule is maybe firmer in the third quarter than the first quarter?

Yes, that's exactly it. We've seen some deferrals of turnarounds in the first quarter being deferred to the third quarter, or even a little bit pushed into the second quarter. So, as we look at that, it's -- our concern there is as much as it may push into the third quarter, we've got limited capacity to handle it. So we can be chockablock full on the WSI side as those turnarounds push.

We are seeing -- we are pursuing more international opportunities. But the outage schedules and the turnaround schedules, the good news is they are tending to be a little larger than some of what we've seen in the past, so they are kind of getting back to a normal turnaround cycle, full turnarounds and larger turnarounds. So -- which is -- we like the small stuff, we like the emergent work, but we really like it when we can plan and have quite a few resources on site.

Got it. And one last question. You've (technical difficulty) US galvanizing and bringing the margin up. Is there something you can actually do to improve the margin profile? Are you moving more dependent on the end marketing and customer base turning around more so than maybe (technical difficulty) do internally?

No, a lot of what way are doing is just more the operational improvements, bringing them up to our level of standard operating practices, driving the discipline, leveraging the zinc productivity, if you will. And so it's mostly internal stuff. There's a little bit of pricing maybe, but I think we are counting on mostly what we have control over to get there. So we don't see tremendous risk. It's just a lot of it is around getting the right people in the right roles, and making sure they have the right training and the right tools.

Great, thanks, thank you very much. I'll get back in queue.

Noelle Dilts, Stifel.

Good morning. First, just expanding a little bit on your comments about the turnaround season, are you guys starting to see more full-scale turnaround work, or are you expecting that to come as we move into the fall turnaround season? Just some thoughts there would be helpful.

I think we are seeing the stuff we are now quoting for the third quarter, and, one, it's ramped up pretty highly in the last few weeks or couple of months. And two, they are larger. I don't know if they are necessarily full-scale, but they are planning on working on a lot more stuff than they have been, whereas a lot of what we have seen, last year particularly and maybe in the year before, was just fix what they absolutely have to fix. And so now it's the larger planned activities, which tends to bode well for us, because we like to get into the cokers and the reactor drums and things like that, which tend to be the longer turnaround times.

Okay, great. And then just in terms of just US or I should say North American utility spending, can you just comment a bit there, I guess both in terms of what you're seeing as it relates to your enclosures business and then also just on the generation side, how you're thinking about the outlook here for fiscal 2017?

It's interesting. We've seen more spend for us on -- from the power generation side, which has been good for us, a lot of large enclosures and switchgear and things like that. And everything we are hearing, that's going to continue for us. We have seen a little fall off. We were doing -- and we had alluded to it a couple of times last year -- the pipeline enclosure business. That's now probably off a little bit, but it's been replaced by power gen. The transmission distribution stuff is strengthening, but it's still not robust. So, I would say we are pleased with the power generation stuff.

Okay. And then I guess just on the galvanizing side, can you comment a little bit on some of the trends there you are seeing by end market maybe again? It sounds like T&D maybe is coming back a little bit not particularly strong. Maybe you could talk about some of the aftermarket OEM work you're doing. That would be helpful as well.

Yes. Tim Pendley, our COO of the galvanizing business, is sitting here, so I'll just let him answer that.

Good morning Noelle. What we are seeing on the industrial market is we are anticipating that to be basically flat compared to the previous year. Our EU spin, electrical utility spin, we are looking at that increasing on small magnitude going forward. The petrochemical side, it's relatively flat. We are seeing the decrease in the oil, but at the same time we are seeing the increase in LNG facilities.

The transportation market continues to be very solid for us with some growth potential there, the same with OEM. We continue to make great inroads there. I'll give you an example. The intensity of use of hot dip galvanizing in the US has increased from 25% to 35% 2011 compared to 2015.

Okay, great. That's very helpful. Thanks a lot.

(Operator Instructions). Jon Braatz, Kansas City Capital.

Good morning Tom, Paul. Paul, I was reading the 10-K, and I think, if I read it correctly, the litigation expense is included in other income in the fourth quarter.

It's (multiple speakers)

Or other expenses I should say.

Part of it is in other expense. Part of it is in SG&A.

I'm sorry, what?

Part of it is in SG&A and part of it is in other. Different -- go ahead.

Okay, so that -- corporate overhead was up like $2 million in the fourth quarter from about $7 million to $9 million. Does that explain a lot of the increase?

It's a good part of that increase.

Okay. Okay. And then what can you -- on the raw material front, Paul or Tom, what are you seeing in terms of maybe the outlook for zinc, steel? And we are hearing a little bit about some cost increases. What are you seeing?

Zinc is obviously very volatile right now. It's still down year-over-year. We are watching the volatility closely. As you know, we do bring in some zinc forward. We have in the past and we are reevaluating every day which -- what the best thing is to do. I think it's more important to us to dampen that volatility and just kind of get a more normalized flat zinc cost over time.

As far as steel goes, that's not nearly as important to us as the zinc, but currently I believe zinc (technical difficulty) about $0.86 a pound, and fourth quarter at about $0.89 a pound was our realized. So we're -- we continue to chase the market down. As we talked about a couple times in the past, we had -- we locked in a certain amount of supply, and as the price in the market continues to fall, we are chasing that cost down. We are trying to reduce the volatility.

Okay. All right. Thanks Paul.

(Operator Instructions). John Franzreb, Sidoti and Company.

I just want a little sense of perspective here. The Westinghouse job and jobs of that size and magnitude for LNI, how often do they come about? How should we think about them and the recurring nature of them, or not?

Yes, they don't come around very often because there's not very much new plant construction going on. And those jobs were related to the two plants in the Carolinas, Mobile and Sumter, and also the Chinese nuclear plants. And there may be some additional Chinese nuclear plants go-forward. So we could see that, but it's rare. And I would have to say that as we look forward at that, we'd probably bid those at different price points now that we understand how much engineering goes into those things. And so we would evaluate very carefully as we move forward on that large a project. I think at the time those were taken, it was just prior to when AZZ acquired NLI. So, we have different processes for reviewing those. We are not seeing a whole lot of anything anywhere near that size. And by the way, even though it was -- we've talked about the $25 million. It was actually several projects within the $25 million. They all related to new construction. And there's not much new construction on the horizon at the moment.

Okay. So there's nothing that you're bidding on, say, within the next two-year horizon that would be material of any size?

No, I would say we are much more normalized. I mean we have -- we are bidding more normal stuff. So it's the maintenance stuff. It's the ongoing -- there are still some ongoing upgrades, not a lot around the Fukushima things, but some. I would say we are in a normal cycle. We have been working very hard on signing up new original equipment manufacturers to do their testing certification and qualifications. So, it's a larger business as a base than what it was, say, three years ago. But now we don't have the project, the big new project activity.

Got it. Got it. And when you look at the energy savings margin profile, what kind of margin profile are you embedding in your guidance for fiscal 2017? What kind of range are you expecting?

We haven't gotten down into that level of guidance. But we would expect, as Tom alluded to a little bit earlier in the call, we would expect some improvement there.

Okay. Thank you.

Ladies and gentlemen, this will conclude our question-and-answer session. I would like to hand the conference back over to Tom Ferguson for his closing remarks.

Thank you. I am confident we will make progress on the M&A front while improving the structure and focus of our operating platforms as we get deeper into fiscal year 2017. I look forward to discussing the impact of these activities when appropriate.

So, thank you for participating in today's call and we look forward to talking with you again at the conclusion of the current quarter. So again thank you and have a great day.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.