Barrett Business Services Inc (BBSI) 2011 Q1 法說會逐字稿

Good afternoon. My name is Vernell, and I will be your conference operator today. At this time, I would like to welcome everyone to the Barrett Business Services Investor Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you. Mr . Miller, you may begin your

Thank you. This is Jim Miller with Mike Elich. Today we will provide you with our comments regarding the Company's operating results for the recently completed first quarter ended March 31, and our outlook for the second quarter of 2011.

Our remarks during today's conference call may include forward-looking statements. These statements along with other information presented that are not historical facts are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by these forward-looking statements. Please refer to our recent earnings release and to our quarterly and annual reports filed with the Securities and Exchange Commission for more information around about the risks and uncertainties that could cause actual results to differ.

Page 1 of yesterday's earnings release reflecting our operating results summarizes the Company's revenues and cost of revenues on a net revenue basis as required by Generally Accepted Accounting Principles.

Most of our comments today, however, will be based upon gross revenues and various relationships to gross revenues, as management believes such information is 1, more informative as to the level of our business activity; 2, more useful in managing and operating our operations; and 3, adds more transparency to the trends with our business. Comments related to gross revenues as compared to net revenue basis of reporting have no effect on gross margin dollars, SG&A expenses or net income.

Looking now at the first quarter results, as reported, the Company earns $0.54 per diluted share in the 2011 first quarter as compared to a diluted loss per share of $0.16 for the 2010 first quarter. Income for the 2011 first quarter included the $10 million of proceeds from the key man life insurance policy the Company maintained on Bill Sherertz, the Company's president and CEO who passed away in January of this year. Without the benefit of the life insurance proceeds and certain incremental SG&A expenses associated with leadership transition, the Company experienced the net loss of approximately $0.19 per share for the 2011 first quarter.

Total gross revenues for the 2011 first quarter of $331.1 million, increased $68.5 million, or 26.1%, over the 2010 first quarter. California, which comprised approximately 83% of our overall first quarter gross revenues increased 29.6% owing to continued growth and new PEO business.

Staffing revenues for the first quarter of 2011 increased d $1.3 million, or 4.7% over the first quarter of 2010, primarily due to an increase in demand for our staffing services from existing customers. New staffing business during the first quarter approximately offset the loss of business from former staffing customers.

PEO gross revenues increased $67.2 million, or 28.6%, on a quarter over quarter basis, primarily due to the addition of new customers. Our new PEO business during the quarter from customers added since April 1, 2010, totaled $73.7 million, which tripled the amount of lost PEO business from the first quarter of 2010 from former customers.

Our PEO revenues from existing customers also experienced an increase of $13.5 million, or 6.4% on a quarter-over-quarter basis. The increase in PEO revenues from existing customers represents the fourth consecutive quarter of existing customer growth. Gross margin dollars for the 2011 first quarter of $5.6 million, increased approximately $233,000 over the 2010 first quarter, primarily due to the increase in revenues. Gross margin percent on a gross revenue basis was 1.7% for the 2011 first quarter as compared to 2.1% for the 2010 first quarter, primarily attributable to higher direct payroll costs and higher payroll taxes and benefits.

Direct payroll costs increased 23 basis points over the 2010 first quarter due to an increase in our mix of PEO services, which typically have a much higher payroll cost component than staffing services. Payroll taxes and benefits for the 2011 first quarter as a percentage of gross revenues increased from approximately 9.4% to 9.6%, due to higher state unemployment tax rate in various states the Company operates in.

To mitigate the impact of the increased unemployment tax expense, from our PEO customers, we analyze PEO customer unemployment experience and negotiate higher markup rates, when warranted, upon the customers annual contract renewal. Workers compensation expense for the 2011 first quarter increased $2.1 million over the 2010 quarter. Workers compensation expense for the first quarter as a percentage of gross revenues decreased slightly from 3.4% to 3.3%, primarily due to the relative stability of the fixed cost components of our self-insured program.

The company experienced a similar loss levels for the 2011 first quarter in relationship to business volume, as compared to the 2010 first quarter. Selling General and Administrative or SG&A expenses of $8.8 million, increased approximately $600,000, or 7.3% over the 2010 first quarter. This increase was primarily due to increases in branch manage payroll, travel, and cost associated with the leadership transition.

Other income net for the 2011 first quarter totaled $454,000, primarily attributable to investment income earned on the Company's cash and marketable securities, as well as gains recognized on the sale of certain marketable securities. The income tax rate for the first quarter of 2011 was 19.5%, which included a favorable benefit from the effect of the $10 million life insurance proceeds on the annual effective tax rate for the Company.

We expect the effective tax rate of approximately 19% to 20% to continue through the second through fourth quarters of 2011, and we expect our overall tax rate to return to a more normalized rate in the low - mid 30s percentage for the first quarter of 2012. Looking now at the balance sheet of March 31, cash and marketable securities totaled $62.4 million, compared to $55.4 million, at December 31, 2010. This increase is primarily due to the receipt of the life insurance proceeds, partially offset -- or by the loss from operations and payment of the quarterly cash dividend during the first quarter.

Trade accounts receivable at March 31 of $54.8 million, increased approximately $17.2 million over December 31, primarily due to an increase in accrued revenue at the end of March. Today's sales outstanding and accounts receivable or DSO of 14 days is up over the December 2010, similar count of 10 days, and that's primarily due to seasonality and is fairly consistent with the DSO of 14 days at March 31, 2010.

Accrued payroll, payroll taxes, and related benefits, increased $23.6 million over December 31, due to increases in accrued payroll and first-quarter payroll taxes, which were much higher during the first quarter of the year, as taxable unemployment wage ceilings are reset each January 1. Stockholders equity increased approximately $4.7 million, over December 31, 2010, primarily due to the net income of $5.5 million, offset by cash dividends paid of approximately $900,000.

Looking now at our outlook for the 2011 second quarter, as reported yesterday, we are expecting gross revenues to range from $347 million - $352 million in the second quarter of 2011. This projection represents likely midpoint increase of 17.6% over the $297.1 million in the second quarter of 2010 gross revenues.

The projected increase of 2011 second quarter gross revenue is based upon our recent revenue trends, and it doesn't factor in too much of a seasonality, given the current economic conditions, which appear us to be somewhat neutral. Based upon the foregoing estimates for gross revenues, we anticipate diluted earnings per share for the 2011 second quarter to range from $0.31 - $0.34 per share as compared to diluted earnings per share of $0.22 for the 2010 second quarter.

The $0.31 - $0.34 range includes the favorable benefit from the effect of the lower tax rate on an annual basis of approximately 20%. Using a more normalized rate, for income tax, we would anticipate diluted earnings per share for the second quarter of 2011 to range from approximately $0.25 - $0.28.

At this time, Mike Elich will comment further on the recently completed first quarter and our outlook for the second quarter of 2011. Mike?

Good morning. I guess overall we consider that it was a very good quarter. In the quarter, we saw that we added 136 new clients. We lost 32. Of the 32 that we did lose, 2 of them were due to AR issues, 6 were due to non-AR issues, 6 businesses sold, 11 left a due to price, 7 took payroll in-house, and 3 went to a competitor, which left a net gain of clients at 104.

The Company overall sees stability in it's existing client base, and we continue to retain our best clients. Our pipelines overall are very strong. As evidenced at the beginning of April, we also continues to see strong growth in new PEO clients ads. Overall, our clients see stability in their employment base and continue to hire, but the hiring is not as much widespread -- it is -- we see it more in smaller pockets, which lends us to believe to that, as we continue to add to our base of clients, we will eventually see that uptick and leverage through those existing clients as they add employees, but not have realized that yet.

By region, we have -- for Southern California, we continue to see a firm footing and growth. Northern California continues to be our strongest growth region. Northwest continues s to be relatively flat, although in the last month, we are starting to see signs of an uptick in both growth of employees and growth of new clients. Mountain states, we continue to see strength in both Utah, Colorado, and Arizona. Idaho continues to lag somewhat in recovery. And on the East Coast, we see it being relatively flat. We believe that the weather in the first quarter affected the add of new business, and also employee headcount in that region.

Related to our overall transition over the last 90 days, it's really been a test for the organization. I would give us extremely high marks and how we've been able to execute. We've seen -- and my observation has been, from an organization, we see continued great strong continuity with the organization between the board and management. Organizationally, we're very focused and very committed to divisions that we're working towards. We see no customer concerns, and I've been fortunate to be out and visit with the majority of shareholders, and see significant confidence in where we are intending to take the Company.

Tailwinds that we are recognizing is that the recovery remains on track, even though in the first quarter, we saw unrest in Egypt and Libya and the earthquake in Japan and even $100 plus oil. Employers continue to be forward-looking in making decisions.

Our referral networks continue to mature and grow, and our pipelines remain very strong because of that. Headwinds that we see are that credit with -- for new clients coming in continues to be a challenge, and workers comp, as the recession has lasted longer than ever expected, continues to offer an ongoing management -- not concerned, as much as it is something we're watching very closely.

Moving forward, we continue to mature the organization. With the transition that we've been through, we are now looking at different things that were assumed that many years ago that we are looking at and trying to understand why we do certain things we do. Most of them very justified, but some of them we found that we can do and maybe improve on. We're also looking at how we can use and evaluate our data more effectively to make business decisions from. And how, looking more importantly, how we continue to stay in front of our growth curve and build for our future.

With that, I will turn it over for questions.

Thank you.

(Operator Instructions)

We will pause for just a moment to compile the Q&A roster. And we do have a question from Josh Vogel from Sidoti.

Thank you. Good morning, Mike and Jim. I guess my first question, Jim, you commented about increased revenue with existing clients, it being the fourth consecutive quarter. I was curious, is this more a function of these customers using more of your services, or is it more a function of them hiring?

Well, I think it's probably more of a function of increasing hours, as I think most of our customers were at less than capacity a year ago. And I think it's really more of an increase in hours rather than necessarily much in the way of hiring.

Okay. And in terms of, I think you said it was a $13.5 million increase. Is this -- can you maybe parse it out a little bit geographically? Is that mostly from, like, Northern California?

Yes. That would be mostly Northern and certainly Southern California, as well.

Okay. And you mentioned, you're trying to mitigate increases in the state unemployment taxes and your negotiating higher markup rates. Are you getting any pushback from your clients?

I would say we're not seeing a pushback. And in fact, we've worked with our clients throughout the recession to support their business model. And as we're bringing our own justification a value that we bring and also the cost that we're seeing increased, it's been -- it's not having any adverse effect on our business.

Okay, great. Just a more quick ones and I'll hop back in the queue. Can you just talk about the average size of your new PEO clients, in terms of total employees versus maybe what you've seen in prior quarters?

I would probably say -- we go through patches where we all see the dynamic shift, but I would say that we've probably seen the average size increased a bit.

Okay. And then on the last conference call, you guys were talking about exploring 2 possible opportunities on the acquisition front. I was just wondering if you have any comments on that.

Right now, and on an ongoing basis, I continue to engage with both brokers and also interested parties. I think I have 3 on my desk right now that we continue to visit with. It's maturing a relationship, trying to understand how it would make sense. So at some point down the road, we would -- if it makes sense, pursue those opportunities.

Okay. Thanks, Mike and Jim. I'll jump back in the queue.

Thank you.

Your next question is from the line of Jeff Martin with Roth Capital Partners.

Thanks. Hi Mike and Jim. Could you go into a little bit more detail on the payroll taxes? I know that's been a drag on gross profit for a little while now. And that improves with renewal period. Can you give us a sense of when the bulk of customers renew and when the payroll taxes will return to or will contribute to margin improvement? Secondly, is it possible to quantify the dollar amount that you expect to recoup?

Well, first of all, each customer is on their own contract year. So we have renewals each month, and I don't know that we have necessarily any date that is really more dominant than the other, although maybe January 1 might be a more -- might have more renewals than other months. So it is really an ongoing renewal process.

I would probably add too, Jeff, as we are working and interfacing with our clients, we're -- it's a process that start -- the increase process and transition some of those costs back through our markup is really a total evaluation of the client. And where -- where have they been from inception to where they're at today. And we're really working through each client in 2011 to assess where we are from a profitability with the client. If they are in line and things are looking good, there's not a reason to change. If, because of the increase in SUTA and/or maybe changes in workers comp have crept into our overall margins spread, that's where we're sitting down with the client and evaluating where an increase is necessary. The one thing that we do see, and we did recognize this quarter as much as any is over the last few years, as we've noticed increases in overall state increases to SUTA, if you compare this year over last year and the way those dollars have been diluted back into the quarter, it seems to have normalized itself. The rates, even though their increasing in some areas, continued to increase in some areas, we may have seen the top.

Okay. And then you also talked about areas to improve from this management transition. You're kind of looking and investigating. Can you go into more detail of what some of those are, and do those have a direct financial impact and what's the timing?

I think the more -- the financial impact will be found in that as we look at the operation and we look at how we are operating at the size we are today and as we continue to grow, we're looking for areas that we can leverage our operation more effectively. As we look at the data, we're finding that we can make better decisions about when we let clients go, how we keep them, where our price points need to be. We're already pretty tight, but we just see some areas for improvement. The other area that I see that we can start to mature our overall operating platform is that we have a certain predictability with our client as we work with them, and we're working on models right now that allow us to take our client down a more direct path and are able to manage and measure how they're doing as we work with them over the years.

Okay. And then you also mentioned economic conditions appear neutral. What are the factors that you're taking into account there, and what is your crystal ball say?

I think the neutral factor is we look at hours worked on a week to week basis, and not total hours worked, but by individual. And we see that -- even though headcount has not been robust or increasing robustly, the stability within the hours worked per employee has been very stable for probably the last 6 months. Given that, you'll eventually see companies reach a point of capacity and have to either increased hours, which isn't as easy to do once you start getting into overtime issues, or increase headcount. So we're not seeing the choppiness that we saw a couple years ago or even a year ago, and we are seeing that base being fairly firm, where the clients that we have our maintaining the headcount numbers and the hours worked that they have.

Okay. That's helpful. And then this is more of a question for Jim. You mentioned that the increase in SG&A was largely due to management transition. Is that largely complete, and should we expect to see SG&A tick down in Q2?

Well, I think the transitional costs were up maybe a quarter of the overall increase in SG&A costs. And we've had a little bit of an increase in the SG&A just to service the increase in the business volume. And I think Mike can probably talk more about future transition costs.

Yes. One of the things that's happened is, if you take -- if you go back and say that we were in a recession from '07 or '08 through 2010, you're somewhat managing the organization sideways. And even as you start to see recovery, we have not -- we were not in 2010, very aggressive at re-investing back in infrastructure. Now as we consider and see that the organization is pretty stable and that the trends economically are going to continue, we are looking at the investments we need to make as we see our -- the organization growing over the next couple of years. And we need to be ahead of the curve on that. So the SG&A expense should be in line with the business growth, but I don't -- I see it being the structural moves that once the investments are made, we should see tremendous leverage out of.

Okay. Thanks . Good luck,

Thank you. Our next question is from the line of Mitch Almy with McAdams Wright & Regan.

Just wanted to kind of pick your brain a little. We've had the confluence of Bill Sherertz' passing, the receipt of key man insurance and the filing on April 11 of some employment contracts. And in light of the call today, where the Board -- you say that there's continuing work between the Board and Management, you're committed to the vision of the Company. I'm just kind of -- I've got two basic questions. The first one is, what are you telling me shareholders by the option of the employment contracts? And second, within those contracts, there seems to be some eventualities that might come out that could, truly benefit management without benefiting shareholders at the same time. I think they're a bit loose, in other words. There could possibly be changes, changes to the Board, changes to management, that leave the company essentially as it is, yet trigger some of the payouts. Could you please just address those questions?

Yes. No. Please do.

First of all, the employment agreement and changing control agreement of that were filed was really a transition from existing agreements that were already in place. I already had an agreement in place. It would have expired April 20. And this was merely a replacement to that. One of the things within a transition, as we've gone through, as management needs stability to know that we can continue on to do what we need to do, and as well what's in the best interest of the shareholders to have those agreements in place to make sure that we know that we can continue to do our jobs as they were intended and not have to always be wondering what could happen tomorrow. So that was the first intent. And as well, previous executives to the organization had had similar agreements and with those agreements in place, it felt -- the Board felt it was a prudent idea to put those in place as well for the balance of the Officers, be it Greg and Jim. As far as representing or -- our focus everyday when we come to work is to run the Company in the best interests of all shareholders. And if the agreement would protect all shareholders from those who might otherwise want to hurt the Company, then they protect all shareholders.

Okay. I was just looking -- I don't know, I'm not an expert in this, but if Bill's estate owns 24% of the Company and the best thing for the estate is, without making any judgment on management capability or your vision or anything like that, if the best thing for his estate is to sell the shares and they get sold to somebody who owns 5.5% of the Company, you could keep doing exactly what you're doing, yet it's going to trigger every single event in there. That's only why am asking, because it looks like that might happen. It could happen.

Well -- I -- first of all, in the agreements, there is a double trigger. And so the double trigger -- if it was a single trigger, I could see that. But as it is a double trigger, it's still -- nothing changes, unless there is adverse change to the overall management structure.

Okay. Well, thank you very much then.

Thank you.

Thank you. Our next question is from the line of Michael Prouting from 10K Capital.

Good morning, guys. Congratulations on a good quarter.

Thank you.

I had a new questions . Firstly, I was wondering, following Bill's passing, I'm just wondering if you could give us a sense of [moral] at the Company, both in terms of the sales force and I guess sort of throughout the Company as

You know, Bill was a great friend to all of us, and through the transition, it was extremely challenging. But one of the things that we did, and I think that we've done well, is we've made a continued effort to communicate with each individual within the Company. Following the transitional moves in late January and early February, I was on the road and met with every -- 98% -- all but about 4 managers in our Company face-to-face. And those that I did not meet with face-to-face, met with on the phone and spoke with on the phone. We spent time in those meetings initially intended to last about two hours. They went about 4 to 5 hours. We were able to really talk about the Company, what Bill had brought us and offered us, and we're allowed the opportunity -- were allowed the opportunity to really grow up in that sense to take that vision and take everything to the next level for him. So the overall tone is extremely good. We had an all call after our last conference call for the Company, and I sent an e-mail out to every person in the Company. Not every manager, but every person in the Company, to get onto the call and have a chance to ask any questions you want to ask. And that was extremely well received, and because it was so received, we're doing it again today at two o'clock. I believe in the opportunity the opportunity for every person to be able to communicate with management and help us understand what we can do better, where we might be off track, and determine where we can contribute to make the company stronger tomorrow. But the overall tone within the company is very, very positive.

Okay. Thanks. Secondly, as far as your guidance for top line for the second quarter, in terms of the mid point of that guidance, that seems to imply some considerable slowing in top line growth when looked at on a year-over-year basis, versus the last several quarters? And I'm wondering, does that reflect something you're seeing in the business environment? Is that conservatism? Just how we should understand that?

This is a little bit a challenging quarter -- coming out of first quarter is always challenging going into second quarter, because in first quarter, you see kind of the recovery of the holidays. January is always slow. And as we go through March and then roll into April, we see trends moving in a certain direction. And so we guide off those trends. The bigger challenge is that we can never really recognize what the seasonality of the business is going to be. And so if anything, we tend to be a little more conservative and our revenue guidance in those areas just because we don't have a solid trend built for the year yet.

Okay. As far as seasonality goes, is there any reason why the second quarter of this year would be any different from any second quarter you know, say comparing it to the second quarter of last year? Or other second quarters? I just want to understand if there's anything you're seeing that's different.

No, we don't. The challenges that you find is when you find what went on in Libya, what went on Cairo, what went on in Japan. What you never know -- how much and some of the inflation pressures, you don't know how business owners are going to respond to hiring. And if they -- if they don't hire a bunch of new people for the seasonality of the business and it remains relatively neutral, we'll probably guide to we're were at.

Okay.

And from our year-over-year comparison, we are going to be coming up against higher comparables, and that will slow our rate of growth even though incrementally we're still adding a tremendous amount of business.

Thanks for clarifying that. Looking at the balance sheet, obviously you've got a good bit of cash on the balance sheet at this point. Sounds like you're still evaluating some acquisition opportunities. Can you give us some kind of breadbox size of acquisition opportunities that you're looking at and how much cash you feel you need to retain in order to pursue those kind of acquisition opportunities?

Well, we have a certain threshold, because we do work in so many states that, from an insurance standpoint, like to see cash on our balance sheet, as well as our customers like to see balance sheet cash on our balance sheet and their customers. So we see a floor on our cash, or an area of comfort in that $35 million to $40 million. Cash over and above that area would be utilized for opportunities and whatever might come along that could be created.

Okay. And then at the beginning of the quarter -- call, I'm not sure if you already addressed this, but have any decisions been made as far as Bill and the family stock is concerned?

We have worked with and been very closely working with a couple different firms to explore all of our options. The Board has been very actively working to understand what it is that they have at their disposal as well as what represents the best interest to all shareholders. And there has been dialogue and they're faced with the shareholders -- or with the estate to try to understand how we can facilitate whatever they might need to accomplish.

Do you know when we might get some clarity on that? Because I get the sense that there is some degree of, shall we say, uncertainty or anxiety among the shareholder base relating to what might transpire there. So can you give us some kind of time frame?

The dialogue is ongoing, and as we know more, we'll let you know.

Okay. All right.

It's somewhat out of our control, to the extent that, the estate and the heirs of the family need to have the opportunity to understand what they want to do. And when they can narrow their options as well, we're hoping that dialogue will include us, and then we will work towards trying to facilitate whatever is necessary.

Okay. I know there's a lot of conditional events here, but once we get some clarity on that, and I guess these new term acquisition opportunities, do you think there might be a possibility to address perhaps the stock buyback or something here? Just given the amount of cash that you have, given the amount of cash you're generating, given the valuation of the company, it doesn't seem to me, notwithstanding the change of control provisions, it doesn't seem to be in anyone's interest, either current stockholders our management that the stock should continue to trade at the levels it's currently trading at. It seems like that does create the kind of risks that are prior questioner alluded to.

Well, I think -- first of all, we do have a stock buyback plan in place, and I think we still have about, what, 1.4 million or so shares available for that. But as well, in the last -- we lost a founder that had been in place -- that founded the Company, been CEO for roughly 40 years. And since his passing, we've been able to transition the Company, and our stock is up roughly 10% since that day. I would probably say for the first 90 days, we've accomplished a lot. I will say that we'll continue to work on areas of the Company that will bring value to our shareholders and continue to support the success of the Company.

Okay. Great. Best of luck. Thanks for taking my questions. Thank you.

Thank you. Our next question is from the line of Kim Sherertz with Estate of William Sherertz.

Good morning. I have no questions at this time. Thanks.

Thank you, Kim.

Thank you. Our next line is from Ken Thomas from Progressive Investment.

Good morning, gentlemen. Can you hear me?

Yes.

Great. I wanted to follow up on Mitch's question regarding the [EPA] and the change of directors or principal officers, under golden parachute position there. Was there any event or series of events that led the Company to feel that the timing was now, or necessary to do this today? And could you also clarify maybe a little bit on the double trigger that you talked about with Mitch?

Well, the double trigger is that the only way that the change of control provision within the agreement would come into play would be if there was a significant change in the overall landscape of the Company.

That's first trigger, right?

Well, no. That would be the second trigger, related to the first -- the first trigger would be change of control. The second trigger would be a significant change in control in the overall landscape of the management of the Company and how we're expected to manage the business.

Okay. Back to the first part, , was there a single event or series of events that made this

No. A s I stated, I had an employment agreement in place that was to expire April 20. Based on the events, because there was a 90 day window following the change of control of Bill Sherertz , where I had the option of just exercising my option and moving on, and I didn't. I chose to stick around, and for personal reasons, I felt it was important to get either a complimentary agreement or a replacement agreement in

Okay. Thanks. I have a follow-up question regarding the management turnover but since Bill's death, have you seen any turnover at the branch level of management or higher? And how many of the branches currently are missing management -- permanent managers?

I have 1 manager that has left for personal reasons. He wanted to move back to Southern California because he had a son that has had a prolonged illness, and the environment -- and because family lives there, it was a direction he wanted to move. We've been talking for roughly a year. And besides that -- including that, I have 3 branches right now that are without managers that we are actively searching for replacements. Of the 3, we're 90% along with 2 of them.

Okay. That was going on before Bills death, correct? So that's not a significant change?

It's somewhat an ongoing process. We find that there is roughly a 10% to 12% change out of management and branch management on an annualized basis. So it's normalized to the ongoing of the business.

All right. Well , thank you very

Thank you.

Thank you.

(Operator Instructions)

And I am showing no further questions at this time.

With that, thank you very much. We'll see you at the end of the second quarter. Thank you.

Thank you for your participation in today's investor conference call. You may now disconnect.