Bel Fuse Inc (BELFA) 2011 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Bel Fuse, Incorporated second-quarter results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host for today, Mr. Dan Bernstein, President and CEO of Bel Fuse, Incorporated. Sir, you may begin.

Thank you. I would like to welcome everybody to our conference call to review Bel's second quarter 2011 results. Before we start, I'd like to hand over to Colin Dunn, our Vice President of Finance.

Thank you, Dan. Good morning, everybody. Before we begin, I would like to read the following statement. Except for historical information contained in this second-quarter 2011 financial results call, the matters discussed in this call are forward-looking statements that involve risks and uncertainties.

Among the factors that could cause actual results to differ materially from such statements are -- the market concerns facing our customers; the continuing viability of segments that rely on our products; the effects of business and economic conditions; capacity and supply constraints or difficulties; product development; commercializing or technological difficulties; the regulatory and trade environment; risks associated with foreign currencies; uncertainties associated with legal proceedings; the market's acceptance of the Company's new products and competitive responses to those new products; and the risk factors detailed from time to time in the Company's SEC reports.

In light of the risks and uncertainties, there can be no assurance that any forward-looking statements will, in fact, prove to be correct. We undertake no obligation to update or revise any forward-looking statements.

Now moving to the meat of today's call.

Sales -- for the second quarter of 2011, our sales were $79.2 million, which was a second-quarter record -- up 2% from the $77.7 million that were reported in the second quarter of 2010. In our Modules product group, sales for the second quarter of 2011 increased by 81%, while the Interconnect product group, primarily through an increase in sales by Cinch, experienced a 7% increase. Sales in the Magnetics group was down 37%, mainly the integrated connective modules product line, and circuit protection revenue declined by about 8%.

We continue to experience significant low demand for integrated connector modules in comparison to prior-period. Integrated connector modules backlog remains flat with the prior year-end. Now backlog from modules remains at historically high levels, but is down from March 31, 2011, while orders for DC-DC converter products increased slightly.

Turning to cost of sales and net results, the significant shift in the nature of our business away from labor-intensive magnetic products towards more value-added modular products is having an impact on our gross margin. The products in our Modules group, which includes SmartGrid, powerline, and DC-DC converter modules, have a higher material content and are lower profit margins than our other product lines. Also, manufacturing costs have been affected by higher costs for commodities, including gold, copper, and petroleum-based plastics, and government mandates for higher minimum wages and overtime requirement in China.

Fixed overhead costs represent a higher percentage of sales due to the lower level of magnetic product production in our Chinese factories. On a positive note, we're able to continue steady production in China coming out of the 2011 Lunar New Year holiday, without hiring a significant number of new workers, in contrast to our experience in the same period in 2010. As a result, costs associated with recruiting, training, overtime, and production inefficiencies resulting from the hiring of new workers have been much reduced in 2011.

The net result of these factors was an increase in cost of sales from 79.2% of sales in the three months ended June 30, 2010 to 82.6% of sales in the three months ended June 30, 2011. During the second quarter of 2011, we recognize a net total of $2.8 million in charges associated with two ongoing lawsuits. The details of the ongoing negotiations relevant to these lawsuits remain confidential at this time.

On [an] order to GAAP basis, Bel reported income from operations of $400,000 and an aftertax net loss of $600,000 for the second quarter of 2011. Last year, we reported income from operations of $6 million and aftertax earnings of $4.8 million for the second quarter of 2010.

The (inaudible) results on a comparable basis -- non-GAAP income from operations for the second quarter of 2011 was $3.2 million compared to non-GAAP income from operations of $6.3 million for the second quarter of 2010. Litigation costs and costs associated with our proxy initiative have been excluded from the non-GAAP income from operations for the second quarter of 2011, while severance and plant closure costs have been excluded from the comparable 2010 non-GAAP income from operations. Virtually all the decrease in second-quarter 2011 versus 2010 non-GAAP operating income is attributable to the decrease in gross margins described above. A reconciliation of GAAP to non-GAAP measures is included in our press release.

Moving forward, we expect continuing material cost increases, particularly for components, [there's] metals and petroleum-based plastics content, increased pressure on pricing, as it usually is associated with relatively short production lead times, and a continuation of the account proportion of module sales in our product mix.

SG&A on a comparable net GAAP basis, the dollar amount of selling, general and administrative expenses, and percentage relationship of these expenses to net sales remained flat at $10.2 million or [13.2%] of sales during the three months ended June 30, 2011 and 2010. During the past 12 months, we have leveraged monthly legal bills of approximately $137,000. We expect this to reduce significantly as we move forward.

Taxes -- Bel recorded a provision for income taxes of $1 million for the three months ended June 30, 2011 compared to $1.3 million for the three months ended June 30, 2010. Mainly due to a large portion of the litigation charges being recorded in Asia, with minimal tax benefits, the Company's effective tax rate, the income tax provision of percentage of earnings before income taxes, was more than 250% for the three months ended June 30, 2011 compared to an effective tax rate of 20% for the same period of 2010.

The Company's effective tax rate will fluctuate based on the geographic segments in which the pretax profits are in. Of the geographic segments in which Bel operates, the US has the highest tax rates; Europe tax rates are generally lower than US tax rates; and the Asia has the lowest tax rates. The Internal Revenue Service ordered our federal tax returns for the years 2004 through 2009 is ongoing. At this time, Bel has provided all documents requested by the IRS for this examination.

Turning to the balance sheet, cash and equivalents -- at the end of June 2011, our cash, cash equivalents and investments securities were $99.7 million, which was $14.1 million higher than our December 2010 balance of $85.6 million. The increasing cash resulted primarily from earnings and the favorable operating cash flows, partially offset by the payment of $1.6 million in dividends and $1.4 million of capital expenditures. To date, the litigation charges, which are reflected in accrued expenses, have not resulted in significant cash outflows. However, we anticipate that up to $11 million in cash may be required to be paid or placed in escrow in the third quarter of 2011.

Receivables and payables -- receivables net of allowances were $49.4 million at June 30, 2011 compared to $53.3 million at December 31, 2010, a decrease of $3.9 million. Our Accounts Payable at June 30, 2011 were $22 million, a decrease of $800,000 [for] December 31, 2010. And on inventories, at the end of June 2011, our inventories were $56.3 million, which was down slightly from the December 2010 level.

Other balance sheet comments -- our capital spending for the three months ended June 2011 was approximately $800,000, while depreciation and amortization was $2.2 million. On a per-share book value -- at June 30, 2011, it was $18.86 including goodwill and intangibles, and when we excluded goodwill and intangibles out, per-share value was $17.54.

That's all the comments I have related to the press release. I'll now turn the call back to Dan Bernstein.

Thank you, Colin. At this time, we'd like to open up the call for any questions you might have.

(Operator Instructions). Zach Larkin, Stephens, Inc.

Thanks for taking my call. Hey, first off, I wondered if we could dig into the margins a little bit. You mentioned, obviously, the mix shift going to modules impacting margins as well as increasing high levels of commodities. Could you put a little bit of a finer points on that? Maybe give us a sense for how much of the decrease was related to commodities versus the mix shift?

And then also maybe give a little color on where you expect margins going forward? Are we going to be with the increased module sales, closer to what we saw this quarter? Or are we going to get back a little bit more towards historic normals or somewhere in between there, if you could?

Okay. We really -- basically, the -- obviously, the modules put a lot of cash on the way of bottom line, although it is lower gross margin percentage. We don't think -- I'm sort of jumping to the last part of your question first -- we don't think there's going to be much change in the next quarter, particularly in the next quarter, and maybe for the next two quarters going forward.

Basically all the -- we've obviously gone back and spent a lot of time analyzing this, but basically all the drop in margin on an average basis was related to the change in mix. Really, the drop-off in the additional costs we had in commodities was primarily covered by efficiencies and reduction in overheads, and also, as I spoke about, much better labor productivity.

And although wages did go up another 18% in the areas where most of our factories are in China, in May of this year, we certainly were able to cut back on overtime from the overtime levels we've been operating at, because we've been much more efficient. And so that sort of mitigated a lot of the material cost increases.

Okay. Thanks for that, Colin. That's very helpful. And then so if we've got flattish margins for the remainder of the year for the most part, do you think that we should see an improving environment going into 2012? Is that a fair assumption?

I think it's still -- again, what's going to happen next week? Can you tell me that question? And if I can get some visibility on that then I can make predictions in six months. But at this point, we still see a tremendous amount of uncertainty in the marketplace. We see companies with a tremendous amount of cash but they don't look like they're reinvesting too heavily in new equipment.

So I think again until the economy -- everybody gets a better understanding of what's going to happen in the economy, I think everybody is sitting tight for a while. So in short, we have very little visibility past next year. Up to the end of this year, we see slightly -- probably remain the same for the balance of this year. Next year, I think the jury is still out.

Okay, fair point. Fair point. Do you -- kind of on a --this may be a visibility, a tough question to answer -- do you think the Magnetics business is going to continue to see some of the pressures you saw this quarter? Is that something you view as ongoing? Or again with all the uncertainty (multiple speakers) --

Well, I think -- we had a problem because we're so -- our major product in Magnetics is the MagJack, the integrated RJ45 connector. For so long, we have been a market leader in that affair, in that arena, and with many customers we were single source.

So I think the volumes are still there at our customers, but I think they have got second and third sources, and that has made pricing somewhat more competitive. But at this point in time, I think it's very difficult in our industry to give any price decreases because of the labor situation in China and material situation. So we don't see major price decreases. We just don't know at some point -- one of our competitors might want to go out and buy the industry and that just -- and then all hell breaks loose.

Right. Okay. [No, that's fair] (multiple speakers) --

So again, as I said, I think our customers are using the same amount of the units as they have in the past; but again, now we have second and third sources, so we lost -- I think that's where a majority of our decreases come from.

Okay. Thank you for that. And then again, I mean, you get asked this almost every quarter -- continue to be very cash generative, strong cash balances on the balance sheet. What are you thinking in that regard? I know you've been asked about increases in dividends in past quarters, but what are you guys thinking of (multiple speakers) --?

Our goal has always been for the last three or four years is to get critical mass into the Company that can really help us with our overhead structure. It makes us a lot more price competitive, fills our baskets of products that we can bring to our customers. So again, as you know, we work with two of the leading investment banking firms in regarding of acquisitions. And at any point -- you know, currently, we have six companies we're looking at. I'm going to be in Europe next week looking at three companies.

So again, we are hoping that we can get some acquisitions and use a lot -- and we feel that's a lot better for our shareholders. We have looked in the past at one-time dividends. However, the Board believes it's a lot better to use the cash for acquisitions.

Great. No, thanks for that color. I'll jump back in the queue.

Sean Hannan, Needham & Company.

So, can you provide just a quick bit of color, at least the sequential relative performance of the four business groups? I joined your call slightly late, so I'm not sure if I may have missed that or (multiple speakers) --?

No, I think we haven't discussed it, we haven't broken down the product groups. However, I think most product groups we were slightly up on, the Modular group, which includes the [Avien] product and DC-DC converters. We had substantial growth of (multiple speakers) --

Well, let me just run them through again, Sean. Modules for the second quarter of 2011 were up 81%; Interconnect primarily due to an increase in sales by Cinch, up by 7%; the Magnetics group was down by 37%, mainly in ICMs, integrated connector modules; and circuit protection was down by 8%.

Okay. That's helpful. And then just to follow-up on some of the earlier comments around ICMs. We realize the space is already competitive today. Just trying to figure out where specifically are you seeing the most competition? Is this coming from smaller Asian competitors that perhaps are emerging? (multiple speakers) Are these larger players like a Tyco or a Molex --?

No, we're seeing a lot more competition from Molex and Tyco, our large customers. And I think that's where -- again, the customers we deal -- have a difficult time using low-cost manufacturers from the Far East because of the quality and the product offering. And as we get more into gigabit and power over ethernet, Power Plus 3, as you evolve in these faster technologies, we are better suited for that ourselves and Pulse and Molex and Tyco. So again, that's where we see a lot of the price pressures and some of our market share is being cut back.

That's helpful. And then when you talk -- or when you think about the dynamic of some of those -- some of that share reallocation that has occurred, is there anything that perhaps you suspect could be a specific short-term dynamic behind the scenario that has compounded the problem but could abate? Or is this really the situation going forward?

I think it could be -- again, it depends on who has the best pricing; but I think, again, when the shortages came, I think the customers over-reacted and they went with too many suppliers. And I think a commodity like this, you need maybe two or three suppliers. I think if you have four suppliers, it's too much. And what happens then is that suppliers can't make -- we can't make -- if we're one of four people competing at a customer, we can't make commitments to that customer that we could do in the past -- for example, maintaining inventory, finished goods, raw materials, if there's an upsurge -- because we don't know if we're going to have the business in the quarter or the next quarter.

So I think at this point, the smoke is finally settling from the upsurge. And I think now our customers are evaluating how best to handle this commodity that historically has been very labor-intensive.

Okay. And then, lastly, MagJack leadtimes, what have they -- have they moved to?

They're about eight weeks, seven to eight weeks.

Seven to eight weeks. Okay. So down slightly from last quarter, I think it was eight to 10 or eight to 12 weeks (multiple speakers) last quarter.

Again, when it gets too slow, to be honest, it just -- it doesn't really matter. Again, the leadtimes are so short from eight to 10 that it doesn't affect too much.

Sure. No, that's helpful. Thanks very much, Dan.

John Hudson, private investor.

I have a question -- a couple questions. The first one is the situation you've gone through with Pulse. Do you still consider them a reasonable and viable potential acquisition now that their stock is trading at [four]? Does it even look a little more potentially viable? Or do you have any comments on that?

Again, what we said to the public a while back is, as we face more competition with Molex and Tyco, we thought it was important for our shareholders and Pulse shareholders that the companies get together, so we could be a lot stronger competing against the larger players in the industry. And I think now the smoke has tried to settle, so it's kind of late to try to put both companies together.

So I don't know if we're as anxious as we were in the past at the current price -- again, I don't think we're out buying shares, that's for sure. And I think -- so again, it's something we constantly look at and we see how they are in the marketplace, how we are in the marketplace. And we believe going forward, both of us are going to have -- it's going to be tough sledding for the next half year. And we feel a bit more confident that, hopefully, we can do a better job than they can do. And both stocks will reflect that.

Yes. Well, what I'm looking at is I think it's still -- there's still something makes sense, but the price should be even be lower if -- something --

The problem we have is when we went out and met with the investors, nobody -- and I think we were very upset meeting with the large shareholders -- that nobody wanted to sit down and really look at the evaluation, and what each company was worth, and what the values would be as an all-stock deal or a cash deal, and what made sense. And the only thing they were concerned about is, give me a $1 more, give me $1 more. And we tried to ask why you want a $1 more -- explain why the company should be worth this. And we never got any good answers. (multiple speakers)

Right. So it's been (multiple speakers) talked about.

(multiple speakers) And I think that's the problem you have when you do an unfriendly takeover -- the arbitrage come in and they really don't look -- I don't think they really looked at the values of both companies and what really made sense. And that's (multiple speakers) extremely --

(multiple speakers) It's a difficult situation, yes.

Exactly. So I don't know -- I would think -- again, however, if we ever did look at it, I assure you we would go in and buy 9.9% first, that's for sure -- or try to do it on a friendly level. (multiple speakers) But we should have -- in retrospect, we should have been a lot more aggressive.

Okay. My other question is on the $11 million going into escrow -- potentially going into escrow. Can you comment any further on that?

No, just once again, it's going to the appeal process and we don't know how the appeals -- it's going to be handled by the federal government. So it's again -- people know about the court in Texas, the fast track record. The judge that handles our case, 88% of the time the plaintiffs win. And I think in the Texas court, East Texas court, is it? The plaintiffs win 77% of the time.

So again, as it goes through the appeals, we don't know how it's going to be handled and how it's going to be addressed, but so that's why we can't commit to really understand what -- we can only put in what the lawyers tell us to put in. And that's the amount that we're accruing for now.

Yes. Fair enough. You've got to be ready for any contingency. All right, thank you very much.

We appreciate the call. Thank you.

Hendi Susanto, Gabelli & Company.

Thank you for taking my questions. My first question is about the material costs. How much of your material cost is based on the spot price and how much is based on contracts? And how much of the increase in material costs is transferable to customers?

Hi, Hendi. We don't -- we just don't buy enough of the raw material -- and we don't buy any of the raw material directly ourselves. So what happens is we have to rely on the converters who are actually taking the commodities and then selling them on -- and converting them, and then selling them onto us, to take those risks. And they do that. So we end up paying the bill. But most of those agreements that we have for those converters do have a clause in it that does trigger. And the costs do go up as the commodities go up -- or they go down as the commodities go down.

In our signal transformer business, where we have much more specifically copper in our 50, 60 Hertz primarily transformers, and just massive amounts of basically pure copper, we do have a figure on our invoicing. So all orders for those products -- not all orders, but most of the orders for that company do have two prices on the invoice. One price is for the base cost and the other is a -- has a indexed copper price, and that is -- or subtracts based on where the copper is at the time. So that one is very clear. The other one we are somewhat -- we don't break it out. It's -- we just can't break it out, for example, on a connector.

Okay. And do you have updates on new products that you're working on?

No, again, we are always constantly working on new products from all our groups. However, generally, we don't have -- we have press releases that come out probably weekly on new products. Again, so we don't put into our press release and we don't put projections of sales for the product.

And then could you talk about the backlog again, where they came from?

The backlog has remained -- let me just back up here for a second, Hendi. Just pull out our numbers here. Sorry. Our backlog has remained fairly constant. It's really not moving at the moment, but it varies dramatically by product line. For example, if we look at the Modules group where backlog is -- we have much longer leadtimes for modules because you might have 85% of your bill of materials is purchased in materials.

So they tend to -- for example, we know right now, for example, some of the products we're making -- we've got the purchase orders in-house and we know what we're going to be delivering, say, in 2012, first quarter of 2012. So we've got that in place. The DC-DC backlog is up from where it was a quarter ago. Fuses are up from where they were a quarter ago. Integrated connector modules are up just slightly from where they were a quarter ago, and what I'm saying, end of the day, I'm talking about is this June.

In our Cinch group and all of that is [mill] aerospace, particularly in the commercial aerospace goes to folks in the, you know, Boeing aircraft and things like that. We have that up -- actually it's level where -- from where we were in the first quarter.

But to summarize it, our backlog, if you look at the end of the first quarter, our backlog is basically the same as it is today -- just maybe a $1 million difference. But again, the backlog has been very stable throughout the year.

Okay, thank you.

(Operator Instructions). Lenny Dunn, Freedom Investors Company.

A couple of comments and a question then. The Pulse, chasing them, cost us a lot of money.

(multiple speakers) I think -- I would say this, Lenny, it's probably about 80% cheaper than what Pulse spent. I think we spent roughly $250,000?

Yes, a little less.

And we already made $130,000 in profit. So to be honest, I think when everything said and done, I think we'll be plus on it. I don't think it costs the shareholders any money, if that helps out at all.

I guess my -- well, my comment would be that if you can't prearrange a friendly deal with them, it's fairly obvious that these people are going to be [intransient] and they want to feather their own nest. I know you can't say the kind of things I'm saying, but (multiple speakers) --

Oh, we said it. Don't worry about it. (laughter)

But, clearly, that's what they're interested in. So they can't do that if you buy the company. So their interest is in continuing to feather their own nests. So clearly, even though the acquisition itself may make sense, it doesn't make sense for you to go after them unless you can prearrange an amicable agreement.

Lenny, I tend to disagree with you on that, I think. We have been very aggressive on the acquisitions. Again, we have $100 million of cash, so -- and we have done it with numerous companies -- Power-One, [Preston] -- (multiple speakers) and most [of them] have been very successful.

And we try to talk to these companies very nicely, and after getting rejected a couple of times, we feel we have no other choice to see if we can put the company into play and see if it can bring value to our shareholders. So I think, again, we are -- we will maintain that philosophy that if we see a company that can add true value to Bel -- after they don't want to speak to us, we will probably end up taking stakes into it. And again, I think it's been very -- overall, a very successful strategy, either acquiring companies or making profit for our shareholders.

Well, you know, again, (laughter) if you can do it amicably, great. It would appear to me that as long as you have the A/B structure of stock, that you're going to have difficulty doing stock acquisitions, because these advisory firms generally don't like that when (multiple speakers) --

Well, again, when we said with the Pulse deal, we said with the Power-One deal, and we said with the Artesyn deal, all three times we said if the A/B stock is a problem, then we would dissolve the A/B stock. And Pulse knew that; Artesyn knew that and Power-One knew that.

So that -- and again, even when we told that to ISS when we met with them, they refused to listen; but that is truly the case. But there's -- no, to collapse the stock at this time, there's still a lot of strong companies out there that believe that A&B stock has a lot of value. And at this time, until we see a deal that makes us want to collapse it, then we will; but we won't do it until we kind of see what makes sense for us.

And again, to be honest with you, on the other hand, Lenny, sitting with $100 million of cash and no debt, as -- if we didn't have the A/B stock, I don't think I'd be speaking to you today.

Well, I understand that you have to protect the interests there and the cash -- somebody's going to want the cash. But -- and I'm all for you deploying the cash, because clearly, it's earning de minimis for the Company as cash. Obviously, it would be better used in a business. So I'm not quarreling with that, it's just I think maybe some consideration should be given to collapsing the stock in advance to be preemptive, but (multiple speakers) --

As I said, if we collapse the stock, the only thing that would be preemptive is someone taking us over. Look at our market cap, it's [220], right?

Yes.

And we have $100 million in cash. So I think it -- again, I think -- again, it's not the best time to do it, that's for sure. If we didn't have any cash, then I think we'd be a lot more conducive to do it.

Well, maybe if you deployed $40 million or $50 million in an acquisition, that would be the time to do it then.

Yes. Hopefully, $100 million. (multiple speakers) But anyway -- but no, we understand your point. And at every Board meeting we discuss the A/B and at what time it should be collapsed or not. So it's a subject that has been discussed and will be discussed.

But once you've got to -- the most important point is when we did discuss, when we met with Artesyn, when we met with Power-One, when we met with Pulse, every opportunity we sat and we went on trying to do a friendly deal, and they brought up A/B stock, we said unequivocally that that's not a deal-breaker and we would collapse the stock.

I did ask on the last conference call about a small raise in the dividend to keep shareholders happy while we're waiting for things to happen (multiple speakers) --

Lenny, trust me -- nothing would make me happier. You're speaking to one of the largest shareholders at Bel. (laughter) So, and besides making me happy, you'd make my wife even more happy.

Well, then make her happy and make me happy, too.

I wish I could. I tell the Board every time, but I'm just one voice on the Board.

But you know, we wouldn't have to -- I'm talking about a massive increase or a one-time payment, those type of things I think the acquisition strategy makes sense for; but I'm not too sure that a small raise in the dividend would really affect your ability to make an acquisition.

Lenny, I will make you a promise right today. At the next Board meeting, we'll bring it up again.

Okay. And these one-time charges kind of make it more difficult to really (multiple speakers) --

(laughter) It drives us crazy. And it's one of the things -- in the past, before Sarbanes-Oxley, you could really do a lot better job of setting up reserves that you knew it was going to occur. But it's just -- again, our hands are tied and we have arguments all the time of every quarter having these reserves pop up. But it's very difficult the way accounting is set up today, to change it. But I agree with you 100%, because you really don't know what's really going on with the Company any more.

And is there any other pending legislation -- I mean, litigation; I didn't mean legislation -- litigation that we can expect charges on? Or is this pretty (multiple speakers) --?

No, but again, we are -- the problem we do face, though, Lenny, is we are looking at streamlining our organization, making it more efficient. So, again, as we do that, there might be charges related to that. Again, it's just something that's very difficult nowadays.

There's no litigation.

But there's no litigation. Again, that's why we made a point that we had legal fees of $135,000 a month and we hope going forward that'd be substantially reduced.

Okay. Well, thank you very much and (multiple speakers) --

As much as you hate these one-time hits, I think we hate them a lot more and we wish we could take them all at once.

Okay. Well, you know, the death of 1,000 cut sort of -- but anyhow, if going forward, we should be clean other than if you do any type of restructuring --

Yes.

-- that isn't -- the litigation thing makes me more nervous than a restructuring charge would. And you said clearly that there is no pending litigation, so that's good.

I'm knocking on wood.

Thank you. Okay, that's all I have. Thank you.

Thank you, Lenny. Have a good day.

Thank you, sir. And with no further questions in queue, I would like to turn the conference back over to management for any closing remarks.

Once again, we thank everybody for joining us and we look forward to speaking to you in the future.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect. Have a great rest of the day.