Blackbaud Inc (BLKB) 2013 Q2 法說會逐字稿

Greetings and welcome to the Blackbaud second-quarter 2013 earnings conference call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

(Operator Instructions)

As reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tony Boor, Chief Financial Officer. Thank you sir, you may begin.

One moment please, your conference will resume momentarily.

Good morning everyone. Thank you for joining us today to review our second-quarter 2013 results. With me on the call is Marc Chardon, our President and Chief Executive Officer. We both have prepared remarks and then we will open up the call for your questions.

Please note that our remarks today contain forward-looking statements. These statements are based solely on present information and are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Please refer to our SEC filings, including our most recently reported Form 10-Q, our most recent annual report on Form 10-K, and the risk factors contained therein, as well as our periodic reports under the Securities Act of 1934 for more information on these risks and uncertainties and on the limitations that apply to our forward-looking statements.

Also please note that a webcast of today's call will be available on the Investor Relations section of our website. With that let me turn it over to Marc to review our high-level financial performance and business highlights, then I will come back at the end to provide greater details on our second-quarter results, as well as guidance for the third quarter. Marc?

Thank you Tony, and thanks all of you for joining us today to review our second-quarter results, which represented another solid performance. We're pleased to have generated non-GAAP revenue and profitability that exceeded the high end of our guidance ranges. During the second quarter, we continued to build on the positive performance we delivered during the past two quarters and we made good progress on a number of our key priorities. We delivered a solid sales performance in the quarter and we continued to see improvement in our opportunity pipeline.

The cost rationalization and operation efficiency improvements we have made in recent quarters are taking hold faster than we anticipated, generating a faster-than-expected and more meaningful improvement in our profitability. And we achieved a significant milestone with the release of the Raiser's Edge and Luminate Online integration, which enables the seamless sharing of data and information between them. And will expand our opportunity cross-sell these solutions, decrease implementation times, and give our customers a 360-degree view of their supporters.

We have been particularly pleased with the Company's ability to rapidly improve profit margins as we integrated the Convio acquisition. Our 21% non-GAAP operating margin in the second quarter represents our highest margin performance since the third quarter of 2011, which was prior to the acquisition of Convio. To put this achievement in context, Convio had a non-GAAP operating margin of approximately 10% prior to being acquired by Blackbaud.

Let me provide a brief overview of our second-quarter financial performance. We delivered non-GAAP revenue of $125.7 million, which exceeded the high end of our guidance. We generated non-GAAP operating income of $26.4 million, which was well above the high end of our guidance range.

Based on the Company's solid performance in the first half of the year along with our view on the second half of the year, we are narrowing our full-year revenue guidance, which means a modest increase at the midpoint of our range, and we are increasing our full-year profit outlook Tony will detail our guidance later.

For now, let me turn to the macroenvironment, which remained stable in the second quarter. As we look ahead, we're not anticipating any material change one way or another in the near term. The Blackbaud giving index experienced a minor deceleration during the quarter, but it continues to reflect year-over-year growth. This environment of modest growth in overall charitable giving has been the reality for the nonprofit market since the recession began nearly five years ago. We see no changes anytime soon.

Blackbaud's market-leading portfolio of best of breed fundraising tools, CRM platforms, and back office solutions are tailor-made for the nonprofit industry to be able -- to enable improved constituent relationships. And increase the efficiency and productivity of their fundraising efforts.

I would like to take a few minutes to review the performance of each of our business units, beginning with our enterprise customer business unit. ECBU performed at a high level in the second quarter, including signing eight deals across our CRM offerings. We saw a good mix of CRM deals in the quarter in a number of different verticals, including healthcare, higher education, religious, and political.

We had a healthy mix between new customers and upgrades from our sizable Raiser's Edge install base. Signing deals at the low end of the CRM market has been a strategic priority for us, and we are pleased with the improved performance we're seeing in this segment of the market. We continue to see a solid pipeline of opportunities for our CRM portfolio, and we believe we are well-positioned heading into the second half of the year.

We also had very strong performance in terms of go-lives, bringing seven Blackbaud CRM customers live during the quarter, including Best Friends Animal Society and Legacy Health. This represents the largest number of CRM customers we have ever brought live in a single quarter. This expanding set of referenceable customers is a significant asset for Blackbaud in future sale cycles.

During the quarter we also made good progress expanding the Luminate Online pipeline in the enterprise segment, and we are beginning to generate positive momentum with this offering. During the quarter we closed our first joint Luminate Online Blackbaud CRM deal, which we believe is a positive indication that customers are seeing the value of the combined offering. Jono and his team have also made significant strides with our ECBU services organization, where the steps we've taken to improve our forecasting and staffing plans to drive improved utilization is having a positive impact. We think the new policies and procedures we put in place will generate significant improvement in the future.

Turning now to the general markets business unit, Kevin Mooney and his team once again delivered solid performance in the second quarter. We saw the mix shift towards our subscription offerings continue during the quarter, as subscriptions outpaced license deals nearly five to one. This is helping to drive our recurring revenue growth, which now represents a significant majority of our general market business revenue; this is positive for Blackbaud as a gives us greater visibility and predictability into our financial performance.

We were particularly pleased with the performance of Luminate Online in GMBU during the quarter. We see a significant opportunity over time to cross-sell Luminate Online in our sizable mid-market install base. And with the Luminate Raiser's Edge integration just entering general availability, we're in the very early stage of executing against this opportunity.

Another positive driver in the general market business is the success we're having converting Blackbaud's legacy installed base of mid-market customers to our merchant services solution, which offers better payment processing rates and is integrated into a growing percentage of our products. In the second quarter, we added merchant services to The Education Edge, and there is also a significant opportunity to convert Convio's installed base once we integrate merchant services into Luminate Online.

Our international business posted solid results, even as the macroenvironment overseas has seen greater headwinds than we have experienced domestically. That said during the quarter, Everyday Hero signed its three thousandth charity. We had several CRM go-lives internationally and we're seeing good customer interest in our CRM offerings.

We are focused on closing as many of these opportunities as is possible this year, but we are also mindful that the macro environment can impact the timing of when large deals such as these close. We believe we're underpenetrated internationally and expanding the percentage of our business that we generate outside the United States is a key long-term priority for Blackbaud.

In summary, Blackbaud has delivered better-than-expected results in the first half of 2013 as we see customers recognize Blackbaud as the strategic vendor of choice for the full lifecycle of the nonprofit's fundraising and CRM needs. We believe Blackbaud is positioned to generate accelerating revenue growth over time while also delivering improved profitability, which we believe can drive meaningful shareholder value.

With that, let me turn the call over to Tony to discuss our financials in more detail.

Thanks Marc. We are pleased with our performance in the second quarter, which exceeded the high end of our guidance on both top and bottom line. The efforts we have undertaken to improve our operational efficiencies and position the Company for improved revenue growth in the future have positively impacted our financial performance more quickly than we had anticipated. And we're focused upon building upon this initial success.

Now let me turn to the second-quarter results, starting with the P&L. GAAP revenue was $125.5 million and non-GAAP revenue was $125.7 million, which exceeded the high end of our $121 million to $123 million guidance range, and compared to $113.7 million in the second quarter of 2012. Non-GAAP subscription revenue was $52 million, compared to $40.8 million in the second quarter of 2012, and up from $47.9 million last quarter. As expected, our subscription revenue grew sequentially due to seasonal improvements in our transaction revenue and overall growth in our subscription base.

Maintenance revenue was $34.1 million for the second quarter, and up approximately 1% from a year ago quarter. When combined with our subscription revenue, our total recurring revenue was $86.1 million for the second quarter; that's an annualized run rate of over $340 million. License revenue in the second quarter was $6 million, compared to $4.5 million in the year-ago period. License revenue, which can be variable on a quarter-to-quarter basis, continues to become a smaller part of our overall revenue mix due to the growth in our subscription business.

Services revenue in the second quarter was $31.6 million, up 8% from last quarter, and down slightly from last year. We are pleased with the progress we have made in increasing the efficiency of our services organization and we see opportunities for further improvement. We are continuing to work to implement these improvements, and we expect to make continued gains in our services business, though the full effects will not be felt until later in the year and into 2014.

Turning to profitability. Non-GAAP gross margin was 60%, comparable to the second quarter of last year. Our gross margin was positively impacted by increased scale of our subscription revenue base, which now represents 41% of our total revenue. Non-GAAP operating income was $26.4 million, and was meaningfully above our guidance of $21 million to $23 million. Non-GAAP operating margin was 21%, representing a 400 basis point improvement from the second quarter of 2012.

Our better-than-expected profitability was driven by our revenue performance, our improved cost structure, and process improvements in we implemented in recent quarters to increase our operational efficiency. Our non-GAAP diluted earnings per share were $0.33 for the quarter, which was $0.04 better than the high-end of our $0.26 to $0.29 guidance range.

Turning to the balance sheet and cash flow. We generated $24.5 million in cash flow from operations during the second quarter. We used $5.5 million to pay our quarterly dividend, invested $4.7 million in capital expenditures and capitalized software, and used $15.5 million to pay down our debt.

We ended the quarter with $195.5 million of debt, which is down from $211 million at the end of the first quarter. We are now levered less than 2 times EBITDA, which is down substantially from last May when we acquired Convio. Our total deferred revenue balance was $191.5 million, an increase of 4% from a year ago.

I would like to finish by turning to guidance, starting with our full-year guidance. As Marc indicated earlier, we're refining our total revenue guidance to a range of $498 million to $504 million, as compared to our prior guidance of $495 million to $505 million. Our updated view includes a negative impact of approximately $1 million related to changes in foreign exchange rates for the second half of the year.

In the first half of the year we had several unanticipated positive impacts on our top line that we are not forecasting to re-occur in the second half. Such as an increase in charitable donations related to the Boston Marathon bombing and the Oklahoma tornadoes, as well as a record number of CRM deals we closed in the second quarter. All things considered, we have effectively increased the midpoint of our 2013 guidance range from $500 million to $501 million.

From a profitability perspective, our strong first-half performance enables us to increase our full-year non-GAAP operating margin guidance range, which we are now guiding at 19.9% to 20.2%, versus our prior guidance of 19.0% to 19.5%. This now represents approximately 340 basis points of year-over-year margin expansion at the midpoint. This translates into non-GAAP EPS of $1.26 to $1.30, an increase from our previous guidance of $1.19 to $1.25.

While we are very pleased with our margin performance in the first half of the year, we do want to call out that it has benefited from the timing of certain investments and a lower-than-expected increase in headcount compared to our initial hiring plans for the year. We currently have a number of open positions and we anticipate filling a number of those slots in the second half of the year. We also continue to make investments we discussed last quarter in consolidating disparate back-office systems and implementing a best-in-class integrated CRM platform to improve our efficiency as we position the Company to scale effectively in the coming years.

Turning to the third quarter, we expect non-GAAP revenue to be in a range of $128 million to $130 million, and non-GAAP operating income of $26 million to $28 million, resulting in non-GAAP earnings per share of $0.33 to $0.36. In summary, we are pleased with our second-quarter performance and the Company continues to deliver against its key objectives. We have an improving pipeline of sales opportunities and we believe we are well-positioned to increase our full-year financial targets. We feel good about the progress we have made so far this year and are confident in our ability to create a significantly larger, more profitable Company over the long term.

With that, we're happy to take your questions.

(Operator Instructions)

Matthew Kempler with Sidoti.

Thank you, good morning. I wanted to start off on the enterprise side. You said a record number of CRM deals. So I'm wondering if you are starting to see the replacement cycle for large enterprise play out, and what are the signs that the nonprofits are now ready to upgrade versus holding off for years?

A part of them are upgrades to the Raiser's Edge and so the signs of the desire to upgrade to Raiser's Edge in the enterprise space is continuing to grow. You're seeing a combination of both centralization of chapter-based organizations towards a headquarters and that pressure is continuing to grow in terms of getting more efficient and getting more cost effective in fundraising. We also seeing continued interest in the -- in both cause and cure and hospitals and healthcare. So yes, it is a slow growth but it is a growth.

Okay. And then I wanted to follow-up on the services side. You said you have made a lot of changes there and expect improvements into the latter half of this year and into the first half. Can you talk about what are some of the changes to policies and procedures that you've put into place? And in general terms, what kind of impacts you expect to see from this over the next year?

Well, we won't make a guidance for next year obviously at this point, but the kinds of changes we've installed, quality control function as a direct report to the enterprise leadership team, and that does everything from scope reviews in the quoting process through quality assurance reviews on the quarterly basis through the process. That means that any new deal sold in the second half of last year and beyond, or last quarter of last year and beyond will start to see the benefit, and so the mix shift will happen over the 18 to 24 months after that system got put in place because you are still working out the backlog of pre-existing deals. I've said before that I think there are a couple points overall corporation-level at the professional services margin line to be had and this is a key component of getting that now.

Matt, we are also in the process of installing some best-of-breed solutions for Management of the professional services area as well. And that is in the early phases, so we still have some work to do there, but we expect those solutions to be in place sometime in '14.

Okay. And last question for me and then I'll get back in the queue. In the prepared remarks you talked about merchant services and the opportunities you have been seeing there. Could you just expand a little bit more on merchant services, the value differentiation of that product and why clients would be converting to it?

Well there's a combination, actually in many cases it's less expensive than their current offering in the low-end, but the most important is that because it's integrated directly with our CRMs, you get the information flow into your CRM on a much more timely and less person-intensive basis. The other thing is that as countries, especially outside the United States, start to implement higher levels of PCI standards, they want to outsource the tokenization and they don't really want to have credit card numbers inside their organizations and so having the ability to have that built into your CRM is absolutely critical to them.

Okay, thank you.

Ross MacMillan with Jefferies.

Thanks a lot. You mentioned that there were some one-time benefits such as the Boston Marathon charity, and I just was curious if I look at the subscription line, was there bigger-than-normal benefit from the transactional component of that line? Could you maybe add any color to that?

Yes Ross, we certainly saw some benefit in the quarter from those unfortunate incidences. But it was not something that was so material that we would want to call out specifically from a numbers perspective. It did have an impact but not substantial.

Transaction revenue in general in Q2 is the highest level, Q2 and Q3 are higher than Q1 and Q4, just because now with the combined business, the event business and the online fundraising in the event business or the transaction-based pricing of the event business happens mostly in the spring, summer, and early fall.

Is that revenue stream that you get from transactional business equivalent margin to the broad base of subscription? Or higher? Is it higher, simply because it is a higher revenue base on very little incremental cost? I'm just trying to get a sense for how that impacts the P&L in Q2 and Q3.

There's two kinds of transaction revenue. The first kind is where you're doing it in lieu of a subscription, and I would say margins are relatively similar. We could have transaction-based pricing even if we don't actually run the transaction through our merchant services.

The merchant services business, however, is very, very high margin because it is net, so in our P&L we don't include the overall fee we charge, we only include the net proceeds that we get because transaction processing, merchant processing at this point is not a core portion of our business. We are not the core provider.

That is helpful. And then just bigger picture on the recurring revenue base. You have done a really good job at managing the gross margins despite the shift in growth from the higher-gross margin maintenance line to the lower-gross margin subscription line. And I know you've got opportunities to increase gross margins on subscription over time, but on a blended basis, we have been seeing that recurring stream have a gross margin non-GAAP in the 73% to 74% level. Do you think that is sustainable even if growth, if you will, continues to shift towards the subscription line? Thanks.

Sure, Ross. I think that we will continue to be impacted by the drag that is created with that conversion to subscription in the ratable recognition for some period of time until we get through the transition and get that base of recurring subscription built up. But I think that offsetting that as Marc and I have spoken numerous times before, we still think we have quite a few opportunities for margin expansion with the business as we continue to shift more towards SaaS as an operation as a business, I think within our service delivery work, we have talked about within hosting we have opportunities to gain leverage. So I think there are still several places as we have spoken in past quarters to get some additional margin expansion to help offset the drag that we have from the conversion.

I would also point out that the bottom line of Tony's comments is the margins of the service delivery component will continue to expand, the question then is how quickly you shift from maintenance. If you were to make a specific decision relative to going to a subscription model 100% for example, you probably wouldn't maintain the gross margins exactly where they are. But we have been sort of being graceful in the transition to subscription, and at a graceful rate I think you can probably grow SDO service delivery margins fast enough to keep things somewhat in the same ballpark.

That is really great color, and maybe the last one just on maintenance itself. You are obviously going through this transition as you begin to even upgrade the RE base and other parts of the traditional product base to subscription. How should we think about that maintenance line? Is a going to grow? Should we think about it being flat? Just at a high level, how should we think but that?

Maybe two things I would point out. One, Ross, you'll recall we do have some downward pressure this year on the maintenance line caused by the accounting change that we had at the beginning of the year on the gross versus net on our ticketing business, and so that is affecting maintenance. I think if you adjust for that on a pro forma basis, Q2 maintenance would have grown at about 3% on a pro forma basis versus looking relatively flat on the face of the financials.

And then secondarily, as we said last quarter, I think we continue to believe that we will see something in those lines for the rest of the year of a slight growth in that maintenance line. We are not guiding to '14 yet, but I think it ties back to Marc's comment about how quickly do you make that conversion would be the biggest impact on the maintenance line.

Great, that is all for me just now. Congratulations again on a good quarter.

Thank you Ross.

Tom Roderick with Stifel Nicolaus.

Hi guys, good morning. So we're lapping the Convio acquisition by a year here and things are really starting to go smoothly for you on the operating side. I guess the question I would have from the standpoint of raising your margin guidance here, Tony, is where can this go if you look out over two to three years? If you think about the incremental investments needed to put all these products in a smooth product roadmap and a cohesive product suite, how much more investment on the R&D side needs to occur? Do you think the heavy lifting is largely behind you, and if that's the case what does that mean for margins again over the next, not just this year as you raise your targets but even over the next couple three years?

I'll start with the product roadmap answer and then let Tony talk about the numbers and margin implications, Tom, if that's okay. We clearly do not have behind us the work of rationalizing the product portfolio. I would say that we've got a good start and we have some very clear understanding of the kinds of directions we would be going in, but until the internet offering across the Company is rationalized and until there is a very clear roadmap for every single RE customer as opposed to part of the RE base that is out there and in the market, the job is not done. And we will announce each step of that along way as it shows up, but you won't see R&D going down. If anything I would expect that there is some investments that still need to be made that might move it gently in the other direction.

I think, Tom, from the margin expansion opportunity, obviously the midpoint of the revised guidance that we are guiding to 340 basis points expansion in our operating margin, which is obviously great performance compared to last year, we have largely implemented all of the planned synergies so we're well into that. I think the one thing I would point out is that we had a bit better performance than planned in the first half of in Q1 and Q2 because we have had quite a few open heads that we have been behind schedule on hiring. We are currently recruiting for 130 heads, a big chunk of those being in products and in sales and marketing. And so I'd tell you there is a timing issue of when we can get those heads on board that we will have some headwind on us in the second half is what we are anticipating.

Overall, over the longer term as Marc and I have said time and time again, we believe there's great opportunity for margin expansion. We are making a lot of improvements in our back-office infrastructure right now. The plan is that those investments would allow us to gain more substantial leverage in the future and help drive more growth for the future. So we think those are the right investments to make.

Getting back to our margins of old, I think that's a question we will have to look at over time and balance between putting that money back into the business to drive more topline growth versus to the bottom line for margin expansion as we talked about. And we are trying to balance the two of those obviously as effectively as possible, and I think thus far we have shown that we have done that very well here in certainly the last year since the Convio acquisition.

Great, thank you. One last follow-up question from me. Just in terms of the quarter showing a record number of CRM deals, you had a big jump in the license line this quarter. Recognizing licensing as a huge component of revenue but it did have a very nice jump. How should we think about where these CRM deals are contributing in subscription versus license? And is this $6 million range maybe a better range to think about, or will it still kind of jump around in the low- to mid-single digits here by quarter?

Yes, the CRM business still is primarily license. There are a relatively small number of subscription CRM deals when you talk about the traditional Blackbauds here. Obviously all the L CRM deals are subscription-based. So depending on the mix in any given quarter of L to B, you could have a different ratio. And depending on what decisions we might make as a Company over time about whether we are going to subscription overall you might see that.

Leaving that the same, you would expect that the number could vary -- it could vary from four to six on any given quarter, and in fact being six this quarter and being four a year ago, means that it looks like it is growing and being four this year and six a year ago would make it look like it's going down, because it's just lumpy business.

I understand. Just to be clear, the revenues recognized from the deals in the quarter are largely already recognized, in other words there aren't additional elements of these deals that were booked this quarter that will show up in future periods, or is there still sort of a term-based component behind it?

There's some with a term-based component and there's some that are booked in the quarter, and there's some that have essentially very little software revenue per se because their upgrades -- or much less software revenue because they're lower-priced deals and upgrades from the Raiser's Edge. So it is a real mix.

Got it. Okay, thanks guys.

Thank you.

(Operator Instructions)

Sterling Auty with JPMorgan.

Yes thanks, hi guys.

Hi, Sterling.

Let's start administratively, what was the actual total headcount at the end of the quarter versus the end of last quarter?

Give me just a second to grab that here.

Okay. And as you're doing that maybe you can just qualitatively comment, you mentioned a couple of times that you are a little behind on the 130 open recs that you have. Is that a function of given the macroenvironment, not putting a lot of pressure on people to really get that hiring done, just seeing how the year is playing out? Or is it a function of actually having a little bit more difficulty finding the right people to fill those slots?

I would say it is probably both of what you said. The first component of it not as much pressure, I think one of the things is we went through the rationalization of our headcount and all of the attainment of synergies, I think that has an emotional impact on our personnel and our team. And with the adjustments we made in Q1, I think we had less hiring just naturally coming into that event and had less hiring coming out of that. I think part of the issue, Sterling, is the human nature effect of those kind of changes.

And then secondarily, I think it's a bit of a tough market in some of the areas, certainly for some of the engineering staff in some of the locations, and some in sales and marketing as well. So you fight that on both ends where attrition is working against you and then it's also if it's a little more competitive environment, tougher to find the right people. So I think it's a combination of all of those things. We are planning to more aggressively recruit in the second half than what we were in the first half, and hence our forecasting to fill some of those open positions more quickly. The numbers that you'd asked, for Q1 was 2,575, Q2 was 2,629 heads. So we were up 54 heads effectively.

Okay. And you mentioned implementation of I believe a system to help better manage services. Can you give a little more detail, were you talking something like a net suite to help manage billable hours, utilization, et cetera?

This would be a best-of-breed solution specifically made for the services business, a services business. And the nice thing about it as we have said we are implementing in a CRM across the business, so we're in the middle of that pilot and ready to move hopefully forward with expansion of that rollout of a consistent CRM across the business. This integrates very tightly with that CRM.

We also are looking at a best-of-breed, not looking or implementing a best-of-breed solution for the quote, the contract piece of the business as well that will integrate very tightly with our CRM solution. So we should get a very tightly integrated solution that works all the way through from quote to cash to CRM to management of the services engagements, all the way through to billing of those as well.

Okay, and can you give us an update on the CEO transition process?

Yes, we have been working diligently on the process as a Board, and we believe we are very close to concluding it. But we don't have anything to announce today and we're looking forward to making an announcement as soon as we're done.

Last question from my side. In that context, can you give us an update in terms of the product transition, meaning the transition to SaaS, and are there elements of that that need to wait for a new CEO to come in and put their stamp of approval on it? Or is the actual direction pretty much set and you are moving forward, despite the transition?

I would say that the Board, the full Board, six independent directors and myself, have debated the product direction and the transition to the various different platforms and SaaS technologies at length and we are quite aligned on it. So my guess is that there will be some significant continuity and direction from that perspective, and certainly I know the Board is lined up behind what we're doing. We have not postponed any decisions relative to roadmaps in waiting for in the past two-plus quarters since we announced the CEO transition, and we have made good progress in that time.

Great, thank you guys.

Thank you.

Mr. Chardon, it appears we have no further questions at this time. I would now like to turn the floor back over to you for closing comments.

Thank you very much. And thanks everybody for joining us again today on the call. To summarize, we performed at a high level in the second quarter, revenue and profitability both exceeded the high end of our guidance. The cost savings that we have generated in the integration process with Convio and in the operational efficiency improvements have been driving significantly better-than-expected profitability, our non-GAAP operating margins have returned to pre-Convio levels, I am feeling good about all of that. And looking forward, the Luminate pipeline is showing good improvement during the quarter. We see building pipeline of opportunities in the coming quarters for our traditional products and for the Convio Luminate products.

We are confident as a team about Blackbaud's ability to execute against the market opportunity we are targeting, and we believe we are well-positioned to deliver on improved growth this year and beyond. So we look forward to updating you on our progress at the next earnings call in October. Thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.