Comtech Telecommunications Corp (CMTL) 2015 Q2 法說會逐字稿

Welcome to the Comtech Telecommunications Corp. second quarter fiscal 2015 earnings conference call. At this time all participants in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Thursday, March 12, 2015. I would now like to turn the conference over to Ms. Maria Ceriello of Comtech Telecommunications. Please go ahead, ma'am.

Thank you and good morning. Welcome to the Comtech Telecommunications Corp. conference call for the second quarter of fiscal year 2015. With us on the call this morning are Dr. Stanton D. Sloane, President and Chief Executive Officer of Comtech, and Michael Porcelain, Senior Vice President and Chief Financial Officer.

Before w, proceed, I need to remind you of the company's Safe Harbor language. Certain information presented in this call will include but not be limited to information relating to the future performance and financial condition of the company, the company's plans, objectives and business outlook, and the plans, objectives and business outlook of the company's management. The company's assumptions regarding such performance, business outlook, and plans, are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company's Securities and Exchanges Commission filing.

I am pleased now to introduce the President and Chief Executive Officer of Comtech, Dr. Stanton Sloane. Dr. Sloane?

Thank you, Maria. Good morning, everyone and thank you for joining us on the call. Before discussing yesterday afternoon's press release, which announced Comtech's second quarter results and updated our business outlook for fiscal 2015, I'd like to take a moment to provide a few comments regarding the recent leadership change announced by our Board of Directors in December 2014.

I joined the Comtech Board in January of 2011 and I've been privileged to be a Director and now CEO and President. We have a topnotch management team here at the company, world-class products. We also have tremendous market opportunities in front of us. I have admired Fred Kornberg's leadership and I'm honored to step into his prior roles. His will be big shoes to fill.

Let me shift now to current topics. As announced yesterday, we reported our second quarter results of $81.8 million in revenue, GAAP diluted earnings per share of $0.46, and adjusted EBITDA of $14.9 million. In summary, we're pleased with our solid second quarter financial results.

At the same time, in light of slowdown in satellite earth station bookings and the large shift associated with timing of unanticipated -- of anticipated orders for large contracts in our over-the-horizon product line, we now believe that revenues in fiscal 2015 will be in the range of $320 million to $330 million. GAAP diluted earnings per share is expected to range from $1.35 to $1.51, and adjusted EBITDA is expected to be in the range of $52 million to $56 million. Our updated earnings guidance for fiscal 2015 includes approximately $1 million of incremental costs associated with senior leadership changes.

Given our new guidance, we no longer expect year-over-year revenue or EBIT growth -- EBITDA growth. Nevertheless, I view these events only as short-term impediments on the road to sustainable long-term growth.

Since assuming the leadership role in January, I have spent a great deal of time meeting with our management team, our employees, and our customers. While my review of strategy and operations is not yet complete, based on what I've already seen, I can tell you that I'm confident our products and technologies are second to none and I do believe that we're on the path to long-term growth.

Now, before I turn the call over to Mike, I want to thank Fred personally for his service and commitment to Comtech, and to our entire management team, all of whom have assisted in making sure I get up to speed quickly. Over the next few months I expect to continue to meet with customers and investors, and continue the critical work Fred and the management team has started.

With that said, let me turn it over to Michael Porcelain, our Senior Vice President and CFO, to provide an overview of our financial results and some comments on our business outlook. I'll return later and talk more specifically about each of our business segments. Mike?

Thanks, Stan, and good morning, everyone. Let me walk you through our Q2 results and as I do, I will provide some comments as it relates to our updated fiscal 2015 business outlook. During Q2 we generated revenues of $81.8 million of which 27.5% were for US government end users, 60.8% were for international end users, with the remainder being for domestic commercial end customers. Net sales of our telecom transmission segment were $53.9 million in Q2 of fiscal 2015 as compared to the $56.5 million we achieved in Q2 last year, representing a decrease of 4.6%. This decrease represents lower net sales in both our satellite earth station product and our over-the-horizon microwave system product lines.

During the second quarter of fiscal 2015 we experienced a significant slowdown in bookings as well as lower sales in our satellite earth station product line. As we first discussed in our first quarter SEC filing and on our last conference call, global oil prices have plunged, certain businesses were experiencing reductions in revenue, and we did see reduced spending by some of our customers in November. Unfortunately, during our second quarter, volatile market conditions continued. In fact, during this past quarter oil prices continued to decrease, and the US dollar strengthened.

As most of you know, almost all of our sales are denominated in US dollars. As such, these conditions resulted in lower purchasing power for many of our international customers. Ultimately, and although December and January monthly bookings for our satellite earth station products increased from the level we saw in November, they did not reach the levels we were originally expecting. As such, and although we believe our pipeline of satellite earth station opportunities is strong, we believe many of our customers will continue to face economic headwinds and have adjusted our expectations for this product line. Looking forward, we believe sales in fiscal 2015 will be lower than the level we achieved in fiscal 2014, and based on the timing, we expect sales to be weighted towards the fourth quarter of fiscal 2015.

Now he let me give you some color on our over-the-horizon microwave system products. Here, sales on this product line in Q2 of fiscal 2015 were also lower than Q2 of last year. We continue to see strong demand for our over-the-horizon microwave system products from both the US government and international customers. However, we have updated our assumptions as relates to the timing of certain expected large orders and are shifting the anticipated related revenue and operating income from fiscal 2015 to fiscal 2016. Stan will provide some color as it relates to these opportunities. I just want to say here that the awards for these potential projects are large, the sales cycle is long and the timing of orders is difficult to predict.

Net sales in our RF microwave amplifier segment were $21.6 million in Q2 of fiscal 2015, as compared to $22 million in Q2 of fiscal 2014, a decrease of 1.8%. To date, the volatile business conditions that have impacted our satellite earth station product line have not significantly impacted our RF microwave amplifier segment. In fact, bookings for the second half of fiscal 2015 are expected to be slightly higher than the first half, and many orders we expect to ship in the balance of fiscal 2015 are already currently in our backlog. As such, revenue and operating income in this segment are expected to be higher than the level we achieved in fiscal 2014, with growth expected to occur primarily in the latter part of the second half of fiscal 2015.

Turning to our mobile data communications segment, sales in Q2 of fiscal 2015 were $6.3 million as compared to $6.9 million in Q2 of fiscal 2014, a decrease of 8.7%. This decline in sales is largely attributable to the absence of sales in our most recent quarter of certain SENS technology and products as well as lower sales to a small customer. Sales in both periods include $2.5 million of revenue related to our BFT1 intellectual property licensing fee. For the year, given the discontinuation of sales of certain of our SENS technology-based solutions, net sales in our mobile data communication segment are expected to be lower in fiscal 2015 as compared to fiscal 2014.

Now let me walk you through our gross margin and other data to give you some perspective on our results. Our gross profit percentage in Q2 of fiscal 2015 was 46.3%, versus the 43.7% we achieved in Q2 of last year. This increase is primarily driven by a higher gross profit percentage in all three of our operating segments. During the quarter we recorded $1.5 million of benefits to gross margins resulting from better than anticipated performance and warranty reserve reductions for certain over-the-horizon microwave system contracts. Looking forward, Q3 and Q4 will not reflect this $1.5 million of gross margin benefit, and despite all the various mix changes and year-over-year decline in expected sales that are more thoroughly described in our Form 10-Q filed with the SEC, we believe that our consolidated gross profit in fiscal 2015 as a percentage of consolidated net sales will be slightly higher than the level we achieved last year.

On the expense side, SG&A expenses were $16 million or 19.6% of Q2 fiscal 2015 net sales as compared to the $16.3 million or 19.1% we achieved in Q2 of last year. SG&A expenses in the second half of fiscal 2015 are expected to reflect almost all of the $1 million of incremental costs associated with the senior leadership changes announced by our Board. For the year, we expect SG&A expenses in dollars in fiscal 2015 to be comparable to fiscal 2014, but as a percentage of sales to be slightly higher.

R&D expenses were $9.7 million, or 11.9%, of sales versus $8.3 million, or 9.7%, in Q2 of fiscal 2014. As a reminder, both periods do not reflect customer-funded R&D projects which approximated $2 million in Q2 of 2015 as compared to $3.6 million in last year's comparative Q2. We expect company-funded R&D dollars for fiscal 2015 both in dollars and as a percentage of consolidated net sales to be higher in fiscal 2015 as compared to fiscal 2014.

Amortization of intangible items was $1.6 million for the second quarter of both fiscal 2015 and fiscal 2014. Total stock-based compensation expense which is recorded in our unallocated segment was $1.1 million in both comparative periods. Based on the amount and type of outstanding equity awards, stock-based compensation in fiscal 2015 is expected to be higher than fiscal 2014.

Consolidated operating income in Q2 of fiscal 2015 was $10.6 million, or 13% of consolidated net sales, as compared to $11.2 million, or 13.1%, in the second quarter of last year. The decrease in operating income, both in dollars and as a percentage, is primarily due to lower consolidated net sales during the second quarter of fiscal 2015 as compared to second quarter of fiscal 2014. Given the reduction in expected sales and incremental costs associated with our senior leadership changes, we are now targeting operating income as a percentage of consolidated net sales in fiscal 2015 to be approximately 11%.

Interest expense was $0.1 million in the second quarter of fiscal 2015. As announced in May 2014 none of our 3% notes are outstanding any longer. As such, we expect interest expense for fiscal 2015 to be significantly lower than fiscal 2014. Interest income and other in both periods was nominal.

Turning to income taxes, we did record a discrete tax benefit of $600,000 or approximately $0.04 of diluted EPS, which resulted in our GAAP effective tax rate for the second quarter of fiscal 2015 being 28.7%. Excluding the impact of any discrete tax items, our effective tax rate for the year will approximate 34.75%, which does include the extension of the Federal Research and Experimentation credit through December 31, 2014.

On the bottom line, as I mentioned earlier, we delivered GAAP diluted EPS of $0.46 in Q2 of fiscal 2015.

Now let me provide some additional financial metrics to add some color to our results. Adjusted EBITDA, as defined at the end of our press release that we issued yesterday, was $14.9 million in Q2 of 2015. At January 31, 2015, our backlog was $129.4 million.

Our balance sheet remains strong. We had $135.1 million of cash and cash equivalents and no long-term debt as of January 31, 2015. This cash balance does not reflect our Q2 dividend payment that was just made in February which approximated $4.9 million. Also yesterday, our Board of Directors approved a dividend for the third quarter of fiscal 2015 of $0.30 per common share. This dividend is expected to be paid on May 21, 2015, to stockholders of record on April 22, 2015. To date, and over the past 18 consecutive quarters, we have paid out almost $95 million of dividends and we continue to believe our dividend program is an excellent way to return capital to our stockholders.

During the first six months of fiscal 2015, we did have operating cash outflow of $8.2 million. As stated during our prior conference calls, we do expect to generate significant cash flows this year, however, it is expected to be generated in the second half of the year. We currently have a large receivable from a large US prime contractor which we expect to begin collecting on shortly. In addition, assuming the first option year for the IP fee of $10 million is billed in April and collected shortly thereafter, cash flow from operations in the second half should come in pretty strong.

Before turning it back to Stan, I do want to give some color on our third quarter, in case you did not see our comments in our press release yesterday. We expect that consolidated sales in our third quarter of fiscal 2015 will be lower than the consolidated net sales achieved in our second quarter. In addition, our GAAP diluted EPS is expected to range between $0.20 and $0.24 for the quarter. I want to point out that our Q3 revenue is expected to reflect period to period mix differences, including shipments of production units pursuant to our contract to develop and manufacture the ATIP for the US Navy's Space and Naval Warfare Systems Command. These production units are expected to generate lower margins than our historical product mix. And finally, as always, our fiscal 2015 EPS and EBITDA guidance provided does not include any additional stock repurchases that we may make pursuant to our share repurchase plan, and does not include any other one-time items.

Now let me turn it back to Stan who will discuss our business in further detail. Stan?

Thanks, Mike. Now let me discuss some of the recent developments in each of the three business segments. Starting with the largest segment, telecommunications transmission, the segment is comprised of two product lines -- satellite earth stations and over-the-horizon microwave systems. We remain the undisputed leader in the satellite earth station SCPC modem area, driven primarily by our proven ability to deliver the most bandwidth-efficient modems and high efficiency amplifiers to our end customers.

We continue to be excited about our advanced VSAT product line. These products combine a variety of technologies within our IP portfolio to provide integrated solutions to our customers. By listening closely to our end customers, we've focused our technology developments on solutions targeted at markets that have traditional been served by TDMA. Recently we've seen TDMA users move away from that technology as customers demand for efficient use of bandwidth, lower latency and higher quality of service.

Despite the recent slowdown in satellite earth station bookings, we've made and expect to continue to make significant investments in research and development that we believe will result in success. In fact, in next week's satellite 2015 show in Washington, DC, we will announce new satellite earth station network product offerings targeted at new growth end markets. I can't be more specific at this time but I will elaborate on that at our next conference call expected to occur in June.

Some of the new products we've introduced in the past, such as our Advanced VSAT and the new network product offerings we are planning to announce next week will take a little time establish themselves in the market. At the same time we're also offering technical services to our customers and expect this to contribute to growth over the next few years.

On the US government side of our satellite earth station product line, we're beginning to be see some return to normalcy in US government procurement. Recently, for example, we've seen a substantial increase in proposal activity for government satellite terminal applications and upgrades. One example of an important US government program that will position is in new market areas is the Advanced Time Division Multiple Access Interface Processor, or ATIP, which we'll be developing and manufacturing for the Space and Naval Warfare Systems Command. In February we announced the receipt of $6.4 million contract extension for the ATIP contract which will be applied to development of an adaptive coding capability to significantly improve the Navy's communication system performance. During the second half of fiscal 2015, we expect to ship ATIP production units to the customer. At the same time we'll be performing additional NRE for this adapted coding. The ATIP contract is our entry into the protected MILSATCOM market, a strategically important market for us where there are several sizable opportunities with US military as well as with US allies overseas.

As Mike mentioned, we believe many of our international satellite earth station customers will continue to face economic headwinds. Nevertheless, we believe we are well-positioned to capitalize on market opportunities when economic conditions improve.

On the over-the-horizon front, we started the year with a strong base anchored by backlog from programs with our North African end customer. We have a long relationship with this customer and believe that there are additional large opportunities that will materialize in the years ahead. Although we've lowered our revenue expectation for this product line for fiscal 2015, we do believe it's just a matter of time before these opportunities materialize. Demand for over-the-horizon microwave systems both with US government customers and new international customers continues to be strong. However, anticipated timing of receipt of potential contract awards for these opportunities is difficult to predict.

We also anticipate significant orders if our Modular Tactical Transmission System or MTTS, a high capacity over-the-horizon microwave system designed for easy and rapid deployment. In February, we demonstrated MTTS to the US Army, successfully establishing and maintaining a 50 megabits per second communication link between two systems separated by over 100 miles. Although it's difficult to predict timing for these orders, we believe the US government has a definitive need for this equipment. We're confident it will generate significant revenues for the product line in fiscal 2016.

We're also bidding international opportunities in the Middle East, Australia, Asia, South America, and Africa. We're increasingly confident that some of these opportunities will result in substantial contract awards. Timing of contract awards for the over-the-horizon microwave systems are always difficult to predict. However, we nonetheless anticipate we will generate revenue and related operating income from some of these contracts in fiscal 2016. All in all, despite year-over-year revenue declines in our telecommunications transmissions segment, I believe our products are second to none and that we're positioned to grow over the long-term.

Turning now to the RF microwave amplifier segment, we've received some significant awards so far this fiscal year. The strong bookings at the end of fiscal 2014, as well as expected bookings in the second half of fiscal 2015, will provide another year of revenue growth for this segment this year. We recently received US military orders for traveling wave tube amplifiers for the FAB-T and WIN-T programs. Those, plus opportunities we see in tactical communications enabled by our X-Band products, should provide a strong base of US government-related revenues for the next several years.

On the commercial side of the TWTA product line, we continue to see broadband high throughput satellite and direct to home TV markets as very exciting growth opportunities for us. We've already sold products into most of the large North American and European Ka-band platforms and are building on next generation platforms with these customers as well as new opportunities with new customers. The focus area for us is the direct to home market, which is poised for dramatic growth in the next few years, as broadcasters not only build out new infrastructure to serve new markets, but also start to replace aged, inefficient equipment in their current infrastructure with the high power, high efficiency broadband amplifiers necessary for high definition and ultra-high definition broadcasting.

We believe that our product offerings are uniquely positioned. In fact, at this week's -- I'm sorry, at next week's satellite show in Washington, we will be officially introducing our new product line of very high-powered TWTAs which will include 1.5-kilowatt and two-kilowatt TWTA KU band products targeted for this lucrative DBS market. These products will offer significant performance and cost advantages for our customers by replacing inefficient and expensive Klystron tube amplifiers.

On the solid state power amplifier side, business remains good. So far in fiscal 2015, we've booked $8.9 million in SSPA orders from international customers. Also in fiscal 2015 we signed a master purchasing agreement with a major domestic OEM for identification, friend or foe, IFF, solid state power amplifiers, for approximately $6 million. Although a smaller part of the SSPA business, our commercial product line serving the aviation medical communities also continued to do well.

During the past year or so, we've made significant inroads into the high-growth in-flight entertainment and communications market. This market space should be a significant revenue contributor for Comtech over the next several years. As of today, a significant amount of our projected RF microwave amplifier sales for the balance of fiscal 2015 are already in backlog and we see this segment growing significantly.

In our third segment, mobile data communications, the largest revenue contributor remains our BFT-1 sustainment work for the US Army. These activities continue to be funded, despite ongoing government spending pressures. We believe this is continuing and tangible evidence of the important role our technology plays with the US Army. During fiscal 2014 we received two new three-year BFT-1 sustainment contracts with a combined value of $68.2 million. The first contract, which has a not-to-exceed value of $38.2 million, continues our engineering and satellite network operations services. The base period for this services contract is from April 1, 2014, to March 31, 2015, and the government has two additional 12-month option periods that can be exercised. The second contract is a continuation of our IP licensing agreement and the associated $10 million annual license fee for the period from April 1, 2014, to March 31, 2015, with two additional 12-month option periods exercisable by the Army. We've been notified by the US Army that they intend to exercise the first option year for both the services and IP licensing contracts before the current term expires at the end of this month.

In addition to our sustainment activities on BFT-1, there are other opportunities we're pursuing both with US military as well as international military customers. Although we're optimistic about some of these opportunities will develop into sizable orders, it is difficult to predict timing.

The primary goal in the mobile data communications segment continues to be providing the US Army with outstanding support. Doing so should position us well to participate in next generation platforms. In fact, we've recently responded to two government RFIs seeking technology for future BFT capabilities. Although we believe we have uniquely qualified and cost-effective solutions to meet customer needs, the current initiative is in its early stages.

With that, I'd like to proceed to the Q&A part of our conference call so I'll turn it back over to the operator.

(Operator Instructions). Our first question is from Mark Jordan from Noble Financial. Your line is open.

Good morning, everyone, and welcome, Stan. The first question -- relative to the revenue shortfall that you highlight with the reduced revenue guidance at midpoint, about $35 million, can you break that down as to how -- a rough percentage of the reduction as tied to the modem market versus the tropo?

Without giving specifics, it's probably fair to assume about 50% to both of the product lines.

Okay. And with the -- relative to the tropo, is this all international delays or is there some domestic? We have talked and I think your partner in the NTPS market has looked for some significant shipments. They thought skewed more towards the latter part of this calendar year. So when you look at that, what your assumptions had been, is it all tied to international contracts or had you pushed out of some domestic opportunity?

It's both. It's with our new international customers for some of these large projects that we've been working on for several years, and I think you alluded to it. But our comment would be in February we tested and demonstrated the MTTS system, so obviously it takes some time for them to go through their process and do what they need to do before we ship. So that is part of the shift in our over-the-horizon microwave product line.

Okay. On the modem side, you mentioned you sell in dollars. With the strength of the dollar against some currencies at least, especially, the euro, have you seen a change in the competitive landscape? Are you losing any competitive bids because of being dollar-based or are you seeing your customers just deferring purchase as you don't have effective competition?

So I'd say it's -- it's -- we're not losing things. It's that people are delaying their capital expenditures because of the problem. Whether that's a short-term or longer term effect, who knows because things obviously will keep changing, but I don't believe it's because of loss of market share. It's just delays.

Okay. In the marketplace, do you see any effective competition from a -- a non-dollar-based competitor?

No. Not -- nothing different than what's been the status quo. Obviously we have competitors in the international markets.

Okay. I guess the final question for me, relative to the small form factor tropo opportunities that you have similar to the MTTS, have you seen an interest and how are you marketing that internationally?

Let's see. How do we market? So we have a go to market structure through either direct through end primes or directly to customers in the field. Obviously we have a sales and marketing organization internally. What I think is most of interest in the tropo is that we're getting the data rates now that become -- that make tropo pretty attractive. There's nobody in the world that has that sort of performance out of tropo systems. So I think that's going to open up additional markets and additional interest and we'll go to market with that again either directly through primes or integrating larger elements of systems or directly through our sales force.

Okay. Thank you very much.

(Operator Instructions). Our next question is from Tyler Hojo from Sidoti & Company. Your line is open.

Yes. Hi, good morning. Just firstly, I was hoping we could talk about ATIP a little bit more. In the press release you guys talked about some potential mix issues stemming from that contract in Q3. And I'm just trying to clarify, has something changed in regard the profitability on the hardware, or is this margin issue in Q3 really predicated on the $6.4 million development contract that you got and that basically running through the P&L?

It really is a mix issue, Tyler, as simple as that. The ATIP contract is structured really in two phases. It's an NRE development which is cost plus work, and obviously we've mentioned on past conference calls, we're not -- we're not doing -- making a lot of money on the NRE. These initial production units that are going out the door are profitable. However, they're not as profitable as our regular satellite earth station modems for let's say the commercial markets. So what you're seeing is we had lower bookings in Q2 of commercial type products. That's not going to be shipping in Q3, where a large percentage of our regular shipments, let's just say, I don't even want to say large, but a portion of our mix is going to be these ATIP products, which will just be at lower margins.

Okay. So can you maybe quantify on the hardware side what the differential in margin is? Because I know this is going to be an even more important contract in fiscal 2016.

I can't -- I can't do that but what I can tell you is that over time, the -- as we get out of the initial production units, our margins should be higher than what we'll do in Q3.

Okay. That's fair. Okay. Appreciate that. And then just a follow-up on the OTHMS conversation, as it relates to the guidance certainly I understand kind of the push-outs in orders, but is there anything anticipated in terms of booking and shipping a new OTHMS order, whether it be from North Africa or somebody else, embedded in the fiscal 2015 guidance?

I would say smaller orders but nothing -- nothing huge.

Okay. Got it. And then lastly, if I may, just a question for Dr. Sloane -- I understand you're still kind of new on the job and working through your process of learning the company and really getting situated, but I was just curious, if you think anything will potentially change just in regards to kind of the company's capital deployment strategy?

So, let's say I've been on the job five weeks. I'm still trying to absorb things. A little bit of a head start from being on the Board for a few years and know something about the company. So I don't have -- at the moment I don't have any plans finalized that I could share with you. We're obviously assessing everything, deciding what way we're going to head, but at the moment nothing to tell you.

Okay. Fair enough. Thought I'd ask, though.

Sure.

(Operator Instructions). And we do have a follow-up question from Tyler Hojo from Sidoti & Company. Your line is open.

Actually, just one more question -- if you have it handy, what's the backlog by segment?

Sure, Tyler. Our backlog for the quarter was $129.4 million. In our telecom segment we finished the quarter with $71.4 million. RF amplifiers was $53 million, with the remainder being in our mobile data communications segment.

Got it. And just in regards to telecom, I know in the Q, you guys indicated that bookings for satellite earth station picked up, I think it was in the month of February. As you sit here, I realize we're fairly early in March here, but as you sit here in kind of mid-March, I mean, can you maybe just update that commentary in regards to kind of real time trends?

I couldn't update anything better than what we told you. I mean, we've seen -- November was the month we first saw the slowdown and certainly that slowdown continued in the three months of Q2. We did in the month of February have a relatively good bookings and that number did include $5 million of funded orders pursuant to our ATIP contract with the advanced modulation. So we need March to work its way through, and April. And obviously we do think our customers are facing headwinds, which is why we've adjusted our guidance accordingly. We are expecting bookings to effectively increase at a very, very slow rate for the rest of the year, but we just need to see the second half play its way out.

Yes, okay. Got it. That's all I had. Thank you.

And there are no further questions at this time.

Thanks again for joining us today. We look forward to speaking with you again in June.

That does conclude today's program. You may now disconnect at any time.