Carpenter Technology Corp (CRS) 2015 Q4 法說會逐字稿

Good morning and welcome to Carpenter Technology's fourth quarter earnings conference call. My name is Laura and I will be your coordinator for today.

(Operator Instructions)

As a reminder, this call is being recorded. I would now like to turn the call over to your host for today Mr. Mike Hajost, Vice President of Investor Relations and Treasurer, please proceed.

Thank you. Good morning everyone and welcome to Carpenter's earnings conference call for the fourth quarter ended June 30, 2015. This call is also being broadcast over the Internet along with presentation slides. Please note for those of you listening by phone you may experience a time delay in slide movement.

Speakers on the call today are Greg Pratt, Executive Chairman, Tony Thene, President and Chief Executive Officer and Tim Lain, acting Chief Financial Officer. Statements made by Management during this earnings presentation are forward-looking statements and are based on current expectations. Risk factors that could cause actual results to differ materially from these forward-looking statements can be found in Carpenter's most recent SEC filings, including the Company's June 30, 2014 10-K, September 30 and December 31, 2014 and March 31, 2015 10-Q's, and the exhibits attached to those filings.

Please also note that in the following discussion, unless otherwise noted, when Management discusses sales or revenue that reference excludes surcharge. When discussing operating income, that reference excludes pension earnings interest and deferrals, or EID, when referring to operating margins, that is based on sales excluding surcharge and operating income excluding pension EID.

I will now turn the call over to Greg.

Thank you Mike. Good morning everyone, it is good to be with you today.

I have appreciated having the opportunity to talk with you over the last several quarters as we repositioned our Company for growth and conducted a search for our new CEO. As you know, we concluded that process recently and appointed Tony Thene as the new president and CEO of Carpenter. Tony has been instrumental in helping me address our challenges this year, however we still have a significant amount of work to do. I have every confidence that Tony will provide the continuity essential to carrying forward our ongoing initiatives that are positioning Carpenter for long-term success.

With that I will now turn the call over to Tony.

Thank you Greg and good morning everyone. Let me start on slide 4 with our safety performance.

I'm very pleased to report that for the full fiscal year we achieved a total case incident rate, or TCIR, of 2.1. This is annual company best, and represents a 36% improvement over last year.

We had 29 sites with 0 OSHA recordable injuries during the last fiscal year and our new Athens facility has had only one recordable injury since its startup. I'm extremely pleased with the improvements we have made in the area of safety. We want to be very clear that a 0 injury workplace is possible and it is our ultimate goal.

Moving to slide 5 in our full-year performance summary. As Greg mentioned we faced several challenges this past fiscal year. Over the last 2 quarters we've acted decisively on several fronts to improve our performance and deliver greater value to our shareholders.

We implemented a restructuring plan that included the elimination of approximately 200 salaried positions and 60 outsourced positions, as well as other non-related -- non-labor related costs. It is estimated that these actions were yield approximately $30 million of annual overhead savings.

We targeted an inventory reduction of $50 million by year end, versus first quarter FY15 level. We actually achieved a $67 million reduction. We strengthened our continuous improvement process with the introduction of the business management office.

We announced a $500 million, 2 year share repurchase plan. In FY15 we purchased $125 million of our shares, and in the month of July alone, we purchased $30 million at our shares for a total of $154 million spent under the program to date.

And we made several key organizational moves, most notably naming a new Senior Vice President of our SAO Operations, Joe Haniford, and yesterday naming Brian Malloy as the new leader of our SAO Worldwide Commercial Group. We certainly have more work to do, but those actions have established a new tone in the organization.

In FY15 we generated $74 million of free cash flow, our first year of positive free cash flow since 2010. And we grew sales excluding surcharge by 2% in a challenging environment with growth in our aerospace, medical and transportation markets offset the decline in our energy sales.

Moving to slide 6 in more detailed look at our fourth quarter performance, we generated $107 million of free cash flow driven by inventory reduction of $54 million and lower capital spend of $18 million. The actions we have taken to date on operating cost performance and overhead cost reduction, drove improved operating margin sequentially.

Sales in our SAO segment were down 3% year-over-year, driven by the decline in energy, however aerospace and medical markets were up year over year, resulting in a stronger mix. Sales in our PEP segment were down, both sequentially and year-over-year. Again the primary driver was the decline in energy, down 53% year-over-year.

And last but certainly not least, we achieved our first vender approved process, or VAP qualification, at our Athens facility. I visited the Athens facility last week and was very pleased with the progress and efforts of the team. I will speak more to Athens' qualifications later in the call.

Let me turn to slide 7 and discuss some highlights in our end-use markets. In total, sales ex-surcharge were down 5% from the prior quarter on 14% lower volume, as our overall product mix improved. Our aerospace and defense in-use market sales have returned to, and slightly surpassed, the relatively high demand levels we experienced a year ago. Fastener activity continued to be strong as evidenced by both year-over-year and sequential sales growth. We also saw benefits from the growth of specific defense programs which utilize our materials.

Our energy end-use is market down significantly on a sequential and year-over-year basis. We continue to see weakness for drilling materials sold by our Amega West business. We also began to experience the anticipated softening in demand for nickel-based products for oil and gas completion materials, sold through our SAO segment.

Medical was our fastest growing in-market, both year-over-year and sequentially. We're seeing what we believe to be supply chain stabilization and the return to more normalized buying patterns. Coupled with our improving market position we saw strong demand for materials used for surgical instruments and titanium materials used in orthopedic implant procedures.

Transportation, which had been our fastest-growing end-use market for several quarters has currently stabilized at very high demand levels. Market trends favor our material attributes as design engineers strive to reduce emissions and improve fuel efficiency.

Now let me turn the call over to Tim to cover the financial overview.

Thanks Tony, good morning everyone. Let's start on slide 9 with the income statement summary.

Net sales in the quarter were $558 million or $463 million, excluding surcharge. Sales excluding surcharge were relatively flat sequentially on similar volumes. In the quarter, selling, general and administrative expenses were $45.2 million, which is in line with the sequential quarter as we had expected.

Operating income was $39.5 million in the quarter. Excluding pension EID the restructuring charges and special items, operating income was $48.2 million or 10.4% of net sales, excluding surcharge. This represents a sequential improvement in the operating margin of 280 basis points, driven principally by the actions we took to improve our operating cost performance in the quarter, as well as the benefits of the overhead cost reduction initiatives that we announced in the third quarter.

Our fourth quarter effective tax rate was 32.4%, which is in line with are expected normal run rate. Net income for the quarter was $22.5 million or $0.44 per share. Adjusted for the $6.3 million of restructuring charges and special items which I will cover in next slide, earnings per share would have been $0.52 per share.

Let's move on to slide 10 to discuss restructuring charges and special items in little bit more detail. The restructuring charges in the current quarter totaled $3.7 million. These charges include some additional severance costs associated with the position eliminations that we initiated in the third quarter. The restructuring charges for the quarter also include some trailing costs associated with the closure of certain sites. These costs are associated with the actions we took in connection with the restructuring plan we outlined in our recent third quarter, aimed at reducing annual operating overhead costs by about $30 million annually.

The special items in the quarter are $2.6 million for consulting costs associated our business management office, or BMO as we call it, and certain strategic planning initiatives. For reference the restructuring charges and special items are included in corporate costs, and not included in our segment operating income. We do expect additional restructuring charges in the first quarter of FY16 as we work through completing the actions we initiated in FY15. The magnitude of any remaining charges are expected to be below the fourth quarter levels.

Moving on to slide 7 the free cash flow summary. In the fourth quarter we generated $107 million of free cash flow. A couple of items to note.

The first, we generated cast of $54 million as result of reducing inventory. We're happy with work we've done in this area, and as Tony mentioned in his comments, we exceeded our target reducing inventory in the quarter. That said this will continue to be an area of focus for us. We are talking further reductions in FY16 as we develop sustainable processes to identify and execute opportunities to reduce inventories across the organization.

The second item I want to highlight is the trending capital expenditure. In the current quarter we used cash to pay for about $18 million of capital expenditures. The fourth quarter spending is below the prior quarters, mostly as result of the spending for the Athens project being completed in the third quarter.

We are managing capital projects closely. We set integral targets to balance the need for maintenance and infrastructure capital against investments to capitalize on growth initiatives with a attractive payback and return metrics.

For the fiscal year free cash flow was $74 million, which as Tony mentioned marks the first full year of positive free cash flow since FY10. Our total liquidity stands at $563 million, which includes $70 million of cash on hand, and $493 million of available borrowings under our credit facility. Let's move on to slide 12.

Slide 12 is an update of the $500 million share repurchase program that was authorized in October 2014. Through June 30, 2015, we have spent about $125 million against this authorization. During the fourth quarter we used $64 million to purchase approximately 1.6 million of our shares. As of today we can tell you that we also used $30 million of cash to purchase shares during the month of July alone. So in total we've used about $154 million to purchase about 3.8 million shares over the first 9 months of the program.

Moving on to slide 13 to discuss some guidance for FY16. As you update your FY16 models we thought it would be helpful to provide some specific guidance on a few financial items.

First, with our Athens facility online for all of FY15, we expect to see little change in total depreciation and amortization for FY16. We currently expect to depreciation and amortization of approximately $121 million in FY16.

Net interest expense, as we reported on our income statement, is expected to increase from approximately $28 million in FY15 to $32 million in FY16. The higher interest expense is due primarily to lower capitalized interest in FY16, as a result of reduced capital spending. For FY16 we expect net pension expense to increase to $54 million in FY16, mainly driven by the impacts of changes in mortality assumptions. We expect the effective tax rate to be in the range of 32% to 33% for FY16.

In terms of pension contributions we made about $7 million in pension contributions to our qualified US defined benefit pension plans during FY15. For FY16 we don't expect to be required to make any minimum contributions to these plans. For capital expenditures with the Athens project behind us, we currently expect we will manage capital expenditures to a base level of approximately $120 million in FY16.

With that let me turn the call back to Tony.

Thanks Tim. Let's turn to slide 15 to cover the individual reporting segments starting with SAO.

Compared to year ago quarter, net sales ex-surcharge are down 3% on 15% lower volumes driven by lower sales to industrial and consumer markets and weakness in demand for materials used in oil and gas applications. The results reflect a stronger mix versus the year ago quarter as we increase sales in the aerospace and defense and medical markets. On a sequential basis sales were relatively flat on similar volumes, despite the decline in demand in oil and gas.

Operating margins were lower compared to the prior year quarter, as a result of higher operating costs in the unfavorable margin impacts of reducing inventory. However, most importantly, on a sequential basis operating margins showed some improvement as we started to see the benefits of the operating cost performance initiatives and the overhead cost reduction actions.

As we look to the first quarter of FY16 we expect lower volumes due to the continued weakness in oil and gas demand. This will amplify the normal seasonal volume decline we see in the first quarter of each year. Our operating margins are expected to be sequentially lower as operating costs improvements are more than offset by the decline in volumes.

Moving to slide 16 in the PEP segment. Performance in PEP continues to be impacted by the significant decline in oil and gas business due to limited drilling activity. During the quarter the unfavorable oil and gas impacts were partially offset by strong performance in our titanium and powder business driven by an improved mix.

The fourth quarter also included a positive impact of a better than expected inventory evaluation judgment. For the first quarter of FY16 we currently expect oil and gas demand to remain at the current low levels. In addition, we expect operating income to be lower in the first quarter relative to the fourth quarter due to lower demand in our titanium and power businesses. And finally the favorable inventory evaluation of fourth quarter will not repeat in the first quarter.

Turning to slide 17 let me give you a progress update on the product qualifications at our Athens facility. As we announced during the Paris sales show in June, we have and achieved our first VAP qualification for Athens. This serves as an important proof-point for us, as this is a challenging alloy that was approved at a relatively early date.

Achieving a full slate of VAP product qualifications for Athens remains a lengthy process. However this early success gives us great confidence as we work through the remainder of this calendar year to finalize our internal processes and develop the data to support the vendor approvals with our supply chain customers. We continue to expect that the pace of achieving external product qualifications will start to pick up during the first calendar quarter of 2016 and continue for several quarters thereafter.

It is important to note that we have also made significant progress expanding the scope of approved products required only site certifications, or non-VAP materials. These efforts will support a higher utilization rate for Athens and provide near-term capacity relief at our Reading and Latrobe constrained work centers.

Let's turn to slide 18 in my closing comments. As we look to the first quarter of FY16 the significant decline in the energy market remains a primary concern. This weakness will amplify the seasonal volume decline we typically experience in the first fiscal quarter of each year.

First quarter FY16 operating margins are expected to be sequentially lower as any operating cost improvement will be more than offset by the impact of the decline in volumes. Looking longer term we expect our energy market demand will remain depressed throughout our FY16. The energy in-use market accounts for approximately 14% of our total annual sales.

With that in mind we will continue our valuable operating cost performance improvement plan with the goal of getting back to the FY14 performance level this fiscal year. As a reference, we closed approximately 50% of the GAAP in the first quarter.

In addition we will focus on inventory reduction efforts, targeting an additional $50 million in FY16 and capital spending discipline with a cap of $120 million. We understand that superior customer service and consistent delivery performance are key to maintaining and growing our business. And we are committed to making a positive change in these areas this fiscal year.

We believe that the have an industry game changer in our new Athens facility. With shorter lead times, we believe we can grow our business and with the additional capacity we can step up to the anticipated demand growth in the aerospace market. We have a group of employees at Athens as well as employees across other locations that are supporting the Athens efforts, that are capable and fully engaged in qualifying this facility.

We appreciate our customers who are working closely with us to move the qualification process forward. Their cooperation and guidance motivates us to be the preferred supplier. We anticipate using free cash flow generation to execute our share repurchase program based on the current environment and business outlook.

In closing, let me say I am excited to lead this company as we enter the new fiscal year. Of course we have our challenges. But over the last two quarters we're taking action that I'm confident will make a difference going forward. That preference for action will continue, and grow stronger.

We have made key organizational changes that will drive our journey to the next level of performance. And most importantly, we have an engaged workforce that is eager to move this company forward.

Now I turn it back to the operator so we can open the line for questions.

(Operator Instructions)

Gautam Khanna, Cowen and Company

Congratulations, Tony.

Hi, Gautam, how are you this morning?

Pretty well. Hey, I was wondering if you could talk a little bit about the operating challenges that you are facing and have you been able to isolate root cause on some of the production inefficiencies that you have had over the past couple quarters and if not, how do you get to that point, and what you are doing?

We are making very good progress, Gautam. If you remember in the third quarter when we put out the pre-release, we listed -- unfortunately a long list of some operational issues that we have. And if you take a look at that, if you use FY14 as the base to say, well, that was good operating cost performance. We've got 20 or 25 independent projects going after each one of those to solve the root cause and we have probably clawed back about 50% of that. So, in this quarter. So as we look forward to the first and second quarter, our goal is to get that second part. And by the time run rate in FY16 we hope to be back at those levels that we experienced in FY14.

Okay. And just sort of put some quantification around that, do you anticipate getting to a 17% operating margin or better in any quarter at SAO in FY16? And is the 21%, if I recall, you had in Q1 of 2014, is that out of the cards in FY16?

Well, I think there's a couple of different pieces that play a part there. Number one, is the variable operating costs that you and I are speaking of now. If that was by itself the only driver, yes, I think we can get back to those levels.

On the fixed cost side, we have implemented our reduction in force. We probably in the fourth quarter, Gautam, got about 60% of that run rate value. Right? The big drivers are getting back to those margins are going to be the markets and how the markets perform. We feel relatively comfortable in the aerospace side, but obviously on the energy side that's going to be the wild card on whether we can get back to those levels.

Okay. And one other one, just on demand. Can you talk a little bit about what you are seeing with respect to your incoming orders on the aerospace engine side as well as the fastener side. Is it consistent across OEMs, or are you seeing fits and starts, any sort of color you could provide there would be helpful.

I had a feeling you were going to ask that question. On the engine side we feel very comfortable. So we have a good order intake. We believe that's going to be relatively stable for us. And we don't see any major differences among our primary customers.

On the fastener side we had a very good fourth quarter. Volume was very good at our Dynamet business. We do see the first quarter, maybe the second quarter, being a little bit choppy, consistent with maybe what you have heard in the market over the last couple of weeks. But we think that will sort itself out and year over year we'll have good volumes on the fastener side.

Okay. Thank you and good luck. I will turn it over.

Thank you.

Steve Levenson, Stifel.

Thanks. Good morning everybody.

Hello, Steve.

Just to follow up on that first and second quarter being choppy in fasteners, is that program-specific do you think, or does that have to do with inventory levels at some of your customers or even their customers where there might be is a destocking still ahead.

If I don't like to work is the word destocking, but yes, I think you have some.

Out of balance?

Out of balance, but we do think that this quarter and possibly into the next. But we don't see that as a long-term negative driver for our fastener business.

Okay. Thanks and I don't know if you'd be willing to break anything out on the fastener stock business, but would it be possible to give us a little more detail on volume and pricing and margins?

Yes, well going forward we'll take a look at that, right now obviously, we present as a segment in total but certainly we'll take a look at going forward

Okay. I appreciate that. Thank you.

Josh Sullivan, Sterne Agee Capital.

Just with rig counts in the US showing some indications of inching up, what is your sense of how this inventory cycle plays out on the energy side? You given us some guidance for the year, which is helpful, but just thematically how should we think about the duration of this energy inventory overhang, relative to the rigs beginning to inch up here.

So maybe I'll take a step back and answer that question in a general standpoint and then we can drill down into it. We have two -- our PEP segment and SAO segment are going to react a little bit differently. On the PEP segment you are going to see the impact quicker, because their on the drilling materials primarily. Our SAO is probably going to be about a quarter lag, that's what you have seen primarily on completions -- materials.

If you look at our PEP segment over the last -- since the first -- our third-quarter of FY15 you have seen a very steep decline. We believe as we get into the next couple quarters, at least as we look forward, that maybe we have seen the bottom of that. But that doesn't mean that we think we're going to see an improvement going forward. We believe that we're going to bounce around those bottom levels for the rest of our FY16 in our Amega West business. And we're looking at ways now, just like other companies are, we have to make sure that we rightsize our organization and rightsize our cost structure to meet with that demand that we anticipate we're going to have to work with for the rest of this year.

Okay. And then just from the cash deployment strategy. Maybe you could give us some channels. What sort of scenario in energy would make you have to revisit those targets for the $500 million repurchase program? Or do you feel like as you just mentioned that you are seeing some bottoming where you are pretty confident?

I would say we're pretty confident right now. As you look forward, we have plans in place and we have had plans in place, in fact Greg that kicked off for us more than a half a year ago, looking forward to the oil and gas market. What are we going to do at each stage of that rollout, if you will. So we feel comfortable that we have got that baked in. The impact of that and, as we see it now, will not have an impact on our cash deployment plan.

Okay. And then just one last one on the aerospace side, you know, last week there was a Boeing executive talking about the 787 titanium supply and they are trying to control costs on that program. Was that more general to just partnering for success, or have you seen any indications on the titanium fastener in particular?

No impact that we believe on the titanium fastener side. That's not going to be the real driver. But we look at it as a possible opportunity for us on some alternative products that Carpenter makes, that maybe we have an opportunity there.

Okay. Good. Thank you.

Thank you.

Phil Gibbs, KeyBanc Capital Market

I have a question just on general outlook for either volume or sales this year. Anything that you can provide us in terms of just the thought process on growth, top-line growth this year, and what you are anticipating or should this be viewed as more or less a year of stabilization given what we are seeing in energy?

Yes, I think it is more the latter. We think aerospace -- we know aerospace is going to the consistent for us. We are like everyone else trying to understand where the bottom is on energy on our two different businesses. We're looking at ways to offset that as we move into other markets. We see the medical market doing better for us. That is relatively small. But still obviously, a very good margin business for us. So I think it's quite frankly, Phil, more the better as we take away quarter by quarter through this year.

Okay. Terrific. And a question on the, I think you said you had an inventory valuation benefit in PEP in 4Q, what was -- is there a magnitude of that that you could provide us?

Well I will tell you it this way. I would normally never call that out, because any type of inventory valuation changes, that's part of your numbers whether they're positive or negative, and if it was negative it shouldn't be excluded. The only reason I mentioned it is because you saw our PEP business be relatively flat quarter over quarter from an operating income. I would tell you this, if you would exclude that, you would have seen the type of decline in PEP that we had guided to last quarter, which was around 25%. And that way you can do the math and get the feel for that edge, it's is in that $2 million to $2.5 million range.

Okay. So we should think about that level in terms of trying to think about the September quarter?

Yes. Let's just call that $2.5 million. We know that is not going to repeat and then we have the normal -- the other items that we gave you on the slide.

Okay. Thanks so much.

Thank you.

(Operator Instructions)

Andrew Lane, Morningstar.

Could you provide some commentary as to trade flows and import pressures you are seeing in the stainless markets? And have you been an active participant in the provision of a potential trade case filing on stainless?

For us we are -- some of the news that you're seeing out there, remember we play in the top end of this market and especially steel market. We do not participate in those lower commodity areas, so therefore that's not an impact for us.

Okay. And then also could you provide some color as to the size and mix, or a texture of your backlog and on a related note at least qualitatively, what kind of growth are you looking for in the aerospace and market in FY16? Are there any particular contracts or programs you'd highlight that should be good near-term growth drivers?

Well, I have to say on our backlog if you look at -- let's say from a revenue basis right now whether it's year-over-year or sequential. It is down slightly, but almost all of that is driven by energy market, right? Our aerospace backlog is going to be up, a little down, but it's pretty consistent at least it has been over the last several quarters. But the main driver for our backlog now is energy and some on the industrial side as well, as we move, selectively move out of that market, and move more into the higher-end automotive side. So our backlog is going to move around from quarter to quarter; as I said right now the main driver is energy.

Great. And then in terms of aerospace sales qualitatively in 2016, you said it might be a consistent end market for you, so similar growth as to what we saw here in FY15 most likely?

Yes I think it's going to be -- there is a wide range of what folks say out there, we look at as it going to be in that 2% to 3% or that type of range, that's what we've planned for. And if it's a little bit more than that, that'll be great, but from our planning standpoint that's what we are looking at.

Okay great thank you very much.

Gautam Khanna, Cowen and Company

I'm trying to get comment on any incremental price pressure you've seen across the business. Given the oil and gas continues to weaken. Are you seeing more feverish competition in nickel alloys sales in other markets? Is it bleeding over?

Certainly we have seen some of that on the energy side. Right? And we are being very selective on what those trade-offs are. But we've not seen a significant evidence of that in our -- that that has been bleed over into our other markets.

Would you anticipate the fact that that could happen or is that contemplated in your outlook?

No, that's contemplated in our outlook right now. We don't perceive it.

And just to follow up on the fastener comments from earlier, were those isolated to one OEM or were you seeing this broadly across some of your end customers?

Well, I will just say that our immediate customers saw that, so I will the that to them; we supply to a broad range of folks.

Okay. Do you think that it was confined to the Boeing supply chain or to Airbus as well?

Well, I think it was probably, to be quite frank, probably more specific to Boeing.

Okay. Thanks a lot.

Thanks Gautam.

Phil Gibbs, KeyBanc Capital Markets

Hey, Tony, I just had a question related to the two new hires you mentioned. Maybe they are on the line here too. Just in terms of what you think or they think that they bring to the table that is different and then strategically what may you be looking at doing moving forward that you weren't doing before or you know just in terms of strategy here?

Thanks for the question, Phil. Joe Haniford is not here with us today we wouldn't allow him to be here, he's out in the plant, so he was in Athens earlier this week, and he's on his way to Latrobe today. So that's where his expertise will help. Joe has had a 30-plus year career in this industry and operations in commercial. He brings a wealth of knowledge to us, and ideas, he's been very well received. I think he's in his third week right now so we're looking forward to that.

On the commercial side, Brian starts on Monday and again, we have got a very workforce and we are trying to supplement that with some key external hires that bring sometimes a different view and some different experiences that we can leverage and take this company to the next level. And from a strategic standpoint you're not going to see any drastic changes from me. We've got our marching orders on where we think we add value with our customers.

We believe we have capabilities and products that others don't. And we are going to make sure that we leverage those to the best of our ability. That's the key for us. And we know there are areas where we need to improve on to make sure that we maintain that position.

I appreciate that. And the lastly, can you talk of touch upon the powders investment that you are making? I think in Alabama near the Athens facility? And what you are expecting that to give you moving forward? Thanks.

Thanks Phil. That's very exciting, it's right across the street from our Athens facility. We are in startup mode right now with that facility. And are very excited about the potential there to supply super alloy powder into the engine market. As you know, we have an agreement with Pratt & Whitney. We are very excited about that. And we have other possibilities there as well. So that is an area where the market is moving and we are at the very beginning of that and we think going forward we will remain a leader in that area.

Thanks Tony.

Thank you.

That concludes the question-and-answer portion of today's call, let me hand it over to Mr. Mike Hajost for any closing remarks. Please go ahead, sir.

Thank you again for participating on today's call. We look forward to speaking with you again next quarter. Thank you and goodbye.