EMCOR Group Inc (EME) 2007 Q2 法說會逐字稿

Good morning. My name is Janice, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Second Quarter 2007 Earnings Conference Call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

I will now like to turn today's conference over to Mr. Bob Joyce with FD. Mr. Joyce, you may begin your conference.

Thank you, and good morning, everyone. I'd like to welcome you to the EMCOR Group Conference Call. We're here to discuss the Company's 2007 Second Quarter results, which were reported this morning.

I'd now like to turn the call over to Kevin Matz, Senior Vice President, Shared Services, who will introduce management. Please go ahead.

Thank you, Bob, and good morning, everyone. Welcome to EMCOR Group's Earnings Conference Call for the Second Quarter of 2007.

For those of you who are accessing the call via the Internet and our website, welcome, and we hope you have arrived at the beginning of a slide presentation that will accompany our remarks today.

Currently, everyone accessing the slides should be on slide one, which is the EMCOR title slide. During the call, instructions will be given for you to advance to the next slide. Please advance to the next slide now.

Slide two depicts the executives who are with me to discuss the quarter and six-month results. They are Frank MacInnis, Chairman and Chief Executive Officer; Tony Guzzi, President and Chief Operating Officer; Mark Pompa, our Executive Vice President and Chief Financial Officer; Mava Heffler, Vice President, Marketing and Communication; and our Executive Vice President and General Counsel, Sheldon Cammaker.

For call participants who are not accessing the conference call via the Internet, this presentation, including the slides, will be archived in the Investor Relations section of our website under Presentations. You can find us at EMCORGroup.com.

Before we begin, I want to remind you that this discussion may contain certain forward-looking statements. Any such statements are based upon information available to EMCOR management as of this date, and EMCOR assumes no obligation to update any such forward-looking statements. These forward-looking statements also involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these statements are no guarantee of future performance.

Such risks and uncertainties include, but are not limited to, adverse effects of general economic conditions, changes in the political environment, changes in the specific markets for EMCOR services, adverse business conditions, increased competition, mix of business and risks associated with foreign operations. Certain of the risks and factors associated with EMCOR's business are also discussed in the Company's 2006 Form 10-K, its 10-Q for the second quarter ended June 30, 2007, and in other reports filed from time to time with the Securities and Exchange Commission.

With that said, please let me turn the call over to Frank. Frank?

Thank you, Kevin. That Dale Carnegie course has paid for itself.

Good morning, everyone, and welcome to our regular quarterly conference call for investors, analysts and other friends of EMCOR Group. We are conducting today's call, as usual, by telephone and simultaneous webcast. And I'll be referring from time to time to a slide number to identify the relevant slide for webcast participants. Right now, we're still on slide two.

The focus of today's call will be on the 2007 second quarter and year-to-date earnings press release and Form 10-Q that we issued and filed earlier this morning. We'll follow our customary conference call format today. First, I will present and discuss our operating results and quarter-end balance sheet, including comments on the performance of our divisions and some of our subsidiaries during the period. Then, I'll discuss the evolution and the quarter-end status of our contract backlog portfolio with special emphasis on those sectors that we expect to perform well over the next few quarters.

Then I'll turn the call over to Tony Guzzi, our President and COO, for his views on some notable recent contract awards from around our large and diverse company, followed by a brief presentation of our regional power-up business development program.

Finally, I'll comment on some of the major factors that we think will influence EMCOR's performance during the last half of 2007. And I will update you on our revenue and EPS expectations for the full year.

At that point, there will be an opportunity for you to make comments or to ask us questions. And you can see from slide two that a number of our senior officers are here to help me with our responses.

We have plenty of good news for you today, including record operating results and liquidity, record contract backlog, and improved expectations for future performance. Before we discuss these superlatives, however, there are two other important milestones that we are passing today and that, I think, are worthy of note.

Firstly, this is our 50th quarterly earnings conference call with you, our precious shareholders, colleagues, and friends. The other day I had a chance to look at the participant's list from our July, 1995, including, I suspect, a few friends who are listening again this morning. Thank you all for your faith in us and for the support that has made our success possible.

And speaking of success, this quarter also marks our 48th consecutive profitable quarterly earnings report. Twelve solid, consecutive years of growth in a tough, challenging business. We are proud of this record of sustained, consistent success. And we are grateful to all our constituents, but especially, our talented and dedicated employees for the value they create everyday for all of us.

So let's discuss those operating results. Please go to slide three.

The quarter just completed was the best second quarter in EMCOR's history by any relevant measure of corporate performance. All prior year comparisons, by the way, have been adjusted to reflect our two-for-one stock split that was completed on July the 9th.

Net income for the second quarter was $26.2 million, or $0.39 per diluted share, an increase of 55.1% over the year earlier quarter.

Revenues of $1.41 billion were about $190 million or 15.2% higher than the second quarter of 2006 primarily due to strong organic growth. And operating income was also exceptional, rising 74.3% to $44.2 million or 3.1% of revenue, compared to $25.3 million or 2.1% a year ago.

Selling, general and administrative expenses rose in tandem with revenue at a steady level of 8.9% reflecting discipline cost management, especially considering the impact of our rising stock price on variable compensation calculations.

Please go to slide four.

Our six month operating results show similar strong growth patterns. Income from continuing operations of $38.1 million, or $0.57 per diluted share, was 55.7% higher than the similar period last year. Year to date revenues grew 14.9% to a new record $2.72 billion. Organic revenue growth was 11.4%.

Operating income in the first half of 2007 was $63.1 million or 2.3% of revenue, compared to $37.7 million or 1.6% of revenue last year while SG&A as a percentage of revenue actually declined slightly year over year.

During the second quarter, several of our operating segments showed dramatic margin improvement. And a strong demand for our services and contractor capacity absorption led to pricing power in some of our important markets. Our U.S. Electrical and Facility Services segment companies nearly doubled their operating income to $21.2 million or 6.2% of revenues on an 11% increase in revenues, including excellent performance from our Dynalectric electric companies in Atlanta, Washington, Contra Costa, Salt Lake and San Diego, our Midwestern electrical companies as a group and Welsbach and Forest Electric in New York.

Our U.S. Mechanical and Facility Services segment showed sharply improved results. Revenues grew 34% year over year, including 23% organic growth and operating income more than doubled to $28.5 million or 5.1% of revenues. Excellent performance in this segment occurred at F&G Mechanical in New Jersey, Penguin in New York, [Golan Camp South], Higgins in Boston, Border and Gowan in Texas, Shambaugh in Indiana, our new S. A. Comunal operating in the Midwest, Hansen in Las Vegas, and University Mechanical in Arizona.

Our U.S. Facility Services revenues continued their steady growth, rising 12% to $259 million. And Operating income advanced 24% to $12.6 million or 4.8% of revenues. Both our Mobile and Site based Facility Service operations showed improved volume and profits in the quarter.

Our U.K. operations reported an operating loss of $2.2 million for the second quarter. Those losses were centered on a specific project in the U.K. Rail division which is in the process of being downsized and merged into our U.K. Construction business. The U.K. Construction division itself showed improved operating income over the year earlier period. And U.K. Facilities Services operating income was sharply higher. We expect U.K. operating results to improve overall during the last half of 2007.

Likewise, our Canadian company reported reduced operating income compared to 2006 but expects improved performance in their operational results in the next six months.

Operating cash flow for the first half of 2007 was $62.3 million, slightly lower than the first half of 2006 but excellent performance nonetheless.

Please go to slide five.

The solid operating cash flow performance led to continued excellent liquidity in our quarter-end balance sheet. Cash rose more than $60 million to $336 million. Working capital was up $75 million to $531 million. Both comparisons are to year end 2006, by the way. And the balance sheet remains essentially debt free.

Shareholder's equity continued its long term growth to a new high of $770 million. And contract backlogs advanced 32.3% year over year to a new all-time record of $4.3 billion. We are very please with these financial results and with the strong market positions that they reflect.

Please go to slide six.

These strong market positions are vividly illustrated by this slide. A bar chart showing the evolution in the value and the components of our contract portfolio from 2001 to the present.

During our last conference call, I commented on the continued strength of private sector demand for our construction and Facilities Management service offerings, particularly in the Commercial and office building and gaming and hospitality sectors. Since then, we've grown contract backlog by a further 10.9% on a sequential basis, or $420 million to a new record level as previously mentioned of $4.3 billion.

Importantly, however, we've also retained the same healthy balance between business sectors that I noted during my last call. Commercial and hospitality and gaming represent 56% of our total current portfolio supplemented by increased activity in healthcare and continued strength in transportation, institutional and the water and wastewater sector.

Additionally, we've noted a trend toward a somewhat higher proportion of larger, more complex projects within backlog as customers seek out EMCOR companies to reliably perform these sophisticated, time-sensitive projects. We think that this record backlog is of very high quality and provides a firm foundation for our future profit expectations.

Here to discuss some of the notable contract awards from the last quarter, followed by a presentation of our power-up business development initiative is our President and COO, Tony Guzzi.

Please go to slide 7. Tony?

Thanks, Frank. As our backlog level attests, we continue to see strength in our markets as we continue to exercise discipline, selectivity, and making the most of our resources.

Let's look at a number of our projects that made it into backlog this quarter. Frank noted that healthcare is a trend. And healthcare spending continues to increase. And in this quarter, our Dynalectric San Diego Company is providing the electrical fit [out] for the new 58,000 square foot Palomar Pomerado Medical Center. Dyn's work will include fire alarm systems, datacom, nurse call and security systems.

Staying in the healthcare sector, our Heritage Mechanical Company in New York City will be working on the East River Science Park Facility. This state-of-the-art bioscience center will consist of pharmaceutical, biotechnology, life science products and other research companies. Heritage will be installing the HVAC systems. And that will include approximately 700,000 pounds of sheet metal ductwork.

In Texas, our Gowan Company is providing the HVAC systems for Chevron's complete retrofit of a 50 story building in Houston. This [batch strack] 12 month project consists of the replacement and upgrade of all air-handling units and systems, all new ductwork, all new terminal boxes, new control systems, and building commissioning.

In Denver, there are two projects that demonstrate the diversity of our companies, and in this case, it is within our Dynalectric Denver Company. These projects also demonstrate the diversity of green projects, more of which we see every day.

First, for the U.S. Army Core of Engineers, Fort Carson Division Headquarters, Dyn Denver will be providing the entire electrical package for 125,000 square foot network operations center. Interestingly, and as we have seen with other green projects, Dyn worked with a general contractor for almost a year with pre-construction and construction [mobility] issues prior to final bid and award.

The other green project is a downtown Denver commercial building at 1900 16th Street where we will furnish and install the electrical distribution feeders and equipment and exterior and interior lighting, CCT TV, and security and card-access systems. As we have mentioned in previous calls we excel at greens projects as we find our mechanical and electrical systems to comprise the majority of our cost of a green project and make up approximately 75% of the LEED credits.

For those of you unfamiliar with LEED, LEED stands for Leadership and Energy and Environmental Design and is a nationally accepted benchmark for green buildings.

In Flintridge, California, our Dynalectric Los Angeles Company will be providing the entire electrical package for the Jet Propulsion Laboratory and NASA's new Flights Project Center. Jet Propulsion Laboratory and NASA plan on using this central facility as a mission project, management and science for all future unmanned robotics and remote space sensing missions.

We have a dominant position in the hospitality and gaming sector that we featured before. And while the majority of our gaming work is in Las Vegas, we have extensive experience with Native American casinos across the country. One such Native American project is in Shingle Spring, California where our Marelich Mechanical company will be performing the HVAC and plumbing systems for the new 280,000 square foot Foothill Oaks Casino to be owned and operated by the Miwok Indian Tribe.

In Las Vegas, both or Hansen Mechanical and Dynalectric Las Vegas electrical companies will be working side by side on the new cosmopolitan resort. This one-of-a-kind casino resort will encompass 4 million square feet of total space with approximately 2,200 condo hotel units and hotel rooms over 150,000 square feet of convention and meeting space, 300,000 square feet of retail, restaurant and entertainment space, and a 70,000 square foot casino, and a four level parking garage. Hansen will be responsible for the complete mechanical systems installation, including, air conditioning, plumbing, central plant for the entire project. Dyn will be providing all the primary and secondary power, as well as, complete fire alarm, teledata and custom lighting systems.

In Las Vegas, we are proud to have the premiere electrical and mechanical operations in that city. And there have been many instances when these two companies have worked together on the same project. We all now that Las Vegas is a very small big town. And our two companies communicate very effectively with each other and for our customer's benefit.

We know at EMCOR that there is power of communication. And I would ask you turn to the next slide, slide 8.

We have broadened this concept across EMCOR to regional communications meetings, and we have taken it to a whole new level within EMCOR. Our marketing group leads our regional power ups. And it is new program that we are excited about and I will walk you through that program now.

Our goal in these regional power ups is to leverage our regional capabilities into incremental opportunities both on a regional basis and on a national basis. We focus where EMCOR has a high concentration of business and a high concentration of potential customer overlap, especially at the owner level. The structure is regional meetings. We bring our CEOs and the next level down to understand not only the capabilities of their companies, but the capabilities of all the other companies that EMCOR has, and also, our broader reaching capabilities to include Facilities Management, Car Protection Service, and Mechanical Service.

So far, so good. We've implemented this today in Chicago, Boston, Washington, and Atlanta. We have follow up meetings. And what we're looking for here is the gaps where EMCOR companies can extract additional revenue and additional margin from our existing customer base or attack new areas in the market or take existing customers to other parts of the country. Our marketing team has done a great job. It has been received well, and we'll continue on.

And with that, back to the boss.

Thanks, Tony.

EMCOR companies are learning to work together in selected markets to gain even more leverage and market share. And we support those efforts.

Let's go to slide 9.

We're optimistic about EMCOR's revenue and profit opportunities for the remainder of 2007 and into next year as we build on the foundation of our record first half. This slide lists the fundamental factors that will help us achieve those goals. Our accumulation of well-balanced, multi billion dollar portfolio of high quality contracts provides the raw material for continued success. EMCOR's labor relations are good. And management talents and expertise, I believe, are the best in the industry.

We see continued growth opportunities in the outsourcing driven Facilities Services markets. We're particularly interested in the government sector where we have had recent success, especially with our U.S. Navy relationship. Overall, we continue to think that we can grow this sector at organic rates in the low to mid teens annually.

Our liquid, debt free balance sheet and solid SG&A control demonstrate our continued disciplined approach to project and overhead expense control. We expect cash flow from operations to continue its strong performance for the remainder of this year.

We've continuously pursued investment and acquisition opportunities both large and small seeking to strengthen and to diversify our service offerings in markets that we think will offer future growth opportunities. We are very pleased with the continued strong performance of our Fluidics and Communal acquisitions and we have added three more companies to EMCOR Group in the last couple of months.

Air Systems is EMCOR's entry into the large and promising San Hose, California mechanical service market. Fuller Air Conditioning will become part of the California operations of our Mesa Company. And Midland Fire Protection from Providence, Rhode Island will enhance the operations of Boston-based JC Higgins in the strategically important fire protection market.

We welcome these new additions to the EMCOR family and hope that we find more such capital deployment opportunities in the coming months.

Please go to slide ten.

Based on all of the foregoing and assuming, as we do, the continued strength of our end markets based on what we believe to be reliable indicators, we've adjusted upward our revenue and earnings guidance for full year 2007. We now expect full year revenues in the range of $5.6 billion to $5.7 billion, a $100 million increase in the low end of the revenue range. And we have raised EPS guidance to a range of $1.48 to $1.60 per diluted share, compared to our previous estimate of $1.38 to $1.50. We have a high level of confidence in our ability to achieve results in the lower half of our new earnings range and believe that market demand and pricing power put the top end of the range within reach if our optimistic point of view proves to be accurate.

That's it for now. As always, thank you for the support that has made 48 consecutive profitable quarters and 50 earnings calls possible.

Now there is time for your comments and questions. And Janice is here to tell you how to queue.

(Operator Instructions). We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Alex Rygiel with FBR.

Good morning, Frank, and congratulations on another great quarter. I wouldn't be surprised if I was one of those on that July, 1995 call.

You were on that call. We were much younger then, Alex.

We were and it is almost scary that I was on that. I must admit that over the 50 calls I have never seen operating margins like this in the third quarter -- in the second quarter -- and I have actually never even seen a sequential improvement in margins like this. Can you talk a little bit about, obviously we know the power of your businesses, if all of your segments have strong quarters at the same time, we get margins like this. And that clearly is what's happened here. But it is kind of odd that it happened in the second quarter rather than the fourth quarter.

Your guidance would suggest that it is going to continue over the next couple quarters. That's really, really strong.

Yes, it is. The demand ingrained in our major markets and our ability to meet that demand are both at an all time high. We are clicking on all cylinders right now and we are very pleased and proud of it.

Are you seeing any constraints in labor right now?

Not at EMCOR. We don't know if some of our competitors are feeling that way. But we're noticing in particular that there is at least a modest trend within our record backlog towards larger and more complex, maybe more mission critical, projects as competition clears out of that segment of our business and customers understand that there is really only one company that can reliably deliver large, complex, mission critical projects in this kind of a market. So we've seen some benefits in that direction as well.

Great. And your backlog mix has been shifting towards a more positive end market. At what point do you pull back on the reigns on that market backlog mixed shift and keep the mix kind of static?

We're careful deployers of both financial and labor capital, Alex. And we know from experience that we can't overload individual business segments or individual subsidiaries for that matter. But the talent of experience and expertise of our subsidiary management personnel is at an all time high just like it is at corporate. And we believe that we have the ability to identify, to price, and to manage risk where the rubber meets the road.

You are having such a good year. Is there anything we should think about as it relates to higher employee compensation that might hit in the forth quarter and abnormally hit your G&A line or anything of that nature?

No, I don't think so. A bunch of glum faces in the room as I say that, but I think we are adequately provided for in terms of both anticipated incentive comp and also the variable compensation as a result of the excellent performance of our stock in the last while.

Great. And one closing question as it relates to the recent projects that you announced. Can you talk a little bit about how large they are and how long they will burn through your P&L?

You mean the large projects that I mentioned that we were gravitating towards?

Exactly, the ones that Tony was -- well, no, the projects that Tony was talking about.

Oh, okay.

Approximately when will they start? When will they finish? And about how big are they in size?

Here is Tony.

The projects we feature are all north of $15 million. And when they will start, they started. They are all in pre-construction planning right now. They are in various stages. Most of them will hit full construction where we have significant men on the job between fourth quarter this year and second quarter next year. Duration, anywhere from eight months to twenty-four months.

Great. Thank you very much.

You bet, Alex.

Your next question comes from the line of [Tara Afsawl] with Keybanc Capital Markets.

Hi. Congratulations once again on an excellent quarter. Just had a couple of questions, number one, in terms of the [FX] impact on Canada and U.K., would you happen to have that spread?

Tara, we have that. We don't have it in the room. If you call me after, we'll give it to you.

Sure. And then if I look at your backlog, your backlog seems very strong, yet the guidance you have given for revenue seems fairly conservative going into the second half of the year. Are you assuming a slower burn then on some of these large projects?

Yes. That is exactly it, T. We expect that, as Tony mentioned in his response to Alex's question, that both we and customers will space out these projects to take advantage of optimal labor conditions. And as we -- I don't mean to say that there has been a huge shift towards these larger, longer term projects, but it is definitely there. And the result is that this backlog that we're reporting today extends further into 2008 than would have been the case, say six months or a year ago.

Great. So you have better visibility in terms of revenue going into '08 then, I would assume.

That is exactly the case.

Okay. That's great. And then you mentioned something about your competition clearing out. If you could just elaborate on that a bit.

Well, the kind of projects that we're talking about that are larger and more complex, or as a specific example, the -- you've seen major growth in our healthcare segment this quarter that is backlog growth. That is a system-rich environment comprised of a group of mission-critical systems that must work optimally all the time. We get the same kind of situation with data centers, for example, where downtime is not an option. And our casino customers, especially in Las Vegas, won't take no for an answer when it comes to both quality and timeliness.

Our customers, we think, are voting with their feet in coming to EMCOR for reliable delivery of these very critical, high end projects and the margins that go with them. And we welcome those customers.

Okay. Great. And one last question and that is on your cash. Your cash balance [continues to build]. Are we going to be seeing larger acquisitions in the mix going forward or are we going to continue to see smaller ones?

If it were up to me, you would see acquisitions with some scale in the future. I've commented on previous calls that it is not for lack of trying that EMCOR has not announced more material acquisitions and investments in the past. We have been priced out of the market, at least until recently, by the private equity competition. It is our belief that credit market events of the last couple of weeks may have made it marginally more difficult and expensive for our private equity competitors to buy target companies.

EMCOR has retained its discipline and always will. But if the road gets rougher for our private equity competition, then maybe we'll succeed in making an investment with scale that will payoff in spades for our shareholders in the long term future.

Okay. Great. Thank you very much and congratulations once again.

Thanks again, T.

(Operator Instructions). Your next question comes from the line of Rich Wesolowski with Sidoti & Company.

Thanks. Good morning. Frank, looking at the trend in the share of your backlog represented by the higher margin hospitality casino commercial-type work, you've now round tripped a period in which you had first [risen] that mid 50% level. Does that say that over the next six, eight quarters operating margin expansion would have to be based more on pricing, execution, or rather can we expect to see further gains from that share going up?

I think that it's a pricing and execution story primarily. The contract capacity absorption issue is the one that leads to pricing power in our business, and there has been a material change in that situation since a year ago. So pricing opportunities hand in hand with enhanced execution capability are, I believe, our story for the next six months to a year. Tony, any comment?

Yes. I think, building on what Frank said, we're at a good mix. What we can spend our time doing is looking at the right discipline to put our labor and project management to work on. We continue to see good opportunities in front of us and we've got to continue to execute and get the productivity in the field. And one of big advantages that make us more comfortable, especially on the mechanical side, and I think one of the things that you are seeing underlying, is we're becoming really, really good at prefabrication and using our shop in 3D CAD design. And unless you are a major player like us that can share resources across geographies to do that and make the systems investment, you don't get the kind of productivity that we are getting right now on the mechanical side. And that is expanding even more and more into the electrical side which always had a little better productivity.

So I think what you are seeing in a nutshell, Rich, is enhanced productivity across the board, and therefore, reduced vulnerability to labor shortages even in extremely hot markets like Las Vegas for example.

As a follow up, Frank, you mentioned the contract capacity absorption. Does that notion is that playing out also in the relatively commoditized sectors that you are playing or is that only in the larger, more system rich type of jobs?

I think it is primarily in the larger system rich area where expertise in terms of 3D CAD design and the other sophisticated bells and whistles the top end customers insist upon are in EMCOR's hands and not in many of our competitors.

But one of the things that we are seeing is because of the demand for energy efficiency and other things on that smaller project work, our ability to bring quick design built solutions in the mechanical service space is paying off in spades within our EMCOR Facilities Services business.

Great. Thank you.

You bet, Rich.

Your next question comes from the line of Brent Thielman with D.A. Davidson.

Good morning, guys, and congratulations as well on the quarter. Just a quick question for you, just looking at the electrical construction services group, obviously some really great improvement there. I am just curios is there something one time in nature in there? Is that simply a function of your focus on higher margin work and are these kinds of levels sustainable going forward?

I'll let Tony comment on that, Brent.

One is better execution across the board. Our electrical group has been known for great performance, performance that puts it at the top of its class. The one thing we have is an absence of badness that had throughout last year in Miami. That's a small part of the story. The larger part of the story is great project bidding discipline, terrific productivity on some key large, complicated projects that Frank talked about. And finally, customers that are recognizing when they need job done right and quick. And we're seeing it especially in tenant fit-out work. Our electrical guys are the ones to use.

Great.

I will say, by the way, Brent, that contrary to the comments that I have read in connection with another couple of manufacturing companies in the last few days about perceived slowdowns in project activity and awards in the U.S. building sector, we see no such down turn. We are as busy as we have ever been in the area of development and proposal of new projects. And all the indicators that I watch for signs of impending slow down or, indeed, recession, continue to be positive.

And I will site just one example. The architect's billing index that came out a week and a half ago is at a level of 59.2 where anything over 50 represents growth and 62.3 as an index for new project inquiries. These are remarkable numbers and suggest continue to strengthen this market well into next year.

That is good to hear. Thanks guys.

And there are no further questions at this time, sir. I would like to turn the conference over to Mr. MacInnis for any closing remarks.

Thank you, Janice. Once again, thank you all for your long term faith and support in EMCOR. Watch this space for interesting developments. Thanks again. So long.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.