Federal Signal Corp (FSS) 2014 Q3 法說會逐字稿

Good day and welcome to the Federal Signal Corporation Third Quarter Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brian Cooper, Senior Vice President and Chief Financial Officer. You may begin.

Thank you. Good morning and welcome to Federal Signal's third quarter 2014 conference Call. I'm Brian Cooper, the Company's Chief Financial Officer. Also with me on this call are Dennis Martin, President and Chief Executive Officer and Jennifer Sherman, our Chief Operating Officer. We'll refer to some presentation slides today as well as to the news release, which we issued this morning. The slides can be followed online by going to our website, federalsignal.com, clicking on the Investor Call icon and signing into the webcast. We've also posted the slide presentation and the news release under the Investor tab on our website.

Before we begin, I'd like to remind you that some of our comments made today may contain forward-looking statements that are subject to the Safe Harbor language found in today's news release and in Federal Signal's filings with the Securities and Exchange Commission. These documents are available on our website. Our presentation also contains some measures that are not in accordance with US Generally Accepted Accounting Principles. In our news release and filings, we reconciled these non-GAAP measures to GAAP measures. In addition, we will file our Form 10-Q later today.

I'm going to start by addressing our financial results and Dennis will provide his perspective and Jennifer will comment on our goals and outlook. Our consolidated financial results for the third quarter show a continuation of the positive trends of recent quarters, solid growth in revenues, expanding margins and robust orders and backlog. Consolidated operating income was $24.9 million, which represents 32% improvement versus Q3 last year. Sales were 5% higher with exceptional growth in our Environmental Solutions Group being offset by deferrals in our Fire Rescue Group, which resulted in low sales there during the quarter. Consolidated operating margin rose to 11.4% versus 9.0% a year ago. It was also up sequentially versus the 10.2% operating margin that we reported in Q2 this year.

Interest expense was $0.9 million dollars, down from $1.5 million last year and adjusted net income from continuing operations for Q3 was $15.3 million or $0.24 per share. As most of you know, last year we released valuation allowance against deferred income taxes. Excluding the effects of that change, our adjusted EPS last year was $0.18 per share and this year's $0.24 per share represents 33% improvement. We also continue to see strong order growth with consolidated orders of $225 million in the quarter, up 14% versus last year. Demand was strong from municipal and government markets as well as from industrial markets. With the strength in municipal, our revenue mix remains approximately 60% from municipal and government markets and 40% from industrial markets. Within that industrial piece, about 9% of our orders now relate to oil and gas industry. Strong Company-wide quarter flow contributed to a very healthy backlog level of $353 million, which is 23% higher versus a year ago.

From a group perspective, ESG continued its run of excellent results. Orders were 25% ahead of last year and backlog rose to a very healthy $212 million. Sales in the third quarter increased by 19% compared to last year to $134 million. The increase reflects strong demand in both municipal and industrial markets for our street sweepers, sewer cleaners and hydro-excavators, as well as increased production throughput in our manufacturing facilities. Leveraging those sales, operating income was up 78% to $21.5 million and operating margin increased to 16%, up 530 basis points versus last year.

SSG also produced an excellent quarter. Orders were up 10% and sales rose by 4%. Operating income in the quarter increased by 34% versus the prior year to $9.4 million and operating margin improved to 15.7% and has a huge step up from Q3 of last year and sequentially from last quarter, which were both 12.2%.

Sales at Fire Rescue Group during the quarter were low at $25.5 million, down 34% on lower unit volumes and FRG again reported a nominal operating loss. Orders were down 21%, reflecting differences in timing versus last year. Year-to-date, orders are up 14% over 2013 and backlog remains excellent at $101 million. We are confident the demand remained strong for our aerial lift products. In addition, we believe that we have successfully executed on the recovery plan at FRG, setting up FRG for a very strong fourth quarter and for steadier profitability into the future.

Corporate operating expenses were $5.8 million, up compared to $3.6 million last year. The increase primarily reflects higher incentive and stock compensation expense, which has resulted from the Company's strong performance. Income from continuing operations reflects the operating income, which I just reviewed, plus the effects of interest expense, some nominal foreign exchange effects, and income taxes. Interest expense remains low, reflecting lower interest rates and our declining debt balances. Income tax expense for the quarter was $8.5 million compared with $0.5 million a year ago. Tax expense last year was low as a result of benefits from valuation allowance on deferred tax assets.

For Q3 this year, the effective tax rate is almost 36%. We expect our effective tax rate for the full year excluding discrete items to be between 32% and 33%. This is slightly higher than we had been anticipating, as a result of our continuing profit momentum in higher tax rate jurisdictions. And the rate for Q3 reflects some catch-up to the expected annual tax rate.

Please note that from our cash perspective, we paid little income tax in the US where our income continues to be offset by use of deferred tax assets, consisting of net operating loss carry-forwards and tax credit carry-forwards. On this GAAP basis, we therefore earned $0.24 per share from continuing operations in Q3, compared with $0.26 per share in Q3 last year.

We had no significant unusual adjustment items this year. To facilitate earnings comparisons, we've been adjusting for unusual items reported last year, including restructuring activity, debt settlement charges and income taxes. Income tax expense included in our adjusted earnings per share for 2013, therefore reflect a normalized effective tax rate of about 32%, which excludes the effects of unusual tax items, most notably valuation allowance effects. On this basis, our adjusted EPS for the quarter was $0.24 compared to $0.18 per share in Q3 a year ago.

Looking at the balance sheet and cash flow, cash generated by continuing operations was $20.9 million during Q3 compared to $26.4 million in the third quarter a year ago. Year-to-date, we have generated $44.6 million compared to $37.3 million last year. With this cash flow, Company was able to pay down debt and add to cash balances during the quarter. Company's total debt balance was $69 million compared to $92 million at the end of 2013, and our net debt dropped to only $40 million. Our leverage ratio of debt to adjusted EBITDA continued to improve as well, dropping to 0.7 times. That compares to 1.1 times at December 31 and 1.7 times a year ago.

The Company funded dividends of $1.9 million and share repurchases of $3.4 million during the third quarter. Last night, we also announced a new Board authorization of up to $75 million for the repurchase of Federal Signal shares. Combined with availability under the authorization announced earlier in the year, we now have total availability of $83 million under our share repurchase plans, which is just under 10% of our current market cap. We put this new plan in place to help manage our capital structure, given our very strong cash flow and already low debt levels. We believe there may be opportunities to return some value to shareholders via repurchases while at the same time, investing in our growth opportunities and funding dividends. Dennis, will talk more about our growth opportunities in his remarks.

This next slide provides a breakout of our global sales, which we feel may be helpful in assessing the impacts from changes in foreign exchange rates. This is approximate and can vary from quarter-to-quarter. We also included some related commentary in our earnings news release. But this shows you that about 35% of our total sales, the blue slices, are delivered outside the US, 15% of our sales shown in light blue are made from the US to other parts of the world. Those sales are pretty much exclusively denominated in US dollars. The dollar value does not change directly when exchange rates change. We also believe that those sales generally remain competitive at similar margins when the dollar strengthens.

Almost all of our sales that are produced outside the US are denominated in the currency where the product is made, as represented by the 12% -- 20% in darker blue. Margin percentage on such sales does not change when exchange rates change. Therefore, foreign exchange movements can directly affect the US dollar value of about 20% of our sales, the dark blue slice, and the translation of profits from that 20%. There's been about 8% strengthening of the dollar, which probably approximates what we've seen recently, we estimate there should be a very small reduction in our operating income of about 1%.

That concludes my overview of the numbers. And I'd like to turn the call over to Dennis.

Thanks, Brian. I think that covers our results pretty thoroughly. Our consolidated results have been strong all year and we have excellent momentum building in our businesses, supported by growing orders and healthy backlogs. We are also proud of the steady improvement in our operating margins.

While we have not seen good results in the last few quarters from FRG, our Bronto Skylift business, its future prospects also look very good. And I'm looking forward to a solid fourth quarter from all three business groups. Looking a little further ahead, I'd like to talk about some of our growth opportunities, and how we are moving to capitalize on them. I've said before that we are fortunate to have many internal opportunities; some are straightforward as adding production lines at Vactor and Elgin and along with the same lines, we are exploring opportunities to expand our facility in Alabama and we have expanded our Jetstream facility. These expansions allow us to address areas where rapidly growing demand has taxed our capacity, and to enter some markets that are newer to us with better products.

At the same time, we've been aggressively investing in our sales forces to support our industrial growth strategy and to drive demand at both SSG and ESG. We have added sales people with good experience and expertise in the industrial markets where we really want to grow. We've also added a new global sales manager at Bronto. We have supported these other investments with hands-on research and one example this year (inaudible) a cross-functional team with engineering and marketing expertise to visit about 60 end-users in a variety of utility markets, which are still relatively new to us. We did this to learn how to use our equipment and what they need in order to do their jobs effectively. These efforts are leading us to design new products for their requirements, innovate new tools, and expand offerings of accessory products.

Another way that we are attacking our growth opportunity is to move more quickly, and decisively. We've challenged our teams to respond more quickly to new market opportunity. In this area, I think about how we spend an additional million dollars on engineering work across our businesses this year in order to expedite new product development. We've also added a new FS Solution Center in North Dakota, which has kicked off extremely well. The new center provides service to oil industry users of our hydro-excavation and our vacuum truck products where we already have a leading market share. This helps us to develop our repeat business and our service offerings. It also helps us to better anticipate new trends, needs, and improvements for our existing products.

Similarly, we have enhanced our Bronto distribution network in North America, which we expect to help us capture industrial growth opportunities for Bronto. We are fast-tracking new global product offerings for Jetstream and SSG, and we'll capitalize on channels that we already have. They're also helping us to expand more effectively in the global markets. We also have added new engineers and refocused our talent again (inaudible) tend to be more timely, nimble and responsive to customer needs.

There are accelerated new product development activities underway in all of our businesses. These internal growth investments also help us focus our efforts on potential acquisitions. We have defined our goals for M&A to be primarily tuck-in acquisitions that build on or complement our core competencies. Specific areas of interest would include the ability to leverage distribution and channels with additional products, assess adjacent markets or expand our geographic reach.

Just as important, we are committed to disciplined acquisition and integration process. We are working with our business teams to help identify targets that may be attractive to us, so that we can proactively approach them. Of course, we also respond to opportunities that are proposed to us. Over the [last five months or five quarters] or so, we have filtered something over 100 ideas have advanced to a variety of stages. About half have gotten some close scrutiny and a handful have pursued fairly far in the process. And from our work to this point, we believe that there are relevant and profitable opportunities for acquisition. We are working to find the right ones.

These growth opportunities are the main focus for the use of our capital. Organic opportunities are our highest priority and we believe that acquisitions can provide a strong complement to them. Of course, we also remain committed to a healthy dividend policy. And after those priorities, we believe that we will still be able to repurchase shares as a way to return value to shareholders and to manage our capital structure. Our robust cash flow should allow us to execute share repurchases without impacting our ability to invest in internal and external growth opportunities.

And I'm pleased to turn the call over to Jennifer.

Thank you, Dennis. Like many companies, Federal Signal, at this time of year, reassess its strategy and set operating plans for our next fiscal year. We are in the middle of that process. So, it is still too early for us to comment on our 2015 expectations. However, it is not too early to revisit our longer-term strategies and goals, including our four main initiatives.

Dennis just talked about creating disciplined growth with organic investments and focused acquisitions. We feel that our opportunities translate to revenue growth above US GMP. We also focus efforts to leverage our invested capital. This leverage is evident in our results over the last two years and we continue to pursue it with our internal growth initiatives and our flexible manufacturing model. Innovation of new products and services focuses on expanding opportunities in end markets like utilities and oil and gas and expansion of targeted global opportunities should help us to grow faster in industrial markets and continue to diversify our customer base. And of course, we have a relentless focus on improving our efficiencies and cost structure and continuing to optimize our municipal and governmental (inaudible).

As we consider these initiatives, our progress and momentum and the opportunities we face, we have reset our longer-term financial goals. Over our planning horizon, we are aiming to: one, grow consolidated revenue faster than GMP while increasing share from industrial markets; second, continually improve return on invested capital; third, improve consolidated operating margin to 12%; and fourth, consistently grow earnings per share at a percentage rate in the low-to-mid teens. With these goals in mind, we are optimistic about 2015.

On our last call, I spoke at length about the recovery plan that we put in place at Bronto, including a significant investment in capital equipment, which should increase productivity over the longer-term. I'm pleased to report that we have successfully executed against the plan and we believe FRG Bronto's fourth quarter will be the best quarter it has had in recent years. In the near-term, our continuing momentum, our strong backlog and the recovery of Bronto give us better visibility into the fourth quarter. We, therefore, raised our outlook for 2014 adjusted EPS from a range of $0.83 to $0.87 per share to a new range of $0.87 to $0.91 per share. This compares to $0.67 per share in 2013. Since we are at $0.62 per share year-to-date, this updated outlook translates to a range of $0.25 to $0.29 per share for the fourth quarter.

With that, I think we're ready to open the line for questions. Operator?

Thank you. (Operator Instructions) Steve Barger, KeyBanc Capital Markets.

It's actually Ken Newman on for Steve this morning. You talked about solid market demand, just curious, can you give more color on the muni budgets and is this pent-up demand driven by underinvestment or did actual fleet grow due to stronger tax base and a change of view on budget risk?

Yes, I think what we've seen primarily is some release of -- a little bit of the pent-up demand that existed but it seems to be steady demand because of the better half of the municipals. Primarily on the sweepers and the vacuum trucks side, we've seen good activity on the police side, but it's not accelerated dramatically, as we get fairly good documentation from the (inaudible) produces police cars registered in a year. So police activity is about the same, but we're seeing more under the environmental side.

Got it. And your focus on operational efficiencies are clearly working. So what are you looking to next drive incremental margin expansion? Is there anything in the distribution model you can optimize or further supply chain initiatives you can talk about?

On the distribution side, the thing that's going to drive beyond the operational excellence activities are the increases in the sales forces we've made. We significantly increased the sales force in our SSG, safety side and on our ESG direct side, serving the industrial contractors, also on our Bronto side. So our initial -- our investments in the operating side continue and we still have some good leverage there, but we also have gone at the front end of the business now and begun to add new products. On the longer -- I mean, sales people. In the longer-term -- mid-term to longer-term, we have a good number of brand new products that will hit the market midyear -- next year by midyear, that along with additional sales folks, the new products we think will also stimulate activity.

These products, it's just as a follow up on those across all the segments or is that primarily on the Bronto side or --?

No, all the segments are working on new product development, primarily Bronto has been introducing new models this year and will continue into next year. The SSG team on the industrial safety side, we've had police new fire products this year. So it's pretty, well spread across the business and our efforts on adding engineering development time and resources is really across the Company.

Got it. And then just one more if I could. ESG margin was really good this quarter and it's the second quarter at 16% or better. Has mix been a big factor in the last couple of quarters or is this a sustainable margin for the near-term?

I think it's been sustained for two quarters and mix is clearly a big part of it, and I think if we have another quarter of this, obviously, we were seeing better impact of all the efficiencies, but I would say it's still exceptional quarter for us.

Walter Liptak, Global Hunter.

Yes, especially the margins in ESG look terrific, but I want to ask about what's embedded, Jennifer, in the guidance for fourth quarter in the FRG business, realizing that it's probably a little bit tough to model for us, just because we don't know how much extra cost was in this quarter and how much is coming out next quarter with the fourth quarter production in your sales levels, I wonder if you can give us some more color on that?

I talked at length on the July call about the recovery plan that we've put in place. We've been monitoring our progress versus that plan. We believe that we talked about some low margin units and we believe most of those units have been produced. In addition, we talked about some production inefficiencies as a result of investment in some capital improvements. Those capital improvements are completed and we expect to see improved productivity over the longer-term. In light of all that and our success against the recovery plan, we expect to have a strong fourth quarter at Bronto, and we believe it will be the strongest quarter that they had in years. So that was an important part of the guidance moving forward. In addition, we have, as we mentioned, good visibility not only in Bronto's backlog, but into ESG's backlog.

Can you quantify the third quarter inefficiencies that were going through Bronto?

Well, I think if you look at Bronto, there was a net loss minor. So the inefficiency is really (inaudible) product out the door, along with some other conversion things that we did. Look last year and year before, we are running at a more normal run rate of 6% operating income. And so we would expect that we should be able to back to that level and once we are passed some of the production hang-ups, which we think we're passed or close, then we should see a more normal run rate.

That said, we expect the fourth quarter to be a bit of a catch-up period also, it will be a very good quarter for Bronto.

That sounds great. But kind of on the production side of the aisle, are there other trucks that were waiting to ship or are there -- what does the production level look like --?

We have a typical fourth quarter run rate plan for Bronto in terms of production. We had some machine ship slip over from the third quarter to the fourth quarter. So like Brian said, it will be a strong quarter for us, because we've got a lot of machines that have already been shipped in the quarter and so it's progressing the way we would expect. There's always one or two on the bubble. (multiple speakers)

There's probably more completions in the fourth than we typically have because they have been in process.

It'll be a heavier quarter than normal.

And if I can switch gears to SSG, it's nice to hear the municipal is picking up in the US [I think we've been waiting for a good -- I] wondered about the international orders and, it's something you've got some and ship some just recently, what does the pipeline look like, does the drop in energy prices have an impact on any of the business in the Middle East or in North America?

Jennifer will talk a little bit about SSG. But in terms of the international orders that we're getting, we don't think that -- they come and go sporadically over years, but we don't think that the drop in oil price will affect the orders that we get in international.

On the municipal side of SSG, we're starting to see modest recovery and our fleet orders are up. On the industrial system side, we have a very strong pipeline with respect to our international orders and we expect that to continue through the fourth quarter and into next year.

That sounds great. And I wonder if you could just help us with this last one. You've got some international sales, just kind of generally I think most of those are Bronto but with Europe slowing down, what percentage of sales are other products outside of Bronto? Do you have to take any steps to maintain margins if Europe goes into the recession?

Walter, if you look at our business in the US, shipments -- the export, we don't ship to Europe primarily. So our shipments from ESG as an example are primarily sweepers and they primarily go to the Middle East. The Bronto business, you might see a drop over next year in orders in Europe by choice from us for not taking the low margin orders, which we took this year. So the revenue line might be impacted some, but I think the operating income line will be impacted positively in that regard.

So we don't think that the current slowdown -- the Obama police business is steady and it hasn't been robust and we think it's running at a fair pace that will continue. But beyond that, we don't a lot into Europe. We don't believe that's going to be a major impact on the Bronto machines that are shipped globally to Europe to Asia Pacific. They're not related all to energy, they're related to more safety and industrial safety and (inaudible) industrial, but we think those will continue because of the demand.

We've also made a number of investments on the Bronto side in North America in terms of appointing a new partner, on the fire side. We talked about our new dealer we have on the industrial side and we continue to see growth for Bronto in North America.

(Operator Instructions) Robert Kosowsky, Sidoti.

I was wondering at ESG, it was obviously really good margin expansion versus last year. And I wonder if you could bucket increased production throughput versus mix versus just some other efficiencies you might have gotten from better vacuum truck production rates?

Yes, we introduced a brand new production line in April. We advised you last year, we launched that new line plan in October of last year and that new line has really come through in terms of adding additional production. So, the production capacity at Vactor has increased. We also have produced more product out of the Belgian plant. So really the mix was good -- the mix is good, and also the production, the capability to get product out the door has helped us quite a bit.

Do you see the need to add more production lines now given where your backlog is?

We constantly assess that. We've made some decisions to introduce a flexible manufacturing model, which we talked about before, but in order to do that, we've utilized some of our other locations, including our Alabama location and we are actually adding a facility there, a small facility relatively speaking, but it allows us to have additional capacity. So, fully utilizing the existing new line like we did in Vactor -- the two new line or the new line at Elgin and in other locations. We don't anticipate in the next year adding major plant expansion in order to meet the capacity demands. We are still working on the 80/20 stuff and we still think we'll be able to push (inaudible). That doesn't mean that a few years down the road, we may not choose to expand Vactor, but I think we still have plenty of capacity at both Elgin and our Leeds, Alabama location, our FS Solution Centers in the Vactor, but do what we need to do there.

And finally with ESG, you had pretty tremendous growth in orders and I'm wondering if you could say what the market was up, whether or not you picked up market share and dimentionalized (inaudible) expansion into new markets or new geographies, just to get a better sense of how well Federal Signal is performing relative to the market and on some of the initiatives?

Talking about market share is extremely tricky, because there is no reporting mechanism for us in the markets that we're dealing with. We do know that the areas that we're expanding in are broadly base through sweepers as well as our hydro-excavating product and even the vacuum truck products. So it's really just robust activity. Oil and gas is driving some of it. The heavy industrial contractors are driving some of it, the municipals and the sweepers. So it's a healthy market situation right now, Rob, that's pretty broad based.

Kind of uniformly across the board and I'm wondering also just what the impact is of oil coming in as much as it is, if we do see the rig count start to go down, is that going to be a major headwind against growth of orders in the next few quarters?

Yes, I think our activity -- I know our activity is not related as much to installing brand new wells as much as it is in maintenance and the operations that go on, on the facilities. So, it's yet to be seen, nobody expected oil will drop as low as it did. I think our overall relationship with the oil and gas industry, Brian is what, 10% to 12%.

9% (multiple speakers). Probably two-thirds of that is -- [half the two-thirds] of that is exploration and production activity, but as you say, even there, we are applying the maintenance that's going on after (inaudible).

Right, so Rob, we don't -- it's good for us but it's not a major -- if it shifts up or down, then the quarter is not going to have a major impact.

Was that 10% of the segment or 10% of the Company?

About 9% of our overall revenues are related in one way or another to oil and gas and that also includes SSG.

Right, the industrial safety products.

Selling to oil rigs and refineries.

And a large percentage of that's maintenance, which is critical.

(Operator Instructions) Steve Barger, KeyBanc Capital Markets.

With the business on better footing, can you talk about what the key metrics you are managing or incentivizing people on, is it margin expansion, EPS growth, return on capital?

Well, the Company has long and short-term incentive programs for all the leadership, and a major portion of our compensation of executives is based on performance of the Company.

Yes, and we're very focused on operating income across the Company, and on working capital efficiency. So we put measures in around that, in around return on invested capital. I think with a lot of the growth in many of our business, a lot of the focus really is on delivering the bottom line and that's pretty clear for people.

We don't talk about revenue on the calls much. We do care about revenue, but really, it's really driven in profitable growth strategies. So we do want to grow the business, but -- as I said, we haven't set lofty revenue targets were really more important than profitable growth toward the right revenue targets.

Our longer-term incentive plan focuses on earnings per share and this year, we introduced return on invested capital.

We try to align clearly with the investors.

And your net income to free cash flow conversion has been really great. Is that a ratio or something you target and is sustainable at these levels from what you can see?

We don't target that specifically. And the question of sustainability, a lot depends on the economic cycles that we run through. I mean our businesses, like all other large capital equipment businesses, can be subject to big swings in capital markets, and while we expect a good performance to continue through the next near quarters, you just don't know what's going to happen. So if the market goes into another 2009 kind of downturn, it would be very difficult to show the same conversion of cash that we have experienced, but all things being equal if the economy stays strong, we think we're doing the right things in terms of expanding our customer contacts, our intimacy with the customers and selling more products or efficiencies in the plants and our development of new products, and we think we should continue to be a well respected company.

And in the face of strong markets, as Dennis has been describing, most of our internal investment opportunities have really high returns, but we don't need to spend a lot more capital than we have been, and part of the reason we're generating such good cash flow is the tax position we're -- where we're sheltered in US. So we expect that cash flow to continue, but it's not part of what we target people on, we are targeting them on delivering on the business performance and it translates for us.

We tend to run a very disciplined process of working on value-added activities in the Company and our teams do that and we're more focused on the process sometimes than the hard number, but the result is we get the number.

With all that being said, we talked about our strong backlogs and our visibility into the fourth quarter and the beginning of 2015, and we're optimistic about 2015.

One last one from me. There was a really impressive increase in the buyback authorization, just curious what your thoughts are around the cadence of executing against a new authorization and how are you thinking about your other capital allocation priorities?

That will be the fourth priority, to buy back stock. It's there as a tool. We do believe that we will utilize the first three priorities with a much more stringent focus over the near-term, but we wanted to have it out there as one of the tools.

Yes. It's one of the tools where -- we'll probably use it less as we find more acquisition opportunities that we like but we do want to manage our capital structure. So with the cash flow we have, we want to have that tool available to us also.

And we have no further questions at this time.

Well, thank you all for joining us today. I think you can see in our results and I hope that you can tell from our comments and discussions that Federal Signal is on a good track. Our people continue to work hard, our dealers continue to deliver for us and our customers continue to honor us with their business. We hope this call has helped to answer your key questions. We feel optimistic about our future and we'll look forward to talking with you again in the next quarter. So, thank you very much.

Thank you.

That concludes today's conference. We appreciate your participation.