Iridium Communications Inc (IRDM) 2010 Q3 法說會逐字稿

Welcome to the Iridium Communications conference call to present their earnings of Iridium Communications for the third quarter of 2010.

During the presentation, all participants will be in a listen-only mode. Afterwards you will be invited to participate in the question-and-answer session. And now I will turn the program over to Steve Kunszabo, Executive Director of Investor Relations.

Good morning and thanks for joining us. I'd like to welcome you to our third-quarter 2010 earnings call. Joining me on the call this morning are CEO, Matt Desch, and our CFO, Tom Fitzpatrick.

Today's call will begin with a discussion of the 2010 third-quarter results, followed by Q&A.

Before I turn things over to Matt Desch, I'd like to caution all participants that our call this morning may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical fact, and include statements about our future expectations, plans and prospects. Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks and uncertainties which would cause actual results to differ from the forward-looking statements. Such risks are more fully discussed in our filings with the Securities and Exchange Commission.

Our remarks today should be considered in light of such risks. Any forward-looking statements represent our views only as of today. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our expectations or views change.

During the call we will also be referring to certain non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with Generally Accepted Accounting Principles. Please refer to today's earnings release and the Investor Relations section of our website for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.

We will also use the term "Iridium"; this term refers to Iridium Holdings LLC for the periods before September 30, 2009, and Iridium Communications Inc. after September 30, 2009.

Lastly, I trust many of you have received the "save the date" announcement for our 2010 analysts today, on December 16 at the Waldorf in New York City. We are putting together a great program. We will announce registration details soon and hope to see you all there. With that, let me turn things over to Matt.

Good, thanks, Steve, and good morning, everyone. Thank you all for joining us.

This morning, Iridium announced strong third-quarter results, highlighted by record operational EBITDA, high-quality growth in recurring service revenue from our commercial and government businesses, and good execution across our key markets, including land-mobile mobile handsets, maritime, aviation and machine-to-machine, or M2M.

We continue to win as a mobile satellite services provider, with 413,000 billable subscribers because of a superior network with 100% global coverage, a strong portfolio of mission-critical solutions created and distributed through a growing ecosystem of world-class partners; and a business model anchored by significant operating leverage. Put plainly, we believe we have a high-growth subscriber base that drives long-term, sustainable revenues and predictable cash flow, and the third quarter was proof of that.

Iridium is healthy and strong, and we believe we've made the right decisions to support cash flow expansion and deliver shareholder returns. We are squarely focused on driving organic growth in each of our markets and look forward to building a strong track record of execution with each passing quarter and year.

In our commercial business, we continue to see strong demand across a variety of vertical markets and industries. As I consider how our business has evolved during the last few years, it has clearly become our primary growth engine in this rapidly evolving industry. With commercial service revenue now representing 50% of our total revenue, this high-quality and diverse recurring sales stream will be bolstered by contributions from across our services portfolio.

In the land-based handset market, we remain the gold standard for anytime/anywhere communications with the Iridium 9555 phone. It's the right device for our enterprise customers who continue to rely on the superior functionality and coverage of our network and are pleased by the device innovations we are making for e-mail, Internet access, and expanded SMS capabilities.

We understand that less costly handsets are being introduced in this segment, but most of our partners and customers are staying with us because of the reliability and quality our system provides. As evidence of this important differentiator, commercial voice subscribers grew 14% from the comparable period last year, reinforcing our leading position in this important market.

As we discussed during the last several quarters, the commercial machine-to-machine or M2M market is expected to be an increasingly important contributor to our success in the months and years ahead. The range of opportunities in this market is significant and growing, as organizations need to track and monitor their physical and human assets increase.

Our 9602 transceiver and the ingenuity of our value-added partners in building custom applications make this a very versatile and dynamic segment. They are allowing our customers to manage their transportation fleets, track high-value assets such as industrial equipment, monitor locations of vehicles on the move, and be a backbone for sensors that report back on critical information like weather, machine status, or any number of important factors to their business.

As evidence of traction in this market, we increased commercial M2M data subscribers 46% from the year-ago period, and we are only now starting to see the benefits of our new smaller and lower-cost 9602 transceiver, which was introduced near the end of the second quarter.

We also continue to see strong progress in our maritime and aviation markets, with Iridium OpenPort selling well and gaining market share across the world's commercial and fishing fleets. This high-ARPU product is an attractive, easily integrated and less costly alternative for maritime customers in managing their vessels, accessing and sharing critical data such as weather reports and electronic charts, and meeting crew communication needs. We expect to steadily build market share in this important business, characterized by recurring revenue customers.

Turning to our government operation, where we grew year-over-year revenue by 14% during the quarter as a trusted partner for government and military personnel, DTCS or Netted Iridium, again doubled in size with more than 3,300 additions during the quarter, as momentum continues to build with US Central Command and its soldiers on the ground for this adaptable, reliable and rugged product. We are also hearing of additional demand from other commands in other parts of the world.

On the government M2M data side, we are seeing the same good traction as in our commercial business with government M2M data subscribers now accounting for 14% of all government subscribers, an increase from 9% in the year-ago period. Government's need for robust M2M applications is only expected to grow, supported by their requirements to track and monitor a complex network of resources deployed around the globe.

Turning finally to the successful close of our financing facility and Iridium NEXT progress, I will be brief as I know you got a play-by-play along the way, but these items are worth addressing a final time because of their importance to our success.

The $1.8 billion export credit-backed financing facility is done, with attractive borrowing costs and good terms over a long period of time. We now have tremendous flexibility to execute our business plan and focus on the operational aspects of launching our next-generation satellite constellation.

I'd like to share my heartfelt thanks to my many Iridium colleagues, advisers and the banks themselves for all their hard work in getting this across the finish line.

Iridium NEXT will be a big step in what we can offer our customers -- expanded traffic capacity, hardware and software enhancements that support future product applications and higher data speeds, all with the LEO constellation that boasts 100% global coverage of cross-linked, meshed network architecture and backwards compatibility to our existing network, which is a critical requirement for our customers.

At the end of the day, sustained call quality, higher data speeds and more flexible bandwidth will offer an even better experience for our customers than what they enjoy today.

We're also excited to finally enter the development phase for Iridium NEXT and with just a little over four years to our first launch. We have a firm, fixed-priced US dollar-denominated contract with our prime supplier to develop our new system, as well as a fixed-price contract for launch services.

With our financing wrapped up and assuring our future for many years, we are again laser focused on our business including a new initiative to host payloads for our customers. Our new constellation will be a powerful and effective platform for hosted payload, and it should create a new recurring revenue stream for us. We expect this business to develop in 2011 or 2012, as we hammer out specific opportunities from the many we are working on today.

In closing, we have and expect to successfully compete in this rapidly evolving industry by having a quality network, strong partners and the best set of voice and data applications that generate predictable and consistent recurring revenue streams and cash flow.

I look forward to seeing many of you at our upcoming Analyst Day in mid-December and updating you early next year on how we finish 2010. So with that, I will turn it over to Tom for a more detailed financial review.

Thanks, Matt, and good morning, everyone.

As Matt noted, Iridium reported excellent third-quarter financial results, showcasing the ability of both our commercial and government businesses to generate strong, subscription-based recurring revenue and healthy cash flow. It's worth reinforcing the huge operating leverage and competitive advantages we bring to the table to keep these numbers moving in the right direction. We also provide updated financial targets for 2010, which I will review with you in a moment.

We believe we will produce strong cash flow by sticking to the fundamentals of a proven strategy -- grounded in a great network and a strong portfolio of solutions for commercial and government markets. We will add subscribers to support long-term, sustainable revenue that grows cash flow and delivers shareholder returns.

As we reflect on the performance of this quarter, the power of this business model is becoming increasingly clear. Iridium recorded quarterly revenue of $94.5 million and record operational EBITDA of $47.1 million, representing growth of 12% and 22%, respectively, from the year-ago period.

Our operational EBITDA margin was 49% for the third quarter, an expansion from 46% in last year's comparable period and a great example of the significant operating leverage we've pointed to during our discussion today.

Third-quarter net income was $10.7 million. This compares to net income of $15 million for last year's comparable period.

As we've shared with you before, our net income during the third quarter was again impacted by non-cash purchase accounting adjustments related to last year's transaction. The third quarter included $12.3 million of purchased accounting adjustments net of tax. Excluding these adjustments, it's easy to see that our net income growth mirrors our growth in operational EBITDA.

On an operating basis, we recorded commercial service revenue of $47.3 million, yielding a year-over-year growth rate of 8%. We continue to see strong demand across a variety of vertical markets and industries for our innovative communications solutions, resulting in commercial subscriber net additions of 26,000 during the quarter for a total of 371,000 billable commercial subscribers.

Commercial machine-to-machine data customers continue to be an important source of growth during the quarter, representing 27% of billable commercial subscribers, an increase from 23% during the prior-year period. As Matt discussed, we are building critical mass in our commercial business by leading the handset market with our feature-rich, reliable voice communications and working with our value-added partners to attack new revenue streams in the maritime and machine-to-machine markets.

Turning now to our government services business, during the third quarter, government service generated revenue of $15.4 million, up 14% from the year-ago period. The aggressive adoption of DTCS or our Netted Iridium, push-to-talk tactical radios by US forces, as well as broad-based demand for our satellite handset across the defense community, continues to be our formula for success. Government services added 4,000 new customers during the quarter for a total of 42,000 billable subscribers.

We also continue to capitalize on the same encouraging trends in the machine-to-machine business as the government sees more and more uses for integrating machine-to-machine services to manage its operations. M2M subscribers accounted for 14% of billable government subscribers during the quarter, and this high-margin service revenue grew as well.

Focusing next on equipment which produced revenue of $27.1 million, a 28% increase from the year-ago period, resulting from strong handset sales and increased volume from machine-to-machine units. We took steps during the quarter to successfully address the parts supply delay we discussed with you back in August, and are now back to filling customer orders on more standard timelines.

Moving now to our financial and operating outlook for 2010, which we've increased in key areas as a result of our strong performance during the first nine months of 2010 and better visibility as we wrap up the year. We expect operational EBITDA between $155 million and $160 million for the full year 2010, an increase from $150 million when we last updated you on our second-quarter call.

On the same basis for full-year 2010, we now expect the following -- total billable subscriber growth to be approximately 25%, up from greater than 20% previously; government service revenue growth of between 8% and 10%, up from greater than 5% previously. We are also affirming our previous guidance for commercial service revenue growth of greater than 12%, and equipment revenue growth in the mid-to high single digits. Taken together, these targets reflect our ability to execute our operating plan and grow cash flow in 2010 and beyond.

Finally, an update on our financing and capital structure and liquidity position. The financing is done and we are incredibly pleased with the terms. As Matt touched on, we now have greater operational flexibility to execute the business plan and focus on the design and development elements of Iridium NEXT.

As we discussed our third-quarter results with you today, we've drawn $135.1 million from the facility and have spent $192.3 million on Iridium NEXT. As of October 31, 2010 we also had a cash and cash equivalents balance of approximately $111 million.

As an important reminder, repayment for this facility commences in 2017 and runs until 2024. We will continue to access the facility during the planned construction period for Iridium NEXT. We'll grow revenue and cash flow during the period and have manageable debt and leverage target levels as well.

With that, let me turn things back to the operator for the Q&A portion of the call.

(Operator Instructions). Chris King, Stifel Nicolaus.

Good morning and congratulations on wrapping up all of the financing since we spoke last.

A couple of questions for you. One, I just wanted your commentary or 30,000-foot outlook, I guess, on the price competition right now on the industry with both Inmarsat and Globalstar in particular and what you're seeing there in terms of price action amongst your competitors.

And then secondly, just flying through the Q here, I did see that Accounts Receivable ticked up a little bit in the quarter. I just was wondering if there was anything seasonal or kind of one-time in there that we should be thinking about. Thanks.

Good morning, Chris. Yes, there is price activity you are talking about is really in the handset segment primarily, though of course competition is -- you know, we have across the market. We compete very well and have always been the premium supplier, not because of any kind of premium cost structure but really because we have a much higher-performing product than anyone else, with our coverage and the fact that it was designed to be a handheld product used in any kind of form or place.

We haven't really seen a lot of competition, as you can tell by our results. You've seen our growth. In fact, I still don't really see much impact, really, in terms of -- you know, against the kinds of business expectations that we had. There doesn't seem to be a slowdown or a wait-for or anything like that. And I think it's just due to the fact that it's a -- the products that really are out there are -- more address the very low end of the market. People don't need it in a critical, mission-critical way. And we are certainly very confident of our ability to keep competing on that basis.

So, Tom, maybe you want to talk about the other questions.

Sure. The bump in receivables in the quarter was related to our government -- the government receivable which occasionally comes in a little late. We have that cash in hand currently, so that is abated.

Chris Quilty, Raymond James.

Good morning, gentlemen, and congratulations on the results. Dialing into the MQM business, it looks like you more than doubled the number of M2M additions in the third quarter. Is it fair to assume those are all the new 9602 devices?

You are talking about net additions probably, but -- and the answer is no. Actually, the 9602 is starting to get -- to come out. We are starting to see the effect of it, but really customers only were able to start designing that in earlier this year, and we will probably see that coming online really over the next couple quarters. So most of the business is still in our traditional 9601 device and growing on the basis of that.

So does that mean we should assume probably see a pretty steady ramp in terms of net adds in that business?

I think -- obviously we still continue to expect that there will continue to be ongoing growth for a long time to come in that business. It is a large and growing market that we are addressing. We think we have the best value proposition in the market for it now with the new 9602; we had the best network and performance, but we really didn't have the device to work within it. So we do expect that that will continue to be a very strong growth market for us going forward.

And last quarter you had mentioned you had orders for 100,000 devices to ship over the next 18 months. Was that a surge, a one-time surge in orders, or are you continuing to see more orders come through?

There continues to be more orders. That was a milestone we wanted to describe to probably demonstrate really right out of the box how many of our customers had given pre-orders for a period over the following -- for the coming quarters. They didn't all expect delivery immediately; they expected delivery over the coming number of quarters. So that continues to be the tone, if you will, in terms of our customers' expectations on that product. And we are seeing -- I think more than anything else we are seeing more applications, more partners being attracted to it that perhaps were using other devices.

We are not even thinking about using a satellite modem because it wasn't small enough or cheap enough for the applications that they had. We are starting to see maybe potential of moving into more of a retail market segment in certain applications, particularly in terms of two-way personal locator devices. So there's just a lot more things.

But frankly, that 100,000 was primarily from existing customers and applications as they moved dramatically toward the new device due to its cost and size and all the other factors to it.

Hey, Chris, it's Tom; how are you?

Hey, Chris, the only thing you should consider in the quarter is, as we said we would, the suspended customers that are not part of billable -- billable subscriber base -- that has been concluded. And we now have about 7,000 customers who are paying us the fee to -- and who are being billed and being paid a fee to remain on our billing system. So that is the only thing you should consider in looking at run rate additions in machine to machine.

Got you. So there obviously were a number of subscribers that dropped off during the quarter?

No, they didn't drop off. We took -- suspended subscribers are not in billable subscribers, and so about 7,000 of formerly suspended subscribers are now billable because they are paying us the fee for that service.

But if I remember you were talking about pretty low monthly fee relative to your normalized ARPU.

Right.

So it has a little bit of an effect of dragging it down.

Dragging ARPU down, yes.

Okay. Speaking of ARPU, OpenPort units -- can you give us some more color on what you are seeing in terms of unit shipments and ARPU trends there?

You know, it continues at a steady pace. I mean, we've really seen sort of the -- generally what we saw last year, we are seeing this year. We are continuing to get growth in units onto fleets and then onto ships. It continues to expand. Our ARPU has been pretty consistent, been very close to what we have been seeing. It varies a little bit quarter by quarter, but for the most part, it is obviously a lot higher than we had ever seen in the past and continues to probably drive up, or, if you will, balance the M2M subscribers in terms of overall ARPU, in terms of our - to the extent that matters, really, that overall is a much higher ARPU product than anything we have. But I consider this -- it still continues to be a success in the market; still the value play, if you will, in that segment, in maritime. And we're going to start seeing, I think, a little bit of aviation coming on here over the next couple quarters as well, which isn't quite as large as maritime, but it also adds units as well.

Okay. And because the OpenPort gets bundled in with the commercial voice, it sort of impacts the ARPU trends there. If you were to take out the OpenPort, what are you seeing happening with trends on the core commercial voice business?

Well, if you take a look, year over year, it was down; think of it as about $4, something like that. And I would characterize probably $2 of the $4 as either one-time or purchase accounting relating related, $2 of the year-over-year decrease of $4. The balance is slightly lower usage on the core voice products. so about $2, year over year, of the ARPU decrease.

Add final question here, I think you mentioned 33,000 or 3,400 of the Netted Iridium or DTCS subs, in terms of shipments or subscribers. Is that a correct number?

I think I said 3,300 new subscribers were activated during the quarter, so almost doubling the number of DTCS or Netted; we're going to have to pick one or the other to talk about; we keep saying it like it's two words; but, in the quarter. So actually we've doubled subscribers just in activations during the quarter.

We don't see really shipments, because those come from another supplier, not from us at this time. And there are probably other suppliers that will be making tactical radios in the future, so we more see them when they activate.

Okay. I just wanted to make sure because DISA had put out a press release yesterday saying that they fielded 5,300 of the devices recently. So that matches with the number that you gave, because yours was an increase year over year.

That's a good thing, because they are our primary customer, if you will, in terms of turning those on and deploying those in the field. And they are a key part in sort of deploying that out to all the different regions.

Great. And the new hardware? I mean, is that something that is imminent within the next couple quarters? Because I think that has been a limitation in terms of hardware pricing.

The new hardware? I'm not sure what you're --

For the radio itself.

Oh, for the Netted radio?

Yes.

Yes, I don't have a -- sort of anything to report there. I know there's a lot of activity right now as the customer is looking for multiple choices, multiple devices. And, frankly, even I think long term, we see the evolution of maybe even getting our waveform into standard, tactical devices that are used in the field today or would be used in the field of all different types.

So there is a potential, really, of expanding that market dramatically over a longer period of time, but I don't have anything to report today in terms of the numbers of devices.

I think they are keeping up, so far, with demand. If anything, demand has been held back a little bit in that Netted world by making sure that they have adequate training for everyone, that they have a good user experience because these are put in far-flung, remote places to people that are at potential risk. And they want to make sure that they work well, that they can provision them on the fly. And that's what happens when you really kind of product-ize a product like this around the world.

Jonathan Atkin, RBC Capital Markets.

Yes, good morning. I wondered if you can maybe provide perspective as to what you might expect in the way of future competition from Globalstar as they refresh their constellation? And then maybe any further thoughts on both broadband data and voice competition from Inmarsat, as well as maybe just on a more regional basis from Thuraya.

I mean, yes, those are the primary competitions. I personally think that the market is big enough for everyone. I know that sometimes it doesn't seem -- based upon what some of those other suppliers say -- they try to describe it in other ways. But of course we certainly don't see the impact, certainly, at this point, from them.

But Globalstar has been out there; we've competed with them very effectively in the past. They haven't been much of a competitor in the last couple years. Congratulations to them on getting the successful launch up, but they've got a number more to go before they really have a very high-quality network. And we are not really expecting, based upon what we hear from our partners and customers, that they are going to be very attractive for at least another year or two.

So someday we will probably see them back in the market, but don't really expect -- and they were positioned very differently from us in the past, as more of a land-based device as opposed to one that would work anywhere on the planet like ours. You know, their product will work, I think, well someday, but it's still a couple years away and we still have a lot more to offer and to do, even before we get to that point.

As far as Inmarsat goes, I think I mentioned, there are products out there. We are not really seeing much of an effect from it at this point. If anything, it is probably pulling from the low end along with Globalstar, to those customers who may not otherwise be interested in a more premium, high-quality product, just to use on a much more irregular basis.

We don't really think it's the right product or don't believe our partners are telling us they see it as the right product for the highly intense, mission-critical kind of applications where it absolutely has to work and you don't have to worry about how it is positioned or whether -- or how the product works or if you can point it in the right direction or there's instructions, etc. But we do believe it will sell over time and we've sort of put that into our long-term plans. And as we report more to you in mid-December about our future, we will have that completely factored in.

Then you mentioned Thuraya; frankly, Thuraya is not very evident to us right now. They have not expanded their business very much. It's hard to tell really with them are -- probably gotten a number of partners in the Middle East and Asia over the last year or two that frankly have moved towards us for whatever reason and are deploying our product instead.

But on a day-to-day basis they really, again, are positioned very differently from us as a very regional kind of a cell phone replacement product. It's a nice little handheld device but it really again is more land-based, it's more regional-based, and it doesn't really have the same value proposition we do.

Great. Thank you very much.

[Harry Radisinker], [Wolf Acre].

Thank you. Congratulations on a great quarter. My question is related to the financing of constellation and NEXT. You provided some great color, especially in terms of hosted payloads, but as the interest expense -- the cash interest expense from your borrowings from the credit facility kicks in, can you help us understand your -- between the $1.8 billion of debt and your operational EBITDA, how should we think about the hosted payloads in terms of its ability to fill the rest of the gap for the $3 billion-plus of CapEx?

And I think in your financial statements historically you've talked about that and the warrants. So again, how do you see the source of cash in bridging the CapEx over the next four years?

As we've said many times publicly that you've referred to them all -- the sources of financing are the $1.8 billion Coface facility; operational EBITDA, which has been growing and we expect to continue to grow over the period; two tranches of warrants; and hosted payloads. Those are the four components that give us a fully funded plan and funding of Iridium NEXT.

When you mentioned the interest costs, you recognize that some of the interest, a portion of the interest, is built -- is financed through the Coface facility.

Got it.

Got it? I think that covered it very well. I mean, the predominant amount of obviously GAAP, as you've described it, is going to be operational EBITDA growth and our current operational performance and the cash that it generates.

You know, the credit facility was designed over the last several months, as you could expect with the banks -- with a fundamental requirement, frankly, to get export credit financing, that you have a fully funded plan and fully funded in the case of, frankly, downsizing your business case -- business plan potentially going forward.

So on that basis, that's really how the $1.8 billion was originally developed, frankly, by them; we weren't asking for that much, but I think it's -- between those sources, there is overlap, if you will, in our ability to really be able to perform against the NEXT contract, essentially and fulfill all our requirements over the coming years as our business grows and expands. So, that's an area I think we will probably spend even more time on in December. As we go through that, I think that will be a good topic, essentially, as we talk more about our future, about our expectations for growth in the future and where we are at.

Chris Quilty, Raymond James.

I was hoping you could give us an update on some of your efforts in personal tracking. I saw this morning one of your partners, NAL Research, had out a press release about some developments they were doing in that area. But when should we expect to see those devices start to hit the market? Will they primarily be focused on the government or the commercial consumer markets when we first see them?

Yes, there's quite a few of our partners -- in fact a growing number of partners, some who are joining us even more recently here and expect to over the next quarter -- who, especially based on the new 9602, see our two-way global coverage and frankly attractive pricing, etc., all as being a desired move, having Iridium-based, essentially, personal locator business. And I'm really talking about obviously the business created for and developed by Globalstar with their SPOT product, but they see the desire to move into a much more capable product.

I think the products we've seen so far out there -- and there's been a couple addressed -- are more focused on the enterprise market, on what I would call the industrial-strength market that is built frankly on the 9601 product. It's more expensive and so therefore not quite as attractive from a device perspective. But I really think over the next coming quarters -- and I frankly don't know of, don't think these will make it by Christmas, essentially, but I could see in 2011 we will start seeing a number of new devices.

I didn't see that one from NAL; that's one of them that has developed with what I think they call the nano, but there will be others out there I think that build on a number of different platforms. And I think Iridium is going to be a great platform for those kind of devices and applications, because you really don't have to worry about whether they work and you can provide a two-way connection where you can actually message back and forth,. And I think that's a lot more attractive to a lot of the emergency-response organizations, as well as the users of those devices, that they will really work in an emergency.

Great, thanks a lot.

I am not showing any other questions at this time. I would now like to turn it back for any additional remarks.

Well, thank you all for joining us. It obviously has been a great quarter. We are really pleased. We hope to see a lot of you on December 16 when we have our Analyst Day. Obviously that will be another time to discuss our results. And obviously next year, I welcome Steve Kunszabo; we didn't really get a chance to introduce him. But it's great to have him on the team, and he is here to support you from an investor-relations perspective, and it's great to have a full-time member of the team.

But, thank you all for coming; we hope to see you soon. Take care.

Ladies and gentlemen, this does conclude today's program. You may now disconnect, and have a wonderful day.