Insight Enterprises Inc (NSIT) 2016 Q4 法說會逐字稿

Hello, ladies and gentlemen and welcome to Insight Enterprises fourth quarter 2016 operating results conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to Chief Financial Officer, Miss Glynis Bryan. Please, go ahead.

Thank you. Welcome, everyone. Thank you for joining the Insight Enterprises conference call. Today, we will be discussing the Company's operating results for the quarter and full year ended December 31, 2016. I'm Glynis Bryan, Chief Financial Officer of Insight and joining me is Ken Lamneck, President and Chief Executive Officer. If you do not have a copy of the earnings release that was posted this afternoon and filed with the Securities & Exchange Commission on form 8-K, you will find it on our web site at insight.com under our Investor Relations section.

Today's call including the question-and-answer period is being web cast live and can be accessed via the Investor Relations page of our web site at insight.com. A copy of the conference call will be available approximately two hours after completion of the call and will remain on our web site for a limited time. This conference call and the associated web cast contain time sensitive information that is accurate only as of today, February 8, 2017.

This call is property of Insight Enterprises. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will refer to non-GAAP financial measures as we discuss the fourth quarter and the full year 2016 financial results.

When referring to non-GAAP measures, we will refer to such measures as adjusted. Adjusted measures discussed today will exclude the gain recorded in the second quarter of 2016 on an asset held for sale, severance and restructuring expenses recorded in all periods and acquisition related expenses recorded in 2016 as well as the tax effects on these items. You'll find a reconciliation of these adjusted measures to our actual GAAP results included in the press release issued earlier today.

Also, please note that unless highlighted as constant currency, all amounts and growth rates are discussed in US dollar terms and please note that the results today do not include the results of Data Link Corporation as that acquisition closed on January 6, 2017.

Finally, let me remind you about forward-looking statements that will be made on today's call. All forward-looking statements that are made in the conference call are specific to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our annual report on form 10-K for the year ended December 31, 2015 and other reports we file with the SEC.

With that, I'll now turn the call over to Ken.

Hello, everyone. Thank you for joining us to discuss our full year operating results. I'm pleased to report our (inaudible) team closed the year strong with solid top and bottom line results reported by each of our operating segments. For the fourth quarter of 2016, consolidated net sales were $1.5 billion, up 6% year-over-year and up 8% in constant currency with constant currency growth in each region.

Gross profit was $191 million in the fourth quarter, up 6% year-over-year and up 9% constant currency with growth margins steady year to year at 13.0%. Consolidated selling and administrative expenses were $145 million in the fourth quarter, down 2% year-over-year and up 1% constant currency reflecting modest investment across the business.

Adjusted earnings from operations increased 37% to $45.9 million, or 3.1% of sales. On a GAAP basis, earnings from operations increased 33% to $40.7 million. Diluted earnings per share was $0.72. On a GAAP basis, diluted earnings per share was $0.59. Within these results, North America business reported 6% top-line growth and the hardware category sales increased 8% driven by strong server and storage sales as well as growth from networking and device solutions.

In the software category, sales increased 1% year-over-year in the quarter reflecting a higher mix of software sales reported on a net basis. And in the service category, the acquisition of BlueMetal hit its one-year anniversary on October 1st while the team delivered 7% year-over-year organic growth for the quarter.

By client group our top-line growth was driven by increased volume with large enterprise and SNB clients while sales to public sector clients softened particularly in the state and local space. Gross profit in North America in the fourth quarter grew 6% and (inaudible) drove adjusted earnings from operations up 36% year-over-year.

In the fourth quarter, we announced the acquisition of Data Link which closed on January 6, 2017. We're really pleased to have Data Link organization join the Insight team. We believe our strong foundation built on strategic and operational discipline combined with Data Link's deep technical talent and complimentary offerings will help us develop and deliver solutions for our clients in the future while driving economic value for our shareholders. We're a few weeks into the integration process and are very pleased with the progress so far.

As we look back on North America business for full year of 2016, there are quite a few areas we're excited about. Hardware sales grew 5% year over year gaining market share from competitors according to independent third party data and reflecting good growth in data center solutions as well as devices. Our software business in North America reported sales flat year over year due to a higher mix of cloud and maintenance sales reported on a net basis.

Despite the top line optics, we're pleased with our progress helping clients assess and integrate cloud solutions into their business which is driving gross profit growth much faster than sales. And our Services business grew 10% in 2016, reflected organic growth in the integration of BlueMetal into our business.

From a profitability perspective, gross margins in North America in 2016 increased ten basis points year-over-year. The effect of higher services sales, good execution in their partner and incentive programs and more software sales recorded a net basis more than offset lower margins on buying with large enterprise clients.

And when combined with tight expense control, adjusted earnings from operations in North America increased 17% to $124 million, adjusted earnings from operations margin was 3.1%, up 35 basis points year-over-year. In EMEA net sales increased 70% year over year in constant currency in the fourth quarter of 2016 reflecting double digit growth in hardware, software and services for the quarter. Gross profit grew 14% year-over-year on constant currency contracting 30 basis points year to year due to higher sales to large enterprise clients.

But expenses grew slower than gross profit and the operating leverage drove adjusted earnings from operations up more than 40% year over year to $10.3 million. For the full year 2016 in constant currency our EMEA business grew top line (inaudible) by 4% and gross profit by 7% compared to 2015. Executing very well on the core business while continuing transformation to cloud and solutions company in the region. By client group, our team continued to drive very strong growth with service providers a faster growing end market for emerging hardware and cloud technologies while delivering at or above market in corporate and enterprise clients.

Software sales grew 6% year-over-year on constant currency with solid growth in business productivity solutions on premise and in the cloud. For the full year 2016, we believe that we led the market in cloud adoption with our largest software partner in EMEA. In Services sales in EMEA grew 22% in constant currency as we expanded our software licensing in cloud consulting services across the region.

Currency exchange rates continue to dampen our reported results in 2016 but despite the currency head wind, our team delivered top-line growth and expanded gross margins and controlled discretionary spending which drove adjusted earnings from operations up 25% for the full year.

In Asia Pacific fourth quarter net sales increased 5% year-over-year in constant currency. During the quarter, we saw lower hardware and software sales primarily in Australia but our services category grew significantly year-over-year partly due to the recent acquisition of Ignia and partly due to organic growth across the region.

Strong gross profit growth drove double digit earnings from operations in the quarter compared to last year. 2016 was a good year for Asia Pacific business overall. Top line results reflect more than 30% growth in hardware sales and services sales more than doubled for the year assisted by the acquisition of Ignia but also reflecting expanded software license and cloud consulting engagements.

The growth reported in hardware and services was offset by a decline in software sales due to a higher mix of software maintenance and cloud sales which are recorded on a net basis in our financial statements. This led to flat year-over-year performance and up line in constant currency. Gross profit however grew 14% in constant currency in 2016 reflecting the strong underlying growth across the business.

Our team continued to execute our strategy to expand our cloud and professional services offerings and grow hardware sales in the portfolio will combine with good expense control. Was able to drive adjusted earnings from operations up more than 30% for the full year.

I'll now hand the call back over to Glynis who will discuss our full year 2016 financial results in more detail. Glynis?

Thank you, Ken. For the full year 2016, consolidated net sales were $5.5 billion an increase of 2% (inaudible) in US dollars and 4% in constant currency. North America net sales increased 4% to just under $4 billion reflecting 5% growth in hardware sales and 10% growth in services sales while software sales were flat year-over-year. In EMEA net sales decrease 2% year over year to $1.3 billion in US dollars but in constant currency net increased by 4%. Hardware and software sales in EMEA grew 1% and 6% respectively while services sales grew nicely at 22% all in constant currency.

In Asia Pacific, net sales of $175 million were down 2% year-over-year in US dollars and flat year-over-year in constant currency. Our top line results in 2016 were negatively impacted by a higher mix of sales recorded on a net basis primarily driven by the adoption of cloud offering by our clients.

Please recall that cloud and software maintenance sales are recorded net in our financial statements where gross profit earned on the transaction equals the sales amount. This treatment affects reported top line results but has no impact on profitability. Despite the impact on the top line, we're pleased with the growth we're seeing in our cloud business which now makes up approximately 13% of our gross profit.

Full year 2016 consolidated gross profit was $743.1 million, up 4% in US dollars and up 6% in constant currency. Gross margin in 2016 was 13.5%, up 20 basis points up year-over-year. This increase was primarily driven by an increase in (inaudible) sales which are transacted at higher gross profits than our corporate average and a higher mix of software cloud sales reported on a net basis in our financial statement.

Finally, our administrative expenses for the full year of 2016 were $585 million, flat year to year in US dollars and up 2% in constant currency. In North America, SG&A increased 1% year-over-year due primarily to higher head count related expenses including much higher health benefit expenses partially offset by the expense reduction actions that we took in the second quarter of 2016.

In EMEA SG&A expenses were down year to year in US dollars but up 3% in constant currency. In Asia Pacific expenses increased 7% in constant currency due to an increase in head count and related expenses and to the Ignia acquisition completed in September of 2016. Also in 2016, we incurred $4.4 million in acquisition related legal and professional expenses associated with our acquisition of Data Link and (inaudible).

As a result of restructuring activity in North America and EMEA, we recorded severance and restructuring expense of $4.6 million in 2016 compared to $4.9 million in 2015. All of this led to earnings from operations of $149 million in 2016 up 18% from 2015. Adjusted earnings from operations were $158 million or 2.9% of net sales, up 19% year-over-year from $132 million, or 2.5% of net sales in (inaudible).

Our effective tax rate in 2016 was 39.3% compared to 36.4% in 2015. The increase was primarily due to the effect of change in tax law enacted in December of 2016 related to taxation of foreign currency translation gains or losses arising from qualified business units and also to the non deductibility of certain acquisition related expenses earlier.

And finally, diluted earnings per share came in at $2.32 on a GAAP basis. Adjusted diluted earnings per share were $2.52, up 19% from $2.12 to $2.11 reported in 2015.

Moving on to cash flow performance. For the year ended December 31, 2016, our operations generated $96 million of cash down from $181 million in 2015. These 2016 results reflect the collection of a single large receivable of approximately $160 million in the fourth quarter of 2016, for which the payments of the supplier was due and paid in January of 2017.

In the fourth quarter of 2015, we had a similar experience with a $60 million receivable collected in the fourth quarter for which the payment for the supplier was then made in the first quarter of 2016. Excluding the effects of these individually significant timing differences, cash flow from operations would have been nominal for 2016 as we used more working capital in the fourth quarter as our sales growth was weighted in the last few months of the year and for the full year, we invested about $30 million in inventory for specific client engagements that will be completed in 2017.

For the full year 2017, we expect working capital trends will return to normalized levels and we'll see a positive contribution from the Data Link business. The positive cash flow for these activities will be partially offset by $160 million payment I just mentioned and for the full year of 2017, we expect consolidated cash flow from operations to be between $20 million to $40 million.

Also in 2016, we invested $12 million in capital expenditures down from $13 million in 2015. We also spent just under $11 million to acquire Ignia in the third quarter of 2016 and we used $50 million in 2016 to purchase 1.9 million shares of our common stock. All of this led to a cash balance of $203 million at the end of 2016 of which $108 million was (inaudible) and $39.5 million of debt outstanding on our debt facilities.

This compares to $188 million of cash and $89 million of debt outstanding at the end of 2015. From a cash flow efficiency perspective, our cash conversion cycle was 14 days in the fourth quarter of 2016, a decrease of six days year to year as a result of higher DPO in North America, primarily driven by $160 million single payment I mentioned earlier, partially offset by higher (inaudible).

Before I hand the call back over to Ken, I want to take a moment to outline our expectations regarding the impact of the Data Link acquisition on our financial results.

We expect the Data Link business to contribute approximately $600 million to our top line results in 2017. Data Link gross margins have historically run between 21% to 22% of net sales. We expect SG&A as a percent of sales to be just under 20% for the full year including expected intangible amortization expense of about $20 million and the impact of expense synergy's but excluding the effective of acquisitions and integration related expenses.

As mentioned in our last conference call we've also borrowed approximately $200 million to fund the acquisition and our current average borrowing rate is approximately 3%. I will now turn the call back over to Ken to review our 2017 operating priorities and outlook.

Thank you, Glynis. Moving on to our 2017 operating plans, across the markets where we do business, industry analysts expect flat to low single digit growth in hardware sales in 2017 and mid single digit growth in software and services sales.

Our plans for 2017 are focused on driving growth in excess of the market across our operating segments. However, given continued weakness and major global currencies against US dollar we expect that our reported growth in US dollars will be in the low to mid single digit range before giving effect to the addition of Data Link to our business. As previously discussed, we expect Data Link will an add additional $600 million in net sales in 2017.

The IT industry is stable yet constantly changing which provides opportunity for Insight to bring value to our clients, partners, teammates and shareholders. We believe that the investments we've made organically and through recent acquisitions combined with our global scale, strong data center, software and services capabilities position us well to compete in the marketplace in 2017. Our operating priorities in 2017 are clear. In North America, our core business is healthy and growing.

In 2017, we'll focus on accelerating the momentum gained in 2016. We'll continue to invest in and leverage our best in class digital marketing platforms and sales (inaudible) engagement models to earn new enterprise clients and more business with existing clients with competencies around supply chain, software, cloud and to bring additional value to our technical and consulting services capabilities.

Our strategy includes the development of more mature offerings around workplace services, hybrid cloud, Internet of Things, cloud (inaudible) service for both domestic and global clients. In addition, we'll continue our initiatives to improve and scale our inside sales business. In the back half 2016, we added approximately 180 teammates to our inside sales model in Conway, Arkansas.

In 2017 we'll continue to invest in sales and marketing resources in Conway and other US locations as well as sales and (inaudible) platforms that drive digital marketing, predictive analytics, web automation and cloud aggregation all aimed at improving the productivity of our sales teams. And we'll be focused on integrating Data Link seamlessly into our organization. Our first priority is to ensure stability in the business operations and retentions talent.

To ensure we meet this objective we're approaching integration on two fronts. The first is centered around the sales market and the service delivery parts of the business. Sean O'Grady, previously Chief Operating Officer of Data Link has joined Instight as Senior Vice President, General Manager of the Data Link Business within Insight. Sean will lead the integration efforts working with Steve Dodenhoff, President of the US Business. Together they're focused on ensuring that operationally the business continues with as little disruption as possible while it will assess the sales and profitability opportunities of the combined business.

The second is focus on integration of systems and back office functions. We've completed quite a few IT integration system projects over the last few years including integrating old and more recent acquisitions in our Asia Pacific and Canadian business onto our SAP platform.

We believe we have model supported by cross functional teams across the business that is proven and works well for these projects. We expect to convert the Data Link business to our common systems in the first half of this year. Moving on to EMEA, our EMEA business has been on a multi-year journey to transform to a cloud and services oriented business. In order to fund these initiatives the team has focused on improving the sales execution and profitability of the core business. Over the past three years, the EMEA team has more than doubled the earnings from operations of the business and revitalized the sales engagement model.

At the same time, they expanded their services offerings around license and cloud consulting services and introduced new managed services offerings across the region. In 2017, our EMEA business will continue with the same strategy with the focus on gaining new clients, share and market relevance in key markets, scaling solutions and selling more broadly in region, driving a high performance sales organization, and improving the performance of certain unperforming markets.

And finally, our Asia Pacific business will stay the course on the strategy to selectively expand hardware capabilities across the region and to deepen its relevance to new clients in it's relationship with existing clients while broadening the cloud and services offerings we bring to market. In support of this strategy we recently completed the acquisition of Ignia in Perth, Australia. The addition of Ignia to our business expands our capabilities in the areas of application design, cloud, mobility and business analytics. In 2017, we'll extend the Ignia offerings to Eastern Australia for new and existing Insight clients.

Moving on to our outlook for 2017, for the full year 2017, with the addition of Data Link, which we acquired on January 6, 2017, we expect our business to deliver sales growth of 12% to 15% compared to 2016. We also expect adjusted diluted earnings per share for the full year 2017 to be between $2.80 and $2.90.

This outlook assumes amortization expense associated with acquired intangible assets of $16.7 million, effective tax rate of approximately 37% and capital expenditures of $15 million to $20 million. This outlook does not assume any severance and restructuring or acquisition related expenses.

Thank you again for joining us today. I want to thank our teammates, clients and partners for the dedication to Insight. That concludes my comments. We'll now open up the lines for questions.

(Operator Instructions). I'm showing we have a question from the line of Adam Tindel, with Raymond James. Your line is open.

Okay. Thank you. Good evening. Congratulations on 2016, particularly in the EFO dollar growth line.

Thank you, Adam.

Yes. I wanted to ask in particular on the operating margin in Europe, that was probably the biggest surprise in the quarter for me was that multi year highs. Ken, you talked about some of the drivers underlying this performance. Do you think this is a region that can operate above 2% in 2017 on the EFO line?

In the fourth quarter, Adam, we had one large significant transaction that drove that outstanding performance that we had in EMEA. That is not expected to be duplicated in 2017. It was a significant transaction that was very profitable that drove that bottom line in EMEA. I think we have an expectation that our EMEA business will, over time, get to greater than that 2%, likely not in 2017.

Got it. Okay. Maybe digging a little bit more into the 2017 guidance on the gross margin line, I think the inclusion of Data Link should lift gross margin above 14%. I was hoping to confirm that. And are you anticipating any partner program change head winds like we've seen in the past?

I think you're correct Adam, on the margin front, yes, we'll exceed the 14%. We're excited about that. On the partner program changes, there's no indications that we'll have any changes coming into this year. Of course, that's the partner's discretion to do that but there's been no indications to that. So we feel pretty good about that at this stage.

Okay good. If I run that through, i think that it is implying that EFO margins might see flattish to modest growth year over year in 2017. So was hoping that you could maybe talk about the puts and takes, particularly on EFO margins in 2017 given it seems like gross profit dollars will be growing?

Yes. So when you look at the EFO, you're correct. It is going to be modest growth in EFO margin expansion in 2017. We would anticipate a little bit greater margin expansion in 2018 as we get to the full run rate of synergy's around the Data Link acquisition. So when you look at 2017, we have $12 million of incremental intangible amortization associated with Data Link. We're getting maybe 50% of the expense synergy's associated with the Data Link acquisition and despite the growth in margin, we're not seeing all of that flow through to the bottom line.

In our North America business we're seeing some margin expansion but we're also investing in digital capability to drive our SMB, some growth in our SMB business to support the Conway operation as well as our inside sales. So we have some strategies that we're making investments in such that in 2017, we don't anticipate that we'll see significant margin expansion at the EFO line.

Okay. And you bring up the digital capability in the SMB business. That's an interesting point because your main competitor is also reshaping its go to market and investing in digital and eCommerce tools which I think is something that you guys have been doing for a couple of quarters now. Was hoping that maybe you could talk about why you think this is becoming more of a focus now across the industry. Is your competitive set changing? Are you running into more of the Amazons of the world in this space?

No. Adam, it really is the way really to really prove return on investments that we make. Our digital marketing is incredibly measurable. It is very targeted. So I don't think it has anything to do with the likes of any of the eCommerce providers out there. It is just a journey we've been on for actually the last two years plus. It is starting to gain some really nice traction. We're able to see the results.

Our partners are moving this way as well. So they're encouraging us to continue to lead in this fashion. But it is all about really being able to target the message very specifically to individual clients and to be able to track that and measure that through the entire system from the point we generated a lead all the way through the actual closure.

It gives us good feedback as to exactly what mechanisms are working the best and how we can continue to invest in those areas. So that's really what's continuing to drive it. The consumer side has been doing this probably ahead of the B to B side for awhile. It is the B to B community that's just adopting these trends again that are very targeted.

Okay. Makes sense.

I think partners would say that they think we have a best in class platform. That shows them quite clearly the return they're getting for the dollars.

The key to it, Adam, is twofold. We know this from our personal lives when we go on-sites. First and foremost, you have to have outstanding content that clients obviously want to consume. And second part is you really have to have a very sophisticated systems and tools. It is a combination of multitude of different tool sets that we use in order to be able to provide this information to our sales teams in a very timely fashion and to be able to (inaudible) the measuring. Things now are done in seconds not in days.

If you don't have both of those great content and a really sophisticated eCommerce platform with all of the associated tools, you can't deliver on the digital marketing promise.

That's helpful. Thanks and best of luck.

(Operator Instructions). We have a question from the line of Matt Sheerin, with Stifel. Your line is now open.

Yes, thanks. I actually jumped on the call a little late so you may have talked about this already. For your revenue growth assumption for 2017, what's the assumption for Data Link? I know you've talked about a 600 plus revenue I think when you announced the closing of the deal. Is that still the assumption in terms of your growth outlook for the year?

Yes. So if we do it in two pieces, Matt. For Data Link, we're assuming a $600 million revenue, just around $600 million for 2017. We're looking at somewhere between a 21% to 22% gross margin assumption against that. In general, their SG&A is run at around 20%. That would include the intangible amortization of the $12 million that we discussed. It would exclude any acquisition related costs that are still to be incurred or that we incurred in the first quarter.

When you look at our core business, when you look at the core business, what we anticipate is it will be low single digit growth in actual dollars and mid to high single digit in constant currency. That's because we have an impact with the euro and (inaudible) primarily that's about an 8% head wind in 2017 given what the average exchange rates were in 2016 relative to the forecast out there currently for what the exchange rates will be for 2017. Those two pieces impact the revenue growth line.

And then we talked about the fact that our margins would get a bump ultimately from the combination with Data Link since they drive higher average margins than we would have. Adam in his question mentioned somewhere in the 14% range. And that we would be making certain investments as you heard toward the end probably in digital marketing, our web site and some sales head count to drive our SMB lines of business at Insight sales. At the bottom line for Insight in total, we'll get EFO dollar expansion but our EFO margin will be nominal.

Got you. That's very helpful. And in terms of the synergy's, you talked about that incremental $12 million, I'm sorry, there's an incremental number for next year. That's $10 million. And part of that is integrating the IT systems. Can you just walk me through some of the heavy lifting that needs to take place between now and the end of the year before you start to realize some of the savings next year?

So the critical piece ultimately will be the systems integration. We've been working on that with the Data Link team, our IT team, we have a whole integration team that focused around the systems integration getting the marketing tools, the services tools, all of the other aspects that Data Link uses to run the business understanding (inaudible) how they integrate with tools that we have here currently. Our current expectation is that we will migrate Data Link on to our SAO system in the first half of the year.

So probably May-ish ultimately, because we don't like to things in June, in the last month of a quarter. First half of the year will be likely in the May time frame. From, there we start dating the synergy's and expectations that we have around synergy's specifically as it relates to the back office and expense take outs associated with redundant functions that go away once we are all on the same platform. That's a big part of it. Immediately, we're getting the benefits from the SEC cost, CEO, CFO, not duplicating those functions. We get those costs immediately.

And then as we go throughout the year, we anticipate that we will consolidate facilities and take out some costs there as well throughout the rest of this year. Then we're still on track ultimately to get into the $20 million run rate as we see it now with regard to 2018 when we exit 2018, we have the $20 million run rate expense synergy take out.

Okay, got it. Thank you. And then just jumping around on your North America business, you continue to have pretty strong growth in hardware which is counter to what some other companies in the channel have been seeing. Maybe talk about the mix there and the demand by product. And if you look at this year, other resellers and distributors are basically talking about a little more optimism particularly from North America customers in terms of potential pickup in IT spending. I know your overall growth assumptions are relatively soft, partly because of the FX issues. But what is your outlook, Ken, in terms of North America outlook? Are you starting to see customers a little more optimistic about spending as well, as other companies are?

Yes. The first question, the growth in Q4 was very nice in the hardware front as we indicated. A lot of that came from data center. We're very focused on the data center, as you know. In fact, that was one of the prime reasons for the Data Link acquisition because that's their soul purpose so they'll add even more skills to that as we see most of our clients really going to hybrid cloud. So the private data centers and (inaudible) infrastructure, we see a nice trajectory in growth. We had substantial growth in server storage in Q4.

To address the question next year, we actually feel that the guidance we're giving is above market growth, what's muting it a little bit as you indicated was the impact that currency is having there. We're actually pretty optimistic with where the market is. We don't see a softening. We see the market continue to be pretty stable and continue to grow and our expectation is that we'll continue to slightly outperform that market from a share point of view.

Okay. Okay. That's it for me. Thanks very much.

Thank you. I'm show nothing further questions at this time. So with that said, I would like to thank everyone for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone, have a wonderful day.