Stericycle Inc (SRCL) 2013 Q2 法說會逐字稿

Good afternoon, my name is Tracy and I will be your conference operator today. At this time I would like to welcome everyone to the Stericycle second-quarter earnings conference call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you, I'll now turn the call over to Ms. Laura Murphy, Vice President of Finance. You may begin your conference.

Welcome to Stericycle's quarterly conference call. Joining me on today's call will be Frank ten Brink, CFO; Rich Kogler, COO; and Charlie Alutto, CEO.

I will now read the Safe Harbor Statement. Statements by Stericycle in this conference call that are not strictly historical are forward-looking. Forward-looking statements involve known and unknown risks and should be viewed with caution.

Factors described in the Company's Form 10-K, 10-Q as well as its other filings with the SEC could affect the Company's actual results and could cause the Company's actual results to differ materially from expected results. The Company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after this date that may vary upon forward-looking statements.

I will now turn it over to Frank.

Thanks, Laura. The results for the second quarter are as follows. Revenues were $526.5 million, up 12.3% from $468.9 million in the second quarter of 2012. And internal growth, excluding returns and recall revenues, was up 7.5%. Domestic revenues were $370.2 million, of which $346.5 million was domestic regulated waste and compliance services, and $23.7 million was recalls and returns.

Domestic internal growth excluding recalls and returns revenue was up 7%, consisting of SQ up 8% and LQ up 6%.

International revenues were $156.3 million and internal growth adjusted for unfavorable exchange impact of $4.1 million was up approximately 9%.

Acquisitions contributed $34.1 million to the growth in the quarter.

The gross profit was $237.9 million or 45.2% of revenues and SG&A expense including amortization was $100.6 million or 19.1% of revenues.

Net interest expense was $12.9 million and net income attributable to Stericycle was $78 million or $0.89 per share on an as-reported basis and $0.93 adjusted for acquisition and other nonrecurring expenses.

Now the balance sheet. Our covenant debt to EBITDA ratio was 2.1 at the end of the quarter. The unused portion of the revolver debt at the end of the quarter was approximately $644 million.

In the quarter we repurchased 540,390 shares of common stock on the open market in the amount of $59 million, and we have authorization to purchase an additional 3.2 million shares.

Our capital spend was $20.9 million and our DSO was 63 days.

Q2 year-to-date cash provided from operations was $176.5 million. And I will now turn it over to Rich.

Thanks, Frank. Worldwide we continued to use our strong free cash flow to drive our growth through acquisitions. In the quarter we closed 12 transactions, 8 international and 4 domestic. The international acquisitions consisted of one in Japan, three in the UK, one in Romania, one in Portugal and two in Brazil. Our worldwide acquisition pool remains robust with well over $100 million in annualized revenues in multiple geographies and lines of business.

At the end of the quarter we had approximately 550,000 accounts, of which approximately 532,000 were small, the remainder were large.

The strong domestic internal growth rates we experienced this quarter resulted from more customers implementing our multiple services such as StrongPak, Steri-Safe, Pharma Waste and Sharps Management. International internal growth rates accelerated due to increasing customer adoption of multiple services and expansion into new lines of business.

Worldwide we see increased regulatory requirements driving customer demand for our regulated waste and compliance offerings. And as we expand into new services such as communications solutions, we provide additional value to our customers. This strengthens our customer relationships, provides us with multiple new long-term growth opportunities.

We remain excited about our future growth because when customers adopt multiple services this can more than double or triple their revenues.

In closing we want to take time to thank each member of our worldwide team for their strong performance and continued commitment to our customers, our shareholders and our values. I'll now turn it over to Charlie.

Thanks, Rich. I would now like to provide insight on our current outlook for 2013. Please keep in mind that these are forward-looking statements.

Revenues from the 12 acquisitions were approximately $1.6 million in Q2 and annualized are approximately $38 million. Keep in mind our 2013 guidance does not include future acquisitions, divestitures, integration, acquisition-related and other non-reoccurring expenses.

We believe analyst EPS estimates will be in the range of $3.69 to $3.71. We believe analyst revenue estimates for 2013 will be in the range of $2.12 billion to $2.15 billion, depending on the assumptions for growth and foreign exchange rates.

We anticipate 2013 internal growth rates to be SQ 8% to 10%, LQ 5% to 8%, international 5% to 8%, and recall and returns revenues between $95 million to $105 million.

We believe analysts will have estimates for free cash flow between $353 million to $357 million. CapEx is anticipated to be between $67 million to $70 million.

In closing, we are very pleased with our Q2 results, and excited about the multiple growth opportunities for 2013 and beyond. Thank you for your time today and we'll now answer any questions. Tracy, please open the Q&A line.

(Operator Instructions) Nicholas Hiller, William Blair.

Yes, this is Nick in for Ryan. I was just wondering do you feel that you have a fairly complete platform built out for patient communications now, or do you think you'll be doing anymore decent size deals in that space during the second half, or is the focus now going to be more on go to market and driving organic growth?

Yes, I think from a platform perspective and the services that we offer, we have a fairly complete service offering. We'll continue to make investments in infrastructure and platform in 2013. Long-term we see a great opportunity to grow this business and we're encouraged because we are seeing hospitals outsourcing some of their communication services.

Okay. Great, thanks. It looks like you're branding some of the communications assets now as a Stericycle Communications Solutions Company. I'm just curious if you could discuss your go to market strategy in that space, and if you found that leveraging the Stericycle brand in tandem with the existing operator brand is driving more market awareness of the services or helping drive a higher win rate?

That's a good question, Nick. I think from a go to market strategy, we still are using the Beryl name. But we are introducing to Stericycle name under the communications solutions umbrella. We are receiving really good feedback from our customers. They have been very positive about Stericycle becoming a leader in the space.

Just one quick housekeeping question. On the acquisitions this quarter, could you give any breakout between SQ and LQ or what business lines those were in?

Yes, so it was 35% SQ and 65% LQ revenues. And 11 of the acquisitions were in regulated waste and one was in the kind of recalls and returns area.

All right, thanks, I'll get back in the queue.

Al Kaschalk, Wedbush Securities.

I guess they changed my name from Al to Bill (laughter).

Hey, Al, how are you.

Good, guys. Just on the acquisitions there on the recall and returns, Frank, is that geared geography-wise, or is it another service opportunity or another type of recall?

No, that was a geographic expansion. It was an international one and is expanding our capabilities internationally in the recalls and returns.

In terms of international, though, is this your initial acquisition internationally on the returns, recalls business?

Yes, how we've had some recalls the past where we've done some international capabilities where we've subcontracted some of that work. This acquisition created an opportunity for us to build infrastructure, specifically in the European marketplace.

And that would suggest that there are some opportunities to grab some share, and there's some growth in that type of business?

Absolutely.

Okay. And then just one other item I wanted to try to adjust here, Charlie. On the margins, it looks like you're getting some good pull-through on some of the developments of some of the new initiatives. I was wondering if you could just maybe give us an update on how you feel where you're at? I know there is a lot of work to be done, but just in terms of the overall contribution to gross margin, as you move out and where you're at in the expansion of these services.

Yes, I'll let Frank bridge a little bit on the quarter to quarter margin, but I think the opportunity for margin expansion hasn't changed. We continue to look long-term to increasing our gross margins in the international markets. That will come by focusing on the SQ business, adding additional services like clinical services and Sharps Management.

And then the US the side of the business, where we did see a relatively nice uptick in margins in Q2, again, the focus is on those additional services that do have higher incremental gross margins than our base business. Frank can maybe walk you through the puts and takes for the quarter with respect to the margin in Q1 versus Q2.

Yes, acquisitions were just a slight drag, only 4 basis points. Foreign exchange kind of offset that. Because international grew a little bit faster than historically, because of margins in general being a little bit less there, brought margins in fact down. But the general business had a nice uptick somewhere between 11 and 15 basis points quarter over quarter.

Okay, and just back to the more broader question, if hospitals are outsourcing a little more, should we think through that as eventually getting more scale and your operating leverage for that segment or is that going to be sort of consistent with your historical trends on performance there?

I don't know about consistent. Operating leverage on the communications solutions business will come from building out our infrastructure, getting on a common platform and being more productive with respect to the centers we are running today, Al. Any time you can add more activity into the center obviously you will get some lift as well.

Okay, thank you.

Sean Dodge, Jefferies.

Thank you. Congratulations on the quarter. So you guys have talked in the past that Japan is about the second largest med waste generator in the world. And I'm curious. So the weakness we have seen in the yen over the last few quarters, how big of a role does that play in your acquisition strategy there and does this maybe help you guys accelerate your move down to the central and southern parts of that country?

Most acquisitions aren't as much driven by foreign exchange, and so the timing of them isn't driven by the dollar or the yen or any other currencies getting stronger. And obviously if the yen goes a little weaker, the deals may get a little cheaper in dollar terms but then obviously it also has the relative slightly less consolidated results onto our total returns.

No, I don't think so. Japan continues to be a market where we see opportunity. It's a gradual increase, it's always a little tougher to do M&A in Japan, as we have said before. But there's good opportunity there and the group will continue to look for opportunities there to buy businesses.

Okay, that's helpful, thank you. And then outside of Japan you guys really haven't done much in the other parts of Asia. Is there something structurally about those markets that are keeping you out of there, or is it just you have your plate full with Europe and South America and the other geographies that you just haven't had time for yet?

No, Sean we continue to look at markets around the world, Asia being one of them. Again we're looking for -- there are a lot of factors that go into selecting the next geography. We certainly have some targets in Asia. But we're very patient and we want to make sure we do the right deal in the right terms and find the right management team. So we continue to look in Asia and I think over time you'll see an expansion into other markets in the Asian region.

Okay, thank you.

Scott Schneeberger, Oppenheimer.

Guys, could you clarify, did the high end of RMS guidance go down by $5 million? And if so, why, because you had a good quarter and you mentioned this acquisition?

Yes, we did bring the top end down a little bit. The quarter itself was okay within our own guidance. We're starting to see some international revenues on that one, but overall we're cautious for the second half. We haven't really had any major larger recalls. Again the team did a fabulous job in that they managed the record quantity again this quarter and a number of events. And that's good, but we haven't had any blockbuster large recalls.

Got it, thanks. A little bit more housekeeping on the acquisitions. With regard to those international, could you give us a feel for SQ/LQ recall mix please, Frank?

Yes, I think total the mix was 35%/65% and it kind of crosses over. That's for the total that we normally give the information on for all the deals combined.

Okay. So international is representative of the total as well?

Yes, it's probably similar, yes.

Okay, thanks. And then no patient communications acquisitions in the quarter? I think someone asked earlier on this. But it was my understanding that you guys would start to become aggressive with acquisitions once you had the infrastructure set up the way you like it, and felt you could integrate well going forward. Is that still on pace? I know it we touched on this little earlier, but I was just curious to see an absence in the quarter.

Yes, very much on track, just to reeducate everybody again, we did a rather large acquisition of the BerylHealth business in Q4. We're integrating their team with our team, so I would tell you that everything is on track there. But again, the Beryl acquisition integration is one that we wanted to make sure we were comfortable with before we move forward. But everything is on track and we definitely will continue to look at the space. I wouldn't read anything into the fact that there were no patient communications deals this quarter.

Okay, thanks, and don't want to ask too many, but just on CapEx -- free cash flow and CapEx were pretty consistent with what you'd said last time, but a big jump in the second quarter this year versus last year. Is that just a timing issue? I guess it is based on the guidance, but anything special going on there?

No, it's really just the timing of investment in plants in the US, in Latin America and Europe kind of simultaneously. All of these projects had a good return for us. We're still going to manage to a CapEx number of about $67 million to $70 million for the year.

All right, thanks guys for all the questions.

Michael Hoffman, Wunderlich Securities.

Wunderlich Securities. Thanks for taking the call. Can you help us a little bit about your thoughts on a trend as a percent of sales for the remainder of the year on your G&A and your D&A?

Yes, so in general, you've seen a slight uptick in the SG&A this quarter versus the prior. Some of that was kind of acquisition related, a little bit of investment spend continuing on things like Com Sol and the like that obviously -- if you include amortization where you've seen over the years more of an uptick coming in. So the 10 basis points is really a function of the acquisitions a little bit, and then the overall for the year we think the guidance is about 19.1% (corrected by company after the call).

19.1% for the whole year?

For the year.

Well, then that calls for a really steep increase in the second half then.

No, no, that's SG&A, stock options and it includes the amortization.

Okay, sorry, I didn't have --

That includes it, yes.

Okay, I didn't have the amortization in it. And then on your D&A?

D&A, fairly stable. I mean, no major things there. No, I don't see major swings there. Again the A is where you'll see the move a little bit, depreciation very stable 2.9%. It's in the amortization that it may be the 1.2%, 1.3% on a rounding.

Okay, and then a pretty big working capital swing this quarter -- how much of that is just timing? And you have already got it back, but it was a pretty negative working capital swing.

Yes, most of it was receivables. And so on the receivables side we had a lot of acquisitions that closed at the end of the quarter, so the receivables show on the books. And that kind of changes the DSO paradigm a little bit because you don't have the revenues in the quarter. We had an increase a little bit in the UK to NHS. It has gone through a kind of restructuring under payment systems. And that delayed payments out of the NHS a little bit that impacted. So the receivables is more a timing issue in the quarter. Both Q1 and Q2 were unfavorable cutoffs. They were Sundays, so that never helps on your collections. But we think for the year we'll get that back and that will become more in line.

Okay, and have we already seen some of that back in the third quarter?

Yes.

Okay, and then can you talk a little bit about sort of the nature of the activity in Steri-Safe? I remember, Charlie, when we met in New Orleans you talked about what I call up-selling, going from low tier pricing to mid-tier to high tier. Can you frame the character or characterize that in the second quarter and sort of the trend as it goes through the year? That and StrongPak.

I don't think there's -- I'm sorry, Michael, what was the follow-up on that?

Well, and then StrongPak, a similar conversation about how do you feel about where that rate of growth is. Is it still trending up or has it hit a level and it's holding?

I think Steri-Safe continues. It's a long opportunity for us. There hasn't been any material change in the percentage of growth attributed to Steri-Safe quarter to quarter.

On the StrongPak, if you remember when we sell it, it's re-occurring revenue. But the contracts are -- it's a large contract that we implement that flow to both LQ and SQ. So the timing of those opportunities do fluctuate quarter to quarter, Michael.

Okay. So how was the second quarter impacted by StrongPak?

Yes, I think if you look at the growth rates from quarter to quarter you see that it was a little lower in SQ in Q2, so we didn't have that large influx of a large StrongPak contract that was implemented in Q2. Nothing to read into that, we feel really -- we remain excited about the opportunity in StrongPak. We still think the market opportunity is over $1 billion. Again, we are leveraging our core competencies in transportation, compliance and routes.

Okay, and then on the patient comms, one of the initiatives was to rationalize some of the call centers. Where are we on that?

Continued nice margin expansion in that sector, and so from that point, the team has done a very good job in the integration. If you look year-over-year, I mean definitely percentage points of improvements and we see continued opportunity for improvement there.

So what inning are we in, this initial rationalization of the cost structure?

Second inning.

Second inning. Okay. And then last, just so I'm clear, maybe I misunderstood this. The international business tends to be more LQ, so would the acquisitions tend to be skewed differently than normal? I mean usually you're mostly LQ and a little bit of SQ.

It was 35% SQ, 65% LQ.

Oh, okay great. Didn't you say the overall pool was 65%?

No, 35% SQ, 65% LQ.

Okay, great, I misunderstood that. Thanks.

Erin Wilson, Bank of America Merrill Lynch.

Thanks for taking my questions. Can you talk a little bit about the potential opportunity associated with waste management's overall sort of de-emphasis of the med waste business and did that contribute anything meaningful in the quarter?

Well, I think that we've all seen the same meter reports that they are reevaluating their healthcare business but what we see is they continue to compete with us in multiple geographies.

Okay, so could you speak I guess, then, to the current pricing environment in the US?

There's really no change in the market.

This business has always been competitive as long as I've been in it, and I've been it for over a decade. So it really doesn't change, and as I said, waste management continues to compete vigorously out there.

Okay, and you touched a little on this but what were the key drivers for the international internal growth rate? Was there any particular ancillary service that received greater adoption or any other key drivers that you would like to point out?

Yes, I think some good color on the international growth, Erin, would be we do see the European escalators slowly improving. There has been an adoption of our rollout of additional services like Sharps Management and Clinical Services. And we did see some of the -- an increase in some of our international recall revenues in the quarter. Those all contributed to the really nice growth that we had in Q2 for international.

Okay, great. Thanks, that's all I've got.

Shlomo Rosenbaum, Stifel Nicolaus.

Thank you very much for taking my questions. Just looking at the revenue guidance, the revenue guidance is up $10 million on each side. You added about $20 million which should be additive through acquisitions. Is the difference $5 million because of recalls and then some kind of rounding or something, because I would expect that the revenue guidance would be a little bit higher?

Yes, in fact foreign exchange is the main contributor. So the previous guidance was $2.11 billion to $2.14 billion. And foreign exchange continues to be a little bit of a headwind, probably in the $7 million to $7.5 million over the second half. And then the acquisitions in the remainder of the year are about $19 million. And so that gets you to your $2.12 billion to $2.15 billion.

Okay, and what kind of tax rate should we use? Tax rate has been light for the last couple of quarters. What should we expect for the rest of the year?

It's a little bit better the overall outlook, so right now it's in the high 35%'s.

And then on the StrongPak business, can you talk about a little bit any interesting developments that might have happened over the quarter or competitively? Where do you guys think that you stack up vis-a-vis some of the larger players in that part of the industry?

Shlomo, we haven't seen any kind of changes on the competitive landscape. There are some larger privately owned companies that are national in their offering. There is another player that actually is a publicly traded company that also participates, but there really hasn't been a change in the competitive nature of the business.

So the other question was related to regulatory? I think the other thing is you have seen some media reports about some fines that were settled by retailers. I would tell you that those fines were settled. Those companies already made a buying decision so it didn't impact in the quarter. But anytime we see those kind of reports, we like that. It validates what we're doing. It demonstrates to other retailers they do need to comply with these regulations. So I think those are some of the things you saw in the quarters. For our business, we're on track with our plans. We still think there are over 750,000 retail locations in the US that would require this type of service, and that equates to about $1 billion market opportunity.

Okay, thanks. And the last thing, the receivable is tricking up. That is primarily what you talked about the UK, NHS and the acquisition has got nothing to do with anything like in Spain.

No, Spain in fact is still nicely ahead of when we acquired it. As you know we had an influx last year. It's gone up slightly but not as much, and that has not been a big influence on it.

Great, thank you.

Jason Rodgers, Great Lakes Review.

Hi, it's Jason Rogers, Great Lakes Review. Actually, all of my questions were asked, thank you.

Kevin Steinke, Barrington Research.

Good afternoon, I was just wondering if you could offer any commentary on the Pharmaceutical Waste offering and how that is playing out in the market for you currently.

Sure. It actually is being well received. It has been for some time. The team is on plan with their goals. We still see a healthy pipeline of contract orders and installs. And as we said before, this is $200 million-plus opportunity for us in just the domestic LQ space. So we have a lot of runway still to go.

Do you see opportunity to roll that out internationally as well in the future?

I think in certain markets it may be applicable. But one of the things about international is you have to look at the regulations and the healthcare regime in each country. So, I think right now we're very busy in the United States and we will be for some time.

Okay, and Frank, what was energy as a percentage of revenue in the quarter?

Energy and fuel was 5.5%. But always remember that calc now is based on the services impacted by energy fuel only, not on total revenues.

Okay, that's all I had, thanks for answering all my questions.

Richard Close, Avondale Partners.

Yes, just a follow-up on the international rebound there. Is that something we should expect to continue over the foreseeable future here or upcoming quarters, at or above the high-end of your targeted range on internal growth?

No, I think we left that unchanged there, Richard. We are assuming 5% to 8%. Obviously, we feel a lot better about it. That's why we left the guidance unchanged from the year before even though obviously we are in the 4% and 5% in 2012 in the first part of this year. We're always conservative with our guidance but we feel real comfortable with that 5% to 8% range, but certainly feel the team did a really good job in the international markets in the last quarter.

Okay, and a continuation on the international, just to be clear on the returns management acquisition there. That's going to show up on the returns line and not in the international line?

No, I think the segment reporting will require us to continue to book that under the international numbers and when it becomes material there, then we will break it out.

Okay, just wanted to talk a little bit about maybe what's in store in the next couple years. Obviously you have these higher-margin or higher growth areas, the Sharps, the Steri-Safe and I guess pharmaceutical returns, things along those lines, and patient communications.

How do you guys go about determining areas to add on, service areas to add-on? I mean what do you think the opportunity is there? Obviously I don't expect you to go into specifics to show your hand there, but how many additional areas do you think could be growth opportunities for you guys?

Richard, I wouldn't want to put a number on the growth opportunities. I think what we do, we do have a business development team. We're always looking at how we can leverage our core competencies. And what are some of our core competencies? Transportation, the technicians that we have in the field for our Sharps Management Services, the consultants that we have in the field doing Steri-Safe compliance services. So we do try to stick within that.

Obviously Communication Solutions was an offshoot of the very large call-center we were running in Indianapolis for our recall and return services. So we certainly want to look at those existing services that we have and how can we leverage those core competencies. So that's how we look at it.

We don't set a number that we have to have so many new services. And we are very conservative before we start talking about them. And you know that from our past. We definitely play out the market, do a lot of analysis and research, do pilots and then launch. It's worked for us in the past. We continue to use the same recipe for looking at new service lines.

And then I guess final question for me is on the organic growth, this small quantity ratcheted down a little bit. Was there anything specific on that front that we should note, or anything one-time or anything along those lines?

No, we said last time on our last call, growth rates vary quarter to quarter depending on the influx of both LQ and SQ customer contracts. We're within our guidance range and we have reiterated that guidance for the remainder of the year.

All right, thanks.

James Francescone, Morgan Stanley.

First, just one more on international. I know you have touched on this several times before, but it still seems pretty impressive. I mean that's a business that had been putting up 4% to 5% quarters for the past 8 quarters, and suddenly puts up a 9% quarter.

Is there anything that was not sustainable or one-time that's worth calling out there? Is that simply you had a really good quarter in recall this quarter, or does it really feel like something more important has changed either in the environment or in your execution?

No, I think we're hitting on some cylinders now with Clinical Services. We've moved out of the pilot stage in Spain, so we're starting to gain entry on the clinical service offering in Spain as we now build that SQ business through to 10 acquisitions we have completed in Spain. Sharps is getting some leverage in markets like Ireland. We are soon to roll it out in the UK.

And recall obviously did impact it. It wasn't material, but it had a little effect and brought it up in Q2 certainly.

Any way you could help us with a little more granularity on what the recall impact was?

I think it was maybe 1%.

Okay, that's very helpful. And then secondly on margins, particularly on SG&A, obviously you've done a better job leveraging the gross margin line over the past year or so. But SG&A has actually been going probably in the wrong direction, even putting aside the amortization bit. Is leveraging that line a priority of yours? And how should we think about that going forward, particularly in relationship to any investment needs in some of your growth drivers?

Yes, I think you just hit it. Obviously it's an investment spend. We're now in certainly new lines of businesses like Communication Solutions, like StrongPak. These have really great long-term growth opportunities for us. So we will certainly make those investment spends. I think we are very still very conservative when we come to spending. We look at resource allocation from different buckets that we have on the different lines of business.

But it certainly is attributable to the investment spend that we're making into this business for the long-term growth. And it also has something to do with acquisitions. Obviously as we have made our way into the Communication Solutions business we haven't rationalized that SG&A yet, which we will over time.

Got it, thank you.

Barbara Noverini, Morningstar.

As you guys grow the StrongPak business domestically and extend your reach, are you finding that you need to partner with third parties for final disposal or incineration of this material that you collect or are you internalizing most of this additional volume?

You know, we use third parties for disposal or incineration. We have a pretty good platform in place that we built out over time to sort of allow ourselves to manage the waste, transfer the waste, bulk waste, things like that.

Okay, thank you.

Stewart Scharf, S&P Capital.

Can you just talk a little bit about price in the market and the mix based on different markets and regions? Are you seeing any kind of improvement or worsening in price in any areas?

You know, it's pretty much the same. I mean as I said, I think, on an earlier question related to a competitor, very competitive business. So, obviously everybody's price sensitive and we have to react to that, but otherwise no changes.

Okay, thank you.

At this time there are no further questions in queue. I'll turn the call back over to the presenters.

Thanks, Tracy. We appreciate everyone taking time to participate on today's call. Enjoy the rest of your summer and we'll see you on the road later this quarter. Have a great evening, thank you.

Ladies and gentlemen, thank you for joining. This concludes today's conference call. You may now disconnect.