Standex International Corp (SXI) 2012 Q2 法說會逐字稿

Good day ladies and gentlemen, and welcome to the second quarter 2012 Standex International Corporation earnings conference call. My name is Jenada, and I will be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question and answer session. (Operator Instructions). As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. David Calusdian. Please proceed.

Thank you. Please note that the presentation accompanying management's remarks can be found on Standex's Investor Relations website at www.standex.com. Please see Standex's Safe Harbor passage on slide two. Matters that Standex management will discuss on today's conference call include predictions, estimates expectations, and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You should refer to Standex's recent SEC filings and public announcements for a detailed list of risk factors.

In addition I would like to remind you that today's discussion will include reference to EBITDA, which is earnings before interest taxes depreciation and amortization, adjusted EBITDA, which is EBITDA excluding restructuring expenses and one-time items, non-GAAP net income,non-GAAP income from operations, non-GAAP net income from continuing operations, and free operating cash flow. These non-GAAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles Generally Accepted in United States. Standex believes such information provides an additional measurement and consistent historical comparison of the Company's performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Standex's second quarter news release. On the call today is Standex Chief Executive Officer, Roger Fix, and Chief Financial Officer, Tom DeByle.

I would like to turn the call over to Roger.

Thank you David, and good morning everyone. Please turn to slide three. In addition to reporting our Q2 FY 2012 financial results, we announced this morning that Standex has decided to divest the Air Distribution Products business. I will start today's call with some comments on that. We came to the decision to divest the Air Distribution Products business, or as well call it, ADP, for two reasons. First, although ADP has generated significant profits and cash flow for Standex over the years, we do not believe it is core to our focused diversity strategy going forward. Our stated strategy is to focus our management attention and investments on businesses that provide value-added products and services to our end user markets. In short, we want to be in businesses that allow us to differentiate ourselves from our competitors by providing not just products, but technical solutions to our customers which we believe will allow us to generate superior returns for our shareholders over the long run. As such, ADP is not well aligned with our focused diversity strategy as it is more commodity like.

Further, its profitability and rate of return profile are dilutive to our other strategic business units. The second reason for our decision to divest ADP at this point, is our belief it will be quite some time before the US housing market recovers to a level that will allow the ADP business to generate profit margins and returns consistent with our expectations. ADP sales volume and therefore its profitability is highly correlated with the number of new housing starts in the US. Although there have recently been some signs that the housing market in the US may have bottomed, we believe that any robust recovery in housing starts is still several years into the future. As a result we believe that it will take considerable time before ADP's financial performance recovers to the point that is no longer dilutive to our overall profit margin and asset returns.

Consequently we believe it is in the best interest of our shareholders to divest the business now, and to focus our efforts on driving profitable growth in our other strategic business units. We expect the sale to take place within the next 12 months, and accordingly, we are reporting the ADP business in discontinued operation is as part of our Q2 results. The division to divest ADP will result in a net loss for the second quarter of fiscal 2012, and discontinued operations of $14.2 million, or $1.11 per share. In order to reflect the carrying value of the business at its net realizable value. This loss includes noncash goodwill andreal estate impairment charges and other expected transaction costs, which include costs related to withdrawal liability associated with certain multiemployer pension plans that ADP is party to.

Note that the loss we are booking in Q2 is our estimate of the impact of the anticipated sale of ADP as of December 31. We are currently in negotiations with a prospective buyer, and while no definitive agreement has been entered into, it is possible that we will incur additional charges in connection with the divestiture in the range of $0.18 to $0.23 per share, which will be reported in discontinued operations during the third quarter, if the transaction is concluded as currently structured. We anticipate using expected sale proceeds to support the profitable growth opportunities that exist for our other businesses.

Please turn to slide four. This slide illustrates the impact of a divestiture of the ADP business on our trailing 12-month sales and non-GAAP profit and returns from continuing operations. As you can see, removing the ADP business improves our non-GAAP operating profit margin by 90 basis points. EBITDA margin improves by 100 basis points and earnings from continuing operations excluding special items, improve by $0.07 per diluted share. Further, the sale of ADP will result in a decrease of $30 million in net assets, which when coupled with the improvement in profit margins also improve asset returns. This is borne out in the asset ratio return shown on slide four.

Return on investment capital improves by 40 basis points, and return on net assets, or RONA, which we define as net income divided by the total of fixed assets and working capital improves by 300 basis points. We believe and this is supported by feedback from the institutional investor community that over the long run improved profit margins and asset returns are significant factors in driving share price, and therefore shareholder returns. Accordingly despite the write-off we are recording this quarter, we believe the divestiture of the ADP business is in the long-term best interest of our shareholders.

Please turn to slide five. Moving on to our results for our ongoing operations we reported another good quarter in Q2 with sales up 9%. This reflected organic growth of 5.6% and 3.3% from recent acquisitions. All four of our operating groups reported year-over-year growth with three in double-digits. The organic growth we recorded in Q2 is the result of our ongoing topline growth efforts. As we have discussed in our quarterly calls over the past roughly year and a half, each of our business units has developed and is executing on a number of organic growth initiatives.

We believe these programs have been successful, as we not only see the results in our operational metrics, but also through the achievement of topline growth rates in excess of the economic growth rates that our end user markets are currently demonstrating. In terms of acquisitions, our metal spinners purchase has been a solid success, resulting in the engineered technologies group sales and profitability growth this quarter. In addition we continue to build a solid pipeline of acquisition targets. We continue to emphasize a Lean cost structure, which is the result of restructuring actions completed during the past three years, and our ongoing focus on improving operations and tightly controlling expenses. Our solid sales growth leverage against this cost structure resulted in a 10% increase in non-GAAP operating income, with three of our groups reporting double-digit increases in profitability.

Please turn to slide six. The second fiscal quarter was the tenth straight quarter of non-GAAP trailing 12-month EPS growth. As the chart illustrates, non-GAAP earnings for the trailing 12-months through the recent quarter were $3.16 per share. This EPS performance is 82% above our peak prerecession earnings of $1.74 per share in the first quarter of 2009, yet our current trailing 12-month sales were still slightly below our sales at that peak. We are very pleased to see this continuing momentum in our earnings growth. Please note that the charge has been restated to exclude the impact of ADP activity from historical results.

We will discuss each of the business segments after the financial review, and with that, I will turn the call over to Tom.

Thank you, Roger. And good morning, everyone. Please turn to slide seven. Net sales for the quarter were up 9% to $154.9 million from $142.1 million in the second quarter a year-ago. Excluding special items, operating income grew 9.9% to $15.1 million from $13.7 million a year ago. Adjusted EBITDA grew 8.7% to $18.4 million.

As slide eight illustrates, net income from continuing operations for the quarter includes post-tax $0.5 million of restructuring charges. The second quarter of 2011 included post-tax $0.3 million of restructuring charges,$0.2 million in acquisition related expenses, and $0.2 million gain from a real estate transaction, as well as a nonrecurring tax item of $0.3 million. Excluding these items from both periods, net income from the continuing operations increased 13.4% to $10.5 million,from $9.3 million in the second quarter of last year. Earnings per share for the continuing operations excluding special items grew 13.7% year-over-year to $0.83 per share.

Slide nine reveals our year-to-date performance. Operating income from continuing operations for the first six months of the fiscal year including special items was $30.5 million, compared with $31.6 million in the first half of last year. Excluding special items, non-GAAP operating income increased 6.1% to $31.7 million.

Our year-to-date bridge outlining the special items is on slide 10. Net income from continuing operations for the first half of fiscal 2012 was $21.9 million, or $1.72 per diluted share, compared with $21.2 million or $1.66 per diluted share in the same period last year. Net income from continuing operations excluding special items increased 11.4% to $22.2 million, or $1.74 per diluted share.

Turning to slide 11. Networking capital at the end of the second quarter was $116.4 million, compared with $115.7 million at the end of Q1, and $103.4 million at the end of Q2 last year. Working capital turns were 5.3 in Q2, down from a 5.5 turns at the end of Q2 last year. Working capital turns for the quarter were negatively impacted by safety stocks related to two facility consolidations, and the transition to a new metal supplier. However, we are nonetheless pleased to have working capital in the second quarter at over 5 turns for the third consecutive year.

Looking at slide 12, we had free cash flow from continuing operations of $8.9 million during the quarter as we successfully resumed converting our net income into cash flows from operations after an inventory build in the first quarter. Capital spending for Q2 was $2.8 million in line with our expectations as we return our capital spending to being in line with depreciation, or in the range of $10 million to $12 million.

Slide 13 illustrates our debt profile at the end of the quarter. Our net debt for the quarter was $37.6 million, and our ratio of net debt to capital was 13.3% at December 31, 2011. As we discussed last quarter, we signed our new revolver this past month, a five-year $225 million unsecured facility. Based on our debt at December 31st, the new facility leaves us with $160 million of dry powder to use for organic and acquisitive growth initiatives. Additionally the new revolver has flexible terms that allow our agreement of surrounding acquisitions and divestitures, which will allow us to continue to execute on the focused diversity strategy.

With that, I will turn the call back to Roger.

Thank you, Tom. Please turn to slide 15, Food Service Equipment Group, and I will begin our segment overview. Food Service sales up 4.3% in the second quarter year-over-year while operating income declined by 2.7%. In the Refrigerated Solutions group we saw strong sales growth to the quick serve and national chain restaurant market, and also reported our first substantial orders in the emerging dollar store segment of the market. We expect this to be a long-term trend although due to the normal slowdown in construction and remodel activity that occurs in the winter months, Q3 will not be as strong as Q2 in this area.

Success in these segments of the market was partially offset by the continuing slowdown at retail drugstore are customers, who have announced significant reductions in new store openings. They are doing more remodels than historically which gives us a nice opportunity, but this won't be enough to overcome the lower rate of new store openings. Scientific sales were also lower in Q2, that is due to lumpiness of that business. Margins in Refrigerated Solutions were negatively affected by product mix, pricing pressure in the walk-in business, and labor inefficiencies as a result of the consolidation of Kool Star into our new Albany, Mississippi, facility in Q1 which have been addressed. As a reminder the consolidation eliminated redundant operations on the cold side, and freed up in room in Nogales Mexico, with the continued expansion of Cooking Solutions. We still expect to gain $1.5 million in annual savings from these moves.

Growth in the cooking solutions was tempered by lower than expected sales of griddles to a prominent quick service hamburger chain. As we discussed on last quarter's call we are providing griddles for this chain's premium burger roll out. We are hopeful that this delay will be short term. The topline was also affected by softer demand from the grocery store segment in Europe, where our largest retail customer continues to delay store remodel plans. Our bottom line in Cooking Solutions was negatively affected by lower margins on a large sale of Combi ovens. This large sale included training and installation, which carries lower margins.

In addition, we had an unfavorable product mix in the quarter, but are working on cost reduction initiatives to enhance profitability of these lower margin products, and we also saw some pricing pressures in certain segments of our cooking line. This is also a quarter of strong growth in our custom solutions product lines driven by higher sales to convenience stores , buffet and cafeteria chain businesses, and the general dealer channel. Looking forward our Food Service Equipment Group will continue to focus on driving growth in both sales and improving operating margins. Our efforts to improve operating margins will be achieved through an improving pricing environment, the recently completed plant consolidations, purchasing and value engineering initiatives, and from leveraging our topline growth.

Please turn to slide 16 the Engraving Group. Standex Engraving sales were up 11.2% in the second quarter year-over-year, while operating income was up 30.4%. This group turned in excellent performance in Q2 both on the top and bottom line. Sales were driven by strong demand at the mold texturizing business, primarily in North America as a result of automotive platform work, and China where we continue to expand the business. We also experienced positive results from Europe.

During the quarter, we opened our fourth Chinese facility in the Fujian province on schedule. The facility which provides texturizing services to manufacturers of televisions and other electronic products, began to contribute to revenues in the second quarter. As we have discussed previously grow in the automotive sector and other key markets for Engraving Services, is and will continue to come from the emerging economies. In order to position Engraving to it participate in this growth, last fiscal year we purchased mold texturizing companies in India and South Africa, while at the same time continuing our organic growth initiative in China by opening our third facility in Tangin.

Over the next 12 to 18 months we will be expanding our mold texturizing infrastructure and sales channels in South America and the Pacific Rim, as we are actively engaged in plans to grow in these regions. The roll engraving machinery business remains slow in the quarter due to the housing weakness, and we also experienced some economic related softness in Brazil. We do not expect the mold texturizing business to be as strong in the third quarter as in the second, because of the lumpiness in automotive OEM platform launches, and some seasonality impacts. Going forward we are very excited by the prospects for this business as we believe our global infrastructure and superior technologies represent very promising long-term prospects.

Please turn to slide 17, Engineering Technologies Group. Engineering Technologies sales were up 33.5% year-over-year in the second quarter, with operating income up 13.7%. The Metal Spinners business we acquired in Q3 last year, fueled the top and bottom line growth for the segment. Strong demand from the oil and gas market was primarily responsible for the significant increase in sales at Metal Spinners, and we expect excellent potential from this market for the foreseeable future. Much of the work that we are doing right now at Metal Spinners is for the expansion of offshore oil production in Brazil and Africa.

At our legacy Spincraft business, sales into energy related markets continue to be negatively impacted by an inventory correction implemented by one of our major land-based gas turbine OEM customers. Based on recent forecasts from this customer, we expect improvement in the second half of our fiscal year compared with the first, but not yet back to historical levels. On the positive side, we had increased sales to the aerospace market, and we expect to report strong revenues in this segment for the year. We are very excited right now about our prospects in the space sector for unmanned and manned space exploration programs. We have secured long-term orders through 2015 from the United Launch Alliance, or ULA, for unmanned space flight hardware. The orders from ULA exceed our historical run rate for this segment of the unmanned space market.

In the manned space flight segment of the market, we have several development programs underway, to provide hardware for NASA's Space Launch System, or SLS manned space flight program. NASA announced SLS in response to a Congressional directive this past summer, whereby NASA is to develop the next generation deep space manned exploration system, by using wherever possible existing technology and infrastructure. This positions our Spincraft business very well to participate in this still emerging opportunity.

Please turn to slide 18, Electronics and Hydraulics Group. This segment reported yet another solid quarter with 12.4% year-over-year topline growth, and operating income growth of 14.8%. Double-digit sales growth in Hydraulics drove the excellent sales performance. We continue to see a strong recovery in North America for dump trailer systems, and new business we have captured in refuse handling applications. There are also early signs that the domestic dump truck segment may be rebounding as well.

Internationally our efforts to capitalize growth in emerging markets are progressing very nicely, as we experienced good growth in Mexico, South America, Thailand, Australia, and the Middle East. In addition there has been a very positive reaction to the exports of telescopic and rod cylinders from our China facility into all major geographic markets we participate in. Electronics business reported a slight sales growth in the quarter compared with Q2 of last year. As we discussed last quarter, we have seen a softening of reed switch sales into China and Asia Pacific markets, and a softening of demand for magnetic products at certain large OEM customers. We have continued to implement cost reduction efforts to mitigate the effect on profitability.

Looking forward, we have a number of new product launches that began this month, and will continue throughout the calendar year. We expect these product launches to have a measurable affect on our revenues in fiscal 2013. For example, we just launched a float sensor line into the HVAC market, where we have a good opportunity to take market share. We believe that there is significant opportunity to leverage the innovation at the electronics business into long-term revenue and profitability growth.

Please turn to the summary on slide 19. As we enter the second half of our fiscal year, the uncertainty surrounding the macro economic environment gives us reason for some caution. We are, however, better prepared for a possible slowdown in the economy than at any time in the history of our economy. We have maintained a strict focus on cost control and productivity improvements, and this has as a resulted in substantially improved operating leverage, increased cash generation, significant debt reduction, and a much stronger balance sheet. Moreover, with the expected divestiture of ADP will provide additional cash to invest in profitable growth, allow management to focus on our remaining businesses, and boost our overall margins and asset return metrics.

Let's close by reviewing our operational objectives for the remainder of fiscal 2012. First, we are committed to driving profitable organic growth. The success of our organic growth initiatives was evident in our fiscal first half 2012 results, and we will continue to make the necessary investments to develop innovative new products, penetrate new geographic markets, and increase market share. Second, we also continue to build a solid pipeline of acquisition targets as part of our acquisition strategy.

Our recent acquisitions have been highly successful in terms of achieving our strategic objectives, and in contributing to both top and bottom line growth. Third as part of our topline focus we also have engaged with the markets and our customers to implement price increases in order to offset some of the commodity inflation we have experienced. Again, we have already seen some success with these efforts in the first half of the year. And finally, we are maintaining our focus on improving operations and tightly controlling our expenses.

With that, Tom and I would be happy to take your questions. Operator, can you

Thank you. (Operator Instructions). Your first question comes from the line of Michael Saloio with Sidoti & Company. Please proceed.

Good morning.

Good morning, Mike, how are you?

I am well. You have to will excuse me however as I did have to juggle a couple of conference calls this morning, so I may have missed some of your comments. My first question just has to do with the Food Service business. I was wondering if you could just provide a little more detail on kind of what the trends were in the quarter, and why you kind of saw some softness relative to your expectations in that business in the quarter?

Well, again, taking it kind of piece by piece, in the Refrigeration side refrigeration side of the business, we saw real strong growth in the quick service side of the business. It is all about which chains are you most hooked up to in terms of your market participation, and we are on the refrigeration side very well positioned on the quick service chains that are growing. That is offset on the retail side where it is probably now like CVS, Walgreens, and others have identified that they have significantly reduced their number of new store openings, several of those chains are focused more on the remodel side.

But the remodels aren't enough to offset the reduction in the new store openings. So net/net we saw growth on that side of the business, but tempered because of what happened in the retail side. In cooking, just the opposite. Our distribution side the dealer side of the business grew fairly nicely actually, where the chains that we are most hooked up to, or our market share is focused on, did not show a lot of growth in the quarter and that impacted our topline results there.

Are you seeing among your competitors similar trends to what you just basically portrayed?

Well, we obviously we don't have the inside view of the detail of their numbers, but we think the trends that we are seeing are general across the market place as we interact with both the chains as well as the dealer channel. There are winners and losers out there, in terms of what is going on in the quick service side of the business. The larger dealers are tending to take share from some of the smaller dealers, so I think those trends are probably consistent across the market.

Okay. I wanted to ask a question on Engraving. Looked likes a pretty solid quarter in the segment. What are your thoughts moving forward into 2012, and if you have any comments on what your customers are saying about platform builds over the next 12 to 18 months, it would be helpful?

It well, it is hard to generalize because again, we participate and have significant share with the Big 3 here in North America, with the major OEMs in Europe, and also with the Asian both Japanese and Chinese. But what I would say is that the market is definitely healthier than it was certainly two or three years ago. I think you are seeing as a result of that a desire on the part of the OEMs to continue to invest in new platforms and in the remodels of existing platforms. We think our position is very unique in the sense that we are the only mold texturizing company that has a global presence. All of our competitors are regional in nature.

As more and more of a the OEMs are going to what we call global platforms where they require mold texturizing services around the world, that our ability to coordinate work going through a number of our plants simultaneously in different parts of the world, assuring consistent quality, consistency in mold texturizing, consistency in the service really uniquely positions us. Again, I think I would say that we see the market as generally improving. The build count certainly in North America is still well below the peak values that it was, say five or six years ago. But as I mentioned in my comments we are really trying to position our business for the emerging economies, where certainly in Brazil and in China we are seeing double-digit kind of increases in build count, which we think ultimately will continue to benefit our business as well.

Okay. That is really helpful. I apologize if I said build count. I guess what I am really asking is maybe this is a better question. What are you seeing internationally as far as platform refreshes, which is more of an impact to your business than build count, correct?

Correct. I think build count speaks to the general health of an OEM.

Okay.

If they are growing they are tending to be investing more in new platforms or model refresh, because they are just economically stronger, more able to do that over the long-term. So again, it is hard to generalize because from quarter to quarter there will be a different number of launches, but you we don't see any particular negative trends from what we have experienced, say over the last 12 to 18 months.

Okay. And just one last question on Engineering Technologies. Could you give us a ballpark estimate as to what percentage of that overall business including Metal Spinners now is oil and gas, and secondly medical, and if you could speak to some of the trends is you are seeing there, that would be helpful?

We haven't disclosed specifics by sector, and I wouldn't want to shoot off the cuff. I think the trends though, we can definitely speak to. The oil and gas is very much an emerging opportunity. When we bought the business not quite a year ago, there had only been really some pilot level activity that had occurred in the prior 12 to 18 months before our ownership began. Since that time, we have solidified a much better outlook of what the profile of oil and gas looks like for us going into the future, and we see that growing into a sizeable opportunity. Could grow into say in the $5 million to $10 million business over the next four or five years quite easily. We see that as growing from essentially nothing to a sizeable piece of that business. The medical side is a business, or is a segment that Metal Spinners was well developed in and participated in, at the point of our acquiring the business. We see that growing but again, off a larger base so the percentage, or the impact on the overall top line won't be as great as the oil and gas side, because again we are growing from basically zero to a sizeable piece of the business.

Okay. That is very helpful. And great quarter.

Thanks, Mike.

(Operator Instructions). Your next question comes from the line of John Walthausen with Walthausen. Please proceed.

Good morning, Roger, how are you doing?

Good John, how are you?

Good, good. Great quarter. You have got yourself in a good financial position. Could you update us with some granularity on the acquisition strategy for the different businesses?

Well, without disclosing specific targets, each business unit or each of our segments if you will have different needs, so I could probably just generalize, and go through each of the segments. In the Food Service side we have identified specific product lines particularly on the cooking side of the business, and to some extent on the Refrigeration, where we feel like there are gaps in our product portfolio, where a bolt-on or a tuck-in type acquisition would help us fill out that product offering. The Tri-Star acquisition we did a little over a year ago is a good example where we brought in a range product line that was prior to that missing from our portfolio, and again there are other product gaps out there that we are very interested in filling through acquisitions.

In the Engineering Technologies area, geographic expansion as well as what I will call closely associated manufacturing processes, are potential targets that we would like to pursue in that regard Metal Spinners is a good example. Metal Spinners gives us exposure in the European marketplace that we heretofore hadn't been able to penetrate because of location. They also had a different end user profile than what our legacy businesses and our Spincraft business had been.

Then getting outside of pure spinning and fabrication we think there are some other manufacturing processes that would be synergistic to spinning and heavy fabrication, that would allow to us bring a broader array of products to our existing customer base. So kind of a two-fold view on acquisitions in that part of the world. The other businesses again more of the same, either looking for opportunities to expand geographically or to bring in complementary products that we can move through our existing channels to leverage our infrastructure, both from a standpoint as well as from a plant stand point.

Okay, that is helpful. And then in the electronics and hydraulics, at this point no particular strategy to add to those?

No, I wouldn't say that. Again, without going into more detail, I would say that we are looking for opportunities really across-the-board in the four business groups that we now have in continuing operations.

Okay. In your comments about the outlook you talked about that both Food Service and Engraving would be weaker sequentially. Now in the Food Service that would kind of be expected, given the seasonality of that business. Do you mean a more profound slowdown that should be expected than just a seasonal?

No, but we would like to remind people that business in particular is seasonal, so no, nothing profound but again just a reminder that business because of the construction side is always the weakest in Q3. And on Engraving it is a combination of two things. The lumpiness on the OEMs. We had a very strong OEM platform profile in Q2 that looks to not repeat in Q3, and that is just the lumpiness associated with the business. And then on the roll engraving and capital equipment side of the business, historically it also is weakest in Q3. A combination of those two things was really the reason to give folks that perspective.

Right. In terms of just looking across the business, the bookings that you are experiencing, would you characterize it as symptomatic of a slowdown in the economy, or are you putting out your notes about what may happen going forward more from reading the press and hearing the economic commentators?

More of the latter. To address your point about bookings, with the exception of our Engineering Technologies group, where our bookings and order profile go out depending on segment 6 to 12 months and we have pretty reasonable visibility. In the other businesses, our backlog and order profile is measured in weeks, certainly six weeks or less. So you really can't look at that. My comments are to your point more just looking at what is going on in the world, and particularly in Europe and wondering about the knock on effect of certainly some recessionary trends in Europe, and what that would do to the US economy and the world economy in general. I don't think my perspective is particularly unique for companies in our position.

Okay, good. Thanks an awful lot.

At this time, we have no further questions. I would now like to turn the call back over to Mr. Roger Fix for any closing remarks.

Once again, we thank everyone for their participation, and we always appreciate the questions, and we look forward to chatting next quarter. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, have a great day.