TTEC Holdings Inc (TTEC) 2013 Q1 法說會逐字稿

Welcome to the First Quarter 2013 Earnings Conference Call. I would like to remind all parties that you will be in a listen-only mode until the question-and-answer session. This call is being recorded at the request of TeleTech. I would now like to turn the call over to Karen Breen, TeleTech's Vice President of Investor Relations. Thank you, ma'am, you may begin.

Thank you and good morning to everyone. TeleTech is hosting this call to discuss its First Quarter 2013 results ended March 31st. Participating on the call today will be Ken Tuchman, our Chairman and CEO, and Regina Paolillo, our Chief Financial Officer.

Yesterday we issued a press release announcing our financial results for the first quarter and also filed our quarterly report on Form 10-Q with the SEC. This call will reflect items discussed within those documents, and we will make reference to them several times on the call today. We encourage everyone to also read our quarterly report on Form 10-Q.

Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise this information as a result of new data that may become available.

Forward-looking statements are subject to various risks, uncertainties and other factors that could cause our actual results to differ materially from those described. Such factors include but are not limited to reliance on several major clients, service associated with lower profitability from or the loss of one or more significant client relationships, execution risks associated with ramping new business or integrating acquired companies and the possibility of additional asset impairment and/or restructuring charges.

For a more detailed description of these risk factors, please review our most recent SEC filings along with our 2012 annual report on Form 10-K. A replay of this call will be available on our website through May 16th, and I will now turn the call over to Ken Tuchman, our Chairman and CEO.

Thank you and good morning to everyone joining us today. We continue to execute on our mission to become the preeminent customer experience transformation company of the 21st century.

Numerous industry reports from Forester to Gartner and, most recently, to PWC, confirm that the customer acquisition, growth and retention is the number-one strategic imperative of every CEO. The good news is we are well positioned at the epicenter of this sea change and are actively helping clients solve their most pressing challenges around the customer experience -- management.

From strategy to technology and ultimately delivery we are enabling clients to enjoy greater growth, brand loyalty, and advocacy. This, in turn, is enabling deeper and longer term client relationships for TeleTech.

In this quarter alone, we signed $100 million in new business. This represented the highest bookings since the first quarter of 2011. Our outcome-based approach enables clients to grow and retain the value of their customers, migrate to the best-in-class technologies and operate with increased scale and efficiencies.

The explosion of data is fueling a world where companies increasingly require real-time customer insights to both sense and respond with timely, relevant, and personalized communications. In addition, the rapid advances in consumer technologies have left companies struggling to keep up.

To address this perfect storm of disruption, clients need to rewire and to deliver a new data-driven customer experience. Our emerging businesses provide the technology-enabled solutions required to deliver this next-generation approach. These businesses now comprise 23% of our revenue, up from 20% in the year-ago period. We are well on our way to achieving our revenue diversification goal of having 30% of our total revenue derived from our emerging businesses by 2014.

We continue to achieve solid operating margin performance while proactively investing in the business. The 170 basis-point improvement in the adjusted operating margin of our CMS segment was led by our decision to proactively exit certain underperforming businesses in 2012 and from an increasing capacity utilization, to 79% from 68% in the year-ago quarter.

Our strategy continues to gain traction. Let me briefly review our priorities after which Regina will discuss our financial results in greater detail.

First, we're focused on improved top line growth. Second, we will continue to invest in innovation across our highly scalable technology-enabled platform and, lastly, we will continue to leverage our strong balance sheet to pursue strategic and accretive acquisitions that further enrich our offerings.

Let me speak to certain accomplishments against these priorities in the first quarter. On the sales front, we signed an incremental $100 million of annualized business in the quarter, the highest amount in nearly two years. Importantly, nearly 40% of these wins came from our emerging businesses. This included the addition of 18 new clients, more than double the seven clients we added the year-ago period.

It's also important to note that we earned additional work from 59 clients during the quarter. As in the past, our embedded client base will continue to be an important part of our growth trajectory. We saw particularly strong revenue gains in certain verticals, as health care grew more than 27% from the year-ago quarter. Additionally, we enjoyed solid growth in our financial services, retail, and transportation sectors.

As to the second priority around continued investment and innovation, during the quarter we increased our efforts around a more comprehensive cloud-based offering as the growth opportunities in this category continued to be exponential. Since the launch of our expanded capabilities, we have nearly 25 clients that have utilized our cross-segment services to solve their business challenges.

The most exciting client opportunity is underway where we can meaningfully infuse technology into a traditionally labor-intensive solution to dramatically improve not only the quality of the experience but the overall cost to serve the customer.

These proof points also validate our strategic priority around continued investment in both of our sales efforts and our technology-enriched platform during 2013. We continue to complement organic investments with the pursuit of highly targeted, accretive acquisitions. We completed the acquisition of Technology Solutions Group, or TSG, at year-end, and we're well into the integration during the first quarter.

The acquisition is now part of our Customer Technology Services segment where we enable clients to transform to a digitally enhanced business. Clients increasingly realize that industrial-age business models are unable to compete with digital realities of today's always-on customer.

With regards to our Customer Strategy Services segment and with oversight from Brian Shepherd's leadership, we've fully integrated our consultative offerings into a unified value proposition. As a result, we've proactively rationalized certain operations and in March they returned to profitability. We expect this segment will continue to deliver improved results throughout the year.

In closing, the first quarter demonstrates solid traction against our vision of becoming the customer experience transformation leader. I am very excited about the rest of 2013, and I look forward to sharing our continued achievements with you in the coming quarters. I firmly believe this approach will continue to accelerate market leadership and provide meaningful benefits to both our shareholders, our clients, and the customers in the years ahead.

And, with that, I'll turn the call over to Regina.

Thank you, Ken, and good morning, everyone. Let me first highlight and then provide greater detail on our first quarter results after which I'll review our 2013 business outlook.

Q1 revenue was $288.4 million compared to $292.7 million in the first quarter of 2012 and down primarily from the exit of certain underperforming business during 2012.

Adjusted operating margin increased 60 basis points to 8.3% on $23.8 million of adjusted operating income. This compared to $22.7 million, or 7.7% in the same period last year.

Adjusted EPS was [10%] to $0.32 from $0.29 in the year-ago period. Importantly, we continue to return capital to shareholders with the acquisition of approximately $10 million of stock.

Let me now review our results in more detail. The $4.3 million revenue decline to $288.4 million from the year-ago quarter was attributable to $16.3 million of decreased revenue from exiting certain unprofitable, underperforming programs, partially offset by the revenue contribution from certain acquisitions.

Our first quarter GAAP operating income was $23 million, or 8% of revenue compared to 6.4% in the year-ago quarter. Our charges related to asset impairment and restructuring were $900,000, down from $3.8 million in the year-ago quarter. Excluding these items, adjusted operating income was $23.8 million, or 8.3% of revenue compared to $22.7 million, or 7.7% of revenue in the year-ago period.

SG&A expenses in the quarter were 15.9% of revenue down from 16.4% in the year-ago quarter. These improvements are the result of ongoing efficiencies we continue to realize from leveraging our G&A expenses across an expanding suite of service.

These increased efficiencies have and will continue to enable us to make additional investments during the year in both sales and marketing along with R&D.

Our effective tax rate this quarter was 11.4% and benefited from several items, none of which were individually significant. Excluding these benefits, our normalized effective tax rate for the quarter was approximately 18%.

Our first quarter GAAP fully diluted earnings per share grew 21.4% to $0.34 from $0.28 in year-ago quarter. On a non-GAAP year-over-year basis, EPS grew 10% to $0.32 compared to $0.29 a year ago.

During the quarter, the Company repurchased approximately 500,000 shares for a total of $9.8 million. Our Board continues to be extremely supportive of returning capital to shareholders via share repurchases.

Free cash flow was $2.4 million compared to $8.3 million in the year-ago quarter. This reduction relates to the variable incentive compensation payout for 2012 in Q1 of 2013. We continue to pace our capital expenditures relative to our growth requirement and spend $4.1 million on capital items in the first quarter compared to $6.4 million a year ago.

We ended the quarter with $170.6 million in cash and $128.9 million of debt. This resulted in a net positive cash position of $41.7 million.

Our total debt to capital ratio was 20.1%. Our current ratio is 3.2 times, and our adjusted return on invested capital is 24%.

As of March 31, 2013, we had $381.2 million of additional borrowing capacity available under our revolving credit facility. This continues to provide us the liquidity to fund a combination of organic growth, share repurchases, and accretive acquisitions. We'll continue to opportunistically execute tuck-in acquisitions adding additional competency, scale, and geography. Our DSOs were 77 days, lower by one day sequentially and up one day from the year-ago quarter.

Let me now review our first quarter segment results. As a reminder, we began allocating our corporate costs against each of our business segments beginning in the fourth quarter of last year. We believe this provides greater transparency into the profitability of each of our businesses.

Customer Management Services revenue was $222.6 million compared to $234.9 million a year ago. The $12.3 million reduction in revenue was attributable to the loss of $16.3 million in underperforming revenue offset in part by growth in certain client programs.

Adjusted operating income was $21.4 million, or 9.6% of revenue compared to 7.9% in the year-ago quarter. The 170 basis point lift in operating margins was related to proactively managing underperforming business out of the portfolio and a meaningful increase in capacity utilization from 68% in the year-ago period to 79% this quarter.

Customer Growth Services revenue was $22.9 million compared to $22.8 million in the first quarter of 2012. Adjusted operating income was $1.3 million, or 5.6% of revenue compared to a loss of $227,000 in the year-ago quarter. The improvements stem from a higher mix of performance-based programs and increased operating efficiencies.

Customer Technology Services revenue was $33.6 million compared to $25.6 million in the year-ago quarter. The revenue gain was primarily due to the acquisition of TSG on December 31, 2012. CTS operating income was $2.9 million, or 8.6% of revenue compared to $3.7 million, or 14.4% of revenue in the first quarter 2012.

The nearly 600 basis-point change in operating margin was due to higher amortization expense of $700,000, or approximately 200 basis points related to the TSG acquisition. The remaining 400 basis points was primarily attributable to an increased investment in sales in our cloud-based offering. As a result of these investments and strong demand, we have grown our cloud pipeline threefold in the last couple of quarters and continue to expect the operating margin in this business to be in the low to mid teens in 2013.

Turning to our Customer Strategy Services segment, revenue was $9.4 million and flat to the year-ago period. This segment had an adjusted operating loss of $1.8 million compared to a profit of $500,000 in the first quarter of 2012.

As Ken mentioned, in the fourth and first quarters, we proactively worked to unify our consulting acquisitions into one holistic global business. While this resulted in lower revenue in the first quarter, our repositioned efforts enabled strong first quarter bookings of nearly $9 million. This segment returned to profitability in March, and we expect its financial results, both revenue and operating income, to improve throughout the year.

Regarding our business outlook, we are reiterating our 2013 guidance. We continue to believe revenue will grow between 4.5% and 6.5% to between $1,215,000,000 and $1,240,000,000 with adjusted operating margin increasing to between 9.25% and 9.5%.

In addition, we believe our effective tax rate will range between 20% and 22% for the year.

We continue to prudently pace our investment in global infrastructure in line with our new business wins and expect full-year 2013 CapEx to range between $50 million and $60 million of which 70% is expected to support growth in our new businesses.

As it relates to the three emerging segments, which includes CSS, CGS, and CTS, we expect the combined revenue for this group will grow 30% to 40% of which, roughly, half will be organic. We expect these businesses to reach 25% of total revenue during 2013.

With regard to the combined operating margin for these businesses, we believe they will exceed 10% on a full-year basis in 2013.

Also keep in mind that about half of the $25 million incremental investment in 2013, which is fully included in our guidance, will be directed to these emerging segments.

Relative to our longer-term revenue goal of $1.6 billion, we believe we can organically grow to $1.4 billion by the end of 2014 and complement that with approximately $200 million of acquisitions. From a margin perspective, we believe the 11% to 12% range is achievable by the end of 2014 with approximately 100 basis points coming from increased G&A leverage and another 80 basis points from scaling our emerging businesses. The remaining 20 basis points would result from increased operating efficiencies in our CMS segment.

As Ken mentioned, we are optimistic and excited about the future in the investments that we are making to continue to drive meaningful outcomes for our clients and their customers. Thank you and, with that, I'll turn the call back to Karen.

Thank you, Regina. As we open the call to questions, we would ask that you limit your inquiries to one at a time so we have the opportunity to take everyone's questions. Pat, you may now open the line.

Thank you. At this time we will begin the question-and-answer session. (Operator Instructions) Mike Malouf, Craig-Hallum Capital Group.

Thanks a lot, guys and nice quarter.

Thanks, appreciate it, Mike.

You bet. A question on the utilization continues to remain high, and I'm just wondering, Ken, if you can give us just a snapshot of where we are in sort of the traditional call center business and how the pricing is, how the business seems to be going -- the new business wins, even though 40% of that was in the new emerging areas, still seems pretty strong for you. Thanks.

Is this a question about utilization or pricing?

Can you answer both?

Sure. So our utilization, we feel very good about. When we look at it, going forward, and projecting it, we think, through the year, it's going to bounce around between probably 79% and up to 83% or so and kind of go back and forth. And the reason for it going back and forth is because we're in the process of expanding and adding some more capacity based on client demand, et cetera. And so, as you know, when you open these new sites, it takes time to infill the sites, et cetera. And so we don't really expect to see the utilization drop below the 79%, per se, but we also don't necessarily think it's going to go above around 83%.

Now, that said, we think that the following year that we can, in fact, get our utilization in the 85% range and possibly a slight bit above that. And that's kind of where we feel it needs to be so that we have the headroom to be able to always be there to be able to take on growth with many clients having short expansion notice, et cetera.

As far as the second part of the question was, I think, towards pricing. We actually feel very good about how we're pricing our deals. I think that we're really not necessarily going against the traditional kind of commoditized business opportunities that are out there. We're being very selective. We're really only working with clients that have made the decision that they want to be top in their category from a net promoter score. They are looking at all the clients who are representing. They are looking at the impact we're having on their net promoter score, which is, of course, computed by a third party. And they understand that to drive a higher net promoter score and to drive higher retention and to drive higher revenue per customer that they need higher quality.

And so that's my way of saying to you that we think we've created a pretty differentiated capability, and we're selling our services really based on total value delivered versus getting out of the muck of price permitted or price per hour, et cetera. And we can do that because we bring forth so many different technology capabilities into the deal that we can show our clients that we're actually the lowest-cost provider. Or another way of looking at it is the lowest cost to serve.

And so I would say that right now we're feeling just fine with where we're pricing our deals, and I'm not concerned that there's any threats lurking around the corner as it relates to pricing.

Thank you. Howard Smith, First Analysis.

Yes, good morning, all. A question on the top line at CGS. I understand the back half of last year was strong in booking. The revenue hasn't quite responded, at least as I had modeled. I was hoping for some color on maybe the timing of the revenue growth.

Yes, hey, Howard, it's Regina. I think it's really just a matter of timing. The strong performance in the back end I think is a typical lift up in the back half. We have a lot of technology mix in the customer base in that segment.

I think the other thing that's happening, the other dynamic, is we had pretty strong bookings in CGS in the back half of last year, just under $10 million. Match that at about the same level in Q1, and it's just a matter of ramp. We can see the backlog of that ramp and the additional backlog that we've created in Q1.

So -- I would expect we see that same lift going into Q2, Q3, Q4, and as we said earlier in the script, we reiterated our guidance relative to the performance of these emerging businesses, albeit a little slow out of the gate for a variety of reasons across the segments. We have good visibility from CMS ramps, CGS ramp in terms of backlog, Consulting backlog, and Managed Services backlog, too.

Just a quick follow-up on that -- I know in CMS it takes several quarters sometimes to ramp customers so you can get a booking, and it can be many quarters before you see the revenue. What is that in CGS as a general rule? Is that a faster ramp or can it still take several quarters?

Yes, we don't see any difference in the ramp between those two BPO businesses. I think the difference is sometimes when we're adding to a particular line of business in an existing client that we can certainly ramp faster versus we're starting a new line of business and/or a new logo.

Thank you. Tobey Sommer, Suntrust.

Hi, this is Frank in for Tobey. A quick question on kind of growth trajectories. If you look across your segment, you've spent some time rationalizing or kind of adjusting your offerings, exiting some underperformance businesses. What are you doing in terms of initiatives to grow those businesses that you're happy with? And then, two, in terms of the client signings, $100 million, any particular areas of strength and weaknesses?

I guess what I would tell you is we're doing the things that one would expect. We are significantly expanding our investment in sales and have been doing so on a consistent basis, and we'll be making in the very near future bringing on some significant additional folks that will totally be focused on our sales efforts around the world.

Secondly, we are putting much more energy into our verticalization, which has to do with taking advantage of all of our deep consulting capabilities so that we can demonstrate to each and every vertical that we serve that we have deep domain expertise.

The bottom line is that our pipeline, without getting into it, because we don't really get into significant details, but is growing at a very significant rate, and we're very comfortable with the pipeline and what our outlook looks to as it relates to -- or deals to be closed in second quarter and beyond.

So -- what I would say to you is that we're taking a very methodical approach, and we are increasing our investment significantly in sales, which we stated in our previous conference call as to the overall dollar amount that we were stepping up that investment, and we're on track to, in fact, take advantage of that.

As it relates to the various different areas that are doing well, actually it pretty much -- although we pointed out health care, and we pointed out Financial Services, the reality is -- as well as Transportation -- the reality is that we're actually seeing opportunities across the entire spectrum right now.

I think that we really are at a tipping point in the marketplace where companies are so desperate for growth, number one; and, number two, they are so desperate to keep and maintain their existing clients; and, number three, many of them made a lot of very rash decisions where they potentially offshored to markets that are not working out or they tried to build a captive that they're not successfully managing, and that's creating some very significant opportunities for us. As they are realizing that they're running out of time due to the fact that their third party satisfaction scores along with their MPS scores are demonstrating that they're just not executing well.

And so where we really do well is when clients are in that situation and where we can demonstrate that we have a solution that will immediately turn that around.

I hope I'm being helpful. Regina, do you want to add anything to that?

The only thing I'd add is relative to the bookings, it was a strong $100 million with a strong back -- pipeline behind that. 60% of it was in CMS and 40% in our emerging businesses, and when you look at that comparatively from Q1 of last year, that's nearly a 75% increase. And yet some of it came from the fact that we acquired TSG, and now they're contributing bookings. But a good piece of it was strong performance across those segments, which bodes well for the uptick that we need in the revenue to get to our full-year numbers.

And the last point that I would just make is that early into the second quarter, we are very -- we feel very good about what we've already signed. So I think that we're tracking where we need to, and that's why we're continuing to reiterate our guidance and stick with it and look forward to updating you as we have more to share with you.

(Operator Instructions) Kevin McVeigh, McQuarie.

Hey, good morning, guys. This is actually Derek Sbrogna in for Kevin. I was wondering if you could just touch on your capital allocation strategy. You guys bought back roughly 10 million shares, and it looks like you only have about 15 or so -- a little more than $15 million remaining on the current authorization. Would it be fair to assume, at some point in Q2, we see a step up in that authorization? And then, secondarily, related to capital allocation, could you talk about the acquisition appetite right now and if there are deals out there and if there's anything you guys are looking at?

Well, as a Chairman of a Board, what I would say to you is that you probably should judge us by our historical past. It would be unfair for me to just automatically assume that our Board will increase. But I would tell you that it would be out of character for our Board to not continue to be supportive for us to continue to increase our stock purchase. We have been the most consistent at purchasing our stock of anyone in this entire space, anyone in the entire BPO space and have been consistent over the last decade, and we have no plans to change that, and we will keep that up.

So maybe another way of putting it is that I don't think you have to worry about that $16 million going to zero. So I hope I'm answering your question, but I'm sure I have Board members listening to this call, and I never want any of my Board members to think that I'm being assumptive or presumptuous because we have not yet had our Board meeting, but we feel okay.

Understandable.

As M&A goes, the answer is we're very interested in doing strategic acquisitions that are infills to our strategy that give us more girth in areas where we feel would be beneficial. That said, we are only going to do what's in the best interest of shareholders, and we're not going to do something that is stupid or that's going to create an M&A hangover. And so as much as we have the desire to execute on M&A, we have to be realistic about the realities of the market and, as you can only imagine, you have sellers that are looking at where the market is today, and you have buyers that are more realistic. And so there's a pretty good disconnect in the marketplace right now as it relates to M&A as to what buyers are willing to pay and what sellers believe their companies are worth.

And so I don't have a crystal ball. I can tell you that we have a good pipeline, but I can also tell you that you can go through a lot of deals before one actually gets done just based on the realities of, a, when you get to your due diligence is the company a high quality company and, b, is it, in fact, going to be accretive immediately. And that's determined based on a lot of different characteristics.

So what I would say to you is we're in a great position to do a multitude of strategic acquisitions, and our teams are in place, and now it's really just simply a matter of us making decisions on deals that are ultimately accretive.

Okay, and if I could just ask one more follow-up. The longer-term, or your 2014 target for 11% to 12% operating margin, and then could you maybe talk about how you bridge that with the emerging business getting to 30% and CMS, the legacy business, staying at 70% and how or what that kind of implies for the margin profile of each of those two maybe broader segments?

Yes, sure. First of all, I'll make the comment that -- or our view is, as we said, from a revenue perspective, we feel that we've got the platform to get to $1.4 billion organically and that we have a good landscape to buy with but that has less predictability to get that other $200 million, which would be acquired.

Our comments on getting to the 11% to 12% kind of stands regardless, at least at the 11%, so our view is on the $1.4 billion of organic growth. We see our way to that 11% largely due to the expansion of the margins in the emerging businesses, which we attributed about 80 basis points as well as efficiencies in the CMS business.

And so if you look at our 2013 projected margins, which we articulated as above 10%, and then add that 80 basis points, we expect those businesses collectively, with continued investment, to drive double-digit revenue growth to be in the early to mid teens depending on the segment.

Thank you. Josh Vogel, Sidoti.

Thank you, good morning. Can you tell us how many clients today are using one or more of your services versus a year ago? And are you having any success in cross-selling CMS to existing clients within the emerging businesses, or is it mostly the other way around?

Well, I'll just answer the last part and let Regina answer the first part. The answer is definitely on the cross-selling, and we actually, I believe, given some examples on our last conference call. And we're feeling very good about the other significant opportunities that we're working on right now where they would come out of -- where they would come from the other direction out of our CSF and then move to CSS, et cetera. So the answer is yes, we are seeing success.

That being the case, you know, although this is a significant priority of ours, the fact of the matter is we are still fairly new at this, and so what we've said is that we will double the account base by the end of this year from what we had last year that was using across all of our capabilities. And we think that trend will kind of continue for the next two to three years as more and more of all the various different clients understand what our overall capabilities are.

Yes, and just from a data point, it's just about 25 clients today that are taking multiple capabilities across the segments. And I guess the other noteworthy point, which is part of our strategy, is that it is our existing clients and our larger clients, which I think is a demonstration of the relationship and the power of that embedded base relative to these emerging segments.

Thank you. [Steven Chu], Stifel.

Good morning, guys. I just wanted to get a little more color on customer strategy services. Were the rationalizations you guys made mainly in PRG? And, if so, how is that business different from what you expected when you guys bought it? Thanks.

Yes, so I would say if you look at the performance of PRG, it was flat, and it was flat for a couple of reasons. One, timing of bookings; two, timing of the delivery; and, third, and most importantly, we made a movement to strategically align the Consulting segment with the overall business and then specifically to integrate what has been three logos that we purchased over the last couple of years into one holistic global consulting firm.

And that caused a bit of a shift, which caused a reduction in the revenue, although we can see again from the $9 million of bookings that this business will pop back to the low to mid single digits in terms of revenue per quarter.

Yes, I would say that the bulk of the rationalization happened within PRG relative to span of control of partners and directors. But what we've created across the world with Brian Shepherd's leadership and direction are really two consulting groups -- one covering the Americas and Asia Pac, and the other EMEA under two distinct individuals who lead those businesses and now have full command of the practice areas and the consulting base, which is going to allow us much greater, I think, penetration into our accounts in terms of prioritizing, account managing, and focus, but also much greater improvement in the utilization of the consultants given the fluidity of a good part of those folks -- 50% to 60% of those consultants would be capable of moving across the consulting practices.

So not much changing in terms of the capability in IP that we got from PRG in terms of segmentation and helping our clients figure out their customer experience strategy, but definitely organizationally and focus and -- additionally, we're adding things like call center consulting and learning and change management to fill out that full offering to be aligned with our overall customer experience strategy.

So let me stop there. Hopefully, that helped. Let's see if you have any follow-up.

No, that was good, thank you.

Thanks, guys.

Thank you. This concludes the first quarter 2013 earnings conference call. You may disconnect at this time.