Yellow Corp (YELL) 2004 Q3 法說會逐字稿

Good morning ladies and gentlemen, my name is Paul, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Yellow Roadway Corporation third 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 period. If you would ask a question during this time, please press star then one. I would now like to turn the conference over to Mr. Stephen Bruffett, Senior VP - Corporate development and Investor Relations. Please please go ahead, sir.

Thank you, Paul, good morning everyone and thanks for joining us for the Yellow Roadway Corporation third quarter 2004 earnings call. With us this morning are Bill Zollars, the Chairman, President and CEO, Don bar engineer, our CFO, Jim Staley, president of Yellow Roadway group, James Welch, and Jim Richie, President of Meridian IQ. Statements made that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This includes statements regarding the company's expectations and intentions on strategies regarding the future. It is important to note that the company's financial results could differ materially from those projected in such forward-looking statements due to a variety of factors. The format of this call does not allow us to fully discuss all these risk factors, so for a full discussion please refer to our 10-K., 10-Qs and last nights earning release.

Provide comparisons to 2003 avenue after adjusted for performing accounting policies and calendar quarter accounting periods, for further details please refer to our earnings release and segment operating statistics which are both currently available in PDF format on the yellow Roadway Web site under the heading of earning releases and annual reports. Bill Zollars will provide our comments this morning as Jim Staley, name and Jim Richie are here and available to participate in the Q&A session. With that, I'll turn the call over to Bill Zollars.

Thanks, Steve, and thanks everybody for joining us this morning. We posted solid results in each of our operating units so far and the third quarter was no exception to that. EPS of $1.38 was above the high-end of our increased guidance. The results exclude the right off related to the elimination of our secured credit facility which John will discuss a little bit later.

Our consolidated operating ratio for the quarter was 93.2, which is our best consolidated quarterly operating ratio since 1988; and we've been talking to some of you about the fact that we thought we could operate this business in the low 90s, and we are well on our way to doing that. This strong performance in spite of disruptive hurricanes experienced through the southeast, which cost us about three to four cents per share, is evidence of significant operating leverage of firm pricing environment and our success in capturing cost synergies. As we move into the fourth quarter we are well-positioned to cleat a very successful first year at Yellow Roadway with strong growth and expanded margins.

In addition, our unique apple to capture significant cost synergies while growing our strong brands will continue to provide operating income benefit regardless of future economic trends. Speaking of synergies we remain on schedule and delivered $15 million of cost synergies during the third quarter which is the number we guided to on last quarters call. We still expect to deliver about $25 million of synergies during the fourth quarter. This brings our 2004 synergies to about $50 million with a run rate of chest to 100 million as we exit the year. That's the number we've been talking about for all of 2004. Let me now move into talking about each of the operating units.

Yellow Transportation set record levels of financial performance reporting the highest quarterly revenue in operating income in its hurt. That's about an 80 history now. Posting record revenue for the third quarter in a row. Quarterly adjusted operating income of 62 million exceeded the previous record established just last quarter by nearly $17 million. The comparable number from last year's third quarter was 43 million so that's about 45% increase from last year. Yellow Transportation also posted a into .5 operating ratio, 92.5, that's an improvement of 1.7 percentage points over last year and again the best quarterly operating ratio since 1988.

The third quarter incremental margin transportation was 21% which is slightly above the targeted number of 19 we usually talk about. All time high quarterly revenue of $829 million was 12.3% above last year's third quarter and 36 million higher than the previous record set in the second quarter. You'll remember in comparing us to last year that this was about the time of year in 2003 that we began to see the economy turnaround. So that 12.3% over last year is coming against some pretty tough comps from the previous year.

Penetration of premium services remains one of the priorities of the company and in particular spreads the sped time definite service of Yellow Transportation had revenue growth of 41% in the quarter compared to last year. On a year-to-date basis the revenue growth from express was 54% so that service continues to grow very rapidly. The pricing environment during the third quarter was strong at Yellow Transportation as capacity tightened during the key shipping season. The Yellow Transportation recognized L. C. L. improvements after you adjust for change in Mick of 4.5%. Mick's. LTL tonnage per day in Yellow Transportation was up almost 5% in 2004 compared to the third quarter of 2003.

To put these current volume levels in perspective third quarter tonnage per day is ahead of two thousand which is a time when everyone remembers the economy it was extremely strong. So we've now exceeded the 2000 business volumes at Yellow Transportation. Let's talk a little bit about Roadway group. Roadway Express continue its trends of improving profitability by posting an operating income of 52 million in the third quarter, that's a 93% improvement over the number from last year and the highest third quarter operating income in Roadway's history, again, almost an 80 year history.

Another measure of the Roadway teams success was third quarter adjusted operating ratio of 93.5, a substantial improvement over last year's comparable number of 96.5 and the best quarterly operating ratio again since 1988. This improvement translated into an additional $24 million in operating income and 31 cents per share. Third quarter revenue at Yellow Roadway express was 812 million which was 5.5% above last year. And Yellow Roadway premium expedited brands time critical and time advantage contributed to the revenue and income growth establish which will. Combine revenue of these as to services was up 70% over the third quarter of 2003.

Again yield was a gate story at coy compress. They generated yield improvements year over year after adjusted for changes in mix of 4.4%. The LTL tonnage per day at Roadway finally popped into positive territory on year over year comparison, up 1.4% in the third quarter when compared to the third quarter 2003. Which was above our expectations. You might remember that we expected when we were talking about the third quarter at the end of last quarters conference call that we were same levels at 2003. We've actually ended up about a percent and a half higher than that. These [INAUDIBLE] tonnage trends have continue nude October and we expect Roadway Express to achieve fourth quarter year over year tonnage per day growth in LTL of about 5%.

We are really pleased with progress at Roadway Express. The team there continues to focus on margin improvement while working effectively toward a balanced approach of increasing volume and price. Let's talk quickly now about New Penn. New Penn continues to deliver impressive results posting a third quarter operating income of 10.3 million. That's a 72% increase from last year. They remain very effective at securing profitable business as reflected in the third quarter operating ratio which was a pretty solid 85.4. This is also a significant improvement over last year where you had an operating ratio of 89.3. So four-point improvement in operating ratio.

Revenue of 70.7 million was up almost 26% from the third quarter of last year. That's a 21.3% increase in LTL tonnage and a 2.3% improvement in yield excluding field as you are fuel surcharge. New Penn fuel was up two-point yield was up 2.6% avenue of after adjusting for changes in mix. Margins up about 30% so they've didn't a nice job of bringing that incremental business to the bottom line. The team has prudently large influx of this business while maintaining excellent servicing on time deliveries in the third quarter or 97%. So they handled the business very well both in terms of incremental profitability and maintaining excellent service.

Finally in Meridian IQ third quarter results were consistent with our expectations and favorable trends that we talk about in recent quarters. Revenue of 57 million increased by 70% compared to the third quarter of last year due at a combination of organic growth and acquisition. When compared comparing to just last quarter revenue increased by 6.4 million or 13%. Operating income at mere rid I didn't IQ was 1.1 million, a very significant improvement over last year's income of 600,000. So to summarize all our business units delivered strong financial performance in the third quarter. We are pleased with the operational execution as well as the progress of our synergy efforts.

We've said that we believe we can deliver this business at an operating ratio in the low 90s, as I said, and we are well on our way to that objective. Our plans remain on track for the next phase of synergies. We are targeting another $100 million of synergy on cost side in 2005. Now I am go together turn it over to Don to talk a little bit more about financial highlights.

Thank you, Bill. For the third quarter consolidated revenue of $1.77 million, operating income of $120 million EPS of $1.38 per share we expect to deliver strong full year financial results. In addition to these financial measures we remain focused on return on invested capital and debt reduction.

Our return on capital is running at a higher rate than we originally anticipated at this point in the year. This is a direct result of our margin improvements combined with lower debt balances. We still expect to receive our 10% cost of exceed our 10% cost of capital by the ends of this year a significant accomplishment after just one year of doubling the size of our company. We were able to reduce our debt by $64 million during the third quarter while still funding expected pension contributions of 42 million. At September our total debt was $728 million, reduction of 181 million since year end.

This obviously exceeds our previous guidance of 150 million debt pay down for this year. Our current cash flow projections we now expect to reduce debt by around $200 million in 2004. At September 30 our debt to cap ratio excluding available cash was at 38%. This represents a 7.4 percentage point improvement since year end and puts us near our targeted level. And we are about six months ahead of what we expected to be. We have further debt reductions planned and we are evaluating the best use of the additional free cash in the future.

This could include any combination of reinvesting in the business, making further acquisitions, purchasing stock or paying a dividend. During the quarter we replaced our secured credit agreement with a new five-year, $500 million unsecured credit facility. The unsecured facility provides more favorable terms and greater flexibility in running our business. It is also allowed to us increase the capacity under our asset backed securitization facility which allows us to borrow at low rates.

We expect to recognize an annual reduction in interest expense of around $4 million after tax or eight cents per share, from reduced facility fees and debt amortization costs. The reduced expense in '04 is about three cents per share with mostly benefit the quarter and was included in the guidance we provided last night. Our third quarter income statement includes a one time non-cash charge of $18 million for the unamortized debt cost in the original secured facility. After taxes this charge is about $12 million over, or 23 cents per share.

As you probably are aware, on September 30, the emerging issues task force, EITF, of the Financial Accounting Standards Board, reached a final conclusion on the accounting for contingent convertible notes. As we expected, the EITF stated that companies should account for potential EPS dilution from the notes under the if converted method, regardless of conversion triggers. You should refer to our October 19th press release for further details. After evaluating our options, we have decided to do offer the holders of our contingent convertible new notes with a net share settlement feature. This means upon conversion, instead of settling the notes entire until stock, we will settle the part of value in cash and the excess value in stock. The net share settlement feature changes the dilutive impact of the notes because it would not only include the stock component and dilution calculation.

Instead of a 9.6 million shares of dilution under the converted method, we estimate the net share settlement feature would only be about 1.3 million shares, assuming our stock price is $48 dollars per share and all current holders exchange the notes. This means EPS dilution would be about 3% instead of 13% under the converted method. In our fourth quarter guidance, we have included between 3 and 4 cents per share for fees associated with the exchange offering. 48 cents. We expect to file an escrow with the SEC in the next few days and plan to complete exchange offer by the ends of the year.

The net share settlement feature is consistent with how we view the contingent convertibles. We believe the economics are in the best interest of our shareholders and will in no way limit our strategic flexibility. I will now turn it back to Bill for closing remarks.

Thanks, Don. I am going to conclude our guidance by providing guidance for the fourth quarter and as a result of that obviously the full year. In the fourth quarter we expect to earn between $1.17 and $1.22 per share which includes approximately $25 million of cost synergies and also includes the absorption of that three cents per share in associated with the fees in association with that convertible issues. Full pains is increased to $3.90 per share to $3.95 per share on the strength of our third quarter performance and our fourth quarter expectations.

Our fourth quarter and full year guidance includes the legal and banking fees I said about three cents per share to complete the exchange for our contingent convertibles. The guidance does not include the potential dilution that Don talked about from the conversion of those converts. Obviously this is strictly an accounting change and has no impact on the underlying strong performance of Yellow Roadway. We still expect our 2004 consolidated revenue to be about 6.7 billion. Our updated interest expense for the full year is expected to be about 44 million. And we still expect full year tax rate of about 38.5%. We now expect our 2004 gross Capex to be about $210 million.

We remain focused on our top priorities which you may recall includes focusing on the customers and service quality and operational excellence, continued investment in our full portfolio of brands, further market growth and penetration of premium services, and continuing to achieve significant synergy opportunities. With that we will turn it over to the moderator for questions.

Ladies and gentlemen, as a reminder press star then the number one on your telephone key pad for any questions or comments at this time. One moment, please, for our first response. Our first question comes from Edward Wolf with Bear Stearns.

Good morning, guys. I don't know if you're aware of this but it sounds like you are underwater, it's very hard to hear you at least for us throughout the conference call.

We apologize. We have a new sound system here. We will try and speak up a little bit.

I wanted to make sure it was a head up for you more than anything else.

Thanks.

Just a quick follow up on the guidance just to make it real clear to myself, the range of 117 to $1.22, what you're saying is on an operational basis that three sent the range is 120, to 125?

That's right if you excluded that 3 cents from the C. conversion.

But not the dilution, which will probably be an '05 event any way it looks like.

Right, exact July in terms of I heard you say that you're expecting Roadway's tonnage within your guidance up about 5% in the fourth quarter?

That's correct.

Did you give a similar number or if not would you for yellow.

It will probably be consistent with the trends we are seeing in the third quarter.

Can you talk about those trends as we went through the quarter between July, August, September and now October at yellow and at Roadway?

Sure. At yellow we had kind of a very unusual July which was beyond our wildest expectations and then August and September were more consistent with what we would have expected. At Roadway we saw continuing strength throughout the quarter. So every month has been better than the previous month and October is running about 3% ahead of the previous year at Roadway Express.

Okay, so in terms of a fair tonnage number for yellow, you know, 5% or so convertible senior note?

I think it will probably be a little less, Ed, because yellow has tougher year over year comparisons. As you'll recall last year around the third quarter we started to see the economic recovery at yellow and so I think the year over year comparisons will be a little more did you live for them so it probably won't be quite as robust as Roadway.

Okay. Okay, talk to -- your goal was [ECHO, BAD AUDIO] do you think that improvement you are seeing continue consistently both the that's going to change?

No, I think that in a good economy we can feel confidence about running this business in the low 90s. I don't think we said 90 yet but in the low 90s and we haven't seen anything that would change our mine there. We still think that that's very doable. In fact we have more confidence now that we are down in that 93 area.

And do you have any change off of your guidance of 100 million of [INAUDIBLE] cost savings in '05 over '04 I don't.

No, we still feel really good about that next 100 million. We have lots of plans that are already in place to get that next 100 million.

Okay. Can you talk a little bit about the yield and the pricing, maybe what the yield at Roadway and Yellow are, give or take some mix issues in fuel issues, underlying pricing at these companies.

Yeah, I think we've seen pricing get firmer every month. The 4.5% or so that was generated by both Roadway Express and Yellow transportation is I think is good reflect of the fact that pricing is continuing to firm. So we think that the pricing environment is going to continue to be very strong and as we work our way through the remainder of the peak shipping season here in 2004.

But if you netted our can you talk to what the real kind of pricing piece of this?

I think that we gave you the excluding fuel surcharge numbers but I can tell you that those numbers excluding fuel surcharge are higher than historically we've seen. The 4.5% net of fuel is a real number in both companies.

Okay. And directionally when do you expect to take your next rate, I mean, is this a July event going forward? And you know, do you think this accelerates, do you think you hold this, do you think this diesel rates from here?

Well, first of all, half of our business is contractual so we are constantly talking to customers when their renewal date comes out about new contracts and a big piece of that of course is the pricing discussion. In terms of general rate increases we never make that decision until we get to the point where we are ready to do so and we are a long way from that. Excel rates.

Are you seeing any difference between the longer haul, is pricing firmer than longer than than regional for instance, are you seeing any difference in your lanes in terms of pricing?

No, we really haven't seen any difference in either the demand level or in the pricing environment in any of the segments. July and on any primarily guidance for Capex at this point for '05?

Ed, not at this point, I mean I think we are looking at trying to manage our Capex win a reasonable band as we've indicated to you before.

We are hearing most of the LTL carriers taking Capex guidance up. Is it fair to say it's going to go up, it's just a matter of how much?

No, I think that you can see assume that our gross capital next year will be around the 200 million range again. We are continually improving our return on assets so we don't see a need for any big bubble in Capex.

Because you mentioned it, how about capacity? It feels like yell slow probably getting closer. Can you talk about how utilized the network is and what that means if it is more utilized going forward for margin and for growth potential?

Sure. You know, as we fill up the network at Yellow Transportation we got pretty aggressive in our customer mix management and traded off some volume for higher margins in quite a few cases. So we talked about the fact that we were going to do that in the third quarter and we did execute that very well. We are running close to capacity at Yellow Transportation, although we still have a little bit of room. At Roadway Express we've got a little bit more capacity just because of the starting point there.

Okay. Thanks a lot for the time, as always.

You bet.

Our next question comes from Gregory Burns with JP Morgan.

Hi, guys. Wanted to -- Bill, wanted to clarify a couple thing you said, wanted to make sure I heard it right because the acoustics weren't the best.

Hurricane impact -- did you say 3 to 4 cents. Three to four.

By the way, can you hear us better now?

Yeah, a little bit.

Okay. So that clears up that. I'm wondering what the major buckets are going to be for the synergies that you're targeting next year? Can you just list sort of the two or three largest buckets there where you are going to get the savings?

Sure. Network optimization is probably one of the biggest buckets, and that does not mean integrating operations but it does mean taking best practices from each company and using those in the other company to improve the network efficiencies. So that's one big bucket for next year. A second large bucket would be in the maintenance area, where we've got opportunities there to do some combinations or from a maintenance standpoint and a third area I mentioned would be technology where we've integrated our technology organizations now and our, in a position where we can take some cost out there as well.

And what cooperation if any does the maintenance and the network optimization require from the Teamsters?

We really can handle most of that through attrition, Greg. We've got a certain level of attrition every year so it's not a matter of really needing to get a lot of agreement from the Teamsters there to do what needs to get done.

Great. Thanks a lot, guys.

You bet.

Our next question comes from John Barnes with CSFB.

Good morning, guys. Bill, you talked a little bit about Yellow transport improving the quality of the freight mix as you got closer to fill the network. Filling the network. I would say the same question as the was asked a little while ago. If you are you be Luke are looking at chasing out some marginal freight in your business where are you in that process, I don't think you have as far to go as they do but everybody has some so where are you in that process and, two, if had you to grade your freight both at Yellow and at Roadway on your normal report card A. to A., A. to scale where do you think the grade would come out on both networks freight mix right now?

In terms of the mix management that's something that we never stop. So that will continue forever. I think we are in really good shape at both companies. If I had to give us a grade I would say we probably are in the B. plus kind of area.

Okay. Let's see. In terms of the remaining dilutive impact of the company company C. O. C. O. And I know the vast majority of that dilution has gone away but looking at a pretty good capital situation, really good cash flow situation does it make sense to buy back enough stock to offset the remainder of the dilution? I think the estimates are like 1.9 million shares. I mean, you've got that kind of cash flow, does it make sense to start looking at that?

It's certainly something we are going to look at, John, as we approach the ends of the year. We are going to have excess cash. We should be back into our zone of debt to cap ratio somewhere in the mid 30s. So it does give us a high class problem in terms of what we wanted to with that excess cash. One of the options would certainly be stock repurchase. We've also been looking at thing like a dividend and as Don mentioned, there's also an opportunity if a great looking acquisition came along we would look at that. So we will be looking at all those thing as we approach year end.

In terms of listening to some of the competitors both on the national and on the regional levels and I guess back to Eds question about everybody raising Capex targets for 2005 at least preliminarily, as you sit there can you concerned at all to hear that? We heard the who arear stories of the mid 19 minutes where everyone turned on one another and capacity was out of balance and pricing took a hit. You are enjoying some of the best pricing environment you ever had. Are you worried that people are starting o to do things irrational on the capacity side?

I don't think so. It's been so long since some of these companies have invested in infrastructure that it would make sense at some point for them to do that. But I really think most of the bad actors are out of the industries. I think we've learned a lot of allegations over the last several years. I'm lessons. I'm not really concerned about that.

Okay. I have a question Jim Richies way because we've been so focused on Roadway for two to three quarters I can't remember the last time I heard the Meridian question. Out of curiosity can you give us an update on where that business stands and what does the bid pipeline look like as business has picked up momentum?

Sure. The business continues to improve substantially quarter over quarter. As we mentioned the growth rates are 70%. The earnings continue to grow at a higher ratio than the growth, than the revenue growth is. So we are very satisfied be come Tim with the growth and the sources of that growth thus far. The pipeline remains very strong. Both on the contract logistics side as well as the international forwarding side. We are very satisfied with both performance levels. We made some nice investments in the marketing side to continue to keep those pipelines full so we don't have any valleys in the growth and it just continues to grow on that trends. So overall we are very satisfied with the direction that we are heading and the performance thus far.

All right. There have been a number of acquisitions done in the content logistics space in recent months. Are you beating the Bushes looking for the same opportunity or are you just comfortable growing it organically right now?

Well, we will look at opportunities to make acquisitions where they make sense so I would say that we've still got a lot of thing on our radar screen there.

And lastly, have you had any success yet, Ed, some of the cross-selling opportunities between Meridian and Roadway? I know it's something you tried to explore with control low but have you had the opportunity to start that process with any of the Roadway customers?

Actually what we've, we haven't started with Roadway yet by design. We've been heavily integrated with Yellow Transportation and as we went there was the acquisition we wanted to make sure that Roadway got their feet on the ground and we are very comfortable operating in a new [INAUDIBLE] we purposely have kind of stayed out of the way until they were ready to invite us in to start talking about what we are do to work closely with their sales organization and their customers and that has started in the last 30 days or so. And we are in the planning process for 2005 as to how we will move forward and work closer together.

Okay. All right. Guys. Nice quarter. Thanks for your time.

Next question comes from Jason Seidl with Avondale Partners.

Quick question pertaining to Roadway's results in the quarter. Obviously very impressive. But, you know, Roadway is more exposed to the retail side of the business and we heard some shaky thing about the retailers in the quarter. Can we assume that Roadway was taking back some of the market share it lost at the end of last year?

Was the question taking back some of the market share? Yes.

I think that our quarter over quarter trends have been positive. We expressed to you at the end of the quarter that we expect it to be back at a break even tonnage level in the third quarter. We improved over that projection by 1.4%. And I think in the second quarter we were talking about maybe 4% tonnage improvement in the fourth quarter, now we are looking at at least 5% tonnage improvement. So our retail business remains solid. We are comfortable there. There are always opportunities that we are looking at but I think that our, we are pleased with our tonnage growth, the trend is good.

As are we here. A question on New Penn going forward, on the U.S. freight ways calls they said they were ahead of plans with their expansion in the Middle East northeast. They did about $3 million in three-week. Have you seen any pressures in the northeast with New Penn as pertains to who will lands entry?

I think the way it structured Holland into the northeast it's more northeast to midwest market push that they are making and New Penn's real expertise is in the overnight northeast market so their structure really does not put them in a very competitive situation with New Penn.

Fair enough. Thanks a lot, guys.

You bet.

Next question, Richard Hayden with Omega Advisors.

Could you help me better understand cost synergies? You said you exit from this year with a run rate of 100 then you have potential of another 100 in '05. How much, can we just take '05 by itself, how much do you think you can capture in synergies in that period?

Another incremental, probably 50 out of that 100.

So we have the carry over plus 50?

Right, 150 total.

In he is '05.

Correct.

Big number.

Yeah.

Real big number. Okay. Five. Second question. If you just take your earnings estimate for the fourth quarter and assume another $50 million in debt pay down will you ends up year end with roughly 36% debt to total cap own a GAAP basis or book value basis. So you are at that level that you suggested. Is it fair to assume that looking at '05 that you will have somewhere in the area of 150 to 200 million in free cash flow?

That's about right.

That provides some interesting opportunities.

Certainly does.

Okay. Just kind of verifying those numbers. Thank you very were much.

You bet, Richard.

Thank you very much.

You bet.

Again ladies and gentlemen star one for any questions or comments at this time our next question response comes from Jack Waldo with Stevens incorporated.

Nice quarter. I had a couple questions. One is your stock price has done real well this quarter. It seems like at this point the last couple of years we start talking about incentive plans for you management guys and how that will impact the fourth quarter results. I'm guessing that's factor nude your guidance.

Yeah, we have no issue this year.

No issue at all, even at Roadway as well?

No issue.

Could you give us an update on the, your progress in the regional markets?

Sure. Yellow transportation is still moving toward entry into that market sometime around the ends of the year.

Are you going to do it kind of on a pilot test basis or do it in a big way?

No, we will start out with a pilot and go slow and make sure that we've got it right.

And is Roadway Express' focus still going to focus on the regional through New Penn?

Yes, that's right.

Okay. Then last question on the hurricanes, it looks like the impact was fairly severe not on a percentage basis but just on an EPS basis. Do you think that compared to some of what your peers are saying do you guys think you might have a better IT system to be able to identify these type of issues or?

Well, I think that we've got a very good way to measure the impact of things like hurricanes and having four in a row is probably something we never experienced before. But we feel pretty confident we've been able to cull out the impact that had on our earnings. But as someone once said this is an outdoor sport but realize that that's part of the game here.

I understand. Congratulations on a good quarter.

Thanks.

Gentlemen, there are no further questions at this time.

Okay. Thanks for joining us. We will talk to you at the end of next quarter.

Thank you, ladies and gentlemen, for participating. You may now disconnect.