Q4 2019 Earnings Call

Greetings and welcome to the Allied motion technologies Inc. fourth quarter 2019 financial results at this time, all participants are in a listen only mode.

<unk> answer session will follow the formal presentation.

And then once you require operator systems during the conference. Please press Star Zero on your telephone keypad. Please note. This conference is being recorded.

Now I'll turn the conference over to your host Gregg Mollins Investor Relations you may begin.

Yeah. Thank you and good morning, everyone. We certainly appreciate your time today as well as your interest and Allied motion joining me on the call or Dick Warzala, Our chairman, President and CEO and Mike Leach, our Chief Financial Officer.

Taking Mike are going to review, our fourth quarter and full year 2019 results and provide an update on our strategic progress in outlook after which we'll open it up for QNX.

Should have a copy the financial results were released yesterday after market close if not you can find it out or web site at Allied motion Dot com.

The website, you'll also find slides that accompany today's discussion if reviewing those slides. Please turn to slide two for the Safe Harbor statement.

As you are where we may make some forward looking statements on this call during the formal discussion as well as during the Q and <unk>. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what I've stated on todays call. These risks uncertainties and other factors are discussed in the earnings release as well.

I was with other documents filed by the company with the Securities and Exchange Securities and Exchange Commission you can find these documents on our website or it FCC dot Gov.

I want to point out as well that during today's call will discuss some non-GAAP measures, which we believe will be useful in evaluating our performance you should not consider the presentation or this additional information in isolation.

Or as a substitute for results prepared in accordance with gap, we provided reconciliations of non gap to comparable GAAP measures and the tables accompanying the earnings release and flights with that please turn to slide three and I'll turn it over to deck the began Dick.

Thank you, Greg and welcome everyone.

2000, Nike with a year, which we made significant progress towards achieving our long term strategic goals and objectives.

Despite the continued softness in Europe, we once again delivered above market growth through effective execution of our one allied strategy.

Fourth quarter revenue was up 19% overall, and 10% organically driven by strong demand at our aerospace and defense and vehicle markets.

And Andy specifically the advancement of our sales team has been driving these <unk> results as we further penetrate applications that require precision solutions from the ongoing electrification of defense vehicles.

Well your revenue also grew 19% to a record 371 million and was supported by 9% organic growth.

We continued to make progress towards further diversification of our business with measurable growth at our aerospace and defense and medical markets up 33% and 19% respectively.

And medical we're benefiting from the overall growth at our core markets and increasing our share by adding new customers and our overall content with existing customers.

Further expansion and execution of our business operating system.

Allied systematic tools or E. S. T was a key component to our margin expansion at both the quarter and full year.

As we drive a higher level of continuous improvement in all areas of the company around quality delivery cost and innovation.

Currently the full year benefit of our T.C.I. business strategically expanding our addressable market. It was a strong contributor to both improvements in both gross margin and operating margin.

As a result of the enhanced margin profile, we achieved strong bottom line results with fourth quarter net income up 32% and the full year, reaching a record level of 17 billion.

Cash generation with solid during 2019 as we almost doubled the cash provided by operations compared with 2018.

And we use that capital to reduce debt and fund expansion initiatives to support both current and future opportunities.

Turning to slide four.

We're also excited about our recent acquisition of that I have a controls group as we continue to build out our ability to leverage control motion solutions in a wide range of markets.

First off I welcome the entire I'm dynamic control seem to Allied and we are very excited about our bike bright future together.

The strategic rationale for this acquisition with compelling.

They have a strong and very experienced electronic and software engineering design team that's significantly increases the available critical engineering resources within Allied.

Their product suite of solutions will further strengthen our medical market position around patient mobility rehabilitation.

And enables us to further develop higher level solutions with a better electronics across our other major market verticals.

From a financial perspective dynamic is expected to approve our overall gross margin profile and to be slightly accretive for the year.

The integration of multiple system elements that are designed and manufactured by ally.

Leveraging the strength of our company, while also improving the overall value proposition for our customers.

And with an expanded global marketing manufacturing footprint, we're further enhancing the value proposition.

With the ability to service customers within the geographic markets. They currently reside.

With that Mike, Let me turn it over to you for a more in depth review the financials.

Thank you Dick we provide an overview of our top line on slide five.

As a reminder, our results include <unk>, which we acquired in December 2018.

Fourth quarter revenue was up 19% to 87.9 billion, despite an FX headwind and reflected double digit digit growth in a d. and vehicle.

Dick touched on the specific drivers Randy.

Our vehicle market was also solved in the quarter as we saw higher demand in power sports and continued to benefit from a legacy commercial automotive program in Europe.

We achieved organic rose 10% in the quarter.

Reflecting new customers and applications as well as strong macroeconomic drivers in the United States.

2019 revenue reached a record 371 million.

Up 19%.

It was supported by 9% organic growth.

The ban was broad based.

With growth in all of our major served markets and we saw particular strength within a Andy and medical.

Domestic growth also continued to far outpace the general industrial softness in Europe, which is reflected in the increase of sell to U.S. customers to 57% of total sales.

Hi, six shows the change in our revenue mix by market for the full year as well as each markets annual growth.

As we've talked about the path.

Growing our Indian medical markets are important element of our strategy to broaden the scope and diversification of the business.

Keep in mind at the T.C.I. business can be found in industrial and distribution and accounts for the 157% growth and distribution.

Do you see I, it's performed as expected as headwinds in the oil gas market had been offset with nice growth in the water treatment and age back markets.

New product introductions have also been encouraging.

There recently introduced Pete you connect our software communications interface that can receive command instead its data for industrial devices remotely.

As depicted on slide seven.

Our gross margin expanded 90 basis points for the quarter and year to 30.1% 30.3% respectively.

These increases largely reflect our continued productivity initiatives higher volume and enhance mix.

As we've discussed on previous calls the supplier issue that impacted us during the full year 2019 remained a headwind as expected.

We estimate the fourth quarter impact on gross margin to be approximately 40 basis points as we were still working through the remaining inventory.

There'll be some lingering impact into the beginning of 2020, we expect to exhaust the remaining inventory in the first quarter.

As a reminder, we only expect to get back around half of that negative impact given the pricing terms with the new supplier.

Moving on to slide eight you can see the impact of our strong operating leverage is past investments in our infrastructure now supporting higher volume.

Operating costs as a percentage of sales declined to 100 basis points to 23.6% for the quarter.

You can see the added leverage demonstrated the gionee and de expense summaries.

While operating cost and expenses did increased 50 basis points to 22.4% of sales for the year.

Those were largely related to additional personnel to support our growth.

An incremental intangible asset amortization related to the T.C.I. acquisition.

Most importantly investments in our growth threat levels that can support and provide for expanded operating leverage in future.

Interest expense increased the 1.2 million in the quarter and totaled 5.1 billion for the year as we took on debt that funded the GCA acquisition.

Turning to slide nine you didn't see our bottom line results.

Net income increased 32% to 3.5 million.

Were 37 cents per diluted share in the fourth quarter.

And was supported by a lower effective tax rate due primarily to additional R&D tax credits.

The effective tax rate for the year did increase to 28.6%.

Which reflects a 433000 an increase in the income tax provision in the third quarter 2019 related to a tax assessment in a foreign jurisdiction for a previous acquisition.

Despite that our 2019 net income increased 70% to a record 17 billion or $1.80 per diluted share.

Excluding the tax item another atypical costs adjusted net income for the year was 17.9 billion up 10% or $1.89 per diluted share.

Accordingly, I encourage you to review our non-GAAP disclosures and reconciliation tables that are provided in the release and slides.

We anticipate the effective tax rate for fiscal 2020 to range between 27 and 29%.

Adjusted EBIT for the quarter was 10 million were 11.4% of sales.

Full year adjusted EBITDA increased 24% 47.5 billion, while adjusted EBIT margin increased 40 basis points to 12.8%.

We use adjusted EBITDA as an internal metric and believe it as a useful in determining our progress in operating performance.

Slide 10, 11 provide nobody group, our balance sheet and cash flow.

At year end told that was 109.8 million down 12.8 million from your end 2018.

Net of cash was approximately 96 million were 44.7% net debt to net capitalization.

We generated outstanding cash flow from operations of 17.5 million in the fourth quarter, bringing the 2019 totaled 34.5 million.

This was used in part to fund our annual capital expenditures of 14.9 billion.

We expect our fiscal 2020 capex to range between 15 and 18 billion.

Which primarily consist of investments for new customer project.

Next generation off road vehicles during capabilities and completion of manufacturing lines in our China facility to support the vehicle market project wins.

2019, even turn inventory turns were 4.1 times.

An improvement from last year as we've done a better job balancing our strong south pipeline with a tight supply chain.

And our Dsos at 46 days, a 10 day improvement from 2018.

I'd like to add that we announced in February that we secured a new 225 million senior secured revolving credit facility within according feature in allowing expansion up to 300 billion.

This refinancing expanded our borrowing capacity nearly 30%.

Reduces cost of debt.

It enhances flexibilities extended <unk> continued to drive our growth strategy.

We will however continue to prudently manage your balance sheet as our capital allocation strategy has not changed.

Our primary focus is advancing internal inorganic growth initiatives.

As well as paying down debt to reload for future acquisitions.

A dynamic controls purchase price was 15 million plus square cash acquired.

It was funded with borrowings under our revolving credit facility.

I'll now turn the call back over to debt.

[laughter].

Thank you Mike.

That's depicted on slide 12.

All your orders grew 9% to 366 million.

And absent unfavorable FX orders would have been nearly 373 million a very solid level given the softness in Europe.

Backlog at year end was approximately 125 million.

About 80% of our backlog is expected to convert in the next six months and most of the remaining over the next 12 months.

As a reminder, just a nominal amount of the 225 million.

And the several vehicle market Awards, we previously announced are included in our reported backlog numbers.

We have begun shipments at very low levels for the first of three seven year Awards and we expect production for these projects to wrap up this year and through 2021.

It is worth noting like many others, we're paying close attention to developments relating to the Corrado virus.

First and foremost we're focused on the health and safety of our employees.

We are pleased to report that at this time all of our employees and families are safe and healthy.

Dr. Sodium chango, China was closed for spring festival, when the outbreak in China occurred.

While we were delayed from reopening for a couple of weeks that facility is now fully operating.

I would also note that our new facility in Suzhou, China that came along with the dynamic controls acquisition also experienced the same type of delays in reopening.

From a supply chain perspective, while we have not yet seen any significant impact we are anticipating some challenges as we move through our second quarter.

Encouragingly the supply chain within China has gradually come back and appears to be operating at or near normal efforts at this time.

As of now the potential impact to our first quarter is relatively small and we'll continue to closely monitored this evolving situation as we move forward through the year.

Most importantly, the.

The fundamentals of our business remains strong.

And while there will be some headwinds to contend with we believe we are well positioned and confident that we can continue to advance our strategy over the long term.

With that operator, let's open the lines for questions.

[noise] sure at this time will be conducting a question and answer session. If he would like to ask your question. Please press star one on your telephone keypad confirmation tone will indicate your line is into question in queue. You May press star to if he would like to remove your question from the Q4 participants using speaker equipment, a maybe necessary to.

Pick up your handset before pressing the star Keith I'm only please while he poll for questions.

[noise] [noise] and our first first question is from Greg Palm from Craig Hallum.

Please proceed with your question.

[noise] great six.

Really nice way to end up pretty successful 29 chain. It's good to have at least a little bit a good news this morning, and wake of all the negativity out there. So so congrats and good quarter.

Thanks, Greg.

So I guess, starting with the actual results I mean, I feel like pass. This question almost every quarter, but organic growth of 10%. So I mean, it's it's impressive it's clearly a much higher than and market. So I mean, where do you see in the most success right. Now is it is it products is it end markets I'm, assuming that's a combination of.

You know share gains new customers, but maybe you can elaborate a little bit on that.

Yeah, I think Greg it's a combination of several.

Different things first off I mean, as you look at the market markets themselves that we've talked about a we're experiencing.

Ah games that are above the overall market.

Increases.

I think yeah, you heard us talk about for many years about.

Working on new projects says that we're in the pipeline that you know take.

I have a gestation period it takes time for them to come to its into actual production and get delivered so I think it's a combination of those items that have been worked out for several years.

And again, taking some market share.

And in certain customers Oh, Yeah, I'll say in particular I won't get into the details of the customers, but where we are.

Supplying a particular product, let's say a motor we've all had some success in supply additional components that we have at our product portfolio. So that to US is continues to be a well so strong opportunity for growth in the future because we can gain more share in current applications just by adding yeah.

More of our technology just to the solution.

And as we've also said in the past that.

It was while there are challenges with that getting.

Customer sometimes to accept that the they're relying more bar upon you or in this case about allied providers solution. It also.

The tighter integration has proven to improve quality reduce size or and hopefully over while overall or reduce the cost with the customer. So that's that's our emphasis and focus and we think that that's a certainly driving our success across the broad range of markets.

Yes, that's helpful I mean, what.

What any nor are we in that sort of transition to more of a I'd call. It a full solutions provider I mean, I don't know if you can give any commentary on you know percentage of customers that have made the switch or what the potential opportunity. It's just trying to get a sense for or is it still early days and they're still you know a lot of.

And he's out there.

Well.

Let's talk about a little bit will throw in the acquisition here that we just made and bringing that to light here because.

You heard us talk about their expanding our engineering resources, especially around electronics and software. So internally over the last few years, we've made significant investments in that area that we recognize.

That the electronics and software communications are all very important part of being able to provide that total solution.

Oh with the acquisition of dynamic controls that gives us significant core unit volume, which drives cost as well as doubles, our engineering capacity and what we see as a very important Oh electronics and software strategy. So I will say to you know that were in early.

Because this is it's it's evolving the company's evolving.

And.

You know, where we have now a strong.

Core base of volume and not <unk>, you can classify as somewhat standard product that we can leverage I think that's got to be key to our continued success.

And well dynamic controls was focused in particular, the medical mobility and rehabilitation markets core technology. They have we're very excited about because it engages other aspects that we can apply in markets, where currently serving and accelerate.

Our opportunity to penetrate those markets in addition.

Given that their full electronics.

They didn't Sally electromagnetics, they didn't sell Gary.

Didn't have that well I think it's not hard to figure out that.

We say, we want to add more value to the overall solution.

We have a strong platform all voters gearing and so forth that we feel can also be applied in the medical and rehabilitation and mobility and rehabilitation markets as well. So I think early innings is how I would classify it lets call it third inning.

And if that helps you at all.

And I think it's just a continued evolution as a company that will keep driving towards generating.

Higher value solutions, more integrated solutions, leveraging our footprint or around the globe.

And certainly you know the integrated solutions are key element.

That's correct.

You know given your [noise].

Switching gears here, you're one of the so later reporters here, so I feel like you've maybe got a little bit better idea on what's going on out there from an end market demand standpoint, I mean, you gave a little bit a color around you know some near term impacts you know supply chain and you know factory start ups, but.

What's your sense of how that impacts kind of the near term revenue results I mean, what do you what exactly are you seeing out there from an end market standpoint.

Yeah, there's two things that I think I'd like to point out first off.

We're not going to be immune you know as well as everyone sees what is unfolding in the in the global markets today.

There's certainly the man is gonna be driven down is a and I think we're being realistic about it say.

We're not going to be immune from that we see it a little bit of the impact and I'll say, it's a little bit for first quarter.

I'm, a little bit qualified 3% to 5%, let's call it on topline.

Unless something really crashes here in the next couple of weeks, but.

The.

When you look longer term, there's a couple of things we see the supply chain.

Here's the have returned to a pretty much normal state.

Well the exception that we may start to see certain electronic component art shortages.

And it's too early for us to call that right now.

But that certainly is something that could happen secondly.

What I would caution us on is that while.

We may see strength in our bookings numbers, we have to be very careful and look at that to say our people pumping in orders today to secure supply for the future and when you get into the early stages. That's not uncommon. There you know people are wanting to secure their source of supply.

Hi.

So well.

We we see encouraging signs here, we're talking about things we don't normally talk about you know what I'm, saying, it's their unique circumstances you know we're a watch it closely to make sure that it's not double ordering and things of that nature, but I would suffice it to say, we said minimal impact in the first quarter there will be some impact.

And as we are building our forecast right now further out in the year, we're not predicting a major it back but I think that's subject to change and it's going to be a very dynamic situation that I would not want to really go on Ilim right. Now lets say you know I think you you and everyone else could probably get better guidance is maybe what's going to happen.

Here and then the world markets given the conditions that were facing so.

If it was steady state.

Oh I would be on the phone <unk>, yeah, very upbeat very positive very encouraging because we're going to continue you know and allied and the past when faced with those situations a global markets and a weakness in global markets and no no challenging circumstances, we weathered and very well.

And we will that lose focus we will maintain our course too and we're not going to do anything drastic we're going to continue to you got some great developments and the pipeline some great projects, we're working on and we're going to look at this on a long term basis and so even if the short term.

Does have some glitches, you're not going to see us overreact to.

Yeah, Okay. That's a that's a good message I think I'll leave it there for now best of luck here in the future.

Hi, good correct correct.

[noise]. Thank you and once again, if you have a question you Me press Star one on your telephone keypad.

Our next question is from Brett Carney from Gamco investors these but [laughter].

Hi, good morning, Thanks for taking my question.

Good morning Barney.

Hi, I'm vehicle market it sounds like I'm, starting to get underway at the beginning of 'em shipment from the New award you secured the past few years, what's your sense at this stage talking to customers are they still pretty firm on the date and the production schedule that's been laid out or you know some.

Our ability there might be reevaluated, it could potentially oh, I see the timing or maybe move a little bit from our what's originally kinda contemplate.

Sure.

Well, let's again I I have to put it in perspective, and say that a you know we have deadlines and timelines that were working toward to ramp up.

Ads and deliver at a low volume levels here for production through and through 2021 sort of global market demand goes down you.

You know.

For us in the short term, we're not going to see much in fact based upon our expectations because we didn't have much built in.

And.

If anything you know the demands that going to go away. It will it may get delayed, but again and if it gets delayed into ramps up quickly, but we're positioned to keep the deadlines and timelines that we've committed to and it all yeah. There's no sure no delay and are ramping up and don't.

Delay and the launch that we see at this time, but I certainly go can you would expect that if global market demand went down things they get pushed out a bit but again the impact on us this year I don't see it and the impact because we didn't have much built in that's the reason and next year So little.

Too early to call that but so fortunately we weren't in full production, where all of US other came to a crashing alter something in the it's it's so that's not built into our plans for this year.

Perfect and then if I could sneak in one more just wanted to ask or with dynamic controls got completed now with acquisition Parnell at this point.

By you know could we see a it you expected to be more you know business as usual for allied or we see the company, maybe lean and even more heavily and it five valuations become more favorable and some opportunities you often tracking opera come a lot more actionable say in the you know.

Coming on.

It's very possible, yeah, and I think.

From the standpoint of we've always Ah I shouldn't say always I think that too in the past.

Yeah, we maintained a strong balance sheet, so that and yeah, we had taken actions in advanced here.

Yeah, getting our new credit facility in place a.

Strong cash generation this past year some.

Internal improvement projects that are well underway. So I would say to you that were very well positioned that if the opportunities do accelerate we're gonna be there.

Terrific. Thanks, so much.

Thank you Brett.

And our next question is from Dick Ryan from Dougherty and company. Please proceed with your question.

Thank you.

[laughter] Dick you mentioned, a aerospace and defense and vehicles for Q4 previous couple of quarters Medical was a highlight and obviously did well for the full year, but didn't even go on in the medical side in Q4.

You know anything in particular, I'd say to you that's out of the ordinary what we experienced for the full year. The answer is no. I mean, we've had some I can just say to you that we've had some very exciting wins during the year we've seen.

Volume increase on you know mostly existing projects that we had been designed in the past several years and and we continue to get designed in a new projects that we haven't even seen the results from yet.

Okay, we're very very bullish on that.

You know medical increasing and you know we're bullish on the medical market.

I think acquiring a dynamic controls, which is really medical all medical again in a reinforces that our commitment to that market and I just can't emphasize enough that what I believe this brings to our.

Technology base and resources that are now available to us to really work hard at penetrating even a greater level [noise].

Great. Thank you say on T.C. I with a recent turmoil in the oil market, maybe it's too soon but what could be the impact there or what are you starting to see if anything on the oil and gas impact.

Sure well again, we are as you know we've only on PCI for a little over a year now, but TCR has experienced in the past as a company in factually oil and gas market when things to have a falling so we've looked at that we are we are aware of the impacts.

That they encountered in the past and what it could do and I would tell you. Yeah. That's it's it's fairly significant Tc I, if oil stays with the depressed level. It will certainly have an impact on their business.

For now.

We're protected through the first half of the year. That's about the best I can tell you is that we should not see any it backs based upon what is already in the pipeline and in our backlog.

And depending what happens I mean, it can turn around very quickly.

But we are looking at saying that if it stays at a depressed level it will definitely having it back and we're gonna have to respond in some way.

But right now I would tell you. We're we're good through the first half a year.

Okay and on the legacy vehicle in Europe that a program. That's kinda contributed the last couple of quarters, what's the longevity of that contribution.

Well I want to qualify the longevity of the contribution and the term contribution.

It is a legacy programs that are we acquired along with the Globe acquisition and I will tell you that while it has topline benefit it has very little bottom line benefits. So.

ER and for US, it's a matter satisfying a contract we had side and for a customer we see continued demand in that area, but for US you know sooner.

That gets converted out in the new stuff gets converted into better it's gonna be for our bottom line.

Okay, great. Thank you.

[noise] and once again in Star one assay question and we now have Michael Mccroskey from principal financial. Please proceed with your question.

Good morning, gentlemen.

Good morning, Michael.

And others, good steady [laughter] quarter congratulations.

Couple of things and I apologize I'm light to the conference call and you may have covered this.

With the dynamic control.

Purchase the only financials that really addressed was you know some positives to gross margin and slightly accretive.

Is there a reason we're not talking about what our topline acquisition is their cost swaps that help help me understand the financial.

I've got act others, Yeah. We you know I guess, we just wanted to be consistent with how we've handled.

Reporting of acquisitions or.

The previous the dynamic controls and that if they're not material. Overall, then we don't we really don't put into press release, the financial terms, So and we're just being consistent in that matter now I have no issue, Mike did talk about our purchase price to be in 15 million and top line revenues would be.

We should be double that.

Oh, my apologies, but yeah, we did no Europe. He did mentioned the 15 million I don't think we did mention anything a top line, but have no proud to say, it's about 30 million a topline and as we said it will be slightly accretive to our earnings this year.

Oh, it sounds like one factor there.

Yeah, what the one factor there is that it maybe you did mention you missed this but for US it's really not just the you know the topline and they need to create a piece of it. It is really the technology and the and the resources that are coming along with the acquisition that we feel can accelerate.

Right.

The leveraging up electronics and software into our other markets as well in addition to that.

Leveraging our existing.

Product portfolio within Allied motion electromagnetic.

Gearing piece of it and so forth mechanical.

Into the markets that a dynamic control services. So it is really a great marriage, it's consistent with our past strategy of looking for complimentary technology complimentary markets.

Focused on an emphasis on continue to expand our medical and aerospace and defense pieces. So I think.

Some of this was talked about but as asking the question I would like to reemphasize to us it's as a.

Yeah. This is an excellent win and I think it helps position us well into the future as far as a adding to critical resources that doubles the size of our electronics and software technical group. So that's a big.

Okay. That's helpful.

And can and you touched on this in the past and and just for.

Open site.

The fourth quarter, and I don't even know to call it necessarily seasonality, but can you touch on or go a little more color and into that Lumpiness that fourth quarter seems to present is still I know, it's we're moving towards.

A more of an even quarter to quarter.

Expectation, but is there a way to expand on that just a little bit.

Sure, it's type or like to talk [laughter]. Yeah. So it is not by any means atypical of us to have a lower revenues in the fourth quarter you you're exactly right I would agree with your term. So there is some seasonality to our business I would point predominately toward the power sports market as the the prominent driver.

To that seasonality or it's you know they're going through a inventory de stocking in model year changes and it's it's just not unusual for them again to take less product in Q4. So that's the primary driver between that and that season out of it you see on an annual basis.

I also would add to what Mike said there is that the this year, we did see Europe's often for in the fourth quarter and particularly.

In December or.

But bounced right back in January to North Malay near or at normal levels.

Well again, thank you all poor on behalf of my accrue.

Yeah, Allergists, so consistent and it's really appreciated.

Yes.

Thank you.

Thank you good here from me Michael.

And we have reached end of our question answer session and I won't call ill turn the call over to management.

Well. Thank you everyone for joining us on todays call and for your interest in Allied motion.

As always please feel free to reach out to us at anytime and we look forward to talking with all of you again after our first quarter results.

Thank you for your participation and have a great day.

Operator that a lender call. Thank you.

And this concludes today's conference and you may disconnect you lines at this time. Thank you for your participation.