Q2 2022 Quantumscape Corp Earnings Call

phase one engineering line is to improve the quality, consistency, and throughput of our separator production. AT&T

and the first goal of our phase two engineering line.

is to do the same with cello assembly.

We're pleased to report that our Phase II engineering line is now operational and cell assembly has been transitioned to this line.

Located at QS Campus.

The Phase 2 line benefits from 6 times more floor space for self-subway, increasing flexibility and moving to area of other process. The Phase 2 line benefits from 6 times more floor space for self-subway, increasing and moving to area of other process.

Extend automation and inline metrology.

and add more cell assembly lines as we continue to scale our production.

This quarter, we achieved the peak of greater than 5,000 weekly separator film starts.

To improve the quality distribution of ourselves, we've been using much of our separator production capacity, the baseline, the quality improvement I mentioned earlier.

While we don't expect the near increases in starts each quarter,

We retain our goal of achieving peak weekly starts of 8,000 before the end of the year.

On the customer front, we continue to collaborate closely with Volkswagen as we work to bring our technology to market.

Our collaboration with Volkswagen's engineering teams has intensified in recent months.

with regular technical and product development meetings.

The rest of the keys has proved especially valuable as we build competence and mass manufacturing.

In addition to the Volkswagen Group, I have previously announced the use.

but please to report to additional customer sampling agreements without a moriboy ends.

We've now announced agreements with fixed prospective automotive customers.

Global Top 10 Manufacturers by Revenue

to premium performance in luxury armatures.

encompassing both PEOEV and Conditional OEA.

We've engaged with companies we believe provide us with a strategic mix across geographic footprint and vehicle segment.

This breadth of customer engagement gives us confidence that demand for next generation solid state that the metal batteries remains robust across the automotive industry. The cost of the automotive industry. The cost of the automotive industry.

And if we can accomplish our goals, the scope of the opportunity ahead of us remains compelling.

Before I pass things over to Kevin, up you concluding remarks.

This quarter has been both rewarding and challenging.

Despite facing the hurdles I mentioned earlier.

The team has made significant strides in cell development, many statue and customer engagement.

We're grateful for the exceptional focus and discipline the team has shown through the challenges of delivering on a never before realized technology.

and the commitment of our automotive partners to help us bring this technology to market.

We remain focused on our key goal of delivering a 24-layer A sample to the automotive customer this year and look forward to reporting on continued progress in the coming months.

Kevin?

Thank you, Jagdeep. In the second quarter, our operating expenses were $96 million. Our gap net loss for the quarter was $95 million.

This level of spend was in line with our expectations entering the quarter.

Cash operating expenses, defined as operating expenses less stock-based compensation and depreciation were $60 million for the quarter.

For full year 2022, we continue to expect cash operating expenses to be in the range of $225 million to $275 million as we support additional hiring and increase production volumes on our engineering lines.

In line with previous guidance, we forecast AWPX to grow steadily during 2022 and 2023 AWPX to grow modestly from 2022 levels. As we slow our headcam growth rate, we will be back in a few minutes.

reallocate resources from development to manufacturing, and realize gains from investments into automation.

in the second quarter was approximately 28 million.

Approximately 40% of our Q2 CapEx went towards our Phase II engineering line.

40% towards QS0 and the QS campus build-out, and 20% towards our Phase 1 engineering line.

This level of CapEx spend was below our guidance range of $35 million to $65 million as we are actively working to prioritize investment into critical milestones while conserving cash to maintain flexibility through the current difficult macroeconomic environment. Drivers of lower CapEx spend varied by project and included deliberate postponements to refine equipment specifications.

Delays imposed by supply chain factors or technical challenges as discussed in the shareholder letter, realize cost savings, and improve visibility into order times. Delays imposed by supply chain factors or technical challenges as discussed in the shareholder letter letter letter letter letter to provide a better understanding of the cost savings of the cost savings

An example of realized savings was the facility cat-backs to support our phase two engineering lines. In this case, value engineering and in-sourcing construction activities help the specific projects come in below budget. The specific projects come in below budget.

These drivers also impact full year CAPEX projections.

And we now estimate our capital expenditures to be between 175 million and 225 million for full year 2022.

We believe most of the reduction in our forecasted 2022 CapEx spend will now be pushed out into 2023.

Despite the lower cap expend in 2022, we remain focused on achieving our goals for the year, including delivery of a sample prototype cells to a customer, demonstration of a cell format designed to accommodate lithium plating and stripping.

Scale up a peak film start to 8,000 per week and taking delivery of the majority of QS-0 equipment toward the 2023 line start. A chance towards&2 remind Di you about oversight, toward the 2023 line start.

We note that on the last school, there is a distinction between equipment sufficient to allow us to make the first cells on the pre-pilot line.

and equipment required to make significantly higher volumes.

We believe we remain on track with respect to the former, but expect some of the tools required for the latter to be received in 2023. With respect to cash, we spent $79 million on operations and capex in the second quarter.

We now expect to enter 2023 with over 950 million in liquidity above previous guidance of over 800 million.

With that, I'll pass it over to you, John .

Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors and analysts over the Say app in our IR inbox. We received many questions around our timeline. In this quarter, we spent some time discussing that in more depth in the shareholder list. So, Jagdeep, can you give any more color on when our technology will be fully developed through the timeline more broadly?

Yes, John , our goal is to get this technology to market as quickly as possible.

On today's call, we wanted to update our view of the timeline going forward.

Our timeline is gated by a number of factors.

some of which we control and some of which we don't. For example, like other companies, we're always vulnerable to unexpected supply chain disruptions.

There also product and processed development risks.

as well as the need to specify, order, and qualify production tooling.

And subject to these uncertainties, as we said in the letter, we're currently targeting approximately 18 months between the A and B sample. I'd like you to say the A sample and prototype B sample which may use some low volume processes.

And we anticipate a similar time frame to go from B sample to C samples.

However, given the unequivocal demand with these customers, the differentiated performance of our prototype self and the strength of our balance sheet, we believe the opportunity ahead of us remains uniquely compelling.

Okay, great. You know, another topic we've spoken a lot about is the Commetitive Landscape. Someone on the SAAP, this quarter asked, will lithium ion batteries be able to bridge the gap to tell the state over the next five years?

Yes, a relative to conventional lithium ion cells, we don't believe it's possible to achieve a dramatic increase in performance without a change in chemistry. The environments change tremendously, and therefore we try to prove a significant footprint you

We believe our approach based on a solid state-shrown accelerator and an in-stitute form anode of pure metallic lithium can deliver between 900 and 1,000 watt-hours per liter, while simultaneously enabling 15 minute charge. Those are targets we don't believe are achievable with conventional chemistry.

Now, relative to next generation automotive chemistry, such as lithium metal or solid state, we haven't seen anyone show data comparable to what we've published, which includes the ability to run 800 charge-to-start cycles at a one-hour rate of charge, at room temperature and modest pressure, and what we refer to as the gold standard test conditions.

And we've shown data in single, four, and ten there.

But of course we do need to do more work to scale up the high layer counter production throughput. We're targeting 24 layers for our first ASAPLs, which of course we planned a ship later this year. And while we're pleased that we showed early progress on these cells today, I want to note that we're not done with this development.

Okay, great. We had another investor ask the question, does Qonscape need to make perfectly uniform, and totally defect free separators for yourself to work?

So the short answer is no, we don't. In fact, the baseline process we show in the quality improvement section of our letter, which shows a number of non-uniformities, has already produced separators that have delivered industry leading results we've shown so far, including cycling on those gold standard test conditions, as well as repeated 15-9 charge performance.

So the key is knowing which defects matter and which ones don't, and to focus on the former, not the latter. And based on the many years of experience, we've gained with this system and with Solid State in general. We believe we've gained a lot of learnings on this topic, and this is actually a key part of our IP, our intellectual property.

That's it. If you think of the quality distribution as a bell curve, for example, what we're trying to do is shift the entire curve to the higher quality end of the spectrum, because we believe improving the quality distribution of our materials raises the performance.

skill of duty and the reliability of ourselves.

Okay, great. We'll switch gears a little bit now on the next ones for Kevin. We've said that we plan to be strategic around fundraising and careful capital spending in general. What should investors think about our funding and work as a cash run when now?

Thank you for the question, John . We ended Q2-22 with approximately $1.28 billion in liquidity and forecast exiting 2022 with over $950 million in liquidity. With over $950 million in liquidity.

and forecast our cash runway extending through the end of 2024.

This, we believe, provides sufficient capex to complete our second phase engineering and pre-pilot QA zero lines, which we believe will be capable of producing our B samples and initial C samples.

This also includes OpEx to run the lines, generate samples to engage in customer qualification, and continue process development working towards broader commercialization.

To support subsequent expansion of the business, we'd anticipate raising funding between now and the end of 24 and plan to be strategic on the form, timing and amount. And plan to be strategic on the form, timing and amount.

Okay, great. Shaky, some investors have asked how Volkswagen's creation of PowerCo affects QuantumScape and our relationship with Volkswagen.

This relationship with Volkswagen Date Type 2012 stands multiple CEOs, and we've worked with Frank Bloma, who's the CEO of Powerco for many years, including as a member of our board of directors. We have a tremendous amount of respect for Frank's battery knowledge and operational experience, and more importantly, a high degree of trust with Frank. And more importantly, a high degree of trust with Frank.

Given that the core of power coal is the former battery center of excellence within VW, which is a group we've been working with since a inception, we expect this transition to be quite natural.

Okay, great. And then we had two questions come in from Jose Asimendi of JP Morgan, his first question, which technical milestones are you looking to achieve in the next six months? And what has been the largest technical challenge you had to overcome to develop the 24 layer yourself?

Yes, so the most important milestone we're looking to achieve in the next six months is, of course, delivery of the A sample. This kicks off the automotive qualification process and in our view represents a substantial risk reduction to our path forward. Relative to the largest technical challenge we faced last quarter, I would say it was the discovery of the contaminant in our material that we referenced in the letter. And of course, through some great work on the part of the QS and methodology team, we were able to identify the composition of this contaminant.

And this allows us to work to resolve it. Okay, great. Jose's second question was, with regards to Volkswagen and the recently launched new battery company structure, has this changed in any form your collaboration with the firm? Is there any additional color you can provide on the collaboration?

To relative to the collaboration, we've been collaborating more closely with BW recent months with more frequent technical and program manager meetings, but relative to the nature of the collaboration itself, we have an amount that changes.

Okay, thanks so much guys. We're now ready to begin the Q&A portion of today's call. Operator, please open the line for questions.

Absolutely. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star two. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question.

We'll pause here for just a moment to compile the Q&A roster.

Our first question is from the line of Winnie Dong with Dorsche Bank. Winnie your line is open.

ohhu very.

provide a bit more detail on possibly the items that test that you're pushing out, which is a little lower cap expending for the year. This is what kind of supply chain factors, I know you mentioned the technical challenges that you're facing, but what kind of supply chain factors are you considering that's pushing that up? Thanks.

Winnie, thank you for the question. If you compare the annual guidance from last quarter of $325 to $375 million, take the midpoint of $350 and compare it to the current $175 to $225, midpoint of $200, we are seeing pushing approximately the bulk of that $150 million into $23, which is, I think, what you're asking about. For more information, visit www.winnies.com

The primary drivers were the deliberate postponement to refine specification. We had execution buffers in our goals in 22. And while we still target achieving those 22 goals in 22, we have used up much of that buffer. And that has delayed the ordering of equipment gated by a technical development. And an example of that would be some aspects of the self-assembly, which would be gated by high confidence in the proprietary cell design.

Another example would be we made changes in some of our separator processes in the quarter to improve quality and reliability and we wanted to incorporate those process changes into some of our tooling that automates one of our separator processes. And when you combine those postponements and ordering with supply chain headwinds facing the industry, that's what's resulted in our updated capital forecast.

Okay, got it. Separately, I was wondering if you can remind us again what's required to go from A sample to B sample. You mentioned the 18-month timeframe that you're targeting and similar timeframe for it from B to C as well. Could you remind us the steps or what are the paths that you need to accomplish to go from A to B? Thank you.

Yeah, so this is Jagdeep. I can take that one. So, generally speaking, the A sample is whatever the automotive OEM thinks they need to see in order to convince them that the product basically is capable of delivering the functionality they want. So that obviously will vary by OEM. Every OEM will have a different definition of that. The B sample typically represents the functionality in the A sample, maybe a little bit more. Some small tweaks are typically okay.

but it's typically made using processes that are closer to production processes. They can be on smaller versions of production tooling, but they're more production-like than the A sample, which can be completely handmade. And the C sample then has all the functionality, has those production processes, and is actually implemented on the production tooling on which you're gonna produce the production self. So if you think about that definition of a C sample.

then clearly the C sample line depends on the volume of the vehicle that you're trying to serve. So if you're trying to serve a car that makes a million units a year, that will be a very different type of C sample line than a car that makes a million units a year.

just a thousand units a year, right? Because in one case, the tools required are much better than the other case. So the C sample line, the real definition is that it's the line off of which your production cells are coming and how big that line is a function of how big of volume you're trying to serve with that line. The only point I'll make is that, um,

Typically, all these different sample stages have multiple generations. So there might be multiple A's and B's and C's. And what we said on the call here was the very first B sample that we make, which are the prototype B sample cells. They're like B samples, but they're prototypes.

Those could come off a line where some of the process steps are lower volume than others. So that's really some of the other timeline.

Okay, thanks. Thanks so much for taking my question.

Absolutely.

Thank you, Wendy.

Our next question is from the line of Gabe Dowd with Cowen. Gabe, your line is open.

Thanks, and after you're in, everybody, thanks for all the prepared remarks. Jack, maybe if we could just try to hone in a little bit more on the timeline. So if it's 18 months between, you know, A, B, and C, and if we think about A, this year as being...

call it December delivery. So does that put your C sample delivery to late 25 and then

You know, maybe QS1 is then stood up in like late 26 early 27. Could you maybe just help us frame that timeline and then progression to QS1? I guess.

Yes, so we didn't say anything – thanks for the question. We didn't say anything about QS1 in the letter. What we did say, though, on the timeline for A, B, and C is exactly what you laid out. So assuming that the A sample happens as we are targeting at the end of this year, and assuming that the gap between A and B and B and C are what we're anticipating, which is, as we said, roughly 18 months, then you're absolutely right. That would put us into the end of 25 for the C sample. Remember, the C sample, of course, is defined as –

the tools, the specifications and so on, so we can order larger versions of those tools and more of them to be able to turn up bigger lines. The thing you don't want to do is start trying to turn up a higher volume production line before you have all the details worked out of the tooling because that just puts capital at risk and that would be so you don't want to do that.

Okay, got it. Thanks, Adeep. That's helpful. And then maybe just as a follow-up, I know we're kind of focused here on the 24 layer, but I guess I was just curious if the 16 layer, did that hit 800 cycles? And then – and I guess as we are, maybe – Okay, absolutely.

So that's the first part of question. And then I guess sorry, back to the 24 layers, since that is closer to representing an A sample, is there like anything you can say on what that looks like on an energy density standpoint. Thanks guys.

Yeah, yeah, sure. Yeah.

The 16 layer wasn't an explicit milestone that we had, and we felt like we made enough progress on the 16 layer to where we could move to making 24-layer cells. As you pointed out, we already reported over 500 cycles in that 16-layer cell, so we didn't really see a need to continue to work more on that and switched over to 24-layer cells. And we're actually, as you point out, you know, quite pleased to have those first 24-layer cells on test already today in July .

That gives us a number of months to refine the design, incorporate any improvements, and still be able to make the ASAPL target for the end of the year. The edge density we have in common on the gate, the ASAPL really isn't going to be the cell with the edge density that are close to the production level because it doesn't have the right number of layers and the packaging isn't really optimized.

All those things and things that we think will happen in connection with the B sample.

Got it, thanks locking dear.

Absolutely, Jake.

Thank you, Gabe.

The next question is from the line of Chris Snyder with UBS.

Chris, you're on it open.

Hey, thank you, and thanks for taking my question. I wanted to follow up on Gabe's question on the timeline, but with a specific focus on the programming towards QS1.

You know, is it fair to assume that the delivery of a C sample, you know, is required for QS1 to be commissioned and move forward, or could that, you know, checkpoint be met with a B sample? Any color there would be really helpful. for the offense record.

Yeah, I know this is a great question. I think one of the things that we are thinking at this point is that one of the goals that we think we can meet from the QS-0 line itself is to make C samples. And by doing that, we think we can gain a lot of learnings that might otherwise need that one gig of what our QS-1 line. So, so basically we think that essentially QS, the C sample coming out of QS-0 can deliver to us some of the same learnings that we might otherwise need to do the one gig.

from the analyst community that QS1 or just the first kind of substantial production facility would be with Volkswagen as the JV and the counterpart. Is there opportunity that the counterparty on the first

Commercial, commercial-sized facility could be an OEM other than Volkswagen.

So we haven't said anything about specifically who else we're going to do JVs with outside of Volkswagen. There obviously is the joint venture with Volkswagen, which is designed to serve the needs of Volkswagen. For the other non-Volkswagen customers, I think there's a couple different ways to serve them. We've gone through this expanded QS0 line where we produce sea samples off of QS0.

That will allow us to serve a certain volume of vehicles so we wouldn't be able to do super, super high-volume type vehicle programs out of that line, but for smaller, perhaps premium high-performance type of vehicle, that would be one option. There's an option, of course, to do two adventures like the ones we have with BMW.

with other OEMs. In fact, one of the, I think one of the agreements that we announced, specifically had a section in there discussing the possibility of a joint venture with that, other top 10 automotive OEMs. So that's another possibility. And there are also other opportunities that we're looking at beyond those that might involve other more creative ways to get there. But I think that,

Our main goal is to get the technology into the market as quickly as we can. And we've said in the past there were basically three sort of general ways to do that. One is to build on batteries. I guess QS0 is an example of that. It's small, you know, battery, but it's a battery. The second is to partner with OEMs to do JVs. The VWD was an example of that. The third one we referenced in the past occasionally, although we haven't provided any more details on that, is that, you know, at some point it might make sense to license the battery. And to license the QIP.

We'd only do that if there's someone that we trust as a partner and where the economics make sense. But those are the three general options. And we don't have any religion around any one of them. We want to basically pursue what makes the most business sense for us, for our investors, for our customers. Michael I appreciate that. If I could squeeze one last one in. Over the past couple of years, the company has produced a very high number of data and

and test metrics that they've provided to the market. You know, I would just be interested, Jaggi, amongst all these test metrics, data that you guys produce, which what to you is the most significant, you know, kind of indicator of what you're tracking. You know, whether it's just be the company's progression, you know, the technology, you know, just be interested to hear an interview amongst all this data and test metrics. What do you think is important? Yeah, it's a great question. I think, I would say it was the most significant aspect of the data we've published in this notion of what we call the gold standard test conditions, right?

in recent times at one C, one C meaning one hour of charger rate at room temperature. A recent test had been at 25 degrees Celsius for air cycles as per gave a little to his question earlier. And done in modest pressure, we use no more than approximately 2.4 atmosphere of the pressure. And in recent times where you would drop the pressure below that. So that's the first key point I spoke about is test results that show that they're done under these gold standard conditions without compromising pressure or temperature or rate.

The second key thing I see on the data front is that we've shown data showing both the ability to run at even higher rates. So we earlier this year published some data on 15-minute charge 400 times in a row. So that's also really a remarkable result. We haven't seen any data from any other lithium metal player that can do that or for that matter even lithium-ion type players for energy cells.

We mean cells that are designed for the highest possible energy, not power cells, which are designed for power. And then I think the third thing that I would point to is the data is we keep showing data on increasing layer counts. I think we've steadily, you know, we've kind of tried to keep our notes of the grindstone and just stay focused on the mission, which is to keep increasing layer counts, you know, while trying to maintain that level of functionality. So we run from one layer to four layers to 10 to 16 and now 24 layers, at least the very early. So we're going to do that. So we're going to do that.

data on 24 we're not done with that yet I want to be cheerful about that But those three things combined I think what gives us you know a lot of a lot of comfort that run to something here right that with the fundamental You know data the goal center data is very compelling that you know at one hour charge rate for either cycles the high rate charge data for single ourselves was was now very compelling and then we try to you know take that care of the end and increase the layer count with that and I think

I think that all the things or things that we...

we really haven't seen with other approaches to high energy density automotive lithium metal cells.

Thank you for all that. Appreciate it.

Absolutely, thanks for your question.

Thank you, Chris.

The next question is from the line of Ben Callow with Baird. Ben, you're on it open. Ben, you're on it open.

Good afternoon guys, thanks for taking my question.

Congrats on adding two new customer relationships. Maybe could you just talk us through kind of how those relationships span from like.

maybe have just provided them with a sample cell, like two layer cell, or how do all the different relationships differ, I guess is the question.

Yeah, yeah. So these relationships are generally quite similar. What they basically are is that they represent a, in fact, if you have a reservation agreement on the part of the OEM to get a certain amount of capacity out of our... to get a certain amount of capacity out of our...

out of the QS0 line. And then in addition to that, this involves our providing those OEMs with a set of intermediate samples. So it will provide them samples before the A sample, A sample, and subsequent samples leading up to that pre-pilot line. And I think the thing that we're excited about is not only that there's now six such OEMs.

But they really represent a broad cross-section of the automotive sector, right? So they mentioned in the letter, they represent top 10 players on one hand, as well as non-top 10, but well-established premium luxury type brands. They represent pure EV type players and conventional Williams. So we have both end-to-the-fetcher on multiple axes of representatives. And we try to be, as you said, no problem.

For teaching about who we work with, we are in the position for better or for worse of being supply constrained right now. There's more demand than we have the ability to provide self today. Frankly, we think we'll be in that position for some time into the future. But the benefit of that is it allows us to be a little more thoughtful about who we choose to work with and we've tried to choose players that we think to accomplish the full spectrum of automotive sector.

in order to make sure that we have exposure to the whole sector. So I think we feel pretty good about the OEM momentum. And our focus now is really just trying to deliver these cells so we can realize the potential of the opportunity ahead of us.

Thank you for that. I guess what I'm, those advocates, has everyone received something physically to test or is everyone at different stages in their testing or some maybe have just received data, you've started a relationship with their person, others, and tested the actual cell.

So I think...

And don't quote me in this, but I think, you know, because I haven't made the full list and we've got to just see this question. But I think every one of these guys, to my knowledge, I would say most of these players haven't actually seen sales at some stage and have already tested them. And well, I should say, yeah, most of them have. I think not everyone has, but most of them have seen sales in the test of them. And there are different stages of their process. So obviously, someone like BW is, you know, for their long, we've had that partnership in place for a lot longer.

Some of the newer players, we've been announcing players at regular intervals in time, so some of them were gonna be at different points in their process. But most of these guys have already received and tested cells, and some of them that haven't will get cells shortly and will test them. So the process is moving forward with all these players, but they're just at different points in their journeys.

Cool. Thank you. In the last question, you call out and you highlight the cell manufacturing step being completed. Could you just maybe delve into that a bit more on what that means and what how it's changed from how you previously did it. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.

Well, yeah, I think that particular reference was to the Phase II line. So, as you know, we have this Phase I engineering line, which was in our older building, and we were turning up a Phase II version of the line for additional capacity and capability in our new QS Campus facility. And we've now turned up that Phase II engineering line and transferred production cell assembly to that line. So that is the end of the presentation.

That's an important point because it means that we're actually now making cells in this new facility, which means we're putting in place the building, the appropriate dry rooms and appropriate clean rooms and power supply and people and all of these things have to go into place to be able to make cells. Also in this building, where we're planning on deploying the rest of the QSR, which is a pre-potted light. Can I have anything to add to that? Nothing else, good summer entry, dude.

That's an important point because it means that we're actually now making cells in this new facility, which means we're putting in place the building, the appropriate dry rooms and the appropriate clean rooms and the power supply and people and all those things have to go into place to be able to make cells. Also in this building, we're planning on deploying the rest of the QSR, which is a pre-potted life. Can I have anything about that? Nothing else. You got some range. Thank you guys, hell good night.

Absolutely, thank you Ben. So I think I think at this point, yeah, let me just go ahead and close out the call. I want to thank everyone for joining the call. I'd also like to thank our investors for their ongoing support of our mission. I'd like to thank our forward thinking customers for their commitment to helping us get this technology to market. And of course our amazing team for their incredibly dedicated efforts to overcome all the hard problems associated with bringing the groundbreaking new technology to market. Thank you.

We look forward to reporting on further progress in the coming quarters.

That concludes the QuantumScape Q2 2022 earnings call. Thank you all for your participation. You may now disconnect your lines.