Q2 2023 Primoris Services Corporation Earnings Call
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Thank you for standing by my name is Henry King and I'll be your conference operator today at this time I would like to welcome everyone to the Prim Morris Service Corporation second quarter 'twenty 'twenty Tree conference call. All participants have been placed on mute to prevent any background noise. After just because remarks, there will be a question and answer session. If you'd like to ask a question during.
This time simply press star followed by the number one on your telephone keypad.
I would like to withdraw your question Press Star one again, thank you.
I would like to turn the call over to Blake Holcomb V.
V P of Investor Relations.
Please go ahead.
Good morning, and walking them for more of a second quarter 2023 earnings conference call.
Joining me today with prepared comments are Tom Mccormick, President and Chief Executive Officer.
Kinda Algin Chief Financial Officer, before we begin I would like to make everyone aware of certain language contained in our safe Harbor statement. The company cautions that certain statements made during this call are forward looking and subject to various risks and uncertainties actual results may differ materially from our projections and expectations. These risks and uncertainties are discussed in our reports filed with the.
SEC.
Our forward looking statements represent our outlook as of today only August eight 2023, we disclaim any obligation to update these statements except as maybe required by law. In addition, during this conference call. We will make reference to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures are available on the investors section.
One of our website and in our second quarter 2023 earnings press release, which we issued yesterday.
I would like to turn the call over to Tom Mccormick Tom.
Thank you Blake.
Good morning, and thank you for joining us today to discuss our second quarter 2023 financial results and operational performance update.
But Morris continues to build positive momentum in 2023, delivering another well executed quarter with improved topline revenue and margins.
In fact, our revenue and gross profit in Q2 were the highest reported in the company's history and we believe we have the potential to continue to set new records as we grow market share in certain businesses and benefit from increased customer spending.
I want to thank our employees out in the field and in our offices to make this success possible.
They're working hard and often harsh weather conditions to repair lives after a storm.
Sunpower generation to provide electricity to homes and construct facilities that will allow us to fill our cars at that Paul.
Most importantly, they perform their duty safely efficiently and to the satisfaction of our customers.
Our safety performance. This year has been particularly strong and we have the ability to meet or exceed our best safety year on record.
We also ended the quarter with record backlog of just under $6 $6 billion, including booking a record $2 $5 billion during the quarter.
To put that in perspective, five years ago, our total backlog was only $2 8 billion.
This represents an increase of 133% or $3 $8 billion over that period.
This growth can be attributed to our hard working business development and operations personnel and our strategic decision to increase our focus on renewables communications and power delivery opportunities, while also being a selective and winning a lower risk strong margin industrial heavy civil and pipeline work.
Now, let's turn to our operational performance more closely by segment.
Starting with the utility segment, we saw year over year improvement in revenue gross profit and gross margin during the quarter.
The acquisitions of DLA can become helped drive revenues higher in power delivery and communications. We also saw strong growth of more than 10% and gas operations with improved margins.
Gas operations has been better than expected in 2023, as we have been able to pick up market share in certain regions.
We've also been able to increase margins by selectively exiting unfavorable contracts and reducing costs and some underperforming markets over the past 12 months.
Power delivery also saw revenue and gross margin improvement from the last year.
Youll recall, a significant inflationary challenges that we face in the second quarter of 2022.
We experienced rapid escalation of wages in our non union operating areas that we were not able to make up for during the period.
We also saw steep increases in fuel prices due to uncertainty of supply. Following this started the conflict in Ukraine.
Today, we are in a much better position with our contracts due to our ability to negotiate adjustments to many of our msas.
While non union labor rates remain elevated compared to 2021 levels, we've been able to claw back much of the margin pressure through increased revenue and improved contracts.
Okay.
We are continuing to make progress updating the pls contracts, particularly in the southern region.
We expect this effort to be completed by year end and to be accretive to margins.
Last quarter, we discussed our intention to increase our mix of major projects in power delivery.
Our goal is not to grow projects at the expense of Msas, but to complement them.
Msas often serve as the gateway to project work with customers and we are in a good position to continue growing our share of work with our MSA customers by adding projects.
We have also acquired some exceptional talent to assist us in winning and managing more of these projects.
To put the scope of this market opportunity in perspective, we are currently evaluating or bidding over $2 billion of major projects most of them with existing MSA customers.
We are also projecting that over the next 12 to 18 months, we will perform approximately $60 million of high voltage interconnect work from our renewables business in support of their customers' projects.
These and other scopes of project work, our growing industry need and currently an underserved market by for Morris.
We are optimistic that we win our fair share of major project work, while maintaining our disciplined approach and managing project execution risk and margin profile.
Wrapping up the segment with communications, we're pleased with our ability to grow revenue, while being disciplined on margins.
We remain selective in the regions in which we work in and the customers. We work for in order to maximize the efficiency of our teams and maintain margins.
To this end we are seeing significant expansion in the central Texas market and gained share with a new customer in the Arizona market.
We are also being pulled into the Colorado market by key customer relationship, which will allow us to enter into another high growth area of the country.
We remain on track to achieve our growth targets and communications in 2023, even as our second half is expected to slow down. Some of this work was pulled forward to the first half of the year.
Moving over to the energy segment, we saw multiple business lines increased revenue and improved their margins from the prior year, including our renewables industrial and pipeline services businesses.
Pipeline is seen somewhat of a turnaround from the prior year when we experienced negative gross margin due to low project volumes and cost overruns on a project.
In Q2, 2023 pipeline has been able to execute well from a stronger backlog position and pick up some additional work at favorable margins in fact margins in the second quarter improved closer to a mid cycle level in the low double digits.
Challenges remain in this business and the market remains competitive, but we are seeing more opportunities to bid projects that require specific experience equipment and skills that we possess.
Also several additional carbon capture scopes that we're targeting to build on the success of our first announced project earlier this year.
Another big story for the quarter and energy was the over $1 8 billion in bookings representing a two three times book to Bill for the segment.
Included in these bookings were $650 million in industrial and heavy Civil awards that span across several states will provide a diverse range of sizes and scopes.
These wins represent not only the benefits coming from federal stimulus.
But also a favorable change in customer behavior.
Customer demand for quality specialty contractors is rising.
And as a result, we are seeing improved productivity for services that are in high demand.
We believe that if this trend continues and we finalized some projects that had been a drag on margins. We will continue to see margin expansion in the next couple of years in these businesses.
<unk> continued to see solid demand announcing several large contract awards in the quarter as well with a combined value of approximately $770 million.
These solar energy facilities will add another one four gigawatts of renewable energy to the grid.
Two of these projects will not begin construction until late 2024, which signifies the strength of our relationships and the confidence our customers have in our people to contract early and make supply chain commitments.
We believe we are uniquely positioned to be the contractor of choice for these and other customers going forward.
On top of a great quarter of bookings, we also saw revenue and margin growth within renewables compared to the second quarter 2022.
We believe we are on track to achieve our 30% to 40% revenue growth targets as well as continuing to achieve solid margins in 2023 by maintaining our high performance standards.
We are very pleased overall with our execution and performance in renewables.
Market for renewables remained strong and we arent anticipating a slowdown within the next few years.
Solar module delays are appearing to be less of a concern for delivery in 2024 to.
To support this we are seeing billions of dollars of investments in domestic solar module manufacturing to help the industry capture the benefits of the inflation reduction Act.
This supply chain investment reflects a long term bullish view on this market that we share with these manufacturers.
We're also seeing our customers comply with IRA labor requirements sooner than we expected following further clarity on their IRA incentives that were made known in may of this year.
This means that our apprenticeship and prevailing wage programs are now in place and we have plans to execute on our first project needs in this program beginning in Q3.
Also in anticipation of the industry's continued strong growth trajectory.
We are working towards expanding the number of our utility scale solar project teams by the end of the year.
We have built a very solid reputation in the industry, which enables us to attract and promote top talent.
We believe our approach to solar EPC is best in class when we plan to keep recruiting and retaining top talent to ensure we perform our work safely and to maximize our efficiency and profitability.
I'll now turn it over to Ken for more on our financial results.
Good morning, everyone revenue for the second quarter was a little over $1 4 billion, an increase of $390 million from the prior year driven by growth in both of our segments. The.
The energy segment was up over $226 million or 41% from the prior year. This was driven by growth in our pipeline renewables and industrial business lines as well as some work being pulled forward from Q3 and Q4, especially in our pipeline business the.
The utility segment also saw strong growth of $164 million up almost 35% from the prior year driven by double digit gains across all business lines compared to 2022.
Gross profit for the second quarter was approximately $157 million, an increase of over $65 million from prior year due to both higher revenue and improved gross margins.
Gross margins were 11, 1% for the quarter, which was up more than 200 basis points compared to 9% in the prior year.
Now, let's look at our segment results in.
In the utility segment gross profit was $66 5 million, an increase of $26 2 million or almost 65% compared to the prior year due to higher revenue, which was partially driven by the acquisitions of <unk> and become.
Gross margins improved to 10, 4% compared to eight 5% in the prior year, when we felt the impacts of labor and fuel inflation in certain markets.
We have renegotiated many of those contracts and we're seeing the results of better rates, we still expect utility segment margins will be 9% to 11% for the full year with Q3 margins slightly better than Q2, and Q4 margins seasonally down from Q3 like normal.
In the energy segment gross profit was almost $91 million for the quarter, an increase of $39 million or 75% over the prior year due to both higher revenue and improved margins across multiple business lines.
Gross margins came in at 11, 7%, which is an improvement from nine 5% in the second quarter of last year.
Much of the increase in gross margins can be attributed to a recovery and pipeline projects, which delivered low double digit gross margins this quarter compared to negative margins in the prior year.
Gross margins also remained strong in our renewables and industrial businesses.
Renewables continues to lead the segment and revenue and gross profit and remains on track to achieving 30% to 40% revenue growth this year.
Industrial margins also improved after moving past our legacy LNG project that weighed on margins in the prior year, we expect the energy segment to remain strong for the balance of the year and gross margins to remain comfortably in the 10% to 12% range.
Taking a look at our SG&A expenses in the second quarter were $85 6 million, an increase of almost $26 million over the prior year the.
The increase in SG&A is primarily due to the impact of acquisitions and the incremental cost to support growth in our key lines of business.
As a result, SG&A as a percentage of revenue increased slightly to six 1%, but in line with our expectations, we maintain our full year SG&A SG&A guidance in the low 6% range.
Net interest expense in the second quarter was $16 9 million compared to $4 7 million in the prior year.
The increase was due to higher average debt balances and higher average interest rates.
We continue to anticipate our full year interest expense to range between 73% and $77 million.
Our effective tax rate increased slightly to 29% for the quarter and we expect it will be in that range for the full year.
The increase from 28% in the first quarter was primarily due to a shift in revenues to higher tax jurisdictions non deductible per dms and some small discrete tax items during the quarter.
Net income of $39 million or <unk> 72 per diluted share was down approximately $11 million from the prior year, primarily due to a $40 million gain on sale and leaseback transaction, which occurred in Q2 of last year.
Adjusted EPS was <unk> 80 per diluted share an increase of 32 per share from the prior year and adjusted EBITDA was $102 4 million for the quarter, an increase of $46 2 million or <unk>, 82% compared to the prior year.
Both increases in adjusted EPS and adjusted EBITDA were primarily driven by the higher revenues and gross profit noted earlier.
Turning to cash flow, we generated $34 $5 million of cash from operations in Q2.
The primary drivers were an increase in adjusted net income along with strong customer deposits in the quarter.
We are still in the early stages of the working capital initiatives, we announced last quarter. We are encouraged by the progress. We made this quarter and we'll look forward to continued progress over the coming quarters.
We ended the quarter with $122 7 million of cash and net debt of approximately $1 billion.
Borrowing capacity under our revolver was $153 4 million, providing total available liquidity of $276 1 million at quarter end.
Reducing our leverage continues to be a priority for the company. Our trailing 12 month net debt to EBITDA ratio was around two eight times at the end of Q2, and we believe we are on track to reach our goal to be around two times by the end of 2024.
Our plan is to accomplish this through earnings growth and debt reduction over the next several quarters.
Total backlog at the end of the quarter was a little under $6 6 billion compared to just under $4 6 billion in the prior year, an increase of 44%, resulting in another record backlog.
Fixed backlog increased to $4 5 billion up over $1 7 billion or about 62% primarily due to the strength in our energy segment.
MSA backlog was up 16% or $281 million to a little over $2 billion, driven by communications growth in central Texas and power delivery growth.
We expect 100% of our utilities backlog and 59% of our energy backlog to convert into revenue over the next four quarters.
And finally, turning to our full year earnings guidance, given our strong start to the year and constructive outlook for the second half of 2023, we are raising our earnings guidance.
We expect EPS of $2 15 to $2 35 per share and adjusted EPS of $2 60 to $2 80 per share.
Adjusted EBITDA guidance has also been raised to $360 million to $380 million for the full year 2023.
Given the timing of certain projects and the revenue that was pulled forward to the first half of the year. We anticipate Q3 will be flat to slightly up sequentially from Q2.
We also expect the fourth quarter to revert closer to Q2 levels as we typically see a slowdown in certain markets during the fourth quarter overall.
Overall, we are pleased with our results and believe we are on track for a record 2023, which we are optimistic will set the foundation for further growth in 2024.
With that I'll turn it back over to Tom.
Thank you Jim.
Before we take questions I'd like to summarize some key takeaways from the quarter.
I am proud of our safety performance as well as of our operational and financial results in the first half of 2023.
We have successes to celebrate across all of our businesses and remain committed to executing on behalf of our customers with a focus on safety quality and productivity.
We are establishing new records in raising our expectations for what we can achieve as a company and I believe the best is yet to come.
We have made great strides growing in our strategic markets of renewables power delivery and communications.
We are also delivering improved profitability and cash flow in many of our other businesses through strong leadership and disciplined execution.
This only increases our conviction that we are focused on bidding the right projects with the right customers in the right markets.
Additionally, we are in a great position to further grow market share in the renewable space, particularly in solar and energy storage.
We are growing teams, bringing value to our customers and expanding our customer relationships and service offerings, all of which will help us solidify our position as a top provider of renewable EPC services.
As renewable energy sources continued to grow and benefit from a favorable environment for Morris is in a great position to work with the right customers to execute on our strategy.
We have the best people and a unique opportunity to assist with the energy transition.
While also building in the U S infrastructure necessary to keep the economies in North America running smoothly.
Finally, as we look towards the back half of 2023, we are not complacent and we know that there is more work to do to finish the year strong.
We are focused on the safe execution of our customers' projects now on improving our profitability through increased productivity and effective project management.
Success in these areas will allow us to improve our cash flow generation.
Reduce our debt balance and provide us with maximum flexibility to invest in our business to the benefit of our employees the communities in which we work and our shareholders.
We will now open up the call for questions.
At this time I would like to remind everyone in order to ask questions Press Star then the number one and your telephone keypad, we will pause for just a moment to compile the Q&A roster.
Our first question comes from Adam Callahan from Thompson Davis, Adam. Please go ahead.
Hey, good morning, guys great quarter.
Hey, there was a fair amount of discussion about a pull forward of work from the back half into the second quarter can you just kind of review all of that.
Yes.
Yes, Adam is spread across.
Lot of different business units, a little bit of pipelines definitely on the utility side as well.
I don't have exact numbers in front of me, but.
The top line is probably about $150 million that was pulled forward.
Okay, and then I guess, along the same lines.
Is that a revenue comment about revenue slightly up Q3 versus Q2, and then Q4 is more in line with Q2.
Yes, that's.
Okay, and then how does that kind of breakdown between that.
Segments.
The.
The utility segment is going to be.
Just double checking the utility segment actually.
Whereas we normally kind of have our peak in Q3, we added in Q2 because of the revenue pull forward. So revenue is going to be down sequentially in utilities.
In Q3, and Q4 energy is going to be the opposite energy will be up sequentially from Q2 into Q3 and Q4.
Okay.
Correct.
Ill.
I'll turn it over and hop back in the queue. Thanks.
Your next question comes from the line of Sean Eastman and Keybank capital markets. Sean. Please go ahead.
Hi team. This is Alex on for Sean. This morning, Thanks for taking our questions and congrats on the quarter.
Yes.
So I guess my first question are we still on pace for that $100 million to a 150 million operating cash flow range. This year.
Then like how do we think about a normal like cash flow conversion as we think about 2024 and beyond with these working capital initiatives.
Yes.
This year, yes, we're still looking at the same range.
We picked up a little bit in Q2.
As you noticed in Q3, it's going to be a push.
Dependent on the timing of certain projects kicking off in Q3.
So the bulk of it is going to be backend loaded into Q4 like normal.
As for next year, you know to be honest with you. We're just about to kick off our planning process for next year and with so many initiatives going.
That I can tell you much more about next year, just yet I guess can be another quarter.
Quarter, or so before we have better visibility into that.
Sure.
Got it and then and then on pipeline.
That business sounds like it's performing a lot better. This year can you just talk about the pipeline of future opportunities over the next 12 months are you seeing more large diameter pipeline out to bid.
Is there an update on this carbon pipeline you booked last quarter did that begin construction.
So the carbon project, we announced last year will go into the field next year. So in 2024, we're not seeing a lot of large diameter. If we are there shorter runs or more intra state than they are cross state lines.
Seeing more projects in there again, there are smaller projects.
Ed.
Be remiss to give you a range, but they are smaller than what you typically see or we've seen historically, but there are a lot more of them. So there is a lot of cut cut out some replace sections in and just smaller sections that are supporting some of these LNG plants. Since these other industrial facilities are being built.
Thank you.
Your next question comes from the line of Julio Romero with Sidoti <unk> Julia. Please go ahead.
Hi, Good morning, Tom Kennan Blake This is Alex <unk> on for Julio at first question Ron Utilities can you talk about your efforts to win more.
<unk> work in the power delivery business and talk to you when we can expect to see that reflected in the backlog.
Well, we're starting to see some of them are reflected in the backlog you will see in the back half of this year.
We've been doing some cross selling with our renewables group. So we are actually gaining some high voltage work for them.
As noted in my comments earlier, we'll spend we'll see probably about $60 million of revenue added for just those projects alone I think as you see as we get into 2024, youre going to see that ramp up our revenue and that work ramp up we really went through a consorted effort in bringing in a management team that has the X.
<unk> and the experience to chase that type of work and as I noted earlier, we're not going to sacrifice. Our MSA work forward is really to complement the MSA work and actually it will drive a little bit higher margins for us.
Got it thank you.
In terms of pipelines is.
Is there a way to quantify the benefit of the mid Atlantic pipeline projects, either from a margin or profit dollar perspective.
Overall second quarter energy segment performance.
The mid Atlantic project, you're talking about from last year.
Yes.
Really just some some maintenance work to clean up the right away and so that they can they can walk.
We walk away from that work and I could have certain obligations that the client has to meet.
The respective departments of energy, which that part many of the states in which that pipeline was built and was being built and so we're just cleaning up that work in cleaning up the right away and finishing up some work for them, we'll finish that work this quarter.
Got it thank you.
And.
Okay.
Okay.
At this time I would like to remind everyone that in order to ask a question. Please press Star then the number one on your telephone keypad.
Our next question comes from Jerry Revich from Goldman Sachs.
Hi, Good morning. This is Adam on for Jerry today, Thanks for taking my question.
Can you just update us on where the crew count stand in utility scale and small scale solar today and.
How you expect that crew count to evolve over the course of the year.
Entering 2024.
Okay.
I can tell you we're somewhere between 12 and 15 crews on utility scale solar we're working towards the end of trying to achieve.
Build three new teams or actually get to 15 by the end of this year and we're right in the middle of that so it's somewhere between 12 and 15.
DG smaller scale.
We're at five teams there I may I may be off a team or two and thats.
We're seeing quite.
Quite a bit of that work, but I don't I'm not sure what our goal is as far as building those teams with their smaller teams I think are the biggest concentration right now is building the larger scale teams.
Got it that's helpful. And then you know really strong margin performance in the energy business in <unk>, we normally see a seasonal step down in that business I think of around 100 basis points given some of the moving pieces, there and growing solar revenues can you just help.
Calibrate us on puts and takes on the sequential margin cadence in energy in the back half of the year versus normal seasonality.
Yes, it's.
Good question, we will see us a small step down in Q3, but not to the cadence that you mentioned, but it will probably be closer to about 50.
A few bps in the in Q3, and then probably stay flat sequentially into Q4.
Okay. Thanks, so much.
Your next question comes from the line of Oliver.
Rice with D. A davidson.
Oliver Please go ahead.
Hi, there guys some sitting in for Brian Thanks for taking my question.
Wanted to kind of get back to the MSA versus project work balance that you were speaking with earlier.
Can you talk about the progress made towards finding the balance between the Msas and project work.
Do you feel that you are making progress towards finding.
More project work versus Msas.
Yeah, I think we are I think you will see through the course of the year the percentage of our total revenue in that group become.
More balanced between what we what we do and project work versus Msas at one point in time last year I think we were at 90% MSA and 10% project, we really wanted to get that down to 70, 30, maybe something a little bit lower a little more balanced would not not with not the intention of going 50, 50, but $60 $65 35.
Would not be bad.
But they were saying we're doing some work right now and as we continue to perform that work and do it successfully and demonstrate to our clients that we have that capability, we're seeing more and more opportunity to bid other projects.
That's great. Thanks, so much for that color and just kind of to get back to the solar a bit I know you mentioned that you are taking on more crews.
With the more substantial workload that you guys are taking on is there capacity to take on more.
As we build our crews there is we're just trying to be very disciplined about it look we've had tremendous growth rates in that business over the last five years and we've been successful in executing all of our projects successfully because we've been very disciplined in how we recruit hire and onboard train and developed our crews and we're going to continue.
To do that.
Yes.
Awesome. Thanks, so much guys.
Your next question comes from the line of Lee Jagoda with C. G S Securities.
Hi, Good morning, it's Pete Lucas for Lee.
You talked about utility margins being strong in the quarter and you gave us some good color in terms of the outlook. There just wondering the impact of the on those margins of Pls contract re pricing did some of that get pulled forward more than expected and how should we think about that contract impacting the back half.
Yes, not much of it got pulled forward, we just continue with that process and it will continue as we've talked about over the course of the balance of the year.
I think what youre going to see it's going to be a combination of normal seasonality within utilities as well as a little bit PL H contract negotiation should see margins tick up a little bit.
In Q3 sequentially and then drop back down in Q4 like normal.
Great very helpful. And then how much of the current energy backlog is attributable to solar projects as of Q2.
One point I'm looking at $1 eight $1 8 billion.
Great and then last one for me you mentioned pipeline starting to show some improving demand.
Some projects Rolling off there just wondering is there anything meaningful happening on the regulatory front to structurally improve the business.
Yeah, we keep here and talk about it but we haven't seen a lot of what we're doing is doesn't require FERC permits a matter of fact I most favorite not everything we're doing right now doesn't require for a permit so.
We hear them talk about it but.
We hope we're waiting on it but we're not there yet.
Yes.
Very helpful. Thanks, I'll jump back in the queue.
Our next question comes from the line of Adam <unk> with Thompson Davis. Please go ahead.
Hey, Tony made a comment about customers demanding quality specialty contractors or the demand was rising.
Thank.
You said as a consequence of that.
Could be good for margins for a few years it struck me as a.
Possibly really bullish comment I, just was hoping you could flesh that out a little more.
Well, we've been in the seller's market for so long Adam.
Were you really.
Really had very little room, one of very few projects to bid.
We had very little room to negotiate we're seeing clients being much more receptive to granting much more amenable terms.
We've seen it in renewables for the past several years, where clients have actually been willing to move their schedules and their project schedules just to be able to have our teams available.
We all know there's a tightness in the market with respect to craft labor, but there also is with respect to management talent and so.
Clients are seeing more and more where they are.
Where contractors are executing projects successfully for them if they have other projects. Following those they want to secure those resources for their upcoming projects and we're seeing the benefit of that as our some of our peers I'm sure.
Was that mostly renewables comment or is that in a bunch of end markets.
We're seeing it in energy as well I think I think we're seeing it in utilities with some of our clients and power delivery, where we're getting opportunities because we have successfully executing some projects in the past we've struggled prior to this.
Our leadership team in industrial for sure we've seen it in a lot of it is based on when you're successful breath success breeds success clients see that they saw you Havent see you have a good client project team and they want to retain them. If they have if they have other work for sure.
Yes.
Understood Okay. Thanks, Tom.
I'll now turn the call back over to Tom Mccormick for closing remarks.
Thank you Enrique and thank you for your questions and for participating in the call. This morning.
I also want to again, thank all of our employees, who make for Morris the great company that it is today and who will be the drivers of our becoming a leader in the industries, we serve in the years to come.
Have a great Q2, and first half of 2023, and I'm optimistic about the balance of the year and setting the groundwork for a promising year in 2024.
We look forward to updating you next quarter.
Have a good day.
Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
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