Q3 2023 ADTRAN Holdings Inc Earnings Call

Ladies and gentlemen, thanks for standing by and welcome to the Altra and Holdings incorporated third quarter 2023 earnings release Conference call.

At this time all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period.

You'd like to ask a question. During this time simply press the star followed by the number one on your telephone keypad, if you'd like to withdraw your question. Please press the star followed by the one once again.

During the course of the conference call I tried representatives expect to make forward looking statements that reflect management's best judgment based on factors. Currently known however, these statements involve risks and uncertainties, including the ability of component suppliers to align with customer demand.

Successful development and market acceptance of our products competition to the market for such products, the product and channel mix component cost fight in logistics costs manufacturing efficiencies and ability to effectively integrate mergers and acquisitions and other risks detailed in our annual report on Form 10-K for the year ended December 31st 2022.

And our quarterly report on Form 10-Q for the quarter ended June 30 of 2023.

These risks and uncertainties could cause actual results to differ.

Materially from those in forward looking statements, which may be made sure Nicole.

Mr presentation found on that trying to invest a surface relations website has been updated and it is available for download.

It is now my pleasure to turn the call over to Tom Stanton, Chief Executive Officer and tried holdings.

Please go ahead.

Thank you very much and good morning, everyone. We appreciate you joining us for our third quarter 2023 earnings Conference call.

With me today is that trend holding CFO will lead off.

Following my opening remarks, Julie will review the quarterly financial performance in detail.

And then we'll take any questions that you may have.

Before reflecting on the quarter I'll start out by addressing the announcement that we made yesterday, we have taken decisive steps to transform our business to a leaner more efficient and more profitable company.

We have already implemented and have recently expanded a business efficiency program focused in two key areas.

Cost efficiency and capital efficiency.

On the cost efficiency side. The program includes the discontinuation of legacy noncore products, the streamlining of operations to align with the current market environment and operational savings from site consolidations.

These operational cost savings are expected to generate a 15% reduction in non-GAAP operating expenses from Q3 to Q4 of this year, while preserving our substantial investment in our core product and growth regions.

The capital efficiency program a portion of the program includes a suspension of the <unk> Holdings' quarterly dividend and cash proceeds from site consolidations.

Regarding the decision to suspend the quarterly trend holding's dividend. This decision did not come lately.

Although we believe the dividend can be an appropriate value delivery mechanism. We believe that shareholders will benefit both in the near term and long term by redirecting the cash dividend to reduce our debt and interest expense.

This assessment aligns with the input we received from our investors as we reached out with a recent survey where we requested input from investors that in total held more than 70% of our shares outstanding.

The majority of those that responded to the survey indicated that the dividend is not their preferred use of capital at this time.

We're all we expect that the result of the capital efficiency program, including site consolidation will produce up to $180 million in cash in 2024, which will be applied towards paying down debt and improving our capital structure.

Coming out of this program, we expect to be a leaner more efficient and more profitable company.

And one that can easily navigate market uncertainty and of course to drive higher returns once we get past these near term market headwinds.

Moving to the results in the third quarter of the product mix and retail split of revenues were consistent with the first half of this year pointing out that there are no fundamental changes in demand for the product categories or regions that were serving.

However, we did see slower spending with our mid size and larger service provider customers as they continue to reduce inventory levels and took a more cautious approach given the uncertain macroeconomic conditions. This cautious that did lead to a general slowdown in revenue for the quarter.

Looking across our customer base are large enterprise customers and regional broadband service provider customers showed the most stability relative to previous quarters. The large enterprise customer segment, primarily consists of governments universities financial institutions and web scale companies purchasing optical networks solutions for public and private.

Data center interconnect applications.

The regional service providers continued to be driven by the build out of fiber networks across the U S and the UK.

Taking a long term view, we are still making good progress on key initiatives around fiber footprint capture high risk vendor replacement fiber networks cross selling synergies and adoption of our software platforms. These are the initiatives that will drive long term sustainable growth after the market recovers from the near term headwind.

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Starting with customer acquisition, we added 13 more fiber to the home operators during the quarter as we bring on these fiber to the home operators, we are having increasing success in selling them, our complete portfolio, including our in home Wi Fi solutions and SaaS applications, while also driving interest in our packet optical portfolio.

This growth in the U S is well aligned with the broadband funding is still ahead of us with large programs like B is expected to make impact in late 2020.

Four through 2026.

Looking outside the U S. We continue to be one of the biggest beneficiaries of high risk vendor replacement initiatives. In this past quarter. We were awarded two key tier one metro WDM projects, which would have likely been awarded to high risk vendors in the past.

On the fiber to the home side, we have multiple large service provider opportunities in our funnel in Europe, where we are well positioned for success considering that we shipped over 75000 port of our new flagship <unk> platform. The SPX 63, 30, this past quarter and this platform is an ideal fit for these customers.

While some of these vendor replacement initiatives Walt to produce market material revenue for.

And this year, we are on pace to become the market share leader in both Metro WDM and fiber to the home LLP solutions in Europe within the next two years.

We continue to build momentum in our packet optical portfolio in the U S retail service provider space and we are of course, expanding our footprint of fiber access across Europe.

The timing of these opportunities is a good match to two enhancements in our optical transport folio that are targeted to the needs of regional service providers, including our new coherent applicable modules are open line system optimized for our regional networks, and a new generation of cost space and power optimized optical terminals.

That our 800 gig ready.

For the 100, ZR coherent plug able module, which is highly anticipated across a broad range of customers. We are launching trials this quarter and we have already received orders for future deployments.

On the software side, we added 68, new mosaic one customers in the quarter. The second highest number in additions in any quarter driving adoption of Mosaiq, one to more than 300 customers in total.

This growth in SaaS has been aided by the recent launch of <unk>, Our cloud managed Wi Fi solution paired with the launch of our next generation Wi Fi six Wi Fi six Wi Fi seven platforms.

That deliver high performance multi gig speeds in a compact form factor.

We expect continued growth in both SaaS and our in home platforms in the quarters ahead, given the enhancement to the portfolio and the broader adoption of our software platforms.

In addition to our SaaS offerings, we continue to grow our base of recurring revenue associated with hardware and software maintenance and our leading network infrastructure and network management platforms.

This portion of our revenue streams offers high margins more predictability and steady growth opportunities, while contributing towards our software related revenue that generates more than 10% of the total company revenue at this point in time.

In summary, we continue to focus on capturing fiber footprint with our optical transport and fiber access platforms led by the U S and Europe, and then drive adoption of our complete portfolio, including subscriber platforms software applications and services.

Despite broader market challenges, we still made progress against these goals.

While we remain very confident in our long term outlook. We are in a period of market uncertainty due to ongoing inventory reductions and more restrained capital spending across our service provider customer base, particularly in the large service customer segment.

This uncertainty led to more order push outs in Q3 and Q4 this year driving us to take a more cautious approach with our forecast and operating model we.

We are now planning for a scenario, which the current headwinds could persist through 2024.

As a result, we decreased our non-GAAP operating expense levels during the past quarter consistent with previously stated targets and we have set additional expense reduction targets for early next year.

non-GAAP operating expenses were reduced 6% this past quarter relative to Q2 and as stated earlier, we expect to see additional an additional 15% reduction in non-GAAP operating expenses this quarter as part of our expanded efficiency program.

As noted earlier, we are still focused on investing in products and regions that are core to our growth and in the future and there is still achieving our planned cost optimizations with those in mind.

Our continued focus on customer capture our continued focus on customer capture and high growth regions, new product innovation, improving margins and operational cost savings has us well positioned for long term growth. After we navigate the headwinds that are our market.

With that I will turn things over to Julie to provide a review of our financial results and then following <unk> remarks, we'll open it up to any questions that you may have.

Thank you Tom.

Hello, everybody.

I'll cover our third quarter 2023 sites and provide our expectations for the fourth quarter.

Please note that Q3 2023 results include a full quarter consolidation of the airtran networks financial financials, which affect year over year comparisons.

Since this is the case I will refrain from repeating the consolidation effect when discussing the year over year comparisons of our results.

I will be referencing non-GAAP information with reconciliations to the most directly comparable GAAP financial measures presented in our press release.

And also certain revenue information by segment and category, which is available on our Investor Relations Web page at investors <unk> com.

In addition, we have updated the investor presentation to the site, which is available for download.

Unless stated otherwise all financials are presented in U S dollars.

Q3, 2023 revenue came in at $272 3 million and was down 20% year over year and down 17% quarter over quarter.

Our network solutions segment accounted for 83, 9% of revenues in Q3.

Compared to 89, 5% in Q3, 2022, and 86, 4% in Q2 2023.

Our services and support segment contributed $16, 1% of revenues in Q3, 2023, compared to 10, 5% in the year ago quarter, and 13, 6% in the previous quarter.

Access and aggregation contributed 34, 8% of revenue and grew seven 3% compared to the year ago quarter, but was down seven 9% compared to the previous quarter.

Our uptick of networking solution category contributed 42, 7% of revenues and was down two 2% year over year and down 18, 7% quarter over quarter.

Subscriber solutions continued to struggle and was down 54% year over year, and 24, 7% quarter over quarter and contributed 22, 6% of Q3 revenues.

As Tom mentioned earlier, all three revenue categories were impacted by constrained customer spending.

Regionally year over year third quarter domestic revenue was down 34, 3% and international revenue declined 6%.

International revenue made up 59, 1% and domestic revenue contributed 49% of total Q3 revenues.

We had 110% or more of revenue customer in Q3.

Q3, non-GAAP gross margin was 43% and increased by 220 basis points year over year, and 170 basis points sequentially.

The year over year and quarter over quarter increase is due to lower purchasing and transportation costs and a more favorable customer and product mix.

Our cost synergies are starting to show the expected effects.

Compared to Q3, 2024, which was a quarter with only a partial contribute <unk> contribution our non-GAAP operating expenses were $114 9 million, increasing by 5% year over year, However, compared to Q2 2023, non-GAAP operating expenses decreased by 6%.

We reduced non-GAAP R&D spend by 4% and SG&A expenses by 8% quarter over quarter.

non-GAAP operating expenses were 42, 2% of revenue compared to 32% of revenue in Q3, 2022, and 37, 5% of revenue in Q2 2023.

non-GAAP operating loss was $5 1 million, which translates into a non-GAAP operating margin of negative one 9%.

The quarter over quarter and year over year decrease in our operating profitability is due to lower revenues.

We offset by increased gross margin and operating expense improvements.

The company's non-GAAP tax provision for the third quarter of 2023 was $6 8 million.

The company's GAAP tax was a benefit of $16 6 million.

The difference between the GAAP and non-GAAP rate was mainly driven by the jurisdictional mix of the non-GAAP adjustments during the quarter.

Closing out the income statement results total non-GAAP net loss was $13 7 million and a net loss of 10 8 million after adjusting for minority shareholder interest in Airtran networks as Eve.

This resulted in diluted loss per share attributable to the company of 14.

Sure.

Turning to the balance sheet and cash flow statement cash and cash equivalents totaled $116 1 million at quarter end cash.

Cash flow generated from operations was $6 8 million and improved by $23 million compared to the previous quarter.

Trade accounts receivables were $229 3 million at quarter end, resulting in DSO of 77 days compared to 67 days in the prior quarter.

Inventories were $374 million at the end of the third quarter, resulting in terms of two dose zero compared to two three in Q2 2023.

Inventory includes a write off of $21 million as we accelerated the end of life of certain product to streamline our product offerings.

Accounts payable were $148 9 million, resulting in <unk> 60, compared to 59 in the previous quarter.

Okay.

As Tom mentioned earlier.

We decided we have taken decisive steps towards a much leaner and more efficient company.

Furthermore, we have taken measures to de lever, our balance sheet and strengthen our capital structure.

For this reason, we implemented and expanded our business efficiency program, which consists of a cost efficiency program and a capital efficiency program.

With our cost efficiency program, we are expecting annual savings of $90 million by the end of 2024.

The key initiatives of the program are.

Global workforce reduction.

Site consolidation, including partial sale of owned real estate, which will reduce operating cost and increase efficiency.

And then accelerated end of life of certain products.

First three sites of the cost efficiency program will already be effective in Q4 2023.

We estimate to reduce our non-GAAP operating expenses sequentially by 15%.

With our enhanced operating model, we are expecting to return to non-GAAP profitability latest by Q2 of next year and to generate positive free cash flow.

As part of the capital efficiency program, the company yesterday decided to suspend the quarterly dividend.

Generating annual cash savings of $28 million, which.

Which will be used to contribute on the execution of our business efficiency program and to repay debt.

In addition, we are executing our site consolidation program, which will include divestiture of certain company owned real estate a real estate.

In total we expect to generate cash of up to $180 million, which will be used to repay our existing debt borrowings and improve our capital structure.

I Timidly, we believe that this business efficiency program will benefit all our stakeholders and will increase shareholder return.

Consistent with our industry we.

We expect Q4 Q4, similar trends compared to Q3.

And anticipate that the ongoing macroeconomic challenges and higher inventory levels at our customers will continue into 2024.

Affecting our customers' ability to invest.

We expect our industry being challenged through the first half of 2024.

To address these challenges we are concentrating on FX, we can influence specifically managing costs and enhancing operational efficiency.

We are actively working to reshape our business at its core and.

And we remain committed to implementing our strategy aimed at bolstering our strong position in fiber access and optical networking.

For the fourth quarter of 2023, we expect revenue to range between $210 and $240 million and we expect a non-GAAP operating margin between negative seven and zero percent.

If revenues.

Looking beyond 2024, I would like to discuss with you our midterm financial target model, which builds on our enhanced operating model.

We expect to be ideally positioned.

Based on our existing customer base and continued success of new customer wins.

Our comprehensive product and software portfolio.

The future tailwind arising from government funding and high risk vendor replacement initiatives.

And most importantly, the strength of the global <unk> team.

We are targeting to achieve a sustainable non-GAAP operating margin in the low teens for.

For the year 2025.

This comprehensive and forward looking financial model is designed to get the company's growth enhanced the financial stability.

And ensure a prosperous future for all our stakeholders.

Yes.

Once again additional financial information is available at <unk> Investor Relations Web page at investors <unk> com.

Thank you for attending our call I will now turn it back over to the operator, and we will take your questions.

Alright, ladies and gentlemen, who will now conduct the Q&A session if.

If any participant would like to ask a question. Please press the star followed by the one on your telephone.

To cancel this is question. Please press the star followed by the team.

Our first question comes from the line of George Notter from Jefferies. Please go ahead with your question.

Hi, guys. Thanks, very much I guess I wanted to ask about the excess inventory that's out there.

If I go back I think three months ago, you guys were looking at the CPE pieces of the business kind of kind of running that inventory off by the end of the year and I think on the optical side of the business. I think you thought maybe you could run it off by Q1 of next year and now you based on your comments it sounds like that inventory has is larger and it's going to.

Linger for longer can you talk about whats youre seeing in the marketplace, where is that inventory and why is it a surprise to you in terms of the depth and duration of the correction.

Yet towards that at this point in time I think there is.

Okay.

It's a little opaque as to exactly.

What is inventory versus what is.

Kind of capital constraint actually people trying to serve.

Lower their expense level I think the inventory levels on the CPE side I don't think that they are high but I think people are just starting to run leaner and leader.

I think it's very similar on the optical side, what we've seen is.

We don't see a lot of inventory out there, but we will be seen as projects actually just being moved and as you probably know.

The WDM portion of the business and a lot of that is project oriented where they do an upgrade and we're seeing those upgrades and we literally saw that through the quarter, where they were moving these upgrades into next year. So.

You wouldn't call. It an inventory write that was literally just a movement from one quarter to another.

And thats kind of where that.

That's kind of what we're seeing.

Gotcha Okay.

That makes sense and then the weakest point I would say at this point is but let me just read I would say at this point is probably more environmental than inventory.

Okay.

Okay.

Okay.

And then.

Maybe also I guess, you mentioned that one bright spot in the business with regional service providers I think in quarters past you guys have given us some.

Compares.

On the fiber to the Prem <unk> side of things can you give us any sense for how that business was growing with regional service providers.

Quarter on quarter or year on the oil business.

<unk> business in.

In the U S. Let's.

<unk> tier one tier two tier three the regional service providers was actually I don't have the number in front of me, but I've seen the number and was actually up sequentially and year over year. So that that is a bright spots that piece.

Got it okay.

Can you give us a sense for how big the U S. Regional writers are as a percentage of sales that that trend now.

Gino early.

Okay. Thank you.

Yes.

30% 30, 35%.

Mid <unk>.

Got it okay.

Great and then and then last one.

I think you mentioned on the call that software is now more than 10% of sales can you talk about that.

I assume we're talking about mosaic or are there. Other pieces here is is it mostly in SaaS and recurring models is it in perpetual license models, just talk a bit about that software business and what we're talking what we're looking at there. Thanks.

Yes so.

We don't have that breakout, but I can talk to you just kind of in general terms. So it does include all of that.

The software piece is that there are two ways that we actually took let's say three ways. We do perpetual licenses, we do software and software maintenance right. So we have long term maintenance contracts on that software.

Which is typically a larger company model.

And then we have our SaaS products.

The most notable one being mosaic.

I'd say if you look at.

Recurring versus nonrecurring, which is kind of the big metric that that we look at.

It's about it's about a third maybe a 3rd% to 40% is recurring and then the rest of it is nonrecurring and we're doing everything we can do to move that to change that metric.

Got it okay, all right great. Thanks, very much I appreciate it.

Okay.

Yes.

Thank you. Our next question comes from the line of Michael Genovese from Rosenblatt Securities. Please go ahead with your question.

Great. Thanks.

So I think in.

Prior quarters recently, we heard about <unk>.

Sort of larger.

The us tier one and tier two.

Order softness it seems as I look through this.

Most meaningful change with sort of.

Sure.

Inventory correction order softness spreading to the European customers is that.

Is that I mean, I don't know if spreading the right word.

That's kind of the incremental change was the European demand getting softer at that is that a fair read.

I'd say thats, probably the environmental yeah, that's the environment because the U S is already soft.

The larger carriers in the U S. We're already saw so.

I think we saw it in Europe, and then probably more impactful on.

The optical side of the business. So we saw that increase that we kind of expected that to increase coming out of this year.

Not as much as the day, we really did see a lot of projects predominantly in the U S. I mean excuse me in Europe, they've got just kind of shifted into next year.

Okay, and then if I could.

That's helpful. If I could go back to the.

The regional service provider.

Yes.

Like George was asking the question was coming to my mind is that it was really sort of a tier three focused question and.

But I guess it sounded like from your answer that your definition of regional includes tier ones tier searches and tier threes can you no no no it doesn't no no no.

<unk>.

Depending on the tier three RSP number was on <unk> was actually up.

Yes.

I don't think tier two really affect as it never includes tier ones.

Got it okay.

And then I mean, basically it seems like for the actual the third quarter right I mean, the weakness was really.

In subscriber solutions, but it must be the order intake more for optical and somewhat for access and aggregation in the third quarter must have.

Most have been disappointing rate to get to this fourth quarter guide so I.

I would say that access and aggregation in optical have held up but where it seems like we're kind of and we're expecting those to be much softer than the fourth quarter I just want to verify that.

Hum.

The answer is yes, I mean, we expect the same kind of pressure.

Optical will be.

Right now our expectation is optical will actually be farther down.

Then where we expect access and aggregation to drop as far as on a percentage basis, So thats really.

Like I said, it's the project move outs are probably the biggest thing that you can highlight as far as our kind.

Kind of re looking at Q4, and then just really no rebound no bounce up on any of the other pieces of the business.

Okay.

I always appreciate that really helps our responses. Thank you. Thank you Tom Okay, Alright, alright.

Thank you. Our next question comes from the line of Brian <unk> from Needham <unk> Company. Please go ahead with your question.

Thanks for the question.

I wanted to maybe come at this a different angle here.

As we.

Youre talking about capital constraints at providers here tightening spending.

I would think about that.

Actually probably is affecting the OLED business, where you have all the capital intensity around labor.

Fiber in the ground.

And why wouldn't customers be more focused on success based spending in <unk>.

Lighting up.

Tops.

And their existing footprint and if so why aren't we seeing CPE.

CPE rebound given the customer constraints.

Yes, that's a good that's a really good question and I think.

And I would agree with you I mean, there are things that are more easily moved out than other things right in new footprint expansion is typically.

One of the things.

That is just easier to move same thing with some of these <unk>.

WDM projects.

I think some of it is just kind of what the plan build was so.

I had mentioned we shipped.

Just a ton of ports out of the SPX that was planned for a long time and there was part of that expansion, but I will tell you that even in that case, where we're shipping SD exports a lot of it has to add more towards two.

Kind of existing footprint, so it's kind of.

Increasing your homes passed and that existing footprint. So they're not so I think even in those cases, they are trying to minimize the capital and labor cost with adding to their commitments on their homes passed.

You're absolutely right on subscriber we expect just from the business and on the homes passed.

That we're shipping now to see an uptick in that business in the first half, but we just haven't seen it.

We just haven't seen it yet.

Sure. Okay. Thanks, that's helpful and regarding your guide for Q4 and I heard your comments it sounds like some of this.

Real tightening.

The impact Europe, specifically I heard from another vendor about some changes in the regulatory climate in Germany as it relates to some of the.

Fiber broadband.

Subsidies.

Seeing any of that impact and your chairman customers included in your guide or is this just unrelated and driven by just pure capital conservation.

It's just pure capital conservation, but is that that is spotty. So like if I look at this.

Say, Germany.

<unk>.

That business on fiber to the home.

We expect to pick up even in the near term.

And that's just because of where we are with $63 30 lab approvals and where they are with homes passed now.

Now project related like optical business, we expect to continue to slide.

Those are the two pieces in Germany, actually we would expect a stronger.

We expect a stronger Q4 and actually Q1.

Okay great.

Remind me.

Great. Thank you for that Tom and Lee can you remind me of the revolver terms you guys have right now any plan changes in the debt structure.

No that terms are still the same.

No change.

Got it alright, thank you.

Thank you. Our next question comes from the line of Tim <unk> from Northland Capital markets. Please go ahead with your question.

Hi, good morning.

Couple of questions about the Q4 guide.

<unk>.

It looks like.

Based on the separate report.

The kind of legacy AD, that's expected to be flattish into Q4.

I don't know if thats a lot of decline in optical and in some strength in enterprise, but.

So it would seem based on that did most of the weakness is coming from there.

And our legacy AD trans side.

I'm wondering if you could confirm that and talk to whether that has a geographic focus to it in Q4.

And kind of is it.

As an aside to that maybe asked the same question.

Regional service providers for your Q4 guide as you answered earlier for Q3.

Which is I don't know if you expect that to grow in Q4, but do you expect you to outperform.

Thanks Hello.

Let me get the first piece and I'll ask <unk> I'm not sure how we're getting.

We're coming to that number.

Our expectation right now is the optical piece of the business is going to be down materially. That's the biggest that's the biggest drop so and so that's the legacy add the piece of the business, which we do expect to be.

That's the kind of the big change as those project movements Julio you want to touch on it is going to be it's going to be further down.

You recall at last quarter.

<unk> side of the business update at our yearly guidance.

<unk> two down to the to the low teens for.

For the year so.

I don't know where you got the read from the <unk>.

Net net.

Networks as he said, we will continue to be on that level, where it's currently at.

So again the yearly guidance for the Worksite.

We're excited.

Fair in the low teens.

What I'm reading here is high single digits to low teens.

<unk> taken a mid range there but.

Clearly we are on the bottom end of that range that's fair enough.

Like Tom said earlier, yes, like Tom said earlier the order entry was.

Disappointing on the on the <unk>.

<unk> on the optical side and the push outs, where actually the big mover right. The push outs into next year for many of the projects that were originally scheduled for the fourth quarter.

Okay, well then it sounds like on that basis that you could have some decent expectations for regional in Q4, but I just wanted to follow up on that question.

Yes, its been relatively consistent <unk> shipments have been relatively consistent.

Just ongoing and Theyre not.

There was a period not that long ago, where theyre growing 30%, 40% a year, but at this point in time. They are kind of just flattish and we're okay with flat right now needless to say so.

I don't have that exact number but I would expect them to operate the way and behave the way that they have been behaving.

Does that get your question Terry.

Great. Thanks very much.

Okay.

Okay at this point in time it looks like we are.

We have no more questions in the queue. So.

I appreciate everybody joining us for the call today, we hope to very soon be able to have these calls b.

A little bit brighter.

I just wanted to leave you with this.

The solid sense that we understand the environment. We're in we're making the changes in the way that we operate the business in order to be able to weather the environment that we're in that will absolutely play.

That will absolutely help us.

And.

Accelerate the growth coming out of this period of time.

But we're committed to getting it done so thank you everybody for joining us today.

Sure.

Thank you. Thank you.

Thank you ladies and gentlemen, this does conclude today's conference call. Thank you for participating you may now disconnect.

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