Albany International Corp. (AIN) Q1 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Albany International First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to your host, Director of Investor Relations, Mr. John Hobbs. Please go ahead.

Thank you, Greg, and good morning, everyone. Welcome to Albany International's first quarter 2021 conference call. As a reminder, for those of you listening on the call today, please refer to our press release issued last night detailing our quarterly financial results. Contained in the text of the release are certain information regarding our forward-looking statements and the use of non-GAAP financial measures and their associated reconciliation to GAAP. For the purposes of this conference call, those same statements apply to our verbal comments we make this morning. Today, we will make statements that are forward-looking, that are containing a number of risks and uncertainties, among which are the potential effects of the COVID-19 pandemic on our operations, the markets we serve and our financial results. For a full discussion, including a reconciliation of non-GAAP measures, we may use on this call to their most comparable GAAP measures, please refer to both our earnings release of April 26, 2021 as well as our SEC filings, including our 10-K. Now, I'll turn the call over to Bill Higgins, our President and Chief Executive Officer, who will provide some opening remarks. Bill?

Thank you, John. Good morning, and welcome everyone, thank you for joining our first quarter 2021 earnings call. I'm pleased to report that we started the year strong delivering another solid quarter both segments got off to a good start. As a company, we achieved $222 million in revenues, an excellent bottom-line performance of GAAP EPS of $0.85 or $0.87 per share on an adjusted basis. Our cash flow generation was particularly good for the first quarter and we continue to pay down debt and have a healthy balance sheet, which enabled investments in future growth. I'm particularly proud of how our employees continue to perform through the pandemic even while following our COVID-19 protocols and safety procedures. Our operating teams are driving process improvements with Lean Kaizen. Our R&D teams are working on the next-generation of materials and products, and we continue to do a great job for our customers in delivery, quality and service. Our Machine Clothing segment had it's strongest quarterly top-line performance since 2015 with revenues up nearly $12 million year-over-year, and good order activity in Q1 which bodes well for this year. In fact, other than the secular decline in publication grades, Machine Clothing end-market demand in packaging, tissue pulp and engineered fabrics were all positive in Q1. In addition to a solid backlog, our engineering teams are hard at work developing new technology belts for our customers which was critical to our success and value proposition. We have seen some instances of isolated supply constraints impacting raw material pricing and delivery timing in this segment, and we continue to actively manage our supply chain securing the materials we need to support our customers demand. In summary, our Machine Clothing segment continues to perform well, serving customers around the world as the recognized global leader supplying these critical consumable components to the paper industry. This success is the result of a disciplined execution of our long-term strategy. In Aerospace, as we've reported last quarter, our Engineered Composites segment will be grinding through a year of destocking of excess inventory in the channels for LEAP Boeing 787 and F-35 products. That said, Engineered Composites is on-track with our plan and ready for the upturn as commercial air transport improves, inventory in the channels is consumed, and our production is back in sync with aircraft OEM production. We're on good platforms that we expect will recover, and we continue to do this as the time to further improve our operations. We're ready and looking forward to the upturn. We're working closely with Safran to coordinate our operations as the LEAP engine production ramps up supporting the Airbus A320neo and Boeing 737 MAX. With domestic air travel recovering first and fueling demand for narrow-body aircraft, the A320neo and Boeing 737 MAX are in the sweet spot of the air transport recovery. In Engineered Composites, looking beyond our current portfolio of the programs, our opportunity pipeline is full as it's ever been. We're developing a breadth of capability to be the next-generation supplier of advanced composite materials. This ranges from our proprietary 3D-woven composites currently used on LEAP engine sand blades and fan cases to automated fiber placement composite wing skins for Lockheed Martin's F-35 Joint Strike Fighter to complex components on the Sikorsky CH-53 helicopters. We continue to develop applications for the Wing of Tomorrow program with Airbus industries, and we're investing more this year in R&D projects with new customers and new platforms is in advanced materials such as our 3D-woven composites on a range of exciting applications including unmanned hypersonic and electric aircraft as some of these efforts furthers our goal to diversify and grow our customer base and broaden our material science capabilities. As I mentioned, we have a strong balance sheet and good free cash flow generation. These allow us to sustain our investment in the technology and customer programs that expand and broaden our competitive positioning in both segments. Our first priority for capital allocation is to invest in organic growth programs across both business segments, and then to seek acquisitions that fit our long-term strategy. Our reputation for reliability, service and technical excellence is well established in the Machine Clothing segment, and our brand is growing in Aerospace as a reliable supplier in engineered materials partner, and we're optimistic about the long-term opportunities in both segments. But with that, I'll turn it over to Steven for more detail on the financials. Steven?

Thank you, Bill. Good morning to everyone. I will first talk about the results for the quarter and then comment on the outlook for our business for the balance of the year. For the first quarter, total company net sales were $222.4 million, a decrease of 5.7% compared to the $235.8 million delivered in the same quarter last year. Adjusting for currency translation effects, net sales declined by 8.2% year-over-year in the quarter. In Machine Clothing, also adjusting for currency translation effects, net sales were up 4.9% year-over-year, resulting in the highest Q1 revenue for the segment since 2015 as Bill had mentioned. The increase was driven by growth in all major products -- all major grades of product other than publication grades. The revenue from publication declined by 10% in the quarter and represented only 16% of MC's revenue this quarter. Currency-neutral revenue in both, packaging and tissue grades reflected a high single-digit growth rate in the quarter driven by the high orders we had seen in the fourth quarter of last year. Engineered Composites net sales, again after adjusting for currency translation effects declined by $26.2 million, primarily caused by significant reductions in LEAP and Boeing 787 program revenue, partially offset by growth on the F-35 and CH-53K platforms. During the quarter, the ASC LEAP program generated a little under $27 million in revenue, a slight improvement over the roughly $24 million delivered in Q4 2020, but down significantly from roughly $39 million delivered in Q1 of last year. First quarter gross profit for the company was $88.5 million, a reduction of 1% from the comparable period last year. The overall gross margin increased by 190 basis points from 37.9% to 39.8% of net sales. Within the MC segment, gross margin declined from 53.2% to 51.5% of net sales, principally due to higher fixed costs and lower absorption. Within AEC, the gross margin declined from 17% to 16.4% of net sales, driven primarily by the impact of changes in the estimated profitability of long-term contracts. Last year, during the first quarter, we recognized the net favorable change in the estimated profitability of long-term contracts of close to $1 million, while this year, the net change in the estimated profitability of long-term contracts for the first quarter was insignificant. First quarter selling, technical, general and research expenses declined from $49.2 million in the prior year quarter to $46.7 million in the current quarter, and were roughly flat as a percentage of net sales at about 21%. The reduction in the amount of expense reflects the absence of severance cost recognized in the prior year, the impact of additional accounts receivable reserves we recorded in Q1 2020 when the pandemic began, and lower travel expenses, partially offset by lower foreign exchange gains. As expected, and consistent with our full year plans, R&D expenditures in both segments increased this quarter. Total operating income for the company was $41.8 million, up from $39.6 million in the prior year quarter. Machine Clothing operating income increased by $3.2 million, driven by higher gross profit partially offset by higher FTGNR [ph] expense and AEC operating income fell by $4.7 million caused by lower gross profit. Other income and expense in the quarter netted to an expense of $600,000 compared to an expense of $15.6 million in the same period last year. Last year's results included a significant charge related to a foreign currency revaluation loss. The income tax rate for this quarter was 26.7% compared to the unusually high 62.1% rate we recorded last year. The primary driver of the reduction in the tax rate was the non-deductibility of last year's foreign currency revaluation loss. Apart from that in this quarter, favorable income tax adjustments reduced income tax expense by $1.3 million compared to an increase of $5.1 million from similar adjustments in the same quarter last year. Net income attributable to the company for the quarter was $27.6 million, an increase of $18.5 million from $9.1 million last year. The increase was primarily driven by the absence this year of last year's foreign currency revaluation loss and by higher operating income. Earnings per share was $0.85 in this quarter compared to $0.28 last year. After adjusting for the impact of foreign currency revaluation gains and losses, restructuring expenses, expenses associated with the CirComp acquisition and integration, and severance costs in the prior year period, adjusted earnings per share was $0.87 this quarter compared to $0.78 last year. Adjusted EBITDA grew 2.6% to $60.7 million for the most recent quarter compared to the same period last year. Machine Clothing adjusted EBITDA was $54.9 million or 37.1% of net sales this year, up from $49.2 million or 36% of net sales in the prior year quarter. AEC adjusted EBITDA was $16.7 million or 22.6% of net sales, down from last year's $22.1 million or 22.3% of net sales. Turning to our debt position. Total debt, which consists of amounts reported on our balance sheet as long-term debt or current maturities of long-term debt, declined from $398 million at the end of Q4 2020 to $384 million at the end of Q1 2021. And cash declined by just over $3 million during the quarter, resulting in a reduction in net debt of over $10 million. The first quarter is typically our lowest quarter for cash flow generation due to working capital seasonality and the incentive compensation payments made during the quarter. This year, we performed better than we would typically expect and delivered free cash flow, defined as cash flow from operations less capital expenditures, of $21.1 million, compared to a use of over $19 million in the same quarter last year, driven primarily by improvements in AEC working capital. We were pleased with the cash flow performance of the AEC segment this quarter, which swung from a significant use in the same quarter last year to significant cash generation this year. Capital expenditures in Q1 of each year were approximately $13 million. Our absolute net leverage ratio is now 0.65, providing us with a very strong balance sheet, allowing us to take advantage of organic and acquired growth opportunities. As we look forward to the balance of 2021, the outlook for the Machine Clothing segment remained strong. Compared to the same quarter last year, MC orders were down 2%. However, as you may recall, near the end of Q1 in 2020, orders spiked from customers who are concerned about the availability of supply in light of the emerging pandemic. Further, from a backlog perspective, we are in a stronger position entering Q1 in 2021 than we were in 2020. So overall, we are feeling good about our previously issued guidance of revenue for the segment of between $570 million and $590 million. From a margin perspective in Machine Clothing, we delivered another strong quarter, with adjusted EBITDA margins north of 37%. I should note that some of the headwinds we projected this year, most notably a return to normal levels of travel and the absence of the foreign exchange benefits we enjoyed during the middle last year, have yet to impact our comparative results. That said, we are pleased with our performance for the quarter. While we are maintaining our adjusted EBITDA guidance for the segment of $195 million to $205 million, we are currently trending toward the upper portion of that range. Turning to Engineered Composites. We are seeing the expected impact of the 787 frames channel destocking in our top line results. During the quarter, we generated less than $1 million of revenue from the 787 frames program compared to over $12 million in the same quarter last year. I already noted that the ASC LEAP program was also down by about $12 million during the quarter. These two programs account for almost all of the year-over-year decline in AEC revenue that we saw during the quarter. As a result of these declines, the share of AEC revenue derived from defense programs grew to over 48% during the quarter. That said, we will still see the previously disclosed revenue impact from F-35 channel destocking in the second and third quarters. So, I would expect the defense program share of AEC revenues to dip somewhat over the next couple of quarters. This will also make the second and third quarters quite challenging for the segment overall. The year is shaping up in line with expectations for the segment, and we are maintaining our guidance range of $275 million to $295 million for segment revenues. From a profitability perspective, our performance to date is broadly in line with our expectations, and we are maintaining our AEC adjusted EBITDA guidance of $55 million to $65 million. We are also maintaining all of our previously issued guidance ranges for company-level performance, with the exception of guidance for GAAP earnings per share, which has been updated to reflect non-GAAP adjustments recorded in Q1. Current guidance is as follows: revenue of between $850 million and $890 million; effective income tax rate of 28% to 30%; depreciation amortization of between $70 million and $75 million; capital expenditures in the range of $50 million to $60 million, GAAP earnings per share of between $2.38 and $2.78, down slightly from prior guidance of $2.40 and $2.80; adjusted earnings per share of between $2.40 and $2.80; and adjusted EBITDA of between $195 million and $220 million. Overall, we are very pleased with how the year is progressing and hope to see a continued progression to normalcy in the balance of the year. With that, I would like to open the call for questions. Over to you, Greg.

[Operator Instructions] Your first question comes from the line of Peter Arment from Baird. Please go ahead.

Hi, good morning. You actually have Eric Ruden on the line for Peter today. But I wanted to touch on AEC and kind of the balance of the year here. Is the $60 million to $65 million of inventory destocking kind of headwinds still the right number for this year? I think, adding up the numbers there, we had about $23 million from 787 and on LEAP with F-35 still to come. How should we think about the remainder of the year? And have we hit bottom on 787 and we're building on production from here?

So first thing, the $60 million to $65 million, yes, that's still the right number for the overall year, roughly. It's in that range. We -- as I mentioned, the F-35 inventory destocking has yet to hit us. In fact, in Q1, we saw some revenue growth in F-35, as I noted, from Q1 of 2020 to Q1 of 2021. But in the second and third quarters, we will see a dip down in F-35. So that's still -- that part is certainly still ahead of us. On LEAP, we are seeing some destocking, both in the channel and, in fact, on our own books. Some of the products that we had, as I mentioned over the last year, we've had a significant stock of inventory. For example, on LEAP-1B, which powers the 737 MAX, we went up well over 200 shipsets, close to 250 shipsets, at the end of last year. At the end of Q1, we're now down under 200 shipsets on hand of LEAP-1B revenue. So we're certainly seeing some of the destocking. And where that appears in our balance sheet that would be in contract assets because it is a product on which we've already recognized revenue and profit. So if you see the decline in contract assets this quarter, part of that is this destocking in LEAP. So that is progressing as expected. However, predicting exactly what the profile looks like over the balance of the year largely depends on Boeing's ability to ramp up as they expect to ramp up in 737 production. So I'm not going to provide a quarter-by-quarter profile of the burn down, but it is progressing as we would have expected. On 787, certainly, as I mentioned, will be less than $1 million of revenue this quarter. It's hard to believe this quarter is not the bottom in terms of revenue, but Q2 is going to be another challenging quarter on 787. So the improvement on that program, assuming as we say -- as we've said before, that Boeing manages to deliver both their existing stock of 787s and sell additional aircraft. So follow their build profile also in 787. Assuming that happens, we would start to see some recovery on 787 in the back half of this year, where we would start to go through to get through some of that inventory destocking during the channel. But the second quarter is not going to be much of an improvement on 787 over the first quarter.

Okay, thank you, That's really helpful. And then maybe just a quick one on MC. You mentioned rising input costs. And obviously, inflation is top of mind for a lot of investors. Can you maybe just provide a bit more color on what you're seeing there? Was there any pressure on the 1Q numbers? Are you expecting that to put more pressure on the back half of the year?

Yes, Eric, this is Bill. We're watching it pretty closely right now. We seem to have a handle on it. So we're not seeing pressures at this time, but we did see some activity around logistics and transportation bottlenecks slowing things down and then some price pressure that was very minimal, and we were able to manage through so far. So -- but we are watching it. And as you've seen in other industries, there's quite a bit of price and logistic concerns out there.

Okay, thanks. I'll hop back in the queue.

Your next question comes from the line of Gautam Khanna from Cowen. Please go ahead.

Yes. Hey, thanks guys. A couple of questions. So just to follow up on the prior question, on the F-35, do you guys have visibility that, in fact, will decline throughout the year? Or is this just in anticipation of potential destocking? I'm just curious what your order visibility is.

Yes, this is...

Yes -- oh, sorry.

Yes, we do have visibility in our plans through the year of destocking that's going to go through on F-35.

Okay. So when does that kick in? I mean, is it already kicking in, in Q2? Or...

Yes, we expect to see it through Q2 into Q3.

And is it still 20 units? I think that's what you guys talked about previously.

Sorry. Yes, what we talked about previously, there were two drivers. That is the biggest one, where last year Lockheed produced about 20 units fewer than they had expected. And we delivered all of our parts for those 20 units. But in addition, as we noted, for a variety of reasons, not all of which are clear to us, but presumably, pandemic-related, there was a less depot activity last year. And so there was less product consumed also for aftermarket refurb and repair of aircraft. And so the actual impact on us is more than just that 20 shipsets. But it's in line with the -- the dollar impact we provided at the end of Q4 still holds for the full year.

Okay. Separately -- and I may have missed this because one of the other earnings calls is running along -- on the 1A and 1B. So if you could just clarify again how much inventory -- when you start to see a production increase for yourselves in time based on the announced build rates of the program? So when do we see a pickup? And then secondly, you mentioned the AEC cash conversion better in Q1. How much was that true-up of -- how much is explained by the true-up of the Safran contract from last year where you had to absorb the fixed cost and get reimbursed later?

Sure. No, I can make those 2. So on LEAP-1B, as I've mentioned, we were up not quite 250 shipsets, but closer to 250 than 200 at the end of 2020. We're now down under 200 shipsets. So we're seeing some -- we're seeing some destocking of what is on our books right now. Now we're not going to see a significant increase in production on that though for some time period, but obviously, still have those close to 200 shipsets on hand, and we'd like to see Boeing meet its production ramp-up. So that is probably outweighs before we see a material pickup on 1B production. On 1A right now, when we see a pickup in production, all depends on when Airbus meets its ramp-up points. As you know, they projected a couple of points, both later this year and next year when they expect to step up production. And we would certainly expect our production to rise in line with that. But overall, in the LEAP program, the next big step-up is really on 1B when we get back to meeting the actual full demand for that. And that's probably beyond 2021. So I wouldn't expect to see significant changes. As we said, overall, for the year on LEAP, collectively, this year is going to be roughly comparable to last year. It's going to be up a little, but not appreciably up over the revenues we delivered last year. In terms of the cash flow in Q1, look, very strong cash flow for AEC for Q1. It was certainly benefited from LEAP in two ways. One is I mentioned that destocking of inventory in our books, and there was a little bit of compression in 1A inventory on hand as well, although much smaller on 1B because we just didn't enter the quarter with the excess inventory. But clearly, that is cash. Those are deliveries of which we've already recognized the revenue and costs and profit. And we need cash collection when we deliver it. On the true-up specifically, there are puts and takes on that, but for -- and some of it dribbles into Q2 impacts, so it's not all felt within in Q1, and it differs by facility. We have separate true-ups reach. But overall, somewhere in the mid-teens, a little under $15 million benefit in Q1 as a result of the true-up.

Okay, that's helpful. I'm sorry to keep asking questions, but I did want to make sure we got these answered on the call. The -- was there any cumulative catch-up of consequence at either segment, but EAC in particular, in Q1?

Yes. So we only really have two catch-ups in AEC in Machine Clothing. We really don't recognize on a percent complete basis just because of the terms of our contracts there. So within AEC, it was insignificant this quarter compared to about $1 million pickup in Q1 of last year. So really effectively rounded to zero.

Got it. And just on Machine Clothing, so the margin performance is very strong. You mentioned you're trending towards the higher end of the guidance range. But I am curious, like, again, how much visibility do you have out there? Can you -- it's been one of these segments that's done better for longer. What sort of -- what gives you concern about the Q1 run rate not extending? Are there any specific things in the order book? Or is it just you're making a macro assumption? And yes... thank you.

Yes, this is Bill. Yes, we're still watching the publication end market pretty closely. That has been a good market for us. It's become a much smaller part of our revenue. As we said, we got down into the 16% of the quarter revenues for publication. And it's hard to say how fast it's going down. I think you'll see there were some announcements this past week by -- in Europe to close down a couple of big mills, very large business in Finland and Sweden. I think we're expecting there's going to be some more of that, but it's really hard to tell. Our visibility goes out. It goes out beyond the quarter, but it doesn't extend through the full year in our backlog. So we're just sort of -- we're being careful as we watch that publication grades. The other end markets have looked pretty good. Packaging, tissue and then even some of the engineered fabrics and wood products or nonwoven end segments are looking pretty good. So it was a little too early to kind of change our guidance for the full year. We'll look at it as we get into the middle of the year and see how the markets play out.

Thanks, guys.

Your next question comes from the line of John Franzreb from Sidoti & Company. Please go ahead.

Good morning, guys. Just sticking with Machine Clothing. Was the revenue growth and results uniformly good across all major geographies.

Yes, John, this is Bill. I would say it was strongest in Asia and China in particular. And then not quite as strong, obviously, publication hit hard in Europe and harder probably in Europe than anywhere, but also in Americas. But I would say Asia was stronger overall.

Yes, John, the 10-Q will come out later today, and you'll see. But effectively, Americas where we combine both North and South America, was effectively flat year-over-year. It was less than -- it was down by a few bps, whereas Eurasia, which is Europe and Asia combined, was up quite significantly more in that 20% range and our engineered fabrics business was actually up double-digit rates as well during the year. And that we don't break out by region. We break out our paper machine clothing business by region. Engineered fabrics was up double-digit rates as well.

Do you have a lot of exposure to India? I don't recall.

No, we do not.

Perfect. Okay. And also, you mentioned the commodity pricing, what ability do you have to raise pricing in Machine Clothing? Or is it you're just going to have to absorb it?

Yes. As you know, the Machine Clothing segment mostly works on contracts of various ranges of time. So it's not something where we can just pass through price increases quickly. It would take us time to recover significant material price increases in our end-product pricing. We would, of course, work our best to improve operations and take cost out to adjust as well.

Got it. And just on the cash flow, Bill, it's going to be another strong -- what's going to be your priorities use with cash at this point?

Yes. As we stated, our top priority is to continue to fund organic growth programs and what we describe as the incubator projects we have in the company in both -- primarily in AEC for new products, but for the next generation of belts in MC as well. So that's going to be our first priority. After that, if we can find acquisitions that fit our strategy to improve our materials capability and diversify our customer base, we'll consider acquisitions as well. But our first priority will be to continue organic growth.

Okay. Thanks for taking my questions, guys.

[Operator Instructions] And you have a question from the line of Pete Skibitski from Alembic Global. Please go ahead.

Good morning, guys.

Good morning, Pete.

I don't know -- I obviously don't know the question-and-answer protocol. I wanted to ask -- Stephen, I know you don't want to talk too much about the quarter, but I'm just trying to get a feel for kind of 2Q and 3Q. It sounds like you get the incremental headwind sales-wise from the F-35. Is something in the low 60s kind of what you guys are thinking? Or is that too conservative? Any kind of ballpark you're able to give?

Yes. Look, I don't want to give a specific number, but certainly, there will be -- there's not a huge amount of improvement, as I mentioned, particularly in Q2 in programs like 787 and LEAP in Q2, yet there is the additional headwind of some F-35 decline. So even sequentially, that will be a challenging quarter. Q3 may have a little help depending on what happens on LEAP-1A 1A, but -- and so I would expect sequentially Q3 to be better than Q2. But look, I certainly think that the low 60s is probably a little too low for that business. So it's somewhere more challenged than it was this quarter, but I would expect it to be certainly somewhere probably north of the low 60s, but south of what we delivered this quarter.

Okay, fair enough. And then just another one on the 777 times program. I'm just wondering, is that -- for you guys, is the activity pretty minimal right now? And is there any kind of -- if you look out a few years, is there any kind of minimum level of volume that you need on that program for it to be profitable or even kind of in line with the balance of AEC's programs?

Yes, there's very minimal work on it right now. We have continued a little bit of development work, and that's primarily what we've done so far. So we haven't gotten to the point where we have kind of a commercial plan for it. So it would be hard to answer the second part of your question, what's the minimum quantity. It depends on design pricing, everything being finalized from the development work, which is very slow right now.

Okay. So you don't really have any kind of go-forward risk from that project because you don't have any production terms set up? Is that right?

Yes. Well, we've been working -- it's been a development program so far. It's not a commercialized program yet.

Okay. Thanks, guys.

Your next question comes from Gautam Khanna from Cowen. Please go ahead.

Yes. Just a quick follow-up. I think you made comments in your opening remarks about M&A. And I'm just curious what can you say about the M&A pipeline and the types of opportunities you're looking at.

Yes. We are actively out looking. It's a difficult marketplace for acquisitions. Pricing has been high and very few companies have come to market. So we're continuing to look for things that would fit within our strategy as we did the acquisition of CirComp in Germany at the end of 2019. That's a small, high-technology company that brings us some more advanced capability around thermal plastics and filament winding, adding to our materials capability. So we'll continue to look for technology plays that we could fold in, that would add to our complement of what we can offer on the sort of the next generation of aircraft. But it's a pretty tough marketplace out there for acquisitions right now.

Okay. And we should assume that's of the tuck-in variety, if they're similar to what you did previously? Is that right?

That would fit within our strategy, yes.

Okay. Thank you, guys.

And at this time, there are no further questions.

All right. Well, I'd like to thank everyone for joining us on our call today. We appreciate your continued interest in Albany International. Of course, if you have any questions, please feel to reach out to John Hobbs, our Director of Investor Relations at 630-330-5897. Thank you, and have a good day.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.