AstroNova, Inc. (ALOT) Q3 2014 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Astro-Med Inc. Third Quarter Fiscal Year 2014 Financial Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, Wednesday, November 27, 2013, at 11 a.m. Eastern Time. I'll now turn the conference over to Mr. Stan Berger. Please go ahead, sir.

Thank you, Ron. On behalf of the management of Astro-Med, we're extremely pleased that you've taken the time to participate in our conference call. Thank you for joining us to discuss the company's fiscal 2014 third quarter financial results and business outlook. Before I introduce management, I would like to remind everyone that certain statements made during the course of this conference call, especially those that state management's intentions, hopes, beliefs, expectations or predictions for the future are forward-looking statements. During this conference call, we may make forward-looking statements within the meaning of the Securities Exchange Act of 1934. These statements are based on the company's present expectations and beliefs concerning future events and are necessarily based on certain assumptions, which are subject to risk and uncertainties. Actual results may differ materially from those discussed here. More information on these risk factors is included in the company's filings with the Securities and Exchange Commission. By now, you should have received a copy of the news release, which was issued yesterday after the market closed. If you have not received a copy, please go to our website at www.Astro-MedInc.com, where a copy of the press release can be downloaded from the Investing section of our homepage. Hosting the call today are Everett Pizzuti, President and Chief Executive Officer; Gregory Woods, President and Chief Operating Officer; and Joe O'Connell, Senior Vice President, Treasurer and Chief Financial Officer. At this time, I will turn the call over to Mr. Pizzuti. Everett?

Thank you, Stan, and good morning, everyone, and thank you for joining our conference call, especially on this snowy/rainy day before a holiday. I will make some brief opening remarks and then Joe O'Connell will provide detailed financial results, Greg Woods will provide a recap of operations and then we'll take your questions. As you read on the press release we issued yesterday, our third quarter was very strong with healthy revenue increases compared to the third quarter of last year. Additionally, the third quarter reflects a continuation of the progress we've been making all year from quarter-to-quarter with improvements in revenues, profit margins and operating margin. And while we had double-digit growth in both domestic and international channels, we are particularly pleased with the 19.2% growth in international, especially in light of the typical August shutdown in Europe. Our third quarter as you know, embraces August. Our color label printers and consumables sold extremely well in the quarter and beat last year's third quarter by over 17%. Driving the improvement are the Kiaro! color label printers and the associated consumables, which include label materials and ink cartridges. The Kiaro! is truly a salesmen's dream, as it is full of advanced features, it's easy to demonstrate and it's exceedingly reliable. Now at the end of the quarter, we made our very first shipments of the new Kiaro! 200 with -- color printer, which can print labels up to 8 inches wide compared to the Kiaro!, which prints labels up to 4 inches in width. The Kiaro! 200 is targeted especially for the labeling of products sold in large containers, such as chemicals, janitorial and janitorial supplies, paint and the like. This model sells for approximately $24,000 compared to the Kiaro!, which has a price of $9,995. On the Test & Measurement front, we experienced solid growth in both ruggedized products as well as our data acquisition systems. The latter had been somewhat affected by sequestration as many of our data acquisition applications are defense or aerospace-related. But now, there seems to have been some return to spending. During the quarter, we continued with the Lean initiatives that we started earlier in the year with one of the primary benefits being a continuous program to drive costs down to improve profitability. The Lean program is positively embraced by all in our workforce. Spending was up somewhat in the quarter as we invested especially in selling and marketing to assure high double-digit growth going forward. Spending and R&D was also up over last year's third quarter to support our strategy to introduce several leading-edge new products every year. The pipeline of new products includes data acquisition, color printers and ruggedized products. We are also making progress to add growth by acquisition, as we have been mentioning on these calls several times. We have identified and met with several targets and are being extremely selective to assure not only the proper fit, but also accretive financial results right from the start. Of the targets currently in our sights, there's one that we hope to close this fiscal year. As of today, we are 1 month into the final quarter of our fiscal year and we are optimistic that the positive results that we have experienced so far this year will continue. Greg will present more color on the operations but first, Joe will present the financials. Joe?

Thank you, Everett. Good morning, everyone. I'm very pleased to report on Astro-Med's third quarter financial results for the fiscal year 2014. As you've heard from Everett and also possibly read in yesterday's press release, the company had another strong quarter in revenue growth and improved margins. Net sales in the quarter were $18,179,000, representing a 13.3% increase over the prior year's third quarter sales, and a 5.7% higher than this year's second quarter sales revenue. We experienced double-digit growth from both the company's domestic customers at $13,198,000, being up 11.3% over the prior year, as well as from international customers at $4,981,000 over the previous year's third quarter sales by some 19.2%. Relative to the business segment, the company's QuickLabel Systems product group of color and monochrome printer systems reported sales of $12,509,000, achieving a new record in quarterly revenue and exceeded the prior year's sales volume by 17.1%. Our Test & Measurement product group of ruggedized products and data acquisition systems had sales in the quarter of $5,670,000, a 5.8% increase from the prior -- previous year. Profiling the third quarter sales by products has the company's consumables lines at $9,419,000 in sales, a 19% increase from the previous year, whereas, as hardware sales reached $7,762,000 in the quarter, a 7.2% growth rate from last year. Our service parts and repairs contributed another $998,000 in the quarterly sales, up some 13.1% over the previous year. The third quarter sales generated $7,362,000 in gross profit dollars, representing a 13.6% improvement from the prior year and earned a margin of 40.5% in the quarter. That's against the prior year's 40.4% margin and our second quarter margin of 40.3%. As you heard the secondary expenses of Selling, R&D and General & Administration were $6,180,000 in the quarter, consuming some $0.34 of the third quarter sales dollar, an increase over the prior year's operating expenses. The increased spending being traceable to selling and marketing initiatives, including personnel, trade shows and promotion, as well as increased R&D spending. The company earned $1,184,000 in operating income in the quarter, slightly behind the previous year's operating income of $1,202,000. Astro-Med earned an operating margin of 6.5%. That's an improvement over the second quarter's margin of 5.2%, however, still lower than the prior year's operating margin of 7.5%. With respect to the segment operating profits in the quarter, QuickLabel Systems earned $1,493,000 in segment operating profit with a margin of 11.9%, while the T&M segment earned $912,000 in segment operating profit with a corresponding margin of 16.1% on sales. The federal state foreign tax provision in the quarter was $347,000, representing an effective tax rate of 24%. The lower rate being traceable to a one-time tax benefit of $187,000 related to the true-up of our tax obligation from filing our prior year's tax return. Net income in the third quarter was $1,108,000 or $0.14 per diluted share. This result was lower than the prior year's net income of $1,307,000 or $0.18 per diluted share. However, net income in the third quarter from continuing operations was $745,000 or $0.10 per diluted share, slightly below the prior year's third quarter net income from continuing operations of $749,000, but still at $0.10 per diluted share. Net income from our discontinued operation was $363,000 in the quarter or $0.04 per diluted share against the previous year's net income from the discontinued operation of $558,000 or $0.08 per diluted share. Prior to the review of the balance sheet accounts at the end of the fiscal third quarter, I'll provide a quick recap of Astro-Med's 9-month results. Our net sales for the 9-month period was $50,858,000, with 9 months ended November 2, 2013. This volume represents a growth rate of 12.9% over the prior year. Sales in our domestic channels were $35,965,000, an 8.6% improvement over the last year, whereas international shipments especially strong at $14,893,000 rose 24.9% from the prior year. Favorable foreign exchange contributed 1% to this year's international sales growth. The double-digit sales growth was shared by both the business segments, with QuickLabel Systems sales of $36,101,000. That's an increase of 13.3% from last year, whereas the Test & Measurement segment sales were $14,757,000, an increase of 11.9% from -- over the prior year. Non-GAAP gross profit dollars for the 9 months of fiscal 2014 were $20,062,000. The non-GAAP represents the exclusion of the one-time costs that related to the product replacement. The $20,062,000 gross profit dollars reflects an increase of 14.4% over the prior year's gross profit dollars and a margin of 39.4% versus last year's 38.9%. The company earned non-GAAP net income of $1,591,000 for the 9 months, representing $0.22 per diluted share. In the previous year, Astro-Med earned $2,829,000 in non-GAAP net income or $0.38 per diluted share. Now for a quick review of the balance sheet. Our assets at the end of the third quarter were $77,768,000. Our equity balance was $64,555,000, representing a book value of $8.60, slightly down from the year-end. Our cash and marketable securities position was $32,628,000, representing a slight decrease from the year-end balance. Accounts receivable at $12,743,000 represents some 53 days sales outstanding, up a couple of days from the year-end balance. Inventory levels were $15,037,000, representing some 99 days on hand, again, slightly up from the year-end 82 days on hand. Our capital expenditures for the first 9 months were $910,000. Most of those dollars traceable to information technology, machinery and equipment and some building improvements. Our dividends for the first 9 months were $1,569,000, representing a $0.07 per share per quarter. Our employee population at the end of the third quarter was 330 folks, representing a decrease of 11 people from the year-end. And our sales per employee for the trailing 12 months is $217,000, against last year's corresponding $216,000, on a sales per employee. That concludes the review of the financials for the third quarter and for the 9 months ended. Everett?

Thanks, Joe, and now Greg will -- Greg Woods will present some color on the operations. Greg?

Thank you, Everett, and good morning, everyone. Well as you've heard, it was another strong quarter of revenue and earnings growth for Astro-Med. The growth was broad-based geographically as well as across our product lines. And within the product lines, we saw nice growth in nearly all of the market segments where we compete. The Test & Measurement group has strong bookings of airborne printers throughout the quarter and we landed several multi-unit orders for our data acquisition recorders within the Ruggedized Product group. At our QuickLabel Systems group, sales of our new Kiaro! printer continue to accelerate, driven by a very attractive and active trade show season. Sales were strong both domestically and internationally with our European and Canadian offices once again turning in an exceptional quarter. In addition to increasing revenue, we began to see the benefits of our Lean initiatives positively impact our margins in both business segments. We continue to drive Lean practices throughout the company and we have several Lean events in the queue for the coming months. During Q3, our Lean events were focused on our consumables production facility, where we manufacture the paper, labels, inks, ribbons, et cetera that are used in our label and airborne printers. As you place more and more printers around the world, this drives an ever-increasing demand at our consumables operation. Before embarking on our Lean conversion earlier this year, it was beginning to look like we might soon have to expand this facility to handle the increased volume. However, we're now confident that the Lean improvements we have made to-date, together with those that are planned in the coming months, will allow us to handle the increased volume in our existing facilities for at least another year or so. Last quarter, I mentioned that we had initiated the new Stage-Gate process to more systematically drive our product development programs. We are now using that system across-the-board, and it was put to the test this past quarter as we successfully launched several new products in both business groups. Backing up those newly launched products is a growing pipeline of future products that are being added to the Stage-Gate process and being driven by the voice of the customer. Our channel expansion efforts continued in the third quarter with several new additions. We added to our direct salesforce in North America, Latin America and Europe and we added several new dealers in those regions, as well as in Asia and Africa. Now let me give you a little more detail on the individual business segments. Our QuickLabel Systems business posted nice sales gains on both the year-over-year as well as on a sequential basis. Demand for our color label printers continues to be strong especially for the new Kiaro! inkjet line of printers. Once again this quarter, we shipped a record number of these color inkjet printers. To ensure that we keep up the pace in growing our share of the on-demand digital color label printing business, we continue to invest heavily in both product development and promotion. During the quarter, we exhibited at 12 major trade shows around the globe. This is the busiest trade show period for us during the course of the year. At the shows, we announced and demonstrated 5 new QLS products, the most notable of which was a new member of the Kiaro! family, the Kiaro! 200. This new printer can print labels that are over 8 inches wide. That's double the width of the original Kiaro! introduced last year. The Kiaro! 200 was very well received and we sold several units right off the trade show floors. Production shipments began at the end of the quarter and we expect the Kiaro! 200 to made good inroads into the wide prime label market. Other products introduced during the fall of trade show season included an automatic cutter attachment for the Kiaro! and the Lustro-Lam series, which is the proprietary line of clear label laminators. The Lustro-Lam process gives our labels a higher gloss finish and also increases their durability for use in harsh environments, such as chemical plants. In addition to supporting the various trade shows during the quarter, our marketing group created several new testimonial videos that are now posted to our website. If you haven't already done so, I encourage you to visit our QuickLabel sub-website at quicklabel.com to check out the wide range of customer testimonials in a variety of languages. While there, you'll notice that we have also added a Spanish-language version of our website to complement our other foreign language sites. Moving on now to our Test & Measurement group. We achieved nice growth from both our data acquisition products and our ruggedized products. In Data Acquisition, orders for our flagship TMX data recorder were up significantly in the quarter. Business was especially good in the Aerospace and Defense segments and the Power and Utility segment. The fall is also a busy time for Test & Measurement trade shows. Last month, Astro-Med exhibited at the Automotive Text Exposition in Michigan and the International Telemetry Conference (sic) [International Telemetering Conference] in Las Vegas. We took the opportunity of these shows to introduce a newly enhanced version of our Dash MX data recorder. The Dash MX is a smaller, mid-level data recorder that allows us to address applications that do not need the full set of high-performance features offered on our top-of-the-line TMX recorder. Based on the many positive reviews received on the new Dash MX, we expect sales of this product to grow steadily over the coming quarters. In the Ruggedized business, our airborne printer products continue to gain share in all 3 of our Aviation market segments: Commercial Jets, Business Jets and Military Transport. Most of our new contracts are for the latest model, the ToughWriter 5. The ToughWriter 5 is based on a new architecture that provides increased performance and lower overall weight. Two critical factors for the avionics market. The ToughWriter 5 also has the option of being equipped with secure wireless capability allowing pilots to print from their tablet computers directly to the estimate printer on the flight deck. This feature has become increasingly popular as more and more airlines are allowing pilots to use tablets on the flight deck for certain routine tests. In addition to the work on the product development front, our engineering teams were busy this past quarter working with our aviation customers on the new contract qualification processes. As you know, we have won quite a few new contracts recently and most contracts require some type of custom modification to the baseline ToughWriter model. This is in order to fit the particular specifications of each customer. Once this qualification process is completed, the printers can then move on to the regular production process. And that's it for the operations update.

Thanks, Greg. Ron, we're now ready for questions.

[Operator Instructions] Your first question comes from the line of Anya Shelekhin from Sidoti & Company. Anya Shelekhin - Sidoti & Company, LLC: My first question is could you provide some more detail on international sales? What efforts have you made there and detail into expansion in Latin America, Asia and Europe?

You got it, Greg? Go ahead.

Yes, sure. So starting in Europe, I've -- I mentioned we've added to our direct sales forces as well as our dealer network. So we've added people in, I think all 3 offices that we have over there. So we have offices in U.K., France in the Paris area and in Frankfurt. We added direct salespeople to all of those locations. And also we added dealers throughout Europe. So the dealers in Europe are managed directly by those area offices. And then in Latin America, we hired our first direct person actually, that will be based in Mexico. And he will cover the area -- primarily Mexico is the main area he focuses on, but he goes all the way down to Columbia. We already have dealers there, so his task would be to expand that dealer network as well as to do the direct sales force there. And then in North America, we expanded our direct selling sales force. And in the U.S., we use reps. We added roughly a dozen reps. And in Canada, we have used dealers. We added a couple of dealers up there, as well as a new direct sales person. And then beyond that, the other areas that we -- where we don't have direct offices, we've managed that through an international dealer network that's run by a team here in West Warwick and they've added dealers, as I mentioned, in Asia, Africa, some Eastern Bloc countries, it's pretty much handled over the rest of the world. Anya Shelekhin - Sidoti & Company, LLC: Okay. And at the moment, international sales are about 30% of revenue. Are you planning to keep it around that level or do you expect it to grow?

Well our general -- Anya, our general plan has always been to try to get international sales up at least to 50%. So we are at 30% and continuing to drive because we think we have lots of opportunities internationally.

Yes. Anya Shelekhin - Sidoti & Company, LLC: Okay, great. And the increased sales and marketing spending, in that case -- so that's kind of the mix of adding employees and also trade shows and conferences?

Exactly right. That's precisely -- it really is -- as Greg mentioned earlier, it's really to support the expansion of the business, both domestically and internationally. Anya Shelekhin - Sidoti & Company, LLC: Okay. And then final question is, the contracts related to discontinued operations is Grass Tech.

Yes. Anya Shelekhin - Sidoti & Company, LLC: Contract revenue there, how long do you expect to revenues for that to last. Is that recurring mainstream, do you think or...

Well, the arrangement we have with them is a TSA arrangement, which expires on January 31, 2014. But they have approached us and we have an extended contract with them for next year, for fiscal 2015, which we are fiscal 2015. So -- but that's a -- it's on a much reduced level. As you might suspect, these folks have facilities throughout the globe, if you will, and they're -- but they're -- so they're trying to move some of the operation -- it's actually taken some of our lines that we manufactured from this year and it moved out over to one of the European locations. So it's a kind of operation that's moving away from us and eventually it will be -- it will not be an operation that will have a relationship with these folks.

So we're just helping them to transition into their own manufacturing facilities. They knew a lot of -- they have a facility, for example, in Ireland, where they make a lot of their disposables such as electrodes. So they're transferring the electrodes that we used to make for them to that Ireland plant. And so that will continue next year. So we do not expect that part of the business to continue. It's going to decline as the year progresses.

Exactly. Anya Shelekhin - Sidoti & Company, LLC: Okay. And final question is, how many -- could you give me the exact number of how many salespeople you added in the quarter?

I wouldn't release that exactly, but it's less than 10 or close. That's for direct. The dealers and the reps is much higher number to be [ph] exact.

Your next question comes from the line of Samuel Kone [ph] with Delta Analytics [ph].

Basically, I wanted to ask you a couple of questions. You had mentioned, first of all, about the target closing within this fiscal year. Are you talking about the fiscal year or you're talking about the year-end of this year, and can you elaborate a little bit about that?

Yes, well, we don't -- we certainly, Sam, don't want to compromise any negotiations that we have in the works right now. But what I mentioned this year I meant our fiscal year, so that would be by January 31.

Right, and is it sizable or a smaller type of target?

Well, again, since we're in the midst of negotiations, I think it would be -- it's too delicate a question for me to answer publicly like this.

I understand. Second one, I want to ask you is -- and then I have a third question. Is that -- in regards to a buyback, okay, what have you -- what's arise [ph] in terms of the buyback previously, and what have you accomplished in the buyback so far in the last quarter or the last 9 months?

We haven't done any buyback recently, Sam. But we have the authorizations. It's 392,000 shares that we could buy back. We have, really since 1996, we've bought over 1 million shares, but we have not, more recently, we have not been in the market buying Astro-Med shares.

The final question I wanted to ask you, gentleman, is -- besides wishing you all a very happy holiday, is when go out to the deal with the Sleep division, is -- that'll close in January, correct?

Yes, the final events take place as of January 31.

Right, and then what will be the proceeds approximately for that to the company?

Well the things that are...

With the inventory, I mean, approximately.

Yes, approximately we have about $1.8 million in escrow. So that will come back. And then at that -- on January 31, there's -- the Natus is to buy the inventory for their products that we're now holding for them and that inventory is about $3 million, in that range.

So it will be a total $4 million -- $4 million to $5 million you expect to get for -- in total in January.

That is right, Sam.

And that hasn't been accounted in many of the previous -- have you accounted that previously in the...

No, it has not. It hasn't.

Your next question comes from Steve Busch [ph] with SouthPaw Investments.

[indiscernible] a little bit late, so I apologize if I ask some questions about what I may have missed but, on the financials, maybe Joe, this is for you. We had sales up about $2 million versus last year, same quarter, expenses up about $1 million. Did the sales number include the Grass?

It doesn't, Steve [ph]. It actually does not. What we do is to -- on the GAAP reporting basis, you've got to take the sales out and actually what you do is report just the net number. You'll see that on the press release, which is Discontinued Operations.

Well, I saw that in the earnings. So I guess, my question is, so earnings were about flat even though our sales were up quite a bit.

Yes, that is correct. That is correct. In fact, I think you'll see that right on the EPS, where we break out the EPS between discontinued and continued operation, Steve [ph].

Right. Yes, I just wasn't sure about the sales part. So...

Still do not include any Grass Technology numbers.

Right, so there's -- so $0.10 versus $0.10, on a much higher sales number, what was -- do we expect it to be able to generate more earnings from our sales going forward? Or do we have some expenses that were kind of one-off or...

It's really the -- it's more the latter than anything else. As you've heard, we did invest some additional expenses going forward in anticipation of the continued growth. I think you'll see -- on a go-forward basis, you'll see continued improvement in the margins. I mean our goal is really to get the operating margins up to 10%. Obviously, we're still a good distance from there, but I think the strategic plan we put together and the capabilities that we have with our product lines, I think is going to allow us to get there in a relatively short enough period of time.

All right. So we expect year-over-year earnings growth going forward?

You should. Yes, that's correct. Well, I think you'll have some -- yes, that's correct, Steve [ph]. You will. I think, in fact, if you look at -- it's always a little challenging when you have this discontinued operations even on 9-month basis, when you break out the numbers, the continuing operations is about flat with last year. Obviously, the Grass Technologies was a significant contributor to the company's profitability, historically and certainly in fiscal 2013.

Right. So in terms of the airline printers and pilots being able to print to their laptops or whatever device they have with them, is that going to affect, you think, dramatically our paper sales or just kind of a small thing right now?

Well, we're selling paper for our printers that go into the cockpits and cabins, but we're also selling paper for other brand printers that are currently flying in aircraft. So we expect the paper business to go up.

Yes, mainly the paper that you may have read about, that they're "removing paper from the cockpit". That refers to the flight manual -- pilots use to carry these big extra kind of rectangular bags that has 6, 7, 8 manuals in them. That's what they've put in the iPad now. What they'll tend to do...

You're saying they can print -- you're saying they can print out the flight plans now onto their iPads?

They could -- it depends on the airline what they allow them to do but it could flight plans. It could be technical data. It could be airport diagrams. So things that used to be -- yes, they'd have -- every airport diagram in, let's say, North America takes up 4 or 5 volumes of books, so they can put all of that on an iPad, just print the ones they need for a particular flight.

[Operator Instructions] Your next question comes from Ronald Cohen [ph], private investor.

I'd like to know, have you guys had any discussions about raising the dividend currently?

Well, Ron, that comes up regularly at all of our board meetings. We always discuss everything that's looking for the shareholders' benefits. And we're not -- that's not on our agenda right now to do anything with the dividend. The cash that we have on hand, we're preserving so that we can really grow the business and continue to grow it at high double-digit rates. And so we're going to use it for organic growth internally, as well as for these acquisitions that we've been talking about for a year now. So we're going to put it to good use to enhance shareholder equity. But we have no plans to -- for any handouts at this time.

My next question is, you say you're in the market to make an acquisition. Do you know the size? Could you disclose the size of the acquisition as far as the value of the company? What the gross sales would be of the company that you're currently looking to acquire?

Yes. Well, as I mentioned on an earlier -- in answer to someone else that asked a similar question, Ron, since we're in the midst of negotiations now, we really have to remain silent on that area. We don't want to compromise what we're doing, at this point. So again, we're hoping to announce something by January 31. But right now, we're certainly in a quiet mode.

Okay. I understand. So currently, we have roughly $33 million -- well, let's just round it off, we have approximately $35 million in the bank, is that correct?

No, it's a little less than that. We have $32 million.

Okay. But we also have -- I was listening to the other participant, he quote -- he asked how much other funds would Astro-Med get from the sale of Grass, which was another number that we can probably bank on. So that would bring us up about $5 million. Is that correct?

That's -- a little less than that. That's very rough.

So don't you think it would be prudent to do what we did last year and maybe talk to the board about paying a special dividend, year-end, increase the shareholder value?

Well again, Ron, we, as you know, we had our board meeting on Monday of this week and as I say, that is always part of our conversation and it was determined that is -- this is not an appropriate time to do anything.

Okay. Because of the acquisition negotiations?

Right.

Right.

Next, we have a follow-up question from Steve Busch [ph] with SouthPaw Investments.

Yes, so I may have missed this, but in regards to the potential upcoming acquisition, is it still a concept of you guys to make sure it's accretive from Day 1 or is it 1 or 2 quarters out?

No, we're looking for something to be accretive immediately. Something that we can fit right into our plant here without any duplications anywhere.

Can you comment at all on your potential earnings add if it were to complete?

It's too early, Steve [ph], to be honest with you. I think it would be premature. As Everett mentioned, we're still in the negotiation stages at this juncture.

And there are no further questions at this time. Please continue.

Okay. If there are no further questions, we want to thank you, everyone, for attending and we'll see you at the next conference call in March.

Ladies and gentlemen, that does conclude our conference call for today. Thanks for participating. You may now disconnect your lines.