Astronics Corporation (ATRO) Q1 2018 Earnings Report, Transcript and Summary

Greetings and welcome to Astronics Corporation's First Quarter 2018 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host, Deborah Pawlowski, Investor Relations for Astronics Corporation. Thank you. You may begin.

Thank you, Rob, and good evening everyone. We certainly appreciate your time today and your interest in Astronics. On the call with me are Peter Gundermann, our President and CEO, and Dave Burney, our Chief Financial Officer. You should have in hand the news release that crossed the wire earlier today before the market and if you don't, it's available on our website at astronics.com. As you are aware, we may make some forward-looking statements during the formal presentation as well as during the Q&A portion of this teleconference. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from where we are today. These factors are outlined in the earnings release as well as in documents filed by the Company with the Securities and Exchange Commission. You can find these documents both at our website and at sec.gov. So with that, let me turn it over to Pete to begin. Pete?

Thank you, Debbie, and good morning everybody. We're going to talk about our first quarter which was an interesting quarter and from our perspective, a reasonable start to the year. I hope to explain that statement because the numbers don't always line-up the way we would like them to on any individual period. But the highlights for the first quarter are first of all, very strong revenue and bookings especially for our aerospace business which saw once again record sales, record bookings, and ended the quarter with a record backlog. The bad news for the quarter of course was that we faced a lot of margin pressure from a lot of different direction. So we're going to spend quite a bit of time on this call talking through the issues but they have to do with certain acquisition-related and legal expenses. Certain of our operations had a difficult quarter or difficult start to the year and the reality is that even though we had pretty strong revenue for our history of $179 million, our company today is sized for something greater than that. Luckily, we think that most of these margin pressures are going to take care of themselves, be moderated as we work through the year, and again, we're going to spend quite a bit of time talking about why we think that's the case. But long story short, we think our second quarter sales are going to increase pretty dramatically, that's the quarter we're in right now from $179 million to something close to $200 million. We expect our Test business to more than double in sales and we think the weaker parts of our Aerospace business are making substantial progress in terms of minimizing the losses that we've been incurring over the last couple of quarters. So we'll talk about that and finally the acquisition and legal expenses which definitely impacted our first quarter are going to drop to less than half in the second quarter and drop again in the third quarter such that in the second half of the year, they will become relatively modest. So the first quarter, revenue strong at $179.1 million, that's our highest revenue in over two years above our comparative period of the first quarter of 2017 by over 17%. Our acquired businesses since the first quarter of last year primarily Telefonix, PDT but also CCC added $25.1 million in revenue through the first quarter results. Our organic growth on the other hand was therefore pretty modest at only about 1%. Our Aerospace sales in the first quarter were $164 million just shy of $165 million; up 20% from the comparative period when we had sales of $137 million that is a new record. Test sales were only $14.5 million. Our Test segment had a difficult quarter that's down 7% from last year and down pretty dramatically over the last couple of quarters and down quite a bit from where we expect them to be going forward. It's really just an issue of program timing, customer orders, and we expect these problems to resolve themselves naturally as we kind of move through the year. I already said we expect our Test business to more than double their sales as we in the second quarter. Again consolidated our bookings were strong at $196 million that's another positive book-to-bill of 1.1 and left us with a backlog of just shy of $400 million at the end of the first quarter, that is a new record for the company. But of course the bottom-line results were like; we ended up with net income of $3.3 million, 1.8% of sales down substantially from $11.6 million or 7.6% of sales in the first quarter of 2017. Diluted earnings per share of $0.11. Our margins struggled under a range of pressures. I talked about the Test business that had a operating loss of $1.9 million largely due to the Telefonix acquisition we had purchased accounting expenses of $4.7 million in the first quarter and that is made up of intangible asset amortization of $3.4 million and inventory step-up expense of $1.3 million. So the total again there in the quarter was $4.7 million that number is going to drop as we go through the year and we'll talk about that in a minute. We also had a legal reserve in the quarter of $1 million due to a longstanding dispute that we have been kind of working our way through. It's been something that's happened -- been happening both in the U.S. and in Germany and we've been very successful in the U.S., we've not been as successful in Germany, and our advisors have suggested that we're facing -- likely to face a $1 million penalty at some point probably next year and that litigation continues. So we will see how it ends up at the end of the day but we did take a $1 million reserve in the first quarter. And then we have three struggling aerospace operations. We talked about these three in the last call a little bit, they are companies we refer to as CCC and AeroSat and Armstrong. Consolidated those three put up an operating loss in the neighborhood of $8.9 million in the first quarter. We expect that to lessen going forward and we will talk about that in a minute also. And finally, again volume of $179 million though it's one of our highest revenue quarters ever, our company is biased to do something greater than that and we would expect to be much closer to $200 million on average over the course of the year for 2018. We think our margin profile will look substantially different at $200 million. Going into our segments in a little bit more detail, aerospace first revenues of $160 million, just shy of $165 million, up 20% from the comparative quarter of $137 million, that is a new record. Operating profit was $13.1 million or 8%. I already talked about most of the negatives there. The things hurting us were purchase accounting, legal accrual, and three struggling business units in particular. Bookings however were really strong $181 million that is our strongest aerospace quarter ever and continues an encouraging trend. Our book-to-bill for the quarter of 1.1 and leaving us with a backlog of $306 million also a new record. So again for our aerospace segment, record revenues, record bookings, record ending backlog. Moving to our Test segment quickly, revenues were $14.5 million that's down 7% from last year and well below where we expect our Test business to be for 2018. At that volume, the operating profit was a loss of $1.9 million. Bookings however were positive $15.3 million in bookings, book-to-bill of 1.06, leaving us with a backlog of $92.3 million. And the real issue with our Test business very simply was just the scheduling of deliveries and some orders that we expected to get or still expecting to get kind of a long frustrating story, but we think our Test business is in pretty good shape for the year. We just need to get some of the schedules to cooperate and align. So looking forward, what do we expect to happen the rest of this year and what do we expect to happen for margins, in particular. We are largely maintaining our initial guidance which we released back in January but we're bringing up the low end a little bit based on our booking success. So today, we're saying that we are forecasting consolidated revenues of $765 million to $815 million for the year, that's an increase of about 26% over last year. We expect Aerospace to be $650 million to $680 million the mid-point would suggest growth of about 24%. In Test, we expect to be $115 million to $135 million that's the same range as before the mid-point would suggest growth of just shy of 40% over where they were last year. And again we believe these ranges capture the reasonable estimates but there is some upside potential, of course there is always downside potential to it. But we can pretty confidently say based on the bookings we've received and the things that we're anticipating that there is upside potential to those stated ranges. Looking a little closer, we expect second quarter revenues to be above $200 million. We expect the third quarter to show or turn in another jump equivalent to what we're expecting from Q1 to Q2. So that put us in the $220 million range. So let's talk a little bit about margins and try to explain why we think, as we said in the press release, that we think our margins in the second half of the year as we get to the end of the year will be somewhere in the mid-teens our operating margins, that's well below where we were in the first quarter obviously and has been common and concern on our margin structure in general. And I think the best way to do this in a short period of time would be to look back at first quarter and place them, if, then kind of gains, particularly looking at Aerospace, we're going to look at our Aerospace segment specifically because that's where most of the noise is, we think our Test business again is going to end up at a pretty reasonable volume and be a solid contributor by the end of the year. So it will take care of itself but 80%, 85% of our business is Aerospace and that's where most people pay the most attention. So first quarter Aerospace sales from the 12 months and numbers here were about $165 million and our operating profit was about $13.1 million that's 8%. We had, what I would call, some legal or acquisition-related expenses, most of which is going to drop off over Q2 and Q3, and that total which will be gone by the time we get into Q3 is about $4.1 million. So if you take the $4.1 million, that's going to drop off and you add it back to the $13.1 million we had in Q1, our operating profit goes from 8.0% to 10.4%. And then, we have the three operating units in our Aerospace segment which have been causing us a fair amount of pain, I talked it about it before CCC, AeroSat, Armstrong and the good news is that we feel we've got line of sight to bring their performance collectively as a group, up pretty strongly as we move through the year, not such that they're going to be incredibly profitable, but at least we will start to eliminate the operating losses or we'll work towards that substantially. And to give you an order of magnitude or to sort of frame again, in the fourth quarter of last year these three came in with an operating loss collectively of $27.3 million that was largely weighted by a $16.2 million impairment charge at Armstrong. So $27.3 million in the fourth quarter, so that number was reduced effectively to $8.9 million in the first quarter of this year, the quarter we're talking about today. That $8.9 million includes $2.1 million adjustment for a completion requirement on a program at CCC that we are very involved and very engaged in. That would be the second estimate to complete adjustment for that program. We took a similar size one in the fourth quarter; we believe we are through that process now. I'm sure we'll get questions on that. But this is a company we bought in April of last year and this program that we're describing or talking about or referring to somewhat briefly is something that's been growing and getting a ton of attention from around the company. We think we've got our hands around it now and we think this estimate to complete will be the last one. So that $8.9 million this year, for this quarter, we expect to drop to about $4.5 million in the second quarter, and we expect that number to drop again to somewhere in the neighborhood of $2 million in the third quarter. So it's a little bit of a leap, but let's say that we get to the end of the year and we take that $8.9 million operating loss collectively for those three companies in the first quarter and we were to turn it to breakeven that would be an addition of $8.9 million back to operating profit which would bring us up to 15.9% in the first quarter. Again looking at the purchase accounting adjustments and legal accrual and assuming we can get those three operating companies back to breakeven or close to it, we end up with operating margin in the first quarter of 15.9%. In the first quarter, our Aerospace sales were $165 million, in the second half of the year we expect them to be up about 15%, 20%. So the combination of those things on the Aerospace side combined with the pending backlog that we have to deliver again on the Test side, give us reasonable confidence that we're going to have a much stronger margin profile as we work through the year. I think that's my prepared remarks little bit shorter than normal but it's the first quarter, so always a little less to talk about. Rob, we can open it up for questions now.

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions]. Our first question is from Ken Herbert with Canaccord Genuity. Please proceed with your question.

Pete, I appreciate the additional detail. I just wanted to confirm, so is the assumption that the $1 million you spent on legal this quarter and the money you spent on the loss reserve that those completely drop-off in the second quarter or those lingering into the second quarter as well?

Those two particularly completely drop-off. I mean assuming we don't have another estimate to complete. I mean obviously this program we're working on, the one in question at CCC is one that’s going to wrap up in the second half of this year and we will do quarterly reviews and the assumption is that we have it under control, we know what it's going to take to finish the program, but if we have to surprise, theoretically, we could have another charge there, but we're not -- we're not planning on that certainly.

Okay. So if I look at the sort of that the loss reserve around the particular program, legal obviously the inventory step-up and the intangible amortization. Of those, the intangible amortization obviously steps down, I think you guided to sort of $2.2 million in the second quarter then down to a run rate of 1.6. But those so you should see sequentially at least from the first or the second quarter about $7.8 million dropdown to the $2.2 million, I just want to make sure I got that correctly.

Yes, that's correct.

Okay, okay, yes, thank you. And then I guess just bigger picture with the comment on what you expect to ship from the backlog this year with what you've done in the first quarter, it looks like you've got about give or take to the mid-point of the guidance about $250 million in sort of book and ship sales, still to come this year? I'm just curious if you can provide some commentary around I guess it sounds like Test is probably a bit more of a wildcard as part of this just considering timing, but maybe confidence around this sort of book and ship business between now and the end of the year and areas where you might say there's even still some risk although certainly it sounds like you're a little more confident on the Aerospace side?

Yes, I guess we feel pretty confident. They did a comparison of our book and ship requirements this year compared to last year. I don't know if you want to jump on this one?

Yes, I think we're really confident that the orders that will take in the next few quarters would be able to get us to that mid-point of the guidance. We're seeing continued strong bookings, the first quarter was strong, fourth quarter last year was strong. So and we see -- we see no reason to think that those booking trends are going to are going to change. So yes, we're really confident that the book and ship will get to that point. The biggest part of our book and ship is our cabin business and the cabin business tends to get orders with roughly a 13-week lead time or there about eight to 13 weeks somewhere around there. So while we don't have complete visibility, we do have an idea of what's going on in the market and what we expect to see in there for the balance of the year.

Yes, okay, that's helpful. And just finally on -- you've highlighted again in the release some mix customer pricing and pressures specifically in the Cabin Power segment, can you just comment more on that and are you expecting that to maybe abate as you go through the year or is that in a particular testing on the original equipment and maybe the retrofit side as well or any more color around that would be helpful?

Yes, it’s a modest challenge for our business. I guess I would say that it's I color it making three point. The first point is it's a much larger business than it has been before just around the world and in the mind of the industries. So to some extent, we have bigger customers buying more product they expect pricing advantages and we're working our margins on our cost side to accommodate that, but we've certainly been in situations where we've agreed to more aggressive pricing in exchange for longer contracts or bigger orders. So that's part of it. The other part of it is that we’re making this transition from wide-body operators to narrow-body operators and in some cases that is a shift in market and not to bring in new competitors who maybe want to offer a much lower cost kind of system without the intention frankly of ever being operable at the OEMs. Our systems are designed so that when we sell a program to an airline and they want to retrofit their fleet and then they want to buy some new airplanes from the OEMs, primarily Airbus and Boeing, they want the same system. So the system in order for Airbus and Boeing to put it on the airplane has to be operable at Airbus and Boeing that means it has to be designed and built and tested and improved to their specifications and we do that. That's our standard way of operating. And for the most part our traditional wide-body customers who also offer narrow-body airplanes or fly narrow-body airplanes as they put our products on a narrow-body fleet, they know that value proposition, they understand that value proposition and they're onboard. There are occasionally narrow-body operators who don't have that historical wide-body experience and don't understand the value proposition and it's a little bit more of a struggle for us in those kinds of situation. But we are doing well and we feel we always talk about having more than 90% market share, I think we can very confidently say that we're maintaining that and that's an important objective of ours as we kind of manage this transition from wide-body to narrow-body from one-time USB to USB only. It's a -- I would say that’s kind of a color that I provide for it.

Okay, great. And just finally you mentioned specifically you expect the Test system to double, I'm assuming that comment was about sequentially from the first to the second quarter?

Correct.

The next question is from Michael Ciarmoli with SunTrust. Please proceed with your question.

Pete, maybe I missed it, did you just say there were three points driving the mix in pricing in the cabin?

Let’s kind of merge two of them together.

Yes, I figured you may have.

In my head when I started it was three, but it turned out to be two.

Got it, got it. Just want to make sure we didn’t miss anything there.

Just two, just two.

Just on the CCC, Armstrong, AeroSat, did you guys, I mean you guys couldn't have anticipated that they would run at a loss seemingly all years, I mean should we expect these businesses to be dilutive to margins even as we go into 2019?

Well it's a little early to talk about 2019, but let me maybe rundown what we see happening at those at each of those three companies.

Yes or even maybe I would say can they get to that in line average, can you bring them up to sort of historically where you've been?

Definitely.

Okay.

I think we had clear line of sight, I would say in two of the three and the third one is a little bit more of a development effort but we're hopeful there also. I think all three are making really good progress. CCC is struggling with a program that we're not allowed to talk too much about right now, but we think is going to be a very worthwhile program, once it gets going and it'll get going we believe in towards the end of this year and carry us into next year, so we're excited about that. Armstrong has had a tremendous turnaround in terms of market presence and customer orders. And I think we're as excited about that business as we have been since we’ve owned it. So it's not out of the woods and it's not going to be tremendously profitable this year but it's certainly going to have the volume to work with which is something that's been half a battle up till now. And then in AeroSat has a number of initiatives are the tail-mount Business Jet, large Business Jet program that we've been talking about forever is finally showing solid momentum with our partners on that effort knocked down some hurdles, we have six airplanes working, they're working well and we expect much more volume in the second half than we got in the first half and with that AeroSat's performance will improve pretty dramatically to flat. I think all three we have line of sight but we're -- it's a little early for us to do our budgeting on the fly year for 2019, that’s an exercise we typically don't get into totally October timeframe or so.

Okay, fair. What about I mean organic growth clearly late in the quarter even the biggest sub segment of Aero, the electric power motion I guess an improvement but still below 1, you talked about the booking strength, I mean you guys continue to spend a lot on R&D, I guess 13% of sales, I mean, I guess I'm -- I would have expected better organic growth performance and it sounds like I guess we should see organic growth acceleration into the remainder of the year based on that revenue cadence you gave us, but is there anything else in the marketplace or kind of rates are going up, it seems like the aftermarket retrofit is good, you did mention though it's a wide-body narrow mix, but I guess with the bookings trends above 1, the R&D investment, I would have expected maybe a more consistent pick-up in inorganic growth

Yes, we were thinking that when we were doing our budgeting at the end of last year, we were thinking that that our first quarter would be stronger than it was revenue wise but it's really just a function of orders and timing and it's just kind of the way it works out. We think that it's all snowballing in a sense you look at our inventory build-up on our balance sheet and you look at the headcount additions and the backlog and the orders and it's all coming in but definitely some things that we thought would happen in the first quarter have moved out a little bit. I'll you one little story from our Test business which just I guess accentuate the point, it's not uncommon when you get a big test order to have what's called a post-award conference where you meet with a customer and you do some planning for timing and scheduling and logistics and clearing expectations of how the program is going to be managed. And we had a customer schedule a post-award conference in February, we had in February and here we're in April we still don’t have the order, so the post-award conference turned into a pre-award conference. And it's just an example of how we expected that order which was material to contribute to Q1 results and we still don't have it. So some situations like that you put two or three of those in a quarter in a company of our size, it definitely has a material effect. But it's not as though our markets are softening, we don't think, it's not as though there are competitive threats that we don't have answers to, it's just a matter of customer timing and kind of the way the ball bounces sometimes.

Got it. And then just the last one, have you given or would you be willing to say what you think organic growth will be for the year or what you think the acquired revenue contribution is going to be this year?

We haven't given it, but Dave is holding me, he has given me the caution finger as he look something in our book.

We talked earlier; I think in the last call the Telefonix PDT contribution this year $70 million, $80 million range. And then, you've, CCC was onboard last year for all the first quarter, so that’s really the only significant adjustment you have to make organic.

Our next question is from George Godfrey with C.L. King. Please proceed with your question.

Thanks for all the color on the margins and the expenses, backlog and order growth looks fantastic just one question, is there anything that would structurally be different about the profitability of the future business as it comes on, we always read about how Boeing is always pushing back on suppliers and pricing and want to be more aggressive in the aftermarket, so just want to be sure that there is nothing pricing or margin difference in the future business? Thanks.

Yes, I don't think so, George, I mean, it's certainly a competitive world out there; we have lots of companies that live to eat our lunch before we do. But for the most part I think we're holding our own reasonably well. Boeing is an important customer to us but not our sole customer by any means and we haven't had any contract renegotiations recently don't have any that we're -- that I'm aware of in the immediate future. But there's always cost on pressure. But I think the little exercise I walk through demonstrates that if we could just get some struggling companies to breakeven and if we could work our way through some purchase accounting challenges and some legal accruals that our emotions are actually not in terrible shape. I mean they jump right up to the mid-teens pretty quickly and that's without the effect of the increased volume that we expect to happen over the coming quarter. So we’re not pleased with how the first quarter margin show up but we don't think that that's representative of where the business is or where it will be as we work through the year.

[Operator Instructions]. Our next question is from Jon Tanwanteng with CJS Securities. Please proceed with your question.

Good morning gentlemen, thanks for taking my questions. My first one is --

Good morning.

How are you doing, Pete?

Good.

Any update on the semi Test business, your competitive in that space and especially on new programs versus your legacy customer and kind of how it plays heading into 2019?

Well, Jon, I guess we would say it’s little early to talk confidently about 2015. I think we continue to feel we’re making pretty good progress, we think this year will be a big step-up over last year. And I think our team in that area has done a good job covering the world and really we're all over the place talking to all the potential customers and everybody knows who we are, we've established the name, kind of from nowhere a few years ago. So I'm pretty confident look and I think the real issue with 2019 is going to be customer timing. I mean I think we're doing the things we need to do demonstrate the technology, improve the value, it's a question and I think the customers in general understand that and appreciate it, the challenge is pushing the go button and getting through kind of the necessary development proof-of-concept kind of exercises that they need to go through when they spend the kind of money that we're talking about with these programs. So I think we're confident, I think 2018 is going to be a big step-up over 2017 but little early to talk confidently about where 2019 will be but the potential is there for it to be a pretty good year.

Okay, great. Thanks. And then just because there's one news, do you guys have any exposure in terms of Iranian carriers and kind of the next Iran deals, would there be any impacts from Boeing and Airbus not shipping planes there to you guys?

Not a major, we do have, we do work with airlines in a normal world and we obviously do what we can or do what we have to do to stay within the letter of the law. But I would say we don’t have anything major involved over there.

Okay. And finally, Dave, just a quick update on the cash flow, I know you had said last quarter that you didn’t expect to build so much cash given the inventory and working capital build, just a quick update on that?

Same picture. As you would expect as we expect the year to grow as we go on, it’s going to consume some of our free cash flow and building up the inventories and receivables and we don't expect to be able to reduce our debt load probably until looking into the fourth quarter of this year. If you kind of just look at the forecast that Pete talked about with heavy loading in the last half of the year, we do expect the capital to continue to increase a little bit as we go forward through the second quarter.

Our next question is from Dick Ryan with Dougherty & Company. Please proceed with your question.

Thank you. So Pete on the topic of increased competition moving from wide into the narrow-body world, they’re just using the presence of some other competitors to get better terms from you or have you actually lost any kind of meaningful awards that you were going after?

I would -- we haven't lost anything real meaningful. There are some little programs here and there that do something we don't like, but there are couple of dynamics that we think play to our favor. First of all this is a lot harder to do than people think it's easy to cobble together a system but it's hard to do it really well and reliably and I think for the most part customers around the world understand that and appreciate it. The operable issue is a big deal and there's actually a fair amount of migration in power, you wouldn’t think about it, most people think about there are 110 volt electro hour in the wall of their house hasn’t changed much over the last 20 years. But when you think of the kind of systems that we put on airplanes, they actually do change a lot. And one of the things we offer is kind of the done there, done that, lessons of life where we have you want a basic USB system, we have that, you want USB combined with 110, we have that, you want 110 in various power levels, we have that. You want to go USB Type C which is kind of an emerging technology and it will eventually obsolete the current whatever understands today to be USB, we have that, so you want to go wireless, we are demonstrating and showing wireless technology now. So I think that breadth of product is unmatched and unrivaled and I think at the end of the day we're going to be successful, we just don't want to take our foot off the gas at all from a competitive standpoint as we -- as the technology spreads and goes around the world and goes from wide-body to narrow-body. So maybe that gives you a little more context for it.

Sure. And looking at the strong wins you had in ISP last year in Asia and the U.S., some of those installations are going to start in early 2018 and go out for the next several years, has there been any delay in those installations or are they tracking to your previous timeframe expectations?

I think we're tracking more or less as we would expect them to. There are always moving parts that go in and out but nothing that changes our overall expectations for the year obviously we would have to reflect that in our revenue guidance. But we're pretty much actually on the Aerospace side we’re effectively raising our guidance by bringing up the low-end a little bit so nothing major sliding out.

Okay. On the Test side, I think you mentioned deliveries and anticipation of orders, you had some other commentaries from some backend test companies that through some caution out there with the major player and I guess I'm just wondering if you're keeping guidance as is what gives you the visibility that that slipped from February to April isn't going to slip till summer or early fall if by then?

Well that slip I was talking about was actually an A&D slip not a semi slip just to be clear.

Okay.

So, no, our -- I mean you can always be surprised I suppose that firm orders and backlog and those schedules aren't moving except to the extent that they need to move for logistics reasons but nothing major at this point. So we’re not expecting that.

Okay. One last one, E&D combined organic with acquisitive, it looks like it’s like 15-ish percent or so, what should we expect for that in the remainder of the year?

For A&D test?

No, E&D, engineering and development.

E&D, I’m sorry. Okay, we’re expecting that pretty much matched the forecast, it was a little high percentage wise because of the lower revenue frankly we are pretty confident that Q1 will be our lowest revenue quarter for the year and our spending will kind of stay, I think will luckily stay the same in actual dollar terms but it will drop in percentage terms as revenue climbs.

Ladies and gentlemen, we've reached the end of the question-and-answer session. At this time, I’d like to turn the call back to Pete Gundermann for closing comments.

Thank you, Rob, and thanks everybody for attending. We look forward to a better report at the end of Q2. Thanks for your interest. Have a good day.

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.