Astronics Corporation (ATRO) Q1 2022 Earnings Report, Transcript and Summary

Greetings and welcome to the Astronics Corporation First Quarter Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I would now like to turn the call over to our host, Deborah Pawlowski, Investor Relations for Astronics Corporation. Thank you. You may begin.

Thanks Diego and good morning, everyone. We appreciate you joining us here today. On the call with me are Pete Gundermann, our Chairman, President, and Chief Executive Officer; and Dave Burney, our Chief Financial Officer. You should have a copy of our first quarter 2022 financial results, which we released earlier this morning. If not, you can find the release on our website at astronics.com. As you are likely aware, we may make some forward-looking statements during the formal discussion as well as during the Q&A session. 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 what is stated here today. These risks and uncertainties and other factors are provided in the release as well as with other documents filed with Securities and Exchange Commission. You can find the documents on our website or at sec.gov. During today's call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the table that accompanies today's release. So, with that, let me turn it over to Pete to begin. Peter?

Thank you, Debbie and good morning, everybody and thanks for tuning in for our call here. Our agenda is as follows; I'm going to start by talking about a couple of prominent forces which have been affecting our company for some time, but have really come to a head here in the first quarter. And then I'm going to turn it over to Dave to talk through financials including some pretty strong cash results over the course of the quarter. I'll take it back and we will talk about a forward look for the remainder of 2022 and revisit our guidance and some of the issues affecting that and then go to Q&A at the end. So, the two prominent forces affecting our company; one negative one positive, if you read our press release, you've seen them both pretty prominently displayed. The negative one is supply chain struggles. We're not unique here and I don't intend to present a thesis, but I do want to describe how the supply chain is affecting our performance, it was pretty significant in the first quarter and it's something that's been growing. The positive force is continued strong demand from the market for our products and for our services. Bookings were really strong, backlog set another record and it's setting up for what will undoubtedly be a pretty exciting second half of 2022. So, the supply chain, this was something that's become more and more of an issue over the last six to nine months, basically as demand started picking up for us, that's when supply chain struggles became more and more apparent. In the first quarter, it was as bad as ever. We went into the quarter thinking that we would have revenues somewhere north of $130 million, we ended up at $116 and the reduction occurred kind of steadily over the course of the quarter when we realize that necessary components that we needed to build our products were not coming in as expected or, or as really agreed to by our suppliers. It's a very unpredictable situation, products that we buy and have bought forever, that have pretty standard and stable lead-times of maybe three or four, six weeks, or whatever the case may be all of a sudden, can turn in 20 or 30, or even longer. And it's really kind of across the board. Although the worst situations for us are in the area of electronics, a large percentage of what we build and produce for customers, involves electronic components and electronic components seemed to be the sweet spot of the worldwide supply chain shortage and that is the case with us. I think it's kind of thing that affects pretty much everybody in business these days who produces a product. But it's especially bad for companies that have to buy chips and other electronic components which are designed in the products that they produce. Again, I don't want to turn it into a thesis, but I do have to say that as far as we can tell, the situation is not really improving. I keep asking our people that every time I can and nobody's willing to step forward and say that the situation in general is getting better. We've gotten a lot better at identifying problems early and responding to them as proactively as possible. Sometimes that involves spot buys and special purchase techniques, which can be expensive. So, there's always a little bit of a reality check as to when a problem pops up, what are the possible solutions and how expensive will it get? But it's obviously a worldwide problem. It's affecting a lot of companies and it got us in the first quarter. We'll talk about the rest of 2022 later, but we have incorporated what we know as best we can, with reasonable buffers into our revenue guidance going forward. So, we are sticking with our revenue guidance, but we issue that in our last call. And in there's some margin for supply chain problems, which, which may raise their head. That being the case, however, these things are unpredictable, it's a little bit difficult to know for sure how things are going to work out with any particular product or any particular period, but more on that later. The positive force that continues to drive our business is bookings. We have bookings of $175 million in the first quarter, that's book-to-bill of over 1.5 and it's our second quarter in a row. In the fourth quarter last year, we had a book to bill of 1.53. So, two very strong booking quarters in a row have left us with a record backlog. For the last 12 months, bookings have totaled $633 million, that's over sales of $455 million. So, for a rolling 12 month interval, our book-to-bill has been 1.39. It's important to note that in these bookings totals, there's really nothing special in terms of new, significant big chunks of business so far. So, it's really been kind of a groundswell of orders from across our product line, which is especially encouraging. That means our markets are coming back and the demand that used to exist for our products pre-pandemic, is increasingly back in play. Aerospace, in particular, has been really strong. Our aerospace book-to-bill in the first quarter was 1.59. Aerospace amounted to 90% of our bookings over the last year and if you look at the rolling 12 months, the book-to-bill is 1.48 for our aerospace business. All these numbers, by the way, are being taken off the table on the back of our press release, the last page of our press release, I should have mentioned that earlier. For aerospace again, very strong terms quarter-to-quarter over that rolling 12-month period. Basically bookings quarter-by-quarter went from $118 million to $142 million to $148 million and now to $161 million. So, aerospace bookings are definitely going the right way. One of the interesting observations in the bookings is that we are seeing some evidence of wide-body resurrection, I guess I would call it, Some kind of resumption of wide-body orders. Some of our products are specific to narrow-body applications, and some of them are specific to wide-body applications and we're seeing early signs of some kind of rebirth of wide-body demand, which has really been dormant for most of the time of the pandemic. Our test business demand has been a little bit weaker with lower bookings in early 2021, resulting in low sales now. Our quarter one backlog consolidated, as I mentioned, as the new record of $475 million, that's an increase from early 2021, when our backlog was at $283 million. So, obviously the bookings have positioned us well, in terms of work to be executed, we need to have our supply chain cooperate, so we can do the work and turn the backlog in in new revenue. Last time, we had a backlog anywhere near current levels was really late to 2018. At that time, our annual sales level was running at around $800 million a year. So, those are the two big forces that that I think about when I think of our first quarter supply chain struggles and strong demand from the market. And I'm going to pass it over to Dave now to talk through the specifics of our income statement. And I'll take it back and we'll talk about our forecasts for the rest of 2022 at the end here.

Thanks Pete. Consolidated revenue was $116 million in the quarter up almost 10% from last year's first quarter, flat sequentially from the fourth quarter of 2021. It's still not where we need to be to get to breakeven which is around $160 million per quarter in revenue to hit GAAP breakeven. We don't expect to get to breakeven until the second half of the year. As Pete mentioned, we're expecting some significant growth on the topline in the third and fourth quarter this year, as well as improved topline growth in the second quarter. Although we're expected to get to the point where we'll be GAAP breakeven in the second quarter. Aerospace revenue was $101 million and test revenue was $15 million for the quarter and consolidated gross margin was $19.9 million or 17.2%, with a loss from operations of $4.2 million and a slight adjusted EBITDA loss of $353,000 after removing the impacts of the AMJP grant, and the gain from the earnout for the sale the semiconductor business. Margins continue to be compressed as a result of the low revenue in the quarter and increased cost of raw materials. roughly $3 million of raw material costs in the quarter relates to what we call spot buys as we source materials outside of our typical supply contracts to meet customer demand. Outside of the spot buys, we've experienced general information relating to our materials and labor of between 5% and 10%. As Pete mentioned, supply chain continues to be our biggest challenge as lead-times are continually moving around making planning a challenge and limiting our ability to book and ship orders quickly, but we're managing through it. We've had about $140 million of backlog scheduled for delivery in the second quarter, but we anticipate some of that may push out into the second half of the year. And we have about $220 million the backlog scheduled right now for the second half of the year. As Pete mentioned, we will need to get some book and ship orders, which are within our typical range for the second half of the year. Quarter was not as noisy as the fourth quarter of last year, but we did have some atypical income and expense items. We recognized $6 million of the AMJP grant as a reduction of cost of goods sold. We recognize and received earnout income, which is below operations of $11.3 million for the 2021 turnout period. We also received $10.7 million for the 2020 earnout period, which was recognized in the fourth quarter of 2020. We have a bit of an odd income tax expense rate, which reflects new tests for R&D expenses that requires these expenses to be amortized over a five-year period, rather than expenses incurred and this is part of the Tax Reform Act of 2017. This would typically create a deferred tax asset is as -- it's just a timing difference, and has no impact on the tax rate. But because we have a cumulative trailing three year loss, we fully reserve our deferred tax assets at this point. This will reverse when we produce cumulative trailing three-year income in the future. There's a lot of speculation regarding this treatment of the R&D tax expense that may be rolled back or pushed out later this year. If that happens, again, we'll reverse the impact of this. Bookings and backlog continued to be strong. Bookings for the quarter were $176 million and a book-to-bill ratio of 1.5 times with $160 million -- $161 million in aerospace and the book-to-bill 1.59 in aerospace. Test bookings were $15 million and a book-to-bill about one times and the backlog at the end of the quarter again, as Pete mentioned was a record of $475 million. Turning to the segments, the aerospace segment, while not profitable absent the impact of the AMJP program, shows measurable improvement compared to the first quarter of 2021. Sales were up significantly as were bookings, backlog, and our pipeline of opportunities. The segment's operating margin benefited from $6 million relating to the AMJP grant program, which is an offset in operating costs and cost of goods sold. It offsets higher wages and benefits fit and cost the materials that we experienced in the quarter compared to the first quarter of last year. Commercial transport market continues to strengthen for us and sales were up $64 million, up 10% sequentially from the fourth quarter and up 68% from last year's first quarter. Military market and business jet markets remain sequentially steady. The test segment continues to be somewhat sluggish with sales down $9.7 million from last year's first quarter, resulting in an operating loss of $1.8 million. The sales drop was primarily in the military market. Orders continue to be lightened the segment, but there's several large opportunities that were pursuing it in both the transit area and the military area in the test segment. Turning to the cash and our balance sheet and debt with a strong quarter with respect to cash taking in $36.4 million relate and $5.2 million of that was related to the AMJP grant, $9.2 million was from tax refunds, and $22 million were from earnout payments. Our net debt is now $113 million, down from $133 million at the end of the 2021 fiscal year. Cash flow from operations was slightly positive at $316,000. Cash used by operations reflects increases in net working capital assets that were offset by the tax refunds of $9.2 million and the second AMJP grant installment of $5.2 million. Proceeds from the earn out of $22 million were received in the quarter and reflected in cash flows from investing activities. At the end of the quarter, we were compliant with our debt covenants with our leverage ratio calculated in accordance with the credit agreement of 3.78 times adjusted EBITDA versus a maximum leverage limit of 4.75 times. The maximum leverage covenant will remain at 4.75 times through the second quarter, then dropped to 3.75 times going forward. We continue to forecast compliance even as our maximum leverage covenant drops to 3.75 times in the third and fourth quarter and we're forecasting profitability to increase as we move through the year. Our revolving credit facility expires in May of 2023 and we're working to replace the revolver over the next few months with the goal of having a new long-term facility in place before we report in the second quarter. Pete?

Okay, looking ahead, we are maintaining our revenue guidance for the rest of 2022, which calls for revenues of between $550 million and $600 million. We have an internal forecast that actually exceeds that range slightly. So, you can see what kind of margin we're building in for potential supply chain disruption. And supply chain, as I said earlier, is likely to remain a factor as we move through the remainder of 2022. The midpoint of that range $550 million to $600 million would represent about 30% growth over 2021 with sales of about $450 million. The high end would represent growth of about 35%. Are those numbers realistic? That's a big step forward. We think so of course. A reminder I talked to earlier that the trailing 12 months of bookings were $632 million, so a forecast of $550 million to $600 seems to jive with that number pretty well. Also, our first quarter backlog was a record $475 million with $364 million scheduled to ship in the remainder of 2022. That would suggest we need another -- approximately $100 million of kind of book and ship business which in the normal course should be pretty achievable for our business. We expect the second quarter to be somewhere in the neighborhood of $125 million to $135 million. If you run the numbers and add it to the midpoint for the first quarter that would show 40%-plus -- 42% of 2022 volume in the first half and much more maybe 58%, 60% in the second half. So, we're obviously at expecting a ramp. And again, if you use midpoints and make some assumptions, this implies quarterly revenue of about $165 million on average in the third quarter and the fourth quarter, although we expect the third quarter to be a little bit lower and the fourth quarter to be a little bit higher. So, some big ramps, some real accelerations compared to where we've been our backlog demands its supply chain holds up and performs, the second quarter -- the second half should be much more positive from a financial perspective than the first half. We'll also continue to watch demand in the second half. I described earlier that the big amount of our bookings so far in recent times has really been from a groundswell of business kind of across the business, without any kind of real big special items in there. But I also want to tell you that we are pursuing a number of significant pieces of business, which collectively will drive us not necessarily in 2022. But we're -- we'll get a calendar out already almost halfway through, now's the time where we start building our business activity list for 2023 and beyond. And over the next few months, and over the rest of this year, I am hopeful that we're going to have some pretty significant new wins to talk about. I've been with this company for many, many years. I don't -- Dave and I were talking last night, I don't think we've had a time in this business where we've had such a wide array of significant opportunities in both segments near-term playing out, and many of them are undisclosed at this point. I can't talk about them in detail too much, but some of them -- maybe a couple of them I will, a significant opportunity for us has to do with the Army's future lifts competition, which is playing out right now in Florida [ph]. Many of you know what that is. It's a competition between a team led by Bell and a team led by Sikorsky and we are a solid member of the Bell team playing a significant role that down select is supposed to happen late summer early fall. And we're doing the electrical power generation distribution system for that airplane for Bell. It's a franchise or a product line which we trademark something called [indiscernible] power, it's flight critical electrical power for small aircraft primarily and it's a position that we've been building for quite a few years now. And I'm not going to go into too much detail about it, but it's a franchise that I think will become a very prominent part of our business going forward and certainly if Bell wins -- that'll be a big deal for our company immediately. Also, we did a press release this morning again back to core power and flight critical electrical power and the position that we have developed with respect to our electrical power distribution -- flight critical electrical power distribution on small aircraft and the advent of electrical aircraft, which is happening in various parts of the industry. Many of you know that electric -- more electric is becoming a big deal in aerospace in an effort to reduce carbon footprint, noise pollution, and create new business models. And one of the terms being thrown a lot is electric vertical takeoff and landing, eVTOL, we have found that our core power expertise applies very well to this emerging eVTOL market. And the eVTOL market is something that's getting a lot of attention not only from the main OEM airframe businesses that exist in the world today, but also a bunch of entrepreneurial startups that have raised significant amounts of money in the stock market, primarily are also in the public debt market. And there are some pretty wild forecasts out there, reasonable people can support those forecasts or disagree with them, but the important thing for today for this group is that our core our franchise has been or has been being adapted to address the needs of the eVTOL market and we are having pretty interesting and fruitful discussions with a wide range of participants. And I expect that, we will play a role in this market of some significance going forward. So you can expect, though we don't have specific announcements to make today, I expect that, we will over the course of the next six months to 12 months. And we'll see how all this plays out in the future. But I've seen some of the aircraft have talked to some of the companies doing this kind of work. And it's -- I think, pretty interesting to be a part of, we're excited to be a part of it. So I think that ends our prepared remarks. Diego will open it up for questions at this point.

Thank you. And at this time, we will conduct our question-and-answer session. [Operator Instructions] Our first question comes from Pete Osterland from Truist. Please state your question.

Hey, good morning. This is Pete on so for Mike Ciarmoli this morning. Thanks for taking our questions. First just wanted to ask on the 737 Max, what monthly rate are you currently producing to? Are you aligned with the underlying production rates at Boeing? Are there any differences in your rates, whether driven by inventories or availability of materials?

We assumed it will bounce around a little bit. But we are as best we can tell pretty well aligned with what Boeing is doing. We think the -- we had an inventory buildup that happened when the thing shut down. But they've pretty much shoot through that. So they've got us at the same rate that they're producing at this point, which was you know, high 20s trending to 30.

Okay. Great. And then just a follow up on aero, you mentioned in your release that you're seeing signs of a pickup on the wide-body market as well. Just because you get a little color on the main improvements you're seeing there. And you know, maybe whether you're seeing any incremental headwinds from the delays on the 787. And now, if you could just as a reminder, what about is your revenue mix currently, in terms of why body versus narrow body?

A lot of questions there. I'd say the 787 slowdown has kind of flown through the system already. We're not hurting any more there. It's all upside from here I would say. As far as products, I can tell you that there are certain types of in-flight entertainment systems which are standard in wide-body and not so present in narrow-body. And we make components that go into those systems. And we've noticed an increase in order for some of those products. They only go in wide-bodies, so wide-body demand must be improving, maybe not on the production line, because as you point out, 787 for example is not increasing at this point. But maybe more on an aftermarket, maybe pulling airplanes out of storage and getting them ready to fly. Our business mix in our commercial transport business before the pandemic was pretty evenly divided. We were for practical purposes, 50-50 wide-body narrow-body and 50-50 line fit and aftermarket. That has skewed heavily, especially when the MAX was shut down, towards narrow-body aftermarket. Wide-body was kind of down on both sides, aftermarket and line fit, and narrow-body line fit was way down with the MAX being down. The MAX coming back has really helped us a lot, and is a big part of why we think we're going to -- 2022 will be a significant year of improvement for us. We're not counting on wide-body production rates coming back in the near-term future. I mean Boeing can't comment on that very accurately. We're not going to comment on it. But we have noticed these increases in sales. Another product, to give you an idea, we make motion systems for high-end aircraft seating typically found in long-haul, wide-body first and business class sections. And we've noticed an uptick in orders for those kinds of programs, too. Again, that's, for the most part, those products don't find a place on narrow-body airplanes. It's early and it's not real significant, but there's a lot of industry prediction that wide-body recovery will happen over the course of 2023 and 2024. And just like we're seeing strong demand and growing demand over the last 12 months, it's primarily been narrow-body driven as narrow-body airplanes have resumed flying. And it's interesting to me to watch the beginnings of wide-body ordering also. So hopefully, that's a sign for that the wide-bodies are going to be -- if production rates don't increase, the ones that are in storage are going to be brought out and maybe airlines are starting to think about what they want to do with them in terms of fleet upgrades or refurbishment or recovery in advance of increased flying as early maybe as this summer. Does that answer your question?

Yes, it does. Thanks a lot for the color. I'll jump back in the queue.

Thanks.

Thank you. [Operator Instructions] Our next question comes from Jonathan Tanwanteng with CJ Securities. Please state your question.

Hey, good morning. Thank you for taking my questions. My first one is -- if you're not seeing so much improvement in the supply chain, what's really giving you the confidence that you can actually increase sales, to the guy levels through the second quarter and the second half? Are those -- are your suppliers telling you they can meet those volumes? And, what the track record of them being able to do that at this point?

Well, it's a very fair question. It is a little bit tricky to explain what we went through in the first quarter, and then talk about that kind of ramp in the second half. But the reality is that, we have that work scheduled, and we've gone out and sourced those components. And we have them on order. So, if things -- if the supply chain performs, we should see a ramp. The question is, will we continue to see surprises and slips and we think we will. But we don't know exactly which parts are going to flip. And we don't know cumulatively what the effect is going to be. But the overall velocity is going to increase no matter what, unless the world falls apart. Because we have these orders, and we've gone out and, and put the orders on our supply chain. So we can accommodate a reasonable amount of slippage, so to speak, and still have significant ramps in the second half. And that's how we've constructed that revenue guidance that revenue forecast. Does that make sense? We can withstand quite a bit of slippage and still be in that range.

Yes, it does. Thanks for clarifying that. And then second, just in terms of your own internal capacity, have you made progress at all in closing the labor gap that you've been talking about in prior quarters? And can you meet that production level internally?

It's another good question. The reality is that if our supply chain snapped to right now, I'd probably be telling you about a labor shortage. Because I think I talked on the last call that we were a couple of hundred people below where we wanted to be. We were at 2,200 I think at that time, and we wanted to be at 2,400. We're making pretty good progress though on the labor side. I mean it's not -- the pressures aren't gone for sure, but we are seeing a little bit of improvement in various markets that we operate in. Not all markets and not all positions. But the production ramp that we're talking about is really production floor kind of labor where we need it. And we are seeing a general loosening there. We're seeing more applicant flow, for example for new positions. So it's possible that that becomes more and more of a pressure point as we start to ramp up volume in the second half. But at this point, we're more concerned about supply chain than about labor.

Okay. Great. That makes sense. And if I could slip in one more, just you talked about these touch projects that could be awarded midyear. What's the relative scale of those? And what would that mean for year-over-year growth and into 2023 if you landed those?

I've got to -- let me do -- it's significant, Jon. The programs are over the life of the programs, very easily over $500 million. I mean, I'm just running numbers in my head, I'm looking at data, but there are probably six, seven, eight of them in both segments, and of course, FLRAA if we were to be successful, that's going to run for 20 years, who knows. And be a couple 1,000 airplanes. I mean, you could easily stretch those numbers to include that one especially well over a $1 billion, frankly.

Got it. Now that seems like a big opportunity. Good luck there.

Thank you. Good luck to both.

Thank you. [Operator Instructions] Our next question comes from Pete Osterland with Truist. Please go ahead.

Hey, guys, Thanks for taking the follow-up. I just had one quick one. On cash flow generation, just -- with the guidance for sales to improve sequentially through year end, do you think it's feasible that you'd be able to get to breakeven on a free cash flow basis over the course of the year? Or are there any other working capital or other considerations that might keep your free cash flow negative even as the top line improves?

Yes. I don't think we'll create significant free cash flow as we ramp through the second half of the year. The inventory component of working capital stuff is kind of -- is where we're most inefficient right now. And on one hand, we have more inventory than we would typically have, if you go back to the pre-pandemic days, maybe as much as $40 million more inventory than we have with the sales level we're at right now. But you can't turn around inventory either. You don't want to slow that down. And so I expect what kind of tread water as we move through the year in terms of free cash flow there. I think our as our margin picks up, I think, what we'll see is, increased working capital components there. But then at some point, it'll flip around to be a tailwind as we move through a normal supply chain environment in the next year. As I said, our inventory is turning much, much slower than it used to turn prior to the pandemic. And it's because of these supply chain challenges where you can have 99 out of 100 parts that you need to ship something and you're missing a washer, and you can't ship it. It affects everything. But I think cash flow wise, I think, we should be able to, depending on where the working capital and the inventory goes, be able to kind of tread water on that.

Great. Thanks a lot.

Thank you. Our next question comes from Jon Tanwanteng with CJS Securities. Please go ahead.

Hi. Yes. Thanks for the follow-up. Just one on pricing. I was wondering, because we've seen a lot of companies do this in the quarter, if you've been able to pass on some of the more extraordinary inflationary costs that you've been seeing, that 3 million excess spot costs that you talked about in the first quarter, if your customers have been amenable to that, I think, being transparent with that, as has helped a lot of other companies that we've covered, I'm wondering if you've seen any receptivity at all.

We have seen that and, yes, we've been passing on price increases where we can, when we can, and frankly, for the most part, we're pretty surprised with how cooperative everybody is about it. And everybody's experiencing the same thing. So it never comes as a surprise. That doesn't mean that customers are happy to pay more. But for the most part, we have seen and taking advantage of that ability to the extent that we can. And at the same time, we do have long-term contracts on certain things where that's not as easy to do. But even in those cases, we are initiating conversations occasionally and trying to keep the situation from spiraling out of control. But at this point, we don't view that as our biggest headache, our bigger headache is just getting parts in here in the first place and executing the demands, the customers are placing on us.

Got it. One more follow-up. Just you mentioned the big projects that were in the pipeline, but I was wondering if there's actually any general thoughts on military spending, just given the highest security concerns that we're seeing to the world, not on new programs, but existing programs and kind of how that makes -- to you guys?

I'm not sure the -- well, I think the Army’s future lift initiatives probably become more of a priority, right? That's one thing I would say. Not too long ago, people were saying there was never going to be another ground war. So why do we need a ground force? I think the recent events have probably changed the thinking on that significantly. So I expect spending there to be up. I'm not sure that translates much to an increase in Joint Strike Fighter fighting, for example, or most other aerospace applications. But I think the helicopter programs probably become more important, not less important with the Army's version of the future battlefield.

Understood. Thank you.

Thank you. There are no further questions at this time. I'll hand the floor back to management for closing remarks.

Well, thank you for your attention and time today. Obviously, interesting times for our company and we look forward to reporting second quarter results probably early August. Thanks for your time. Have a good day. Bye.

Thank you. That concludes today's conference. All parties may disconnect. Have a good day.