Concentrix Corporation (CNXC) Q4 2021 Earnings Report, Transcript and Summary

00:04 Ladies and gentlemen, thank you for standing by, and welcome to Concentrix’s Fiscal Fourth Quarter 2021 Financial Results Conference Call At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] 00:33 I would now like to turn the conference over to your speaker for today, David Stein, you may begin.

00:38 Thank you, Towanda and good morning. Welcome to the Concentrix’s fourth quarter fiscal 2021 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the permission of Concentrix. 00:51 This call contains forward-looking statements that address our expected future performance and that by their nature address matters that are uncertain. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. 01:07 We do not undertake to update our forward-looking statements as a result of new information or future events or developments. Please refer to yesterday’s earnings release and our most recent filings with the SEC for additional information regarding uncertainties that could affect our future financial results. This includes the risk factors provided in our Annual Report on Form 10-K. 01:31 Also during the call, we will discuss non-GAAP financial measures, including free cash flow, non-GAAP operating income, adjusted EBITDA and adjusted EPS as well as adjusted constant currency revenue growth. A reconciliation of these non-GAAP measures is available in the news release and on the Concentrix Investor Relations website under Financials. 01:54 With me on the call today are Chris Caldwell, our President and Chief Executive Officer; and Andre Valentine, our Chief Financial Officer. Chris will provide a summary of our operating performance and growth strategy and Andre will cover our financial results and business outlook. Then, we will open the call for your questions. 02:12 Now, I will turn the call over to Chris.

02:17 Thank you very much, David. Good morning, everyone and welcome to our fourth quarter 2021 earnings call. Ending our first year as a public company, I'd be remiss in not recapping some of our major accomplishments. Not only did we grow faster than the market at 17% in adjusted constant currency, but the growth came from all verticals and all geographies. 02:36 Our non-GAAP operating margin came in at a record 13.1%, which was 230 basis point improvement. It's important to note that our growth has come from sustainable business, were shorter term COVID work being only about 1% of our revenue. We have also made significant progress in evolving our offering in 2021. Some unique offerings include the release of our VOC Essentials platform. Now we have 15,000 daily users in our VOC business. 03:07 We also became an Amazon Connect partner and are now seeing growth in seats under management. In our Marketing Solutions business, we launched our EV Consumer Experience Index to help automakers attract more electric vehicle customers. We have also increased our technology penetration by 71% over last year into our new economy accounts with combined buying technology and services together now. All this has increased the number of clients, so it's given us a 10 out of 10 on innovation by 60% year-on-year. With innovation always top of mind for us, I couldn't think of a better way to end the year then announcing our PK acquisition. 03:47 This acquisition allows us to deliver even more technology solutions for the CX marketplace at scale. All of this and more continued to position us, as a CX digital solutions leader in the global market. 04:02 Now, specific to the fourth quarter, our revenue of $1.47 billion represented an increase of 13% compared with last year on a reported basis. On an adjusted constant currency basis, revenue increased 14%. Non-GAAP operating income of $203 million was up 16% compared with last year. Adjusted EBITDA increased 13% to $238 million compared with $211 million last year. 04:30 Our strong growth in the quarter came across all verticals including double-digit growth in our key strategic verticals, technology, retail e-commerce and travel, banking and finance, and health care. The contribution from our new economy clients is continuing to make a positive impact. With fourth quarter new economy client revenue of $329 million, our annual run rate is now over $1.3 billion from these clients. 04:59 You will notice that we changed our description of these clients to new economy rather than disruptor clients. It's a terminology change and not a change in the underlying client set, just at more aptly describes them. As expected, we did see supply chain impacts for a few of our clients which impacted our transaction volumes with these clients and muted the quarter slightly. 05:20 Our unique approach to intentionally infusing digital technology and analytics is driving high levels of sales success. During the fourth quarter, we signed two dozen new clients. Example of our wins include a broad range of new clients in FinTech, retail, travel and media providing a full spectrum of services. 05:39 We are also starting to make traction supporting WEB 3 evolution and while early days, the potential is promising with a supporting many of the market leaders. Going into the new year, our pipeline remains strong in all verticals and geographies, particularly in tech banking, finance, e-commerce and travel. 05:58 From an operating perspective, we maintained strong performance levels in the quarter, with 65% of our talent continuing to work-from-home. We continue to maintain high levels of satisfaction with our clients and staff. Our client scorecards continue to outperform pre-COVID levels. 06:16 Our excellent results leading position and strong balance sheet gave us the flexibility to continue to invest in the business to drive total shareholder returns. Consistent with our capital deployment strategy during the fourth quarter, we paid 13 million in dividends and repurchased 25 million of our stock at an average price of about $181 per share. 06:39 The solid close to the year and additional strong new business signings gives us confidence in our ability to grow faster than the market again in 2022, while continuing to see margin expansion over the longer term. 06:51 Now coming to our PK acquisition. I would like to welcome all new 5,000 team members to Concentrix. The depth of experience is impressive and we can clearly see the value of the combination. We have started the process of integrating our PK, Tigerspike and Marketing Solutions business into one. We are calling this combined team Concentrix Catalyst, as the expertise and design consulting and execution around digital solutions is truly a catalyst for our clients to think differently about what the art of the possible can be. 07:22 Our clients view the combination of deep domain expertise digitally enabled global delivery and the ability to invest in secure, adaptable and scalable technology infrastructure as key differentiators. The reception of both existing and prospective clients encourages us that our strategy is working. We will continue to keep you up to date on our progress. 07:43 Turning to the first quarter outlook and client opportunity perspective, demand for end-to-end solutions remains at historic highs. The market demand for digital customer experience services and solutions has accelerated. We believe we are reimagining what the customer experience can be for our clients and that resonates with what they want to take with their brands. 08:05 While we do see tighter labor markets in a few countries and continuing impact from the current COVID variant spikes. This is helping demand for technology automation which we are focused on taking advantage of. Our overall pipeline remains very strong and healthy with the right mix and type of opportunities we are after to grow. 08:26 I would also like to thank our Philippines team, who dealt with the impact of Typhoon Rai that was both impactful from a humanitarian perspective as well as a business perspective in December. The management team did an amazing job taking care of the team and their families while fully recovering from the storm within a few short weeks. 08:45 In summary, we had a great first year as a public company, focused on transforming everything CX for our clients and their customers. We remain bullish on the CX market fundamentals and our ability to execute to create value for our clients and our shareholders. 09:01 We will be going into more detail on our Investor Day next week on Tuesday January 25, while we had hoped for an in-person gathering and appreciated all interest in attending in person due to venue restrictions and limitations of large in person gatherings, Investor Day will now be a fully virtual event. We're eager to share more about our progress and the incredible opportunity we have in the customer experience industry. 9:23 Now, I will turn the call over to Andre. Andre?

09:28 Thank you, Chris and hello, everyone. I will begin with a look at our financial results for the fourth quarter and then discuss our business outlook for fiscal 2022. We experienced strong revenue and profit improvement in the fourth quarter. Revenue in the fourth quarter was $1.47 billion. 09:46 On an adjusted constant currency basis, revenue increased 14% compared with last year. The strong growth in the quarter across all of our strategic verticals was led by increases with large technology and travel clients. Revenue from technology and consumer electronics clients grew approximately 17%. Revenue grew 15% in both the retail, travel and e-commerce vertical and the banking financial services, and insurance vertical. Revenue from healthcare clients grew 14%. Contributing to the strong growth across our strategic verticals were over 125 new economy clients representing about 22% of our fourth quarter revenue, which grew 48% year-over-year. 10:35 Turning to profitability. Non-GAAP operating income was $203 million in the fourth quarter, compared with $175 million last year. Our non-GAAP operating margin was 13.9%, up 40 basis points from 13.5% in the fourth quarter last year. Adjusted EBITDA was $238 million, compared with $211 million in the fourth quarter last year. 11:00 Our adjusted EBITDA margin was 16.2% in line with last year. Profitability in the fourth quarter reflects flow-through from revenue growth continued investment in seasonal and new program ramps and continued COVID related costs. Non-GAAP net income in the fourth quarter was $158 million, compared with $107 million last year. 11:25 Adjusted EPS was $2.99 per share compared with $2.07 last year. GAAP results for the fourth quarter of 2021 included $34 million of amortization of intangibles, a 11 million of share-based compensation expenses and $1 million of expenses related to the acquisition of PK. 11:45 Turning to cash flow. Fourth quarter cash flow from operations totaled $182 million and capital expenditures totaled $36 million. This resulted in free cash flow of $146 million in the quarter. Moving forward we expect capital expenditures to approximate 3% of revenue. 12:06 Turning to the balance sheet. At the end of the fourth quarter, cash and cash equivalents were $182 million and net debt was $620 million. During the fourth quarter, we paid a quarterly dividend of $0.25 per share. We also repurchased 138,000 shares of our stock for approximately $25 million. 12:26 As of today, we have $475 million remaining on our share repurchase authorization. Given the PK acquisition in our near term focus on debt reduction, we expect our near-term priorities for free cash flow to be our dividend and debt reduction, with some modest share repurchase activity. 12:47 As I said, when we announced the PK acquisition in November, with its strong digital capabilities, complementary client base and cross-sell opportunities we expect the PK acquisition to be accretive to our growth rate and adjusted earnings per share. We closed the PK transaction at the end of December. As we indicated, when we announced the transaction, we financed the acquisition by entering into an amended credit facility. 13:13 Under the amended facility, we increased our term loan to $2.1 billion with a five-year maturity from the transaction close and we increased our revolving credit facility to $1 billion. The $2.1 billion term loan includes rolling in our previously outstanding $700 million term loan. The balance of the funding for the transaction came from approximately $200 million in borrowings under our AR securitization facility. 13:43 Pro forma for the transaction closed the net debt to adjusted EBITDA ratio of the combined company was 2.4 times on a trailing 12-month pro forma basis. That is within our target range of up to 3 times adjusted EBITDA. We expect that our strong cash flow generation and earnings growth will allow us to bring net leverage to less than 2 times by the end of 2022, assuming no further acquisitions. 14:10 Ample liquidity will help us preserve our financial flexibility post close. We expect our financial profile remains strong and our capital structure principles remain unchanged. We remain committed to investing in growth and returning capital to investors via our dividend. 14:28 Now, I will discuss our business outlook for the first quarter and full year of 2022. For the first quarter, we expect revenue to be in a range of $1.51 billion to $1.54 billion. This includes PK revenues for two months of approximately $78 million and nearly 2 point negative impact of foreign exchange rates compared with the comparable period in 2021 and a little over a 1 point headwind related to businesses that we divested in the third quarter of 2021. 15:02 On a pro forma adjusted constant currency basis, our revenue guidance equates to 9% to 12% revenue growth. Our profitability expectations for the first quarter, include non-GAAP operating income in a range of $190 million to $205 million. Our expectations for the first quarter of 2022 include a negative impact of $10 million to $15 million in both revenue and profit from the surge of COVID cases globally, which is impacting staff availability. This impact is much shorter in duration and less acute than we experienced at the beginning of the pandemic. 15:40 We expect interest expense in the first quarter to be approximately $9 million. We expect an effective tax rate of approximately 25% to 26% and a weighted average share count of approximately 52 million shares. We expect to have a preliminary purchase price allocation for the PK acquisition later in the first quarter, allowing us to provide a full reconciliation of our non-GAAP operating income outlook to the comparable GAAP measure on our next call. 16:09 Moving to our outlook for the entire year. We expect 2022 revenue to be in a range of $6.45 billion to $6.6 billion. This includes approximately $485 million in revenue, from PK for 11 months following the acquisition. This revenue expectation for PK for fiscal 2022 is in line with our stated expectation at the time that we announced the transaction. 16:40 Also included in our expectation is a little over a 1.0 negative impact of foreign exchange rates compared with 2021 and a little over 0.5 point headwind related to the businesses that we divested in the third quarter of 2021. On a pro forma adjusted constant currency basis, our revenue guidance for 2022 equates to 9% to 12% revenue growth. 17:02 Our full-year profitability expectations include non-GAAP operating income in a range of $890 million to $930 million. We expect full year interest expense to be in a range from $50 million to $54 million with an effective tax rate of approximately 25% to 26% and a weighted average share count of approximately 52 million shares. 17:26 Our business outlook does not include amortization of intangibles stock-based compensation or any future acquisition related impacts or transaction or integration costs. Also not included in the guidance, our impacts from future currency fluctuations. 17:44 In closing, we are very pleased with our excellent results for the fourth quarter and for the full year 2021 and we're very confident in our outlook for 2022. We are well-positioned, global leader in a fragmented and growing market. We're executing our plan to grow faster than the market on an organic basis and as a proven consolidator in our market with a strong balance sheet, I believe, we're in a great spot to deliver sustainable growth, margin progression and strong free cash flow. We look forward to speaking with all of you next Tuesday at our Investor Day. 18:16 With that now operator, will you please open the line for questions.

18:21 Thank you. [Operator Instructions] Our first question comes from the line of Ruplu with Bank of America. Your line is open.

18:42 Hi. Thank you for taking my questions. I have a couple for Chris and one for Andre. Chris, my first question relates to the revenue growth in fiscal ’22. If I take out, X -- if I take out PK looks like you're guiding for about 8% year-on-year organic growth. The last time you talked about market growth I believe the commentary was that given recovery out of COVID, the market itself was growing 6% to 8% which is faster than the long-term 3% to 5%. So, can you please update us on what you expect the market itself to grow in fiscal ’22 and would you say that the growth in fiscal ‘22 for Concentrix is above market growth and if so, can you just talk about your strategy this year for driving above market growth and who are you taking share from?

19:31 Hey, Ruplu. This is Andre. Another question was for Chris, but I will start. If you go back to my prepared remarks, on a pro forma basis, adjusted constant currency and taking into account the divestitures we're guiding to roughly 9% to 12% growth in 2022. PK is part of that growth. And as I said, it’s accretive to our overall growth rate by about a point in that number. So that implies to me that the underlying is growing at an 8% to 11% organic rate that would be my clarification there. 20:12 Chris, where do you see the market growing?

20:13 Yeah. And Ruplu, good question As I've stated, while analysts are still talking about a sort of three to five or range within that period of growth for the next year or two years to three years, we've actually felt that the market in 2021 was growing sort of 6% to 8%. We still see as I mentioned in my sort of prepared remarks that the market is a little more robust, but I also made mention that we’re driving a lot more technology in automation and so that does have some impact to sort of top line growth numbers. But to Andre's point, we still believe we're growing faster than the market and still believe in 2022. We will grow faster than the market. 20:54 In terms of your other question, just in terms of share and where it's coming from. We're seeing our wins come from sort of, very two distinct camps. One is from consolidation where people are using us as their premier partner and we are seeing kind of consumption of other people share which is coming from sort of traditional CX players, some new economy CX players that we are getting because of our scale and operational discipline in the fact that they can buy technology and the services from us together. We're also seeing frankly net new opportunities that are coming to us from clients which historically have not outsourced, but it's one piece of the puzzle that we don't have in a process and we're doing everything else for them and so they are now seeing the benefit of moving that across to us and so that's really where we're seeing the growth coming from those two areas.

21:47 Okay. Great. Thanks for clarifying all of that, Chris. Maybe for my second question, I'll focus on margins. If I look back historically fiscal 1Q seems to be a sequentially lower margin quarter from 4Q, even the revenues can be higher. So, I was wondering, if you can just double click on that 100 basis points of operating margin decline. I think in 4Q, you reported 13.9% operating margin. And if I look at the midpoint of guidance for fiscal 1Q I think it's like 12.9%. So just -- if you can just kind of give us some details on what's driving that? And then how should we think about margin improvement for the rest of the year in fiscal ‘22 to get back to your fiscal ‘22 midpoint of guidance of 13.9% operating margin?

22:35 Yeah. So Ruplu, I'll take the question in two parts. The first question is really around your comment about the first quarter margins tending to be a little lighter than the fourth quarter and that is historically correct. And that tends to be because we get higher occupancy and utilization within the fourth quarter just because of seasonality and a few other things that happen. And then in the first quarter, you tend to be rightsizing some of your staff and you're getting less occupancy within that and so you tend to see that historically. I would say, there are some anomalies this year with the spikes in COVID and Typhoon that hit in the Philippines. Then generally, you've got to somewhat backed them out, but that's probably where you're seeing some of the margin erosion. Why we kind of are talking about the full forward year guidance is because as we've executed through the course of 2021 and as you've seen from sort of our track record, we expect that we will make that up through the course of the year and continue to see the margin expansion growth based on our offerings and what we have in our pipeline.

23:38 Okay. Got it. And then, thanks for the details on that. Maybe for my last question, if I can just ask one for Andre. Looks like the tax rate in 4Q was about 21%, which was lower than I guess you had guided 27% to 28%. And also, if I look at the fiscal ‘22 guide, it's 25% to 26%, so which is about two points lower than the previous guide. So, can you just kind of give us some details on what's driving that lower tax rate? Thanks.

24:09 Yeah. Thanks, it's a good question Ruplu and glad to provide some details. So, in Q4, you’re right, we saw lower tax rate both on a GAAP and non-GAAP basis than we expected. That’s largely reflecting kind of final jurisdictional mix of our income, for the full year as we analyzed it and that creates some adjustments which can have kind of an outsized effect on your Q4 rate. I would point you more towards the full-year non-GAAP tax rate of what I believe is about 25.5% which is you're right, the midpoint of where we're guiding for 2022. So, we do think that with kind of our current jurisdictional mix as we look forward that we'll see a tax rate for the full year that is pretty much in line kind of midpoint or guide being in line with what we saw for the full-year ’21.

25:09 Okay. Thanks for all the details and congrats on the strong execution.

25:13 Thank you very much.

25:15 Thank you.

25:16 Thank you. Our next question comes from the line of Shannon Cross with Cross Research. Your line is open.

25:23 Thank you very much. I was wondering, can you talk a bit about what you're hearing from customers and seeing in terms of signing? Are you seeing customers extend the -- or more willing to sign longer contracts and how are you putting into these contracts, any kind of accelerators or offset to potential inflationary environment, actually it's not potential to the inflation on environment?

25:52 Shannon don't be so positive, my goodness. So, the first question is, it really depends the offering that we're delivering. There is not generally a change, it's a primarily, primary services unless it's very complex services of extending the contracts longer. Our average contract is about three years and obviously, we keep the contracts much longer because they are evergreen and they continue to build. When we're selling technology and services together where we're actually taking over a whole process, you tend to get the sort of the three to five-year horizon from a contract perspective, but it's not materially different than what we've seen before. 26:33 From how cost is built in, generally, that's an ongoing conversation regardless of what the contract says because it's a combination of -- as the demands change in the type of services you're performing, as the automation technology come in which helps to offset some of the inflationary pressures, all of that kind of plays a mix. And so those conversations with clients are on a sort of a fairly regular basis. And then we do have some contracts that have a built-in COL or cost of living, indexing system that kind of come through based on the country and based on some data points that are mutually agreeable between the client and ourselves, but that's a smaller portion of the overall contract mix.

27:20 Okay. Thanks And then, can you just talk a bit about what you're seeing with PK. How we judge success of the integration maybe some KPIs to watch for and the opportunity like, how far you think you take some of their technology into your existing customer base and vice versa?

27:40 Yeah. So that's a great question and there's a couple of things. And by the way, we're going into a fair bit more detail on the Investor Day around how we see the complementary clients set and technology and skills come together. But some of the prepared remarks and endpoints of that, I mean, in our new economy clients which historically are not big tech buyers is up 71% from clients in that segment that are buying technology and services together because people are starting to realize that there is real power of automating the journey math. There is real power to kind of bringing in new processes versus trying to do it by just sort of share workforce. And so, we're seeing a high demand for us and one of the reasons why we were very excited about being able to do the PK acquisition was the fact that we can now deliver at scale because we were able to do it but we were starting to outstrip our internal resources to be able to do it. 28:31 And I'll tell you the client discussions so far and again early days, but so far, the incredibly positive because they see the power of these two things coming together where you've got deep domain expertise in the journey map, you've got deep domain expertise around how to deliver services at scale and understanding the processes are specific to the client and then you've got this really robust talent set that's able to automate that and drive better efficiencies through that. So, both clients who are using both companies already, have already started to think differently about how they can engage us and what value we can add to them. And then we've had a very good sort of feedback in conversations from our existing clients about wanting to get in front of those services and bringing the two powers together. 29:18 In terms of metrics and how we look at it we are looking through that and doing it. I suspect that we will start to talk about kind of combination deals that are coming through and percentage of tech sales that we go through on a more regular basis going forward so that people can see that. And then ultimately, as we've talked about over time, we see our margin being able to continue to increase and that will be driven by this combination of both tech and services together.

29:49 Great. Thank you and look forward to virtually seeing you next week.

29:52 All right. Me too. Thank you very much.

29:56 Thank you. [Operator Instructions] Our next question comes from the line of Vincent Colicchio with Barrington Research. Your line is open.

30:10 Yes. Chris, I was curious, what verticals as you grow fastest in ’22, I assume it's your core verticals and also part of the question is, what will telecom and media, I'm sorry -- communications and media look like had sort of a sizable drop sequentially? Thank you.

30:31 Hey, Vince. So, a couple of things. As we kind of mentioned, FinTechs are doing very, very well for us and that's primarily based on sort of just people buying habits and what consumer offerings are now available in that space and so we continue to see very, very robust growth in that. Health care, e-commerce, we see very robust growth in that. And as we've called out twice, travel is actually starting to really rebound. And what's interesting is that the wins we are having in travel are almost all domestic travel, which if you remember historically, we were never in that space. We were almost all in the international space. And so not only do we see additional growth in domestic space but I’d hopefully at some point international travel comes back and hopefully at that point we're the beneficiary of that. 31:21 Tech is also doing well for us. Our challenge with tech right now is just sort of supply chain constraints with some of our clients that they're just seeing. They don't see the demand going away. They just aren't able to ship as much as they would like and so we expect to see sort of strong growth through that through the course of the year primarily catch-up as well as sort of net new products that are coming to market. 31:42 In terms of media and communications, our media side is doing well and continues to grow quite, quite well. And that's primarily driven by lot of our content, safety services that we do and content moderation services that we do and our trust services that we do in that space. On the telecommunication side, as we've talked about, we want to kind of bring it down. It's now, bounces around between 17% give or take of our business. We're very comfortable with that space. As we see new offerings from our technology side going into telecommunications, we see that might kind of bump up a little bit, but it's different offerings and what historically we've always done in the telecom space. And we don't see it kind of jumping up substantially larger than where it is at this present time based on how we focused on getting it to where it is.

32:36 And has there been any -- given the inflation that we've talked about has there been any flexibility on the client side in terms of giving some relief on prices?

32:51 Yeah. So, certainly there is some, but I don't want to over blow it. The reality is, the conversations we're having both from a tight labor market and inflationary perspective is really about changing how they're doing processes and putting more technology in place, so that they can do more with less. And that's really the conversations we're focused on having and really discussions around the total cost of delivery versus a unit of labor so to speak. And that's more appealing to us and frankly more appealing to the clients versus just trying to chase the inflationary labor market.

33:27 Your response makes sense, but I guess I should have asked like the pure labor intensive contact center work you're doing is there any relief on that side. I mean I know that's a very competitive business. I assume there's not too much relief, is that right?

33:44 First, I would say that the work that we do in that space has evolved pretty dramatically into sort of very higher value engaged conversations and they tend to have sort of certification levels like in our health care business, our financial services business, there is a lot of education because instance it's a different type of market and different pay scale than what you might think. But when we are delivering those types of services, there is always opportunities to talk to the clients around pricing them appropriately for the type of skill set that you need. And so that's really where we see ourselves and those conversations are ongoing but really the focus is more about driving better automation, better efficiencies that needing to increase headcount in a linear fashion.

34:36 And then one last question, so this has been answered before, but I don't recall. The integration of PK, will you be integrating the systems that they're on, with your system. How will that work?

34:48 Yeah. So clearly, we'll be getting to one HRS system and one accounting system that’s we've done that many, many times as we've integrated acquisitions. We do that fairly quickly. They have some unique tool sets that are very focused on their type of business and engagements around resource management. We actually will be moving a lot of our Concentrix team members on to some of those tools just to get better efficiencies and better benefit. So that's pretty standard and easy for us. There is no system that disrupt the client that are being touched as we do this integration.

35:27 Okay. Thanks for answering my questions.

35:31 Perfect.

35:34 Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to Chris for closing remarks.

35:40 Great. Thank you very much for all your interest in Concentrix today. And as a reminder, we look forward to talking with all of you at our Investor Day next week. Hopefully, you are all healthy and well and have a great day. Thanks very much everybody.

35:52 Ladies and gentlemen, that concludes today's conference call. Thank you for participating. You may now disconnect.