Digi International Inc. (DGII) Q4 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 Digi International Inc. Earnings Conference Call. At this time, all participant lines 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] I would now like to hand the conference over to your speaker today, Jamie Loch, Chief Financial Officer. Thank you. Please go ahead sir.

Thank you, Gigi. Good afternoon everyone and thank you. We are happy to have you joining us today to discuss the fiscal 2019 fourth quarter results of Digi International. Joining me on today's call is Ron Konezny, our President and CEO. Ron will provide his thoughts on our business and I will follow with the highlights of our financial performance. Following our prepared remarks, we will take your questions. We issued our earnings release shortly after the market closed. You may obtain a copy through the Financial Releases section of our Investor Relations website at digi.com. Some of the statements that we will make during this call are considered forward looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance and speak only as of today's date. We undertake no obligation to update publicly or revise these forward-looking statements. While we believe the expectations reflected in our forward-looking statements are reasonable, we give no assurance such expectations will be met or that any of forward-looking statements will prove to be correct. For additional information, please refer to the forward-looking statements section in our earnings release today and the risk factors of our 2019 Form 10-K and subsequent reports on file with the SEC. Finally, certain of the financial information disclosed on this call includes non-GAAP measures. Information required to be disclosed about these measures including reconciliations to the most comparable GAAP measures are included in the earnings release. The earnings release is also an exhibit to a Form 8-K that can be accessed through the SEC filings sections of our Investor Relations website. Now, I'll turn the call over to Ron.

Thank you, Jamie and welcome to everyone that has joined our call today. We capped off another record-breaking fiscal year with a strong fourth quarter and entered fiscal 2020 with excitement in both of our business segments and also with the pending acquisition of Opengear. Our past fiscal year was driven by key initiatives that the team delivered. New product introduction, we doubled our revenue from products introduced within the past three years to nearly $40 million and we forecast that number will increase to $70 million in fiscal 2020. These key metrics shows the alignment and effectiveness of our product management, sales, and R&D teams within IoT Products & Services. Strong direct sales force and solution selling. We are sustaining high win rates on large opportunities, while continuing to work closely with our critical channel partners. Our $20 million purchase order this past summer highlighted this effort. While we are still unable to disclose the specific end user, we can talk about the project in more detail as we think we can replicate its success. A large U.S. city is deploying a full suite of Digi products and services to connect thousands of signalized intersections to its traffic management center. When finished, this smart city project will be one of the largest mission-critical cellular networks in the world. This smart city project is a natural consequence of the global trend towards urbanization where city managers must increase surface transportation capacity to support residents and businesses. So you package the solution with partners to control reference design and is actively engaged with other cities. The Digi product suite includes Remote Manager, WR54 FirstNet routers, 900 megahertz radios, and port servers. Digi services include custom application development, configuration, solution kitting, and technical support. Improve system and process efficiency. We launched the final stage of our CRM ERP transition in early October. The entire company is now on one system with one database and increased visibility, a tremendous accomplishment and a huge thank you to the team. We are digging into process efficiency with the goal of making Digi an easier company for customers and partners to do business with. Effective leadership. We named presidents of each business unit in November of last year, a new supply chain leader in early 2019 and a new CFO this past May. We have a great team that is aligned in our mission and supporting each other with unwavering commitment. As we look forward to fiscal 2020, we look to deliver another record year, turbocharged with the Opengear acquisition. As disclosed on November 7, Digi announced we have agreed to acquire this leader on remote access, network resiliency, and automation services. The Opengear team will continue to be led by Gary Marks, their CEO and reports in to Mike Ueland, the President of Digi's IoT Products & Services business. We share similar cultural values. Some of our teams have worked together in the past easing the planned transition. It will be imperative that we support all the attributes that has made Opengear a leader in their market, while acclimating their teams to Digi. Jamie will provide the expected financial contribution to our results in his comments anticipating a close by year-end. Now a few comments on each of our business segments. Our IoT Products & Services customers and partners are looking for more complete solutions, oftentimes incorporating professional services and sometimes including other products that are integrated with Digi's offerings. We will expand our professional services team to support these initiatives building from our large smart city project. New product introduction in our cellular and infrastructure management product lines, we will be introducing new and refreshed offers that are based on a single device operating system linked to our Digi Remote Manager application. In our embedded and RF product line, we'll be launching the ConnectCore 8, ConnectCore 8 Nano SOMs and we will be building on our leading XBee product family to offer choice and ease of use. Service offerings. We will increasingly offer our products in combination with device management, wireless data and professional services. This combination will help our customers but will also provide opportunity to our channel partners to have more repeatable sales. Increasingly we are hardware-enabled and software and services defined. Increased efficiency. We must drive improvements from forecast to cash. We will be leveraging NetSuite to integrate point-of-sales data, integrating it with demand planning software and improving the productivity of our team. This will benefit customers as we expect this to lower the time and effort required to do business with Digi. As we look forward to fiscal 2020, as project-based business can experience uneven performance, as you will hear in our guidance, we will start a bit softer but we expect to ramp throughout the year. Including the pending Opengear acquisition, we expect IoT Products & Services to generate higher growth rates, higher gross margins, and higher EBITDA margins. Our SmartSense IoT Solutions business continues its focus on health care, food services, and logistics customers to increase their efficiency, improve their safety, and enhance their decision-making. This subscription-oriented business was increasingly focused on annualized recurring revenues including bundled offers to an increasing number of enterprise customers. We expect this bundling will temper top line growth rates but will accelerate recurring revenue growth rates. We added over 2500 sites in the quarter ending the year with approximately 63500 sites. We anticipate continued subscriber additions that will build on our nearly $15 million in annualized recurring revenue. SmartSense 4, the singular destination platform was launched last quarter and more of our new customers would join that platform. We will work closely with our existing customers to introduce the new platform and migrate them when appropriate. New product introduction. New products introduced in the first half of 2020 will allow the interoperability of our Bluetooth and ZigBee sensors to better meet our customer requirements. This provides an optimized IoT environment to help our customers achieve their goals. We are investing in automation and process control to make onboarding and support of our customers easier and more efficient. Improved mobile applications will guide users through the installation and training process and a new e-commerce site will allow our customers to self service. Our IoT Solutions business remains in growth mode and we expect the business to contribute a modest but growing EBITDA contribution in fiscal 2020. Lastly we improved our cash balance by $30 million and reduced our inventory to just under $40 million in fiscal 2019 providing an even stronger balance sheet. The Opengear transaction will put us in a net debt position but we expect to generate significant cash in fiscal 2020. We continue to look for acquisition opportunities in both businesses and would ideally like to enhance our solutions business if the opportunity presents. I will now turn the call over to Jamie for more detail on our financial performance.

Thanks, Ron. Good afternoon, everyone. I'll start with some of the key financial highlights that contributed to the results of our fiscal fourth quarter and our fiscal year. Our fourth fiscal quarter revenue performance of $65.0 million and adjusted EBITDA performance of $7.6 million or 12% of revenue both exceeded our quarterly guidance ranges. As demonstrated during our fiscal year, our annual performance continues to trend of delivering dependable quality results. Our record revenue of $254.2 million for fiscal 2019 was at the high end of our original guidance range for the fiscal year and we delivered $26.5 million of adjusted EBITDA which exceeded the midpoint of the original guidance range. We are proud of our ability to deliver quality predictable results for our shareholders. Our adjusted EBITDA was $7.6 million for the quarter and $26.5 million for the year or 12% and 10% of revenue respectively. Included in our fiscal 2019 adjusted EBITDA figure is approximately $1.6 million of acquisition-related earn-out expense as well as approximately 30 basis points related to impacts from China tariffs. Finally, we drove our cash to $92.8 million through strong collections from accounts receivable and good cash management related to accounts payable and inventory. As Ron had mentioned we grew our cash balance by $30 million with $29 million coming from operations. Now I'm going to move to discussing our results on a segment basis. Both of our segments were important in delivering a strong performance for our fiscal Q4. I'll start with IoT Products & Services. Our revenue in IoT Products & Services was $55.4 million for the fourth fiscal quarter representing a decrease year-over-year of 1.7%. The majority of that year-over-year decline is related to lower sales for the quarter up from our cellular and network products. For the fiscal year 2019 our IoT Products & Services revenue increased by 6.8% to $215.3 million. The increase was mainly driven by improved sales from our RF and embedded products as well as incremental revenue of $5.4 million from Accelerated since the acquisition occurred in January 2018. That growth was partially offset by lower sales from our network products. Gross margin for IoT Products & Services was 47.9% for our fiscal Q4 compared to 47.3% in prior fiscal Q4 which is an increase of 60 basis points. The increase was driven by favorable product mix and lower manufacturing costs. For the fiscal year of 2019 our IoT Products & Services gross margin declined 1.1% to 46.7%. That's primarily due to unfavorable product mix, as we had lower sales from our network products, which typically have higher gross margins. Partially offsetting that was lower manufacturing costs that we incurred during the fiscal year. If I shift over to IoT Solutions. As Ron mentioned, our IoT Solutions business surpassed 63,000 sites, exiting the fourth quarter with an annualized recurring revenue, or ARR, of nearly $15 million, which is approximately 35% of the total solutions revenue. We finished the quarter with revenue of $9.5 million and the fiscal year with $38.6 million increases of 9.1% and 53.3% respectively. These increases were driven by new customer deployments, additional purchases of equipment upgrades from existing customers, as well as an increase in our recurring revenue base. For the quarter IoT Solutions gross margin was 42.7% that compares to 46.4% in fiscal Q4 of last year. This decrease was primarily related to implementation costs incurred -- higher implementation costs incurred compared to the prior fiscal Q4. For the year, our gross margin was 47.6%, an increase of 6.7%. The increase is reflective of our growth in our ARR and demonstrates the leverage that would be expected with increased recurring revenue. Finally, a few additional balance sheet items to mention. As Ron discussed, our cash balance of $92.8 million. In addition to that our strong cash performance, our inventory balance is $39.8 million, down by $2 million sequentially and $1.8 million from September of prior year. We anticipate continuing to drive this balance down as we progress through fiscal year 2020. As mentioned in our earnings release, we have adopted an expanded non-GAAP EPS calculation this fiscal quarter. We now further exclude the effects of amortization, stock-based compensation expense, adjustments to acquisition earn-outs, acquisition-related expenditures and other non-operating income and expenses. We believe this gives our investor community a better understanding of financial performance of the company and better benchmarking of our performance externally against our competitors. Now I'm going to shift to provide our first quarter and full year 2020 guidance. For the first fiscal quarter of 2020, we expect revenue of $58 million to $62 million. We expect our GAAP EPS to be between a loss of $0.02 to an income of $0.02 per diluted share. We expect our adjusted EPS to be between $0.10 and $0.14 per diluted share. And we expect adjusted EBITDA to be $5 million to $6 million. For the full fiscal year of 2020, we expect revenue of $310 million to $325 million. We'll continue to focus our gross margin rate improvement combined with OpEx controls to give us expanded leverage with targeted GAAP EPS to be $0.70 to $0.83 per diluted share and targeted adjusted EPS to be $1.14 to $1.27 per diluted share. We expect adjusted EBITDA of $45 million to $50 million. As mentioned in Ron's prepared remarks, we are anticipating the Opengear merger to close before January 2020. With that, we've assumed nine months of Opengear results in the above annual guidance ranges. In general, this includes approximately $45 million of added revenue and approximately $15 million of adjusted EBITDA from their performance. For reference, the Opengear financial figures provided in the investor presentation that is available on the Digi website are unaudited financial results. We expect on a GAAP basis for Opengear the adjusted EBITDA figure to be approximately $1 million lower than the posted figure in the investor deck. Finally, included in our guidance, we expect our fiscal 2020 annual effective tax rate to be in the range of 15% to 20%. That's driven up by our increased profitability that we're projecting for fiscal year 2020. That completes our prepared remarks. And at this time, Ron and I are pleased to take your questions. Gigi, could you please provide the instructions?

[Operator Instructions] Our first question is from Scott Searle from Roth Capital. Your line is now open.

Hey, good afternoon. Thanks for taking my question. Congratulations on the Opengear transaction.

Hey, thanks, Scott.

Hey. First off, on Opengear, could you just provide us a little bit more color with the historic growth rate? And just looking at some of the existing customer base and sales channels, do you expect a lot of cross-selling opportunities? I mean, how are your initial thoughts kind of approaching that as we go into 2020? And then I had a couple of follow-ups on guidance.

Yes, great question. They've experienced double-digit growth in the past, and we do expect that to continue. You can tell from our guidance we're being, maybe, modest at the midpoint here to make sure we're incorporating any acclimation to Digi. We do anticipate the opportunity to do some account mapping. Opengear, as I mentioned earlier, we share a lot of the DNA and have called on similar customers, sometimes with similar offerings, but also with very different offerings. So, one of the first exercises is to take our joint sales teams and do some account mapping to see if there's some opportunity that can be unlocked.

Okay. And maybe on the cellular product side of the equation, I'm not sure if you gave a breakup, but you could provide a little bit of color in terms of fourth quarter how that looked? It sounds like it's a little bit softer and I would imagine we'd see some acceleration going into 2020. So, your thoughts in general around the cellular products and Accelerated acquisition?

Yeah. The fourth quarter, we actually had a good contribution from cellular through the year, and embedded and RF were a bit of the success story. They performed a little better than expected, but we do anticipate in fiscal 2020 that between cellular and our network product offerings that those will have significant contributions. Clearly, the large $20 million projects is at its core cellular router. And so, that in particular is going to contribute to the success of cellular.

Got you. And lastly, if I could, just looking at the guidance for fiscal 2020 backing out contribution from Opengear and guidance that you've given for the first quarter, you've got organic growth of about I think 6% to 10% for the year, but given the flattish guidance in the December quarter, it certainly implies an acceleration in – over the last three quarters, I think of 7% to 14%. So, could you take us through what gives you the comfort on that front from a visibility standpoint? It sounds like cellular is certainly a key component of that, but just help us understand a little bit better why you feel so comfortable with that acceleration in the back half? Thanks.

Yeah. Thanks, Scott. Yeah. Our first fiscal quarter is – it's not unusual for us to have a slower quarter. Channel tends to want to optimize their inventory, and so they're being careful with restocking orders. There's not of course as many selling and installation days. So that first fiscal quarter does tend to be a slower one for us. We did see quite frankly a little bit of revenue that we would have ordinarily seen in this quarter that actually got accelerated into the previous quarter, which helped us exceed the guidance we had previously set in fiscal Q4. But between the large project we talked about, our strong bookings that we've seen to-date and some higher visibility from larger accounts, that gives us a little more confidence than what we've seen in the past where it just didn't have quite as much visibility.

Great. Thanks and congrats on Opengear again.

Thank you, Scott.

Thank you. Our next question is from Anthony Stoss from Craig-Hallum. Your line is now open.

Good afternoon, Ron and Jamie. And my congrats as well on the acquisition. Ron or Jamie, maybe you can provide a little bit more info on Opengear such as their average gross margins, average sales side? How many 10% customers they may have? And then Ron, your comments kind of alluding to potential other smart city type of deals, is it your partners in this first $20 million win that are drawing you into others? And anything you'd like to elaborate on there would be helpful? Thanks.

Great. Thanks, Tony. Yeah, the Opengear business, it has a lot of similarities to Digi's infrastructure management or network business. So, they have margins that are higher than Digi's combined margins in that products and services similar to the margins that we've experienced in the network and infrastructure management business. They do service 75 of the top Fortune 100 companies, but they do have four large direct customers that represent combined something close to 20% of their business, but they do a lot of business through channel partners Ingram micro and SYNNEX in particular. So they do have a distributed book of business. They do have a relatively narrow product set. They have a very good focus and have established themselves both branding as well as performance within that product set. And what's happened to them recently as well is they've expanded beyond being more of a North American provider into EMEA and APAC. So across the board, we think they've got good growth rates, good margins, good EBITDA margins that will help lift the overall performance of product and services. And as I mentioned before, you anticipate some cross-selling opportunities. On the smart city question, these are – is a problem that many cities face. Cities approach it in different ways. We think we've partnered with some great companies to offer one of the leading implementations. We've got this great reference point. We've got a pipeline that's built. These projects do take some time, especially projects that require some type of government funding. There's a bit of a lead time with it, but we're encouraged by the ability to start talking about this project more publicly, proving ourselves in the field with this customer, and we do have a dedicated team that's working these types of customers to create repeatable sales.

Great. Thanks, Ron.

Thank you. Our next question is from Mike Walkley from Canaccord. Your line is now open.

Great. Thanks guys. Just maybe a follow-up on Tony's question. Just as we put Opengear into the model, can you help us Jamie just think about operating expenses coming in from that customer – from that acquisition?

Yeah. Mike, I think with the offering that they have as Ron alluded to with the expanded margin rates in that sector, you do see more that kind of flows down at the EBITDA line. That suggests that the operating expense profile does kind of line up with what Digi sees. The go-to-market strategies with channel, there's really and part of why it's a good fit is their structure and the way that they go to market largely matches the way that we do. So there's not really anything that's unusual there and it kind of fits the profile that Digi has and where you see the leverage is in that product offering that comes at pretty good margins. And I will say, we'll give the Opengear team a lot of credit. They've got a narrower product set, a very defined market. So they've got a well-run company. Their OpEx profile is quite frankly lower than what Digi has experienced with our combined portfolio.

Great. That's helpful. And can you just help us think too about as you guys first time, since I've covered you that you're starting to lever up the company a little bit. You've talked about maybe looking at solutions. So what is kind of the acquisition appetite? Where are you guys comfortable leveraging up the company? And Jamie, maybe you could help us for the models for your adjusted EBITDA guidance. What type of net interest expense are you guys assuming for fiscal 2020? Thanks.

Why don't I take the first question and Jamie can take the interest expense question. As you can see from Opengear and you see the progression historically, we started off with small acquisitions to form SmartSense. We increased our appetite and confidence in taking on bigger acquisitions. Opengear represents the largest acquisition if and when closed in the company's history. We want to follow that theme. We're not going to be exclusive, but we are looking for bigger more transformative opportunities. We want to look for opportunities that have characteristics of Opengear that they're leaders, they've got momentum, they've got a great track record. On the solutions side quite, frankly, the metrics are going to be a little bit different. They're not going to be probably as based on a multiple of EBITDA. They'll be based on growth rates and recurring revenue. So we may or may not be able to use debt as efficiently as we have with the Opengear transaction, where it's accretive immediately and generating cash and not diluting the shareholders we think ended up being the right approach for this particular opportunity. But as we look for larger solutions opportunities, those valuation metrics are different. And depending upon where we stand in terms of the net debt, we'll have more or less flexibility. As I mentioned in my remarks, we do anticipate the combined company generating a significant amount of cash and you could visualize this company getting back to a net cash positive position in a relatively short amount of time. We are left then with a company with expanded EBITDA margins and quite frankly more capacity to take on some debt should an opportunity arise.

Mike, it's Jamie. On relative to the debt as we kind of move through fiscal 2020 the interest that we're kind of assuming below the adjusted EBITDA number it comes in at a rate of about something below LIBOR plus 300. There are step-downs throughout the year as we delever ourselves. And so we've got that moving between that L+200, L+300 range with step-downs kind of practically starting around the first half of the year and stepping down sequentially each quarter after that.

Great. That's helpful. And one more question and I'll pass on kind of a two-part question. Ron with the city opportunity it's great to hear, how long are these projects? Is that $20 million was that all included in fiscal 2020 guidance? Or is it spread out longer than that? And maybe any color on pipeline of how many more of these projects you think you might be able to enter over the next year? That would be great.

Those are great questions. We did start deployments of this project last quarter. And so it did contribute somewhat to the upside we saw in the quarter. Of the $20 million about $1 million of it is an annual recurring revenue that we are expecting to achieve over the next five years. So that $20 million sort of becomes $15 million. A little bit was deployed in fiscal 2019. The balance we'll deploy in fiscal 2020. But with this tale of annualized recurring revenue that goes beyond fiscal 2020.

The -- sorry.

Yeah. Sorry, what?

No, go ahead.

So the pipeline we're not prepared to share quantity information, but we're getting some really positive feedback. Again these sales cycles take a while. So the pipeline might be a little bit deceiving in terms of the number of entities. We've had a chance to talk to and begin to share some of the success. We are greatly anticipating to be able to share the specific end user, because it's a public entity it will be registered and will be available for the public to know. So we're anxiously awaiting that time because I think that provides even more of an explanation point beyond what we've described this project, but we're anticipating being able to land additional projects potentially as early as this year.

Great. And one last question popped in my head. Just on the solutions business with the talk about going to more bundled deals, should we assume implied in your guidance a step down in the run rate of that business maybe closer to halfway between the run rate of the business and what you put up last quarter on recurring revenue and last quarter like say $6 million to $8 million? Thanks.

Yes. So we do expect the top line to grow. We expect the annualized recurring to grow faster than the top line, because we anticipate 3,000 to 4,000 subscribers happening on a quarterly basis. We were a little bit short of that last quarter, but we think we'll more than make up for it this current quarter. But if you kind of extrapolate those additions and assume high customer retention that's how -- that gives us the confidence that the recurring revenue will grow. And bundled deals are generally going to have higher ARPUs than our existing installed base which also encourages that acceleration in annualized revenue.

Thank you, very much.

Thank you. Our next question is from Greg Burns from Sidoti & Company. Your line is now open.

Yes, thanks. I guess, just kind of dovetailing on the last question about the solutions.

Hey Greg, I think we're having a tough time hearing you.

Okay. Sounding better?

No. Greg you're pretty tough to hear.

Okay. I'll just -- I'll catch you after the call.

Thank you. Our next question is from Jaeson Schmidt from Lake Street. Your line is now open.

Hey guys, thanks for taking my questions. Just curious, if you could share what would the breakdown in Opengear's revenue between products and services and solutions was or is? A – Ron Konezny: Yes. So the -- as I mentioned in my remarks Jaeson, that this business will report into the Products & Services business units. So all of its revenue will attribute to that business segment. It is truly in the spirit of hardware-enabled software-defined although the customers in that business are mainly paying an upfront fee. They do have a stronger attach rate than what Digi has historically experienced on their equivalent of device management. So -- but a little bit under 5% of their total revenue would be software recurring in nature.

Okay that's helpful. And then just lastly if you could comment on what you're seeing as far as inventory in the channel at the distributors? And where you think that is?

The channel inventory is pretty similar to what we've reported in previous quarters around $20 million or so maybe a little bit higher than that but it's around that $20 million mark.

Yes Jaeson, it's actually stayed fairly consistent quarter-over-quarter, so not a lot of movement there. There wasn't really a lot that changed from fiscal Q3 into fiscal Q4.

Okay. Thanks a lot.

Thanks, Jason.

Thank you. [Operator Instructions] Our next question is from David Gearhart from First Analysis. Your line is now open.

Hi, good afternoon. Thank you for taking my questions. I wanted to go back to the IoT Solutions business. In the past, you've said that the IoT Solutions business should grow roughly 20% annually on a total revenue basis. And I know what the model shift is. I was wondering if you could update that metric so we can kind of not get too far afield on that line?

Yes, it's a good and a fair question. We've achieved our goal of growing this business over 20% on the topline in the last couple of years with the focus more on recurring revenue, which is really where we want this business to land. Our expectations for top line growth are probably closer to 15% to 20%. But that subscriber base and the annualized recurring revenue should grow faster than that.

Got it. And then back to the site additions, I think it was one of your lowest quarters for site or asset additions, since you've had the business. And just curious why is it? Is it just ebbs and flows normal project-based work? And what gives you the confidence to get back up to a normal more 2,000, 3,000 plus units per quarter?

Yes that's another real good question David. I think that on the positive side, we haven't seen any market trends either customers' interest competition that have challenged our projections or confidence in the business. I do think as we enabled SmartSense 4.0 and we are starting to move customers to that as the destination platform I think that's caused us a little bit of a hiccup last quarter. We do anticipate seeing much improved subscriber numbers in this current quarter. So -- but you're right last quarter was a little bit lower than what we've traditionally achieved. And -- but we do expect that to bounce back for not only this quarter, but for the balance of the year as well.

Got it. And the last one for me housekeeping question. What was the CapEx in the quarter?

For the year right now -- yes for the quarter David, we were under $100 million in CapEx for Q4.

Got it. That's it from me. Thank you.

Thank you. At this time, I am showing no further questions. I would like to turn the call back over to Ron Konezny President and Chief Executive Officer for closing remarks.

Thank you, Gigi. In closing, I want to thank the entire Digi team, our customers and our partners. We are unwavering in our mission to support them with leading IoT offerings. We believe that we will build shareholder value and earn investor trust and confidence. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.