Comfort Systems USA, Inc. (FIX) Q4 2011 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the 2011 Comfort Systems USA Fourth Quarter Earnings Call. My name is Larry, and I will be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today, Ms. Julie Shaeff, Chief Accounting Officer. Please proceed.

Thanks, Larry. Good morning, everyone. Welcome to Comfort Systems' fourth quarter earnings call. Our comments this morning, as well as our press release, contain forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. What we say today is based on the current plans and expectations of Comfort Systems USA. Those plans and expectations involve risks and uncertainties that could cause actual future activities and results of our operation to be materially different from those set forth in our comments. You can read a more detailed listing and commentary concerning our specific risk factors in our Form 10-K, as well as in our press release covering these earnings. A slide presentation will accompany the prepared remarks, and has been posted on the Investor Relations section of the company's website found at comfortsystemsusa.com. Joining me on the call today is Brian Lane, our President and Chief Executive Officer; and Bill George, our Chief Financial Officer. Brian will open our remarks.

Thanks, Julie. Good morning, everyone, and thank you, all, for joining us. I want to start by thanking each of our talented team members for the reference. We appreciate everyone's hard work and dedication. Before we begin, I'd like to recognize the leadership provided by Bill Murdy during his tenure as CEO of Comfort Systems. When Bill joined the company in June of 2000, Comfort Systems was a fairly new public company with $300 million in debt and facing difficult industry conditions. Bill led us through these difficult times and helped transform Comfort Systems into what it is today. The entire Comfort Systems family is grateful for Bill Murdy's dedication and leadership over the past 11 years. Thank you, Bill. Let me start with an overview of key points for the quarter and the year. Bill George will take you through the financial results. And finally, I'll discuss backlog and the outlook for 2012. 2011 was another tough year for the nonresidential construction industry. Like our industry, we faced weak fundamentals and challenging activity levels. Excluding goodwill and other noncash charges, we are reporting EPS of $0.15 for 2011, compared to $0.43 in 2010. Despite the challenges, 2011 was a year of steady progress for Comfort Systems. Same-store revenue increased 1.6% for the full year, the best top line comparison over the past few years of difficult industry conditions. In 2011, we improved the strength of our operations and expanded our capabilities with the fourth quarter acquisition of Environmental Air Systems or EAS. This acquisition increases Comfort's geographic footprint in the mid-Atlantic region and expands our product offerings in the custom off-site construction business. EAS is a positive addition to our family of companies. We are pleased to report that EAS posted good results for the fourth quarter. EAS has already started working on a job with ColonialWebb, and there are several opportunities that they are pursuing jointly with other comfort companies. I am very optimistic about the strength and potential of their outstanding team, and we welcome all of their employees to Comfort Systems. We had strong performance at most of our 38 operating locations. Despite tough conditions and a difficult pricing environment, most of our companies executed work extremely well. Comfort's focus on project selection, estimating, pricing and execution, along with a disciplined cost structure, have allowed us to earn solid profits this quarter. We also had our share of executional shortfalls this year. We had previously discussed the operational challenges facing Delcard, which is based in Delaware. 2011 was another disappointing year for Delcard, and during the fourth quarter, we made the difficult decision to begin exiting that market. Bill will discuss the charges incurred as a result of the decision to curtail Delcard's future operations. Finally, we had exceptionally strong cash flows for the quarter. This marks the 13th year in a row where we had positive free cash flow, which is a great achievement for our dedicated nationwide workforce. Let me turn this over to Bill now to discuss the financial results.

Thank you, Brian. I'll start with the quarter, and if you have the slide show, you can turn to Slide 1. We were profitable during the fourth quarter. As expected, however, we continue to be broadly impacted by the ongoing weakness in the nonresidential construction markets as gross profit and operating income margins were lower due to continued challenging market conditions. Total revenue increased $3.1 million to $317.7 million compared to the fourth quarter of 2010. This was a result of the EAS acquisition in November. Without that acquisition, same-store revenue decreased 4.8% compared to the fourth quarter of 2010. Similar to trends from earlier quarters this year, gross profit margins were lower compared to 2010. Gross profit was 15.9% for the fourth quarter of 2011, compared to 18.1% in the fourth quarter of 2010. The decrease in gross margins was generally broad-based, and results from weak pricing. Total SG&A expense decreased $2.4 million for the fourth quarter compared to the same period in 2010. As a percentage of revenues, SG&A dropped from 15.4% in 2010 to 14.5% in 2011. If we look at same-store SG&A, we were helped even more by lower overhead costs. Excluding amortization expense, same-store SG&A decreased by $3.3 million, a 7% decrease. Including our incremental goodwill adjustment, operating income was 0.3% for the fourth quarter of 2011, compared to 2.3% for the fourth quarter of 2010. Excluding goodwill and other intangible impairment charges recorded in both periods, operating income was 1.5% for the fourth quarter of 2011, and that compares to 2.7% in 2010. Now I'm going to take a few minutes to describe some individual items during the reported periods. During the third quarter of 2011, we concluded that impairment indicators existed within 4 reporting units, based upon year-to-date results and recent forecasts. We did an impairment analysis and recognized an estimated $55 million pretax noncash goodwill impairment charge during the third quarter. We finalized that assessment of this goodwill impairment charge during the fourth quarter, and as a result, recorded an additional -- a goodwill impairment charge of $2.2 million. We also recorded a $1.6 million impairment charge related to Delcard's intangible assets. This impairment charge was triggered by our decision to curtail future operations at Delcard. We expect that Delcard will be reported as a discontinued operation in a future reporting period. As we announced a few months ago, during the fourth quarter, we made a substantial investment in North Carolina as we commenced a new partnership with Environmental Air Systems, EAS. Because we own a partial interest in EAS, I want to review how they end up being reflected in our financial statements. We have a 60% interest in EAS, and thus, we consolidate their results. We include the assets, liabilities and results of EAS throughout our financial statements from the top line of the income statement down to net earnings, and in our balance sheet accounts. We then subtract net income attributable to the 40% interest still held by the sellers in order to calculate the bottom line for our shareholders. For the fourth quarter, even after amortization, we had a net positive contribution from EAS for the 2 months they were a part of Comfort Systems, and we're still very excited about this new partnership. Please turn to Slide 3 and we can look at full year results. As you can see, total revenue increased $131.7 million, or 11.9% to $1.2 billion, primarily due to acquisitions. Without acquisitions, same-store revenue increased 1.6% for the full year. In addition to the EAS acquisition for 2 months during the fourth quarter, the ColonialWebb acquisition was included in our results for the full year in 2011, and that compares to 5 months in 2010. Full year gross profit margins were 14.6% in 2011, compared to 17.0% in 2010. Continuing trends from earlier in the year, the gross profit decrease was broad-based, and results from the weak pricing environment. Full year total SG&A expense increased $8.7 million, or 5.3% to $172.1 million, but all of that increase is due to acquisitions. As a percent of revenue, SG&A dropped from 14.7% in 2010 to 13.9% for 2011. Excluding acquisitions and amortization expense, same-store SG&A actually decreased $9.3 million or 5.9%. After the third quarter goodwill write-off, operating income was negative 4% in 2011, compared to 1.8% in 2010. Excluding goodwill and other intangible impairment charges recorded in both periods, operating income was 0.8% in 2011, compared to 2.3% in 2010. Now let me quantify our goodwill impairment and other charges in a little greater detail. As I mentioned earlier, we recorded goodwill and other intangible impairment charges during the third and fourth quarter. The total goodwill and other intangible impairment charge for 2011 was $58.9 million pretax or $1.22 per share after tax. The other items relate to noncash charges that we recorded and discussed last quarter. We revalued the earn-out liability related to the ColonialWebb acquisition, and an increase in valuation allowances was recorded against certain deferred tax assets. During the third quarter, we reassessed the value of the earn-out obligation. And as a result, we reduced the liability resulting in a full year gain of $5.5 million, which was a pickup of $0.14 per share after tax. The same economic and outlook factors that led us to conclude goodwill impairment was necessary during the third quarter also lead to examining future tax benefits we had booked relating to historical losses in certain locations. The net impact of the increase in valuation allowances that we concluded were appropriate was a loss of 0.06 or $0.06 per share. The net effect of these 3 items, all 3 items, goodwill, earn-out and tax adjustments, was $1.14 loss per share. So without these items, the EPS for the year was $0.15 per share. I want to end by running through a few more items that are more routine in nature. Our tax rate for 2011 was 18.3%, coming in at that level as a result of the developments described above. Keep in mind that given the goodwill-related loss, income tax is a benefit, so in this case, a lower tax rate actually means lower reported earnings. Going forward, we expect our tax rate to be in the 35% to 45% range. It's a broad range because it's difficult to project the tax rate in light of the potential impact of future fair value adjustments, not goodwill, the other types of fair value adjustments that we now do under the new accounting rules. During 2011, we also purchased 739 shares of our stock through the share repurchase program. Since we began buying shares in 2007, we have repurchased 5.6 million shares and returned $61.5 million to our shareholders. We plan to be very price-sensitive and opportunistic in share repurchases in 2012. The best news this quarter, and the statistic that I want to end my comments on, is cash flow. Free cash flow was exceptionally strong, coming in at $49.5 million for the quarter, compared to $43.8 million in the fourth quarter of 2010. Free cash flow for the year was a positive $21.7 million, compared to $33.5 million in 2010. We've generated positive free cash flow for the past 13 calendar years. We feel good about the cash flow prospects in 2012, although I want to note that if activity levels were to begin to increase significantly, that would result in a significant net incremental investment in working capital, and that would most likely result in lower cash flow. That would be a good problem to have. Overall, we remained financially and operationally sound. We have good cash balances and reasonable debt. Our unused credit lines don't expire until 2016, and we meet our covenants by wide margins. During 2011, we invested in a significant acquisition, paid a dividend and continued to retire shares. Despite tough market conditions and the results that go with them, we continue to search for and implement strategies to prudently use our strength to compete and prove and grow. Before I end, I also want to add my thanks to Bill Murdy for 11 amazing years. And with that, I'll turn it back to Brian.

Thanks, Bill. Let me give a little more commentary on the operating results. As you can see on Slide 6, backlog at the end of the fourth quarter of 2011 was $633 million. Backlog on a same-store basis was down $39 million or 6% on a sequential basis, and down $20 million or 3% compared to the fourth quarter of 2010. For the first time in a few years, our book-to-burn ratio for the full year is at 1. As noted in Slide 7, the institutional markets of government healthcare and education represent a significant portion of our revenue. These markets are active and make up 63% of our backlog. The private commercial sectors remained weak, but we continue to win our fair share of smaller and midsize projects. Overall, although margins remain tight, we remain cautiously optimistic that activity levels in most market sectors are stable. Let's discuss what we're seeing by region. For us, the downturn started in the west then moved to the southeast, with minimal impact in the northeast. The northeast region includes the companies on the upper Midwest. Throughout the downturn, the northeast has been stable and is our most profitable region. We have a strong market presence in the northeast, and we compete based on expertise and not just on price. The majority of these companies, and most notably the operations in Maine, Massachusetts, Michigan, Wisconsin, New York, Ohio and Northern Maryland, continue to report good results. The majority of the operating companies in this region have a strong backlog and are currently operating at full capacity. During 2011, we did have weakness at the Washington, D.C. area operations. This was due to a combination of competitive pricing and job underperformance. This operation is led by a seasoned company president. We are dedicating resources to turn this company around and we expect improved results in 2012. Conditions in the southeast, and most notably in the mid-Atlantic region, continue to experience weak pricing in nonresidential construction. Despite the tough climate, we had strong execution and solid results from the Arkansas, Central Florida, Florida Panhandle and Tennessee operations. Most of the markets in the west have stabilized and a few are beginning to show some strength. Booking activity has picked up in most major markets, except for Arizona. The operations in Washington and Iowa posted good results for 2011. Since the operations in the west were the first to be impacted by the recession, we are hopeful that this signals an overall improvement. Please see Slide 8 for a comparison of the revenue mix. Pure service, which is maintenance and repair, was 17% of revenue for 2011, compared to 18% in 2010. Our retrofit and replacement work grew from 35% in 2010 to 40% in 2011. We invest in service over the past several years. We hired top service professionals, added new training programs to help our employees excel and perform work profitably and develop new management tools and resources. This has resulted in a stronger maintenance base and operating performance from the service side of the business in 2011. Our safety record continues to be strong. During 2011, we achieved an OSHA recordable rate that was 27% below the industry average. Our lost time injury rate in 2011 was 72% below the industry average. These achievements in safety are a result of a continued focus and we benefit from lower insurance costs. Finally, let's discuss outlook. Industry forecasts are signaling a gradual but delayed improvement in nonresidential construction. However, there have been a few false starts during the course of this recession. We continue to experience pricing pressure as the anticipated recovery has taken longer to develop. Whatever the conditions may be in the coming quarters, I believe that Comfort Systems is well positioned to make the best of them. Conditions will improve, the only question is when. When they do, we feel confident that we have the team, the resources and the attributes to be an even more significant force in our industry. Our ongoing investments are intended to provide value growth over a long-time horizon. Our strong financial position and broadening capacity are competitive advantages. I expect to see Comfort Systems grow into an increasingly dynamic company as we find ways to differentiate ourselves from competitors and build for the future. Again, I'd like to thank all of our 7000-plus team members for their efforts. I will now turn it back over to Larry for questions. Thank you.

[Operator Instructions] And our first question comes from the line of Adam Thalhimer of BB&T Capital Markets.

I just want make sure I have this -- the pretax charge in the quarter, the $3.8 million. The after-tax charge is $824,000.

Yes. Yes, that has to do with essentially complicated things that are going on with the tax rate.

Okay. I just want to make sure that I had the numbers right.

No, that's how it came out. The problem is that you should keep in mind that, that 2.2 was incremental to a $55 million charge, and every time -- every one of those accounts, they live in different states, some of them are from -- some of the accounts per one entity live in multiple states, so a lot of things happen when you start to run those through. It turns into a -- it turns into quite a computational session, and then you have to prove it to your auditors. We're comfortable those are the numbers, but on the base that -- they're odd to me as well.

Okay, good. Bill, what was Delcard's annual revenue?

Annual revenue in 2011, I'll look that up and have it for you here in a minute.

And while you're doing that, I just, I wondered if you could comment. With 63% of the backlog being institutional, obviously, there's a lot of concerns about government spending. I mean, what are the trends you're seeing in that business in terms of bidding opportunities?

All right. 2011 revenue for Delcard was $23 million. It'll be effectively 0 in the 2012. I don't know, Brian, trends in the institutional?

Yes, on the institutional, the bulk is still healthcare and education, most of it the high university for us. On the government side, it's on the federal work, a lot in the military, that they're continuing to spend. So we don't think we'll be negatively impacted, at least for next few years and a decrease there.

I'm sorry, that was for all 3 segments, Brian, the government, institutional?

Right. You look out the next 3 years, it's pretty much stable spending, at what we're penetrating there, Adam.

Okay, great. And then, I guess, the last question for me is just that we got that January nonres construction number just about an hour ago from the Census Bureau and, we're up 17% year-over-year. And that seems like pretty impressive growth, particularly when you compare it to kind of the last recovery cycle, I don't think we saw anything near that this early in the recovery. And I just wonder, you had some interesting comments about what you're seeing, recovery-wise, in the west. I just wonder, what's your typical lag from things like Census Bureau data?

Well, the monthly numbers can be very erratic. But our lags -- we don't lag Census Bureau that much. Typically, we lag McGraw-Hill a year or more because that's contract starts. Census Bureau is a report of activity, so, yes, I don't have much -- I don't think we see anything like that, like what you just described for what happened in the month in the markets we're in.

Our next question comes from the line of Tahira Afzal of KeyBanc Capital.

This is Saagar on for Tahira. A quick question on the sequential uptick in gross margin. I'm sorry if I missed your comments around it. It went from 15% to 15.9%, I know, and previously, you guys have mentioned that going forward, it should be in the 15% to 16% range. I just want to see what was -- what happened there for the increase to happen and if that's going to be sustainable going forward?

No, I think it's a return to a traditional pattern that we've had in the past of lower fourth quarter revenues. If you look back over 13, 14 years, we -- the first and fourth quarter revenues for us, for our industry, have been the lowest revenues. The first quarter earnings have been, by far, the lowest earnings, but we typically have decent margins in the fourth quarter. Part of that is a lot of jobs get completed and finally closed out and booked, so I would say, that's more of a fourth quarter change than something that you would infer for the full year. Having said that, those are range -- both of those numbers are ranges we should -- that should -- that you could -- that are possible for the full year of 2012.

Okay. And then I know you guys had previously set a range of 14% to 15% going forward, for at least a near to medium term. So definitely it falls in-line with that.

And we're also over 50%, service and retrofit, Saagar. They are up 57%, so you will find a better margin on that side of the business.

Perfect. And then next question, in the past, you guys have said that a lot of the work that you guys have been getting or a lot of the bidding activity out there has just been continuously rebid with sponsors or customers hoping to get lower prices on the rebid work. Have you guys seen any shift in that, where instead of customers stopping and not having things going forward, actually moving forward with those awards now?

Yes, we have one example of a major project being rebid 2 or 3x during the last half of this past year. And I think it was, as much as anything, some of those look like it's the customer not quite ready to pull the trigger and one way -- it's a convenient way to not quite pull the trigger. Just say, oh, we need to look at the price a little more. But I think -- Brian, I don't hear much about that now, do you?

Not as much. Fewer people are showing up for bids, and I think that there's not as much of that. Still a long time in decisions, though. It's not like it was a few years ago. We're still -- people not pulling the trigger as quick as we'd like.

Yes, they deliberate, they say, well, we have a board meeting next month. We're going to wait until after that, and there's some of that going on.

Okay. And then last question, what sort of impact did the modest weather have on your -- under the volume of your service calls and all that?

It doesn't help, Saagar, I'll tell you that. It's been very mild pretty much throughout the country. But having said that, we have a lot stronger service business today than we did years ago. But we didn't get the surge you're going to get from that dramatic decrease in temperature, hopefully a rise in temperature in a couple of months. The other issue you see out there is going to be impact of the gas price. As it keeps going up, we'll see how that plays out here in the short term.

And what the fuel cost then, is that something -- how -- historically how much of an impact does that had on your margins, in a '08, '09 time frame.

Mathematically, it's not very big on the whole Comfort Systems. It doesn't help like it's the cost that goes up. It has a little more effect on the 15% that's service, so that's one of the reasons that -- and so if you are running, remember, service is 17% of our revenues, and if you're running a service department, it's a bigger proportion of what you're scratching your head about. Having said that, is it something to put in a model if you're thinking about the whole of Comfort Systems? I just think it's just -- can't get to significance for that, unless it doubles or something. Right.

Our next question comes from the line of Rich Wesolowski of Sidoti & Company.

There has been an unprecedented swing in the mix of your backlog with regard to the project sizes during the last couple of quarters -- quarter-year filings in the third quarter. We saw the share of large projects fall to a ratio far below anything you've reported the last 5 years or so. But then in 4Q, you had a surge in large project wins or those above $15 million. Can you explain what's going on there?

I think there was a trend that was based on the economy and the dearth of large projects. And then when the EAS came in, that's a company that does a lot of data centers and hospitals and pharmaceutical factories, they -- that I think a lot of what you would've seen in this most recent reported period, had a pretty big effect on that, obviously, also, added to our backlog.

But they're, what, $35 million out of a $600 million backlog. I can't imagine that was the whole thing, was it?

Well, on the backlog, yes, they were more than the increase. But as far as the project size, we also had one enormous project in the mid-Atlantic that averaged in a sort of -- probably the biggest project we've done in years.

Yes, ColonialWebb had a large data center, Rich, too.

That was the one that was cited in the file with just some $50 million and thereabouts.

Correct.

Okay. If -- when we see management get bullish on the prospects for pricing improvement, should we expect the share of large projects to go down? Would that be the early indicator of Comfort believing that the recovery has begun in earnest?

It could be. I mean that, I guess, the thesis for that would be we're exercising pricing discipline, maybe.

Or did you want to lever yourselves to the incremental project being at a higher margin than the one you're working off?

Well, that's been true for a while. One of the interesting things that's been happening in our market is people were willing to take lower gross margin 6 months ago for a project that was 9 months than they would take for a project that was 2.5 years. If you're a local company President, you need -- you want -- you don't mind tying up some resources for the next 0.5 year, or 9 months because you have air pockets, but your loath to go commit your resources at current pricing on a multi-year project. And so you might have seen 300 or 400 basis points higher bid margins on multi-year projects. So I think that -- I guess that kind of supports that thesis. It's all conjectural, I don't know and I haven't really thought enough about it to have an opinion.

And then lastly, would you expect the company has any more sizable acquisitions left in it before the market really recovers, or has Comfort kind of made its bids in that regard?

I think that we're still going to actively look for acquisitions. We have bought 2 of the 5 largest construction companies in our industry, private construction companies in our industry in the last 1.5 years. So I don't know that you're going to see us. Until we become convicted of a recovery, I don't think you're going to see big incremental investments on the heavy construction side of our business. We're still -- we love tuck-ins, we -- knock on wood, we haven't had a bad tuck-in, in like 7 or 8 years. And we also -- there are other little niches, things that have interesting service, things about them or we still like controls companies where there's a big installed base of buildings that they service. So you're going to see more of that. Brian is that...

Yes, I think that's right. You won't see us doing a big construction company, Rich, for a while.

Our next question comes from the line of John Rogers of D.A. Davidson.

Brian and -- relative to your comments about markets maybe getting better out in the west, stable in some places, how do you rectify that or -- with the falloff in organic growth and organic backlog?

Yes, I'm looking at a really -- on a go-forward basis, John, over the next year. And when I say it's improving, I'm talking about from a very low base, which the West was in. And to me, a little bit of stability, more activity that we're finally seeing in the West, we haven't seen for a few years. So that's a relative comment.

Yes, John, when we saw a drop-off in backlog, obviously, that caused us to go do a lot more talking and scratching our heads, because we'd had multiple consecutive quarters of really modest, but consecutive improvement.

But improving, yes, yes.

I believe, I really sense -- and I think you know us well enough to know we wouldn't just say this, I really think that this quarter was a onetime event. I think we were in the middle of the winter. This is a time when no owner -- we don't put things in backlog till we have signed the paperwork, right? We have a pretty strict definition, not a lot of people are out there, making sure they get projects signed around Christmas in a market like this. So I think -- I feel good about our backlog trends for the coming year. I think that's more -- backlog's very lumpy for us. I think that was a one-quarter event.

And -- but, Bill, I mean, you also saw the downturn in revenue growth, as well, lost momentum there.

Then I think that was us hitting the fourth quarter. So I really -- I don't know, Brian, how bookings for the first quarter look...

Bookings for the first quarter, John, look pretty good.

Okay. And did the closure of the operations -- how are you treating that in those organic numbers?

It's in there fully as if it's ongoing. Nowadays, GAAP has strict, strict requirements before you treat something as discontinued operations. You can't have any revenue. So if you're still collecting money from projects, you have to keep it in your ordinary numbers. It flips over. At some point, you reach a point which will happen probably in the next few quarters, maybe the second or third quarter of this year, although I'm just guessing, where you meet the GAAP definition where you have to put it in the discontinued operations. And when that happens, we'll be forced to state our past numbers -- restate our past numbers to the ones that we are still reporting, that are still in the periods we're reporting to remove that company. So we would've preferred to put it straight into discontinued operations to have a clean cutoff at year-end. There are -- people have abused that, I guess, because there are very, very strict guidelines for when you can do that, and it's pretty much got to be -- you just got to have no further participation in any of the closeout processes for a company before you can do that.

Okay. And you said the annual revenues, they were about $23 million?

Yes, they reported $23 million of revenue in 2011 and I don't think -- that number will be closed -- pretty much 0 in 2012.

Our next question comes from the line of Clint Fendley of Davenport.

Most of my questions have been answered here, but -- and this is just kind of a bigger picture question. But I'm wondering, I know at the residential level for HVAC companies, we're seeing the government-mandated change, I believe, away from the R-22 refrigerant, and I'm just wondering, does this have any ramifications at all, looking forward for your service business given what is the -- expected to be the big increase in price for that refrigerant?

That's likely to have a very, very minimal effect on us just because of the nature of the equipment that we interact with. That's -- I think, that's more of an issue for people that have a different business mix than we do, and in particular, for the residential guys.

Yes. We'll have to deal with some of it, but it's not going to be material.

With no further questions, I would like to turn the call over to Mr. Brian Lane for closing remarks.

Right. Thanks, Larry. I'd like to thank all of our listeners for their interest and support for Comfort Systems, and our employees for making this all possible. We look forward to seeing you all on the road. Thank you very much and have a great day.

Thanks.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may disconnect at this time, and have a great day.