Welcome to ITT's 2021 Second Quarter Conference Call. Today is Friday, August 6, 2021. Today's call is being recorded and will be available for replay beginning at 12:00 p.m. Eastern Time. At this time, all participants have been placed in a listen-only mode. And the floor will be open for your questions following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to Mark Macaluso, Vice President, Investor Relations. You may begin.

Thank you, Christen, and good morning. It's my pleasure to welcome you to ITT's second quarter 2021 earnings conference call. Joining me here this morning are Luca Savi, ITT's Chief Executive Officer and President; and Emmanuel Caprais, Chief Financial Officer. Today's call will cover ITT’s financial results for the three-month period ending July 3, announced yesterday evening. Today's remarks may contain forward-looking statements including comments relating to company performance, strategic priorities, business mix, market conditions and the effects of COVID-19 on ITT, which are subject to certain risks and uncertainties. These statements are not guarantees of future performance or events and are based on management's current expectations. Actual results may vary materially due to among other items, the factors described in our 2020 Annual Report on Form 10-K and other recent SEC filings. ITT does not under any expressly disclaims any obligation to update forward-looking statements whether as a result of new information, future events or otherwise. Except where otherwise noted, the second quarter results we present this morning will be compared to the second quarter of prior year and based on non-GAAP financial measures. These adjusted results exclude certain non-operating and non-recurring items, including but not limited to asbestos-related charges, restructuring, asset impairment, acquisition related items and certain tax items. All adjustments in the quarter and expected for the full year 2021 are detailed along with the reconciliation of such measures to the most comparable GAAP figures in our press release and presentation, both of which are available on our website. Before we begin, I'll provide a brief overview of our second quarter GAAP results. Revenue increased 34% to $692 million, segment operating income increased 206% to $114 million, which equates to segment operating margin of 16.5%.Reported earnings per share decreased 15% to $0.45, driven primarily by a $28 million after-tax loss on the divestiture of InTelCo Management LLC, formerly a wholly-owned subsidiary that holds legacy asbestos liabilities and related insurance assets, as well as prior your income tax benefits and increased corporate and environmental costs. With that, it's my pleasure to turn the call over to Luca who will begin on Slide #3.

Thank you, Mark. And good morning. I want to first thank you, our stakeholders for your continued support and investment in ITT. I also want to thank the nearly 10,000 employees at ITT that continue to demonstrate the resilience that makes ITT a trusted partner for our customers and the communities in which we operate. We are all focused on ensuring ITT delivers on its commitments, hour-after-hour was taking care of each other, our families and our customers. This has been a pivotal quarter for ITT. On July 1, with diversity the subsidiary that all of our legacy asbestos liabilities to portfolio company of Warburg Pincus. Importantly, ITT is indemnified from any further responsibility for all pending and future legacy asbestos claims. This transaction followed the successful transfer about a U.S. pension liability in October 2020. And will allow us to focus more on growing the core business organically and through acquisitions. We're now beginning the next chapter in ITTs history. On the operational front, over the past few months, I've had the privilege of meeting our teams in person at our sites in Italy, California, the Netherlands and the Northeast. I continue to be encouraged by the progress we are making, by the opportunities that remain, and by the commitment and the passion I see from our workforce. Before reviewing our results, let me talk a little bit about ITTs sustainability efforts. In the coming weeks, we will be releasing our 2021 sustainability report supplement, which will show our commitment to environmental, social and governance initiatives. It is clear that while we have made significant progress in 2020, despite the impact of the pandemic, there is still more that we can do. Our employees’ efforts during the pandemic to take care of each other and our customers as transcend…

Thank you, Luca and good morning. Motion Technologies Q2 organic revenue growth of 64% was primarily driven by strength in auto. As you know, the second quarter of last year was down significantly due to the pandemic. However, Friction continues to outperform global auto production by a very wide margin. And from an operating standpoint, our OE business performed very well with 99% plus on time performance. This was a key reason, MTs revenue eclipsed pre-COVID levels in the second quarter of 2019 by 8%. The strong orders growth in MT this quarter was a combination of both auto and rail, where we continue to gain share. Segment margin expanded 660 basis points versus prior year to 18.8%, mainly due to higher volumes and productivity offset by the impact of higher raw material costs for steel, tin and copper. As we indicated last year, MTs margins declined sequentially in the second quarter, given the increasing commodities pressure, however, MT delivered almost 30% incremental margin in spite of these headwinds, Wolverine sales growth was over 60% driven by OE shims in North America and Europe and in sealings, while KONI, grew by double-digits organically. Margins in Wolverine, KONI and Axton were all double-digits in the quarter. For industrial process revenue was up 8% organically. This was driven partially by easy prior comparison, stemming from steep declines in project shipments, which resulted in over 50% revenue growth this quarter. We also saw minor short-cycle declines driven by lower service sales and flat growth in baseline pumps due to the materials shortage. As we have indicated, given the order trends we see across IP, we continue to expect the short-cycle businesses to accelerate in the second half. From an end-market perspective, growth was spread across general industrial, oil and gas and chemical market.…

Thanks, Emmanuel. ITT continues to execute on its strategic priorities to position the company for long-term success. The actions we took to eliminate our legacy asbestos liabilities will allow our teams to drive better growth in the core, and up our gain in capital deployment. We are now even more laser focused on growing ITT organically and through acquisitions, while funding high return growth investments, given our capital flexibility, and strengthen cash flow profile. We continue to outperform across all our businesses. And we see encouraging signs in our orders growth, which we position as well for the remainder of 2021, 2022 and beyond. And continue to drive strong cash generation through increased income and effective working capital management.

Thank you. The floor is now open for questions. [Operator Instructions]. Please limit your questions to one question and one follow up. Thank you. Your first question is coming from Jeff Hammond with KeyBanc Capital Markets.

Hey, good morning, guys.

Good morning Jeff.

Good morning Jeff.

Good morning Jeff.

Yes, so just want to get a better feel for sequential margins in the segments, it sounds like MT maybe is under a little bit more pressure and then you get mixed benefits in the other two segments, is that the right way to think about it?

So, MT is being impacted by raw materials. And I think that if you look at between Q1 and what happened in Q2, there's definitely the impact of those raw materials inflation into Q2, and this is going to go in accelerating in Q3and in Q4, also, and the difference what we're going to see in the second half is we're going to see a ramp up of all the pricing and productivity actions that we're going to drive to compensate for those negative impacts.

Okay, and then just on the pricing, where are you specifically pushing price?

So when -- hi, Jeff good morning. When you look at price, we have a positive price of impact in IP and in CCT. This is where we have the distribution. And this is where is, as always been done also, traditionally. A positive sign that we've seen in Q2 is also price has be neutral for motion technologies. And you know, the dynamic in auto and this is the first time ever the pricing is actually be neutral in Motion Technologies. Now we of course, we need to work harder to negotiate to stay at the table and negotiate with all our OEM customers, as the material cost base now is completely different level. So we are expecting to get pricing also at MT in the second half of the year.

Okay, great. And then just last one, if you look at the 3 point raise in organic growth, would you say that's fairly balanced between the segments? Or is that a heavier lean towards MT?

I would say that….

I think Jeff….

Go ahead Emmanuel, please.

I think, Jeff, it's pretty balanced across all segments; all segments are growing versus our previous expectations. And this is really good news. And as we discussed, short-cycle has been really strong in terms of orders for IP and CCT. So I think that we're going to benefit from that. And then we continue to see really good momentum from an auto standpoint, even though volumes have been impacted by chip shortage.

feed:

Okay, great. Appreciate it, guys.

Thanks Jeff.

Thank you, Jeff.

Your next question is from Andrew Obin with Bank of America.

Yes, good morning.

Hey, Andrew.

Good morning Andrew.

Just a bigger picture question, right? You guys have been very good at sort of managing the downturn, managing the upturn. But given the inflationary pressures both on labor and inputs? Are you guys changing sort of a way you're thinking about approach to costs, supply chain processes in a more structural wayi.e.do you think what's happening is more permanent in nature? And if so how are you guys adjusting the organization, because execution so far has been superb?

products :

Sorry, I keep hitting the -- I haven't learned how to use the mute button till. Yes, I -- the question was, are you making any adjustments to your supply chain in the view of sort of supply chain disruptions? But it actually sounds you guys executing quite well, right? Is that a fair takeaway?

Absolutely. Right. Of course, as you can imagine, not only were working with our commercial team on the sales front with our OEMs, but our supply chain team is working hour-by-hour for, of course, to find new sources. But today is particularly in terms of securing the supply, because of all the disruption that we have on the supply chain being one port or being with one supplier. So it's more the way that you're working, which is hour-by-hour, as we said in the prepared remarks, because this is exactly what's happening right now.

Got you. And just a little follow up, you said something about aero industry having inventory. And I'm just trying to understand, because I think some companies highlighted the fact that on defense side, there was some pull forward of activity at last year, as detailed supply chain, sort of working in this bad downturn. But we've also heard some companies talk about the fact that aero framers have pre-ordered some components last year to also sort of keep the supply chain what so to speak, is that what you're referring to in terms of inventory of your customers? Thank you.

Yes, so for us, as we said, our aero customers are flushed with inventory. And, while they've been consuming some of the inventory, they told us earlier this quarter in April, that they had so much inventory that they weren't intending to order some of our components until next year and actually need them until 2022. So for us aerospace for the moment is -- our customers are full with inventory. We don't expect really that to change anytime soon. On a defense standpoint, I would say that our orders have been pretty good. And they've been not only good year-over-year, but they've been also good sequentially growing on several high profile programs. And so we expect for the year to be mid-single-digits up in terms of orders and revenue should also be okay.

Your next question comes from the line of Joe Giordano with Cowen.

Hi, Joe.

Hi. Good morning. Luca how are you? [technical difficulty].

Hey, Joe, you're cutting in and out. And try one more time and if not, we'll come back to you.

[technical difficulty] Better now.

Yes, go ahead.

[technical difficulty]right now.

Yes, sir. Your next question comes from Scott Davis with Melius Research.

Hi, Scott.

Good morning guys.

Hey, Scott how are you?

Good morning Scott.

Use landline, I'm from old school as guys over -- do not use a cell phone anyways. I know…

I'm sorry, presenters. We have lost him. Your next question comes from the line of Vladimir Bystricky with Citigroup.

Good morning, guys.

Hey, how are you?

Good morning, Vladimir.

I am doing all right. Fingers crossed here that lasts for question or two.

We count on you Vlad, please. Stay on.

So, nice quarter guys, obviously and particularly on the order side, so you've now had, I think 700 million plus in orders each of the past two quarters. So can you talk about sort of your confidence in sustaining these stronger order trends? And just given all of the supply chain and logistics challenges throughout the industrial economy? Are you seeing any pull forward or extra ordering from customers looking just to secure supply? Or do you think this is really sort of end market levels of demand that you're seeing on the order side?

Okay, thank you Vlad. To -- let me answer the question straight and then give you some color. No, this is the strength of the demand, and is the strength of the performance and the way that we work with our customers. So what we've seen in terms of trends in Q1, have been confirmed in Q2 across all the businesses. We saw it in rail, the orders grew sequentially year-over-year and happen again, in Q2.We saw in auto with the award, across the wins the new awards in Europe, in China, North America, in the new awards in the electric vehicles. We saw it of course, in connectors, we've seen it. As a matter of fact, if you look at the distribution connectors order, in Q2 at roughly $46 million, this is the highest on record for ITT, and the inventory level at our distribution stays low. And then if we look at the short-cycle for IP a very solid and robust Q2 month-after-month. So let me add to that how we saw in the month of July, July, is really confirming all these trends. So it's not a buildup on the inventory, we don't see the inventory build up on the -- in the auto, we don't see the inventory build up on the connectors. So it's strength of demand, a strength of our performance. A –EmmanuelCaprais: And Vlad, let me just ask -- add a couple of color on the -- couple of data on the customer inventory for auto specifically. So inventory -- our customers are very low. And this is especially true for North America, where inventory is around 40 days, which is much lower than prior much lower than prior quarter. And is not expected really to recover for the full year on the account of the chips shortage. So not only we were seeing strong orders, but there is strong customer demand pull from -- in order specifically. And that bodes well for the future.

Okay, that's really helpful. And then just digging in, specifically on the IP side of the business. Can you talk a little more about sort of what you're seeing on the project side there obviously very strong shipments in the quarter sort of how long visibility to sort of those strong project shipments? And then what are you seeing in terms of new project activity are you starting to see activity ramp for quotes on newer projects going forward?

So when we look at this project, Vlad, this project usually have -- you expect to this project from everything between six months to two, three years. So if I think about our largest project recently, which was for more than three, so we have good visibility on the project for the next year a couple of years. Now, one thing which is interesting though, if you look at the backlog, the backlog for IP which usually was 60% project and 40% short-cycle as swap today, the short-cycle backlog is 55% of the total, while project is 45% and the short-cycle backlog that we have today is the highest since 2015. So now going to the second part of your question, which is, how do we feel about the projects? We said last quarter, they were warming up and they did they warmed up. If I look at the orders for projects in June, it was a very strong month and July it was a strong month as well. To build on that another dot for you is the funnel. The funnel of opportunities and we're talking about the funnel of projects continue to improve sequentially, Q2 over Q1 was up 11% and went up 2 percentage point in the month of July. Year-over-year, the funnel is still down. But if you take oil and gas out, the funnel year-over-year is up 22% and is up 37% sequentially versus Q1. All of these are good dots good sign, they makes us think that the projects will resurge towards the end of this year.

That's really helpful color, guys. Thanks very much.

Thanks Vlad.

Thank you, Vlad.

[Operator Instructions] Your next question comes from the line of Joe Ritchie with Goldman Sachs.

Thanks. Good morning, everybody.

Hey, Joe.

Good morning Joe.

impetus:

So, let me frame a little bit the briefly our capital deployment during the last couple of years. If you look at the last couple of years, we continue to invest organically in our businesses. We may do two acquisition in 2019. We increase our dividends consistently and more aggressively in the last couple of years. We repurchase $73 million in 2020, the COVID year $50 million of share repurchases in 2021, we transferred the U.S. pension liability. And most importantly, we transferred on July 1, all our pending and future legacies asbestos obligation. Obviously, as you can imagine in the last period, we were on a blackout period. So this is just to tell you how we saw the capital deployment, it was really strategic to do all of these steps. And now we can really up our game even more focusing both on the organic, but on the M&A with much more flexibility. Our pipeline is good with -- while we were in blackout and previously, we were really working out to build the pipeline, and I can tell you its good and present opportunities across all the three businesses. One thing that we keep on reiterating Joe is that we will remain very diligent and very rigorous, both strategically and financially. Financially, the deals need to add value strategically and financially.

Got it. That's helpful, Luca. And then maybe my follow on, you guys, continue to keep us updated every quarter on all your EV platform getting some pretty good share, particularly in China. I'd be curious at this point like how big is your EV backlog? And how should we be thinking about that as a percentage of what we can see coming through from a growth standpoint in the coming years?

Joe, when it comes to EV, this story today is still very much in award success story and the EV volumes that are still very low. We are projecting though our market share in EV to be substantially higher than our current market share in IC in 2023. So pretty early. Now these will not necessarily be very meaningful because also in 2023, they EV vehicles will not be that big number. But you can imagine as EV adoption accelerates in the next eight, nine years from 2023 to 2030. We will benefit tremendously from already is starting high market share in EV. So I don't know if this helps you to frame it.

Yes, that's perfect. Thank you. Have a great weekend.

Thank you, Joe.

Thanks Joe.

Thank you.

Okay, we were able to reconnect and we have Scott Davis with Melius Research.

Yes, I guess my landline comment was a little premature. I’ll try the cell phone next time and see if that works.

No, next time you will be in the room with us Scott.

I think That's probably the safer bet. I'll just drive up to your office, it's not that far away. I had asked about on time deliveries, and I have no idea what he heard my question or not, but you were, you just mentioned 99% on Motion on OE, which is extremely high for the auto side. I mean, I don't know anybody that's anywhere close to that so far this quarter, but we would love to just get some color on, on where you're at in your other major businesses even if it's just ballpark?

Sure. So have you see, this quarter, we had some impacts due to supply chain issues. And if you look at the impact of all the other businesses, it's probably something around a little bit more than $10 million that we weren't able to ship. Because we didn't have the raw material that was needed. A lot of it is in Wolverine. And that's specifically for steel. And then some of it is in IP and also CCT. So overall, not a very large impact. And we're working really hard with our suppliers to make sure that we correct us and arrive at the end of the year with a much better picture.

Okay, that's really helpful. And then just switching over gears to the to the EV side, because I think those questions are fairly relevant. You've had-- you don't have a lot of cars on the road, but you've got enough cars on the road, to see your performance your brakes and seeing how that after-market is evolving. Is it evolving, as you've kind of expected? Clearly, I think brake usage is a little bit less than an EV. But the brakes a little different. So help us understand at least what you're thinking on-- now that you've had some time in the space here, what you're thinking about the after-market potential?

Sure, it's probably still a little bit too early Scott to draw a conclusion, because different OEMs are really adopting different approach. There are OEMs that are using these brake pads exactly in the same way, there are different OEMs that are really reducing the thickness of the pads. And therefore for them, the after-market probably will continue to persist. Is still probably too early to assess, is still at the embryonic stage has not been mature enough to know exactly how it's going to pan out. The after-market I mean.

Okay, I'll keep asking. Appreciate it.

Thanks Scott.

Your next question comes from Mike Halloran with Baird.

Hey, good morning, everyone.

Good Morning, Mike.

So a lot of moving pieces on the Motion side. Specifically on the Friction side, I'm looking for maybe a little longer term view on how you think this shakes out next 12 to 18 kind of months. So inventory for your comments is low, a lot of inflation pricing actions, which is seems like a little bit of a change versus history and how frequently you're going and trying to get those supply chain challenges are pretty high. Are you going to see push outs on these numerous project awards that you -- platform awards that you keep getting? How does that timeframe work out? How do you think this whole thing kind of cadences out if you take a little longer lens than just the next six months?

Thanks for that. And then just on the connector side, maybe just a little bit thoughts on sustainability underlying trends here, the short-cycle pieces seem like they're doing well. How much of that is just kind of a catch up from a bottom versus what you think of is sustainable demand as we sit here across those specific end markets?

When I talked to some of our distributors, some of our rep council, some of the reps in connectors is really market demand. And this is confirmed by the lower level of inventory that we see in all our distributors on the connectors. They strength the connectors come on the defense on the industrial and we start seeing moving also in the aerospace industry, too. So it's really demand. The level -- the inventory level are low. Auto connectors is not a concern at all today.

Thank you, Luca. Appreciate it.

Thank you, Mike.

Your next question comes from the line of Damian Karas with UBS.

Hey, good morning, everyone.

Hey, Damian. How are you?

Hi, Damien.

ally:

So Damian, is true, but don't forget that what we're talking always is a business here that is outperforming the market. So it's true that the market probably is going to grow in 2021 between 8% and 10% depending on who you're talking to. But if we look just at the market, I personally see some good tailwinds in the market, because the production today is not satisfying the demand that is out there. And you see it in talking to our customers and in -- trying to buy a car today for instance, if you go out there or talk even to the dealers. But then building on this one, as I said, we've always outperform every single year for the last nine years, roughly 900 basis points every year. Today in 2021, we will outperform the market even stronger. And because of these outperformance Damian, we expect to surpass 2019 levels this year at Friction while the market will probably hit 2019 level in 2023. So it's always the game of outperformance the market in the down and in the up.

Okay, that's helpful. And then just a follow up on the raw materials inflation that you guys are seeing, just wondering if-- as the copper ,tin ,steel, these products that you alluded to where you're feeling that -- should they start subsiding next year, what would you see kind of a full offset on that or since it's mostly in MTs, should we kind of view that as some cost?

So in terms of raw materials for the moment, there's no sign of abating the copper as flatten out as the high -- at the highest level. But still is really very much on an accelerating path. And so for us the game is to go back to customers and to really negotiate price recovery to offset those negative impacts. And that's what we're going to do. And that's what we're doing also already to some success in the second quarter.

That’s all:

Thanks, Damian.

Your next question comes from the line of a Joe Giordano with Cowen.

Hey, guys, can you hear me better now?

We can hear you? Great. Welcome back.

It’s perfect. It’s perfect Joe. Thank you.

Excellent. So just on the raw materials. I'm curious, like from a bigger picture standpoint, as you look at the markets, and you think about the future, like when do you start thinking, okay, this is something that's going to temporary increase that kind of goes back down cyclically or maybe we should think about redesigning certain of our products to use different types of materials or be lighter, or I know you guys are kind of going through that process in IP more broadly. But what was like that threshold where you begin to think about raw material costs on a more structural basis, rather than kind of cyclical changes.

Right. Okay, that's helpful color there. I think you mentioned that Wolverine, KONI and Axtone were all at double-digit margins in the quarter, which is good to see what's like a realistic target for businesses like that over like one two year period from here?

So, Joe, for us, there's no reason why we are not able to bring those three businesses in line with where Friction is today. That's going to require a lot of work. But we have definitely line of sight. And we're making both the improvement and the investments in terms of our production capability, but also in the way we manage our existing assets and our existing resources. We've seen some really nice progress, especially in Wolverine that had been impacted very much so by the tariffs. But we're very confident that we can bring those businesses to the level that Friction is at today in the next few years.

Awesome, thanks. Thanks for let me jump back on.

No problem, Joe.

Your next question is from Nathan Jones with Stifel.

Good morning everyone.

Hey, Nathan,

Good morning Nathan.

I just wanted to follow up on price cost commentary on -- in the brake pad business. Historically, that businesses had a lot of fixed price contracts. And also historically, auto OEMs are not the easiest to renegotiate fixed price contracts with. I think Luca, you noted being price cost neutral in the second quarter and expecting to be price cost neutral in the back half on brake pads. Can you talk about how that's possible given that historical contract structure have been changed there? What's the mechanism that you're using to actually generate these pricing improvements given where the contracts have historically been structured?

Nathan, just a quick rectification here. So in the quarter, what Luca said is that we were priced neutral on the price so we didn't give any price reductions to customers. Like we usually do, and usually it’s something like between 1% to 3%. So we didn't give any price reductions because we were able to get some price increases. And then so we were neutral in terms of margin from a price standpoint in the quarter the impact of commodities in the quarter were already high in Q2. And I would say that’s the price cost impact, this quarter was around 200 basis points, overall at ITT level or higher add Motion Technologies. And we expect that price cost impact to be around 200 basis points, as well, for the full year as the commodity pricing is ramping up, but it is offset by higher price negotiations or higher price impact from the negotiations with customer. And keep in mind that there is a timing component to it, where we're going to reach a much different picture by the end of Q4, than where we're going to be for instance in average in Q3.

And, Nathan, if I can build on what Emmanuel said regarding the process. There is no secret recipe here is really we need to work harder on pricing, sit down and negotiating with our customers a good and fair deal that reflect a completely different raw materials cost base. This is a must. This is what we have already started doing with some good results and some mixed results. We've been able to sit down with some customers and have constructive conversations. And we had some strong resistance from others. Now, on our side, Nathan, what helps is our quality track record. We are the best quality supplier in terms of break pad, and our on time performance at 99%. plus, during a period of market the other supply chain disruptions helps us in the negotiation for sure.

You guys have also had -- you guys also generally have much, much higher margins in a brake pad business in the overall industry does. Most of the rest of the industry, I think makes about low single-digit kind of margins, which would mean that they're under significantly more pressure from raw materials than you guys are. Are you seeing that present you any additional opportunities to gain market share as some of these competitors might be struggling a bit more than they have over the last few years?

I think that if I look at the priority today, Nathan, I seen that we are already winning market share because of the performance we have, because of the differentiation we have in terms of our product. And because of the quality we're delivering those are the key criteria that how helping us to win market share. As of today, we are not envisioning really using price to win market share. Today, I think the effort would be really to use price to compensate some of the headwinds that we have because of the raw material cost. That would be the priority.

And just one last one, I think you guys had signaled last quarter that you are anticipating a poor mix in industrial process with higher project shipments in the quarter. Clearly had short-cycle orders being stronger here. Are you expecting improvement in mix as we go through 3Q and 4Q and any comments you can give us on how that impacts margins in the back half?

Nathan, this is Emmanuel. Yes, absolutely, we expecting an improving mix in Q3. And then to the point that in Q4, as well to the point that the mix impact for the full year will be substantially lower than what we have experienced in Q2. And this is on the back of really strong short-cycle growth. Obviously year-over-year, but also very much so from a from a sequential basis compared to Q1, we've seen really strong service and valves, order growth sequentially. And some pretty decent also activity from a baseline standpoint. So we expect these will contribute very positively to the mix in Q3 and Q4. And I would say we're happy with that. But this is not what we're using to really drive margin expansion at IP. For us fundamental -- progress on the fundamentals is much more important. We'll take some positive mix any day. But this is not the indicator of success for us.

We have reached the allotted time for questions. This does conclude today's conference call. Please disconnect your lines at this time. And have a wonderful day.