Kulicke and Soffa Industries, Inc. (KLIC) Q2 2021 Earnings Report, Transcript and Summary

Hello, and welcome to the Kulicke and Soffa 2021 Second Fiscal Quarter Results Conference Call and Webcast. At this time all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Joe Elgindy, Senior Director, Investor Relations and Strategic Initiatives. Joe, please go ahead.

Thank you. Welcome, everyone, to Kulicke and Soffa's fiscal second quarter 2021 conference call. Joining us on today's call is Fusen Chen, President and Chief Executive Officer; and Lester Wong, Chief Financial Officer. For those of you who have not received a copy of today's results, the release as well as the supplemental earnings presentation are both available in the Investor Relations section of our website at investor.kns.com. In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a complete discussion of the risks associated with Kulicke and Soffa that could affect our future results and financial condition, please refer to our recent SEC filings specifically the 10-K for the year ended October 3, 2020, and the 8-K filed yesterday. With that said, I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

Thank you, Joe. In addition to our normal quarterly update during today's call, I will also share our perspective on the underlying driver contributing to the global semiconductor shortage. Clarify which drivers are expected to be transitional versus secular and also highlight recent customer win and the progress within our growing portfolio. Before addressing these items, I would like to first discuss our ongoing ESG focus. As we continue progress on this evolving ESG journey, we have continued to expand our reported metrics while ensuring we are organizationally prepared to meet our future goals. During the March quarter, we issued our fifth annual sustainability report, a 75 page document that track our accomplishment in addressing environmental, social and governance topics. In addition, I'm pleased to report that we have recently brought on dedicated staff to support our global diversity and inclusion initiative. We look forward to sharing more information in the futures. Turning to our current business condition. We would like to share our perspective on the underlying demand driver, positively impacting our business today. At a high level, we see two transitional drivers and several additional and meaningful secure drivers that are expected to continue positively impacting demand for our products and solutions over the long-term. First, the two transitional drivers stem from dramatic capital equipment underinvestment in fiscal year 2019 and 2020. And also the incremental end market demand due to work and play from home effecting applications such as PCs and gaming. While we expect these drivers to be transitional, lead-times for our new core products and also capacity utilization of our installed base remain at a very high level. These data points give us confidence that these transitional drivers are likely extend into fiscal year 2022. The most comparable period of underinvestment in the past was during 2008 and 2009, which then lead to an extended period of strong demand. In addition to these two transitional drivers, I would like to clearly highlight the more material and secular long-term trend such as the anticipated data explosion, supported by global 5G, IoT and artificial intelligence adoption. The electric and autonomous vehicle transition, and also the increasing capital intensity needed to support next generation, higher density semiconductor assembly requirements. These new applications are expected to create additional layer of demand, structurally supporting the above average semiconductor growth over the coming years. Specifically for K&S, we are also addressing the increasing capital intensity needs within our core-served market while we are actively expanding our core market reach. As I discussed last quarter, this new capital intensity dynamic is being driven by growing demand for multi-chip applications. Placing several dies into one semiconductor package provide an effective high-density assembly solution that support smaller form factor, feature-reach, connected consumer electronics. Higher density package such as a System-in-Package, multichip modules and heterogeneous assembly techniques are market-ready solution to mitigate the well-known challenge of 2-dimensional node shrink. Today, we estimate approximately 40% of wire bonder shipment are supporting multi-die assembly. This rate has effectively doubled in the past years, highlighting our direct participation supporting more complex assembly. Added complexity creates the need for more advanced assembly solution, which extends our value proposition within this core served market. On average, multi-die package consists of approximately four individual die. Looking ahead, we expect this to be the beginning of a long-term trend and anticipate the percentage of bonders supporting multi-die applications to grow along with the average number of die-per package, creating a new and significant growth driver to our large and dominate core business. An increasing number of die-per-package increases the number of interconnects per package, which in turn, increase the capital intensity of the assembly market. Similar to the increasing complexity, we are experiencing within our core market. Multi-die packaging is picking the momentum for the leading-edge logic, memory and optical applications. We continue to anticipate adoption will increase over the longer term, driven by the need to reduce design costs, while enhancing power efficiency and the performance in a post-Moore's world production environment. We are very well prepared to support customers through this transition, and I'm pleased to announce that we have recently won several qualifications at the top OSATs, IDMs and the foundries supporting complex assembly of leading-edge applications, enabling next-generation logic, memory and image sensing capabilities. As a reminder, we are participating in this fundamental assembly change at the leading edge through four competitive systems: The APAMA thermocompression system, the Katalyst high accuracy flip-chip system, the Liteq500 lithography system and our hybrid System-in-Package solution, which is uniquely positioned to support high-speed placement for high-density multi-chip, flip-chip applications. Over the coming quarters, we are extremely focused on expanding our customer engagements and expect these recent qualification win will further enhance our product diversification and the long-term growth rate. Within mini LED, we shipped over 130 PIXALUX systems collectively, through the March quarter. This rapid growing installed base highlights our leadership and enabling position within this exciting, emerging mini LED opportunity. Our execution and the current run rate is on track to achieve this high-end of our fiscal 2021 target of $60 million to $80 million. We also anticipate market opportunities to broaden in the second half of fiscal year 2022. We have a clear leadership position in this market and have materially enhanced our technical competency since releasing PIXALUX in fiscal 2019. Our development initiatives remain on track as we actively extend our existing competitive position and the market presence. Mini LED technology is expected to penetrate the broad display market, addressing consumer, IT and the commercial applications. We remain very engaged with the prospective customers and expect market adoption to accelerate throughout fiscal 2022 and a multi-year ramp to continue. I look forward to sharing additional updates as we expand our portfolio of mini and micro LED solutions. Turning to the March quarter's results. We generated $340.2 million of revenue, representing a 27% increase from the December quarter and an over 125% increase from the same period in the prior year. The APS segment increased by over 15% sequentially, driven by higher utilization of the installed base. We continue to make ongoing progress to expand our shares within the APS market. Capital equipment represents 85% of overall revenue and increased by 29% sequentially, due to improvement across all of our end markets. Within the March quarter's capital equipment sales, general semi competitor which supports a broad set of applications, such as smartphones and consumer electronics continue to be very strong. And increased 16% sequentially. As discussed earlier, increasing complexity adds an additional layer of demand and the higher growth to this sizable end market. Across our other end market, we saw the largest sequential trends within the automotive and the industrial end market, which increased 83% sequentially. These sales are helping to address near-term automotive semiconductor production needs and also much longer-term production supporting the transition to electrification and autonomous driving. Next, Memory increased by over 60% sequentially. Although continued to remain relatively soft, we currently see high utilization within the memory market and anticipate further improvements within memory over the coming quarters. Finally, LED increased nearly 60%, driven by sequential improvement in both general lighting and advanced LED. For the March quarter, we estimate approximately 35% of capital equipment sales, supported more complex, advanced packaging applications, which highlights the increasing capital intensity of general semiconductor, LED and the memory market. During last quarter's earnings call, we guided revenue to be $1.1 billion for the full fiscal year. Despite a very strong demand environment, we anticipated supply chain constraints would limit our production capacity in our second fiscal half. Although both known and unknown supply chain challenge remains. I'm pleased to report that our efforts to mitigate recent supply chain constraints strengthen our ability to support customers and improve global semiconductor production capacity. Additionally, as we have aggressively worked to improve the known supply chain constraints, our outlook has also improved. For the full fiscal year, we now anticipate revenue to be between $1.3 billion to $1.4 billion, representing a significant increase over our prior guidance of $1.1 billion and an over 100% sequential change from fiscal year 2020. Over the remaining fiscal year, we anticipate some incremental manufacturing and operating expenses as we continue to address these controllable supply challenges. Lester will provide more details shortly. In summary, we are confident current market driver, including 5G, IoT; transitions in automotive and the fundamental change within our core equipment market increases our value proposition for our customers and the broader industry. Additionally, our progress and execution entering new higher growth market supporting leading edge IC assembly and the mini and the micro LED panel assembly add additional and meaningful layers of business that further support the inherent leverage in our operating model. I would now like to turn the call over to Lester Wong, who will cover this quarter's financial overview in greater detail. Lester?

Thank you, Fusen. My remarks today will refer to GAAP results unless noted. As Fusen mentioned, demand for our products and services remained strong in the March quarter with revenue of $340.2 million, up 27% sequentially. We were again able to quickly flex our operational capacity while mitigating supply chain challenges within our control. Gross margins in the March quarter came in at 43.7%, below our target due to the strong growth in equipment, but also additional costs largely related to spot purchases and expediting fees. These incremental fees amounted to $4.9 million during the March quarter. Considering ongoing global supply chain challenges and our strong business outlook, we anticipate these incremental expenses to temporarily continue through the second fiscal half. As demonstrated last quarter, we are now generating a higher level operating margin, which we believe is sustainable and helps to reinforce the longer-term potential of our model. We generated non-GAAP operating margins of 26.4%, which represents a 410 basis point improvement from the December quarter. Over the coming quarters, we continue to be very focused on cost control, but also on new longer-term growth initiatives within the dramatically changing semiconductor and display markets. Overall, non-GAAP net income came in at $79.4 million or $1.26 of non-GAAP EPS during the March quarter, which highlights the leverage in our model. Considering this operating leverage and traction with our outlook, we expect to generate strong free cash flows over the coming years. Operating expenses in the March quarter came in below our previous guidance due to several favorable items, including foreign exchange gains, credit and asset sales. Collectively, these favorable items reduced March quarter operating expenses by approximately $4.7 million and are not anticipated to continue nor considered in the June quarter's outlook. Separately, we previously explained our OpEx model on a GAAP basis, although have adjusted this model to conform to non-GAAP to better align with peers and analysts reporting. On a non-GAAP basis, we expect quarterly operating expenses to represent roughly $48 million of fixed expenses plus 5% to 7% of variable expenses tied to revenue. Outside of this adjustment to non GAAP, this OpEx model remains consistent. Tax expense for the quarter came in at $12.2 million, and we continue to target an 18% long-term effective tax rate. Through fiscal 2021, we continue to anticipate the effective tax rate will come in closer to 15%. Turning to the balance sheet. We ended the March quarter with a total net cash and investment position of $564.3 million, down $12.3 million sequentially, representing $8.92 per diluted share. This decrease in cash is largely due to an increase in working capital due to the demand environment and also accounts for the Uniqarta acquisition, which was closed during the March quarter. Despite the absolute increase in working capital, we have maintained efficiency. Days of accounts receivable increased slightly from 76 days to 81 days. Days of inventory improved significantly from 77 days to 66 days, and days of accounts payable increased slightly from 55 to 58 days. Similar to last quarter, demand continues to strengthen although our outlook remains supply chain constrained. Our operational and development teams continue to work aggressively to mitigate supply chain challenges within our control. For the June quarter, we expect revenues to be approximately $400 million, plus or minus $20 million. Gross margins are expected to be approximately 44%, plus or minus 50 basis points due largely to product mix and additional costs related to spot purchases and expediting fees. Non-GAAP operating expense is expected to be approximately $72 million, plus or minus 2%, and non-GAAP EPS to be $1.35, plus or minus 10%. In summary, demand patterns continue to be very strong, with transitional drivers expected to continue well into fiscal year 2022. And many structural drivers, such as big data, 5G, IoT, automotive transitions and higher density packaging to continue well into the long term. We also anticipate our successful and aggressive market expansion plans will continue to provide new growth opportunities and support a higher sustainable level of operational leverage. We look forward to sharing additional information regarding these new opportunities over the coming quarters. This concludes our prepared comments. Operator, please open the call for questions.

Thank you. [Operator Instructions] Our first question today is coming from Tom Diffely from D.A. Davidson. Your line is now live.

Yes. Good morning, and good afternoon, good evening. Maybe just start with the health of the end markets, some of the traditional metrics like utilization rates. We hear that lead times for wire bonders maybe extending up to upwards of a year right now. And so I just wanted to hear your view of this huge ramp in how you protect yourselves against the concern of double ordering?

So Tom, let's talk about – the first one is utilization rate. Okay. I think our utilization rate currently is very high and that's why I can trigger a lot of capacity, right. So second question to answer you is a double booking, right. So actually, we check carefully about customer double bookings. I think at this moment we feel quite comfortable. But if this run rate continue into say middle of next year, we might expect maybe a little bit more double booking. But at this moment, I think for all business, we don't think booking, double booking is significant. The third question, I think, you asked is the lead time, right? So, at this moment, actually, I think our lead time is about 10 months. The gating item actually is supply chain, actually bottleneck. Our engineering team and operating team actually work closely with our supplier partner and make sure we address these supply chain shortage issue and also increase the capacity to meet the demand that customers really need from us. Is there any question I haven't answered?

Okay, great. Yes. No, that's perfect. And just one quick follow-up, when you look at just the core wire bonding market, is there any way to quantify the benefit you're getting from capital intensity increases for, I assume having to slow down the wire bonders to do more accurate bonding with these multi-chip packages?

Okay. Okay. Let me tell you, maybe what I know then we can come back if additional questions. Actually, when we enter from 4G to 5G, we see a lot of additional demand for these multi-chip packages. So, right now, we are not only seeing the actual amount of demand needed. The multi-chip package also have additional capital intensity; because you interconnect a lot of interconnect within the package, right? So maybe I'll answer the other way. Tom, if you remember, two, three quarters ago, I mentioned our – maybe best line for our core business is about $750 million. In a normal year which represents 6% to 8% unit growth, but at a high-growth year, like 10% our core business probably will be about $850 million. But we love the estimate this multi-die package probably will add about additional $100 million to $150 million annually to our base line. So I think you can take the ratio roughly articulate about the ratio of improvement due to the multi-die package.

Okay. Now that's very helpful. Thank you. I appreciate your time.

Thank you.

Thank you. Our next question today is coming from Krish Sankar from Cowen & Company. Your line is now live.

Yes. Hi, thank you for taking my questions. I had a couple of them, and congrats on really strong results. First, Fusen or Lester, I just wanted to square this first. You said fiscal 2021 revenue is $1.3 billion to $1.4 billion, which implies September revenues have to be down sequentially from June. Why is that the case?

Krish, I think we guide this come – as we move on, outlook actually also getting better. So previously we guide $1.1 billion, but this time we guide actually between $1.3 billion to $1.4 billion. So Lester, our new guidance.

And Krish, I think also, it's also – there's a lot of volatility in the supply chain, right? So I think right now, we're still looking in terms of the visibility got better, as Fusen said in his script for the second half, which is why we increased guidance. But we're still being a bit cautious in terms of the quarter, a little further out.

So Krish, if you do the math. I remember the first quarter roughly 270 something. And this quarter 340, so get about 600. So if we do our Q3 400, about $1 billion, right? And if you remember two quarters ago, during my script, I also say maybe we would experience very slightly seasonality in Q4. So $1.3 billion to $1.4 billion, you take the midpoint, say, it's a 350. So that's exactly what we're talking about.

Got it. Got it. Fair enough. Thanks for the color. And then I just had two quick follow-ups. One is, I think, Fusen, you mentioned about how lead times are now 10 months. Is the gating factor for your OSAT customers more on the substrates not wire bonders? Or is wire bonder also a big issue for the OSAT customers?

Yes. Actually, from all the information we got, right now demand for wire bonder is very strong in OSAT. We continue to get a call not only from OSAT, from different called industry like automobile. So we have a lot of high-level talk and see how can we work together and make sure we are not the bottleneck. But I can tell you, I think – OSAT actually call us to be bottleneck, but hopefully, we want to remove the bottleneck.

Fair enough. Fusen, just last quick follow-up. How much was China as a percentage of total sales?

So for the quarter, China was 61% followed by Taiwan at 21%.

Got it. Thank you.

Thank you. Our next question is coming from Charles Shi from Needham & Company. Your line is now live.

Thanks for taking my question. Congrats on the next results. I think I want to start from your visibility in terms of the orders, definitely, I understand you sort of guided a flat fiscal fourth quarter flat or slightly down. I mean, given the – your supply constraints you are facing. And I wonder, what's your outlook today as where you stand about the December quarter right now?

Well, so Charlie, I think from all the information we have, actually, next few quarters to – into FY 2022, very, very strong. And when we give our guidance, we also want to make sure the supply chain issue we can address it, right? So I think the December quarter for us, we still believe will be very good. But we are not only dealing with a non-supply chain issue. Once in a while, you never know, today, we need to deal with the unknown supply chain issue. That's why; I think the only thing we can tell you is that right now, the order really is not an issue. Extend well into the next few quarters. But last year had some uncertainty if everybody can work together to make a capacity go up as everybody's need. So I think we have a quite good visibility to December quarters, even for the early next year.

Got it. Got it. Thanks, that's very helpful. So also a follow-up to one of the questions previously asked. And that seems like that you are expecting your baseline business, the core business. With the multi-chip packages, I mean, four dies per package, even at the same semiconductor package unit growth rate, you are sort of expecting $150 million to about $1 billion of your core business revenue. Is that right?

Yes. I think, of course, in a normal year to normal year, I think it's probably about $900 million something. Yes, so close to $1 billion. I think we are in a much stronger position to support future $1 billion business with net profit probably with a length 20%, right? So with the current change from 4G to 5G, with change higher demand of multi-chip and with our new business in [indiscernible], we do feel much better to support in a stronger position to support baseline, probably close to $1 billion and above.

Got it. Got it. So my follow-up to that will be – I understand you massively increase your CapEx and over the last few quarters, but you also highlighted that the supply constraints is probably not – not your own manufacturing capacity at this point. It's probably more of the upstream. The supply chain is more constrained, that's limiting your output. I wonder with your current capacity, if we exclude any of the constraints in your supply chain network, what is your kind of design capacity is as of today? And what's your end goal after maybe at the end of this fiscal year?

Okay. So we guide the next quarter is a $400 million. So from the information we've got from our customers. For this cycle, we believe may be the ideal capacity – chip capacity for us, we are seeing maybe around $450 per quarter. And as you know, K&S, historically, we can ramp-up quickly. I think this time, if you remember our trough was 2019, actually Q2, we ramp actually from $150 million to the guidance of next quarter, $400 million. And we can do this quickly because of our design actually is not as heavy. It's a more labor related. And we can ramp it up. You also see that our financial model, around $1 billion, we can have a 20% for sure net profit. So even we have some investment, this will not change our financial model.

Got it. Got it. Sorry, allow me for asking the last question. On mini LED, we recently hear that the premium electronics company in the U.S. They are seeing some yield issues, but it's more likely due to PCBs, adhesive materials as far as the press report says. I wonder whether that changes your – I mean, very near-term outlook for your mini LED toward shipment and revenues in terms of supporting the ramp of that latest tablet model equipped with mini LED. And if you can provide any color, what do you think whether that can proliferate to the premium laptops within this year or early next year as a suitable technology?

Okay. So PIXALUX is our first-generation tool. And for FY 2021, actually, we guide $60 million to $80 million annuity revenue. So we start to ship higher volume of our PIXALUX Q3 of 2020. So it's almost a four-quarter like Q3, Q4 and then our Q1, Q2. In the past few quarters, I think we shipped around maybe $20 million per quarter. And this quarter, actually, we are shipping the PIXALUX family is close to $18 million to $19 million. So we do believe, I think, from now to 2022 – middle 2022, this run rate probably will impact. And our second-generation of Luminex, which is in the final stage of development, probably will make some contribution into the very later part of 2022, right? So that's my view of our revenue for our advanced display for the next few quarters. We do not expect the shipment to our customers for our PIXALUX will slow down. Of course, some quarters will be higher, some quarters will be low. But averagely, I think this year, we guide $60 million to $80 million, and we are on track to achieve a higher end of our guidance. And the next year, I think with Luminex, our second generation, which will contribute to the revenue data for 2022. The whole year at this moment we look at about $100 million. And traditionally, hopefully, will go higher because of this Luminex, the second-generation actually serve multistep, multi process industry. And PIXALUX only serve one step on process which is the final placement. So this is a huge market, and we are very excited. At this moment, I think we work with the industry and the feedback has been very positive.

Got it, got it. Thank you for the second time. I want to go back to the queue. Thank you.

Okay. Thank you.

Thank you. [Operator Instructions] Our next question is coming from Christian Schwab from Craig-Hallum Capital Group. Your line is now live.

Hi. Fantastic quarter, and very impressive outlook for the year. I guess my only question is just kind of tying up a lot of the questions that have been asked, Fusen. I'm wondering, given the long-term structural changes that you highlighted as far as capital intensity in multi-die packaging as well as the opportunity in mini LEDs in the near-term and micro probably a little bit later. As we look to next fiscal year, what would be the puts and takes for that for your revenue to be flat, up or down from the extremely strong guidance this year? Is there any puts and takes that you can walk us through?

Sure, sure. Christian, I think is a little bit early to forecast precisely next year, right? But I think the next few quarters, we will provide more details. But I can tell you our preliminary view of FY 2022 outlook. So from our indication, including our market study and the customer feedback, 2022 will continue to be a very strong year for us and driven by very strong secular growth, and I mentioned in my script 5G, IoT, AI, EV, memory will go up and also our advanced display. But I think that we might see some suffering in the transition driver, right? This transitional driver at a certain point will slow down a little bit. So let's make a hypothetical – if we finish our FY revenue, say, $1.3 billion to $1.4 billion, right? And this year, we are going to grow almost double. Such a fast growth is not unreasonable to expect. A little bit suffering in a transitional driver, so $1.3 billion to $1.4 billion, possibly, not unreasonable to expect to be around $1.1 billion to $1.2 billion, right? This double of our revenue to pull back a little bit to consolidate, I think, is reasonable. But even with a little bit slower FY 2022, lower than FY 2021 due to a huge ran. We actually are quite optimistic because we still have another consideration to go. A lot of growth initiatives, including advanced LED, dedicated AP, our free chip, and we can also grow APS. So we believe if we pull back a little bit in 2022, say, $200 million, we should be able to bring the revenue back to 2021 level even beyond or even beyond in FY 2023 and beyond, right? So again, this is not forecast, and since you asked, I just tried to provide this just our preliminary view.

Thank you for that. That's fantastic. Now, I don't have any questions. Thanks, guys.

Thank you. Our next question today is coming from David Duley from Steelhead Securities. Your line is now live.

Thanks for taking my question. Most have been answered. But as far as the advanced packaging products, the APAMA and Katalyst and the lineup of products there. What is a reasonable target for those advanced packaging products as far as revenue goes, perhaps in fiscal year 2021 and maybe a target for fiscal year 2022?

Okay. So Dave, I think in my script I mentioned we actually have – actually working with the customer, have a multiple win. So I can tell you, there are areas for some we have a win in the area of apps processor and also imaging sensor and also leading-edge logic customers. And this all just a task qualification and probably will grow next year. And the free chip, we have a position in the OSAT. And our hybrid system which you can put a package and active in the same package. We just have a win. This is application for DRAM along a microprocessor. So with this newly qualification, we do expect maybe next year 2022, we probably can grow additional $40 million to $50 million of revenue on top of 2021 and hopefully, this can grow bigger beyond 2022.

When you talk about – you kind of talked about having revenue be in $1.1 billion, $1.2 billion range in 2022. If some of the – if the advanced packaging products grow as you expect, wouldn't you think your revenue would be more flattish rather down a little bit?

So Dave, when Christian asked his questions, we just try to hear the – our preliminary feeling, right? I think this market really very difficult to precisely forecast it. I think our next two quarters; we probably can have a better discussion. This is just what we see right now. And the transitional maybe can be as good as this year or can be a little bit worse than what I say, right? So what I'd say is, I think, to ramp up 100% and to expect continued growth, probably is not very reasonable for us. At a certain point, I think slowdown will come. But we do expect it will be minor, and we still have organic growth can compensate it in the near futures. So in short summary, I think we are in a better position to support $1 billion and above any time before. And we have a very, very strong operational margin when we are over $1 million. And the EBIT at a quarterly $340 million, we almost touched 25% net profit, right? So we cannot precisely predict the market, but I think the company is moving forward positively.

Okay. Thanks.

Thank you. We reach end of our question-and-answer session. I'd like to turn the floor back over to management for any further closing comments.

Thank you, Kevin. Thank you all for joining today's call. We will be presenting at several upcoming conferences over the coming months, including conference with Cowen, Craig-Hallum, Stifel, Jefferies and also the CEO Summit. As always, please feel free to follow-up directly with any additional questions. Have a great day, everyone. Operator, this concludes the call. Thanks.

Thank you. It does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.