Thank you for standing by, and welcome to Micron Technology's Fiscal Second Quarter 2022 Financial Conference Call. [Operator Instructions] Please be advised that today's call may be recorded. [Operator Instructions] I would now like to hand the call over to Farhan Ahmad, Head of Investor Relations.

Thank you, and welcome to Micron Technology's Fiscal Second Quarter 2022 Financial Conference Call. On the call with me today are Sanjay Mehrotra, President and CEO; and Sumit Sadana, our Chief Business Officer and Interim CFO. Today's call is approximately 60 minutes in length and is being webcast from our Investor Relations site at investors.micron.com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website along with the prepared remarks for this call. Today's discussion of financial results is presented on a non-GAAP financial basis, unless otherwise specified. A reconciliation of GAAP to non-GAAP financial measures may be found on our website. We encourage you to visit our website at micron.com throughout the quarter for the most current information on the company, including information on the financial conferences that we will be attending. You can also follow us on Twitter, @MicronTech. As a reminder, the matters we are discussing today include forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today. We refer you to the documents we file with the SEC, specifically our most recent Form 10-K and 10-Q for a discussion of risks that may affect our future results. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after today's date to conform these statements to actual results. I'll now turn the call over to Sanjay.

Thank you, Farhan. Good afternoon, everyone. Micron delivered an excellent performance in fiscal Q2 with results above the high end of our guidance. We grew revenue and margins sequentially while driving favorable mix and cost reductions amid ongoing global supply chain challenges. We saw broad-based demand for our products with our SSD products achieving record revenue and our auto market revenue also reaching an all-time high. Execution was outstanding with our industry-leading 1-alpha DRAM and 176-layer NAND technology node ramps delivering strong cost reductions. Our portfolio transformation continues to gain momentum as we lead the industry on the DDR5 transition and grow our mix of NVMe data center SSDs. Following a solid first half, we are on track to deliver record revenue and robust profitability in fiscal 2022 and remain well positioned to create significant shareholder value in fiscal '22 and beyond. In fiscal Q2, 1z and 1-alpha DRAM combined represented the majority of our DRAM bit shipments, while 176-layer NAND represented the majority of our NAND bit shipments. Our 1-alpha DRAM and 176-layer NAND products are achieving excellent yields, providing us with solid front-end cost reductions and contributing meaningful revenue. We qualified additional products on these advanced nodes with a broad set of customers, which sets us up for continued strong revenue ramp in the second half of the fiscal year. We are tracking several quarters ahead of the industry in ramping products based on these leading-edge process technologies. We are also investing to maintain technology leadership for the next decade and making good progress in the development of future technology nodes. Micron is not only a technology leader, but also the industry leader in quality with the majority of our customers ranking us #1. Our leadership in quality is an important differentiator for Micron, particularly in fast-growing data…

Thanks, Sanjay. Micron delivered excellent fiscal Q2 results marked by record revenues across multiple products and markets, strong profitability and generation of over $1 billion in free cash flow. I'm particularly excited by the execution of our industry-leading 1-alpha DRAM and 176-layer NAND technology ramp and the accelerating momentum of our product portfolio transformation. Fiscal Q2 revenue was approximately $7.8 billion, up 1% quarter-over-quarter and up 25% year over year. Revenue was particularly strong in client and cloud markets. Fiscal Q2 DRAM revenue was $5.7 billion, representing 73% of total revenue. DRAM revenue increased 2% quarter-over-quarter and was up 29% year-over-year. Sequentially, bit shipments increased in the high single-digit percentage range, while ASPs declined in the mid-single-digit percentage range. Fiscal Q2 NAND revenue was $2 billion, representing 25% of Micron's total revenue. NAND revenue increased 4% quarter-over-quarter and was up 19% year-over-year. Sequential bit shipments were flat, and ASPs increased in the mid-single-digit percentage range due to stronger mix of SSDs, more than offsetting like-for-like price declines. Our ongoing portfolio transformation and a solid front-end cost reduction drove sequential gains in gross margin in NAND despite sequential price declines in most products. Now turning to our fiscal Q2 revenue trends by business unit. Revenue for the Compute and Networking Business Unit was $3.5 billion, up 2% sequentially and up 31% year-over-year. Cloud generated record DRAM revenue, and client DRAM revenues also performed well in the quarter. Revenue for the Mobile Business Unit was $1.9 billion, down 2% sequentially and up 4% year-over-year. Our Mobile business continues to perform well, building on our leadership in managed NAND and MCPs as well as our strong relationships with all smartphone customers. Revenue for the Storage Business Unit was $1.2 billion, up 2% sequentially and up 38% year-over-year. We achieved record SSD revenues, which…

Thank you, Sumit. I'm proud to note that earlier this month, Micron was named one of the world's most ethical companies by the Ethisphere Institute. This recognition reflects our global team's dedication to holding ourselves the highest ethical standards both in how we operate and how we pursue environmental and social responsibility. We continue to manage our business with a discipline and foresight that is driving industry-leading technology ramps, improving our product portfolio and strengthening our customer relationships. A strong first half performance and our guidance for an all-time record quarter show our continued progress toward delivering record fiscal '22 revenues and robust profitability. Given our technology leadership, Micron is in an excellent position to capitalize on the broad trends that are driving demand for DRAM and NAND solutions, solutions that transform data into better customer experiences and greater business value. I look forward to seeing you at our Investor Day presentation on May 12 in San Francisco, where we will discuss the technology drivers behind these trends in greater depth and detail Micron's strategies to seize the opportunity ahead. Thanks for joining us today, and we'll now open for questions.

[Operator Instructions] Our first question comes from the line of C.J. Muse of Evercore.

I guess first question, as I look at your results, the mix and operational performance is excellent. And as you look ahead to the second half, you did talk about a pull-in of costs in the February quarter, but would be curious to hear how you're thinking about mix, both like-for-like in DRAM and NAND into the second half of the fiscal year and how we should think about kind of the gross margin trajectory from here.

All right. So in terms of the gross margins and the mix, I'll just point out that for FQ2, for example, we had exceptionally strong performance in gross margin due to the ramp of our 1-alpha and 176-layer NAND and our portfolio mix. And our NAND gross margins actually improved due to mix effects alone. And of course, we had good cost reductions in 176-layer NAND. So that momentum is continuing. So as I look forward to FQ3, you have seen that the gross margin guidance at the midpoint is sequentially higher. So we are very positive on our gross margin trajectory going forward. I want to point out a couple of things that are important here. So both NAND and DRAM gross margins are expected to improve sequentially in FQ3. And as you highlighted, we have spoken about some cost improvements that got pulled into FQ2, so that’s going to have little bit of a dampening effect on the cost improvements we will see sequentially. But there are a couple of important factors that are going to affect our FQ3 gross margin by about 100 basis points. The first one is that our variable compensation accrual is increasing sequentially from FQ2 to FQ3 because our overall profitability forecast for the year -- for the fiscal year is quite a bit higher than we were expecting originally. So that is increasing our bonus accrual. That impacts costs in the following quarter. We have already taken that impact in the OpEx for FQ2, but it will impact costs in FQ3. So that's an impact on gross margin sequentially in FQ3. And the other aspect is that our NAND business in FQ3 will grow faster than our DRAM business in FQ3. So that has a little bit of an impact on the…

Our next question comes from Vivek Arya of Bank of America Securities.

Interesting to see that the strong outlook, and you're maintaining the full year kind of industry view unchanged also even though there have been some recent kind of softer data points and deceleration in PC and smartphone demand. Is this just the case of data center strength overpowering those headwinds? And what are you doing to make sure that you don't oversupply to the data center?

So certainly, let me take this question. Regarding PC, what I would like to point out is that in PC, enterprise and desktops are strong. Chromebooks and consumer PCs have had some weakness as is well known, but enterprise and desktops are strong. And that's a favorable mix for us because enterprise and desktops take higher content of both DRAM and NAND. So while we look at PC unit growth on a year-over-year basis to be flattish, the enterprise and desktop mix is favorable in terms of DRAM and flash content requirements there. And data center, certainly a strong market for us. Second half of calendar year '22 should be strong for data center because of new CPUs that are expected to be launched, which will be driving greater content in the servers. So data -- and you have heard about various hyperscalers talking about their investments -- their CapEx investments in data center as well. And again, all the workloads related to AI/ML are just driving greater content within the data center space. But it's not just about data center or the aspects of PC that we just discussed. Of course, 5G smartphones continuing to drive strong DRAM and NAND content as we mentioned; and automotive market, strong growth driver as well. So the point is that the demand is broad-based and demand, we expect to be strong going forward as well. And of course, on the aspect of supply, of course, the supply is contained in the industry because of the discipline on CapEx that has been exercised by the various players. And of course, on the NAND side, the aspect of the contamination issue that impacted a competitor's fab and impacted the supply in NAND in a big way there, too. So overall, healthy environment that we see for -- in terms of DRAM and NAND supply and demand balance through the year.

Our next question comes from John Pitzer of Credit Suisse.

Congratulations on the strong results. Sanjay, you've spent the last several years trying to reposition the NAND portfolio to higher-value products. I'm kind of curious, relative to the May guide of NAND growing faster sequentially than DRAM, can you help us better understand what products and end markets are really driving that? And is this really the fruits of some of your qualification labors? And as you answer the question, I'd be curious, when you think about NAND gross margins, what's the impact as the mix continues to improve? How much of the gap between NAND and DRAM do you think you can close over time? Or how much more upside do you think there is in the NAND gross margin business over time as you optimize the portfolio?

So certainly, in NAND, I think our team has done a great job in leading the industry by several quarters with 176-layer NAND technology and now deploying it into various products. We talked about in our prepared remarks some of the SSDs that we have introduced now for data center as well being the first ones to introduce data center NVMe SSDs with 176-layer NAND technology with vertically integrated solutions, including our own controllers. Our manufacturing ramp has been excellent as well. They are really exceptionally executed in terms of our yields, in terms of production ramp, in terms of quality. And all the work that we have been putting in over the course of last several years absolutely is coming to fruition here. We have had -- we have enjoyed already the gains in share with respect to mobile-managed NAND solutions both on the MCP side that contain DRAM and NAND solutions as well as on the discrete NAND side. And you have seen how we have grown our share from low single digits a few years ago to now in the high teens in terms of our share in the market. So strong performance already enjoyed on the mobile NAND side of the business. And now SSD is getting absolutely into high gear here. Our client SSDs, our introduction of QLC, 176-layer SSD, our data center NVMe SSDs, all the work that we have vertically integrated solutions with our own controllers, all this work that we have been doing for quite some time is hitting the market now, and we are well positioned to gain share in the SSD space in the client as well as on the data center side. And all of this being built on the foundation of leading, highly cost-effective 176-layer NAND technology positions us well for improvements in our revenue outlook for NAND as well as for our profitability outlook for NAND. And in terms of the differences between DRAM and NAND, of course, as Sumit was just earlier highlighting that there are significant differences in the industry margins of DRAM as well as NAND and certainly for Micron as well. But the point is that our margins in NAND are improving given the accelerating portfolio of momentum we have and our ability to really address wide range of end-market applications from smartphone to client SSDs to data center SSDs as well as strong position in the channel markets as well.

Our next question comes from Timothy Arcuri of UBS.

I just had a quick question on cost as well. So if I look at the slide, Sanjay, where you're talking about the current outlook, the verbiage change to basically reflect the fact that you're costing down better this year than the industry. And of course, there are headwinds on cost for the industry this year. But I'm wondering whether your ability to outpace the industry's cost down will also extend into next year. Because if I look at the verbiage on the slide, last quarter, you said that you think that you'll be competitive with the industry over the longer term. So I'm just wondering whether you think that this is a 1-year thing where you're costing down better than the industry? Or is this -- can this be sustained into next year?

We feel really good about our technology road map. And just like we have led the industry with our 1-alpha DRAM as well as with our 176-layer NAND, we certainly plan to lead the industry with our future generation nodes as well, and we are making good progress on those. And those nodes will be introduced sometime in calendar year '23 time frame as well. So really, it's our technology leadership position and our ability to successfully ramp it into production across a broad range of products, is key to our strength in continuing our cost position in the industry. So we feel very good about our cost position versus our competitors going forward as well.

Our next question comes from Pierre Ferragu of New Street Research.

I have, first, like very quick simple one on the mobile market. So it's slowing sequentially now. What kind of visibility do you have there? Do you think we are reaching like a -- kind of like plateau in content increase in the kind of growth that 5G generated in that market? Or is that something different and more temporary? And then I have like a broader question for you guys. Your peers in logic are very active on, I would say, the geopolitical front, investing in the U.S., investing in Europe to create a more balanced manufacturing footprint in the world. And we don't hear much about that in the memory market. And so I was wondering if there could be a topic there, if there are conversations and is that something that could benefit Micron at some point.

So it's a great position to be in today that we have Sumit here as interim CFO as well as our Chief Business Officer. So I will actually let him address the first question of yours, and then I will take the second question. Sumit, go ahead with the first one.

Sure, Sanjay. So Pierre, thanks for that question. So in terms of the model average capacities node, we don't see this anywhere close to a plateau of any kind. We are very positive on average content growth in mobile. The 5G transformation in the industry continues in the handset portfolio. So if you think about an industry of about 1.4 billion smartphones approximately being sold on an annual basis, about 500 million or so in calendar 2021 were sold as 5G. We expect a 40% growth to 700 million being sold as 5G handsets this year. And a 5G handset has typically 50% more DRAM content, more than double the NAND content of a 4G handset. So that trend has a lot to run still. And I think on the -- even beyond that, we do expect applications to come up that take advantage of 5G in ways that are going to continue to drive the average capacities for both DRAM and NAND hire. So there's plenty of room to run there. Yes, the smartphone business, we do expect a low single-digit sort of unit volume growth in this calendar year overall for the smartphone volumes, consolidated volumes overall. And average capacity is then on top of that. So the overall growth is going to still be robust. And keep in mind, we are going to enter a seasonally stronger period when new handsets get introduced in the fall for the mobile business. So that's going to be another catalyst as well. So with that, I will pass it over to Sanjay.

Thank you, Sumit. And Pierre, regarding your second question, so of course, as you know, Micron has made investments over the course of last few years in our clean rooms in the U.S., in Taiwan, in Singapore as well as Japan. In terms of cleanroom expansions in these locations, again, leveraging our globally well-diversified manufacturing footprint, these cleanroom expansions position us to implement the technology transitions in our production. And we have not added new wafer capacity, but we have invested really prudently over the course of last few years in cleanroom expansion, positioning us well to deliver on technology transitions, which are -- which is what is positioning us to drive our cost reductions as well as bit growth in line with the demand growth. As we look ahead, we have announced in October of last year that we would be looking at investing more than $150 billion over 10 years in leading-edge memory manufacturing and R&D on a global basis. So of course, we have also, as part of that, highlighted that in '25-'26 time frame, we would be needing to add new wafer capacity for DRAM in order to continue to meet the increase in demand for the later half of this decade through the 2030 time frame. In that regard, of course, we are evaluating the new expansion on a global basis. And certainly, in the U.S., the discussions that have been proceeding related to chips and the FABS Act, which are about upfront support for investments, new manufacturing capacity as well as ongoing investment tax credits, these are important aspects to help the U.S. bridge the gap with Asia operations. And these are the things that we will, of course, continue to monitor. And we will be making our decisions regarding future expansions once again that is more about the second half of this decade because until then, we are well positioned with our cleanroom situation in our diversified footprint in various countries, including the U.S. today. And in this regard, we are very much engaged with the U.S. government related to passage of CHIPS and investment tax credits.

Our next question comes from Mehdi Housseini of SIG

One follow-up for Sanjay. How should I think about DDR5 contribution, especially to the operating profit this year, which -- it seems to me mostly driven by the PC end market versus next year where the server application picks up.

So I think we mentioned in our prepared remarks that DDR5, of course, it is a bigger die because of the specs of DDR5. By the way, that has an effect in terms of moderating the supply bit growth in the industry as well as DDR5 continues to ramp in client and, in the future, in the data center space as well. So DDR5, we noted in our remarks, that has a pricing premium in the industry as well. And Micron actually is leading in terms of DDR5 supply capability in the industry today as well. So it is a positive contribution to our overall DRAM margins with DDR5. And certainly, we are getting pricing premium for DDR5 in the industry. And as new processors get deployed widely in the data center space that can make use of DDR5, which are expected to begin later this year, you will see DDR5 continuing to ramp rapidly during calendar year '23 as well. We are well positioned with our DDR5 road map for client as well as for data center market.

But there will be a pricing premium for server application versus desktop, correct?

DDR5, as we noted, has pricing premium, yes.

Our next question comes from Chris Danely of Citi.

So just specifically to DRAM, can you just talk about how the 3 main end markets did relative to your expectations? And then on the guidance, how they did -- or how they're -- you expect them to do relative to the expectations as far as PC, server, data center and mobile?

All right. So Chris, yes, I can take that. So in terms of our end markets, FQ2 was a really good quarter. When we think about PCs, PCs performed well. Mobile performed well. Data center continues to be strong. And in fact, a lot of the gross margin upside that we experienced in FQ2 came from pricing improvements that were driven out of actually both DRAM and NAND, but definitely in DRAM as well versus our expectations. So those markets have been strong in FQ2. And as we look ahead in FQ3, most of our sequential growth in FQ3 is being driven out of the compute market, which is mostly DRAM; and then the storage market, which is mostly NAND. So our Storage Business Unit and our Compute and Networking Business Unit, these 2 business units are going to be the primary drivers of growth. All 4 business units are likely to grow well, but these 2 are going to be exceptional growth drivers sequentially in FQ3. So we do expect continued strength in PC. As Sanjay mentioned, the average capacities are increasing because of the mix improvements in PCs due to the shift towards corporate PCs and laptops away from lower-end consumer. So that's helping there. Data center continues to be robust. We expect the rest of calendar '22 to be robust for data center because a lot of demand growth there at our customers who are allocating significant CapEx increase. And the mobile 5G shift continues to be positive for average capacities. And even though mobile is not going to be a big driver of growth sequentially in FQ3, we do expect it to pick up sequentially in FQ4 because of seasonality and these continued trends.

Our next question comes from Joe Moore of Morgan Stanley.

You touched on the impact of the contamination issue in NAND at your competitor. Can you talk about how much of a change that was, how tight you think the NAND market may be because of that? And do you expect that -- the impact of that to be durable beyond the current period?

It certainly brought down the year-over-year supply growth for the industry. It had brought it down based on some of the estimates that are out there by a couple of percentage points in terms of, again, the year-over-year industry supply growth. And certainly, that's -- in terms of the demand-supply dynamic in the industry, that's favorable because the demand for all the reasons that we have just discussed, whether it's in data center or in the client applications or on the mobile phones or even in the automotive markets, the demand for NAND along with demand for DRAM continues to increase. And we fully expect a healthy demand-supply balance for the NAND industry as we look ahead.

Our next question comes from Toshiya Hari of Goldman Sachs.

I had a question on NAND ASPs and how to think about the evolution going forward. I think in the February quarter, your ASPs were up mid-single digits sequentially despite the industry environment still being relatively soft from a pricing perspective. Sanjay, just given your comments around your success in data center SSDs and winning some of those important designs, is it fair to assume that your sequential ASP expansion going forward should outperform the industry throughout the year? Is that a fair assumption to be making? And then separately, Sumit, you talked about the headwinds associated with inflationary pressures and the supply chain mitigation actions. I think you said 100 basis points. At what point could that reverse? I know that's a hard question to answer, but should we expect those headwinds to persist for a couple of quarters? Or could those headwinds turn into tailwinds eventually?

Sumit, why don't you go ahead?

Yes. In terms of our cost pressures, certainly, if you look at the overall environment out there, things are continuing to be challenging. And this is an industry-wide statement. So whether you look at the price of oil and natural gas that are important commodities that impact even the price of electricity, to a lot of the other raw materials and commodities that we purchase, noble gases, a lot of these things, even the pricing of OSAT external subcon services. And of course, you're seeing inflation and even foundry logic prices. So there are lots of vectors. And then, of course, we are also seeing wage inflation happening. So there are lots of vectors through which inflation is getting transmitted into the business. And of course, we are, I believe, doing a really extraordinary job of containing our costs. But of course, these inflationary pressures are there. So we are planning for these pressures to persist for several quarters. We are not thinking that these will let up anytime soon. And so our work is focused on continuing to find efficiencies, continuing to ramp our new technology as fast as we have been doing in an excellent way. So the rest of it comes from, of course, considering these costs as we think about how we price our products, and of course, driving stronger mix of products so we can get not only good ASPs, but also have positive gross margin benefit of products that have higher ASP, better high-value mix in our portfolio. And that mix improvement is happening on the NAND side. It's also happening on the DRAM side with examples like DDR5. So with that, I'll turn it over to Sanjay.

So I think Sumit touched on the next aspect, which was the first part of your question. And as I think Sumit had highlighted in his prepared remarks that for NAND, even though there was a like-for-like price decline, our -- overall due to the mix, our pricing went up in FQ2. And again, this is just highlighting that how mix is playing an important role. The new products that we are launching with SSDs as well as our mobile-managed NAND solutions and shifting away from components into greater and greater mix of high-value solutions positions us well for continuing to improve the profitability of the business here.

Our next question comes from Ambrish Srivastava of BMO.

Sumit, I'm a bit confused. I just wanted to make sure I understood the headwind that -- in the prior question. I thought the cost headwind, the 100 bps you called out, that was from the variable comp and had nothing to do with all the mitigation costs that are going on, which should continue for the next several quarters. Is that the case, the 100 bps is mainly --

Yes. Yes, that is -- your understanding is correct. Yes, your understanding is correct. The 100 basis points impact to sequential gross margin in FQ3 versus FQ2 stemmed from the variable comp increase that I mentioned that's going to impact FQ3 as well as the NAND revenue mix that is going to increase in FQ3 and caused an impact to the consolidated gross margin just mathematically. So the sum of the 2 is over 100 basis points and --

On the gross margin.

On the gross margin side, that's right.

Got it. Got it. So then the question is then -- I'm just trying to unpack this because you talked about inflationary costs. We all understand that. We're feeling it in our own homes. But as you look at the business, you also said that some of the component availability is improving, and that has been a headwind as well to the back-end costs. So I'm just trying to unpack these comments. So on the one hand, you have -- and then you're also having to secure raw materials. I'm assuming neon is part of that. So can you just help us understand kind of what's the right way to think about these costs that could sustain for the next several quarters? So that was my first question. The second one is, thanks for providing that commentary on the inventory. That was very helpful. We had to wait for the Q. The finished goods being down quarter-over-quarter for both DRAM and NAND. That was very helpful. The question is, is that seasonal? Or is there something going on that finished goods system?

Sure. So in terms of the first question about costs, yes, we do expect that the availability of components is going to improve the overall shortages that we have been experiencing quite significantly over the last several quarters. The situation is improving. And as Sanjay said in the prepared remarks, it's not improving to an extent that all of those issues will be gone this year. We expect continuous improvement through the course of calendar '22. And we expect that because of those improvements in availability, the full demand will be experienced in terms of memory and storage because our customers can now order match sets of products. They can get their hands on all of the components that are short. We can get our hands on more components to build our products. And so that is improving through the calendar year, but there is going to be some components that will shift into -- in calendar '23 in terms of when we expect further improvement. There will be still some shortages. And even though the availability of some of these components is improving, there is a level of cost pressure across the supply chain. And these cost pressures are coming across a range of commodities that we buy, a range of input costs in the way we operate our fabs in back-end facilities. So it's an industry-wide pressure across a range of issues, and they will continue despite the improvements of availability of some components. And now switching to your question about inventory. We have been managing our inventory tightly. So our finished goods inventory is down quarter-on-quarter by design. We have higher levels of WIP, mainly staging for a pretty robust growth in FQ3 sequentially. And you can see that in our guidance. We are growing very robustly in FQ3 compared to FQ2. So we do expect inventory to come down in FQ3 and to end up in pretty much the normal range that we have for the year at the end of FQ4. So we do still have that expectation that we would -- as we had mentioned last quarter as well, we would build inventory ending FQ2 and then reduce inventory in FQ3, FQ4. So that is continuing to be the plan, and that's the set of numbers that you see. Just one last point I last point is part of the inventory increase is to just ensure supply continuity, right? I mean this has been a challenge in terms of getting our hands on all the components we need. So part of it is just ensuring that we have adequate supply on hand to meet our customer demand as we ramp revenue.

And so WIP has been going up consistently in the last 2, 3 quarters as a result of that rate?

Yes. Exactly.

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