OSI Systems, Inc. (OSIS) Q3 2024 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the OSI Systems, Inc. Third Quarter 2024 Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alan Edrick, Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining us. I'm Alan Edrick, Executive Vice President and CFO of OSI Systems, and I'm here today with Deepak Chopra, OSI's President and CEO. Welcome to the OSI Systems, fiscal ‘24 third quarter conference call. We are pleased that you can join us as we review our financial and operational results. Earlier today, we issued a press release announcing our 2024 fiscal year third quarter financial results. Before we discuss the results, however, I would like to remind everyone that today's discussion will include forward looking statements and the Company wishes to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to such forward-looking statements. All forward-looking statements made on this call are based on currently available information, and the Company undertakes no obligation to update any forward-looking statement based on subsequent events or new information or otherwise. During today's call, we will refer both to GAAP and non-GAAP financial measures when describing the Company's results. For further information regarding non-GAAP measures and comparable GAAP measures of the Company's results and a quantitative reconciliation of those figures, please refer to today's earnings release. I will begin with a high-level summary of our financial performance for the third quarter of fiscal ‘24, and then turn the call over to Deepak for a discussion of our business and our operational performance. We will then finish with more detail regarding our financial results and a discussion of our updated outlook for fiscal year ’24. Following record revenues and non-GAAP EPS in Q2, our third quarter financial results were very strong led by the Security division, which delivered extraordinary revenue growth and a significant increase in year over year operating income and adjusted EPS. We are encouraged by the momentum in our overall business as evidenced by another quarter of strong bookings. Let's start with a high-level summary of our fiscal ‘24 Q3 results. First, revenues increased 34% year over year to a Q3 record of $405 million, driven by the performance in our Security division where revenues were up 60% year over year. Second, the significant revenue growth led to record Q3 non-GAAP adjusted earnings per share of $2.16 up 45% from Q3 of the prior fiscal year. Third bookings were again strong with the book-to-bill of just over one, and we ended the quarter with a backlog of nearly 1.8 billion. The strong backlog provides good visibility for the balance of the fiscal year and into future years. Before diving more deeply into our financial results and discussing the fiscal 24 outlook. I'll turn the call over to Deepak.

Thank you, Alan, and welcome to the OSI Systems earnings call for the third quarter of fiscal 2024. We are very pleased with our fiscal third quarter performance in which revenues grew 34% to a record $405 million. We had a book to bill of exceeding one and finished the quarter with a healthy backlog of about 1.8 billion. Our reserves were primarily driven by our Security division, which continues to perform well. I will now discuss some key highlights from our third quarter performance across each division before handing it back to Alan for a further discussion of our financial results. Beginning with the Security division where year over year revenues grew 60% in Q3, the division's bookings were approximately 300 million plus achieving a book to build exceeding one. During the quarter, we continued to deliver on the two major programs, the approximately $500 million contract with SEDENA, which is Mexico's Department of National Defense for cargo and vehicle inspection systems and related services, and a 200 plus million cargo program with another international customer. Our cargo and solutions team has been relentless in its efforts and both programs are progressing well. In March, we announced a new a $100 contract for various cargo and vehicle inspection systems. As you may recall, we previously announced the receipt of a large award of $59 million at the end of Q2 for cargo and vehicle inspection systems from another international customer. These significant recent awards, in addition to the combined 7 million of contracts discussed earlier, provide great confidence and sustainable growth worldwide for cargo, as a market leadership breadth of product and solutions portfolio and our ability to deliver are being recognized and awarded going into Q4 and into fiscal 2025. We are spending a fair amount of time here talking about the programs and market traction, but let me take a moment to provide an example here to illustrate how we affect everyday life and wellbeing with our cargo security products. We learned during the quarter that U.S. Customs and Border Protection CBP Officers at the Camino Real International Bridge on the Texas U.S. Mexico border performed a secondary inspection on a suspicious truck manifesting a shipment of chemicals, designated for agricultural use. The scans utilizing our company's Z Portal cargo scanners revealed anomalies in the cargo and CBP officers subsequently discovered 6.5 tons of methamphetamine, which had a street value of $117 million. The largest ever met seizure in the U.S. Port of Entry. We are proud to support the US CBP and their critical homeland security mission in stopping illegal drugs and other contraband and entering our nation. Moving on to the aviation and checkpoints, business continues to perform well with strong revenues and bookings. During Q3, we announced $21 million award from an international airport for checkpoint security infrastructure solutions, including our 920CT computerized tomography screening systems with automated tray return system, along with a multi-year service and support. We also announced a $27 million award from a leading European airport to provide the Itemiser 5x explosive trace detection ETD systems for secondary screening of passengers and carry-on baggage. As a side comment, the Itemiser 5x in addition to recurring service revenue like other products also has an ongoing revenue -- recurring revenue of consumables, which has a very healthy margin. And finally, we announced a $4 million award from a leading global air cargo logistics customer to provide various screening systems including the RTT 110 CT-based explosive detection system, the Orion 927DX and the 937DX for large package screening and the 920CX for smaller packages. As you can see from the different products mentioned, it helps to have a broad portfolio, which we are proud to say that we have the broadest portfolio compared to our competitors and utilizing this features and technology variations to provide optimized solutions for customers. We have seen over the last few quarters that airports and air cargo customers are making significant security infrastructure investments, and our business has benefit, and we believe that this trend will continue into fiscal ‘25 and beyond. Our turnkey projects in Albania, Periodico, Guatemala, and the European airport have been performing as anticipated. In addition, we are also gearing up to begin our latest turnkey Uruguay -- turnkey, which we expect to commence sometime in summer. In security, we look to finish the year strong, recent bookings activity and a significant opportunity pipeline suggests continued strong growth demand for 2025 and beyond. Moving to our Optoelectronics and Manufacturing division, where it was an uncharacteristic softer quarter, which we think is a one-off. We continue to work with several major customers to sync with their inventory demand forecast, which has impacted revenues in the short term as we had anticipated. The Opto Division achieved a book to bill exceeding one for the quarter, which bodes well for the business going forward. We announced a couple of Optos key wins, including a $15 million order from a healthcare OEM to provide critical subassemblies that are used in its innovative and specialized solutions. We also announced a $3 million award from major defense electronics OEM to provide sensors for advanced missile systems. During Q3, we began introducing prospective customers to a new operation in Mexico, Tecate, which has given us a significant capacity to help customers aspiring to shift work from Asia to nearshore. Looking ahead, we expect Opto to return to form in Q4 and believe the division is well positioned for fiscal ‘25 as the inventory rightsizing winds down with many of our customers. Finally, moving on to the Healthcare division, where revenues were approximately 6% lower than in the prior year’s Q3. This division continues to work through a challenging hospital CapEx environment despite that healthcare had an active booking score just before quarter end, we won a $6 million order from a U.S.-based hospital for our patient monitoring systems, including exhibit central stations, expression patient monitors, and queue patient monitors, which we expect to begin delivering in Q4. Our patient monitoring solutions allow customers to enhance their services by integrating features like the SafeNSound digital health platform and mobile app. This addition enables real time patient monitoring services. Additionally, customers can leverage the Rothman Predictive Health Analytics software to access advanced health analytics further augmenting our comprehensive monitoring offerings. We continue to invest heavily in developing new products, primarily in our next-generation platform for patient monitoring products and solutions. Overall, we are excited about a strong finish in fiscal ‘24 and continuing our momentum into the next fiscal year and beyond. As always, I would like to thank our employees, customers, and stockholders for their continued support. With that, I will turn the call back over to Alan to discuss her financial results and guidance in more detail before we open for questions.

Thank you, Deepak. Now, I will review in greater detail the financial results for our third quarter. Again, our fiscal ‘24 Q3 revenues were up 34% compared with revenues in the third quarter of the prior fiscal year. The 60% year-over-year increase in Q3 Security division revenues was largely the result of sales growth of our cargo and vehicle inspection products. We also had double digit percentage revenue growth in our aviation and checkpoint products in related services. Q3 revenues included continued shipments from the $200 million plus cargo contract announced in January of 2023, and significant revenues from the $500 million plus cargo contract announced in March of 23. Third-party Opto sales were down approximately 3% year-over-year. As mentioned on last quarter's call, we anticipated that with certain Opto customers adjusting inventory levels and/or ordering patterns, revenues in this division would continue to be impacted over the short term and that has indeed been the case. As Deepak mentioned, we see this improving going forward. The Healthcare division sales decreased 6% year-over-year in this challenging hospital CapEx environment. The fiscal ‘24 Q3 gross margin of 33.6% was down from the 34.3% gross margin in Q3 last year. This was largely due to the mix of revenues. As our Q3 growth, this year was driven by a significant increase in product revenues, which carry a less favorable margin than service revenues and a less favorable mix of service revenues in the quarter as well. Thus, while the gross margin on product sales increased, the gross margin on service revenues decreased year-over-year. Our gross margin will generally fluctuate from period to period based on revenue mix and volume inflation and impacts of changes in supply chain costs among other factors. Moving to operating expenses, we continue to work diligently across each of our divisions to improve efficiency and to prudently manage our SG&A cost structure. Q3 SG&A expenses for $66.6 million or 16.4% of sales compared to 17.7% of sales in Q3 of the prior year. The year-over-year increase in absolute cost was driven by higher compensation, including incentive compensation linked to our significant sales growth, increased professional fees in unfavorable FX among other items. Research and development expenses in Q3 of fiscal ‘24 were $17.1 million or 4.2% of sales compared to $14.9 million or 4.9% of sales in the same prior year quarter. We continue to dedicate considerable resources to R&D, particularly in our Security and Healthcare segments as we remain focused on innovative product development, which we view as vital to the long-term success of our businesses. We recorded $1 million of restructuring and other charges in Q3 of fiscal ‘24. Moving to interest in taxes. Net interest and other expenses in Q3 increased to $7.4 million in fiscal ‘24 from $5.7 million in fiscal ‘23, primarily due to increased interest rates on a higher level of borrowings. We executed an interest rate swap during Q1 at fiscal ‘23 to fix a portion of our floating rate bank debt. Our reported effective tax rate under GAAP was 22.6% in Q3 of fiscal ’24 compared to 23.8% in Q3 of fiscal ‘23. In Q3 of each of fiscal ‘24 and ‘23, we recognized immaterial amounts of discrete tax items, excluding the impact of discrete tax items. Our normalized non-GAAP effective tax rate in Q3 fiscal ‘24 was 23.0% compared to a normalized effective tax rate of 23.2% in Q3 of fiscal ‘23. I'll now turn to a discussion of our non-GAAP adjusted operating margin. Overall, our adjusted operating margin in the third quarter of fiscal ‘24 increased to 13.9% from 12.9% in Q3 of fiscal ‘23, driven by the strong performance of the Security division. The non-GAAP adjusted operating margin in the Security division expanded to 18.6% in Q3 of fiscal ‘24 from 18.3% in Q3 of ‘23, primarily driven by higher product revenues. The adjusted operating margin in our Opto division decreased to 12.2% in the third quarter of fiscal ‘24 from 14.1% in last year's comparable quarter due to lower sales and a less favorable product mix. We anticipate a sequential improvement in this division as we finish out fiscal ‘24. The Healthcare division's adjusted operating margin was negligible given the reduction in the division of sales. Moving to cash flow, we invested significant amounts in working capital associated with the Company's strong growth. In Q3, cash used in operations was $52 million, primarily due to increases in accounts receivable associated with the Security division revenue growth. CapEx in Q3 of fiscal ‘24 was $4.9 million, while depreciation and amortization expense was $10.6 million. Our balance sheet is solid with modest net leverage of 1.5. Aside from $7.5 million of annual required principled payments under our bank term loan, the bulk of our debt matures in fiscal ‘27. And finally, let's turn to guidance. We are increasing our non-GAAP diluted EPS guidance to growth of over 30% earnings per share over fiscal ‘23, while maintaining our revenue guidance of an increase of more than 19%. This fiscal ‘24 non-GAAP diluted EPS guidance excludes potential impairment restructuring and other charges, amortization of acquired intangible assets and non-cash interest expense and their associated tax effects as well as discrete tax and other non-recurring items. We currently believe this guidance reflects reasonable estimates. The actual impact on the Company's financial results of timing changes on the expected conversion of backlog to revenues, disruptions, and increased costs in the supply chain and inflation and interest rates is difficult to predict and could vary significantly from the anticipated impact currently reflected in our estimates and guidance. Actual results and non-GAAP earnings per share could vary from the guidance indicated above due to other risks and uncertainties discussed in our SEC filings. We continue to remain focused on the growth of our businesses. We believe our efforts will enable OSI to continue providing innovative products and solutions. We would like to take this opportunity to, again, thank the global OSI team for its continued dedication and supporting our customers and partners. And at this time, we'd like to open the call to questions.

[Operator Instructions] Our first question is going to come from the line of Josh Nichols with B. Riley. Your line is open. Please go ahead.

Great to see the backlog holding near these record levels despite the big conversion. I thought most people would have expected to see a little bit of a decline. I'm just kind of curious, could you contextualize this? I know, you're not giving guidance for next fiscal year, but of that $1.8 billion backlog you have right now around how much of that is going to be recognized next fiscal year?

Josh, this is Alan and thanks for the question and good question. We don't provide necessarily guidance on the rollout of our backlog from a year-to-year perspective. We would say that we do see a significant portion of that backlog will be recognized in fiscal ‘25. Therefore, with a couple of months before the start of our new fiscal year, we believe we have very strong visibility into next year already at this time, not to mention, all the bookings that we'll tend to get here in Q4 as well before we start fiscal ‘25. So, it really places us in a nice position and gives us a great deal of confidence for next year.

Great. And then good to hear that it sounds like the inventory rightsizing in the Optoelectronic space is effectively behind the Company, looking for some sequential improvement in fiscal 4Q. Looking at the Healthcare division, though, I know it's not a very big percentage of revenue, but it's been a little bit of a headwind and typically is higher margin contribution. When looking at 4Q, that's usually a pretty strong quarter for Healthcare. I guess any type of guidance that you could provide for what you're expecting for the fourth quarter for Healthcare?

Josh, I'll give you a little color there and Deepak can add on. Though, we don't provide guidance by division, as you recall, Q4 of last fiscal year was an extremely strong quarter for our Healthcare division aided by a significant booking that we had received in Q3 and then shipped in Q4. So, it provides a pretty tough comp embedded in the guidance that we're providing for OSI Systems overall, for fiscal ‘24, suggests that we will improve sequentially in our Healthcare revenues over Q3, but we won't be at the level we were at in Q4 of last year.

Got it. And then last question for me, I, mean, I know that there was a significant bump in the accounts receivable, but I guess is that like subsequently been collected and expectations for free cash flow in at the fiscal fourth quarter?

Yes. Good question. Clearly, big investments in working capital receivables are up significantly with the heavy growth that we had in our Security division namely. We have collected a nice amount of cash subsequent to March 31st as we sit here today and expect to collect a significant amount of cash through the balance of the quarter as well. However, we think the real turning point for generating the real strong cash flow is fiscal ‘25. So, this has been a year of heavy investment in both inventory and receivables. And while, we expect to continue growing at ‘25, we think we can start to see a little bit of a reverse course on the big investment in those two areas to really drive some nice cash flow next year.

And our next question is going to come from the line of Larry Solow with CJS Securities. Your line is open. Please go ahead.

I guess just a question on the backlog or I guess my real question is just forward looking. Backlog obviously feels like ‘25 should be another good year for you guys. I guess the people would get better comfort. And maybe as we look out beyond ‘25 and you mentioned Deepak or the pipeline opportunities maybe you could just kind of help us give a little more color there? Just how strong that pipeline is and your confidence level maybe any given quarter, the book to bill falling below one, but just your comfort level and then over the long run your book to bill remaining above one and you're continuing to be able to grow that top line beyond once these two larger contracts are satisfied over the next couple years?

We are very, very confident and feel good about it. The pipeline of activity is quite strong. We are entering into the next year with a very strong backlog to begin with. But more than that, I think the important thing to say is that the whole world continues to be more concerned with security all over at the same time as aviation is going up, as people do more trade between each country, as people are moving from China to other places, everywhere you look at it, security is an important factor for them. And we are very proud to say that we have the broadest for product portfolio. We have a very good reputation, and the more we do and install and stuff, our stuff all over the globe, more it looks like to the customers when they do come to the interest to buy something, we are definitely invited to the dance. So, we definitely have good prospects, good pipeline, good reputation, good product portfolio. All those things we think will be very beneficial for not just ‘25 but beyond. And we continue to at the same time invest heavily in innovation and new products. And we really feel very confident this will continue.

I guess a question for Alan, just on the -- you mentioned sort of the margin profile and that probably explained some of the sequential kind of drop in margin. I know last quarter you had called out that when it was over '22, that that was a little bit of an anomaly on the upside, but just on the shift downtime, this shift down this quarter, it sounds like it's more just a mixed shift. Less service revenue, more of the new product revenue, just trying to get a little better color over the longer term or even the next couple of years? Do you expect margins generally to Security division to go higher? Does that -- is there any reflection based on where you stand in some of the ramp of these orders that the margins, do the margins get better as you sort of complete some, as you progress with some of these larger orders? Is there any economies of scale within the orders or you overall as you get more and more orders? I'm just trying to get a basic kind of a little more context on just the margins short-term and more mid to longer term outlook?

Our goal is always to couple top line growth with margin expansion. And I think we've been able to do that on a -- historically on a year over year basis quite regularly, certain quarters based upon the mix of revenues by the product or by the customer may shift margins around a bit. But as we look forward, our goal is to continue to expand our operating margins in the Security division on an annual basis. And when we look out at not just what's in our backlog, but the pipeline of opportunities expanding out into ‘26, ‘27, ‘28, we think there's a ample opportunity to do that given the strong backlog, that we have right now. And as Deepak alluded to with the great confidence in ‘25, at this point we're already beginning to fulfill things in ‘26 and even into ‘27. So, we're really focused on a lot of those out years, and we think there's a margin potential in all of those.

And just like if I look at Mexico, the SEDENA contract in particular because that's a big one, obviously, probably makes up still a quarter of your backlog or something like that. Is the margin on that changed, like as you progress, I mean, I imagine beyond that 500 million the service component, which is probably maybe you can give us some call on what percentage that will be, but as a percent of how much revenue that'll be annually? But I imagine that margin will be a lot better too. But does that margin also improve, like the back half get better? Do you get better at it? Is there any difference in margin as you fulfill that contract?

So, Larry, the contract that you're referring to consists of multiple different products, as well as service. The margin will differ a little bit depending upon the products and the mix of products that were fulfilling in a particular quarter. Our team is actually doing an outstanding job on that. But you're right, as we move into the service element, service generally carries a higher margin than our product revenue. And we would expect that to be the case here too. So, as we start getting those annual recurring revenues from service, post-warranty, then that will be nicely margin accretive to us as well. But it's been a very nice contract for us.

Our next question is going to come from the line of Jeff Martin with Roth MKM. Your line is open. Please go ahead.

Wanted to dive in. Obviously, cargo and vehicle inspection in the international markets is a huge opportunity for you. Still not a mature market. I was curious, if you could just comment with respect to that, and also kind of lay out how you see OSI position competitively relative to the other providers that you see out there?

This is Deepak here. We feel good about it. I've said it before that we are proud to say that we have the broadest product portfolio compared to our competitors. Also, we can also say that especially in the cargo solution there in the space, we now can say proudly that we are number one. As you get larger, as your product line gets more accepted, as you get more broader reach in the world and get with a good reputation, you continue to draw more attraction and preferential from the customers, because no country is going to put millions of dollars at stake with any vendor unless it's tried and have a good reputation. We are quite happy with what we are doing. We are very much focused at the same time to continue to do better. The team is doing a marvelous job, but we keep talking about cargo, your question about cargo, but even in the aviation space, we've had some great successes. We have a very good product line. We continue to look at a broader product line, and we think that as aviation traffic improves, that will continue. And not to forget the thing that most people ignore it, that the air cargo space continues to grow too and that's also very good. And we have the largest install base even in that space. All in all, we think that we are well suited for not just domestically but international and we continue to look at it and be focused and working with the customers and listening to the customers what they want.

Deepak, could you comment or maybe Alan, on update what you think might happen with potential follow-on orders from the U.S. Customs and Border Patrol?

Obviously, we have those two big IDIQs and now that the budgets have been settled there, we are looking forward to it. And we think that for the next year or so, or even more, there'll be more requirement. Again, like we said, we are well placed and we think that going into fiscal ‘25, there'd be a lot more activity. All in all, not just the border patrol, but the State Department, DOD, and as we mentioned in the last conference call, yes, it's unfortunate for all the international events that are happening in Ukraine around that area, the Middle-East and stuff. But as they settle down, there's going to be much more requirement for security equipment to protect the Western allies people. We again think that the government will finance it and we are well placed for it.

And finally, how are you thinking about capital allocation next year because you're going to be generating significant free cash flow as that working capital investment flips into cash generation?

Jeff, this is Alan here. Yes. From a capital allocation perspective, we principally look at three areas, and we don't necessarily look at them as mutually exclusive. We can oftentimes do all three. We expect to grow nice organically, but we always look to supplement that with strategic M&A as well. So, some of the cash flow could very well go to some acquisition targets. Stock buyback is something we've historically been very active in, not as much this year as we've been investing so much in working capital. And then any residual cash that we have, we would use to pay down our borrowings.

[Operator Instructions] And our next question is going to come from the line of Christopher Glynn with Oppenheimer and Co. Your line is open. Please go ahead.

Just wanted to sort of ask a supply chain question a bit as pertains to gross margin, you talked about the gross margin year over year mix dynamics. I'm curious, 60% security growth, how is that supply chain performing? You've seen variability around expedited costs, curious, if there was any material variability sequentially on supply chain or if that sequential bridge and gross margin was really just the mixed dynamics as well.

Well, very good question. Excuse me. Definitely, as you ramp up so fast, supply chain is a challenge. We have good context. We've done well. We managed it well, and our ability to be global even in our manufacturing has helped us very much. But the challenges are there, but we think that, we have been successful in managing it well, and some of those big things that were a couple of quarters of at post-COVID of the cost, prices, the freight and stuff that has stabilized, and we think that going forward we have it under control and we can manage it well. Alan, you want to add something?

Sure. Chris, some of the changes you see in gross margin for OSI overall, year-over-year and sequentially is really a function of product versus service. With these two large contracts right now, we're delivering substantial product revenue growth, and the product revenues inherently carry a lower gross margin than service. As a result, when we consolidate the whole thing, our gross margin would be impacted by that. Once, we finish delivering these products and it becomes, added service revenue, that's really an opportunity to enhance the gross margin overall. But that being said, even where there may be a little dip in the gross margin, because of higher product related revenues, it still is very nice contribution to the operating margins.

Follow ups on O&M segment. I guess, the declines on the external sales aren't that really extreme given we're in a lead time and inventory correction period, and you sound pretty constructive going forward. I'm just curious if you could talk a little bit more about that visibility how much is tied to direct specifications? Are there any verticals like defense or medical or whatever you want to provide in terms of where you see the thrust picking back up for Opto?

Good question. Firstly, I mean, we did say on a call, that the book-to-bill was a one for the Opto group that shows that we think there's more stability going forward, and we'll get back on track. Most of the segments we think are going to get back to normal with their inventory adjustment. Consumer products might be a little bit behind, especially as the budgets get passed, as the stuff keeps happening with the aid to Ukraine and Israel and stuff, the aerospace defense business will then start picking up again. We are well designed into it. The automotive industry is up there and we supply to that our medical industry though there is a lot of tension on the CapEx in the hospital market, but there is still a lot of need for what I call devices and those kind of things consumables, and we supply product for that. So, we think overall, all the segments will do well. One of the good things we can proudly say, we are not dependent on any one segment. We are very broad segment based, and we think that overall, the business is going to start growing. Alan?

Yes, I think that, I think that's the case. And I think you're right Chris. The third-party sales reduction in light of some of the corrections on inventory levels from some of our customers was somewhat modest. And while that may continue a little bit more into Q4, we do expect to see a nice sequential improvement in revenues overall, and we are seeing that across the spectrum. We're quite diversified between industrial, medical, defense, automotive, technology companies like Deepak was mentioning. We are highly encouraged that we'll see a nice pickup here in Q4 over Q3.

Thank you. And I'm showing no further questions at this time, and I would like to hand the conference back to Deepak Chopra for closing remarks.

Thank you once again for attending our conference call. We look forward to speaking with you over the next year-end call in August. Thank you to everybody, our employees, and to our investors, stockholders, and our customers. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.