ePlus inc. (PLUS) Q2 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the ePlus Second Quarter Fiscal 2014 Earnings Results Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Kley Parkhurst, Senior Vice President. Please go ahead.

Thank you, Jonathan, and thank you, everyone, for joining us today. With me are Phil Norton, Chairman, President and CEO of ePlus; Mark Marron, Chief Operating Officer and President of ePlus Technology; Elaine Marion, Chief Financial Officer; and Erica Stoecker, General Counsel. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon, and our periodic filings with the Securities and Exchange Commission, including our Form 10-K for the year ended March 31, 2013, and subsequent Form 10-Q. The company undertakes no responsibility to update any of these forward-looking statements in light of new information or future events. And now I'd like to turn the call over to Phil Norton. Phil?

Revenues on our fiscal second quarter ended September 30, 2013, increased 4.3% to $271.1 million, the 15th consecutive quarter of increased revenues for the trailing 12 months. The revenues topped $1 billion for the first time ever. This is a significant accomplishment for ePlus and reflects the high value that our complex integrated solutions provide to our customers, vendors and partners. I would like to thank our employees, customers and partners for helping us to get to this point in our corporate history. During the quarter, we experienced some variability with revenues trending lower in the last 2 months of the quarter. We believe political events and general economic uncertainty negatively affected IT spending and caused some customers to delay purchasing and implementing projects. On a positive note, with these events behind us, we believe IT spending will standardize as customers -- stabilize as customers resume purchasing. Our gross margin percentage for sales of product and services of 17.8% is one of the highest in the industry. We continue to focus on this metric by increasing professional services as a percentage of total revenue, ensuring we are maximizing incentive programs with partners and optimizing our product mix, when possible, to focus on higher-margin sales. In our Technology segment, gross margins on products and services decreased 20 basis points for the quarter. But if we compare the 6-month period year-over-year, we had a 20-basis-point improvement in the gross margin. Our SG&A costs were up year-over-year, partially as a result of 89 new employees and about 75% of whom are customer-facing. We are investing in the most important resource for our long-term success, people, by scaling our professional services and sales staff to capture customer and market opportunity. Pursuant to our strategic plan, we are continuing to transform the company by building and executing strategies to address rapidly advancing technologies such as cloud, big data, mobile device management and software defined networking. Each of these offers significant future growth opportunities. For example, SDN is expected to increase six-fold over the next 5 years according to the Dell’Oro Group, an industry research firm. We have an advantageous combination of engineering capability and vendor relationships, especially Cisco, which is expected to be the dominant player to capture growth in this rapidly expanding technology. In all of these technologies, we need to make investments now to the best positioned for these future opportunities and to meet our customers' expectations of being a technology leader. While investments in additional headcount over the past year contributed to our SG&A increase of $2.6 million, or 7.4%, we have executed our plans to reduce our annual SG&A run rate by approximately $2.9 million, without affecting revenue or gross margin production. The cost savings from our completed plan should flow through the income statement in our fiscal fourth quarter. We will continue to find ways to further reduce costs by constantly evaluating all of our expenses -- our expense areas, product lines and types of businesses to ensure they are aligned with our strategic goals. In order to be a leader in complex integrated solutions, it is critical that we continue to invest in transforming ePlus by hiring and training the best people, and strategically aligning ourselves with key vendors and partners. We have built ePlus by employing the strongest and most experienced sales professionals, solution architects, implementation engineers and project managers available. We have aligned ourselves with the fastest-growing and most important vendors in technologies, such as Cisco, VMware, HP, EMC and NetApp. Using insights gained daily from some of our enterprise customers, combined with insights from our best engineers, we are significantly focused on driving value for our customers. Our goal is to engage our customers at the architectural level and provide a comprehensive solution set to plan, build, optimize and manage their advanced technology environments. We believe the emerging market for cloud opportunities continues to provide us with numerous opportunities in consulting and enablement. A number of these have developed into significant opportunities for private cloud consulting, enablement and implementation and should lead to future public hybrid cloud sales. Our strategy is to provide our customers with consultative approach that helps them realize the promise of cloud computing, whether it is in a private, public or hybrid solution. During the last 6 months, we have been focused on developing our engineering skills in software defined networking and big data. We see both of these areas as having great potential for future revenue growth. A number of our customers are pursuing big data efforts and we are developing strategic partnerships to facilitate delivery of analytic program and skills that complement and augment our infrastructure expertise. We are actively pursuing opportunities in next-generation equipment that support SDN programming and architecture. Over the past year, ePlus has invested heavily in our security practice by hiring regional security architects and business development executives to provide nationwide coverage by working closely with our regional personnel. Security is expected to be one of the highest growth areas in IT. While Gartner predicts an 8.7% annual growth rate in 2013, others predict a 10x increase over 10 years. Security is a growing concern for all of our customers, whether big or small, public or private. Further, it touches almost every one of our advanced technology, complex integrated solutions, including data center, networking and infrastructure, giving us a broad array of products and services on which we can leverage security sales. Turning to the financing segment. Our origination volume increased 40% during the quarter as compared to the prior year's quarter, reflecting better sales execution through our direct and indirect channels. Customers are continuing to value our processes, automation, responsiveness and ability to offer customized financing solutions that are tailored to their unique requirements. In this segment, our manufacturer partners are relying on us more than ever to meet their requirements for rapid turnaround on financing transactions. For the quarter, pretax earnings in the segment were down $1 million on slightly lower revenue. Earnings were affected by a decrease in revenue from our portfolio and an increase in direct lease costs. We remain focused on increasing volumes and increased profitability through gain on sale transactions and build our own balance sheet portfolio for the long-term to create recurring portfolio earnings and increase earnings from post-contract transactions. We continue to review many acquisition opportunities given our balance sheet, resources we have -- the capital resources to execute acquisitions and expand in new territories. Our strategic growth plan of building a national footprint through a balanced program of acquisitions and new hires is an optimal way to build the company effectively. We are also looking for acquisitions that can accelerate our growth in key technologies and solution areas. In summary, we remain highly focused on executing our growth plans and improving shareholder value. At the end of this call, I'd be happy to answer any questions. But first, I'd like to introduce Elaine Marion, our CFO.

As Phil mentioned, for the quarter ended September 30, 2013, consolidated revenues grew 4.3% to $271.1 million, the 15th quarter of consolidated revenue growth on a year-over-year basis, despite challenging economic conditions experienced in the second half of the quarter. In the Technology segment, revenue for the quarter increased 4.5% to $263.1 million compared to the same quarter last year, as demand for products and services continued to increase. We experienced stronger growth from our small and mid-market customers and a slight tapering amongst our largest corporate customers. In the Financing segment, revenues for the quarter decreased 3.2% to $8 million compared to $8.3 million in the quarter ended September 30, 2012, due to an increase in marketing income, offset by higher net gains on sales of financial assets. We are seeing an increase in demand for our financing by our customer base as well as through the vendors financing program that we've established over the last few years. For the 6 months ended September 30, 2013, consolidated revenues increased 5.1% to $530.4 million compared to $504.8 million in the 6 months ended September 30, 2012. The growth in revenues was attributable to increases in both the Technology and Financing segments. Our Technology segment has revenues of $511.6 million, an increase of 4.8% as compared to the prior year. Revenues in our Financing segment increased 12.7% to $18.8 million due to higher net gains on sales of financial assets as a result of higher volumes of transactions sold. In the Technology segment, the gross margin on sales of product and services decreased 20 basis points to 17.8% for the quarter ended September 30, 2013, from 18% for the same quarter last year. The decrease in gross margin was impacted by the amount of vendor incentive earned as well as the amount of revenues from third-party software assurance, maintenance and services which are presented on a net basis. For the 6 months ended September 30, 2013, our gross margin on sales of products and services increased 20 basis points to 17.7% from 17.5% in the prior year. The increase was primarily due to higher service revenues. For the quarter, net earnings were $8.6 million and fully diluted earnings per common share were $1.06, with 8.2 million shares outstanding compared to the $10 million in net earnings, and $1.25 per share in the quarter ended September 30, 2012, with 8.1 million shares outstanding. Both segments reported lower earnings, which I will discuss. In our largest business segment, Technology, segment earnings before tax was $13.7 million for the quarter compared to $14.9 million in the same quarter last year. Total overhead expenses increased $34.5 million for the quarter compared to $31.7 million in the same quarter last year. We had 88 net new employees for a total of 881 employees in the Technology segment as of September 30, 2013. Most of the new employees are salespeople and engineers, as we continued to invest in customer-facing personnel in order to build out our geographic footprint and expand our solution offerings. In addition, we experienced higher commission cost as a result of higher gross profit on expanded sales. We've actively been working on bringing our expenses into line. As stated in the press release, we have already executed a plan to reduce approximately $2.9 million of annualized overhead expenses to better adjust our expense base to revenue. And we will continue to look for efficiencies to reduce cost while still investing in the necessary resources to capture advanced technology opportunities. In the financing segment, total cost and expenses were $7 million for the quarter, compared to $6.2 million in the same quarter last year. The increase is driven by higher direct lease costs due to an increase in depreciation expense for operating leases. As our investments in operating leases increased 16.3% to $25.2 million as of September 30, 2013 from $21.7 million as of September 30, 2012. As a result, segment earnings before tax for the quarter were $1 million compared to $2 million for the same quarter in the prior year. For the 6 months ended September 30, 2013, net earnings were $16.4 million and fully diluted earnings per common share was $2.03 compared to $18.1 million in net earnings and earnings per common share of $2.25 in the 6 months ended September 30, 2012. In the Technology segment, total overhead cost increased 11.8% to $70.1 million due to increases in salaries and benefits and general and administrative expenses. The increase in salaries and benefits was driven by increases in the number of employees, as well as commission expenses due to the increase in gross profit during the period. The increase in general and administrative expenses was due to the increases in office locations and expenses related to a larger workforce. In addition, general and administrative expenses increased as the result of an adjustment to the value of contingent considerations related to a previous acquisition, which was settled and paid during the quarter. As a result, segment earnings before taxes for the 6 months ended September 30, decreased $2.4 million to $23.3 million compared to $25.7 million for the 6 months ended September 30, 2012. In the financing segment, total costs and expenses for the 6 months ended September 30, 2013 increased 17.7% to $14.1 million driven by the increase in direct lease costs due to higher depreciation expense related to operating leases, as well as the increase in commissions and bonuses as a result of the increase in revenue during this period. Segment earnings before taxes increased slightly to $4.8 million for the 6 months ended September 30. As of September 30, 2013, we had $53.7 million in cash and cash equivalents as compared to $52.7 million on March 31, 2013. Our total stockholders' equity was $252.8 million as of September 30, 2013, compared to $238.2 million as of March 31, 2013. We continue to identify investment opportunities to expand the business such as acquisitions and the build-out of our national footprint. And our liquidity and strong balance sheet provide us with the resources to execute quickly and when the appropriate opportunities arise. That concludes our prepared remarks. Jonathan, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Gregg Hillman from First Wilshire.

First of all, Phil, can you explain software defined networking distinctly for me, please?

Well, I'll let Mark Marron do that. He's more familiar with it.

Easiest way to define software defined networking; it's basically a new approach to how you design, how you build and how you operate your networks. That really delivers business agility and cost savings to our -- to the customers. So immediate revenue opportunities for a company like ourself is somebody in [indiscernible] switches and -- sorry, Cisco has going from originally 1 GB to 10 GB to now 40 GB, so it provides better throughput and speed for customers.

Okay. So it's like a software managing system for a network that you could somehow optimize it better? But it's a software product, is that correct?

That's correct. It's software defined network is what SDN stands for. And basically, it's kind of taking the traffic from the different systems and forwarding that traffic to selected destinations in a quicker and speedier format.

Okay. And then just a question about acquisitions going forward. Do you need to make any acquisitions -- like a technology acquisition for your company, as opposed to expanding your footprint or just increasing the size of the company?

What do you mean by technology company?

Well, it means to acquire some capabilities that you currently don't have, maybe technologically.

Well, we always are looking for things that are -- that will help us get better, and we are always looking out in the future to see what technologies are -- might be prevalent and be the leaders. So on our acquisition process, we're looking at companies like that in the security field and I think in the cloud field. And we will continue to move in those directions as the market changes.

One other thing, if you don't mind, I'm going to add. So if you look at acquisitions, the way we look at it, it's not just we building out our national footprint and our reach within maybe markets we're not in. There's 4 things we look at, not these only 4 things, but 4 key components of what we look at from an acquisition standpoint. One is territory coverage, so either expand an existing region and give us a bigger presence within that region and/or to get us into a new market. Second, is we look at technical expertise. So like Phil has just mentioned, for example, 2 years ago, we acquired a company called NCC based about half an hour outside of Chicago. It gave us a footprint in the Midwest that we didn't have that we can now continue to expand out. But more importantly, it gave us security expertise that we were able to build out and replicate across all the other regions within ePlus. The other 2 things that we look at is the accounts that's, that company has. Is that something that -- is it an overlap with what we have in terms of our accounts or is that net new accounts we can then pick up and sell all the solutions that we have? And then the last piece is the people. At the end of the day, that's really what makes it works. So with the acquisitions we look at the management team, we look at the sales teams, the services teams and see if there's a good fit, not only culturally but also from a technology standpoint.

Okay. Okay. Fine. And then I think you claim that you have better technical people than other value added resellers or better engineers. How are your engineers better than the engineers at other VARs?

How are they better? Well, once again, we're pretty proud with our engineers they have -- and I don't know the exact numbers in terms of certifications, but with all of our key partners, when we make an investment in a vendor, so whether it's Cisco, HP, NetApp, EMC, VMware, we make a commitment that we're going to send our systems engineers through their training and get the highest level of certification with those vendors. So to give you a couple of examples why we feel we're some of the best. The [indiscernible] stuff that you asked a question about earlier, it was a -- Cisco just rolled out application-centric infrastructure. We were one of only 4 partners that were asked to be part of that. We've put about 30 or so of our engineers through this training already. And the only reason we were asked is based on the business that we built with Cisco in terms of our technical capabilities and what they know that we can do, as it relates to the network and everything that hangs on to the network. Another example might be, 5 or 6 years ago, we got about 30 to 35 of our systems engineers trained on VMware. And a year later, we were the VMware Solution Provider of The Year. So it's really, one, making that commitments to the vendors and solutions that we want to focus on, and then investing in the training that you need to be confident and capable, of not only selling the products, but providing the services and support that our customers look for. And we are pretty proud of our systems and services team. We think that -- we do believe we have the best in class.

Our next question comes from the line of John Lewis from Osmium.

Just a couple of questions, really, on the business strategy. It sounds like you guys are continuing to move up kind of the value-added food chain with Managed Services, big data, security. And so if you look out at the business model and where you're taking it in terms of what an investor might expect as you scale this business, do you see a long-term impact ? I mean, I know these are small businesses but with -- I believe, much better margins than the core VARs and services business today, do you see this business going from like 6% EBITDA margins to 9% or 10% in 3 to 5 years? Or how do you see your growth trajectory playing out over time?

Well, John, it's hard to forecast what we're going to have in the future. We think there's a couple of things on our business strategy. One, we want to make sure that we're providing our customers the highest level of engineering and technology capabilities for them to run their business. I think it's very important for us to stay up with the leading technologies that are out there and for us to turn our business model somewhat into a consultant approach which, over time, should give us much more recurring business as well as higher level of margins than we have today. Something like an Accenture, and we are hoping to be closer to that in the next 3 to 5 years. And Mark?

John, if I could add something. As part of what we're doing, it's all about growth and long-term sustainability, so our corporate objectives revolve around a few things. One, growing out our footprint, which we talked about previously. Selling focused solutions that our margin rich. Meaning, both from a product standpoint and from a services standpoint, improving operational efficiency and recruiting, retaining and developing our employees. And part of what we're doing here is the change is moving from just selling solutions to more of a consultant approach. So everything from assessments through to optimization and really helping customers in terms of how they can reduce loss, how they can track and procure products and basically giving them one [indiscernible] to procure products, track products and have all the services that they're looking for, whether from assessments to professional services to Managed Services. And one other thing just to note, as part of one of our initiatives is we're building out our staffing capabilities, being able to provide bodies to our customers as they need them, and we seem to be a prevalent in the market that we're in. We're building out our staffing capability. Just recently, we provided our client, we were able to provide 20 to 25 bodies within a two-week time frame. So we're starting to provide that kind of value add that our customers are looking for. That will, one, give us the long-term foothold and safety nets that we look for from our clients.

That's really helpful, I appreciate that. And if you can get 14% operating margins like Accenture, we'd be obviously thrilled over time.

Our next question comes from the line of Matthew Galinko from Sidoti & Company. Matthew Galinko - Sidoti & Company, LLC: Just a couple here. First, is on -- did you have any 10% customers in the quarter?

No, we didn't. Matthew Galinko - Sidoti & Company, LLC: Okay. And then in terms of the macro, I know you mentioned slower purchasing and some headwinds in the quarter. I guess, can you point to any verticals that you saw some trouble in, or was that broad-based? And then also, to the extent that you could talk about what you've seen so far post the end of the quarter, has that alleviated at all or are you still seeing the same source of [indiscernible]?

On a vertical or standpoint, we really didn't see much of a difference. So for example, the bigger verticals that we sold into for this quarter as well as for the first half would be SLED, technology, health care, financial services and telecommunications. Matthew Galinko - Sidoti & Company, LLC: And then in terms of a post quarter, any -- has it eased up at all?

I'm sorry, I'm not sure I follow the question when you say ease up, what ease up? The pressure never eases up, but that's a different story. Matthew Galinko - Sidoti & Company, LLC: Fair enough. Then just one other question. You mentioned sort of investments in some of your core areas going forward in security and then certain more future areas such as SCN. Is there a meaningful financial investment there, or is it just sort of business focus that blends in to the rest of it?

I don't really think you can go with anything new or a change in technology without making some investments in better personnel and a better trained workforce. So I think there will be some differences of people that we have that are either able to make the grade or they or we have to have new personnel. Matthew Galinko - Sidoti & Company, LLC: And I'm sorry, one last quick one. Have you been able to feel any impact, there's sort of a revolt or whatever you want to call it against spying -- government spy. There's been some theory that could have an impact on cloud-related services. Have you felt any impact on [indiscernible] that you can see from your end?

So for cloud, I'm not sure this may cover it. I believe -- here's what you have with cloud, as people try to make decisions on whether public, private, hybrid, there are still a few things that every company kind of looks through. They look through, one, is in terms of kind of get the benefits of cloud is there's still security and compliance issues they have to worry about. They're still ill at ease, so there's still a lot of well-publicized outages that have been out there that everybody is aware of that I don't need to rehash here, and then still a lot of confusion. So as we do in trying to help our clients make the move to the cloud, if you will, there's still a lot of confusion about the different offerings out there, the pricing from an ROI standpoint, what's the right way to do it. So from our end, we have what we call a cloud readiness assessments. So we'll actually walk a client through from their legacy systems to this new cloud offering that their moving towards. And try to give them the feedback that they need to make that decision. We also have the ability to provide security Managed Services and we also have the ability to do some other things as it relates to the cloud to make that move that much easier for them. I'm not sure if that address it in total, but you have a lot of people that are trying to make that decision of what they have and what they need. And we're doing everything from the discovery and the analysis and implementation to help move them there. Matthew Galinko - Sidoti & Company, LLC: And so you wouldn't foresee of any decrease in interest, but it still continues to be a driver for you?

Yes. There's -- and once again, it fits within our sweet spot in terms of -- it all entails, a lot of it entails server storage and networking and virtualization on the project clouds. And then we're also tightly aligned with a lot of the different cloud providers like a Verizon Terremark to provide solutions to our clients if they're looking to go that route. The other thing is, I saw something the other day, the public cloud services I think is expected to grow like 18% this year. So there's no less interest. I think it's just a matter of a lot of our customers trying to figure out both the security issues they have to get past, and then trying to understand all the offerings and what's right for their organization.

Our next question comes from the line of Dominic Marshall from Pacific Bridge Capital.

Just had a couple of quick balance sheet cash flow sort of items. Do you guys have the number for cash flow from operations in the quarter?

We haven't published the Q yet, it's probably going to come out this evening.

While you're looking at it, it looked like inventory was up quite a bit last quarter and down a little bit this quarter, so I was just kind of wondering is that -- if you would say it's at a normalized level or there's typical seasonal patterns that I should be looking for?

I would say inventory is at a fairly normal level right now at the end of the quarter.

And any buybacks -- stock buyback in the quarter and how much do you guys have authorized under the buyback at this point?

The authorization expired on September 15. And we did buyback -- there's a 40 [indiscernible]...

90,000? Okay. And then on the $2.9 million in SG&A savings, forgive me if I missed this, but how does that rollout over the September, December, March, quarters? And if you give me a little bit of feeling of where that's coming from, because it sounds like you guys are adding, as you said, customer-facing employees. So where is that savings coming from?

Yes. We're adding customer-facing in the areas -- in some of the bigger areas that we kind of discussed in some of the previous questions. So as it relates to the cloud, security, our service offerings in terms of Managed Services and staffing. And as still noted in his original opening, it's approximately 75% of the headcount we added is in this space. Some of the headcount we took out is reorganization of some of our management team and also some of our underperforming sales reps.

Then how will that $2.9 million rollout over the -- how much of it was in September, and how much it will be in the December and March quarters?

Most of it will be starting next quarter.

So on an annualized basis, the full $2.9 million in cost savings will be felt in the fourth quarter or December quarter?

Well, it's an annual number, so it's one whole quarter.

Right. On an annualized basis, the cost savings will be taken out fully by early this quarter?

I would say by next quarter, by our fourth quarter.

Okay. Great. And then just the last question on the -- you guys talked a little bit about M&A, but could you kind of characterize what you're seeing out there in terms of pipeline opportunities, valuations of companies that you might be looking at, especially given the valuations in the public market being up as much as they are?

Well, Kley, is the head of M&A and has an answer to that.

Yes. The pipeline is pretty robust for smaller companies. And there is a disconnect between public company valuations and private company valuations that's become, I think, wider over time as the number of strategic acquires has been reduced by their own acquisition over time. So there are a lot of opportunities, a lot of activity in the marketplace.

Our next question is a follow-up from the line of John Lewis from Osmium.

I was just curious, has there been any scheduled hearings on the litigation front with Lawson anytime soon?

Erica?

Yes. This is Erica Stoecker. The most recent trial court opinions our under appeal to the Federal Circuit. There is briefing that is scheduled through January. There is not an oral argument in that case. But yes, we anticipate the court will schedule that sometime after the briefing.

This does conclude the question-and-answer session -- there's a follow-up question from the line of Gregg Hillman.

I was just wondering if you could kind of categorize the work that you do for clients, I guess, in the technology side? What kind of solutions, I mean, what percentage of the work is with telecom and networking as opposed to something else? How would you characterize the work you're doing for your clients, by the type -- the solution you're giving, if you get the gist of my question?

Yes. Well, let me -- maybe I'll try to tell you where we focus and I'm not sure if that will answer for you. I don't have a breakdown off the top of my head of breaking down servers versus storage versus networking, cloud security and what have you. But if you look at ePlus, there's basically 3 parts to our business. One is the technology resell portion, and the main focus is really kind of data center virtualization cloud, using collaboration and infrastructure management. And then what overlays all that is having the services that are clients look for. For example, as I talked about a little bit earlier on the cloud scenario, having the ability to do the upfront assessment of looking at their legacy systems and helping them move to whatever cloud architecture they're moving to. And then the ongoing optimization services that they have like Managed Services and things like that, all right? The other piece would be, as it relates to security, is that we have all the security that our customers are looking for. Security data center, BYOD, so the mobile device management that I think a lot of people hear about, with people bringing their own devices to work. The 2 supporting arms that we have is we have a leasing arm, so we give our clients the ability and flexibility they look for in terms of how they want to procure the product from us. And then on top of that, we have our own proprietary procurement software. So we have the ability for -- our clients to use our portal that kind of source and search and compare products, but then also give them the reporting that they're looking for from an asset management standpoint to kind of attract their assets and understand what the end of life, end of support, whether they should be paying maintenance or not on product. And then also spend management. Actually breaking out for them where their spend is coming from, whether it's by a particular product or by a particular vendor. So I'm not sure if that broke it out, but the big focus: data center, virtualization cloud, UC and collaboration, infrastructure management, all overlaid by services and security.

I'd now like to hand the call back to Elaine for closing comments.

Jonathan, I just wanted to correct the amount of shares that we did buyback for the 6- and 3-months periods as of September 30 were 53,000 shares approximately.

Jonathan, thank you very much, and everyone for joining us on the call. If you have any follow-up question, we'll be available today and all day tomorrow for additional questions. Thank you.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.