Tecnoglass Inc. (TGLS) Q3 2017 Earnings Report, Transcript and Summary

Greetings, and welcome to the Tecnoglass Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rodny Nacier, Investor Relations. Thank you. Sir you may begin.

Thank you for joining us for the Tecnoglass' third quarter 2017 conference call. A copy of the slide presentation to accompany this call may be obtained on the Investor section of the Tecnoglass website at www.tecnoglass.com. Our speakers for today's call are José Manuel Daes, Chief Executive Officer; Chris Daes, Chief Operating Officer; and Santiago Giraldo, Chief Financial Officer. Moving to slide two. Before turning the call over to José Manuel, I'd like to remind everyone that matters discussed in the call, except for historical information, are forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth, and future acquisitions. These statements are based on Tecnoglass' current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary in a material nature from those expressed or implied by these statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risk and uncertainties affecting the operations of Tecnoglass' business. These risks, uncertainties and other contingencies are indicated from time-to-time in Tecnoglass' filings with the Securities and Exchange Commission. The information discussed during the call is presented in light of such risks. Further, investors should keep in mind that Tecnoglass' financial results in any particular period may not be indicative of future results. Tecnoglass is under no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise. I will now turn the call over to José Manuel, beginning on slide number four. José Daes: Thank you, Rodny, and thank you, everyone, for participating on today's call. I will begin with a review of our third quarter results. Chris will then discuss our backlog, followed by Santiago, who will take us through our market update, financial results, and outlook. During the third quarter, we made further inroads our expansion into the U.S., which shows up 33.8% in the region across our increasingly diverse footprint. We were proud of our teams' ability to accomplish that sales growth despite the significant business eruptions caused by the Hurricane Irma and related flooding in Florida and the Southeast. While our U.S. warehousing and light manufacturing assets were largely impact, some of our customers experienced work stoppages on job site due to the extreme weather. We estimate that disruptions differ approximately $2 million of third quarter net sales in 2018. We also estimate that additional $3 million to $5 million of net sales has been pushed from the fourth quarter into 2019. During our favorable shipping arrangements that are made possible by the number of ships are head by to the U.S. and Columbia less than helpful, we expect to be able to make up all of these weather-related delays as affected customers resume construction activity. In Houston, where we have a growing presence, Hurricane Harvey did not materially impact our third quarter results. South Florida, in particular, remains a very important market for us, where we have a dominant position that we estimate has allowed our windows and products to be installed in approximately 60% to 70% of the high-rise buildings during the past 20 years. In large part, our success in that market and a significant majority of our U.S. growth over the past 20 years has been triggered by our ability to provide a steady stream of new cutting-edge products that typically extreme, minimum standards required by local building codes. This is the first time we recorded history that two Category 4 or higher, hurricanes has struck the U.S. Mainland in the same year. So, we are proud that initial feedback indicate our installed windows performed extremely well throughout the storm in both the South East and Texas. We anticipate that this superior performance will help build awareness for the quality and the strength of our products in the many U.S. markets that we serve, along with the general importance of impact-resistant windows for any low, mid or high rising structure. Additionally, after severe storms, we [Indiscernible] an impact [Indiscernible] opportunity to review building codes especially, on exterior products such as windows, which further drives the shift to a better quality product. We have a long track record of innovation; we are now more prepared than ever to contribute to the rebuilding and remodeling effort ahead. During the third quarter, our total revenue grew by 2.9% compared to the prior year period. Our U.S. growth was partly offset by continuous pressure in Columbia. While construction activity has been tampered by significant pent-up construction, activity, and delayed projects. This is due to macro factors, including temporarily higher interest rates in late 2016 and early 2017 along with the structural tax reform completed in January 2017. Fortunately, interest rate have normalized and we are seeing increased coring and building activity in Columbia, which translated into recovery in local revenues in 2018. Third quarter adjusted EBITDA was $17.6 million compared to $18.9 million in the prior year quarter. This year-over-year difference primarily reflects the mix of revenues in 2017 versus 2016. On a sequential basis, which provides a better comparison of performance on a similar revenue mix, third quarter adjusted EBITDA as a percent of sale increased by 450 points to 21.1% compared to the second quarter 2017. This improvement was a direct result of previously announced steps to rationalize our cost structure for the second half of 2017, given the shift of a portion of products in backlog into 2018. This included ongoing companywide cost coring initiatives in SG&A, direct and indirect labor, raw material sourcing, and other efficiencies throughout our plant network to enhance margins. We expect to see those benefits continue into the fourth quarter. Additionally, we expect to realize some cost savings from our solar energy conversion efforts by year end 2017, which we will discuss further later in the call. We remain sharply focused on generating additional value for our shareholders and we were extremely excited to increase our dividend by 12% to an annualized rate of $0.56 per share. Beginning with the third quarter 2017 distribution, this represents a dividend yield of 7.5%, which is the highest under all large U.S. building product companies as well as the highest across the broader U.S. industrial sector. Although, the significant upside of our business is not yet fully reflected in our share price, we are encouraged by the very strong foundation that we continue to build for Tecnoglass and by the visibility of our project pipeline afforded by our backlog, which has climbed to a new record level of $488 million. We continue to build backlog primarily in Florida and all the U.S. regions with incremental coating and building activity, providing us with a stronger project pipeline and better visibility into 2019, which Chris will discuss further. With the strengths of our balance sheet and financial flexibility, we are extremely confident in our ability to achieve our growth objectives, while further improving our industry-leading margin. We have a highly efficient, vertically integrated, and low cost operation with an extensive portfolio of in-demand products, which will allow us to best serve the abundant pent-up demand in our markets. I will now turn the call over to Chris to provide additional details of our backlog.

Thank you, José Manuel, and good morning to everyone on the line. Moving to our backlog on slide number five. We expanded backlog by 22% year-over-year to a record $488 million. We are pleased to accomplish this during the quarter of record revenues, which means the new additions to backlog fully replace record invoicing during the quarter. Additions to backlog include a combination of attractive project wins from GM&P and additional success in our legacy business in both the U.S. and Columbia, where we are seeing increased coring activity. Compared to the second quarter 2017, backlog expanded by $1 million sequentially. This represents our ongoing efforts to expand our geographic footprint, broadening customer relationships, and introduce new cutting-edge projects, such as our Prestige and Elite residential product lines in 2017. Sticking with Residential, we remain on track to hit our roughly $10 million sales targeted 2017, which we continue to expect to ramp to a range of $20 million to $25 million of sales in 2018, given the strong interest in these new products. Overall, we continue to feel confident of our market base on increasing coat and bidding activity, particularly, in the U.S., which is now providing us with a stronger revenue visibility through 2019. Looking at our geographic breakdown on the slide number six. We are sourcing from a more diverse number of regions within the U.S., where our structural glass and curtain wall systems continue to lead the architectural glass trend. We'll continue to invest and expand our presence into many additional U.S. markets with quarter three backlog representing additional project wins across more than 10 states. Some recent project wins have elevated our profile in the Northeast, West Coast, Chicago and Texas. Our expanded service capabilities through GM&P are providing a lot of these opportunities to reach new markets in the U.S. The higher share of backlog in Florida on a sequential and year-over-year basis primarily reflects additional wins in these markets, where we are seeing healthy activity in certain asset types and also the full contribution of GM&P's backlog. In Columbia, we expect backlog to remain at a strong level, given pent-up activity in that market. Activity in other Latin American market is picking up, providing a pipeline of additional diversification opportunities into new markets over time. Overall, we are bidding on a range of projects across our diversified markets to help populate our backlog with a range of attractive projects. As a result, we ended the quarter with better visibility on a multi-year project pipeline and we are actively diversifying our geographic and market exposure in a disciplined manner. Moving to our solar energy investment on slide number seven. With our planned network largely built to support anticipated growth, our capacity investment during 2017 has been focused on productivity and innovation to continue to produce industry-leading margins. Our multiyear investment to convert a portion of our energy needs to solar is on track to reduce our electric and natural gas consumption needs by about 7% with both phases already operational in 2018 and with the possibility to expand into subsequent phases in years to come. We recently completed the successful implementation of Phase II of our solar energy conversion, which is expected to be operational by the end of November, putting us ahead of our year-end target. Additionally, we are now eligible to receive tax benefits given by the Colombian government to clean energy users in 2018. Beyond this initiative, we remain committed to sourcing and generating additional high return projects focused on innovation, productivity, and capacity expansion as needed beyond our strong install capacity. I will now turn the call over to Santiago to discuss our markets and financial results.

Thank you, Christian and good morning to everyone on the line. Turning to our GM&P update on slide number nine. Given the contribution of GM&P to our U.S. market region capabilities, I'd like to spend a moment discussing the strategic benefits of this acquisition to our combined operation and the attractive opportunity ahead. In March 2017, we completed this deal at a very attractive multiple of near four times pro forma LTA and EBITDA. As a result, during the first nine months of 2017, our U.S. sales increased 26% year-over-year to a record $174.8 million. We have now more control of many projects, with our in-house engineers working hand-in-hand with architects. Our in-house installers are ensuring best-in-class installation of our manufactured glass windows and doors systems. GM&P also generates external sales to enhance relationships through our engineers and installers; more efficiently expands our channels to more U.S. customers than previously available. As a combined company, we construct additional benefits from strong U.S. construction activity and continue our expansion into other previously untapped U.S. markets. With our vertically integrated business model, strategic location, and low cost footprint, we can continue to grow and drive superior margin performance compared to industry peers. Looking at the U.S. construction demand on slide number 10. We continue to see favorable construction activity in many markets in the U.S. Additionally; we continue to diversify our mix of projects, which include multi-family, office buildings, high-rise hotels, and more recently, single-family homes. Looking at commercial, which still represents the majority of our business; underlying U.S. demand remains positive despite the flattish non-residential construction starts year-to-date. While the ABI reading dipped below 50 in September after seven months of steady growth in the demand for design services, the indicators showed healthy expansion in three regions and the LTM trend continues to support a stable positive outlook. Project increase and new design contracts remain healthy and the continued strength in more sectors and regions indicate industry-wide stability. Moving to the global and U.S. construction glass market outlook on slide number 11. Globally, the Glazing Industry, which represents a good market proxy for our business, is expected to continue expanding at mid-single-digit pace over the next five years according to third-party sources. The need for energy-efficient buildings, increasing environmental regulations, rapid advances in coating technology, and expanding urbans centers is fueling that growth, which is not expected to taper off until well after 2021. Looking at the U.S., the Glazing Industry is expected to grow at a mid to high single-digit pace through 2022. With our exposure to both new construction and renovation projects in the U.S., along with our ambitions to expand deeper into Residential and the possible benefit of the increased awareness generated by the recent hurricanes, we see significant upside in our business to capture a rising share of U.S. and LatAm demand and even expanding into a more global footprint over time. Turning to our Colombian market update on slide number12. In Columbia, our sales were down during the third quarter of 2017, consistent with Q2, mainly due to project delays and an overall more tempered pace of construction activity country-wide. While construction GDP expanded in the single-digits in the first half of 2017, building construction licenses stalled due to a continuation of macro factors discussed in prior calls. First, the structural tax reform introduced at the beginning of 2017 pushed out a large number of project starts as contractors awaited this new legislation. The legislation eventually passed with favorable outcome, providing for a gradual reduction in corporate tax rates to 33% by 2019 compared to 40% in 2016. Secondly, higher interest rates taken at 7.75% in Q2 2016 delayed more 2017 activity than initially expected. The Colombia Central Bank rates have since dropped by 275 basis points to 5% as of October, providing for a more favorable environment to get projects off the ground. Overall, builder sentiment is improving based on our conversations with contractors and a rebound in construction licenses during August, which continues to reinforce our confidence in the significant pent-up demand in this market. Local quoting activity is picking up significantly, which is encouraging. Based on the typical multi-quarter lag between a quote and an invoice, we expect to see revenues recover in 2018, which is further reinforced by an increasing our Colombian-based backlog year-over-year. Moving to our financial highlights on slide number 14. Revenues increased 2.9% year-over-year, primarily driven by U.S. commercial activity. Excluding the impact of the first sales due to Hurricane Irma, sales would have increased by 5.3% year-over-year. Gross margin performance year-over-year was primarily impacted by a higher mix of engineering and installation revenues, along with additional D&A expenses, resulting from the robust CapEx program finalized in 2016. However, Q3 gross margin of 32.6% improved substantially on a sequential basis compared to 27.8% in the second quarter. This was a result of several previously announced actions taken at the beginning of third quarter to rationalize our cost base. We trimmed about 5% of administrative headcount and approximately 7% of our operational labor force as we develop better visibility on the cadence of our project pipeline. We remain very confident in our ability to generate additional operating leverage on higher sales and we'll continue to source additional avenues to improve efficiencies and reduce our cost base. During the first nine months of 2017, we generated positive operating cash, which improved by $21 million compared to the prior year period. Year-to-date, we have completed annual tax interest payments of $15.7 million and we have paid cash taxes of $15.6 million, representing nearly all taxes out for the year. We ended the third quarter with ample liquidity, including a cash balance of $36 million and with a conservative leverage profile. This balance sheet strength supports our future growth initiatives and capacity investments, along with our direct return to shareholders through our upwardly revised dividend of $0.56 per share raised by 12% beginning in Q3 of 2017. Looking at the drivers of Q3 revenue and adjusted EBITDA on slide number 15. For the third quarter 2017, total revenues increased 2.9% to $83.4 million. This growth was mainly attributable to the additional GM&P and core demand in the U.S., which was partially offset by the impact of temporary market pressures on Colombia revenues. And the by the postponement of invoicing associated with the recent hurricane activity. Adjusted EBITDA in the third quarter of 2017 decreased to $17.6 million. Volume was up slightly and price was essentially flat year-over-year. That said; we had a higher mix of revenue from engineering, design, and installation services, which are industry services that carry lower margin. With the help of cost-saving actions, SG&A spend decreased $2.5 million year-over-year and as a percent of total revenue improved to 18.9% compared to 20.9% in the prior year quarter. As mentioned, we made good progress in our margins during the quarter. But we are very focused on additional efficiencies and productivity initiatives to further enhance profitability, while preserving a strong platform to support expected growth. Moving to our 2017 outlook on slide number 18. Based on our results year-to-date, we continue to feel encouraged by the much stronger prospects for our company in 2018. As we look to the balance of the full year 2017, we are revising our outlook to reflect stronger bottom-line expectations despite the unfavorable impacts of weather to topline performance. As José Manuel mentioned earlier, while our manufacturing and distribution operations were largely untouched by Hurricane Irma, the work stoppage and disruptions faced by our customers is estimated to result in a total of $5 million to $7 million of revenue deferred from 2017 into 2018. To account for this weather dynamic, we are revising our sales outlook to a range of $314 million to $324 million. This range compares to a prior range of $320 million to $330 million, which reflects the impact of Hurricane Irma. At the same time, we're thrilled to raise our adjusted EBITDA outlook to a range of $59 million to $65 million compared to $57 million to $65 million prior, despite the delays caused by the hurricanes. This improved forecast is based on our anticipated mix of revenues and continued efforts to optimize cost. We continue to expect to generate positive cash flow from operations for the full year. In summary, we are pleased by our progress during the third quarter and look forward to delivering on an upwardly revised adjusted EBITDA expectations for the full year 2017. We thank you for your continued support in Tecnoglass. We'll be happy to answer your questions. Operator, please open the line to questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Jeremy Hamblin with Dougherty & Company. please proceed with your question.

Good morning gentlemen. It's great to see the improved margin performance in the quarter. And I want to start my first question with that. In terms of gross margins, you had a sizable sequential jump from what we saw in Q2. And I think as you absorbed the GM&P acquisition and get a better understanding of what the impact overall will be on a long-term basis for your business, how should we be thinking about gross margins on an absolute basis moving forward? I think you had indicated on the last call that you expected kind of low 30%s and now you just put up 32.6%, really in a quarter that wasn't particularly strong on the sales front. As you continue to see your sales grow, where do you think is a reasonable range over the next couple of years on gross margins that you could achieve?

Hi Jeremy, this is Santiago. So, basically, we've estimated that the GM&P acquisition is basically a 200 basis point or so effect on gross margins. The 32.6% that you're seeing there does include some efficiencies on fees and services and installation cost. For the remaining part of the year, we expect gross margins to be basically in line with Q3 and what we have said in Q2 was -- low 30s was a fair estimate. That being said, we think that through operating leverage, we could improve that over time and we'll provide more detail once we come out with the 2018 guidance in our next call. But for the time being, this is a more normalized margin profile rather than what you guys saw in Q2, which did account for a significant amount of fixed cost that we have seen trending down.

Okay. Well, somewhat related to that question, I wanted to come back to the solar energy project, which sounds like it's nearing completion in this phase. You've had a couple of big investments that you've made, the -- certainly, the soft coating capability and equipment. I think that you had initially expected that to yield $6 million to $8 million of annual savings. And I think you're calling out some additional savings that you expect related to the solar project. But in terms of thinking of these investments on a return on investment standpoint, how do we kind of bridge that gap of the total expected savings from these projects on a long-term -- or, let's say, with -- as it relates to the soft coating, that you've maybe just not been able to achieve the kind of capacity utilization that you had initially anticipated and that's why we haven't seen quite as much improvement? José Daes: Jeremy, José Daes. How are you?

I'm well. Thank you and yourself? José Daes: Good, good. Thank you. Listen Jeremy, the soft coat has been a little possible for us at the beginning. Even though we're getting better coatings and better product, the saving hasn't reflected yet because we're doing very, very low volume. And we expect next year to increase by 30% to 40% and then the year after another 30% to 40% and then we will see mixed savings into the soft coat line. As I told you on the previous call, most of our costs are fixed. And when we increase sales, the margins increase because the SG&A remains mostly the same. And as we are going to increase next year the sales, the margins are going to improve. That's what we believe.

Okay, great. That's helpful. Let me come back to where you mentioned sales and one of the areas, obviously, that's been very weak is your local business in Colombia. You called out several macro factors related to that, noting that statutory tax rates are clicking down to about 33% in 2019. If the tax rates have been a significant driver along with the interest rate hikes that started a year ago, is there a concern that some of the effects in the Colombian operations could linger in 2018 until we get to that full tax break in 2019? I mean, what is the expectation in terms of Colombia, specifically, bouncing back here over the next four or five quarters? José Daes: Colombia is going to bounce back. We already have the backlog. The point Jeremy was that the interest rates were really, really high. And the interest rates have a direct affection to the construction business. People don't buy that much when they cannot finance the homes or the offices. And there was really a big gap for a year, year and a half of new construction. Now, interest rates are back to normal for Colombian rates, which is 5.5% the prime rate and around 10% for financing. And we believe that -- I mean we have the backlog for next year improving around 20% to 30% from this year for Colombia sales. And we believe 2019 is going to be even stronger than that. What happened was -- I mean, the interest rate killed the business.

Let me apply that then a little bit to the U.S. markets. Obviously, we have seen a very, very slow gradual rise in interest rates that I think at this point are expected to continue at least into 2018. What do you think is -- when you look back at the cycle from the past decade or so, in the U.S., specifically, where is the tension point on interest rates where you think that could potentially stunt some of the construction activity and growth within the United States? I mean, is it when fed funds rate gets to 3%? Is it something higher than that? Do you have a sense of where you might start to see interest rate increases in the U.S. start to have a negative impact? José Daes: I believe if the government raises by two to three points. I don't believe a quarter raise or a half a point is going to kill anything. It might slow down a little bit residential side. But interest rates are very, very low, I mean, historically now, so I believe 4% to 6% of mortgage financing is normal. 3.5% that we're seeing now to 4% is very, very low historically. And let me tell you, we have seen in the past three to four months a quoting activity that we haven't seen before. And we expect to close most of those businesses in the next six to nine months for delivery in 2019. And -- I mean, that is very encouraging for our business.

Yes, absolutely. Well, let me further ask about the U.S. And you noted that you have -- I think, it calculates to about $260 million to $265 million of your backlog, specifically, tied to Florida. One of the things that we've heard in discussions with distributors and other construction-related businesses in Florida is that they have tons of business that it's hard to keep up with the amount of inbound calls, partially related to the rebuilding. But one of the challenges appears to be labor supply shortages. You certainly -- you just don't have enough qualified personnel really to keep up with some of the demand. And I recognize that's a high-class problem to have. But what do you see in terms of the potential risk factor of labor supply shortages on your projects? Does that raise the concern about projects being in Florida, specifically, being completed on time? And then I have a follow-up after that related to it. José Daes: No, we don't. We're not seeing that in our side. Because I mean the first six months were very low in sales even in Florida because most of our buildings are tapping up and the new ones got delayed or haven't started or this or that. So, we have the labor to do all the buildings that we have contracted and even the labor to do the ones that we are going to contract. We're not worried about that. That might be on the Residential side because the Residential side is very split up. I mean, if you're going to do a house in Palm Beach, you have to send three, four people to each house and that requires a lot more people than doing the building. But on the building side, we're fine. We're very equipped to do all the buildings that we have contracted. We're not seeing any problem on that side.

Okay. And then what about on the materials front. I know that you have some pass-through pricing in your contracts. But there has been call-outs that development costs have risen significantly since the rebuild efforts have started over the last month or so or month and a half. And that is also another potential risk factor that there have been some delays simply because where contract pricing is not in place to account for the increase in demand for raw materials that that has been another challenge for some development projects. What are you seeing on that front in terms of material costs? José Daes: No, the only material that has increased price is the aluminum has been increasing for the last six months. It went from $1,600 to $1,700 to around $2,050, $2,070 this week. But as you know, we already have bought everything for 2017 and we have bought around six months of 2018 at a very preferable price of $1,700 per ton. So, we're not concerned about that. And the labor cost to us has remained flat. The glass -- since we source most of our glass now, the flat glass in Colombia has remained flat, so we're not seeing that. That's why maybe our margins are improving.

Okay, great. And then I wanted to ask Santiago. As we look at your future depreciation and amortization expectations, you've seen a kind of level out in this kind of mid $5 million plus range. How should I be thinking about that moving forward? I think you had guided to $18 million or $19 million. I may have missed it actually in the guidance on depreciation and amortization. How should we be thinking about that for the remainder of this year and into 2018? And then the same question on interest expense?

Yes. So, basically, what you saw in Q3 is pretty much a good benchmark, Jeremy, about $5 million to $5.5 million, out of which roughly $4.7 million is depreciation. And as you know, our CapEx this year has been very much reduced. And then you have about $500,000 of amortization related to the acquisition of GM&P and other intangibles that are amortizing. So, what you saw in Q3 has been benchmark going forward. We don't expect any significant differences from that. And then on interest, also, what you saw in Q3 is a good benchmark on a nominal basis. The amount of debt that we have in the balance sheet, we're expecting to keep it basically the same. So, what you see really with most of our debt being fixed interest rate should continue to be pretty much in line with what you just saw in Q3.

Okay. So a little bit of a step down on the interest expense moving forward?

Yes, yes. And as you recall, when we announced the bond issuance, one of the benefits was that our weighted average cost of debt was going to come down. So, even if you compare it year-over-year with a higher amount of nominal debt, our interest cost is actually coming down a bit.

Okay. And then last question and appreciate your generosity in taking the questions. In terms of your cash flows, you haven't generated a ton of cash over the last couple of years, some of that's investment related. But in terms of thinking about free cash flow moving forward, it does look like you're going to have lower overall CapEx needs both this year and into next. Can you give me a sense of what we should be thinking about on a free cash flow basis?

Sure. So, this year, the expectation would be to end up between $10 million to $12 million of free cash flow. We had previously guided that the CapEx was going to be less than $10 million this year and about the same the next year. And if you look at what we've done in CapEx through September, we're pretty much in line. The expectation for next year would be depending on how working capital demands end up playing out would be to also generate cash flow as we're doing this year and as we expect to close the full 2017.

Okay, great. Thanks so much for taking all my questions guys. And best of luck moving forward here.

Thank you, Jeremy. José Daes: Thank you.

Thank you. We have no further questions at this time. Mr. Daes, I would now like to turn the floor back over to you for closing comments. José Daes: Thank you, again, everybody for participating in today's call and for your continued interest in Tecnoglass. We look forward to speaking again soon. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.