Insight Enterprises [NSIT] Conference call transcript for 2022 q1
2022-05-08 07:43:49
Fiscal: 2022 q1
Operator: Good day and thank you for standing by. Welcome to the Insight Enterprises First Quarter 2022 Earnings Conference Call. I would now like to hand the conference over to your speaker today, Glynis Bryan, our CFO. Please go ahead.
Glynis Bryan: Thank you. Welcome, everyone and thank you for joining the Insight Enterprises earnings conference call. Today, we will be discussing the company's operating results for the quarter ended March 31, 2022. I'm Glynis Bryan, Chief Financial Officer of Insight; and joining me is Joyce Mullen, President and Chief Executive Officer. If you do not have a copy of the earnings release, or the accompanying slide presentation that was posted this morning and filed with the Securities and Exchange Commission on Form 8-K, you will find it on our website at insight.com under the Investor Relations section. Today's call, including the question-and-answer period, is being webcast live and can be accessed via the Investor Relations page of our website at insight.com. An archive copy of the conference call will be available approximately 2 hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, May 5, 2022. This call is a property of Insight Enterprises. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will refer to non-GAAP financial measures as we discuss the first quarter 2022 financial results. When discussing non-GAAP measures, we will refer to them as adjusted. You will find a reconciliation of these adjusted measures to our actual GAAP results included in either the press release or the accompanying slide presentation issued earlier today. Also, please note that unless highlighted as constant currency, all amounts and growth rates discussed are in U.S. dollar terms. As a reminder, all forward-looking statements that are made in this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our most recently filed periodic reports and subsequent filings with the SEC. All forward-looking statements are made as of the date of this call and except as required by law, we undertake no obligation to update any forward-looking statements made on this call, whether as a result of new information, future events or otherwise. With that, I will now turn the call over to Joyce and if you're following along with the slide presentation, we will begin on Slide 4. Joyce?
Joyce Mullen: Thanks so much, Glynis. Hello, everyone and thank you for joining us today. It is my pleasure to report our performance for the quarter. We delivered a record Q1 for revenue, gross profit and adjusted diluted earnings per share. Year-over-year net sales grew 21%, adjusted earnings from operations grew 31% and adjusted diluted EPS grew 39%. With supply constraints somewhat easing for devices, hardware net sales grew 27% year-over-year which was higher than expected. Product demand remained healthy and hardware backlog bookings grew faster than sales, resulting in another sequential increase in our ending backlog. The demand for our services business is also healthy. Bookings grew over 20% in Q1 and we expect strong double-digit bookings growth to continue in Q2. Our Cloud business continues to perform well with gross billings growing more than 20% year-over-year. These points demonstrate clients are looking to Insight to provide more services than ever as inflation and labor shortages have increased their focus on digital transformation and automation projects. We're proud of these results and even prouder of the Insight teammates who work tirelessly to meet our clients' needs and expectations. As CEO, it is my privilege and responsibility to assemble a world-class leadership team, a team that will drive the transformation required to accelerate our vision of becoming a leading solutions integrator. To that end, I am extremely pleased that we have added 2 stellar executives to our leadership team. First, Dee Burger joined us on May 2 as our President of North America. Dee joins us from Capgemini, where he led the North American business. With nearly 30 years of experience, Dee is a customer-centric leader and has a proven track record of building and delivering new services to customers, including Cloud and digital applications, AI and cybersecurity. Dee also has incredibly strong reputation as an effective leader. His vast experience will be critical to transforming our sales organization and ensuring we have the appropriate capabilities to accelerate our solutions business. Another key addition to the leadership team is Suma Nallapati who joined us on April 4 as our new CIO. Suma brings extensive experience with large-scale digital transformation and demonstrated success delivering effective and efficient IT solutions. Her knowledge of global enterprise SaaS operations, modern infrastructure and business intelligence will guide our continued focus on automation, agility and cybersecurity. Additionally, over the last several months, we have consolidated our services, presales and solutions delivery organizations to drive a more seamless client experience. This consolidation also supports our increased focus on building innovative and scalable solutions that leverage our IP and deliver differentiated value to our clients. And while we don't do everything, we are extraordinarily proud of our capabilities and our key areas of expertise: modern workplace, modern applications, modern infrastructure, data and AI, cybersecurity and intelligent edge. The outcomes we deliver to our clients are driven by their business needs but in general, include improving their own customer or user experience, reducing operating costs and enhancing productivity through automation, designing and implementing solutions to manage cybersecurity risk, consolidating workloads and reducing data center footprints to drive efficiency and increase sustainability and leveraging data to build new or improved business models. For example, on Slide 5, a long-standing fashion retailer operating in over 30 countries, wanted to streamline and secure their back-end operations with an updated Cloud infrastructure while also modernizing their global e-commerce shopping experience. Our team of Cloud and security experts met their needs against the client's goal to create a scalable, cost-effective and secure hybrid Cloud platform that could accommodate future growth. This engagement delivered impressive results. The client has passed all 44 controls for regulatory compliance and tripled their identity secure score which is an Azure metric, all while improving overall efficiency and user experience. And we continue to help them with our ongoing global digital transformation, demonstrating the enduring nature of many of our client engagements. Navigating digital transformation while protecting business continuity is never simple. And because digital transformation requires an intimate understanding of our clients' business, we cultivate and nurture long-term relationships like this. On Slide 6 is an excellent example of this type of relationship with a global leader in the travel industry. Over the past 3 years, we've helped this client with various projects and are very familiar with their operations across 150 countries, supporting 18,000 employees around the world. This client experience dramatic changes in demand due to the pandemic and they needed to shift their IT spend to a more flexible usage-based model that can scale as demand returns. Our solutions experts recommended an all-in-one infrastructure solution deployed through consumption models fully managed by Insight. The results have been remarkable as this solution has dramatically reduced their support costs while at the same time, improving efficiency and security. And post the initial deployment, we are providing ongoing single point of contact support for their network, compute storage and hyper-converged infrastructure. These types of global engagements are delivered through our more than 4,500 solutions and services experts. Our technical expertise is a key differentiator and we continue to invest. In fact, we've added over 150 new solutions experts in the first quarter. We also continue to invest in our people by implementing programs like our distinguished engineering program. Our distinguished engineers demonstrate the highest levels of technical expertise, thought leadership and industry influence and they are committed to mentoring and developing the next generation of highly skilled engineers and architects. As champions of people, leadership and culture, we strive to be a place where everyone has an opportunity to reach their full potential while contributing to the sustainability of our communities. Our culture which is based on our values of Hunger, Heart and Harmony is also a key differentiator in attracting and retaining our talent. Hunger is all about delivering results like these. An example of Heart is the work our teammates did to dominate money and send truckloads of goods to the Citizens in Ukraine over the past couple of months. Harmony is all about working together and leveraging the diversity of thought, background and experience that we have across our teammate population. I'm proud that we ranked number 59 on Forbes Best Employers for Diversity in 2022 and have achieved a perfect score of 100 on the Human Rights Campaign Foundation's 2022 Corporate Equality Index. These values, combined with the meaningful work we do to help our clients improve their businesses are key drivers of the Great Place to Work recognitions we have achieved critical in this labor market. Finally, sustainability is increasingly important to our clients and our teammates. And I'm proud that this year, industry was recognized for the very first as one of Barron's 100 Most Sustainable Companies for 2022. In summary, I'm very pleased with our Q1 results and the outlook of our business. Client demand for digital transformation solutions remains robust. We have added depth and talent to our leadership team and our services and solutions business as well positioned for continued growth. Now, I'll turn the call back over to Glynis to review our first quarter financial results.
Glynis Bryan: Thank you, Joyce. As Joyce mentioned, we're certainly pleased with our record results for the first quarter. We saw stronger-than-expected hardware net sales and continue to have elevated backlog, leading to record financial results in the quarter and positioning us well for the rest of the year. Our consolidated results can be found on Slides 8 and 9. Net sales in the first quarter were $2.7 billion, up 22% in constant currency and up 21% in U.S. dollars compared to the first quarter of 2021. Product net sales grew 22% year-over-year, driven primarily by hardware net sales which grew 27%. Services net sales grew 14% year-over-year, primarily driven by Insight delivered services. Gross profit of $379 million increased 14% over the prior year quarter and gross margin was 14.3%. Gross margin decreased 80 basis points over prior year, primarily driven by expanded hardware growth and more specifically, growth in devices. Product gross profit increased 18% year-over-year, driven by growth in sales of devices, as I mentioned and services gross profit increased 10% year-over-year. Our Cloud gross profit for the trailing 12 months ended March 31, 2022, was flat compared to prior year at 18% of consolidated gross profit. And our services gross profit was 49% of total gross profit on a trailing 12-month basis. SG&A expenses were up 11% year-over-year in constant currency and up 10% in U.S. dollars. As a percentage of net sales, both adjusted SG&A and SG&A GAAP basis were 11% versus 12% in prior year quarter. Adjusted earnings from operations was $90 million, up 31% year-over-year also up 19% on a GAAP basis to $80 million. And our adjusted diluted earnings per share was $1.81, up 39% versus $1.53 per share on a GAAP basis, an increase of 30%. Moving on to the results for each of our operating segments. We'll start with North America operating results on Slide 10. First quarter net sales were a record $2.1 billion, up 25% year-over-year, driven by a 31% increase in hardware net sales. Product net sales grew 26% year-over-year, primarily driven by hardware net sales and more specifically devices. Services net sales grew 15% year-over-year, primarily driven by Insight-delivered services and higher sales of software assurance. Gross profit in North America in the first quarter increased 18% year-over-year and gross margin was 14.5%, down 80 basis points, driven by the mix of products and services. In Q1, more than 50% of the total hardware growth was related to devices, the lowest margin category in IT. We expect that this will be similar in Q2 but as we progress through the second half of 2022, we would anticipate more growth related to networking and infrastructure products versus devices. And as I mentioned, we exited the quarter with elevated backlog in the business. Product gross profit increased 24%, driven by growth in the sales of devices, as I mentioned and services gross profit increased 12% year-over-year. Selling and administrative expenses increased 14% year-over-year, driven by higher personnel and variable compensation costs associated with higher gross profit and our investments in solutions and services teammates. Adjusted earnings from operations grew 34% year-over-year to $73 million. GAAP earnings from operations grew 20% year-over-year to $65 million. Moving on to EMEA on Slide 11. Net sales in the first quarter grew 17% in constant currency. Gross profit grew 3% in constant currency slower than net sales due to a net decrease of 86 basis points in product margin which includes partner funding and freight and the decline in agency fees reported in services net sales. Adjusted earnings from operations were $13 million, up 21% in constant currency. GAAP earnings from operations grew 13% year-over-year to $11 million. Now on to APAC on Slide 12. Net sales of $55 million in the first quarter decreased 3% year-over-year in constant currency, driven by a shift from software to Cloud solutions. Gross profit of $14 million increased 23% year-over-year in constant currency, primarily due to higher profit sales in services and higher volume of Cloud solutions. This led to adjusted earnings from operations of $4 million in the quarter, up 32% in constant currency. GAAP earnings from operations grew 30% year-over-year to $4 million. Moving on to our tax rate. Our effective tax rate for the first quarter of 2022 was 24.1%, relatively flat compared to 23.8% in 2021. Turning to the details of our first quarter 2022 cash flow performance on Slide 13. Our operations used $284 million of cash compared to $43 million of cash generated in the same period in 2021. As we have highlighted previously, our cash conversion cycle is inverted, meaning we pay our partners on terms shorter than we receive payments from our clients. This allows us to drive more cash flow when hardware sales decline while in periods of hardware growth, more cash is used in our operations. In the first quarter of 2022, the decrease in cash flow from operating activities was primarily driven by growth in hardware net sales and changes in partner mix, including increased volumes with distributors with early payment terms. In the first quarter of 2022, our cash conversion cycle was 41 days, up 8 days from the first quarter of 2021 as a result of the increased volume with distributors that I just discussed and offset by a slight reduction in DSO. In 2022, we invested $26 million in capital expenditures, mainly related to facility and technology investments. As a reminder, we received $27 million in proceeds from the sale of real estate assets in the prior year. We continue to have $75 million outstanding under our share repurchase authorization. As of March 31, 2022, we had the majority of our $1.2 billion capacity, available under our ABL facility and we have ample capacity to fund future growth. At the end of the first quarter, we had a cash balance of $115 million, of which $83 million was resident in our foreign subsidiaries. We had $718 million of outstanding debt, including our senior convertible notes at the end of the quarter compared to a prior cash balance of $139 million and total debt of $417 million. Effective January 1, 2022, we adopted ASU 2020-06, the new accounting standard for convertible debt instruments and contracts. During the first quarter, our convertible notes exceeded the market price trigger of $88.82. And the notes became convertible at the option of the holders through June 30 of 2022. If the holders exercise this option, we will be required to settle the principal amount of the notes in cash. As such, the balance is classified as current at March 31, 2022. If the convertible notes continue to exceed the market price trigger of $88.82, in future periods, the notes will remain convertible at the option of the holders and the principal amount will continue to be classified as current. Given the market value of the convertible note, we do not anticipate that note holders would convert their notes in the near term. Moving on to liquidity on Slide 14. We are exiting the quarter with a leverage position at less than 1.7x debt to cash flow or EBITDA which is well within our comfort range. Under our ABL agreement, our primary compliance covenant is a fixed charge coverage ratio which includes trailing 12-month EBITDA coverage over capital expenditures, taxes and cash interest. As of March 31, we're at 3.9x, the minimum requirement of 1.0x and we are confident we can support our capital requirements and liquidity needs. For our full year 2022 guidance on Slide 15, we expect to deliver low double-digit net sales growth. We expect diluted earnings per share for the full year of 2022 to be between $7.95 and $8.15. This outlook assumes interest expense between $30 million to $35 million and effective tax rate of 24% to 25% for the full year 2022; capital expenditures of $65 million to $70 million, including final completion of our new corporate headquarters and an average share count for the full year of 35.6 million shares. This outlook excludes acquisition-related intangible amortization expense of approximately $31 million, assumes no acquisition-related or segment and restructuring expenses and assumes no significant change in our debt instruments or the macroeconomic outlook. I will now turn the call back to Joyce.
Joyce Mullen: Thanks, Glynis. In closing, I would like to thank our teammates for their commitment to our clients, partners and each other, our clients for trusting Insight to help them with their transformational journeys and our partners for their continued collaboration and support in delivering innovative solutions. Insight is off to a good start in 2022. Despite the economic uncertainties, demand is strong and we're optimistic about our ability to expand our solutions business and deliver even more value to our clients as they modernize and transform. This concludes our comments and we will now open the line for your questions.
Operator: Your first question comes from the line of Matt Sheerin from Stifel.
MattSheerin: Yes. First question just regarding the strength that you saw in the quarter, particularly for client devices. Joyce, it sounded like you said that supply is starting to open up. Is that even in the enterprise level devices where we've seen shortages for a while now? And it also sounds like your backlog is up. So would you expect a better than seasonal June quarter because of that?
Joyce Mullen: Yes. Thank you, Matt. Yes, we do expect to see pretty strong device demand and frankly, hardware demand continue through Q2. And in fact, we expect because the supply chain has opened up a bit for devices. We will see good invoicing on hardware devices also in Q2. In the back half of the year, we have really, really tough compares on devices. So we would expect growth in the 4 devices in the back half of the year to be a bit more muted but we would expect to start shipping more infrastructure and networking gear in the back half of the year. And that supply chain is not quite as healthy. So we expect infrastructure and networking supply constraints to persist through the first half of 2023.
MattSheerin: Okay. And in terms of the backlog that you're seeing, is that also on the infrastructure side which gives you confidence in seeing that turnaround or that step-up in the second half?
Joyce Mullen: Yes. Our infrastructure backlog is at record levels -- multiples of record levels. So yes, absolutely.
MattSheerin: Okay. And then regarding gross margin, I mean, I understand the mix issue and why the gross margin was down year-over-year. And it sounds like Glynis was talking about maybe similar gross margin profile this quarter due to the mix. Is that the case? And what should we think about gross margins for the year? Would you expect it to be flat or down from last year?
Joyce Mullen: We would expect gross margin to be flat for the year but we do expect gross margins to be compressed a bit in Q2 as well because of the strength of the device mix that we're seeing.
MattSheerin: Okay, great. And just lastly, just regarding your OpEx, you're seeing very nice leverage there. There's also a lot of inflationary pressures on all businesses, particularly keeping good talent. Could you talk about your labor pool and any pressures that you're seeing on the cost side?
Joyce Mullen: Yes. So first of all, our services business is strong and bookings were pretty strong. And we've had pretty good success retaining our teammates. We attribute a lot of that to 2 things, the strength of the culture that we talk about all the time and also the interesting work that our teammates get to do in helping our clients. So retention has been reasonable. I mean it's slightly elevated from previous years but nothing like the industry, so we're happy about that. We're also very actively recruiting, of course, at all times and we have seen some -- for some types of jobs, we have seen some wage increases for sure. But I'd say overall, we've been able -- inflation has not played a huge part in our results at all. So we're able to pass that on to our clients but it's been not very significant in the aggregate for either -- on either the product side or the services side.
Operator: Your next question comes from the line of Anthony Lebiedzinski of Sidoti & Company.
Anthony Lebiedzinski: Yes. So I just wanted to clarify. So it sounds like the -- overall, the sales growth was more unit volume-driven versus pricing, right? Is that fair to say?
Glynis Bryan: Yes, yes. There was significant volume increases that we saw in the quarter. And I think that there were some ASP increases as well. I'm not going to say they weren't but it was primarily more volume driven than it was rate driven.
Anthony Lebiedzinski: Got it. Okay, that's great to hear. And then as far as your regional performance, should we expect North America to continue to outperform the other 2 smaller regions here as far as -- I just wanted to get a better sense as to what's embedded in your guidance?
Glynis Bryan: APAC had a great quarter. APAC had a great first quarter, albeit small but they did have a great first quarter. Yes, we would anticipate that North America is going to continue to outperform but each region will contribute in the guidance. So Europe, while the margin was somewhat depressed there, EFO expansion was good.
Anthony Lebiedzinski: Got it. Okay. And then have you seen any notable impact from the lockdowns in China as far as the impact on your business?
Joyce Mullen: Well, supply chain constraints, as we mentioned, for devices have been -- have loosened a bit. The supply chain, I would say, though, is still a bit unpredictable, Anthony. So -- and even for devices. So we're not really sure ever exactly when we're going to get what. But we have seen that improve from a device point of view. The supply chain has gotten worse for infrastructure and specifically networking products. Some of that has, certainly, China doesn't help. The lockdowns in China don't help.
Operator: Your next question comes from the line of Adam Tindle from Raymond James.
Adam Tindle: I just wanted to ask on the backlog portion. You talked about obviously supply getting better in devices. But is there a way for us to think about the size of the backlog in the devices versus the data center stuff? And I think kind of the heart of the question is if we ultimately get through the device backlog because supply is really easing, is there enough in data center to fully offset that and continue to carry us through or would backlog significantly shrink?
Glynis Bryan: So I guess if you look at the, just the industry in general, our backlog is weighted like the industry. So it's more heavily weighted towards devices. However, on a year-over-year basis, as Joyce mentioned, our backlog around networking and infrastructure is up significantly on a year-over-year basis. But I don't want to say that, that backlog would be larger than the device backlog. It's not. But it's up significantly versus what you would expect there. So I think that as devices continue to flow through, we're not seeing that necessarily device backlog is going to decline. We grew 35% in Q3 of 2021 as an example. We're expecting to grow in the low to mid-single digits in 2020 -- Q3 of 2022. So we still anticipate that devices are going to be in our mix. It's just not going to be the 30-plus percent growth that it has been in Q1.
Adam Tindle: Okay. And that comment for Q3 was for total company because I'm just also trying to get the shape of the model for the year? You obviously raised the forecast for the full year and it's lower than .
Glynis Bryan: By that comment on the backlog, I was talking more specifically to North America which is where the bulk of the backlog is. Sorry.
Adam Tindle: Okay. Well, maybe we could tackle the shape of the year because the raise for the full year is more than just the beat in Q1 and I'm just trying to think about what kind of growth rates given, as you mentioned, you're facing tougher comparisons as the year progresses. Do we stay in sort of the high-teens level in Q2 and then go closer to mid to high single digits in the back half? Or is it more smooth than that? Just any sense of getting our models in shape from a linearity standpoint through the year.
Glynis Bryan: Yes. I think that growth in Q2 is going to be high, not as high as it was in Q1. The model is more weighted towards growth in the first half of the year -- teens -- high teens, potentially in the first half of the year. And then the second half of the year, it's going to be in that mid-single-digit range. That's the, that's our assumption with regard to -- because of the high comps that we have relative to Q3 and Q4.
Adam Tindle: Okay, makes sense. And maybe just one for Joyce. Some of the changes that you've made internally, you talked about consolidating services and presales obviously, now adding on to the team. Are there any further changes that you're anticipating under these tenure? And what are kind of the key marching orders and KPIs?
Joyce Mullen: Well, Dee just started on Monday. So I don't know if he's had a chance to figure out what kind of changes he's going to make yet. But certainly, his experience in solutions is one of the reasons why he's here. And we would expect to accelerate our solutions, the momentum that we see in our services and solutions business as a result of his expertise and his guidance and leadership for sure. I don't know when exactly, Adam, that's going to happen, so -- but that's the whole point, right? We've got to sell a whole lot more solutions and services and that's the plan.
Adam Tindle: I guess I have high expectations.
Joyce Mullen: So do I. We'll let you know.
Adam Tindle: On services, I mean, like some of the data points that you're going quickly here but I was trying to jot down. Obviously, it's lagging hardware sales growth. That's somewhat understandable because hardware sales are so astronomical right now but they are lagging. I think you said TTM Cloud gross profit dollars were flat. I think that was as a percent of mix. You talked about a decline in agency fees and net sales just like the couple of things that are -- that you're seeing challenges in the services business, a little bit more specifics on what Dee can potentially do and some of the challenges or opportunities that you see?
Joyce Mullen: Yes. I mean I think we're really quite happy with our services bookings rate. So we see good momentum there. We did have some tough compare, a really large deal in Q1 of last year that has made the comparison for this quarter a bit tough on the services gross profit line and the growth line but we are really happy with what we're seeing. And so -- and the demand continues unabated. So we like the momentum we're seeing. We like kind of the mix that we're seeing. Demand was strong for Insight delivered services bookings more than -- it was up more than 20% and across all major areas, including consulting, Managed Services and professional and life cycle services. So we -- I guess, the momentum in the last quarter has given us a lot of confidence. And then the client demand and the need for Managed Services is higher than ever given the labor issues. So we're feeling pretty good. And growth -- Cloud gross billings were up 22% year-on-year and up 24% for the trailing 12 months. So that's also given us some confidence.
Adam Tindle: Got it. One last one for me. Glynis, is just a quick clarification. Does the EPS guidance consider anything with the convert and warrants outstanding? I think we're kind of near or close to strike price for converting those. Maybe you could remind us of that and if guidance contemplates any additional dilution.
Glynis Bryan: So no, the guidance does not include any additional dilution associated with that convert. We are evaluating what we're going to do with our convert as we move on from here. The price is -- $103.12 is the price and it would have to stay at that level -- likely would occur in Q2 -- stay at that level for 20 consecutive days of over 30 average over quarter. So we are looking at that -- actively looking at that and what our alternatives are? But none of that is contemplated in the guidance at this point.
Operator: Your next question comes from the line of Vincent Colicchio from Barrington Research.
Vincent Colicchio: Yes. Joyce, I'm curious on maybe your thoughts on the economic outlook? And are you seeing any signs of economic weakness in any of your geographies or verticals?
Joyce Mullen: So thanks, Vince. So far, we are not. And we're pretty proud of the organic growth that we're seeing sort of across all verticals and all segments. So we're starting to hear some hints from our OEMs that there's slight, some concern around consumer demand. But we're not -- we don't participate there and so that's not impacting us. But we're watching that carefully. So -- but we have not seen any sort of pullback at all so far. I think I heard one customer say, "hey, we're taking a look at kind of our spend in the second half of the year," but that's one customer out of thousands so far. So knock on wood but so far, it looks strong.
Vincent Colicchio: And on the services side, how would you expect the growth to ramp which quarter should be strong as moving forward for the balance of the year?
Joyce Mullen: So our bookings have been strong for the last 4 quarters, where we would expect to see that translate going through the year. And I think you'll start to see just because of the difficult compares on the hardware side, we'll start to see services growth to be equal or higher than product growth in the back half of the year.
Operator: And ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
