Avnet, Inc. (AVT) on Q2 2022 Results - Earnings Call Transcript
Operator: Please standby. Our presentation will now begin. Welcome to the Avnet Second Quarter Fiscal Year 2022 Earnings Call. I would now like to turn the floor over to Joe Burke, Vice President of Treasury and Investor Relations for Avnet.
Joe Burke: Thank you, operator. Earlier this afternoon Avnet released financial results for the second quarter of fiscal year 2022. The release is available on the Investor Relations section of the company's website. A copy of the slide presentation that will accompany today's remarks can be found via the link in the earnings release as well as on the IR section of Avnet's website. Lastly, some of the information contained in the news release and on this conference call contain forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Such forward-looking statements are not the guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in Avnet's most recent Form 10-Q and 10-K and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this presentation and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this presentation. Today's call will be led by Phil Gallagher, Avnet's CEO; and Tom Liguori, Avnet's CFO. With that, let me turn the call over to Phil Gallagher. Phil?
Phil Gallagher: Thank you, Joe and thank you, everyone, for joining us for our second quarter fiscal year 2022 earnings conference call. I hope your 2022 is off to a great start. As many of you are aware, our priority since I took the helm has been to make durable changes to our business that would yield more consistent results, drive sustainable growth and position us to capture share across regions and segments. I am pleased to say our team's focus on execution has yielded strong competitive gains and financial performance which is again evident in our second quarter results. In the quarter, revenues were $5.9 billion, up both sequentially and year-over-year and our adjusted diluted earnings per share was $1.51. Our adjusted operating income increased 21% from the prior quarter and our adjusted operating margin also increased sequentially to 3.7%. We are competing favorably across the board but we're particularly pleased to see further evidence that Farnell is a needle mover for total Avnet. Looking at our core Electronic Components business on Slide 5. Revenues were up both sequentially and year-over-year in the quarter and we posted sequential growth across all 3 geographic regions. EMEA and Asia delivered solid results, while we saw a nice rebound in our Americas region which was up double digits year-over-year. We were pleased with the Americas team's ability to maintain expense levels while capturing significant business opportunities from new customers and expanded scope of work from existing customers and that will be critical to continued success in the region. We're especially excited about the prospects for the region as 23-year company veteran, Dayna Badhorn, takes the reins as the new President of the Americas. In her prior positions at Avnet, Dana has served in sales management, supplier management and customer technical support and most recently, as our strategy leader, where she played an integral role in identifying growth opportunities to enhance Avnet's overall business portfolio. We are confident she will leverage her breadth of knowledge in guiding the Americas team to capture market share as well as new and expanded business opportunities with existing customers in the future. Our book-to-bill ratios at the end of the quarter remained strong. Lead times remain extended with certain products like microprocessors, microcontrollers and power continue to have extended lead times. We experienced continued strong demand in key verticals such as automotive, industrial, defense, communications and health care, pretty much across the board. We continue to tightly manage our backlog and we're satisfied with our inventory levels which increased later in the quarter, primarily to support past dues and firm orders. It should be noted that investment is usually made in the December quarter to support the traditionally strong start to the calendar year in the Western regions. Further, our continued investments in digital and design tools and field application engineers are paying off as demonstrated by another strong quarter of design and engineering activity across all regions. Strong levels of design registrations and wins in prior quarters resulted in record demand creation sales and gross profit in the current quarter. Turning to Farnell on Slide 6; sales were up 35.3% year-over-year to $441 million with notable performance from Farnell's Americas business. We continue to execute on our commitment to our Farnell segment. We added over 22,000 SKUs in the quarter which gets us to about 55% of the way toward our plans to add up to 250,000 SKUs through the fiscal year 2022. Supplementing our inventory investments, we're continuing to enhance and invest into Farnell's e-commerce capabilities. In the second quarter, 54.5% of total sales and 71.5% of total transactions were placed through Farnell's e-commerce platform. With additional critical updates to the platform and sustained investment in improving the user experience, we expect we'll continue to see increased traffic and new customer acquisitions in the quarters to come. In summary, we're pleased with our performance in calendar year 2021 and feel that the business is well positioned to weather macro challenges and continue to capture exciting new opportunities heading into 2022. Our incredible employees have demonstrated their strength and commitment to the business and our customers over the last year and I'm confident in our team's ability to achieve even greater success in the quarters to come. With that, let me turn the call over to Tom to report on the financials for the quarter. Tom?
Tim Liguori: Thank you, Phil. Good afternoon, everyone and thank you for attending today's call. As Phil stated, we are pleased with our results this quarter. I am encouraged by our momentum as we head into the second half of fiscal year 2022 and I'm excited to share some highlights from the second quarter. Turning to Slide 8; our revenues of $5.9 billion and adjusted EPS of $1.51 both exceeded guidance. Consistent with our objective of growing higher-margin businesses, our Farnell revenues grew 35.3% year-over-year, while Electronic Components grew 24.9%. Our gross margin improved to 12.2%, while our adjusted operating expenses continued to decline both as a percent of sales and as a percent of gross profit dollars. Our adjusted earnings per share of $1.51 is a company record and provided a return on invested capital of 12.5%. Narrowing in on our two operating segments; year-over-year Farnell revenues grew 35.3% to $441 million and Electronic Components grew 24.9% to $5.4 billion. We continue driving operating margin growth, posting operating margin of 3.5% for Electronic Components and 13.7% for Farnell. Solid execution in our core business and continued progress with e-commerce and expanding inventory breadth and Farnell remain key priorities and were critical to our achievement of an adjusted operating margin of 3.7% for total Avnet in the quarter. Moving to the second quarter income statement on Slide 10; gross margin of 12.2% was up from 11.8% last quarter, primarily due to sequential margin expansion in Farnell as well as strong pricing in all businesses. Compared to the prior year quarter, gross margin improved by 121 basis points. Adjusted operating expense of $498 million were up $17 million or 3.5% sequentially, primarily driven by costs associated with higher volume. As a percent of revenue, adjusted operating expenses declined to 8.5% from 9.3% in the prior quarter. On the non-operating front, interest expense decreased $1.2 million sequentially to $21.6 million. We recorded foreign currency transaction losses of $3.2 million which represents an improvement of $2 million over the prior quarter. We booked a 23% adjusted tax rate in the second quarter, the high end of our guidance range. On Slide 11, we highlight results across our Electronic Components segment. Sales growth across every region, Americas, EMEA and Asia, contributed to the 24.9% year-over-year sales growth to $5.4 billion in the quarter. As Phil noted, we were especially pleased by our performance in the Americas which grew sales double digits year-over-year and is poised to sustain solid growth in the seasonally strong third quarter. Our Electronic Components operating margin of 3.5% improved 31 basis points from last quarter, with all regions contributing to the sequential improvement. Turning to Slide 12; Farnell achieved another solid sales quarter with revenues totaling $441 million. Farnell's operating margin increased 276 basis points sequentially to 13.7%. The Farnell team continues to improve the business through investments in SKU expansion, e-commerce capabilities, our online engineering community and new product introductions, all major contributors to sustainable operating margins. Turning to cash, liquidity and the balance sheet on Slide 13; we increased receivables and inventory in the second quarter as customer demand remains strong. Our liquidity position remains solid with cash and equivalents of $168 million and $1.5 billion of available lines of credit. Our gross debt leverage was 1.9 and net debt leverage was 1.7. The cash outflow of $232 million was primarily the result of an increase in accounts receivable from higher sales as well as inventory which we secured late in the quarter. We anticipate a positive cash flow in the third quarter as we collect our accounts receivable and maintain our control of inventory and payables. Turning to Slide 14; we repurchased 921,000 shares in the quarter and our dividend of $0.24 is a 14% increase over the prior year. We remain committed to increasing shareholder value by delivering a reliable and increasing dividend, opportunistic buybacks and investments in both organic and inorganic growth. Let me wrap up on Slide 15 with guidance. Our third quarter guidance today assumes ongoing strong demand, continuing supply constraints and COVID restrictions similar to the December quarter. For our fiscal Q3, we are guiding revenue in the range of $5.4 billion to $5.8 billion and adjusted EPS in the range of $1.45 to $1.55. In summary, we remain committed to excellent execution in our core business, continued growth and margin expansion in Farnell and reliable shareholder returns. With that, I'll turn it over to the operator for questions and answers.
Operator: Our first question is from Nik Todorov with Longbow Research. Please proceed with your question.
Nik Todorov: Thanks and good afternoon, guys. And congrats on great results and execution. Phil, a couple of quarters ago, you talked about how you see the current conditions sustainable at least through the March quarter. We're at the March quarter now. Can you give us an update how you're thinking about the sustainability of those conditions? And related to that, are you seeing any changes in customer behavior recently?
Phil Gallagher: Yes. Thanks, Nik. I did say that a few quarters ago and looks like I was right, at least to date. We'll continue to see strong demand, Nik. And while it's obviously difficult to forecast how long the supply constraints and the high demand will last, most of the market participants, including our suppliers and I think it's going to extend well into the calendar year. So we guided through March. It definitely feels like it's at least going to be pretty solid through June and then we'll take it from there. There's a lot of variables, right, as we outlined in the script. But as we see it right now, the bookings are strong, backlog's strong, demand's high and products are still pretty extended on lead time.
Nik Todorov: Okay. Second question, you guys have achieved the near-term margin targets that you gave several quarters ago. How should investors think about the next near-term margin targets as we go forward?
Phil Gallagher: Tom, will you take that?
Tim Liguori: Sure. Nik, in the near term, margins, we should be staying in the high-3% range, 3.7%, like it was this quarter for the foreseeable future. Foreseeable future would be definitely March and most likely June. Further out and I'm talking a year, two years down the road, assuming that we have a growing economy, today, we're making investments in core; in Farnell, we're doing SKUs, e-commerce, online community investments. So we see a path to get over 4% more in the mid to longer term. Part of what gets us there as well is what you saw this quarter with growing our higher-margin businesses at a faster rate than our base distribution business. You saw that with Farnell. And with Farnell being over 13% -- and applause to the Farnell team, that was very, very nicely done. They seem to be in the race now with Americas if we can expand margins faster. But with those investments and with growing Farnell, that's our path longer term.
Nik Todorov: Okay, great. And speaking of Farnell, sequentially, it seems sales were down. But obviously, margins increased quite nicely. Can you give us the puts and takes between that dynamic in Farnell in the quarter?
Tim Liguori: Yes. Part -- the sequential revenue, I think it was 3%, is a very slight decrease. That was mix. That was a single board computing and that's a product that we had shortages in. So there were some lower revenue, could also contribute part of that to seasonality. But that said, the mix of business was higher margin. The gross margins expanded, to be honest with you, several hundred basis points. It did a very, very good job with pricing, mix, management and things of that nature. So those are the puts and takes. Phil?
Phil Gallagher: Yes. No, I'll just add to that. Thanks, Nik. And year-on-year is 35% growth. So we were really pleased. But I'll highlight the seasonality aspect of it, particularly in Europe which is our largest piece of the Farnell business. Europe does tend to shut down a bit more firmly, if you will, than the other regions in December. So with the concentration mix of Farnell in Europe, we expected that.
Nik Todorov: Got it. Thanks, guys. Good luck.
Phil Gallagher: Thanks, Nik.
Tim Liguori: Thanks, Nik.
Joe Burke: Operator, is there another question on the line? Hello?
Tim Liguori: Hello, everybody. Give us a minute while we check with the operator.
Nik Todorov: Hey, this is Nik. Can you guys hear me?
Phil Gallagher: Yes, Nik. You can move around.
Joe Burke: This is Avnet, we can hear you.
Nik Todorov: Yes, so I'm on the call. I don't know -- I don't know, it seems like my mic is still on. I'm not sure what's going on.
Operator: I apologize for the technical difficulty. One moment and we will resume the question-and-answer session.
Phil Gallagher: All right, Nik. We'll catch up with you later then, Nik.
Nik Todorov: Okay.
Operator: Thank you. Our next question comes from Melissa Fairbanks with Raymond James. Please proceed with your question.
Melissa Fairbanks: Hi guys, great quarter. Really strong margin performance in both businesses, very impressive results overall. Last quarter, you guys mentioned that pricing was a 200 basis point tailwind in Farnell. Just wondering how much benefit you saw in the quarter in the December quarter. And then also, typically, you're able to pass through higher costs on the Electronic Components side. Just wondering if you saw any margin benefit there as well or if that was just kind of the benefit from mix?
Tim Liguori: Yes. So pricing benefited across the board, good pricing discipline. Farnell, if you took out the benefits of the market, including pricing, about a 9.5% to 10% operating margin which is slightly ahead of where we expected them to be by this time but things are going very well. And the good news is on the 9.5% to 10%, there's plenty of roadway ahead to continue to improve that.
Phil Gallagher: Yes, Melissa and I'll just add on the overall price increases. We particularly we have customer contracts in place, where we are passing those on as quickly as we can. Keep in mind, we're getting -- 50-plus suppliers have raised prices half a dozen times in the last year or so. But we don't see as much a margin percent increase as we do dollars in that, right, from an ASP standpoint on those parts. There's other competitive pressures in other products; so that's a general statement. There might be -- there's some opportunity out there in the -- where we don't have contracts to increase the margins. But where we have them, we typically just pass that on to the customer.
Melissa Fairbanks: Okay, perfect. Great. As a follow-up, I'm just wondering it's pretty clear the industry is starting to better understand the value of supply chain partners. Just wondering if you see any opportunities out there emerging for some inorganic growth or maybe different areas, different markets you might be able to address organically?
Phil Gallagher: We're definitely seeing people, customers and suppliers -- we've already appreciated what we do, okay, from a supply chain standpoint, the expertise we bring to the market. We're seeing an increased awareness and an increased interest from customers who're doing business with, they want to do more with us or where there's maybe some large customers or suppliers that haven't utilized us in certain cases that are now bringing us in with our supply chain. We call them supply chain architects, Melissa, where we're building out some new supply chains. And that takes a while. You don't see the immediate impact on that. But there's some others call large OEMs that maybe weren't traditionally utilizing our services that are now coming into play. And they -- those opportunities, we would see them as organic opportunities at this point. And they're very real and they're very sizable; it's exciting.
Melissa Fairbanks: Excellent. Great. Thanks very much, guys.
Phil Gallagher: Thanks, Melissa.
Operator: Thank you. Our next question comes from Matt Sheerin with Stifel. Please proceed with your question.
Matt Sheerin: Yes, thanks. And hello, everyone. Phil, just another question, if I can, regarding the pricing environment. Is there a way that you can tell the growth rate, that 20% plus year-over-year growth rate that you saw in the business, how much of that is related to just the pass-through of higher ASPs which have been pretty broad? Do you have any sense of that?
Phil Gallagher: Yes. We'll just continue to try and extrapolate that out, Matt. And the best we can do now is what we're looking at, it's a few percentage points. It's not as large as some would believe. And the reason is, even within a supplier's portfolio, they're raising -- they might be raising prices in certain areas but not in others. And then there's the balance of what we sell that they're not raising prices at all and it's still -- they're flat or they're competitive, right, where you still need to go win that business. So it's kind of averaging out where it's more demand than it is inflation. But there's, let's call it, 0% to 3% or something along those lines at this point. We're continuing to study that one.
Matt Sheerin: Okay. And then you talked about the margin tailwind that you're seeing from Premier Farnell on the premium pricing. Are you getting a sense of that benefit in the core business as well? I mean margins obviously are up significantly year-over-year. How much of that is attributed to just favorable pricing and less typical price competition that you normally see?
Tim Liguori: Matt, so on the core side, 20 to 30 basis points. So it's much more pronounced on the Farnell side.
Matt Sheerin: Okay. And then, Phil, just a different question just regarding the whole supply environment. It looks like you were able to produce some significant upside. So you're able to get your hands on components. You talk about some building inventory late in the quarter. But still a lot of your customers, including some big EMS guys, are missing numbers and guiding down because they can't get parts. So are you still seeing a mismatch of parts? How are you helping your customers manage that so that there's not an inventory mix and negative mix? And any signs of when this starts to ease at all?
Phil Gallagher: Well, it's a great question. I got to give a shout-out to our asset and procurement teams who're doing a really good job and our supply chain team is working with our suppliers and customers. I mean we're taking thousands of these MRPs, Matt, as you know, on a weekly, monthly basis and trying to balance all those SKUs with the demand environment and the supply environment from the suppliers. So I would just say the team has done a great job. And yes, I'm still involved, as it was today, with multiple customers with the OEM and EMS space with expedites. And I know in some cases, there are certain chips that just aren't available and it's causing some constraint in some of them hitting their numbers. I'm aware of what you're referring to. As far as the -- looking to the future, if you will, it's tough to call. I mean I'm sitting here looking at the lead times as I'm talking to you and there's not been a lot of relief in the lead times, whether it be in the -- from ceramics to microcontrollers to discrete cell and power. So it's pretty broad based at this point in time. The demand environment looks really solid and we're -- in some cases, we're going to be hand-to-mouth working the issues. So it's just -- Matt, it's just robust across the board, as I said, in transcripts as we got -- every vertical pretty much is pretty hot. And then that further exacerbates the amount of technologies that are impacted. So I'll just say that we're -- the more we get involved with our customers upfront, the more visibility they give us. And with our supply chain folks, we'll continue to do the best job we can to take care of them.
Matt Sheerin: Okay, great. And just lastly, you talked a couple of times about the margin expansion you're seeing in North America components, where I know that over the last three or four years, it's underperformed other segments because of some prior issues. How much progress have you made there? And at what point do you expect that to get to kind of the corporate margins or above?
Tim Liguori: Matt, they made a big lead this last quarter and it's very promising. More to come in the March quarter from Americas. And when would they get to where we expect? I would say, four to six quarters.
Phil Gallagher: No, I think that's right, Tom. It's -- yes, we've been very transparent with that, Matt. The two needle movers for us are Farnell and the Americas. Europe and Asia, it's kind of stay the course, right, steady as she goes. And from a percentage, they're probably 60% -- 55%, 60%, 70% of where we need them to be. And we have a path to get to the four to six months to get to where we need to get to. And of course, Farnell's kind of where we need them to get. A little bit more to go there, too, for Chris Breslin who's listening but they really jumped out.
Matt Sheerin: Okay, sorry. Thanks a lot.
Phil Gallagher: Thanks, Matt.
Operator: Thank you. Our next question comes from Ruplu Bhattacharya with Bank of America. Please proceed with your question.
Ruplu Bhattacharya: Hi, thanks for taking my questions. Phil, I was wondering if you can give us your view on overall inventory in the channel. I'm just talking about your inventory but your view of distribution overall and inventory at OEMs. Do you think that there is any buildup of inventory, maybe in Asia? I mean are you -- do you think that overall inventory in the channel is still pretty lean and there's no real buildup yet?
Phil Gallagher: Yes. It's a great question, Ruplu. And I wish I had the crystal ball to be able to see in everybody's inventory exactly. We don't have that. I'm sure there's some buildup out there but it's tough to pinpoint how much and where it is. I know our own inventory. We're really pleased with what we're able to do with the inventory position which is positive, as we pointed out a little bit earlier in the access we've had. And it's clean. So when we track, we're trying to track inflated bookings, inflated forecast and we track those as they come in and see where we might see some buildup. And we catch that and our asset teams and supply chain team. We see someone buying excessively to what they're typically forecasted -- and historically, we catch that and have a conversation or cut it back, to be candid with you. But I'll just speak with Avnet, we don't see excess inventories at this point in time to what the demands are. Again, tough to call that and what's in whip out there, where some customers can't get components and they're holding up a product for -- to get a couple of chips. I'm sure there's some of that out there. But really tough for me to make that call.
Ruplu Bhattacharya: Okay. No, that's understandable. I understand. Phil, you had said -- in relation to Farnell, I think it was a couple of quarters ago, you said that you have a target of getting to 250,000 SKUs by the end of fiscal '22. Just wondering how you're tracking on that? And do you need to hire any more salespeople or field application engineers? And how should we think about the SG&A, OpEx costs?
Phil Gallagher: Yes. So on the SKUs, we're about 55% to 60% of the way there, Ruplu. And some of that expansion is going to be availability of product, right, getting it -- it might have it on backlog but maybe it's not shipping yet. So we're tracking -- Chris and the asset teams in Farnell, we're pleased with that. And some of that is -- I mean it's already paying off. And some of that, we gave credit in the script to the Americas Farnell team. We don't talk about them a whole lot. That's the Newark team. We're expanding the SKUs and that they're benefiting from that to get more on-the-board, if you will, component growth in Newark where they do a lot of MRO and test and measurement. And we're starting to see that really pay off. So we're on track. If we can accelerate it, we will because the returns in Farnell are terrific. As far as account managers and FAEs, that's more a question for the core, I would think. Farnell has a sales team but they don't really have many, if any, FAEs as we traditionally call them. They're well-staffed from a sales standpoint. And on the core, we're continuing to invest there. Our team has greenlight to invest in account management, greenlight to invest in field application engineers. And we think we're well staffed and we'll continue to staff where we need to. And then, of course, a lot of that traditional technical support is going to come from digital as well, right? So we're putting more and more investment in the digital design support in addition. That's in addition to the field application engineers.
Ruplu Bhattacharya: Got it. I'm going to try and sneak one more in and I apologize if you've already addressed this. But are you seeing your suppliers continue to raise prices? And at some point, do you think some of that pricing has to come down? And if it does, in some time in 2022, how quickly would you have to pass those savings on to your customers? Is there a delay? Or do you think pricing can remain elevated over the next couple of quarters?
Phil Gallagher: That's a good question and again a tough one to answer. The first part is, yes, we're still seeing suppliers increasing pricing. And as long as they're getting -- there's a lot of additional cost in the supply chain from fab, wafer through logistics and plastics and chemicals, et cetera, et cetera. So as they get that, they're going to continue to pass that on as they really have to and should and we'll continue to do the same. On the correction side, based on supply and demand, we'll see. We'll see what happens with the average selling prices this go around. Will they go down as they have typically? I'm not sure that, that they will, frankly. I think there'll be some but I'm not sure how accelerated it will be and how much. It's really tough to call. And we'll remain competitive in the marketplace. If we have to adjust our resales and along with costs coming down, of course, customers have that information. They know what's going on and we're not going to hide that from them. We'll -- we've got long-time partnerships with our customers. We'll work with them on that. But I think it's a -- I think it's a little ways away right now.
Ruplu Bhattacharya: Okay. Thanks for all the details. Congrats on the execution. Thank you.
Phil Gallagher: Thanks, Ruplu.
Operator: Thank you. Our next question comes from Jim Suva with Citigroup. Please proceed with your question.
Jim Suva: Thank you. And now that we've been through this pandemic for two years now, I'm wondering if your suppliers, the chip companies have talked to you about different agreements, whether it's you hold more inventory, you hold more buffer for them, risk mitigation for future shocks, any of that going on? Or is it just still right now kind of fork-to-mouth selling stuff as quickly as you can? I was kind of wondering, structurally, if there's any thoughts about adjusting what you get paid and what you hold to prevent risks in the future.
Phil Gallagher: Jim, the answer's yes. We're definitely having some different conversations with suppliers. They're actually -- Jim, it's not just suppliers, it's on the OEM side as well in the customer side that the -- they're actually, in some cases, taken us in with them to some of the customers, the end customers, to help reevaluate their supply chain, reevaluate buffers, they just-in-time go too far, right? We don't need just-in-case but the just-in-time go a little too lean, right? So yes, those conversations are for sure happening. And definitely the suppliers are talking about longer-term agreements as well, okay? And we're in the middle of those with the customers. So yes, the dynamics is definitely changing. And how dramatic it will be, Jim, at the end of the day, not sure. But I think some of them will be permanent. And as we get into some of these new arrangements with the suppliers and the customers, it's -- I see it as really positive as we become the -- we call it the orchestration. We do the orchestrating of the supply chains and with the command controls and help everybody get more visibility to what's going on in the marketplace as well. I think that's part of the challenge. I think -- we think some companies have lost the visibility of where the manufacturing is and the supply chain supporting them; so we see it as a positive.
Jim Suva: Thanks so much. Thank you.
Phil Gallagher: Thanks, Jim.
Operator: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Phil Gallagher for any closing remarks.
Phil Gallagher: Great, thank you very much. And thanks, everybody, for joining the call and the questions. So I want to just -- thanks for attending today's earnings call and I look forward to speaking and hopefully seeing, you all again in our -- sometime between now and the first fiscal third quarter earnings report in April. Have a great rest of the week. Thanks.
Operator: Ladies and gentlemen, this does conclude today's conference call. You may disconnect your lines at this time. Thank you for your participation.
