CSW Industrials (NYSE:CSW) Q1 2020 Earnings Call

0:00 Greetings and welcome to the CSW Industrials first quarter 2020 earnings call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Tom Cook. Mr. Cook, you may begin.

0:29 Thank you, Jerry. Good morning, everyone, and welcome to CSW Industrials Fiscal First Quarter 2020 Earnings Call. Joining me today are Joseph Armes, Chief Executive Officer of CSW Industrials, and Greg Branning, Chief Financial Officer. If you have not received the earnings release, it is available on our website at www.cswindustrials.com. This call is being recorded. A replay of today's call will be available, and details on how to access the replay are in the earnings release. During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results could materially differ because of factors discussed in today's earnings release, in the comments made during this call, and in the risk factors section of our annual report on Form 10-K and other filings with the SEC.

1:18 We do not undertake any duty to update any forward-looking statements. This call will also include an analysis of adjusted operating income, net income, and earnings per share, Thank you, Tom. Good morning, and thank you for joining our fiscal Q1 conference call.

1:55 I will begin with a high level discussion of our results for the quarter followed by segment level remarks and a review of our end markets. I will then hand the call off to Greg for a closer look at the numbers. Our fiscal year is off to a strong start as we saw our consolidated revenue increase 14.2% to 102.3 million year over year, 9.6 of which was organic. We continue to see widespread growth across the end markets we serve and help drive the results we experienced this quarter. Our first quarter adjusted earnings was 98 cents per diluted share, which marked an increase of 28.9% over the prior year. This growth was due to leverage on sales, margin expansion initiatives and the benefits from strategic actions we took last year.

2:46 Especially notable this quarter was the continued strength in operating margin that our specialty chemicals business achieved which continues to reflect the benefits of leverage on sales and our efficiency initiatives. Next, I would like to focus on capital allocation. On organic investment, as we previously discussed, we have increased our capital spending in fiscal 2020 to a range of 2.75 to 3.25% of sales, which will help enhance and diversify our product portfolio through new product introductions. We are already seeing early success of this internal initiative which will further enhance our ability to leverage our distribution channels and add value for our customers through offering best-in-class products to serve their needs.

3:34 Moving to M&A, in April we announced the acquisitions of MSD Research and Peterson Metals to fold into our industrial product segment which strengthened the breadth of our product offerings, increased our geographic coverage, and exploited our market positioning in HVACR and building products in markets. We are pleased with the initial results delivered by both of these businesses. This reflects the fact that we have spent significant time over the past two years upgrading our infrastructure and talent within both industrial products and specialty chemicals to support and integrate acquisitions. As a result, we believe that both segments of the company are now in a much stronger position to execute on potential opportunities that meet our internal hurdle rates for risk-adjusted returns.

4:23 Moving to the return of cash to shareholders, in July we declared our second quarterly dividend of 13.5 cents per share, which is payable on August 15, to shareholders of record on July 30. This quarterly rate indicates a 54 cents per share dividend on the stock for the full year, which is just shy of a 1% yield. Overall, we will continue to direct capital to the highest risk-adjusted returns available. Our strengthened cash flow profile allows us to execute on a variety of capital allocation strategies and is due in part to the strategic actions we have taken over the past few years. Furthermore, our cash position, revolver capacity, and minimal debt give us ample flexibility to allocate capital across the range of investment options available to us.

5:13 Moving to our segment performance, sales in our industrial products business were up almost 18% for the quarter. Higher revenue mainly resulted from increased sales volume in HVAC-R and acquisition-related revenue of $4.1 million. While we are essentially only one quarter into our ownership of MSD Research and Peterson, we are very pleased with the performance of both businesses thus far, which is ahead of our original expectations. We've completed the integration of MSD, and Peterson's integration is progressing well. The commercial teams in our architecturally specified building products businesses have been trained with the Peterson commercial team to allow for cross-selling of products. We want to remind investors that our industrial products business can be lumpy based on distributor order flow, construction labor availability, and weather.

6:05 As a result, while we experienced an easier comparable period in the first quarter, we expect to have a tougher comparable period in the second quarter of fiscal 2020. Segment level adjusted operating income came in at $17 million, or 26.8% of sales, compared to $13.6 million, or 25.2% of sales in the prior year. Margin performance remained strong in the quarter, and we believe that while further margin expansion will be modest, we do have the opportunity for incremental improvement through added leverage on sales. Turning to our specialty chemicals segment. We posted top line sales in the first quarter of $39 million, up 9.1% over the prior year. Growth was driven by increased sales volumes across rail, energy, architecturally specified building products, and mining in markets.

6:57 Adjusted operating margins of 17% were the highlight of segment level performance and reflected a 330 basis point improvement against the prior year period, demonstrating the operating leverage on increased sales and the benefit of prior years efficiency initiatives. On a go-forward basis, we believe mid-teen margin levels for this segment are sustainable, and moreover, we still have room to further optimize the business incrementally and leverage our cost structure with increased sales. Now turning to our end markets. Overall, we still are observing solid demand across the end markets we serve. In HVACR and plumbing, we continue to see strength for our product offerings and still expect to see growth outpacing the end markets driven by new product introductions and enhanced go-to-market strategies.

7:49 As a reminder, new housing starts are not as correlated to demand in this end market as repair and remodel activity on the installed base serves as a stronger barometer and represents a larger portion of the market opportunity. In architecturally specified building products, we continue to see strong bidding and additional cross-selling opportunities driven in part by the acquisition of Peterson, which is combined with SmokeGuard, Balco and Greco. We believe the increased diversity of our product offerings and categories that we serve help provide a level of insulation for us from macro exposure. Moving to energy, commodity prices during the quarter edged up given geopolitical uncertainties. Despite some weakness in Canada, our sales volumes were up in the quarter as rig count increased slightly.

8:37 In our rail business, which primarily consists of trackside applicators and lubricants and generally follows rail traffic, we saw strong growth for the second consecutive quarter. Some of this growth was the result of seasonal changeover of lubricants and varies due to weather. But as mentioned last quarter, this business is more volatile quarter to quarter and is generally a GDP growth type business on an annualized basis. To that end, and based on macro forecast, we would anticipate modest growth throughout fiscal 2020. Finally, in our general industrial end markets, demand continued to be positive in the first quarter as it grew in excess of GDP. We continue to monitor the industrial end market for signs of an industrial slowdown, as reported by peers, but to date, we are pleased with our above market performance.

9:27 To conclude, fiscal 2020 is off to a strong start, and we are well positioned to build on the momentum generated during the first quarter. We still see health across our end markets and opportunities for us to continue to win in the marketplace. Execution remains a priority and the primary driver of our market growth opportunities. We continually evaluate our operations to identify areas where we can further optimize our business and drive additional margin expansion opportunities. And we expect to make incremental improvements in both business segments on a continual basis. We believe all these efforts will further enhance the free cash flow generation of the business and Drive Long-Term Shareholder Value. Now with that, I'll turn the call over to Greg for a closer look at the numbers.

10:15 Thank you, Joe, and good morning, everyone. Our consolidated revenue during the fiscal first quarter of 2019, of 2020, increased 14.2% to $102.3 million compared to $89.6 million in the prior year period and 9.6% of this growth was organic. The higher revenue was driven by increased sales in both the industrial products and specialty chemicals segments, mainly due to increased sales volumes into the HVACR end market, as well as smaller increases in the architecturally specified building products, rail, energy, and mining end markets, coupled with the inorganic revenue from our recent acquisitions. Looking at our segment-level revenue and operating income, in our industrial products segment, revenue was $63.4 million, which was up 17.6% over the prior year period.

11:10 The higher revenue was mainly the result of increased sales volume in HVACR coupled with acquisition-related revenue. As we look at the balance of the year, these acquisitions are subject to the normal seasonality we see in this segment, so we expect the contribution will moderate as we exit the peak of the season. Our GAAP segment operating income increased to $17 million, a 22.3% increase over the prior year. Segment adjusted operating income as a percentage of sales improved 160 basis points to 26.8%. We are pleased to see the incremental margin improvement on higher volume, which largely results from the 25 to 35% fall through from incremental organic volume. I will note that we had no adjustments in the current year results, but we did have adjustments in the prior year as a result of some favorable One-time items primarily gains on sales of facilities, which we called out last year.

12:08 The specialty chemical segment revenue increased 9.2% to $39 million over the prior year period. Increased sales were driven by higher volumes in the rail, energy, architecturally specified building products, and mining end markets. Gap segment operating income was $6.6 million compared to the prior year period of $6.5 million. Segment adjusted operating income as a percentage of sales improved 330 basis points to 17% compared to the prior year period of 13.7%. This improvement in operating margin was related to the efficiency initiatives implemented last year as well as the anticipated 25 to 30% fall through on incremental organic volume. Just as I mentioned with industrial product segment, I will note that we had no adjustments in our current year specialty chemicals segment results but we did have adjustments in the prior year as a result of some net favorable one-time items, primarily gains on sale of facilities, which we called out last year.

13:08 As we move to our consolidated results in the first fiscal quarter, our consolidated gross profit increased to 47.2 million, up 12.1% over the prior year period. Our gross margin as a percentage of sales decreased 80 basis points to 46.2% compared to 47% in the prior year. This decrease in gross margin was primarily the impact of the net one-time adjustments in the prior year that did not recur primarily the gain on facility sales. Consolidated operating expenses in the quarter were $26.9 million or 26.3% of sales compared to the prior level of $24.3 million or 27.2% of sales. The 90 basis point decrease in operating expense as a percentage of sales was driven by sales leverage partially offset by increased personnel related costs and costs associated with acquisitions.

14:01 Consolidated operating income for the first quarter was $20.3 million or 19.8% of sales compared to $17.7 million or 19.8% of sales from the prior year. When comparing current year operating income which had no adjustments to the prior year adjusted operating income of $15.9 million We saw an increase of 4.4 million or 27.7%. Fiscal first quarter consolidated operating margin was 19.8% of sales compared to the prior year adjusted operating margin of 17.7% of sales, a 210 basis point increase. The increase in operating margin was driven by leverage on sales and prior year efficiency initiatives.

14:46 The effective tax rate on continuing operations for the quarter, June 30th, 2019, We now expect our fiscal 2020 effective tax rate to be in the range of 23 to 26%. Reported net income from continuing operations increased to $15.3 million or $1.01 per diluted share compared to $14 million or $0.88 per diluted share in the prior year period. Adjusted to exclude one-time items in the prior year and applying a normalized tax rate in both years, adjusted net income from continuing operations in the fiscal first quarter increased 23.3% to $14.8 million or $0.98 per diluted share compared to $12 million or $0.76 per diluted share in the prior year period.

15:36 Moving to our cash generation and balance sheet, our operating cash flow from continuing operations was $9.7 million in the first fiscal quarter 2020 compared to $11.8 million in the prior year period. The decrease was the result of increased working capital in fiscal Q1 to support our increased sales. Our net debt at quarter end was $11.6 million as we closed the quarter with $10.2 million of cash on our balance sheet. We had $239.5 million of borrowing capacity remaining on our revolving credit facility, which provides us ample flexibility to fund our growth and capital allocation strategy, including acquisitions. With that, I'll turn the call back to Joe.

16:18 Thanks, Greg. The solid foundation of our strong results in fiscal Q1 positions us very well for the balance of fiscal 2020. We intend to continue our integration and efficiency initiatives and to offer best-in-class products to serve our customers and help their businesses grow. Let me take this opportunity to thank all of my colleagues at CSW Industrials who collectively own over 5% of our company through our employee stock ownership plan. and also thank all of our other shareholders for their continued interest in and support of our company. With that, operator, we're now ready to take questions. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad.

17:03 A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question is from John Panmenteng, BJS Securities. Please go ahead, sir.

17:29 Good morning, gentlemen. Thank you for taking my questions, and congrats on the strong results.

17:34 Thanks, John. Thanks, John.

17:36 Joe, you've said for maybe a year now that there is an extended HVAC maintenance and upgrade cycle ahead of you. You mentioned that it's not tied to housing starts. Has that played out as you expected, and does that trend have legs? And if it does, how long do you think that goes on for?

17:52 Yeah, John, our primary thinking around that is that it's really a business about installed base. And as the installed base has grown, repair, replacement, maintenance, all those things are good for us. New installs are good as well. but we're really highly focused on the installed base and the growth opportunities there in addition to our kind of what I talked about our enhanced go-to-market initiatives and strategies. I think we've seen an upgrade, a professionalization of our sales efforts and our marketing and some investment there that's really paying off nicely and so Notwithstanding the housing cycle and all of that, our business, we believe, is going to be resilient and continue to grow through the cycle.

18:43 Okay, great. And then from what you can see, were there any pull-ins or push-outs either from the architectural side or order timing maybe from the stocking side from your HVAC construction customers? I know sometimes it can get a little lumpy.

18:56 Yeah, we absolutely did see some projects move to the right in architecturally specified building products. and that's been a theme that you've heard quite a bit. I think some of that is labor shortage, some of that is just idiosyncratic to each individual project. I think weather can play a role in that, but there were some projects that got pushed to the right. On HVAC are I would say less of that. We would recommend that everybody look at the first half of the year versus the first half last year. Between Qs 1 and 2, you can have some lumpiness there. So the comp goes easier this quarter, be tougher next quarter. If you really look at the first half of the year, might be a better way to look at that.

19:48 Got it. OK, thank you. Speckham, it looked great. You touched on this. Your sales were better. You outgrew the markets. Industrials obviously look like they're slowing down across the markets. What's driving your improvement ahead of the market, number one? And number two, I think you did 17% operating margins, and you said mid-teens was the target. Any reason why it's not mid to high teens?

20:14 Well, it probably will be mid to high teens now, but... Yeah, we feel like we have really innovative, strong products. We have for some time. I think, again, we are marketing those better. Our go-to-market strategies have improved. We have moved into higher growth in markets and geographic markets for that, I think, in a very thoughtful way. And we're winning in the marketplace. And so we expect to continue to outgrow are in markets, and while most of those in markets, at least domestically, are GDP growth, we expect, there are markets outside the U.S.

20:59 where the growth can be higher, and we're exploiting those opportunities as well. But yeah, there's no question but that increased volume drives our margins there, and that will continue to be the story. And as we can continue to increase our volume and throughput through our facility, we'll see improvement in margins.

21:21 The other thing I would add, John, is, yeah, I think, you know, the mid to high teens makes sense given where we finish the quarter. The one thing that, you know, I think the reason why we focused on mid-teens is I'll just remind you and everyone else that we do have the seasonality in fiscal Q3. In both segments, obviously, it's more pronounced in industrial, but we do see it in spec chem as well. And, you know, as you've seen over the last few years, volume makes a big difference in that business. And so as volume falls off some in Q3 to that seasonality, it'll pull that margin down.

21:57 Okay, great. Thank you. And then just heading into Q2 on that business, do you see this momentum being sustained based on what you're seeing in July and August?

22:07 You know, it's early on and we don't provide guidance, but we're very pleased with the results so far in Q2. So we're not providing any kind of cautionary information at this point because we don't see any need to.

22:24 Okay, great. And then finally, just on the capital deployment, obviously you've done two acquisitions this year. You've initiated the dividend. What's next in your plan? How does the pipeline look for M&As? Do valuations look a little bit better, or do you see more opportunities, just more color on the whole process?

22:42 Yeah, John, I wouldn't say that valuations have changed, but I do think we're seeing more better opportunities. We're very pleased with the pipeline. I've had an opportunity to go through that very, very recently, and there's a lot of activity on that front. So I do think that's going to be a high priority for us on the capital allocation strategy. Otherwise, we're going to stay the course. We're going to... Allocate capital to the highest risk-adjusted return opportunities in front of us. And we were very pleased and very proud of the contribution that two seemingly small acquisitions made to our growth rate over and above organic. So 500 basis points of growth in the quarter from two really seemingly small acquisitions just proves that the acquisition strategy of singles and doubles I think would work really, really well over a long-term basis, and you think about the compounding effect of that.

23:42 So we're highly focused on the acquisition pipeline, highly focused on getting new products added to our distribution channels through acquisition, and I think we're going to continue to see success in that area.

23:56 I think the other thing is that from the standpoint of adding new products to our channel, that is a key focus for our businesses even more so probably continuing on the industrial products just because they've been at it longer and so with the leadership we have there They're doing a really nice job of looking to consistently add new products, some of which are causing the higher capital that we talked about last quarter and again this quarter that we'll see for the year. But a lot of it doesn't take capital. It's working with partners and being able to launch products that takes very little investment on our end but will pay off in nice organic growth.

24:40 Yeah, not to put too fine a point on that, John, but I mean, there are some products that we can just distribute, and it takes no capital whatsoever, and we can just put them through our distribution channels quickly. The margins are really attractive from that standpoint. There's no complexity really to speak of, and so it's really a nicely profitable business for us. So I think we are going to be and have been and continue to be agnostic in some respects as to how we fill and exploit that distribution channel. Thanks a lot, guys. Thank you. We have a question from Joe Mondillo, Sedoti & Company.

25:39 Please go ahead, sir.

25:42 Hi, guys. Good morning.

25:43 Good morning, Joe.

25:45 I'm just wondering about the acquisition. Number one, was that a sort of a normal quarter sort of run rate in terms of revenue contribution? And number two, how much did the acquisition contribute to either operating income or earnings? Joe, this is Greg.

26:09 I would say that from the standpoint of the revenue, obviously part of that revenue is in HVAC, and so there's some lumpiness there. You'll see a slightly diminished revenue number in fiscal Q3, so I wouldn't take it and annualize it, but it's not going to be significantly off of the annualization number either for the two acquisitions. And then from the standpoint of the profitability, both of them were profitable and they contributed nicely but not from a material standpoint given the fact that you've got purchase accounting and they're just starting out but we're very, very pleased with them and I would say both on the top line and the bottom line they exceeded our expectations.

26:57 Okay, and the DNA that you realized for the quarter just in terms of acquisition, is there any Sort of one-time type of stuff, or is that DNA that you saw in the quarter sort of a good run rate going forward?

27:09 Yeah, that's a good run rate going forward. I would say the only thing, just like any type of DNA, particularly on the depreciation side, our CapEx was, to no surprise, lighter than our guidance, if you will, of the higher capital expenditures. We only ended up at 2.2% of sales in CapEx in the quarter, so You'll see a little bit uptick in DNA, but it's not going to move the needle simply because of how depreciation flows out. Yep, okay.

27:44 Could you repeat the CapEx guidance again, actually?

27:48 Yes, it's between 2.75% and 3.25% of sale. Okay, great. The increase is being driven by opportunities in new product development, primarily in our industrial products area. The projects have been developed. This is buying equipment to produce the products.

28:16 And in what category would that be in? Is that HVAC or something else?

28:21 That's an HVAC.

28:23 Okay. So I also wanted to ask about the architecturally building products and sort of the visibility that you have. How does that – I believe this is more of a backlog-driven business. How has that backlog been trending, and how does that look like for going forward?

28:47 Yeah, John, this is Greg. As you know, we track that backlog really closely, and we look at it on a quarterly basis as well as a book to build – It's important that you just don't look at it at one point in time because like a balance sheet, it could fool you. But the good news is the backlog is up. If you back out the backlog primarily from the Peterson Metals acquisition because it's architecturally specified building products whereas the MSD is not, even if you back out the acquired backlog we are still up over prior year and we're up over the last four to five quarters so we're positioned well and expect to continue to see nice strength there but as Joe mentioned earlier we will continually caution people that you know when it comes to projects particularly in architecturally specified it can be lumpy due to labor shortages from our customers and in the marketplace and due to weather, but we're still very bullish and expect to see continued nice growth.

29:52 On a directional basis, just given what we've seen with the slowing of the economy, and you've even seen it in the non-res construction spending numbers as well as the Architectural Buildings Index, Have you recognized any sort of slowing in there, or is it still very strong? How would you characterize that?

30:16 Yeah, I'd say it's still very strong. And frankly, the commercial building indexes have been negative for some time now, and our backlog has built. And so at this point, we're not feeling it. And again, we think execution, providing really high-quality products and delivering those on time to our customers, Given our size, is a much larger driver than the macro trends at this point for us. And so we're very pleased with the backlog, very pleased with the growth in those businesses, and at this point are not experiencing for ourselves and our business any of that

30:52 softness. Yeah, and this is Greg again, Joe. I would echo Joe's comment. Execution is really critical, and so we think even in a soft to down market, we can still grow. because of execution. The other thing, as we've said in prior calls over the last over a year now, when you look at the majority of our products that go into our architecturally specified building and the customers, the buildings that they go into, they tend to go late in the building cycle. And so, in theory, that should give us some advance notice. So let's use railings and smoke curtains for a minute. The building's got to be substantially built before those railings go in. Once a building is under contract, they're going to finish that building, and so our sales will continue. But that's why we do track the backlog and why we track bookings and build to book, etc., all of that, to make sure that we're well prepped.

31:50 But as Joe mentioned, execution is really key, and despite the slowdown, we continue to see strong bookings. which is, to me, the more important thing to look at because it says we are executing.

32:05 Yeah, definitely, for sure. Thanks. Also, the strength that you're seeing in HVAC, can you talk about volume versus price? And then not sure if you have the visibility, but do you have any sense of what is sort of channel stocking versus actual end user consumption?

32:26 Yeah, sometimes you don't know that until after the fact, Joe, but we don't believe there's channel stocking going on there. I mean, it's a short cycle, right? I mean, summer's three months, four months long, and so that begins to work its way out pretty quickly through the system. So we don't really have any concerns about channel stuffing or anything like that or concern about destocking later. So that's fine. With respect to growth or our growth being volume or price, we have taken some price increases, but we also see volume moving up dramatically. So it's really a nice combination of both. And again, I think our go-to-market strategy is really, really been enhanced over the last couple of years.

33:12 And I really think we're seeing the fruits of that now. And I think we're selling premium products at premium prices. and executing really, really well. So it's a nice combination of both price and volume.

33:23 And I would reiterate what we've said in the past is that on the price, you know, that price has been largely pointed to address tariffs. And so, you know, you've seen our margin increase. So we have not been diluted due to the tariffs. We've passed those prices along and and they've been accepted in the market because of the premium products that we have. So we haven't seen, volume is by far the biggest driver for us. And just to maybe head off a question that might be out there with the most recent tariff announcements, we don't believe those tariff announcements are going to affect us. Our products that were impacted by tariffs have already seen the impact and so absent any increases in tariff percent, we think we're in good shape there. Okay.

34:14 That was actually going to be my next question, so I appreciate that. At the spec chem business, we don't talk a whole lot about input prices or materials. What would your biggest input materials be? I would maybe guess that they're petroleum-based, and then could you talk about price cost at that segment?

34:37 Yeah, it is. It would be base oils, petroleum-based base oils. But again, it's not a huge component. We don't have any primary commodity exposure that we really have to worry about driving the cost structure for our business there. And so by the same token as on the industrial product side, we've had a nice increase in volume and some price action that we think is – Indicative of our quality products and so again we're very pleased with the the way that we are going to market and those price increases our value that we provide for the for the price that we charge for our our products has been well received and you see that in the volume increase.

35:28 All right great and then last question for me the cash flow in the quarter I may have missed this in your prepared remarks Greg but It was weaker than a year ago, and it looks like it's sort of working capital-based. Just wondering if you could address that.

35:46 Yeah, it was down versus the prior year. Primarily, you're absolutely right, working capital. Working capital was used as a result of our increased volume. Obviously, our sales were up significantly, and so our receivables were up. We were also positioning inventory to make sure that for the fiscal second quarter where we still have strong growth to make sure we're in good shape there. We did see an increase of cash use in the liability side, payables and accruals. That runs hand in hand with the normal aspect of paying off some year-end items. you know, compensation type items that we'll turn around and rebuild.

36:33 So we should still have nice cash growth in fiscal 20 over 2019, just a little bit of a blip in the first quarter.

36:42 Okay, perfect. All right, thanks a lot, guys.

36:45 Sure. As a reminder, if you wish to ask a question or have a follow-on question, press star 1 on your telephone keypad. That's star 1. There are no further questions at this time. I'd like to turn the floor back over to Joe Armes for closing comments. Please go ahead, sir.

37:08 Great. Thank you very much. Once again, we had a great quarter, and we're very pleased with the prospects for the remainder of the year. And so thank you for joining us for this call, and we look forward to doing this again next quarter. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a good day.