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spk00: Ladies and gentlemen, thank you for standing by and welcome to ADTRAN Holdings Inc. First Quarter 2024 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question at that time, please press star followed by one on your telephone keypad. As a reminder, today's call is being recorded. During the course of the conference call, ADTRAN representatives expect to make forward-looking statements that reflect management's best judgment based on factors currently known. However, these statements involve risks and uncertainties, including the risks detailed in our earnings release, our annual report on Form 10-K, and our filings with the SEC. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements which may be made during the call. We undertake no obligation to update any statements to reflect the events that occur after this call. During the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in our investor presentation and our earnings release. The investor presentation found on ADTRAN Investor Relations website has been updated and is available for download. It is now my pleasure to turn the call over to Tom Stanton, Chief Executive Officer of AdTrend Holdings. Sir, please go ahead.
spk06: Thank you, Juliana. Good morning, everyone.
spk05: We appreciate you joining us for our first quarter 2024 earnings conference call. With me today is AdTrend Holdings CFO Uli Dopfer. Following my opening remarks, Uli will review the quarterly financial performance in detail, and then we will take any questions you may have. Our first quarter revenue came in as expected, with revenue just above the midpoint of our guidance range and non-GAAP operating margin within guidance. Our focus on managing expenses and reducing inventory levels helped us achieve positive free cash flow during the quarter, despite the near-term headwinds that continue to impact service provider spending. While we do see signs that the market will improve as we move through the year, we will continue to focus on managing our expenses and further reducing our inventory levels. Taking a closer look at the results in the first quarter, the overall revenue and geographical mix was very close to the results from the previous quarter, with 63% of our revenues coming from outside the US. On the product mix, we were well balanced in revenue across the three categories, with 31% of our revenue coming from subscriber solutions, 36% of revenue from access and aggregation solutions, and 33% of our revenue coming from optical networking solutions. Our subscriber solutions category was down 7% quarter over quarter after posting a strong quarter in Q4. The access and aggregation solutions category was up 27% quarter over quarter, driven by an increase in shipments of our fiber access platforms for both European and US customers. Optical networking solutions continue to be impacted by inventory reduction initiatives with customers. We had two primary areas of sequential growth in the quarter. In the U.S. market, we had a strong quarter with our small to midsize service provider customers purchasing our fiber access platforms and residential fiber CPE. This customer segment was up sequentially for both direct purchases and indirect purchases through our distribution partners. The second area of strength was our large customers in Europe. This customer segment had a strong quarter with purchases of our fiber access platforms and Ethernet CPE. These two customer segments, the small to midsize service providers in the U.S. and the larger service providers in Europe, are the segments where we continue to see the highest growth potential moving forward, given their close alignment with our strategic initiatives and portfolio investments. These two key strategic initiatives to maximize the investment opportunity in fiber-based broadband networks in the U.S. and high-risk vendor replacements in Europe continues to drive our corporate focus. Taking a closer look at these market segments, I will start with the U.S. market. This past week, we hosted our Broadband Business Solutions Summit at our corporate headquarters here in Huntsville. This is a multi-day event that we host twice per year, with attendees primarily being small to mid-sized U.S. broadband service providers. These are the customers that are leading the charge in building out fiber across the US. And the energy there was high. It's as high as it's ever been, and we had a record attendance with over 180 customers and partners at the event. That excitement and energy really comes from two areas. For one, despite some recent challenges, it is still a good time to be in the market. Nearly half of the US households still lack a fiber connection. and the government stimulus programs funding further investment in these networks are still in their early stages. During our event last week, a quick poll of the audience showed that more than 80% of customers in attendance were participating in broadband stimulus programs. The second driver for this excitement comes from the broader set of needs that we can meet with our customer segment, with this customer segment. We have been very intentional in creating more comprehensive fiber networking portfolio that is optimized for the needs of these small and midsize US service providers. These customers ideally want to buy in-home networking solutions, business networking solutions, fiber access platforms, optical transport platforms, network automation software, and cloud-based monitoring tools from a single vendor that they can trust to deliver reliable solutions and support them throughout their deployment. On top of that, the solutions need to integrate seamlessly with their existing systems without a lot of custom IT integration activities. There is only one vendor that can check all of these boxes, and that's AdTrans. You can go through each segment of our portfolio and see where our investments in a more comprehensive and integrated portfolio are paying off. In our residential portfolio, we have launched IntelliFi, along with our latest SDG series of Wi-Fi 7. We have already signed up dozens of customers for IntelliFi, making it the highest growth application in our Mosaic SaaS application suite, and hoping to push the total number of service providers adopting Mosaic One to 400. We have added 36 new Mosaic One customers this past quarter. On the network infrastructure side, we have taken the best fiber access platform in the industry, our SDX series, and integrated it into the leading billing systems targeting the U.S. regional service providers. These efforts have led to a surge of deployments over the last six months, helping us add nine new fiber to the home operators just this past quarter. These customers were a mix of new operators and vendor swap outs. As operators build out these higher capacity fiber access networks, they need to upgrade their transport networks as well. We've spent the past two years developing an optical network solution that is optimized for the needs of regional networks, regional middle mile, Backhaul networks need the capacity and reach enabled by technologies like coherent DWDM widely deployed in core networks, but they need these technologies to be optimized for regional network deployments. This network optimization means integrated temperature-hardened pluggables enabling up to 800 gig speeds instead of the traditional large overlay systems. also means you need end-to-end service automation and precision monitoring of the fiber infrastructure after a sizable and well thought out investment we have launched an optical optical portfolio that is tailored to address all these needs and is the perfect complement to our fiber access and subscriber solutions portfolio reinforcing that progress over the past two quarters We have had over 20 U.S. broadband service providers start to purchase our Ethernet and optical portfolio that were previously broadband-only customers for AdTrend. We see this segment continue to accelerate as these customers increase their builds with stimulus funding. Our fiber networking solution set, covering everything a small and midsize operator needs to deploy fiber to every home, business, and 5G site, is paired with an increasingly integrated management suite that simplifies the deployment of operation of these networks. We believe the progress in selling our complete portfolio offering paired with our strong regional capabilities that include local manufacturing has us well positioned to succeed in upcoming bead projects in the U.S. One notable milestone with our local manufacturing is that we have now shipped over 1 million OLT ports that comply with the latest Build America, Buy America rules that is part of BEAT, highlighting our long history of US-based manufacturing. Moving to Europe, the theme around investments in our portfolio, our portfolio beginning to pay off as is consistent with what we are seeing in the US market. But that customer segmentation and market drivers are a bit different. In Europe, Many of these service providers are migrating away from high-risk vendors, and they are making this shift as they upgrade their fiber network infrastructure. Also, while we are very successful with smaller altnets in Europe, the bulk of the investment is still coming from larger service providers in the region. These customers value a trusted, secure partner with a broad portfolio and scaled deployment in the region. It is also just as important to have an in-region R&D sales, installation, and support services and supply chain capabilities as well. AdTran is really one of only two vendors that can address these needs. As I mentioned earlier, this past quarter was very successful with our large European customers deploying our fiber access platforms. For our two largest customers in the UK and Germany, we continued to ramp deployments of our latest high-density 10 gigabit fiber access platform, the SDX6330, which was the key catalyst for this growth this quarter. We were also selected as a vendor in the latest Ethernet aggregation service offering at one of these customers. The technical superiority of the SDX6330, which has better power efficiency and density than competitive solutions, while also building on a more modern architecture, has us well positioned for sustainable success with these customers and other operators in the region. One of these operators is a multinational tier one operator where we have already been deployed in three countries. We have recently launched customer trials in a fourth and much larger country that they operate in, opening new growth opportunities for us later this year. In another Tier 1 fiber access operator that we won last year with the SDX 6330, we continue to make great progress through the lab and remain on track for scaled deployments next year. In addition to these projects, we have recently awarded a strategic software award for MPLS edge routers with a multinational Tier 1 operator. This MPLS software suite for our packet aggregation platforms has experienced high demand in the past six months providing another growth opportunity for us moving forward. On the optical transport side, where we have traditionally been very strong in Europe, we remain on track to start deployments late this year with our recent Tier 1 optical wins. With the recent launch of the MFLEX 800, our latest 800 gig optical platform, we are still well positioned to benefit from the next upgrade cycle from 400 gig to 800 grid across our broad operable customer base in that region. In summary, we have introduced key enhancements across our portfolio, enabling us to be more competitive in landing new customers and expanding our business with existing customers. These portfolio enhancements, paired with our strong regional presence and progress in selling our complete portfolio offering, have us well positioned for success in the ongoing investment cycle and fiber networks across both the U.S. and Europe. While we remain confident in our long-term outlook, we see the path to growth in the quarters ahead. We continue to see cautious spending from service provider customers, driving us to continue our cautious approach to our forecast and operating model. As a result, we will continue our focus on becoming a leaner, more efficient, and more profitable company with a best-in-class fiber networking portfolio. With that, I will turn things over to Uli to provide a review of our financial results. And following Uli's remarks, we will answer any questions you may have. Uli?
spk01: Thank you, Tom. And hello, everybody. I will cover our Q1 2024 results and provide our expectations for the second quarter of 2024. I will be referencing non-GAAP information with reconciliations to the most directly comparable GAAP financial measures presented in our press release and also certain revenue information by segment and category, which is available on our investor relations webpage at investors.adtrend.com. In addition, we have updated the investor presentation to the site, which is available for download. Unless stated otherwise, all financials are presented in US dollars. Q1 2024 revenue came in slightly above midpoint of our guidance at 226.2 million and were down 30% year-over-year, but slightly up sequentially. Our network solutions segment accounted for 80.1% of revenues in Q1 2024 compared to 87.2% in Q1 2023 and 80% in Q4 2023. Our services and support segment contributed 19.9% of revenues in Q1 compared to 12.8% in the year-ago quarter and 20% in the previous quarter. Access and aggregation contributed 36% of revenue and was down 16% compared to the year-ago quarter, but grew 26.6% sequentially. Our optical networking solutions category contributed 33.2% of revenues and was down 49% year-over-year and down 12% to 12.7% quarter over quarter. Subscriber solutions contributed 30.8% and was down 12.1% year over year and down 7.3% quarter over quarter. International revenue made up 63.2% of total revenue and domestic revenue contributed 36.8%. We had two 10% or more of revenue customers in Q1 2024. Q1 non-GAAP growth margin was 41.6% and increased by 429 basis points year-over-year and was slightly below Q4 2023. The year-over-year improvement is mainly driven by lower manufacturing and transportation costs and a more favorable customer-product mix. Q1 non-GAAP operating expenses were 102.7 million, 18% down year-over-year and slightly up quarter-over-quarter. The sequential increase was mainly due to unfavorable currency exchange rates as well as to seasonal effects. Year over year, we reduced non-GAAP R&D spend by 20% and SG&A expenses by 16%. Non-GAAP operating loss was 8.8 million, which translates into a non-GAAP operating margin of negative 3.9% compared to negative 1.4% in Q4 2023. Our operating margin was within our guidance range of between minus 7 and 0% of revenues. The sequential decline in operating margin was attributable to higher OPEX and slightly lower gross margins. The year-over-year decrease in operating profitability was due to lower sales volume, partially offset by improved gross margins and operating expense reduction. The company's non-GAAP tax benefit for the first quarter of 2024 was $13 million. Total non-GAAP loss was $1.7 million and after adjusting for minority shareholder interest in Atra Networks SE. This resulted in non-GAAP diluted loss per share attributable to the company of $0.02 per share compared to $1.09 in Q4 2023 and 14 cents in Q1 2023. Turning to the balance sheet and cash flow statement. In Q1 2024, we made significant improvements to our working capital. Trade accounts receivables were 187.6 million at quarter end, resulting in DSO of 75 days compared to 88 days in the prior quarter. We reduced our inventories by 40.1 million compared to Q4 2023. The improved working capital resulted in positive operating cash flow of 36.6 million compared to a negative operating cash flow of 16.3 million, an increase of 52.9 million quarter over quarter. Consequently, we generated 23.2 million of free cash flow. This resulted in a noticeable increase in cash and cash equivalents which came in at 106.8 million, a quarter-over-quarter increase of 19.6 million, or 22%. In summary, near-term headwinds continue to impact service provider spending throughout the quarter. We continue to focus on the execution of our business efficiency program and as a result managed to significantly increase our cash flow quarter over quarter, resulting in positive free cash flow. Even as we continue to see cautious spending from our service provider customers, we remain confident in our long-term outlook as we see a path to growth in the quarters ahead. We are convinced that the long-term growth drivers for our business are fully intact. We expect that the investment in data-driven infrastructure and a fiber-everywhere future will continue, supported by stimulus funding and the desire to reduce exposure to high-risk vendors. We continue on capturing fiber footprints with our upgraded fiber access and optical transport platforms, while driving the adoption of our latest subscriber platforms, software solutions, and high-value services. We maintain our focus on becoming a leaner, more efficient, and more profitable company with the best-in-class fiber networking and software portfolio. Consequently, for the second quarter of 2024, we are narrowing our guidance range to between $215 and $235 million, and we expect a non-GAAP operating margin between negative minus 3 and positive 2% of revenues. Once again, additional information is available at AdTrend's investor webpage at investors.adtrend.com. I will now turn it back over to the operator, and we will take your questions.
spk00: Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from George Nodder from Jefferies. Please go ahead. Your line is open.
spk03: Hi. Thanks a lot, guys. I guess I would like to just step back and kind of I guess better understand the bigger narrative here on the business. Obviously, over the last year, year and a half, we've been talking a lot about excess inventories at customers. I know that your CP business kind of went through that excess inventory and digestion phase. I think we're out of it now, but I'd love to hear your comments there. And it seems like we're still in that phase with optical. But just give us the picture on excess customer inventories. What do you see? What parts of the business are getting better? What parts of the business are still going through it? You know, what's the picture? Thanks.
spk05: Yeah, sure. So let me start with where I think the least amount of inventory is. And that's in our access and aggregation and predominantly our, you know, fiber to the prem OLT product line. So there's just not a lot out there at this point in time. So that one has been the least impacted. And I think, you know, you can kind of see that in the numbers and the growth that we saw in fiber to the prem. Middle of the road would be subscriber. I think there are many customers that no longer have inventory situations, but there are some that still do. I mean, we kind of did, I talked to some customers this last week, and there are some that still have a buildup of inventory because they just got too many in. But I would say it's a mixed bag with more, and every month that gets better. And then optical, I think you're correct. I think that's probably the least one where we're through that inventory situation. If there are some larger customers that just have some, those impact the numbers kind of disproportionately. But that itself is getting better, but it's got the longest path ahead of it. Does that answer your question? Got it.
spk03: Okay. Any expectation on when you would get through that inventory on the optical side of the business?
spk05: I think it's going to end up being a lot like the other three. So we'll see some pickup, and the pickup will be muted because of the ones that do have it. But we'll see some improvement in the second half of the year. We may get most of the way through it. If I look at the inventory situation today at those larger customers, our expectation is we get through that in the second half. But you'll see some, I think, that will come on stronger. So I would expect better numbers going forward. You know, let me caution a little bit. I mean, we feel like we're at the lowest level at this point in time, but we could be surprised. But at this point in time, we feel, you know, like the pluses and minuses even themselves out at this point. Got it. On the other two, we expect those just to get stronger through the second half.
spk03: Okay, great. And then you also made some comments about just softer service provider spending, cautious service provider spending. I guess I... want to delineate between what is a byproduct of excess inventory versus what is just genuinely softer consumption rates by customers. Do you have a perspective on that?
spk05: It depends. There are so many different ways to dissect that. Europe, especially with larger customers on the access side, they're just moving ahead with their plans. So, you know, one of the reasons we had a strong European quarter. In the U.S., I'd say there's some caution, but it's spotty. And you talk to customers, I'm sure, as well. It depends on which customer you're talking to. So there's some that are moving forward spotty. know there are some that are equity backed that are moving forward that have aggressive plans there are some that are trying to see how the stimulus thing is going to roll out um and then there are some that are kind of in both camps want to see how stimulus is going to roll out but they they they're going ahead with their plan so it's i think it's a mixed bag um i'd say demand is there but i mean there's no doubt that demand has been impacted by the current environment but trying to figure out how much is inventory. I would say still inventory is by far the bigger hangover.
spk03: Okay, great. I'll pass along. Thanks very much. All right. Thank you.
spk00: Our next question comes from Michael Genovese from Rosenblatt Securities. Please go ahead. Your line is open.
spk04: Great. Thank you. I guess first, you know, I sort of understand what's going on in access and aggregation, and then it sounds like we need a couple more quarters. of inventory burn off for optical platforms before we see an uptick there. I guess, can you comment more specifically on subscriber solutions and experiences? What's going on with, you know, inventory versus demand there and, you know, and also just roughly like how much of that is related to, how much of that category is related to access and how much is related to optical? And, you know, if there's any differentiation to answer the first question between optical and access in subscriber, that would be interesting to hear about. Thank you.
spk05: Well, let me just give you some things that just come off the top of my head here that I think may help shed some light on it. If you look at, so first of all, subscribers had a pretty strong quarter last quarter, especially if I look at the residential piece of subscribers. So it was down a little, but it was not a bad quarter for that residential piece of the business, which makes you feel like that inventory piece is working itself through the system. And I think for most people, it's a past event versus still an upcoming event for most customers. So that piece as well. The piece on subscriber, even on a year-over-year basis, Subscriber Solutions was down on a year-over-year basis, but I can pinpoint that residential was actually up. ONT shipments were actually up. CPE shipments, Ethernet NID shipments were actually up. The only thing that was down was some legacy products that we sell to two large carriers, well, one large carrier in Europe and one large carrier here in the U.S., who we know have inventory situations. If I were to subtract those two customers from the mix, that whole category would be up sequentially in year over year for that matter. So, so we are, we are definitely getting through that bubble. Okay.
spk04: Is there, is there a meaningfully, I guess, I guess, I mean, I don't know if you have this number or would give this number, but I mean, I assume most of subscriber solutions is, is related to the access business, but I think there's probably also a meaningful piece that's related to the optical business. Can you help us understand that breakout at all?
spk05: On the optical side, it's the Ethernet NID piece is kind of the traditional, I'll call it ADVA piece that we're talking about here. And that business is actually doing pretty good. And then the other pieces of that are the subscriber piece is broken up multiple areas, right? One is residential, and that's kind of the ONTs, RGs, the things that are driven by fiber-to-the-brand shipments. That business is up on a year-over-year basis. The piece that is down is we have, if you remember, traditional switches and routers. Those typically go through carriers, and they go along with service offerings from those carriers. And we have two big customers that drive that business, and both of those customers were down. That's the whole totality of subscriber solutions.
spk04: Got it. Thanks for that. That's helpful. And then my other question is, I mean, it just, you guys are clearly doing a lot on the management front to, I think, as you say, you know, make it a more profitable company, you know, even as, you know, if, if revenues, you know, are lower than before for, for a period of time. And, and, and, and we can see that, but I think that, you know, I want to make sure I'm not missing anything, right. Cause there's restructuring, and there's working capital management, bringing down inventory. My question really is, am I missing anything there that I should be focusing on? But then also, can you give us an update on anything related to the real estate portfolio transactions? Thank you.
spk05: Yeah, so we do have some real estate here in Huntsville that is for sale. We have two different pieces. have a tower that at this point in time is 90% unoccupied. We're moving the rest of that. I think this quarter we should be done with that. That's on the market right now. We do have interest in that. We haven't closed anything. We also have the sale and leaseback potential on the other building here in Huntsville. That is one that we're putting off and just trying to make sure that we're doing the right thing at the right point in time on that. so that we may or may not execute on that one.
spk04: And Uli, were there any other categories of kind of, you know, so there's, you know, OpEx restructuring, working capital management, any other kind of big categories of what you're thinking about? to improve the margin profile?
spk01: These are the main categories, Mike. Okay. You know, the efficiency program includes, you know, getting more efficient as a company, optimizing cost, optimizing physical footprint, and then, of course, the working capital measures you mentioned. The big piece here is the management of inventory.
spk05: Okay. We did also announce a closure of a site in Germany earlier in the quarter.
spk07: All right, well, I'm all set. Thanks a lot. All right.
spk00: Our next question comes from Brian Kuntz from Needham & Company. Please go ahead. Your line is open.
spk02: Thanks for the question. I wanted to ask for some feedback from your customer summit you had there. We heard one of your peers in the U.S. here talk about the really stalling customer activities, customer planning for 24. We've also heard, you know, I've heard in my work a lot of concern from the smaller customers about the regulatory requirements around BEAD, maybe some pushback there. Any feedback for us on either of those topics from your summit?
spk05: Yeah, yeah, so we talked a lot about that. And there are, you know, BEAD for the most part hasn't started flowing yet. It's real clear that some states are better at implementing than others. There was a lot of interest there. There were a lot of people, I mentioned like 80%, so that they were taking stimulus dollars. They were getting ARPA funds today. There are different buckets out there, but most of them are participating in some form or fashion. There was skepticism on B, but in the regulatory piece of that, and we had some breakout sessions on that. But you have this group that's just going to do it and think they can do it, and they see it as a headache, but they see it as a manageable headache. And then you have some that are saying no, but those typically have different financing arrangements. I would say the majority of people there were very open to it and were kind of just waiting to see how the state rules roll out and where they get in line at. So I think that's very fluid. The money feels like it's definitely going to be taken. It's just who's going to take it. But it was way more... Like I said, 80%, I'm saying they were going to take some form or fashion of stimulus funding over already taking it.
spk02: Got it. Helpful, Tom. And on the OpEx efficiency, I understand there's some one-time impacts on FX and probably seasonal kind of payroll type things that hit Q1. Where are we headed to there in terms of OpEx efficiency? Any more you can share in terms of how you think about that line for the rest of the year?
spk05: Well, we haven't gotten to our, you know, I think we laid out a plan where we, you know, Q2 was going to be kind of where we kind of hit our ultimate target that we want to get to, and that's actually below the Q1 level, and that's where we're headed to this quarter. Got it. Thank you. I don't know if you said any more things granularly.
spk01: We said not the last earnings call, the earnings call before. If you recall it, Ryan, we said our target is to reduce our 2024 expenses by $90 million compared to 2023, and this is still our target. Yep. Okay. Got it. Thank you.
spk05: All right. Thanks. I don't think we have any more in the queue or not.
spk00: We do have one more question from Tim Savageau from Northland Capital.
spk06: I think that was, yeah, I think that was Tim right there. No, that was right. Oh, Tim, can you hear me? Oh, yeah, sorry. Okay, great. We had a couple of questions. First one is on the outlook, which is sort of, you know, flattish, but I wonder if you might know give us a little more color on your expectations by segment it sounds like and especially after a nice quarter in access and aggregation that maybe that growth is likely to continue maybe even subscriber two and be offset by optical continued inventory work down there but um like you know kind of comment on whether directionally that's that's accurate or if there's something else going on yeah i think
spk05: Yes, the answer is yes, directionally that is accurate.
spk06: The other two, yes, just the way you said it is accurate. Great. And I assume you had some pretty sharp moves sequentially in Q1. Would you expect those movements by segments to be a little more modest in Q2?
spk07: I guess I don't know what you mean by sharp moves.
spk06: I mean, access and aggregation was up 30% sequential almost in Q1.
spk05: I mean, those types of movements versus... Yeah, we're not modeling for that type of sequential increase on a quarterly basis. We would expect them to just get to the numbers that we're talking about, right? We would expect them to be modestly up on a sequential basis, and then optical to be modestly down.
spk06: Great. That's what I was looking for. On the 10% customer fronts, can you comment on, you know, did you have anybody in the U.S., or should we assume those are both international? These are both international. Great. And last question on the Q2 guide. Obviously, your gross margins are up. pretty sharply, and you mentioned the drivers there. OPEX, although you just reiterated the target there, it's certainly higher than I was looking for. I mean, to some degree, as you look at the Q2 guide for modestly negative operating margins, should we expect that to reverse a little bit, maybe with gross margins backing off and along with OPEX coming down pretty solidly?
spk01: I mean, as you know, you know, gross margin is always a subject to customer mix and product mix, especially, you know, when it comes to the last month of the quarter, there's many moving parts. But if you look into your model, right, Tom just said OPEX, we expect OPEX to come down in the second quarter, which would then mean that, you know, if you model the midpoint of the guidance at gross margin would come down slightly a little bit as well.
spk07: Great. Thanks very much.
spk05: Well, I think we're through the call queue, so thank you very much for joining us on our conference call this quarter, and we look forward to talking to you next quarter. Thank you.
spk00: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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