Comtech Telecommunications Corp.

Ladies and gentlemen, thank you for standing by. Welcome to ComTech Telecommunications Core Fourth Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press the star and 1 on your push-button phone. As a reminder, this conference is being recorded Tuesday, September 29, 2020. I would now like to turn the conference over to Mr. Jason DiLorenzo of ComTech Telecommunications. Please go ahead, sir.

Thank you, and good afternoon. Welcome to the ComTech Telecommunications Corp Q4 and year-end conference call for fiscal year 2020. With us on the call are Fred Kornberg, Chairman of the Board and Chief Executive Officer of ComTech, Michael D. Porcelain, President and Chief Operating Officer, and Michael Bondi, Chief Financial Officer. Before we proceed, I need to remind you of the company's safe harbor language. Certain information presented in this call will include, but not be limited to, information relating to the future performance and financial condition of the company, the company's plans, objectives, and business outlook, and the plans, objectives, and business outlook of the company's management. The company's assumptions regarding such performance, business outlook, and plans are forward-looking in nature and involve significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company's Securities and Exchange Commission filings. I am pleased now to introduce the Chief Executive Officer of ComTech, Fred Kornberg. Fred?

Thank you, Jason, and good afternoon, everyone, and thank you for joining us on this call. Today, we will be discussing the results for our fourth quarter of fiscal 2020 and our outlook for fiscal 2021. We hope our employees, suppliers, customers, partners, and investors remain healthy and safe as we continue to navigate in this COVID-19 environment. As you can see from our announcement this afternoon, our fourth quarter performance reflected a strong finish to what was a challenging year resulting from the COVID-19 pandemic. Our fourth quarter sales were $149.7 million, with an adjusted EBITDA of $23.5 million. In the fourth quarter, we generated a book-to-bill ratio of 1.07, and our pipeline remains strong with a number of large opportunities that we are optimistic about. For the year, we achieved a net sales of $616.7 million and an adjusted EBITDA of $77.8 million. We finished the year with a healthy business and a solid backlog. Our prudent financial management in these turbulent times has enabled us to generate $52.8 million of operating cash flows and the flexibility to continue to invest in our business. I firmly believe that we remain on the course of delivering long-term growth and driving shareholder value. Now that things have somewhat stabilized, although things are still fluid, we are reinstating guidance, and our initial thinking is that we can do better in fiscal 2021 than we did in 2020. That said, we're targeting to achieve fiscal 2021 revenues of approximately $610 million to $630 million with an adjusted EBITDA in the range of $74 million to $78 million. I believe that as the year progresses and new orders come in, I remain optimistic that actual 2021 results will exceed our targets. Before further discussing our financial results and business in more detail, I would like to say a few words about the status of the Gilad acquisition. As a reminder, in January 2020, we announced the highly strategic acquisition of Gilad, a worldwide leader in satellite networking technology solutions and services. Unfortunately, after we announced the Gilad acquisition, the COVID-19 pandemic resulted in a sudden and steep decline in the travel and aviation markets, where Gilad's operation is, and a significant slowdown in Gilad's business. As publicly reported, Gilad has suffered lower period over period sales and a negative adjusted EBITDA for the first six months of the calendar year 2020. Given everything, in July 2020, we commenced litigation in the Delaware court of Chancery seeking certain declaratory judgments, including a declaratory judgment that Gilad has suffered a material adverse effect, and that as a result of the material adverse effect, we are not obligated to complete the acquisition. Currently, a trial is scheduled for October 5, 2020, and the Delaware Court has indicated that it intends to render a judgment prior to October 2020, the date that we or Gilad may terminate the merger agreement. Because this matter is getting ready for trial, I must tell you, and I'm sure you will understand, that we will not make any further comments on the Gilad acquisition or take any questions related to Gilad or the related litigation. Now, let me turn it over to Michael Bondi, who will provide additional commentary about our financials and then to Michael Porcelain, who will provide an update on our business and our pending acquisitions. Mike?

Michael Porcelain Thank you, Fred, and good afternoon, everyone. Our net sales for the fourth quarter of fiscal 2020 were $149.7 million, and we finished the year with net sales of $616.7 million. Our revenues for Q4 represent a 10.8 percent quarter-over-quarter increase as compared to our Q3 2020 results, which were significantly impacted by the COVID-19 pandemic. In fiscal 2020, net sales to US-based customers were 76.5% of total net sales, with 23.5% to international customers. It was a strong quarter for bookings. We received $159.7 million of orders, which resulted in full-year bookings of $584.4 million. Despite the impact of the pandemic, we achieved a book-to-bill ratio of 0.95 times and finished the year with a healthy backlog of $620.9 million. Although visibility into the economy remains a bit cloudy, we do have pretty good visibility into fiscal 2021 given our healthy backlog. In fact, when you add our backlog, plus the total unfunded value of multi-year contracts awarded to us, but not in backlog, and for which we expect orders against, we have clear visibility to approximately $1.1 billion in total future revenue, a substantial portion of which we estimate will be recognized as revenue during the next 24 months. Now let me give you some financial metrics and commentary with respect to the rest of the income statement. Our gross profit percentage in Q4 was 33.2% and for the year it was 36.8%. Our gross profit in fiscal 2020 reflects minor increases in costs due to a lower level of factory utilization and higher logistics and operational costs resulting from COVID-19. As we look into fiscal 2021, we expect a slightly higher level of sales growth in both our government solution segment and our commercial solution segment, and we expect ongoing higher production, logistics, and safety-related costs resulting from COVID-19. It would be reasonable to set an initial gross margin percentage target of 35% for fiscal 2021. However, if product mix shifts favorably even a bit, we could easily be back to 37%, if not higher. SG&A for Q4 was 23.6 million, or 15.8% of consolidated net sales. For the year, selling general administrative expenses were 117.1 million, or 19% of consolidated net sales. Turning to research and development expenses, we spent $11.3 million in the fourth quarter of fiscal 2020, or 7.5% of consolidated net sales. For the year, R&D expenses were $52.2 million, or 8.5% of consolidated net sales. Total amortization of stock-based compensation expense during Q4 of fiscal 2020 was $6.2 million, and for the year, it was $9.3 million. Next year, we expected to approximate $11 million to $13 million. Total amortization of intangibles was $5.6 million in the fourth quarter of fiscal 2020. For the year, it was $21.6 million. Looking to fiscal 2021 and excluding the impact of our pending acquisitions, we estimate total annual amortization of intangible assets of $21.3 million. Our consolidated gap operating income for the fourth quarter of 2020 was $2.8 million, or 1.9 percent of net sales. As Mike will discuss in a bit, we continue to incur acquisition plan expenses, including litigation costs. Excluding $6.4 million of such costs, operating income in Q4 2020 would have been $9.2 million, or 6.1 percent of consolidated net sales. For the year, GAAP operating income was 15.2 million, or 2.5 percent of net sales. In fiscal 2020, we incurred $21.2 million of acquisition plan expenses and other similar expenses. Excluding such expenses, GAAP operating income would have been 5.9 percent of net sales. Our adjusted EBITDA was $23.5 million, or 15.7 percent of consolidated net sales, for the fourth quarter of 2020. For the year, the $77.8 million of adjusted EBITDA translates into a ratio of 12.6% of consolidated net sales. On a segment basis, in Q4, Commercial Solutions delivered $14.6 million of adjusted EBITDA, or 17.2% of related net sales. For the year, adjusted EBITDA in this segment was $61.7 million, or 17.4% of related net sales. Turning to the government solution segment, we delivered $5.4 million of adjusted EBITDA on Q4, or 8.3% of related net sales. For the year, our government solution segment delivered adjusted EBITDA of $25.7 million, or 9.8% of related net sales. Looking to fiscal 2021, and despite all of the mixed changes, we expect adjusted EBITDA to approximate 12.3% when using the $620 million midpoint of our 2021 targeted range for net sales. Now, let me talk further about interest, taxes, EPS, cash flows, and our balance sheet. Interest expense was $1.1 million in the fourth quarter of fiscal 2020. Fiscal 2020 For fiscal 2020, it was $6.1 million. Excluding the impact of our pending acquisitions, interest expense is expected to be around $5.9 million in fiscal 2021. On the tax side, excluding discrete tax items, our fiscal 2020 effective tax rate was 37 percent. When thinking about our tax rate for fiscal 2021, it is important to note that we will incur significant acquisition plan expenses. So, for modeling purposes, if you assume acquisition plan expenses of zero, our effective tax rate is expected to approximate 21 percent. For now, we would tell you to use that rate, but note that as we incur acquisition plan expenses, the actual effective tax rate for fiscal 2021 may be lower. On the bottom line, GAAP net income in Q4 of 2020 was $1.1 million, or four cents per diluted share. excluding acquisition plan expenses and discrete tax items, our non-GAAP net income for Q4 2020 was $5.2 million, or 21 cents per diluted share. For fiscal 2020, GAAP net income was $7 million, or 28 cents per diluted share, excluding adjustments indicated in our press release issued earlier today, our non-GAAP net income for fiscal 2020 was $19.2 million, or 77 cents per diluted share. We achieved operating cash flows of $13.8 million for the fourth quarter of fiscal 2020, and as Fred mentioned, $52.8 million for fiscal 2020. This is quite impressive. Our balance sheet as of July 31st, 2020 includes $47.9 million of cash and cash equivalents, and our total debt outstanding was $149.6 million. Before turning it over to Mike for a business update, let me provide color on the cadence of our expected fiscal 2021 performance. Although the outlook is somewhat cloudy, we do have some visibility into the timing of how things are expected to ship. Currently, we are expecting our Q1 revenue to come in at around $125 million with adjusted EBITDA of about $8 million. For the remaining quarters in fiscal 2021, We expect sequential growth with Q4, like usual, targeted to be the peak. Now, I'll hand it over to Mike Porcelain. Mike?

Thanks, Mike. As most everyone knows, since the onset of the COVID-19 pandemic, the health and safety of our employees, customers, and suppliers has really been our top priority. In addition to safety, we've been focused on ensuring business continuity for the many critical advanced technology solutions we provide to our customers. For instance, can you imagine if our 911 public safety technologies suddenly were not available? Healthcare responders, police, fire, and ambulatory personnel would be unable to timely respond, if at all. Also, military and government personnel would not have the ability to securely communicate in their lives, and the safety of our citizens around the world would be imperiled. For many years, I've been saying that keeping people around the world connected using our critical technologies is the reason ComTech employees came to work each day. But in 2020, that changed. Instead of being able to go to work, many of our employees had to stay home to do their jobs. Nonetheless, we had to keep both our networks and the networks of our customers operating and troubleshoot and adapt to whatever our customers needed. It was simply amazing to see, and it all unfolded almost perfectly, and our employees adapted to it all. Since March, we have conducted most of our non-production-related operations using remote working arrangements. also were curtailed most business travel, and we have established social distancing safeguards. No doubt our employees did their jobs and saved lives. Our employees are critical to the success of the company, and I must take a few moments to thank them for their incredible efforts and their commitment and dedication to serving our customers. With that said, let me now talk about our team's success in terms of business performance, contract wins, and the direction of where these efforts will lead us. I will talk first about our commercial solution segment. Here, net sales were $85 million in Q4 and $353.7 million for fiscal 2020, which is a decrease of only 1% versus last year. That small decrease is pretty incredible given everything that has gone on this year. Additionally, bookings in the commercial solution segment were strong at $90 million for the quarter and $321.3 million for the year, resulting in a solid 0.91 book-to-bill ratio in the COVID-19 environment. Looking forward, we expect fiscal 2021 sales in this segment to be slightly higher than the level we achieved in fiscal 2020. Although the business impact of COVID-19 resulted in significantly lower net sales of our satellite ground station technologies during fiscal 2020 as compared to fiscal 2019, bookings did begin to rebound in the fourth quarter of rough fiscal 2020. we were awarded a number of important satellite ground station technology orders during Q4, including contracts valued more than $2.2 million for KA-band high-powered traveling wave tube amplifiers, or TWTAs for trailer-based satellite communication terminals. We were also awarded a contract valued at more than $1.5 million for 500-watt KA band TWTAs for a tracking, telemetry, and command application to be deployed globally by a major satellite service provider. We also received $1.3 million in orders for advanced satellite modems, WAN optimization, and redundancy switches to support cellular LTE backhaul for a service provider in the Middle East. We also received a $1.1 million order for satellite ground station equipment from the Southeast Asia Ministry of Defense for a network upgrade which could expand to more than 2,000 units. Importantly, we saw continued strength in our U.S. government satellite ground station business, receiving additional orders to support a critical U.S. Air Force and U.S. Army anti-jam modem program known as A3M. The A3M program is intended to provide the U.S. Air Force and U.S. Army with a secure, wide-band, anti-jam satellite communication terminal modem for tactical satellite communications operations. Our HITES products continue to draw interest, and we continue to educate our customers. Although there are signs of pent-up demand, The satellite ground station has some ways to go before it fully rebounds, as many of our customer locations remain closed or are eliminating installations to only truly must-have equipment. Now let me turn to our public safety and location technology solutions, whose net sales were higher in 2020 than in 2019. To date, the business impact of COVID-19 on our public safety and location technology solutions has been relatively muted, and demand for our products appears strong. For example, we secured several multi-year contracts valued at more than $15 million to deploy new call handling solutions in the Midwest region of the United States. Also, we were awarded and began work on close to $30 million of multi-year contracts from two U.S. Tier 1 mobile network operators for 5G virtual mobile location-based technology solutions, including public safety applications. Although COVID-19 has resulted in the cancellation of several key public safety trade shows, and some states and municipalities have announced budget constraints, other existing and potential customers are increasing their funding for next generation 911 solutions, recognizing the critical importance of upgrading their 911 systems. For example, during Q4 2020, we were awarded a contract valued at up to $54 million to design, deploy, and operate next-generation 911 services for the state of South Carolina. Additionally, we are working with two other states for multimillion-dollar contracts to upgrade certain components of their 911 networks. As you can see, we believe we are well positioned for long-term growth in this market, and as mentioned on prior calls, we have several large opportunities for which we hope to announce contract awards soon. Now let me turn to our government solution segment. Here, net sales were $64.7 million in Q4 of fiscal 2020, as compared to $73.4 million in Q4 of fiscal 2019. For the full fiscal year, net sales were 263 million, which represents a decrease of 16.4% from the prior year. Bookings in our government solutions segment for fiscal 2020 were 263.2 million, representing a book-to-bill ratio of one. Fiscal 2020 includes a nominal amount of sales related to our new XY satellite tracking antenna product line, which we acquired through our acquisition of CGC. We believe sales in fiscal 2020 for this product line will start to take off. Margins in this product line are a bit less than our normal product set, but as volumes increase, we do expect margins to go up. All in all, we believe fiscal 2021 net sales for the government solution segment will be slightly higher than the amount we achieved in fiscal 2020. In addition to revenue contributions from the CGC acquisition, Fiscal 2021 is expected to benefit from existing and future orders to supply MANPAC satellite terminals, networking equipment, and other advanced VSAT products to the U.S. Army, and existing and future orders to provide ongoing sustainment services to the U.S. Army for SNAP VSATs. In addition, we expect to continue working with the U.S. government and delivering our joint cyber analysis course, as well as performing sustainment work related to the U.S. Army's Blue Force Tracking BFT-1 program. As mentioned on prior calls, we are extremely pleased that in fiscal 21, we will be managing certain aspects of the space component supply chain for NASA's Artemis missions. We are excited to be part of this important space program and expect more follow-on orders in the future. Also, we expect to receive new orders for our recently introduced common terminals, the world's smallest deployable troposcatter system. Additionally, we are making progress with respect to initial deliveries to the U.S. Marine Corps for our next-generation troposcatter system. Finally, we have several other large opportunities in this segment and are optimistic that as the fiscal year 2021 progresses, we'll be able to report them as bookings. Next, I would like to make some quick statements regarding 21 expenses and speak about the status of UHP, our other pending acquisition. First, acquisition plan expenses in fiscal 2021 will include significant litigation expenses associated with our pending acquisition and litigation related to GALAT, as well as ongoing expenses related to seeking Russian regulatory approval. To date, acquisition plan expenses in Q1, most of which relate to GALAT litigation, approximate $14.2 million. As the trial continues, litigation expense will obviously go higher, and if we are required to close the transaction, we would expect to incur an additional $38 million or so, including litigation costs. Given the ongoing trial, as Fred mentioned, we won't make additional comments about the status of the litigation or take questions on this matter. Second, as it relates to UHP, the leading provider of innovative and disruptive satellite ground station technology solutions, here we are focused on the regulatory process in Russia, where we still need certain approval. Since our last conference call and announcement, we have made progress, and we were requested to provide certain information to the Russian government and have provided such. We hope that we will be able to receive approval from the Russian government and close this acquisition by December 31, 2020. For those that want more detailed information about the UHP acquisition and Gallaudet acquisition-related litigation matters and the status of regulatory approvals, I do refer you to our Form 10-K that we just filed with the Securities and Exchange Commission earlier this afternoon. Now, let me turn it back to Fred, who will provide some closing remarks. Fred? Thank you, Mike.

As I mentioned before, I'm very pleased with how our business is performing. particularly the results for the fourth quarter. Fiscal 2020 was obviously a challenging year for ComTech and illustrates the earnings power of our business and our product leadership positions. Looking out to fiscal 2021, we have a strong, diversified customer base selling to both government customers and commercial customers. We have a good business mix and a diversified product line that has protected ComTech in the past, and we believe it is a significant source of strength today. We remain determined to extend our market-leading positions and are firmly focused to achieve growth in fiscal 2021 as market conditions continue to improve. As I've said before, we believe that in an environment of increasing market demand for global voice, video, and data usage, customers will increasingly turn to ComTech to fulfill their needs for secure wireless communications. Given our business outlook, our board of directors declared a dividend for the fourth quarter of fiscal 2020 of 10 cents per common share, payable on October 27th, 2020, to shareholders of record at the close of business on October 14th, 2020. We continue to believe our dividend program is a great way to return capital to our shareholders as we grow the business. Finally, today, we announced our board of directors approved the new $100 million stock repurchase program. Clearly, we believe this authorization demonstrates our confidence in the underlying value of our stock and in our future. Now I would like to proceed to the question and answer part of our conference. Operator?

And again, that is star and 1 if you would like to register to ask a question today. We can go ahead and take our first question from Asiya Merchant with Citigroup. Your line is open.

Great. Thank you, gentlemen, for all the color. A couple of quick questions. maybe for Mike, Fred, Mike, it doesn't matter. Uh, first quarter guide is down, uh, 16%, I believe sequentially. Uh, you know, if you can give us some color on what's going on there, and then obviously you expect the quarterly progression to be there. Seems like the guide, you know, saying slightly better than what you guys achieved, you know, given that you guys have a good backlog, good visibility, um, Why just slightly given economic conditions have resumed? If you can give us some color on that. Thank you.

Sure. So, you know, the customers out there, the way we're seeing in the marketplace, the order activity interest is pretty high. But there are still issues in terms of installations that are ongoing. I mean, you know, I referred to that in my prepared remarks. Customers still have their doors locked, so to speak, and it's very difficult to get in to do installations. This is a global company with global installations, and it does take some time to find the right talent in the field that is willing to do it. So, you know, with that being said, you know, we are expecting a quarterly ramp up. Q1, you know, is the number Mike gave to you, and then each quarter thereafter is the way we're thinking about it. If things shift earlier because a vaccine gets developed or something like that and installations get ramped up, then that will change. But right now, that's the way we're thinking about the delivery of the revenue. Order flow, we actually feel pretty strong about. We've got some large opportunities out there in the 911 space. And, you know, yesterday's news in the marketplace is very favorable to the things we need. It's just another sign to the politicians that the 911 systems need to be upgraded. So things like that, you know, kind of go in our favor, we think.

Fair enough. And then on cash, cash flow, that was a pretty strong cash flow that you guys generated this year. Can you guys share some commentary on should we expect cash flow again then to be higher given revenues will be higher next year? Or was there something one time that we should kind of keep in mind that will not occur in 21?

Well, Mike did talk about strong cash flows that we do expect. You know, I think obviously we're going to call out again the acquisition plan expenses. So, you know, I mean, candidly, I think, you know, I think we spent $20 million or so in fiscal 2020. So, you know, anything above that number for 2021 will make that year-over-year comparison probably be lower is the way I would tell you to think about it because acquisition plan expenses just need to get paid. And obviously, we are in litigation. So if you look at it two ways, if you pull out the acquisition plan expenses, you can see the very strong cash flow dynamics of the company. And, you know, I think that's really the right way to look at the company on a long-term basis.

Okay. Thank you.

And, again, that is star and one for your questions today. We can go to Mike Lattimore with Northland Capital. Your line is open. Thank you.

Great, thank you. Yeah, just looking at the SG&A line there, it came down fairly significantly sequentially. I guess, is that a good baseline to think about? Was there any one-time items in there? You know, what was the main factor behind that decline?

Mike, that was probably a function of our cost savings initiatives that we put in place in Q3, and you're seeing the benefit of that in Q4. Okay.

And that's a good kind of baseline number to think about to start there?

Yeah, as we enter 2021, certainly we'll be looking to be mindful of the cost expenditures on the SG&A line. Our view is that we're still seeing the benefits, and for the foreseeable future, we're going to have those programs in place until conditions meaningfully improve.

Okay, great. And then in terms of the U.S. federal government, we're kind of heading right into their fiscal year end here. And I guess, how is that, you know, customer behaving, I guess, into their fiscal year-end? Sort of a normal pattern there?

I guess we could say normal pattern. I think it'll, you know, it all depends on how close we get to October 31st.

Okay. And then you talked a little bit about the like demand being solid and a little bit, you know, harder to get in and do installs, I guess, does, does the, does that install dynamic affect the sales cycle to a little bit such that maybe the sales cycle is a longer because of the longer install?

Definitely. No question about it. The sales cycle is definitely longer. The way I would describe it in a good way, though, is back in Q3 and we didn't see any new opportunities. right anything that was being done was old opportunities and now with everybody going to all the online video sales channels we've really seen a pickup in new opportunities and and those are the types of things that we started to see in q4 come in we expect them to continue to come in and then it's just a question of figuring out how we're going to get them installed whether it's Comtech doing it or a third party doing it or, you know, one of our partners in the field. So we, you know, that is extending that process, you know, and I would say a good amount. It's not a small change. It's a big change that's out there.

Okay. And any color on just international versus domestic demand? Is one, you know, clearly outperforming the other here?

No, we're not, you know, I would say overall we're not seeing, you know, much difference between how people are reacting to the virus out there. You know, I would say a brightable positive note is our 911 business. You know, I mean, I think, you know, that we are seeing. And, you know, we would like to see them, you know, push the final pen across the paper and, you know, sign their final documents, so to speak.

Yeah, right, right.

Okay. Great, thank you.

And we'll go now to Chris Sakai with Singular Research. Your line is open.

Hi, everyone. Just had a question, first question I guess on their research and development expense. I know this quarter it was down, you know, about four, four and a half million dollars from a year ago. Just wanted to see, you know, what you guys had to say about that going forward. Do you see a rebound in that expense? Thanks.

Hi, Chris. Yeah, you saw a decline in the fiscal 2020 period. Certainly as we came out of Q3, we tried to be very mindful of, you know, critical projects and make sure we continue to invest there. You know, as we go into 2021, I would say that our normal pattern would still exist. in terms of percentage of sales.

Okay. And then, you know, I've been noticing over the last four quarters, your inventory level has been increasing, you know, about two to three million a quarter. Can you guys comment on that? You know, is this planned? What do you see for 2021? How do you see those levels?

Yeah, I think we do expect inventory to go down a little bit, you know, in 2021. You know, some of the inventory buildup is, you know, we've taken the position is when we can get parts, you know, from suppliers, we'll take them. You know, given that there's, you know, logistical issues, and Mike referred to that in his prepared remark portion, you know, there are some supply logistics that are out there. And when we get a lot of components or something like that, we've decided to take them in so we have them to deliver our customers when they want to. But there's nothing Nothing special per se that that you know is occurring other than that and normal seasonality and normal fluctuation Okay, well all right, okay, thanks And as a reminder that a star and one for your questions today We do have a follow-up from a sea emergent with Citigroup.

Your line is open

Hi, thanks. Thanks for the opportunity. Again, a quick question on the stock buyback program. I'm trying to remember when was the last time you guys were buying back stock, but you also have, you know, two acquisitions in play here. So is this authorization something that one would expect would get executed during the fiscal 21 even partially or if you can just help us understand the rationale behind the stock buyback? Thank you.

Well, I think we view the stock as being undervalued, obviously. And really, it depends upon the litigation that we're in. Our cash position is such that the old buyback program was coming to an end. And so we thought we would reimplement it. And depending upon our cash position, we will start buying stock.

All right, so while the acquisitions are in play, will you still be mind-stuck, or you'd wait until the acquisitions one way or the other, you know, are either consummated or terminated? Yeah.

I think we will probably wait until the litigation is over, but we really hope to have the litigation over by the end of October.

Okay. Thank you.

And we will pause to allow any further questions to queue. Again, that is star and one to register to ask a question. It does appear that we have no further questions at this time.

Okay, thanks very much, operator, and thanks, everyone, for joining us today. We look forward to speaking with you again in December.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.