Corsair Gaming, Inc.

good afternoon and welcome to the corsair gaming's fourth quarter and full year 2022 earnings conference call as a reminder today's call is being recorded and your participation implies consent to such recording at this time all participants are in a 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 With that, I will now turn the call over to Ronald Vanveen, Corsair's Vice President of Finance and Investor Relations. Thank you, sir. You may begin.

Thank you. Good afternoon, everyone, and thank you for joining us for Corsair's Financial Results Conference Call for the fourth quarter and full year ended December 31st, 2022. On the call today, we have Corsair CEO Andy Paul and CFO Michael Potter. Andy will review highlights from the full year of fourth quarter 2022, Michael will then review the financials and our outlook. We will then have time for any questions. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements related to the expected future results of our company and are therefore forward-looking statements. Our actual results may differ maturely from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC files. Note that until our 10-K has been filed, these numbers are preliminary. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information and the GAAP financial information, is provided in the press release we issued after the market closed today. With that, I'll now turn the call over to Andy.

Thank you, Ronald, and welcome everyone to our Q4 and full year 2022 earnings call. We are pleased with our fourth quarter results following a challenging 2022 year impacted by the Russia-Ukrainian conflict, high freight costs, and a large channel inventory adjustment. Q4 2022 holiday sales were strong for most of the gaming and streaming categories that we participate in, and our overall retail sales out from the channel was substantially above pre-pandemic 2019 levels, putting us on a positive trajectory for the first half of 23. There are a number of notable financial highlights from Q4 and 2022. First, the gaming PC component market resumed growth. We benefited from an uptick in demand in the gaming PC market, fueled by new GPU and CPU launches from NVIDIA, AMD, and Intel at the end of 2022, with more expected to roll out in Q1 2023. As we've noted before, gaming PCs built with these new platforms need faster memory, such as DDR5, larger power supplies with 1,000-watt capability or higher, and better cooling technology. These are all product categories that we are expert in and have attained a dominant market share. This is a big positive for our enthusiast customers who are now able to build faster, more powerful gaming PCs with more features at a lower cost than they could during the pandemic. There have also been several recent games launched or updated that take full use of the new technologies built into the new GPUs. making them more immersive and more exciting to play. This is another powerful growth catalyst for us as helping to drive higher demand for gaming PCs as well as peripherals. Based on our improved results, we believe we continue to gain market share in components used to build gaming PCs. We continue to command a premium price because of our steady stream of innovative products and our proven expertise in developing the components gaming customers need for superior performance and quality. Secondly, the peripheral market held up well despite challenging macroeconomic headwinds. The gaming peripheral market for headsets, keyboards, and mice showed good recovery in Q4, and in the US was within 6% of Q4 21. Compared to pre-pandemic levels in Q4 19, the U.S. market was up by 58% according to NPD. In Europe, the market was down 10% from last year, but was still 26% higher than Q419 according to GFK. All this indicates that the peripheral market, while getting a boost from more people at home buying gaming peripherals during 2020 and 2021, is now showing that there has been fundamental growth and expansion compared to the pre-pandemic period. And thus, we are cautiously optimistic that despite macroeconomic headwinds, the market will continue to grow over the next few years and will likely be boosted by the incremental gamers that were first-time buyers during shelter-at-home. We observed some deep discounting in the gaming peripherals market in Q4, since the channel had large amounts of excess inventory from many suppliers. However, at Corsair, we were able to avoid much of this heavy discounting and rebates, since by the holiday period, we had already largely cleared our excess inventory. We had record sales with our SCUF controllers, boosted by the launch of Call of Duty Modern Warfare 2, and we sold out our new Elgato Stream Deck Plus within days of launch. Overall, in our peripheral segment, we were down 33% in revenue from Q4 last year. However, approximately one-third of this drop came from channel inventory adjustments. While our channel inventory situation is close to being a target now, we see many signs that there is still excess inventory in the channel from other suppliers, and we think that this will take one or two quarters to be resolved. At that point, we think we will start to gain market share again, because of less discounting and also from some exciting new products that we have in the pipeline. In addition, we see a very nice list of exciting new games that will be released in 2023, which we believe will drive growth into the gaming peripherals market. We're also excited to see our Stream Deck products continue to get used in many new applications, as well as pure content creation. Thirdly, margins improved. We are very pleased that margins bounced back in Q4. As expected, freight rates have continued to decline, and the excess channel inventory has mostly been cleared. As we've been discussing in recent earnings calls, this was causing a headwind on both sales and margins, and we're happy to see the improvement. In addition, we've made great progress in bringing down our own inventory and exit the year at our overall inventory target level. We expect these factors, as well as new product introductions, to continue to move up margins in 2023. In terms of geographies, the U.S. continued to be a strong market for us in Q4, and we expect Q1 to see continued growth in all categories. Europe continued to track lower than last year, but it is starting to show improvement. Let me now take a minute to update you on some of our more notable Q4 product developments. First, we're excited about the Q4 launch of our Stream Deck Plus. This is a new addition to our award-winning lineup of tactile control interfaces. As the name implies, we originally developed Stream Deck for streamers. But the market use cases have continued to expand from streamers to anyone more broadly looking for a great programmable macro device. We added new functionality, including four push dials and a dynamic touch strip. The key is making content creation workflow more efficient, which we excel at. The other nice feature is Stream Deck Plus integrates seamlessly with Elgato's software, namely Camera Hub, Control Center, and our popular Wavelink Virtual Mixer. Second, we saw strong interest in our new Xenion Flex 45 WQHD 240 OLED gaming monitor and expect to start shipping volume in Q1. This 45-inch monitor, designed in partnership with LG Display, uses flexible OLED technology and is designed so that the monitor can be adjusted by hand from flat to a curved display. We're also excited about our expanded webcam product line with the launch of Elgato's FaceCam Pro, which is a high-end camera which can output 4K at 60 frames per second. Creators now can more easily produce ultra high definition video without the need for an elaborate camera setup. This groundbreaking technology combined with Elgato's powerful CameraHub software makes Spacecam Pro the new benchmark in the global webcam industry. Corsair remains one of the industry's most innovative gaming companies. We are excited about our product roadmap for the coming year and look forward to sharing more updates with you as these launches occur. In summary, the fundamentals of our business remain very strong and we are well positioned entering 2023. We are pleased with our team's continued execution and success in what was a challenging year for the gaming industry and broader market. We have an exciting product roadmap for the coming year with a full slate of launches planned for both our gamer and creator peripherals and gaming component systems segments. We expect to benefit from multiple catalysts in our core segments with the second half of 2023 expected to be stronger than the first half of 2023. Let me now turn the call over to our CFO, Michael Potter, for details on the financials. Michael, please go ahead.

Thanks, Andy, and good afternoon, everyone. Q4 2022 tracked to the very high end of our expectations and ended well with momentum carrying into Q1 2023. In terms of specifics, Q4 2022 net revenue increased to $398.7 million compared to $311.8 million in Q3 2022. This compares to $510.6 million in Q4 2021. Net revenue for the year was $1.375 billion compared to $1.904 billion in 2021. a decrease of 27.8%. Our channel partners continue to reduce their inventories in Q4 2022 to current and expected consumer demand and the reduced transit and lead times. We also further reduce our own inventory by about 23% quarter over quarter, which is back to more historic normalized levels. We are hopeful that the broader industry's inventory in the channel is also in a better position. which would lead to less discounting in 2023. European markets continue to be softer than America's and contributed about 30% of our revenue, well below the historic average in the high 30 percentile, but up from the approximately 29% in Q3 2022. Turning now to our segments. The gamer and creator peripheral segment contributed $117.8 million of net revenue during the fourth quarter, up from $96.8 million in the prior quarter and a decrease of 33.4% from $176.9 million in Q4 2021. The gamer and creator peripheral segment net revenue contributed 29.6% of total net revenue, a decrease of 500 basis points from 34.6% in Q4 2021. For the year, gamer and creator peripheral segment net revenue was $437.8 million, a decrease of 32.4% year-over-year. The gaming components and systems segment contributed $280.9 million of net revenue during the quarter, up from $214.9 million in the prior quarter, and a decrease of 15.8%, from $333.7 million in Q4 2021. Memory products contributed $158.1 million in Q4 2022, compared to $176.8 million in Q4 2021. For the year, gaming components and systems segment net revenue was $937.3 million, a decrease of 25.4% year-over-year. Overall gross profit in the fourth quarter decreased by 19.7% to $97.9 million from $121.8 million in Q4 2021. The decrease compared to Q4 2021 was primarily driven by reduced revenues. Gross profit margin increased 60 basis points to 24.5% compared to 23.9% in Q4 2021. This reflects the benefit of the improving supply chain environment, including a significant reduction in freight rates and supply chain lead times, which are rapidly approaching the same levels as they were pre-pandemic. We expect to realize the full benefit over the coming quarter, given the typical four to five month lag before these cost reductions are fully reflected in our P&L as our inventory turns. For the year, gross profit was $296.6 million. Note that this was impacted by the $19.5 million charge taken previously in the second quarter to account for inventory reserves in excess of our normal run rate to address overhang in the channel. The gamer and creator peripheral segment gross profit was $39.7 million, a decrease of 24.9% from $52.8 million in Q4 2021, primarily driven by a decrease in revenue. Gross profit margin was 33.7% compared to 29.9% in Q4 2021. For the year, gross profit was $125.1 million. The gaming components and systems segment gross profit was $58.2 million, a decrease of 15.6% from $69 million in Q4 2021, primarily driven by the decrease in revenue. Gross profit margin was 20.7%, unchanged from Q4 2021. For the year, gross profit was $171.6 million. Our memory products margin in this segment was 18.1% for the fourth quarter, compared to 17.5% in Q4 2021. Fourth quarter SG&A expenses were $68.5 million, a 16% decrease compared to $81.5 million in Q4 2021, driven in part by reduced freight costs out to our customers on lower revenues and lower freight rates. We did have some headcount reductions earlier in the year, and we also continue to closely monitor all expenses while continuing to invest in our revenue generating areas. Fourth quarter R&D expenses were $15.7 million, up slightly from $15.1 million in Q4 2021 as we continue to invest in our new products. GAAP operating income in the fourth quarter of 2022 was $13.6 million compared to $25.1 million in Q4 2021. For the year, we had $54.8 million operating loss. Adjusted operating income in the fourth quarter of 2022 was $29.6 million compared to $38.5 million in Q4 2021. For the year, this was income of $34.6 million. Fourth quarter net income attributable to common shareholders was $12.5 million. This represents net income of 12 cents per diluted share as compared to net income of $24.7 million or $0.25 per diluted share in Q4 2021. For the year, we had a net loss attributable to common shareholders of $60.9 million or a loss of $0.63 per diluted share. Fourth quarter adjusted net income was $20.7 million or a net income of $0.20 per diluted share as compared to adjusted net income of $34.7 million or 35 cents per diluted share in Q4 2021. For the year, we had adjusted net income of $18.4 million or 18 cents per diluted share. Adjusted EBITDA for the fourth quarter of 2022 was $32 million compared to $39.5 million for Q4 2021. For the year, adjusted EBITDA was $46.5 million. Turning now to our balance sheet. We took the opportunity to fortify our balance sheet in Q4, ending the year with a cash balance of $154 million, which includes the addition of approximately $81 million from our November equity offering. From a capital allocation standpoint, we continue to prioritize growth and will maintain a healthy balance of cash until the economic situation is clearer. We did pay down about $5 million of debt in Q4 2022, and would consider small repayments in 2023 if the year is meeting our expectations. We ended Q4 with $240 million of debt at face value, and our $100 million working capital revolver remains undrawn and fully available. We spent $6.5 million on CapEx in Q4, with the elevated capex level related to new facilities now mostly behind us. Barring strategic investment opportunities, we will look to bring our cash balance further up over time and resume reducing debt on a more accelerated basis. Outlook. In terms of the full year 2023, we expect total revenue in the range of $1.35 billion to $1.55 billion. adjusted operating income in the range of $75 million to $95 million, and adjusted EBITDA in the range of $90 million to $110 million. With the Fed rate hike cycle still in progress, forecasting interest expense remains more difficult. Assuming no further debt pay down, we expect interest expense of approximately $4 million per quarter before the impact of interest income. Assuming we maintain the same cash balance in 2023, we would expect to earn about $1.5 million of interest income per quarter. An effective tax rate of approximately 18% to 22% for 2023 and full year weighted average diluted shares outstanding of approximately 106 to 108 million shares. We expect to see revenue distributed more as it was in the past before the pandemic, with Q2 being the lowest quarter of revenue and the second half of 2023 being stronger than the first half. We were aggressive in reducing inventory starting in mid-2022, and the at-expectations second half of last year allowed us to get our own inventory levels to our top-level targets. We believe that we're starting 2023 at a healthier level of inventory, both in our own warehouses and in the hands of our channel partners. To summarize, we're seeing signs of improvement and expect a strong first half of 2023, led by the uptick in demand for self-built gaming PCs that Andy mentioned. We're also seeing the benefit of cost reduction actions we previously took, and we're closely monitoring all expenditures while continuing to support our product and revenue generation. Finally, we expect to see a few additional percentage points of margin improvement in 2023 over 2022, as we benefit from normalized freight costs and reduce need for us to discount now that we're back to our target inventory. With that, we're now happy to open the call for questions. Operator, will you please open up the call for Q&A?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would 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 key. First question comes from Drew Crum with Stifel. Please go ahead.

Okay, thanks. Hey, guys. Good afternoon. So, you know, I think there's a comment in the press release that revenue guidance is not expected to be affected by negative inventory trends. So if your revenue is flattish to slightly up for the year, is there a way to help us understand the tailwind you expect to get from restocking? And what does your forecast assume in terms of retail performance? Is it up, is it down, or is it sideways? And I have a follow-up.

Yeah, so the premise that we've done our forecast and guidance on is that We expect the market overall, and obviously this depends on different regions, but we expect the market overall to be flat, perhaps very slightly down, perhaps very slightly up. We definitely have a tailwind in there of something like $100 million, and that's assuming that this year is neutral, which is a good assumption, because we definitely shipped out to consumers $100 million more than we shipped into the channel. So hopefully that That gives you a sense of where we're at. The midpoint of the guidance is roughly $100 million up compared to our 2022 revenue.

Got it. Okay. Now that's helpful. And then maybe for Michael, are the lower shipping costs mentioned those running through the COGS line and SCNA, or is it one or the other? And then you mentioned a decline of over 70% in Q4 versus the beginning of last year. Is there a way in which you can put that in dollar terms? And what type of benefit does your guidance embed for 23? Thanks.

Yeah, so for the first question, for gross margin, that's benefit in shipment in. Shipment out, we recognize the quarter we do the shipment. There's no delay in it. So it's whenever you do the ship out, that's an OPEX. But bringing inventory in gets capitalized into inventory and comes out over the terms. Just roughly in terms of some numbers, the change, as we left 2021, it was costing close to $20,000 a container, depending exactly on the routes. But on some of our routes, it was that high. By the end of 2022, it was somewhere between $3,000 to $4,000 a container, again, depending on specifically what route. So there was a pretty significant decrease on container costs. Okay, thanks guys.

Next question, Aaron Lee with Macquarie. Please go ahead.

Hi, thanks for taking my question. Wanted to touch on the promotional environment for a second. You guys gave some good color on the heavier discounting by your peers and some of the excess inventory that could take some time to resolve for the industry. Outside of that, are you starting to see any improvements in the promotional environment or is it too early to tell? And assuming peers continue to discount, is your strategy to maintain price just given your premium positioning?

Well, firstly, let me welcome you to the analyst group, Aaron. I know you're the new analyst on Macquarie, so it's the first time we've spoken. So in terms of promotional activity, we actually think we're a little bit ahead of our, generally, of our competitors on inventory. I mean in terms of inventory reduction in the channel. We saw through Q4 many of our larger competitors discounting far more heavily than we were, and it indicated to us they may be a little longer on inventory in the channel. Now, we think we, well, we know we've roughly taken care of our inventory overhang by the end of the year, and whatever was left we're eating up. In fact, in many areas now we are under inventory targets in the channel. But we think many of our competitors still have access. I believe that there'll still be some discounting going on in the channel, mostly in gaming peripherals for the next one or two quarters. And we will do what we can to maintain our market share, but most of the discounting tends to happen in the entry level. And we're okay to lose a little bit of market share in the entry level if it would then cause us to be in a lost position. So hopefully that makes sense. So we think that promotional environment will be still going on for the next six months, three to six months, and I hope by the second half it'll go away as everyone's inventory clears up back to a normal level.

Got it. Perfect. That's helpful. And just as a quick follow-up, I know you've recently announced several upgrades to some of your existing product lines. And you've also launched, obviously, some new products as well. So as you look at 2023, how are you planning on splitting your development resources between upgrades and new product launches? Is it, you know, pretty split pretty evenly?

No, it's not. I mean, we've obviously got different sizes of businesses across the board. Some of the businesses we're in, like Elgato Streaming, for example, has got a very heavy software content and so the products are just a lot more complicated, and for that reason, higher margins. So there's a lot of resources going into that. We've got a pretty big software ecosystem which requires resources. We have a much bigger TAM that we're addressing in gaming peripherals, and so there's a lot more products coming out there. In terms of the gaming components, products that we use to build gaming systems, that's the biggest part of our revenue now. And so, obviously, we keep having to upgrade those. Most recently, what we've had to do is upgrade all of our power supplies to higher wattage levels because the new graphics cards from NVIDIA and AMD come to that are using a lot more power, a lot more powerful. I'm sure you've seen that in the news. So it's a general upgrade across the board. But I'd say, look, in general, the... R&D budget is more geared towards products that require a lot more software and complexity. But that doesn't necessarily, you know, tie up with the revenue of each product line. I think in terms of longer term, you know, market share expansion, we'd expect there's a lot more opportunity for us to grow in the gaming peripheral and the El Gato streaming area because those are newer products. We're quite well established in memory sales and other components that go into self-built PCs, and we have very high market share.

Gotcha. Perfect. Thank you very much. And, yeah, congrats on the quarter. Really nice performance.

Once again, if you would like to ask a question, please press star 1 on your telephone keypad. Next question comes from Doug Krutz with Cowan & Company. Please go ahead.

Hey, thank you. If I take the midpoints of your guidance ranges, you're sort of suggesting you're going to earn close to 7% EBITDA margins, which is basically where you were pre-pandemic. If I think about what the pathway is to get to, let's say, 10% EBITDA margins, is that just a function of creating operating leverage from top-line growth, or are there still things going on in the market or with you that are structurally impacting your margins that you think will get resolved over time?

Yeah, that's a good question. And both are true. The largest component is size and leverage. And so clearly at the two plus billion dollar level, there's a lot more overhead, less overhead in terms of percentage. So that drives it up. But there's still a lot of margin enhancement going on in almost every product line. We still have some remnants of... high freight costs sitting in inventory. As Michael said, they go into the balance sheet. We still have some discounting going on, as I said. So we think if we got back to the normal situation that we were in in 2019 in terms of market, we'd actually be substantially above probably one or two points higher in terms of EBITDA level.

Okay, that's very helpful. Thank you.

Next question, Mario Liu with Barclays. Please go ahead.

Great. Thanks for taking the questions. So the first one is just a high-level question. So now that the retail channel is normalizing, I'm curious if there's any, you know, other areas of focus that you'll be returning to or new initiatives this year. I know in the past you mentioned kind of growing your DDC channels or growing your services segment, for example. Thanks.

Yeah, good questions, Mario. Well, at the moment, the most important market we're chasing after is, or trying to keep up with, is a self-built PC component market. That has really resurged with the new graphics cards coming out from NVIDIA. And in fact, it's only really the high-end cards that have come out so far. So we still have the 4070 card, which will probably end up being the most popular card that will drive most volume for us. So the first priority for us is to keep up with that demand. It's very strong, stronger than I think most people would expect given a sort of a recessionary period. You would think it would be difficult for people to spend $2,000 or $3,000 on building their own PCs, but that's what everyone's doing at a very good rate, substantially above pre-pandemic levels. So that is one area. We talked earlier about the fact that we still have a large market to go after in gaming peripherals, so that'll continue to be a focus. Streaming and building out some of the streaming and content creative products, such as Stream Deck, we're trying to enhance that so it's more useful for people doing all sorts of work in business, whether it's using Teams or Zoom or Adobe. So we're going to do a lot of work there. And then, yes, we're actually doing very well in our direct-to-consumer business. We had a record 15% of total sales last quarter that was direct-to-consumer. So I think it's important for us to continue to build that out.

Great. Thanks. And just a follow-up on the comment on seasonality. You mentioned that the second half is supposed to be stronger than the first half. Is there any that we could use, like, for example, should we look back in 2019 where, you know, the second half was, I'll admit, 50% of total? Thanks.

It should be much more like pre-pandemic type of patterns, you know, down from Q4 into Q1. Q2 is the lowest, and then it starts going back up. Second half is higher than the first half. Partially, it will be from new product releases during the year as well. We believe that will expand the addressable TAM for us, and that will give us more opportunity for more revenue throughout the year, and that will help our second half.

Got it. Thanks, Michael. Just to give some color there, Mario, the uncertainties that we face are several. We know right now we've got a very, very strong self-built PC market with more to come. And so we expect that's going to go on for some time. If it does, it'll be stronger in the second half, probably in the first half. We have China, which is sort of going through an exit of COVID, if you like. And if you remember, when everybody came out of COVID in the U.S., in Europe, the initial reaction was to do lots of vacations and restaurants and that sort of thing. So people were spending money in other places. So that's yet to come. And so there's a lot of things like that. Europe, how soon will the Ukraine-Russia situation resolve itself? How will inflation work over there? So while we've got a very clear sight and feel great about the US, I think there's more uncertainties in Europe and Asia that could affect how the seasonality works.

Got it. Thanks, Andy.

Once again, if you would like to ask a question, Please press star one on your telephone keypad. Next question comes from Colin Sebastian with Baird. Please go ahead.

Hey, good afternoon, Andy and Michael. It's Reece on for Colin. I kind of had a two-part question on Europe. The first part being, could you just kind of frame up where you are in that 26% growth stat versus 2019 relative to the market? And then What's kind of embedded in the guidance this year for Europe? Is it continued weakness or is it something else? And then I think, Andy, in your prepared remarks, if I heard you correctly, you mentioned something around mobile. If you could just touch on that, that'd be great. Thanks.

So just for normal percentages, in the past for Europe, we're usually in the high 30%, close to the Americas. That went down into the mid-20s at the start of the conflict between Russia and Ukraine. Got back up to about 30% by the end of last year. Assuming that there's no further deterioration from energy costs or the conflict there, we do expect to have some gradual improvement in Europe through the year, but not returning back up to the old levels by the end of next year, but certainly some strength there.

Yeah, the added color there is that there was more of an inventory adjustment needed in Europe than in the U.S. So what that means is that, you know, remember the first question about how do we think about revenue sales out from the channel versus sales in? There was a bigger differential in Europe than there was in the U.S., which therefore affected our revenue mix. In terms of mobile, I'm not sure what the question was. You mean, what's our feeling about mobile gaming today?

Yeah, I thought you had mentioned something about mobile gaming product development. I may have heard it incorrectly.

Yeah, no, that's right. We've said previously that there's a couple of areas that we're looking at carefully in the gaming or the interactive entertainment space. One of them is AR and VR. Still a little bit early for us to jump into that. And the other one is mobile gaming, which we're watching closely. It's sort of a fairly small market in terms of the accessories, and by accessories I mean something that clips onto the phone and allows you to use buttons for a better gaming experience. So we're looking at that very carefully. Clearly we have console controllers in our SCUF division, so we know about how that market works. But the vast majority of people playing games on phones are just using the phone screen for inputs. But as that's developed and if some opportunities arise, we'll certainly jump into that.

Excellent. Thank you.

Thank you. I will now turn the call back to the company's CEO for closing comments.

Well, look, thank you, everybody, for joining the call today and for the continued support. Obviously, we're feeling pretty bullish at the moment with our nice results in Q4. We expect that to continue for the next year. Against obviously macroeconomic issues. So if you have any further questions, please contact our Investor Relations Department. We look forward to updating you next quarter. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.