Frequency Electronics, Inc.

Greetings and welcome to the Frequency Electronics fourth quarter and fiscal year end 2021 earnings release conference call. 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. As a reminder, this conference is being recorded. Any statements made by the company during this conference call regarding the future constitute forward-looking statements pursuant to the safe harbor provisions of the private securities litigation reform act of 1995. Such statements inherently involve uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences are included in the company's press releases and are further detailed in the company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements for revisions or changes after the date of this conference call. It is now my pleasure to introduce your host, Stanton Sloan, President and CEO.

Thank you. Good afternoon, everyone. Thank you for joining us on the call today. Let me begin by saying I'm very pleased with FDI's improving financial performance in fiscal year 2021. We increased by approximately 31 percent compared to fiscal year 2020, and 53 percent compared to Q4 of fiscal year 2020. Gross margin for the fiscal year increased to 31 percent, and while we worked diligently to keep improving that, the trend is very encouraging. Comparing Q4 fiscal year 21 to Q4 fiscal year 20, revenue increased by $5.4 million. Operating income was positive, and net income was significantly improved at $1.4 million. Again, that is an encouraging trend. Net income for the full fiscal year was also substantially improved, and we generated over $12 million of cash from operations. ending the year with approximately $20 million of cash and marketable securities. We also ended the year debt-free and with approximately a $40 million backlog of funded contract work. SG&A costs increased last year due to legal and other administrative cost increases. Absent these unusual expenses, bottom line performance would have been higher. The fact that we achieved these improvements in a very difficult year attest to the growing strength of the company. The COVID-19 pandemic was a particular challenge last fiscal year due to supply chain issues and delays in customers processing of the anticipated contract awards, particularly in our Zephyr operations. Sadly, we did lose one employee to COVID. Except for that extremely unfortunate event, it was a very good year. Now let me turn the call over to Steve and have him take us through financial details. Steve?

Thank you, Stan, and good afternoon. For the fiscal year ended April 30th, 2021, consolidated revenue was $54.3 million, up 31% compared to $41.5 million for the same period of the prior fiscal year. The components of revenue are as follows. Revenue from commercial and U.S. government satellite programs was $27 million compared to $20.4 million for the same period of the prior fiscal year, and accounted for approximately 50% of consolidated revenues compared to 49% for the prior fiscal year. Revenue on satellite payload contracts are recognized primarily under the percentage of completion method and recorded only in the FEI New York segment. Revenue from non-space U.S. government and DoD customers, which are recorded in both the FEI New York and FEI Zephyr segments, were $27.8 million compared to $16.9 million in the same period of the prior fiscal year and accounted for approximately 46% of consolidated revenue compared to 41% for the prior fiscal year. Other commercial industrial revenues were $2.5 million compared to $4.2 million in the prior fiscal year. Intersegment revenues are eliminated in consolidation. For the fiscal year ended April 30, 2021, gross profit and gross profit percentage increased significantly as compared to the prior fiscal year. The increase in gross profit and gross profit percentage was due to completion of several programs identified in prior periods that incurred higher engineering costs in their development phase and have since been completed or are near completion. For the fiscal year ended April 30, 2021 and 2020, selling and administrative expenses were approximately 24% and 28% respectively of consolidated revenues. The increase in SG&A expense was mainly due to an increase in professional fees relating to litigation, deferred compensation, and insurance expenses. R&D expense for the fiscal year ending April 30, 2021, and 2020 decreased to $4.7 million from $5.1 million, a decrease of $0.4 million, and were 9% and 12% of consolidated revenue. The company's R&D expense decreased year over year as previous R&D efforts have ended and turned into production. However, the company plans to continue to invest in R&D to keep its products at the state of the art. For the fiscal year ended April 30, 2021, the company recorded an operating loss of $1 million compared to $10.9 million in the prior year. The decrease in operating loss in the fiscal year ended April 30, 2021 reflects improvement in revenue, gross profit, and gross profit percentage. Other income consists primarily of investments derived from the company's holdings of marketable securities. For the fiscal year ended April 30, 2021, investment income includes a $105,000 dividend from Morion compared to a $250,000 dividend from Morion in the same period in fiscal 20. Included in other income for the fiscal year ended April 30, 2021, was the collection of a $1 million note relating to the sale of Jelam in April of 2018. This yields pre-tax income of approximately 476,000 compared to a pre-tax loss of approximately 11.8 million in the prior year. For the fiscal year ending April 30, 2021, the company recorded a tax benefit of 204,000 compared to 1.7 million for the prior year. Consolidated net income for the fiscal year ending April 30, 2021 was 680,000 worth $0.07 per diluted share compared to a consolidated net loss of $10.3 million or $1.10 per share in the previous fiscal year. Our fully funded backlog at the end of April 2021 was approximately $40 million, up approximately $5 million from the previous year end to April 30, 2020. The company's balance sheet continues to reflect a strong working capital position of approximately $57 million at April 30, 2021, and a current ratio of approximately 6 to 1. Additionally, the company is debt-free. The company believes that its liquidity is accurate to meet operating and investing needs for the next 12 months and the foreseeable future. I'll turn the call back to Stan, and we look forward to your questions shortly.

Thanks, Steve. Before we take questions, please be advised that we will not discuss details of any pending litigation or matters related to it. Now let me turn the call over to the operator who will explain how to submit your questions. Operator?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate that 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 keys. One moment please while we poll for questions. Our first question is from Brett Rice with Janie Montgomery Scott. Please proceed.

Thank you. Hi, Stanton. Hi, Steve. How are you? Good, good. Congrats on the quarter. Very, very encouraging. Thank you. Just one or two questions. If we have a quarter where you do let's say, 18 to 20 million in revenues with the same mix of business as this last quarter. What do you think the gross margin would be in that kind of quarter?

Well, I would hope it would be as good or better. We obviously keep striving to raise the gross margin, so we'll continue to do that. It's driven by a lot of things, product mix, timing, a variety of other Right.

I'm just trying to get a sense of what kind of operating leverage, you know, we have as revenues, you know, hopefully continue to, you know, to move up.

Well, I think we've said before the business is very sensitive to revenue. So the best predictor I think here is the revenue trend. That's what I would look at.

Great. Great. All right. I'm going to drop back because I'm sure you have a couple of other people on the call.

Thank you.

Our next question is from Sam Radotsky with SARE Asset Management. Please proceed.

Yeah. Good afternoon, Stan and Steve. Thank you for taking my call. You folks have done wonderful, unbelievable Stanton since you've been aboard. And tell me, is it possible to expect at this point in time, the shareholders that get stock will stop selling and hold on to the stock as you clearly have expect to improve earnings?

Well, hard for me to predict people's behavior. I can tell you I'm not selling anything. So I think, you know, I believe that people will, that their confidence in the business will increase as we continue to improve. And I would hope they'll continue to hold and buy more. That would be my expectation.

Well, that's wonderful. That would be my expectation. And As far as – I know we talk about a number that's unfunded. Do you have a number of sales backlog that's unfunded or funded that you could sort of share with us at this time?

So, as we've said many times, we only report the backlog that's funded, but the unfunded part is substantial. It's probably in the order of – probably in the $40 million range.

Unfunded, $40 million. And funded is the $40 million, too. Okay. Correct. And is it possible you will start telling your story as it's improved to the Wall Street people? Of course, the numbers are really wonderful, and it's clear it's something to talk to about from so everybody would know what you're doing?

Yeah, the answer is yes. I've been hesitant until I felt like we had things on the right track, and I think we are. So I'm ready to get out and start talking with folks.

Congratulations.

Thanks.

Thank you. Our next question is from Michael Eisner, a private investor.

Please proceed. Great job. Did you hire more people this quarter and going forward?

We have. We've hired roughly 25 people since January. Let's see, this quarter. So last quarter you're talking about Q4.

Yes, and going forward?

Yeah, we've added about 25 folks. I think we have openings for another 10 or so. So we're adding folks, yep.

So you could find people.

We've had reasonably good luck finding folks. In this environment, of course, very difficult. We seem to be holding our own. Our turnover rates are very low here. Average tenure of the workforce is pretty high. So at the moment, we're doing okay.

How's the supply chain now?

Still some issues in the supply chain related to COVID. There's sort of a lag effect in some parts of the supply chain as they catch up. A lot of folks had people out, had delays in their raw materials and other things. It's fairly isolated. It's not a widespread problem, but But we are having some lingering effects. We're working through those. We have alternate sources of supply for a lot of things. So at the moment, we're holding our own.

Yeah, this is affecting everyone, though, this supply chain problem. You know, your backlog, I think, was about the same last quarter, but your revenue went up much higher. Is that going to – what was that – how did that happen? What was it, just the timing of when you recognized revenue?

Yeah. 606 Accounting, of course, we record the revenue as we complete the work, which is disconnected from when the billings are. So, you know, you see variation in the timing as a result of that.

Yeah, you guys are always lumpy. Do you see revenue increasing?

That's our objective. Backlog's increasing, so that's the best indicator, I think.

And the bid's outstanding?

Yeah, that goes up and down as things get awarded or not. We're doing pretty good on win rates. I think last year our win rate was about 40%. I would say that's pretty good. So, yeah, things look promising.

No, but I think it was like $600 million. The bid's outstanding.

Yeah, it's probably a little lower than that right now just because a lot of stuff got awarded or we didn't win it. But I don't know what the number is offhand. It's probably between $400 and $500 million.

Okay. Thank you. Sure.

Thank you.

And we have one more, we have another question from Brett Rice with Jamie Montgomery Scott. Please proceed.

Hey, Brett.

Hi.

You know, because things really look like they're turning around and you're building cash, is it too soon or premature for the board to, you know, at least consider instituting some sort of share buyback authorization?

So I'll just say that we're mindful of deploying capital and looking at all the options, and the board obviously watches that, and we'll decide what to do with it at some point, but we want to make sure we employ it effectively.

Great. All right. Thanks for the additional question.

You bet.

Thank you. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the queue. And we have another question from Michael Eisner, a private investor. Please proceed.

So I'm going to hit you with so many questions. Lockheed launched GPS 3. I think it was launch number 5. What was that?

Space vehicle five.

Yeah. And they're going to launch six, seven and eight. Now are we involved in that or we're involved in GPS three F, which I think starts at, uh, launch number 11. If I remember.

You're correct. We're not on the three program.

We're on three F. So we won't, we won't, I mean, they're working on it now, but I will, our stuff won't be launched until number 11.

Well, it's a little more complicated. We have two products that will potentially be on the GPS3F satellites. The exact satellite, the first satellite that those products will go on to is a little uncertain at the moment, schedule-wise. There is a potential that we'll be putting one of those products, a development version of that product, actually on a GPS-3 launch. That's in discussion, but at the moment, that's not a hard contractual requirement.

And final question. Elcom, it's been a long contract, the Advanced Electronic Warfare. How's that going?

You're talking about the Advanced Off-Board electronic warfare, A-O-E-W. The products are in the final development stage. They've tested very well. At the moment, we're awaiting a production order, which is dependent on, not on us, but on Lockheed Martin and the government to get through the milestone in authorized production. So that's where that stands.

So you haven't booked any revenue on this yet?

We've booked revenue on AOEW, but not on the production options. We don't have that yet.

Just on they gave you money to R&D?

Yeah, the development and the initial testing and qualification.

All right, and if things get busy, you can outsource?

Yeah, we outsource quite a bit, you know, things that aren't core to the business, circuit board assembly, that sort of stuff, and, you know, machine shop, mechanical parts. So we do a fair amount of that.

All right. Things are going good. Thank you.

Better, yes. Thank you.

Thank you.

Ladies and gentlemen, we have reached the question and answer session, and I would like to turn the call back to Stan Sloan for closing remarks.

I'll just say thank you, everybody. It was a good year, and we look forward to talking to you again at the next call. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you very much for your participation. Have a great day. Hello. you Bye. Thank you.

Thank you.

Greetings and welcome to the frequency electronics fourth quarter and fiscal year end 2021 earnings release conference call 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 as a reminder this conference is being recorded. Any statements made by the company during this conference call regarding the future constitute forward-looking statements pursuant to the safe harbor provisions of the private securities litigation reform act of 1995. Such statements inherently involve uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences are included in the company's press releases and are further detailed in the company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements for revisions or changes after the date of this conference call. It is now my pleasure to introduce your host, Stanton Sloan, President and CEO.

Thank you. Good afternoon, everyone. Thank you for joining us on the call today. Let me begin by saying I'm very pleased with FDI's improving financial performance in fiscal year 2021. We increased by approximately 31 percent compared to fiscal year 2020, and 53 percent compared to Q4 of fiscal year 2020. Gross margin for the fiscal year increased to 31 percent, and while we worked diligently to keep improving that, the trend is very encouraging. Comparing Q4 fiscal year 21 to Q4 fiscal year 20, revenue increased by $5.4 million. Operating income was positive, and net income was significantly improved at $1.4 million. Again, that is an encouraging trend. Net income for the full fiscal year was also substantially improved, and we generated over $12 million of cash from operations. ending the year with approximately $20 million of cash and marketable securities. We also ended the year debt-free and with approximately a $40 million backlog of funded contract work. SG&A costs increased last year due to legal and other administrative cost increases. Absent these unusual expenses, bottom line performance would have been higher. The fact that we achieved these improvements in a very difficult year attest to the growing strength of the company. The COVID-19 pandemic was a particular challenge last fiscal year due to supply chain issues and delays in customers processing of the anticipated contract awards, particularly in our Zephyr operations. Sadly, we did lose one employee to COVID. Except for that extremely unfortunate event, it was a very good year. Now let me turn the call over to Steve and have him take us through financial details. Steve?

Thank you, Stan, and good afternoon. For the fiscal year ended April 30th, 2021, consolidated revenue was 54.3 million, up 31%, compared to 41.5 million for the same period of the prior fiscal year. The components of revenue are as follows. Revenue from commercial and U.S. government satellite programs was 27 million, compared to 20.4 million for the same period of the prior fiscal year, and accounted for approximately 50% of consolidated revenues compared to 49% for the prior fiscal year. Revenue on satellite payload contracts are recognized primarily under the percentage of completion method and recorded only in the FEI New York segment. Revenue from non-space US government and DoD customers, which are recorded in both the FEI New York and FEI Zephyr segments, were $27.8 million compared to $16.9 million in the same period of the prior fiscal year and accounted for approximately 46% of consolidated revenue compared to 41% for the prior fiscal year. Other commercial industrial revenues were $2.5 million compared to $4.2 million in the prior fiscal year. Intersegment revenues are eliminated in consolidation. For the fiscal year ended April 30, 2021, gross profit and gross profit percentage increased significantly as compared to the prior fiscal year. The increase in gross profit and gross profit percentage was due to completion of several programs identified in prior periods that incurred higher engineering costs in their development phase and have since been completed or are near completion. For the fiscal year ended April 30, 2021 and 2020, selling and administrative expenses were approximately 24% and 28% respectively of consolidated revenues. The increase in SG&A expense was mainly due to an increase in professional fees relating to litigation, deferred compensation, and insurance expenses. R&D expense for the fiscal year ending April 30, 2021, and 2020 decreased to $4.7 million from $5.1 million, a decrease of $0.4 million, and were 9% and 12% of consolidated revenue. The company's R&D expense decreased year over year as previous R&D efforts have ended and turned into production. However, the company plans to continue to invest in R&D to keep its products at the state of the art. For the fiscal year ended April 30, 2021, the company recorded an operating loss of $1 million compared to $10.9 million in the prior year. The decrease in operating loss in the fiscal year ended April 30, 2021 reflects improvement in revenue, gross profit, and gross profit percentage. Other income consists primarily of investments derived from the company's holdings of marketable securities. For the fiscal year ended April 30, 2021, investment income includes a $105,000 dividend from Morion compared to a $250,000 dividend from Morion in the same period in fiscal 20. Included in other income for the fiscal year ended April 30, 2021, was the collection of a $1 million note relating to the sale of Jalam in April of 2018. This yields pre-tax income of approximately 476,000 compared to a pre-tax loss of approximately 11.8 million in the prior year. For the fiscal year ending April 30, 2021, the company recorded a tax benefit of 204,000 compared to 1.7 million for the prior year. Consolidated net income for the fiscal year ending April 30, 2021 was 680,000 were $0.07 per diluted share compared to a consolidated net loss of $10.3 million, or $1.10 per share, in the previous fiscal year. Our fully funded backlog at the end of April 2021 was approximately $40 million, up approximately $5 million from the previous year end, April 30, 2020. The company's balance sheet continues to reflect a strong working capital position of approximately $57 million at April 30, 2021, and a current ratio of approximately 6 to 1. Additionally, the company is debt-free. The company believes that its liquidity is accurate to meet operating and investing needs for the next 12 months and the foreseeable future. I'll turn the call back to Stan, and we look forward to your questions shortly.

Thanks, Steve. Before we take questions, please be advised that we will not discuss details of any pending litigation or matters related to it. Now let me turn the call over to the operator who will explain how to submit your questions. Operator?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate that 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 keys.

One moment please while we poll for questions.

Our first question is from Brett Rice with Janie Montgomery Scott. Please proceed.

Thank you. Hi, Stanton. Hi, Steve. How are you? Good, good. Congrats on the quarter. Very, very encouraging. Thank you. Just one or two questions. If we have a quarter where you do let's say, 18 to 20 million in revenues with the same mix of business as this last quarter. What do you think the gross margin would be in that kind of quarter?

Well, I would hope it would be as good or better. We obviously keep striving to raise the gross margin, so we'll continue to do that. It's driven by a lot of things, product mix, timing, a variety of other Right.

I'm just trying to get a sense of what kind of operating leverage, you know, we have as revenues, you know, hopefully continue to, you know, to move up.

Well, I think we've said before the business is very sensitive to revenue. So the best predictor I think here is the revenue trend. That's what I would look at.

Great. Great. All right. I'm going to drop back because I'm sure you have a couple of other people on the call.

Thank you.

Our next question is from Sam Radotsky with SARE Asset Management. Please proceed.

Yeah. Good afternoon, Stan and Steve. Thank you for taking my call. You folks have done wonderful, unbelievable Stanton since you've been aboard. And tell me, is it possible to expect at this point in time, the shareholders that get stock will stop selling and hold on to the stock as you clearly have expect to improve earnings?

Well, hard for me to predict people's behavior. I can tell you I'm not selling anything. So I think, you know, I believe that people will, that their confidence in the business will increase as we continue to improve. And I would hope they'll continue to hold and buy more. That would be my expectation.

Well, that's wonderful. That would be my expectation. And as far as... I know we talk about a number that's unfunded. Do you have a number of sales backlog that's unfunded or funded that you could sort of share with us at this time?

So as we've said many times, we only report the backlog that's funded, but the unfunded part is substantial. It's probably in the order of probably in the $40 million range.

Unfunded, $40 million. And funded is the $40 million, too. Okay. Correct. And is it possible you will start telling your story as it's improved to the Wall Street people? Of course, the numbers are really wonderful, and it's clear it's something to talk to about so everybody would know what you're doing.

Yeah, the answer is yes. I've been hesitant until I felt like we had things on the right track, and I think we are. So I'm ready to get out and start talking with folks.

Congratulations.

Thanks.

Thank you.

Our next question is from Michael Eisner, a private investor. Please proceed.

Great job. Did you hire more people this quarter and going forward?

We have. We've hired roughly 25 people since January. Let's see, this quarter. So last quarter, you're talking about Q4.

Yes, and going forward?

Yeah, we've added about 25 folks. I think we have openings for another 10 or so. So we're adding folks, yep.

So you could find people.

We've had reasonably good luck finding folks. In this environment, of course, very difficult. We seem to be holding our own. Our turnover rates are very low here. Average tenure of the workforce is pretty high. So at the moment, we're doing okay.

How's the supply chain now?

Still some issues in the supply chain related to COVID. There's sort of a lag effect in some parts of the supply chain as they catch up. A lot of folks had people out, had delays in their raw materials and other things. It's fairly isolated. It's not a widespread problem, but But we are having some lingering effects. We're working through those. We have alternate sources of supply for a lot of things. So at the moment, we're holding our own.

Yeah, this is affecting everyone, though, this supply chain problem. You know, your backlog, I think, was about the same last quarter, but your revenue went up much higher. Is that going to – what was that – how did that happen? What was just the timing when you recognized revenue?

Yeah. 606 Accounting, of course, we record the revenue as we complete the work, which is disconnected from when the billings are. So, you know, you see variation in the timing as a result of that.

Yeah. You guys are always lumpy. Do you see revenue increasing?

That's our objective. Backlog's increasing, so that's the best indicator, I think.

And the bid's outstanding?

Yeah, that goes up and down as things get awarded or not. We're doing pretty good on win rates. I think last year our win rate was about 40%. I would say that's pretty good. So, yeah, things look promising.

No, but I think it was like $600 million. The bid's outstanding.

Yeah, it's probably a little lower than that right now just because a lot of stuff got awarded or we didn't win it. But I don't know what the number is offhand. It's probably between $400 and $500 million.

Okay. Thank you. Sure.

Thank you.

And we have one more, we have another question from Brett Rice with Jamie Montgomery Scott. Please proceed.

Hey, Brett.

Hi. You know, because things really look like they're turning around and you're building cash, is it too soon or premature for the board to, you know, at least consider instituting some sort of share buyback authorization?

So I'll just say that we're mindful of deploying capital and looking at all the options, and the board obviously watches that, and we'll decide what to do with it at some point, but we want to make sure we employ it effectively.

Great. All right. Thanks for the additional question.

You bet.

Thank you. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the queue. And we have another question from Michael Eisner, a private investor. Please proceed.

Sorry to hit you with so many questions. Lockheed launched GPS 3. I think it was launch number 5. What was that?

Space vehicle five. Yeah.

And they're going to launch six, seven, and eight. Now are we involved in that or we're involved in GPS three F, which I think starts at, uh, launch number 11. If I remember.

You're correct. We're not on the three program.

We're on three F. So we won't, we won't, I mean, they're working on it now, but I will, our stuff won't be launched until number 11.

Well, it's a little more complicated. We have two products that will potentially be on the GPS3F satellites. The exact satellite, the first satellite that those products will go on to is a little uncertain at the moment, schedule-wise. There is a potential that we'll be putting one of those products, a development version of that product, actually on a GPS 3 launch. That's in discussion. But at the moment, that's not a hard contractual requirement.

And final question. LCOM, it's been a long contract, the Advanced Electronic Warfare. How's that going?

You're talking about the Advanced Off-Board electronic warfare, A-O-E-W. The products are in the final development stage. They've tested very well. At the moment, we're awaiting a production order, which is dependent on, not on us, but on Lockheed Martin and the government to get through the milestone and authorized production. So that's where that stands.

So you haven't booked any revenue on this yet?

We've booked revenue on AODW, but not on the production options. We don't have that yet.

Just on they gave you money to R&D?

Yeah, the development and the initial testing and qualification.

All right. And if things get busy, you can outsource?

Yeah, we outsource quite a bit, you know, things that aren't core to the business, circuit board, assembly, that sort of stuff, and, you know, machine shop, mechanical parts. So we do a fair amount of that.

All right. Things are going good. Thank you.

Better, yes. Thank you.

Thank you.

Ladies and gentlemen, we have reached the question and answer session, and I would like to turn the call back to Stan Sloan for closing remarks.

I'll just say thank you, everybody. It was a good year, and we look forward to talking to you again at the next call. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you very much for your participation. Have a great day.