Kelly Services, Inc.

and consulting business will expand Kelly's set delivery platform and establish the business as a top provider of tech talent solutions in the U.S. Seven Step will bring its industry-leading brand and highly attractive client base in both RPO and MSP to elevate Kelly OCG's RPO segment to among the top five globally. Motion Telco will add a complementary client portfolio and delivery capabilities to Kelly's existing telecom specialty to create a market-leading telecom offering. And TG Federal will bring a dedicated new platform in government technology subcontracting with strong partnerships to build upon Kelly SET's success in the government space. The highly complementary nature of our SET and OCG segments and MRP's portfolio of businesses and customers forms the basis for substantial long-term value creation. Through this transaction, Kelly will provide MRP and its leading brands with a highly invested partner and a breadth of resources to fuel its continued growth. Likewise, the acquisition of MRP will enhance Kelly's revenue growth potential and accelerate EBITDA margin expansion. it will build upon the significant EBITDA margin expansion we've delivered through actions implemented in 2023 and the sale of Kelly's European staffing operations in January 2024. This deal demonstrates our commitment to rapidly and responsibly redeploying capital in pursuit of inorganic investments in higher margin, higher growth specialties. I look forward to sharing more details and formally welcoming MRP to the Kelly team when the transaction closes, which we expect to occur in the second quarter of this year, subject to regulatory approvals and other customary closing conditions. In tandem with our pursuit of this transformative acquisition, we remained focused on delivering results. Through persistent macroeconomic uncertainty and headwinds impacting our industry, we focused on what we can control and continued making progress on our journey to drive significant EBITDA margin expansion. We began 2024 with an adjusted EBITDA margin of 3% following the sale of Kelly's European staffing operations, and we delivered an increase of 20 basis points in the first quarter, raising our adjusted EBITDA margin to 3.2%. Our continued progress demonstrates that the growth and efficiency actions we are implementing across our businesses are working, positioning Kelly to convert a greater share of top-line growth to bottom-line growth. For more details on our results in the first quarter, I'll turn the call over to our Chief Financial Officer, Olivier Tiro.

Thank you, Peter, and good morning, everybody. As a reminder, Kelly's 2023 results include the European staffing business that we sold on January the 2nd of 2024. To provide greater visibility into trends in our operating results, I will also discuss year-over-year changes on a reported and also on an organic basis. References to organic information exclude the results of our European staffing business in 2023. Revenue for the first quarter of 2024 totaled 1.05 billion, compared to 1.27 billion in 2023, down 17.6%, resulting primarily from the sale of our European staffing business. On an organic basis, revenue declined 2.6% in the quarter, reflecting a continuation of staffing market headwind. Notwithstanding those headwinds, our education segment's revenue growth continues to be strong, up 16% year-over-year. The continued double-digit growth reflects both net new customer wins, strong fill rate, and demand from existing customers. In the set segment, revenue was down 6%. During the first quarter, we saw the continuation of challenging market conditions, with year-over-year revenue down 4% in our staffing specialties and down 9% in our outcome-based business. Permanent placement fees continued to be impacted by lower demand and declined 23%. In our OCG segment, revenue declined 6%. Year-over-year declines in RPO continued due to slower hiring in certain market sectors. Deceleration in MSP revenues continued. while PPO revenues improved on a year-over-year basis. Revenue in our professional and industrial segment declined 11% year-over-year in the quarter. Revenue from our staffing product declined 14%, reflecting continued challenging market conditions, and the segment's contact center outcome-based specialty revenue also declined year-over-year in the quarter. Revenue improved in our other outcome-based specialties And revenue in Mexico, which is now included in P&I, also improved. Overall, firm fees in P&I declined 42%. Overall gross profit was 19% as reported, or 8% on an organic basis. Our gross profit rate was 19.7% compared to 20% in the first quarter of the prior year. Our GP rate reflects a 90 basis point improvement from the sale of our European staffing operations. So on an organic basis, the GP rate declined 120 basis points in Q1, 80 basis points due to unfavorable business mix, and 40 basis points due to lower perm fees. The business mix impact reflects growth in specialties with lower GP rates, including education, and lower GP rates in SEP and OCG due to customer and product mix, respectively. SGN expenses were down 22% year-over-year on a reported basis and 10% on an organic basis. Expenses for the first quarter of 2024 include 2.3 million of restructuring charges related to our ongoing transformation efforts, as well as 5.6 million of expenses related to the sale of our European staffing operations, including transaction and also transition expenses. SG&E expenses in 2023 include 6.6 million of restructuring charges. So, expense declined by 23% on an adjusted basis, or 12% on an adjusted and organic basis. Like-for-like expenses were lower in Q1 2024 due to the positive impacts of our structural transformation efforts as well as lower performance incentive compensation expenses reflecting the challenging top-line trends. As a reminder, beginning in the first quarter, we are now reporting the operating results of our reportable segments utilizing revised business unit profit measures. We are allocating a greater share of the costs we had we have previously reported as corporate costs to our business units. In addition, we are no longer including depreciation and amortization in our business unit profit measure. We believe this provides greater visibility to the financial performance of each business unit and how they contribute to Kelly's overall performance. On a consolidated basis, our reported earnings from operations in the first quarter were 26.8 million compared to 10.7 million in Q1 of 2023. Our Q1 2024 results include 11.6 million gain on the sale of our European staffing operations. As I noted, our 2024 results also include 2.3 million of restructuring charges and 5.6 million of expenses related to the sale of our European staffing operations and related transition activities. Our first quarter of 2023 included a $6.6 million restructuring charge. So on an adjusted basis, Q1 2024 earnings from operations were $23.1 million, a 34% improvement over the prior year. An adjusted EBDA margin also improved 110 basis points to 3.2%, reflecting about 30 basis points of improvement from the sale of our European staffing operations and 80 basis points of improvement from our ongoing transformation efforts. Income tax expense for the first quarter was 4 million compared to 1.8 million in 2023. Our effective income tax rate was 13.5% in Q1 2024, consistent with the prior year. And finally, reported earnings per share for the first quarter was 70 cents compared with $0.29 in 2023. Earnings per share in 2024 include $0.14 related to the gain on sale of our European stashing operations, the gain from settlement of the related forward contract, partially offset by transaction-related charges and restructuring charges or net of tax. Earnings per share in 2023 included $0.13 per share of restructuring charges net of tax. So on an adjusted basis, Q1 2024 EPS was $0.56, compared to $0.42 per share in Q1 of 2023, a 33% increase year-over-year. Now reflecting on the balance sheet at Quaternary, cash totaled $201 million, and we had no debt outstanding. This includes the cash proceeds from the sale of our European staffing operations that was payable at closing. We expect additional cash proceeds in the third quarter of 2024, under the terms of the transaction related to final cash, debt, and net working capital adjustment, but do not expect any earn-out proceeds. At quarter end, accounts receivable total 1.2 billion, and global DSO was 58 days, down one day for both year and 2023, and the first quarter of 2023. In the quarter, we used 29 million In the quarter, we used $29 million for operating activities and capital expenditures compared to using $18 million in the comparable prior period. Looking forward, the expected due to closing of the motion recruitment partners acquisition will be funded by cash on hand and borrowing on existing credit facilities. Our ability to rapidly redeploy capital to advance our inorganic strategy reflects the strength of our balance sheet and our commitment to responsibly manage our liquidity. To maintain financial flexibility as we move forward, we are currently working with our banking partners to amend our credit facilities, to maintain our ability to invest in additional organic and inorganic initiatives, and to navigate an uncertain market environment. Looking ahead to operating results for the second quarter, We believe that staffing market conditions will remain relatively consistent with what we have experienced over the past several quarters. For the second quarter of 2024, on an organic basis, we expect revenue to be up 1% to 2%, with no significant effect impact, resulting in a midpoint revenue expectation of $1.03 billion. Our outlook? reflects an expectation that Q2 revenue trends will be consistent with Q1 of 2024 with a benefit of lower comparable. And for clarity, our expectations do not yet include any impact from our acquisition of motion recruitment partners as we await regulatory approval and the completion of other customary closing conditions. For the second quarter, we expect our GP rate to be between 20.1 to 20.3%. On the lack-for-like basis, this is a 60 base point decline at the midpoint of our range, reflecting the change in our business mix, primarily because our education business is expected to continue to deliver significant revenue growth. Also, we expect to continue to deliver sustained improvement in efficiency as the impact of our transformation-related actions continue. On the lack-for-like basis, we expect adjusted SG&E expenses to be similar to Q1 2024. Overall, we expect adjusted EBITDA margin of about 3.3%, an improvement of 120 basis points versus Q2 of last year, or 80 basis points on an organic basis. And we believe that when the staffing market recovers, we'll be well positioned to take further advantage of our improved efficiency. We expect our effective tax rate to be in the mid to high T. And now back to you, Peter.

Thanks for those insights, Olivier. When we initiated this transformation last year, I committed that we would implement structural, sustainable improvements to our business that would benefit all our stakeholders. Through the progress we have achieved to date, I am pleased to say we're delivering on our commitments. We said we would significantly improve Kelly's profitability, and we have, increasing the company's EBITDA margin to 3.2% in the first quarter. This is a step change from our recent net margin average of approximately 2%, and we delivered the improvement in a very short time. We said we would unlock new value-creating opportunities, and we have, signing the largest deal in the company's history in a bold move that redeploys capital to a business with highly attractive financial profile, seasoned leadership, and valuable assets in which Kelly is well-positioned to invest and grow over the long term. We said we would find new avenues of growth, and we have, as both our localized delivery model in P&I and large enterprise account strategy continue to deliver encouraging early results, positioning Kelly to capture increased demand when the macroeconomic environment rebounds. It's been an exceptionally productive start to the year as we've worked to deliver on these priorities. I'm grateful to the Kelly team who have executed on our specialty growth strategy with urgency and agility to bring us to this point on our journey. They've done so while keeping our clients and talent at the center of everything we do with our noble purpose as their guide. Their ongoing commitment to excellence is reflected in Kelly being named number one on Forbes 2023 list of America's top temporary staffing companies, an honor we are proud to have received this week for the second consecutive year. While there's more work to be done, I'm confident these accomplishments form a solid foundation upon which we will establish 2024 as an inflection point on our journey and propel Kelly into a new era of growth. Greg, you can now open the call to questions. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press 1 then 0 on your telephone keypad. You may withdraw your question at any time by repeating the 10 command. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press 1 and 0 at this time. And one moment, please, for your first question. Your first question comes from the line of Joe Gomes from Noble Capital. Please go ahead.

Good morning. Thanks for taking my questions.

Good morning, Joe. Good morning, Joe.

So first, I'm going to hit you up with questions on the acquisition and see what more detail we can get. Can you give us any kind of indication of revenue contribution, adjusted EBITDA margins? Obviously, they should be higher than Kelly's existing, since you say it should increase Kelly's overall margins. What kind of growth rates have has this business been seeing recently, you know, in terms of customer concentration, you know, top management planning on staying with the business, or do you see some of the management, you know, leaving here? Any more detail on the acquisition would be greatly appreciated.

Yeah, I think, Joe, thank you for your question. Of course, you know that we are still to close the deal. I think it's going to be in the course of Q2. So there is not so much we can provide at this stage, what I would say in terms of pure numbers. Revenue is in excess of $500 million. So that's, of course, I think a key information in terms of impact or future impact on Kelly growth and value profile. As Peter was saying, the growth and net margin profile of this acquisition will enhance Kelly value profile including the net margin. We will be in a position to give more information when we close. in the course of Q2. And probably, Peter, you can comment a little bit more on complementarity, acquisition for new capabilities, and size in various areas.

Yeah, thanks, Olivier. Joe, we really like the financial and business profile of Motion Recruitment Partners, the capabilities that they bring to Kelly across the technology government, telecom, and RPO and MSP spaces. Customer set, very complementary to Kelly's customer set, very little overlap, strong leadership team, excellent business processes, and I think a very compatible culture. So we're very excited. We're going to continue, as I said, to operate their very successful businesses under the current operating entities and brands. And we will, you know, work diligently after close to work with their management team on the plentiful value creation opportunities that we see.

Great. Thank you for that. Olivia, if I just might have missed this, but I thought I heard you say you did not expect to see any additional earn out from the sale of the European staffing business.

That's correct. If you are referring to our EMEA staffing business, no, because now we have basically, you know, the condition where certain financial metrics to be achieved in 2023, and we have the confirmation that they are not going to be sent out. Although now, as I stated, we have still to wait until we finalize the transaction in early Q3, looking at debt free cash-free and networking capital adjustment, we expect at the moment, based on what we know and what is measurable, some cash in the region of 27 to 28 million that would come basically early Q3. That's our base estimate for the moment. It may change a little bit when we know more about, especially about the networking capital adjustment. But Broadly, it should be around $28 million of additional cash that we should receive, again, early Q3.

Okay, thank you for that clarification. And, Peter, I just want to maybe give us a little additional color, you know, kind of on the environment, especially on, you know, talent supply and ability to get people to fill whatever roles that you're trying to fill.

Yeah, Joe, I... I think the macro environment has not changed significantly from the past couple of quarters in terms of availability of talent. If you take a look at the labor force participation rate, quit rates, some other key labor factors, they're all pretty flat to what they've been in the past few decades. quarters. So we don't anticipate in Q2 that we're going to see any significant change. I will say I'm pleased with the ability of the Kelly team in the face of sluggish demand to improve our fill rates and continue to find ways to shorten cycle times and take market share where it's available without compromising price.

Okay, great. Thanks for that. And one last one for me. I'll get back in queue. You know, one of the other acquisitions that occurred, you know, had some struggles going on, Rocket Power. And I just wanted to give us a little update. I know you talked about doing a lot of different things to try and improve your some of their operations and is just trying to maybe give us some update on how all of that progress is progressing.

Yeah, we're very pleased, Joe, with the, I would say, the foundational and structural improvements at Rocket Power because they're in the RPO space. Like many operations in RPO, they've faced some headwinds. But we're beginning to see, particularly in the technology space, some, I would refer to green shoots in Rocket Power's book of business, and the steps that we've taken between the time we acquired them and now, we think position them well to capitalize on any rebound in that space. And, you know, we have... we're optimistic about the potential for rocket power going forward as part of the larger Kelly OCG RPO practice.

I would just add one data point. When you look at revenue of rocket power in Q1 versus Q4, so sequentially, we have seen an improvement of about 27%. So we start to see some good traction, better pipeline, as Peter was mentioning.

Great. That's awesome news for that business. I'll get back in queue. Thanks for taking my questions. Really looking forward to see how the MRP acquisition unfolds here. Thank you.

Thank you, Joe. Your next question comes from the line of Kevin Steinke from Barentine Research. Please go ahead. Good morning, Kevin. Good morning.

Good morning. following up on the motion recruitment partners acquisition, the one piece you did give there was the revenue size. And I don't know if you'd be able to give more detail just kind of in terms of the breakdown between the various areas, technology, telecom, government, RPO, MSP, just to maybe give us a sense of how much scale will be added to those various pieces of your business from this transaction.

Yeah, I think we are going to give you a high-level percentage. So if you think about seven steps, RPU, MSP on one side, and I would say the IT, telco, and federal business, IT, telco, and federal business is about 90% of the revenue, so it's heavily weighted into our set business. Although, again, I think the RPO ad is very interesting, not only with the well-known brand name, 7 Step, but also in terms of coverage, industry verticals, and so on. And within, basically, the set business, a large majority of this business is basically IT companies. whether it's IT staffing or consulting and equivalents.

Yeah, Kevin, I'd add from a qualitative standpoint, particularly in the technology space, the addition of a substantial technology business repositions, Kelly, when added to our existing technology practice, including Softworld and the legacy, Kelly mentioned, IT business, we're substantially repositioned in what is potentially the fastest growing part of the industry, at least historically. And we think that that's really important to continuing to remix our business towards higher margin, higher growth businesses. Similarly, in the telecom and government businesses, MRP's businesses are highly complementary to Kelly's as opposed to overlapping. So in government, while we're very strong as a prime contractor, MRP has some excellent relationships as a subcontractor, which is not something that Kelly currently participates in. And in the telecom space, Very little overlap in terms of customers, but excellent addition of particularly technology capabilities in the telecom space from MRP, whereas Kelly tends to be stronger in the engineering in telecom. So very nice adjacencies within the MRP portfolio of businesses that in addition to scale, we think they're going to bring some really significant capabilities to our portfolio.

Okay, thank you. That was very helpful insight. Just in terms of the organic revenue trend in the first quarter, you mentioned you didn't see a whole lot of change in the macro environment. a bit more of a decline than you saw in the fourth quarter, I guess, maybe not materially so. But, you know, any meaningful change in terms of, you know, the trend in perm placement or any other areas you might point to?

Kevin, no change in the continued results from education growth, which is, you know, continues. And, again, I repeat myself that we're very bullish on the On the pipeline, new wins, growth in existing customers, improved operation performance. Perm placement has been where it's been. We haven't seen any significant change among perm placements. We have seen some, as Olivier mentioned, in Rocket Power, some signs that there is In the technology space, and I would say we're seeing similar green shoots in our soft world and legacy Kelly technology business. It's still early, but those businesses are going to recover at some point. But as Olivier mentioned regarding Q2, we don't foresee any significant change in the next few months.

Okay, thank you. I did have one other question I want to circle back with on motion recruitment partners. Maybe just if it's possible to give us a sense as to how the deal came together, if it was a business that was up for sale or if it's someone you built a relationship with over time. Just kind of curious about that aspect.

Yeah, we... We developed a relationship with MRP over the course of a period of time, and I think on both MRP's side as well as within Kelly, we were strongly attracted to the complementary nature of these two businesses and saw significant upside potential by... partnering towards growth in the future. And all of our discussions up to the signing a couple weeks ago did nothing but to reinforce that. So we're very pleased with the process and the result.

Okay, just a couple more here, which I'll try and combine into one question. you know, your projection for organic growth in the second quarter that's consistent with what you said before, is that, would you attribute that to some of your transformation-related growth initiatives gaining traction? And then, you know, secondly, just if you can give any insight on the just the change in the gross margin outlook relative to what you had previously discussed. Thanks.

Yeah, I think, Kevin, on the first part of the question about revenue, we are, as I said in my notes or my script, encouraged by the steps we've taken to focus on organic growth, particularly in the omnichannel strategy that we've introduced in our professional and industrial space or segment, as well as the large account enterprise strategy. You know, we're basically a quarter into it, but encouraged by new wins, both existing customer expansion as well as the acquisition of new logos. And we think that when the macroeconomic environment for our industry improves, we're very well positioned to continue to see success in those two areas. I'll turn it over to Olivier on the gross margin question.

Yeah, just on the gross margin, I would say, as we said, you know, for Q1, and we anticipate something very similar in Q2 mix, the main mix being, you know, education versus the rest of the business. We see that as something that is going to continue until our top line growth is more balanced. What I can tell you is when you look at, and I look at spread, whether it's in P&I, in education, or in SET, our spread was moving up, especially in SET, to some extent in P&I, is now flat but not at all declining, which is a sign that basically we don't see big pricing pressure and we don't sacrifice our price. But we still, and we will still continue to suffer a little bit about this mixed factor that is linked to our stop line dynamic that should evolve as soon as we get a more balanced stop line growth. If you ask me why we believe that we are going to move from 19.7% growth margin rate in Q1 to a mid-range of 20.2 in Q2, one of the points is education seasonality, meaning education usually at the end of Q2 is starting to slow down because of school years and summer type of conditions. We see good traction in terms of our BPO business in P&I that would help us a little bit. And also as Peter was mentioning, we anticipate more favorable mix in sets because of the traction we start to see in technology that usually got a better margin profile than the average. So there are a few factors that should help us to go to something around 20.2 versus 19.7. But as I mentioned, at 20.2, we are going to be still 60 basis point on a organic basis versus a year ago. And the main driver is going to continue to be mixed pressure.

OK, that's very helpful. I'll turn it back over.

Thanks for taking the questions. Thanks, Kevin. Thank you. Your next question comes from the line of Kartik Mehta from North Coast Research. Please go ahead.

Good morning, Peter and Olivier. Good morning, Kartik. Good morning. Peter, just on trends in April, I'm assuming from the commentary you gave, the trends in April were very similar to what you saw in the first quarter. But I'm curious to understand, if you look at throughout the first quarter, if you saw any change in trends,

Not really. I would say that it was a pretty, when we look at the monthly performance, the sequential month-to-month changes, I would say it was relatively consistent throughout the quarter. Probably a little too early to talk about the full month of April, but we didn't see anything or haven't seen anything that would cause us to change our outlook for Q2.

I agree. When you look at our March exit rate, we are basically on par with our total Q1 trend. So far, we have not seen any significant changes that would lead us to say there is something changing in the market conditions.

And I guess from a similar standpoint, Peter, what about your conversations with customers? Are they... You know, just market's not changing. Do you think, as you talk to other people in the industry or your customers, have they come to this area where just the market is kind of what it is and it's flat and they're not seeing any changes either? Or are you getting any inclinations that maybe things are starting to improve, they're kind of accepting where we are and, you know, this is kind of the bottom?

Yeah, I think what we hear from customers is not doom and gloom. It's not that they're discouraged by their prospects for business growth going forward. Probably the period of time that they're expecting it to happen may be pushed out a little bit from, say, December of last year. But Customers are still optimistic and looking for ways to optimize their talent supply chain, optimize their expense structure, and all of that long-term bodes well for Kelly because we're right in the middle of that and can support their efforts to figure out how to optimize their talent strategies and supply the talent that they need to deliver their products and services. So I would say no significant change, still positive on the future, and maybe a little bit more optimistic or less pessimistic about a possible downturn.

And then just one last question, Peter. As you look to transform Kelly, you know, in MRP, and I'm wondering, you know, does that mean for now or until you digest this acquisition that no more acquisitions, or are you still looking, and are there still opportunities that you'd like to pursue?

Well, I think we've got a large acquisition to manage in the near term, but that doesn't mean we're going to stop continuing to develop relationships and look for high quality assets that could potentially compliment the Kelly portfolio of businesses. We understand that the cycle time, the lead time actually of finding high quality properties, developing a relationship, avoiding a bidding process It takes time. It takes a lot of hard work to do that, and we will not let up on that regardless of the amount of work that we will also put into making sure that the acquisition of motion recruitment partners lives up to its very significant upside.

Thank you very much. I appreciate it.

Thank you. Thank you. Your next question comes from the line of Mark Riddick from Sedoti. Please go ahead. Good morning, Mark. Good morning. Good morning, John.

So I wanted to sort of maybe follow up on the last question to some degree. I was sort of curious as to given the size of the transaction that we're looking at, is there sort of a general way we should think about how you're looking at your balance sheet going forward, comfort as far as leverage levels, financial flexibility, and the like?

Okay, so as we speak, we have 201 million of cash, and about 300 million of additional financing capabilities, so half a billion liquidity. If you look at the projections we have, you know, post-acquisition, we are going to go to probably 2.3, 2.4 debt to ABDA for few quarters, but rapidly going below two and then below one and a half. We still have a strong balance sheet and I think we still have opportunities if we deleverage as planned to go back to acquisitions knowing the lag time you have between starting some relationship and when some of them make coming to fruition. But balance sheet-wise, the cash we have now, the fact that our DSO now is at 58 days, which I think is great news, good management of working capital, cash flow generation, I think we are comfortable not only to get to this transaction with your partly funding it in cash and the rest in borrowing. but we believe that we still have opportunities after that to continue on our inorganic journey. I think pretty quickly, in fact.

Okay, that's very helpful. Thank you. And then maybe sort of as a tangent to that, outside of this transaction, are there sort of any thoughts or views as to maybe what that overall sort of what we're looking at as far as the general pipeline, as far as valuations, competition levels from private equity, and maybe just the availability of attractive targets. Maybe you can sort of give us an update as to what you're seeing out there beyond the transaction you've already got on your plate now.

Yeah, thanks, Mark. I wouldn't say the landscape has changed significantly. We haven't reached maybe what I would call a thaw in the the prior 12 to 18 months, there's still fewer properties on the market and those that are not always carrying the quality. But I would say there's more discussions happening. There's more companies that are at least beginning to entertain discussions around possible combinations or exits, what have you. Private equity is still... not at the level it was two or three years ago, but is beginning to show some interest in our space because I think people recognize that whatever the duration of this current industry environment is, it's not going to last forever, and there is likely going to be a fairly significant upturn at some point, and I think companies recognize that now is a great time to consider adding high-quality assets to their portfolio, like we just did.

Thank you very much.

Thanks, Mark. If there are any additional questions, please press 1, then 0. And at this time, there are no further questions. Okay, Greg, thank you very much for your help, and we can end the call. Thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.

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