Key Tronic Corporation

and welcome to the Keytronic first quarter fiscal year 26 investor call. Today's conference is being recorded. After the presentation, we will begin the question and answer period. At this time, I would like to turn the call over to Tony Voorhees. Please go ahead.

Good afternoon, everyone. I am Tony Voorhees, Chief Financial Officer of Keytronic. I would like to thank everyone for joining us today for our investor conference call. Joining me here in our Corinth, Mississippi facility is Brett Larson, our President and Chief Executive Officer. As always, I would like to remind you that during the course of this call, we might make projections for other forward-looking statements regarding future events or the company's future financial performance. Please remember that such statements are only predictions. Actual events or results may differ materially. For more information, you may review the risk factors outlined in the documents the company has filed with the SEC, specifically our latest 10-K and quarterly 10-Qs. Please note, on this call, we will discuss historical, financial, and other statistical information regarding our business and operations. Some of this information is included in today's press release. During this call, we will also reference slides that accompany our discussion. The slides can be viewed with the webcast and the link can be found on our investor relations website. In addition, the slides together with the recorded version of this call will be available on the investor relations section of our website. We will also discuss certain non-GAAP financial measures on this call. Additional information about these non-GAAP measures and the reconciliations to the most directly comparable GAAP measures are provided in today's press release, which is posted to the investor relations section of our website. For the first quarter of fiscal 2026, we reported total revenue of $98.8 million. compared to $131.6 million in the same period of fiscal year 2025. Revenue for the first quarter of fiscal year 2026 was adversely impacted by reductions in demand from one longstanding customer and delays in new program launches as our customers face continued uncertainties in the global economy. In addition, the consigned materials program that was announced last quarter has begun to ramp. As this large program grows, reported revenue is expected to be lower compared to traditional turnkey programs, while our gross margin is projected to improve. Our gross margin was 8.4% in the first quarter of fiscal year 2026. compared to 6.2% in the previous quarter and 10.1% in the same period of fiscal year 2025. The sequential quarterly increase in gross margin was primarily related to operational efficiencies gained from the reductions in workforce. The year-over-year decreases in gross margin in the first quarter of fiscal 2026 largely reflects reduced revenue. as well as inventory and accounts receivable reserves of approximately $1.6 million due to a customer bankruptcy. Our operating margin for the first quarter of fiscal year 2026 was a negative 0.6%, down from 3.4% for the same period of fiscal year 2025. As top-line growth returns, we expect margins to be strengthened by improvements in our operating efficiencies and the positive impact of our strategic cost savings initiatives. We also believe the recent cost savings initiatives have made us more competitive when quoting new program opportunities. As production volumes increase and our operational adjustments take full effect, we expect to see greater leverage on fixed costs, enhanced productivity, and a more streamlined supply chain, all contributing to stronger financial performance. Our net loss was $2.3 million, or 21 cents per share, for the first quarter of fiscal year 2026, compared to net income of $1.1 million, or 10 cents per share, for the same period of fiscal year 2025. As mentioned previously, the change in earnings was largely due to the reduction in revenue when compared to last year's results. Our adjusted net loss was $1.1 million, or $0.10 per share, for the first quarter of fiscal year 2026, compared to adjusted net income of $2.8 million, or $0.26 per share, for the same period of fiscal year 2025. The non-GAAP financial measures in the earnings release for additional information about adjusted net loss and adjusted net loss per share. Turning to the balance sheet, our inventory for the first quarter of fiscal 2026 remained largely unchanged from the same time a year ago. Our recent strategic initiatives were designed to better align our inventory with our current revenue. While many of our customers have revamped their forecasting methodologies, we have made significant enhancements to our materials resource planning algorithms. As a result, we are now more prepared to address potential future disruptions in the supply chain and more able to respond effectively to evolving tariff implications as we continue to manage inventory more cost effectively. For the first quarter of fiscal 2026, we reduced our total liabilities by a combined amount of $21.8 million or 9% from a year ago. Our current ratio was 2.4 to 1 compared to 2.6 to 1 from a year ago. At the same time, accounts receivable DSOs were at 81 days compared to 92 days a year ago reflecting stronger collection on receivables. Total cash flow provided by operations for the first quarter of fiscal year 2026 was approximately $7.6 million as compared to 9.9 million for the same period of fiscal year 2025. Our continuing ability to generate cash from operations has allowed us to reduce our debt year over year by approximately $12 million. Total capital expenditures in the first quarter of fiscal 2026 are about $3.2 million, and we expect CapEx for the full year to be around $8 million, largely spent on new innovative production equipment and automation. While we're keeping a careful eye on capital expenditures, we plan to continue to invest selectively in our production equipment, SMT equipment, and plastic molding capabilities, utilize leasing facilities, as well as make efficiency improvements to prepare for growth and add capacity. As we move further into fiscal year 2026, we are pleased to continue to see our new programs gradually ramping. and our cost and efficiency improvements from our recent overhead reductions are paying off. We expect to see growth in our US and Vietnam production, have a strong pipeline of potential new business, and remain focused on improving our profitability. Over the longer term, we believe that we are increasingly well positioned to win new programs and profitably expand our business. Due to the uncertainty of timing of new products ramping, we are not providing forward-looking guidance in the second quarter of fiscal year 2026.

That's it for me. Brett?

Thanks, Tony. Moving into fiscal 2026, the uncertainty surrounding global tariffs and the macroeconomic outlook continue to delay new program ramps for many of our customers. To provide our customers with options to manage these uncertainties and to remain cost competitive, we have continued to build up new production capacity in the U.S. and Vietnam and have right-sized our Mexico facility. Demand from certain longstanding customers has reduced total revenues when compared to last year's first quarter results. Moreover, the continued market uncertainty and shifts of tariffs have unfortunately impacted new program launches across all of our facilities. We're doing our best to work with suppliers and with our customers on options for manufacturing their products from different locations in mitigating the impact of tariffs. Our changes made to our manufacturing footprint and cost reductions enable us to offer improved mitigation options. particularly when our customers consider the varying implications of current and future potential tariffs. We're moving full speed ahead with adding capacity in key regions. During the first quarter of fiscal 2026, we opened our new technology and research and development location in Arkansas. We're delighted to be enhancing our operations, in a region where we have maintained a long-standing presence and a strong team and can benefit from a business-friendly environment. Our U.S.-based production provides customers with outstanding flexibility, engineering support, and ease of communications. We expect double-digit growth in our facility in Arkansas during the latter half of this fiscal year. In Vietnam, we have doubled our manufacturing capacity in Vietnam. They now have the capability to support anticipated future medical device manufacturing. Our Vietnam-based production offers the high-quality, low-cost choice that was associated with China in the past. In coming years, we expect our Vietnam facility to play a major role in our growth. We anticipate that these new facilities in the U.S. and Vietnam will enable us to benefit from customer demand for rebalancing their contract manufacturing and to mitigate the impact and uncertainty surrounding tariffs on goods and critical components. By the end of fiscal 2026, we expect approximately half of our manufacturing to take place in our U.S. and Vietnam facilities. These initiatives reflect both the longstanding customer trends to nearshore, as well as de-risk the potential adverse impact of tariff increases and geopolitical tensions. Our Mexico facility offers a unique solution for tariff mitigation under the existing USMCA tariff agreement. Given the sustained trend of continued wage increases in Mexico, We have streamlined our operations, increased efficiencies, and invested in automation in order to be more cost competitive in the market. Our improved cost structure in Mexico is anticipated to lead to new programs and growth over the longer term. During the first quarter of fiscal 2026, we won new programs in medical technology and industrial equipment. In addition, we got underway with the recently announced manufacturing services contract with a data processing OEM that will consign its materials to our Corinth, Mississippi manufacturing facility. As we discussed, the consigned materials model is new for us at this scale, and if successful, will considerably improve our profitability in coming quarters. It has the potential to ramp significantly during fiscal year 2026 and is estimated to grow to over $20 million in annual revenue. Despite the many uncertainties and disruptions in our global markets, our strong pipeline of potential new business underscores the continued trend towards onshoring and the dual source of contract manufacturing. We expect that global tariff wars and geopolitical tensions will continue to drive OEMs to re-examine their traditional outsourcing strategies. Over time, the decision to onshore production is becoming more widely accepted as a smart long-term strategy. We believe our manufacturing footprint and cost competitiveness will allow us to take advantage of these opportunities. The combination of our flexible global footprint and our expansive design capabilities continues to be extremely effective in capturing new business. Many of our new manufacturing program wins are predicated upon Keytronic's deep and broad design services. And once we have completed the design and ramped it into production, we believe our knowledge of a program's specific design challenges makes that business extremely sticky. We anticipate a continued increase in the number and capability of our design engineers in coming quarters. We also continue to invest in vertical integration and manufacturing process knowledge, including a wide range of plastic molding, injection, blow, gas, assist, multi-shot, as well as PCB assembly, metal forming, painting, and coating, complex high-volume automated assembly, and the design, construction, and operation of complicated test equipment. We believe this expertise will increasingly set us apart from our competitors of a similar size. While the global market uncertainties have created some delays to new product launches for us, our suppliers, and our customers, we believe geopolitical tensions and heightened concerns about tariff and supply chains will continue to drive the favorable trend of contract manufacturing returning to North America as well to our expanding Vietnam facilities. We are expecting revenue growth in the coming quarters from new programs launching in the U.S., Mexico, and Vietnam. We move forward with a strong pipeline of potential new business, and we're seeing significant improvements in our operating efficiencies. Over the long term, we remain very encouraged by our cost reductions made over the past few years to become more market competitive, our increasing cash flow generated from operation, enhanced global manufacturing footprint, and the innovations from our design engineering. All of these initiatives have increased our potential for profitable growth. This concludes the formal portion of our presentation.

Toni and I will now be pleased to answer your questions.

Thank you.

If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question.

And we'll pause for just a moment to give everyone an opportunity to signal for questions.

And we will take our first question from Bill DeZellum with Titan Capital.

Thank you. Let's just start with the two wins this quarter. What was the size of each of those, please?

Sure, Bill. Just to clarify, there was actually one medical and two industrial. The medical was roughly about $5 million in size, and the two industrial combined is probably around $6 million.

All right. Thank you very much. And you referenced in your opening remarks the medical capabilities, medical production capabilities in Vietnam. does this particular product belong in Vietnam or will it be produced somewhere else?

So our intent is that later this fiscal year to be actually up in production for some medical device over in Vietnam. We've recently received certification to do that, and our customer actually visited the site just last week and has given us the go-ahead.

And this specific customer or another medical customer?

Sorry, this specific customer. And I think with the introduction of one, our anticipation is that that facility will continue to show well, and we're expecting continued interest from others.

Right. Okay, that's helpful. And you referenced the manufacturing services contract. As you think... I guess let's start with the level of revenues that you experienced this quarter. You said it was the first quarter where you had some revenue there.

Yeah, it had just started. So I'm assuming you're talking about the consigned program that we referenced. That's right. Yeah, the consigned program down here in Corinth. And Tony and I are actually down in Corinth today visiting and checking in on that program and seeing it launch and ramp. And in our first quarter, there was roughly just over a million dollars of actual revenue. That'll grow sequentially over the next few quarters, and our expectation, it could exceed 20 million on an annual basis.

Great. That's helpful. And then as you As you referenced in your opening remarks, if it's successful, the $20 million or more, what are the swing factors that will make that contract more successful or less successful?

You know, I think from our perspective, Bill, a consigned program, you know, it takes a special customer that has its own supply chain capabilities. And has the ability to provide the components on a timely basis and has the capital to do so. In this specific instance, all of those are true. And I think with, you know, with a consigned model, the amount of margin will increase because you're not including the cost of the materials. So on two fronts, both are reported margin percent is expected to go up. And then also the amount of working capital required for that revenue is minimal other than local ancillary supplies and of course labor.

Great. So essentially you are really billing for use of the facility, labor, and your profit. and not for the inventory component, which historically is a very large portion of your revenue.

It is.

It is. Okay. That's helpful. And so ultimately this model's success or failure is a function of your customer's ability to manage the inventory. It's really on their shoulders rather than, anything tied to Keytronic and your activities other than what would be normal for any other manufacturing contract?

Yeah, this one's a bit different in that respect. And, of course, there's communication and correspondence between us and them of specific components that are required, but ultimate delivery of that will be dependent on their supply chain. rather than our own group going out and buying from specific suppliers.

Right. Okay. And thinking out loud, do I remember correctly that 80% of the bill of materials ends up being inventory as opposed to labor or overhead expense?

That's a bit high. I would say it's closer to about 60% to 70% bill is material on a typical turnkey program.

Okay. Thank you. Appreciate that. And then over the last several quarters, you all have talked about a utility product program. It's not for a utility, but but your customer would be selling to a utility. What's the update on that product's success with their customers and your ramp of that business?

Sure. That's a good question, Bill. In our first quarter, we had anticipated to have some production revenue from that particular customer. It was delayed by about a month and a half, but fortunately we're seeing that ramp nicely in our second quarter.

And then you have also talked about a consumer product that I think that your customer had some challenges. It could have been a very large program had they been able to be successful with the retailers that they were going into. What's the update on that, or is there an update?

No update at this point. We are seeing some softness in some of our longstanding customers, in particular consumer products. I can't recall the specific one you're mentioning, but we are seeing some reductions in demand from some consumer products that we are building today.

So the one I'm specifically referring to, I believe you all announced, made an announcement about it. It could have been that large.

Okay.

It's not resonating what that one might be.

No, I am sorry, Bill.

Okay, no problem. And then... Relative to one additional question here and then I'll turn it over. Relative to Mexico, you have been right-sizing that for some period of time. Where are you at in that process?

We will continue to monitor that. We have excess capacity in Mexico. We also have a very strong sales pipeline that we're expecting to to drop in in the latter half of this fiscal year into Mexico. If that doesn't transpire, we'll need to make some additional cost reductions, but I don't anticipate in our second quarter to make any big severance or headcount reductions in Mexico. We do have capacity. I feel like we are now market competitive in our cost structure, and we're seeing the benefits from that in an increased amount of activity and interest down in that site.

So basically, the excess capacity that you have, you believe you will be able to fill or start to utilize in a meaningful way in the second half of this fiscal year. If that does not happen, then you'll have to take another bite at the apple.

Absolutely. Yep. Well said.

And if it does happen and you are able to use that capacity, then would I be mistaken to think that that will have a meaningfully favorable benefit to net income and should be something that we shareholders are quite enthusiastic about?

Yeah, if that comes to fruition, as we've discussed before, there's an earnings multiple once your fixed costs are covered. And yes, that would be a meaningful improvement in the overall profitability. Great.

Thank you.

Thank you.

And we will take our next question from Sheldon Gradsky with Gradsky Associates.

This is quarter after quarter here, but let me ask a couple of questions here.

First of all, Is your facility in Vietnam primarily to serve the North American market or to serve the Asian market?

It's both.

Any sense as to how much is going to Asia and how much to the U.S.?

Broad brush, I would say two-thirds Asia, one-third North America at this point.

Okay. What kind of tariffs are you facing on your Vietnam imports?

You know, it's, what is it, Tony? 20 or 30 percent?

Yeah.

You know, and that, Sheldon, that's actually covered by our customers would be paying that to import that into the U.S. We'd be selling that to them in Vietnam.

Okay. And what sort of tariffs, what is the actual tariff situation in Mexico? I know there have been a lot of moving targets, and I've come to the conclusion that I know nothing on the subject of tariffs and where the tariffs are, and I have a feeling we're getting a lot of misinformation on the subject. Are most of your products exempt under NAFTA II, or are you being heavily tariffed there, or what's that story?

Yeah, I think you bring up a good topic, Sheldon, is our Juarez, Mexico facility does provide a level of tariff mitigation. So if there is enough product change, if there's a tariff shift, oftentimes you can take advantage of the USMCA and be able to provide manufactured product without incurring a tariff. Of course, there's nuances in that, depending on if it has metal, you know, from a foreign source. And, you know, I don't even, I'm not even going to pretend to know that I know all the details. But for the most part, yes, we are able to mitigate most tariffs by production of an assembly down in Mexico.

Okay, so I've been trying to figure out where it's bad and where it isn't, but your customers seem to be put off completely anyway. It seems like we're going into a manufacturing depression with the tariffs that were supposed to give us a manufacturing new beginning here.

What we're finding is there's a lot of paralysis. There's a lot of intent, a lot of verbal discussion, of transfers, of manufacturing, but I think the unknown and the fluidity of duties and tariffs I think have put many of those on a let's wait and see.

You mentioned also in the presentation that you had a customer bankruptcy that cost you some money. some money. Is this a big customer, longstanding customer, or just someone who came briefly and managed to go belly up?

It was about a three or four year customer relationship. We did get stuck with some inventory and receivables. Unfortunate. But yeah, that was not a significant customer by any means, but it did sting in writing off the million six this quarter.

Okay. I'll let you go on to some other questions.

Thank you.

Thank you. And we will take our next question from George Mellis with MKH Management.

Thank you. Hello, guys.

As a follow-up on the last question, You had gross margins of 8.4 million this quarter, and in dollar terms it was 8.3 million. If we add back the 1.6, which was the reserve that you took, you also had some severance of 1.2 million in the quarter. How did those flow through the P&L?

Yeah, so the severance definitely goes through COGS, so that would have an impact to your gross margin. The 1.6 write-off for the bankruptcy was segregated into two amounts. $600,000 of that went through cost of goods to write off the inventory, and roughly $1 million went through SG&A as writing off the receivable.

Got it. Okay, good. So let me just quickly adjust this in my model. So I would say your adjusted gross margin was roughly 10.2. It goes from 8.4 to 10.2 if you add back the sequence and the $600,000 for the inventory write-off.

Yes.

So trying to find some, you know, some good things in the release, that's a pretty good gross margin for you guys, especially at that revenue level, and especially given that the consignment material model hasn't really sort of contributed much. As you said, it was just roughly $1 million in revenue. So help us understand why that margin is as robust as it is.

I think there's two things there. George, one is, of course, the continued reduction in our overall costs. I think that is what we're demonstrating that. And even if you look at the gross margin sequentially from Q4 to Q1, it's improved. One item to talk about in Q1 is there was quite a bit of NRE revenue, which is essentially revenue we charge our customer up front for tooling, for line setup, for engineering services, that was fairly high. And I think that helped bring up the gross margin in the first quarter. So can we continue to replicate a 10% gross margin? It would take more revenue going forward.

OK. Because the tooling whether you use the line setup, the engineering service. I can see how engineering services you would charge more than a normal or average gross margin, but you do the same for tooling and line setup then?

We do. We do. Okay. It just so happens with a couple of large programs we're ramping, we were able to book the profits associated with that during our first quarter.

Okay. Can you give us an order of magnitude of how much that was?

Oh, an estimate. I think between one and one and a half million dollars.

Of revenue? Of profit. Of gross profit. Okay. It's always meaningful. Okay.

The consignment materials program, if it ramps up to $20 million, and with the math that you gave, Bill, it's sort of equivalent to a $60 million program for one of your regular programs, right?

That is correct.

Okay. So that would make it probably your largest customer or one of your top three customers?

Yes, it would.

Okay. And what is your assessment so far of how the program is ramping up?

We are actually down in Corinth real time and watching that ramp and excited to see where it's headed. We are definitely not on a 20 million run rate yet. But, you know, that's our goal to get there by the end of the fiscal year. And we are... Visually trying to add some additional capacity down here in order to achieve that.

Okay. So as you see the program ramp as you expected, the entire program production would be in Mississippi?

At this point, yes. There is some possibility of some dual sharing of that program across a couple of sites. But at this point, we're expecting that to be in our Mississippi.

Great. And then a quick question on SG&A. SG&A was sort of flat issue over a year despite a meaningful revenue drop. And is that how one should model SG&A going forward or is there something missing maybe?

I don't expect any big changes in SG&A with additional revenue. I do know that we had the $1 million of write-off associated with the bankruptcy that went through there in Q1.

Yes, yes.

But, you know, I think we'll largely be close to, you know, that dollar amount moving forward.

And so that dollar amount includes the $1 million write-off or...

Well, there will be some increases. You know, as we return to profitability, I think there will be some... Our intent is to have some bonuses and different things that go into that G&A going forward, which there's not now. So I would expect it to be roughly about what it was in Q1.

Okay, great.

And then...

You mentioned sort of you have expected return to profitability by the end of this fiscal year. So it's just a few quarters away. And what needs to happen in order to achieve that? And maybe what kind of revenue do you need to achieve? And of course, you have the different kinds of revenue. You have the regular revenue, the consigned material program revenue. But can you give us some color on what needs to happen?

Yeah, I think we were able to demonstrate, you know, if you take Q4 to Q1, even on less revenue, we were able to generate some additional profitability and actually some improvement. Our expectation to get back to profitability is that we'll need to continue to ramp this consigned program. We'll also need to continue down the ramp of the utility provided metering system that is ramping nicely this quarter. And we'll need to add some additional revenue down in Mexico. If we're able to do those three things, we'll be able to achieve those goals.

OK. Can you give us roughly a revenue target that you need to achieve to... I don't think we can at this point, particularly with the complexity of now a fairly large consigned program. Right, right. So if you have those three major factors that you need to achieve, the consignment program has started and it's ramping. The utility program is ramping, so it's really about executing on that, but also having some additional sales in order to fill up the Mexico plant. Correct. Okay, great. And just one quick question on the balance sheet. The AR seems to have been, you know, came down drastically, meaningfully. and the inventory was roughly flattish. So I was really happy about one and disappointed in the other. Can you talk a little bit about the reduction in AR and also about where you see inventory going?

You bet. So definitely a reduction of $16 million in AR sequentially. Some of that is obviously driven by, oh, reduction in revenue. quarter over quarter, but a lot of that is largely due to favorable collections by our AR group. So we've seen some significant improvements there. In addition to that, like Brett mentioned, we did write off some AR. So that's primarily the result of the reduction in trade receivables there. The inventory, like Brett mentioned, we have two, one which is consigned, but we have another large program that is material heavy. So the reason we didn't see inventory continue to go down quarter over quarter is largely due to us bringing in inventory to support a couple of other programs that we're currently ramping.

Okay. And one of those programs you're ramping, Tony, is the one that you refer to as the utility program?

That is correct, yes.

Okay, great. Okay, thank you so much for taking all my questions.

Thanks, George.

Yeah, thanks, George.

Thank you. And we will take our next question from Bill DeCelen with Titan Capital.

Yes, I have a couple of follow-ups. First of all, you all haven't talked a lot about the Mississippi facility in the past. Why is it that this customer chose this facility and the advantages that it brings for them?

Yeah, that's a good point, Bill. I think, you know, in the past there's been some fairly flat revenue in Mississippi, some longstanding customers of, you know, many years. I think there's a lot of history here down in Mississippi. You know, this particular consigned program, I think for us strategically was best suited down here. One, because of the labor that's available locally. And then two, I think we are looking to transfer some of those existing programs that have been in Mississippi up into Arkansas, into that new Springdale facility we discussed, because it's a better fit from a technological standpoint. That leaves the capacity and the labor available for this consigned program down here in Corinth. It will take some additional capital. but I think we're well on the way proving that this is the right location for that.

Great, thank you. And then I understand that you're not providing official guidance, but when you look out at the variables directionally, are you thinking that REVs will be up or down in Q2 versus Q1?

I think in Q2, there won't be any meaningful change.

That's helpful. Okay, thank you. And one additional question relative to the general delays that you referenced with new programs. I think it was in the press release. Is it your sense that that is... nearly 100% tied to tariffs and the uncertainty with that, or is it a broader uncertainty in the overall market or a broader cautiousness? What's your view there?

Yeah, that's all it would be. My view, Bill, is I think it's both. I think not only are they concerned about the uncertainty of specific tariffs, but I think there also is some uncertainty of consumer demand and how good, you know, how healthy is the economy. And I think everybody is extra cautious right now, I think, in making any big changes.

Great. Okay. Well, thank you. I appreciate the perspective.

Awesome. Thanks, Bill.

Thank you. And we will take our next question from Sheldon Gradsky with Gradsky Associates.

This is a tricky question to ask, but if I remember correctly, you guys got a new bank relationship sometime in the last year. And as far as I can remember, there haven't been too many good things happening since you signed on with them. How is your relationship with your bank lender?

I would state that actually our relationship with our bank is extremely solid and healthy. We meet with them on a quarterly basis. While our income or our actual net income has not met what we had hoped, we are generating cash and we're actually paying down debt. And there's actually more available on our revolver now than there was a year ago.

Okay, that sounds good. Thank you.

Thank you.

Thank you. Once again, if you would like to ask a question, please signal by pressing star 1. And at this time, we have no further questions. I'd now like to turn the call back to Mr. Larson for any additional or closing remarks.

We'd like to thank you for attending or listening to today's conference. Tony and I look forward to talking with you in next quarter.

Thank you. And this does conclude today's call.

Thank you for your participation. You may now disconnect.