Points.com Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Point International's financial results for the first quarter ended March 31st, 2021. Delivering today's prepared remarks are Chief Executive Officer Rob McLean, President Christopher Barnard, and Chief Financial Officer Eric Giorgio. Following their prepared remarks, the management team will open up the call for any questions. Before we go further, I would like to turn the call over to Cody Slaw of Gateway Investor Relations Point International's IR Advisor as he reads the company's safe harbor that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Thank you. Please be reminded that the remarks on this conference call may contain or refer to forward-looking statements within the meaning of Canadian and U.S. securities laws. Management may also make additional forward-looking statements in response to your questions. Although management believes these forward-looking statements are reasonable, such statements are not guarantees of future performance or action and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions are applied in making forward-looking statements and may not prove to be correct. Important factors that could cause actual results to differ materially and the assumptions used in making such statements were included in our first quarter financial results press release issued prior to this call, as well as other documents filed with the Canadian and US securities regulators. Except as required by law, the company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With that said, I'll turn the call over to Point's Chief Executive Officer, Rob McLean. Rob?

Thanks, Cody, and good afternoon, everyone. As our broader industry works towards recovery, we are pleased to have carried our momentum from last quarter through Q1. Our first quarter results exceeded our expectations as we continued to deliver sequential improvements across key financial metrics, achieving three times the adjusted EBITDA we generated last quarter. In addition, we have further enhanced our strong liquidity position through the successful completion of our $31.6 million Canadian dollar public bought deal offering in March. Our team has remained dedicated to not only supporting our current partners, but also driving new business development opportunities across our growing partner base. Though we continue to operate with caution in the near term, the resilience and flexibility of our platform has made us well-prepared for longer-term growth in our industry. With COVID-19 vaccinations becoming more widespread, the travel and hospitality industry has begun to see the return of consumer confidence in travel. In the United States, the CDC recently deemed domestic travel a low-risk activity for people who are fully vaccinated, and throughput at TSA checkpoints nationwide has remained at well over 1 million travelers per day since the middle of March. Many countries around the globe are also easing their pandemic-related restrictions and putting new travel policies in place. The pace of recovery, of course, is neither quick nor universal. Several countries are still contending with elevated case counts, and international traffic remains below 2019 levels. Yet the trends we are seeing demonstrate that there is significant pent-up demand for travel and that loyalty programs have a key role to play in meeting these returning travelers' needs. Operators have also continued to leverage the ongoing value of loyalty programs to support their own recovery. In early March, American Airlines announced the issuance of $7.5 billion in new financing backed by its Advantage program, an offering that was soon raised to $10 billion in response to elevated interests. The prevalence of actions like these since the onset of the pandemic signals the important, steady role that loyalty programs are fulfilling in the industry's short- and long-term recovery efforts. On an operational level, loyalty programs have been strong, consistent sources of value for both customers and operators because of their scale and flexibility. Even as they remained largely grounded over the past year, active loyalty consumers have continued earning points and miles, which they can readily deploy for new trips as travel rebounds and spend on an increasing range of non-travel options. For operators, the points that their loyalty customers continued earning served as critical sources of liquidity during the most difficult times the travel industry has ever experienced. Against this backdrop, the work we have put into adapting our own service suite and developing our pipeline seeks to enhance this inherent scale and flexibility. Helping our loyalty partners and customers adapt to new normal requires us to continually innovate as we respond to their needs. This focus on innovation and adaptability has fueled our continued execution on our core growth drivers. Our recent launches to date in 2021 have deepened our existing relationships by deploying net new services and optimizing several services we already have in the market. We've also further enhanced some of our newer relationships and strengthened our foothold in the Middle East. As Chris will discuss later on the call, we have worked to expand several features that gained traction during the pandemic such as our subscription and accelerate anything products, which have generated strong partner interest throughout the pandemic. This is all in addition to the continued progress we've made with our core currency retailing activity. As we have since the outset of the pandemic, we are closely monitoring the various states and paces of recovery around the world and across our partner base. While we remain encouraged by current trends, we recognize that visibility is still limited within our own business and those of our current and prospective partners. We certainly believe we are in the early stages of the recovery. However, the pace of that recovery will be gradual and largely non-linear. Yet, amid this landscape, we are making demonstrable progress with the factors that are within our control. We are building the roster of partnerships that benefit from our services, We are leveraging our unique and valuable products and services to enhance and grow our existing loyalty program partnerships. And we are optimizing the reach and technological capabilities of our already comprehensive platform. Given the continued growth we see ahead, we have also streamlined our business internally to better serve our partners and leverage the capabilities of our platform to drive greater efficiencies. This realignment of our operations towards a platform-focused approach will enable us to better capture current and future opportunities as the pace of recovery increases. We have also aligned our financial reporting to this approach, and Eric will address this shortly. I'm proud of our team's constant resilience and dedication, and we look forward to working towards further progress on our global growth drivers. I will now hand it over to Eric to review our financial performance for the first quarter, and then Christopher will provide some additional highlights and perspective on our partner activity. Eric?

Thank you, Rob, and good afternoon, everyone. Unless noted otherwise, all figures on today's call are in US dollars and presented in accordance with IFRS. In advance of walking through our quarterly results, I wanted to provide a brief overview on some changes to our financial reporting that are taking effect this quarter. First, and as Rob mentioned, we have made some internal changes to our organizational structure to drive efficiencies as we grow out of the COVID-19 pandemic. To better align our reporting with our move to a platform-focused approach to operating the business, starting this quarter, our revenue, gross profit, and expenses will be reported on a consolidated basis only, without the separate breakouts for each of our three legacy lines of business. Second, we have added additional transparency to our cost base in our financial statements starting this quarter. Our operating expenses on our income statement will be classified by functional area, including research and development, sales and marketing, and general and administrative. In addition, the notes to our financials provide additional details on our employment costs. We have made this change in order to align our financial reporting with how we view our business internally and to more closely align with the way our peer tech-enabled platform companies report their results. With those changes in mind, I will now focus on the quarterly numbers. While we continue to operate in a very challenging macro environment, our first quarter results represent our best quarterly performance during the pandemic. Revenue in the first quarter of 2021 was $65 million, compared to $82.7 million in the year-ago quarter. While our year over year comps continue to be impacted by the impact of COVID-19, we generated sequential revenue growth of 15% as sales activity across our platform increased relative to the fourth quarter of 2020. Growth profit, which is our more appropriate proxy for top line, was $9 million in the first quarter, down from $13.8 million in the year-ago quarter due to the impacts of COVID-19. More importantly, Gross profit increased 6% sequentially from 8.5 million in Q4 2020. As Rob noted, these results exceeded the expectations we had set at the start of the quarter, and we saw some encouraging improvement in our transactional metrics as the quarter progressed. As a reminder, our fourth quarter is traditionally a seasonally strong quarter for us, so we were encouraged to generate a second straight quarter of growth in the first quarter of 2021. Of note, we saw an improvement in both the performance of our marketing campaigns, which have been the primary source of our economics throughout COVID-19, and also in our traditional baseline activity, which is more associated with short-term travel activity. And importantly, the improvement in our transaction metrics was generally widespread across our partner base. Turning to our cost base, operating expenses in the first quarter of 2021 were $10.2 million, a slight increase of 3% from Q4 2020 and down significantly compared to $12.5 million in the year-ago quarter. This quarter, we recognized approximately $1.2 million related to the Canada Emergency Wage Subsidy Program, similar to what we recorded in the fourth quarter. As of today, the wage subsidy program is approved to run through to early June 2021 with a proposal to extend the program until September. At this time, we expect to continue to participate in the second quarter, albeit with significantly less funding than what we received in the first quarter based on current funding formulas. Adjusted EBITDA for the first quarter of 2021 came in at $1.2 million, down from 3.6 million in the year-ago quarter but up significantly compared to roughly 400,000 in Q4 2020. The sequential growth was due to the aforementioned increase in our gross profit combined with a relatively flat cost base. Turning to our balance sheet, we've strengthened our financial position during the quarter and we remain very well capitalized. In early March, we repaid the remaining borrowings we had from our previous drawdown on our credit facility over one year ago. And as previously announced, we raised 31.6 million Canadian, or 25.1 million U.S., in aggregate gross proceeds from our bought deal public offering, which closed on March 29th of this year and included the full exercise of our over-allotment options. We ended the first quarter with total funds available of approximately 94 million, a significant increase from 79 million as at the end of 2020, which included 15 million of borrowings. To summarize our first quarter, we generated sequential improvement across our core financial metrics for the second consecutive quarter and reinforced an already strong balance sheet, positioning us well to accelerate our growth. Given the current climate, We continue to operate with caution in the near term, but our success in the first quarter has strengthened our optimism for the long term. In the meantime, we would like to thank our investors for their support and confidence during this dynamic period for our company. With that, I'll turn it over to Christopher.

Chris? Thanks, Eric. Our consistent focus on our three core growth drivers has helped us build momentum into 2021. We've continued working to develop new relationships with additional partners around the globe, launch net new services as we deepen our current partnerships, and leverage our growing automated marketing capabilities to further enhance and expand the services we have in market. To reiterate Rod's earlier remarks, these drivers help us adapt and optimize our platform to meet our partners' evolving needs. As our portfolio of services deployed on our platform grows, The value of the network of opportunities we offer our loyalty programs expands. As a great example of new launches with existing partners, we recently announced deepening our long-running partnership with Southwest Airlines with the launch of the Rapid Rewards Point Subscription Plan. Under this offering, Rapid Rewards members can choose between three different subscription plans that enable them to build a balance of either 30, 40, or 80,000 points over the course of a 12-month period. Once members choose a plan, their points will be automatically deposited in their account on a monthly basis, with quarterly bonus points awarded along the way. Our subscription offering is the latest addition to our overall service portfolio, and with the launch of Southwest marks our second deployment following the monthly subscription option we added with United Airlines last quarter. Giving loyalty members the ability to earn points regardless of their travel activity provides an expanded optionality for customers and loyalty operators alike. In addition, we continue to execute on our regional expansion strategy, an important growth accelerant for us. At the end of 2019, we opened our Middle East office in Dubai with an eye to expanding existing and adding new partnerships in the region. We continue to make progress on this, and since we're pleased to see further development during the first quarter. First, we launched our Accelerate Anything capability with Emirates Skywards program. As a reminder, accelerate anything expands the scope of our accelerator product, which we had historically applied to boosting airline miles earned through travel activity to now allow members to accelerate any of their prior loyalty earnings, including miles earned through credit card spending and similar activities. This enhanced capability offers another optimized form of earning that doesn't rely on travel activity. In addition, Our foothold in the Middle East strengthened further with our recent announcement of the car and hotel rewards deployment for Qatar Airways Privileged Club Program, which enhances a new partnership we launched with Qatar Airways last year. Members can now earn and redeem miles on hotel bookings and car rentals. And just last week, Qatar became the third partner to launch our Accelerate Anything service. More importantly, both of these launches are significant expansions of our partnership with Qatar Airways, which just started last August with the launch of our buy, gift, and transfer services. We were also pleased to recently launch a new partnership with Mashrek Bank, a leading financial institution in the UAE with a footprint across 12 countries in Europe, Asia, Africa, and the U.S. Our new partnership enables members of the Maastricht Salon program to exchange their points into Emirates Skywards miles. Elsewhere, we expanded the reach of our buy services with Spirit Airlines, enabling members the ability to use their miles balance plus cash to top up more miles to seamlessly earn flight rewards. Finally, we expanded the integration We helped facilitate in 2019 between Hilton and Lyft, which enabled the two operators' shared customers to earn more Hilton points for every Lyft ride or use Hilton points to pay for Lyft rides. Our latest enhancement to this service leverages our platform to support Lyft's vaccine access initiative, which helps members donate a ride to a vaccine appointment for someone in need. Until the end of May, Hilton Honors members who have donated a ride will receive a one-time bonus of honors points for taking part and helping those in need to fight against COVID-19. Our work to expand our overall network of services has helped our partner loyalty programs support increased member engagement, both outside of travel and in preparation for its longer-term recovery. As we operate within this transitional period, the new and core service offerings we put into market will benefit customers and operators alike as we facilitate more ways to earn and spend the rewards. Having these deployments also makes our platform more resilient against future fluctuations in broader travel patterns, as they provide the propensity to earn and burn regardless of an individual member's near-term travel activity. We continue to believe that loyalty programs will remain crucial to the travel and hospitality industry's recovery, and that the growing network of services enabled by our flexible and comprehensive platform enhances their value. This commitment underscores our continued execution on our growth drivers, from maximizing the performance of our in-market services and cross-selling to existing partners, to signing new partnerships across new verticals and geographies. Our business development pipeline remains strong and reflective of our ability to launch new services and add new partners to our roster. Further, the work we are doing to bolster our core platform both through adapting existing services and innovating new offerings, should steepen our growth trajectory as we focus on accelerated performance over the coming quarters. Our strategy and operations remain resilient through some of the most significant industry-wide challenges we've faced to date, and I'm proud to say that we're emerging as an even stronger company. As always, we're grateful for the hard work of our team and the support of our shareholders as we make continued progress on our growth drivers this year. Operator will now open up for questions.

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Drew McReynolds with RBC Capital Markets. Please proceed with your question.

Yeah, thanks very much. Good afternoon. A couple for me. I think maybe starting with you, Eric, when we look at quarterly op-ex and certainly understand your comment on further subsidies in Q2, but as we kind of reopened here into the back half of this year and, and obviously in the next year, how do you see, um, you know, that, that trend in, in OpEx, uh, how, how do we begin to think about, um, you know, what we should be adding here as, as the top line improves. Um, and then secondly, at a high level, when we look at the LCM part of the business, and really keeping it at a high level. As you come out of this, are there any structural changes to that business, you know, with respect to what was there before, how these agreements were contracted, the gross margin profile, all of, you know, years of of work that went into this segment. You know, is there anything we should be aware of that would change coming out of COVID here? And then I've got a couple of housekeepings after. Thank you.

Sure, yeah. It's Eric here. Thanks for that. So on the expense side, we had wage subsidies of roughly $1.2 million in the first quarter. And so I think I mentioned in our prepared remarks We expect that to come down pretty significantly in the second quarter. So I'd expect certainly some ramp up just from that. You know, I think I mentioned as well, the subsidies have been proposed at least to extend out until September. I think the eligibility criteria on that is still a little bit of a question mark. So that's not something we're banking on at this time, but, you know, we're certainly monitoring it. You know, I'd say the other thing that we're looking at from Q2 to Q4 is some modest headwinds on the Canadian dollar. It's looking like it's strengthened about 7% or so, which is what we would have seen last year. So certainly, you know, some headwinds in those two areas. I think on the LCR side, I'll touch on that quickly and pass it off to Rob, but we haven't seen any structural changes to our pricing. You know, most of that's contracted upfront in our contracts and certainly a lot of the net new deals we've launched are very characteristic of what we've seen historically. Maybe Rob, if you want to add some context on that.

Yeah, it's a good question. I think what's probably come out of the pandemic in terms of LCR in general, when I think of a kind of structure, The potential of the business is much more significant than I think probably even us as optimists felt like going into the pandemic. We had been on a really nice trajectory through 19. What I saw in, you know, over the last 12 to 18 months is the value of the monetization part of these loyalty programs, you know, just the importance of that grow for our loyalty program operators and the airlines and hotels that own them. So I do see a significantly greater amount of attention being spent on how these programs can actually help the parent companies generate economics and be monetized. So I think that's really positive for us inside an industry that's getting recognized as having really, really substantial revenue generating and profit generating potential. So I think that would be the first thing. I think part of what comes out of that is These are big businesses now. I think I mentioned in my prepared remarks, you're seeing companies like American Airlines and United and Delta leveraging their loyalty programs to generate huge capital raises, whether it's through debt or bonds, et cetera, $7 billion to $10 billion. That's because these are big, strong, solid businesses. They're also managed by much more sophisticated management teams than probably five or six years ago. that's also leading to a more, I'd say, aggressive stance for these loyalty programs. I think that's only going to accelerate post the pandemic. They've gotten a taste of what these programs can do and I think they'll build on it. And we're seeing the products expand now with new distribution channels. Christopher talked about our launches on Accelerate Anything and with our subscription launch with Southwest here just recently. Those are just good examples of our partners saying, hey, this is a really strong business. Let's push it as hard as we possibly can. Let's maybe be a little bit more courageous. Let's be a little bit braver in terms of how we can grow this business. And we love that, right? That's the innovation and the ideation that translates to all kinds of really interesting growth going forward. So I don't know. I think those are kind of structural elements of structural change that we'll see going forward. And it all feels very positive from our stance.

That's excellent, actually. Two tidy-ups here. You've obviously done the raise. You've paid down the balance on the facility. I don't think you can do a buyback until the end of Q2. So just a good time maybe for you, Eric, just to provide an update here on free cash flow priorities as we get back to normal beginning here in the back half of 2021. And I'm assuming if there's any administrative or technical or timing breach of covenant in Q3, that that's largely a non-issue. But maybe you can comment on that as well.

Yeah, sure. So I think on the last part from a covenant standpoint, we're not too worried there. I think it's a very moot point with no borrowings on the books now. We have great relationships with our lenders and not overly concerned there. From a priority standpoint in terms of spending, I think what the bot deal has done for us certainly has provided us a bunch of flexibility to start investing in some of those areas we had put on pause pre-COVID, so advancing our product roadmap and marketing automation capabilities. So I think you'll see us start to focus in those areas in probably the second half of 2021.

Okay, got it. I'll leave it there. Thank you.

Thank you. Our next question comes from the line of Gary Prestapino with Berrington Research. Please proceed with your question.

Hey, good afternoon all. Eric, are you going to be able to prepare or offer to us the, you know, a recast of the expenses on a quarterly basis throughout 2020 just for modeling purposes. So it's a little bit easier for us to, you know, compare year over year changes.

Yeah, that's a great question. Let me think on that one. I mean, that one really should come out with our quarterly numbers as we issue it to the public. So I think if you know, it's not something we can do on a one-off basis. So let me take that back internally and we can think on that one. It certainly wasn't in our plans to do so, but I can try and help guide you on that.

Okay, no problem. I mean, you know, it just makes it a little bit easier. And then could you maybe, if you would, talk about how the, can you talk about the cadence of your sales growth sequentially throughout the quarter? I mean, did it, Pick up, obviously, from February to January, March to February. And then can you maybe give us a little bit of visibility on how April and May compared to, you know, maybe March?

Yeah, I can certainly touch on the trending in the first quarter and if Chris and Rob want to chime in along the way. So, you know, we ended Q4... all things considered pretty strong in a COVID environment. Q4 has been traditionally our strongest quarter, so heavier marketing activity. And so when we entered the first quarter, we set our expectations a little bit lower on the basis of a lighter marketing calendar and also just from a seasonality standpoint. So we factored in kind of the trending of Q3, Q4 from a baseline metric standpoint, overlaid with a lighter marketing calendar. And so we entered that quarter with, I would say generally expecting some smaller numbers than Q4. What we saw in the quarter, we started out that way. When we hit March, I would say we saw a very steep acceleration in our metrics. And I'd say that was twofold. It was across that marketing activity that we've been relying on so much in the pandemic, but it was also in what we call our baseline metrics, so that non-promotional activity. I wouldn't say that's back to pre-COVID levels yet by any means, but I would say it really was the first indication to us of some meaningful improvement in that area.

Yeah, and I'll jump in. The CFO wants to hand the forward-looking stuff off to me. Look, I do think, as Eric indicated, we saw really good progression through the quarter. That has continued into the kind of April and May period, and that's not surprising. When you think about our business, we've said a number of times previously that we feel like we will be on the early side of the recovery curve, And every metric you look at, particularly in the U.S., every metric you see in terms of airline travel, hotel occupancy, et cetera, those are really positive signs that have really picked up here in the last 30, 60, 90 days. So I would expect to see us track with that. I think we're going to be in advance of that, and we're going to actually, given the progress we made with all the new launches we had in 2020 and then continued through Q1, all of that is helping us. have a bigger footprint to capture more of this recovery. And I believe that ultimately leads to kind of continued acceleration of our growth. So we feel pretty good about what we saw in the first quarter and what we're seeing now.

Good. That's good to hear. And then in a normal environment, you know, pre-COVID, could you kind of give us the mix of what your business was between marketing and baseline and then, you know, where you are right now?

Yeah, it's Rob. Good question. One of the things we love about this business, it is remarkably responsive to smart marketing and merchandising. And we've built up our team over the last several years to just take our learnings around the data and analytics and just get smarter and smarter in terms of how we target and segment these hundreds of millions of loyalty program members that we have access to. and obviously in concert with our partners. And so we, you know, pre-COVID, we were seeing some really good work being done about obviously putting great offers in front of people that was driving great conversion and great results. And you saw that in our performance through 19. You know, part of our strategy is to actually get that first-time buyer on the flywheel and into the cycle. And so there was some really good work being done on that. Because you want to get these hundreds of millions of consumers aware of the opportunity to purchase these miles and get that travel that they want, but then get them back with good offers and keep them engaged. I would say we were seeing really good growth on the baseline activity as we were being effective in the programs in terms of awareness and getting engagement up. Obviously, with COVID, when people weren't traveling, The promotional response, so what I mean by that is not just that I'm purchasing miles to supplement a trip I'm doing, but the offer being put in front of somebody to incent them to make a purchase, we skewed more towards that during COVID for obvious reasons. I think now as we're seeing more members jumping on airplanes and staying in hotels, it's reverting back to some of the more traditional levels It's not there yet, but I would expect it to continue to improve. We are seeing baseline or non-campaign or non-promotional transactions improving nicely here as the travel recovery takes place. So I think we're heading back in the right direction.

Okay. Would skewing more towards your traditional non-promotional business, does that improve margins overall? Absolutely. Absolutely. Okay. All right. Thank you.

Thank you. As a reminder, ladies and gentlemen, if you'd like to ask a question, please press star 1 on your telephone keypad. Our next question comes from the line of Ed Wu with Ascending Capital. Please proceed with your question.

Yeah, thank you for taking my questions, and congratulations. Do you notice any significant differences between geographies with either your European carriers versus your North American versus your Asian versus your Middle East?

Yeah, it's Rob. Certainly we're seeing the most robust recovery in the U.S. for sure. You know, again, I think the domestic market in the U.S., there's been lots of coverage about volumes picking up there, Americans traveling within the country. So certainly that would be the strongest. We're seeing good signals out of Europe. I think the U.K. vaccine rollout, vaccine confidence is going to be helping there. Middle East is in the earlier stages of recovery, although those airlines in particular have been perhaps more active than other regions, even in the depths of the pandemic. So I think, you know, contextually, that would be the way we see our partners rolling out based on the transactional activity. And again, it mirrors largely what we're seeing in travel, which is, you know, broadly reported.

Great. And then, you know, going back to, you know, seeing all these, I guess, green shoots of improvements and, you know, people going back to travel, have you seen it in terms of your partners, in terms of the pipeline of people, you know, back to work in office and just focusing on, you know, plans for more programs or more services or more partnerships with you guys, you know, for the back half of this year into next year?

Yeah, I think, A couple of pieces to that. You know, we had a fantastic 2020 in terms of new partnerships and new deployments. I think we reported on that over the last 12 months. You know, really solid pipeline, lots of delivery, lots of launches into the market, which has been great. I think our expectation is that continues. Our pipeline has continued to be very strong. Again, as I mentioned in answering Drew's question, there's more, I sense more confidence in our loyalty program operators that they have a really powerful asset that they're managing. And so ways to try to find opportunities to monetize that asset, it's moved up the priority for those programs. So I think that's going to continue to be very positive. I think it's not only the new partnerships and the new products that we've been really happy with, the launch profiles on that. I think you'll continue to see more of it. Importantly to me, I think we're just going to see all of these programs push a little bit harder to see how much potential these programs really have in terms of generating revenue and profitability from the products and services that we provide. That's where we want to be. We want to be moving quickly and helping these partners generate as much revenue and profitability as possible.

Great. Well, thank you for answering my questions, and good luck.

Thank you. Ladies and gentlemen, at this time, there are no further questions. I would like to turn it back to Rob McLean for closing comments.

Thank you. We'd just like to thank everyone for listening in on today's call and look forward to speaking with you all when we report our second quarter results. Thank you.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.