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spk08: Greetings and welcome to the Transcat Inc. First Quarter Fiscal Year 2022 Financial Results Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Doheny, Chief Financial Officer. Thank you, Mark. You may begin.
spk04: Thank you, operator, and good morning, everyone. We appreciate your time and your interest in TransCat. With me here on the call today is our president and CEO, Lee Rodo. We will begin the call with some prepared remarks, and then we will open up the call for questions. Our earnings release crossed the wire after markets closed yesterday and can be found on our website, transcat.com, in the investor relations section. The slides that accompany today's discussion are also posted on our website. If you would, please refer to slide two. As you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference. Those statements apply to future events, which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release as well as with documents filed by the company with the Securities and Exchange Commission. You can find those on our website where we regularly post information about the company as well as on the SEC's website. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether as a result of new information, future events, or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. Additionally, during today's call, we will discuss certain non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We've provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release. So with that, I'll turn the call over to Lee to begin the discussion. Lee?
spk03: Thank you, Mark. Good morning, everyone. Thank you for joining us on the call today. In the first quarter of fiscal 2022, we got off to a very strong start, achieving excellent results across all our key metrics. As I walk through the highlights of the first quarter, in addition to the prior year comparisons, I'm going to compare our current performance to the first quarter of fiscal 2020 prior to COVID provide additional insight and context to our current performance. Let's get started. Our broad-based performance was driven by consolidated revenue growth of 23%, a first quarter record for TransCAD. The quarter was highlighted by our service segment, which continues to perform at a high level. Organic service growth was roughly 17% as we continued to capture market share in a highly attractive highly regulated life science market. Throughout the pandemic, the life science market remained resilient and it continues to be strong. Compared to the first quarter of fiscal 20 prior to COVID, organic service revenue increased 12.5%. The second quarter represented our 49th straight quarter of service growth. We also delivered outstanding margin performance in the quarter. Gross margins for service increased 540 basis points to 31.8%. The margin improvement is a testament to our focus on continuous process improvement, productivity, and more than anything else, inherent operating leverage in our service business as organic revenue volumes increase. Compared to fiscal 20 first quarter prior to COVID, service gross margins improved by 780 basis points. Moving to distribution, reported revenue was up 27% on improving market trends and favorable comparisons to a significantly COVID-impacted prior year first quarter. Distribution gross margins also improved to 23.6%, a 260 basis point expansion from the prior year. The expansion was driven largely by favorable product mix. Strong performance across both service and distribution led the first quarter adjusted EBITDA of $6.1 million up 75% from the prior year, and up $2.2 million or 55% from the first quarter of fiscal 20, again, prior to COVID. Our balance sheet remains strong with a leverage ratio slightly under one. And it's important to note that in the quarter, we amended our credit facility to increase our revolving line of credit from $40 million to $80 million with very favorable terms. The increased revolver provides more flexibility to support the execution of our strategic plan, which includes capitalizing on the robust acquisition pipeline we have developed over the past couple of quarters. All in all, our first quarter results demonstrate the talent and commitment of our team, the continued strength of our unique value proposition, and the attractiveness and resiliency of the markets we serve. With that, I'll turn things over to Mark.
spk04: Thanks, Lee. I will start on slide four of the earnings deck, which provides detail regarding our revenue on a consolidated basis and by segment for our first quarter. Consolidated revenue of $47.8 million was up 23% versus prior year on broad-based strength across both of our operating segments. Service segment revenue growth of 20% was stronger than we expected, with 16.6% of the growth coming organically and the other roughly 3% from acquisition. As we mentioned, our highly regulated end markets, including life sciences, remained very strong. We also saw improving trends with our customers more exposed to industrial markets, and our growth level was also helped by an easier comparison to a COVID-impacted prior year. Turning to distribution, revenue of 20.2 million was up 27% versus the prior year. As we mentioned, we saw improving market conditions and the recovery in our base business was the primary driver for the significant year-over-year increase. Turning to slide five, our consolidated gross profit of $13.5 million was up 44% from prior year, and our gross margin expanded 410 basis points to a first quarter record of 28.3%. Service gross margin was up an impressive 540 basis points, to 31.8% as we experienced significant operating leverage on our fixed costs from the high level of organic growth, and our technician productivity remained strong. Distribution segment gross margin was up 260 basis points from prior year, and as we mentioned, a more favorable sales mix. Turning to slide six, consolidated operating income of 3.7 million was up 2.7 million from prior year. Service segment operating income increased 1.9 million and operating margin expanded 590 basis points as a significant portion of the gross profit increase fell through to operating income. Distribution operating income of 0.7 million improved by 0.9 million from prior year, which was significantly impacted by the onset of the COVID-19 pandemic. Turning to slide seven, Q1 net income of 3.7 million increased 2.9 million from prior year, and our diluted earnings per share of 49 cents were up 38 cents from prior year, a result of the strong operating performance. The first quarter also included a favorable discrete tax benefit due to tax accounting associated with share-based awards and stock option activity. With this in mind, we now expect our full-year fiscal 2022 tax rate to be in the range of 16% to 18%, which is down from our previous expectation of 20% to 22%. Flip into slide eight. where we show our adjusted EBITDA and adjusted EBITDA margin. Among other measures, we use adjusted EBITDA, which is non-GAAP, to gauge the performance of our segments because we believe it is the best measure of our operating performance and ability to generate cash. A reconciliation of adjusted EBITDA to operating income and net income can be found in the supplemental section of this presentation. Consolidated adjusted EBITDA of 6.1 million was up 75 percent from prior year, and our adjusted EBITDA margin increased to 12.8 percent. Both segments showed strong improvement from prior year, and we were particularly pleased with our service segment's adjusted EBITDA margin, which increased 460 basis points to 17.1 percent. Moving to slide nine, cash flow from operations. While down 1.9 million from prior year was in line with our expectations, as we paid out certain performance-based accrued employee expenses and working capital increase on the strong organic revenue growth. First quarter capital expenditures were 1.2 million, and we continue to expect our full year fiscal 2022 capital expenditures to be in the range of 7.5 million to 8.5 million. Slide 10 highlights our strong balance sheet At quarter end, we had total net debt of $21.9 million with a leverage ratio just below one, and we had $27.9 million available under our revolving credit facility. Importantly, as Lee mentioned, we did amend our credit facility to increase the revolver to $80 million from $40 million, along with certain other term adjustments, which included a reduction to the LIBOR floor on our revolving line of credit borrowings and a modestly reduced interest rate on the term loan. Lastly, we expect to file our Form 10-Q on Tuesday, August 3rd. With that, I'll turn it back over to you, Lee.
spk03: Thank you, Mark. As we look forward, we're pleased with the strength of our balance sheet and we're pleased with the strong demand for our products and services. We expect our second quarter to be another quarter of growth in both of our operating segments. From a margin perspective, we continue to run ahead of schedule, but by all means, we will continue to leverage technology process improvement to further gains in sustainable margins. Automation will continue to be a focus as we believe expanded use and adoption of automation will drive a defendable competitive advantage in the markets TransCat serves. In service, we are projecting similar organic growth as we just achieved in the first quarter of fiscal 2022. We expect service growth gross margin to moderate in the second quarter compared to what we experienced in the last couple of quarters as technician productivity comparisons are becoming much more challenging, especially starting in the second quarter of last year. Distribution, market conditions improved in the first quarter and we expect that to continue. We anticipate high teens growth in the second quarter when compared to prior year on improved market conditions and with comparisons to a COVID impacted second quarter of last year. I'd like to conclude with a few comments related to acquisitions. At this time last year, we made a commitment to resource the development of a more active and impactful acquisition strategy. Today, we are pleased with the progress we've made, which includes both the level and quality of opportunities we are currently pursuing. And overall, we think we're well positioned to continue to execute our strategy. In combination with improved macro economic conditions, our value proposition, and leading place in the market and the industry, all of this should allow us to enhance shareholder value throughout fiscal 2022 and beyond. And with that, operator, we can open the lines for questions.
spk08: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions.
spk07: Thank you.
spk08: Our first question is from Greg Palm with Craig Hallam Capital Group. Please proceed with your question.
spk00: All right. Thanks. Good morning, everyone. And first off, congrats on the results again. Execution's been really impressive the last few quarters.
spk03: Thanks, Greg. Appreciate that.
spk00: So, you know, revenue, I guess, starting with the top line, revenue was well ahead of the guidance that you put out, you know, I think mid-May and obviously our expectations. I mean, is it fair to assume that you saw a big uptick in the month of June, or how would you characterize kind of the activity or the cadence throughout the quarter?
spk03: I think, Greg, we saw, you know, nice patterns and nice revenue flows, both segments, really the whole quarter. You know, we ended the year strong. In fiscal 21, we had nice pipelines going into the year and, you know, they delivered and beyond. And so we did see, you know, good revenue flows. And I think they stayed steady and maybe even increased throughout the quarter. That's how I would characterize it.
spk00: Got it. And, you know, in terms of, you know, industry growth versus, you know, share gains, how do you think about that?
spk03: Yeah, I think what we saw, we ask ourselves that question all the time. We're studying the data, Mark and I and the team, we look at this. It's been difficult to pinpoint exactly how much is pent-up demand versus market share growth versus industry growth. I would probably say comfortably it's a combination of all those things. There's no question there's some pent-up demand. There's also no question that, particularly in service, where we continue to take market share. And we know that by the competitive activities that we're involved in. So I think it's a blend of all three, and we'll see if it sustains. But right now, things look pretty positive getting through second quarter.
spk00: OK, great. And then just in terms of M&A, I know you made some interesting changes. You talked about this in terms of the revolver. how should we think about the pace of M&A? We've been kind of talking about, you know, increasing pace for quite some time. And would you be disappointed if you didn't complete a transaction or to the remainder of the calendar year? Or is this just sort of, you know, getting things ready for maybe a more active year in the next kind of 12, 18 months?
spk03: Right. That's a good question. So, you know, when we look at the pipeline, let's say prior to you know, the renewed initiative that we started about a year ago, which I just referred to. You know, the pipeline would always have a handful of opportunities in it that we would go through and, you know, sort of examine these opportunities for strategic fit, so on and so forth. I think, you know, when we look at it today, it probably takes about a year, you know, to go from, you know, what's called that pipeline, a traditional pipeline, to something that we were striving for as part of our strategic plan. So here we are one year later, and you look at the same pipeline, and what you see is just really kind of a night and day difference. And again, I alluded to the size and quantity and the quality, just things we're pursuing. And I think it's ample. And so ample enough to complete our strategy and execute it. So to answer more directly, I would be surprised, of course, if I didn't see a deal get done in this fiscal year. Let's just say, for example, I won't tie myself to multiple deals or even the calendar year, but we're in fiscal 2022 and I do see activity getting accomplished in this year, for sure.
spk00: Okay, that's great. Well, best of luck going forward. Thanks.
spk07: Okay, take care, Greg.
spk08: Thank you. Our next question comes from Scott Buck with HC Wainwright. Please proceed with your question.
spk06: Hey, good morning, guys. Thank you for taking my questions. First, I'm curious if there are any areas within your kind of end-user markets where maybe activity remains slow and hasn't really kind of picked up here post-pandemic?
spk03: Relative to oil and gas, let's say on the distribution business, we've seen a really nice recovery, but we're still not at 100% of where we were in FY20. We may be something like 90% recovered. So there's still a little bit of drag on that market relative to products and service. I think things are as expected, mostly life science, but we've got some nice aerospace and defense in there and industrial as well. There's been pickups across the board. So that's how I would characterize it.
spk06: Okay, that's helpful, guys. And then, you know, thanks for the additional commentary around M&A. But I was curious, you know, any changes to what has been kind of the historical strategy of bolt-ons in adding either, you know, a new geographic region, a new service capability? I mean, are you looking at anything kind of outside the box? Or is it, or should we expect kind of more of the same?
spk03: Yeah, I would say all of the above. And by that, I mean there's no question that expanding our geographic footprint to be more comprehensive in areas where we have gaps is going to be a driver. You're right about that. Expanding capabilities is going to be a driver. Bolt-ons we will make frequently whenever we can find them. They just make a whole lot of sense from a strategy perspective. And I've messaged sort of repeatedly through the last few quarters that It's important that we identify adjacent markets and expand our addressable markets where it makes sense for TransCat. And so I think that very much is part of the strategy as well. And so it's a combination of all the things you mentioned.
spk06: Okay, that's great. And then last one for me, I'm just curious if we can get kind of an update on the rental business. It's kind of slid out of the deck the last couple of quarters. I'm just kind of curious what the trends are there.
spk04: No, Scott, it's Mark. And actually, it's really favorable trends in the rental business. And you saw the improvement in our gross margins sequentially and year over year. Part of that's the rental business is very strong. It's a nice environment for the rentals business where it's difficult to get new equipment across the board in this sort of economy. So I think that's been helpful for the rental business. So I'm very pleased with the performance of the rental business.
spk07: All right. Great, guys. Thanks for the time. Thanks, Scott. Thanks.
spk08: Thank you. Our next question comes from Jeff Van Sinderen with D. Reilly and Company. Please proceed with your question.
spk10: Good morning, everyone. Let me add my congratulations. A couple of multi-part questions here, if you can bear with me a little bit. I understand you've seen a pickup overall so far. But I guess is it fair to say that you're not seeing any negative change at all in customer activity over the last month or so with the resurgence of COVID? And I guess overall, how are you thinking about the potential impact of Delta beyond the current quarter? Or have we just kind of reached a juncture where most customers simply must do the service work now that slowed during COVID?
spk03: Right. So it's a good question. We have not seen any impact. But remember, and we saw this throughout COVID while it was peaking, that service business has to get done for the most part. And so it's a resilient business and it's highly driven by regulation, high cost of failure. So we wouldn't expect, Jeff, to see it in service and we haven't seen it in service. Where you would see it, talking about the variants and the Delta resurgence, where you'd see that would be on distribution. But right now, We sit in a position where I'm not seeing it. I don't think we're seeing it. I mean our service, our distribution business is up. Let's call that a leading indicator, right? That would be affected first and it has not been affected, you know, so far in this fiscal year. Now, could that change? I mean, yes, it could. I don't see it changing on service. It could change on distribution. It has not changed yet, not for TransCat.
spk10: Okay, great. And then just relevant to your acquisition pipeline, are you finding anything that could be transformational? Has the environment changed at all in the last couple months? You know, is there anything, I guess, in the context of the COVID backdrop that's changed? And also just kind of specifically wondering about the acquisition opportunities around the life sciences area.
spk03: Right. I'm reluctant to add any more color than, you know, on the earnings script, and I'd rather not get down the road to are we working on something transformational. I would say that it's a good pipeline. I think the opportunities are compelling. I think they're good for the business. You know, this is what we guided that we'd be working on, and we are working on it, and I expect to, you know, see results this year. And I'd just leave it at that. I think that's probably appropriate.
spk10: Okay. Fair enough. Thanks for taking my questions.
spk07: No problem. Thanks, Jeff.
spk08: Thank you. Our next question comes from Jerry Sweeney with Roth Capital. Please proceed with your question.
spk09: Good morning, Lee and Mark. Thanks for taking my call.
spk07: Hey, Jerry. Good morning.
spk09: I wanted to circle back to revenue. Obviously, great organic growth. Are you seeing any fundamental changes out there in the marketplace, which means maybe a shift towards more outsourcing. Obviously, labor is an issue. That could be a positive or negative for you, but just curious if you're seeing any fundamental shifts that may be driving some of that organic growth as well, especially since we're coming out of COVID. Usually, those are times.
spk03: It's an interesting question. I was thinking about that myself recently, and one of the things I think is occurring, and this is conjecture for sure, and this is not a fact by any stretch, but when you have events like the pandemic and similar macro events, the strong tend to get stronger. You've heard that before. And sometimes the weaker get weaker. I think TransCat has just been a really strong company for a really long time. And when you get through something like COVID and we've done the right things, both from an outwardly reaching market perspective and marketing and delivering good services and internally where we've taken care of our employees, And we've gone over and above to make sure that they were safe and well cared for from an employee perspective. It just makes for a good company. And so good companies come out of pandemics strong. And I think that's part of the longer-term success of this company is this reputation that we've built internally and externally for getting our work done and getting it done right. And I think we're reaping some of the rewards of that as you see the continued growth.
spk09: Okay. That's helpful. I can completely understand that. Shifting gears a little bit to margins, I'll just start with this. Can you bucket out or qualitatively, quantitatively, however you would want to do it, but how much of this margin improvement maybe was mixed in a leverage of overhead? And obviously, we've always talked about automation. Is any automation starting to play a role in some of that margin improvement as well?
spk04: Hey, Jerry, it's Mark. Yes, certainly, we can provide some more color and You know, when you experience this sort of organic growth at almost 17% for the service business, the vast majority of the margin improvements we saw was around that fixed cost leverage. And I think Lee mentioned in his prepared remarks, this business has kind of reaffirmed this. It has an inherent amount of operating leverage to it, a strong amount of operating leverage. That was the big call-up. Technician productivity are starting to hit more difficult comps. So there was, you know, much more modest improvement versus prior year. That was helpful. We had a slight increase on the number of onsites versus prior year. So, you know, it's not something that we called out as a big drag in the press release or earnings deck. I would continue to go back to that operating leverage. on the fixed costs and continued strong technician productivity as really the drivers.
spk09: Gotcha. And then just on the technician side, this is more out of curiosity, can techs sort of shift from industry to industry? I mean, if there's an increased demand, say in life sciences and less demand in industrial, or are they sort of trained up in a certain process and technique?
spk03: Yeah, generally speaking, all of our technicians, capable and in most cases are trained across the spectrum so whether we're doing temperature work for a life science company or pharma company or whether we're doing temperature work for an industrial manufacturer or chemical or some sort of process it's about the same there are nuances by industry but generally speaking the disciplines carry across across the spectrum so it's flexible and you know to the degree that someone who's experienced as a technician, that's great. But through the years, in the last five to seven years, we bring people into the company, train them up, and they just need to have technical aptitude. You don't always get experienced, quote-unquote, calibration technicians. Sometimes you do, but you get guys with technical engineering aptitudes, math aptitudes, and these guys take about a quarter or two to get up and running, and then we usually have them pretty productive.
spk09: Got you. Okay, great. Congrats on a great quarter, and thanks again for your time.
spk07: Appreciate it. Thanks. Thank you, Jerry.
spk08: Thank you. Our next question comes from Dick Ryan with Colyers. Please proceed with your question. Thank you.
spk05: Hey, guys, your comment on gross margin for Q2, the moderation, are you talking from the absolute levels that we saw in Q1 and Q4, the roughly 32%, 33% level, or are you still talking about moderation of the growth year over year, which had been, you know, 400, 500 basis points?
spk04: Hey, Dick, it's Mark. Yeah, it's the moderation of the growth year over year. We think we have sustainable gross margins, but You know, describing the Q1 and our leads guide for Q2, the comparisons on the technician productivity side get more difficult later in the year, even from Q1 to Q2. So, again, while we expect some growth year-over-year in Q2 and gross margins, it's not going to be to that same degree. You'll still get the operating leverage, but that technician productivity comparison is much more difficult. So that's the way to think about it.
spk05: Okay. And in the past, you've had comments either on op-ex or op-income. Anything you'd care to share on that line item?
spk04: Yeah. You know, from what we just, for example, if you look at our SG&A op-ex from this past quarter, you know, something around that level, maybe slightly up from that would probably be the best way to think about that.
spk05: Okay. All right. What percent of service is life science now?
spk03: It's right around 50%, Dick.
spk05: Okay. Let's see, one last one for me. On the CBL side, it looks like you're still kind of in that 20 count, kind of centered in the northeast and the southwest. What's the attitude to kind of grow that, or is that just going to be, is that not a primary pillar of growth, or how do you state the business case for the CBLs?
spk03: Yeah, I think the CBLs, if I were, I wouldn't focus on it or overly focus on it. We're going to grow the service business. We have growth targets. They've always included CBLs. They'll include CBLs in the future, but it's not as if That's what we're focused on, and it's going to represent a large percentage of our growth. During COVID, there were no CVL sales, and that's completely understandable. And building up that pipeline in the future, I'm pretty confident that's going to happen, and it'll be part of our growth. But we're going to grow either way. So we've got transactional business. We've got sort of what we call the 20 to 120, the midsize companies, and then we have these large CVLs. I'd expect to make progress in each of the – your channels.
spk05: Okay, great. Thanks, and congratulations on a nice quarter.
spk07: Appreciate that. Thank you.
spk08: Thank you. Thank you. Our next question comes from Mitra Ramgopal with Sidoti & Company. Please proceed with your question.
spk01: Yes, hi. Good morning. Congrats on a great quarter. A couple of questions. First, on the margin side, I know I think one of the things you highlighted was the technician productivity, and I was just curious, as you look at your existing workforce today, if you feel the need to maybe upgrade even further, as we saw in the past, and that's obviously bearing fruit now, or you're in a pretty good spot in terms of being able to meet your existing needs with what you have.
spk03: Yeah, I would say that 17% organic growth was higher than we anticipated. And so we weren't staffed up the way we'd want to be or that we need to be in the future to be able to maintain anywhere near that type of growth. So when you have 17%, we're not likely to be as ready. So what does that mean? That means, you know, more overtime and, you know, you've got to train up new technicians quicker. There's a little bit of drag sometimes on margin. We didn't really see it, which is a good sign, but it could be. I think... We're going to continue to grow. We're going to continue to add technicians, right? And we're in that frame of mind now. We didn't add a lot of technicians last year for the first three quarters. We started doing that in Q4, and we've absolutely had to do it, Mitra, in Q1. I anticipate the same thing will continue as we continue to grow.
spk01: Okay, no, that's great. And then on the Delta variant, I mean, who knows how this plays out, but we're starting to see changes in policies of mask mandates in the workplace, et cetera. And if you could remind us, in terms of your staffing, et cetera, any concerns of, you know, if this should become a bigger issue that's better prepared this time around versus maybe a year ago to deal with it.
spk03: Yeah. So, you know, of course it was a challenge last year, but we got through it. We have a really good leadership team and management team. We tend to follow the state laws. So whatever's required, wherever we're working, we adopt those policies. And some of them have been changing, and we've been changing with them. And I think we've broadcasted that and communicated that pretty well throughout our organization. So it gets to be not really a transcat decision. Our employees understand that we're going to follow the local guidance and the local laws. And I think that's the best way to do it for now. It's what we did last year. It wasn't easy on anybody, of course, but I think people understood that. We'll continue to do much the same as need be.
spk01: Okay, great. And then finally, I know for some companies, depending on the industry, the sense is the pandemic has changed the thinking for a lot of their potential customers in terms of maybe being more willing to outsource their business than they might have been in the past as a result of what happened. I was curious if you're starting to see maybe increased interest or more conversations around that from potential customers.
spk03: Yeah, I mean, there's multiple drivers for the healthy pipelines that we have, and I'm sure somewhere within that group there are outsourcing opportunities. I'm quite sure whether it's a result of COVID or not COVID, I mean, it would be difficult for me to characterize it, We have healthy new business go forward pipelines. It's really good for the business, and we're pleased to see it. I'm sure it's a combination of that and many other things. So we'll just keep moving forward with that in mind.
spk01: Okay, great. Thanks again for taking the questions.
spk07: Our pleasure. Thanks for the question.
spk08: Thank you. There are no further questions at this time. I would like to turn the floor back over to management for any closing comments.
spk03: Okay, well, this is Lee, and I just want to thank everybody for joining us on the call today. We certainly appreciate your continued interest in Transcat. We will be participating in the virtual Oppenheimer Technology Conference on August 11th and the Collier's Investor Conference on the 9th, so feel free to check in on us then. And if not, and otherwise, we're always available. Feel free to check in, and we'll talk to everybody after the second quarter results. So take care. Thank you.
spk08: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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