Bright Horizons Family Solutions Inc.

Good afternoon, ladies and gentlemen, and welcome to the Bright Horizons Family Solutions third quarter of 2023 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is my pleasure to introduce your host, Michael Flanagan, Vice President, Industrial Relations for Bright Horizons Family Solutions. You may begin, sir.

Thank you, Judith, and welcome to everyone on Bright Horizons' third quarter earnings call. Before we begin, please note that today's call is being webcast, and recording will be available under the Investor Relations section of our website, brighthorizons.com. As a reminder to participants, any forward-looking statements made in this call, including those regarding future business, financial performance, and outlook, are subject to a safe harbor statement included in our earnings release. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially and should be considered in conjunction with the cautionary statements that are described in detail in our earnings release, 2022 Form 10-K, and other SEC filings. Any forward-looking statement speaks only as of the date of which it is made, and we undertake no obligation to update any forward-looking statements. We may also refer today to non-GAAP financial measures, which are detailed and reconciled to their GAAP counterparts in our earnings release, which is available under the IR section of our website at investors.brighthorizons.com. Joining me on today's call is our Chief Executive Officer, Stephen Kramer, and our Chief Financial Officer, Elizabeth Boland. Stephen will start by reviewing our third quarter results and provide an update on the business. Elizabeth will follow with a more detailed review of the numbers before we open it up to your questions. With that, let me turn the call over to Stephen.

Thanks, Mike, and welcome to everyone who has joined the call this evening. I am pleased with our performance in the third quarter. We delivered strong results with 20% year-over-year revenue growth and 33% adjusted EPS growth. Full-service revenue came in ahead of our expectations with comparable high single-digit enrollment growth. And Backup Care delivered an exceptional quarter with use across all care types, well outpacing our expectations. Overall, as we approach the end of 2023, I'm proud of our performance and continued progress toward our near and long-term objectives. So to get into some of the specifics, in our full-service child care segment, revenue increased 17% in the third quarter to $445 million. The typical seasonal enrollment dip over the summer months, primarily driven by older children aging up and out into elementary school, was slightly better than we expected, driving higher-than-projected year-over-year enrollment growth. The Center cohorts we have discussed previously continue to demonstrate improved year-over-year performance. In Q3, our top-performing cohort, defined as above 70% occupancy, increased to 36% of our centers, which is an improvement from 25% in Q3 2022. And our bottom cohort of centers, those under 40% occupancy, represent 17% of centers as compared to 20% in the prior year period. To provide a bit more color on enrollment trends, in centers that have been open for more than one year, enrollment growth expanded to a high single-digit rate in Q3. with occupancy levels averaging 58 to 60% in the quarter. In the U.S., year-over-year enrollment increased nearly 12% in these life centers, with strong growth across both our client and lease models, and notable ongoing momentum in our younger age groups, with mid-teens growth in our infant and toddler classrooms. Outside the U.S., enrollment again increased at a low single-digit rate in Q3, and the UK remains our most challenging geography. Enrollment growth in the UK improved modestly in Q3 as compared to Q2, but as we discussed last quarter, the macroeconomic backdrop and staffing environment continue to be a headwind to the cadence of our recovery from the pandemic. In the Netherlands and Australia, where occupancy averages more than 70%, enrollment increased sequentially over Q2, broadly in line with our expectations. On the staffing front, the U.S. continued to see positive recruitment and retention trends. Staffing levels increased year-over-year, accommodating higher enrollment, underpinned by increased applicant flow and better retention rates. Outside the U.S., staffing trends continue to be more mixed. In the U.K., labor continues to be a constraint to our enrollment and overall cost structure. As we discussed last quarter, we continue to execute on a variety of talent acquisition initiatives and have undertaken actions to retain our existing staff, attract new qualified staff, and reduce our reliance on costly agency staff. While I am optimistic that these initiatives will improve overall staffing levels and operating efficiency, these efforts will take time to drive a material change in labor costs and the profitability of our UK centers. Let me now turn to backup care, which delivered another outstanding quarter. Revenue grew to $169 million, but 32% growth outpaced our expectations as we delivered a record level of use. Traditional network use was well above our guidance for the quarter with robust demand, notably from families with school-age children on summer vacation. The strong youth growth experience in July continued through August with our Bright Horizon Centers and Stephen Gates Camps showing the strongest growth across care types. September was another strong month of use, though the pace of growth moderated from the high concentration of use over the summer. Overall, I am delighted with the performance this quarter and the execution by our operations team to meet this surge in demand, ensuring client families received the care they needed to remain productive at work. The growth and expansion of our backup services this year illustrates the broad opportunity we have within the backup care segment as we leverage the investments we have been making in technology, marketing, and product. Our education advisory business delivered revenue of $32 million, increasing 3% over the prior year. Notable new client launches in the quarter for Ed Assist and College Coach included Presenius Medical and Hubbell Incorporated. As I wrap up, I want to take this opportunity to recognize the incredible work of our center teachers and staff teams. They have always been the key to our ability to deliver the highest quality education and care to families and clients. I am thrilled to share that we just received the results of our Parent Impact Survey. We again saw excellent MPS and customer satisfaction scores and heard overwhelmingly from currently enrolled families that the quality of our teachers and the impact they have on their child's education sets Bright Horizons apart from our early education peers. Our business is fundamentally about people serving people, and this recognition is a great affirmation of the work we do every day. So in closing, I like the continued progress we are seeing across our business. Given our results year to date, In our current outlook for Q4, we are narrowing our full-year guidance to a revenue range of $2.375 to $2.4 billion, or 18% to 19% growth, and an adjusted EPS range of $2.73 to $2.78. With that, I'll turn the call over to Elizabeth, who will dive into the quarterly numbers and share more detail around our outlook.

Thank you, Steven, and hello to everyone on the call. To recap the third quarter, overall revenue increased 20% to $646 million. Adjusted operating income of $67 million, or 10% of revenue, increased 46% over Q3 of 22, and adjusted EBITDA of $101 million, or 16% of revenue, was up 26% over the prior year. Lastly, adjusted EPS of $0.88 a share grew 33% in the quarter. We added four new centers in Q3 and closed nine, ending the quarter with 1,063 centers. To break this down a bit further, full service revenue increased $64 million to $445 million in Q3, or 17% over the prior year, ahead of our expectations of 14% to 16%, driven by increased enrollment and pricing. Enrollment in our centers open for more than one year increased high single digits across the portfolio. Occupancy levels averaged in the range of 58% to 60% for Q3, ticking down sequentially as expected given the typical enrollment seasonality over the summer months. As Stephen mentioned, U.S. enrollment grew in the low double digits, while international enrollment increased in the low single digits over the prior year. Adjusted operating income of $7 million in the full-service segment increased $10 million in Q3. This year-over-year improvement was driven by higher enrollment, tuition increases, and the improving operating leverage across our broader enrollment base. Partially offsetting the earnings growth was a $5 million reduction in support received from the ARPA government funding program over the prior year, and the continued cost impact of inefficient labor and agency staffing in our UK business. Turning to backup care, revenue grew 32% in the third quarter to $169 million, well ahead of our expectations for 12% to 15% growth. And operating income was 31% of revenue, growing to $52 million. As Stephen detailed, use volume was higher than we anticipated, with strong use across care types particularly in our school-age summer programs. Lastly, our educational advising segment grew revenue by 3% to $32 million and delivered operating margin of 26%. Interest expense increased modestly in the quarter to $11 million, excluding the $1.5 million per quarter in both 22 and 23 that is related to the deferred purchase price on our acquisition of Only About Children. The structural tax rate on adjusted net income increased to 28.5%, an increase of 180 basis points over Q3 of 22. Turning to the balance sheet and cash flow, through September of this year, we have generated $161 million in cash from operations compared to $131 million last year. We have invested $92 million in fixed assets and acquisitions in 2023, And comparatively speaking, in 2022, we had invested $251 million, including the acquisition of Only About Children on July 1st of 2022. We ended the third quarter of this year with $41 million of cash and a debt leverage ratio of 2.8 times net debt to EBITDA, down from the 3.25 times that we started in 2023 at. Moving on to our updated 2023 outlook. As Steven outlined, we are raising the lower end of our range to the full year revenue guidance of $2.375 to $2.4 billion to reflect the revenue performance through the first nine months of the year. In terms of segment revenue for the full year, we now expect full service to grow roughly 18% to 19%, backup care to grow approximately 20% to 22%, and Ed Advisory to grow in the mid-single digits. On an adjusted EPS basis, we are narrowing our guidance range to $2.73 to $2.78 for the year. In terms of the remainder of 2023, this full year outlook assumes that Q4 overall revenue will be in the range of $575 to $600 million, and adjusted EPS will be in the range of $0.72 to $0.77 for the quarter. Before I close, as we've done each quarter this year, I want to quantify three discrete items that are affecting our reported margins and earnings growth rates in 2023. That is ARPA funding, interest expense, and the tax rate. In Q4, we expect those items to account for an approximate 25 cent headwinds to year-over-year growth for Q4. With 13 million less in ARPA government funding at P&L centers, approximately 230 basis point higher tax rates, and roughly $3 million more in interest expense. Two notes here. The sequential step-up in interest expense to $14 million in Q4 of 23 reflects the new quarterly run rate that we expect through 2024 as our interest rate caps step up this month. Also as a reminder, funding from the ARPA program at P&L Centers, which effectively ended September 30th, will be $33 million lower in 2024. So in closing, echoing Steven's comments, we're pleased with the continued progress across the business this year and continue to be excited about the opportunities ahead. And so with that, Judith, we are open to questions and can go to Q&A.

Thank you very much, Mel. Ladies and gentlemen, we will now be conducting the question and answer session. If you would like to ask a question, please press star then 1 on your telephone keypad. Confirmation turn will indicate that a line is in the question queue. You may press star 2 to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Andrew Steinemann of JP Morgan. Please go ahead.

Hey, it's Andrew. I just wanted to ask about the UK business. What gives you your confidence that you'll be able to improve the UK business and kind of how important is it strategically to serve the UK and the US, let's say, together?

Good evening, Andrew. Nice to hear your voice. So look, we have been in the UK since and so know that market incredibly well and understand how to operate within that market. We certainly recognize the challenge that we are currently facing there and have been facing. But on the other hand, we also are starting to see some progress as it relates to our ability to staff and our ability to take out some of the agency staffing that we had continued to have. In addition to that, I think that our quality leadership position in that market really holds us in good stead as we continue to build that business back. I think that in addition to that, we are seeing the government start to have very reasonable proposals as it relates to things like the qualifications of staff, the ratios in classrooms, as well as starting to think differently about funding. And so again, from our perspective, we believe that the UK, and especially the portfolio that we have in the UK, represents something for our future. We are being very disciplined, so we will continue to look very hard at particular locations that over time are not going to make sense for us. And we'll take the steps to have closures where we think the prospects are not strong. On the other hand, overall, we believe in the UK market in the long term and believe that we have a unique position to continue to make progress there.

Okay, thanks, Stephen. Appreciate it.

Our next question comes from George Tong of Goldman Sachs.

Hi, thanks. Good afternoon. You mentioned occupancy levels averaged in the range of 58% to 60% in the third quarter. Can you elaborate on some of the trends that you're seeing with occupancy as you head into 4Q and how you would expect trends to play out in 2024? Hi, George.

Sure. You know, the trend there continues to improve, and it's sequential dip, but as we compare the enrollment year over year and we continue to have a group of centers coming into this cohort that are more than 12 months operating, we feel good about the progress even as it's just sort of steady quarter to quarter. Looking ahead to next year, we mentioned these three bands, if you will, of centers that are performing and our top performing group that was 36% of the total this quarter, and we had reported last quarter was 43%. That's the lion's share where we are obviously aiming to get back to over 70% next year. They have already gotten there. They're achieving that performance now. So enrollment improvement there would be modest next year. It's really in the middle band and the lower band where we would see enrollment progress. Looking at 58 to 60 now, we would be looking to be growing enrollment again in the high single digits overall next year across the various cohorts and centers that have the opportunity to keep growing that enrollment. So that's probably how we think about it.

Got it. And just to follow up on that, when would you expect to get back to pre-COVID levels of occupancy rates?

Well, as mentioned in the top group, we are already back to pre-COVID levels. The middle group, which is just for those listening, would be currently enrolled between 40% and 70%. Those centers are averaging in that range of what I even just quoted. They're in that 55%, 60% range. So those centers we would expect to have the most opportunity for growth. next year and be very, you know, getting to the pre-COVID levels that they had operated at in the second half is what we would be targeting, second half of the year. And then the bottom cohort is a broader mix of centers, and so those would be certainly looking out to 2025 based on the cadence of enrollment that we're seeing now.

Got it. Very helpful. Thank you.

Thank you.

Our next question comes from Jeff Luna of Baird. Please go ahead.

Yeah, thank you. Just first on backup care strength, I guess just feels like I'm asking the same question as last quarter, which is you keep calling for deceleration and then the business keeps outperforming. So I can understand, like, why the Stephen Case outsized growth from this last quarter won't repeat. But just help me out with, like, any other – factors like the percentage of use banks that are exhausted at this point of the year relative to what that metric typically is or just any other constraining factors on the growth because otherwise it's looking like maybe you're set up for a couple of years of potentially stronger post-COVID growth given all the clients you signed on during COVID.

Thanks, Jeff. I think you're pointing to some of the factors that do come into the overall mix. A number of our clients have arrangements with us that are essentially on a pay-per-use basis or have a base level fee and then paying for use over a minimum threshold. And so there's an opportunity, of course, more users at a client to be utilizing backup care. But for the most part, clients do have a constraint, if you will, on how much an individual employee can utilize. And so given the uses that we have seen through the first nine months, those baskets for the individual employees have largely been consumed for those that are the primary users through the first nine months. So that is what gives us some pause about just continued growth across a whole new cohort. We will certainly have some new users and be reaching out to all of those opportunities, but I think our view is that with the pull into the summertime with all of those school-agers and the concentration of a week or two at a time of use for those parents, that there has been more consumption a bit earlier in the year for those heavier users. We don't want to have a great story sound negative. It has been a terrific growth trajectory a couple of years now of 30% growth plus in the third quarter. And the components of the way that this business is seasonal is sort of amplified by the numbers of clients who are seasoning in to their use banks. And as they consume the different use care types, we have the opportunity to make that more year-round. That's our outlook for the first day of November.

Okay. I guess we'll see if I'm asking that question again next quarter. On full service margins, just anything else that's weighing margins down relative to expectations in the quarter besides UK staffing and enrollment levels? I asked because it looks like there was a decent-sized shortfall despite revenue changes. upside and I would think the stronger enrollment growth would be coming at high incremental margins given the excess capacity that you currently have.

Yeah, I mean it's certainly a fair call out. I think other than the UK which certainly has been challenged and is even slightly more challenged than we had, our outlook had been last time we talked to you all so we've sort of further refined that for the third quarter's actual results and how we see it coming in the fourth quarter. But I think the only other thing I'd note is that with the higher concentration, the growth of the infants and toddler age groups, which is a positive to the long-term enrollment story, that comes at a higher intensity ratio and a higher cost structure as well. And so that's probably the other component that I'd lay out in terms of the labor cost element.

Okay. Thank you.

Thank you.

Our next question comes from Manav Putnik of Barclays. Please go ahead.

Thank you. Elizabeth, just to follow up on that, and I apologize if I missed it, but can you just help us with your... operating margin expectations for the three segments? I don't know if anything's changed, I suppose, since the last quarter.

Not significantly, no. I think that back up, just to start there, we had just over 30% operating margin this quarter. That's similar to what we would expect from Q4. The full service Still in the low single digits in Q4, so also similar. And that's, again, I'll just note it, that's improvement, that's performance against a quarter that won't have ARPA funding coming through. And then the advising business is, again, still in the 25 to 30% range, so I would say consistent.

Okay. And then, Stephen, just in terms of, you know, your comment around just, you know, looking at the portfolio, just curious on ad advisory. It seems like that's been decelerating. It's been missing expectations. You've lowered the expectation of growth there for quite some time. You know, just your thoughts on whether that's strategically important or not.

Yeah, thank you Manav. So look, our advisory business we believe is strategic to the overall enterprise and the relationships that we enjoy with our clients. We have about 300 clients in that area who depend upon us to either support their employee dependence through education advisory and or employees going back to school themselves, which obviously in the current environment and the environments coming forward is really critical from an upskilling and reskilling perspective. In terms of thinking about the growth, we said and shared in the last quarter that we absolutely are in a time where we are continuing to reposition that service again the needs of our employer clients and prospective employer clients, and that is underway. We have new leadership in that business and really believe going forward that there is a large opportunity for us to continue to lean in with the clients and new clients. So overall, yes, we believe it's strategic, and we believe that we are advantaged in the market and just need to get the cadence of growth both from an employer perspective as well as from a participant perspective

going into next year. Okay, thank you. Thanks.

Our next question comes from Josh Chin of UPS. Please go ahead.

Good afternoon, Stephen and Elizabeth. Thanks for taking my questions. So for my first question on backup care, could you just kind of talk about what is driving the consumer behavior to use much more the benefit now than before. I know that you always try to market your benefits and get the users to use it more, but why is it that this year and last year, especially, that the users are accelerating their use, it seems like?

Yeah, I can start off, and Stephen can add color. You know, I think the interesting thing or the notable thing about Backup Pure to consider that it is different from full service care is that it is a benefit that is paid for mainly by the client. So the employee's co-payment, their participation and the cost is much lower. It's intended to be filling in when another care source breaks down and or a need is there. And so from an employee standpoint, it's an opportunity to lean into a benefit that is provided by their employer and now with the additional care types that we have across virtual learning solutions across pet care, school-age children as well as younger children in centers and in-home. I think it's able to touch a wider array of employees at our client partners that have this sponsored as a benefit. So there's that element and it's flexible in terms of how it's delivered across the Bright Horizons network of centers, across an in-home solution and what have you. So I think the opportunity is very broad. with the employment base, and the cost to that consumer is very modest, relatively speaking. Full-service child care is also subsidized by the employers through their facilities and often through tuition discounts, but the parent still has a meaningful out-of-pocket cost for it, and it's a more concentrated benefit for a more concentrated number of employees. I don't know if you have other thoughts on the consumer behavior, Stephen?

Yeah, I think the only thing I would add, because I completely agree with Elizabeth, I would say that over the last several years, we have absolutely been investing in a more seamless experience for the end user through better technology and interfaces. We certainly have been investing in more personalized outreach and marketing efforts. And so, again, I think those efforts are starting to bear fruit. So ultimately, we continue to have these ongoing opportunities to continue to refine that experience and continue to refine those marketing opportunities and outreach opportunities, but believe that many of the investments are starting to pay fruit and you're starting to see the last couple of years really show some really nice growth on top of what Elizabeth shared in terms of the actual use case growth and demand for the service.

Thank you for the call there. That's really helpful. On the full service side, given that you seem to be expecting fairly healthy enrollment trends into next year, is there an opportunity to open more centers next year than perhaps usual given market demand or to take advantage of any disruptions that you see in the market? Could you just talk about potential center opening cadence into next year?

Yeah, sure. So look, I'll start by saying that certainly going into next year, our number one priority continues to be enrolling our existing centers. That has been our priority. It will continue to be our priority. It is our best opportunity in the near term to continue to grow the impact that we have and to grow the economics that we enjoy. We are calling for center growth of about 20 to 30 centers next year. And our expectation is that that will be a combination of new employer centers that will be opening on behalf of our clients, as well as new lease models and acquisition opportunities. As we have shared in the past, when ARPA ended September 30th, we do see that there is likely to be a knock-on effect in terms of other operators in certain geographies thinking differently about their longer-term plans of continuing to persist with their centers. And so, again, we're continuing to monitor that. But that's another aspect of the growth that we may see in 2024. Great.

Thank you both for your time.

Thank you.

Our next question comes from Jeff Silber of BMO Capital Markets. Please go ahead.

Thanks so much. Wanted to continue the conversation about the new center pipeline. I know it's a long sales cycle. I'm just curious in the current environment, are clients still receptive or are you seeing more caution giving the uncertainty?

Yeah, I mean, certainly we continue to see an elevated level of interest. But as I shared on the last call and certainly is still the case, Employers are definitely taking more time to make decisions. They recognize that putting a center on site is a long-term decision, and so they want to make sure that they are deliberating that appropriately. But again, as we think about the longer-term growth on this, our existing client base is really pleased that they have centers. And I think that those who do not and are considering it are again thinking about the impact it can have on their employees, as well as their return to office. And so, you know, again, elevated interest, but certainly taking longer to make those decisions.

All right. And I know you're not getting 2024 guidance yet, but I was curious, you know, maybe we can just frame what you're thinking in terms of price increases for next year relative to cost inflation.

Yeah. Yeah, we will be providing, obviously, detailed guidance when we talk with you all after 2023 is finished, so in February. But, you know, we are in the process of getting through our budget process now. And so from a general cost inflation standpoint, our primary cost in the full-service businesses is certainly wages, and other businesses have personnel costs but other technology as well. But wage increases, we are – looking at likely 3% to 4% from a general inflation standpoint. Other costs are more variable given inflation, although certainly some of the things like energy have come down. Other occupancy costs have been a little persistently higher, but broadly speaking, call it 3% inflation. From an overall pricing standpoint, our look at this point is likely in the 4% to 5% range, so 100 basis points to 200 basis points of spread. We do a center-by-center review in geography-by-geography, so that's a broad average, but we will go higher where the market permits and where the structure is right, and we are also mindful of driving enrollment as our primary goal, as we have talked about. So those are probably the two key elements on the structure for next year in our primary full-service business.

All right. That's really helpful. Thanks so much.

Thank you. Ladies and gentlemen, just a brief reminder, if you'd like to ask a question, you're welcome to press star and then 1 on your telephone keypad to place yourself in the question queue. Our next question comes from Toni Kaplan of Morgan Stanley.

Thank you. So you beat the 3Q revenue guide by about $30 million at the midpoint, but raised the full year guide by under half of that. I guess why shouldn't we expect the beat to flow through? I know you mentioned the UK was maybe weaker than expected, but is there anything else that we should be thinking about, or is it just conservatism for thinking about 4Q? Thanks.

Sure. Hi, Tony. Thanks for the question. You know, I think that the view, of course, we did outperform, as you say, and we've flowed that through the backup outperformance. Really, essentially, we raised that for the year. It's a little bit lighter in Q4 at the midpoint, but roughly, you know, rough math, it's very similar. As it relates to the rest of the business, the main driver really is foreign exchange with the FX rates where they are. We carry that forward into Q4, and then that is a headwind against the revenue, what it translates to in revenue. And that's where I think you see the difference between essentially carrying forward where we think we've performed to date and staying firm.

Great. And then I'd like to ask the full service margin question in a different way. I guess ex-ARPA this quarter, which I think you said was about $9 million, the margins in full service were actually slightly negative again. What gets it to improve next quarter and going into next year? Thanks.

Yeah, so as much as we have the turnover, if you will, of enrollment in the third quarter, and how that manifests itself in averages for the quarter is relatively consistent to maybe a slight uptick in enrollment in Q4, but it's absorbed into a more efficient structure as we cycle through that Q3, Q4 turnover period. We also have contributions coming from The international operations, particularly Netherlands and Australia, have tended to operate at a higher level of occupancy and sort of have a steadier contribution that continues to flow through somewhat better in Q4 than Q3. And so those are the primary drivers. But the full-service business is somewhat seasonal, and that's not always evident in the timing of Q3 into Q4 and how the the costs come into line, if you will, as we've transitioned teachers and transitioned children into the classrooms in Q4.

Thanks a lot. Thank you.

Our next question comes from Harold Antone of Jefferies. Please go ahead.

Hey, this is Harold from Jefferies. Not 100% sure if you touched on this, but how should we be thinking about interest expense in 2024 given the rise in interest expense on 4Q? And if you could provide any insight on flow and rest fixed debt in your current capital structure.

Yeah, so as mentioned, the step-up in Q4 that we got into to about $14 million a quarter is what we broadly expect overall interest rate to translate to for next year. We do have variable rate debt, but we have interest rate caps on that floating debt and so therefore are able to manage and contain that cost. We do have We have a payment for oak, the remaining deferred payment for oak that will be going out early next year and so there will be some temporary revolver borrowings in the early part of the year but otherwise that $14 million a quarter is a good measure for the year.

Thank you. Terrific.

Well, thank you all very much for joining the call, and I hope you have a great rest of your evening. We'll see you all on the road.

Thank you. Ladies and gentlemen, that concludes today's event. Human knowledge, disconnect your lines, and thank you for attending.