Crane NXT, Co.

Greetings and welcome to the Crane NXT third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, 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, Rima Haider, Vice President of Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. I am Rima Haider, Vice President of Investor Relations, and I want to welcome all of you to the third quarter 2023 earnings call for Crane NXT. Before we begin, the slides we will reference during this presentation can be accessed via the Investor Relations section of our website at craneNXT.com. A replay of today's call will also be available on our website. After our prepared remarks, we will open the call to analysts for questions. Before we discuss our results, I encourage all listeners to review the legal notice on slide two, which explains the risk of forward-looking statements and the use of non-GAAP financial measures. Additionally, we refer you to the cautionary language at the bottom of our earnings release and also in our forms 10-K and 10-Q, filings pertaining to forward-looking statements. During the call, we will also be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying slide presentation, both of which are available on our website at craneNXT.com in the investor relations section. On our call this morning, we have Aaron Sake, our president and chief executive officer, and Cristina Cristiano, our senior vice president and chief financial officer. Now, let me turn the call over to Aaron.

Thank you, Rima, and good morning to everyone. Yesterday, we reported our third quarter financial results, our second quarter since separation to launch Crane NXT. And I'd like to take a moment to thank all of our associates for their efforts to deliver a strong quarter, driving growth, operational excellence, and strong free cash flow generation. You can see the highlights of our third quarter performance on slide three. We delivered $353 million in sales with 4% core sales growth, adjusted EPS of $1.09, which was ahead of our expectations, and this outperformance was driven by strong sales growth and margins in the international currency business along with lower corporate costs. Margin performance was also very strong overall, with an adjusted EBITDA margin of over 29% and an adjusted operating margin of 26%, which was approximately 10 basis points higher than prior year. Additionally, adjusted free cash flow was 98 million, which supported an additional 125 million pay down in our term loan. Our net leverage ratio is now at 1.3 times, giving us substantial financial flexibility for M&A. The strength of our year-to-date performance gives us confidence to raise the low end of our full year adjusted EPS guidance to a new narrowed range of $4 to $4.15. This narrowed range reflects the strength in the international currency market where we continue to gain share. At CPI, as we noted last quarter, we continue to see customers adjusting their inventories to reflect reduced lead times, resulting in lower orders versus prior year. As a result, we're continuing to assess demand and adjusting our inventory levels accordingly. Overall, we're on track to deliver the $1.4 billion in sales this year that we spoke about earlier, with adjusted operating margins above 27% and free cash flow conversion of approximately 100%. So I'm now going to hand the call over to Christina to walk us through more of the details on our financials. Christina?

Thank you, Aaron. I would again like to thank our global Creen NXT associates for their continued focus and discipline to drive results. We appreciate your hard work. As Aaron mentioned and as summarized on slide four, we had a strong quarter with core sales growth of 4%, adjusted operating margin of 26%, and adjusted EPS of $1.09. We also continue to see strong free cash flow generation and are on track to achieve approximately 100% adjusted free cash flow conversion for the full year. Overall, we are pleased with the results this quarter and the continued disciplined operating execution by both segments. Moving to slide five, crane payment innovations reported flat core sales. As we discussed last quarter, continued improvement in our supply chain enabled us to ship more orders out of backlog in Q2, and that impacted Q3 sales. Despite flat core sales, adjusted segment operating margins increased 190 basis points to 29.4%, as compared to last year, reflecting strong pricing, productivity, and cost savings actions, partially offset by unfavorable product mix. From a market perspective, we are gaining share in our services business, with new wins in the quarter in the retail and financial services end markets. We continue to see solid growth opportunities in services, which drives increased recurring revenue and high share of wallet at key customers. Looking forward, we are seeing softness in new orders across some of CPIs and markets, most pronounced in retail and gaming, as customers continue to adjust their inventory from COVID-related supply chain issues. We expect this dynamic to continue over the next several months until our backlog normalizes to pre-pandemic levels. We believe this normalization will occur in the second quarter of 2024, Given this dynamic, we expect sales to decline year over year for CPI in Q4, and we now expect CPI sales to be flat to slightly up for the full year. With our strong pricing execution and focus on productivity, we expect segment operating profit margin to be in line with our prior guidance. Moving to Crane Currency on slide 6, the quarter was ahead of our expectations with core sales growth of 12% driven by international sales. As we've noted in the past, this business is project-based and revenue in any quarter depends on the timing of shipments to central banks. Adjusted segment operating margin was very strong at 28%, but down from the prior year due to unfavorable product mix related to orders from the U.S. government. As we discussed last quarter, we continue to see a greater mix of orders for lower denomination banknotes, which come at a lower margin. We expect this trend to continue for the balance of 2023. In the international market, we continue to win new orders, increasing our backlog approximately 80% from the prior year. One of the drivers for the strength in international sales is our continued focus to be the technology leader in the market. Specifically, we continue to see growing customer interest in our new rapid vision technology, which was launched in Q2 and has already been selected for several new denominations. As a reminder, rapid vision is the world's first multicolor micro-optic security feature. With its eye-catching, high-contrast color, it is easily authenticated, and its uniquely secure infrared technology facilitates highly secure machine readability. Moving on to our balance sheet, our adjusted free cash flow was $98 million in the quarter, providing further confidence in achieving an adjusted free cash flow conversion ratio of approximately 100% this year. Given our strong free cash flow, we repaid another $125 million of our term loan during the third quarter, reducing net debt to adjusted EBITDA to approximately 1.3 times. We have approximately $1 billion in M&A capacity and substantial flexibility to deploy capital toward M&A. Moving to full-year guidance, as Aaron mentioned, we are narrowing our adjusted EPS guidance to a range of $4 to $4.15. We believe core sales growth will be between 3% to 5% based on the strength of the currency business offset by softness in CPI, as I mentioned earlier. Additionally, we now expect non-operating expenses will be approximately $45 million, updated from our previous guidance of approximately $50 million. This decrease is driven by lower interest costs due to the pay down of debt. All other metrics to which we previously guided for the full year of 2023 remain unchanged. Overall, our year-to-date performance continues to support the investment thesis for Crane NXT as a premier industrial technology company with mid-single-digit growth, strong operating margin, and 100% adjusted free cash flow conversion. Let me now hand it back to Aaron for a few closing comments.

All right, thanks, Christina, and thanks again to everyone who's joining us this morning on our call. In summary, we had another strong quarter where we continued to demonstrate core sales growth, excellence in operational execution, and strong free cash flow generation. We raised the low end of our adjusted EPS guidance and believe we are well positioned to achieve our full year results within the guidance range. Additionally, the strength of our balance sheet and our low leverage provides us with the opportunity to create further value for our shareholders through disciplined M&A, diversifying the portfolio. You know, as we think about this diversification, I want to reinforce that we've launched the company from a very strong position. As shown in slide 10, NXT is an industry leader, providing trusted technology solutions to secure, detect, and authenticate what matters most to our customers. We have two market-leading businesses, Crane Currency, which provides proprietary technology to secure currency and other high-value physical products, and CPI, which offers detection equipment and systems, aftermarket services, all focused on detecting and authenticating payment transactions. As I mentioned earlier, we are on track to deliver approximately $1.4 billion in sales this year with adjusted operating margins above 27%, and free cash flow conversion of approximately 100%. Given our strong free cash flow conversion, our capital allocation strategy is first to continue to invest and grow the core business, improving operational performance by utilizing the crane business system, or CBS. The second priority is to pay a competitive dividend, and finally, we'll continue to deploy capital to M&A following the same playbook that built NXT, targeting adjacent, resilient, and higher growth in markets. As we continue to execute this strategy, over time it will position NXT as a strong compounder, creating significant shareholder value. As part of the value creation strategy, we've set very clear goals for the business over the next five years. As shown on slide 11, Building off our strong foundation, we plan to grow the business to $3 billion in revenue and grow core revenue at mid-single digit plus. We will maintain adjusted EBITDA margins in the high 20% range, along with strong free cash flow conversion of approximately 100%. Our performance in the third quarter is another important step in our journey as a new company, and it gives us confidence in achieving these longer-term objectives. Again, I'd like to say thank you to the entire NXT team for their dedication in delivering a strong Q3. Also, thank you to everyone who took their time today to join us on this call. So with that, operator, we're now ready to take our first question.

Thank you. We will now be conducting the 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 two 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. We ask that you please limit yourself to one question and one follow-up question. For additional questions, please rejoin the queue. One moment, please, while we poll for your questions. Our first questions come from the line of Ian Safino with Oppenheimer. Please proceed with your questions.

Hi, Greg. Thank you very much. Good morning, Ian. How are you? Hey, good, Ian. Good to hear your voice. Good, good, good. I wanted to ask you on the backlog, maybe to talk about what the mix is of the backlog, you know, by vertical, if you could, how that might have changed from, let's just say, the past quarter or so. And then also help us understand the destocking, you know, what your thoughts are as far as end market destocking and, you know, the backlog and how that's going to help you basically mitigate sort of destocking at the customer end. Thanks.

Yeah. Sure. No. Hey, thanks for the question, Ian. So, you know, just zooming out, I assume your question's both in total but probably more specific there to CPI. Again, currency backlog, as we've said, is fantastic, up close to 80% year over year, and feel very good about that. When you look at CPI and break that down by vertical, really our comments there and how we're thinking about that are primarily around the gaming segment. When you think about where we're at today in the backlog, we're probably at about two times the normal backlog level. And when we look at our run rate to burn that down over the next several months, that's what gets us into 2Q of next year. So these are orders that were placed due to the long lead times that go back, you know, to the really middle part of COVID and have extended as supply chain continued to normalize over the last several months. So really, this is primarily a gaming discussion. And, you know, we have very good line of sight to the shipment now of that backlog to customers who still need those products. And we expect that to occur kind of within what we've expected now for the last quarter or so to burn that down over the coming months. When you look at the other verticals, the backlogs are basically at expectation, kind of where we would expect them to be under normal conditions that feels in line with what we would look at and As we've said in our prepared remarks, Christina mentioned services continues to be a bright spot and a strength, and we feel very good about that. So really, in essence, it's about this burndown of the gaming backlog. Hope that helps, Ian.

No, that's great. And then also on the M&A side, I know that's an integral part of the story here. You know, how are we thinking about this as maybe, I don't know, timing or what does the environment look like or multiples, you know, because we're kind of expecting you guys to do something, I don't know, relatively soon. Thanks.

Yeah, I would, you know, maybe just to take the last part of your comment then on relatively soon, I would say we're, you know, very much on track to do what we laid out at our investor day. which was to take the first several quarters post-launch and operate the company very well and continue to focus on operational excellence in our core businesses. That's the first pillar of our strategy. And I think that's what we're doing here, again, in Q3. So that, I think, as I mentioned in our second quarter earnings call, we're really looking at you know, the first part of 24 and middle part of 24 for the first type of M&A window to be where we would like it, you know, if all things equal. And I think we're on track for that. You know, we feel good about the health of the funnel. We feel obviously very good about our balance sheet with the $125 million pay down this quarter, which was just, you know, due to our strong free cash flow. So it puts us in a very good position with our leverage. And that's what I'd be looking at, you know, sometime in 24 for our first M&A deal. And again, feel good about that.

Thank you. Our next questions come from the line of Matt Somerville with DA Davidson. Please proceed with your questions. Thanks.

A couple questions. So just going back to CPI, if we can kind of parse this out a little bit, how much of Are you actually seeing a demand issue or is this really just supply chain inventory and backlogs are all going through this normalization process? And if you could speak to the four main end market verticals from a demand standpoint, that would be helpful.

Sure thing, Matt. Good morning. Thanks for the question. Yeah, let me start and I'll go through each vertical for you. So You know, I would just put vending and financial services together and say they're performing as expected. I don't think that's the same dynamic that we're seeing in gaming and retail. And that was similar to my comments to Ian's question earlier. So, again, I would pull those to the side. and say, again, we feel very good about how those end markets are performing both within the quarter and the outlook that we have for the rest of the year. I think gaming is very unique in that it is really about the burndown of the backlog. When we zoom out and look at those end markets, I think we're as confident as ever that they're performing very well. You see that in the end customers. You see that in how our channel partners are performing. And also, our relative market share in that market continues to be very strong. So again, gaming at a high level, I think, again, is a very strong vertical for us. And we're just working through the backlog position that was built up, again, expecting that to burn down over the next two and a half quarters, as I said in the earlier remarks. Not as much around order intake and kind of in-market demand. So again, unique situation in gaming. And then when you go to retail, I think that's a combination a little more complicated with three different factors. One is inventory restocking. That's present in retail, again, where the channel is at a higher level of inventory than they would have been ex-COVID. We've seen some project push outs that probably speak just to demand. at the end with the customer inside the channel. And then, of course, I think as you know very well, Matt, we also have two of our bigger customers going through their own changes over the last several months with an intense focus on cash management for them. So I think all three of those together in different proportions are what's driving that softness in retail. And we're going to continue to assess that, obviously, in Q4. When you zoom out, though, and we talk about the tailwinds of the markets, you know, those are unchanged. Automation, labor scarcity, those continue unabated. We think that positions the retail market long-term for continued growth. And we just have these combination of factors here that we're assessing, obviously, both in Q3 and Q4 as we look ahead.

Hopefully that helps, Matt. Yeah, that does. And then maybe over to currency. Aaron, what are your takeaways from the Fed's latest print order for calendar 24 versus trends you may have observed over the course of 2023? And to that point, does it make a difference that they're now issuing this based on a calendar year versus the government fiscal year? Does that skew any sort of seasonality you may have had in that business?

Yeah, let me start with your first question, just our expectations. You know, being very close here with the BEP and the Fed in our working relationship and with the planning for the Catalyst series, I would say very much met our expectations is the bottom line, Matt. If anything, and I think as you saw in the report and in your write-up, you know, there's a skewing here versus the prior year to 10, 20, and 100. which is obviously a benefit for us, just as you look at that increased technology that goes into each of those denominations, particularly the 100, obviously more so than the others. So on a relative basis, that's positive for us. The total demand is right at the expectation that we had. And I think it also pointed to the continued work going on with Catalyst, again, which we feel very good about, and the continued timeline that they're executing to move out of pilot into production in 25 for launch in 26. So that feels pretty good overall, Matt. Moving from the fiscal year to the calendar year, materially no impact. I think it obviously is helpful just from a planning perspective for us. That's how we think about a year. So I would call it an aid in simplification, but not a material change in any part of the business.

Thank you. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. Our next questions come from the line of Damian Karras with UBS. Please proceed with your question.

Hi. Good morning, everyone. Good morning, Damian.

So, Christina, you've updated CPI guidance for the rest of the year. I'm just curious how much of a headwind you're expecting that destocking to be in the first half of 2024. And then once you do get through that in the second quarter, would you expect to sort of revert back to the mid-single-digit type of growth that you target over the longer term?

Hey, Damian. Good morning. Thanks for calling in. Yeah, so just on the, you know, we're not giving 2024 guidance today. We're just rolling up our operating plans now. So we're going to be working on that over the next several weeks, and we'll put out 2024 guidance, you know, in early February with our year-end earnings release. But overall, as I mentioned, you know, for the rest of this year, You know, we're seeing CPI will be down, you know, as compared to last year. And that's just a continuation of this softness in orders relating to the realignment primarily in gaming, as Aaron said, and also some project delays in retail. And, you know, despite that, though, you know, we still are on track with our margins, as we said, just based on overall pricing and productivity. So, you know, that's really what we're saying now for the rest of this year and more to come on next year as we roll up the operating plans.

Okay, understood. And then I was wondering if you could maybe speak to the strength that you're seeing in international currency, perhaps a few examples that you might be able to provide of the type of projects, the type of business that you're driving. I'm curious, are there any new micro optics customers? You know, is this more redesigns or just kind of an uptick in production? Really any color that you could provide on that international strength would be appreciated.

Yeah, really happy to do that. There's a really great strength in the orders and in the backlog we're seeing for international right now. which includes winning new denominations internationally, and we're feeling really good about that for the rest of this year, and also it sets us up very well for next year. So, you know, it's a combination, as you mentioned, of our technology sales, our overall banknote sales, and just winning share. So just feeling really good about the currency business overall.

Okay, great. Thank you. Our next question has come from the line of Bob Labic with CGS Securities. Please proceed with your questions.

Good morning. Thanks for taking my questions.

Good morning, Bob.

Hi. So I was having some technical difficulty there. I apologize. So if you just answered this, I may have missed it. But I just wanted to ask about currency. Obviously, the really strong backlog. Looking ahead, how does the pipeline of currency new bidding opportunity internationally and rebids look now versus a year ago? And what are the other opportunities there? I guess that's part one. And then part two is, how does Catalyst Series impact 24 operating profit, if at all? I know it's supposed to come out later, but how does it impact the operations in preparation?

Yeah, thanks, Bob. So I would say if To the first question you asked, if you look out to the next year, the activity and the ability for us to continue to bid both in new denominations that are going through a redesign or with incumbent product and denominations we have is largely the same as we've seen in 23. So that gives us, again, the ability to kind of continue our trajectory. And that, of course, at this point, we'll be talking about projects that are really set up for bids in 24 and delivery in 25. You know, the strength of our backlog, which we're going to bring into 2024, gives us a lot of confidence for that business for next year. This is really a backlog that's at near all-time highs in the international side of the business and in total. So I think that, again, gives us a very firm foundation operationally for performance in 24. And the market dynamics, to your question, are continuing to favor more technology, more sophisticated anti-counterfeiting technology, and high-quality, beautiful designs of currency, all of which play to our strength. So I think that's a nice tailwind for the market that we continue to believe is going to last not only in 24 but beyond. To your last question on Catalyst or the U.S. government series, as was mentioned in the recent WICO or the annual currency order report, it remains on track as they call out in that report. They'll be looking at production in 25, launch in 26. So it's really not a material item for us in 24.

Okay, great. And then just following up on earlier comments on M&A, obviously you mentioned expectations to get something done potentially in 2024. How has the higher interest rate environment helped or hurt your prospects? And kind of what key areas are you looking for M&A targets?

Yeah, I would answer the last part of your question first of We're still sticking right on the strategy we've talked about since March of thematically in areas around secure detect and authenticate, technology focused, that really reinforce who we are today, but give us the option to create new pillars or platforms inside the company for the future. And the funnel list has only grown. It continues to grow, and we see more deals coming through every quarter. And again, feel very confident to what I said earlier to Ian's question around some action in 2024. I think the interest rate environment has actually helped us given we've paid down our debt. And so our strong free cash flow is an enormous advantage for us. You know, the low leverage now sitting at 1.3 times gives us the right amount of firepower we need for the first few deals. So I think, again, that is moved in our favor, and we feel very good about it. If anything, Bob, it takes other people out of the option to do M&A that, you know, takes a little competition off the table.

Thank you. Our next questions come from the line of Matt Somerville with DA Davidson. Please proceed with your questions.

Yeah, I wanted to ask a follow-up on CPI and the retail sort of sluggishness. Is there a way, if I point to three issues, those being the OEM inventory drawdown that we're obviously aware of, you know, we also are aware that some deployers out there, so the end users of self-checkout, are evaluating third-party options, potentially elongating, you know, the project timeline and And then you also have the rate slash macro. If you had to kind of force rank those insignificance relative to what you're seeing in the business, Aaron, how would you kind of think about that?

Yeah, no, that's a fair follow-up, Matt. I would say that inventory stocking issue, the drawdown, as you said, Matt, on OEMs, that's probably number one, right? That's where we understand from our own channel checks and understand in talking to those OEMs the position they're in. So that's number one. I think the project pushouts I would put as number two, or as you said it, the evaluation of other options. It doesn't change the end result, Matt, that we're going to go install self-checkout systems. It's just created this pushout by a few months from probably where both ourselves and our partners would have expected some of those installations to occur. I think those are really the two big drivers here. Again, all other things fall in comparison to those two.

Okay. And then I recollect the currency division in the first quarter of 24 taking a little more downtime up in Massachusetts for new equipment installation. One, is that still happening and is what I said, I guess, accurate? And two, is there an impact we should think about to the P&L high level as we, you know, try and capture that?

Yeah. Hey, Matt, it's Christina. So, that is correct. So, as we planned, you know, there'll be downtime just to prepare for the new series trials and testing in advance of that production in 2025, as we discussed earlier. And so, you know, how you should think about it is that on the U.S. side will be down, right, in volume and a little bit still in mix, right, as we saw this year with the lower denomination bills until that starts to kick in and maybe follow, you know, what the new order implied, which is that there'll be a more favorable mix in 24. So you can expect to see on the U.S. side down in Q1, which is consistent with what we had this year in Q1. But this will really be offset by the strength in international currency, just like we saw this year. And based on our backlog in orders, we expect to continue well into next year.

Thank you. Our next questions come from the line of Damian Karras with UBS. Please proceed with your question.

Hey, everyone. Just a follow-up question here on U.S. currency. I know you can't get in the weeds on the nature of that contractual relationship, but could you give us a sense for thinking about $10 and $20 denominations versus $1 and $5 denominations, kind of maybe the relative content per bill difference between those 1s and 5s and the 10s and 20s?

Yeah, Damian, happy to answer that in part. As you rightfully said at the beginning, we can't get in specifically to those details of the contract with the U.S. government. The best thing I can point to is what the government publishes and their cost to produce the bills. That's public information that's out there for anyone to look at. Really for us, the key differentiator is more at the $100 bill where our micro-optics or the blue strip that we all know adds a lot of anti-counterfeiting technology to that product for the BEP. That's a significant add, as you can see visually, to the bill. So it's a much bigger differentiator than the lower end or the lower dollar denomination bills. So I would kind of think of this as there's really two main categories. There's the 100 and there's all other where you see this delineation. So a little bit less of an impact for us when you get into the differences between a 5 or a 10 as an example. But I think as you look at those public records of how much it costs for each denomination, you can assume that scales proportionately to the amount of technology that goes into those different denominations. And I think that's why we're excited about the new design and the new series, right? We're working very closely with the BEP and the Fed. We feel very good about that relationship. And just like the rest of our international business, every new redesign of the currency, both in the United States and around the world, adds on more technology. And so that's why this new series is so important for us and for Crane Currency as a significant tailwind to the business really for the next decade. But as I think Bob asked, in 2024, we don't see that as a material item inside the P&L.

Got it. Thanks. That's really helpful, Aaron. And then just a follow-up question on the M&A. You mentioned earlier you'd really expect to execute some deals in 2024. Can you just clarify, so you're not actively pursuing any deals at the moment, just kind of keeping an eye on what's out there until you're ready? Or are you actively looking and just don't expect anything to close anytime soon?

Well, I think it's a little bit of a combination of both, Amy. If you look at the cycle time for a deal, it's months. It's not days or weeks. So I would say we're very active in reviewing and cultivating deals inside the market. And there's some we passed on over the last several months. And I mentioned that in Q2, I believe, that we've been active and we passed on some. I think the key to any M&A is it's not about doing the deal, but it's doing it in a very disciplined way that adds value to the portfolio and ultimately value to the shareholder. And I think that's hard to disagree with. So from the very beginning, we've set out criteria that started with our market work to go into spaces where we could be good owners of the asset and then had very strict financial considerations around those, both in revenue size, size of the deal itself in terms of enterprise value, and where we could drive synergies. So that's a process I would say we're very actively pursuing. And just based on what I know we're doing and what I see coming to fruition, it gives me confidence that we will be doing something in 24. And I think you can take to heart their deals we passed because we don't think those would have been good deals for our shareholder. And we want to be prudent capital allocators here. And that's our number one priority.

Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Aaron Sake for closing remarks.

All right. Well, thank you very much. Thank you, operator, for handing it back over. And again, I'd just like to end the call today by thanking all the NXT team for their efforts to produce very strong results in Q3. You know, earlier this month, we launched our new core values for the company. And the first one is titled People Matter. And I know we could not achieve these results without having a dedicated team around the world that makes a difference every day in serving our customers. So again, thanks to our entire team for a very strong Q3. And also thanks to everyone who joined the call today and for your questions. We appreciate those. And so with that, I hope you have a great rest of your morning, and we look forward to speaking to you again next quarter. Thank you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. We appreciate your participation. I hope you enjoy the rest of your day.