nVent Electric plc Ordinary Shares

Ladies and gentlemen, thank you for standing by and welcome to the Invent Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, J.C. Weigelt. Thank you. Please go ahead.

Thank you, Natalia, and welcome, everyone, to Inven's third quarter 2021 earnings call. I'm J.C. Weigelt, Vice President of Investor Relations, and on the call are Beth Wozniak, our Chief Executive Officer, and Sarah Zawoisky, our Chief Financial Officer. Today, we will provide details on our third quarter performance and an outlook for our fourth quarter, as well as an updated full-year 2021 outlook. Before we begin, let me remind you that any statements made about the company's anticipated financial results are forward-looking statements subject to future risks and uncertainties, such as the risks outlined in today's press release and in-vent filings with the Securities and Exchange Commission. Forward-looking statements are made as of today, and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results. Today's webcast is accompanied by a presentation, which can be found in the Investor section of Invent's website. References to non-GAAP financials are reconciled in the appendix of the presentation. We will have time for questions after our prepared remarks. Now, I will turn the call over to Beth.

Thank you, JC, and good morning, everyone. It's great to be with you today to share our third quarter results, another outstanding quarter for Invent. This is a challenging time for companies across the globe and I'm very proud of how our team has responded. They've been executing at a high level and living our customer first value. Our team has been flexible, adaptive, and innovative in responding to unprecedented demand. Many distribution partners have shared with us that our performance stands out. We believe our 26% sales growth during the quarter speaks to how well we are executing on our strategy of driving sales in fast growth verticals, winning with new innovative products, and expanding globally. Equally important has been the execution of our digital transformation and supply chain strategy. We've worked to develop stronger regional supply chains, invested in capacity in our factories, and developed strategic supplier relationships. We believe our results are reflective of the actions we have taken over the last several years. We are continuing to drive supply chain resiliency with dual sourcing capabilities, more digital systems and automation in our factories, and building flexible capacity. Overall, we are pleased with the progress and the results. Turning to slide three. Sales of $643 million were up 26% and approximately 15% ahead of the third quarter of 2019. Adjusted EPS of 53 cents was above our guidance and ahead of 2019 levels. We generated robust free cash flow at $108 million for the quarter and $233 million year to date, a $53 million increase versus last year. Our third quarter results were solid and we continue to execute well. Our orders were up an impressive 43%. We have confidence in our growth trajectory given our strong orders and record backlog. As a result, we are raising full year guidance for the third time this year. We now expect full year sales to grow 19 to 20% and adjusted ETFs to grow 28% at the midpoint of guidance. Breaking down our performance in the third quarter, we continue to see positive results from our growth initiatives. We saw strong growth with our channel partners outside of North America. New products added about a point to our growth rate. We launched 11 new products this quarter and are on track to deliver 50 new products this year. Our acquisitions performed well and were additive to the overall event growth rate. Our digital efforts are supporting growth, improving the customer experience, and driving efficiencies across our business. Looking across the verticals where we play, we continue to see broad-based growth. The industrial vertical was up strong double digits organically, with particular strength in material handling, automotive, and chemical. As expected, infrastructure sales accelerated with contributions from data centers and networking solutions, power utilities and rail. In commercial and residential, our thermal management segment continued to see high demand for fire rated wiring and floor heating solutions. And electrical and fastening grew nicely in all regions. Energy was also up with growth in thermal management. Geographically, growth continued to be broad-based with all regions growing double digits. North America grew organically in the high teens with particular strength in enclosures. Europe grew approximately 20% led by electrical and fastening. And developing regions grew by more than 50% with strong performance from thermal management. We believe that Invent is one of the best positioned companies to benefit from the megatrend around the electrification of everything. Our products and solutions are instrumental in the connection and protection of electrical systems, making them more resilient. Our enclosures, for example, are critical in industrial automation to protect systems and data. As we see the trend toward more automation, we believe the demand for our enclosures will increase. Our most recent acquisitions have provided us with enclosures that are targeted at fast-growing applications like solar and 5G. Our new power distribution portfolio extends our capability in data centers and networking solutions, from heat management to now include power management. For electrical and fastening, the trend towards smarter buildings requires more power and data connections, which will increase the need for our offerings and expand our content. With the move towards more electric vehicles, the infrastructure built out requires both enclosures and our electrical fastening solutions which provide flexible, reliable, and space-saving benefits. With everything being connected, our thermal management control solutions are positioned to provide enhanced monitoring for protection and safety. We believe our Invent portfolio is well positioned with global investments in infrastructure, such as electrical grid modernization, renewable energy, and energy storage. The trend towards the electrification of everything will drive more demand for our products and solutions. We set a goal to emerge stronger, and we're excited about the momentum we are seeing in our business. We expect to finish the year strong. I will now turn the call over to Sarah for more detail on our third quarter results and our updated outlook for 2021. Sarah, please go ahead. Thank you, Beth. I'm pleased to share another quarter of strong Inven results. Let's turn to slide four to review third quarter performance. Sales of $643 million was a 26% increase relative to last year, or 20% organically. Volume was a big contributor to this growth, adding 11 points, while price added 9 points. Segment income was up 17%, with return on sales of 18.4%, in line with the second quarter. Strong volume and price contributions helped offset the impact from the sequential step-up in inflation, temporary costs feathering back in, and a challenging supply chain. a testament to our team's execution. Price played a significant role in offsetting higher total inflation of $45 million in the third quarter. Supply chain challenges resulted in additional cost pressures, including labor and logistics. And as expected, one-time 2020 cost action impacted the year-over-year return on sales by approximately 230 basis points. Adjusted EPS of 53 cents was up 18% to last year and above our guidance range of 45 to 48 cents. Free cash flow of $108 million was favorable relative to last year, even with the working capital investments that come with growth. We continue to track well above 2019 levels on sales, EPS, and cash flow. Slide five showcases our segment performance, where you'll see the momentum we saw in the first half continue into the third quarter. Enclosures had sales of $335 million, an increase of 37%, or 25% organically. Growth was broad-based, with all geographies and verticals up double digits. And our acquisitions performed well. Similar to last year, orders were particularly strong, driven by industrial and infrastructure demand. Enclosure segment income increased 28% and return on sales of 16.8% was down 120 basis points. With significant demand, we saw increased costs related to a very tight supply chain and higher overall inflation. We were able to partially offset these headwinds with solid price execution of approximately nine points. The team has done a tremendous job of managing the supply chain, and importantly, converting orders to sales. Electrical and fastening sales of $169 million increased 14% organically, with broad-based growth and particular strength in Europe. Another bright spot was our low-voltage power connection portfolio, which grew 40%. Electrical and fastening segment income was up 19%, and return on sales was 28.6%, was up 100 basis points relative to last year. Price added more than 10 points, offsetting higher total inflation. Thermal management grew 16% organically with sales of $138 million driven by commercial and residential as well as industrial. We continued to be encouraged by the recovery in industrial MRO, which was up strong double digits for the second consecutive quarter. Thermal management segment income was up 24% and return on sales expanded 100 basis points to 22.8%. driven by volume and the positive contribution from the industrial MRO. Overall, we are pleased with another quarter of strong performance across all three segments. On slide six, you'll see we ended the quarter with a cash balance of $46 million. We paid back approximately $120 million on our revolver, leaving $520 million available. During the quarter, we amended and extended our senior credit facility to 2026, which included an increase to the term loan facility with a delayed draw option. Slide seven gives an update on our capital allocation strategy. We continue to prioritize growth while maintaining investment grade metrics. As a reminder, we completed two acquisitions in the second quarter with Vinci and CIS Global. We ended the third quarter with a net debt to adjusted EBITDA ratio at two times at the low end of our targeted range of two to two and a half times. Our balance sheet remains in a position of strength. And coupled with robust cash generation, we aim to deliver double-digit returns to our capital allocation strategy. You'll see our updated 2021 outlook on slide eight. Given our performance and strong order trends, we are again raising our full-year guidance. We now expect sales growth of 19 to 20%. Organically, this translates into expected 14 to 15% sales growth versus our prior guidance of 10 to 13%. Our adjusted EPS guidance is now expected to be in the range of $1.91 to $1.94 versus our prior guide of $1.84 to $1.90. This new guidance reflects 28% earnings growth versus 2020 at the midpoint and 8% above 2019. On free cash flow, we are pleased with our performance year to date at $233 million, which is $53 million ahead of last year. We are on track to deliver another year of strong cash flow. with cash conversion of adjusted net income expected to be at or above 100%. This updated full year guidance reflects double digit sales and earnings growth versus prior year and all above 2019 levels. So looking at our fourth quarter outlook on slide nine, we expect reported sales to increase 13 to 16% and organic sales to be up 9 to 12%. This represents a continuation of broad-based growth, reflecting our strong orders and backlog. We expect acquisitions to add approximately four points to sales. Adjusted EPS in the fourth quarter is expected to be between 45 and 48 cents. Let me provide a bit more color on our fourth quarter outlook, first on sales. Orders in the third quarter were up 43% with orders outpacing sales and backlog up double digits across all three segments. This gives us confidence in Q4 growth and into next year. We expect industrial and infrastructure verticals to remain robust, which should benefit all of our segments and particularly enclosures. On margins, we continue to expect a modest decline in return on sales versus prior year, as implied in our previous guidance. The biggest drivers of margin in the fourth quarter are expected to be the following. First, our guidance takes into account increasing costs related to a very tight supply chain. Second, we expect higher inflation to be offset by pricing with overall positive price costs in the quarter. We lapped the end of our one-time temporary 2020 cost action. All in, we are modeling return on sales in the fourth quarter to be between 17% and 18%, with segment income expected to grow nicely year over year as we continue to manage these headwinds with pricing actions, strong volume, and operational execution. To summarize, I am pleased with our performance And we believe we are well positioned for a very strong year. With that, I will turn the call back over to Beth. Thank you, Sarah. Turning to slide 10, I want to highlight the reasons why we're excited about M&A. We have completed four acquisitions, adding more than $200 million in annualized revenue since spin. We believe there are further opportunities that can broaden and strengthen our portfolio, building upon our leading positions while delivering attractive returns. As a reminder, we compete in an attractive $60 billion space that is highly fragmented. We are focused on the electrification of everything megatrend, and each acquisition to date fits squarely within this trend. We've added new product portfolios that expand our presence globally. We've increased our capabilities with broader solutions for infrastructure verticals like data and networking solutions and solar, and also strengthened our offerings in commercial and industrial. As we look at new opportunities, we want to expand in high-growth verticals with portfolios that extend what we do in connection and protection. We have a rich funnel and are excited about the opportunity to generate attractive returns with M&A. Year-to-date, Eldon and WBT performed well with strong double-digit sales growth. We completed the acquisition of Vinci A and CIS Global in the second quarter, so while it remains early, we are encouraged with the integration efforts and the growth synergies that we have identified with these two acquisitions. From a financial perspective, we target a return greater than our cost of capital in two to three years and have already achieved that hurdle with Eldon and WBT. We are building a strong track record of integration and are accelerating our growth with M&A. We believe we can continue to create value with acquisitions and are excited about the opportunities within our funnel. Wrapping up on slide 11, we had another outstanding quarter. with strong results achieved during a very challenging time. We continue to see elevated order trends across the business and are sitting on record backlogs. Like many other companies, we are facing supply chain challenges with material shortages, labor constraints, and a highly inflationary environment. Our execution has been tremendous. One example I'm proud to share amidst this challenging environment Is the opening of our new factory in China further expanding our global capacity? At Invenz, we're adapting and finding new ways to partner with suppliers, channel partners, and customers to find solutions to meet their needs. We believe these efforts are differentiating Invenz. We continue to invest and execute on our growth initiatives. New product sales added over a point to sales growth in the quarter, We continue to expand globally and build out our commercial teams focused on high-growth verticals, as well as strengthen our regional supply chains. Our digital transformation is well underway, and we continue to launch new platforms to improve the customer experience, as well as digitize our back office to drive productivity and insights. In summary, we believe our future is bright, and we see the electrification of everything driving more demand for our products and solutions. While some near-term challenges remain, we are executing at a high level. We are expecting a strong year of double-digit sales and earnings growth and believe these third quarter results demonstrate we are making Invent a high-performance electrical company. With that, I will now turn the call over to the operator to start Q&A.

Ladies and gentlemen, at this time, If you would like to ask a question, please press star and the number one on your telephone keypad. Again, that's star one. To withdraw your question, press the pound key. We will pause for just a moment to compile the Q&A last year. Your first question is from the line of Jeff Hammond. Hey, good morning.

Good morning. Good morning.

So, so you guys seem to be handling, you know, supply chain, you know, maybe better than most. And I guess two part question one, you know, where do you see opportunities or where are you seeing the ability to gain share as a result? And then second, just as you look at, you know, over the last three, four months, where, where are the pain points that are, you know, incrementally getting more challenged?

All right, thank you for the question. So here's what I would say with the supply chain. And I, in my prepared remarks, talked about the fact that we've been working on our supply chain resiliency for the last several years. But here's where, you know, our view is that we're able to perform is we know that we are adding new customers that we did not have before because we have the capability taken in closures, for example. When you look at some of the challenges in the steel markets, the fact that we've been able to work with our suppliers, give them long forecasts, and been able to turn that around in our factories, we've got new customers in areas like food and beverage and wastewater. It's very strong in automation. When we look at some of the panel shops, for example, where we provide our enclosures to, I would say we haven't had 100% of the content there, but given that others just cannot either get access to raw materials or turn it around in their factories, that content for us has increased. So we can see it in terms of new customers as well as the strength that we see going through distribution into panel shops, for example. And I really think it just speaks to The work we've been doing strategically, but then also how we've just been able to look at our supply chain globally and optimize it and have a lot of capability to flex between factories or with different suppliers and that's all contributing to our growth. And I'll let Sarah talk further about just some of the ongoing challenges that we see. Yeah, so clearly I think that growth, you know, up 20% is a testament to our ability to manage these supply changes exceptionally well. With that being said, we're not immune, you know, to what you're seeing in the broader marketplace. And in particular, I would maybe point out constraints that we're seeing on the labor side, as well as just overall kind of availability and long lead times from a raw material and from a logistics standpoint. So if we were to sort of draw a circle around kind of the impact of that in Q3, we saw that to be roughly $5 million. But importantly, any inflation on top of that, we were able to offset with price and obviously saw some very strong volume contribution. So as Beth just talked about, and I think our strong in-region, for-region, as well as the flex capacity, leveraging this broader global footprint has really helped us be able to deliver and convert those orders to sales. But we are seeing those incremental costs in Q3 predominantly related to the labor constraints as well as to the logistics. And we do have that included in our Q4 outlook as well.

Okay, that's a really good color. Really impressive price traction. If I kind of just do the math, it seems like you should have four or five points of price carryover into 22. I guess, one, does this make sense? And two, what have you announced or what are you considering for follow-on increases into 22?

Maybe I'll take the last part of that question, Jeff, and then I'll, again, have Sarah follow up. But for us, the way we've continued to – one of the things is we – well, let me start by saying – You know, we've often talked about our price luck strategy and that's always allowed us to look forward just to understand our cost position and then to be able to manage our price increases accordingly, given that there is some Time that we have to give to our channel partners to roll those out. So we're in a really good position to understand and you know what what that looks like. And what's typical for us is that, you know, typical we will have, you know, we've done many price increases all through the year, but we typically have an end of year or beginning of year price increase across our portfolio. That's pretty common. And so, and we'll continue to do price increases as, you know, as required as we see the input costs going up. So I'll let Sarah then talk about your comments specifically on how price rolls into 2022. Yeah, so Jeff, that math is about right, you know, just based on, you know, price act, you know, where we see pricing today and where we would anticipate that carryover being. And I think maybe just one other point to add, you know, from a pricing standpoint, you see that bill, you know, over the year, we were a point in Q1, six points in Q2, nine here in Q3. And I think just Q2 and Q3 specifically are a good testament of our ability to manage that price cost equation.

Okay. Thanks so much. Your next question is from the line of Joe Ritchie.

Thanks. Good morning. And congrats on a nice quarter.

Thank you.

So maybe just starting off on thermal. So great to see industrial MRO really pick up. I mean, are we at a bottom here at this point in what you're seeing with demand activity and how that ultimately translates into kind of higher margins for the segment over time?

You know, Joe, we actually think that the previous quarter is when we started to see this turn. And so the trends have continued. So we talked last quarter about strong double-digit MRO growth, and that was the same this quarter. And as we look at that type of activity, you know, we reached the inflection point last quarter. And so that's going to, you know, we see continue through fourth quarter and into 2022.

No, that's great to hear. And then I guess just my follow-on question, I'm curious, just bigger picture question, in thinking about the capacity that you're adding in China, is that specific to one segment? Just talk a little bit more about the expansion that you're doing there.

Okay. Yeah, you know, our supply chain strategy is to be very regional, right? So when we're expanding in China, it's in China for China. And it's predominantly a new enclosures facility. And you can think of all the capability that we've built into enclosures, but it will support some of our other segments as required. But it's really to help us build out, for example, our growth around data and networking solutions to be able to serve that market as well as what we see going on with industrial automation and some of the other infrastructure.

Great. Thank you.

Your next question is from the line of Dean Drie.

Great. Thank you. Good morning, everyone.

Good morning.

Hey, lots of positives in execution and outlook here. Can we just talk about the outlook? Can you comment on October trends? My guess is based upon the 4Q guidance, things look pretty good, but any specifics would be helpful.

Yeah, I would just comment that October orders continue to be at the levels that we saw in Q3, so we're very pleased with just 4Q The momentum continues for us, and I'll let Sarah add some more color. Yeah, I would just say, you know, that broad-based strength that we saw in Q3 is what we're continuing to see in October, you know, with all segments continuing to be up double digits from an order rate perspective.

Got it. And it's interesting to compare this call versus a number of your peers where there's a lot of discussion and actually quantifying missed sales. And it didn't sound like that was an issue here, but were the supply chain constraints caused you to miss any sales, any kind of carryover into the quarter? Just some color there.

Yeah, I mean, Dean, it is fair to say that with, you know, our orders were at 43%, so there is really strong demand. And so, yes, we believe that there were some sales that we couldn't execute on. So while our numbers are very strong and we're very proud of that, you know, the day-to-day of our supply chain team working shortages, it is a tremendous amount of effort. So we do believe that there were some sales and opportunities that we missed in the quarter that will carry into Q4.

That's real helpful. Just one last quick, quick one. And, and this has been a, also a pretty common phenomenon is as you have these record backlogs, is there any chance you'd have to go back and reprice any of the, that business or, you know, is there anything contractual that would have locked you in at lower margins?

Yeah. So from a backlog perspective, it's something that we, we monitor and manage very closely. By way of normal course, many of those orders and those backlogs get repriced based on when it's scheduled to ship. So that kind of addresses that risk. And then to the extent it's sort of on a contract-by-contract basis, some of it's rewritten in the contract that it would price, but otherwise we would have to address those kind of one-off. But it is something that we look at and monitor very closely. But normal practice is that it just gets repriced based on what the current price level is.

That's great to hear. Thanks for all the help. Stay well.

Thank you. Your next question is from the line of Julian Mitchell.

Thanks. Good morning. Maybe just wanted to look at sort of operating leverage in aggregate. So it looks like this year you'll probably be closer to sort of low 20s or 20% or so for the year as a whole. Given that you're ending this year with price managing to offset costs, should we think about next year, you're back into that sort of almost 30% type entitlement range for firm-wide operating leverage?

Yeah, so Jillian, I think you're right. From a normal operating leverage perspective, you know, we would expect that to be in that 30% plus range. I think that's just indicative of the strong margin profile across, you know, all three of our segments. I think this year it was impacted by a couple different things. That price-cost equation, even though I think the teams have done a tremendous job of managing that, just the level of inflation offset by price impacts the math, if you will, on those incrementals. That, coupled with some of these supply chain challenges and these one-time year-over-year impacts. I think it's a bit too early to tell. I mean, some of that's just going to be in the context of how high the inflation and then obviously we're going to look to manage that for a combination of price plus productivity. But again, under normal operating environments, we would expect that incremental to be in that 30% plus range.

Thank you. And then just following up on the thermal management business, it can tend to spook investors because it's lumpy and you have the energy exposure in there, which I think is about 20% or so of the revenue mix at the moment. Maybe just explain how you see that energy portion within thermal management playing out and any broad thoughts on the overall demand for that business looking ahead.

Okay. So on thermal management, you're right. The energy portion is around 20%. And some of that comes through the MRO side, which I spoke to earlier, we believe, turned and inflected in the last quarter. And we're seeing nice trends there. We believe that will continue. And we've done a lot in terms of some new products and new service programs and some other things that we believe we're going to benefit from as we go forward. Then there is a project piece to that. And remember, that is more longer cycle. And so what I would say there is we expect that to slowly improve over time, that portion, the project side. You know, we've been executing off some backlog and we're seeing some new orders and projects that we're bidding on. But that'll be, we'll see that pick up, you know, further out. Meanwhile, the commercial and resi side of our business has been very, very strong double-digit, and a lot of things that we've done there to expand globally and drive more channel presence, new products, et cetera. So that's sort of that mix on thermal. We think it's inflected. We expect to see some nice, strong growth, and that momentum will continue into 2020. Or 2022, sorry. Thanks very much.

Again, ladies and gentlemen, to ask a question, please press star 1 on your telephone keypad. Again, that's star 1. Your next question is from the line of Nigel Cole.

Thanks. Good morning. Yes, we definitely come in this way, too. So, back to price. We bet it is quite well, but 9% price, I mean, any of that surcharge is obviously... When you see price of that magnitude, you're thinking surcharges or pass-throughs. Just wondering, you know, is that primarily base price that we can think of that is fairly sticky? And then you didn't call out price within thermal, so I'd be curious if the bulk of that 9% was driven by ESS enclosures with thermal lagging a little bit.

Yeah, so on the thermal side, price is around 4%. That's largely reflective of just not having that really high metal content, so they're not seeing as much of that inflationary pressure as the other two businesses are.

Okay, that's great.

And then from an overall pricing perspective in terms of stickiness, we are seeing that pricing being very sticky, as historically it has been as well. It helps, obviously, with two-thirds of our revenue going through distribution. And so that typically is really what we would kind of refer to as or you refer to as kind of base price, you know, versus something that's going to go away, if you will.

Okay. That's great. And then, obviously, it helps to be able to supply your customers to get price. And clearly, you know, you're able to manage that a little bit better than your competitors. You built inventory from 1Q to 2Q, and you managed to build inventory again from 2Q to 3Q. So maybe a question for Sarah is how much of that increase sequentially is just inflation impact versus unit volume? So I'm just wondering, have you actually managed to build even more buffer to supply customers into 4Q?

Well, here's what I would tell you on the inventory side. It is something that, you know, again, as Beth alluded to, our supply team, our ops team, our customer service team, I mean, obviously we're working kind of daily, weekly in terms of, you know, those mini psyops, if you will, of what inventory we need to be able to convert those orders to sales. Clearly there's inventory that we're targeting in terms of building, I would say, but it's against the backdrop for which the supply chain is very tight. So we're building where we can from an inventory perspective. Got it. Maybe I'm leaving you with this, but we feel like we're in a good spot given what we see and our forecasting for Q4 as well. And we're going to continue to manage that as we work the broader supply chain.

Great. And since I think I'm the last question here, the thermal MRO business obviously had strong double-digit growth, which is very encouraging, but very easy comp. So I'm curious, you know, roughly speaking, where is that business relative to 2019 levels right now?

And that was on what business? Thermal MRO.

The thermal MRO.

Oh, yeah. No, I still have runway to go. Still have runway to go. Meaning, you know, that business on the industrial MRO side for thermal management was down significant, you know, double digits through the course of 2020. you know, because it's the first lever, right, that customers pull and given a backdrop against a challenging market. And so I think just to replay it back for this year, right, we saw orders growth in Q1, right, but not yet sales. And we saw strong, you know, double-digit growth in Q2 as well as here in Q3. So we've got, you know, we've got yet a runway to go, right, to get back to those industrial MRO levels taking us into 2022. Great.

Thanks very much.

Thank you.

Thank you. There are no further questions. I will turn the call back over to Beth for closing remarks.

Thank you, and thank you for joining us today. We continue to execute on our strategy and our building momentum with strong growth, new products, and attractive M&A. It's certainly an exciting time to be an event as we believe we are well positioned to grow sales, expand margins, and generate attractive returns. We hope you remain safe and look forward to speaking to you again. This concludes the call. Thank you.

This concludes today's third quarter earnings conference call. Thank you for participating. You may now disconnect.