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spk00: Good morning, ladies and gentlemen, and welcome to Advanced Training Systems' third quarter fiscal 2021 results conference call. My name is Tammy, and I am your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the presentation over to your host for today's call, Mr. Mike Higgins, Vice President of Corporate Strategy and Investor Relations. Sir, you may begin.
spk01: Thank you, and good morning. Thanks, everyone, for joining us today. With me, I have Scott Barber, our President and CEO, and Scott Cottrell, our CFO.
spk02: I would also like to remind you that we will discuss forward-looking statements Actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC. While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the investor relations section of our website. A copy of the release has also been included in the 8K submitted to the SEC. We will make a replay of this conference call available via webcast on the company website. With that, I'll turn the call over to Scott Barber. Thanks, Mike, and good morning, everyone. Thank you for joining us on today's call. We delivered another quarter of record financial performance in the third quarter of fiscal 2021. Sales grew 24% year-over-year, driven by 17% non-residential sales growth and 36% residential sales growth as we continued to execute at both ADS and Infiltrator in a favorable demand environment. In fact, sales across each of our end markets increased double digits in the quarter. It was very encouraging to see the demand in our non-residential in-market increase 17% this quarter. We continue to benefit from growth in horizontal construction, such as warehouses, distribution centers, data centers, and developments that follow the residential build-out. There was continued strength in the regions we have experienced growth this year, such as the Atlantic coast and southeast. And we experienced a rebound in regions that have been softer this year, like the Northeast and Western United States. In addition, allied product sales in the non-residential market increased 23%, giving us confidence in the underlying market strength. We also continue to experience strength in our residential market with 36% growth in the quarter driven by favorable dynamics and new home construction, repair, remodel, and onsite septic accelerated by the material conversion strategies at both businesses. Our indicators are showing that home builders continue to acquire land for future development and that there's an overall shortage in available homes, which bodes well for both the front end, new community development stage with ADS, and at the home completion stage with on-site septic at infiltrator. The retail market, which is roughly a quarter of our residential sales, continues to experience strong growth as well with the continued strength in remodeling and home improvement. Sales in the agriculture market increased 33% this quarter, driven by the programs we put in place around organizational changes, new product introductions, and improving execution, as well as favorable weather and market dynamics. These dynamics are being driven by favorable indicators such as higher farm income and strong crop pricing, which is leading to farmers to invest in land productivity through better field drainage. Improving field drainage is a low risk, proven method of increasing per acre yield for farmers. International sales also increased 18%, primarily driven by double-digit growth in our Canadian business, which represents about 70% of the international revenue. Canada is doing well across both the construction and agriculture end markets, with similar market trends to the United States. Additionally, this quarter, we were able to leverage our pipe manufacturing facilities in Mexico to help service the strong demand we experienced in the United States. We expect a slower recovery from the COVID-19 pandemic in our Mexico and our export businesses, but these markets will recover and return to growth. Finally, Infiltrator continues to exceed expectations with 37% sales growth in the third quarter. Infiltrator continues to see double-digit growth in tanks and leach fuel products with strong growth in Georgia, North Carolina, Florida, and Tennessee, among other states. This was led by their material conversion strategy of displacing concrete septic tanks with plastic tanks and the economic advantages of septic chambers in leach field systems. Moving to our profitability results, we achieved another quarter of record adjusted EBITDA during the period. Adjusted EBITDA margin increased 540 basis points overall in our first full quarter of comparable results from the infiltrator acquisition. The increase in profitability in both businesses was driven by leverage from the strong sales growth, favorable pricing and material costs, as well as contributions from our operational productivity initiatives. In January, we hosted a well-attended ADS distributor conference to touch base with our partners and outline how we are thinking about the business moving forward. We have many new faces and roles among our senior leadership team, and with that comes new focus programs to build on the ADS value proposition, including the service component of our business. The ADS value proposition includes not only the products we design and manufacture, but It includes the delivery and design services led by the logistics and transportation we provide to our distribution partners and customers. This speaks to ADS's unique model as not just a pipe manufacturer, but also a large, specialized logistics and transportation company. We are committed to investing in the people, processes, technology, and fixed capital to deliver on customer expectations and increase capacity to meet our customers' needs. We also talked to our customers about the new ADS brand and our digital marketing initiatives. You may have noticed we updated the ADS logo and are in the process of rolling out our refreshed brand to encompass the progress we've made over the last several years. Our new brand identity not only visually updates the look of ADS to reflect who we are as a company today, it reflects where we are going. Our products and services platform, sustainability initiatives, and community involvement all drove the new brand look and tagline, Our Region is Water, setting the tone for our updated mission and values, which will be rolled out over the next several months. Looking forward, we believe the demand environment in calendar 2021 will look similar to what we experienced overall this past year. We are certainly fortunate that as part of the construction industry supply chain, we could manufacture and ship our products over the last 12 months without significant interruption. My observation is that the construction industry, including the manufacturing, distribution, and contractors, weathered the pandemic and related economic disruptions better than many parts of the economy. We will continue executing on our material conversion and water management solution strategies in what I expect to be a favorable demand environment, benefiting from our national presence as well as our favorable geographic focus and in-market exposure. Our confidence in these favorable trends is supported by the strength of our order book, our project tracking, the book-to-bill ratio, and the backlog. While we have some cost headwinds coming at us in the fourth quarter, including inflationary costs such as materials and transportation, we are confident we will be able to offset them through favorable pricing, level loading at our facilities, operational productivity initiatives, our recycling programs, and the capital deployment initiatives. In summary, we did a great job executing this quarter, and we look to build on our strong market position execution and new levels of profitability going forward i want to thank our employees without whom our success would not be possible we will stay focused on employee health and safety and delivering on the needs of our customers as we look ahead we are well positioned to capitalize on residential development and horizontal construction while continuing to generate above market growth through the execution of our material conversion and water management solution strategies We will remain focused on disciplined execution as we look to close out on a very strong 2021. With that, I will turn it over to Scott Cottrell to further discuss our financial results. Thanks, Scott. On slide six, we present our third quarter fiscal 2021 financial performance. I'll be brief on this slide. Scott has already covered a lot of the details here, but I want to reiterate a few key points. The very strong 24% revenue growth we reported this quarter was driven by both volume and pricing, as well as strong growth across both our ADS legacy and Infiltrator businesses, as well as in each of our end markets and product applications. The demand environment for our products remains strong, and we expect the strength to continue as we move forward into calendar 2021. The 52% growth in consolidated adjusted EBITDA was driven not only by this strong top-line growth, but by favorable material costs, operational efficiency initiatives, as well as our synergy programs. Finally, we continue to monitor our costs and are committed to offsetting increases that materialize through a combination of pricing as well as operational and productivity initiatives, and continue to look to expanding margins year over year as we move forward. Overall, we are very well positioned to leverage the favorable demand environment anticipated due to our market-leading position, national relationships, breadth of product and services, as well as our geographic and end-market diversity. Moving to slide seven, our year-to-date free cash flow increased $141 million to $391 million, as compared to $250 million in the prior year. These impressive free cash flow results were driven by our strong year-to-date sales growth and profitability, as well as execution on our working capital initiatives. Our working capital decreased to 16% of sales, down from 19% of sales last year. In addition, we ended the quarter in a very favorable liquidity position, with $224 million of cash and $339 million available under our revolve. involving credit facility, bringing our total liquidity to $563 million. It is also worth noting that our trailing 12-month leverage ratio is now 1.1 times. Given our strong balance sheet position, capital deployment remains one of our top strategic initiatives. Our first priority continues to be investing organically in the ADS and infiltrator businesses to support growth, innovation, productivity, safety, and new product development. M&A is our next priority. We remain very focused on following our disciplined acquisition process as we move forward into calendar 2021. Finally, on slide eight, we increased our revenue and adjusted EBITDA guidance ranges for fiscal 2021. Based on our performance to date, order activity, backlog, and current market trends, We currently expect net sales to be in the range of $1,915,000,000 to $1,950,000,000 representing growth of 14% to 17% over last year. Adjusted EBITDA to be in the range of $550,000,000 to $565,000,000 representing growth of 52% to 56% over last year. And we expect to convert our adjusted EBITDA to free cash flow at a rate of greater than 60% for the full year. With that, I'll open the call for questions. Operator, please open the line.
spk00: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Halloran with Bayard.
spk02: Hey, good morning, everyone. Hey, Michael. Good morning. So good stuff. Really impressive quarter there. So at the risk of trying to front run, you know, your fiscal 22 guidance, not what I'm trying to do here, but I do want to parse out a couple things that you said there. On the slide deck, you said demand was pretty similar to last year, but it certainly sounds like you're saying demand is growing. What are your expectations for demand growth in this calendar year? Maybe just kind of sync those two before I go into a few more relevant questions. So good morning, Mike. And what I mean kind of by that is when I look at fiscal 2021 in aggregate, it's going to be, you know, kind of first half, you know, regionally very different. I think it's going to be second half, more regions, let's say, more kind of consistent or equalized, if you will. And I think if you kind of add those two together, I think 2020, 22 fiscal year will be more like that aggregate of the two held together right i think all in all uh you kind of survived and did well and we think we did pretty pretty well over the last you know nine or ten months through the pandemic and i look at what's going forward i think you're you're going to even like that more it'll be more consistent and less nuanced by region So in other words, the expectation is for growth, but it's going to have some variability as you look through it. So a couple things there. One, the pricing side, obviously that's going to be probably pretty robust here based on what at least we're hearing. You know, maybe some thoughts on the willingness of the market to take price, what that kind of looks like, any pushback in any of your regions. I know infiltrator tends to be a little different, so maybe some thoughts on that as well. Yeah, I think the pricing environment across all construction type of materials is going to be robust for lots of different reasons, good demand and rising input materials. Both companies have been out with pricing, and it is sticking and in progress. You probably recall that at ADS we did some back in September kind of timeframe, and that resulted positively. Infiltrator has gone out since that timeframe with some pricing. We are doing some more pricing in our quotation activities, in selected geographies or segments. So I would describe Cottrell as being pretty active with our sales teams on that and has a good line of sight what we need to accomplish our objectives. And to pick up on your point, we've seen it sticking. There's always a little leakage in a couple of places, but it's nothing extraordinary or that we haven't dealt with in the past. And I'd say, Michael, the only thing I'd add, you know, a couple years ago, especially, you know, Scott changed the paradigm around pricing here, which is input costs and resin first, absolutely. But then we also look at what's going on with, you know, diesel, common carrier, transportation, logistics, labor. So it's a holistic look at that, you know, cost. scenarios and making sure that we stay in front of it. So that's embedded in the pricing dynamic or paradigm that we now have. Absolutely. Two more here. One, the commercial side, plus 17%, the non-rest side, pretty amazing considering the environment. Maybe just talk about puts and takes by region, kind of verticals you serve, and then how you feel about the sustainability component. I think the very positive thing about that number in the non-residential, which had a lot of questions and clouds around it, were two things. The return of the Northeast to good demand levels, And the western U.S., particularly California, where we certainly picked up sales in the quarter and some of these target segments we were talking about, distribution, data centers, residential buildouts and land development. All those things we've been working on kind of popped, particularly in the western U.S., Last point, you know, allied products, highly vectored to non-residential. And it had been, you know, through the first half of the year, what was it, plus four?
spk01: Low single digit.
spk02: Yeah, low single digit, which was uncharacteristic for us. However, it rebounded nicely. The order book is good. So that gave us – gives us a lot of confidence and work to do on the non-residential – on that side and making sure, you know, the supply chains and all that stuff are up and rolling. Mike, this is Mike Higginson. One point I would add to that comment about non-residential that Scott made is, you know, he talked about that rebounded demand in the northeast and the west. But the areas that had been strong, the south and the southeast, those continue to be strong, if not accelerate. That's a good point. That's a good point. Great. And then last one, high-quality problem here. It's kind of amazing how quickly your leverage got down towards one. What's the plan on the free cash from here? You know, obviously internal investments, but how's the M&A side look? And how are you thinking about usage of that cash? So two comments I'm sure Patrell will jump into, but we've stepped up our capital spending, and you've noticed that. Now, that's both Infiltrator, which is a big nut, and it's ADS, too. So we're stepping up that, and we had a board meeting yesterday where we talked about this a lot, and they're encouraging us to go faster on the organic side. on the organic side, certainly. We've been working our process. There's a couple things that we're working on there. They're not like an infiltrator type of thing, but we are making some progress through that, but nothing I would say highly imminent or actionable. The only thing I'd add to that is that we're going to make some additional investments on our side, on the capability side, to help accelerate and move that. But it's going to be a disciplined process. So it's been very active, but it's got to be the right thing, you know, close to our core. We've talked about bolt-ons. It's got to be at the right multiple. It's got to hit the strategic lens. So all of those things, we're not going to let kind of this leverage kind of burn a hole in our pocket, if you will. We're going to make sure we do the right thing and do the right acquisitions as we move forward. So very active is the way I would characterize it. We know we've got a great opportunity in front of us, and we're going to make some investments on that side to help accelerate that moving forward. Good stuff. Appreciate it as always.
spk00: Talk soon.
spk02: All right. Thanks. Thanks, Michael.
spk00: Your next question comes from the line of Matthew Booley with Barclays.
spk01: Morning, everyone. Thanks for taking the questions. Congrats on the results. I guess I'll start out with a question on Infiltrator. You know, 37% growth, kind of similar as the non-res question you just had. But, you know, we know Resi is in a strong place right now in general, but I'm curious if you have any sense of how you know, that infiltrator growth may have compared versus sort of the underlying market opportunity. If it's just higher penetration, I don't know if you, you know, rolled out some of that portfolio to new products or just customer wins, just kind of bridge us from the market to that 7% growth there.
spk02: That's a good question. And I would say, yeah, Certainly, and number one, Matthew, we're thrilled with the performance of Infiltrator in all respects. Roy and his team continue to do a great job, and we're continuing to invest in them in lots of ways. But I would say, and I don't know exactly how to break it down, but certainly better than the market, probably twice as good as the market. certainly benefit from secular trends in the southeast and the mid-south and higher penetration of on-site septic in those areas. And I think Roy would tell you, and we were talking about this last night, you know, when people are trying to rapidly develop land, it sometimes is hard to get the municipal sewer systems out there soon enough or to those areas soon enough. So that often makes people go to on-site septic because they can stand up and sell that home faster, if you will. So there has been some incremental use of on-site septic in the category over the last couple of years, and he believes that that has accelerated some. given what we've all seen in kind of the, you know, what I would call, I call the secular migration to the suburban or white suburban or rural areas. So there's definitely some market pickup in there. And then the other piece of that is they have great distribution. I mean, very national distribution of those products. So they're well-connected. Wherever the growth might be for that kind of stuff, they're there. And their primary product, the Chamber, has all these advantages of faster insulation, smaller footprint, high familiarity with the contractors. So if those guys are labor constrained and trying to go fast, I think that just gets it. And this is something that we saw with that team early on, is they've got a flywheel there. And they certainly know how to work that to gain share. So that's what I would kind of add around the infiltrator and And we're thrilled on the residential piece of ADS, too. I mean, the programs we've been working, our high-tech sales model there, it's been working pretty good for us.
spk01: Great, great. Well, that's helpful. And, yes, that just continues to surprise to the upside. Second one on the margin, since, you know, it sounds like you're willing to at least give a little bit of flavor on how you're thinking about calendar 21. So, you know, you're guiding to 29% almost at the midpoint for fiscal 21. So we think about the next leg. You know, are there areas where you can still pay costs out of the system? You know, you had a lot of targets you outlined way back at the investor day there. Presumably mix can still be a driver as infiltrators strong here. But just, you know, what are the puts and takes as we think about margins beyond this 29% here? Yeah, certainly.
spk02: Katrell's going to jump in here because he's dying to. But, you know, if you go back to that investor day and you look at the programs we were talking about in full wall manufacturing and logistics and transportation, I would say those are on or maybe slightly ahead and have gained momentum, particularly in the full wall manufacturing over the last time. And I say that to your point of, you know, what do you got left to go do? And I think in that day we said we're going to get into this. We think there's a lot of opportunity. That has proven to be true and probably feel more confident today about that than otherwise. And it comes in a lot of different forms, you know, non-resident procurement work that is going well, productivity, fixed capital investment, some automation things that we've done. And we continue to believe we're in the early, early innings of that game to be played. so the only thing i'd add to that is you know kind of let's start with that pricing right paradigm we talked about a little bit ago so we're going to keep that pricing in front of us be aggressive on that front stay in front of any kind of material you know cost inflation environment we see not only input costs but uh on transportation logistics across the board Scott hit it on Ops Excellence. I think the key takeaway here is we're in the early innings in almost every one of those categories, and we're seeing really nice traction, and we're backing it up with our balance sheet and deploying capital to do that. I'd say the growth, you can't go without saying that the growth, especially at Infiltrator with their gross margins and EBITDA margins, as well as our allied products, that mix is really bodes well as we start thinking about margins as we move forward. On the SG&A side of the house, sure, we've had some temporary savings this year, but that's all factored into how we think about pricing and operational excellence and so forth. So we don't see that as a big headwind at all as we turn the corner in the next year. So bullish on that margin, sustainability and expansion.
spk01: Great. Well, thank you both for the comprehensive answers and best of luck. Thank you.
spk00: Your next question comes from the line of John Livolo with Bank of America.
spk02: Hey, guys, thank you for taking my questions as well. Maybe dovetailing off of Scott, one of your answers to Matt's question, are you seeing any project delays from builders on the single-family construction side as builders are kind of scrambling to get land and get labor as activity has been so hot? We are certainly out there looking for that. The answer to your question is no. But we also see, as you do, that the land inventory is getting low and they're going to be running into constraints around that. And we've kind of followed the comments this quarter and all the things you guys published around that. And I wouldn't say we've been slowed down by that, John. I would suspect that where we might run into that, if we do, it would be on the ADS side and it would be later in the year. That said, you know, we have incremental gains in relationships to go form with the national home builders. And we have made our guides sensitive to, particularly the more regional guides, that you've got to be not looking only at those big people that are developing 250,000 lot, new communities, but the guy doing 50 or 40 homes and stuff. So, you know, that can hit us. Hadn't hit us yet, but that's a good point. It could. But I think the incremental, perhaps we have a chance to offset it, you know, because we're not up and planing with every home builder in the planet or in the United States. That makes sense. Okay. And then you called out international business, I think, being up 18%. And you mentioned that Canada was up double digits. How did Mexico perform in the quarter? Mexico was up, and we did export some pipe from Mexico into the southern United States to alleviate, just to help us get some more inventory. I think without that, they were up 1% or 2% or something like that. I kind of think we bottomed. And our new leadership has got programs very focused around distribution relationships, segment targeting, a lot of our familiar playbook. So it's a work in progress. They've done a nice job in Mexico making that product and giving it to the United States where we could use it. We'll probably do a bit more of that. as we move through the winter months here. And it's going to be, you know, Tom Juan and I are working it hard. Believe me. Okay. But we were really thrilled with Canada. We were really thrilled with Canada. So I have to put in that plug for our Canadian team that has done a really nice job this year. Gotcha. Okay. And then finally, with more and more chatter around potential infrastructure bill at some point, any updates on your lobbying efforts in Texas and the ability to penetrate that 30 to 60 inch diameter market? So I'll be down there next week to kind of meet with our advocate and some people. And we're progressing according to the timetable that the Texas DOT has given us and the installations that they've given us. We'd like it to go a little faster, you know, but we are... We were doing what we said we were going to go do in terms of getting those installations done. The nice thing right now is we've seen other pickups in Texas, not necessarily related to the Texas DOT, but I think we've sharpened our game some there over the last couple years. And, you know, we're seeing good growth there right now. It has had some tough markets like Houston, but Houston recovered. And so I'm anxious to get down there next week and see how things are going. Yeah, John, I would say in Texas, a couple of things. You know, we've seen good growth in the residential market. And then, you know, while we're working very hard on this TxDOT initiative, we have made progress in some, you know, call it more metro area, metro suburban approvals for public infrastructure. We're starting to see some of those things pay off as well. Perfect.
spk01: Thanks a lot, guys. Hey, John, thanks.
spk00: Your next question comes from the line of Garrett Schmoy with Loop.
spk02: Great. Thank you. Congratulations on the great quarter. Just the first question is just curious how sales progressed during the quarter. I don't know if you could give it by month or just more broadly. Just given consensus and looking from this single-digit growth, and you were so far ahead, and just wondering if the strength, you know, was that right off the bat or did it build and accelerate as the quarter progressed? So it's a good question, and I would say September, October, and until Thanksgiving, we were going pretty darn hard, mainly driven by, yes, the recoveries in the West and in the East, but we were going real hard in the agriculture business. I mean, things were flying out of here in October and November. December seasonally came down, as it normally does, but year over year was still a A good December. So we liked the pace throughout the quarter, to tell you the truth, particularly with a nice December. December and January, you know, in our business, historically can be, you know, pretty tough months. You know, it is for everyone. But we did a nice job in December, and January's good, too. Yeah. Great. Second question is just around the fourth quarter. Are you expecting any abnormal pull forward of sales? I think a year ago you did have some pull forward of sales. It was more due to COVID and people trying to buy ahead of the uncertainty. But I was just wondering if you're anticipating anything abnormal this summer, I guess. Yeah, you're right. I think we had 20, we said there were 20 million in the fourth quarter that we felt like 10 was a pull ahead for COVID uncertainty and 10 million was really good weather patterns that benefited the agriculture business. I guess the way it looks right now, I don't think that's going to be that big of a headwind for us. I mean, we could have some really crappy weather like you had in the Northeast and Our shipments went down for two days. They bounced back yesterday. We watched that pretty darn closely. So I don't anticipate a headwind from that, but I could be surprised by, you know, really crappy weather or something. The other way I would answer that question is that our implied Q4 guidance that's in our guidance range does not assume any kind of pull-aheads into this. As you know, we end here at the end of March, so we're really trying hard not to pull anything in. Great. Thanks for that. And just the last question is to follow up just around the discussion on organic growth and how that's a main priority of the free cash flow. How should we think about the balance between new investments around new products versus just the need potentially to build out incremental capacity? You're just getting the surge in demand, both on the residential and non-residential side. And how should we think about labor inflation in that context moving forward? So I think there's probably, let's call it less than a quarter of that $100 million is probably just pure new product type stuff. And probably most of it is incremental capacity, safety, productivity type investments. There's the IT things in there and stuff like that. You know, there are new products we launched that we've got to go tool, both Infiltrator and ADS, but it's not the preponderance of our capital spending right now. Now, that said, when we invest, let's say, in a set of tooling, like pipe tooling, we often look at the design, the profiles, the weight, you know, all these kinds of things and try to make incremental improvements in that product as we invest in a new tool. But I wouldn't call that a new product. I would call that an incremental thing. But something that we really work hard on is when we make a tooling or a machine investment, we expect better performance out of that piece of equipment or that investment versus the prior design or the prior iteration of the design or the prior iteration of that machine. Great. Thanks again. Best of luck. All right. Thank you.
spk00: Again, to ask an audio question, please press star 1 on your telephone keypad. And there are no more audio questions. I will now turn the call back to Scott Barber for closing remarks.
spk02: Okay. Got it. Thank you, Tammy. And thank you again all for joining. Thank you for the questions today. We always enjoy getting those questions and a chance to elaborate on what's going on. And like I said, we're really pleased with the quarter and with what I would say the momentum we have going forward. We'll continue to focus on health and safety. It's really important right now, as well as providing the essential stormwater management and on-site septic solutions to our customers in the communities they serve. As the sales ramp up in this year, we're going to use level loading, building inventory to get ready for the seasonal demand, productivity, New fixed capital. All those things are going to be important for us to execute our strategy as we move into RFY 2022. Lots of discussion today on mitigating inflation. You know, Scott said it very well several times. We want to be paid fairly for the services we provide. And that's the products and that's the transportation logistics we do. And I think our team is doing a nice job on that and will continue to be a big focus for all of us there. I want to lastly just thank our employees. They've really done a fantastic job in a unique set of circumstances. You see it with them when you're out there and you're with them every day and a lot of pride in what they're doing. And so I certainly appreciate that and the support they're giving us and our customers. So with that, that's a wrap. We appreciate it, and we will talk to you soon.
spk00: Ladies and gentlemen, that concludes today's conference call. Thank you for participating. You may now disconnect.
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