Calian Group Ltd.

Good day and welcome to the Callion Group third quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Jennifer McCauley, Director of Investor Relations. Please go ahead.

Thank you, Michelle, and good morning, everyone. Thank you for joining us for Callion's Q3 2024 conference call. Presenting this morning are Kevin Ford, Chief Executive Officer, and Patrick Houston, Chief Financial Officer. They will present financial highlights on our consolidated performance and key business highlights. As noted on slide 2, please be advised that certain information discussed today is forward-looking and subject to important risks and uncertainties. The results predicted in these statements may be materially different from actual results. As a reminder, all amounts are expressed in Canadian dollars except as otherwise specified. With that, let me turn the call over to Kevin.

Thank you, Jennifer, and good morning, everyone. Before we get on to the business of our third quarter results, I want to give you an update on our progress to reach our three-year plan objectives. For those of you who joined us on our last Investor Day, you recall we laid out an ambitious target to grow revenues 50% over the next three years and double our EBITDA. Not only would this get this to the one billion level, but would position Calendly to take advantage of greater scale and establish us leaders in all that we do in Canada, United States, and Europe. We don't take these objectives lightly. We have delivered and surpassed in the last two, three year plans we've put in place, and our plan is to do the same here again. Our diverse business with strong proven fundamentals will be the tailwind that will propel us to this target. So how are we tracking? We are delivering organic growth in line with our estimates, and our M&A efforts are going faster than anticipated. I will provide some more color on our progress at the end of the call. Now let's turn to our recent quarter. We've reported record results for the third quarter with revenues, gross profit, and adjusted EBITDA up year over year. Revenues were up 11%, with all segments contributing to the growth, particularly our health and advanced tech, which demonstrated double-digit growth. In terms of profitability, gross profit was up 21%, and adjusted EBITDA was up 22%, with their respective margins all up year over year. Again, this quarter, profitability growth surpassed top-line growth, a testament to the strength of our business model a pivot to higher margin businesses, and the successful start of our three-year strategic plan. We completed the strategic acquisition of Mabway, expanding our military training and simulation solutions globally, signed and acquired new contracts valued at over $300 million, growing our backlog to $1.2 billion, and furthered our innovation agenda more specifically in our GNSS Corolla virtual care and our exercise management tool for global military training. Turning briefly to our segments, we had two segments this quarter that demonstrated double-digit revenue and EBITDA growth, advanced tech, and health. Advanced tech revenues were up 17%, and EBITDA was up an amazing 47%. These results reflect the strong performance from our acquisitions of Hawaii Pacific Teleport and nuclear assets from MDA, and organically our transition to increased product revenue. You may have noticed that recently we increased our product catalog with the addition of the dedicated DOCSIS test products from Rohde and Schwartz. Similarly, health revenues and EBITDA were both up 14%, all from organic sources. Health continued its growth momentum and hit the second highest revenue since the peak of COVID. It is now officially on a $200 million revenue run rate, with our past four quarters above $50 million. Despite these strong results, we did encounter some temporary headwinds in the quarter in two of our other segments. First, as we mentioned last quarter, the Canadian government had announced increases in defense spending for the long term with an objective of spending 2% of GUP by 2030, which should be positive for CAI in the long run. But in the short term, they're actually asking the Canadian enforcement to deliver short-term reductions in certain areas as they allocate budget to other economic initiatives. As of last quarter, it was difficult to forecast the timing and magnitude of any impact on Callion. In June, we began to see some reductions in activity, and despite winning new contracts, the ramping up of those activities has been significantly slower than in our past experience. So far, we have seen impacts on our ITCS and advanced tech segments and more significant impacts on our earnings segment. Our health services has not been affected. We expect some of these short-term reductions to continue to impact us in Q4 while we work with the customer to realign their capacity to their mission-critical needs. We have been a trusted vendor of the Canadian Amphibious Resources for over 20 years and have managed demand variability in these long-term contracts. In our experience, while there can be a reallocation of demand from quarter to quarter, we expect the majority of the services over the length of the contracts. As a result, we see this as a timing issue, nothing more. What we provide the Canadian Armed Forces are critical solutions and services needed to generate broad force capabilities, and the demand on the men and women of the military are only increasing due to global uncertainties. Our efforts to diversify our business into Europe will help offset some of the short-term domestic environments. Our European and UK military training operations perform well in the quarter, and my recent visits to the region have only reinforced my conclusions that the urgency in Europe is significantly greater than here in Canada. I also want to briefly comment on the ITCS performance as looking at the results at face value may lead to misinterpretations. ITCS was impacted by a few external factors and internal decisions this quarter. First, the macro environment is characterized with the elongated procurement cycle cycles and lower government spending. Second, we've made the decision to increase investments as Mike Trombley is positioning the segment for the future. And third, and most importantly, the quarter variability. Recall that ITCS had a very high EBITDA on Q2 at $12 million as a result of a pull forward from Q3 and the decisive seasonality. When you take quarter variability as the equation, on a year-to-date basis, ITCS revenues are up 19% and EBITDA is up 25%. In the face of a broader slowdown, our business is maintaining its position and ready to capitalize on the initiatives we begin putting in place. To conclude, despite some short-term headwinds, we remain on track to deliver our seventh consecutive year of double-digit revenue growth and one step closer to the objective of reaching $1 billion in revenue by the end of FY26. Now, I'll turn the call over to Patrick to discuss consolidated results and guidance for FY24. Over to you, Patrick. Thank you, Kevin, and good morning.

Futury revenues increased 11% to $185 million. This represents the highest third-quarter revenue in the company's history. Acquisitive growth with 11% was generated by strong performance from Hawaii Pacific Teleport, Decisive, the nuclear assets acquired from NDA, and about half a quarter from Maboy. Organic growth was flat as strong double-digit growth from Health was offset by declines in the three other sectors. On a year-to-date basis, organic growth stands at 5% in line with our three-year plan objectives. Gross margin reached 33.4%. It represents the ninth straight quarter above 30%. This consistent performance demonstrates we can sustain plus 30% gross margins going forward. Adjusted EBITDA increased 22% to $17.7 million, driven by higher margin contribution from acquisition, revenue growth across all segments, as well as progress to expand geographically and increase share of product revenues. Adjusted EBITDA margins reached 9.5%, up from 8.7% last year. On a year-to-date basis, adjusted EBITDA sits at $63 million. This almost eclipses the EBITDA of all of last year, and adjusted EBITDA margin stands at 11.1%. In Q3, we signed and acquired $317 million in gross new contracts, translating into a book-to-bill ratio of 1.7. Recall that in our business, long-term contracts fully complete every quarter. When we renew, extend, or sign additional long-term contracts, such as this quarter with our defense health contract and UK government through Mapway, we get a cycle boosted backlog. In fact, we ended the quarter with a backlog of $1.2 billion positioning as well for the remainder of the year and into FY25. Net profit in Q3 decreased to $1.3 million, or $0.11 per diluted share, compared to $4.7 million, or $0.40 per share, for the same period last year. The decrease was mainly explained by higher amortization and interest expenses related to acquisitions. This was partially offset by higher adjusted EBITDA and lower income tax expenses. As a reminder, the acquisition-related expenses, including amortization, income compensation, and change in fair value, Related to earn-outs or all non-cash, we typically amortize these costs over the first five years after the acquisition is made, making the impact greater in the immediate years following the acquisition. We generate capital from operations of 14 million in Q3, up from 3 million from last year. We recaptured close to half a million dollars of working capital in the quarter, but we used working capital in Q3 of last year. As expected, our working capital performance reversed from Q2, but remained positive as we monitored very closely. As a result, for the total year, we expect working capital will be positive. It's worth mentioning that our long-term efforts to find more working capital efficiency as we grow is working. We've been able to reduce the percentage of working capital consistently over the last four years. In FY20, it stood at 21% of revenue, as of last year it was down to 14%, and this quarter it reduced further to 8%. Operating free cash flow stood at $10 million or $0.84 per share in Q3 and represented a 57% conversion rate from adjusted EBITDA. The conversion rate was lower than our target in Q3, primarily due to higher CapEx generated by one-time IS infrastructure projects. Here to date, we generated $42 million of operating free cash flow or $3.55 per share versus $34 million or $2.92 per share for the same period last year. After nine months, we've generated over 90% of the free cash flow of all of last year, and our conversion rate stands at 67%, in line with our target. In the third quarter, we invested in our business with the acquisition of Mavway in the UK for a net cash outflow of $30 million. Year to date, we've invested $88 million in acquisitions. We also made CapEx investments of $4 million. Close to $3 million of this was due to an infrastructure upgrade at Decisive. Besides this one-time project, our CapEx levels have remained stable despite significant increase in the size of our business over the last few years. We also provided a return to shareholders in the form of dividends. We paid dividends of $3 million or $0.28 per share, representing 33% of operating free cash flows. On a PTM basis, dividends represent 25% of operating free cash flows in line with our target. In addition, after a short pause in Q2, we reinstated our share buyback program in Q3. We purchased 26,600 shares for a total consideration of $1.5 million. With our current NTIB coming due at the end of August, our intention is to renew our share buyback program subject to TSX approval. Let's take a look at the balance sheet and liquidity capacity. With our solid operating and working capital performance, our balance sheet and leverage position is in great shape. As of June 30th, we had drawn $94 million on our debt facility. During Q3, we drew an additional $25 million on our facility to support our M&A agenda. We ended the quarter with a net debt of $48 million, representing a net debt to adjusted EBITDA ratio of 0.6 times. This is still well below our target level of 2.5 times, meaning we have ample capacity on the balance sheet to complement our strong cash flow performance. Let's take a look at our guidance for FY24. After raising our guidance last quarter, we are now anticipating being at the bottom end of the range, given short-term operating budget reductions from the Canadian Armed Forces, which we expect will have an impact of close to $4 million on EBITDA in the second half of the year. As a reminder, our guidance calls for revenues in the range of $750 to $810 million and EBITDA of $86 to $92 million, including approximately $2 million in transaction costs related to three actions we announced this year. Recall that last quarter we stated we sat in the middle of the range around $89 million. The reduction of our estimates is primarily due to recent budget reductions from the Canadian Armed Forces combined with elongated procurement cycles with the federal government. At the bottom of the range, this guidance reflects revenue and adjusted EBITDA growth of 14% and 30% respectively. Note that EBITDA growth is significantly outpacing revenue growth as we continue to expand into higher margin businesses. It also implies an adjusted EBITDA margin above 11%. This growth is driven from contributions from both our organic and acquisitive agendas. The acquisitions of HPT for 10 months, Decisor for 11 months, the nuclear assets of MDA for seven months, and Mavway for four and a half months represents double-digit acquisitive growth for FY23 with organic growth in the single-digit zone. It would represent the seventh consecutive year of double-digit revenue growth. With this guidance, we're on track to achieve another record year in FY24 and are off to a great start to achieve our $1 billion revenue target by the end of FY26. As a reminder, we are expected to experience increased fluctuations in our quarterly results due to revenue mix, which is more highly skewed towards products where the timing of deliveries come into play, as well as commercial customers characterized by greater demand variability. This is by design as we roll out higher margin solutions across all of our markets. In addition, with the acceleration of our M&A agenda in the past few years, our business profile has changed as a result. Our seasonality has evolved. Our busiest quarter is now Q2 due to Canadian government fiscal year-end, while Q1 and Q3 are the slowest due to timing of vacation periods, statutory holidays, and industry-specific cycles. As always, we must caution that this guidance is ultimately dependent on the extent and timing of future contract awards and customer realization of existing contract vehicles. The guidance also implies no major changes to current economic environment, additional or more extreme defense and spending cuts in the supply chains, as well as no major increases in interest rates and labor costs. Note that our guidance does not incorporate any additional M&A activity than those already mentioned. And should we close any new opportunities, their contributions would be incremental. Finally, in terms of capital deployment for the year, we expect to maintain our capex investments in a range of $10 to $12 million and our current dividend at $1.12 per share. We also plan to use our Share Buy Fast program opportunistically during the balance of the year. We believe this guidance reflects the resiliency in our business. And now I'll turn the call back over to Kevin for his closing remarks. Kevin?

Thank you, Patrick. As I mentioned at the start of this call, we are running our business with a goal to reach our three-year objectives of growing revenues double digits and significantly increasing profitability. For those new to the story, our strategic plan begins this year and ends in fiscal 26. Let me provide a quick summary. We look to drive revenue growth through a combination of organic initiatives and acquisitions for a total CAGR of 15%. This effectively translates into growing our top line by 50% and essentially doubling our adjusted EBITDA over a three-year period. I think that bears repeating. We plan on doubling our adjusted EBITDA over three years from $66 million to $125 million. We plan on achieving this by growing organically and deploying between $250 and $300 million of capital for acquisitions aligned to our strategic plan. paying a multiple between 5 and 8x and generating about $230 million of revenues and $39 million of EBITDA from those acquisitions. These acquisitions are expected to be funded through a combination of debt and internally generated operating free cash flow, and we estimate that we can convert about 70% of adjusted EBITDA into operating free cash flow during this period. Finally, we plan to do all this while maintaining a solid balance sheet of a net debt-to-EBITDA ratio below 2.5 times. The overarching objective of this plan is to build a multi-billion dollar sustainable growth company that is established in Canada, the U.S., and Europe, that offers differentiated products and services, and value to customers and buyers where they cannot fail. Certainly an ambitious plan, but I know we can do it. In very uncertain times, I still believe the world needs Markallion. Let's see where we stand after nine months of our one 2026 strategy. With regard to results, our plan called for 15% revenue growth per year, and we've generated 17% so far. Our plan also called for essentially doubling EBITDA over three years, or generating an additional $60 million. At the bottom of our guidance range, we've added $20 million, or one-third of our objective after year one. Right on track with our three-year plan. Next, our M&A agenda. Year to date, we deployed close to $90 million of capital towards acquisitions, which are expected to generate about $19 million of EBITDA on an annualized basis. After nine months, over one-third of our capital has been deployed and close to half of our EBITDA objective has been reached. With this performance, we're actually ahead of pace on our M&A targets, and we've done this while maintaining a strong balance sheet and very conservative leverage ratio. To conclude, we had a solid quarter, and are right at our pace to achieve our three-year strategic plan objectives with double-digit revenue and a buzz of growth after year one. Looking forward, we're currently working on some exciting strategic opportunities and partnerships that we look forward to sharing with you soon. We're also working on AI use cases in several parts of our business, and our M&A pipeline is healthy, and we hope to close a few more acquisitions before the end of the calendar year. While we are not in position to provide FY25 guidance before our Q4 results in November, current course in speed, we can say that we're currently expecting to generate another year of WJET revenue and Utah growth. On that note, I want to thank our staff for their commitment. I want to thank our customers for their loyalty, our suppliers for the collaboration, and our shareholders for the continued support. So with that, Michelle, I'd like to now open the call to questions.

Thank you. If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Benoit Poirier with Desjardins Capital Markets. Your line is open.

Yeah, good morning, everyone. Morning, Benoit. Yeah, just on ITCS, you experienced some issues due to lower government spending, longer sales cycle, and the value-added resale business. So could you provide some color on how those issues differ versus the one you reported a year ago back in 2003?

I think we're dealing with some, you know, some fundamental, just some timing, to be honest. As I mentioned in Q2, Ben, once we saw the variability, you know, $12 million quarter in Q2 and Q3, obviously we had some timing issues on VAR. So I'm not sure it's changed fundamentally. I think the dynamics and what I've been trying to say on these calls is that variability, just due to the nature and the scope of the VAR, is that something we're going to see in IPCS moving forward, number one. Number two, what's changed definitely from last year is that we continue to see the federal government's procurement processes slow down and even slower than last year, I would say. We had the arrived can, a bunch of different things going on with government that is just causing procurement to do a lot more checks and balances on any of the procurement that they are doing. So it's just slowing down the process. I don't understand why they're doing it, but it is affecting not just County, frankly, all suppliers to the federal government. And then finally, as I mentioned, with Mike Tremblay coming aboard in December, excited about the vision he's created for that organization. And I'm working with him on investment with his team on reposturing some areas, especially in our cyber services, our SOX, the NOX, and how do we then move forward with more enterprise customers. So what's changed from last year is we have a new leader. We have a new vision. We're investing in that vision. I believe in the vision. And frankly, I think, again, between variability and investment in the long term, we're on the right track with ITCS.

Okay, that's great, Calder. And from a margin standpoint for ITCS, you mentioned that you've been dealing with an increase in fixed costs from the acquisition of this as if, but also investment and sales capacity. But even if we assume a higher revenue base for the quarter, it looks like selling and marketing and also G&A expense have been trending higher in terms of percentage of revenue versus last year. So any opportunities to potentially right-size those two elements, or is it just a matter of timing and investing into the future?

So I think to me, I would say it's the latter, investing in the future. As we grow this company, as we look at that billion-dollar number, It is clear to me the investment in our sales capacity across all of Cali and Franklin, not just ICS, it will be a requirement. And we're going to do that. And as I've told many of our shareholders, I'm not running the company quarter by quarter. I'm on a three-year plan to reach a billion dollars and scale this company globally. So right now it's investing in that sales capacity. If you look at even 5% organic growth, those numbers are getting, frankly, they're larger than some of the divisions when I got here. So we have to scale. We have to invest in our sales capacity, our marketing capacity. So in the short term, maybe that looks like it's up, but long term, it's absolutely the right thing for us to be doing to drive sustainable growth long term.

Okay. And maybe last one for advanced techs. If we look at Q4 last year, maybe the question is more for Pat, but it looks like you finished the quarter last year on a strong note. in terms of revenue. So I was just curious to see what kind of organic growth should we expect in Q4 this year, as I'm wondering if you could face a tough compare. So could we expect another negative organic growth for the quarter?

Yeah, if you remember last year, Benoit, it was a bit lovely. If you remember, Advanced Tech had some supply chain issues at the beginning of the year. We worked hard to resolve that. We resolved them in Q4 last year. We finished the year strong. I think what's more impressive this year is just how much of a step forward we've taken overall in the year. in AT and the margins have improved significantly. So, you know, we might be down on a compare versus before last year, but I think if you look at the whole year, I think it's been a really successful year for AT. And to be honest, building momentum going into next year, I think we're very positive about the assets we have there. It should be a growth engine for us going forward.

You know what, Kevin? Like, I want to restate this because, you know, I've seen some of the results in the analysis. Like, on the EBITDA, we're up 80% year over year right now in advanced technologies. 80%. I just want us to digest that and how much work that is from that advanced tech team. Definitely acquisitive, but we are investing more in our product development, more in innovation, and it's reflecting in the results. So as we look at the results in the quarter, I hope people are recognizing the incredible progress we're making with our advanced tech group.

Yeah, that's a great point. Okay, thanks for the caller. Thanks, everyone.

Thank you. Our next question comes from Paul Treber with RBC Capital Markets. Your line is open.

Paul, your telephone may be muted.

Our next question comes from Tanvi Gabriel with V. Your line is open.

Hi, good morning. I'm Tanvi. I'll be stepping in for Rob Gough from Renton Financial. So one of the questions that we have is, you know, you spoke to a headwind that will face in the quarter. How do you plan to sort of address these headwinds moving forward?

Yeah, great question. I think to me, number one, I think it's temporary. I've done this a long time. I've been around defense a long time. And these things are always, you know, it's a headwind for a period of time, and then the reality kicks in. that you can't slow down training in the military. You can try, but over time, and our men and women are being asked a lot of the military right now with regards to our deployment in Latvia, just the state of the world. You need forces that are generating capability. You need forces that are ready to go, that are trained. And I've seen this before. We're short-term by the budget, and I do feel for our military right now. Frustrating as a Canadian to see in today's environment, the men and women being asked to cut a billion dollars, but they're gonna do it, and they're gonna figure out how to do it, because they can get it done, they do get it done. In the short term, it will be some headwinds. Long term, for my comments, it always comes back, because at the fundamental end of the day, you need to have people ready to go, trained to deploy. And I am confident that we are gonna continue to work with the military to do exactly that, Because the state of the world demands nothing else.

Right. Okay. Thank you. And do you also anticipate any delays within the M&A strategy? Or are you confident in continuing at your current pace?

No, we're not slowing down. I mean, as Kevin mentioned, we're already done half the target we set out for three years after three quarters. So the team's working hard. It's been certainly a busy last nine months. But we're certainly not slowing down. We've got the balance sheet. That's not a restriction. We've got the liquidity. As we said, we're way below our leverage target. So in one way, it's just finding the targets and executing the deals. And we're optimistic that we'll be able to exceed our targets over the three years. So we're certainly not slowing down.

Okay. And my last question is, within the learning segment, are there any large outstanding R&Ps within the sales pipeline?

uh lots of opportunities i mean our expansion to europe has led to a lot more opportunities that's been one of the investments we've made and i think um as we mentioned we had a very strong uh quarter end year-to-date performance in europe lots of new opportunities there we were winning opportunities uh in canada it's just that they've been ramping up much slower because of the budget reductions but back to kevin's points that We've been doing this for over 20 years. Our experience is, you know, when we win these contracts, we deliver the services against the contract over the period. So some of this will come back to us in future years.

Yeah, and it's probably worth mentioning as well that, you know, the election cycle that's going on in Europe, you saw the UK change government. They're initiating a defense review. We saw the same in Belgium. You know, these things happen. New governments came in. They do defense reviews, and that generally will put some damper on just pace. But the funnel is very strong, and the team's doing a great job there. I expect, again, Europe and our NATO presence and now the UK. We're going to continue to invest in that. I am convinced that that's where we need to be from a growth perspective. Again, spending a lot of time there this year, personally, including Latvia. As I mentioned, the urgency is there in Europe, so we are going to continue to invest, and I expect those opportunities will be there short-term and long-term.

Okay. Thank you.

Thanks for the questions.

Thank you. As a reminder, to ask a question, please press star 1-1. Our next question comes from Sam Schmidt with CIBC. Your line is open.

Hi there. It's Sam Schmidt on for Scott Fletcher at CIBC. One question for me on the health segment. Organics growth was strong in the quarter, and you noted that came from existing customers. Could you unpack what drove that growth in terms of contract renewals or extensions or maybe the nature of work, like was it mostly health services? Thank you.

Yeah, great question. So really driven by two factors, I would say number one, despite what we're seeing on the learning and IT and some of the other areas in our business and defense, we have seen no slowdown in demand on our healthcare contract at defense. You know, I was meeting with some of the executives and I don't think that's going to change in the short term. The military's cognizant a healthy workforce is critical. to their mandate, and I don't see them slowing down there. So number one, we've had continued demand as those forces ramp up for deployment. We continue to see strong demand in the healthcare business. And frankly, to credit to our team, that's not easy. And our team is stepping up and knocking it out of the park, frankly, on an increased demand. So I want to shed a little shadow to our health services team there. Secondly, we've had some good, strong organic growth opportunities that we're just finishing up in some areas of our business and other customers. And we're starting to see now as well some exciting opportunities in their digital health portfolio, our pharma business as well, so stay tuned. We still see good opportunities in our funnel in that. So in the short term, it's health and some of the other government business we have. In the longer term, I expect that's going to be more balanced with more commercial health in government and some of our digital platforms through our pharma business. So I think it's a combination of factors right now.

Thank you. That's helpful. And then one more from me on the learning segment. You noted that investments in the European expansion drove growth in the quarter. Could you provide any color on how much of the learning segment revenues or bookings are coming from that region at this point and maybe how you see that evolving over time? And then I'll pass the line. Thank you.

Yeah, I think long term, once we have Madway, which is the most recent acquisition kind of on a pro forma basis, we should be generating about a third of our revenues in learning in Europe. So I We've done three acquisitions and have been growing organically there, so it should be a third. And to Kevin's remarks, we're seeing a lot more growth there. So I think it will become a bigger contribution over the next couple of years.

Great. Thanks for the questions.

Thank you. There are no further questions at this time. I'd like to turn the call over to Kevin Ford for any closing remarks.

Thanks, Michelle. I appreciate that. So listen, folks, I am still very excited about the opportunity. We are on track for another double-digit growth year. We're on track for the one 2026 objectives. The billion no longer seems like a faraway number to me. I see it. I can feel it. I know the team is behind me to get there. And as importantly, if you look at the pace in today's macro environment we're working in, When I look at year-to-date results and I look at actual consolidated results, even with the bottom of our guidance, 14%, 15% revenue growth, 30% EBITDA growth, increasing our margins, diversifying our business, doing it efficiently, doing it prudently with our balance sheet, I really hope that people bring that into their discussions as we look at not a quarter, but the trajectory we're on as a business. So with that, I'd like to close the call. Thank you for your time today. Look forward to further discussions as we set in our Q4 and set the guidance for next year, which I'm excited about as well. So have a great day. Thank you so much for your time today.

Thank you for your participation. You may now disconnect. Everyone, have a great day.