BK Technologies - Q2 2023
August 10, 2023
Transcript
Operator (participant)
Greetings! Welcome to the BK Technologies Second Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jen Belodeau. You may begin.
Jen Belodeau (Conference Call Host)
Thank you. Good morning, and welcome to our Conference Call to discuss BK Technologies results for the second quarter of 2023. On the call today are John Suzuki, Chief Executive Officer, and Scott Malmanger, Chief Financial Officer. I will take a moment now to read the Safe Harbor statement. Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenue and profits. These statements are subject to known and unknown factors and risks.
The company's actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements. Some of the factors and risks that could cause or contribute to such material differences have been described in this morning's press release and in BK's filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings that are believed to be accurate as of today. We do not undertake any duty to update such forward-looking statements. As a reminder, there is a slide presentation that accompanies today's remarks, which can be accessed via the BK Technologies homepage. Now, I will turn the call over to John Suzuki, CEO of BK Technologies. Go ahead, John.
John Suzuki (CEO)
Thank you, Jen. Thank you, everyone, for joining today. I'll start by reviewing some of the highlights of our operations and financial results during the quarter. I'll turn it over to our Chief Financial Officer, Scott Malmanger, for a deeper dive into our financial results. We'll conclude by opening up the call for a brief Q&A. Turning to slide three. We saw continued momentum in the second quarter, with revenue growing 57% to $19 million, compared to second quarter of last year. During the quarter, we shipped 8,938 radios, bringing our first half shipment total to 18,939.
With the progress we're making, we are maintaining our annual shipment target range of 32,000-36,000, but we believe there's a good chance that we'll end up at the high end of our radio delivery guidance or even potentially surpassing it. In the second quarter, we were very pleased to receive FCC certification for our BKR 9000 multi-band radio, and we completed our first shipment of the BKR 9000 in early June to the US Army. With its enhanced capabilities and cost-effective price point, the BKR 9000 is a very attractive next-generation portable communications radio. As we discussed on other calls, we expect the multi-band capabilities of the BKR 9000 to open up a larger addressable market with several new market verticals, and we're excited to bring this new portable communication solution to new customers. Turning to slide four.
Our BKR 5000 saw continued demand and strong order activity during the second quarter, particularly as existing customers upgraded their portable communications technology. Of note, we received two large orders totaling over 5,100 radios from the U.S. Forest Service, as well as a significant purchase order valued at $924,000 from the Washington State Department of Natural Resources. Both agencies are longtime BK customers, and we're grateful to partner with them as they upgrade to newer, more reliable portable communications technology. Booking activity in the quarter was strong, and we ended the quarter with a backlog of $24 million as of June 30, 2023. Slide five. Slide five illustrates the continued traction we're seeing with our BKR 5000 radio.
As mentioned a moment ago, in the second quarter, we shipped 8,938 units, bringing us to a total of 18,939 radios shipped year to date. With our visibility today, we believe second half shipment levels will be in the range of 13,000-17,000 and anticipate closing out the year on the high end of this range. Turning to slide six. Our gross margin performance for the second quarter was disappointing as we experienced delays in implementing our cost reduction initiatives. Those initiatives have now been launched in earnest, and as a result, we anticipate the third quarter margins will be favorably impacted. Unfortunately, this delay does mean that we no longer anticipate meeting our gross margin target of 35% for the full year.
That said, with initiatives now underway and with a favorable product mix, now includes the BKR 9000 multi-band radio, we expect to see continued gross margin improvement through the balance of the year. Our expectation is that these cost initiatives will drive further savings in 2024, as we continue our commitment to quarter-over-quarter margin expansion. Slide seven. Slide seven shows our highly experienced engineering, development, and manufacturing teams, who were instrumental to the launch of our innovative BKR 9000 multi-band portable communications radio. In June, we received FCC certification and P25 Compliance Assessment Program, or P25 CAP approval, for the BKR 9000, and began shipping the BKR 9000 shortly after. Our first shipment of the BKR 9000 radios was to the US Army. Since this initial delivery, we have received several additional orders from the U.S. Army, and we're pleased to continue to expand our relationship.
I'd like to take a moment to dive a little deeper into the market opportunity for the BKR 9000, and what makes this radio such an exciting opportunity for our company. In the U.S. alone, there are about 1,000 P25 trunk radio systems. For the most part, each state operates their own statewide P25 radio system, which provides an overlay radio communication to regional, county, and city-owned P25 radio systems. It's very common that these overlay or adjacent P25 trunk systems operate in a different frequency band, so there is a real need for a multi-band radio that can operate on all four of the LMR frequency bands. BK has completed, or is in the process of testing, the BKR 9000 on over 30 P25 trunk systems. Most of these are large, statewide, regional, and/or county P25 systems with hundreds of thousands of radio users.
The BKR 9000 has passed the P25 Compliance Assessment Program, but each P25 system owner requires further approval on their specific system. BK has years of experience acquiring system approval for our legacy P25 radios, and this history is helping us expedite the individual approval process. Early feedback from system owners has been positive, with many owners indicating minimum configuration or software changes required to approve the BKR 9000. Customers are impressed with the look and feel of the radio, which provides high-end capabilities at a reasonable price point. While still early on and anecdotal, we received feedback that our audio sounds better than our competitors' products, and the radio performs better in noisy RF environments. We are encouraged by this feedback and energized to bring the BKR 9000 to more customers. As we continue to receive system approvals, our order book continues to grow.
Our shipment plan remains modest initially, as we prime our production line and ramp up as we head into the fourth quarter and 2024. Now, I'll turn it over to Scott Malmanger, CFO, to take you through the financials. Scott?
Scott Malmanger (CFO)
Thanks, John. On slide eight, you'll see a summary of our financial and operating results for the period ending June 30th, 2023. Sales for the second quarter totaled approximately $19 million, compared with $12.1 million for the same quarter last year. As John mentioned, we closed the second quarter with an order backlog of $24 million. Gross profit margin in the second quarter was 27%, compared with 14% in the second quarter of last year. Selling, general, and administrative expenses, or SG&A, for the second quarter total approximately $6 million, compared with $5.4 million for the same quarter last year. SG&A expenses included increased spending as we launched and improved market awareness of the BKR9000. Operating loss totaled $784,000, compared with an operating loss of $3.7 million for the second quarter of last year.
In the second quarter of 2023, we recognized a net unrealized loss of $376,000 on our investments, compared with a net unrealized loss of $602,000 in the same quarter last year. We recorded a significantly reduced net loss of $1.3 million, or $0.39 per basic and diluted share in the second quarter of 2023, compared with a net loss of $4.3 million, or $1.28 per basic and diluted share in the prior year period. It is our expectation that with continued strong sales performance and gross margin improvement, we should continue our progress towards profitability. Finally, as of June 30, 2023, we have approximately $2.7 million of cash and cash equivalent, and only $24,000 in long-term debt.
From a liquidity standpoint, we believe that our current cash position, combined with anticipated cash generated primarily by radio sales and borrowing availability under our credit facility, provides us with the working capital that we need to grow our business. I will turn the call back over to John.
John Suzuki (CEO)
Thank you, Scott. On Slide nine, we reiterate our operational and strategic focus for 2023. First, we remain focused on maximizing production efficiency. Our capacity is set to produce up to 10,000 radios per quarter or 40,000 for the full year. We are targeting production of 8,000-10,000 radios per quarter, and based on the backlog and forecasted demand, we maintain our stated annual shipment target of between 32,000 and 36,000 radios. As I said earlier, based on where we sit, this is a conservative estimate, and we believe there's a good chance that we will end up on the high end of our radio delivery guidance for the year. Second, we are focused on driving gross margin improvement through 2023.
The third area of focus is around our continuing efforts to establish strategic beachheads in the federal, state, and local public safety markets for the BKR 9000 multi-band portable radio and InteropONE. We believe that establishing these beachheads is important as we plan for continued growth in 2024 and achieving our 2025 revenue goals. Slide 10. On our last slide, we reiterate our long-term goal of reaching $100 million in revenue by 2025. We are investing to drive profitable growth and to establish BK as a premier communications technology provider for the public safety and critical communications market. Our BKR 5000 is a proven success in its appeal to new customers, as well as to existing customers as they move through their equipment upgrade cycles.
Likewise, now that we have launched the BKR 9000, we have the opportunity to significantly expand our target markets and grow our brand recognition among a new customer audience. Finally, we think InteropONE has the ideal capabilities to improve communications between first responders, which will in turn improve safety and response times, potentially saving lives. As a SaaS service, we anticipate InteropONE will play a meaningful role in delivering high margin, recurring revenue as we gain market presence over time. With that, I'll turn the call over to the operator for questions. Mike?
Operator (participant)
At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. We do have our first question. It comes from Matt Williams with K Friese & Associates.
Matt Williams (Portfolio Manager)
Question. John, I wondered if you could just take a minute to talk about seasonality in the business and maybe the number of units shipped in Q2 versus Q1?
John Suzuki (CEO)
Yeah. Our core business is in wildland fire, so their busy season is like now, right? Q2 and Q3. It tapers off in Q4 and starts to build in Q1 again. If you look at, for example, the average revenue per radio shipped in the first quarter versus the average revenue shipped per radio in the second quarter, second quarter is a lot higher, and that's because as these fire teams are being deployed out to the wildland fires, they're checking their kit, and they're ordering a lot of accessories. If you look at the total first half of the year, it's within what we had said historically was about $2,000 a radio, and we're tracking to that this year.
In terms of, of, of the number of radios shipped in the second quarter versus the first quarter, Matt, so I, I, I, I, I assume that you're asking, why didn't we ship more radios? I, I wasn't quite sure.
Matt Williams (Portfolio Manager)
Yeah, that's my statement.
John Suzuki (CEO)
Yeah. Okay. Yeah, so, so from a production standpoint, I can say that we produced a similar number of radios. We did have about 1,000 radios sitting on our dock in that last week. We were expecting some shipments of, of a specific accessory that had to ship with this radio, and it came in a little bit late. You know, if it had been, you know, a week earlier, we would have been closer to 10,000 radios shipped. From a production standpoint, we're, we're holding to that, to that line.
Matt Williams (Portfolio Manager)
Got it. I presume that 1,000 or so radios has shipped subsequent to QN?
John Suzuki (CEO)
Yes.
Matt Williams (Portfolio Manager)
All right. Got it. That's helpful. Then, you know, you talked about gross margins kind of coming in below what you were hoping for. Can you talk about what the issues were? Was it just slower realization of some cost savings? Was it continued higher component costs? Just what is it that, you know, slowed your progression on gross margins?
John Suzuki (CEO)
Let me take the component cost first, right? What we've seen is the component cost has, has more or less stabilized. I mean, there's still a few components that are slightly out of whack, but as in general, I would say it's normalized. The, the bigger issue is in the programs that we had for specific cost downs, 'cause again, we brought these radios into our factories from offshore, and we had a number of programs to update these radios and bring the cost down. We had a, you know, a very aggressive target this year, I would say. We believe, right, we could get this, these costs out of these radios and get these margins up on these products.
In Q2, we had anticipated that we would start recognizing some of those cost savings, and we just did not because some of the development was delayed, some of the certifications, and then getting it into the factory. All that said, we believe that, well, we know that that's being introduced in this quarter, and it will have a favorable impact into the margins of this quarter.
Matt Williams (Portfolio Manager)
Got it. Is there a gross margin number that you think you can achieve in the second half? Maybe the exiting run rate?
Scott Malmanger (CFO)
This is Scott Malmanger. I would say that the best way to say it is, is we are expecting, we continue to expect incremental quarter-over-quarter improvement for the remainder of this year and through 2024. you know, in the past, we've said we're trending back towards the historical rates in the upper thirties, mid to upper 30% range, and we're still comfortable that we're trending towards that direction.
John Suzuki (CEO)
Yeah, if I can put an exclamation point on that, Matt, I would say that we're confident that we can get there. The issue is the timing and the when, and, like I said, we're aggressively moving towards that. Certainly, some of the cost initiatives we'll start seeing in Q3.
Scott Malmanger (CFO)
Yes.
Matt Williams (Portfolio Manager)
Got it. All right, a couple more quick things. On your OpEx, flattish to up sequentially, I thought there were some cost-cutting programs. Just wondered if you could share if that OpEx level is the appropriate run rate going forward, or if we should expect any changes over the next couple of quarters.
Scott Malmanger (CFO)
I would say on the OpEx side, once again, we are launching the BKR 9000, so we have, you know, incremental costs associated with market awareness and some of the, you know, costs for production increases and that sort of thing. I, I think we're gonna-- we're continually, you know, managing our cost structure to the best of our ability, and our focus for the remainder of the year is definitely gonna be on our gross margin improvement initiatives. I think, you know, I think that is about as good as I can, you know, nail that down.
Matt Williams (Portfolio Manager)
Okay, got it. All right, last thing for me is, any data points, milestones on InteropONE that you can share with us, or, or even, you know, anecdotals in terms of what you're seeing with, with regard to market interest?
John Suzuki (CEO)
Yeah. No, thanks for that question, Matt. Appreciate it. We have a number of trials going on, and we're getting some excellent feedback from these customers. I actually plan to do a more extensive presentation on InteropONE next quarter. If, if it's okay with you, I'd like to punt this for next quarter. What I wanted to do was really focus this call on the 9000. I mean, it's been such a long time in coming, and we're very excited about this particular product. In terms of InteropONE, InteropONE, we continue to get more field trials, and like I said, the feedback from the clients are extremely good. In fact, we're, we're actually about to release a second version of InteropONE, like an enhancement, based on all the feedback that we're getting.
We'll have that released in the next month or so. Development continues and, and feedback continues to be strong.
Matt Williams (Portfolio Manager)
All right. Thanks, guys.
Operator (participant)
Our next questioner is Aaron Martin with AIGH Investment Partners.
Aaron Martin (Research Analyst)
Hi, good morning, John. Good morning, Scott. I wanna wanna focus on the 9000, so let's go there. You know, congratulations on FCC certification. It's great. As I say, a long time coming. What should we expect in terms of the mix shift towards the 9000 over the coming quarters and into 2024? Then obviously, as that ties into ASP and then ultimately gross margin.
John Suzuki (CEO)
Aaron, what, what we've, what we've said is, for this year, right, we're shipping 32,000-36,000 radios. That's gonna be inclusive of, of some BKR 9000s. On, on the total number for the year, it's, it's not gonna be a material number, but it will be much more material in the fourth quarter because that's when we're gonna start ramping production. Beyond that, I'm not providing guidance or, or targets on, on the mix between, between our revenue or, or radio sold. It's a very competitive situation, especially on the 9000. You know, I think that just keeping it at a total number of radio shipped is, is the approach that we're gonna take.
That being said, right, as we ship more BKR 9000s, clearly, the, the revenue per radio is much higher on the BKR 9000, and the margin is much better. As we ship more BKR 9000s, you'll see, that those two numbers grow over time, especially as we go into 2024, where the mix will be more prevalent.
Aaron Martin (Research Analyst)
Okay. If we talk about the gross margin, obviously, the cost downs that you're talking about are, are material. In, in your initial plan to get to 35% for the year, which imply, you know, well north of that on a runway for Q4, I, I assume the shift towards the 9000 was a bigger piece of that rather than just the cost down, because, you know, the, the, the ASP increase is, is much larger. Is that accurate?
John Suzuki (CEO)
I wouldn't, I wouldn't say that specifically, Aaron. I think, you know, we, we expected to do better in our gross margins in the second quarter, and we were disappointed in our lack of execution, right? I don't know how else to say it, right?
Aaron Martin (Research Analyst)
Mm-hmm.
John Suzuki (CEO)
You know, it's, it's like we lost a quarter a bit. I mean, we did improve our margins, and yeah, I'm thankful for that.
Aaron Martin (Research Analyst)
It's a little more than 1%, you know, obviously, than-
John Suzuki (CEO)
Yeah. Yeah, it's not where we wanted it to be or expected it to be, right? So, so that's really what's pushing it, pushing it off, more than anything else.
Aaron Martin (Research Analyst)
I guess what I'm trying to figure out is the two two big components, is the cost downs and then obviously the mix shift. There's some accessory shift there, obviously, because those are higher gross margin. I'm trying to sort of get, get at how, you know, how much of those two items are, you know, are, are part of the, you know, getting us to 35+% gross margin. You know, how is it split between those two big items? This delay on the, on the cost downs, is that the only delay? Is there also a delay on the mix shift towards the BKR 9000 or, or not? I'm just trying to parse...
John Suzuki (CEO)
Yeah. The latter, the latter is not, right? What happened in Q2 was an execution, right? The programs that we thought we would have introduced into the factory that would result in better gross margins for our products were delayed. Those programs or some of those programs are coming to an end. We have a series of programs that we had planned throughout the year. The ones that, that had a, I would say, a more material impact to what we thought our gross margins were gonna be in Q2, those, those programs are now being introduced into our, our factory, and so we'll see an impact on Q3.
We never planned to ship a lot of radios on the BKR 9000 initially, so the number of radios that we shipped is basically the plan. Our third and fourth quarter plan hasn't changed.
Aaron Martin (Research Analyst)
Okay, you're saying all the changes are on the cost downs and those programs. Independent of those, obviously, we're gonna be seeing some, you know, material or a step up in BKR 9000s in Q4. That, that should move the gross margin.
John Suzuki (CEO)
Yeah.
Aaron Martin (Research Analyst)
Then in addition to that, on the execution side, we're looking for these programs to be fully in place by Q4 or close to it.
John Suzuki (CEO)
Yeah, that's a good summary, Aaron. You know, we had a speed bump in, in Q2, in essence, right? We're now picking it up in Q3, but the 9000 is an independent stream.
Aaron Martin (Research Analyst)
Okay. The 9000 on its own is, is, is enough for, you know, call it a step function, rather than, you know, this-
John Suzuki (CEO)
You'll notice it.
Aaron Martin (Research Analyst)
Okay.
Scott Malmanger (CFO)
It'll be a step function throughout 2024, is the way I would describe it.
Aaron Martin (Research Analyst)
Okay. Thank you very much. Congratulations on the continued progress.
John Suzuki (CEO)
Thank you, Aaron.
Scott Malmanger (CFO)
Thank you.
Operator (participant)
We now hear from Scott Weis with Semco.
Scott Weis (President and CEO)
Hey, John. Hey, Scott.
Scott Malmanger (CFO)
Good morning.
Scott Weis (President and CEO)
I have got two questions. The delay in the 1,000 phones at the last week of the quarter due to this accessory, was this accessory a BK-made product, or was it a third-party product?
John Suzuki (CEO)
It's a, it's a BK product, but it was a product that was manufactured by one of our contract manufacturers. You have to understand, right, I mean, you're talking a matter of days, right? At the end of the day, if you miss that window, it doesn't fall into the month or the quarter.
Scott Weis (President and CEO)
Mm-hmm. Yep. The last question is, your cash balance didn't move much. You were free cash flow positive, cash flow positive by a bit, but at $2.6 million in cash, do you have enough for working capital purposes? With that, the investment loss of $400,000 plus or so in the quarter, and I believe you've lost near $1 million for the year, can you comment on that and what the plans are, and what that investment loss is, and what your plans are for that?
Scott Malmanger (CFO)
Yeah, we continually review the investment losses, Scott. You know, and it's we've had numerous discussions about that investment and, look at, you know, the alternatives that we have available as far as an, you know, an exit.... As far as the working capital situation, we, we continue to manage the line of credit availability based on, you know, our interest costs. You'll notice that our interest costs are higher. We are managing our line of credit and maintaining the cash balance that we think we need. All in all, you know, I think we have a good cash position to obtain or achieve our growth plans, growth initiatives, using the line of credit that we have, and we'll, we'll manage accordingly. You're exactly right.
You know, we'll have cash positive results going forward, that should, you know, fund any growth that we have.
Orin Hirschman (Managing Member and CEO)
Okay, thank you.
Scott Malmanger (CFO)
You bet.
Operator (participant)
Our next participant is Orin Hirschman with AIGH Investment Partners.
Orin Hirschman (Managing Member and CEO)
Hi, good morning. How are you? Congratulations, definitely, on progress. I have one more question just on the gross margin side. Just, you know, a lot of the gross margin improvement was supposed to come just naturally from going through the higher cost inventory. What, what actually happened this past quarter? Does that mean that there was actually negative progress on the gross margin, and because of the offset from the, going through that higher cost inventory, where we're getting towards lower cost inventory, how should we view that dynamic?
Scott Malmanger (CFO)
There is, there is an amount of inventory that, you know, that we purchased during the supply chain issues of 2022, and we use an average cost basis for the inventory. There is some bleed over of the inventory, but the miss in the second quarter was due to a number of, you know, very specific cost reduction initiatives that we just failed to execute on. You know, I'm glad to say, or happy to say that we completed those now, and we expect to see, you know, incremental improvement over second quarter results back to more the trend that we were on, you know, for the last three or four quarters since, you know, mid last year. That's how I would describe it.
Orin Hirschman (Managing Member and CEO)
Okay. Just, I'm going to reiterate the question: Do you still have the tailwind of 200 basis points from working through the higher, the higher inventory? How are we -- are we in that?
Scott Malmanger (CFO)
Yes, I would say that's a, that's a good assessment. I look at it as a, as a tailwind for that incremental improvement.
Orin Hirschman (Managing Member and CEO)
That's over the next one, two quarters until it's completely bled off?
Scott Malmanger (CFO)
Pardon me? Sorry.
Orin Hirschman (Managing Member and CEO)
I'm saying it's about another one or two quarters in terms of when that higher priced inventory works its way through.
Scott Malmanger (CFO)
Yeah, I, I would say that's, that's the way it will work. I think I mentioned it on prior calls. We had 20-25, you know, specific components that we purchased through the brokerage markets that, that, you know, are bleeding through now.
John Suzuki (CEO)
So part of that, I mean, we did see a small margin improvement, right, in Q2, and a lot of that was the tailwind piece of it. We were obviously planning and, and working towards getting the, the actual cost downs, which we didn't achieve in Q2. That'll give you an idea of what the tailwind gave us.
Orin Hirschman (Managing Member and CEO)
Okay. In terms of getting additional customers for your SaaS offering, where, where are we with that? I know you're going to save the big update for next quarter, but are we seeing, like, a second, third, fourth customer, albeit small?
John Suzuki (CEO)
We are. In fact, actually, we, we received an order from our first reseller. This is a fairly large dealer in the United States, who looks at this service and approached us about reselling InteropONE. Since then, we've actually had a couple other inquiries. I, I find that specifically encouraging, right? Because these guys are really close to the users in these different communities. The fact that they see value in reselling the service, I think is, is very encouraging.
Orin Hirschman (Managing Member and CEO)
Do they have an end customer, or they're just taking it on, you know, hoping to find an end customer?
John Suzuki (CEO)
Yeah, they have -- well, they have a number of end customers. They're a fairly large, reseller of, of land mobile radio. They do service for this customer base. What they, what they see is this service has value, and they want to be able to resell that service to, to the end customer, to their end customers.
Orin Hirschman (Managing Member and CEO)
My question is, have any of their end customers actually expressed, you know, signed on with them, where they went through with the actual just or they?
John Suzuki (CEO)
Oh, sorry, Orin.
Orin Hirschman (Managing Member and CEO)
Anticipation.
John Suzuki (CEO)
Yeah, my understanding is yes.
Orin Hirschman (Managing Member and CEO)
Okay. Okay, that's, that's definitely a positive trend. Just like, you know, just go on the wire again, you know, for the alternative investment tier, that, that even taking a loss on it, the cash would be better kept in your pocket, and it would be less confusing entire investment community by liquidating that investment or swapping it back for PKI shares would be accretive to you.
Scott Malmanger (CFO)
Yes, sir, we continue to evaluate the, you know, our investment.
Orin Hirschman (Managing Member and CEO)
Okay, thanks.
John Suzuki (CEO)
Thank you, Orin.
Operator (participant)
There are no further questions in the queue. At this time, I would like to turn the call back over to the hosts for any closing remarks they may have.
John Suzuki (CEO)
Thank you, Mike. Thank you all for participating in today's call. We look forward to speaking with you again when we report our Q3. All the best to you, and have a great day.
Operator (participant)
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.