CSP - Earnings Call - Q4 2024
December 20, 2024
Executive Summary
- Q4 2024 revenue was $13.03M, down 14.9% year over year and modestly lower sequentially, with gross margin compressing to 28.4% from 35.0% in Q3 as product mix shifted; diluted EPS was $(0.18), versus $0.15 in Q4 2023 and $(0.02) in Q3 2024.
- Management highlighted strong momentum entering FY2025: >100 AZT PROTECT leads from Rockwell, cloud signed >10 new customers, cruise lines poised for a stronger FY2025; recurring revenue reached ~17% of total sales (vs <5% two years ago).
- Balance sheet remains robust with cash and equivalents of $30.6M; Board declared a $0.03 quarterly dividend payable Jan 15, 2025 and repurchased 2,800 shares for $34K in the quarter.
- Results vs estimates: Wall Street consensus (S&P Global) was unavailable at the time of analysis; no estimate comparison provided (S&P Global data unavailable).
What Went Well and What Went Wrong
What Went Well
- Recurring revenue reached ~17% of sales; management expects further growth in FY2025 driven by Managed Services, cloud and UCaaS, and AZT PROTECT adoption: “We have aligned our sales strategy to maximize AZT PROTECT market adoption… grow the recurring business to 17% of fiscal 2024 sales compared to under 5% of sales just two years ago”.
- Rockwell partnership accelerated AZT PROTECT demand: “Strong relationship with Rockwell Automation generates over 100 new business leads for AZT PROTECT” and management noted a Fortune 500 energy win with rollout to “a few thousand endpoints over the next 3 years”.
- TS segment executed well: “Technology Solution business generated approximately $12.7 million in sales in the fourth quarter” with growing cloud/MSP pipeline; recurring revenue and cruise lines show improving trends into FY2025.
What Went Wrong
- Revenue and margins declined YoY; Q4 revenue fell to $13.03M from $15.33M and gross margin to 28.4% from 33.8%, with management citing a higher percentage of product sales and mix effects.
- Q4 diluted EPS swung to a $(0.18) loss vs $0.15 in Q4 2023; note the prior-year quarter benefited from a $2.1M Employee Retention Credit, complicating YoY comparisons.
- HPP contribution was minimal in Q4 (revenue ~$0.4M), while AZT PROTECT’s enterprise sales cycles (often 12–18 months) and legacy Myricom wind-down weighed near-term profitability; SG&A rose to $4.95M vs $4.79M YoY.
Transcript
Operator (participant)
Greetings, and welcome to CSP Inc.'s Fiscal Fourth Quarter and Full Year 2024 Conference Call. At this time, all participants are in listen-only mode, and a question-and-answer session will follow the form of 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, Mr. Michael Polyviou. Sir, you may begin.
Michael Polyviou (Head of Investor Relations)
Thank you, Alan. Hello, everyone, and thank you for joining us to review CSPi's Fiscal Fourth Quarter and Full Year 2024 financial results, which ended September 30, 2024. With me on the call today is Victor Dellovo, CSPi's Chief Executive Officer, and Gary Levine, CSPi's Chief Financial Officer. After Victor and Gary conclude their opening remarks, we'll then open the call for questions. During the Q&A session, we ask participants to limit themselves to one question and one follow-up question, and then re-queue if they have additional questions. Statements made by CSPi's management on today's call regarding the company's business that are not historical facts may be forward-looking statements as the terms identified in federal securities laws. The words "may," "will," "expect," "believe," "predict," "project," "plan," "intend," "estimate," and "continue," as well as similar expressions, are intended to identify forward-looking statements.
Forward-looking statements should not be meant as a guarantee of future performance or results. The company cautions you that these statements reflect current expectations about the company's future performance or events and are subject to several uncertainties, risks, and other influences, many of which are beyond the company's control, that may influence the accuracy of the statements and the projections upon which the segment and statements are based. Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the risk factors section of the annual report, Form 10-K, and the quarterly report, Form 10-Q, filed with the Securities and Exchange Commission. Forward-looking statements are based on the information available at the time those statements are made and management's good faith belief as of the time with respect to future events.
All forward-looking statements are qualified in their entirety by this cautionary statement, and CSPi undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise after the date thereof. With that, I'll turn the call over to Victor Dellovo, Chief Executive Officer. Victor, please go ahead.
Victor Dellovo (CEO)
Thanks, Michael, and good morning, everyone. Our fourth quarter and full year financial results came in pretty much as expected when we last talked with you in August. Recurring revenue, which has been an area we have committed to growing, increased 17% of the total sales compared to less than 5% of sales just a couple of years ago. Overall, we finished the year with more than $30 million in cash and cash equivalents as of September 30, 2024. Our Technology Solutions business generated approximately $12.7 million in sales in the fourth quarter of fiscal 2024. We finished the quarter with plenty of momentum. For example, very little of our fiscal fourth quarter revenue came from our cruise ship customers.
However, towards the end of the quarter and during the current fiscal first quarter, we've seen a pickup in the business, including signing a very large order that should be executed during the next fiscal year. It was the first cruise ship order for professional services for our company in many quarters, and piggybacks on the continued consistent momentum we built in the ocean freight liner market. Our freight liner operation customer continues to add new ships and choose to utilize our managed service offering following the retrofits, which have led to increasing recurring revenue. We continue to see increased demand for our cloud clients who want to migrate the consumption of these services to our cloud group. We also have a dozen active cloud-based projects to accommodate the growth.
We continue to invest in people and process to provide managed service to assist our clients with the day-to-day operations of these environments. The pipeline remains very encouraging, so we are optimistic about our opportunities to grow the overall TS sales, especially the recurring revenue piece during the coming fiscal year. On the HPP side of the business, for the fourth quarter of fiscal 2024, we reported revenue of $0.4 million, mostly from ARIA-based customers. Also, as we discussed in the prior conference call, we were in the process of transitioning our AZT PROTECT sales effort, being led by Greg Fisher, an experienced 20-year OT industry sales veteran who joined us in July of 2024, has redirected the organization to maximize our relationships with Rockwell Automation and other distribution partners.
In the short amount of time, we've made significant progress in building the market for this unique product, and we entered the new fiscal year with great potential from Rockwell and the other distribution partners that primarily serve the middle market OT customers, which tend to have shorter sales cycles than the larger OT organizations. Our internal team will continue to address the large individual corporate OT buyers, with the sales cycles extending up to 18 months while they work closely with the distributors to build a short-term revenue from the middle market customers. An example was a deal we announced with the Fortune 500 electric energy producer that selected ARIA Cybersecurity AZT PROTECT to protect its critical OT infrastructure from malicious cyberattacks. This was the first order of many to come, as it will be a few thousand endpoints over the next three years.
We will assist with the rollout as fast as the customer will allow. We believe this approach will result in a noted upturn in AZT PROTECT sales in fiscal 2025 unfolds. Working with Rockwell Automation and other distribution partners, our sales team has quickly expanded the leads for AZT PROTECT to over 100. Many of these leads were generated from the Rockwell Automation Fair back in late November of 2024, but Gary Southwell, our Vice President and General Manager of High Performance Products, presented an in-depth view of the latest attack techniques and their financial impact. Gary's presentation was one of the show's hits and was a major reason why we generate so many leads from our participation. We also had a booth at the American Petroleum Institute show for oil and natural gas in Houston, where we began a relationship with several large companies.
We further expanded AZT PROTECT's awareness in the market by attending the Industrial Control System Security Week show in Atlanta. While we work to convert the leads generated from these activities into AZT PROTECT sales during the fiscal 2025, we will be supporting additional regional trade shows events with our distributors throughout the year. I strongly believe the interest we are generating at the trade shows is fostered by nine major industry awards from AZT PROTECT, which has received since its launch, including the winner of the Application Security category at the 2024 Fortress Cybersecurity Award presented by Business Intelligence Group. Our efforts to sign new distributors and gain new customers have also benefited from the July CrowdStrike update failure that exposed the risk continuous cloud updates can have on critical OT applications, including industrial automation industry control systems.
There is a recognition from the industrial automation vendors and the distribution channels that the traditional IT-focused endpoint protection methodologies were not meeting their requirements. We believe companies using AZT PROTECT protection capabilities can prevent zero-day malicious code from taking critical systems down out of the box without having seen it before and then relying on cloud updates to block such attacks. We've proven this capability in the field under real-life operational circumstances. This alternative approach to protect industrial control systems is being received as welcome news by Rockwell distributor partners. The Rockwell show was the mechanism needed to bring this news into the ecosystem. From there, we believe we can expand into other markets. We have one agreement already completed and three others in process with top-tier U.S.-based Rockwell distributors, allowing our U.S.
team to work directly with the distributor sales teams to map out target accounts to approach together. In summary, when we consider AZT PROTECT market momentum in the emergence of the Rockwell partnership, the growth of the managed service business, and the pickup in the cruise lines, we have a potential to return growth during the fiscal 2025. With that, I will now ask Gary to provide a brief overview of the fiscal fourth quarter financial performance.
Gary Levine (CFO)
Thanks, Victor. For the fourth quarter ended September 30, 2024, we reported revenue of $13 million compared to revenue of $15.3 million for the fiscal fourth quarter ended September 30, 2023. Revenue was relatively flat compared to 2024's fiscal third and second quarters. Service revenue represented $4.4 million of overall sales compared to the year-ago service revenues of $4.3 million. Gross profit for the three months ended September 30, 2024, was $3.7 million for 28.4% of sales compared to $5.2 million for 33.8% of sales, reflecting a higher percentage of product sales. Gross margins on our service revenue increased 160 basis points from last year's comparable figures.
The company reported a net loss of $1.7 million, or $0.18 loss per common share for the fourth quarter ended September 30, 2024, compared to net income of $1.4 million, or $0.15 per share per diluted share for fiscal fourth quarter ended September 30, 2023. We had cash and cash equivalents of $30.6 million as compared to $25.2 million at the end of our 2023 fiscal year. The robust balance sheet ensures that the company has the resources to implement the AZT PROTECT product offering and other growth strategies. During the fourth quarter of 2024, the company repurchased 2,800 shares of stock at a total cost of $34,000. And the board of directors has approved the payment of a $0.03 per share quarterly dividend to shareholders of record at the close of business on December 27, 2024, payable on January 15, 2025.
For the fiscal quarter, our engineering and development expenses were $793,000 compared to $705,000. The increase was for outside consulting and stock compensation. Our SG&A was $5.5 million compared to $4.8 million in the year-ago fiscal fourth quarter. The increase was based on increased legal, audit, and tax and recruiting expenses. For the full year ended September 30, 2024, revenue was $15.2 million compared with revenue of $64.6 million in the prior year. Gross profit for the fiscal year was $18.9 million, or 34.1% of sales compared to $21.9 million and 33.9% of sales, with the decline largely attributed to product mix. We reported a net loss of $0.3 million, or $0.04 per diluted share in the fiscal year ended September 30, 2024, compared to the net income of $5.2 million, or $0.55 of income per diluted share for the fiscal year ended September 30, 2023.
With that, I will turn it over to the operator to take your questions.
Operator (participant)
Thank you. At this time, we'll be conducting our 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 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 pull up your question. Thank you. Our first question is coming from Joseph Nerges with Segren Investments. Sir, your line is live.
Joseph Nerges (Managing Director)
Morning, guys. How are you today?
Victor Dellovo (CEO)
Good morning, Joe.
Joseph Nerges (Managing Director)
Just one quick accounting point here. Gary, last year, I think you mentioned in our fourth quarter that we had a credit of $2.1 million for an employment retention credit in our reporting of the fourth quarter of last fiscal year. So obviously, that number, and when we're comparing fourth quarter this year versus fourth quarter last year, that credit didn't fall into this year. So that's a considerable number.
Gary Levine (CFO)
Absolutely. Yes.
Joseph Nerges (Managing Director)
I'll go on, not to your question, but we talked about last year, Victor, quite a bit of what we call proof of concept. And I realized the trade shows that you referred to were very recent. In fact, we were in one last week, I believe, in Oman.
Victor Dellovo (CEO)
Correct.
Joseph Nerges (Managing Director)
But the Rockwell was last month, and then the Atlanta show, I think, was the month previous, whatever. So I'm assuming there's an enormous amount of leads come out of all those shows. But do we have any proof of concepts? Have we started testing any of these companies or even prior to where are we at today with testing? How many people are out there? How can I say, testing AZT PROTECT today?
Victor Dellovo (CEO)
Yeah. From the shows, the one for Rockwell, it was right before Thanksgiving, and then you had Thanksgiving, and then it's literally only been like 10 business days that we've been able to contact those. But yeah, there's been a lot of conversation. But the one that was overseas, we actually are starting a POC, believe it or not, on Sunday. That happened already just in a week. So yeah, there's been a lot of activity, a lot of conversations, and a lot of people like the POCs will start after the new year. They're kind of already on vacation mode. But there's been a lot of good conversations and a lot of things that we have to follow up on the new year.
Joseph Nerges (Managing Director)
Yeah, but even prior to that, Victor, we've had proof of concepts ongoing even from earlier this year.
Victor Dellovo (CEO)
Oh, yeah, and those will continue. I think maybe I misunderstood your question, but I thought you meant new just from those recent shows. But yeah, we have probably more than a dozen POCs going on in various stages. The one that we closed with the energy company recently, that was over a year POC, and we finally got awarded. And there's some other that we're waiting. The POCs are done, and now we're just waiting either for budgets or we're waiting to see if we were the last one standing in the POCs. And a lot of them had said to us that decisions will be made in January. I don't know if that's true or not, if it moves, but we are waiting for a couple very promising things in January. So hopefully, they come through.
Joseph Nerges (Managing Director)
Just to clarify, you've made PRs on this before, but we have three Fortune 500 companies now that are utilizing AZT PROTECT: a chemical company, the power company that you just referred to, and then the pharmaceutical company that we announced earlier this year, as well as the government, the Western intelligence agency that are utilizing AZT PROTECT. So we're not talking about small customers here that have looked at it and approved it. I just want to clarify that.
Victor Dellovo (CEO)
And hot off the press is this, just keep your eyes out. There'll be something coming out early next week on another nice win. So just give you an update.
Joseph Nerges (Managing Director)
All right. All right. I appreciate that. And one other point on the stock buyback, I realize 2,800 shares. All I'm saying is I think you guys and the board ought to get maybe slightly more aggressive. I know we have a little more volume in the shares now than we did a year ago. So we can buy more shares under the market conditions. But I would think that you guys should be seriously considering maybe upping the amount of shares that can be repurchased under the program. And I'll move on to somebody else's questions. Thanks again, guys.
Victor Dellovo (CEO)
Thanks, Joe.
Operator (participant)
Thank you. Our next question is coming from Will Lauber with Visionary Wealth Advisors. Your line is live.
Will Lauber (Partner and Senior Wealth Management Advisor)
Yeah. Guys, just so people can realize and help us get a handle on how much money you guys are putting into this AZT effort for hopefully a huge payoff down the line, what would the earnings have been that division for this year?
Gary Levine (CFO)
But it was a loss. So I mean, we've got.
Victor Dellovo (CEO)
No, you said if you took out AZT, if it was just TS, it would.
Will Lauber (Partner and Senior Wealth Management Advisor)
Yeah.
Gary Levine (CFO)
Oh, yeah. Yeah. Definitely. It would be profitable.
Victor Dellovo (CEO)
It would be very profitable. Yes. Yeah. That's one thing that I have to understand. The TS is doing really, really well. They're the cash cow that's paying for all this R&D for AZT. And to grow the cash position and to have a true startup and only have a small loss for the whole year. Like I said, people want earnings. They want dividend. They want cash growth. They want everybody. AZT is truly a startup. We have to build a whole food chain for distribution. There's a lot going on right now. But now they're in building the sales team, getting partners. There's a lot going on on that side of it. And then we had Myricom sales last year. And unfortunately, because that product was over 20 years old, the big distributor or manufacturer, actually, that was building the boards no longer will build the boards.
So all that Myricom business from last year went away. There's some pieces and parts that we still sell, but they're minimal now. So if you really look at it, where we were and where we are, and to Joe's point, our big customers that we have closed are all Fortune 500 customers. And that's where a lot of the testing, it took a lot of time through the POCs. But now we have four customers that are using it that are happy.
Now we're just, like I said, building out the food chain to try to get in front of more people, building our name recognition, which is, like I said on a prior call, is one of the things that I think is just because of our size and our name. It takes a lot more effort to get that sale over the fence just because we're competing with some other multi-billion-dollar companies in this space.
Will Lauber (Partner and Senior Wealth Management Advisor)
Okay. So could you guys put an approximation on it? I mean, could we have earned $1 a share?
Victor Dellovo (CEO)
Yeah. More than that. Yeah.
Will Lauber (Partner and Senior Wealth Management Advisor)
More than $1 a share?
Victor Dellovo (CEO)
Mm-hmm.
Will Lauber (Partner and Senior Wealth Management Advisor)
Okay. And my next question was the increase in your recurring revenue as a percentage is pretty impressive. When you look out, say, three, maybe five years down the line, what percentage do you think that could be? And what's kind of your internal goals?
Victor Dellovo (CEO)
If we could double again in the next 24 months, that would be something that we'd be proud of. And that's where we're very, very focused on that recurring revenue piece of it, especially in the cloud, the Microsoft business that we're continuing to grow, the engineers, the support staff, and the sales staff along with it. And then the MSP, if we could get into the cloud play, the MSP usually comes after that. So they're definitely adjacent to each other. If we can get one, we usually get the other. So yeah, our goal is to grow that as fast as possible. There's no limits on what we want to do, but at least a 10%-15% growth minimum year-over-year, if not more.
Will Lauber (Partner and Senior Wealth Management Advisor)
Okay.
Gary Levine (CFO)
To answer your question, it would be about $0.56 per share.
Will Lauber (Partner and Senior Wealth Management Advisor)
Okay. All right. Thank you.
Gary Levine (CFO)
Yeah.
Operator (participant)
Thank you. Our next question is coming from John Crotty, who is a private investor. Your line is live.
Hi. Thanks for taking my call. I want to just say congratulations on the F500 energy company, 18 months is a long POC. I understand I've been involved with a few, and good job, especially having the patience, and for us investors, we need to have the patience of a dead person, so we're with you right along with it. Anyway, you've talked a lot about the Rockwell, and I read a lot, and that really seems like a great partnership with lots of leads, but I want to talk about the other partnerships you have. You have the large one in Australia. You mentioned there was a smaller one in the Middle East, and then we had a larger one that was out in the U.S., I believe, on the East Coast with a lot of clients.
Could you give us any feedback on that in terms of, are they running proof of concepts? Do they have a large pipeline or any type of info like that?
Victor Dellovo (CEO)
The partner in Australia, they're not the largest partner, but we do have some POCs going on with them. They are good-sized opportunities. And they're not in the commercial sector, so things do take time there, but they are progressing. And yeah, and the partners that we're focused on right now with the Rockwell is because we're really focused on that OT space and because we have the approval from Rockwell as a certified partner, that's kind of where our focus has been because getting into some of the other manufacturers takes time. Rockwell took us almost two years to get approved inside as a certified partner. So we're working with some of the other big manufacturers. We're in different stages of getting approval as a certified partner that can work inside their stack. So yeah, everything is moving just at different paces, just depending on how fast.
And in some of these large organizations, unfortunately, people leave, move, or get fired. And sometimes you take two steps forward, and then someone leaves, and you got to re-educate the new person. And we've seen that happen in some of these large manufacturing companies.
Yeah. I agree. Go for the low-hanging fruit because they're pushing you through. I agree. I also want to talk about what you mentioned a couple of calls ago, that some of the government win that you had, they had many other divisions or departments or areas that were waiting for budgets to add it in. Is anything moving along with increasing any of the opportunities with existing customers, especially like you had mentioned with the Western intelligence?
Yeah. There's another opportunity I think that has moved forward. Timing on that, I'm not exactly sure, but there is a deal that I feel like in the next 90 days, we're hoping that will come in, and that's all I can say about that.
Okay. No, that's fair enough. And I know you have a lot of non-disclosures you got to be cautious with. No, that was it. That's what I wanted just to follow up. Everything else read through, and I liked the response. And I liked $0.56 a share on just the TS side. So that's good. All right. Thank you so much. Keep up the good work, guys.
Thank you.
Operator (participant)
Thank you. Our next question is coming from Douglas Johnson, who is a private investor. Your line is live.
Yes. How large are these AZT contracts you have with these three Fortune 500 companies?
Victor Dellovo (CEO)
I can't disclose exactly, but one of them is in the millions. The other ones, as I mentioned in the script, we're looking to get adopted inside their infrastructure. Some of these were what was left in the current budget, and then we'll roll out. I mentioned the big energy. They have thousands of systems that they told us it could take up to three years to roll them out. We're hoping to speed that up by us doing or assisting with the installation, but there are thousands of endpoints, and how they roll out and how fast is kind of up to the customer.
Okay. Thank you.
Operator (participant)
Thank you. Our next question is coming from Jeffrey Stevens with Long Pond Capital. Your line is live.
Jeff Stevens (Analyst)
What's going on, guys?
Victor Dellovo (CEO)
How are you doing?
Jeff Stevens (Analyst)
Yeah. Good. Good. I looked back a couple of years ago. You guys had a relationship with NVIDIA, with ARIA. You guys did a little announcement with them that their hardware and their software. Is it possible that have you had conversations with them for AZT?
Victor Dellovo (CEO)
Yes. We definitely have had conversations with them. That was one of the examples where some of the powers that be that we were talking with kind of moved on. So we kind of had to start from scratch a little bit on some of the contacts there. But there's definitely conversations. They're not moving as fast as we would like, but we do have some relationships there. And we're talking more in their robotic area. That's kind of where we want to focus on AZT in that area. What comes from it, I can't say, but that's kind of our goal and our focus with those guys.
Jeff Stevens (Analyst)
All right, well, thank you so much.
Victor Dellovo (CEO)
Thank you.
Operator (participant)
Thank you. Our next question is coming from Brett Davidson, who is a private investor. Your line is live.
Gary, Victor. Happy holidays.
Victor Dellovo (CEO)
How are you, Brett? Same to you, Brett.
I'm doing good. I'm going to limit it to one question. It's just going to be a multi-part. I'll link it with "and. Is there any legacy stuff at all going on in the E-2D program? And can you give a little color on those UCaaS contracts that were announced in the last quarterly earnings release?
There is going to be a little E-2D next year. It was supposed to be in this quarter. They moved it. So we're thinking it's going to be Q1. It could move out, but that's coming, as you know, towards the end. It is at the end of its career. But we believe there'll be one more next year and in 2025. And then there'll be some pieces and parts. We're guessing. We're not sure exactly. And then on the UCaaS, we continue just to grow that business, bring in new clients. There's been a few that we sold a deal last quarter, but it took some time to implement, and we turned on the billing in this quarter. So it'll continue to grow over time. And these are usually three-year contracts.
Got it. And so that's this quarter and any headway since then?
Yeah. No, the pipeline looks pretty good on UCaaS, and we're constantly bringing on one or two customers consistently every quarter of all sizes. And it's a monthly recurring, so it's not like you get a big pop. You get whether it's $5,000 or $20,000 or whatever the number may be. It's on a monthly basis. Like I said, we're focused on our recurring revenue at this stage of the game. We'll still sell the product and services as we do. And I mentioned one of the cruise lines finally gave us a nice close to a $1 million professional service contract that will roll out over 2025. Yeah. We're focused on either professional services because of high margin or any of the recurring revenue. And we try to do multi-year deals on pretty much everything we do. Microsoft is a little different.
You either get one year or monthly, but that's because it's a program that they offer.
Got it. Well, thank you very much.
Yep. Have a good one. Happy holidays.
Thanks. Same to you.
Operator (participant)
Thank you. Once again, if there would be any final questions or comments, please indicate so now by pressing star one on your telephone keypad. Okay. As we have no further questions in queue at this time, I'd like to hand the call back over to Mr. Dellovo for any closing comments.
Victor Dellovo (CEO)
Thank you. As always, I want to thank our shareholders for their continued interest and support. Good things are happening at CSPi and AZT PROTECT in generating more interest and gaining more and more momentum in the market. The increased activity we are experiencing is exciting, and we look forward to updating you on our progress in February. Until then, our best wishes for a healthy, happy holiday season. Thank you.
Operator (participant)
Thank you, ladies and gentlemen. This concludes today's call, and you may disconnect your lines at this time. And we thank you for your participation.