Cantaloupe - Earnings Call - Q1 2020

Transcript

Speaker 0

Good morning, ladies and gentlemen, and welcome to the USA Technologies First Quarter Fiscal Year twenty twenty Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Monica Gould, Investor Relations for USA Technologies.

Speaker 1

Thank you, Whitney, and good morning, everyone. Welcome to the USA Technologies First Quarter Fiscal twenty twenty Earnings Conference Call. With me on the call this morning are Don Laiden, Chairman and Interim Chief Executive Officer and Glenn Gould, Interim Chief Financial Officer. Before we begin today's call, I would like to remind you that all statements included on this call other than statements of historical fact are forward looking in nature. Actual results could differ materially from those contemplated by the forward looking statements as a result of certain factors including but not limited to business, financial, market and economic conditions.

A detailed discussion of the risks and uncertainties that could cause actual results and events to differ materially from such forward looking statements is included with our filings with the SEC and in the press release issued earlier this morning. Listeners are cautioned not to place undue reliance on any such forward looking statements, which reflect management's view only as of the date they are made. USA Technologies undertakes no obligation to update any forward looking statements whether as a result of new information, future events or otherwise. This call will also include a discussion of certain non GAAP financial measures that we believe are useful for, among other things, evaluating USA Technologies operating results. These non GAAP financial measures are supplemental to and not a substitute for GAAP financial measures such as net income or loss.

Details of these non GAAP financial measures, a presentation of the most directly comparable GAAP financial measures and the reconciliation between these non GAAP financial measures as well as the most comparable GAAP financial measures can be found in our press release issued earlier this morning, which has been posted on the Investor Relations section of our website at www.usatech.com. And with that, I'd now like to turn the call over to Layden. Don?

Speaker 2

Thanks, Monica, and good morning, everyone. Thank you all for joining today's call. Having just completed my third week as CEO, I've now had the opportunity to meet with many of our top customers and employees. These meetings have been very productive and have confirmed that our customers are pleased with the U. A.

T. Solutions they have deployed, which have enabled them to increase revenue and lower their operating costs. Through our discussions, we've also identified some areas for improvement to help us do an even better job serving our customers and I'll discuss some of those later in my remarks. First, I'd like to review a few key highlights of our first quarter of fiscal twenty twenty. We are pleased to report a solid first quarter performance led by a resumption of strong revenue growth both year over year and sequentially.

Total first quarter revenue was a record $42,100,000 reflecting a 26% year over year and 10% sequential growth from the fourth quarter of fiscal twenty nineteen. Revenue growth was driven by the addition of 900 new customers and 46,000 net new connections, which bring our total connection count to over 1,200,000. Importantly, we continue to have 100% customer retention. Our unique value proposition remains compelling to customers both large and small and this is reflected in our continued ability to maintain our industry leadership position serving almost 19,000 customers while winning new business and enhancing the competitiveness of our offerings. For example, U.

S. A. T. Was recognized by retail CIL Outlook in March as a top 10 retail payment consulting services company for 2018 and in August as a top 10 retail kiosk solution provider further validating the leading innovations we offer in self serve retail and how our best in class end to end payment and logistics system is enabling operators to connect with consumer preferences and manage, simplify and optimize their business. We continue to expand into additional verticals outside of our core vending market and to that end, we signed two important supply agreements this year.

First, we are working with CSC ServiceWorks to equip CSC's air vending machines for tire inflation with USAT's state of the art ePort connection, cashless technology platform and upgraded technology on other machines. We also established a supply agreement with a large amusement operator to deploy our solution in the arcade game space. Finally, we announced a partnership with GNG Marketing and Sales, which will allow GNG to resell USAT's premier payment technology and enterprise service to its national customer base of over 2,000 unattended retail operators. Throughout the year, we have also worked to expand our seed market software offering, which enables owners and operators of micro market companies to benefit from one standard set of tools, including simplified route management, efficient warehouse pre picking and a single reporting interface and cash accountability. As we look ahead, we expect the value proposition we provide to customers to strengthen as seed markets and delivery products mature.

USAT is the clear solution provider for operators looking for a single platform to help them manage all lines of their business, vending, OCS and markets. We're also in a position to enable operators to diversify and evolve from being vendor operators to truly being unattended retailers. To that end, I'd like to speak with you about the path forward and our expectations for 2020. First, we have launched a series of initiatives to reduce our operating expenses and have set a target of reducing our selling, general and administrative expenses by $8,000,000 annualized over the next twelve months. We plan to reinvest a portion of these cost savings into enhancing our customer service organization.

Based on the actions we have taken so far in the second fiscal quarter, we've achieved $2,000,000 in annualized cost savings. These cost savings have and will come from a variety of efforts including a reduction in professional service fees, the renegotiation of our payment processing terms, the implementation of sales tax collection and improved management of our hardware supply chain. Additionally, we have retained Michael Wassifer, who is the former CFO of Ingenico North America, Worldpay Investor as Chief of Staff to me to work with our senior management on a consulting basis to identify additional cost reduction opportunities and to assist in the execution of those initiatives. With respect to our efforts to improve our customer service organization, we have promoted Maeve Duska to Chief Marketing Officer reporting directly to me. Maeve's deep industry experience and strong customer relationships make her the clear choice to lead our efforts in communicating with our customers and the market.

I'd like to speak briefly about our listing on NASDAQ. As you know, on September 24, we disclosed that the NASDAQ hearings panel notified us that it issued a final delisting determination for USAT securities as a result of our failure to regain compliance by September 23. As such, our securities were suspended for trading on NASDAQ on September 26. We requested an appeal and we are awaiting a determination which we expect to receive before the end of the year. If our appeal is not granted, we will then refile for listing on NASDAQ, which could take up to ninety days.

As such, we expect to be back on the NASDAQ by the March. We realize that this delisting has created liquidity challenges for our investors and we appreciate your continued support. We are also planning for our Annual Shareholders Meeting, but before we do so, we want to ensure that we are able to address all of the items that NASDAQ may require us to remediate and get back enlisted on NASDAQ. We are awaiting additional clarity from NASDAQ on these remediation actions and we'll schedule the annual meeting as soon as we have a clear sense of the items that we will need to address. Finally, in order to further strengthen our balance sheet, we plan to sell lease receivables, which would generate 8,000,000 to $10,000,000 in cash proceeds to the company.

We expect this transaction to close late in the second quarter or early in the third quarter of fiscal twenty twenty. With respect to the outlook for 2020, we now expect revenue we continue to expect revenue to be between $165 and $175,000,000 and expect to add 170,000 to 190,000 net new connections this year. Based on the strong performance in the first quarter, I would expect that we would be at the top end of both of those ranges. Adjusted EBITDA was lower than expected in the first quarter of fiscal year twenty twenty, primarily because the company determined that it could only add back a portion of the increased professional service fees related to its restatement audit. Despite the first quarter loss, we continue to believe that we will produce between 10,000,000 and $11,000,000 in adjusted EBITDA for the full 2020 fiscal year.

Although I would expect that we would be at the low end of that range. With that, I'll now turn let me just add one other thing. As you probably also saw the board made a determination on Friday to accept Al Moshener's resignation and retirement as a director. Al has provided tremendous service to the company in serving as a Board member and over the past year as its Chairman. Personally, I will very much miss Al's advice and guidance and the company will also miss his wise counsel.

Upon accepting his resignation, the Board asked me to serve as Executive Chairman, which I've agreed to do. And Bill Shoch has agreed to serve as our Lead Independent Director. So let me just reiterate for a moment my key priorities as I've now had three months to set a direction at least for the next thirty to sixty days for the company. The first and most important priority is to get back on NASDAQ. The second and almost as important is to lower our operating expenses so that we can better serve our customers and our investors.

Third, we will continue to expand into new verticals and I believe that based on the initiatives that we have right now in the pipeline, we'll see some additional new verticals added this quarter. Fourth, we need to continue to wow our customers with even better customer service. And fifth, we're going to improve our already strong capital position through the sale of receivables. With that, I'll now turn the call over to Glenn to provide details on our first quarter results.

Speaker 3

Thanks, Don, and echo the thanks to everyone for joining the call. Good morning. I will start by providing an update on some of the key financial highlights since our last earnings call. Certainly recognize that it's been some time since our last earnings call. We appreciate your patience.

We're excited that we can now dialogue with you in this way and have these communications. After the financial highlights since our last earnings call, I'll review our financial and operating performance for the 2020 of our fiscal year 2020, and I'll conclude with an outlook for the full fiscal year 2020. In October, we reported our financial and operating results for the fiscal years 2018 and 2019, and we completed our restatement of certain select financial data for fiscal years 2015, 2016 and 2017 and quarterly periods from September 2016 through March 2018. As a result of these filings and our Q1 report that will come out later today, we're pleased to report that we are now current on our periodic filing requirements. We've made a number of improvements to our control environment.

We have enhanced our internal compliance through the creation of a compliance committee of the Board of Directors and hired a Chief Compliance Officer who reports directly to the committee. These additions have provided great value to our company already, and we continue to seek improvements in these areas. Additionally, we took significant steps in improving our financial position. Subsequent to quarter end, we entered into an equity financing and debt arrangement with Antara Capital that will support our operating activities. Under the agreement, we received approximately $20,000,000 from the sale of our common stock in a private placement, and we entered into a commitment for a $30,000,000 senior secured debt facility.

There were three primary reasons for this financing from our perspective. We wanted to replace the capital that we had spent on the investigation, the restatement and the audit fees. We wanted to retire the JPMorgan debt. And we wanted to return the company back to our strategic growth plans, which, as Don has described, we are well underway of doing. So from these perspectives, we are able to achieve what we set out to do with this financing.

Looking ahead, we plan as Don has mentioned, we plan to further strengthen our balance sheet by selling a portfolio of our lease receivables. As Don mentioned, we expect this to generate approximately 8,000,000 to $10,000,000 of additional capital for us, and we expect this will close late in Q2 or early Q3 of our fiscal year twenty twenty. Moving on to our fiscal first quarter results. We're pleased to deliver record revenue during the first fiscal quarter. As Don has mentioned, the total revenue grew 25.7% year over year, to 10.3% sequentially over last quarter to $42,100,000 License and transaction fee revenue increased 16.8% year over year to $33,800,000 and accounted for over 80 of our total revenue in the first fiscal quarter.

Equipment revenue increased 82.7% year over year to $8,300,000 We continue to make strides in growing our connection base and customer count as well as sell a diversified suite of services to an expanded customer base. As Don mentioned, we added 46,000 net new connections in the first quarter, bringing our total to over 1,200,000 connections, up 16% compared to the same quarter last year. We also added, as Don mentioned, 900 new customers, ending the quarter with a total of 20,300 customers, an increase of 19% compared to the 17,000 customers in the same quarter last year. Turning to margins. Our gross margin of 23.9% decreased from 32.2% in the first quarter of fiscal year twenty nineteen.

The decrease was primarily related to the lower equipment margin due to a large equipment sale made to a strategic customer, that's the CSC customer comments. It's a very large deal. As we've said in the past, our strategy is to use equipment sales as an enabler for driving longer term higher margin license and transaction fees. On our license and transaction margins of 36%, those remain consistent compared to the same period last year. Looking forward, we expect our L and T margins to remain in that same range.

We are exploring improvements to our cost structure there and expect to have improvements, but we expect those improvements over the next two quarters to be modest and guide to the same 36% the 35% range for our L and P margins. Our equipment margin was 25.7 compared to I'm sorry, negative 25.7% compared to negative 7% last year due to the strategic large equipment order we made during the quarter I mentioned above. Those our margin on the equipment side will be modest. We do expect them to be better than the negative 25.7% experienced in the first quarter, but expect them still to be in the zero to low single negative single digits going forward in fiscal twenty twenty. As Don mentioned, our adjusted EBITDA was lower than expected, came in at negative $7,500,000 compared to negative $2,100,000 I'm sorry, positive $2,100,000 in the same period from the prior year.

The primary drivers of that variance, as Don mentioned, was the increased professional service fees we recognized in our restatement and auto project as well as the difference in our equipment margin as we've referenced. On the SG and A side, SG and A expenses for the first quarter were $18,200,000 percent of revenue compared to $9,500,000 or 28.2 percent of revenue over the prior period. Our SG and A expenses increased year over year primarily due to the increase professional service costs related to the company's restatements and audit activities. As Don mentioned, we have a number of initiatives to progress to reduce our operating expenses. And with the completion of our filings, we expect the professional services expenses to decline substantially in the second fiscal quarter.

Overall, we expect SG and A expenses in fiscal year twenty twenty to decrease as the company has completed our multi period audit and our restatement project. Non GAAP net loss was $8,000,000 or negative $0.13 per share compared to non GAAP net income of $3,000,000 or $01 per share at the same period last year. Looking at the balance sheet. Our cash balance at the end of the first fiscal quarter was $25,500,000 compared to $68,300,000 at the end of the first fiscal quarter last year. This does not include proceeds from the Antara transactions, which were affected after the close of the quarter.

Including these transactions, our cash balance grew to $42,200,000 as of November 1. Net working capital totaled negative $9,700,000 at the end of the first quarter compared to $2,800,000 at the end of the first quarter of last year. Note that working capital has also improved since our financing transaction with Subsequent to quarter end, we drew $15,000,000 on our term facility with Antara and used the proceeds in part to repay the outstanding balance on our revolving line of credit with JPMorgan of $10,000,000 and associated transaction expenses. The JPMorgan debt is now completely retired. Turning to our outlook.

We as Don mentioned, we are reaffirming our guidance for fiscal year twenty twenty. We expect our fiscal year twenty twenty revenue to be in the range of $165,000,000 to $175,000,000 and we expect to add between 360,000 net new connections to our service. In spite of our Q1 miss on our adjusted EBITDA, with our deliberate focus on our cost structure and our SG and A spend, we believe that adjusted EBITDA will be in the range of $10,000,000 to $11,000,000 So as Don mentioned, we are guiding to the lower end of that range due to our Q1 miss. Overall, this is the completion of an enormous amount of work. I'd like to thank our entire finance team, our legal and accounting partners for their immense efforts that have gone into this process.

We are delighted that we are back on file and again that we can engage in these conversations with you again. Looking ahead, we believe that our scalable financial model through our recurring revenue streams, improved financial position and enhanced compliance controls position us very well to capitalize on the growth opportunities ahead of us and the strategic plans that we are putting into place and acting upon. This concludes our financial update. I'll turn the call back to Don for closing remarks. Thank you very much.

Speaker 2

Thanks, Glenn. Before I open up the line for questions, I'd like to briefly address the public statements made by one of our shareholders, Hudson Executive Capital, to the effect that intends to nominate several individuals to stand for election to the Board of Directors. As you have seen from the press releases issued by the company, members of the Board and management have engaged in good faith discussions with Hudson and we continue to be open to a constructive dialogue. The purpose of today's call however is to discuss our earnings and as such, would ask that you keep your questions confined to our earnings for the quarter. With that, we can open up the line for questions.

Speaker 0

Your first question is from George Sutton.

Speaker 4

Good morning. This is Adam on for George. Thanks for taking my questions. Don and Glen, I just wanted to get a little clarification. You talked about reducing OpEx but as well adding different verticals.

Could you go into a little more detail about the balance there between growth and profitability?

Speaker 3

I mean, we have focused on both areas. Certainly, with our cost structure and our struggle historically of being positive on our operating income, we have immediately looked at some improvements that we can readily make on our SG and A line. Now that is a focus of ours, but at the same time, the improvements that we are seeking to make are in no way impacting our ability to grow. We have very deliberate strategies in place that are being executed to help us explore further expanding our services into our white space in our market as well as, as Don has mentioned, explore other vertical adjacencies that we have. So these are in process.

We continue to pursue them, but they're really dual paths that we are trying to make improvements in both areas. And it's certainly possible to do.

Speaker 2

Let me just add some color to Glenn's answer and address part of the implication, I think, your question that moving into new verticals is a costly proposition as we expand the capabilities of our product. We have had initiatives to be able to address additional vertical markets for some period of time. And so what we're now seeing is the conclusion of that product development and sales cycle generating some returns on investments made in earlier periods. And in addition, we believe that the vertical markets that we can continue to attract will require a relatively low product investment to enter into those markets. So those are the markets that we're pursuing most aggressively.

Speaker 4

Great. Thank you. And then in terms of getting relisted on the NASDAQ, what items are you already aware of? Where do you feel that you sit in that process so far? And then does that also include holding an annual meeting?

Speaker 2

So let me answer the first part. We are not aware of the remediation requirements or conditions that NASDAQ may impose. We're still going through the appeal process and we have to complete the appeal process before we can begin relisting. We are to some extent, we're in a little bit of uncharted waters, and so we don't know exactly what NASDAQ may require. As you know, however, NASDAQ did impose a number of conditions during the remediation process, and we suspect that they will have additional things that they may require us to do.

And to the answer to your last question is yes, I expect that the NASDAQ requirements will include holding an annual meeting. We just want to make sure that we understand what other requirements may be imposed that may impact the annual meeting so that we're prepared to address those at the same time and get us back on NASDAQ and provide liquidity back to our investors.

Speaker 4

Great. And then just going through this process, especially considering other vertical markets, has there been any discussion of potential M and A?

Speaker 2

Well, if you know my background, you know that I've spent my entire career doing deals. And so I think about doing deals in my sleep. And I suspect that we will continue to have conversations internally and externally about whether that's an opportunity for the company.

Speaker 4

Great. Thank you.

Speaker 0

Your next question is from Jason Schmidt.

Speaker 5

Hey, guys. Thanks for taking my questions. Just wondering if you could comment on what you're seeing from competitive landscape? And more specifically, if you've seen your competitors become more aggressive in pricing over the last year?

Speaker 2

Yes. The competitive market remains very strong. We are clearly the leader in vending. But particularly in some other vertical markets, we do see very strong competition in those markets and we see very strong competition in the global markets as well.

Speaker 5

Okay. And can you just comment on how you're thinking about the cross selling opportunities for the Cantaloupe offering today?

Speaker 2

Sure. Those efforts have been ongoing. We intend to continue those efforts frankly, expand our sales resources to take advantage of those.

Speaker 5

And the last one for me and I'll jump back into queue. Your comments on expanding into additional vertical markets, what specific markets outside your core are you most excited about or you think provide the biggest opportunity for the company?

Speaker 2

Yes. I think that we're continuing to see strong growth in the micro market area. And I think that our software solution is particularly well suited to that market and we need to continue to find strong partners so that we can deliver our software solution into that space. I do think that the entertainment space, which we closed our first deal in is has very strong opportunities. And when we also think that a number of our operators have a position in other vertical markets that we ought to be able to cross sell into those vertical markets, and we're looking very hard at that.

Once we have a customer relationship to expand the wallet share we have with those customers is a high priority for us.

Speaker 5

Okay. Thanks a lot.

Speaker 0

The next question is from Mike Latimore.

Speaker 6

Great. Thanks. Yes. Nice to have an earnings call again. Very good.

So on the SG and A comment, I guess, I think you talked about getting the $8,000,000 in annualized savings. So should we think about that kind of 18,200,000.0 SG and A going to 16,200,000.0 Or is that or is the comment sort of incremental to the professional services changes that might occur?

Speaker 3

I would think that's incremental, Mike. I think the $18.2 was kind of a high point with our audit restatement project and the amount of cost that we had to incur to go through that project. Those costs will come significantly down. Those are outside of the $2,000,000 that Don was mentioning. Keep in mind that the $2,000,000 is annualized.

So I don't expect that's just a straight $2,000,000 that will come off as the SG and A line in Q2. Will be benefit from the changes we're making. Largest downturn that you'll see from Q1 to Q2 is a reduction in professional service fees, primarily related to our audit activities.

Speaker 6

So it sounds like, just to be clear, the $8,000,000 in annualized savings is are you saying there'll be incremental savings beyond that as additional professional services come down? I'm just trying to get a sense of where the like where the SG and A line might be by year end, let's say, in the fourth quarter.

Speaker 3

So I think quarterly, our run rate is roughly 11,000,000 to $12,000,000 on our SG and A line. Think you'll see that we'll I think it will be a little higher than that in Q2, but we'll get down to that same rate Q3 and start improving on that starting in Q4.

Speaker 6

So then just again, just to be clear, the 18,200,000.0 should be somewhere, what, around 11 exiting the year, 10 or 11?

Speaker 3

By the end of the year? Yes. Yes. I would say by Q4, I think that's a good estimate.

Speaker 6

Okay. Got it. And then on the license and transaction gross margin, it improved from the fourth quarter sequentially. I guess, can you give a little bit of explanation of why that occurred? And then going forward, you talk about it being stable.

I guess, how should we think about the stability there given typically the transaction volumes grow pretty rapidly?

Speaker 3

Yes. So one of the drivers of margin is product mix as we add connections and add our monthly our SaaS software to our connection base. That's our high margin revenue line. And as that product mix, it continues with additional connections to our service that's driving it up. I will say that we have activities in place to pursue cost improvements on this on our licensing transaction fees.

And we expect these dialogues that we're having with our supply chain with some of the services that go into our license and transactioning line of revenue to improve over this year. So with the improvement in the cost structure as well as additional connections with our monthly service fees that we are enhancing and selling into the market, that's what's driving the margin improvement. Got it. Are correct that transaction processing is certainly increasing as well. So that is a dynamic that does impact our L and P margin for sure.

Speaker 6

Okay. And then in terms of the connection guidance for the year, what percent of that would be sort of the cantaloupe, VMS software versus cashless? Or is it all kind of considered cashless? Cashless?

Speaker 3

Well, it's both. It's both cashless and VMS. We have not gone through the exercise of quantifying and breaking out the forecast between the two. To be honest, as we're going forward, we look at our company as one company. And now we have not spent a lot of time bifurcating what revenue is coming from historical Cantaloupe activity versus we're two years beyond the acquisition.

We look ourselves at ourselves as one unified company at this point. To your point, though, we do have these different connections that we sell, and we are seeking to add the VMS type services to our platform. It is a deliberate strategy that we have. We are seeking to add those services to our existing connection base. So that is certainly part of the guidance that you're referring to, Mike.

Speaker 6

Great. And just last one. Do you have the amount, the dollar amount of transaction volumes in the quarter?

Speaker 3

I do not have that at the tip of my tongue. It's just not something I came prepared with. We can get that, though.

Speaker 6

Okay. Thanks a lot.

Speaker 3

Your

Speaker 0

next question is from Chris Kennedy.

Speaker 7

Hey guys, it's Chris in for Bob Napoli. Thanks for taking the question. Any update on your long term margin targets? The prior management team had some targets out there. Any thoughts on those?

Yes.

Speaker 3

So I think, Christian, the previous guidance in this regard that we have sent out is long term range, percent to 35% gross margin overall license and transaction fees, 40% to 45%. I think in the near term, we'll be hard pressed, especially on the total gross margin line to hit that 30% to 35%. I think for the near term, somewhere in the 26% to perhaps 30% as we improve some of the cost structure of our L and T revenue line. Similarly, I think the 40% to 45% is a little aggressive. I think for the near term, I would say 36% to 38% is more realistic.

I think as we continue to look for cost improvements and efficiencies that we are working on, we can perhaps improve that guidance upwards. But in the near term, that's where I see it.

Speaker 7

Okay. And then anything on EBITDA margins longer term?

Speaker 3

Yes. So I think on the EBITDA, the previous regime had guided to 15% to 18. Again, I think that's a little aggressive. If you take our 10% to 11% on $180,000,000 of revenue, that's in the low single digits. I think guiding to the I'm sorry, the high single digits.

I think guiding to 6% to 10% in the near term is probably where I would say we're looking again in the near term. But certainly not long term where I think we want to be. And we're putting in place some strategies to improve that. But near term, I'd say that's where we're at.

Speaker 7

Okay, great. Thanks for taking the question.

Speaker 0

I'm showing no further questions at this time. I would now like to turn the conference back to Don Layden, CEO.

Speaker 2

Thank you and thanks for everybody participating in today's call and for the thoughtful questions. I strongly believe that our ability to make it easy and efficient for customers to adopt and deploy our leading technology continues to provide us with a unique competitive advantage. We remain a trusted brand name known for quality, reliability and innovation and our market leading installed base provides a powerful foundation from which to continue to expand and grow our business. As we look ahead, we're focused on reaching new customers, expanding our footprint within our existing customer base, all while leading the industry in terms of innovation and customer service. I shared with you my five priorities, get back on NASDAQ, lower expense base, continue to expand in new verticals, while our customers with even better customer service and improve our already strong capital position through the sale of receivables.

I think you'll continue to see us do that and execute on those five priorities. Thanks again for joining us today and for your continued support. We look forward to updating you on our progress next quarter. Thanks.

Speaker 0

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.