Insight Enterprises - Earnings Call - Q3 2021

Transcript

Speaker 0

Good day, and thank you for standing by. Welcome to the Insight Enterprises Inc. Third Quarter twenty twenty one Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Thank you. I would now like to hand the conference over to your speaker today, Blinis Bryan, Chief Financial Officer. Please go ahead.

Speaker 1

Thank you. Welcome, everyone, and thank you for joining the Insight Enterprises earnings conference call. Today, we will be discussing the company's operating results for the quarter ended 09/30/2021. I'm Glynis Bourne, Chief Financial Officer of Insight, and joining me is Ken Ramnik, President and Chief Executive Officer. Today, we also welcome Joyce Mullen, President, Insight North America, who will succeed Ken as our President and Chief Executive Officer effective 01/01/2022.

If you do not have a copy of the earnings release and the accompanying slide presentation that were posted this morning and filed with the Securities and Exchange Commission on Form eight ks, you will find them on our website at insight.com under Investor Relations section. Today's call, including the question and answer period, is being webcast live and can be accessed via the Investor Relations page of our website at insight.com. An archived copy of the conference call will be available approximately two hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time sensitive information that is accurate only as of today, 11/04/2021. This call is property of Insight Enterprises.

Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will be referring to non GAAP financial measures as we discuss the third quarter twenty twenty one financial results. When discussing non GAAP measures, we will refer to them as adjusted. You will find a reconciliation of these adjusted measures to our actual GAAP results included in either the press release or the accompanying slide issued earlier today. Please note that unless highlighted as constant currency, all amounts and growth rates discussed are in U.

S. Dollar terms. As a reminder, all forward looking statements that are made during the conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our most recently filed periodic reports and subsequent filings with the SEC. With that, I will now turn the call over to Ken.

And if you're following along with the slide presentation, we will begin on Slide four. Ken?

Speaker 2

Thank you, Glynis. Good morning and thank you for joining us today in what will be my last earnings conference call as President and CEO of Incyte. I'm delighted to hand this responsibility off to Joyce on future calls and I'm confident about Incyte's future under her strong and capable leadership as she steps into the role of President and Chief Executive Officer on January 1. As we all support Joyce in her transition to this new role at Incyte, we remain committed to delivering on our financial objectives and long term priorities. As a reminder, our long term priorities are to continue to innovate to capture share in high growth areas, grow with solutions that drive business outcomes for clients, expand and scale on strategic clients and markets and demonstrate client obsession by optimizing client experience through operational excellence.

Now turning to the third quarter twenty twenty one and operating results on Slide five. We had an excellent quarter driven by 26% top line growth including hardware growth of 36% compared to prior year. We delivered a double digit increase in adjusted earnings from operations up 30% compared to last year's third quarter. Hardware booking trends continued strong throughout third quarter while supply constraints did not ease up as originally anticipated throughout the supply chain. We continue to support our clients by helping them better forecast their IT needs.

We exited the third quarter with elevated hardware backlog above levels at the start of the quarter. We expect about 50% of this backlog will shift in Q4. We're pleased to see the pipeline for future sales continue to build to healthy levels into 2022. Clients continue to focus on business agility and continuity by leveraging the cloud solutions, a trend that increase in pace during the pandemic. Through our deep expertise delivering digital solutions, we've grown sales of both SaaS and infrastructure as a service mid to high digit sales growth for the quarter.

This drove cloud gross profit to 21% of total gross profit, up more than 200 basis points year over year for the trailing twelve months. Over the last eighteen months, we've seen the rapid acceleration of digitalization. IT has gone from supporting the business to becoming the business in many industries. For our clients, challenges arise and growth can be impaired if necessary investments in technology and transformation strategy are deferred or poorly implemented. At Insight, we bring a wealth of knowledge and share best practices that help point our clients in the right direction to reimagine how they work.

And a recent example of this in slide six, we helped the client migrate their on premises data centers to the cloud as part of a shift to digital headquarters. Our client, a food services chain with two fifty locations across The U. S, India and Thailand recognized that eliminating its physical headquarters would require replacing on premises data centers with a cloud solution. Because our client has a long standing relationship with Insight, they knew we offered the expertise and experience to advise and support every step of the migration process. The inside professional services team worked with the client on a cloud economics assessment to better understand which workloads will be moved as part of the migration and which cloud solution provider would be the best fit.

The inside team walked the client through the rightsizing process to determine the configuration needs for its new cloud based data center. At Insight, which started as a professional service engagement now includes ongoing managed services providing our client greater flexibility, better redundancy and resiliency and improved operation of automation for net new workloads that have migrated to the cloud. Whether our clients are reimagining their workplace or looking to evolve with IT in today's digital first business climate, organizations are seeking more guidance on how to navigate these key changes. These include the shift to the intelligent edge, multi cloud and hybrid environments and managing spend as they move from traditional IT procurement to as a service consumption models. On slide seven, one example of innovation changing the way our clients do business is in wireless connectivity, which has become an increasingly critical part of everyday life.

We combine innovative services and strategic partnerships to offer a full suite of integrated network and security solutions to our clients. We achieved the designation of five gs for enterprise branch specialization from Cradlepoint, a global leader in cloud delivered LTE and five gs wireless edge solutions. With this designation, we're positioned to sell Cradlepoint's comprehensive portfolio of five gs solutions. These capabilities are pivotal to delivering fast and consistent communication required for edge computing. Through these efforts our clients are enhancing their business through five gs secure connections and taking a step towards the future.

The Insight Cradlepoint partnership represents our commitment to offering innovative services in a way that takes the complexity of adopting next generation technologies by assessing the unique needs of our clients, building a strategy to embrace the best solutions and then delivering and supporting those solutions for lasting success. Our end to end skill set across our broad portfolio promises a faster more strategic way to implement innovative technologies. We will continue to make the strategic investments and our go to market solution areas to order to achieve our long term priorities and drive value for our shareholders. Our long term priorities are aligned to deliver on our financial commitments. We continue to be pleased with the execution this year and remain optimistic about the prospects with the supply chain and market recovery continuing to strengthen into 2022.

Today, we increased our outlook for 2021 from our previously issued guidance, which reflects continued progress towards these goals as well as our long term goals that we outlined at our Investor Day in late twenty nineteen. I'll now hand the call back over to Glynis to review the details of our financial performance.

Speaker 1

Thank you, Ken. In the 2021, we executed well against our financial and strategic priorities posting continued growth across our business. We accomplished these results while continuing to invest in strategic areas to scale and support our future growth. Moving on to Slide ten and eleven for our consolidated results. Our net sales in the third quarter were $2,400,000,000 up 26% in U.

S. Dollars and 25 percent in constant currency compared to the 2020. This represents record net sales for Insight. Higher hardware net sales of 36% drove gross margins of 14.9%. SG and A expenses were up 12.6% year over year in constant currency and 13.8% in U.

S. Dollars. As a percentage of net sales, adjusted SG and A was 11.1%, down 110 basis points year to year and in line with our expectations for the quarter. As a percentage of net sales, SG and A on a GAAP basis was 11.4%, down 130 basis points year to year. For the full year, we continue to expect adjusted SG a percentage of net sales will be around 11.7%.

Adjusted earnings from operations was $93,500,000 up 30% year over year compared to a 35% increase in earnings from operations on a GAAP basis. And adjusted diluted earnings per share was $1.87 up thirty six percent and $1.51 per share on a GAAP basis, an increase of 37%. Moving on to the results of each of our operating segments and starting with North America on Slide 12. Net sales were $2,000,000,000 in the third quarter, up 30% year over year, primarily related to an increase in hardware net sales driven by 38% hardware net sales of 30% driven by devices, networking and storage solutions and services primarily related to cloud. Similarly to the last quarter, as a result of continued supply constraints and extended product returns, we're entering the fourth quarter with higher backlog.

We expect about half of this to ship out within the quarter. Gross profit of $296,000,000 in North America was up 20% year over year and gross margin was 14.7% compared to 15.9% in the prior year. North America's adjusted SG and A increased 16% year over year, which represents 10.5% of net sales. The increases were driven by investments in overall team headcount and other employee expenses as well as variable compensation due to higher gross profit payment on our new variable compensation plans implemented this year. SG and A as a percentage of net sales on a GAAP basis was 10.9% in the third quarter.

For the full year of 2021, we continue to expect adjusted SG and A as a percentage of sales will be 11.3%. Adjusted earnings from operations increased 31% year over year to $84,000,000 for the quarter. On a GAAP basis, earnings from operations increased 37% year over year to $74,000,000 Moving on to our new operation on Slide 13, net sales in the third quarter increased 7% year over year in constant currency to $381,000,000 due to an increase in hardware net sales driven by increased volumes to corporate clients and services, primarily Insight delivered services and cloud solutions. Gross profit increased 6% year over year in constant currency. We invested in the business resulting in a 6% increase in SG and A, which led to adjusted earnings from operations of $6,000,000 in the current quarter, up 3% in constant currency.

Moving on to APAC on Slide 14. Net sales of $46,000,000 and gross profit of $13,000,000 in the third quarter increased 2126% respectively year over year in constant currency due to increases in hardware net sales driven by large transactions of corporate and enterprise clients and services services. Adjusted earnings from operations of $4,000,000 in the quarter were up 52% in constant currency. Moving on to our tax rate, our effective tax rate for the 2021 was 25.4% compared to twenty three point eight percent in the prior year quarter. The higher effective tax rate was primarily due to beneficial changes in tax laws that were issued during the prior year, which did not recur in 2021, partially offset by current tax benefits related to equity compensation.

Turning to the details of our third quarter cash flow performance on Slide 15. Year to date through the 2021, we invested in our operations and used $118,000,000 of cash compared to cash generation of $462,000,000 during the same period last year. The decrease year to year is due to a 36% increase year over year in hardware net sales, changes in partner mix, including increased volume with distributors and associated early pay terms as well as an increase in inventory purchase to support clients year over year, which contributed to increased use of cash resulting in low cash flow from operations generated year to date September 2021 compared to the prior year. In addition, there were discrete items in 2020 totaling $180,000,000 that consisted of partner payment deferrals and customer advance payment in the prior year with no comparable activity in the current year and deferred federal other taxes through COVID-nineteen relief measures in the 2020. We saw hardware growth of 36% in the third quarter, above our original expectations for the quarter.

We now expect double digit hardware growth Q4, which will further impact our cash flow generation. Our current estimated cash flow from operations for the full year 2021 is between CAD 50,000,000 to 75,000,000. In the first September 2021, we invested approximately $28,000,000 in capital expenditures, mainly related to technology and facility investments. We also received $27,000,000 in net proceeds from the sale of three buildings in Tempe, Arizona and our property in Woodbridge, Illinois. Lastly, we used $50,000,000 to repurchase shares of our common stock in Q2.

We continue to have $75,000,000 remaining under our share repurchase authorization. As of 09/30/2021, we had approximately $1,000,000,000 available under our ABL facility and we had ample capacity to fund future growth. At the end of the third quarter, we had a cash balance of $107,000,000 of which $91,000,000 was resident in our foreign subsidiaries. We had $527,000,000 of debt outstanding including our senior convertible notes at the end of the quarter compared to prior year cash balance of $75,000,000 and total debt of $293,000,000 Moving on to liquidity on Slide 16. We exited the quarter with a leverage position at 1.3x debt to cash flows or EBITDA, which is well within our level of comfort.

Under our ABL agreement, our primary compliance covenant is a fixed charge coverage ratio which includes trailing twelve months EBITDA coverage over capital expenditures, interest and cash interest. As of September 30, we're at 4.3 times the minimum requirement at one point zero times and we're confident that we can support our capital requirements and liquidity needs. For the full year guidance on Slide 17, we're increasing our previously issued guidance for 2021 that we discussed in our call last quarter. We now expect to deliver low double digit net sales growth over the prior year, and we expect adjusted earnings per share for the full year of 2021 to be between $7 and $7.1 This outlook assumes interest expense between $25,000,000 and effective tax rate of 25% to 26% for the full year 2021, capital expenditures of $65,000,000 to $75,000,000 including the build out of our new corporate headquarters and an average share count for the full year of 35,500,000.0 shares. This outlook excludes acquisition related intangible expenses of approximately $32,000,000 the non cash convertible debt discount and issuance costs reported as part of interest expense of approximately $12,000,000 and assumes no acquisition related to severance and restructuring expenses.

I will now turn the call back to Ken.

Speaker 2

Thank you, Glynis. I'd like to thank our Insight teammates for all we've accomplished during my tenure. Together we have transformed Insight and begun the journey to become a global solutions integrator helping solve our clients' most pressing challenges. We've seen revenue grow from $4,000,000,000 to $9,000,000,000 and adjusted diluted earnings per share on an annual basis grow from 1.8 to over $7 Most importantly, we've seen Insight become a best place to work with numerous recognitions throughout our global locations and as evidenced by Forbes recent release last week of the top global companies where Insight ranked number 95 overall and number 12 for all technology companies. It has been my greatest professor of honor to lead this amazing company to work alongside our incredible teammates around the world and to join forces with our partners to serve our clients.

Not only is Insight a great place to work for our teammates, but we are creating value for our shareholders, partners and clients in all we do. That concludes my comments. Thank you again for joining us today and we'll now open up the line for your questions.

Speaker 1

Thank you.

Speaker 0

Your first question comes from the line of Matt Sheerin from Stifel. Your line is open.

Speaker 3

Yes. Thank you and good morning. My first question, Ken, just sort of around gross margin and also just the strength of hardware. Could you maybe be a little bit more specific in terms of that mix there? Was it more client devices versus solutions?

And if it's on the infrastructure side, I would think there'd be more services attached to that. So meaning offsets the margins. So could you give us a little bit of color on that mix?

Speaker 2

Yes. As we discussed Matt, we had 36% hardware growth pretty significant. Certainly the biggest portion of that was in the device area as we continue to see constraints and tremendous demand in that area. So that was the biggest portion. But in that mix, did see certainly high single digit growth in our data center products as well.

So even though there is constraints, there's still product flowing in there. But again, the majority of it being certainly in the device category.

Speaker 3

Okay. And by devices, are we talking about like commercial notebooks and desktops?

Speaker 2

Yeah. The biggest portion of course being notebooks, which of course is really accelerated. Desktops continues to be a good piece, but it's declining certainly from where it was prior to the pandemic. And there's handhelds in there, which is classified as iPad type devices. And there is some certainly smartphone devices in there that we also utilize.

Really not for consumer use but certainly for aspects really more like a mini iPad kind of a situation. So that's what we would call in the device area. But the biggest portion of that by far is notebooks.

Speaker 3

Got it. And in terms of your outlook for Q4, backing into the outlook for the year, it looks like you're going to be up modestly one or two points perhaps sequentially. Typically, there's a little bit more seasonality I know in your business, particularly in Europe and then also in North America enterprise. So were there pull ins in the quarter? Why you're not going to be up that much sequentially?

Or is there product constraints a part of that as well?

Speaker 2

Yes. I think it's certainly all of the above. And then of course you've also got to look at math to compare us as well. Q3 compared to last year was certainly far easier than Q4 is when it started to really recover. As you might recall, we did have growth in Q4 last year.

So I think it's that combination is what you're seeing there. So nothing abnormal. I think the supply constraints are going to continue as we all know for a bit. But again, we also have to keep in mind that we did grow hardware 36%. So it's not like it's a tremendous constraint.

It's I think it's working through the system and the good thing about that is it will lead to I believe next year where people are talking about devices decline and certainly Gartner's predicting that. We don't see that at all. We think that devices are going to continue to be strong through 2022 because there's so much pent up demand that's not being supported and clients are basically increasing sort of their cycle and instead of refreshing sooner they're having to basically sweat those assets longer. So I believe it bodes well for the next year or two for devices as well.

Speaker 3

Okay. And just lastly, looking at the Q4 gross margin, based on the SG and A guide, you can back into it looks like an increase in gross margin sequentially. Is that again a mix based reason where there's more services or less hardware mix?

Speaker 2

Yes, do want to take that one?

Speaker 1

Yes. So Matt, you're spot on. It's going to be the fact that hardware is while it's continuing to grow at its low double digit growth in Q4, it is not the same pace of the 36% we saw So the impact of Hardwear and overall gross margins is a little bit more muted in Q4 than it was in Q3.

Speaker 3

Okay. Well, thanks very much. And Ken, congratulations on your career at Insight. And Joyce, best of luck to you.

Speaker 0

Thank you.

Speaker 2

Thanks, Matt. Appreciate it.

Speaker 1

We'll be with you in a few moments. And

Speaker 0

your next question comes from the line of Adam Sindle from Raymond James. Your line is open.

Speaker 4

Thanks. Good morning, everybody. Ken, my congrats as well. I've always enjoyed your strategic commentary on these calls. So wanted to throw an open ended question to have you maybe reflect on industry evolution during your tenure and your expectation for the next decade or so.

It's still very fragmented at the bar level. The distributor level has recently significantly consolidated. Wondering if you see an era of bar consolidation in a bigger way or any big themes that you want to highlight on a go forward basis?

Speaker 2

Yes. Thanks, Adam, for that. Certainly, the model that we've seen, certainly in my tenure has been moving certainly from, in general, the reseller type model to really being what we call a solutions integrator. There's no question delivering more value and I think you're seeing that with many of the scale players delivering more and more services, more and more solutions to the marketplace. There's a big trend of course towards as a service consumption models that's occurring as well.

And I do believe that that does favor in many cases the larger scale players due to the complexity of that, the systems that are required to really implement that properly. I do think those aspects do favor the scale players. Not to say that the smaller niche players aren't still going to have a play, they always do. They're very, very nimble. But I think overall there's some pretty big changes there.

The challenge, and we've been pretty acquisitive as you know, the challenge that we find on a lot of the smaller players and trying to consolidate them is in many cases there isn't a lot of cost synergies as you know. They're very, very heavily geared towards an owner model where the owner does quite a bit of the work and has a lot of relationships. Those things become a little bit challenging when you try to roll those things up and we spend a lot of time trying to understand if that was a possible play. Now there's a lot of mid tier companies that certainly have more scale that does make some sense and I think you'll see more consolidation there on that front. But yes, that is certainly the trend.

I think it's what our partners are demanding and very importantly what our clients are demanding. It's difficult to go to a client today and just basically be one trick. You've got to the clients are looking for company that really can deliver solutions across as an example their data center. You can't just do one aspect of the data center anymore. You've got to do it all and you've got to have a security umbrella under that as well.

It takes a lot of skills and a lot of complexity there. I do believe that that is starting to favor and you're seeing that of course in the growth areas when you look at the numbers and so forth with the larger scale players are having more significant growth than the smaller players are over the past few years. Yeah, so I think the industry couldn't be in a better position in my mind. When you look at what's going on, it's all about the data. It's all about, AI, which is just starting.

It's all about the intelligent edge, which is again just starting. So I think it's going to be really robust outlook for the next ten years in my mind.

Speaker 4

Interesting. I want to I do want to talk about some near term questions, and, Ken, I'm sure you're not going to miss these. But, maybe we can touch on backlog, the composition of backlog in particular. I'm just wondering if devices are the predominant portion of mix within your backlog. And if so, how do you bet demand as you invest in inventory to fulfill that?

Is there any penalty for cancellations or double ordering?

Speaker 2

Yes. I'll ask Joyce to touch on some of that, and I'll add some commentary as well. So Joyce, why don't you jump in and give your perspective on that?

Speaker 5

Yes. So Adam, I think that the so first of all, I would say that we still see very robust demand. The backlog is reflective of our overall demand that we've seen. So notebooks certainly are still a very significant component of our backlog. We did see some I wouldn't call it recovery because the backlog still grew in Notebooks,

Speaker 1

but we did see us catch

Speaker 5

up in terms of demand and invoicing over Q3. So we got those numbers a little closer together. We did see increased backlog in networking and storage and desktop especially and displays. So our backlog is pretty robust. As Glynis and Ken both stated, we expect about 50% of the backlog to ship in Q4.

And we've seen no evidence, zero evidence of the demand perishable demand or double booking. We have, of course, seen and actually supported some cancellations of orders and rebooking to make sure we optimize for delivery time and helping clients get what they need. But, we have not seen evidence of double booking, and we certainly keep in very close contact with our distributors and our partners to make sure that's not happening.

Speaker 4

Got it. Maybe just one final one for me so I can spread it around to everybody. Glynis, I wanted to ask on the cash cycle. So I did notice that you obviously had a heavy mix of devices that put pressure on gross margin, of course, like you talked about in the quarter. Hardware was up significantly.

But on the cash cycle, we would typically think those turn quicker and help the cash cycle. So maybe you can comment on why gross margin is down and working capital is up.

Speaker 1

Oh, so it's the combination of the types of equipment and where we get the the the product from. And we have shorter payment terms with certain diffusers and OEMs versus others, and it's just the mix of the business with regard to those shorter payment terms relative to, let's just say, other OEMs where we have thirty day facilities or inventory financing facility that we have or sixty day terms, those support two primary two primary vendors. Those were not the ones that were high in q three. It was other vendors that were high in q three, and it's just a mix of business in terms of how how we have the early pay discounts that help us from a margin perspective, but also hurt us from an overall cash cash flow perspective.

Speaker 2

Okay. Got it.

Speaker 3

So we're

Speaker 4

paying the faster

Speaker 1

than we're collecting. We're paying the vendor faster than we're collecting from the client. It's the inverse of what happened in 2020.

Speaker 4

Right. Understood. Ken, congrats again. Joyce, welcome to the call. Thank you.

Speaker 2

Thank you all. Congrats on the quarter.

Speaker 1

You. Thank you, Sam.

Speaker 0

Thank you. And your next question comes from the line of Vincent from Barrington Research. Your line is open.

Speaker 6

Yes. Ken, what product categories currently offer the most opportunity to gain share?

Speaker 2

Big question there. Think, again, market is robust in so many areas. Areas, of course, that we're very focused on, as you know, is in the solutioning side. So the as a service consumption models, the multi cloud approach to the business is an area that we're very focused on. So we think there's ample opportunity to continue to grow with, you know, Microsoft Azure as an example.

Huge opportunities there on that front. So that's that's an area and, of course, you know, everything's about security today. There isn't one client that's not, you know, talking to us about security with all the ransomware attacks and so forth out there. So security again continues to be a very robust opportunity. And then, of course, as Joey's touched on, Glynis touched on the the hardware situation, again, very robust at this stage.

And, as you can see with the growth factors, supply constraints are troublesome, but they're not they're having a dramatic impact on our limiting our growth. And I think it's actually gonna help us as we go into 2022 where there'll be lots of pent up demand here still and the ability to flush this backlog out to really provide some good growth in the hardware sector next year as well.

Speaker 6

And, could you give us some more color on the mix in the software business?

Speaker 2

Yeah. The the software business, of course, for us is, extremely important, big portion of our business. Very strong, of course, with Microsoft and all their their product categories, across the board. We do a significant amount of business, of course. You know, more and more vendors are moving there.

Cisco's got a big software business today that's real important to us. Of course, VMware, very important on the infrastructure side as well. And then, of course, Adobe represents a good portion of our of our revenue stream. And, of course, a whole plethora of security software solutions out there as well. So very important part of the business.

More and more, you know, partners, of course, are driving more towards software in these consumption models. So that's an area that we can certainly continue to invest in.

Speaker 6

And what what what areas stand out as, you know, strongest in the quarter in terms of growth?

Speaker 2

You know, for q three, certainly, the the biggest growth areas was certainly hardware as you could see. But we're also very pleased with the ability of our, you know, our cloud software, you know, offerings, you know, cloud now as a percent of our GP is up to 21%. So that continues to be very, very robust part of our growth portfolio that that we're really pleased with and that's a key indicator for us going forward.

Speaker 6

And are you seeing any impact, significant impact from wage inflation in terms of your existing employee base? Is this something that you worry about when you go to sleep at night?

Speaker 2

Yeah. I think everybody, every industry is seeing that from fast food chains to our industry. Certainly, we're all seeing that. We've been able to manage it very, very closely, but certainly there's no question there's wage inflation throughout all positions. The most sought after positions, of course, are the real technical architect software development areas for us, but we've been able to continue certainly to grow that headcount year over year pretty nicely.

But certainly not without its challenges and certainly increases. But we're also seeing increases of, you know, our integration centers and warehouses like everybody else is as we're competing there. So we've been able to manage it. It hasn't been it hasn't drained in our ability to support our clients. But it's certainly something that we continue to watch and we think it certainly looks to be that it's going to increase and continue to increase certainly into 2022.

Speaker 6

Yeah. So Ken, congrats on your tenure and Joyce, good luck. That's all I have. Thank you.

Speaker 2

Thanks, Ken. I appreciate it.

Speaker 0

There are no further questions. I would now like to turn the call back to Ken for final remarks. Please go ahead.

Speaker 2

Yes. So again, thanks everybody for joining and we appreciate you listening in. Thank you.

Speaker 0

This concludes today's conference call. Thank you all

Speaker 1

for participating.

Speaker 0

You may now disconnect.