Parsons - Earnings Call - Q1 2019

Transcript

Speaker 0

Good morning. My name is Jack, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Parsons First Quarter twenty nineteen Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Thank you. Dave Spilley, Vice President of Investor Relations, you may begin your conference.

Speaker 1

Thank you. Good morning, and thank you for joining us today to discuss our first quarter twenty nineteen financial results. Please note that we provided presentation slides on the Investor Relations section of our website. On the call with me today are Chuck Harrington, Chairman and CEO George Ball, CFO and Carrie Smith, Chief Operating Officer. Today, Chuck will discuss execution against our corporate strategy, George will provide an overview of our first quarter financial results and then Carrie will review our operational highlights.

We then will close with a question and answer session. Management may also make forward looking statements during the call regarding future events, anticipated future trends and anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward looking statements due to a variety of factors. These factors are described in a registration statement on Form S-one and other SEC filings.

Please refer to our earnings press release for Parsons' complete forward looking statement disclosure. We do not undertake any obligation to update forward looking statements. Management will also make reference to non GAAP financial measures during this call, and we remind you that these non GAAP financial measures are not a substitute for the comparable GAAP measures. I now will turn the call over to Chuck. Thank you, Gabe.

Welcome to all who are on the line to Parsons' first quarter twenty nineteen earnings call. We had a strong quarter across both business segments, and our Q1 results reflect the success of executing on our Enhance, Extend and Transform strategy. Financially, we delivered a strong quarter first quarter results, which included notable increases in revenue, profitability and contract awards over the first quarter of twenty eighteen. In fact, our revenue grew 20%, our adjusted EBITDA grew 43% and included a 120 basis point margin improvement. Total backlog increased 35%, now stands at $8,600,000,000 on the strength of a 1.4 book to bill ratio.

And our Federal Solutions revenue contribution increased to 47% of the corporate total in the quarter from 39 in the prior year. Strategically, we closed on a key acquisition, OGSystems, and as you know, recently completed our IPO. Our performance has benefited from our strategy to enhance organic operations through strategic leadership additions, technology R and D efforts and focusing our sales on higher margin, lower working capital markets. Simultaneously, we've also executed our extend strategy to enter the geospatial intelligence, cloud computing and small satellite markets while expanding our revenue in cyber, intelligence, missile defense and intelligent transportation systems. These accomplishments, coupled with the execution of our transform strategy to build our technology revenue streams and transactional revenue streams, has enabled us to accelerate revenue growth, increase margins, generate strong free cash flow and bring new capabilities to our customers.

Our M and A strategy added Polaris Alpha and OG Systems to our Federal Solutions segment in the past year. The OG Systems acquisition was completed in early January of this year. This acquisition provides us with geospatial intelligence capabilities, increased data analytics and cloud computing expertise. Additionally, provides an insider threat detection capability for our defense and intelligence customers. Through OZ Systems, we also acquired the Pearl product suite, which enables our defense and intelligence customers to analyze objects and their movements from 10,000 feet above ground and yields resolution of objects at a four centimeter accuracy.

So we're taking this same technology to infrastructure market to create three d models of existing critical infrastructure structures like bridges, reducing or eliminating the need for inspectors to take physical measurements in the field. M and A will continue to be a key initiative given our transformed strategy and the strength of our balance sheet. And finally, I want to acknowledge Parsons' tenth consecutive recognition as one of the world's most ethical companies by the Ethicsphere Institute. This award reflects our culture and commitment of our global workforce to ethical business practices. We're proud of this recognition, and our commitment to integrity is one of our six core values.

In summary, this first quarter of our seventy fifth year of operations was a success in terms of financial results and strategic actions. With that, I'm going turn the call over to George Ball, our Chief Financial Officer, to discuss our first quarter twenty nineteen financial highlights. George? Thank you, Chuck, and

Speaker 2

good morning, everyone. Today, I will organize my remarks into four key areas: the income statement, cash flow results, balance sheet and contract awards. I will also discuss certain financial results on an adjusted non GAAP basis where we believe doing so provides a meaningful comparison to our prior financial results. GAAP reconciliation tables are provided in the press release and the PowerPoint presentation, which was issued this morning. As Chuck noted, our first quarter revenue, profitability and bookings all exceeded our prior year results.

Total revenue for the first quarter increased 20%, and organic revenue increased 4% from the first quarter of twenty eighteen. GAAP EPS for the quarter was zero one two dollars per share, and adjusted EPS for the quarter was $0.57 per share. Our EPS comparisons are less meaningful this quarter due to IPO transaction costs and the additional shares issued in the IPO. Total shares issued and outstanding at the conclusion of the IPO were approximately 99,400,000.0 shares. Adjusted EBITDA increased 43% to $68,000,000 equating to an adjusted EBITDA margin of 7.5% or a 120 basis point improvement over the prior year.

This margin expansion was driven largely by the addition of our Polaris Alpha and OG System acquisitions, which has significantly higher margins than our legacy business as well as improved margins than our underlying legacy business. Turning now to our operating segments and starting first with Federal Solutions. First quarter revenue grew 45% year over year. This increase was primarily due to the acquisitions of Polaris Alpha and OD Systems, with accompanying organic growth of 3%. Federal Solutions adjusted EBITDA grew 93%, and our margin expanded by two thirty basis points to 9.2%.

This increase was again driven largely by the acquisitions of Polaris Alpha and OT Systems as well as margin expansion in our underlying legacy business. And now a few words regarding our Critical Infrastructure segment. First quarter revenue grew 4% organically year over year on the strength of growth on existing contracts. Critical Infrastructure adjusted EBITDA grew 6%, and our margin expanded by 10 basis points to 6.1%. These increases were driven primarily by the aforementioned revenue increase and improved business mix and overhead cost reduction initiatives, which were partially offset by targeted increases in business development costs.

Now I'll turn to cash flow and balance sheet metrics. Our net DSO for the quarter was sixty one days as compared to seventy five days at the end of the first quarter of twenty eighteen. The decline in net DSO was driven by improved Middle East cash collections in our Critical Infrastructure segment and the acquisitions of Polaris Alpha and OG Systems, both of which have lower net DSOs than our legacy business. During the quarter, we used $60,000,000 in operating cash flow, which represents an 88% improvement as compared to the prior year period. Cash flow tends to be lower in the first quarter as a result of incentive compensation payments and other obligations dispersed during the period.

We expect solid cash flow from operations for the full year in line with or above underlying earnings. Our first quarter twenty nineteen balance sheet reflects gross and net debt of $659,000,000 and $538,000,000 respectively. However, the proceeds from our recently completed IPO reduced these amounts to approximately $250,000,000 and $50,000,000 respectively, and we're therefore ideally positioned to continue our investment in the company's strategy. The implementation of the new leasing standard had no notable impact on earnings in the first quarter, and we anticipate no notable future impact, but its implementation did have the effect of increasing both assets and liabilities by over $200,000,000 As Chuck noted earlier, we reported contract awards of $1,200,000,000 in the first quarter, which represents a book to bill ratio of 1.4x, a strong performance driven largely by our Federal Solutions segment, which achieved a book to bill ratio of 1.9x. Total backlog at the end of Q1 is now $8,600,000 up 35% from last year, and notably, Federal Solutions now represents 60% of the company's backlog as compared to 50% at the end of Q1 twenty eighteen.

With that, I'll turn the call over to Carrie, who will discuss some of our first quarter operational highlights. Carrie?

Speaker 3

Thank you, George. Operationally, as Chuck and George have noted, we had strong performance in both segments and particularly strong in Federal Solutions. Our first quarter book to bill ratio of 1.4x was driven by large contract awards, strong win rates and excellent performance in the Federal Solutions segment, which as George noted, achieved a book to bill ratio of 1.9x. Our Critical Infrastructure book to bill ratio was 0.9x, which was in line with expectations as we implement a focused bid strategy of pursuing higher margin work. We expect our book to bill ratio in this segment to improve throughout 2019.

We had several key awards in our Federal Solutions segment, including our cyber, intelligence and space focused markets. First, we won $175,000,000 repeat award from a classified government customer to provide services relating to information technology infrastructure and industrial control systems. And in addition, we won three significant new awards, a $982,000,000 ceiling value multiple award contract for the Army to provide a full spectrum of cyber electromagnetic initiatives, dollars 147,000,000 award from another classified government customer to provide high end software, hardware, integration, operations and maintenance and mission support. And an award worth approximately $100,000,000 by the Air Force Space and Missile Systems Center for integration services for small satellite delivery to space. For Critical Infrastructure, we had notable contract expansion bookings, including the California Interstate 405, Gordie Howe Bridge and the Southern California Gas Program.

Both segments also had strong top and bottom line growth. The revenue growth was both organic, driven by early contract wins and growth on existing contracts, in the case of Federal Solutions, also inorganic. The margin expansion is the result of top line growth, strong award and incentive fees, as well as cost reduction initiatives in the Critical Infrastructure segment. Next, I would like to briefly discuss our two most recent acquisitions, Polaris Alpha and OG Systems. We are very pleased with the performance of both acquisitions as they continue to experience double digit revenue growth and EBITDA margins exceeding their financial targets.

We're already experiencing revenue synergies, and nearly every bid is a combined Parsons, Polaris Alpha, OG Systems response. A recent example of a Polaris Alpha revenue synergy award is the Army's Defensive Cyber Operations Mission Planning contract. An example of an OG Systems cross segment revenue synergy award is our recent Critical Infrastructure to Buy Roads and Transport Authority win, which leveraged our Pearl Sensor system. Finally, OG Systems, our most recent acquisition, continues to have industry leading employee retention at 96%, which has improved since we closed the acquisition. I'm very excited about the opportunities we have to grow our business and expand our margins.

We're winning more high end work in our targeted markets and are executing well in both business segments. Our pipeline is an all time high, and we have $3,900,000,000 of outstanding bids awaiting awards. On the technology front, our strategic incubator, which we call S Works, is driving growth in markets including artificial intelligence, critical infrastructure protection, and operational energy. We formed company wide technology communities of practice that span both business segments, and we have initiated commercial product marketing strategies. In addition, we're investing research and development in critical areas, including high speed processing, smart cities and border security integrated sensor systems.

With that, I will turn it back over to Chuck.

Speaker 1

Thank you, Carrie. In summary, we achieved strong growth in revenue, profitability and awards. We delivered effective execution against our strategy, and we continue to transform our business, enhancing our revenue growth and margin expansion opportunities. We also have a strong balance sheet, providing the financial flexibility to make continued investments in our strategy. Before we move to the Q and A session, I want to acknowledge that our success is driven by the hard work and dedication of our nearly 16,000 employees.

They are the foundation of our business, and their commitment to our customers' missions and our core values is inspiring and what makes Parsons a great place to work. Their achievements put us on a path to successfully execute our IPO. Now we'll open up the line for questions.

Speaker 0

Your first question comes from the line of Matt Sharpe with Morgan Stanley. Line is open.

Speaker 4

Good morning, Chuck, George and Carey. Congratulations on the IPO and the first earnings print.

Speaker 1

Thank you. I just wanted to

Speaker 4

talk capital deployment a bit here. So post IPO, you guys, I think you're at a net debt number of about $50,000,000 and the company should generate pretty good cash going forward from here. What's appetite? Or can you give us a framework around share repurchase versus M and A versus internal investment from here? Do you have any targets in terms of those buckets on a percentage basis?

Or what can you give us just to help us contextualize your approach?

Speaker 1

Well, given the phenomenal amount of opportunities that we believe exist in the marketplace and the strong growth that we're getting, we're targeting our capital deployment in the area of M and A in the near future of companies that meet our acquisition criteria of high margin, high growth companies with great IP in our focus markets of cyber, intel, space, defense and critical infrastructure in the smart cities area. So we're not counting out the possibility in the future of making share repurchases, but in the near term, we're focused on M and A.

Speaker 4

Got it. And just a follow-up to that. What types of companies maybe are you looking at in terms of size, in terms of market segment? And are you guys considering any divestitures potentially on the critical infrastructure side?

Speaker 1

Well, our focus area has been in the markets of cyber, intel, missile defense, space and smart cities, leveraging our expertise in artificial intelligence, namely machine learning, but also now expanding our deep learning capabilities, cloud migration, IoT and autonomous systems. And we're focused on companies that have a material amount of IP, IP either in the area of software and software development and hardware. And so those will retain our focus on M and A. And the size of the companies we look at are fairly broad. It's really more important to us looking at their margin, capabilities and alignment to our key market focus areas.

Speaker 4

Got it. Any pressure to scale given what some of your competitors have done? Or how do you think about that in the context of M and A?

Speaker 1

We think we have the scale that we need, and we're far more focused on high margin, high growth specialty areas that really play upon our differentiated capabilities versus scale for scale's sake. I'm not sure that that provides us the additional capabilities and what makes us a differentiated offer, which is the agility of our speed to react. And so we don't see a compelling reason for scale in our core markets.

Speaker 4

Got it. Thanks. I'll get back in the queue.

Speaker 1

Thank you.

Speaker 0

Your next question comes from Sheila Kahyaoglu with Jefferies. Your line is open.

Speaker 5

Hey, good morning, guys.

Speaker 6

This is actually Raymond Gonzalez on for Sheila. So just wanted to ask about Polaris Alpha and OG Systems. How are the integrations of those two businesses tracking versus internal plans from a cost perspective? We estimate those businesses have 12% type EBITDA margins through fiscal year twenty nineteen. Should we think about that differently?

Speaker 1

What I'll say in summary, I'll have Carey dive a little deeper into this, is they are meeting and exceeding our expectations from both a revenue generation and synergies where we saw them in the case of Polaris Alpha. So I think you're what we've had communicated earlier, we're on track or slightly exceeding it. Carrie, any additional color you'd like to provide?

Speaker 3

Yes. Thanks, Chuck. We're doing a great job on revenue synergies with both companies. With Polaris Alpha, we also had cost synergies since that was the rollout of six prior companies, and we're on track to exceed those cost synergies. With OT Systems, we did not plan on any cost synergies, so our focus is really on revenue.

And as I mentioned earlier, we've had several key wins already with synergies and every bid that we submit involves all three companies.

Speaker 6

Okay, great. Thank you. And just one follow-up in general on the bid pipeline. Congrats on the all time high there. Just wanted to figure out how has the bid pipeline grown sequentially for the two segments and how is that impacted by the focused bid strategy for Critical Infrastructure?

Speaker 1

Yes. So what I would say in general is the federal marketplace right now is very robust. There's a lot of opportunities, especially in the areas we're focused on, cyber, intel, space, missile defense. Those are all areas where there's a lot of focus and emphasis by the federal government. In the critical infrastructure space, in general, you're right on, in that we're being very selective in the pursuits that we're taking on, where that leverage our core expertise and set our margin and cash flow profiles.

And Carrie, anything you'd like to add in terms of specific color?

Speaker 3

I would just add that our pipeline is $20,000,000,000 Awaiting Notice of Award is $3,900,000,000 And to add on to what Chuck said, Federal Solutions is really an overdrive mode. We have quite a bit of opportunities, particularly greater than $100,000,000 that will be awarded this year.

Speaker 6

Okay. Thank you. I'll jump in the queue.

Speaker 0

Your next question comes from the line of Edward Caso with Wells Fargo. Your line is open.

Speaker 7

Good, Nick. Welcome to the or welcome back to the public markets here. I was wondering if you could give us a look into your crystal ball about the budget, how you see that shaking out as far as shutdown, continuing resolution, whatever your crystal ball tells us.

Speaker 1

Yes. Well, I think if I know one thing, I always try to predict where these things are going to fall in specifics. So our strategy, Ed, was all aligned around getting us into those areas that we feel are going to have the highest emphasis for funding during whether it's sequestration, continuing resolution, which is probably the most likely outcome for a few months. And as I think I've said before, just because we have some disagreements with Washington, the folks that are attacking us either in cyber or missile defense tests and so forth, those don't tend to decline during those periods. So we think our areas are as insulated from that as possible in the federal spend.

Speaker 7

Your revenue number came in a little higher than we were looking for. Were there some pass throughs in the quarter, lower margin pass throughs that raised the number?

Speaker 1

It just tends to be in some parts of our business that revenue numbers tend to be a little lumpier than others. Obviously, our margins were very strong. So it really wasn't pass through costs so much. It was just more maybe a little acceleration on a few programs. They were they staffed or just went a little faster than we had anticipated they would in Q1.

Speaker 7

Last question. Can you give us a sense, since you didn't offer any guidance today, what your approach will be to giving guidance? Thank you.

Speaker 1

Yes. George, you want take that, please?

Speaker 2

Sure, Ed. We plan to provide guidance beginning in 2020, which we'll communicate on our fourth quarter call probably early March.

Speaker 1

Great. Thank you.

Speaker 2

Thank you, Ed.

Speaker 0

Your next question comes from the line of Ron Epstein with Bank of America Merrill Lynch. Your line is open.

Speaker 8

Hi, good morning. This is Natalie O'Dea on for Ron Epstein. My question, so your growth thank you. So your growth strategy is predicated on targeting more advanced technologies that provide additional capabilities and federal solutions. I think you've already touched on what you look for in a target.

Can you talk about your thresholds for return? And then as a follow-up, you've been acquiring higher margin businesses in Federal Solutions. So how do you maintain those higher margins over time

Speaker 1

as you absorb them? Thanks. Yes, great question. So one, the companies that we buy, we always look for accretion of margins in a relatively quick timeframe, certainly less than eighteen months and have been more like a year. Since the areas we're going into, we're not throwing additional overhead onto our units.

So we do a really great job of maintaining, if not expanding the margins of the acquisitions we buy. And our model has been to develop technology in the federal space and then bring that technology to our critical infrastructure space. So for the vast majority of the technology we create, we have actually two market segments we can deploy that technology in. We talked about our Perl sensors. We talked about Domain six in the past.

Many of those software solutions deploy to both. So we continue that margin increase and actually can look at the R and D investment as having two market segments' worth of growth in revenues off of one R and D investment.

Speaker 0

Your next question comes from the line of Tobey Sommer with SunTrust.

Speaker 5

I was going to ask you a question about margins, which you showed really nice expansion, I guess, driven primarily in the Federal Solutions space. How did the business performance, how does that compare to contract awards? And then when you look at your backlog and the potential margin associated with that, do you see margins continuing to improve as a result of the visibility that you have in contract awards and backlog?

Speaker 1

Yes. So when we look at margin and margin expansion profile on a go forward basis, there's really a couple of things that are driving that. One, the work we're selling have been selling over the last year plus has been at higher margins than what we've sold in the past. So we've got a strong organic margin growth profiles in our backlog. Two, we've been working through our enhanced strategy to increase the margins in our ongoing work by continuing to streamline our overhead and G and A, make other growth opportunities on existing contracts to expand margins.

Our M and A has been at higher margins, so that adds into this as well. And then lastly, our move to create more technology and transactional revenue streams, which also contribute to margin expansion. So we see continued growth of margins in the foreseeable future.

Speaker 5

Thanks. And when I look at the book to bill 1.4, is there a way that you could characterize that in terms of your enhance, extend, transform strategy and kind of, you know, kind of give us some color as to which element might have been most pronounced within the 1.4?

Speaker 1

Yes. So I'm going have Carey dive into that a little deeper. But what I can tell you is for the most part of that 1.4 book to bill, you are seeing a more efficient sales and business development operation, which allows us to be more efficient with that B and T that we're spending. That's part of Enhance. Extend is what has moved us into these high growth markets, and most of those sales are coming out of that.

And the Transform is that has really led the M and A profile and is now developing that increased emphasis on transactional and what we call technology led. So as Carey will expound upon that sales process, we lead with the sale of IP and follow that up with services. Carey, you

Speaker 3

want to take that and run? Sure. As you look at Q1, and particularly at the Federal Solutions book to bill of 1.9 times, It really was based on extending into adjacent markets. We have a predominant position now within the cybersecurity area, the intelligence market as well as the space. And our big wins that were greater than $100,000,000 came out of each of those adjacent market areas.

Speaker 1

We might also mention too that we've seen just exceptional growth in the area of missile defense as well.

Speaker 3

That's correct. And that's predominantly on contract growth where we have over 1,000 employees that support missile defense and systems engineering, weapons and missile system, facilities and life cycle support and warfighter support.

Speaker 5

Thank you very much.

Speaker 0

Your next question comes from the line of Cai von Rumohr with Cowen and Company. Your line is open.

Speaker 4

Hi, this is Dan Flick on for Cai. Good morning.

Speaker 1

Good morning.

Speaker 4

So your initial share on the LOGCAP contract was small. Is there a potential to expand that share throughout the life of the contract? And if so, how big might that opportunity be? Thank you.

Speaker 1

For us, and I'll have Kierke go into a little more depth, but our focus on LOGCAP is to bring technology solutions to that. So to the extent that the LOGCAP contracts or specific tasks that are assigned to that have increased technology needs, then that sure will grow. But our focus is the technology side of LOGCAP.

Speaker 3

And LOGCAP, we're a minority joint venture partner. We were awarded the SouthCom Region. The contract is currently under protest. For persons, this represents all new work. So we don't have any existing LOGCAP work.

So we were pleased to get the South Palm Region. As we come through the protest, we would only have additional upside.

Speaker 1

Got it. Thank you.

Speaker 0

Your next question comes from the line of Tobey Sommer with SunTrust. Your line is open.

Speaker 5

Thank you. You cited three substantial single award contracts. I'm curious if there's something that you could describe within the company or within the customer set that's kind of driving these larger awards? And then you call them out. So is that an unusual amount?

Or should that be considered something that historically is at a cadence that you would consider

Speaker 1

normal? We like to call this our new normal. So if you look at where we started with the strategy two, three years ago, oftentimes, we were getting into these markets as really critical subcontract roles. And now we've moved to the prime role. And this is the kind of cadence that we expect on a quarter to quarter basis.

I don't know, Carrie, you'd like to expand upon that?

Speaker 3

Sure. One of the contracts was a recompete, of which we're performing facilities work and infrastructure work, industrial control systems as well as information technology. The other one was in the cybersecurity domain. It was a single sourced award for a classified customer, where we're uniquely qualified to be able to provide software and hardware solutions that support their critical missions. Additionally, our space award, it got us into a new market, which is basically the launch of small satellites that go up with the primary payload.

It's called the Launch Manifest System Integrator contract. That contract was awarded by the Air Force, but will also potentially service NASA and National Reconnaissance Organization and other customers. And finally, another one that I would highlight that we're very proud of was defensive cyber operations where we're the lead system integrator for the Army's defensive cyber programs program of record. We have close to 20 contracts that are over $100,000,000 that will be awarded this year.

Speaker 5

Thank you very much.

Speaker 0

Your next question comes from the line of Matt Sharpe with Morgan Stanley. Your line is open. Matt Sharpe, your line is open.

Speaker 4

Sorry about that. I just want to talk networking capital for a moment here. I believe you guys made some progress on DSO days. But in general, I think the company has run a little bit higher than most peers. Is it a structural issue?

What type of opportunity you guys have to drive that down and sort of provide a tailwind here free cash flow going forward?

Speaker 2

Matt, yes, we this is George. We've made considerable progress on that over the past couple of years, but we still do have additional opportunities, largely in the Critical Infrastructure segment, probably a bit more oriented in The Middle East. And in the federal side, there are a number of large programs with considerable retention and back end loaded award fees and the like that we think will see some liquidation as well. So going forward, I'd say over the next, let's say, eighteen months time horizon, we should see continual tailwinds.

Speaker 4

Got it. That helps. And then just I know we've talked bookings quite a bit, but I want to touch in particular on LOGCAP as well as the Army R4 contract. Those were both incremental awards to the company. So getting a sense here of the ramp up in the path forward, how we should think about that?

Mean whether or not that was incremental in fact to your plan, say a few months ago or whether was already baked into some extent.

Speaker 3

Sure. And also the other classified contract I mentioned was incremental to the plan as well as the space contract. The R4 contract is a multiple award contract, and we've just received a request for proposal for the first task order on that contract, which we're bidding now. On LOGCAP, it's very hard to estimate since it is under multiple protests when the protest resolution will be decided. But we do not have anything baked into our plan for LOGCAP.

So everything we get there is going to be upside.

Speaker 4

Got it. Thank you.

Speaker 0

And that is all the time we have for questions. I would now like to turn the call back over to Dave Spilley for final remarks.

Speaker 1

Thanks, Jack. Thank you for joining us this morning. If you have any questions, please don't hesitate to give me a call. We look forward to speaking with many of you over the coming weeks. And with that, we'll end today's call.

Have a great day.

Speaker 0

This concludes the Parsons first quarter twenty nineteen earnings conference call. We thank you for your participation. You may now disconnect.