Atento S.A.
Q1 2017 Earnings Call Transcript

Published: 14 May 2017

[Operator:]

Welcome to the Atento S.A. First Quarter 2017 Earnings Results and Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Felipe Souza, Investor Relations Representative. Thank you, Mr. Souza. You may begin.

[Felipe Souza:]

Thank you. Please turn to page two. Welcome to our fiscal 2017 first quarter earnings call. With me today are Alejandro Reynal, Atento's Chief Executive Officer; and Mauricio Montilha, Atento's Chief Financial Officer. Alejandro will begin with a brief review of our performance and strategy, and then Mauricio will review our financial results and guidance for fiscal 2017 in more detail. Afterwards, we'll open the call for questions. Following Q&A, Alejandro will have a few closing remarks. Before proceeding, let me mention that certain comments made on this call will contain financial information that has been prepared under International Financial Reporting Standards. This financial information is unaudited. In addition, this call may contain announcements that constitute forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties. Certain results may differ materially from those in the forward-looking statements as a result of various factors. We encourage you to review our publicly available disclosure documents filed with the relevant securities regulators, and we invite you to read the complete disclosure included in the second page of our earnings presentation. Our public filings earnings presentation can be found at investors.atento.com. Please note that unless noted otherwise, all growth rates are on a year-over-year and constant-currency basis. In addition, our revenue growth rates for our consolidated results in EMEA segment exclude the impact of our divestiture of Morocco, which occurred in the third quarter of fiscal 2016. Now, let me turn the call over to Alejandro.

[Alejandro Reynal:]

Thank you, Felipe. Good afternoon and thank you for joining us today. Please turn to page four. I am glad to share with you that we are off to a solid start in fiscal 2017 as we delivered top line growth, maintain our margins, while improving our cash flow and enhance our financial flexibility. Although still there are uncertainties in key markets in 2017, we remain positive in relation to our ability to successfully navigate the situations and achieve our goals. We continue to make progress on our growth strategy. Revenues increased 3% in the quarter, driven by strong growth in Brazil and EMEA regions. We saw a solid revenue growth of 8.8% for multisector clients led by our multisector business in Brazil, which achieved a revenue growth of 9.7%. This confirms the recovery we started to see in Brazil during the fourth quarter of 2016. Also a positive in the quarter, our mix of revenue from higher value-add solutions increased 3.8 percentage points to 26.3%. Revenues from Telefonica are stabilizing in key markets, in line with fourth quarter 2016 volumes and revised master service agreement targets. Adjusted EBITDA margins were 11.5% in the quarter as we achieved stable profitability driven by our continued focus on disciplined Management of our operations and improved business mix. Adjusted earnings per share increased by approximately 31% year-over-year. Free cash flow before interest was negative $9.7 million, but up $17.8 million year-over-year, driven by our strict working capital Management. We continued the execution of our accelerated debt pay-down program of our higher cost Brazilian debentures with the voluntary payment of $27 million in the second quarter. Our leverage ratio is at 1.6 times Adjusted EBITDA to net debt at the end of the first quarter. We believe finally in our ability to deliver our 2017 objectives as expressed in the guidance we disclosed last quarter. Please now turn to page five. Particular accomplishments in the quarter related to our growth strategy in key verticals include; first in telecommunications, we won over 2,200 workstations from non-Telefonica telco clients. Our expertise continue to make us a reliable partner to telcos in the region as evidenced by these wins. Our Telefonica business continues to stabilize. As an example, we won more than 550 new workstations in sales and collection solutions in Brazil. With the extension of our master service agreement to 2023 last year, we feel good about the health of our relationship with Telefonica and we believe there will be opportunities to further expand our share of wallet with them. Overall, telcos are increasingly seeking to optimize their spend while ensuring high quality customer experience. We believe Atento is well positioned to capture these opportunities with both new and existing clients. We also see a tremendous opportunity in the financial services vertical, where we have a 22% share of a $2.5 billion market. In the quarter we won over 700 workstations with new and existing clients in this vertical. Our financial service companies continue to explore higher levels of outsourcing, especially in Brazil with the approval of the new outsourcing law, Atento is poised to capture share through our expanded capabilities in collections, thanks to the acquisition of R Brasil and in back office, our credit origination through the acquisition of Interfile. Let me touch briefly on R Brasil, which we acquired about six months ago. It's still early stages, however, we have made good progress. We have materialized new strategic wins, including our recently announced agreement to serve Itau's demands for end-to-end collections solutions. We will leverage the industry leading capabilities of R Brasil to expand the level of higher value-added services we provide to Itau in Brazil. We also see an opportunity for growth in other industry verticals, where outsourcing is less penetrated or where new disruptive digital players in the region are experiencing fast growth. These verticals include utilities, consumer goods, healthcare, technology among others. During the first quarter, we accelerated growth through the addition of five new logos. A strong component of this growth is related to our digital capabilities and differentiated value offer. For example, we recently announced an agreement to provide Lenovo in Brazil with a wide range of services, focused on technical support, sales, back office and customer care, all managed through a complete digital platform including chat, email and social media. Digital capabilities are also a strong component of the services we will be provided to other logos acquired during the quarter, such as Media Markt in Spain. We have also now a robust pipeline and continue to grow with technology or digital born players who require a strong pan-Latin American regional partner that can support them. Here we're leveraging again our digital capabilities. Finally, we also continue to gain traction in further penetrating the U.S. Nearshore market. During the quarter, we won three new clients, primarily in financial services. In summary, before I hand it over to Mauricio, let me say that I feel very good about what we have achieved in the quarter, given the macro context and I feel very confident in our ability to return to top line growth in 2017. We believe the macro environment will remain challenging in 2017, in some key markets like Brazil, where we are also monitoring closely regulatory developments. As some of you know, the regulatory environment in Brazil is going through important changes, such as the approval of the new outsourcing law last March and the potential payroll tax change in discussions for the second half of the year. It's still unclear to what extent those changes may have an impact for fiscal 2017. However, we believe Atento is the best positioned Company to capture the benefits derived from the expected acceleration of outsourcing penetration due to the new outsourcing law and to better manage the eventual implications of the potential changes in the payroll tax legislation. With respect to the payroll tax change, we have been working together with the Brazilian industry association, which has been in discussions with all levels of government and Congress during the ongoing review process with the objective to maintain the current tax rate unchanged due to the relevance of our industries for employment generation. In conclusion, I remain very excited by the prospects for the business as a leading customer experience solutions Company in our markets. I will now turn over to Mauricio, who will walk you through our financial results in greater detail. Mauricio?

[Mauricio Montilha:]

Thank you, Alejandro. Please turn to slide number 7. As a reminder, I will be referring to growth rates on a constant currency and year-over-year basis, unless noted otherwise. In addition, as a result of our divestiture of Morocco in September of 2016, this business is now in discontinued operations and the revenue growth rates for consolidated and EMEA results have been adjusted to reflect it. In Q1, 2017 we returned to growth mode, and also delivered financially balanced quarter that is predicated on selective growth, margin protection, strict working capital Management and improvement in cash flow. Looking at our consolidated results, revenue increased by 3% driven by Brazil and EMEA, with broad based growth of 8.8% in our multisector business, aided by new client wins and share-of-wallet gains. However, this growth was partially offset by a 4.7% decline in Telefonica, primarily in Argentina and Mexico. Our diversification strategy is progressing well. Mix of revenue from multisector clients increased 4 percentage points or a record of 60%. In addition, we had a solid growth in multisector with 2,200 workstations won from non-Telefonica telcos in the quarter. We have been able to protect margins, a result of our focus on disciplined growth, inflation pass-through, and proactive cost and efficiency initiatives. Adjusted EPS was $0.17, an increase of $0.04, driven mostly by lower net interest expenses. Free cash flow before interest was negative $9.7 million Q1, showing an improvement versus last year, mainly driven by better working capital Management and CapEx efficiency. Please turn to the slide 8. Looking at our segments in Brazil, our growth profile continues to improve sequentially with revenue up 5.2% driven by continued growth in multisector, which increases by 9.7% in the first quarter. We are encouraged by the improving growth profile in Brazil as declines in GDP continue to moderate and consumer confidence strengthens. Revenue from Telefonica declined 3.3%, a significant sequential improvement over the fourth quarter when revenue declined by 17%. We continue to make significant progress with our revenue diversification. The mix of revenue for multisector clients increased 280 basis points to 68.4%, while the mix of higher added solutions reached to 36.4% of revenue, which was in line compared to the prior-year period. Adjusted EBITDA increased 12.8%, while Adjusted EBITDA margin increased by 80 basis points to 14.4% supported by our proactive actions to restructure and align our cost structure with volume levels, effective wage inflation pass-through as well as improved mix of higher value-added solutions. Please change to slide 9. In Americas, revenue stabilized during the first quarter and was approximately flat compared to prior-year period, as most sector grew 7.5% supported by growth in Colombia, Chile, Peru and U.S. Nearshore, offset by 9% decline at Telefonica driven by lower volumes mainly in Mexico and Argentina. In the quarter, we won approximately 2,900 workstations with approximately 72% coming from new clients. Our mix of revenue from multisector clients increased 340 basis points to 56.5% of total revenue. Our mix of higher value-add solutions reached 15.5% of revenue, up 310 basis points compared to the prior-year period. Adjusted EBITDA margin decreased 320 basis points to 10% as we continue to restructure our cost structure to align with the new volume levels, primarily in Argentina and Mexico. Please turn to slide 10. In EMEA, revenue increased 4.2%, driven by 8.3% increase in multisector, supported by client wins and service wins implemented along 2016 and a 2.1% increase in Telefonica. Telefonica volume in Q1 was particularly high due to some temporary campaigns coming back to normality from Q2 onwards. Supporting our growth in multisector, our mix of revenue reached 35.2%, up 130 basis points and our mix of revenue for higher value-add solutions increased 230 basis points to 11.8%. Adjusted EBITDA margin increased 220 basis points to 7.4% driven by temporary increase in volumes from Telefonica and multisector. Please, slide 11. Looking at cash flow and capital allocation. In the quarter, we generated negative $9.7 million free cash flow before interest, up $17.8 million year-over-year and reflects our commitment to improving cash flow conversion supported by stricter working capital Management. CapEx in the quarter was 1.4% of revenue. Please, chart number 12. On the balance sheet side in the first quarter, we had a liquidity of $224 million, which includes cash and cash equivalents of around $171 million and undrawn revolving credit facility of €50 million, and achieved a low leverage of 1.6 times net debt to Adjusted EBITDA. Our leverage was favorably impacted by continued program of voluntary accelerated debt pay down of our higher-cost Brazilian debentures with a payment of $30 million in Q4, 2016. An additional anticipated debt pay down of debenture in Brazil was done at the beginning of second quarter in April, 27 in the amount of $27 million. Please, on chart number 13. Before we will open the call up for Q&A, let me review our guidance for fiscal 2017. We are reaffirming our prior outlook, which includes the following assumptions. Our focus is to return to both top and bottom line growth, drive cash flow, and make target investments that advance our competitive position. We are starting to see some sign of stabilization and recovery in Brazil; however, uncertainties remain for 2017, mainly due to macro and political environment as well for Argentina and Mexico. As a result of this dynamic, we have a pragmatic view of growth for fiscal 2017. We are targeting revenue growth in the 1% to 5% range. We expect to return to normal seasonality this year, which means lower activity levels in Q1 and Q2 and a stronger second half of the year. Q2, we also not have some incremental volume from Telefonica that happened in Q1, especially in Spain and Brazil. The relative and absolute performance of our second half will be even more pronounced as we benefit from the ramp up of new clients and share of wallet gains in 2016 and 2017, primarily from multisector clients, while we expect Telefonica revenues to stabilize at fiscal 2016 fourth quarter levels towards the end of the year. We continue to target Adjusted EBITDA margin in the range of 11% to 12%, which includes ongoing efforts for cost efficiency, strategic investments to advance growth initiatives and the ramp up costs as a result of our stronger commercial pipeline. We expect roughly $30 million in non-recurring items, most related to our program to drive indirect cost efficiencies. We started this program in the third quarter of fiscal 2016 and once completed by Q3 of 2017, we will achieve a run rate reduction of indirect costs, mainly overhead by 12% to 15% reduction. We expect net interest expense to be in the range of $60 million to $65 million at current FX rate as of December 2016. As you consider the GAAP net financing line in our P&L, which is a combination of net interest and FX, please remember that our adjusted net income and adjusted EPS exclude the non-cash effect on net foreign exchange gains on financial instruments, interCompany balance and net foreign exchange impacts on cash positions held in U.S. dollar by local operations. We exclude this from our adjusted numbers to more clearly show the underlying health and trajectory of the business. We are targeting CapEx between 3% to 4% of revenue and we expect our effective tax rate of approximately 34% and a fully diluted share count of approximately 73.9 million shares. Our guidance does not assume any major change in the current operating tax or regulatory environment, changes in capital structure or exchange rate movements on the translation of our financial statements into U.S. dollars and acquisitions. Now I would like to turn the call over to the operator and take questions from the audience. Operator?

[Operator:]

[Operator Instructions]. Our first question comes from Susana Salaru with Itau. Please proceed with your question.

[Susana Salaru:]

We have the questions here, first on the margin expansion in Brazil. It was listed three reasons, the migration to the multisector, efficiency and the macro environment. If you could just elaborate a bit more on how it's evolving the efficiency in terms of moving to Tier 2 cities, reducing turnover just for us to monitor how relevant was efficiency versus the other two factors? And our second question is related to the payroll tax hike. I don't know if you have this measure but the last time that there was a payroll tax hike last year, you know how much you were able to pass through to your clients just for us to know a ballpark of what should we expect going forward assuming that there will be another hike this year as well? Thank you.

[Alejandro Reynal:]

Yes, hi Susana, thanks for the questions and for the call. With regards to the first question, yes, the margin expansion in Brazil is coming from several reasons; one is the continued efficiencies that we are pursuing in the Brazilian operation. We continue to expand in higher value-added solutions, so there's a mix impact from business mix into the margins, and you see that expansion, we commented that for the Group; we expanded the 3.8 percentage points for Brazil, you see also an expansion in higher value-added solutions in the quarter, so that's the second reason. And with regards to the operational efficiencies; in Brazil, we have been benefiting from the lower turnover. In Brazil, when we compare quarter-on-quarter, it went down from 8% to 6%, so basically 2 percentage point reduction. This is a combination of actions that we are doing in our operations plus as you know, there is increased unemployment in Brazil. So there's a positive effect that we are experiencing there. With regards to the move to Tier 2 cities, that program is mostly completed. There's still some minor adjustments that we are doing, but for the most part we have completed that. So in summary, the positive effect in margins is due to—on one end to the business mix, the higher value-add solutions and the expansion [indiscernible] that we're seeing in Brazil and then from operational improvement that we constantly do in our call centers and in particularly as you pointed out the improvement we had in the quarter on attrition. With regards to the second question, which is related to the payroll tax, Mauricio, I don't know if you want cover that one?

[Mauricio Montilha:]

Sure. Hi, Susana, I'll give you—last year the payroll tax was about 1.0 percentage and we included a negotiation of the adjustment for the payroll together with the inflation pass-through. If you recollect the selling increase in Brazil, that is for our industry was around 10% and we have another 1 point on the tax. Typically, we've been able to pass-through thirds of—I'll say the inflation to prices in Brazil, last year it was likely below that given it was 11% and most of our clients were in a very tough situation, given the environment. However, as you can see Brazil margins, as we took all the actions Alejandro mentioned in terms of initiative and also reducing the cost base, we're being able to keep the margins through those initiatives, also adjustments on the service levels and new initiatives we are now putting with our clients, particularly in the automation front. As I think I commented last time we spoke, we focus on a lot of initiatives related to how we operate and as Alejandro mentioned, most of those programs, particularly in Brazil, they are right up and running. The new wave of efficiency is coming from more automation, we are helping our clients to implement their operations. So I would say last year was between 55% to 60% of inflation pass-through, in the prior year it was always around 60% to 65%, some years 70% that has been the [indiscernible] prices, all the others, we've been able to manage either more share of wallet and adjustments and the way we operate.

[Susana Salaru:]

Perfect. Thank you Mauricio and Alejandro. Very clear.

[Operator:]

Thank you. Our next question comes from Vincent Colicchio with Barrington Research. Please proceed with your question.

[Vincent Colicchio:]

Yes, Alejandro, I'm curious, will the new outsourcing have a near-term positive impact in the next couple of quarters or will the response to be subdued given the continued uncertainties in the market?

[Alejandro Reynal:]

Yes, hi Vincent. Thanks for the question. It's hard to say the specific impact on the new outsourcing law. What I can tell you for a fact is that the topic is coming up in conversations with clients and therefore there's been an increased level of interest, in particular from financial services to outsource more. There—to an extent one of the things that we are considering is whether there is businesses or contact center, they still have in-house and whether we can carve those out or do it through a normal outsourcing. But the fact is that the number of conversations around further outsourcing have been increased in the recent months since the outsourcing law has passed. So again, difficult to quantify, but from a regulatory point of view, we see this very positively. And I think if anything, will materialize in further outsourcing. You know that we did acquire a Company, which is Interfile, they specialize on back-office processes, specifically for financial institutions and a lot of the services that banks in Latin America and in particular in Brazil, they still have in-house relay to back-office services. So I think our position had a very good timing because it happened right at the time of the new outsourcing law. So we are very well prepared to address this potential increase in outsourcing through the capabilities that we have acquired. So again, difficult to estimate how much this is going to translate and whether we'll see it in the next quarters, but for sure it is a very positive development in the Brazilian market.

[Vincent Colicchio:]

Then this one's for you, Mauricio. What must happen—could you summarize what must happen for the Company to achieve the high end your revenue and EBITDA guidance ranges?

[Mauricio Montilha:]

Yes. Well, when we did the guidance on the back of Q4 results as we did last year, we are still in an environment, although we recognized there are some, I will say, some signs of recovery, they are not still very strong and sustainable particularly in Brazil. We have some pockets of good news and some [indiscernible]. So we did our guidance in a very prudent way, especially because there are certain drivers like Telefonica revenue is still being negative this year. So we are prudent. We were—also positive surprises, because in Q1 especially we have with Telefonica was ahead of plan, particularly in Brazil and in Spain. In most cases, they are—volumes of activities, they are I'll say, being reduced over time, and we will see it reduce in Q2. So this is better than we expected, particularly. The other area that was better than we expected was the ramp up of new clients that we won at the end of the last year. And we have very good run, particularly in Spain. Last year was the year probably, I think we had the most successful year in terms of commercial activity in Spain the last couple of years. And the ramp ups really prove, especially in Q4 and Q1, they went very well. In Brazil, the same actually we got very good new contracts that were not in the rather—and the ramp ups went very well. So we have all positive, I'll say, in Q1 and with some extra volumes, particularly in Telefonica that we didn't expect, although the Telefonica curve continues for the forecast for the year, the trend that we expect to stabilize [indiscernible] but Q1 was better in this journey but the journey's to [indiscernible] more stabilization later part of year.

[Vincent Colicchio:]

It looks like collections revenue declined as a portion of the mix in the year-over-year in sequential basis, is that a temporary thing, does that start grow again next quarter?

[Mauricio Montilha:]

Yes, absolutely yes. We had absolutely, we are ramping up new clients within Brazil as well, but this will come back strongly towards the end of the year.

[Vincent Colicchio:]

Okay, I will go back in the queue. Nice quarter guys.

[Mauricio Montilha:]

Thanks.

[Operator:]

[Operator Instructions]. Our next question comes from Leonardo Olmos with Santander. Please proceed with your question.

[Leonardo Olmos:]

Good evening everyone. My question is regarding America segment. We notice flat revenues on constant currency terms and in the meantime you added 2,900 workstations in the quarter versus 56,000 in the whole year in 2016. Our question here is, should we expect more inquiries into the next—in the following quarters or did you have some high churn on Americas this quarter that would explain the difference? Thank you.

[Alejandro Reynal:]

Yes, hi Leonardo, thanks for the question. You know, the Americas in the first quarter is basically reaffirmation of what we communicated during guidance. We started—there's a lot of good things happening in Americas, but also we saw some declines, particularly in Argentina and in Mexico due to the macroeconomic environment. So what you're seeing is a continuation of what we saw in the fourth quarter in the first quarter. And when we commented on this last quarter, we did say that that softness and adjustments in those countries will continue to happen for the first half of the year. So I think what you're seeing is to an extent a consistency in terms of reduced activity and especially you see that in the comparison of year-over-year, but it's very much aligned with the themes that we communicated last quarter. The truth is that there is good commercial activity as pointed out by the wins in terms of workstations. Colombia is doing very well. Peru is also doing very well, our U.S. Nearshore operation is doing very well, all of those are in Americas. So while we report these wins, you don't see yet the revenue materialize because basically those are businesses that haven't bumped up, but it's a good proxy for what we also said during the last quarter, which is a stronger second half in terms of growth. So again, in summary, very consistent with what we said in terms of continued softness, which makes the year-on-year comparison not great, but good commercial momentum that should project into a stronger second half.

[Leonardo Olmos:]

Perfectly clear. Thank you. Thank you, guys.

[Operator:]

Thank you. Our next question comes from Dave Koning with Robert W. Baird. Please proceed with your question.

[Dave Koning:]

My first question, yes, typically Q1 seems to be the low point for your EBITDA margin for the year, but this year, it's right within the range, the 11% to 12% range. So I guess I'm just wondering, is there going to be a downtick in Q2 or are you just being a little bit conservative with the 11% to 12% guidance for the year?

[Mauricio Montilha:]

Yes, Dave, Mauricio speaking. I think, as I mentioned, there's—there are a couple of things happened for the year and some for Q2. As I mentioned, we have some particularly higher volumes in Q1 that do not happen in Q2, particularly with Telefonica in some countries [indiscernible] we have some volume down in Q1 added to the revenue. The second point is, we have a lot of ramp-ups to do this year and there's some pressures as you ramp, that will particularly have some implications for Q2 and then using [indiscernible] in Q4. So when we did the guidance, we said Q1 and Q2 will be more pressured this year. Q1, as I said was a very good surprise, particularly the one win much better than we expected and this went up to the P&L, but we still have some foreign downward pressure, particularly in Telefonica, so when the stabilization occurs at the end of the year, some [indiscernible] volume Q1, so Q2 probably will be more pressured than we expected as well, but we see the year—the ramp for the end of the year is still in a good way. But that's more or less the picture we are seeing at this point.

[Dave Koning:]

Then secondly, how big was the impact of the Moroccan divestiture and then also the Brazilian acquisition during Q1?

[Mauricio Montilha:]

On the Morocco, Morocco was about—in terms of revenue, was about $1 million a year. So we are talking about probably $3 million of revenue in Q1 that we lost. Our numbers—we are comparing without Morocco already, okay? So all the numbers we're reporting, we are excluding Morocco from the base, but the EBITDA was flat, so there is no noise in the numbers we're reporting, we excluded in the base. The second question, the acquisition, I think the good point Interfile acquisition, we are—for final execution, we are waiting for the antitrust clearance. This week, actually we got public information already that the antitrust body in Brazil has approved the acquisition without any restrictions. There is now two-week period that anyone can challenge it. We don't expect given the market share on that and once those dispute ends, we may—we will be able probably to close the deal and execute the deal by the end of May. So it will have some implications, a little bit in Q2 but further in Q3 and Q4. Once we get this done, we're going to update with an announcement of the final due and the financial implications for that.

[Dave Koning:]

Then I guess lastly, just a quick one. The $60 million to $65 million of net interest expense that you talk about, is that the same basis as during Q1, it was about a $15 million net interest expense between the interest income and interest expense?

[Mauricio Montilha:]

Yes, we said $60 million to $65 million, this utilized December exchange rate. So if you—it's hard to predict how the exchange rates will work out for the year, but I would say we are—they improved a little bit in Q1, so you see a lower number, but the run rate is around—if you use—December exchange rates, if you use Q1, if they keep stable will be in this range, $60 million to $65 million maximum.

[Dave Koning:]

Okay, great. Well thank you.

[Mauricio Montilha:]

Okay.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the call back over to Alejandro Reynal for closing remarks.

[Alejandro Reynal:]

Yes. Thanks, everybody for the questions. Just a few comments as a recap. We are off to a solid start to fiscal 2017 as we delivered top line growth and maintained our margins, while improving our cash flow and enhancing financial flexibility. We're very confident of our ability to return to growth in 2017, based on our existing and new client business and the investments we are making on our strategic growth pillars. We're also very confident on our capacity to deliver on our strong cash flow generation, which will support our earnings expansion. While we have seen signs of recovery, we continue to believe that this microenvironment will be very challenging in 2017. Factoring in these considerations and our solid performance in the first quarter, we are confident that we will be able to achieve our goals for the exercise and we have reaffirmed our outlook for full-year 2017. Thank you again and look forward to our next interaction. Thanks.

[Operator:]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.