Euronet Worldwide, Inc.
Q2 2021 Earnings Call Transcript

Published: 28 Jul 2021

[Operator:]

Greetings and welcome to the Euronet Worldwide Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Claassen, General Counsel for Euronet Worldwide. Thank you, Mr. Claassen, you may begin.

[Scott Claassen:]

Thank you. Good morning and welcome everyone to Euronet's quarterly results conference call. Today, we will present our results for the second quarter 2021. On this call, we have Michael Brown, our Chairman and CEO; Rick Weller, our CFO; and Kevin Caponecchi, the CEO of our e-pay division.

[Michael Brown:]

Thank you, Scott, and good morning and thank you to everyone who is joining us today. I will begin my comments on Slide number 5. As I kick off the quarter's review and knowing the Olympic Games just commenced, I can't help but to borrow some words that might be used during the boxing matches to describe some of the outcomes. So here we go. In our case its surely great to see the e-pay and Money Transfer segments punching above their industry weight class record second quarter results and double-digit revenue and earnings growth rates and all that. To say the least, those are some Olympian results. Before I get to the operating results for those of you, who have been with us for a while, you know that one of our greatest strengths is the diversity of our business, diversity and products, distribution channels, geography, and employees. This diversity can create nuances in the business that make it more challenging to understand when you don't live and breathe it every day. Today, I want to start with the punch line and then I'll fill in the details. Euronet as a strong financial technology company that is ever evolving to be able to continue to deliver the same strong growth trajectory that we have historically achieved. As I said, e-pay and Money Transfer just delivered record second quarter results across all of our reported financial metrics. The transactions in our EFT segment have proven resilient when borders open and movement restrictions are lifted, and we have developed REN, a world-class technology platform that has allowed us to stay on the cutting edge of payments trends to take advantage of the ever-changing digital landscape. All of which is made possible because of our strong balance sheet. I think the fact that we can talk about Money Transfer and e-pay earnings in the midst of ongoing COVID pandemic is remarkable. It is a true testament to the dedication and abilities of our Olympic champion teams to stay committed to our long-term growth plans and to our conservative financial management, which has given us the balance sheet to retain our employees and continue to execute on our plan.

[Rick Weller:]

Thanks, Mike, and good morning, everyone. I'll begin my comments on Slide12. I think Mike's comments are worth repeating. Any quarter where you have two segments that achieved record quarterly earnings is an outstanding quarter. Particularly with the uncertainty that COVID has created. As has been the case for the past five or six quarters, the strength of our balance sheet continues to provide us with the comfort and flexibility to take advantage of opportunities that are driving the business forward. As you can see here, we ended the quarter with nearly $1 billion in cash and restricted cash. The sequential reduction in unrestricted cash represents the shifting of cash into more than 6,000 ATMs we had reopened during the quarter. More so, adding to our cash balance was approximately $23 million of cash generated from operations during the quarter. Next slide, please. For the second quarter, we reported revenue of $714.7 million, operating income and adjusted operating income of $30.1 million and adjusted EBITDA of $74.7 million. The better than expected revenue growth rate was the result of continued strength in our Money Transfer segment where growth outpaced our expectations. The EBITDA results were in line with the lower end of our range of expectations and would have been better if not for the slower than expected border reopenings and vaccine rollouts in Europe. In the second quarter of 2020, we recorded a $104 million non-cash goodwill impairment charge, $82 million of which was recorded in the Money Transfer segment and $21.9 million recorded in EFT, all stemming from the economic impacts of the COVID-19 pandemic. These impairment charges have been excluded from the prior year adjusted operating income, adjusted EBITDA, and adjusted EPS to provide more comparable year-over-year results. We delivered adjusted EPS of $0.53 per share compared to $0.04 per share for the prior year. Slide 14? On Slide 14, we show you the three-year transaction trends for each segment. EFT transactions grew 46% driven by improvements in ATM transactions as borders began to reopen as well as a significant volume increase in low value point of sale transactions in Europe and low-value payment processing transactions in Asia Pacific. E-pay transactions grew 35% primarily driven by digital media transaction growth across our markets with particularly strong growth from customers in South America and Asia, who have a high volume of low-value transactions sold through digital channels. And while we say these are low-value transactions, the reality is that while the absolute value of these transactions is low, they are accretive to our gross margin percentage. The significant growth in these transactions was made possible by our REN technology, which has enabled the rapid addition of significant transactions and has allowed us to take advantage of these emerging trends in the payment space. And in the Money Transfer segment, we were quite pleased that our most profitable Money Transfer transactions, US outbound and international outbound transactions grew 36% and 44% respectively, which also includes 74% growth in direct to consumer digital transactions. These are partially offset by declines in the US domestic transactions, which then netted to 33% total transactions year-over-year growth for the segment. Next Slide please. On Slide 15, we presented our results on an as reported basis. Year-over-year, the currencies in most of the major markets we operate increased at upper single and double-digit rates with a few outliers including the Indian rupee and Brazilian rial, which increased at low-single digit rates. To normalize the impact of currency fluctuations, we have presented our results on a constant currency basis on the next Slide. I am on Slide 16 now. EFT revenue grew 36%. Adjusted operating loss improved 35% and adjusted EBITDA improved 86% driven by increased transactions from partial lifting of travel restrictions across Europe as compared to the second quarter last year when Europe was largely locked down. E-pay revenue grew 21%. Adjusted operating income grew 42% and adjusted EBITDA grew 40% driven by continued strength in digital media content and mobile sales through digital channels together with certain customer promotion activity. Money Transfer revenue; adjusted operating income, and adjusted EBITDA grew 30%, 49%, and 37% respectively. These exceptional growth rates were the result of growth in US outbound and international outbound transactions of 36% and 44% respectively, partially offset by declines in the US domestic business. Adjusted operating income grew faster than transactions as a result of a shift in the mix of lower value domestic to higher value cross-border transactions. Overall, I think it bears repeating that these are exceptionally strong constant currency results particularly out of the e-pay and Money Transfer segments. And while the EEFT results came in at the low end of our expectations, as Mike mentioned, we are encouraged by the positive transaction trends we saw in the last couple of weeks of June and have continued into July, together with the increased average withdrawal amounts. Nonetheless, as you have been seeing in the press, we too have started to see more contagious variants of the virus make headlines, discussions of the US going back to masks, uncertainty stemming from changing travel policies in countries across Europe, and continued vaccination effort, we realized that the unevenness of EFT transactions is likely to continue through the remainder of 2021. After taking all these things into consideration, we will refrain from giving official guidance but think it is important to provide a couple of data points to help frame your expectations. We would expect third quarter 2021 consolidated revenue to have recovered to third quarter 2019 levels and nearly 20% over last year's third quarter, recognizing the impacts of COVID constrained travel in the EFT segment and the double-digit compounded annualized growth rates posted in the e-pay and Money Transfer segments. From these revenue levels and with careful expense management actions, we expect third quarter EBITDA to be in the $135 million $145 million range. This EBITDA range also recognizes that we will have about 1300 more ATMs this year in the third quarter than the prior year, and we will have about 3700 more active or live Euronet-owned ATMs this year as we see travel ramp up in the third quarter. With that, I'll turn it back over to Mike.

[Michael Brown:]

Thank you, Rick. As you know, COVID creates a level of uncertainty that we just can't do anything about. However, we have been proactive in using our technology to our advantage to further expand our e-pay and Money Transfer segments and the double-digit CAGR growth rates for those two segments are just exceptional. We can't overcome the travel restrictions that are limiting our EFT transactions. We continue to grow by leveraging our technology to create new opportunities to expand our business. I believe Euronet is the most unrecognized Fintech company that's creating in the markets as the technology we develop really blows away that of any other company. Because our strong balance sheet has allowed us to continue to strengthen our value proposition across the company, once travel is allowed to resume, we will continue to grow at consolidated double-digit growth rates, well into the future. As I close, I again reflect on the Olympics. The Euronet Olympians are fighters, we always have been, we've armed ourselves with the best technology in the industry. We've got the best athletes, and our game plan has produced consistently improving results over the 26 years of competition in the midst of this pandemic our EFT team has been blocked from and have stepped in and have been taking the goal. We are confident that as the travel restrictions are removed, our EFT team will soon be picking up the goal. So to that end, we can see in all gold sweep in the near future. With that, I'll be happy to answer any questions. Operator, will you please assist.

[Operator:]

Your first question comes from the line of Andrew Smith with Citi.

[Michael Brown:]

Good morning, Andrew.

[Andrew Schmidt:]

Good morning Mike. Hey, Rick. Hope you guys are doing well. Thanks for taking the questions here. Yes. I appreciate the comments in the technology, the REN momentum and then the use case expansion, Money Transfer, it's good stuff. I wanted to ask question on EFT, can you talk a little bit about, just a little bit more about what you've seen quarter-to-date in the third quarter and then as it relates to what's embedded in the third quarter outlook. It sounds like you're baking in a little bit in the conservatism for unevenness in travel recovery, COVID variants, and things like that. I just want to make sure that's the case. Just to understand a little bit of the context of the embedded EEFT segment EBITDA guide relative to what you're seeing quarter-to-date. That'd be helpful. Thanks.

[Michael Brown:]

Well, as you saw, we really hit the very low end of the range that we gave you in Q2 because you know from just the three weeks into Q2 where we gave the guidance, we saw kind of everything going to hell in a handbasket in Europe and everything kind of slowed down. So we were well on the low end of that range. So, we are a little bit conservative with the EFT moving into the third quarter, that's correct, but let me just tell you, none of us know, nobody knows what's going to be announced tomorrow. Just as we were walking into the room to make this call, we find out that the UK has opened up its borders, so that's a positive for anybody, who is double vaccinated from the US or the EU. So, I guess you just say yes, we're a little bit conservative, but we'll just have to see what occurs and you're watching and reading the same things we are, the travel indicators from the airline, the booking guys, everybody else we're all, it looks like bookings are going to be quite strong in a number of the countries in Europe for the third quarter. So, we just hope that turns into real life people because what we have seen is that if I've got the people there, we'll make the money.

[Andrew Schmidt:]

Yes, that makes a lot of sense. And then just as a follow-up, the Latin American JV in terms of independent ATM deployment and outsourcing, could you talk about that a little bit from like an addressable market perspective. Let's see, I don't think you guys operate in Latin America just yet, so it seems like there's a lot of opportunity there, but what's freight way to think about it from an addressable ATM or market perspective there as you enter Latin America.

[Michael Brown:]

Well there. The interesting thing about Latin America is almost every single country has its own currency, its own Island currency. So unlike the EU, where there's lots of euros going around, with a lot of the countries where we don't have an ability to make a cross currency transaction, that's not the case in South America, and that's what's exciting and certainly, they don't have near the number of tourists that come to, say, South America that Europe does, but like I said, with all different currencies, that means we've got a big potential. With respect to that JV; I'll tell you why we got into that JV. We've got a very good partner procedure with this, the biggest money delivery company in South America. They've got relationships with all the banks. We are going to need cash delivered to our ATMs as we build this out. We've been building what we've done in Asia Pac, which we're really excited about, which is hundreds of millions of dollars we believe in EBITDA potential, but it has taken us five to six years to do so. What we've done is we've adopted a different policy with respect to South America and said let's have a partner, who can get us in and help us get these Visa and Mastercard sponsor banks and central bank approvals, let's accelerate that and do it a different way. So that's why we did it, and we're excited about that possibility and hopefully, we'll see some ATMs live down south within the year. And beyond the ATM opportunity, we see it has been a market rich for our technology. Each of these countries are also dealing with things like real-time payment applications, etcetera, so similar to what we see in Asia Pac, this is that market that's prime for the quality of product that we have. So, not only is it one that we can go after the ATM front, but we can go after, really taking advantage of our REN technology platform there too.

[Andrew Schmidt:]

Got it, very helpful. Thanks a lot guys.

[Michael Brown:]

Thank you, Andrew.

[Operator:]

Your next question comes from the line of Peter Heckmann with DA Davidson.

[Peter Heckmann:]

Good morning, gentlemen. I wanted to follow up a couple of things. Mike, what do you think in terms of your best guess in terms of net ATM installation for this year, any real change there. You've been able to get out and scout relocations and sign new leases and when you think about that number, how do you think it divides between Europe, Asia Pacific, US, and India.

[Michael Brown:]

I think we were looking at 4,000 to 5000 at the beginning of this year, thinking that we would get a recovery faster than we're getting. I would have to say that we're probably closer to 3500 to 4500 kind of would be the focus and we're still putting ATMs into the one country that we're in South Asia that's basically locked down and not making a dime because we know when tourists return to that market, it's almost ATM less in the tourist areas. So, I don't have the breakdown of east versus west, but we'll say that should be the number, probably between 3500 and 4000 with roughly, I don't know if I had to get 20% to 25% would be Asia, something like that.

[Peter Heckmann:]

Okay.

[Michael Brown:]

Again, one of the challenges we have in some of these Asian countries. I mean, they're really in bad shape with respect to the virus and so we can't get out there and hunt sites as easily because of all the lockdowns and so forth. So there's still a lot of variables, particularly in Asia, but a lot of opportunity.

[Peter Heckmann:]

Sure. Sure, definitely. Okay. And then, just any change as you've done your due diligence and then working on your closing of the PB and ideal, any new revelations about the business and any change in terms of thinking about that to close somewhere right around year-end.

[Michael Brown:]

And no, not really nothing has changed that. Our goal is to get it in by the end of the year and there's a lot of hard work that's actually been done as we speak or driving, get all the procedures in the PAT and handovers organized for that. So no new news on that so far.

[Peter Heckmann:]

Okay. Thank you very much.

[Operator:]

Your next question comes from the line of Andrew Jeffrey with Truist Securities.

[Andrew Jeffrey:]

Hey, good morning, Mike. Appreciate the Olympic metaphors and I agree Euronet is probably the least appreciated Fintech publicly traded Fintech out there. My question for you is you've built this really impressive global money transfer business with 3.6 billion of connected accounts and 220 million wallets to note moving into C2B transactions. Can you talk a little bit about how you intend to monetize, the growth has been great, yield has been terrific. You're clearly taking share from the legacy providers. It seems like there's a real sort of optionality aspect to this business, and I'm just wondering how we should think about that over the next couple of years.

[Michael Brown:]

I think you're on to kind of our top secret, which is our top secret plan and that said, as we have added these bank accounts, you've seen the volumes of the money transfers that we're starting to payout in the banks, all these emerging markets they're adding more and more bank accounts. The idea of the population being banked and "financial inclusion" is a big deal for all these politicians in these developing markets and so by us having access to 3.6 billion bank accounts and all those 220 million wallets, this really gives us an advantage over everybody on the planet. So, we're able to drop more money into more accounts than anybody else out there and that's really where the future is, you know, yes, we've got 490,000 at physical locations and that's great, because there will always be that. But the idea that we are connected to these accounts in many, many of them are real time kind of payment opportunities where the money actually you know, you walk into one place and you do your transaction or you do it on your mobile phone and arrive at the recipient's account in seconds. I think what we're doing is building the best set of rails in the industry and we intend to monetize them both for ourselves and for third parties like we've announced in the past. And Andrew, you've seen in the past and heard us talk about relationships with people like Zoom where we help terminate transactions for them and others that we've mentioned along the way here. So the next frontier is beyond what you might call traditional Money Transfer players, okay. And maybe you can appreciate the fact that we have those relationships through our XE business where we do smaller volumes of what I might call mass payments that get to business customers. So, these are small businesses sending out to other business accounts and as Mike said in his comments, this is not just going to consumer or residential accounts, this is going to business accounts as well. So with the insight that we have from our XE business, the knowledge we have of complex foreign FX-based transactions and then the beauty of the network that we have around the world. We think that we've got one of the best-positioned networks of any player in the market, not just Money Transfer guys, but any player in the market. So with that, I think you can start then anticipating what the potential opportunities would be and as Mike said, we look forward to telling you a lot more about that in the near future, really be the bull's-eye is on the trillions. That's what we're going to take, the business payments. We've got the consumer payments down, we're going after the trillions now. Remember, when we acquired RIA, it had 42,000 network locations. We've it chased it up to 0.5 million by now, we've got another chase in pursuit.

[Andrew Schmidt:]

Yes, I think if Euronet doesn't monetize or depending on timing, somebody else is going to, it's a pretty exciting opportunity for you guys, I appreciate it. Thank you.

[Operator:]

Your next question comes from the line of Mike Grondahl with Northland Securities.

[Mike Grondahl:]

Yes. Hey guys, congratulations on the progress. And just following up on the last question. The international payment opportunity, are we going to see that progress via customer wins via you guys hiring maybe resellers, how do we see that play out and maybe what do you guys think are one of the two kind of primary use cases.

[Michael Brown:]

Well, it's just bill payments, you know, Rick talked about math payments. That's the gig economy where you've got a company that has got lots of employees around the world and they need to be paid in different currencies, but there is also just the gig economy of payments where you have lots of suppliers around the world. So, I don't think you're going to see us hiring a bunch of people, you know to sell this, but there are strategic partners where they do payments for companies right now and we think we can do it faster and more efficiently than the bank system. Yes, I mean I think the real advantage that we see in the process is that we will enable entities to simplify a very complex payment. If any of you have tried to make an international payment, you'll realize and I've heard this even from many of the banking professionals that I worked with, they tried to make a payment within their own bank across border and it's painful. What we are looking at is bringing all these pieces together, which is the technology part of it, the simplicity part of it, the compliance part of it, all this is part of the complexity of getting one of these cross-border multi-currency kind of payments made.

[Rick Weller:]

And as Mike said, there's a lot of people that we can work with could be direct relationships with companies, could be partnership relationships, could even be doing like we've already got today, private label agreements with financial institutions to allow them to be able to make one of these payments more efficient. These financial institutions are stuck with swift right now, lord knows when that payment arrives, you know and so, financial institutions are going to have to get competitive with what else is out there with all these Fintechs and they're going to have to give their customers, what the Fintechs want to give them, which is instant payments at guaranteed rate with full compliance.

[Michael Brown:]

Yes. And if you just think about how you try to go about making a payment here in the US. Well, I'll use a simple example, an old one here, you write a cheque, you just simply write a cheque to someone, the banking infrastructure is designed to handle it and it's not a big deal, you put it in the mail. The guy gets the cash, he cashes it, everything's fine and dandy, it takes about a week before you can ever get availability of the money, but the process works and you know how to do it. How do you even go about making an international payment. You can't write a cheque, you can't just go to your PC and do an ACH transaction. ACH transactions aren't available outside the United States right? And what if they close in two days. and then they can be rejected up to six months. I mean it, it's not good funds. So again, it's bringing together making simple a very, very complex product that we've got all of the infrastructure, all the technology, the account, the know-how to bring, so I think we will have several parties that we work with to really monetize this.

[Mike Grondahl:]

Got it. Okay, sounds pretty interesting. Thank you.

[Operator:]

Your next question comes from the line of Darrin Peller with Wolfe Research.

[Darrin Peller:]

Thanks guys. Nice job on the Money Transfer and e-pay segments, but I want to touch on EFT a little more, when we think about bridging the profitability levels from what you had at a normal run rate to where you are now, with revenue coming back, Mike, maybe just remind us the mix of ATMs, by the sort of level of profitability per type of ATM. You know, when you think about the very high margin transactions, how many of your ATMs are now decommissioned that are in that camp. Maybe just provide a mix of ATMs .

[Michael Brown:]

Yes. We've got 46,000 ATMs right now. We have about 25,000 high value ATMs in Europe, we have about 600 to 700 of them in one country in Asia that is locked down, we have about 10,000 that are outsourcing agreements and the rest are the brown label ATMs in India, okay. And obviously, the most profitable are the ones in Europe, okay. And that's the 25,000 there now and the interesting thing and one of the challenges we have with the third quarter is, if we really want to maximize the third quarter, we got to basically turn on most of all our ATMs or what that does is all the savings that we got last year by having our ATMs turned off and not paying cash delivery costs, not paying service and so forth on it, that's all gone now. So, we've got this higher fixed costs that we're dealing with and we'll just have to see how many transactions fall across that fixed cost and that's why we're kind of careful on Q3 because once you've turned them on, the next transaction is almost all margin. We've got to pay about 10% of it to 1% of whatever the spread is at the Visa Mastercard, but other than that of all groups.

[Darrin Peller:]

Okay. And when we think about cost saves that are maybe still running through the P&L that would come back. Is there any way to give us a sense of the figures? How much incremental costs are out of the P&L right now that would come back in, let's call it in 2022 when things are more normalized?

[Michael Brown:]

Probably the biggest single thing are some of the rent relationships that we renegotiated like with a number of the some of our biggest payouts are airports as an example, I mean we're in over 100 airports in Europe and so we went back and renegotiated with them so that we pay a rent proportional to the passengers that go through the airport. So, you'll see more of that come back as more travelers come back and then we've got other smaller deals like that.

[Darrin Peller:]

Okay, go ahead.

[Rick Weller:]

So if you try to get the numbers around and we've told you how many more ATMs we're going to have that are going to be going active and things like that, like you know as you can appreciate, is the first day you take the ATM active, you've got all, what I'll call semi-fixed costs that go with that, you got your rent, you've got your cash fill, you've got maintenance, you've got communications, you've got all that kind of cost that's with it. So then, it really depends upon how many transactions walk-up to that ATM, as Mike said. Each time a new transaction walks up to it, it's very high incremental profit margin for us. So I think if you try to take some of the ATM numbers that we've told you about how many more ATMs we have, how many more are going to be active this quarter, we've told you in the past that it cost us nearly a $1,000 a month to run an ATM. You can pencil out some kind of grenade math to kind of see what is the change in that cost is going to be, kind of second quarter over third quarter.

[Darrin Peller:]

Got it. Thank you. The last one was just quickly on e-pay. When we looked at the growth rate, it has obviously been materially stronger through the pandemic, given all the digital transactions, digital to digital both sides, fairly unique business model that you guys offer for a lot of the media companies and digital giants. When we think about structurally, yes, Kevin, do you see that is sustainable, so beyond the pandemic, are we in a world where we can actually keep growing that double-digit range long-term.

[Kevin Caponecchi:]

Yes, Darren. Good questions. So the digital growth has been obviously accelerated through the pandemic, but we believe that it will, but that trend will continue. When we look at our sales pipeline of new opportunities, there are overwhelmingly digital versus physical and that digital presence there and also gives us a great way to enter new geographies. And as we discussed previously, with the underlying technology within UK is what's enabling this whole digital adoption and distributions. So in summary, we're operating under the assumption that we will continue to deliver double-digit growth in e-pay into the future.

[Darrin Peller:]

Great. Thanks.

[Michael Brown:]

Operator, it's after 9 o'clock. I think we should take one more question and then we'll have to call it quits.

[Operator:]

Okay. Your final question comes from David Togut with Evercore ISI.

[David Togut:]

Thanks for squeezing me in. Two quick questions, Mike, first, what are your updated thoughts on pricing strategy and the Money Transfer business both in the traditional retail cash to cash and an online business and then second, any updated thoughts on capital allocation priorities would be appreciated.

[Michael Brown:]

With respect to Money Transfer, we've had stable pricing for several years now, really, don't expect that to change anytime soon. So we'll just stay stable where we are. And then with respect to capital allocation, even last year, which was the most horrible year ever, it felt like, we still cleared $100 million in cash. So, we'll clear some cash this year as well. So we're always looking for opportunities, the best opportunities are the one plus one equals three kind of acquisitions. So we're looking for those and sometimes when we see big market dislocations, we'll buyback stock, although that isn't our preference, but we'll do it like we did last year when we bought back 3.9% of the company. So, kind of no change there.

[Rick Weller:]

I would say on capital allocation, one of the things that's really helped us over this pandemic is that we have had a very strong balance sheet, and I think a conservative management of that balance sheet has enabled our Money Transfer and e-pay businesses to flourish in this time when the travel has been restricted and we haven't seen that same kind of contribution coming through from EFT. So, while we could always find quick and easy ways to go spend the money, it's been very helpful to have a very strong balance sheet and it's also helpful, not just in terms of supporting our business, it gives our customers confidence that we're going to be here. We deal with some of the marquee name customers in the world and we're handling their money. We're just not processing transactions for them. We are in possession of their money, and they trust us and so it's been very helpful to have a good strong balance sheet. But as we see opportunities come up like with the Piraeus transaction in Greece, that as Mike says or one and one equals three, we'll certainly go after those, but we're quite fortunate to have the strength of our balance sheet to allow our business to flourish.

[David Togut:]

Understood. Thanks so much.

[Michael Brown:]

Okay. And thank you everyone who has joined us today. Hopefully, we'll have some good news in about 90 days from now; so I feel it .

[Operator:]

Thank you for participating. This concludes today's conference call. You may now disconnect.