Mercury Systems, Inc.
Q2 2021 Earnings Call Transcript

Published: 2 Feb 2021

[Operator:]

Good day, everyone, and welcome to the Mercury Systems Second Quarter Fiscal 2021 Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to the company's Executive Vice President and Chief Financial Officer, Mike Ruppert. Please go ahead sir.

[Mike Ruppert:]

Good afternoon and thank you for joining us. With me today is our President and Chief Executive Officer, Mark Aslett. If you've not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at mrcy.com. The slide presentation that Mark and I will be referring to is posted on the Investor Relations section of the website under Events and Presentations.

[Mark Aslett:]

Thanks Mike, and good afternoon, everyone. I'll begin with the business update. Mike will review the financials and guidance and then we'll open it up for your questions. Thanks to our employees, Mercury delivered a solid second quarter of fiscal 2021. We came in above the high-end of our guidance for total revenue and at/or above the high end for profitability. Our book-to-bill for the quarter was 1.0 and our design wins amounted to more than $300 million in estimated lifetime value. At the end of the quarter, we acquired POC and as a result substantially raising our total company revenue and adjusted EBITDA guidance for the full fiscal year. We now expect to deliver 16% to 19% growth in total company revenue for fiscal 2021 including high single-digit organic revenue growth leading to double-digit growth in adjusted EBITDA. Turning to the details on slide 4. Mercury's strategy, technologies and capabilities are aligned with the major industry drivers and trends. New business conditions remain robust. M&A activity is back and we have the balance sheet and financial strength to capitalize on the opportunities in our pipeline. Looking ahead to the second half of fiscal 2021, we expect the contracting environment to improve given that the Defense Appropriations bill is being signed. Our baseline forecast remains for overall defense spending to be flat near-term then grow at low single digits over the longer term. We expect this growth to be driven by a continuation of the national defense strategy.

[Mike Ruppert:]

Thank you, Mark and good afternoon, again everyone. Q2 was a quarter with strong financial performance. GAAP net income and GAAP EPS were at the midpoint and high end of our Q2 guidance respectively. Total revenue, adjusted EBITDA and adjusted EPS exceeded our guidance. We delivered solid bookings and concluded the quarter with record backlog. In addition on December 30th, we completed the acquisition of POC, which we funded with a combination of cash on hand and our revolving credit facility. As a result of the acquisition as well as Mercury's strong organic performance in the first half, we are increasing our full year fiscal 2021 guidance for revenue, net income, adjusted EBITDA and adjusted EPS. Let's turn now to our Q2 results on slide 11. As I mentioned, we closed the acquisition of POC at the very end of the quarter. As a result, POC had an immaterial impact on the operating results shown on slide 11. Mercury's total bookings for Q2 were $210 million, up 0.2% year-over-year. For the last 12 months, bookings are up 10%. Our bookings continue to be driven by our key markets including radar EW and C4I. Our book-to-bill for Q2 was 1.0, and for the last 12 months, our book-to-bill was 1.12. For the full fiscal 2021, we continue to expect bookings with a book-to-bill above 1. Mercury ended the second quarter with record backlog of $945 million including POC, an increase of 30% compared to Q2 of fiscal '20. Backlog expected to ship within the next 12 months was $598 million up, 15% compared to Q2 '20 providing a solid visibility into the second half of fiscal 2021. Total company revenue increased 9% from Q2 last year to $210.7 million, exceeding the high end of our guidance of $200 million to $210 million. Organic revenue also grew at 9% year-over-year. POC, which is considered acquired revenue in Q2 contributed revenue of only $200,000 during the quarter. Mercury's revenue base continues to be highly diversified with no single program representing more than 10% of total revenue during the quarter. Gross margin for Q2 was 42.1% compared to 45.6% in the second quarter of fiscal '20. In addition to favorable program mix in Q2 last year, the decrease primarily reflected $3.1 million of direct COVID-related expenses charged to cost of goods sold this quarter. This had a 150 basis point impact on margins. Operating expenses in Q2 were up 4%, driven primarily by an increase in R&D expense. R&D was $28.1 million in Q2, up 14% from Q2 last year.

[Operator:]

Thank you. And our first question is going to come from the line of Peter Skibitski with Alembic Global.

[Peter Skibitski:]

Hey, good evening guys. Mark, maybe on POC, can you add any more color in terms of the potential revenue synergies that you guys envision from the deal? Can you -- does this allow you to enable to bid on larger programs or add different customer sets, or -- I'm just wondering you've done deals already in that space. I'm wondering what this deal gets you that you didn't have before?

[Mark Aslett:]

Sure. It's a good question Pete, and this is largely a revenue synergy deal. As you know, it does take time for those revenue synergies to actually occur in defense just based upon the life cycle of the programs. But one of the things that we particularly like about the business is the broad range of programs that are -- don't overlap with Mercury. So strong presence on the F-18, F-15, V-22 H-60. So they've got a range of programs. And what we've been able to do over time is to basically pull-through some of Mercury's other capabilities. And likewise what we've been able to do and what we're seeing right now is the opportunity of Mercury taking POC's capabilities into some of our programs. In particular they've got very, very strong capabilities in the storage domain where some of our largest programs are interested in understanding more about what they could provide and they've got some very unique capabilities in mission computing where we see opportunities as well. So a lot of opportunity I think for cross-selling and potentially upselling over time Pete.

[Peter Skibitski:]

Okay. Appreciate the color. Just one follow-up. Is it -- CapEx wise, is it largely kind of in line with Mercury's CapEx levels on a percentage of revenue?

[Mark Aslett:]

Oh you mean at POC?

[Peter Skibitski:]

Yes. Sorry.

[Mike Ruppert:]

Pete their CapEx levels are lower than ours. We haven't provided specific guidance. But in terms of our maintenance CapEx of 3% to 4% as you know we've been investing running higher than that. Theirs are lower than those levels.

[Peter Skibitski:]

Lower than your maintenance level?

[Mike Ruppert:]

Yeah, lower than the 3% to 4%.

[Peter Skibitski:]

Okay. Thanks so much guys.

[Operator:]

Thank you. And our next question will come from the line of Peter Arment with Baird Equity Research.

[Peter Arment:]

Good afternoon, Mark and Mike. Nice quarter. And Mark, I think you both mentioned that M&A is back. So obviously you just closed on the POC deal but maybe you could just maybe highlight if – are you seeing a change in cadence in terms of just overall deal activity? Any color on that? And do you think just the flattening budget environment might accelerate things for you? Thanks.

[Mark Aslett:]

Sure. Thanks Peter. So the opportunity pipeline is pretty robust right now, and I think we said the same last quarter. There is a lot of opportunities, some of which we've been developing relationships with companies for quite some time, as with the case with POC and others are processes that we're invited into. The deals themselves I think range in terms of size from deal size that we've done in the past to deals that are much larger than that. For us, we're going to stick with the current themes that we have. Those are using M&A to gain capabilities in our two core markets C4I as well as sensor and effector mission systems, as well as to penetrate those markets over time. So the market is very active. It's hard to tell whether it's driven by the defense budget or just where interest rates are and the cost of money. But overall, it's a very, very dynamic marketplace. Mike, I don't know if you want to add anything to that?

[Mike Ruppert:]

Yeah. No, I think you hit it. The pipeline is strong Peter, and we've been active. And as I said in my prepared remarks we – even after closing POC we still have a lot of financial flexibility and good balance sheet capacity to continue to execute on that pipeline.

[Peter Arment:]

Appreciate the color. I'll leave at one question. Thanks.

[Mark Aslett:]

Yeah. Thanks, Peter.

[Operator:]

Thank you. And our next question will come from the line of Greg Konrad with Jefferies & Company.

[Greg Konrad:]

Just to start I mean in the announcement one disclosure was the launch of a new family of open architecture EMS solutions, the open architecture kind of stands out. Can you maybe talk about the opportunity and how this maybe expands the opportunity set?

[Mark Aslett:]

Sure. So open architectures Greg as you know have really been a foundational part of Mercury's strategy. So as a horizontal player in the industry and a company that is investing in innovation at industry-leading levels what we seek to do is to design technology that can be rapidly reused in open systems architectures that obviously drives affordability. It drives more rapid technology upgrades. And we've historically done that in the processing domain, and as we've grown our business RF as well as mixed signal. We're now taking those same principles and applying them into those technology areas as well. And I think that's what's really driving the growth that we're seeing across the business in both C4I, as well as in sensor modernization.

[Greg Konrad:]

And then just one on cash, you mentioned 6% to 7% of revenue for CapEx this year maintenance CapEx of 3% to 4% and the target conversion of 30% for this year. Can you maybe talk about how CapEx trends over the next couple of years? And given maybe some of the COVID investments runoff how you're thinking about conversion maybe getting back to closer to your target rate?

[Mike Ruppert:]

Sure. So yeah, in terms of this year and I mentioned some of the things that we were investing in – in terms of the trusted microelectronics from a CapEx perspective the facility in Andover some of our facility in Cypress those are investments that we've been making over the last 12 months and we expect those to ramp down as we complete those build-outs this fiscal year. That having been said, Greg, as you know our expansion CapEx tends to be tied to our acquisitions as we consolidate facilities. And so, going forward our CapEx will really be driven by that. But barring that, I do see over the next year or so getting back down to those maintenance CapEx levels that we've said of 3% to 4%. And it's hard to tell on the COVID investments. I mean we've made it a priority to continue to invest to protect our employees and business continuity. And we're going to continue to do that as long as we think it's needed. And so hopefully though as we get into fiscal 2022 and beyond those costs have ramped down. And once we do return to those maintenance CapEx levels and our COVID expenses draw down, we fully expect that we'll be at the free cash flow conversion levels target that we set.

[Greg Konrad:]

Thank you.

[Operator:]

And our next question is going to come from the line of Colin Canfield with Citi.

[Colin Canfield:]

Guys thanks for the question. Appreciate it. Can you just talk a little bit about Mercury's role as a merchant supplier in an increasingly shrinking smid A&D asset pool, and then discuss a little bit about what you're seeing in terms of the change of administration? You discussed horizontal expansion right and what a new administration might need for your ability to pursue future deals.

[Mark Aslett:]

Sure, Colin. It's a good question. So, my belief is that the Department of Defense would benefit from a strong and robust Tier 2 industrial base. And in specialist companies, they're able to provide capabilities more quickly and more affordably and they have the ability and the willingness to actually invest in innovation. And Mercury is certainly one of those companies, right? Our R&D level this year is 13%. That is way above the 2% to 2.5% industry average. And how that's playing out is really with respect to our growth levels. Our customers are seeking to work with companies who they can partner with, who can invest in innovation and can benefit not only them but the DoD. And that's very much what we're doing. We're investing in innovation, as Mike described. We're also investing in the capital improvements inside of our infrastructure, particularly around our manufacturing assets, trusted domestic manufacturing assets that are so important in today's world with just where much of the technology is manufactured in the commercial world. So, I think the DoD would benefit from having a strong industrial base and Mercury is clearly one of those companies focus on providing secure and trusted processing solutions.

[Colin Canfield:]

Perfect. Thanks. I keep the one.

[Operator:]

And our next question will come from the line of Michael Ciarmoli with Truist.

[Michael Ciarmoli:]

Good evening, guys. Thanks for taking the question. Nice results. Maybe this is just me and maybe semantics, but I think the organic growth you guys are looking for 8% to 10%. You're now calling it high-single-digits. I realize nothing's absolutely changed. You're adding the $60 million in for POC. The prior guide stays the same. But, has anything changed with the organic growth environment? It sounded like with the budget in place clearly the bookings environment improved a bit. I would have thought that maybe would have translated as well into the organic environment. But any color there?

[Mark Aslett:]

Yes. It's really more just a refinement of the prior range that we gave Mike. I think as I said in my prepared remarks, the second quarter was really remarkably like the first where we did see continued impact with respect to COVID slowness as well as the extended CR. So, although we were pleased with the bookings, they maybe weren't quite as high as what we would have liked. And obviously as the year progresses that does have an impact. So, fundamentally, though, when you look at the guidance the organic guidance for the total company and now layering on top the six months of POC, we expect to deliver another year of both double-digit growth in overall revenue and double-digit growth in adjusted EBITDA. So it's going to be another really strong year for us.

[Michael Ciarmoli:]

Got it. Just to – sorry, just one more and a follow-up to that. The outsourcing component of your growth driver, I mean, if we look at historic budget downturns, do you think anything changes there? I mean if some of the larger primes get squeezed, do you think they keep more work in-house maybe as they've done historically to help absorb their overhead, or do you think that trend can continue in a down budget environment?

[Mark Aslett:]

Yes. I think the trend continues Mike, particularly for what we do. Again because, yes, I think there's going to be a greater focus on innovation. There's going to be a greater focus on potentially affordability. And we're playing at both of those trends. Again, if you look at our R&D levels versus the internal divisions of our customers for similar things, we are dramatically higher. And we're leveraging that innovation across the many customers and many programs. And so when they do a make or buy purchasing decision, what they'll find is that it's far more affordable to acquire the capabilities from Mercury than it is to develop it in-house. And we -- because of the investment model have always got the latest generation of technology, which actually helps them as they're bidding for new business. So we absolutely see that the outsourcing trend is alive and well. If you look at the growth in our subsystems in the second quarter, which is really where we're seeing the outsourcing, it was up 75% year-over-year. And so we saw a very, very substantial growth there in certain programs transitioning into production and we're pretty pleased with the way in which things are going.

[Michael Ciarmoli:]

Got it. Thanks a lot, guys.

[Mark Aslett:]

Thank you.

[Operator:]

And our next question is going to come from the line of Kenneth Herbert with Canaccord Genuity.

[Kenneth Herbert:]

Hi. Good afternoon, Mark and Mike. You both sounded pretty optimistic on bookings in the second half of this year. Mark, can you provide any more detail on now that you have a budget, where you're where do you expect to see that coming from and maybe just how -- sort of how strong could the book-to-bill be in the second half of the year based on the sort of the elevated bookings it sounds like you've got good visibility on?

[Mark Aslett:]

Sure. So we do expect a positive book-to-bill organically for the full fiscal year. We just obviously acquired POC, so we're getting our arms around that in terms of just what their bookings might look like. But organically, we are expecting a positive book-to-bill. In terms of where the potential growth is coming from, at the year level, we see opportunities in airborne radar, EW as well as C4I. Those are kind of the three, I think potential drivers of bookings growth at the year level.

[Kenneth Herbert:]

That's helpful. And if I could just a specific question on some of the aircraft programs. There clearly seems to be a push to extend the life and in fact restart production in the case of the F-16 and the F-15. Are those impactful programs for you as we think about sort of modernization and requirements there, or how do you think about the opportunity of some of these older platforms relative to newer systems?

[Mark Aslett:]

Yes. So we obviously participate in both and that's actually kind of a nice element of our model that we're obviously pursuing next-generation systems as the government is focused on those. But as we know, the platforms change far less often than the overall electronics inside them. And yes, we are clearly seeing a wave of modernization in the radar domain. Our radar business was up pretty substantially, up 75% in the second quarter year-over-year as a result of that modernization. We're also seeing a wave of modernization in EW and I think a lot of that is driven by the great power competition, the threats that we see coming out of the Asia Pacific. And then, yeah, I think if you step back, what we've also seen is, really the major reason that we moved into, C4I is once you start to touch the sensors themselves, it drives a corresponding knock on upgrade in two other processing parts of the platforms themselves. One is in platform and mission management. This is obviously where the acquisition of POC fits along with the prior acquisitions that we've done in the space, as well around command and control intelligence processing. So, our goal quite simply is to be able to provide all of the different types of processing solutions that go onboard systems that require trust and secure processing. And we believe we've got some industry-leading capabilities there that are appropriate for both modernization as well as new systems.

[Kenneth Herbert:]

Great. Thank you very much.

[Operator:]

And our next question is going to come from the line of Seth Seifman with JPMorgan.

[Seth Seifman:]

Thanks very much. Good evening guys.

[Mark Aslett:]

Hi, Seth.

[Seth Seifman:]

Hi. So I wanted to ask about, LTAMDS. And I think you mentioned it was the most -- maybe the fastest-growing program, in Q2. And I'm not sure if that's part of the high growth in radar, that you talked about, but given where that program is in the development process and given the impact that it seems to be having on results in Raytheon which is basically a lot of cost. Is that a program that's, considerably and then if you could give us a sense of considerably below, sort of your typical gross margins? And then sort of what the margin opportunity is on that over time? And how the mix of LTAMDS versus other growth might playout over time in terms of how the gross margin evolves?

[Mark Aslett:]

Yeah. Why don't I talk about it from a high level and then, Mike can maybe kind of relate it back to the financial model. So, LTAMDS was our number one revenue program in the first quarter, but it was along with three other radar programs. Two ground radar programs and an airborne radar program. So you clearly are seeing, the wave of radar modernization. We're seeing a similar thing, at the year level, where both radar and EW are probably going to be the major drivers of growth. The LTAMDS program, as you know is something that we've been investing our own internally funded R&D on for several years now. And it's been a substantial driver of our internal R&D funding. And Raytheon has clearly gotten the benefit of that. The program itself, we're in the very early stages, right? We're delivering new initial technologies and capability, associated with the first six systems. But Raytheon over time believes that upwards of 250 Patriot radars could be subject to this upgrade. And I think again, as we've talked about in the past, this is a substantial opportunity for Mercury. So, the program along with some of the other programs, that we mentioned in both, Q2 as well as for the full fiscal year are in the early phases. And as a result of that the margin profile is typically lower than when the programs themselves, go into full rate production. So, a little bit dilutive overall as well combined with the level of internally funded R&D. I don't know if you want to add anything to that Mike?

[Mike Ruppert:]

I think you hit it. I mean, Seth, it's like a typical program and it is one of our biggest -- it is our biggest in Q2. And over the first half of the year, it's our biggest program. And it is lower margins like a lot of our bigger programs at the beginning, as they ramp up, as Mark said. And then we have higher margins, as they go into full rate production. But from an R&D perspective, from Mercury's perspective, a lot of our R&D in that program has been over the last couple of years and a lot of that is behind us that we were investing, going all the way back to three, four years.

[Seth Seifman:]

Great. Thanks very much.

[Operator:]

And our next question is going to come from the line of Jonathan Ho with William Blair & Company.

[Jonathan Ho:]

Hi. Good afternoon. Just one question for me. When it comes to your trusted type of programs you referenced that earlier in the discussion, can you talk about how that's maybe playing out in some of the programs and potential margin impact as well? Thanks.

[Mark Aslett:]

Yes. So, Jonathan, yes, unfortunately we're not going to be able to link here some of our capabilities to specific programs, just given the nature of what we do. But, yes, we have invested substantially, literally over the last 10 years now, on our specialized processing capabilities. And we believe that -- and we're actually on our fourth generation of it. We believe we've got industry-leading capabilities there that spans the IP into next-generation trusted microelectronics, all the way up through various system-level capabilities. And that type of processing, we believe, is crossing the CASM and its driving significant growth inside of the business. Just, unfortunately, I just can't tell you specifically the areas or the programs, just due to the nature of it.

[Jonathan Ho:]

Understood. Thank you.

[Operator:]

Thank you. And our next question will come from the line of Noah Poponak with Goldman Sachs.

[Noah Poponak:]

Hey. Good evening, guys.

[Mark Aslett:]

Hi, Noah.

[Noah Poponak:]

Are you saying LTAMDS is already your single largest program?

[Mark Aslett:]

LTAMDS is the largest program in Q2, yes. Now, as you know, right, it can jump around quarter-to-quarter and period-to-period. But it's the first -- it's the largest in Q2 and we expect it to be the second largest this fiscal year.

[Noah Poponak:]

Could you size it in the fiscal year?

[Mark Aslett:]

I don't think we've -- well, it's 5% of the total in the second quarter and it's round about, maybe, a little bit less at the year level.

[Noah Poponak:]

I mean, how many multiples of the current run rate does LTAMDS become for you when the program is at full rate production?

[Mark Aslett:]

Well, I guess, it depends on how quickly that full rate production occurs. But what we're delivering right now is, technologies associated with the initial prototypical systems that Raytheon is under contract for. After that, we'll see what happens in terms of the production awards. But the thing that's interesting to me about LTAMDS is just the evolution of the program itself, right? You may remember, it started out as a typical contracting program and along the way transitioned to an OTA, just based upon the capabilities and the needs -- the urgent need of it. And it's moved very, very rapidly. So it's probably the program that is moved the fastest into LRIP that I can remember in recent history. So it's an important program, both based upon the size, the potential over-the-long-term, growth for Mercury, growth for Raytheon, as well as a really important set of capabilities to deal with the emerging threats that we are facing as a nation.

[Noah Poponak:]

Yes. I didn't realize it was moving that quickly, I guess, for you, so that's interesting. If I'm just staring at the multi-year model here, you've grown -- the company has grown total revenue at least 20% five years in a row now. 2021, if you end up a little bit above the high end, you'll hit that 20%. 2022, POC is going to lap and is going to be inorganic for half the year. So '22, if you do one more acquisition, '22 is going to be 20%. If I'm staring at how much balance sheet firepower you have and combining that with your organic target, I mean is it reasonable at this point for me to just assume the company grows total revenue 20% through the middle of the decade?

[Mark Aslett:]

So, it's a great question, right and you've probably seen our slide in our Investor Day deck, right, which the model is we're seeking to generate high margins, expressing up more or less greater than 20%. We're looking to grow the business organically at high single digits to low double digits averaging roughly 10% over time and then to layer on top an additional 10% through M&A. We've done very successfully, as you said over the last five years. And we think that we can continue to deliver that high single digit low double digits organically over time as we kind of look out based upon what we see right now. And as we mentioned, the M&A environment is extremely robust. And I think, the balance sheet is in great shape. So, we think that we can continue to execute against the model that it generated so much value for shareholders as we look forward Noah.

[Noah Poponak:]

I guess those are just the numbers. Okay. Mike, if I take your -- if I go into the range for the 3Q guidance components you gave and then the full year guidance components you gave, the 3Q margin needs to be I think down a little bit sequentially and then the 4Q margin needs to be up from that, it looks like about 250 basis points. Is that accurate? And why is there so much gyration I guess in that -- through the back half of the year?

[Michael Ruppert:]

Yes. So Noah, let me make sure, I understand your question. Let me answer it at the annual level just to give you where we're coming out on margins and EBITDA margins from the perspective of our guidance of 21.7% to 21.8%. That does include POC which is dilutive. So, it's about 30 basis points dilutive to the margin. So, if you back that out you're at that 22.1% where our guidance for EBITDA was last quarter. So we're continuing to expect that for the year. That does imply an EBITDA margin in Q4 that is higher. We expect to have higher revenue. If you look at the quarterly revenue, what that implies for Q4, which is going to give us some operating leverage. We also think gross margins will be slightly higher in Q4 pre-COVID expenses than they were in the first half of the year. So that's what's driving Q4 which is driving the annual EBITDA guide -- margin guidance.

[Noah Poponak:]

Okay. That's helpful. And last one, can you tell us what POC added to the total company backlog?

[Michael Ruppert:]

Yes. We haven't broken that out, but you can look into it. Our book-to-bill for the quarter was one. So our backlog quarter-over-quarter on an organic basis was flat.

[Noah Poponak:]

Right. Okay. Got it. Okay. Thanks very much.

[Operator:]

And our next question is a follow-up from the line of Peter Skibitski with Alembic Global.

[Peter Skibitski:]

Yes. Mark, kind of a tough question to answer I think, but there's been a lot of talk about DoD potentially kind of moving large buckets of money around in the fiscal year '22 and beyond budgets, maybe migrate money out of the Army towards Navy maybe Air Force and maybe build more ships. I know, it's tough, but from a gut level do you get a sense of how that could impact Mercury pro or con, or is it a push? Do you have any thoughts there if we do see that money move around?

[Mark Aslett:]

Yes. So we have -- so the majority of our business is tied to airborne and naval, but we are seeing a lot of growth in ground. But the ground growth that we're seeing is not tied to force structure, right the number of HMMWVs or anything like that. It's really linked to ground radar modernization, right? LTAMDS is a great example and there's a couple of others that we're involved with. So I think it's probably true that the Army typically ends up being a bill payer and – during different cycles and this could be the same. But those monies are likely going to move into both the naval and the airborne domain just given the great power competition and the focus that we have on the Asia Pacific region, as well as other high-end adversaries including Russia. So we're not – we don't have a big exposure to ground other than the as I say radar modernizations which we think look pretty good. And the other parts of the business look pretty solid.

[Peter Skibitski:]

Great. Thank you.

[Mark Aslett:]

Thanks, Pete.

[Operator:]

Thank you. Mr. Aslett, it appears there are no further questions. Therefore, I would like to turn the call back over to you for any closing remarks.

[Mark Aslett:]

Okay. Well, thank you very much everyone for listening in. Stay safe. We look forward to speaking to you next quarter. Thank you. Bye.

[Operator:]

Once again, we'd like to thank you for participating on today's conference call. You may now disconnect.