Perspecta Inc.
Q1 2020 Earnings Call Transcript

Published: 15 Aug 2019

[Operator:]

Good day and welcome to the Perspecta Inc. First Quarter Fiscal Year 2020 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Stuart Davis, Vice President, Investor Relations and Strategy. Please go ahead, sir.

[Stuart Davis:]

Thank you. Welcome everyone to today's quarterly earnings conference call. Presenting on the call today are Mac Curtis, our CEO, and John Kavanaugh, our CFO.This call is being webcast on the Investor Relations portion of our website where you'll also find the earnings release and financial presentation slides that we will use for today's call.Turning to slide two of the presentation, please note that, during this call, we'll make forward-looking statements that are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from anticipated results.For a full discussion of these risks and uncertainties, please refer to our SEC filings including our latest Form 10-K.In addition, the statements represent our views as of today and subsequent events may cause our views to change. Though we may elect to update the forward-looking statements, we specifically disclaim any obligation to do so.Finally, as shown on slide three, we'll discuss some non-GAAP financial measures that we believe provide useful information for investors. The slide deck for today's call includes reconciliations to the most closely comparable GAAP measures.At this time, it's my pleasure to turn the call over to Mac, who will begin on slide four.

[Mac Curtis:]

Thank you, Stuart. And thank you all for joining us this afternoon. A lot has happened since our last call. First, we had another strong quarter of operations with robust organic growth, strong margins and excellent free cash flow.Second, the president has signed a two-year budget framework that gives our customers the predictability they need to plan for and execute their critical missions.Third, we had another strong quarter of new business awards.And fourth, we made our first acquisition as a public company.I'll now address each of these points in more detail. First, again, we exceeded consensus estimates on all of our key financial metrics. Quarter after quarter, we're delivering on our growth, margin, earnings and cash commitments.Revenue was up 1% sequential and up 7% year-over-year on a pro forma basis, our fastest growth quarter yet.Controlling for last year's divestiture gain, adjusted EBITDA was up 19% and adjusted diluted EPS was up 18%. Free cash generation was again stellar at 189% of adjusted net income. Just absolutely great execution by the entire team.Second, the president signed the Bipartisan Act of 2019, which increases statutory spending limits by $323 billion in fiscals 2020 and 2021 and permanently ends the sequester threat.The law also suspends the debt limit through July of 2021, avoiding the risk of a federal default on payments until after next presidential election.For government fiscal year of 2020, the defense budget will be $738 million which is up 3.1% and the budget for civilian agencies will be $632 billion which is up 4.5%. This deal is very positive for Perspecta and our industry. Budgets are up nicely and our customers can proceed with the new program starts and expansions of existing programs.Now, Congress still needs to pass the 12 individual funding bills, so some of the agencies may begin the fiscal year on a continuing resolution. But all agencies should have full year budgets in the fall which is a great outcome.Third, new business bookings are very strong, with 76% of the $1 billion in total bookings representing new work for Perspecta. Book-to-bill ratio in the quarter was 0.9 times. For the trailing 12 months, our book-to-bill ratio was 1.5 times. So, we are well positioned for continued growth.An area of booking strength in the first quarter was trusted workforce, which is one of our strategic priorities. The Wall Street shorthand is background investigations, but trusted workforce is more than background investigations. And our trusted workforce business is more than just the OPM contract.This market includes continuous vetting and insider threat. And the newly established defense counterintelligence and security agency, our DCSA, is taking a broader view of how to attract and retain a trusted national security workforce.The trusted workforce market also encompasses industrial and facility security, supply chain security and other trusted identity markets both in the US and abroad.In the quarter, we had $42 million in bookings on our OPM/NBIB contract, reflecting continued workload on that important mission.We also won a $100 million other transaction agreement, or OTA, modernizing the IT systems that support background checks and insider threat programs. Leading a team of several non-traditional partners will enable the DoD to achieve bold transformational change by combining commercial off-the-shelf solutions with our capabilities and expertise in artificial intelligence, machine learning and natural language processing to automate and operate processes a secure government cloud environment.Anyone who wants to understand the trusted workforce market should take a look at the July Bloomberg government report. Their key takeaway is that the demand for investigations will be steady and ongoing. Background investigations are required for all sensitive government positions.200,000 ongoing investigations and 50,000 to 55,000 new background investigation requests per week will be the norm. According to the report, reducing the backlog will continue to be major focus in the short-term; and in long-term, DCSA is seeking a balanced mix of technology and human services to meet the demand and eliminate vulnerabilities. Perspecta is the best company positioned to succeed in this robust market.Now, we also won a five-year, $162 million award from Air Force to develop and operate a modernized enterprise infrastructure for SIPRNet. SIPRNet is the secret Internet protocol router network. This is all new work for Perspecta.As part of this effort, we'll transform and standardize the network's infrastructure to improve management operations and enhance the cyber security posture for over 400,000 SIPRNet users, client devices and servers.Moving on, our intelligence community business remains strong. In Q1, we secured $139 million, 10-year, sole-source award for one of our core intelligence community programs. And shortly after we closed Q1, we were competitively awarded a five-year $824 million contract by the National Geospatial Intelligence Agency to perform full lifecycle systems engineering and integration work.This is our largest program in the intelligence community and the new contract significantly expands the ceiling value and the scope.The pipeline continues to build as we aggressively pursue new opportunities. Our three-year qualified pipeline is $77 billion, including $24 billion of proposals already submitted and awaiting decision. And this is up $17 billion from this time last year.The pipeline is a lot more than NGEN. We're taking some big swings on programs that have the opportunity to reshape this company. Now, while we're on the topic of NGEN, there have been some positive developments since the last call. As part of the procurement process, bidders on the Service Management, Integration and Transport, or SMIT, have received evaluation notices, or ENs. Also, the Navy has indicated that they want to extend our current contract on a sole-source basis.We view this extension as wholly positive for Perspecta. The Navy now has a schedule they can execute to and we're on track for an award in the first quarter of calendar year 2020, so that they'll extend our contract for up to seven months, which could be to December of 2020.This is an acknowledgment of what we've been saying since investor day. NGEN-R is a very complex procurement. The underlying work is complex and it's made even more difficult by splitting the work into the end user hardware and SMIT components. We believe that complexity strengthens our incumbency advantage.Fourth, we're excited to complete the acquisition of Knight Point Systems and welcome their employees and customers to the Perspecta team. We paid $250 million for the company which represents a single-digit multiple on for-12 months EBITDA. The deal will be immediately accretive to Perspecta.Throughout the process, we were impressed by Knight Point's deep customer intimacy, rich legacy of innovation, patented IP and delivery of managed services programs. The acquisition further enhances our already robust and proven offerings in cloud, cyber, digital transformation, enterprise IT that modernize and transform government mission delivery.Knight Point is a perfect acquisition for us. They're complementary to our culture and offerings, while accelerating our growth strategy. And they look a lot like us, which will ease the integration.They have a heavy mix of fixed price contracts and an IP portfolio that differentiates them in the marketplace. They're very focused in both terms of customer footprint with franchise positions at the Department of Homeland Security and DISA, and capabilities with a strong emphasis in IP around digital transformation, cloud and cyber.They offer patented and trademarked cloud technologies that will differentiate us in the market, including Zeus, a managed services automation tool that allows full visibility into public, private and hybrid cloud instances, and CloudSeed, a FedRAMP-authorized cybersecurity-as-a-service offering, with 24/7 SOC operations, certification and accreditation, ISSO and vulnerability management.Now, last fall, we laid out a strategy with five strategic priorities and Knight Point significantly enhances our position in three of them – cloud and IT, cybersecurity and emerging mission challenges. As a result, we expect significant revenue synergies.Just looking at our current pipeline, we see many large opportunities where our win probability is much higher as we integrate our solutions.In conclusion, I hope that it's very clear that we're focused on growth. Our financial results show it and our end markets support it. Our BD engine is focused on delivering it. And we're now allocating capital to enhance it. The market appears focused on NGEN, but we've got 400 other contracts in the portfolio and, frankly, we're not waiting around for it. We're competing aggressively in the market.Over the last year, we submitted $28 billion in proposals and it's showing up in our bookings, with a trailing 12-month book-to-bill and a ratio of 1.5 times with 60% of that being new business. With the two-year budget deal, now is the time to take advantage. We're seeing revenue synergies coming sooner than we expected and we're finding if we really go after something, we can be successful, whether it's an Army cyber command or the US Senate.The Knight Point acquisition is also exciting to us as it opens up new growth areas. I'm confident that we once we win NGEN, the market valuation will rewards us and our shareholders for our ability to drive growth.With that, let me turn the call over to John.

[John Kavanaugh:]

Thanks, Mac. And good afternoon, everyone. I'm extremely pleased with our performance in the first quarter, making it five quarters in a row of solid execution. Once again, we delivered strong margins and cash generation which enables us to deploy capital to grow the business and enhance shareholder value. With an accretive acquisition, we are able to raise guidance and accelerate our strategy.Turning to slide five, revenue for the quarter was $1.11 billion, which was up 7% from the first quarter of fiscal year 2019 on a pro forma basis and up 1% from the fourth quarter of fiscal year 2019.On a year-over-year revenue growth basis, both segments performed at their highest levels as a public company and our 7% growth well exceeded our best performance to date.The growth driver in the quarter was our Defense and Intelligence segment, which increased 13% year-over-year despite an $11 million rollover challenge from last year's contract divestiture.Civilian and Health Care segment revenue decreased 4% year-over-year.In total, the growth in background investigation support as well as the ramp-ups of new Department of Defense and intelligence community programs more than offset the decrease in a few civil agency contracts.Contract mix was consistent with recent levels. As a percentage of total revenue, our contracts were 53% fixed price, 20% time and materials, and 27% cost plus.Q1 adjusted EBITDA was $204 million, which was up 5% compared to year-ago pro forma adjusted EBITDA as margin decreased from 18.8% to 18.4%. Pro forma earnings in the first quarter of fiscal year 2019 benefited from a $24 million gain on last year's contract divestiture. Excluding the divestiture gain, adjusted EBITDA was up 19% and adjusted EBITDA margin was up 193 basis points year-over-year, driven by strong fixed-price program execution and the full run rate from merger cost synergies and operational efficiencies we achieved last year.Also, depreciation and amortization totaled $101 million in the quarter, which was higher than its normal level. Continuing the trend from Q4 of last year, depreciation of $53 million ran hot from additional asset acquisitions and support of customer requirements.Acquisition-related intangibles amortization, which is backed out of adjusted net income and adjusted diluted EPS, was $48 million. We expect depreciation and amortization to moderate over the coming quarters and for D&A to be only slightly higher in fiscal year 2020 than in fiscal year 2019.Net interest expense totaled $35 million in Q1. We also incurred $21 million of transaction, integration and restructuring expense, which was down $7 million sequentially.Q1 adjusted net income was $85 million, resulting in adjusted diluted earnings per share of $0.52 against a diluted share count of 163.3 million. Excluding the year-ago divestiture gain, adjusted diluted EPS was up 18% year-over-year on a pro forma basis.Turning to slide six, during the first quarter, we generated $185 million of cash flow from operating activities and $161 million of adjusted free cash flow or 189% of adjusted net income.The difference between the cash metrics is $36 million of capital expenditures which includes finance lease payments and $12 million of integration and restructuring payments. Note that we adopted ASC 842 this quarter and now use the term finance lease instead of capital lease as we used previously.The strong cash flow in the quarter was reflected in our days sales outstanding metric of 55 days which is at the low end of our target DSO range of the mid to high 50s. Adjusted free cash flow was higher than normal, partly based on timing, with some finance lease payments flipping into Q2, no tax payments in the quarter and one fewer payroll cycle than we'll have in Q2.During the first quarter, we paid down $22 million of debt and returned $23 million to shareholders, $8 million in quarterly dividends, and $15 million in share repurchases. We ended the quarter with $179 million of cash and $2.7 billion of debt, including $293 million of finance lease obligations.After the close of the quarter, we amended and extended our credit agreement to provide us greater financial flexibility. We extended the maturities on a revolver, term loan A1 and term loan A2 by 15 months.In addition, we increased our maximum total net leverage financial covenant to be more in line with our industry peers and increased our size of our revolver by $150 million to $750 million.We also acquired all of the equity interest of Knight Point for $250 million subject to customary purchase price adjustments. Knight Point is roughly $150 million in annual revenues, with an EBIT and EBITDA margin profile similar to ours.The acquisition should contribute roughly $100 million to FY 2020 revenue and about $0.02 to $0.03 to FY 2020 adjusted EPS. The EBITDA multiple we paid is very close to our own.Consistent with our capital allocation model, we have built a modest amount of acquisition revenue and profit into the guidance we gave on the last call.As Knight Point was larger than anticipated, we're able to raise fiscal year 2020 guidance as shown on slide seven. We now expect revenue for the year to be $4.4 billion to $4.5 billion, which is an increase of $50 million to the upper and lower ends of our previous guidance.We expect adjusted diluted earnings per share of $2.08 to $2.18 which is an increase of $0.02 on the upper and increase of $0.03 on the lower end of prior guidance. There is no change to adjusted EBITDA margin, which stays at 17% to 18% and we're now trending to the middle of the range, so up compared to when we originally gave the guidance.Finally, there is no change to adjusted free cash flow conversion guidance, which remains at 95% plus of adjusted net income.Operator, we are now ready to take any questions.

[Operator:]

[Operator Instructions]. And our first question today comes from Edward Caso with Wells Fargo. Please go ahead.

[Jonathan Atkin:]

Hi. This is Justin Donati on for Ed. Thanks for taking my question. Good quarter here. It looks like with some of the recent contracts that you've won, you may have been able to fill in the revenue hole of NASA NEST. Can you provide any more color on that?

[John Kavanaugh:]

Sure, Justin. This is John. So, again, as we indicated, we are increasing guidance on an annual basis. We're taking it up $50 million on the lower and upper end. Clearly, NASA NEST is still a headwind that hasn't changed as we laid out in previous calls, right? It's roughly about $100 million headwind for this year. That said, again, based on the strong business development performance, the ramp ups of some new business wins that are happening, we feel overall, big picture, tailwinds will outweigh the headwinds, but NASA, obviously, still remains a headwind for us.

[Mac Curtis:]

Another way to look at it, Justin, we've talked about revenue visibility and those new wins have allowed us to increase our revenue visibility as we go through and we're kind of on plan with where we were last year.

[John Kavanaugh:]

Yeah, guidance to guidance.

[Jonathan Atkin:]

Okay, thanks. And then, last quarter, you talked about some greenfield opportunities in [indiscernible], could you talk about kind of the potential timeframe for how you see that playing out? Or how long it could be until it becomes a more meaningful piece of the business?

[Mac Curtis:]

Yeah. I think we're also – that's a good question. What we also spoke of is that part of the business was somewhat under-invested as it was part of USPS. And we're reinventing in the business. We've got a new leader on, Rocky Thurston, who understands how to grow business in the civilian sector.We've got some bids. We're focusing on some larger bids. There's some good opportunities, Department of Transportation. Certainly, tomorrow, we'll announce – in Q2 the Senate ITO contract which is about $170. So, we've won that.And so, we see some of the pipeline. We see some opportunities in the Department of State that are kind of in the proposal phase. We see some additional work in the VA that's pending award. So, we're really focused. Department of Labor is another contract that was awarded and subsequent protest. We hope to get that cleared up in the next couple of weeks.So, we don't control when these things are awarded, but we certainly see, in Q2, hopefully some of these things will come to fruition. Transportation, I think, certainly, Department of Labor, get that cleared up.But further out, you see in proposal, the FDIC deal, some Department of State. So, I think we're really starting to see the back end of Q3, Q4 kind of a consistent flow of deals because we're writing the proposals now and really focused on that.We don't do much of Department of Justice at this point. So, we see that as an opportunity. Certainly, several parts of Department of Treasury. So, it's a bit spotty at Q1, Q2, but we see a more steady flow, typically common for Department of State, Department of Justice kind of in the back end of Q3 and Q4. Is that helpful?

[Jonathan Atkin:]

Yeah, very helpful. And then, if I could just speak one last one in here, what are your expectations for pro forma leverage with Knight Point?

[John Kavanaugh:]

Sure, Justin. This is John. So, again, we ended the quarter, net leverage was roughly 3.0. With the acquisition of Knight Point, we'd be roughly net leverage per covenant agreement right around 3.4 and we'll continue to drive that down as we proceed through the year. Very comfortable where we're at.

[Jonathan Atkin:]

Great, thank you.

[John Kavanaugh:]

Sure.

[Operator:]

And our next question comes from Joseph DeNardi with Stifel. Please go ahead.

[Joseph DeNardi:]

Hey, good evening, guys. Mac, appreciate your enthusiasm in your prepared remarks. You spoke bullishly about the bookings activity that you see. And the book to bill the last 12 months has been strong. You talked about the pipeline and the big swings you've got out there. Is it safe to say that if you can retain NGEN and hit on one or two of the bigger opportunities you're pursuing that there's upside to the revenue CAGR guidance that you guys have provided?

[Mac Curtis:]

Yeah. First of all, Joe, thanks. And there's a lot to be enthusiastic about. And I think if you look at that, there's a lot to be awarded. We've got $24 billion that's in evaluation. I think we'll see maybe some those larger ones awarded maybe before NGEN. And so, yeah, that – and a lot of that, we don't have in the forecast quite frankly. So, we see a couple of large deals in NGEN, absolutely. We see some great growth opportunities in the back end of our – our fiscal year 2020, certainly into 2021. So, we've got to bring these contracts online. We don't want to get ahead of our skis. Some of them are army cyber are coming online the way we hoped. We've got to learn to do a better job in some cases of making sure we leverage all of the potential ceiling of contracts. We're getting better at that. But, yes, we see some of the large contracts, Joe, and we see NGEN. Absolutely, in the back end of our fiscal 2020, we would see some really, really strong growth.

[Joseph DeNardi:]

Got it. And then, Mac, just on the NGEN process, you sounded more positive about it now than maybe you have. Is there something kind of in the process, what you've heard in terms of feedback from the customer that makes you feel better about your standing there, maybe help us understand that a little bit more?

[Mac Curtis:]

Well, Joe, I think –I've always felt positive about it. We've always felt very positive. It's a complex contract. I think where we are in the process now is the – no, so I've gotten any ex parte feedback. This is a very tightly controlled processes, as you know. You get a lot of ENs or questions on the technical, the cost and we'll go through the process. We've always been positive about it. We feel very good about how Knight Point can help given what they do in the world of Agile DevOps and certainly looking at cloud as a service which we've wrote about being able to augment our solution with that if given the opportunity. But, no, we all feel positive about it and we'll go through the process. They've given an extension. We've talked about from mid [ph] 2020, could be to December. I'm not sure it's going to go that far. I think the team [ph] is working really hard. They're do a really good job from what we've seen of trying to evaluate this contract which is finally stood up after almost two decades. It's a complicated program. It's a complicated technical program. It's a complicated business program with a lot of buyers across the Navy looking at buying network services, laptops and the odd. So, I hope I'm in an even keel, but very positive all along. I think part of my enthusiasm is certainly that the focus on the other 85% is business. NGEN is what it is and we feel confident about our success. I'm very enthusiastic about the other 400 we've got and the 85% of the business. And it is growing and we're focused on taking big swings that will change this company. So, I've always been enthusiastic and passionate about this business, probably not more so than now.

[Joseph DeNardi:]

Very helpful. Thanks, Mac.

[Operator:]

[Operator Instructions]. And the next question comes from Gautam Khanna with Cowen. Please go ahead.

[Gautam Khanna:]

Yeah. Thank you, guys. Couple of questions. First, I was wondering, on the guidance raise of $50 million on sales, did you guys say the deal is going to add $100 million for current fiscal year revenue? So, is there something in the core business that's eroded? Or what's the signal there?

[John Kavanaugh:]

No. Hey, Gautam. It's John. So, as you know, M&A was always part of our capital allocation plan, right? So, from the get-go, the original guidance we had built-in a modest amount, about $50 million into our guidance. Okay? So, as I mentioned in my prepared remarks, Knight Point is roughly $150 million. On an annual basis, we'll see about a hundred-ish million. So, so we have raised the guidance in line with that $50 million on a lower and upper range. So, again, feel real good about the performance. We're now guiding 3% to 5%. We're breaking [ph] 4% and we feel really good again about the pipelines, as Mac talked about. That's the answer there.

[Gautam Khanna:]

And likewise, for the $0.02 to $0.03?

[John Kavanaugh:]

Yeah, correct. Yeah.

[Gautam Khanna:]

You're raising it by the corresponding amount.

[John Kavanaugh:]

Sure.

[Gautam Khanna:]

To follow-up on the NASA NEST comment, question, was there erosion sequentially in the quarter? And if so, how much and how much still can drop off sequentially?

[John Kavanaugh:]

We're still performing on NASA NEST roughly through the August timeframe. Obviously, we're still in discussions with both NASA and the new awardee. So, we will see the start of that a bit in Q2, but then more pronounced, obviously, in Q3. And as we've talked about, roughly about $100 million on an annual basis, but very low margin.

[Gautam Khanna:]

So, it didn't actually sequentially decline in the quarter just reported?

[John Kavanaugh:]

That's correct. Not in Q1.

[Gautam Khanna:]

The earlier prepared remarks on the SMIT evaluation notices, what is the significance of that? What does that mean?

[Mac Curtis:]

Yeah. This is Mac. It's kind of standard fare in government proposals. They used to call them Q&A. Now, they're calling them evaluation notices because it's in evaluation. And they vary. I don't think the number of – that you get is significant, whether it's split between technical, volume, management volume and a call sign. These are clarifications. And the government says, we've got a question about, what did you mean in your transition plan here. We've run our evaluation model and there's some disconnect between this contract line item and what you said at the bottom. So, they're really kind of clarifications and notices of making sure they can understand what you're saying in your proposal, your technical proposal, to your management proposal, to your cost proposal, that it all ties together clearly, so they can do an evaluation. You shouldn't read anything into it. Gautam, it's typical government evaluation process.

[Gautam Khanna:]

Got it. It's just moving, I guess.

[Mac Curtis:]

It's moving along. That's a good way – it is moving along, which is great. It is moving along. It is moving along.

[Gautam Khanna:]

Excellent. And then, in the quarter, the margins came in pretty good. Could you talk a little bit about – was there any – I think you mentioned an award fee. What was the size of the contract adjustment in the quarter [indiscernible] catch up or what have you if there was one?

[John Kavanaugh:]

So, there wasn't. But let me give you a little bit more color. So, first off, very, very pleased with the continued strong execution and performance in both the segments. So, as I had mentioned in my prepared remarks, we have seen a little bit of increase in depreciation resulting from some customer required procurement of assets. So, that was roughly, if you think about the quarter, that was roughly about $13 million. So, I would look at the quarter running more like 17.3%. But as I've indicated, good performance. And as I've stated in my prepared remarks, now trending more toward the middle of the range on adjusted EBITDA. So, we feel good about where we are.

[Gautam Khanna:]

Got it. So, it did not relate to a one-off contract adjustment?

[John Kavanaugh:]

No.

[Gautam Khanna:]

It was just heightened depreciation in the quarter?

[John Kavanaugh:]

That's correct.

[Gautam Khanna:]

And just last one, you've already started off the third calendar quarter with strong bookings, it looks like. Can you speak to anything that – can you quantify what you anticipate is yet to be adjudicated in the September quarter in terms of size, stuff that – couple of billion or how should we think about the potential?

[Mac Curtis:]

So, it's just kind of in rough numbers. We've got a total of $24 billion in evaluation. There's some large ones in there we think because we don't control that, Gautam, as you well know. But there's some large – we expect the DISA [indiscernible2to be adjudicated we think, GSMO we think, those are contracts – I'm not going to give you specific number. They have a B behind them. And I think as we talked about, we certainly expect to see – hopefully, the Department of Labor, which is a contract that we were awarded that was protested and that could pull here. We think we'll see the VA contract clear which is pretty sizeable. The Department of Transportation, it was about $700 million. We expect to see that clear. So, again, we don't control that. We're coming into the end of the government fiscal year. So, certainly, they're in evaluation now. We should see some of those clear as we get through the back end of the fourth quarter of the government fiscal year. Hard to protect. Hard to predict. But that's kind of what we see.

[Gautam Khanna:]

And just so I'm clear, of all of those mentioned, the labor department one is one that you were awarded that's being protested. The other ones are just out. They haven't yet been adjudicated?

[Mac Curtis:]

That's correct.

[Gautam Khanna:]

Okay. All right. Thank you very much. I appreciate it.

[Mac Curtis:]

Very good.

[John Kavanaugh:]

Thanks, Gautam.

[Stuart Davis:]

As I'm looking at the queue, it looks like that there are no other questions. So, I think we'll bring this call to a close. Obviously, as is our practice, if you have follow-up questions, please feel free to give me a shout. But, Cole, we want to thank you for your assistance and thank everybody for their interest and perspective.

[Operator:]

Thank you, sir. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time and have a wonderful day.