V2X, Inc.
Q1 2018 Earnings Call Transcript

Published: 14 May 2018

[Operator:]

Thank you for joining us for the Vectrus First Quarter 2018 Earnings Conference Call and Webcast. Today’s call is being recorded. My name is Michelle and I will be the operator for today’s call. [Operator Instructions] And now, I will pass the call over to your host, Mike Smith, Director of Investor Relations and Corporate Development at Vectrus.

[Mike Smith:]

Thank you. Good afternoon, everyone. Welcome to the Vectrus first quarter 2018 earnings conference call. Joining us today are Chuck Prow, President and Chief Executive Officer and Matt Klein, Senior Vice President and Chief Financial Officer. Slides for today’s presentation are available on our Investor Relations website, investors.vectrus.com. Please turn to Slide 2. During today’s presentation, management will be making forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. Please review our Safe Harbor statement in our press release and presentation material for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements. We assume no obligation to update our forward-looking statements. At this time, I would like to turn the call over to Chuck Prow.

[Chuck Prow:]

Thank you, Mike. Good afternoon, everyone. Thank you for joining us on the call today. Please turn to Slide 3. This year is off to a great start with solid first quarter financial results that showed growth due to improving sales and operational execution and the great program performance of our teams throughout the world. Revenue increased 11% year-over-year to $321 million, while backlog increased to $3.3 billion, the highest level since becoming a public company. Additionally, adjusting for the required adoption of ASC 606 and one-time transaction cost associated with SENTEL, our operating margin for the quarter was 4%. Matt will discuss the impact of ASC 606 adoption later in the presentation. Our first quarter results, combined with the recent contract wins and extensions, have increased our overall revenue visibility and as such, we are modestly increasing our full year 2018 guidance for revenue and EPS. I have visited our programs in all areas of operation, the U.S., the Middle East and Europe thus far in 2018 and can attest to the progress our teams are making in all aspects of our strategy. Through the application execution of innovative tools and methods, technological convergence, leveraging best available commercial practices and through our enterprise-wide management approach, Enterprise Vectrus, Vectrus is transforming the way in which we sell and deliver services within the federal facilities, logistics and select IT markets. These efforts have the opportunity to significantly improve the outcomes of our clients’ missions, while creating a higher value growth-oriented platform. I would like to thank all of our employees for their hard work as we continue to execute our long-term strategy and position Vectrus as a leader in the converged infrastructure market. In particular, I would like to take this moment to recognize our veteran workforce. Vectrus remains a leading employer of veterans, with over 35% of our almost 7,000 employees reporting prior military service. Our veterans bring leadership skills that create a rich employee base from which they cultivate our future leaders, our veteran posses the unique understanding of our clients’ needs and requirements, which is extremely important as we seek to improve the outcomes of our client missions. I am exceptionally proud of our veterans. And I am honored to announce that Vectrus has, for the fifth time, been recognized with the military-friendly employer designation from Victory Media. On a similar note, this month we will recognize Memorial Day as we honor the brave men and women who gave their lives in the service of our country. I would like to thank all of those, past and present, who have served to protect our freedom. As mentioned, 2018 is off to a good start and our strategy is yielding demonstrable results. For example, during the first quarter, we won over $120 million of new business. These wins include the $108 million U.S. Army DFAC 3.0 contract. Under this 5-year contract, Vectrus will provide continuous operation of 9 dining facility locations in Kuwait. This win represents our strategy and action and we anticipate this new win to add $20 million of annual revenue through 2023. Additionally, during the quarter, we were awarded our fifth task order under the AFCAP IV program at Al Dhafra Air Base in the United Arab Emirates. With this new $16 million order, our team has now successfully won more than $60 million worth of new task orders under the AFCAP IV program. I am pleased with our record on this new contract vehicle for Vectrus. Furthermore, we continued to expand our presence with the Air Force, which now makes up 20% of our revenue compared to 11% for the first quarter of 2017. Net of our very important K-BOSSS contract, the Air Force comprises 34% of our portfolio. We have also increased our geographic footprint with the Air Force and now provide services to the Air Force in 10 countries. Importantly, both of these awards were based in the Middle East, which further positions Vectrus as a leading provider of services in the DoD, CENTCOM area of responsibility. Our existing business also continues to show momentum. And during the quarter, we were awarded a $31 million 1-year contract modification under our Turkey-Spain Base Maintenance contract and a $385 million 9-month extension of our K-BOSSS contract. The K-BOSSS contract is now expected to run through December of 2018 and has one additional option period that affects our site could extend current performance through March of 2019. As we have talked about in the past, our client has incorporated the current K-BOSSS contract at the task order under the LOGCAP V competition, which I will discuss in greater detail in a moment. Additionally, during the quarter, we were awarded a $106 million contract modification by the U.S. Army to continue providing enterprise network capabilities and services in support of the U.S. Central Command in Southwest Asia under the OMDAC-SWACA contract. Our new business awards, extensions and modifications, in addition to the SENTEL acquisition, resulted in a 13% year-over-year increase in backlog. Total backlog, which is a leading indicator of future revenue, now stands at $3.3 billion. With total backlog that is over 2.5x at midpoint of our 2018 revenue guidance, we have a significant opportunity to continue applying innovation and our enterprise wide improvement initiatives to drive performance improvement through 2018 and beyond. Our prospects for new business continue to trend favorably with $1.4 billion of bids submitted awaiting award. While timing of awards is difficult to predict, we believe Vectrus is well positioned to win its fair share of these awards. Our bid submitted number is up from last quarter due to the LOGCAP V bid submittal. The $1.4 billion is all new work and does not include any re-competes. On the topic of re-competes, we have very little re-compete risk in 2018, which in total comprises of about 1 percentage point of our 2018 revenue at the midpoint. Our pipeline of identified opportunities that we plan to bid for over the next 12 months remains solid at $8 billion. This number is up from $7 billion last quarter due to the SENTEL acquisition. We are already benefiting from the acquisition of SENTEL. And together with our opportunities, that neither company would have been able to pursue as a prime contractor previously. As a reminder, in January 2018, we announced the acquisition of SENTEL Corporation for $36 million. Even though it’s been a short time since we have owned SENTEL, the acquisition is tracking favorably and as a matter of fact, SENTEL revenue in the first quarter was ahead of our internal forecast. From a client perspective, we have visited all of the SENTEL programs and the feedback continues to be very positive. Additionally, during the quarter, SENTEL was awarded a re-compete task order to continue providing full software development lifecycle support for core IRS mission systems. Overall, I am thrilled with the new talent that SENTEL has added to our business and pleased with the performance of the business. I look forward to what the combined company will achieve. Turning to LOGCAP V competition, Vectrus is well-known for its ability to rapidly respond anywhere across the world in challenging and austere environments to meet our clients’ contingency mission requirements and we continue to believe that Vectrus is well positioned to win a seat on LOGCAP V. Our LOGCAP V proposal has been submitted and the contract is currently in source selection. We believe our proposal offers the client a differentiated and unique solution that is supported by our over 7 years of reliable and robust experience. Our capabilities and service is strongly aligned to our client requirements and the emerging operational environment. As a reminder, there are expected to be up to 6 indefinite delivery/indefinite quantity contract awards and the government intends to make an award in the fourth quarter of 2018. To retain the K-BOSSS contract, we would have to won a seat on the LOGCAP V vehicle and the associated CENTCOM task. As the incumbent on the largest existing CENTCOM task with excellent performance, we believe Vectrus is well positioned for both LOGCAP V and to win the CENTCOM task orders. Additionally, I would like to point out that our work for the Department of Defense in the Middle East or CENTCOM extends beyond K-BOSSS. In order to provide a sense of our CENTCOM footprint, during the first quarter Vectrus generated revenue of $221 million in the Middle East. Please turn to Slide 4. As you may recall, we have three core strategies

[Matt Klein:]

Thank you, Chuck. Good afternoon, everyone. Please turn to Slide 6. Before we review the financial results, I would like to discuss our adoption of the new revenue recognition accounting standard, ASC 606, revenue from contracts with customers better known as ASC 606. While we have a strong quarter with revenue increasing 10.5% year-over-year, the change to the new standard adversely impacted operating income, net income and diluted earnings per share in the first quarter. The first quarter 2018 operating income decreased by $3.1 million when compared to the previous revenue recognition methodology required under ASC 605. The impact on operating income and margin is solely reflective of the accounting change and does not represent a change in the fundamentals of our business. The $3.1 million impact is only timing and will result in increased GAAP operating income and margins over the remaining quarters of 2018 with no impact to full year 2018 guidance. Financial results for the quarter were solid with revenue of $321 million, up $31 million or 10.5% when compared to the first quarter of 2017. GAAP operating margin was 2.7% in the first quarter and diluted earnings per share were $0.54. Operating margin adjusted under the prior ASC 605 guidance would have been 3.7%. Additionally, operating margin adding back $1.2 million of non-recurring transaction and integration costs would have been 4%. On January 23, 2018, we acquired SENTEL for $36 million. The acquisition aligns directly with our strategy and our first quarter results were strong with revenue of $23 million, up $3 million compared to our internal expectations. Additionally, debt related to the acquisition was paid off at the end of the quarter. In 2018, SENTEL is expected to contribute revenue of $115 million and is expected to be accretive to our full year GAAP diluted earnings per share. As of March 30, 2018, our leverage ratio was 1.48x, which is well below our covenant level of 3.0x. Total debt at the end of the quarter was $78 million. Please turn to Slide 7. On Slide 7, I will be discussing our financial results for the three months ended March 30, 2018. The top of Page 6 represents the GAAP financial results, including the newly adopted revenue recognition accounting standard, ASC 606. The bottom half of the page represents the results under the previous standard and excludes non-recurring transaction and integration costs. In the first quarter of 2018, revenue was $320.5 million, up $30.5 million or 10.5% as compared to the first quarter of 2017 and up $25 million sequentially from the fourth quarter of 2017. For the first quarter of 2018, revenue increased $33.8 million from U.S. programs primarily due to the purchase of SENTEL, $10.7 million from European programs offset partially by a decrease of $40 million from Middle East programs. The Middle East decline was primarily due to the completion of the APS-5 Kuwait program, which contributed $48.4 million in the first quarter of 2017 offset by expansion on existing programs. Operating income for the first quarter of 2018 was $8.7 million or 2.7% operating margin, a decrease of $3 million. As previously mentioned, operating income was impacted by the adoption of ASC 606 for approximately $3.1 million and non-recurring expenditures related to the acquisition for $1.2 million. Adjusted operating and EBITDA margin under ASC 605 and excluding non-recurring transaction-related expenditures is 4% and 4.3%, respectively. During the first quarter of 2018, we recorded a net favorable cumulative adjustment to operating income of $2.8 million compared to $2.7 million in the same period of 2017. There are many factors that drive contract performance, including program execution, contract modifications and scope changes. Cumulative catch-up adjustments can be positive or negative are normal part of this business and our guidance contemplates this reality. Interest expense for the first quarter of 2018 was $1.2 million, essentially unchanged compared to the same period of 2017. Interest expense increased slightly due to the use of revolver to purchase SENTEL offset by decreased interest expense on a lower debt balance. We were able to payoff the debt related to the acquisition in the first quarter of 2018. Net income for the first quarter of 2018 was $6.1 million compared to $6.7 million in the first quarter of 2017. The effective tax rate in the first quarter of 2018 was 18.6% compared to 36.6% in the first quarter of 2017. Please note the tax rate in the first quarter of 2018 is lower primarily due to the Tax Cuts and Jobs Act legislation. GAAP diluted earnings per share for the first quarter of 2018 were $0.54 compared to diluted earnings per share of $0.60 in the first quarter of 2017. Diluted earnings per share adjusted for ASC 605 and non-recurring transaction-related expenditures were $0.85. Quarter-to-date 2018 net cash used in operating activities was $11.6 million, which is $21.6 million lower compared to the same period in 2017 due to a temporary timing issue. This delay was temporary and resolved a few days after the quarter end. Day sales outstanding for the first quarter of 2018 was 68 days compared to 54 days in the same period of 2017. DSO was impacted by approximately 4 days due to the ASC 606 adoption, which increased accrued receivables compared to prior periods. We expect DSO to decline in the second quarter and still expect to achieve our full year 2018 guidance for net cash provided by operating activities. Please turn to Slide 8. For the first quarter of 2018, total backlog was $3.3 billion, which included backlog of $281 million associated with SENTEL. Funded backlog as of the first quarter was approximately $700 million. Total backlog includes both funded and unfunded backlog and represents firm orders and potential options on multiyear contracts. Our contracts are multiyear contracts and the right to exercise an option period is at the sole discretion of the U.S. government or the prime contractor when we are subcontractor. Total backlog excludes potential orders under indefinite-delivery and indefinite-quantity contracts and contracts under protest. Please turn to Slide 9, where I will discuss 2018 guidance assumptions. We had a solid first quarter of 2018 and with the increase in revenue and recent awards it has enhanced our 2018 revenue visibility. Therefore, we are modestly increasing our full year guidance of revenue and diluted EPS. For 2018, we expect revenue to be in the range of $1.215 billion to $1.285 billion, with the midpoint of $1.25 billion. This includes revenue from the acquisition of $115 million at the midpoint. At the midpoint of our revenue guidance, 99% of our revenue is expected to come from existing contracts. Operating margin is expected to be in the range of 3.6% to 4%, with a midpoint of 3.8%. Importantly, our 2018 midpoint includes approximately $3 million of estimated transaction costs associated with the SENTEL acquisition and we are tracking well on these estimates. Excluding the one-time costs, our operating margin range is 3.8% to 4%. Net income will be in the range of $30.9 million to $36.9 million. Diluted earnings per share will be in the range of $2.71 to $3.23. The midpoint of diluted earnings per share is $2.97. The range for diluted EPS assumes an estimated 11.4 million weighted average diluted shares outstanding. 2018 net cash provided by operating activities is expected to be in the range of $35 million to $39 million. Our capital expenditures for 2018 are still expected to be approximately $9 million, which is above our historical average due to a few one-time internal investments. Depreciation and amortization is expected to be $4.2 million in 2018. 2018 mandatory debt payments are expected to be $4 million. Interest expense is forecasted at $4.3 million and we currently estimate a 22% tax rate for the full year of 2018. Now, I would like to turn the call over for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Brian Ruttenbur with Drexel Hamilton. Please proceed with your question.

[Brian Ruttenbur:]

Yes, thank you very much. So, a couple quick questions. First of all on book-to-bill ex your acquisition of SENTEL, can you give me that number? I just want to make sure I am not doing an incorrect calculation?

[Matt Klein:]

Sure, sure. Let me just walk you back from our total backlog. So, if you start from $3.3 billion and you exclude SENTEL of $281 million that gives an adjusted number and then our awarded value in the quarter would be $390 million. That includes the K-BOSSS award and $120 million of new-new.

[Brian Ruttenbur:]

Okay. So what I would be taking to do your core book-to-bill would be then backing out SENTEL revenue also and so that your – I would just look at your core revenue ex-SENTEL would be $300 million. So I do $300 million by your bookings of $390 million. Is that the way to look at it?

[Matt Klein:]

So, the $281 million is net of the revenue. So it’s after revenue. So, the adjusted quarterly position from $320 million, less $23 million of SENTEL gets you about $297.5 million and that’s the number you should draw for the awards.

[Brian Ruttenbur:]

Okay. So you are obviously better than 1.0 and change, so like a 1.2 book-to-bill, which is one of the highest in the industry. Do you expect that the bookings going forward to be at this level? I know that when you had K-BOSSS come through on a renewal, that’s a big one. I would imagine that you will see a drop of 1.0 or better going forward or less, what you think?

[Chuck Prow:]

This is Chuck. We don’t know that yet. We do like our pipeline for the second quarter. As you know, we don’t determine exactly when the government awards, but I would not be handicapping below 1.0 right now, just wait and see how the next couple of weeks progresses and we will go from there.

[Matt Klein:]

I would say that we have also increased our bids pending award, which means they are in final award state. So, that increased to $1.4 billion. We would expect the second and third quarter to increase in award activity.

[Brian Ruttenbur:]

Okay, very good. So that gives me roughly 1.3x book-to-bill which is very good on your core. DSOs, you expect to drop what by second quarter or third quarter or is it going to be fourth quarter, give me a reference point when you are going to get?

[Matt Klein:]

Sure. We expect DSO to come right back in the second quarter. This was a one-time anomaly. They are just pushed out of the quarter. We have large contracts. Our invoices are large. They can drive some material variability. So, DSOs are our plan to come down to normal levels in the second quarter. The one item to note is the 4-day impact for ASC 606. That will continue on at times during the year and so you have to take that into account when you compare prior periods.

[Brian Ruttenbur:]

Okay. So where would DSOs be if they are going to come back down to normal levels in the second quarter? Is that 62, but then you add 4 for the accounting change or give me a ballpark where we are low 60s, mid 60s, high 60s?

[Matt Klein:]

Sure. So the adjusted Q1 number would be 68 less 4, so it’s 64, I would say, in the low 60s and the 60 range or below.

[Brian Ruttenbur:]

Okay, okay. And then in terms of SENTEL, when do you view this as fully integrated? Are you – because this is smaller acquisition, is it within one quarter, two quarters, when do you view yourself as fully integrated?

[Matt Klein:]

I would say that we are tracking really well. I mean, we are 2 months into this. So it’s fairly early. The second quarter will be a big quarter for us to really complete most of the activities. At that time, we will know the total non-recurring spend and we will be well on our way for full integration.

[Chuck Prow:]

Yes, I would like to add to that. That’s a back office view, which is exactly the right view. But on the front office and how we are interfacing with our clients, how we are going to market, I consider us already fully integrated. So, I really like how the teams have come together in short order to have market impact.

[Brian Ruttenbur:]

Okay. And then just last question in terms of sequential revenue, trying to understand any – should we see a sequentially up second quarter versus first quarter? I am just trying to understand, because I don’t know how SENTEL is. I assume similar view where you have a drop off in the fourth quarter, but if you could give me some kind of perspective on revenue flow?

[Matt Klein:]

Sure. So, we ended the quarter at $320 million as we reported. There were a couple deliverables that were completed in the first quarter, we don’t project in the future quarters and that’s about $10 million. So right now, for the second quarter, we are projecting around $310 million give or take a few million dollars. And then as we get through the year, that could level off and flatten out to get us to the 1.25 midpoint guidance. Now, we will say there is some opportunities to reach the higher end of our revenue guidance range. If we continue to see margin or contract expansion above and beyond what we saw in the first quarter, which should happen, that could get us to the upper end of the range. But going back to prior comments, as award activity is expected to increase in the second and third quarter, if those are timely, protests are cleared quickly if at all, we can see some revenue in the fourth quarter.

[Brian Ruttenbur:]

Okay, thank you.

[Operator:]

Thank you. Our next question comes from the line of Ben Klieve with NOBLE Capital Markets. Please proceed with your question.

[Ben Klieve:]

Alright, thank you. First just a quick modeling related question, your CapEx spend during the quarter was nominal. I am curious when the accelerated spending levels are going to really pickup and then at what point you think they are going to come back down towards normalized levels?

[Matt Klein:]

Sure. So that’s a great question. Normally, we see about $2 million to $4 million of CapEx to run our contracts. This year, we guided to higher number about $9 million. The first quarter was light. We do have some equipment on order that we will deliver and be placed in service in the second and third quarter for our Thule contract and then activity for our investments in software, our application monetization and our supply chain as well as moving our facility to a more cost effective location will all occur in the second half of the year. Right now, it’s still a solid number.

[Ben Klieve:]

Okay. So, you think that will – the kind of accelerated spend will be done then by the end of 2018 barring any additional new work or anything like that?

[Matt Klein:]

Sure. That is the plan today and then it would come down to more normal levels, but we will report out as we complete the coming quarters, but we are on track so far.

[Ben Klieve:]

Okay, perfect. And Chuck, I appreciated your comments on the Middle East revenue breakdown to help us understand the potential of CENTCOM. I am curious though of the $221 million Middle East revenue that you reported, how does I compare to the total addressable market within CENTCOM that you see?

[Chuck Prow:]

I don’t know that I would have a market share number for you, but what I will tell you is from all the information we can find we are the leader, if not amongst the top couple of firms in the CENTCOM AOR. And remember, the CENTCOM AOR is not just the Army contracts. Most of our AFCAP activity is included in these numbers, in Turkey, Spain especially. So as the AFCAP continues to stay at the levels that it is today, again, we see our revenue level of maintaining a consistent balance to the op tempo across the theater.

[Ben Klieve:]

Okay, perfect. Thank you. And just one more from me, I guess, I am curious what the passage of the budget here. How this is going to impact bookings from a facility’s perspective versus more pure IT work? Were awards for either segment more or less held up during the continuing resolution? And therefore you expect bookings to accelerate more or do you think that the continuing resolution had the same impact kind of across the board for all of your activities?

[Matt Klein:]

I would frame it this way. I believe the new budget will have a stabilizing effect on both the IT and the facility’s budgets. However, I will say that during the uncertainties over the last couple of years that the facility maintenance budgets were probably more negatively impacted because of the multiple year nature of those activities. So from everything we can see in our pipeline, we like the rate and pace of conversations we are having and awards that we are seeing in the marketplace with regards to our facilities, supply chain, logistics businesses. So I think you see that in our backlog numbers and it’s again just the amount of activity we see and discussing potential activity with our clients in the marketplace we like the activity.

[Ben Klieve:]

That’s very helpful. Thanks so much, Chuck. I will get back in queue.

[Operator:]

Thank you. Our next question comes from the line of Joe DeNardi with Stifel. Please proceed with your question.

[Unidentified Analyst:]

Hey, guys. This is John for Joe. How are you all doing?

[Chuck Prow:]

Yes, great. Thank you. Excellent.

[Unidentified Analyst:]

So I just want to talk for a second about the awards, one of the questions we were wondering is when you break it down into actual contracts versus task orders about how much of your work right now is task order related?

[Matt Klein:]

Yes. I think the only contract compilation that would be considered task order related is our AFCAP contracts.

[Unidentified Analyst:]

Okay. So, go ahead.

[Matt Klein:]

No, I am sorry.

[Unidentified Analyst:]

Alright. And then kind of along the AFCAP, I mean, who do you – right now in terms of your interaction with the customer who seems to be best prepared to start making these awards? And when do you – in terms of your own discussion with contracts, when are they starting to think that they are going to see in cash and being able to get stuff on contract?

[Matt Klein:]

I think across our client set, there is an increasing – again with the budget stability, there is an increasing confidence that our clients have in their schedule from their timeline. So I don’t think you would see an inordinate confidence on the part of the Army or the Navy or the combatant commander. So again, we like the stability that this budget deal has brought to us. Our clients you can tell feel more confident in their timelines and as a result, not only ourselves, but I think industry will benefit from that stability.

[Unidentified Analyst:]

Okay. You guys mentioned on the last call the long-term growth prospects growing out to $2.5 billion by 2023 and 7% EBITDA margins. One of the questions that Brian just had, it seems that, that’s going to require a lot of inorganic growth. I was just wondering if you could walk us through kind of what you are thinking in terms of your M&A strategy for the next 5 years? Is there any specific assets or if you could just give us some color as to the direction of where you are heading? I appreciate that.

[Chuck Prow:]

Sure. I will start from a kind of a strategic framework perspective and I will turn it to Matt for the modeling. First of all, we really like the rate and pace of the progress that we are making in our organic growth activities. So we are planning to grow significantly above the market just based upon our organic prepositioning and work we are doing with our clients and full staff on that. As we move into the inorganic aspect of our growth strategy, we think almost entirely in terms of new capabilities, greater depth in our current clients and expansion into new clients. So, as we see acquisition targets, if you will, that could help us expand capability, move more deeply into existing clients or be able to expand our client base. And by the way SENTEL touched all three of those activities. That’s when we see ourselves moving to acquisitive type growth. So Matt, from a modeling perspective?

[Matt Klein:]

Sure. So from a growth rate perspective, as Chuck said, we expect the core business really grow organically in the 6% to 8% range. So that gets us part of the way there and connecting back to some of the things, Chuck said. We believe that smart consistent acquisitions along the way that increased our capability. We will be able to leverage the core business and kind of build upon itself and we will be able to over the next 5 years, we will be able to get to the $2.5 billion and 7% margins or EBITDA margins.

[Unidentified Analyst:]

Alright. Thank you, guys.

[Operator:]

Thank you. [Operator Instructions] There are no further questions at this time. I would like to turn the call back over to Mr. Chuck Prow for any closing remarks.

[Chuck Prow:]

Thank you, Michelle and thanks to everybody who joined the call today. We think we had a very good quarter and we look forward to updating you on our progress in our next earnings report. Thank you.

[Operator:]

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