Excuse me, everyone. We now have all of our speakers at conference. Please be aware that each of your lines is in a listen only mode. I would now like to turn the conference over to President and CFO, Jeff Liao. Please go ahead, sir.
Thank you, Dan, and welcome to Copart's fiscal 20 21st quarter earnings call. I'll ask Darren Hart, our VP of Finance to start with the safe harbor. Thanks, Jeff. During today's call, we'll discuss certain non GAAP measures, including non GAAP net income per diluted common share, which includes adjustments to reverse the effect of certain discrete income tax items, foreign currency related gains, certain income tax tax benefits and payroll taxes related to accounting for stock option exercises and the effects on common equivalent shares from ASU 20 sixteen-nine. We provide a reconciliation of these non GAAP financial measures to the most directly comparable GAAP measures on our website under the Investor Relations link and in our press release issued yesterday.
We believe the presentation of these non GAAP measures, together with the corresponding GAAP measures, is relevant in assessing Copart's business trends and financial performance. We analyze our results on both a GAAP and non GAAP basis described above. In addition, this call contains forward looking statements within the meaning of federal securities laws, which are subject to substantial risks and uncertainties that could cause actual results to differ materially from those projected or implied by our statements and comments. We do not undertake to update any forward looking statements and may be submitted from time to time on our behalf. For a more complete discussion of the risks that could affect our business, please review the management's discussion and analysis portion of our related periodic reports filed with the SEC.
Thanks, Derek. We are certainly pleased with our results for the quarter. Derek in a moment will walk through details of those results with the metrics that we traditionally disclosed. Wanted to pause for a few minutes also to talk about some of the bigger themes in our business. Those themes I think will help explain and drive the results the past quarter, the past year and frankly shed light also on our strategic approach to the business.
So we want to talk about the evolution of the total loss universe. I think historically we've been good and the industry has been good about talking about repair costs and why rising repair costs due to vehicle complexity and age and labor rates and the like were driving increased total loss frequency. Needless to say, those trends continue unabated and are accelerating due to rising complexity and the proliferation of accidents, detection and avoidance systems. It's well understood among customers, investors and other stakeholders that repairing cars has become progressively less attractive economically for many, many years. I think what we've been less effective is in communicating the other side of the salvage equation and to be precise, I mean the value that we can generate for these cars at auction.
The total loss industry has changed very dramatically over Copart's 37 years and even fairly significantly over the past 5. In our early days, of course, private vehicles were literally worth their weight in metals. You see even messages of this in earnings calls as recently as a year ago when we were disclosing scrap prices and how they changed year over year. I've been the CFO profile for 4 years. Outside of those earnings calls, we literally never want to talk about scrap prices.
Why? Because the cars that we sell increasingly instead became valuable for their parts competition. As the advancement industry results and the OEMs leverage their aftermarket parts businesses for profit through higher prices, the dismantling industry helped to drive Falcon values upward. Since then, however, there's been a still more significant shift in our industry, which is that today these cars are not worth their waste and metals, not work per se their value as parts, but instead their value as drivable, refillable vehicles, which has forever altered the salvage equation for ourselves and for our insurance company partners. The front line then there is that the rising total is beginning to the function of repairing cars becoming more expensive.
It's that totaling them and selling them has become more attractive over time as well. We have a number of initiatives underway with our insurance carrier partners for whom this reality is becoming more and more apparent. We intend to help them further optimize their claims processes yielding more totals than earlier ones as well. But how, how have we been able to drive those volume increases with price increases at the same time, it's in part by becoming a still more global business. Our physical reach, our brand reputation and of course the auction platform liquidity we offer has expanded the buyer universe for our cars and lifted the prices we can achieve at auction.
You can see at
first hand that our unit growth rate is certainly eclipsed that of the industry in general and certainly that of the dismantling industry as well, while our prices at auctions have actually increased. And that's because the fastest growing economies in the world in Eastern Europe, in Africa and Central and South America are also the lowest automotive penetration markets in the world. So while we have grown our supply very substantially over the past few years, we've grown our demand much more still through our proactive marketing efforts. And that's the second thing I wanted to briefly tackle. And that's Copart's auction liquidity, liquidity being the flywheel that generates differentiated value for ourselves and for our customers.
I'm sure we'll get questions in Q and A about certain market share in insurance. You already know that we don't comment on specific accounts on an individual basis. But I think we emphasize that over time we have grown market share very steadily over the years. We just haven't talked about them on an individual account basis. Why?
Ultimately, because auction results are the most important. We generate better value at auctions than the rest of the industry and service levels as well, which we believe we deliver better than others. Our growth is what our auction liquidity has further been enhanced by organic industry growth before the same total occupancy economy I described a moment ago. And then growth in our non insurance business, which is fueled by, but also helps contribute to our insurance business. Every car we earn the right to sell from an automotive dealer also increases the value proposition of our auction and ultimately raises the price we consume our insurance cars as well.
We made the investments in land and technology processing people for decades that enable us to grow this platform, making it more valuable each passing year to our customers and to us and for the virtuous cycle of auction liquidity continues. The last thing I wanted to tackle is our international expansion efforts, which you already know has been an important driver of our path, but likewise will be an important driver of our future growth as well. We described in Grace and Taylor during our Q4 2018 earnings call, our expansion efforts in Germany, our strategy there remains consistent, build the physical infrastructure necessary to effectively serve a nationwide footprint, build logistics capabilities and enable rapid vehicle pickups, use purchase cars to speed our German auction, leverage Copart's buyer global buyer network and bring our value proposition to overhaul the claims prospects for the German insurance industry. As you know already, some Germany are on pension orders and elsewhere in Western Europe as well. Our year over year and sequential trends in Germany are on course with substantial growth in unit volumes, revenue and trading profits providing very clear indications that our consignment model will be an economically superior proposition for the insurance carriers the German market in general.
With that, why don't we dive into specifics of the quarter and I'll turn it back over to our Vice President, Darren Hart. Thanks, Jeff. We delivered another strong quarter with record 1st quarter revenues, gross profit and operating profit. Global revenues grew by 20.2 percent or $93,100,000 despite $3,900,000 in foreign currency headwinds, primarily due to the relative strength of the U. S.
Dollar against the British pound. Global service revenues grew by 23.6%, while purchased vehicle sales were flat as we converted a substantial UK customer from a purchase based sales contract to a fee based sales contract. 1st quarter global unit sales volumes increased by 12.4% and vehicle inventories grew by 14.1% versus Q1 of last year. U. S.
Revenues grew by 25% fueled by higher average selling prices and a 13.2% volume increase driven by the organic growth from our existing insurance and non insurance customers and market share gains. Our non insurance business represents approximately 24% of total U. S. Sales volumes and includes franchises, independent dealers, finance and leasing companies, fleets, charities, equipment dealers and wholesalers. Excluding charities, our non insurance unit sales volume increased by 13%.
We attribute the growth across non insurance to our increased marketing, sales and operational focus and our auction liquidity. 1st quarter U. S. Average selling prices grew 4.2% year over year. ASPs continue improving as a result of more bidders, more international bidders and therefore option liquidity, as well as an increasing mix of newer less damaged cards.
International bidding and buying activities reflect our proactive marketing efforts as well as the effect of international bidders and unique domestic bidders by over 20%. The outcome is higher bids per unit and therefore better selling prices for our customers. Our selling prices continue to significantly outpace various used car indices such as Manheim used car price index, which was roughly flat this quarter versus last year. Increasing ASPs then cycle back to our unit growth drivers. U.
S. Vehicle inventories grew by 15% due to these continued strong industry tailwinds as well as market share gains. International revenues were flat due to the aforementioned customer contract shift from purchase of fee based revenue and unfavorable foreign currency. International service revenues grew by 11.4%, while international volumes grew 8.4% and international vehicle inventories grew 8.1%. Globally, purchased vehicle sales were flat as U.
S. And Germany purchased vehicle growth was offset by UK customer contract shift. Globally, gross profit grew from $195,900,000 to $254,900,000 or 30.1 percent and gross margin percentage grew from 42.5% to 46%, an expansion of 3 50 basis points. U. S.
Gross margin grew from 45.2% to 49.2%, driven by rising ASPs and operational efficiencies. International gross margins declined from 31.4% to 29.5% in part due to the increasing mix of our churning business. In the U. S. And globally, we do note rising labor, health insurance and funding costs.
However, these rising costs have been offset in part by rising ASPs and operational efficiencies. General and administrative expenses excluding stock compensation and depreciation increased from $34,800,000 a year ago to $38,800,000 primarily driven by a $3,700,000 pre tax charge related to the employer portion of payroll taxes on certain executive stock compensation. This one time charge has been reflected as such on an after tax basis and the non GAAP earnings included in our earnings release. Beyond this item, international G and A growth in support of the expansion of our European businesses was offset by lower U. S.
G and A due to decreased legal costs and higher capitalized software development. While our G and A may fluctuate modestly in any given quarter, we continue to generally expect G and A expenses will flow but provide operating leverage over time. Operating income grew from $151,400,000 to 205 point $4,000,000 or 35.6 percent, which represents a 4 20 basis point operating margin expansion inclusive of an unfavorable $800,000 year over year foreign currency impact. Net interest expense was up year over year from $3,700,000 to $4,000,000 primarily due to reduced offsetting interest income given our lower average cash balances. Q1 income tax benefit of $16,100,000 reflects a $62,400,000 tax benefit on the exercise of employee stock options and a $3,000,000 tax benefit from other discrete income tax items.
The one time benefit from the exercise of employee stock options as well as the discrete income tax benefits have been included and reflected as such in the non GAAP earnings included in our earnings release. GAAP net income increased from $114,100,000 to $218,200,000 or 91.2 percent year over year. Non GAAP net income increased 36.9 percent from $113,300,000 to $155,400,000 GAAP diluted earnings per share grew from $0.47 to $0.91 and non GAAP diluted earnings per share grew from $0.47 to $0.65 or 38.3 percent. Now turning to the balance sheet and cash flows. We adopted the new lease standard ASC 842 this quarter and now show a $136,400,000 operating lease right of use asset and $140,300,000 of operating lease liabilities on the balance sheet.
We finished the quarter with $181,100,000 in cash and $219,500,000 in net debt. Operating cash flows for the quarter were $212,500,000 an increase of $105,000,000 driven by higher earnings due in part to the large income tax benefit. We invested $131,500,000 in CapEx during the quarter with over 85% attributable to capacity expansion. Given the sustained industry wide volume fueled growth by higher due to higher total loss frequency, we remain focused on purchasing and developing land to meet current and prospective demand. We currently have 39 new yard and expansion projects in the engineering phase and 33 projects in the development phase.
During the quarter, we also collected $12,600,000 in proceeds from stock option exercises and paid $101,400,000 for employee stock based withholding. We thank you for your continued interest in Copart. Dan, if you'd open it up to questions, that would be appreciated.
Our first question in the queue comes from Bob Labick with CJS Securities. Please go ahead. Good morning and congratulations on another nice quarter. Thanks, Bob. I wanted to start you've talked a lot about your strong international buyer base.
You brought it up obviously and how it benefits your insurance customers, I guess, actually like all your customers that are selling. Can you give us a little more color on the types of cars the international buyers are most focused on? Is it the same as the general pattern in the U. S? Are they more focused on insurance or non newer or older cars?
Just a little color into what they're buying.
Bob, thanks for the question and a good one. I think in general, they are demand is similar with the one nuance being that they will their interest is typically on higher value vehicles, which makes logical sense because a car which is a very old back and case which is part of just metal value, you would never bother to ship overseas. So they tend to focus on refillable drivable vehicles in particular. And those to be able to drive very heavily. I would say that when we talk about how international bidders are purchasing approximately half the value of our U.
S. Options customized, they see it of course on many, many more parts still than that. So the point being that it is similar in the aggregate with the nudge to higher value cars.
Got it. Okay, great. That's helpful. And then just related to that roughly half the value of cars purchased, I know you don't target numbers like that at all.
But so where do you
think the percentage goes given the trends in the industry right now over the next 3 to 5 years? Again, I know you're just focusing on servicing your customers and things, you're not targeting a number. But where do you think it might go?
I don't have an insight in mind. I would think that it has grown steadily over time. There are a number of important secular tailwinds there that we mentioned a few moments ago about economic growth in those markets, low automotive penetration. I think we take for granted here in the U. S.
That mobility is essential for our economic well-being, for education, for healthcare and the like and those economies likewise have demand for that same ability. So over time, I think there will be still more demand for U. S. Vehicles, wrecked cars that can become drivable cars there, but we don't have an end stake in non per se though.
Got it. Okay. And then looking at dealer cars, there's obviously been a lot of growth from franchise and dealer sales on Copart over the past couple of years. Can you talk a little bit about the typical car they're consigning to you and who the buyers are? Is that international or is that other dealers or just a little more info on that dealer cars?
Both. I think the dealer source cards, I think, has been an area emphasis for us for years with meaningful growth really over a number of quarters now year over year. And that's because our value proposition, again, it's the same one as it is for the churn periods that has delivered auction values, which matters the most to them. And that is a function of the phenomenon we talked about a moment ago. That is the whiskey, that is marketing efforts, that is international buyers and domestic alike.
So it is again a fairly representative sample of buyers on the other side of that equation. Super. All
right. Thanks so much.
Thanks, Robert.
Our next question in the queue comes from Greg Kennison with Baird. Please go ahead. Hey, thanks for taking my questions. And Jeff, thanks for the thematic overview. Wanted to start with the U.
K. Conversion. With that conversion to a consignment model, should we anticipate 3 more quarters of pressure on vehicle sales from that customer?
The word pressure, I thought we had to say, the math a few quarters, if that's what you mean. I think for us, it's not pressure per se because I think we think about cars, our economics on a unit and a constant basis, a per unit basis more so than we do the actual gross revenue number. So it's not
Got it. And then I have another math question where we don't get to use numbers, but clearly you earned significant business from an insurer that previously committed nearly all of its volume to a competitor. First, why do you think Copart won that business? And second, this was described as a 30% volume customer that's going to happen, most of which by the end of this year. Does all of that math jive with how you understand the relationship?
So, we've been very disciplined about not commenting on individual customers. More generically, we have earned very significant market share for years and for decades, often organically. And the reasons in general, so not coming to mind specific accounts, are that we deliver superior auction results. That is 1st and foremost. But certainly depending on where we are in this historical cycle, other considerations like catastrophic events and the like can also factor the decision, but ultimately it's about the economic value we deliver to our customers as well.
Number 2, related to some of the things is the service level and that in turn is a function of our yard network, our people, our technology, our process, how well do we service an account day to day, week to week, year to year. And then of course, at the moment, how we service them in times of crisis as well. That's how every insurance carrier considers their salvage partner decision. And depending on who the partner is and when you where we are in history, they'll prioritize differently. So those are the criteria that anyone would take that decision off.
And then my last question just around innovation and what you might be doing to innovate your services and your auction platform. There's been talk lately among your competitors about improving cycle times through a platform that would connect banks and insurers or better video and camera views such that you have a better look at the interior or exterior of the car if you're bidding from all the way across the ocean?
Yes. Good question. And I think perhaps we've been remiss in not describing them robustly enough on our earnings calls. But in general, we take those services those types of services very seriously. So I'll comment just on one, for example, the loan payoff question I think you just raised.
And for those who aren't already in the know, one compensation in the resolution of a total loss claim can be that the policyholder has an outstanding loan on his or her car for the salvage claim can be resolved altogether. The loan payoff balance for being owed on that loan needs to be attained by the carrier and the policyholders so that the lender can certainly pay it off. As I understand, as others in the industry are in alpha or beta testing for a cost product they intend to launch at some point, we launched ours in May 2019. So a whole 6 months ago, we had an automated on payoff offering already delivered to our customers. We didn't talk about it on our earnings calls per se, but we recognize that as an important consideration for an insurance carrier and wanting to resolve those claims.
We love the claims process. We are a specific student of it. We appreciate it for a while now that this is a sticking point and a bottleneck and we developed and delivered the service accordingly 6 months ago.
I'm sorry to follow-up, but is there any way you can describe the cycle time improvement from that loan payoff tool?
Hard to do, Craig, because it's very hard to isolate variables. As you might imagine, that is on a portion of the cards that have loans outstanding and a portion still for which the financial institutions are connected to various intermediaries that we have partnered with. So it is not always quite the blocking price, but it's certainly a tangible improvement that both we and our insurance partners appreciate.
Great. Thank you.
Thanks, Kurt.
And our next question in the queue comes from John Healy with Northcoast Research. Please go ahead. Thank you. I wanted to ask a question about the market share gains, Jeff. You alluded to that the economics and the dollar returns in the business that you get the insurers.
That was I think your lead off point into why the company has been successful over the years in terms of gaining share. Is there any way you could kind of peel back the onion a little bit on that topic for us a little bit? Potentially over the last few years, how that dollar return number to the insurer maybe has changed if you think the gap has widened? And then also what do you contribute the gap to? Is it just purely the build out of the international buyer base and just scale?
Just love to know a little bit more on that topic.
Sure. The delivered values at auction, you've heard us describe a link on this call, the international buyers and how important they are. And I think that sometimes may be underappreciated that how relevant they are both for the units that are ultimately acquired by international buyers, but also on all the other space get off. But they just help provide value disclosure, full and fair value realization across virtually all the units that Copart offers. Beyond that, there are a number of other considerations too.
BB3, if you haven't already, you should attend an online auction to Copart and do so for others in the industry and render your own investments. But we have what we think is the best in class technology for sellers and buyers alike, which yields which has for us anyway yielded increasing bidders, so bidders and it's well in excess even of our unit growth, right, meaning base per unit, domestic base per unit, international base per unit that's very consistently increased for a long time. So it's mostly about the auction liquidity phenomena we just described.
Great. And then just wanted to ask about the land investment in the quarter, kind of jumped up a little bit. And I was curious to know if you could help us think about what we should be thinking about in terms of normalized land spend over the next couple of years. And should we look at Q1 as kind of an anomaly or a sign of things to come here?
I think capital expenditures in particular, I think are hard to extrapolate from beginning quarter. So we're talking about parcels of land and in some cases costs multiple $10,000,000 So reading into 1 quarter numbers, I think is slightly, I would say that if you consider the past 4 years to be close elevated capital expenditure levels for Copart, so investments will continue for years to come, both as necessary for the business that we have today, so as we anticipate. Great. Thank you. Thanks, Tom.
Our next question comes from Bret Jordan with Jefferies. Please go ahead. Hey, good morning, guys. Good morning. Hey, Jeff, if you could put it in perspective, maybe give us a feeling for what the yield spread does look like versus the average competitor.
Obviously, you've done a good job building out these buyer base and the frequency of their bidding. But could you sort of quantify how much the yield does benefit your auction?
We have top of quantify threats. We know it's we believe it's significant. We believe that the industry has generally voted within speed, but literally an individual power of course would not be sold on both options. You would never have an all equal auction comparison like for like. But we believe that simply the international composition of our bids, the increasing number of bids per unit over time is pretty compelling at this point.
You think it's single digit percentage points or double digit percentage points in sort of ballpark?
I don't know. I would I can't who knew they don't have the data to do that. Like literally no cars ever sold on Total Bell on multiple auctions. So it's a small part of that. Okay.
All right. And then the question, I guess, you talked about mix and maybe 50% of the volume is now being rebuilt. Could you compare that to where we were 5 years ago? You sounds like we've had a big change recently, but what percent was scrap? What percent was dismantled?
And what percent was built 5 years ago versus
Well, it won't be an easy point to point in comparison to part because we don't have perfectly visibility either a retro buyer who buys 400 units from us and they have different intentions for different of those units. We can surmise that if they're based in the Ukraine, they intend to drive them again versus if it's a buyer who is 6 miles away and also owns a scrapyard, we can get we can render a different judgment. But those would be estimates in the aggregate, I think directionally very clearly all have been it's been a very significant shift from scrap and dismantling in favor of rebuildable profitable cars. You can see that in part also in the and literally the physical appearances of the cars we've been selling. If you attended the Copart auction in the 1980s and saw what was 4% or 6% damaged car, you would see one that is obliterated, but very clearly whenever you return to the road, if you look at a car today, you're 60% damage, it looks like a car.
We probably have technologies that if you even temporarily forego, dropped the car right away. So the very nature of the car has changed as well. Okay. And I guess do
you have any new thoughts as far as the upper boundary of total loss rates if we're in the high teens now what that number could go
to? No, no new thoughts and perhaps we have old ones then and that is to say the total loss isn't here, so to see 20% or whatever today is under could it 10 days be capped at 25%. And I think if you take then the full year fee and look back to 1980, let's see the total loss sequence. I don't see the logic in believing that it will ultimately pop out at 25 instead. If we're having a conversation at any point over the past 4 years, I think we would have 14 dealings that are quite a bit less than reality ended up being.
So our view is that so long as there is a natural outage for these cars in the form of international buyers, in particular in higher growth economies to use cars that there's no particular there's no ceiling, there's no gas in law for total loss frequency. Okay. Thank you.
Our next question in the queue comes from Chris Bottiglieri with Wolfe Research. Please go ahead. Hi. Thanks for taking the question. First one is on the first one is on ASP growth.
It's pretty demonstrable growth there last year. I mean 4% is still really impressive. But want to get your sense if you're lapping anything or kind of how do you think about the deceleration here on the ASP growth?
I think there's enough noise in any given quarter that I think it's all you hear me talk about this with respect to many variables in our business. This one included over a longer period of time that selling price improvement is a good solid quarter for us and it's been consistent now that we've been up consecutively for 12 quarters or so. As you know, there are secular and cyclical forces here, the second one being total loss frequency that as we total more cars, those are generally better ones. Secular drivers may improve more of them. They will drive ASPs upward as well.
There are typical forces here as well, including currency and things of that sort that can cause fluctuations in both directions. So I think we're happy to continue delivering better values for our customers.
Got it. Okay. And then I kind of re ask the question a different way that was asked earlier. But when I look at your CapEx on a LTM basis, that's 440,000,000 dollars roughly double what it was a few years ago, yet the yard ops and depreciation have kind of barely budged recently. So I guess this would imply that you're you probably have more land in the development phase right now and I'll track them or I can go back and see if you can disclose that.
But just want to get a sense for what's behind the kind of urgency of land expansion. Is there any way to kind of thematically bifurcate where you're kind of adding capacity? Or internationally, domestically, is it yard expansion, existing yards? Are you trying to is it a customer win? So anything you can do to provide clarity on the capacity conditions that would be helpful?
The strong majority of the expenditures are for our traditional markets, the ones in which we've been doing business in for a long time and they are a reflection of demand, demand today, meaning if you had perfect visibility into every Copart yard, you'd be able to see that plenty of them could use more space now. Therefore, a good portion of this CapEx is for expansions. Whenever we can expand into contiguous space, we of course would love to for the operating efficiencies that that affords us and when necessary, we'll expand this way. We will instead build new facilities elsewhere. So you're right to guess that we have many facilities in development.
What's driving that is simply demand today and demand growth in the future.
Got you. Okay. Thank you.
Thank you.
Our last question in the queue comes from Derek Glynn with Consumer Edge Research. Please go ahead. Hey, guys. Good morning. Thanks for taking our questions.
Just a follow-up on yard ops. You gained some leverage on that line item over time, probably helped in part by higher pricing. But I'm wondering if you see any areas of inefficiencies there that you guys can tackle or any initiatives for that cost item in particular to drive further margin improvement?
It's a fair question and the answer is on both yes and no. So this is an area of relentless focus for us is how we optimize the efficiency of our yard operations. And therefore, we are we deploy initiatives all the time, including for example, a subhaul driver app last year, which reduces wait for unnecessary trips that our drivers make to our yard. So that times 100, we have a number of initiatives underway. I don't know that any of them would yield a step function change in some cases to help to offset macro inflation within our business fuel and healthcare and other factors.
I'm sure you know quite well. So yes, it is an area of ongoing emphasis for us and it has been forever.
Got it. And then just secondly, it's been a couple of years since you announced the acquisition of NPA. Just want to get an update there. Can you give us a sense of how the powersports business is progressing? What its contribution to growth has looked like?
And broadly if it's met your expectations?
Yes. NPA has been a great acquisition for us with those that they are part of the Copart family today. I think you may remember from the time we did the deal that our logic twofold. We needed the life of the transaction on a standalone basis and we needed also to believe that it would add that it would contribute strategic value to Copart and our insurance and non insurance business as well. I think it's delivered on both fronts.
The business has grown organically on its own, meaning the powersports business, the options that we run through NPA have grown on their own. And likewise, it's contributed to our expertise when it comes to the power sports space, which you may remember, we noted is that it was a nuance in different markets in many respects as well. So now having that expertise in house has contributed to our capabilities in our traditional business as well. So yes, on both counts.
Great. Thanks, guys. And speakers, there are no more questions in the queue.
Great. Thank you for joining us for the call. We look forward to talking to you next quarter. Thank you, everyone.
You, ladies and gentlemen. This concludes today's presentation. You may now disconnect.