Good day, ladies and gentlemen, and welcome to Fabrinet's financial results conference call for the third quarter of fiscal year 2019. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and our instructions on how to participate will be given at that time. As a reminder, today's call is being recorded. I would now like to turn your call over to your host, Garo Toomajanian, Investor Relations.
Thank you, operator, and good afternoon, everyone. Thank you for joining us on today's conference call to discuss Fabrinet's financial and operating results for the third quarter of fiscal year 2019, which ended March 29, 2019. With me on the call today are Seamus Grady, Chief Executive Officer, and TS Ng, Chief Financial Officer. This call is being webcast, and a replay will be available on the investor section of our website, located at investor.fabrinet.com. Please refer to our website for important information, including our earnings press release and investor presentation, which include our GAAP to non-GAAP reconciliation. I would like to remind you that today's discussion will contain forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations.
These statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise them in light of new information or future events, except as required by law. For a description of the risk factors that may affect our results, please refer to our recent SEC filings, in particular, the section captioned "Risk Factors" in our Form 10-Q filed on February 5, 2019. We will begin the call with remarks from Seamus and TS, followed by time for questions. I would now like to turn the call over to Fabrinet's CEO, Seamus Grady. Seamus?
Thank you, Garo, and good afternoon, everyone. I am pleased that we exceeded our guidance for revenue and earnings per share in the third quarter. Revenue in the third quarter of $399 million was $7 million above the high end of our guidance range, and non-GAAP net income of $0.92 per share also exceeded the high end of guidance. These results also drove strong cash flows in the third quarter, with operating cash flow of nearly $36 million and free cash flow of $33 million. In addition to these strong headline results, we executed well in the quarter to produce non-GAAP gross margins of 12.1%, representing a return to our target range of 12%-12.5%. Component supply constraints that we experienced in the first half of the fiscal year diminished significantly in the third quarter, supporting the return to our industry-leading gross margins.
From an end market perspective, Optical Communications revenue of $298 million, or 75% of total revenue, moderated 1% from the second quarter. As anticipated, we saw continued sequential growth for Telecom applications with revenue of $217 million, up 5% sequentially, and representing 73% of Optical Communications revenue. Also, as anticipated, Datacom revenue decreased sequentially and was $81 million, or 27%, of Optical Communications revenues. By technology, silicon photonics-based Optical Communications revenue was $82 million, or 27%, of Optical Communications revenue, a slight improvement from Q2. Revenue from QSFP28 and QSFP56 transceivers was $44 million, a decrease from the second quarter, as growth in QSFP56 programs was more than offset by declines in QSFP28 programs as our customers transition to next-generation designs. By data rate, 100G programs continue to represent about half of Optical Communications revenue, or $146 million.
Products rated at speeds of 400G and above grew 15% from the second quarter to $23 million, or 8% of Optical Communications revenue. Looking at Non-Optical Communications, revenue was $101 million, up 3% from Q2. Revenue from Industrial Lasers was $48 million compared to $50 million in the second quarter. Automotive revenue increased 6% to more than $24 million, with the majority of this growth coming from new Automotive applications. Sensor revenue was roughly flat at $4 million in the third quarter. Finally, other Non-Optical Communications revenue increased 17% from the second quarter to $24 million. Revenue from new business increased 4% from the second quarter to $152 million and represented 38% of total revenue in the quarter.
While we don't generally discuss specific transactions, during the third quarter, we entered into an agreement with an existing customer that could have a meaningful impact on our results in the coming quarters, and hence warrants further discussion. We typically engage with our customers during the design phase and early in the manufacturing process to help them transition from new product introduction into volume manufacturing. During the third quarter, we signed an agreement with Infinera, an existing customer, to assume manufacturing responsibilities for the products currently being manufactured at their Coriant division in Berlin. We already have staff in Berlin to support this program and anticipate migrating the products currently being manufactured at this location to our facility in Thailand in the coming quarters.
While we expect the revenue impact from this program to be small in fiscal 2019, we believe that it could lead to Infinera becoming a greater than 10% customer in fiscal 2020, in what we believe is a win-win relationship. With this transaction, as well as other new business wins, we expect our first building in Chonburi to reach a level of 70% that is either occupied or spoken for in the coming months. In summary, we're pleased to have exceeded our expectations for the third quarter, with revenue above the high end of our guidance, and to have delivered earnings per share that were also above the high end of expectations. We are pleased to see gross margins return to our target range and are optimistic that our new program with Infinera will further support the momentum we see across our business.
Now let me turn the call over to TS to discuss the details of our third quarter performance and our outlook. TS.
Thank you, Seamus, and good afternoon, everyone. I will provide you with more details on our performance by end market and our financial results for Q3, as well as our guidance for Q4 of fiscal year 2019. Total revenue in the third quarter of fiscal year 2019 was $399 million. Note that our adoption of ASC 606 this fiscal year reduced our revenue by approximately $3 million in the third quarter as compared to what our revenue would have been under ASC 605. Because we provide guidance under ASC 605, this means that we would have exceeded the top end of our revenue guidance of $384 million-$392 million by $10 million if we had reported under ASC 605. Non-GAAP net income was $0.92 per share and was also above our guidance range, even after an $0.08 per share foreign exchange headwind in the quarter.
Adoption of ASC 606 further reduced our net income by approximately $0.01 per share as compared to our guidance provided under ASC 605. Looking at the third quarter in more detail, our quarter played out as anticipated with strong continued growth from Telecom product, a sequential revenue decline from Datacom products, and Non-Optical Communications revenue that was slightly up from the second quarter. Optical Communications represents 75% of revenue, with Non-Optical Communications represent 25% of revenue. Now turning to the details of our P&L. A reconciliation of GAAP to non-GAAP measures is included in our earnings press release and investor presentation, which you can find on our website. Non-GAAP gross margin in the third quarter was 12.1%, an increase of 50 basis points from the second quarter and within our target range of 12%-12.5%, as component supply constraints have eased and as we continue to improve productivity.
Non-GAAP operating expense was $10.1 million in the third quarter. As a result, non-GAAP operating income was a record of $38 million, an increase on the second quarter despite slightly lower revenue. Non-GAAP operating margin was 9.5%, up from the 9.3% in the second quarter. Taxes in the quarter were $1.5 million, and our normalized effective tax rate was 5.2%. We continue to anticipate an effective tax rate of 6%-7% for the fiscal year. Non-GAAP net income was above our guidance range at $34.3 million in the third quarter, or $0.92 per diluted share, despite the foreign exchange headwind of $0.08 per share. On a GAAP basis, which includes share-based compensation expenses and amortization of debt issuing costs, net income for the third quarter was $28.6 million or $0.76 per diluted share, also $0.01 above the high end of guidance.
Turning to the balance sheet and cash flow statement. At the end of the third quarter, cash and investment were $408.9 million, an increase of $26.4 million from the second quarter. Operating cash flow in the quarter was $36.2 million. With CapEx of $3.5 million, free cash flow was $32.7 million in the third quarter. During the quarter, we purchased 100,000 shares of our stock at an average price of $53.78 for a total cash outlay of $5.4 million. In addition, our board of directors has approved the repurchase of an additional $50 million of Fabrinet ordinary shares, bringing the aggregate size of our repurchase program to $110 million, with $61.2 million remaining. I would now like to turn to our guidance for the fourth quarter of fiscal year 2019. This guidance is based on ASC 605. We will provide a reconciliation with our fourth quarter results.
Starting in fiscal 2020, our guidance will be under ASC 606. For the fourth quarter, we expect revenue to be consistent with the third quarter, with a relatively flat performance from Telecom, a modest improvement in Datacom, and a relatively flat Non-Optical Communications performance. As Seamus mentioned, we entered into an agreement with Infinera in the third quarter, whereby we will be assuming manufacturing responsibility of products currently being produced at Infinera's former Coriant facility in Berlin. We expect this program to ramp over time, and that we will ultimately transfer this manufacturing to our facility in Thailand. While the near-term revenue contribution is still fairly small, we believe that when fully ramped, this program could generate enough revenue to move Infinera from a less than 10% customer to a greater than 10% customer.
While this program will be accretive to non-GAAP profitability, we expect gross margin headwind to push us closer to the low end of our target range of 12%-12.5% when fully ramped. As with our customer-specific program, we do not plan to break out revenue from this relationship but may provide incremental color from time to time that could be useful to investors. With that backdrop, for the fourth quarter of fiscal year 2019, we anticipate revenue to be in the range of $396 million-$404 million, representing growth of 15%-17% from a year ago, and growth of approximately 15% for all of fiscal year 2019.
From an earnings perspective, we anticipate non-GAAP net income per share in the fourth quarter to be in the range of $0.92-$0.96, and GAAP net income per share of $0.78-$0.82, based on approximately 37.6 million fully diluted shares outstanding. In summary, we delivered financial results that exceeded our guidance in the third quarter, and we are well-positioned for continued momentum across our business as a leading contract manufacturer for the industry's most complex optical and electronic components and devices. Operator, we would now like to open the call for questions.
Thank you, sir. Ladies and gentlemen, at this time, if you would like to ask a question over the phone, please press star and then one on your telephone keypad. If your questions have been answered or you wish to remove yourself from the queue, simply press the pound key. Our first question will come from the line of Alex Henderson with Needham. Your line is now open.
Thank you very much. I guess I'm a little puzzled by the guidance on the revenue sequentially being flat in the June quarter. It's very much against the historical trends that suggest that this June quarter is sequentially always considerably up and seasonally a much stronger quarter, given what goes on in the first quarter, particularly in the Telecom, but even in the Datacom side. I was hoping you might give us some sense of what it is that is causing that to be sequentially flatter. Is it capacity constraints? Is it timing of new capacity adds on some of the products? What's behind the mechanics there?
Hey, Alex. Thanks for the question. This is TS I think a mixtures of all the things you mentioned. First of all, the Datacom is still pretty unsettled. Although we guided a little bit higher than Q3, but again, still out there, we have probably less than 20% of the market share. A lot of our customers do not participate in broad range of Datacom. A lot of customers who are in the Datacom, major players, are not doing business with us. I really cannot tell, align that with the industry. Datacom, we believe will be a little bit uptick. Telecom, as you mentioned, a lot of capacity constraints, and depending on how well we can execute those capacity together with the customer.
If I could just add, Alex, historically, you're right. Historically, some years we have seen strong sequential growth in Q4. In other years, it has been a little bit more modest. I guess our forecasts are based on the committed orders we have from our customers. It's really a reflection of what we're seeing from our customers. We are pleased, I would say that after a challenging fiscal 2018, we have returned to year-over-year growth for every quarter in FY 2019, and we're looking at about 15% growth for the year.
Just to the point, though, it seems that this implies that there's some constraints that are a little artificial, harder for us to forecast, and I was hoping you might help with a little bit of that. To that extent that some of this is capacity constraint issues, are you anticipating that after a quarter-over-quarter flatness, which is unusual in the June quarter, that you might have more capacity coming on that would help you in the back half of calendar 2019, Therefore it's just a timing of when the growth kicks in? How should we be thinking about that beyond the current constraints?
I would say, obviously, we just guide one quarter at a time, It's not a secret that we are installing capacity to support some of the capacity constraints we've had historically. Also with the new business coming our way, the new program we've announced from Infinera, we do see that having a positive impact in the back half of the year for sure.
Just to be clear, the capacity constraints here are your capacity constraints or capacity constraints in particular products? What exactly are we referring to?
It's with specific products where our customers make investments in, I would say, product-specific unique equipment that can sometimes become the pacing item, usually a piece of test equipment. It's not a piece of, let's say, standard equipment. It's more a piece of unique equipment. Typically, our customers will make that investment, ideally, in an ideal world, ahead of the ramp curve. In some cases, the demand is outpacing the supply, It just takes a little bit of time for capacity to catch up with the demand.
This isn't a function of any move to Chonburi or anything of that sort?
No. Nothing at all to do with Chonburi. It's to do with specific, I would say, product-specific, to be more precise, test equipment. Not at all a function of physical capacity.
Great. That's all very helpful. Thank you very much.
Thanks, Alex.
Thanks.
Thank you. Our next question will come from the line of Troy Jensen with Piper Jaffray. Your line is now open.
Hey, gentlemen. Congrats on the nice quarter and the new one.
Thanks, Troy.
Thanks.
Hey, guys. I guess, I'd love to get just a little bit more color on how big Infinera is. You said it could grow to greater than 10% customer, to my knowledge, they're a current customer. Can you just kind of give us some firmer reference? Are they close to 10% now and this is a modest win, or are they well below that and this is more material?
Well, they're a less than 10% customer. Obviously, we're not going to put a number on that, Troy, I'm afraid. We really only report the 10% customers once a year and only when they become a 10% customer. We'll report it looking back at some time in the future. They're less than 10% customer today. They're a very important customer for us. They've been a long-standing customer for us and just an excellent customer. It's been a great partnership between the two companies. The Berlin business or the Coriant business, I would call it, really what we're transferring, and we have a team on the ground right now in Berlin managing that transfer. We're transferring all of the business, all of the products that are currently being manufactured in Coriant in Berlin are being transferred to our operations in Thailand.
Just to be clear, we're not acquiring a facility in Germany or anything like that. We're just managing the transfer of those activities to Thailand. The products, it's a range of, I would say, line cards for transponders, filters, optical amplifiers, interface cards, power management cards, and then as well as complete network systems for transport for both long-haul and metro applications. In addition to that, there's also the repair center support and reverse and forward logistics that goes with that. It's the full suite of offerings or services that are currently being done out of the Berlin operation will be transferred to Bangkok. It's an excellent fit with our core competencies, and it really strengthens our already, I would say, our already excellent relationship with Infinera.
We do expect that they will become a greater than 10% customer with this transaction, we're not putting a timeline on that.
Okay. All right. Understood. How about just to dive further into the Datacom business. It was down a lot sequentially, now you're guiding it up. Can you just talk about the visibility you have for the Datacom business, and are you expecting to see growth in QSFP28 or different Datacom products?
I guess it's a kind of a mixed message, and as you know, Troy, we don't break it out by individual customer, but what I would say is there's a number of factors going on. There is some price, I would say, price erosion where our customers are giving very significant price reductions to win market share. We're working with our customers to make sure when that happens, that we're able to match that with cost reductions so that we preserve our margin. There's a combination of price reductions coupled with some product transitions where some of our customers, one or two of them, are transitioning to new generation, new technology products. Usually when that happens, there's a significant improvement in performance. For example, a customer goes from a 100G product to a 400G product.
The average selling price of the product goes up, the volume will drop in the short term. We're seeing a little bit of that where there's a little bit of price erosion coupled with some product transitions. Overall, we're very optimistic about the Datacom market. Data center rollouts around the world are just going at a phenomenal pace. I would say over the long term, we still feel very positive about that market, and we think we have the right customers that we're supporting in that market space. It's a couple of things. It's not only one thing. It's a couple of things, and we are looking at a slight uptick then in Q4 with those same set of customers.
All right. Understood. Well, congrats again, keep up the good work.
Thank you.
Thank you.
Thank you. Our next question will come from the line of John Marchetti with Stifel. Your line is now open.
Thanks very much. Just following up on some of the guidance on the telecom side, you mentioned the capacity constraints there. Just curious, Seamus, in your conversations with customers, I'm certainly not asking for any one name in particular, just curious if you're hearing about them seeing any sort of slowing growth, whether it's because of inventory buildups or some of the renewed risk that seems to be coming back in on China. Just curious, in your conversations with customers there, how that may be impacting some of the telecom demand or if they're sharing any of that color with you.
A little bit. I think what we're hearing, again, you'll appreciate we're a couple of steps removed from the end customers, let's say, you mentioned China, for example, the end customers in China. What we do hear from our customers is they tell us that they are not really seeing big inventory builds maybe like we've seen a couple of years ago, that if there are inventory builds going on, this I think was talked about on a couple of our customers' earnings calls the last few days, the last week or so, that if there is inventory builds going on, it's more in support of tenders that are going on where there's a fairly aggressive trial maybe running at the moment, then subject to the trial going well, there would be an installation later in the year.
That's a little bit secondhand or maybe even thirdhand information. Take it with a pinch of salt, I would say. I'll put it this way, we're not hearing from our customers that there's big inventory buildups going on. We're not hearing that. The demand, we touch wood, the demand does remain quite strong in the Telecom space.
If I can just ask another question on the Datacom side. You mentioned that transition from 28 to 56. I'm curious in your mind, sort of where the industry is in that transition, you mentioned obviously the uptick a little bit in Datacom expected in the current quarter. Is that starting to be resolved or am I reading too much into those two sort of comments together?
Maybe reading a little bit too much. Bear in mind, especially with Datacom, we're not in any way a kind of a proxy for the industry. We don't have all the players, and we don't make all the products for all the companies that we do support. Having said that, on the transition to QSFP56, we're probably, again, it depends on which customer we're talking about, but we're probably in the middle of that transition, I would say, at the moment, in the early stages of it. The uptick we're seeing in the current quarter, it's with a couple of customers. In other words, I suppose the softness we've seen, we don't see it as a long-term trend. We see it more as a transition to newer products with higher ASPs, with lower volumes to begin with, coupled with some price erosion from some of our customers.
Got it.
John?
Yeah, go ahead, TS Sorry.
Yeah. If you look at Q2, you are down $17 million, $18 million on Datacom. The only way is to go up. We just guided a little bit higher, maybe back to normal count, normal trend. This quarter was down significantly. Yeah.
Understood. One last question, if I could, TS, you mentioned, with Infinera coming on, as it starts to become more than a 10% customer, that pushes you down towards the lower end of the 12%-12.5% kind of gross margin guide. Does that have to do with them sort of now reaching certain volume breakpoints and some things like that? Is the business that you're bringing over, say, structurally different than maybe what you see with some of your other customers? Just trying to get a little color there on how we should think about once that business hits, how gross margin maybe trends after that.
Yeah. John, you're probably aware that in any product transfer, there's many moving parts. Everything had to be lined up, the moon, the sun, the river. We say fully ramped, we'll get to the more than 10% customer. Again, in the process, anything can just go sideways. We are kind of a little cautious. Obviously, the margin also relates to some of the product. Most of the product we transfer, my understanding is, it's a mass production. It's not new product. If you listen to our earning call in the past, we always say that if it's a brand-new product, we have better opportunity for gross margin-
Yep
increase. These are the existing product. We are transferring the whole thing into Thailand. It depends on how smooth it goes. That's why we cannot set a timing when we become a 10% customer. Yeah, obviously, we'll try to solve for the higher gross margin. Again, there are a lot of moving parts, as I say.
Got it. Thanks very much.
Thank you.
Thanks, John. Thank you.
Thank you. As a reminder, ladies and gentlemen, to ask a question over the phone, press star and then one. Our next question will come from Tim Savageaux with Northland Capital Markets. Your line is now open.
Hi, good afternoon. Question on Datacom in the quarter. Did you see any impacts from the exit of your largest customer, or at least the sale of that unit, to a third party in China? If not, what sort of impact do you expect to see from that transaction as well as kind of the broader exit of the Datacom module business of that customer? Thanks.
Tim, just make sure that we get the question right. You are referring to our top customer who want to diversify some of their Datacom product, correct?
Yeah. It's in progress. Again, so far, this or next quarter, we do not see a major shift. This will take some time to transition to maybe another customer. I understand that they're trying to sell their business to another customer, and hopefully, we continue to build those products. So far, in the Q4 guidance, we did not factor a significant drop in a particular customer, if that is helpful.
I think the question as well, Tim, was related to Q3.
Q3, no
No particular impact in Q3, no.
Q3 so far, yeah, no.
No.
Yeah. Q4, maybe a slight, but it's not significant. Yeah.
Okay, well then to follow up on the Q3 Datacom results. Can you characterize trends in your Datacom business kind of relative to silicon photonics, or more traditional Datacom modules? Is there any kind of divergence there or anything notable? I'm going to assume you did see an uptick on silicon photonics, a small one, that was driven by telecom primarily.
That's a fair observation, Tim. Yeah, most of the silicon photonics uptick came from telecom. That's correct. Now, in terms of Datacom, again, our customer collectively probably participate about 20% of the Datacom business. If you look at a major player, a lot of them, we don't have business with them. So we can only look at the customer we have, their 13-week rolling forecast, and try to do a guidance based on that.
Okay. One last one from me, and I know you probably don't disclose this sort of thing, but in the past, Infinera's had some good times and bad times. Can you say whether they were ever a 10% customer for any particular quarter over the, I don't know, last five years or so?
Again, as I say, we only report 10% customer once a year. In the last couple of years, they have never make it to the 10% customer from a total year standpoint. quarter-to-quarter, honestly, I don't have the data in front of me, so it's hard for me to say.
Okay, great. Thanks. Congrats. I'll pass it on.
Thank you, Tim.
Thank you.
Thank you. Our next question will come from the line of Alex Henderson with Needham. Your line is now open.
Yeah, I just hoped we could try another way of slicing and dicing the Infinera pumpkin. If I exclude existing Infinera business and just look at the business that's being transported, is that roughly a 10% contribution, excluding any business that you already had with them? Is that the magnitude of what's being transferred over?
What we've said is the total we think will make Infinera, the combination of Infinera plus Coriant, a 10% customer. We're not really breaking it out, Alex, for Coriant on its own.
In terms of timeline, if you think about the process flow here, I assume it's a gradual fade in as opposed to a hard flash over. Can you talk a bit about the mechanics of it to help us think about how we should feather it in? Is it 10% of the benefit up front and then 20% in the next quarter and 20% the quarter after that? Is it that kind of slope, or is it 5% here, 8% there, and then 30% in a quarter? Is there any window where we should be more aggressive or less aggressive to help us on the out-year slope of that?
Sure. First of all, if I talk a little bit about the mechanics of the transfer, you're right, it is a gradual transfer. The question, of course, is how gradual and over how many quarters. As you'd appreciate, these are complex products with existing customers who have to qualify a new production site. We've actually started that process. We have over 80 people currently on site in Berlin, and that will grow to over 100 people over the coming weeks. We're transferring as we speak. The revenue impact this quarter will be, I would say, minimal. We'll start to see revenue impact next quarter and beyond. It's probably a 2- to 3-quarter timeline to get everything transferred and fully buttoned down and qualified and ramped up in Bangkok. I would say over a 2- to 3-quarter time horizon.
One more question, if I could. When we were talking last year, the baht had been setting you up for a pretty good benefit. You talked about it potentially adding as much as a point to your gross margins if it had been at that level for a full year trailing. We've seen a lot of movement in it. It obviously isn't come back all the way to where it was, I assume that you're still getting some benefit. Is it reasonable to think that there's a little bit of a benefit from that to help offset some of the costs associated with the lower margins associated with this business move?
Obviously, I like to think that way. If you follow Thai political situation here, they just have the election about maybe a month ago. They have not announced the result yet. They go through the crowning of the king, the new king, which is done last Monday, and they are supposed to announce the election result this week. Depend on who form the customer, the baht may go either way, depend on. Right now, based on the prediction, is that the pro-military camp is probably going to take control, become a prime minister, run the government. If that case, the baht will continue to be stable and strengthened, which I'm a little bit worried that because the country is doing well under the military regime, baht tend to stable and become stronger. I watch it very closely.
Again, we stick to our hedging policy, 100%, 50% and 25% for the next 3 quarters. If there's an impact, there will be a delay factor. It will not impact right away because of the hedging program. Based on the advice in the past, I'm trying to look at the document, all it as a cash flow hedge, we will take it to the balance sheet. That is the direction given to me. I'm trying to maybe beginning FY 2020, we try to get a good documentation and get all these things into the other comprehensive income, which is in the balance sheet.
would you then stop reporting negative currency or positive currency translations of the balance sheet because they're functionally not really ongoing operational expenses?
Yeah.
In your GAAP?
Yeah. If it's not in the P&L, then I won't highlight unless there's significant gain and loss, right? If you look at this year-to-date, I can't break even. Q1, I have a gain, $3 million. Q2, I have slight loss, and at Q3, I have a loss. year-to-date, I'm okay. again, from a quarter-to-quarter, it fluctuates. That even build a case to bring the whole thing to the balance sheet rather than impact every quarter in the earnings.
I see. Okay. Thank you.
Thank you, Alex.
Thanks, Alex.
Thank you. I'm showing no further questions in the queue. Now it is my pleasure to hand the conference back over to Mr. Seamus Grady, Chief Executive Officer, for any closing comments or remarks.
Thank you, operator. Thank you for joining our call today, everyone. We're excited to deliver strong results and a positive outlook as we continue to position the company for sustainable growth and diversification over the longer term. We look forward to speaking with you again. Thank you and goodbye.
Ladies and gentlemen, thank you for your participation on today's conference. This does conclude our program, and we may all disconnect. Everybody have a wonderful day.