Earnings Call: Q1 2019

Apr 26, 2019

and welcome to the IDEX Corporation First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Yates, Vice President and Chief Accounting Officer. Thank you, Mr. Yates. You may begin. Thank you, Doug. Good morning, everyone. This is Mike Yates, Vice President and Chief Accounting Officer for IDEX Corporation. Let me start by saying thank you for joining us for a discussion of the IDEX Q1 financial highlights. Last night, we issued a press release outlining our company's financial and operating performance for the 3 months ending March 31, 2019, and later today, we will file our 10 Q. The press release, along with the presentation slides to be used during today's webcast can be accessed on our company's website at www.idex corp.com. Joining me today is Andy Silvernail, our Chairman and CEO and Bill Grogan, our Chief Financial Officer. The format for our call today is follows. We will begin with Andy providing an overview and an update on market conditions, geographies and our capital deployment strategies. Bill will then discuss our Q1 financial results and walk through the operating performance within each of our segments. And finally, Andy will wrap up the call with an outlook for the quarter and the full year 2019. Following these prepared remarks, we will open the call for your questions. If you should need to exit the call for any reason, you may access a complete replay beginning approximately 2 hours after the call concludes by dialing the toll free number 8 776606853 and entering conference ID number 136 84,162, or you may simply log on to our company's homepage for the webcast replay. Before we begin, a brief reminder. This call may contain certain forward looking statements that are subject to the Safe Harbor language in last night's press release and in IDEXX's filings with the Securities and Exchange Commission. With that, I'll now turn our call over to our Chairman and CEO, Andy Silvernail. Thanks, Mike. Good morning, everybody, and thank you for joining us for our Q1 call. I'd like to start with some key themes. Q1 results were strong and somewhat better than our expectations from 90 days ago. Bill will walk you through the details, but overall, I'm pleased with our organic growth in both orders and sales. The team's execution was outstanding driving operating margin expansion and cash flow, and this helped us deliver another quarterly EPS record, driven by both operational outperformance and favorable tax rate. Momentum continued in our industrial, municipal and life science markets, but was partially offset by softness in ag and semicon as well as some lumpiness in our project oriented businesses, specifically dispensing and MPT. There were some concerns in slowing global economic the global economy and those do remain, but we're confident in our ability to grow faster than the underlying markets as a result of our market leading positions, our ability to capture price and deliver on our targeted growth initiatives. Pulling it all together, we're raising our full year EPS guidance while maintaining our organic revenue growth expectations. Now I'd like to take a moment and talk about what we're seeing across the markets we serve and the regions we do business in. In the industrial market, the overall conditions remain favorable with continued strength in OEM and our targeted growth initiatives. We are, however, seeing some day rate volatility in pockets of our business due to customer caution about the macro outlook. In Scientific and Fluids and Optics, our life science markets continue to expand, our IVD Bio business is leveraging new product launches and platform wins to drive growth and the AI market demand remains solid. In energy, we're seeing some rebound driven by higher oil prices. Mobile truck builder demand is increasing, and we're seeing positive signs in the aviation fueling space. In municipal, the North American market continues to modestly expand. Our focus remains on new product development, notably the recent launch of our new hydraulic tool and our SAM system in fire and rescue, as well as continued expansion in emerging markets. In ag, we're experiencing some contraction due to macro uncertainty around the soybean tariffs and the OEM slowdowns. We are seeing some growth in Latin America and Europe, but North America is a challenge. In semicon, we continue to see broad based pressure by lower investments in Asia and the downturn in membership demand after substantial growth in 2017 2018. In auto, as you all know, there's been a slowdown in global light vehicle sales and that's driven some softness in this market, but as you know, that's a relatively small piece for us. Now let's move on to the geographic outlook. Sales across the majority of geographies performed well in the quarter with North America leading the way. Asia was positive, it's primarily driven by our initiatives versus the macro trends. The European economy lost some traction in Q1, we saw some supply chain disruptions ahead of Brexit. And finally, we are seeing some softness in the German economy. Nevertheless, our targeted growth initiatives and new products continue to drive positive results around the globe. All right. Let me turn now to capital deployment. M and A continues to be a priority for us. With that said, there remains a challenge in the current environment due to valuation. Our teams have evaluated several deals, but our approach has not changed, and we will remain very disciplined with our return framework. We will only close on a deal if it fits the I'd excels competition and delivers long term value for our shareholders. This remains our number one priority. As I said, our balance sheet is very healthy. Our gross leverage is 1.3 times and our net leverage is 0.6 times. When the right deal comes along for IDEXX, we will capitalize on it. In terms of other capital deployment, we did repurchase 50 $2,000,000 of stock in the quarter at an average price of about $140 a share. We also returned $33,000,000 to our shareholders via dividends. Let me now turn it over to Bill, who's going to go over our financial results and our segment discussion. Thanks, Andy. I'll start with our Q1 financial results on Slide 4. Q1 orders of $655,000,000 was an all time record and was up 4% overall and 6% organically. All three segments were up with FMT leading the way. Q1 revenue was $622,000,000 up 2% overall and 4% organically. We expanded gross margins by 40 basis points to 45.6%, primarily due to price, production efficiencies and volume leverage, partially offset by investments in engineering related to new product development. Our Q1 operating margin was 23.8%, up 120 basis points compared with the adjusted prior year period, mainly driven by our gross margin expansion, lower intangible amortization and lower variable compensation costs. Q1 net income was $110,000,000 resulting in record high EPS of $1.44 up $0.15 or 12% over prior period prior year adjusted EPS. Our Q1 effective tax rate was 19.5%, which was lower than the 24% in the prior year period, mainly due to an increase in foreign tax credits, discrete tax expense in the prior year period and the mix of global pretax income. The Q1 ETR of 19.5 percent was also 300 basis points lower than our previously guided amount, mainly due to a higher excess tax benefit from greater than expected stock option exercises in the quarter. This lower tax rate accounted for 5 out of the 7 EPS favorability compared to the midpoint of our previous guidance. The remaining $0.02 of EPS favorability was operationally driven. Free cash flow was solid at 76,000,000 dollars up 12% over last year and 69% of net income. This was our highest Q1 free cash flow of all time. In regards to the balance sheet, no change here. Gross and net leverage remain very healthy. The combination of our strong balance sheet, capacity on our revolver and free cash flow provides us with an ability to deploy $2,000,000,000 in the next 12 months for the right opportunities. I'll now turn to the segment discussion. I'm on Slide 5, starting with Fluid and Metering. FMT continues to deliver strong numbers from both an order and revenue perspective. Q1 orders were up 8% overall and 10% organically. Q1 sales were up 4% overall and 6% organically. Op margin was strong at 29.6%, up 110 basis points over the adjusted prior year quarter, mainly due to price, volume leverage and productivity initiatives. As Andy mentioned earlier, we are seeing some day rate fluctuation in pockets of the business, but overall, the fundamental strength within the industrial sector continues to drive solid results. Our Viking and Richter businesses posted record order and sales in Q1 with continued project wins in the processing and chemical markets across the globe. The municipal water business remains steady, and the oil and gas market conditions have improved due to oil price increases and stabilization. The only business in the segment that contracted year over year was Banjo. The concerns we highlighted with the ag market in Q4 materialized in Q1, and we continue to be cautious on the balance of the outlook for Banjo. Overall, the targeted growth efforts across our businesses in this segment continue to gain wins and market share. Let's move on to Health Science turning to Slide 6. Q1 orders were flat overall but up 1% organically. We highlighted on our last call we expected a tougher comp for HST orders due to an OEM blanket we received early in Q4 of last year. Along with the last time buy, we offered customers in Q1 of 2018, we eliminated a product line as part of the Rochester COE project. Normalizing for the items, orders would have been up 5% organically for the segment. From a sales perspective, Q1 sales were up 2% overall and 3% organically. I'll give you a bit of more color on this in a minute. Operating margin increased 10 basis points to 24%. This was primarily due to lower amortization. Core margin performance was negatively impacted by lower project volume and FX at MPT. Overall, HST's performance was primarily driven by continued success in Scientific Fluids and Optics. Underlying AI and IVD Biomarkets remain positive, and we continue to grow through targeted MPD efforts in collaboration with our key customers. Gas saw strong underlying industrial OEM demand and solid execution on our growth initiatives in the food and beverage market. On the negative side, organic growth was impacted by contraction in our ceiling business, which was affected by both the downturn in semicon and lower auto sales. Finally, MPT backlog remains strong and has grown sequentially versus last quarter, but timing of project shipments is skewed towards later quarters in the year due to longer lead times. I'm now moving on to our final segment, Diversified. I'm on Slide 7. Q1 orders were up 5% overall and 9% organically. Revenues were down 2% overall but up 1% organically. Operating margin of 25.8 percent increased 90 basis points in the quarter. This was mainly attributable to price productivity initiatives more than offsetting our volume decreases. FSD's performance was driven by our Fire and Rescue business continuing to see growth across most of their product categories and geographies, with several project wins resulting from new product launches. BAND IT saw growth in several of its verticals, with aerospace leading the way. They also had some nice project wins in cable management. Our dispensing business was down around 15% organically for the quarter as they had a tough comp against some larger projects last year. We expect them to recover some as we progress through the year, but will be down overall for the full year based upon timing of customer replenishment cycles. I'll now pass it back to Andy to provide an update on our 2019 guidance. Thanks, Bill. So let's wrap things up, and I'm going to summarize here with some additional details on 2019 for both the Q2 and the full year. I'm on our last slide and that's Slide 8. In Q2, we're estimating EPS of $1.47 to $1.50 with organic revenue growth in the range of 4% to 5% and operating margin about 24%. We're projecting 2% top line headwind from FX based on the March 31 date, which translates to about $0.02 headwind in EPS. Q2 effective tax rate is expected to be about 22.5% and corporate costs will be around $20,000,000 Looking at the full year, we're raising our full year EPS guidance. We now expect earnings to be in the range of $5.70 to $5.85 Full year organic revenue growth remains the same at 4% to 5%, with operating margin of about 24%. Top line FX impact will be about 1% based on that March 31 rates. The full year, we expect our tax rate to be about 22%, CapEx to be about $60,000,000 and free cash flow in the range of 105% to 110%, and finally, corporate costs in the range of $80,000,000 to $82,000,000 As always, our earnings guidance excludes any costs associated with future acquisitions or restructuring. With that, Doug, let me pause here and we're going to turn it over for questions. Thank you. Ladies and gentlemen, we will now be conducting a question and answer Our first question comes from the line of Allison Poliniak with Wells Fargo. Please proceed with your question. Hi, guys. Good morning. Good morning. Can we go back to the commentary around MPT? I just want to make sure I understand it. I think, Bill, you were saying sales were weak in the quarter, but you have a strong backlog, so it's really timing of when those projects are getting delivered. Is that a fair point? Yes. MPT is going to be down for the first half, but they'll be up in the back half and overall positive for the full year. Yes. So, Allison, we actually built backlog, and we actually have a great backlog position in MPT. But it's along with dispensing, those 2 tend to be the most lumpy of our businesses. And so we're going to see that backlog flush itself through in the back half. Got it. And then what are those one time events that you referred to on the slide? Is that just the order commentary you were talking about? Correct. Okay, perfect. And then on acquisitions, obviously a lot of dislocation in the markets here. Are you sensing I know it's been a long haul, but any sense of multiples kind of starting to pull in, any sort of change there that you can Not really. It's been pretty consistent. And I think for us, Allison, it really continues to be working it very hard and being patient and disciplined. Eventually something will break here, but the last thing we want to do is do a really expensive deal that doesn't fit our framework. So we're going to keep our discipline. Fair enough. And then last, that corporate expense, it looks like it was just adjusted down a little bit. Is that just your cost control or is there something else in there? Yes. No, it's just a flow through of the favorable variable compensation that we incurred in the Q1. Perfect. Thank you. Thanks, Allison. Our next question comes from the line of Michael Halloran from Robert W. Baird. So I'm hoping to triangulate a couple of things here, Andy. If I think back, you were essentially projecting from an end market perspective kind of a low single digit environment with choppiness quarter to quarter. Is that still the case? Any change there? And then secondarily, could you triangulate that with some of your leading indicator type companies? I know you didn't I don't think you mentioned warm up, could have missed it, but Gast and BAND IT both were really strong in the quarter. So I'm hoping you can kind of put those pieces together for me. It was actually mixed, Mike. So if you go back and you look at how the quarter developed, it was pretty soft in the first half of the quarter. And then strength picked up pretty broadly as we got into the second half of the quarter. So that was a good sign. And obviously building backlog in the quarter and the 6% order rate is a good sign as we walk into Q2. That being said, those businesses that we look at as being very short cycle, that was mix too, right? So we had some if you strip out some really specific wins that we know we got and you look at the day rate business, pretty choppy in some places and then relatively strong as you get as you lean more industrially, pretty strong. So I actually don't think that the point of view has changed much from when we talked 90 days ago. Any different on the regional side? Yes, a little bit. I think Asia is probably a little bit better than we had expected. North America is just about what we had expected and Europe is a little weaker. Great. Appreciate it. Thank you. Thanks, Mike. Our next question comes from the line of Deane Dray with RBC Capital. Please proceed with your question. Thank you. Good morning, everyone. Hey, Deane. Hey, maybe we can start with a review of some of these sector puts and takes that a number of the multi industries have been commenting on, either they were or were not affected. So let's start with there were some issues about pull forward of demand out of the Q1 into the Q4. There was a company last night reported after close where it ended up being much bigger than they thought. Did you see any of that dynamic? Was that at all related to the softer start to the year for you guys? Not really. We had that one order in HST that we talked about, but it went into the quarter Q4, but not a big deal. And that wasn't tariff related as someone to get that up and that was pure timing. That's pure timing with the customer. So generally, Deane, we're so short cycled that we don't tend to we're so short cycled and we're not generally an off the shelf product that we don't play a lot in some of these, for lack of a better term, games that you see out there. Year, we did see it as the tariff stuff was kicking in, we did see some crazy activity there between the second and third quarter. But in terms of looking at 2019, 2018, I don't think it's material for us. Good. And then I didn't hear weather come up at all, but when I hear about ag softness, there was a company, Pantera had issues there with weather. Anything on your side? Yes. The only weather here was Mike's house being shut down by the weather. Last quarter. Exactly right. There was a little bit here and there, but not enough to have mattered. Specific to ag, look, that market is just soft. And we saw it come in late last year. We had that bolus of activity that we cautioned everybody on that we didn't think was going to hold and that has been reality. And they're just going to have to work through their cycle. In terms of whether or not that's bottomed yet, you got some people saying that, I'm not sure. And so we're going to kind of hold off making that call at this stage. And but it's an important business for us, but we think we have it triangulated in terms of the rest of the year. Good. And then just last one for me. Can you comment on price costs in the quarter and any changes in the outlook for the year? Yes. So we're still above 1% in pricing. Inflation did settle in a little bit. So we definitely had a little bit of incremental benefit relative to the expectation of that 30 bps to 40 bps. So it's a little bit better than expected. So we think we're in a good spot for the rest of the year. Great to hear. Thank you. Thanks, Dean. Our next question comes from the line of Matt Summerville from D. A. Davidson. Please proceed with your question. Thanks. Two questions. First, in the prepared remarks, you referenced supply chain disruptions you saw in Europe. Can you get into a little bit more granular detail on that and whether that's still with you here as we're into the Q2 at this point? Yes. So, Matt, the bigger thing there was really specific to the UK, And we have a number of businesses, fire and sealing in particular, that are in the UK. And what you saw was you saw some hoarding of product as people were ramping up to that expected Brexit date. And so we'll see how that plays itself out now that we've got that kick down that can kick down the road again. But you definitely saw some behavior around relationships between the U. K. And the continent in terms of supply chain. It's not that big a deal to us, but to that those businesses, it is. And so we'll keep an eye on it, but I expect as this continues to unfold, we'll continue to see some of that wackiness. And then are you seeing any evidence, you mentioned sort of the short cycle day rate business, but beyond that, kind of thinking in some of your longer cycle businesses, are you seeing any evidence that customers are delaying capital decisions, awaiting some sort of outcome with all of this trade stuff? Absolutely. I actually think that if you go back to last summer, what changed was people pulling in capital, being much more hesitant about releasing larger chunks of capital while this tariff stuff is working itself out and obviously with the government shutdown in the U. S, Those combined events, I think, made people skittish. And if you look across, I was in China last week. And if you look across kind of behaviors, what's happening in Asia, it's a big time wait and see. And then any U. S. Businesses that have a lot of China exposure is a big time wait and see attitude on how things are going to play out. So I do think that there is some constrained relationships between kind of natural supply and demand with this situation. Thanks, Andy. Thanks, Matt. Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question. Good morning, everyone. Hey, Nathan. Hey, Andy. Question here just on FMT and the impact that Banjo had in the quarter. I mean, you got pretty phenomenal order growth, 110 basis points of margin expansion. And I think Banjo is one of the higher margin businesses in there. So it probably was a bit of a drag on margin expansion. Can you maybe talk about what the drag from Banjo was? You're getting pretty close to 30 percent operating margins now. Can we see that number breach this year? Yes. So it's less than you might have thought. There is definitely some impact, but it's less than you would think for a couple of different reasons. Most importantly, the margin profile of the rest of FMT has closed some of the gap on the rest of relative to Banjo. So the mix impact isn't quite as big as you would think. And when it's all said and done, you're talking about this is a company that is sub-five percent of IDEX sales. And so even if you look at it relative to FMT, you're still talking about what 12%, 14% of FMT business, is that about right? So plus or minus. So it's not immaterial, but it's not that big a deal. Not as big as it would have been, say, 5 years ago. Okay. And then maybe, yes, you did talk about pockets of weakness in FMT and you've danced a little bit around what those are. Maybe you could give us some more details on which of the businesses or which end markets that you're seeing that weakness in? Yes. More generally, the pockets of real weakness across the company are around ag, are around semicon and auto. Now the good part is, is we don't I mean, those all those things together are sub 10% of revenue for IDEX. So when it all said and done, yes, there's pockets of weakness there. The bigger thing that I was referencing in my prepared remarks was around the volatility of day rates. And so, we've seen this in a couple of different periods, kind of going into 2015, 2016, coming out of 2015, 2016. Then last summer, you start to as you look at it at some kind of inflection, positive or negative, you kind of tend to see some of this volatility. And I think that back to the earlier question that was asked about capital being held up. I think as capital gets held up, the book and term business tends to have more volatility in it and also projects get kicked out. So I think it's a combination of those things. The good news story here is if you get some relief on that, I think that volatility goes away and you inflect upwards. Okay. So going into 'fifteen, 'sixteen and coming out of 'fifteen, 'sixteen, that volatility clearly resulted in a big downturn and a big upswing. I guess the volatility last summer didn't really move the needle in a big way one way or the other. I would argue that we're in a 6 month period. If I were to go back kind of the Q3 through the Q1, I'd say it's been 6 months of that, right? We've had months that have been weak and months that have been very strong. And so I think we're still in that question mark zone. Okay. So you're still in the period of volatile day rates waiting to see whether that's going to sort itself out or jump off a cliff or inflect up or something like that. Any sense from you of what you think is going to happen around that? The issue I think is this isn't tied to normal economic activity. It's tied to very big macro and political issues. And so, I don't have any idea. Fair enough. Fair enough. And I'm glad to see Mark didn't freeze to death. All right. Thanks, guys. Thanks, Nathan. Thanks, Nathan. Our next question comes from the line of Joe Giordano with Cowen. Please proceed with your question. Hey, guys. Good morning. Hi, Joe. Hey, so some of like the higher profile OEMs in some of the HST areas like on mass spec and chromatography, etcetera, talked about having it sounded like there was some buildup there in the channel perhaps. I'm just curious as to what you're seeing. I know it's a longer sales cycle for you guys there. So what are you seeing relative to that? How temporary does that feel like for you guys? Yes. So we didn't see if you actually look at the life science piece itself, that was actually pretty darn healthy. And so we have not seen that play through. With the major customers, we have electronic kanbans that are in place with all of them. And so we have a pretty good visibility. How that might play through their supply chain their forward supply chain to their customers back to us, we have less visibility on, but I don't think you're looking at something that's going to be a really big deal. Right. FSD, I mean, I guess the pop in orders probably is a bit surprising to most people. How sustainable do you think that is? Is that a business as a segment that might be down organically this year, full year? How are you calling that right now? No, I think this is Bill. Overall, it's going to be up for the year. I think there will be, again, quarter to quarter volatility for dispensing, right? Sales were down 15%, but orders were up 10%. We called out in the 4th quarter, we had something that pushed in the Q1. We landed that order. But Fire and Rescue, really strong mid single digit and kind of same expectations for BAND IT. Yes. Okay. And then just last for me. I mean, we've talked about day rate volatility a bunch here. Andy, I know that's something that really gets you kind of laser focused. So how are you kind of when you're not sure which way it's going to break, how do you kind of act? Do you kind of do you think do you kind of get ready for one side or the other or get actions in place that if it goes one way, we're ready to cap the I know you hate getting behind that either. Yes. I think we are as I've said many, many times in the past, we react much better to the upside than we do to the downside. And so we can move pretty quickly as demand inflects upwards. And I'm happy to have to chase that a little bit. That's all right with me. The contribution margins are going to be high. And you're really chasing it with supply chain and labor. And so I can deal with that. Getting way out in front and having the markets turned over on you is very painful, right, because now you're firing people and you've got a really difficult contribution margin on the backside where the decrementals become painful. So I'd rather be conservative going into that, have to chase the upside a little bit than I would getting out in front and having to dramatically react to the downside. That's fair. Thanks. Thank you. It seems like that's going to be a game changing technology. And curious about initial reception and whether it's already contributing to FSD order rate? I appreciate the question, Brian. So we had the North American fire show in Indianapolis here a few weeks ago and we introduced both the SAM system and the new hydraulic tool. And I think it's fair to say that the SAM system had incredible reaction. The number of people at that booth, the reaction from customers has been terrific. We have already secured our 1st major customer around that. I don't want to talk about who at this time. And it's a big deal, right. We made that small acquisition, technology acquisition last year. That was all about bringing the user interface and our ability to link all of our components into a singular system. And it's really in terms of everyone's talking about IoT and digital. And this is a great example of where we're really on the forefront of that. And what's going to happen is over the course of years, we're going to change the productivity and the safety profile of a fire truck and that's a really big deal. Now that being said, this is stuff that happens really slowly and it happens slowly for two reasons. 1, there's already a year of backlog in the fire truck OEMs, right. So these things have already been ordered. So unless somebody wants to fundamentally change the nature of their order, it's going to take some time for that to go through the system. And then second, there's going to be conversion, right? You've got a huge installed base over time. But I think what happens is you're going to see this over the course of 3 to 5 years. I believe we're going to start taking significant chunks of market share. We've got great intellectual property around this. And I do think it's a game changer for us. As you think about over a decade, our positioning in the fire market relative to this capability and how it pulls through componentry, it's a big deal. That's extremely helpful color. Thank you. Thanks, Brian. And if we could follow-up a little on M and A. Obviously, I have a lot of dry powder right now and good scale and diversification across platforms. With the resources you have in place, is larger scale or more transformational M and A perspective going forward? Brian, we're pretty cautious about that. If you look at the universe of businesses that would be transformational. So let's say our size to half our size, right? If you look at businesses of that scope and scale, there are very few that fit naturally with IDEX. There are a handful and those are things that we keep up on and we work on all the time. And there are a few that we could do. They would be wonderful combinations with IDEXX. But it's not very many. It has to be at the right price. And you have got to be able to drive real synergies. That being said, as you look from, say, that size down to $300,000,000 $500,000,000 so call it $300,000,000 to $1,000,000,000 in revenue, there's quite a bit of stuff out there. And it's really a matter of timing and being able to do a deal with the right kind of economics, that fits our style of competition. And if that happens, we will move really quickly. We've looked at a bunch this year. We've put a ton of effort into them. And we just need to keep to our style of competition and the discipline around our return frameworks and not get seduced into doing mid single digit ROIC deals that are accretive but are really disastrous to the capital structure and the return structure of a business over the long term and we are just not going to do that. Makes perfect sense. Thank you again. Thanks Brian. There are no further questions in the queue. I'd like to hand the call back to management for closing comments. Thank you very much and thank you everyone for joining us here on the Q1 call. More than anything else, I want to thank the teams here at IDEXX who do just a tremendous job being laser sharp focused on our customers, understanding that in a market like this, we really do need to execute and execute well and they've done that. And then discipline around how we spend this free cash flow. And so the teams I'm very proud of the team that we have and culture that we've built. And I look forward to catching up with everybody in the next 90 days. Take care. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.