Good morning, and welcome to The New York Times' fourth quarter and full year 2016 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Harlan Toplitzky, Executive Director of Investor Relations and Financial Planning and Analysis. Please go ahead.
Thank you, and welcome to The New York Times Company's fourth quarter 2016 earnings conference call. On the call today, we have Mark Thompson, President and Chief Executive Officer, James M. Follo, Executive Vice President and Chief Financial Officer, and Meredith Kopit Levien, Executive Vice President and Chief Revenue Officer. Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call, and our actual results could differ materially. Some of the risks and uncertainties that could impact our business are included in our 2015 10-K. In addition, our presentation will include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investors.nytco.com. With that, I turn the call over to Mark Thompson.
Thanks, Harlan, and good morning, everyone. The fourth quarter of 2016 saw unprecedented growth in digital subscriptions, double-digit year-over-year growth in digital advertising, encouraging results in our print consumer business, but continued stiff headwinds in print advertising. Those headwinds, combined with investments in the growth areas in our business, led to operating profit being down both for the quarter and the full year. Nonetheless, we see both Q4 and 2016 as a whole as a strong vindication of our strategic direction. We are a smartphone-first, subscription-first global news provider committed to delivering journalism worth paying for and innovative premium advertising experiences equally worth paying for. In a world full of fake news and low-quality commodity digital ads, it's a distinctive vision and one which audiences and advertisers around the world responded to in 2016. Let me turn first to our subscription businesses.
Donald Trump was once again busy tweeting this weekend that our audiences and our subscribers were, to use his word, dwindling. Well, not so much, Mr. President. We had spectacular audiences in the quarter, with 220 million unique users coming to us in November, for example. As for subscribers, in Q4, we added 276,000 net new digital subscriptions to our news product. For comparison, that's more net new subscribers in one quarter than we added in the whole of 2013 and 2014 combined. In 2016 as a whole, we added 514,000 net subscriptions to the digital news product. Perhaps the new president was referring to the new year and guessing that there had been a post-election lull. If so, wrong again. As you'll hear from Jim in a few minutes, we're continuing to see remarkably strong numbers of new subscribers.
Remember that our digital subscription model was already accelerating even before the present intense news environment took hold. Six years in, our pay model remains buoyant, and the pool of near-at-hand, already engaged potential subscribers looks not smaller, but bigger than it did a year or two ago. Print circulation also benefited in Q4 with the best quarter-over-quarter net growth in home delivery subscriptions in over eight years. All this means that at the end of 2016, if you add up print, digital news, and digital crossword subscriptions, we had a total of 2.9 million paid subscriptions. Indeed, I can announce that as of today, February 2nd, 2017, we have exceeded 3 million total paid subscriptions, a landmark in the history of The New York Times Company. At the very peak of the Times print-only history in 1993, we had 1.8 million subscriptions.
This is an important moment for us. I also want to say that we've only just begun. I believe there is immense further potential for growth in subscriber numbers and revenue. What makes our subscription-first growth strategy possible is the quality of the work of our newsroom and editorial departments. Under Dean Baquet's and James Bennet's leadership, Times journalism is in amazing form, and audiences have been flocking to our authoritative coverage of and commentary about a momentous period in the politics of America and the world. We are committed to covering this period and the new administration fairly, but also rigorously and with neither fear nor favor. Indeed, we've allocated an additional $5 million to the newsroom's budget this year to pay for more journalism and especially more investigative journalism in Washington, D.C.
Dean and the newsroom published their own roadmap of the future a couple of weeks ago, and I'd encourage anyone who's interested in the future of quality journalism at the Times and elsewhere to read it. As we look for ways to reach new subscribers and extend the powerful New York Times brand, we're continuing to innovate in the delivery of our journalism. Just this week, we launched a new podcast, "The Daily," which is already the most popular podcast in the iTunes store. This morning, we announced an exciting new venture with Snapchat that will see us deliver a special version of our morning briefing to that very distinct and highly engaged audience. Digital subscription revenue grew 22% year-over-year in the quarter, and print consumer revenue was flat. Digital advertising revenue also grew 11% year-over-year.
The increase was driven largely by further gains in smartphone, branded content, marketing services, and programmatic. The second half of 2016 was an important turning point for us, as we saw the growth in these businesses more than make up for declines in our web homepage and direct sold banner businesses. Print advertising, however, remained tough for us, as it has for the rest of the industry. In Q4, the year-over-year drop was 20%, while it was 16% for the full year. Now, as I've noted in previous quarters, print advertising is a far smaller proportion of our total revenue than it once was. Nonetheless, it was enough when taken with cost increases, largely associated with our investments in future growth, to impact both top-line revenue and profitability. Total revenue for the quarter fell 1% to $440 million. Adjusted operating profit fell 19% in Q4 to $96 million.
Now, Jim will give you guidance on how we see the present quarter shaping up, but I wanted to say a few words about investment and costs. We do believe that we've been presented with a unique opportunity to introduce and engage new audiences with Times journalism. We plan to invest more in the early part of 2017 on marketing, including a campaign which we'll launch in a few weeks' time. As you know, we plan to use our accommodation in our New York offices far more efficiently. That too will mean expense in 2017, but we expect it will lead to increased rental income beginning in 2018. We will continue to invest in visual journalism, in our new digital advertising businesses, in our global expansion, and in other growth initiatives.
These initiatives are reflective of our continued commitment to aggressively manage the business while investing in our digital future. 2016 was a milestone year for The New York Times Company. We expanded our global footprint, saw record numbers of readers, and accelerated our digital transformation. Most important, we saw a spectacular rate of growth in our consumer business. We're confident that we can sustain or even accelerate that rate of growth. We are a united company. We have a sense of mission, which extends to every department. We know the truth is hard to find, and we're all determined to provide reliable, honest information and objective and insightful analysis and opinion to readers everywhere. We believe that the audience demand is there to make it a great business. Now, with more detail on the financial picture, here's Jim.
Thank you, Mark, and good morning, everyone. As Mark said, the fourth quarter results reflects solid consumer and digital advertising growth, but a very challenging print advertising environment. Adjusted diluted earnings per share was $0.30 in the fourth quarter, compared to $0.37 in the prior year. We reported GAAP operating profit of approximately $56 million, compared to an operating profit of $88 million in the same period in 2015. Overall, revenues are down 1% in the quarter, with weakness in print advertising offsetting growth in both digital consumer and advertising revenues. Total circulation revenues increased 5% in the quarter, with digital-only subscription revenue growing strongly, up 22% to $64 million. On the print circulation side, revenues were slightly lower, largely due to decline in single copy revenues.
Home delivery revenues were flat in the quarter compared to the prior year, as home delivery price increase in early 2016 more than offset volume declines. Although we saw sequential improvement in the print subscriptions, in the fourth quarter, as Mark noted in his remarks, total daily circulation declined 4.3% in the quarter compared to the prior year, while Sunday circulation declined 3.5%. We experienced a decline in ARPU in the quarter from our digital subscriptions, due in large part to the sharp net increase in subscriptions, most of which start with a promotional discount. The large growth in net digital subscriptions also impact ARPU as we receive only a partial quarter of revenue. We are still experiencing a heightened growth rate relative to the month preceding the election, and therefore, we expect ARPU to continue to decline before stabilizing when these new subscriptions revert to full price.
We saw strong growth in digital advertising for the second consecutive quarter. Mobile revenues continued to grow at a rapid rate versus 2015 and represented approximately 29% of total digital advertising revenues in the quarter. As creative services revenues, a component of advertising revenue, have been rising rapidly, the cost to support those revenues have also increased in the quarter. Lower print advertising revenue is mainly due to declines in luxury and retail categories. However, most major categories also experienced declines, and we expect this current environment to continue into 2017. On a monthly basis, overall advertising revenues was down 8% in October, 7% in November, and 15% in December. Early in the quarter, we acquired The Wirecutter and The Sweethome, a home recommendation website that serves as a guide to technology gear, home products, and other consumer goods.
The affiliate revenue we earn from readers who purchase products recommended on these sites is recorded in other revenue line in our financial statements. In the fourth quarter, other revenues grew 16% versus the same quarter in 2015 to $29 million, largely due to this acquisition. GAAP operating costs increased 3% in the quarter, while adjusted operating costs increased 5%. As Mark said, we will continue to keep a sharp focus on our cost base while investing where necessary to support growth. To that end, our print production and distribution costs were lower in the quarter, while costs grew in marketing to drive consumer acquisition, advertising, technology, and in the newsroom as a result of the election. Non-operating retirement costs were down in the quarter to $2.5 million from $7.5 million in the prior year.
In the quarter, we recorded three special items which have been excluded from our pro forma results. In Q3 of 2016, the company offered participants in various defined benefit plans the option to immediately receive a lump sum payment or to immediately begin receiving reduced monthly annuities. In the fourth quarter, the pension funds distributed over $50 million on that offer and settled retirement obligations of over $53 million, resulting in a $20 million charge. The effect of this was to continue to reduce the overall size and inherent risk of our plans, as well as to improve the funded status. The second item relates to a $4 million gain we recorded related to the sale of some assets of Madison Paper Industries, a paper mill in which the company has a 40% interest and which ceased operations in the second half of 2016.
We also recorded a $4 million income tax benefit related to a reduction in the company's reserve for uncertain tax positions. Moving to the balance sheet. In December, we used approximately $189 million in cash to retire a debt at maturity. As a result of that principal repayment, our cash and marketable securities balance declined in the quarter, and we ended the quarter at $738 million, with total debt and capital lease obligations principally related to the sale leaseback of our headquarters building of approximately $247 million. The funded status of our qualified pension plans improved in the year due to strong asset performance and improved mortality tables, partially offset by a lower discount rate, and also actions taken to reduce the size of the plans.
The underfunded balance of our qualified pension plans at the end of the year was approximately $223 million, an improvement of approximately $50 million from last year. In December, we announced our plan to consolidate the company's operations within our New York City headquarters from 17 floors we currently occupy to 9 by the end of 2017. As Mark mentioned, we believe this will enhance our ability to work together, while also allowing us to monetize 8 floors, which total approximately 250,000 sq ft, in addition to the 7 floors leased to third parties today. This effort is scheduled to take the entire year to complete and will require the temporary relocation of a number of employees to office space elsewhere in Midtown Manhattan.
We expect to incur approximately $50 million in capital expenditures in 2017 to reconfigure the space, as well as $5 million-$10 million in operating costs, largely in rent for temporary office and moving costs. We will begin marketing the eight floors shortly and expect to begin recording rental income in 2018. We will also incur upfront cash payments for lease commissions and other lease-related items upon execution of leases, which are not quantifiable at this time. Ultimately, we believe this project will further enhance the value of our headquarters building. Under our sale leaseback agreement, we have the option to repurchase our lease space for $250 million in 2019, which we currently expect to exercise. These actions will not restrict us in any way under this agreement. Now, let me conclude with our outlook for the first quarter of 2017.
Circulation revenues are expected to increase approximately 6% compared to the first quarter of 2016, driven by continued benefit from our digital subscription revenue growth. We expect digital-only revenue to grow at approximately 25%. For the first quarter of 2017, we continue to experience strong growth in net new subscribers. We currently expect more than 200,000 net additional subscriptions to our digital news products and approximately 15,000 net additional subscribers to our digital crossword product. Over the past several quarters, we have experienced rapid growth in the number of subscriptions to our digital news products, far beyond the guidance I have provided on prior quarters' earnings calls. In this environment, this metric has become increasingly difficult to predict, and beginning next quarter's earnings call, we will discontinue the practice of providing forward guidance on the number of additional subscribers we expect.
However, we will continue to report the actual number of both news and crossword product subscription additions each quarter. Overall advertising revenues are currently expected to decrease in the high single digits with growth in digital advertising between 10% and 15%. Other revenues are expected to increase in the high teens, largely from the impact of the Wirecutter business we acquired early in the fourth quarter. We expect additional costs related to an elevated level of marketing and advertising spend to support digital growth, as well as additional costs associated with our acquired businesses and costs associated with our real estate project. As such, operating costs and adjusted operating costs are expected to increase in the mid to high single digits in the first quarter.
Non-operating retirement costs are expected to be about $4 million in the first quarter, while for the full year, interest expense is expected to be $20-$25 million, and depreciation and amortization is expected to be between $60-$65 million. As stated earlier in my remarks, we expect capital expenditures for our real estate project to be approximately $50 million and total capital expenditures to be between $85-$90 million for the year. Finally, I want to note that our 2017 fiscal calendar includes a 53rd week, which will occur in the fourth quarter. With that, we'd be happy to open up for questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question comes from Alexia Quadrani with J.P. Morgan. Please go ahead.
Hi. Thank you. Just a couple of questions. First, I think you guys gave some color on the ARPU on the digital-only subs, but do you actually have a number in terms of the total revenue per subscribers right now? I have a follow-up.
I think we probably give quite a bit of numbers. You can probably get pretty close to that number. I think the ARPU is probably in the $13-$14 range currently.
Yeah.
The point to my comment was largely that in the world where we're adding so many subscribers in a quarter, and those are introductory offers, that puts a little bit of pressure on ARPU, but.
Sure. Morning, Alexia, it's Mark here. The point being, a lot of the surge in new subscriptions happened after the election, roughly from halfway through the quarter. You've got people coming on to becoming subscribers halfway through the quarter. Many of them are on an initial discount. That has, as it were, a transitory effect on ARPU. We expect, as Jim said, once they go to full price, we'd expect some correction in ARPU, though. As Jim also said, we're continuing to see really astonishingly large numbers of new subscribers. Some of this effect will also be true in Q1 and possibly in future quarters.
Just to be clear, that discounting strategy for new subscribers is consistent with what we always do.
That's right. We've not changed the terms in which subscribers join us as a result of the surge. It's exactly the same as it was before.
I guess, Mark, just sort of following up on the really rapid growth you're seeing right now in the subscribers. Clearly it seems that Donald Trump, just much to his chagrin, may actually be adding demand to the news media in general. I know you said both circulation, both digital and print, have done better since the election, or at least recently. Do you think there is a real correlation here between all this sort of chaos or noise coming out, that it is driving a lot more demand for news media? This could be sort of a maybe sustainable trend, at least in the intermediate term.
Alexia, if we restrict ourselves to empirical evidence, I would say that we're still learning by talking to subscribers and through qualitative research exactly what's going on. I would say we're definitely seeing a significant uptick in people's expressed willingness to pay and therefore the conversion coefficients, as it were. We think there are multiple factors going on. I think the broader point is we're entering. One might expect after a U.S. presidential election, a slight period of quiet, a kind of transition followed by a honeymoon period. That's manifestly not the case. We're in a very lively news environment with a very activist news making new administration. I think the issue of how long will this heightened interest last probably is the same as how long will the administration continue to be creating news and controversy.
I think that as a kind of former journalist, my judgment would be that there's plenty of kinetic energy in the news cycle, and that's likely to continue for many months and possibly years.
Yeah. Just to put a fine point on it, the heightened interest seems to be in independent, original reporting and other aspects of journalism, and we think that's going to go on for some time.
Alexia, it's also just worth saying that we're seeing a surge not just in terms of interest in this country, but the whole world is watching what's happening in America. The American political story is part of a broader populist wave which is sweeping the whole of the Western world. We're also seeing real spikes in international interest and indeed in international subscriptions.
Yeah. To me, it seems very logical that would happen. just sort of housekeeping. I think, Jim, you mentioned the monthly numbers for the quarter in terms of the ad revenue. Did you give any color on what you saw in January?
We're off to a pretty good start in January in digital, and I think broadly Jim gave guidance, but you can expect to see digital continuing to be strong, and I expect print to be pretty similar.
Yeah, I would say within our high single digit decline in advertising, as I said, I think, and I also suggested that advertising in the quarter will be up, digital advertising 10% or 15%.
Yes.
That would suggest we're still going to be in a pretty tough print environment in the first quarter. Absolute precision around that is hard.
Yes.
We're not expecting that to change dramatically in the first quarter.
Yeah.
Maybe modest improvement overall, but not much beyond that.
That's right. A modest improvement overall driven by
Digital
Somewhat improved digital results.
Yep.
Yeah.
Okay, thank you very much.
The next question comes from Doug Arthur with Huber Research. Please go ahead.
Yeah, thanks. A question for Meredith. On the digital advertising, the percentage growth by quarter has kind of wobbled all over the place. It's been good, bad, and different. If you look at the dollar growth, the dollar growth was $15 million in 2015 and about $12 million in 2016. I guess you've got an easy comp in the first quarter. How do you kind of juice the dollar growth in digital? You talked about mobile. Obviously native is strong. I'm wondering if you could just dig into some of the components and how you
Sure
See the dollar growth going overall. Thanks.
Sure. I'll just say, look, I think we saw we had a difficult first half of the year in digital advertising and a pretty good second half of the year in digital advertising. Not totally choppy in terms of results. We sort of called early in the year that we would see a lot of the business weighted to the back half in digital. I think what we're seeing now is a real sort of pivot in the business. The growth businesses now, which are branded content and Snapchat and programmatic video and marketing services now together are meaningfully larger than the legacy businesses, so larger than the home page and the direct sold banner business, and we expect that to continue.
I think we're also just getting better at selling those new businesses, and we have a better sense of our ability to sort of sell them across the year. We talked a lot last year about the lumpiness of the business and the fact that we expected to see a comeback in the second half. I think those are becoming part of the regular business now, and we have a bit more visibility into them.
Okay, thank you.
The next question comes from Kannan Venkateshwar with Barclays. Please go ahead.
Thank you. Jim, one on the cost side. We've seen, of course, some investment last year, and based on your guidance, it looks like costs will remain elevated in the first quarter. When does the investment cycle ramp? If some of the cost growth on account of variables like marketing, is it something that you expect to remain elevated given the subscriber growth? Some color on that would be great. Thanks.
Well, the answer is, let me just talk broadly about what we think drives the first quarter in big, large buckets. We are going to be spending more against marketing. I think that's both on the direct-to-consumer side and on some campaign sides. We'll see that more pronounced in the first half. To the extent that we're successful in our marketing efforts, we will continue to do that and find ways to put money against that. That's something that's hard to predict, but there's no doubt that marketing spend in a business that we think very good about is likely to continue to be elevated, and we'll find ways to put money against that, and we'll pull back where we don't think it works. That's one of the components in the first quarter.
Acquisitions, the first quarter will reflect now three acquisitions that were done, where none of those existed last year, and you'll see some of the costs. In that way, those costs, of course, continue. We've got some other costs, which I referred to. We're going to have some more dollars around the real estate project. I do think the way that plays out in the year is we'll see some more elevated costs year-over-year, higher in the first half, second half, that will moderate for a whole host of reasons. There's some other one-time events in the first quarter that we don't think will repeat, but I think we'll probably be more elevated in the first half than the second.
We're going to somewhat, I think on the marketing side particularly, we're going to have to be somewhat adaptable to opportunities as they arise.
I can just reinforce that point, Kannan. I said in my remarks that we put on more new digital subscribers to our news product in Q4 in a single quarter, much of that happening, by the way, in the second half of the quarter, than we did in the whole of two years, 2013 and 2014.
Yeah.
We're going to be prudent about this, and we're seeing spectacular numbers right now in Q1 this year. If we think there is an opportunity to reinforce and to use this moment to reach out and really scale our digital subscription business, we're going to go and spend the money. Obviously figuring out what works and learning from what works about how to scale the investment.
Sure. Just as a follow-up, there's obviously been some restructuring in terms of number of people and so on over the last year. Some of those benefits should start coming in over the course of 2017. Is it fair to say that the organic number, once you exclude the benefit of some of these restructurings, is actually higher, more in the high single digits or double digits in terms of cost growth?
I would say, I'm not sure I completely follow that, but what I would say is the things I've isolated in Q1, when you pull it out, suggest that the cost is relatively flat. There's a number of initiatives inside the company that we've talked about that will play out over the year that will be attacking our core costs.
Yeah. The way I put this, Kevin, is that we are progressively working on, if you like, the legacy cost base of the company, which we expect to decline over time. The issue is, for me now, is about the level of investment in building the digital business. Obviously, the overall cost numbers you see are a blend of the two.
Right. Thank you.
The next question comes from Craig Huber with Huber Research Partners. Please go ahead.
Good morning. A few questions, please. Maybe a couple of housekeeping questions. Jim, your tax rate, I guess, adjusted for the various one-time items the last two years was roughly 36%-37%. Assuming the federal government doesn't change the tax rates here, what do you think it's going to be in 2017?
Any sort of adjustments to reserves that could flow in and out, and it does create a lot of noise. We regularly say we think our tax rate on every additional $ we earn is earned at about a 40% tax rate. That's a pretty good solid number. That's actually come down a little bit over the last couple of years. There's just been some benefit in the state tax rate. I think 40% is a good number to think long term. In fact, actually, slightly beyond that topic, I think, any sort of adjustment to corporate tax rates, I think will be a significant benefit to us since we are a high taxpayer.
Yeah. Okay. On the cost side, it sounds like you said if you strip out the acquisitions and the marketing costs and these headquarters-related costs, so you could free up some space here to rent out next year, take all that out, it sounds like your costs are roughly flat underlying in the first quarter, if I heard you correctly. You're signaling that for the full year as well? Is that what you're thinking?
I'd like to not go too deep other than I'll reaffirm what I just said. First of all, let me say one other thing. There will be elevated marketing spend in the first quarter, both direct to consumer or otherwise. That's all part of that mix. As I said, I think as the back half of the year goes, we will see the first half of the last year, we saw more flat costs in the back half of the year, including the fourth quarter. We saw elevated costs in part due to acquisitions. As we comp through the back half of the year, I think our cost growth will be meaningfully below the first half of the year. With the opportunity that to the extent we see opportunities to invest, we will do that, and we will aggressively do that.
That's the way I think the year plays out without being more precise than that.
Then back on the subject of the discounts that are offered on the digital subs for new subscribers here. My sense is over the many years here, you guys have had an offer in the marketplace for $0.99 per week for the first 4 weeks, and it reverts to the full price. Last year, seeing it out in the marketplace, it looks like you had some offers out there where new subs could get the digital product for half price for the first 52 weeks, then it goes to the full price. That to me, my sense is that's different than prior years and stuff. I don't see that in the marketplace right now going on your website. Is that offer still out there? I guess my main question.
We're always testing different kinds of offers. In general, the second offer you described, the notion of half off for a period of time, sometimes a year, is a pretty standard offer in the market. When Mark answered the question about where ARPU was based on the sharp increase in subs in Q4, and particularly at the end of Q4, that's what he was referring to. Those offers tend to retain very well as well.
That's an offer which, referring back to our earlier remarks, predates the Q4 surge. Although we reserve the right to continue to adjust offers, one of the reasons that we introduced that offer, tested it, and have rolled it out is because, as Meredith says, it's turned out to be highly effective at converting new subscribers into long-term subscribers.
Basically gives them a longer period of time.
It gives them a much longer time to habituate and get used to and to value the Times.
You're saying that's one of the big reasons why the ARPU was down so significantly?
We're saying that because a lot of new subscribers arrived, as it were, through the course of Q4 on that offer, and they were counted in the subscriber count for the quarter, quite rightly, but we only had a part quarter.
Right
of subscribers paying half the regular amount.
Right.
The sheer number, 276 subscribers arriving mostly only for a few weeks and at half price.
And I'll just-
Given just the math pulled there, but we would expect a large number of those subscribers to retain over and to get to full price and to continue to be subscribers paying at the full price.
Right. I'll add to that, we're also getting a lot better at retaining them. We're getting better at how we onboard and how we get them to engage with different parts of the offering.
My last question, please. I appreciate that. On the print circulation side, what did you guys do for pricing? You generally raise those prices in January. What happened this year throughout the U.S.?
We've continued to raise prices and.
I would say in the range of what we've done in the past with slight variations, but generally in the range, and we're feeling pretty good about-
It is early days, but we have been encouraged so far by retention results, notwithstanding the price rises.
That's right.
Jim, you mean like up about 5%, you're saying?
In that neighborhood, yes.
Thanks. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Harlan Toplitzky for any closing remarks.
Thank you for joining us this morning. We look forward to talking to you again next quarter.
Thanks, everyone.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.