day, ladies and gentlemen, and thank you for standing by. Welcome to today's conference call on Synaptics to acquire DisplayLink. As a quick reminder, today's program is being recorded. And at this time, I'd like to turn the floor over to your host, Mr. Jason Tsai.
Please go ahead, sir.
Good afternoon, and thank you for joining us today to discuss Synaptics' acquisition of DisplayLink. My name is Jason Tsai, and I'm the Head of Investor Relations. With me on today's call are Michael Hurlston, our President and CEO and Dean Butler, our CFO. Following our prepared comments, we will open up the call for Q and A. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of our company's website at synaptrix.com.
We will be using a supplemental slide presentation during this call and will also post it on our Investor Relations website. This conference call, the associated press release and presentations made available today contain certain forward looking statements within the meaning of applicable securities law. These forward looking statements relate to our financial condition, results of operation, plans, objectives, future performance and business, including our expectations regarding the proposed transaction between Synaptics and DisplayLink, the expected timetable for completing the transaction and the potential benefits of the transaction. Our estimates and assumptions are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate, including substantial risk and uncertainties arising from the transaction, integration of the acquired business into Synaptics, employee and customer retention, substantial competition in the video interface and docu markets, selling price trends and risks that our markets and growth opportunities may not develop as we currently expect. Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward looking statements.
We refer you to the company's current and periodic reports filed with the SEC, including the Synaptics 10 ks Form 10 ks for the fiscal year ended June 29, 2019, for important risk factors that could cause actual results to differ materially from those contained in any forward looking statements. Synaptics expressly disclaims any obligation to update this forward looking information. The discussion in this conference call will be limited only to the proposed acquisition. In addition, management will also discuss financial metrics on a non GAAP basis, which include share based compensation, acquisition related costs, and certain other cash or recurring or non recurring items. We are in quiet period.
We will not make any comments on our current business environment or near term outlook for our business. I will now turn the call over to Michael.
Thank you, Jason, and thanks to everyone for joining us on this call today. I'm excited to be talking to you again and discussing the strategic rationale for acquiring DisplayLink. This is a $305,000,000 all cash transaction that is very complementary to our existing video interface business. Since the acquisition of IDT's video interface business in 2012, Synaptics has been a significant player in enterprise docking stations. We understand this market well.
It is that understanding that allows us to uniquely unlock DisplayLink's value. While playing largely in different segments of the market, DisplayLink and Synaptics share customers, partners and technologies. In a subsequent slide, I'll discuss how the combination of the 2 companies will enable us to address emerging market opportunities. In addition, we see significant operational synergies that we'll be able to uniquely capitalize on that makes the valuation very attractive, while adding about $1 in non GAAP earnings per share on an annual basis. This is a financially compelling acquisition that adds a highly differentiated technology portfolio to a market in which we already play, while increasing cash flow and accelerating our IoT diversification and our ability to achieve our long term profitability targets.
Dean will discuss the financial aspects of this transaction in greater detail later on the call. So who is DisplayLink? DisplayLink is the unquestioned leader in the universal docking segment. Their unique technology enables any laptop with any port type to seamlessly dock. They do this with an incredibly rich software stack, part of which is included out of the box in the operating system.
They have unique video compression algorithms that enable high definition video to move over thin pipes such as USB Type A. The company has a strong track record of revenue growth and a broad portfolio of patents for their highly differentiated software and compression technology. DisplayLink is privately held and headquartered in the United Kingdom. Founded in 2003, the company has generated approximately $500,000,000 in cumulative revenue. They have a strong list of Tier 1 customers 1 customers and technology partners and have over 100 products in the market using their solutions.
But despite the similar customer footprint and broad ecosystem, we have virtually no overlap with them today. The universal docking solution addresses a different or completely but complementary segment of the market. As a result, we see the acquisition of DisplayLink as being additive in expanding our customer opportunities. Synaptics' strength lies in the commercial hub docs that are sold by PC OEMs to their enterprise customers. These docking stations are effectively tied 1 to 1 with a given laptop can only support the Windows operating system.
With the introduction of our new Cayan solution announced just last week, we expand our capabilities into the consumer space with a leadership platform that offers ultra low power and industry first integration of HDMI 2.1 and DisplayPort Alt Mode 2.0. Cayan enables us to extend our established footprint of enterprise docking into the emerging portable travel docks, dongles, video hubs and protocol converters. As I mentioned earlier, DisplayLink plays in a different segment of the market, universal docking stations. These solutions are also being sold to enterprises by the PC OEMs as well as in a variety of retail and consumer channels because of their ability to support any device, any notebook, any OS, old or new regardless of what external ports are available, Driven by their software and dynamic compression technology, they are able to support older generation or lower end computers that don't have high speed ports and outputs and still deliver a no compromise video output over USB, Ethernet and even Wi Fi. Our combined solution pairs very well with CIOs looking to easily deploy productivity solutions uniformly across our company.
In a homogeneous environment, Synaptics delivers advantageous power and performance. In a heterogeneous environment, DisplayLink enables a seamless user experience. While both teams serve the leading PC OEMs such as Dell, HP and Lenovo, we occupy a different part of their portfolio. By coming together, we are in a stronger position to support these customers and can look to leverage our mutual roadmaps to offer them a top to bottom product lineup. As we look at the underlying trends, the market for computers is getting broader with corporate IT departments offering employees more choices to use whatever computer best fits their needs.
There is also a transformation taking place from traditional office layouts to office hoteling compounded by COVID-nineteen. In addition, the recent surge of employees working from home has triggered a buying spree of laptops and monitors. This has resulted in IT leadership needing to support a broader range of computers using Windows and Mac operating systems in combination with older and newer generation devices with a variety of interface and port options, while ensuring consistent output to multiple high resolution monitors. All of this is being enabled by DisplayLink's universal docking solutions. As you look ahead, the industry is beginning to adopt next generation interface standards such as USB4, Thunderbolt 4 and even wireless connectivity.
In addition, monitors are going to higher and higher resolutions. Meanwhile, employees are demanding more and more displays. All of these emerging trends play to DisplayLink's strengths. The acquisition of DisplayLink is really an example of better together. By combining existing Synaptics chips with DisplayLinks, we can enable a dock to drive 4 4 ks monitors.
As higher resolution displays become more prevalent, we can leverage our video technology with their compression to support up to a 10 ks monitor. Finally, with our recent acquisition of Broadcom's Wi Fi, the combined company can be first to market with a true wireless docking solution. All of these new use cases give us growth drivers and expand our market opportunity in our existing customer base. DisplayLink has built a highly defensible moat around their platform driven by their incredible software and compression capability. This acquisition takes us further down our path of developing a portfolio of highly differentiated products at Synaptics.
This is already a very successful business with a broad range of Tier 1 PC and accessory customers and a very strong track record and design pipeline. We feel that given our detailed market understanding, we can fully unlock DisplayLink's value. We can operationalize the company creating both synergies and unique product offerings. DisplayLink is a highly accretive acquisition that will position us as a clear market leader and accelerate our ability to achieve our financial targets for diversification and profitability. With that, let me turn the call over to Dean to discuss the financial aspects of the transaction.
Dean?
Thank you, Michael, and good afternoon, everyone. Let me provide you with the financial details and and rationale for this acquisition. We will be acquiring this business for a total consideration of $305,000,000 in an all cash transaction and expect to fund it from the existing cash on hand. The acquisition is expected to close in our Q1 of fiscal 2021, subject to customary closing conditions, and we do not expect there to be any regulatory filings required. In the last calendar year, DisplayLink generated $94,000,000 in revenue.
And this business is highly complementary to our existing video interface business. So we believe the market growth will be similar to what we are expecting in our own video interface business. This is already a highly profitable business with non GAAP gross margins of 77% and non GAAP operating margins of 27%. And even at these levels, DisplayLink's is an already financially compelling acquisition. But as Michael pointed out, we are in a unique position to leverage our capabilities to drive synergies and further improve on our combined operations.
We believe we can extract an additional $15,000,000 in operating expense savings over the next 12 months, leading to about $1 in run rate EPS accretion, effectively valuing this transaction at about 3 times enterprise value to sales or about 6xenterprise value to EBITDA. As we capture these synergies and further optimize operations with these acquisitions over the next 12 months, we believe we can achieve a combined EBITDA of approximately $60,000,000 to $70,000,000 a quarter. So we expect our cash flow generation to remain very strong and in a position to continue to grow. The addition of this highly accretive asset is expected to improve Synaptics' consolidated non GAAP gross margins and consolidated non GAAP operating margins by about 200 basis points each and accelerates our ability to deliver long term shareholder value and achieve our long term financial model that we have outlined at our Investor Day in June. DisplayLink will be part of our existing video interface portfolio and part of our IoT business.
As we had highlighted in our recent Investor Day, we anticipate IoT will become the largest part of our portfolio long term and this acquisition will further accelerate our diversification. With the recently announced addition of wireless IoT connectivity and now the addition of DisplayLink, about 37% of the revenue on a pro form a basis will be from IoT, putting us well underway in growing IoT to be 40% or more of our business in the future and becoming our largest business area. The addition of these new products and customers will further accelerate our mix diversification initiatives as well. This acquisition is another example of our long term strategy taking shape. As we redeploy our capital to accelerate diversification, drive top line growth and increase profitability.
We are bringing in a business that is significantly accretive to our profitability and earnings. After accounting for this transaction, as well as the wireless IoT connectivity acquisition announced on July 7, we will still have more than $150,000,000 of cash remaining on the balance sheet, plus an additional $100,000,000 available to us from our existing revolving line of credit. With these acquisitions, we are significantly enhancing our future cash flow generation and believe we will be able to generate $60,000,000 to $70,000,000 in EBITDA after these transactions are completed and we've optimized our operations to capture the expected synergies over the next 12 months, effectively enabling us to grow our cash position and continue to execute on our long term strategy. In summary, this acquisition fits very well into our long term strategy. This is a highly accretive acquisition at very compelling valuation.
The addition of DisplayLink to Synaptics is incredibly complementary for both teams' roadmaps and offers synergy opportunities unique to this combination. We are accelerating our long term IoT diversification strategy and together we will be able to uniquely serve this market with innovative system solutions that leverages our strength in hardware and their software and compression strength to deliver universal docking capabilities that benefit from a growing market trend. With that, I'll now turn the call over to operator for Q and A. Operator?
Thank you very much, sir. All right. And the first from Rosenblatt Securities, our question comes from Kevin Cassidy.
Thanks very much for taking my question and congratulations. Just considering the atmosphere right now with COVID, have you met with DisplayLink in the past pre COVID or was this all negotiated via conference calls?
First, thanks for the question, Kevin. I mean, I think the recent past has certainly been largely conference call driven. We expect members of our management team to meet their management team in the coming weeks to start working on integration. But I would say for the most part, negotiations were done by phone calls, lots of phone calls and lots of Zoom meetings and so on. Now having said that, we know these guys from the past.
It's not the first time that we've taken a look at them. We just got the macro trends and the valuation to line up this time to pull it off. So we had quite a bit of familiarity with the company leading up to this, but this round certainly was largely remote.
Okay, great. Thanks. And was the DisplayLink working on a wireless solution? And did it just come in pretty handy that you have a good wireless solution now?
Yes, they were working on a wireless solution. It's certainly part of what they think about in terms of the roadmap. But nothing had been deployed yet and there was still a lot of roadmap work going on. So it's fortunate that we now have a wireless asset that we can bring to them that with Wi Fi 6 that I think brings them state of the art throughput to couple up with that compression technology that we talked about, Kevin.
Great. Okay. I'll get back in line. Thanks.
Thanks, Kevin.
All right. Moving on to the next we have, it looks like, Charlie Anderson with Collier Security.
Yes. Thanks for taking my questions and congrats on the deal. I wonder if you guys could first spend a little bit of time sort of giving an overview of the docking markets, the size both in terms of dollars and units if you could penetration. I know you had laid out some of this at the Analyst Day relative to your own business there, but with the addition of this, I'm kind of curious how it all fits together and the size of the market you're going after? And then I've got a follow-up.
Yes. I mean, I'll give some high level color, Charlie, and then Salil is here and he can talk
a little bit to the some of
the second order detail. So we think of the market in multiple segments, but at the high end in the enterprise, there's 2. 1 is sort of the traditional enterprise dock that Dell would sell with Dell laptops, that Lenovo would sell coupled with Lenovo laptops. And that's where we play. We have the video transport technology that converts an input and then spits it out to the monitor.
And we are we do very, very well in those one to one type of enterprise stocks. As we said on the call with DisplayLink, their segment is universal docs, which enable any laptop to talk to any monitor. And that universal dock is pretty unique. I don't know about any other company that provides a solution into that market. It's a smaller market, but because of the macro trends, the work from home, hotelling, bring your own device, that segment has actually done pretty well in the first half of the year.
All of the PC segments, as you've heard us talk about have generally done well, but that particular docking solution has probably done better than even the growth in the traditional core markets. But maybe to put some sizing on it, I'll let Saleel give some color.
Thank you, Michael. Charlie, as we've spoken on Investor Day, the market size is around $200,000,000 and that's including the display in portion and the Synaptics portion. So that's how we've sized it. But as Michael spoke in the prepared remarks, we have never competed with them in the reversal space. We've always been on the tell on dial of HP on HP experience, while they really have done a phenomenal job with their video compression technology and their SoCs that allows you to use a Chrome, a Mac, a Windows OS all work and it just works.
And that's how we've got
and this is a great fit for us.
Okay, great. And then a couple of follow ups for Dean real quick. I saw the $60,000,000 to $70,000,000 of EBITDA a quarter and I saw some of the math behind that. I was wondering, I think there was a trailing 12 month Synaptics comment to that, Dean. So did that include the LCD TDI?
I know it was probably minimal, but I wonder if you could maybe just help us on that. And then I didn't see any synergies on gross margin. Obviously, not complain about their high gross margins, but I wonder down the road as you fold them into your scale if there's potential for some gross margin synergies. Thanks.
Yes. Charlie, just on the EBITDA, so you're right on trailing 12 months Synaptics. But actually, if you look at even excluding the TDDI, if you look at where Synaptics is relative to where we are now excluding TBI, we're already near the $50,000,000 mark. And this DisplayLink asset is about 46 on sort of their trailing 12 months. So that adds another 10 plus.
And then when you take into account the Wi Fi IoT business that we announced just a couple of weeks ago, that's another couple of million that gets added on a quarter. So we're sort of there. It's not sort of dependent on this TDDI 12 month look back. So we actually have forward insight into sort of a really good cash flow going forward. On the gross margin synergies, we're not sort of counting on incremental gross margin synergies in our model.
I think ultimately there probably ends up being some just given the scale difference between the two companies. But we're certainly not complaining on the gross margins that these teams have been able to extract so far, which are really great. I think we are able to add something, but it's probably not moving the needle in a meaningful way.
Got it. Okay. Thanks so much.
All right. Wonderful. Moving on, we have Christopher Rolland with Susquehanna International.
Hey, guys. Congrats on the acquisition. And I think I bought 3 of these hubs actually for my home since COVID has happened. So I am part of that revenue. But I did want to ask in terms of the products here.
I did see that they had chipsets on their website as well. So if you were to break this out in terms of the value of the company, how much would you say was in the hardware? How much would you say was in the software? And ultimately, what kind of growth rate are we looking at for the market here, both pre COVID and post COVID in your opinion?
Yes. So Chris, first, thanks for being a great customer. So on just how to break down your chip sales software, how to partition the value. So it's a full solution. The revenue number that you see comes from chip sales.
But clearly, there's a full suite of solutions that's really the software and the hardware combined. It actually one cannot work without the other. So when you look at the revenue, it's actually it's chip sales.
Yes. But I mean to your point, Chris, the differentiation is definitely in the software. If we look at the ICs, they're solid ICs, but they're not particularly differentiated. It's the software is incredible. And to be able to get this chipset to work across different operating systems in particular is the real trick.
And any time there's an update to the operating system, they're able to seamlessly update their drivers to work on the chipset. So, they have probably 3 software engineers for every hardware engineer in rough order. And it really is the software that I think is the key piece.
Great. And sorry, the growth rates pre and post COVID?
Yes. I mean, I think that we expect this to kind of grow PC market. It's obviously had some nice tailwinds recently as all the PC segments have. There's some upside in some of the new use cases that we see, but I would say generally it's sort of in line with the PC market.
Okay, understood. And then, I guess lastly here, as I think about new technologies that you may be able to apply this compression technology to? I know, for example, you guys have set top box that you're working on. Can you talk about some of the other applications that this might be this video compression technology might be useful for?
Yes. I mean, I think we certainly like coupling with wireless. To your point, you can use it in streaming, any over the top streaming as a use case. But really the first area that we think we want to go is in wireless docking and wireless casting, be able to take a solution off a mobile phone or off a PC and then throw it up to a TV in a relatively easy manner. That's where we see the kind of the initial use cases.
Great. Thanks so much.
Right. Moving on from Needham and Company, we have Raj Gill.
Yes. Thank you and congrats as well. In terms of the D and D EPS accretion, you talked about $1 I just want to clarify, is this a pretax or post tax? And the wireless IoT acquisition, I was wondering if you could let us know what the EPS accretion would be for that.
Yes. So that's a what we would expect post tax EPS accretion, so in line with sort of the normal EPS calc. We don't expect tax rates to change by any means because of this acquisition. So you can take the
dollar.
And then the wireless IoT, have you broken down what the EPS accretion would be for that one?
So the wireless IoT accretion, we did not break down a specific accretion number. I think sort of several research reports are out based on the guidance we gave on our last call on July 7. That sort of put it in the $0.40 to $0.50 range is sort of what the current multiple research reports sort of point to. I hope that answered your question, Raji.
And next from Rosenblatt Securities, we have Kevin Cassidy.
Yes. Thanks for letting me take a follow-up. Just how many employees are there at DisplayLinked? And how many are engineers? Can you split that out for us?
Sir, were you able to
hear the question? Mr. Cassidy, maybe if
you could repeat. Apologies that you
answered the question.
I'm sorry. Yes, if you can hear me. I was just wondering about the number of employees at DisplayLink and how many engineers and even will they remain in the UK or are they in the UK?
Okay. Yes. Thanks, Kevin. Thanks for repeating your question. We missed it last time.
Yes. So there's about, so roughly 250 to 300 employees today. They are largely engineering and the biggest portion of them are actually in the UK. That's where their sort of operating headquarters is. They do have a second development site also in Poland.
And so UK and Poland are their 2 primary engineering sites.
Okay. Thank
All right. We will take next from Craig Hallum. We have Tony Stoss.
Hi, guys. My congrats on the acquisition as well. Maybe can you lay out how many 10% customers they have? How many similar customers? I know you said the products don't overlap, but I'm just curious on the customer side.
Thanks.
Yes. So Tony, they have concentration in the major PC OEMs, just like you would probably expect. We're not breaking out what percentage compromises 10% specifically for this business, but you could imagine it's the majors.
And then on the customer overlap?
The customer overlap, it's there's a fair amount of overlap. As you might imagine, the market leaders are sort of the same set of characters today. But the DisplayLink teams seem to have additional channels, specifically more into the retail customers, that versus what we do, given that they serve different business segments. So they I would sort of characterize them as more diverse relative to the Synaptics video interface business today.
Thanks, Michael. And lastly, I assume on the IC side that it's all outsourced foundry. Is it the same group that you use? I'm just trying to get a feel on if there's any scale that you guys could take from it.
Yes. That's right. It's all outsourced. It uses foundry partners that we work with today. I think Dean talked about it in some of his remarks that there's probably some synergies that we're going to get in operations, but we're not banking on those.
I think they're going to be relatively modest in terms of size. So, yes, they do buy from the same customers that we do. And although we don't know the data, I'd be surprised if we're not getting better pricing than they are. But we haven't built any of that into the model.
Got it. Thanks, Michael.
Thanks, Tony.
All right. Next we have a follow-up again from Raj Gill with Needham and Company.
Yes. Thanks. It must have been cut off. In terms of the OpEx savings of about $15,000,000 to drive up the operating margins to 43%, Is this when did you can maybe elaborate a little bit further in terms of where those operating synergies are going to come from? And then just for a follow-up, in terms of the first area of use case is going to be on the wireless docking, wireless casting side.
Is
this going
to be done over existing kind of Wi Fi or is there a new technology? I know in the past 60 gigahertz had been talked about for a while. So just wondering on the wireless side the technology case is there? Thanks.
Yes. So, Raji, I'll take the synergy piece and hand it off to Michael on the use case side. So on the synergies for the $15,000,000 in operating expenses that we expect to extract, So one thing I would say is when we sort of look at DisplayLink today, their operating expenses relative to the revenue is sort of around 50% of OpEx as a percent of revenue. As you know, the Synaptics platform runs significantly under that and our target synergies is to bring DisplayLink into our engineering platform, which total OpEx percentage of revenue is sort of closer to the 30%. So at a high level, that's sort of our intended plan is to bring them onto the Synaptics engineering platform.
For the use cases, Michael, I don't know if you want to comment.
Yes. Just quickly, Raji, to kind of contrast it. The key here is that we're able to take advantage of their compression technology. And so when you have compression technology, you can use existing Wi Fi to send the data. If you're dealing with uncompressed video, then you're right, you need something like 60 gig and that's got a lot of problems because you start putting a hand in front of a 60 gigahertz transmitter and it blocks it.
This has typically good Wi Fi performance in terms of rate and range, but the precursor to that is the video compression that happens before it gets transmitted over the wireless link. So we really do depend on their video compression to make it happen.
And just if you take
a step back, if you look
at your IoT portfolio, in my mind, you're assembling a lot of the key components of IoT that which some competitors don't have. So if I look at the voice capability and the video compression capability, you're unique in that situation. And then you've added Wi Fi 6 and 6E, so you have a lot of the low power Wi Fi. So
if we
take a step back strategically, how do we look at kind of the all the piece parts that you're assembling to kind of make you a leader in IoT?
Yes. I mean, it's kind of like, I don't know, it's maybe akin to sort of puzzle pieces, right? We certainly see WiFi helping us in a significant way with this DisplayLink acquisition. We certainly see Wi Fi helping us with the set top box business that we already had. But I think the unique possibilities are bolting the DisplayLink technology up to our Edge SoCs as somebody talked about in a previous call.
That's a ways out. There's a lot of things that need to happen between here and there. But there certainly is capability that I think this technology brings that we can leverage into sort of unknown parts of our product portfolio or unforeseen parts of our product portfolio. But yes, it's coming together nicely, Raji. I think we will have been, as I said to a previous caller, we've been looking at the DisplayLink deal for quite some time.
And then when the wireless piece came along, we started thinking about how we could put all of it together and we thought both pieces ultimately made sense.
Thank you, Michael.
All right. Moving on, we have Martin Wang from Oppenheimer and Company.
Hi. Thanks for taking my question. First, is there any potential concerns for antitrust inquiries given the combined market share post acquisition?
Yes. I mean, I think that the answer is no. As we've said, we don't think that there's really overlap. We don't see them as a competitor display link. They're in a totally different, call it, sub segment of the market.
We compete with folks like Realtek and Parade in our historic piece of the business. Universal Docs, DisplayLink got a pretty strong footprint there and we don't our solution isn't capable of going into a universal docking solution. So we don't think there's an antitrust concern.
Got it. Thanks. Next question for me. When you look at the customer profiles and channels for DisplayLink, how does that differ from your own display interface?
Sorry, I lost the last part of the question.
So if we compare and contrast DisplayLink with your own display interface business and how does the customer profiles and channels are how are those two aspects different?
Yes. I think Dean talked to it on one of his answers. The main customers are the same, right? It's different segments in different parts of HP, Dell and Lenovo's product offering, but those are the top three customers for us. It'd be the top three customers for DisplayLink.
Where it gets different is in the next tier down. DisplayLink has a pretty substantial retail presence because they're selling to individual users. They also have a presence in sort of off brands that they've been able to leverage pretty well. So they have a pretty long tail in their customer base that perhaps we don't have specific to our video interface business. Now we intend to extend that.
I talked in my remarks about a chip called Cayan. Cayan is moving down market into travel docks and other areas where we would start developing some of the same retail presence in different in channel. But today, they have the longer the vastly longer tail than us.
Got it. Thank you, Michael.
All right. Thank you. Okay. I'm going to draw the good. I'd like to thank all of you for joining us today.
What do we have? Yes, just me. Okay. I'd like to thank all of you for joining us today. This is another exciting addition to our portfolio and I'm confident this will make Synaptics a stronger and more profitable company.
We are in a unique position here and our ability to combine these 2 industry leading portfolios will enable us to serve our customers better with a more complete portfolio and roadmap. We look forward to speaking to you again when we release our 4th quarter results.
Ladies and gentlemen, that does conclude our call for today. We do thank you once again for joining us. You may now disconnect.