Good day, and welcome to the Verra Mobility third quarter 2021 earnings call. Today's conference is being recorded. At this time, I would like to turn the conf``erence over to Ralph Acverham. Please go ahead, sir.
Thank you. Good afternoon, and welcome to Verra Mobility's third quarter 2021 earnings call. Today, we'll be discussing the results announced in our press release issued after the market closed. With me on the call are David Roberts, Verra Mobility's Chief Executive Officer, and Tricia Chiodo , our Chief Financial Officer. David will begin with prepared remarks, followed by Tricia, and then we'll open up the call for Q&A. During the call, we will make statements related to our business that may be considered forward-looking, including statements concerning our plans to execute on our growth strategy, our ability to maintain existing and acquire new customers, and other statements regarding our plans and prospects.
Forward-looking statements may often be identified with words such as "we expect," "we anticipate," or "upcoming." These statements reflect our view only as of today, November 4, 2021, and should not be considered our views as of any subsequent date. We undertake no obligation to update or revise any forward-looking statements. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our annual report on Form 10-K-A and quarterly report on Form 10-Q, which are available on the Investor Relations section of our website at ir.verramobility.com and on the SEC's website at sec.gov. Finally, during today's call, we will refer to certain non-GAAP financial measures.
A reconciliation of GAAP to non-GAAP measures is included in our press release issued after the close today, located again on our website at ir.verramobility.com and on the SEC's website at sec.gov. With that, let me turn the call over to David.
Thank you, Rath, and thank you to everyone for joining us on the call today. Q3 was yet another strong quarter for Verra Mobility this year. We are proud of the great results our team delivered with their consistent execution, and both of our business segments have continued to perform well. As Tricia will discuss in more detail later, our third quarter revenue grew 67% year-over-year to $162 million, and our Adjusted EBITDA was $82 million, which is up 53% year-over-year. The primary drivers for these results include the ongoing expansion of the School Zone Speed program in New York City and a continued strong recovery in travel in the U.S., which has had a positive impact on our rental car tolling business.
We've also made excellent progress this quarter in collecting $87.5 million in receivables from our automated enforcement contract with the New York City Department of Transportation. Q3 was a strong affirmation of our capital allocation strategy and our approach to deploying our cash on behalf of our shareholders. The Redflex acquisition, which closed at the end of Q2, is fully aligned with our strategy to use M&A to both expand our portfolio and solidify our position in core markets. As we highlighted previously, the Redflex acquisition strengthens our leadership position in photo enforcement in North America by providing an enhanced technology portfolio to our customers and creating cost synergies and new revenue opportunities for the business. In addition, we gained access to new markets such as Australia and Europe, which is consistent with our vision of becoming the leader in smart transportation globally.
I'll discuss more about the integration efforts later in my remarks. We also completed a $100 million stock repurchase this quarter. As we explained at the time, we believe that our stock is trading at a discount to its full potential, and redeploying our excess capital by investing in the company enhances long-term shareholder value. This again underscores our strong free cash flow capacity and our strategy of returning capital to shareholders at appropriate times. We are confident in our ability to maintain momentum throughout 2021, given the strength of our core business and our long-term strategy. Now let's move on to discuss the highlights from our two business segments. In Q3, our Government Solutions business delivered 61% revenue growth year-over-year to $85 million, with an Adjusted EBITDA of $31 million, which is up 37% year-over-year.
These Q3 numbers include $22.8 million of Redflex revenue. Success in the third quarter was primarily driven by the ongoing expansion of the School Speed program in New York City, for which we installed 236 speed cameras in the quarter, bringing the total number through the year to 394. We have made strong progress with the program, and we are confident that we will complete the installations of the full 720 camera order early in the first quarter of 2022. In addition, we are proud of our continued customer service excellence by renewing or extending 100% of all of our contracts that were up for renewal in the quarter. We also added new business by winning two new School Zone Speed Camera customers in Virginia and for the city of Atlanta.
While the Government Solutions segment is still encountering some COVID-related impacts, particularly for school bus solutions, we are beginning to see increased opportunities and potential RFPs that bode well for 2022. We also achieved key wins outside of the U.S. this quarter, which furthers our global strategy underpinning the acquisition of Redflex. These wins included deployable speed enforcement solutions for additional cities in Ontario, Canada, where Redflex has a strong footprint. These cities include Oakville, Pickering, and London. We continue to pursue regulatory approvals for our technology solutions around the globe. In the third quarter, we obtained approval in the Netherlands, which expands our ability to solve more client use cases and our addressable market opportunities in Europe. With regard to the Redflex integration, our Government Solutions teams have been focused on executing a successful integration effort.
They are working diligently and have made steady progress at achieving the anticipated $8 million-$12 million in synergies that we targeted as a part of the investment thesis. The integration process is going well, and we are adopting new ways of collaborating with our team members in Australia and Europe. As you can imagine, as with any acquisition, there are some unforeseen challenges, but overall, we are on course and excited about the impact of the Redflex technology, and its global footprint will contribute to our future growth. Like most businesses in the current environment, the Government Solutions segment is not immune to the global supply chain challenges. For example, we are beginning to see longer lead times for certain components for our camera systems.
However, we have placed a strong focus on supply chain management and made some smart early risk investments to avoid impacts to our revenue this year. Switching now to our Commercial Services business. We delivered strong third quarter revenue of $77 million, which was a 75% year-over-year increase. Adjusted EBITDA was $51 million, which is about 65% year-over-year. The continued recovery of travel, which leads to increased toll road usage, was a primary driver for the business this quarter. We are continuing to monitor the re-fleeting occurring within our fleet customers and as fleet levels are still down from where they were in 2019. However, we are seeing consumers opt for longer rental agreements, resulting in more billable days. This helps offset the decline in total number of vehicles. Overall, we continue to see some good tailwinds in the market.
For our European business, we are excited to announce that in Q3 we signed an agreement with Enterprise to launch a pilot tolling program in Ireland. We are currently enrolling more than 2,200 vehicles at multiple pilot locations across the country. This is an exciting opportunity to position ourselves for a significant sized fleet in the country. We will monitor and adjust the program based on the data, and we will collect in coming months. As we have discussed in the past, our goal this year and next is to establish as many pilot toll programs as we can in strategic countries across Europe, such as Ireland, Spain and Portugal. This helps prove the value proposition for our customers. We are enthusiastic about the Ireland pilot as it is a significant step on this journey, and we hope to announce additional pilot programs soon.
Finally, I would like to provide some additional clarity commentary about the big announcement we issued this week regarding the acquisition of T2 Systems. We are thrilled about this fantastic new addition to the Verra Mobility portfolio of smart mobility solutions that make transportation safer and easier. We have been consistent about our desire to enter the parking management business, which is a natural adjacency to many of our existing solutions. T2 Systems is a leader in parking and curbside management for universities and municipalities in North America, and it features best in class SaaS solution. By some estimates, the U.S. parking sector is a $13 billion total addressable market and is expected to grow as cities and municipalities face greater curbside management challenges due to factors like increased e-commerce deliveries and ridesharing.
T2 Systems hardware and software solutions are perfectly suited to address today's market needs as well as evolving challenges. Parking is a new space for us, so we envision that T2 Systems will operate as a third leg of the stool for our company. We will manage it as a portfolio company, and it will operate as a distinct business unit rather than being fully integrated as we did with Redflex and HTA. However, it will retain strong connections to both of our business units to help shape sales opportunities and product development. This acquisition is yet another example of how we are putting our significant cash flow back to work for our investors, all while growing revenue and diversifying our customer base. We don't anticipate any issues associated with closing the deal. We are targeting a closing before the end of the year.
We are excited to welcome T2 Systems talented team to the Verra Mobility family. Overall, 2021 has been a strong year so far for Verra Mobility, and our results this quarter demonstrate the success of our strategic initiatives and consistent execution. We remain committed to our updated guidance. Before I turn it over to Tricia to walk us through the financial results in more detail, I wanted to share that Tricia has announced her intention to retire, and as a result, will be leaving Verra Mobility sometime in Q2 of next year. We will immediately begin efforts to identify her successor and are fortunate that Tricia will continue to serve as CFO during the search process and to assist during the subsequent transition.
Tricia has served as Verra Mobility's CFO since 2015 and has played an essential role in the enterprise-wide transformation that has enabled us to deliver outstanding financial performance to our shareholders. I have deeply valued her strong financial acumen and her strategic insights as well as her friendship. We are thankful for her enormous contributions to our company and are excited for her to take this wonderful and well-deserved next step in her life. With that, I'll turn it over to Tricia.
Thank you, David, and good afternoon, everyone. I'll provide a detailed overview of our second quarter financial performance, and then we'll open up the call for questions. We provided a short earnings deck on our website that provides some insights to the quarter and has reconciliations from GAAP to any non-GAAP results. If you're following along in the earnings deck, I'm on slide 2, which outlines revenue and adjusted EBITDA performance for our Commercial Services segment. This business segment offers tolling, violation processing, and title and registration services for rental car companies and fleet management companies in the United States, and a subset of those products in Europe. Our Commercial Services segment delivered revenue of $77.3 million, an increase of $33.1 million over the same quarter in the prior year.
More importantly, it's in line with the service revenue generated in Q3 of 2019. The recovery in leisure travel that we saw in Q2 continued into Q3, driving this strong performance. The rental patterns that we have recently seen remained prevalent this quarter, with leisure travelers driving demand, creating more billable days per rental agreement, more toll usage, and higher toll fees than in previous years. These trends have improved revenue without the full recovery of rental volumes. We continue to believe that business travel will return in 2022, albeit at lower levels, and anticipate rental volumes to return to their more traditional seasonal patterns in Q4, which should pull back from the Q3 levels. Adjusted EBITDA for the quarter of $51.3 million increased from $31 million for the same quarter of the prior year and generated adjusted EBITDA margins of 66%.
The strong flow through is a function of strategic actions taken last year and into this year. As we're ramping up some costs to capture revenue cycles as it returns, we expect that margins would be a little lower in the fourth quarter as revenues return to more seasonal patterns. Turning to the next slide, you see the results of the Government Solutions business. This segment operates photo enforcement programs for counties, municipalities, and school districts. Our Government Solutions business delivered revenue of $84.8 million in the second quarter, improving $32 million year-over-year. As a reminder, the total revenue for this segment is comprised of service revenue. Now, that's the monthly fee that we generate from the operation of photo enforcement programs and product revenue from selling and installing camera systems and software.
I think it's important that we talk about these two sources of revenue separately. The service revenue for the third quarter was $64.6 million, which grew $25.7 million or 66% year-over-year. There's several components of this growth. $15.9 million came from the acquisition of Redflex, and $9.8 million came from organic growth in our core business. I want to pause for a minute and just let that sink in. Our organic growth in this segment is 25% over Q3 of 2020 and 47% over the same period in 2019. The largest driver for this growth is the expansion of School Zone Speed programs, primarily in New York City, where we installed 720 cameras throughout the 2020 year.
We're now seeing the impact of service revenue as we operate and maintain those systems. We're also in the process of installing an additional 720 cameras in the back half of this year, which will contribute to our growth in 2021 and well into 2022. Product revenue of $20.3 million grew $6.4 million or 46% from the $13.9 million for the same period in the prior year. We installed 236 School Zone Speed cameras under the New York City emergency contract this quarter, bringing the total installations to 394. There was also $3.6 million of product revenue that came from the Redflex acquisition. As David mentioned, supply chain issues have made headlines impacting many industries.
We are proud of our ability to navigate this difficult situation, adapting to the ever-changing landscape. We are working very closely with our suppliers and monitoring upstream product builds. Our operational teams have gotten creative in working around challenges. While we are targeting to install the balance of the cameras in the current calendar year, we are modeling approximately 25 cameras to be in the first quarter of 2022. Adjusted EBITDA of $30.7 million increased $8.2 million from the prior year quarter. Adjusted EBITDA margins for this business were 36.2%. The margin compression in the quarter is related to the inclusion of Redflex in the quarterly results. We've previously stated that Redflex had much lower Adjusted EBITDA margins than the Government Solutions business.
We are making good headway on synergies and have taken actions that will achieve run rate synergies of about $5 million. Over time, we'll see that the margin profile with the combined North American businesses returning to a more historical level. Turning to the next slide, we show consolidated results for the quarter. These are just the combined results of the two business segments that we just discussed, where there's total revenue of $162.1 million for the third quarter, an increase of $65.2 million from the same period in the prior year. This is the largest quarterly revenue generated by the company, and it demonstrates the strength and resiliency in this business model and the hard work of our teams. Now, we know that product revenue is episodic, which is just my fancy word for saying that it's lumpy.
Service revenue is the recurring year after year following our long-term contracts and our deep customer relationships. Service revenue for the quarter was $141.8 million. If we strip out the growth from the acquisition, it's $125.9 million. Now, let me just put that in perspective. Organic service revenue grew 51% over 2020 and 14% over 2019. Verra Mobility isn't just recovering. We are thriving, and that's also reflected in our profitability. Our Adjusted EBITDA of $82.1 million increased by $28.5 million for the same quarter in the prior year, and Adjusted EBITDA margins were 50% in the quarter.
The company reported net income of approximately $27.3 million in the quarter, compared to net income of $11.1 million in the same period in the prior year. Adjusted EPS, which excludes amortization for stock-based compensation and non-cash items, was $0.27 per share for the current quarter, compared to $0.17 per share for the third quarter of 2020. The tax provision for the quarter was $11.5 million, representing an effective tax rate of 29.6%. Our effective tax rate is impacted by permanent differences related to mark-to-market adjustments for both our private placement warrants as well as our tax receivable agreement. The company generated $129.3 million of cash flow from operating activities during the year-to-date period, in large part due to changes in net working capital.
We've talked a lot about our outstanding receivable with New York City, and we're very pleased with the progress that we're making. At the end of September, the City of New York DOT owed us just over $80 million. We billed New York City $41 million in the quarter for products and services and collected $87 million on aged receivables. Based on the current pace of payments, we anticipate being current in relation to the contract terms by the end of the calendar year. Our very strong anticipated cash position led us to the decision of our board to buy back shares at a rate of $100 million, and we executed that in the third quarter.
Even with the $100 million repurchase, our leverage decreased from 4.1 times at the end of Q2 to 3.7 times as of September 30. We're excited about the acquisition of T2 and anticipate using the accordion feature on our term loan B along with cash on hand to close the transaction in late Q4. Assuming that we use the full $250 million of the accordion, our leverage on a pro forma basis after giving consideration to the acquisition would be 4.7 times. We've said in the past that given our cash flow generation of the company, that we'd be willing to increase leverage for the right acquisition, and we believe that this is the right acquisition at the right time. We're confident that the cash flow generation over the next few quarters will de-lever the company very quickly.
Given the strength of the Q3 results, we're raising our full year guidance. We are expecting total revenue in the range of $525 million-$540 million, which includes contributions for Redflex and represents growth of 17%-20% over the pre-pandemic year in 2019. Included in this growth, we expect product sales to be unchanged in the range of $55 million-$60 million. We expect Adjusted EBITDA to be in the range of $250 million-$260 million or an Adjusted EBITDA margin of 48% based on the midpoint of our guidance. We are outperforming our expectations and have returned to 2019 revenue and EBITDA levels.
We continue to grow and invest a significant cash flow back into the business to generate positive shareholder returns and will continue to do so. With that, I'll open the line for questioning.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first caller, Daniel Moore with CJS Securities.
Good afternoon, David and Trisha. Thanks for taking the questions. Many directions to go in. Sorry to hear it, Trisha. Thank you for all of your help, but, congratulations. Maybe quickly, talk about the acquisition process for T2. I assume it was an auction, and more to the point, what type of revenue and/or cost synergies should we be thinking about?
Yeah. Daniel, it's David. With us here today, we have Mike McMillin as well. Mike is our SVP of Corporate Development, and he led the transaction from start to finish. I'll let him answer that question for you. Okay?
Perfect. Thank you.
Yeah. Hi. This is Mike. It was a competitive process. It wasn't necessarily an auction, but it was a competitive process. We were very happy to complete the acquisition or announce the signing of the acquisition. As we think about the business in general, in our press release, we had $80 million of expected revenue in 2021, with EBITDA of around $21 million. As we look at that, historically, we've seen revenue in this business on the services side, which represents about 70%-80% of their total revenue, grow in the 5%-10% range.
We would expect that the revenue in the future to grow at near the top half of that range for services. They also have hardware sales, which represents around 20%-30% of their revenue. Similar to us, their hardware sales are lumpy from year to year. On average, we'd expect more modest growth there, maybe in the 2% range. Overall, we would expect total revenue combining services and hardware to grow in the high single digits over the next few years.
on the synergy side?
On the synergy side. What we are focusing on in this acquisition is growing and emphasizing their core business and leveraging our existing government relationships to really help accelerate their revenue with cities and municipalities. Our plan really is to focus on the growth and revenue synergies in order to grow the long-term strategic position of T2 and our own position in the parking ecosystem, including the long-term opportunity associated with curbside management. The focus for us for this acquisition is really on the revenue and growth side in order to strengthen their position and our collective position in the parking market.
Super helpful, Mike. Forgive me because I'm not as familiar with their business model, but that 70%-80% that services, how do we think about that? Is that SaaS type? Is it recurring revenue? Maybe just to help understand the revenue model there.
Totally.
Thank you.
It's both of those things, Dan. They have a portion of that which is their SaaS revenue licensing, and then they have maintenance agreements associated with the equipment as well.
Got it. Very good. Okay. I will jump back in queue with any follow-ups. Thank you very much.
Thank you.
Thank you. Next, we'll take Keith Housum with Northcoast Research.
Good morning, guys, and congratulations on the quarter. Trisha, I echo those sentiments. Sorry to see you go, but congratulations on that decision. You know-
Thank you.
Building on the T2 acquisition, if I may just kind of add, obviously any kind of acquisition you guys can do is gonna be dilutive to your margins. What kind of scale or incremental margins can this company deliver as it grows?
You mean just for T2 by itself?
Correct.
Yeah.
If we speak to the EBITDA margins of this one, what we actually expect as the services and specifically the software as a service grows greater than the hardware sales over time, we would expect a sort of natural uplift in margin over time as the higher margin software as a service business takes over more of the revenue mix. We would actually expect EBITDA from a margin perspective to outpace revenue growth. If we have revenue growing in the high single digits, we would actually expect EBITDA over the next few years to grow in the low double digits, just due to the natural shift in mix over time.
Great. Then maybe you can educate us a little bit more on like, parking, you know, the market in terms of, you know, largest competitors. I mean, you guys obviously have a dominant share of the business of where you currently do business. Does T2 have the same type of dominance or is it much more diverse or fragmented competitor base?
They don't compete as much in our market. Traditionally, they've been in universities. Most of their business has been working parking systems for large universities. They also work with some cities and municipalities. There is a host of characters there that they would compete with, but they don't compete traditionally with, for instance, the Conduents of the world. Conduent is more known for large cities implementations for parking.
Certainly our hope is to work with them to bring them up at a higher level and using our relationships and expand our capabilities on our Government Solutions side with over 220 customers here in North America, that would be advantageous as they look to kind of drift upmarket a little bit and give them that entree.
If I could just click one more in here. Is there an opportunity to take these guys international as well, leveraging your Redflex relationships?
No. They would be disconnected from that point. I think, perhaps the technology, but if you were gonna do this internationally, you would probably need a different asset over in a different whatever country you're gonna go to.
Gotcha. All right. Thanks, guys. Appreciate it.
Yeah, thanks.
Thanks.
Thank you. Next, we'll move on to Dave Koning with Baird.
Yeah. Hey, guys. Great job.
Thank you.
Maybe first of all, just, you know, looking at the progression, like when we look at your percent of 2019, you've like far outpaced basically any data point we can find on travel or Avis or any of those. You've just consistently just kind of crushed those. This quarter, your step-up wasn't quite as big, and my guess is that's a function of last quarter being so big with registration work. Maybe you can just kind of walk through that and then how we should see it progress. As long as travel keeps going better, should that keep moving kind of above that 100% in Q3?
Yeah. I think on the commercial services side, what we really saw was that the summer driving season opened up a little bit earlier than it normally does. Q2 was a little stronger than it normally would be. Normally your summer driving season is sort of bookmarked by Memorial Day and Labor Day, which is when kids exit and restart school. I think we saw more in April. That's why we really had a strong quarter in Q2. As you mentioned, we did have an uptick, and it was happening in title and registration. In Q3, you know, we are seeing that we are matched with rental car tolling from where we were in 2019. We are ahead of where we were with FMC tolling for the 2019 period.
We had some pullbacks in title and registration, which you can just call a quarter-over-quarter shift. You know, I think what we're gonna see as we move into Q4 is you are gonna see this sort of downtick that is gonna happen that normally happens with you know seasonal patterns of driving. We normally see Q4 to be lower for Commercial Services than Q3. We're expecting that to happen this year as well. For the total company, what's really driving our year-over-year growth from 2019 is that the Government Solutions speed program is really really thriving. You know, that program has really grown in the last two years.
Gotcha. Thank you. Maybe just my follow-up, can you give us the Redflex numbers by service and product again? Then if that sort of mix or if those levels of both kind of subsegments of Redflex are pretty normal just as we go forward.
Yeah. The revenue for service revenue was $15.9 million. Hang on, let me get you the other number. The product revenue was $3.6 million for Redflex in the quarter.
Is that pretty normal? Like, is that $16 million a quarter of service and $3 million-$4 million a quarter of product kind of what you'd expect over time?
I think the product revenue is probably lower than we would expect over time. You know, I think they're experiencing some you know, startup costs and you know, other things that we're seeing here. I would expect those numbers to grow over time.
All right. Great.
We did add some really.
Great job.
Thanks. We did add some really nice little charts in our earnings deck that lay out some of these items.
Oh, thank you. Gotcha.
Mm-hmm.
Thank you. Once again, if you would like to ask a question today, you may do so by pressing star one. We'll move on to our next question from James Faucette with Morgan Stanley.
James, are you there?
Sir, your line is open and active. And we are not getting a response from him.
Okay. We'll move on then.
James, if you plan to join us, please respond. We'll move on to Daniel Moore with CJS Securities.
Very good. I'll go again. Just talk a little bit as T2 as a sort of a new platform or leg to the stool. What do you see the opportunity, roll-up's not the right word, but, you know, should we see this as a platform for further expansion via M&A, over time?
Yeah, I think so. I mean, it's... I think when you would look at the parking business as a whole is, there's not a lot of assets like T2 that are sort of of size and scale with the level of cash flow and profitability that they have. It's a unique market. There's some real big players, and then there's a lot of tiny small players. Certainly there could be some other opportunities there. I think our... You know, the real strategic imperative here is, I think everyone in the category of smart transportation would say that curbside management is, like, gonna be a big challenge for municipalities going forward. And we wanna be a part of that future, and we think it's gonna be important to our customers as well as other customers.
T2 serves as a great platform for us to do that, while at the same time diversifying our, some of our revenue into an adjacent market.
Got it. Switching gears, David, you touched on this, but any commentary around your RAC customers', you know, willingness and, more to the point, ability to refleet or expand their fleets as we think about 2022 in light of, you know, pretty well-documented supply chain challenges, et cetera.
Yeah. I mean, I think overall I would definitely listen to the public CEO comments around that versus relying on my commentary. I think what they would tell you is that they are working hard to get their fleets back to where they were. I mean, Hertz even announced they're gonna buy 100,000 Teslas. Elon Musk seemed to disagree with them, so we'll find out if that's actually true or not.
Exactly.
That being said, you know, what we're I would anticipate that they will continue to be below 2019 levels probably for a significant portion of next year. I think most have indicated that the end of next year or Q4 next year would when they would think the issues around the chips and the new vehicles coming out of OEMs might be solved. But, you know, fortunately, we're seeing a higher level of activity, and that seems to be a durable trend.
Very good. I was typing as quick as I could. Just if you could give us again the remaining receivable that you expect to bring in from New York City in Q4. Thanks.
Well, right now we have about an $87 million receivable. I'm sorry, just over $80 million is the total receivable that we have out there. We would expect to be collecting on that, but also continuing to bill them for the, you know, about the same rate of, call it $41 million in the Q4 as well. We'll still have a healthy receivable there. But, you know, if they continue to pay on time, which they have done exactly what they said they would do, we would bring in that $80 million in Q4.
Very good. Thanks again for the color.
Mm-hmm.
Thank you. Once again, that is star one if you would like to ask a question. Thank you. There are no further questions, so this will conclude today's teleconference. We do appreciate your participation. At this time, you may now disconnect.