Morning. My name is Betsy, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv's Second Quarter 2021 Earnings Conference Call. Please note this event is being recorded. I'll now turn the program over to your host for today's conference call, Ms.
Mack Ziner, Vice President of Investor Relations.
Conference call.
Great. Thank you, Betsy. Good morning, and welcome to Vertiv's Q2 2021 earnings conference call. Joining me today are Vertiv's Executive Chairman, Dave Cote Before we begin, I'd point out that during the course of the call, we will make forward looking statements regarding future events, including the future financial and operating performance of Vertiv. These forward looking statements are subject to material risks and uncertainties that could cause actual results conference call.
You can learn more about these risks in our registration statement, our proxy statement and other filings with the SEC. Any forward looking statements that we make today are based on assumptions caution that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. Conference call. During this call, we will also present both GAAP financial measures.
Our GAAP results and GAAP to non GAAP reconciliations can be found in our earnings press release and in the
Good morning, everyone.
I know I've said this many times,
but I truly believe it. So I guess I'm going to continue to say Vertiv is a great company and is
in a really good industry.
No company, no industry is ever perfect, Garce. But from what I've seen over the last conference. I am very pleased with the company, the management team and the industry. Vertiv continues to make all of the right investments in product development, So it is costing us something to do as you can see from the numbers with those spot buys that Rob and his team have had to do. All of us are absolutely convinced it's the right thing to do.
Taking care of customers today and tomorrow every way you can conference call. To all of you on today's call, thank you for being here. And information about a few of our growth initiatives that we are driving at Vertiv. There are 5 key messages I want to convey today and David Fallon, our CFO, will take you into a deeper dive of the financials in just a few minutes. First of all, comp.
Demand for Vertiv products and services is strong. During our last earnings call, we reported 1st quarter sales that were up more than 22% and orders that were up 21% compared to the Q1 of last year. I am pleased to report that the sales and orders are up comp. Sales were up 25% and orders were up over 24%. Having sales and orders growth in excess of comp.
In addition, our Q2 backlog rose to $2,300,000,000 the highest it's ever been. 2nd, profitability is up. Quarter. This resulted in adjusted operating margin expansion of 40 basis points. 3rd, comp.
Pricing always lags cost by a quarter or 2, and that's exactly what we're seeing now. I have a slide coming up with more details on this. This action demonstrates the confidence we have in our end markets and also reflects the priority we're placing on customer pursuit and capture. In addition, we are balancing the timing of incremental pricing coming into the P and L. Comp.
If the current pace of activity continues in this upward trajectory, we will be able to upgrade a few of the markets that are yellow to green on our next call. The communication network stayed constant in all regions. 5 gs deployments and trials are continuing, as are the starts and stops of customer deployments. Comp. As mentioned earlier, overall market demand is strong as indicated by our order rates and record backlog.
This scenario led us to raise our guidance. For the channel, our channel is growing and is part of our strategy and our growth strategy for our business. We have spent time and listened to our partners. We fine tuned our strategy. We've built a new partner portal, and expanding our list of customers.
These are just two examples that demonstrate the progress we are making as we drive focused comp. But this market has required it. We are estimating having $65,000,000 of pricing actions for the full year versus 2020. Moving to the 2nd column, inflation is being felt by us in material, freight costs and spot buys. Approximately $60,000,000 in materials, dollars 15,000,000 in freight and $35,000,000 in spot buys.
The 3rd column depicts how we expect our contribution margin to evolve over the next two quarters. The timing of pricing comp. We anticipate full recovery by Q4 as headwinds stabilize and the pricing plan is fully implemented. And as mentioned, we're expecting a net and customer investments we are making in are in the short term and will over the long term continue to drive shareholder value.
Adjusted operating profit increased $31,000,000 or 30%, primarily driven by the profit flow through from higher sales. However, as discussed, our contribution margin in the 2nd quarter was negatively influenced by material and freight inflation, comp, which impacted our 2nd quarter P and L in advance of much of the favorable pricing expected to materially benefit the second half of the year. Contribution margin driven by plant inefficiencies driven by the supply chain environment. Fixed costs were up $20,000,000 from last year's Q2, including $30,000,000 from last year's one time expense. Free cash flow was down $20,000,000 from last year's Q2, but as we discussed in our Q1 conference call, free cash quarter as a result of the systems implementation.
And of course, this timing also negatively impacted 2nd quarter free cash flow comp. Net sales in APAC were up $75,000,000 or 23% with growth across most APAC subregions, product segments and market verticals.
Comps.
Once again, this demonstrates the margin benefit of maintaining or reducing fixed costs while growing the top line. Last on this slide, we ended the 2nd quarter with a record high liquidity of $1,100,000,000 and a record low net leverage net debt leverage ratio of 2.2x. Next, comp pricing. And that's probably a little bit more proportionately directed at the Americas versus the other comp up $92,000,000 from last year. But as a reminder, we recognized an $80,000,000 combined charge in last year's Q3 Next, turning to Slide 11, we summarize our revised full year 2020 Margin.
Some of these are favorable, some are unfavorable as illustrated on the next slide. Cost actions we have initiated, including controlling discretionary spending. For the avoidance of any doubt, we are Full year adjusted EPS is expected to be $1.15, $0.04 higher than our prior full year guidance, Driven by the $5,000,000 increase in adjusted operating profit, about $0.01 and $11,000,000 tax benefit that we recognized in the Q2. Finally, we're maintaining our full year projected free cash flow guidance of $300,000,000 which is up almost $140,000,000 from full year 2020. We discussed internally whether we should increase our full year free cash flow guidance, but we are holding flat due to uncertainty in the supply chain.
We generally realize a really nice cash inflow in the 4th quarter from the reduction of inventory. Cost reduction actions we implemented in the Q2, including controlling discretionary spending, and this should as a result of the current supply chain environment. With that said, I turn it back over to Rob.
Conference. Rob? Thanks, David. Turning to slide 13, which is our last slide to recap the key messages for the quarter.
As I close, I I want
you to know how proud I am
of the Vertiv team and what we're doing together as a 1 Vertiv company. We've accomplished a great first half comp. Some in the field and some in offices and some still working remotely in over 130 countries around the world. As I look at the remaining months To all employees, I'm grateful for the part you've played in the past 3 months and have allowed me to provide today's earnings report. Thank you for your dedication and your tireless conference call.
To our investors, thank you for being on the call today and for your trust and support in Vertiv. It is truly my pleasure to be leading Vertiv. I will now turn the call over to the operator who will open up the line for questions.
So surprise, surprise, a question on price. So $65,000,000 How do we interpret that? Are these actions already made to the customers? And Obviously, there's an assumption about how much fixed and how much is given away in, I don't know, etcetera. Is this $65,000,000 sort of like what's being actioned and what we hope to get?
Or is this the conservative view
Okay. Hi, Nigel. Thanks for your question. This is Rob. I'll start off and then let Gary and David weigh in.
Call. Pricing actions were actually underway at the beginning of Q2 as we began to see this inflationary environment. Comp. As you know, we feed a lot off of our backlog and some of those things in our backlog, we can look at price, we can look at freight. But for the most part, as we've indicated on the call, you'll see that really kind of come to light in Q3 and Q4.
So we know orders That's why we feel confident that we will get the price and we are getting the price. So that's the first thing. The second thing we've done, which It's been talked about widely with industrials is the ability to get price in the channel and distribution. That's a much That's an area that we're growing fast. So we have taken pricing actions, in some cases, 3 times within that space We've seen stick and we've seen our order growth rates, as you can see in our channels beginning to grow at a that we've talked about in the past.
We expect to continue to take share in that space while we continue to raise price And drive that. Any other comments, Gary or David?
Yes. Hey, Nigel, Gary. I think Rob hit the nail on the head. The only Two other parts I'd add to your question. We do think most of the pricing that we're going to get right now is sticky.
It's not Not going to be 100%, but the majority of that pricing should be sticky as we head into 2022. And as Rob mentioned in his opening comments, that should provide some tailwind for us throughout that next year. Comp. And then secondly, regional breakdown. I think the other part of your question was, there's a good chunk of this pricing, the majority of it that sits in America.
So we're taking actions in all three regions. But just to your regional mix question, there certainly is a majority of the pricing that's going to happen in the Americas as well.
That's great. Thanks for the color there. And then a quick one on your comments on 2022. Obviously, we're a little bit early to start talking about 2022, but the tailwind that you alluded comp. Would you see other benefits next year?
I think we see that as well as we see continued the pricing that we're getting now for Fairly bullish on 2022 just based on pipeline, based on what we're seeing. I spend a lot of time with our customers understanding and we get a question asked very frequently. Is this typically a build and fill, build and fill? And what we're all
The next question comes from Jeff Sprague with Vertical Research. Please go ahead.
Hey, thank you.
Good morning, everyone. And just to pick up a little bit more on price, Fully understand kind of the carryover impact you'd be expecting based on how you think you'll exit the year. Just wonder what the behavior is though if we get some deflation. Is it been your It lag, so you probably get some benefit from there. But just wondering about kind of the overall stickiness and as we reach kind of a new higher level on pricing.
Good question, Jeff. It's Gary again. I would say that just like you're right, on the way up on the inflationary, it takes a quarters. And if there's a deflationary environment, it would certainly take a couple of quarters to lag on the way down. But with that said, most The actions we have implemented, we do believe are going to be pretty sticky.
I mean, there's a couple of one time type things or things that probably aren't going to carry into 2022, but for the most part, the actions we are taking comp. And the other reason we feel pretty good about that is just going back to what we were able to do in 2019 2020 with pricing both In the $20,000,000 -ish range, that should be sort of the lowest watermark as we think about anything in a normalized state. So overall, feel pretty good about comp. Where we sit for pricing as we go into 'twenty two.
And then just on the fixed cost effort, the $30,000,000 or So you're showing us here in the bridge. Would this represent, I guess maybe for a lack of a better phrase, kind of an Acceleration of what you were doing on this journey to get to 16% or is there some temporary actions here that have to Maybe you could just give us a little bit more context on the self help levers
I think it's a combination of the 2, Geoff, meaning some related to an acceleration of some of the cost actions that we planned at the beginning of the year. The others, it's hard to call them temporary because they're related to assumptions with COVID opening up. So in our beginning of the year guidance, we anticipated that the world is going to open up in 2Q with travel and other discretionary cost that's probably getting pushed out to the 3rd or 4th quarter. So we're certainly going to benefit from lower discretionary costs there. But we've been able to accelerate some of the other fixed cost reductions.
It's hard to quantify how much of that $30,000,000 is going to carry over. If I were to The proportion is probably fifty-fifty. There's probably 50% temporary and then there's 5 50% that is an acceleration of
This is David Ridley Lane on for Andrew Obin. What's the size of shipments you couldn't make in the Q2 due to the supply chain issues or said differently, what portion of that sequential growth you had in your backlog is
Very clearly, the costs are much easier to quantify than Hypothetical loss sales. With that said, it certainly is greater than 0. The way I think is the Best way to understand it is if you look at the second half of the year, what we have built into our guidance is probably somewhat conservative based on what we're anticipating as continued supply chain constraints. And that could amount to anywhere between 200 to 300 basis points of growth in the back half of the year So it certainly isn't insignificant. I think we've gotten some feedback that There's a belief that our top line guide in the second half is somewhat conservative and it could be To being able to obtain parts.
Got it. And are you hearing that competitors are having sort of similar issues with In terms of on time delivery and parts availability?
Yes. David, hi. Rob Johnson here. Absolutely. And it's not just our It's across the board, whether it's steel, plastics for the construction of the building.
It's really hit everybody. So I would say in general, We're seeing lead times, for example, on things like generators and stuff that we don't sell, but go Moving out and it's happening pretty much to everybody. We're trying to all get after some of the same parts, whether it's
Got it. And then I know this might be a little tough to answer, but sort of what's the The status quo price cost benefit you would receive in 2022, if you just assume 4th quarter pricing actions hold for that year and material and freight costs hold for the year at sort of 4th quarter levels.
Yes. I think a fairly rudimentary way to look at this, if you look at Slide 6, you see the pricing bars on the left and the material freight inflation on the right. Effectively, the white space above each of those quarterly Definitely, there's a tailwind from pricing. Don't necessarily want to quantify For all the reasons we discussed, we're not 100% sure that it will all stick. The one thing that is clear from that chart is if What we're seeing in the Q4 for both price and inflation continues into next year.
We certainly should see a net Tailwind, part of it because of the overlap of timing that the cost certainly hit us sooner This year than the benefit of pricing.
Call. The next question comes from Scott Davis with Melius Research. Please go ahead.
Hey, good morning, guys. Good morning, Scott.
At risk of asking a stupid question, can you give us a sense of kind of the Stock buys are most where you guys are most aggressive? What kind of bill of materials?
Comp. It's kind of a combination, certainly electronic components, when we can get those. In the past, it's Combination of areas around really focus there. Fans, I guess I would say, I'd throw into that category as well. So yes, that's And then there's included in some of the spot buys is, for example, the channel.
We know that We don't have the product. We lose the order. It goes to somebody else. So we've had to do some expediting and
Yes, that makes sense. And in that context, when you think about some of the I mean, obviously, your main markets are fairly consolidated, but you do have some peripheral players call. I mean, I would think some of those guys might be suffering right now and perhaps lower down on the list of being able to get materials and things like that. Is
I think your logic flow is very just that logical. I would say that we're being comp. Pretty measured still in the M and A philosophy to say we want anything we do to go back to the 4 key tenants that we've talked about of why we want to acquire a company. Comp. I think from our standpoint, we'll really still stick to the 4 key strategic tenants why we want to acquire a company.
If one of those companies have to be struggling, great, certainly an opportunity there, but we're going to stay pretty tried and true to the types of companies we want to buy, not just because they may be struggling in this environment.
The next question comes from Nicole DeBlase with Deutsche Bank. Please go ahead.
Comp. The majority of the pricing actions are benefiting the Americas. I assume is that also the case for the inflation predominantly impacting Americas? And cost. Maybe as part of the answer to that question, if you want to give any color around what you're thinking for margin trajectory in the 3Q guidance, that would also be helpful.
Got it. So Nicole, this is David.
The one thing that we certainly have learned through conference. And we certainly can probably have a conversation on the drivers of that dynamic. But And also the response for pricing, about 60% of what we're seeing is in the Americas And the remainder fairly equally split between the other two regions. But just to understand the disproportionality there, comp. Americas is about 45% of our company, but it's seen 60% of the impact Of inflation.
And of course, our pricing response there is stronger as well.
Okay, got it. And anything on just margins in the back half or in the third quarter by segment? Or is it just Americas comp probably looking the worst and then EMEA and APAC a little bit better on a year on year basis?
That's certainly the case. The Americas, it depends if you look at it versus prior year versus prior guidance. But the incremental cost that we If I were modeling, I would certainly model the Americas down. But with that said, For avoidance of doubt, the net inflation certainly impacts all three regions. When you get down To the adjusted operating profit line item, the other from a fixed cost leverage, but all other things being equal, it certainly is disproportionate to the Americas.
Okay, got it. That's really helpful. And then I guess on mix, I mean obviously price cost is kind of overshadowing other impacts cost and margins right now. But is there anything on mix that we should be thinking about in the second half as maybe service ramps or other dynamics?
Certainly, the growth in that CI and S is expected to be a little bit higher than the 2 product segments. The sales growth we're seeing is in disproportionate to EMEA. And EMEA's contribution margins are fairly close To the Americas, so we're not necessarily seeing a negative regional mix. So what we would see from a mix perspective
The next question comes from Mark Delaney with Goldman Sachs. Please go ahead.
Yes. Thanks very much for taking the questions. Conference. Just wondering if you could talk more about your expectation on supply chain costs and component availability going forward and Any outlook you may have as to when the cost pressures and supply tightness may begin to alleviate? Related to that, if cost does go up again in the Q4.
Do you think your outlook that you can offset this cost inflation with pricing, would that still hold
comp. So Mark, I'll start off and then David, any comments there. But I would say in general, we think things comp. We'll continue to watch that. And if they continue to creep up, then we're going to have to crank prices up and continue to do that.
So we use that lever. To be fair to our customers though, we're looking to cover our cost in this environment. Comp. As far as the easing of supply, it's going to be a combination of things that are happening. Certainly, chip fabs, comp.
We're in touch with some of the largest ones that we use to understand when they get additional capacity come on. And at the end of this year, There's some capacity and then towards the middle of 2022. So once that capacity comes online, we'll feel better about The overall components chip level anyway. We do know that whether it's fans or even lithium ion,
That's helpful. Thanks. And for my second question, I was hoping to better understand the order growth and some of the components behind that. I believe the company said more than 20% order growth for 2 quarters in a row now. Maybe you could help break that down a little bit further in terms of how much is coming from growth and demand, how much is perhaps share gain?
Thank you. Mark, this is Rob again. I'll start and then Gary will come in over the top. A couple of things We believe the dynamics are happening here. Our plan is working and our plan was to gain share in the colo and hyperscale I would say that, again, kind of similar thing in the channel.
We've posted up some nice growth channel Going forward is people wanting to get their slotting for 2022 to assure supply because everyone is experiencing the lack of Orders in place, fixed and firm and in order to be able to assure that they can get their product when they need it. I don't know how to hear the
thoughts, Gary. Yes. No, I think Mark, I think Rob nailed it spot on and we definitely continue to see the I would say that 20% in the first half growth, there's probably a pretty good chance that the market hasn't grown anywhere near comp. And so I think with the latest updated guide even for the full year, we're at what close to 13%, 14% organic. And I think our best estimates right now is the market is probably growing comp.
Maybe upper single digits, still a little fuzzy to tell exactly. But I think clearly there's great momentum, Not only there's good market demand right now and there's also really good penetration happening by our sales and marketing and product development teams.
And Mark, one other thing to add there that I'm super excited about, David kind of mentioned it, our investments are paying off in our VPDs. And an example of that is our call. For our colo hyperscale, even our enterprise customers and edge customers, the stuff that we've got in pipeline and the stuff that's already hit the ground that is really aiding us and getting above market growth rate. Thank you.
And I'm not sure if you guys have talked about this way in the past, but what was your book to bill in the quarter?
Can you hear me okay, Steve?
Yes.
Yes. Sorry about that. I think I'm not sure if some of the management are having audio difficulties, but I think you're right. I mean book to bill is traditionally not a statistic or a ratio that we I speak about externally, but I think if you look at just the order growth that we've seen over the past couple of quarters in excess of 20%, which has been we've also posted really strong sales growth in those orders too, but The momentum on orders has just been very strong, but book to bill isn't something that we've externally provided.
Okay. And then just on kind of the second half commodity forecast, I mean, you're kind of calling it flat comp. Year over year, I think there are other companies out there that are definitely calling for it to kind of step up in the back half a little bit more. Is there something about how you guys assumption for that flat guidance for the second half on the commodes?
Yes. It's based on what we're seeing In each of the regions and as I mentioned, there's definitely regional differences. I would say we feel pretty good With where we're locked in as it relates in the forecast that is as it relates to APAC and EMEA. The price increases from a steel perspective as an example certainly were more pronounced in the Americas than the other two regions. So I would say if we do have uncertainty, it's related But we believe we have enough of conservatism from
a cost perspective built in.
And as we mentioned, that's primarily related to electronic components and we're certainly not But what we've included in the back half of the year is a combination of what we're seeing in market and also managed. So we certainly have an election whether to do a spot buy or not to do a spot buy. And we're making that decision based on execute spot buys for every single order, but we certainly will prioritize those decisions based on Incremental inventory, Bill, over what I guess what you did in 2Q 'twenty. When should we expect to see the reversal comp. And we generally build inventory during the year and then bleed it down in the 4th quarter.
So I would say normally that dynamic In the current guidance is a little bit because of the dynamic which you're questioning. So It may make strategic sense for us to continue to build inventory, notably with electronic Standard answer is generally we would see that cash flow impact in the 4th quarter. This year, We're going to wait probably till sometime at the end of the Q3, early Q4 to see if it makes sense to continue that inventory investment.
Perfect. And then on the tax swing,
you mentioned that part of it is timing, part of it is just higher adjusted operating profit. Yes. From a cash tax perspective, that's clearly related So that's just the timing issue. I'll probably take this opportunity to maybe talk a little bit about the Tax impact on the P and L. So we did take our full year income tax expense down Just for clarity there, but half of the $20,000,000 ASC seven forty accounting.
So it's purely timing based and a lot of that was unfortunately driven by The accounting we had to do for warrants, which pushed a lot of that $10,000,000 expense in the Q3 slide. I would imagine the gross leverage is closer to 3x, but could you just remind us like where should we think that leverage Whether it's that or gross, where should we think that's going to shape up a year from now, 2 years from now? And what other types of things should we be expecting you to use your cash You're right. On a gross basis, Gross leverage is probably 3.3x and we had about $700,000,000 of cash on our balance sheet At the end of the year, that's what takes you down to the $2,200,000 But we don't see that $700,000,000 as burning a hole in our pocket. So as we kind of mentioned, If you look at our priorities, we'll continue to pay down debt, but we certainly would like to use comp.
But with that said, we would certainly be comfortable getting above 3x for the right deal. Call. But from a prioritization perspective, we'll continue to pay down debt. We'd Certainly look at accretive strategic acquisitions and if we're in a position we have to do something from a dividend perspective
call. The next question comes from Andy Kaplowitz with Citigroup. Please go ahead.
So you've mentioned that your pipeline and orders were continuing to improve in enterprise. Obviously, you didn't change any of your enterprise bubbles yet, but you call. What continuing trends are you looking at to turn enterprise from Yale's degree?
Yes. So Andy, I'll start with that. And what I'd say is we began to Kind of in the June timeframe that enterprise began to pick up by evidence of some of the channel movements, right, typically refreshes as people go back to the office and network closets and things like that need to be picked up and refreshed comp. Since they've been sitting there for a while. So that gives us some excitement about where it's going.
We want to see that continue through Q3. And if we do, then you'll see that turn to green. Those are the buying that is back. I would say, as we think about Some of the hotter verticals right now in the enterprise area, it's certainly Healthcare spending, education spending, some areas still kind of to travel. Comp.
We certainly see financial institutions spending. So beginning, post COVID, but we've got this in out for us in the enterprise space. So I'm confident if it continues at the trajectory we saw in June that we'll be seeing a
Trajectory with Delta being around here, it's still been pretty good in July?
Yes. I would say without kind of going, yes, We continue to see the trajectory and in the right direction for that enterprise business throughout July. Now again, it's early. Lots of places are locking down with mask again. We'll see what happens and what that does.
But prior to all that, we are Optimistic that we would be going green in Q3.
Great. And then it's great that you reiterated your medium term adjusted operating margin target, that 16%,
I'll start off there and then David you can chime in, Gary. But obviously we're getting more and more sophisticated with our ways we get price. We've talked about it in the past call. We've instituted some AI and really pricing tools that allow our salespeople to understand when we lose at what price We're expanding those tools as we talked in the past throughout Europe and then Asia. So this will continue to be a muscle that will flex And grow and get more and more mature and use more data analytics to drive it.
So we continue to believe that pricing will be one of those levers that will comp. But I feel good about where we're at and I feel good about the methodologies that we have and the ability to get that and Really stemmed for a couple of years ago when we first started it and we just continue to drive that. I don't know, David, any thoughts there?
100 percent agree, Rob. So I think what this year, it does not impact comp. And that 16% and in the long term 20% range. And if anything, what we have seen this year We can use that as a lever to on our path to 16% and then 20%.
Appreciate it, guys. Comp. The
next question comes from Amit Dharani with Evercore. Please go ahead.
I guess I have two questions as well. First off, I just wanted to understand, given the decision to ensure you have Supply and product availability versus near term profit, is that resulting in new customer acquisitions, new wins or are you really trying to satisfy your Customers and if it is around new customers then, should we think about you structurally beyond 2021 being able to
I would say absolutely, it's all customers, right? Whether it's new or existing, we prioritize them as the orders come in and take care of them. And we've been very fair in our process. Certainly with some of the new products that we've talked about, the thermal management side and even some of the power management stuff and certainly channel, for us going into the next years. And it's again part of our strategy to grow faster than the market.
Got it. David, when I look at your back half growth guide, you're implying 7% growth, 7.5% growth. Could you maybe contrast that with the first half That's going to grow 24% and your backlog that's up 20%, I guess compares about, but why the decel in back half when your backlog is so strong?
Yes. I think there's 2 dynamics that are driving that. And companies often reference comps. And at the end of the day, we target growth regardless of what those comps are. But We do because of the dynamics of what we saw with COVID in the first half of last year, notably in Q2.
Comp. Some of those sales were pushed in the back half of the year and notably the Q4 of last year creates a challenging comp. So that's number 1. Number 2 is, as we mentioned, there's probably a little bit of cushion or buffer or conservatism, however you want to describe it, built into what we're seeing. As it relates to
conference.
This concludes our question and answer session. I would like to turn the conference back over to Rob Johnson for any closing remarks.
Okay. To all you listening today and for your support, thank you again for the participation, the
conference.