Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2020 Aspen Technology Earnings Conference Call. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Karl Johnsen, Chief Financial Officer.

Please go ahead..

Thank you. Good afternoon, everyone, and thank you for joining us to review our second quarter fiscal 2020 results for the period ending December 31, 2019. I'm Karl Johnsen, CFO of AspenTech, and with me on the call today is Antonio Pietri, President and CEO.

Before we begin, I will make the Safe Harbor statement that during the course of this call, we may make projections or other forward-looking statements about the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from such projections or statements.

Factors that might cause such differences include, but are not limited to, those discussed in today's call and in our Form 10-Q for the second fiscal quarter of 2020, which is now on file with the SEC. Also, please note that the following information is related to our current business conditions and our outlook as of today, January 29, 2019.

Consistent with our prior practice, we expressly disclaim any obligation to update this information. The structure of today's call will be as follows. Antonio will discuss business highlights from the second quarter, and then I'll review our financial results and provide our guidance for fiscal year 2020.

With that, let me turn the call over to Antonio.

Antonio?.

third, enterprise or multi-sized transactions that are larger than our average transaction are targeted for closure; and fourth, a growing GI business for APM with a number of transactions targeted to close.

Of these factors, signing enterprise or multi-site opportunities will be the biggest driver of our second half performance and our ability to achieve our full-year APM growth target. We have a number of this opportunities in our pipeline and our forecast for fiscal 2020, as always anticipated, closing some of this transactions throughout the year.

Overall, we are pleased with our business performance in the first half of the year. Our ability to deliver double-digit growth in the quarter with heightened uncertainty in one of our core verticals is an important valuation of the value AspenTech delivers for customers and the mission-critical nature of our solution.

I would now like to share a few examples of contracts we closed in the quarter. First, a European Oil & Chemicals company and long-term user of our engineering and MSC Suites, selected AspenTech's supply chain management solution to be deployed across its chemical assets, and integrated with our existing planning solution in its refining business.

As part of its digital program, these customers chemical business was looking for a global solution to maximize its business margin, while providing high customer service levels. AspenTech Solution was selected over that of three other established supply chain management software providers in the market.

Second, one of our largest E&C customers headquartered in Europe has committed to take our Aspen Mtell product to market with the objective of building a high-margin revenue stream, and its operation and maintenance crew targeting the brownfield assets of its customers.

This commitment to Aspen Mtell expensive relationship with this customer into a partnership, where the customer will promote the use of the Mtell capabilities to our common customers and others, and will take on the implementation and support of the product once installed.

Third, a North America based chemical customer selected are soon to be released latest generation, planning and scheduling solution after a detailed evaluation of the capabilities of these new product and one of our competitive. This customer plans to replace an in-house developed excel-based planning solution.

The AspenTech sales team identified projected benefits in excess of $70 million at the customers three U.S sites when the technology is fully rolled out.

Fourth, U.S based oil and gas upstream company selected Aspen Mtell after a detailed sole source evaluation of the product for the selected Aspen Mtell after a detailed sole source evaluation of the product for deployment at two offshore oil production platforms in the U.S and Southeast Asia as part of an initial Phase 1 deployment.

The customer is focused on increasing the productivity of their existing assets by generating more volume from existing data. This is one of four digital initiatives in place by the customer.

And fifth and final, a North American based chemical producer formed a digital group in 2019 to evaluate the use of in-house and new technologies throughout the business to increase value creation. The digital group identified in excess of $100 million in value creation opportunities in the operations space.

After a careful evaluation of internal capabilities and the Aspen ProMV product, the customer decided to select Aspen ProMV for rollout across multiple sites due to superior analytical capabilities and its ease of use, especially for online applications.

Value capture from other AspenTech product has already been identified and will become part of the digital group initiatives. As we look to the second half of the year, we're confident about a stronger growth performance and continue to maintain our full-year annual spend guidance.

Our confidence is driven by the volume and quality of the pipeline of business in the Q3 and Q4 quarters.

The expectation of a more favorable environment for chemical customers, a continued improvement in the growth of the E&C business as we get closer to the end of the contracts renewal cycle, a continuation of the strength of our refining business and increasing contribution to growth by the GI verticals because of the applicability of the APM suite in that space.

We also expect attrition to track within the 3.5% to 4.5% range, we guided to at the beginning of the fiscal year. From a product perspective, we continue to make good progress on our investments, in artificial intelligence and data driven applications.

Specifically, we are making good progress integrating the new technology stack into the architecture of our future solutions to leverage cloud and edge computing capabilities to support enterprise deployments.

We believe there is a significant opportunity to bring to market a new generation of solutions that can substantially increase the value creation across customers assets, representing new value creation opportunities for AspenTech. We continue to make progress in the partners area with meaningful new and existing relationships coming together.

This includes the integration of work happening between Hexagon's PPM solutions and AspenTech solutions with significant customer interest and involvement in the process.

We are also engaged in formal joint go-to-market activities with a global consulting firm actively promoting our Aspen Mtell and Aspen GDOT products to the sea level suites of our customers.

More recently we signed a relationship agreement with one of the global implementation services firms to access its vast network of implementation resources for our products and solutions. We continue to successfully balance investing in our product portfolio as well as our sales capacity, while maintaining our strong levels of profitability.

The rigor with which we evaluate investment opportunities and our willingness to reallocate existing investment dollars before commit an incremental capital to new projects; allows us to effectively deliver both a strong growth and margins.

Karl will provide more detail in a few minutes, but we are increasing our free cash flow guidance for fiscal 2020, to reflect lower-than-expected tax payments. Before I wrap up, I want to provide an update on our senior management team and Board of Directors.

I’m excited to announce that John Hague who has been leading our APM business unit as we promoted to Executive Vice President of Operations. In this role, John is responsible for the global sales, customer success, product marketing and partners organizations as well as continuing to lead our APM business unit.

John has been a valued member of the AspenTech team for more than 25 years in a variety of leadership positions, including Head of North America, and Latin-American sales and head of our operations in the Middle East and North Africa based in Bahrain for five years.

We also recently added exciting edge computing on IoT domain expertise with the appointment of Dr. Tom Bradicich to AspenTech's Board of Directors.

Currently he is the Vice President, Hewlett-Packard fellow and Global Head of Edge and IoT Labs and center of excellence for Hewlett-Packard enterprise and was instrumental in establishing HPE's IoT capabilities. I’m happy to welcome Tom to AspenTech and believe he will complement and enhance the strategic value of our Board of Directors.

Finally, earlier today we published our 2020 environmental, social and governance report, a look at AspenTech's continued commitment to delivering exceptional value to all our stakeholders. You can download the report from our website at www.aspentech.com.

To wrap up, AspenTech delivered solid second quarter result and we believe we're well positioned to achieve our full-year annual spend growth and profitability outlook. We are successfully executing against an evolving macro environment and have continued to generate double-digit annual spend growth.

We believe, we are in the early stages of a significant investment cycle around digitalization technologies in our core markets and GEIs. We are confident that AspenTech is well positioned to benefit from this strength and our focus on executing on the growth opportunities ahead of us. With that, let me turn the call over to Karl.

Karl?.

Thanks, Antonio. I will now review our financial results for the second quarter fiscal 2020. As a reminder, these results are being reported under topic 606, which has a material impact on both the timing and method of our revenue recognition for our term license contracts.

Our license revenue is heavily impacted by the timing of bookings, and more specifically, renewal bookings. A decrease or increase in bookings between fiscal periods, resulting from a change in the amount of term license contracts up for renewal is not an indicator of the health or growth of our business.

The timing of renewals is not linear between quarters or fiscal years. And this nonlinearity will have a significant impact on the timing of our revenue. As a result, we believe our income statement will provide an inconsistent view into our financial performance, especially when comparing between fiscal periods.

In our view, annual spend will continue to be the most important metric in assessing the growth of our business and annual free cash flow, the most important metric for assessing the overall value our business generates.

Annual spend, which represents the accumulated value of all the current invoices for our term license agreement at the end of each period was approximately $564 million at the end of the second quarter. This represented an increase of approximately 10% on a year-over-year basis and 3% sequentially.

Total bookings, which we define as the total value of customer term license contracts signed in the current period less the value of term license contracts signed in the current period, but where the initial licenses are not yet deemed delivered under topic 606, plus term license contracts signed in a previous period for which the initial licenses are deemed delivered in the current period was $112.3 million, a 27% decrease year-over-year.

The year-over-year decrease in bookings reflect a decrease in the amount of term license contracts, up for renewal as compared to the year-ago period. Total revenue was $124.7 million for the second quarter, an 11% decline from the prior year period.

The year-over-year decrease in revenue was a result of the decrease in total bookings discussed previously. Turning to profitability, beginning on a GAAP basis. Operating expenses for the quarter were $67.5 million, which was up from $61.9 million in the year-ago period.

Total expenses, including cost of revenue were $83.1 million, which was up from $76.7 million in the year-ago period and down from $86.8 million last quarter. The year-over-year expense increase reflect the impact of the organic investments we’ve been making in the business as well as the impact of the Nuvo and Sabisu acquisitions.

Operating income was $41.7 million and net income for the quarter was $38.3 million or $0.56 per share. Turning to non-GAAP results.

Excluding the impact of stock-based compensation expense, amortization of intangibles associated with acquisitions and acquisition related fees, we report -- we reported non-GAAP operating income of $50.9 million, representing a 40.8% non-GAAP operating margin compared to non-GAAP operating income and margin of $71.2 million and 50.7%, respectively in the year-ago period.

As a reminder, margins will fluctuate period-to-period due to the timing of customer renewals, and therefore license revenue recognized during the quarter. Non-GAAP net income was $45.5 million or $0.66 per share based on 68.8 million shares outstanding. Turning to cash flow.

We generated $46.9 million of cash from operations and $48.1 million of free cash flow after taking into consideration the net impact of capital expenditures, capitalized software and acquisition related payments. The reconciliation of GAAP to non-GAAP results is provided in the tables within our press release, which is also available on our website.

I would now like to close with guidance. Please note that we are reiterating our guidance for all metrics, except for net income, free cash flow, GAAP EPS and non-GAAP EPS. Recall that we only provide guidance on an annual basis to provide directional commentary on the timing of annual spend and bookings during the year.

Full guidance for our income statement metrics can be found in our earnings press release. With respect to annual spend, as s Antonio mentioned, we continue to forecast 10% to 12% annual spend growth in fiscal 2020. Of that, 7% to 9% is expected to come from our engineering and MSC suite and approximately 3% from APM.

We continue to expect bookings to be in the range of $600 million to $650 million, which includes $317 million of contracts that are up for renewal in fiscal 2020. As a reminder, under topic 606, our license revenue recognition is tied to when we recognize bookings. As such, our license revenue linearity will generally track to the bookings linearity.

From an expense perspective, we continue to expect total GAAP expenses of $369 million to $374 million and non-GAAP expenses of $303 million to $308 million. From a free cash flow perspective, we are updating our free cash flow guidance to $260 million to $270 million compared to our prior outlook of $250 million to $260 million.

Our updated free cash flow guidance reflects lower anticipated cash tax payments of $45 million to $50 million as compared to our prior view of $55 million to $60 million. The lower cash tax payments are a function of a change in when we are required to make cash tax payments related to the implementation of topic 606.

Originally, we are required to pay the cash taxes associated with the adoption of topic 606 in fiscal year 2019 and fiscal year 2020. New guidance was issued by the IRS in the second quarter of fiscal year 2020, it allows for cash tax payments associated with our adoption of topic 606 to be paid equally in fiscal years 2019 through 2022.

From a timing perspective, we anticipate free cash flow in fiscal year 2020 to follow a season -- seasonal pattern similar to fiscal year 2019.

We're updating our GAAP and non-GAAP EPS guidance to reflect the impact of an increase to our estimated full-year tax rate, which we now expect to be approximately 19% as well as the impact of the shares repurchased in the second quarter.

We expect GAAP net income per share to be in the range of $2.68 to $3.09, and non-GAAP net income per share to be in the range of $3.43 to $3.84. In summary, we delivered solid second quarter results.

We believe, we're on track to achieve our full-year financial target and we're well positioned to continue delivering an attractive combination of growth and profitability that can generate sustained value for shareholders over time. With that, we would now like to begin the Q&A.

Operator?.

Thank you. [Operator Instructions] Our first question comes from the line of Rob Oliver with Baird. Your line is now open..

Hi, Rob..

Great. Hey, good evening, gentlemen. Thank you very much for taking my question. So I had one and one follow-up. Antonio, I will start with you. So just on the commentary around the transactions in APM that were pushed out into the second half, I know you stated that you guys remain confident that they can add that 3 points of annual spend.

You mentioned the confidence around large enterprises. And I just wanted to kind of double down on that point a little bit. It's been over a year since you guys have made that shift from one-off equipment licenses to site licenses.

And I’m just wondering what gives you the confidence that would start to kick in, in the second half when it hasn’t kicked in really to date? And then I just had a follow-up. Thanks..

Yes. Well, I mean, Rob, just as a reminder, in Q3 of FY '19 we closed a large enterprise deal with APM.

That customer -- the proof-of-concept, an extended proof-of-concept and went straight into a full enterprise deal, so in a way it has not follow the pattern that we’re seeing with all of our customers which is they buy the licenses for one or two sites, and eventually, after a year or two, they start thinking about increasing to more sites or an enterprise deal.

If you look at the trajectory of the APM business, its 2.5 years old now since we formally launched it in July of 2018. And the fact is that now these customers that are ready to expand the scope of the deployment of Aspen Mtell are now looking at multi-site or enterprise style type deal.

So the expectation is that we would see -- we have them in the pipeline. We’ve been working then and we know they’re in Q3, Q4. One of the deals that pushed out from Q2 was a customer that was expanding to more sites from originally two sites. So I think as time has passed now the opportunity exists to start closing some of these deals..

Great. Thanks, Antonio. Then, Karl, just a quick one for you. Just on the annual spend guide I know you guys have said -- you mentioned last quarter as well that it would be more backend loaded. So you guys have been clear on that. That having been said, you look at the last couple of years and you guys do see some sequential improvement in Q2.

So just wondering if you look at in the context of refineries being strong, E&C strongest quarter four years, chem is solid, is that fair to say that APM is the delta there on why annual spend is kind of flat sequentially? Thank you guys very much..

Yes. I think, Rob, that’s a big piece of it. But again, the year is playing out very much like we thought it would, where it's going to be a little bit heavy -- heavily weighted toward the back half. APM, as Antonio mentioned, a little bit behind where we wanted it to be at this point of the year.

So that’s a piece of it, but I would say the engineering and the MSC businesses were strong and came in generally in line with what we thought they would..

Thanks, guys..

Thank you..

Thank you. Our next question comes from the line of Steve Koenig with Wedbush. Your line is now open..

Hi, Steve..

Hi, guys. Thanks for taking my question. Maybe one start with and one follow-up. On the slips deals, those were primarily or all pretty much APM.

And what -- any color on what verticals they were in? Any commonality to why they were slipping and any cancellations?.

Well, I mean, look, from a standpoint of the slipping pattern, I think it's consistent with what we've seen in the past and we’ve talked about it. These were larger deals as they were coming through final approvals, more questions came up from the executive suites, Chief Digital Officers and for greater inspection of those deals.

Verticals, primarily upstream, where we’re getting traction now with APM and some of it in chemicals as well..

Okay. Got it. Okay. Thanks, Karl. And then, Antonio, just -- Antonio, I’m sorry. Thank you for that.

Karl, and then just for you, when I parsed out the results and when you're looking at the results in the quarter, where were you -- where did bookings come in with your expectations? And what drove any variation in bookings relative to what you expected? Was that mostly APM as well?.

So I think bookings we said about 40% to 45% would come in the first half of the year, and we are right around 40% if you were to take the kind of the midpoint of our guidance for bookings. So we’re right about where we thought.

But with the kind of annual spending a little bit behind where we thought it would be, it's really the growth bookings, the renewals came in pretty much like we thought they were would come in. So that came in pretty much in line. It was more along the lines of some of the growth that Antonio mentioned slipping into the second half of the year..

Got it. Okay. I will stop there. Thanks for your answers, guys..

Thank you..

Thank you. Our next question comes from the line of Matt Pfau with William Blair. Your line is now open..

Hi, Matt..

Hey, guys. Thanks for taking my questions. Wanted to ask on the chemicals business.

And have you already started to see some improvement there, or is this something you are expecting to see over the coming months?.

Well, I mean look, the fact is that despite our concerns with sort of the deteriorating macro environment for chemical customers in the second half of last year, especially in the Q4 quarter, we had a solid quarter for our chemicals business.

Our expectation and expectation of our customers as we talk to them is, especially with the uncertainty around trade diminution and an improving sort of global economic growth outlook that they will start seeing better demand.

And the fact is that if you look at the announcement, the earnings announcement from Dow, chemicals they’ve talked in that announcement already about seeing better demand in the January month.

As you listen to the earnings results, certainly for the last quarter and the full-year that they're reporting, they had very poor results, but they’re now starting to see improvement in the demand for their product. So I think this will happen over time here as the year progresses, but within expectation..

Okay, got it. And then I wanted to ask for an update on the partnership.

So over the past year, you've announced quite a few new partnerships, Hexagon, Aon, you announced this E&C customer and sort of global side this quarter, what percentage of your business now is driven by partners and where do you think that could go over time?.

Well, I mean, look at the partnerships that we announced around of E&C's they get reflected on the business relationship that we’ve with that customer as they buy APM entitlement to access the products to deploy them as some of this products are getting sold, and then they have to be deployed.

The aspect of those relationships with the E&C is that roll-in -- just promoting the technology, but more importantly the implementation because they want to be able to rollout these technologies.

With Hexagon is work in progress because we’ve been working on the integration of our products and there's a lot of customer excitement that work has to be done and completed. And then once we release that integration is when we will start seeing the benefit from it.

And then some of these new relationships that are more recent with a global consulting firm and the global implementation services firm, its only the last 6 months with the former that we would be going to market and with the implementation firm, really, in the last couple of months only.

So hopefully, we will start seeing the impact of those over the next 6 to 12 months..

Great. That’s all I had. Thanks, guys..

Thank you, Matt..

Thank you. Our next question comes from the line of Jackson Ader with JPMorgan. Your line is now open..

Hi, Jack..

Great. Thanks. Hi, good evening. First question is on the larger APM deals.

Do they actually attract more competition since they're higher dollar value, or is it the fact that there are larger deals, more products, maybe multi-site, does that already winnow down the number of competitors that can even show up to bid?.

Yes. Well, look, the fact is that those multi-site or enterprise deals are the outcome of a selection of technology that has already happened 6ix months, 12 months, 18 months ago. We have been working with the customer to provide the technology and then the customer is working with us and then it's sort of sole-source negotiation.

We normally don't see competition in those type of deals, but again because it's new technology, it's new capabilities, is getting deployed into areas where these customers will have to change their business processes, their practices and so on. It requires greater preparation by these customers to absorb the technology.

But the type of deals themselves attract more attention as a result of being new spend in new technology. And we’ve discussed these over the last 12 months. It is a phenomena that we continue to see..

Okay. That makes sense.

And then my follow-up really is, was there any impact at all from kind of the, call it, disruption or unrest that we saw at the very beginning of the year in the Middle East, did you see any impact there?.

No, I don't think so. Our business in the Middle East performed well in the last quarter and we’ve a solid outlook for it this quarter as well..

All right. Understood. Thank you..

Yes..

Thank you. Our next question comes from the line of Jason Celino with KeyBanc. Your line is now open..

Hi, Jason..

Hey, guys. Thanks. Hey, guys. Thanks for taking my question. As we kind of think about global CapEx growth, you mentioned again flat to up low single digits. That’s pretty consistent with what we've been hearing over the last year. But you also, again, saw another strong E&C quarter.

Can you just kind of reconciliation the strength you're seeing?.

Yes. Yes. Well, I mean, look, I think certainly I think the last couple of years CapEx spend in upstream has been sort mid single-digits. This year it looks like it might be flat to low single-digit. So there is a benefit from that.

Certainly the attrition rate with our E&C's is coming down as we are completing the renewal of all those contracts and we are nearing the end of the renewal cycle. And then I believe E&C's are benefiting from an increasing CapEx spend to build LNG facilities, not only in the United States but around the world.

And it's expected between 2019 and 2025, there will be another $200 billion in CapEx spend in LNG. And I think that’s flowing through the E&C companies at the moment..

Okay, great. And then one kind of clarifying question for Karl. 2Q OpEx was a little bit lighter than I think what I had expected, specifically in the sales and marketing side.

Is it just a matter of specific timing of investments or hiring?.

It was -- it's a little bit of seasonality in sales and marketing, because in Q1 we have our sales kickoff meeting. You typically see that drop off a little bit and then a little bit of timing of our marketing events..

Okay, great. Thank you..

Thank you, Jason..

Thank you. Our next question comes from the line of Andrew DeGasperi with Berenberg. Your line is now open..

Hi, Andrew..

Thanks. Hi. Thanks for taking my question. Maybe first, can you maybe talk about your pricing model on APM or generally in your products.

I mean, given that you're saving the customers so much money, I was just wondering do you see any potential price elasticity in your products going forward?.

Well, look, I do think there's elasticity in our pricing. We certainly create a lot of value for our customers and you figure that for that value, there will be greater upside. Well the fact is that there is competition in the market and sort of tends to create sort of a optimum pricing for our products.

As we have stated in the past, we do see ourselves as sort of the premium priced software supplier in this market, and it's something that we continuously monitor to make sure that we are aligned with our customers and the market. Look, APM -- the pricing for APM, we have learned a lot over 2 years now, 2.5 years.

We believe we’ve the right pricing for our products, especially vis-à-vis value they create, but we are also monitoring some of those competitors that we see in this space because in a way, there's learning that is happening.

There is a new competitors that show up other that were incumbents and so we were very much aware of the pricing that its happening in the market and we are satisfied with where we are with our pricing..

Got it. And just one last question. And it's a follow-up to the previous one.

I'm just curious in terms of that Q2 push out on the APM and I apologize if you already answered this, but did you say this was -- there was some kind of inspection being done by the C-suite and that's why the timing was pushed out?.

Yes. Andrew, in the past what we have said is that because if deals -- generally, this is new technology into new areas of this customer's organization sort of the maintenance area where they are buying technology of this type for the first time.

So its new technology, it is new spend and the size of these deals tends to be such that they get visibility of the C-suite and what we found in the past and we saw in Q2 as well, there is more questions that come about out of the C-suite.

We try to address that in the past by certainly moving our engagement and making sure we have a sponsorship at the C-suite, not always possible. So we ended up again in a situation where there were a few more questions being asked as these deals get to the final approval stages.

And we are working to -- with the customer to provide the information that they need..

Great. Thank you Antonio..

Yes. Yes. Thank you..

Thank you. Our next question comes from the line of Mark Schappel with Benchmark. Your line is now open..

Hi, Mark..

Hi. Thanks for taking my question. Antonio, just building on an earlier question on APM, in the past you have talked about a fair amount of noise in the APM space, especially around questionable competitors.

And I was wondering if any of this competitive noise contributed to the elongated sales cycles?.

No, not really. Like I said already, these where transactions that we were in discussions with the customer on a sole source basis. We’ve been -- these customers have already been -- I mean, one of them has already been using our technology for over a year.

The other one is certainly a new customer, but we have already been passed the process with the competition and we are in the middle of negotiating and finalizing those deals forward..

Great. Thank you. And then on GDOT, the noise around the APM has kind of crowded out GDOT this quarter. And GDOT is supposed to be important growth driver for the business.

I was wondering if you could just give a little bit of an update on whether you are still seeing -- well, how that's performing for you?.

Yes. Look, there is high aspirations for GDOT. We signed our first GDOT license agreement with a chemical customer in North America. We do not have chemical references for the technology really anywhere and in North America we signed a first license. We expect Q3 and Q4 to have a larger sample of GDOT transactions getting signed..

Great. Thank you. That’s all from me..

Thank you..

Thank you. We do have a follow-up question from the line of Jackson Ader with JPMorgan. Your line is now open..

Hi, Jackson, again..

Thanks. Yes, just a quick one to jump back in. The customer turned partner on Mtell, is this -- do you plan on doing more of this? I mean is this a one-off? It's just -- I don't know, it sounds like a completely different type of channel for you guys.

So I was just curious, how you looked at it?.

Yes. No, as a matter of fact that this is the second type of these customers that have turned partners, if you will. The first one was an North America based E&C company, also one of the largest ones in the world. This is the second one, European-based and one of the largest E&C company.

Our expectation is we will be signing a few more of those in the future, yes..

Okay. Interesting. Thank you..

Yes. Thank you, Jackson..

Thank you. This concludes today's question-and-answer session. I would now like to turn the call back to Antony -- Antonio Pietri, for closing remarks..

Okay. Well, thank everyone for joining the call today and as always Karl and I look forward to meeting you when we go visit the different cities. Thank you..

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..