Luke T. Szymczak - Frontier Communications Corp. Daniel J. McCarthy - Frontier Communications Corp. John M. Jureller - Frontier Communications Corp..

David W. Barden - Bank of America Merrill Lynch David Scott Goldman - Jefferies LLC Barry McCarver - Stephens, Inc. Frank Garreth Louthan - Raymond James & Associates, Inc. Gregory Williams - Cowen & Co. LLC Spencer S. Gantsoudes - Morgan Stanley & Co. LLC Whitney Fletcher - Deutsche Bank Securities, Inc..

Please stand by. We are about to begin. Good day, everyone, and welcome to the Frontier Communications First Quarter 2016 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Luke Szymczak. Please go ahead, sir..

Thank you, Larine, and good morning to everyone. Welcome to the Frontier Communications First Quarter Earnings Call. My name is Luke Szymczak, Vice President of Investor Relations. With me today are Dan McCarthy, President and CEO and John Jureller, Executive Vice President and CFO.

The press release, earnings presentation and supplemental financials are available on the Investor Relations section of our website, frontier.com. During this call, we will be making certain forward-looking statements. Please review the cautionary language regarding forward-looking statements found in our earnings press release and SEC filings.

On this call, we will discuss GAAP and non-GAAP financial measures as defined under SEC rules. Reconciliation between GAAP and non-GAAP financial measures is provided in our earnings press release. Please refer to this material during our discussion, and review the cautionary language concerning non-GAAP measures in our earnings press release.

I will now turn the call over to Dan..

Thank you, Luke. Good morning and thank you for joining Frontier's first quarter 2016 earnings call. I'm going to discuss our first quarter results, update you on our acquisition of California, Texas and Florida markets, and share our outlook for the remainder of the year. Please turn to slide three.

During the first quarter we were intensely focused on preparing for the closing of our California, Texas and Florida acquisition, an enormous undertaking in terms of size and complexity. I'm pleased to report that during this period we continued to execute on our key strategic initiatives and we delivered a solid first quarter.

We maintained our momentum on broadband growth with net additions of more than 24,000. Our progress with business customers continues to be positive, with another quarter of sequentially stable SME results. And our video initiative received a positive reception during its introductory quarter in its first market.

In Q1, over half of the broadband activity was at speeds above the basic speed tier. We increased the portion of sales from alternate channels in Q1 to 45% so that contact center team members could attend training and prepare for system modifications necessary for our integration of the new properties.

I'm pleased with these results given the magnitude of changes we were implementing in Q1 in preparation for the deal closure.

With this transaction completed, we have dramatically increased our scale with the addition of approximately 3.3 million voice customers, 2.1 million broadband connections, and 1.2 million FIOS video subscribers, as well as related businesses. We've also welcomed approximately 9,400 new employees to the Frontier team.

The cutover that began on April 1 was the largest and most complex flash cut that has ever been executed in our industry and I'm proud to say that it has been very successful. We took lessons from previous cutovers and applied them to strengthen our processes and minimize service interruption.

As with any transfer of this scale and complexity, there were some issues at the outset, but these affected less than 1% of our customers in total and much less than that at any point in time. As we moved through the initial transition period, we identified and addressed a number of issues with imperfect data extracts and network complexities.

We were able to modify our business practices and conduct additional rounds of employee training immediately because of our extensive preparation and the contingency procedures we have developed. This delayed the rate of reaching a normal business cadence and as a result, we were slower in responding to customers and restoring service.

This disappointed some customers and resulted in some negative publicity in the market. We now have these issues resolved and behind us. At this point, we have completed all business and residential billing cycles for the first month of ownership.

We know that disruptions of any kind are frustrating for customers, and our teams worked around the clock to resolve outstanding issues and restore service. This cutover required extensive training of more than 10,000 field technicians and customer service representatives, which could only take place after the transaction was closed.

During this training period, we relied on partners to help us support customer service requests. As of today, we have completed that training. We have our customer service teams back to full strength, and we will be reducing reliance on the temporary partner. We expect this to have a significant positive impact on the customer experience.

All service issues related to the conversion have been substantially resolved, and the level of reported outages is now trending at approximately the levels we expect for these properties. We continue to monitor customer call trends closely and are doing everything we can to respond and improve the customer experience.

I'd like to take this opportunity to thank our customers for their patience throughout this process. And we'd like to thank all of our employees for their outstanding efforts on this very challenging transformation. I see a great deal of potential in these three new markets. In addition to increased scale, they each have significant growth opportunity.

California, Texas, and Florida are projected to account for nearly half of the U.S. population growth over the next decade. We're expanding into these markets with leading-edge capabilities, including networks that are 55% FiOS enabled.

With the completion of this acquisition, we have begun to refine our expectations for 2016, and we are targeting a range of free cash flow of between $800 million and $925 million, and John will cover our guidance in additional detail momentarily.

As we continue to learn more about these markets and the employees who have joined us, we believe we will be in a strong position to drive significant additional benefits for our customers and shareholders. I expect the second quarter to be impacted by integration in a few ways.

As far as the integration plans, we minimize marketing efforts to allow our teams to gain proficiency and utilization of the Frontier systems to operate the business. This will impact the gross additions in these new operations. This was planned and necessary to ensure we were capable of meeting higher activity level.

As a result, we anticipate that the customer metrics for the second quarter will most likely be negative, as we begin to build our marketing campaigns over the coming weeks. Please turn to slide four. Let me review the opportunity for Frontier going forward.

We will continue to be focused on increasing our broadband opportunities, both in FiOS and copper market. We're building out increased speed capabilities across our network, using both our own funds as well as CAF II funds for rural areas. We have substantial opportunity to increase our broadband penetration.

And we are at the beginning of a multiyear program to offer video service to an increasing portion of our footprint. We can service slightly over 30% of our 14.5 million household footprint with video today, and we anticipate that will grow to well in excess of half over the coming year.

We believe that the expanded reach of our video capability will help us attract new customers to Frontier for both video and broadband service. We will continue expanding our capabilities for business customers, particularly in the newly acquired California, Texas and Florida markets.

This includes developing direct and indirect channels to service the opportunities we see in these markets, and we will continue to focus on improving customer retention.

We anticipate that as these trends grow in their contribution, increasing the availability of video through our compelling low-risk deployment plan, improving broadband speeds, increasing retention and broader availability of our compelling business offering, that our revenue trends should improve.

Furthermore, we continue to have a substantial opportunity to improve efficiencies across the business. This is an exciting time for Frontier. We appreciate the investment community's ongoing patience and confidence as we execute on the transformation of Frontier's business.

I will now hand the call over to our CFO, John Jureller, who will go into more detail on our financial performance..

Thank you, Dan. Frontier reported a loss per common share of $0.21 in the first quarter of 2016 after dividends on our preferred stock compared to a loss per common share of $0.14 in the fourth quarter of 2015 and a loss of $0.05 per common share in the first quarter of 2015.

Adjusting for dividends on preferred stock, acquisition-related interest expense, acquisition and integration cost, severance cost and certain tax items, our non-GAAP adjusted net income was $0.01 per share in the first quarter of 2016 compared to $0.05 per share in the fourth quarter of 2015 and $0.02 per share in the first quarter of 2015.

On May 2, the board declared a common dividend of $0.105 per share for the second quarter 2016, payable June 30, in line with a dividend rate in recent quarters. We will also be paying the regularly scheduled dividend on our preferred shares on June 30. Please turn to slide five.

First quarter revenue was $1.36 billion as compared to $1.41 billion in the fourth quarter. Revenue declined by $58 million, reflecting the anticipated sequential step-down in CAF II revenues of $39 million as well as a decline in voice services revenue, partially offset by an increase in data services revenue.

Customer revenue of $1.19 billion was down $18 million sequentially, or negative 1.5%, reflecting the sequential decline in voice revenue. Total residential customer revenue was $583 million, was down $11 million as compared to Q4. The decline was primarily due to a decrease in voice revenue.

During the quarter, we continued to migrate the Connecticut-based customers who received the one-year acquisition pricing offers beginning in late 2014 and through early 2015 back to the non-promotional pricing. Business customer revenue of $606 million was down only $7 million sequentially.

Within business, as Dan noted, SME revenue was stable sequentially. Approximately, one-half of the quarterly sequential decline was due to the anticipated reduction in wireless backhaul revenue. Total data and Internet services revenue declined slightly from the prior quarter.

During the quarter, our residential combined with SME, data and Internet services revenues continued to increase. This was offset by the decline in wireless backhaul and other carrier revenue. The rate of voice revenue decline improved from the fourth quarter.

In Q1, we had a sequential improvement in the impact from residential rate migrations and a stable trend in residential voice disconnects. Regulatory revenue for the quarter was $166 million, a sequential decrease of $40 million.

This reflects the anticipated CAF II revenue recognition as we recognized revenues throughout the year as compared to 2015 when the incremental subsidy revenue recognition was concentrated in Q3 and Q4.

Beginning in the second quarter, the regulatory revenue will increase by approximately $12 million per quarter due to the incremental CAF II subsidy revenue for California and Texas. Residential average revenue per customer, or ARPC, was $62.64 for the first quarter of 2016, a decline of 0.8% sequentially.

This reduction reflects a continued decline in the percentage of customers that bundle voice as well as the residual impact from a migration to stay connected rates that occurred in Q4. Prior years have shown that we see a return of stay connected residential voice revenue in Q2 and Q3. Business ARPC was up 0.6% sequentially.

In Q1, our residential customer churn was 1.83%, an expected slight seasonal increase over 1.76% in Q4, but a material improvement as compared to the 1.97% in Q3 2015. Cash operating expenses of $827 million represented an increase of $14 million sequentially.

However, this is better than the sequential estimates we had provided on the fourth quarter earnings call. The improvements came from multiple areas including operations, third-party services, and benefits expense.

The adjusted operating cash flow or EBITDA margin in the first quarter was 38.9%, a decline from Q4 that we anticipated due to the lesser amount of CAF II revenue recognized in the respective quarters and from the estimated sequential increase in cash operating expenses.

Capital expenditures were $207 million in the first quarter and we spent an additional $52 million in CapEx related to integration activities. Please turn to slide six. Frontier's cash flow remains very healthy. Our adjusted free cash flow was $187 million in the first quarter.

Our dividend payout ratio, adjusted to exclude the incremental dividends and interest expense on the capital raise for our transaction with Verizon, was 56% in the first quarter as compared to 43% in the fourth quarter of 2015.

The adjusted dividend payout ratio excludes the incremental capital cost of the debt and equity capital for the acquisition and we believe it remains the appropriate measure until we begin to include the operating cash flow from the acquisition. Please turn to slide seven. Our leverage ratio at the end of Q1 was 3.85 times.

Pro forma for the inclusion of the Verizon transaction and incremental debt based upon our trailing 12-month results, the reported Verizon Separate Telephone Operations' pro forma results for 2015 as filed in our recent 8-K, and an estimated $600 million of annualized net cost synergies, the net debt to EBITDA ratio would have been approximately four times.

Frontier's liquidity position remains robust. Excluding the restricted cash that was earmarked for our acquisition, we ended the quarter with approximately $1.25 billion in cash and credit availability. Our debt maturity schedule is well laddered and we have the ability to comfortably manage the debt maturities coming due over the next few years.

Frontier's capital allocation framework remains unchanged. We will invest appropriately in our network infrastructure and operations, including our newly acquired operations, support our current dividend, and utilize remaining cash flow to reduce debt and our leverage ratio.

We are committed to maintaining our liquidity and reducing our leverage over time. Please turn to slide eight. With the California, Texas and Florida acquisition completed effective April 1, let's look at Frontier's outlook for the full-year 2016.

We anticipate full-year 2016 adjusted free cash flow, otherwise known as leveraged free cash flow, to be in the range of $800 million to $925 million. The adjusted free cash flow guidance range is after the deduction of dividends paid on the preferred shares. This includes the contribution from three quarters of the newly acquired operations.

The adjusted free cash flow guidance includes the in-year benefit of the cost synergies with respect to this transaction. This guidance estimate excludes our remaining integration spending in 2016, the majority of which is estimated to be completed in the second quarter.

Within this quarter, we will be filing the Verizon Separate Telephone Operations' Q1 2016 financial results and pro forma adjustments, which will provide further information on the most recent operating trends in this business.

We anticipate capital expenditures of $1.25 billion to $1.4 billion in 2016, inclusive of our CAF II related expenditures, but excluding the integration spending. We continue to estimate full-year cash taxes in a range of $5 million to $15 million, including the impact of our acquisition.

We estimate cash pension contributions for 2016 in the $15 million to $25 million range, inclusive of the pension funding obligations for the transferring employee workforce in California, Texas and Florida. We estimate that 2016 reported interest expense will be in the range of $1.53 billion to $1.55 billion.

Keep in mind that interest expense in Q2 will step up sequentially from the first quarter by about $20 million, reflecting the drawing of the Term Loan A at the quarter end to fund the acquisition, as well as the interest related to the debt we have assumed from Verizon at the closing.

We estimate that interest expense, excluding the Q1 portion of interest expense on the $6.6 billion of acquisition-related debt, will be in the range of $1.34 billion to $1.36 billion. The adjusted free cash flow guidance range of $800 million to $925 million reflects this interest expense range.

Approximately 13% of our debt is at floating interest rates, so we have relatively minor exposure to fluctuations in variable interest rates.

In summary, Frontier's Q1 2016 operating results, our opportunities with the California, Texas and Florida acquisition, our prudent capital investments and expense management, all provide a strong cash flow base and a solid financial platform for supporting and investing in the business.

We have ample capital to invest in and enhance our competitive infrastructure, service our debt, and comfortably sustain our dividend and maintain a dividend payout ratio superior to others in the telecom sector. With that I'll pass the call back to the operator, who will open up the line for questions..

And we'll go first to David Barden with Bank of America..

Hey, guys. Thanks for taking the questions. I was wondering -- just a couple if I could – first on the network integration side, I was wondering if you could highlight if there is going to be any perceptible financial implication with respect to refunds or credits or things that you're going to be giving to people.

And then second, I guess, when could we anticipate the timing of the all-clear on the billing system integration? And then lastly, John, I think – I could ask this question a lot of ways, but I think it might be just super helpful for you maybe to walk through the guidance and adding up the different pieces, so that people can come up with a definitive answer for what the Verizon contribution's expected to be to this analysis in the last nine months of the year.

Thanks..

Hi Dave. It's Dan. So, on the first two, on the network integration and any potential impacts on refunds, we've been handling those. They've been very small from a volume perspective, and we've been handling that with customers in our normal course. So you won't see a lingering impact past essentially the first month or so of operation.

From a timing and a billing system perspective, we have completed all the bills for both – for our commercial, residential and carrier. They have all been sent at this point. We're waiting to see if there's any issues. We don't anticipate that. So I think the all clear is essentially now on the billing system..

Q2, Q3, Q4, our guidance with respect to cash taxes and CapEx, our guidance with respect to the $1.3 billion plus of interest expense, it gets you back up to perhaps the adjusted EBITDA number. We don't separately break out the legacy portion as compared to the Verizon portion.

But obviously when it comes to our reported results beginning with the Q2 earnings is we'll break those out separately. So you'll see the different revenue and expense components of those two parts of the business..

We'll go next to Phil Cusick with JPMorgan..

Hey guys, it's Boris (22:32) in for Phil. I was just wondering if you could update us on your union situation. What's the status there? And also if I could ask another, what is the potential to cut cost beyond synergies both in the acquired and legacy properties? Thanks..

Yes, Boris (22:48) from a union perspective, we're actually in very good shape. We have normal relations ongoing right now. We've had no impact from the Verizon work stoppage. We continue to move through our normal negotiating calendar with our various union partners, and there is no changes to that whatsoever..

Yes. At this point in time with respect to synergies, we're not calling out a different number. We're very confident in our day one number of $600 million, and as we get through the year, we will make any adjustments that we see, but again are both very confident in the $600 million day one..

We'll take our next question from Scott Goldman with Jefferies..

Yes, hi, good morning, guys. I guess, a couple questions if I could. One, just following up to that, John. You said confident in day one synergies.

Wondering if you could just help us think about how the remaining synergies might get layered in from a timing perspective and where there are any of those that might actually show up inside of guidance or inside of 2016 numbers? And then secondly, you highlighted in the prepared remarks the cash cost came a little lower than you had previously guided to for this quarter.

Wondering how we should think about that in terms of is it timing related or is it something that we should see carrying through into 2Q on the legacy side? Thank you..

Scott, this is Dan. On the day one synergies, I think, John is exactly right. We're very confident on those. Obviously, we're coming right out of the integration activity, but we have several activities that are planned through the latter half of this year that will improve the synergies but will have limited probably impact in 2016.

It's more setting a stage for 2017. And we can give updates on those as we start to execute those strategies throughout the year..

Yes, Scott, with respect to the cash expenses coming in better than we anticipated, it was not due to timing issues; for example, things that will spill over into Q2 or later quarters. These were frontend reductions that we saw in quarter.

And again related to some of our outside service costs, and our benefits cost, our medical expenses coming in slightly lower than what we had anticipated. So all those things we see of really of a permanent nature, not timing related..

We'll go next to Barry McCarver with Stephens, Inc..

Hey, good morning, guys, and thanks for taking my questions. Dan, on your prepared remarks, you mentioned that customer metrics would be a little bit negative in 2Q because of the focus on customer service.

Can you tell us a little bit more specifically, are you just talking about subscriber numbers may look a little bit different or are you thinking it's going to affect ARPU as well, just more color on what's going to be different?.

Sure, Barry. As part of the normal process what we try to do is minimize additional variables that could be introduced into the first two months or so of operation in the property.

It's kind of our standard to not introduce a lot of marketing calls; one, because we were relying up until this week on third-party partners on the customer service side to answer a number of calls.

But more importantly we wanted to allow our field technicians, our support teams that are there helping them on a daily basis to get good and proficient at using our systems.

So as a result what you tend to see in the first month or two months of operation is the normal activity that's happening in a market that could be everything from people moving out of the market to different individuals making decisions to go to a different provider, all a gamut of why people disconnect and limited in where activity associated with the marketing.

So as a result, you absolutely will see a negative subscriber metric for Q2 and then we anticipate that changing to more normal rhythms as we exit the quarter and move into Q3.

So we wouldn't have the inward activity from the subscriber perspective and potentially inward activity we're having you associated with a month or two months of revenue with those customers. That's what I was really trying to make sure everybody understood..

And we'll go next to Frank Louthan with Raymond James..

Great, thank you. For the 3 million homes that you're expanding the video to, you mentioned that's a low cost.

Can you give us an idea of what that cost for home past is and your penetration expectations? And how much of this is related to CAF II type properties that you're deploying?.

So on the second part, Frank, there's not a whole lot that's really associated with CAF II. CAF II can have some benefits in certain areas that may enable a slightly larger footprint availability in those markets. But it's not really the driver on the video.

The video is really around leveraging the investments that we've made historically in the market from a transportation perspective, and also from an electronics perspective. And the low cost deployment is really about how little it takes to enable a market from a video capability perspective.

And generally, that is enabling what people refer to as a video head office in a market.

And the technologies, as we've described on the last call, really have come down from a cost perspective on routing, on server architecture, and also the codec around compression that's used in these markets really are what makes it very low cost, as opposed to some of our peers in the past who might have been forced to deal with much higher cost to enter a market.

So, we don't see a whole lot of loop shortening in the short term, so that really doesn't drive a lot of CapEx. And it's really about selecting where we think the highest opportunity are, and as we go through the back half of the year, we're finalizing the rollout schedule.

We have probably three to five already identified, and we'll be announcing those as we go through the year, and there'll be more as we get later in the year (29:37)..

Frank I'd say, just to add to Dan, we have previously mentioned that we'll spend probably about $150 million addressing all the households that are in our plan over the three-year to four-year period. And we see no change to that number right now..

Okay, thank you..

We'll take our next question from Greg Williams with Cowen & Company..

Thanks for taking my questions. Just want to talk a little bit more about the integration. I believe in the past, you've messaged $450 million in integration cost for Verizon. And I think today in your script remarks (30:13) about $50 million was spent on CapEx.

How far along in the integration spend are we, both OpEx and CapEx? How much is contemplated in the free cash flow and the CapEx guidance for the balance of the year? Thanks..

Sure, Greg. It's John. Let me take that. We spent a little over $470 million in the pre-closing period, so through the end of the first quarter. And that's a combination of OpEx and CapEx. We'll have a little bit more to go in this second quarter, probably with a small trailing amount in Q3, but after that, we're seeing it's pretty much done.

We have some capital spend to finish up and then we have some integration-related OpEx, primarily sort of bubble workforce that are helping us in both engineering and in – or IT and our call centers, so that will go away. Those integration costs, whether it's OpEx or CapEx, are excluded from the adjusted free cash flow guidance.

So that you won't see it in there..

We'll take our next question Batya Levi with UBS..

Hi. This is Chris (31:28) for Batya. With the FCC and DRM coming out last week on business data services, can you remind us your thoughts about special access? And if Washington does get rid of the lock up provisions and regulates the market more actively, how should we think about the financial impact? Thanks..

Chris (31:45), this is Dan. I think, as we look at what the FCC proposed on regulating the business broadband pricing; one, we think that the Ethernet marketplace is very competitive today. We see each and every day, we're competing for business. I think the transformation that happened with fiber-to-the-cell tower really enabled that.

But I think the reality is that the FCC will find many of the markets very competitive, that it won't have much of an impact at all. I think it's pretty premature at this point to predict what any final decision will look like, because they are really in a fact-finding mode.

But we obviously have said publicly we're not – we don't think that there is a real need for regulation on the Ethernet side of the business. And we still believe that today. And I think the FCC will see that as they move through it.

On the special access side of the equation, it was really focused on TDM services that were what people referred to as TS-1s and TS-3s, so older (32:51) transport.

It was not really focused on the IP-based services, and it was really, for us, limited to looking at some special tariffs that were followed by Verizon and AT&T that we inherited as part of the acquisition. From our perspective, any changes to that will be prospective. We don't anticipate any large impact to our revenue streams.

And we will be working with the FCC moving forward as they make decisions on how to modify pricing terms for customers accordingly..

We will go next to Simon Flannery with Morgan Stanley..

Hi. Good morning. It's Spencer for Simon. Just a quick question on leverage.

You've talked in the past about delevering 0.1 turns to 0.2 turns per annum, do you still think that's the case and when do you expect to start it up this year or more like next year?.

Hey, Spencer, it's John. Yeah, we do still have that in our plans and I think you'll see that as we begin to transition into 2017. We'll just need to get the business in and under our belts and get it running. And then from 2017 onward, that's what we anticipate..

We'll take our next question from Matthew Niknam with Deutsche Bank..

Hi, this is Whitney on for Matt. My question is on revenue stability, so after closing the Verizon acquisition, is it still your expectation to reach quarter-over-quarter revenue stability in 2017? Thanks..

Well, let's begin with, revenue stability is clearly we're looking to achieve, particularly as we build out our video customer, our video offering for our residential customers as we drive more opportunities in the SME marketplace. Those are things I think that will help enable our business.

And we've also talked about two of the opportunity set in broadband in the California, Texas, and Florida markets where Verizon historically has experienced a level of net deacts every period. And while we have the opportunity, we think on a very capital efficient basis, the increased capabilities and increased customers in those markets.

So, those three are really all drivers to help us offset the sequential decline in voice revenue. So, our objective as we get into 2017 and beyond is to achieve that point of stability..

Operator, we have time for one more call..

We'll take our final question from Barry McCarver with Stephens, Inc..

Thanks guys for allowing me the follow up. So, you mentioned in your prepared remarks specific focus on enhancing business services in the three new markets that you just acquired.

Can you give us a little more detail on what those enhancements might be and kind of the timing we should expect for those?.

Sure, Barry. This is Dan. The business set of customers and the revenues that we acquired as part of this what I would categorize as the basic business services. So, traditionally POTS, Centrex, low-speed, business high speed products as well as some basic transport services.

The remainder of the higher end products, whether it was complex Ethernet solutions or data products were really offered under the Verizon business brand. So, as we come in, we will be introducing the Frontier brand and competing for total solutions with customers from CP (36:37) perspective as well as advanced Ethernet applications.

And we anticipate beginning to offer those very quickly just as we established the distribution challenge. This is very different than the last Verizon acquisition where we had to build out the network to be able to offer those products and it took several years. In this case, the network is in very good shape with the capabilities existing currently.

And it's a matter of marrying distribution strategy around capabilities and then executing. So, we think that is a near-term opportunity and we're working on it right now..

This concludes today's question-and-answer session. I'd like to turn the call back to management for closing statements..

Thank you. Well, in closing we had solid results for this quarter. We're executing on our plan and we're on track to deliver on the targets we have outlined. The entire Frontier team remains intensely focused on increasing shareholder value and we believe we have significant opportunities ahead of us.

Thank you for joining our call today and we look forward to updating you again on the second quarter call..

This does conclude today's conference. We thank you for your participation. You may now disconnect..