Good day, ladies and gentlemen. Thank you for standing by. Welcome to Itron's First Quarter 2024 Earnings Release Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Paul Vincent, Vice President of Investor Relations. Please go ahead, sir. .

Good morning, and welcome to Itron's First Quarter 2024 Earnings Conference Call. Tom Deitrich, Itron's President and Chief Executive Officer; and Joan Hooper, Senior Vice President and Chief Financial Officer, will review Itron's first quarter results and provide a general business update and outlook.

Earlier today, the company issued a press release announcing its results. This release also includes details related to the conference call and webcast replay information. Accompanying today's call is a presentation that is available through the webcast and on our corporate website under the Investor Relations tab.

Following prepared remarks, the call will open for questions using the process the operator described. Before Tom begins, a reminder that our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance.

Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our Investor Relations website. We will be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could differ materially from these expectations because of factors that were presented in today's earnings release and comments made during this conference call as well as those presented in the Risk Factors section of our Form 10-K and other reports and filings with the Securities and Exchange Commission.

All company comments, estimates or forward-looking statements are made in a good faith attempt to provide appropriate insight to our current and future operating and financial environment. Materials discussed today, May 2, 2024, may materially change, and we do not undertake any duty to update any of our forward-looking statements.

Now please turn to Page 4 of our presentation as our CEO, Tom Deitrich, begins his remarks. .

data center related demand growth; reindustrialization and production localization; and electrification of transportation and the home; water scarcity and the automation of water infrastructure, safety applications for gas customers and the digitalization of their operations.

Notable backlog added during the quarter includes Oklahoma Gas and Electric renewed their long-standing partnership with Itron. This agreement consolidates a comprehensive range of hardware, software and services across OG&E's territory that enables the adoption of new technology as their needs evolve.

Also during the quarter, the city of Fort Collins selected Itron to provide a distributed energy resource management solution to manage demand response, energy efficiency and customer engagement programs.

Itron's software solution provides a single enterprise platform to support control strategies for a range of use cases, including EV charging and battery management. Now Joan will provide details about our first quarter and our outlook for the second quarter. .

Thank you, Tom. Please turn to Slide 7 for a summary of consolidated GAAP results. First quarter revenue of $603 million increased 22% year-over-year and was our highest level since the fourth quarter of 2019. The growth was driven by conversion of previously constrained revenue and continued customer demand.

You may recall, we entered 2024 with approximately $125 million of previously constrained revenue. More than half of this was fulfilled in the first quarter, which resulted in higher than expected revenue. Gross margin of 34% was 240 basis points higher than last year, primarily due to favorable product mix and operational efficiencies.

GAAP net income of $52 million, or $1.12 per diluted share, compares to a loss of $12 million, or $0.26 per share, in the prior year. The improvement was driven by higher operating income due in part to a restructuring charge booked in the prior year. Regarding non-GAAP metrics on Slide 8.

Non-GAAP operating income of $67 million increased 115% year-over-year. Adjusted EBITDA of $76 million nearly doubled from the prior year. Non-GAAP net income for the quarter was $57 million, or $1.24 per diluted share, versus $0.49 a year ago. This quarter was a record high for non-GAAP earnings per share.

Free cash flow was $34 million in Q1 versus negative $5 million a year ago. The improvement reflects significant year-over-year earnings growth. Year-over-year revenue comparisons by business segment are on Slide 9.

Device Solutions revenue of $127 million increased $7 million or 6% on a constant currency basis, driven by growth in water meter and communication module sales in the EMEA region. Network Solutions revenue of $408 million, a new quarterly record, increased 30% year-over-year.

Revenue growth was driven by improved component availability, operational efficiencies and project scheduling alignment. Outcomes revenue of $69 million increased 10% year-over-year, primarily due to an increase in recurring revenue. Moving to the non-GAAP year-over-year EPS bridge on Slide 10.

Our Q1 non-GAAP EPS increased $0.75 per share year-over-year to $1.24 per diluted share. Pretax operating performance contributed $0.88 per share year-over-year improvement, driven by the fall through of higher revenue and gross profit, partially offset by higher operating expenses.

Higher tax expense had a negative year-over-year impact of $0.11 per share, and FX and share count had a negative $0.02 per share impact. Turning to Slides 11 through 13, I will cover 2-month segment results compared with the prior year. Device Solutions revenue was $127 million, gross margin was 23.7% and operating margin was 17.1%.

Gross margin was up 360 basis points year-over-year, and operating margin was up 520 basis points, reflecting a higher value product mix and operational efficiencies. Network Solutions revenue was $408 million with gross margin of 37.1% and operating margin of 28.6%.

Gross margin increased 340 basis points year-over-year, and operating margin was up 470 basis points due to favorable product mix and volume-related efficiencies. Outcomes revenue was $69 million with gross margin of 35.1% and operating margin of 13.1%.

Gross margin decreased 760 basis points year-over-year, and operating margin was down 740 basis points due to a lower margin revenue mix and increased services costs. Turning to Slide 14, I'll review liquidity and debt at the end of the first quarter. Total debt was $460 million, and net debt was $159 million.

Net leverage was 0.6x at the end of Q1, and cash and equivalents were $301 million. During the first quarter, we acquired Elpis Squared for cash consideration of approximately $34 million. Now please turn to Slide 15 for our second quarter outlook.

We anticipate Q2 revenue to be within a range of $595 million to $605 million, an 11% year-over-year increase at the midpoint. We expect the remaining approximately $40 million of previously constrained revenue will be delivered in the second quarter, and this is reflected in our outlook.

We anticipate second quarter non-GAAP EPS to be within a range of $0.90 to $1 per diluted share, which at the midpoint is approximately 46% year-over-year growth. Now I'll turn the call back to Tom. .

Thank you, Joan. Our Grid Edge Intelligence platform is at the core of our ability to innovate and continue to offer our customers advanced solutions that address the growing complexity of energy and water management. Two recent milestones signify the scale and breadth of Itron solutions.

The differentiated services we offer through our Outcomes segment are a competitive advantage, and we are honored to have recently surpassed 100 million endpoints under Itron management, 365 days per year, 24 hours per day.

This is possible due to the consistent delivery of reliable, critical infrastructure and the trust that a wide range of customers have granted. Additionally, a long-standing customer, Xcel Energy, recently deployed its 2 millionth distributed intelligence endpoint and continues to expand its deployment.

These endpoints are critical in Xcel's efforts to provide cleaner, safer and more reliable energy to their customers across 8 states. This milestone is an important marker as the nature of what we do requires careful planning and project resiliency. Finally, during the quarter, we hosted an Investor Day.

Presentations included detailed discussions of our Grid Edge Intelligence platform, customer testimonials and a comprehensive segment level discussion, new long-term financial targets and a virtual technology demonstration.

I encourage anyone interested in learning more about Itron to visit our website where these presentations are available for replay. Thank you for joining us today. Operator, please open the line for some questions. .

[Operator Instructions] And our first question coming from the line of Noah Kaye with Oppenheimer. .

It's almost implied in the results and your commentary around catching up on the deferred revenue in 2Q.

But just as I say, can you talk about the overall health of the supply chain and manufacturing efficiencies of the company at this point? And what, if any, improvements you still are looking for as we move into the back half of the year?.

Sure. Happy to do so. The numbers that are in the Q1 results and implied in the outlook for the second quarter had us finishing up that roughly $125 million of deferred backlog that we had coming into the year. But that is what's in the numbers that you've seen.

What allowed that catch-up to go a little bit faster than we had originally anticipated in Q1, for example, is better component supply, factories running at a good clip all the way through the process to get logistics work done to ship products and complete field installation, which allows us to recognize revenue.

So that entire chain worked better than expected -- than what we thought coming into the year itself. So that was really healthy. We see supply chain as continuing to be healthy. Reliability of inbound components is strong and steady.

Lead times are still a little bit longer than pre-pandemic levels but starting to retract slightly in pockets here and there. So we view the overall supply chain all the way out through field installation as healthy and constructive for the business. .

Very clear and helpful, Tom. You mentioned data center demand, which is just about the hottest topic on the planet right now as one of the vectors or the influencing factors around the utility customer base. And certainly we see that in a lot of the public dialogue the utilities are having right now.

Where do you see Itron within the ecosystem of enabling providers for data center? You're talking about load growth, but you're talking about load growth in very sort of specific concentrated pockets with very high reliability demand.

How does Itron fit in that? And what kind of conversations and solutions are you discussing with your customers around it?.

Sure. So data center's clearly growing as you've referenced. Those are enormous loads, and they're sitting in one spot. So from a utility planning perspective, they've got to put a lot of power into that one location. How do you do that? You certainly have problems with getting enough generation and transmission in place to be able to do that.

In the meanwhile, as that is still waiting to happen and demand load growth is progressing, you've got to find a way to make do with what you have. And that's where we come in to wring out the efficiencies in the distribution channel -- in the distribution network, rather, to work through that.

So non-wires alternatives to balance supply and demand to be able to get better efficiencies out of the distribution network is where we play. Non-wires alternatives are things that happen faster than building a new power plant or even a transmission line.

And that nimble nature is really what's allowing utilities to deal with increased loads broadly, whether it comes from transportation or electrification in the home or massive things like data center. It is making the distribution network work better.

That efficiency gain is where we've got a big role to play, and we see a lot of traction with customer conversations already today. .

And our next question coming from the line of Pavel Molchanov with Raymond James. .

Let me actually follow up on the data center from earlier. Is this going to show up in Outcomes, or will there be incremental demand in Networks as well. .

It shows up in both of those segments for us. Depending on the individual customer deployment, you've got to create visibility into your distribution network to be able to enable that balancing of supply and demand on a local level. So generally, there's a networking component that goes along with that to get the communications channels in place.

And then in order to be able to enact changes in demand response kinds of programs or balancing supply and demand or understanding what's happening in the distribution grid, that's usually software-oriented and that accrues to the Outcomes business.

So it shows up in both of the segments that we've been investing in, and it just plays to the longer-term strategy that we've been working towards. .

Okay. Let me also follow up on Outcomes. This quarter specifically, you referenced that Networks revenue was at a record. Outcomes was up year-over-year, but not quite at record levels.

Do you see those 2 line items kind of sinking up in terms of growth directionally, or are they disconnecting in some sense?.

Well, in the Networks numbers that we talked about, there clearly was that catch-up phenomenon which drove the percentage up much faster than what you saw in the Outcomes segment. The Outcomes segment is generally ratable recurring revenue, which just layers in on top of each other.

So longer term, the percentage growth rate of the Outcomes business clearly will outstrip Networks as we're going through this short-term catch-up on revenue from component constraints from years' past. Clearly, Network is outgrowing the Outcomes segment in the near term. But longer term, that obviously more and more accrues to the Outcomes business. .

Okay. Makes sense. .

And our next question coming from the line of Jeff Osborne with TD Cowen. .

Tom, I had a question on the networking side as well.

With the Elpis acquisition and then going back to DISTRIBUTECH with the Schneider ADMS integration, can you just walk us through as you're adding more software, how that potentially might drive more NIC card sales for the networking piece? Is there a way to frame like what those two announcements mean in terms of adding networking intelligence to things like transformer substations and other assets?.

Sure. It's kind of a similar question to the prior in terms of how to think about it overall. What our Grid Edge Intelligence platform does is provides visibility of what's out there in your distribution network. And in order to be able to provide that visibility, you need connectivity to the asset. And okay, the asset could be an EV charger.

It could be a line sensor. It could be a house. It could be a smart panel. There are many, many different types of assets that you might want to keep track of and have the visibility on. And every time you add that connectivity, that accrues to the Networking business.

When you want to do something with that connectivity, meaning, okay, I want to take action, I want to turn something on or off based on that visibility, that is something that generally accrues to the Outcomes business.

So when we do things like power flow analysis or grid planning so a utility could understand where it is appropriate for them to hook up a distributed energy resource that'll allow you to interconnect your rooftop solar, for example, that is a combination of Networks and Outcomes for our business, but it fits into that entire Grid Edge Intelligence platform.

.

Got it. That's helpful. And then I've asked you this on prior calls, but everything on the recorded results was phenomenal other than the bookings number, which you said was in line with expected seasonality. Just getting some of that's your questions as related to the full year visibility.

So is there a way you can frame or confirm -- I assume you've been technically awarded enough volume to be book-to-bill above 1 for the year.

You're just waiting on regulatory approval? Or is there still some awards that you need to receive notification that you've been technically chosen?.

Yes. I'd certainly just frame up one quarter bookings so that there's no mystery there. It was in the range we were expecting. Q1 is generally seasonally low. No change in the full year outlook that -- based on the Q1 results. Rich pipeline of opportunities for all the reasons we were talking about.

In order for us to put something into backlog and declare it a booking, we obviously need the award. We need the signed customer contract and, of course, regulatory approval. There is a larger number of deals that are in that governmental and regulatory approval portion of the process that is typical.

And that's what still gives us a good view for the year overall. But it's always a bit lumpy, and you got kind of a low point in Q1, but we're still feeling like we're on track for the full year. There are several hundred million dollars of bookings that are past the award and through that contracting and regulatory governmental approval process.

So we're feeling good about it. .

And our next question coming from the line of Chip Moore with ROTH MKM. Chip, your line is open. .

Can you hear me?.

Now we got you. Very good. Go ahead. .

Okay. Apologies. Tom, I wanted to ask about the outlook. Just looking at Q2 expectations I think implies maybe more subdued growth in the back half. Obviously, you'll be lapping some tougher comps. And I assume you'll wait for Q2 to make any updates to the full year outlook.

But any way to think sort of high level expectations in the second half based on your current visibility?.

Yes, this is Joan. I'll take that one, Chip. I would say stay tuned for August. At this point, when we started the year and gave the full year guidance, our expectations for the second half I think are still pretty consistent with that view. We'll see how Q2 goes and the timing.

As Tom mentioned, the bookings can affect quarter-to-quarter when it comes to rolling off backlog. But at this point, really no change to our expectations to the second half. .

Understood. And maybe my follow-up, just on Outcomes in the quarter on the margins.

I think you called out some mix in service costs, but anything there? Is it sort of a larger software project that didn't materialize or anything like that?.

No. As we've talked in the past, Outcomes is still really a subscale business for us. So you will get variability from quarter-to-quarter depending on the proportion of software licenses in that particular quarter.

So as we mentioned, there was a lot of recurring services in there, which tends to be a little bit lower margin, but nothing fundamentally different in our view of where Outcomes can continue to scale and grow its margins. .

And our next question coming from the line of [David Sinderland with Merigan]. .

I wanted to first ask about devices and the strong gross margins there. I know part of this is due to mix and partly costs. Just wondering if you could maybe break out a bit more detail as the contribution from each of these and what's assumed for the rest of the year on that front. And then I have a follow-up. .

Yes. So again, we mentioned it in the prepared remarks, and it's been consistent the last several quarters. We had a really favorable mix of water sales in Europe, which tend to be a higher margin than some of the other products that we sell. So we saw a continuation of that. Not quite as high in Q1 as it was in Q4.

But we will continue, I think, to see strong water sales. And obviously, they spent a lot of time in the last couple years just pruning the portfolio. And as we get the factories loaded and we continue this year to close one factory that's primarily a devices factory, that's kind of all built in our expectations.

So while we don't give overall guidance by segment, as we said last quarter, we sort of expect for the year Outcomes to be kind of flattish on the top line and continue to improve its margin over time to reach the aspirational targets that we communicated at Investor Day. .

Got it. That's helpful. And then maybe that's actually a good segue. Could you just talk about new market opportunities? Anything you're seeing, maybe specifically in Europe or elsewhere as it relates to water or any other new products? And then again, just what's embedded in the guide or what your assumptions are as it relates to that. .

Sure, I can take that one. We see good growth opportunities with that Grid Edge Intelligence platform, as we talked about, which eventually ends up in both Networks and Outcomes segments for us. What's fueling that growth, it really is the automation of infrastructure.

It's creating better visibility into the distribution network so that you can cope with rising demand and load variability. Things like hooking up an EV to the grid, it creates an enormous variable load at a local spot. So in order to be able to cope with that and ensure resiliency and reliability, you want to invest in your distribution grid.

As more generation and more transmission, it takes a bit longer to come by, investing in non-wires alternatives to wring out efficiencies in your existing network drives growth. In the water and gas space, it is automation of the basics. It's digitalization of that infrastructure drives growth.

And then finally, that there's good pockets of growth with some of the things we do in smart cities. So automating lighting infrastructure inside of cities is an area that we see continued growth. Smaller business for us, but it's a good pocket.

Those are the things that drive the overall business growth and generally are accruing to the Networks and Outcomes business where we clearly have growth aspirations as we laid out in the recent Investor Day. .

[Operator Instructions] Our next question coming from the line of Kashy Harrison with Piper Sandler. .

So just picking up on a few earlier questions. The load growth expectations do keep rising, most recently with a bigger cutoff date. I know the benefit may not be necessarily direct since it's a lot of business from very large loads. But I was just wondering, is there a simplistic way we can think about some of the U.S.

load growth expectations that have underpinned the long-term 4% to 6% forecast from the Investor Day? And then maybe some sort of sensitivity on what all these changes in demand expectations could mean for your forecast. .

So, difficult to try to correlate it because there's a pretty wide gap between an overall demand forecast and what it looks like on a regional level for us. But if total electricity consumption for the U.S. was kind of flattish for, I don't know, 20 years from maybe 2000 to 2020, starts to grow, and you're talking single digit growth.

Either low-single digits or some folks are talking about much higher percentage growth rates on electricity overall, using the U.S.

as an example, how do you -- how can you manage that? It really does come down to you need more generation, you need more transmission, and you're going to have to invest pretty dramatically from a distribution network, which is where we play. So we think we're looking at low-single digits to mid-single digits in terms of total electricity growth.

That's aligned to what most analysts are expecting. And that is what is underneath our Investor Day longer-term targets for growth. If for some reason it were to go faster, that clearly would be a tailwind for our business. But it's that low- to mid-single digit overall electricity growth, which is part of our underlying thesis for business growth. .

That's very helpful context. Appreciate it.

And then the revenue outperformance in Q1, and then I guess Q2 to some extent, is there a way to think about how much of this is backlog pull-forward versus incremental book-and-ship business? Just trying to think through if you outperform this year, it could end up pulling some revenues from 2025 and maybe perhaps impact how we should be thinking about year-on-year growth.

.

Well, again, I'd say we entered the year assuming that we had about $125 million of that previously supply-constrained revenue. When we initially did Q1 guidance, we were sort of thinking half in Q1, half in Q2. In reality, it was more like $85 million in Q1 and $40 million in Q2.

So part of it, when you look at the guidance we gave for second quarter, it's kind of flat sequentially, and that's really the reason why. So that's probably the best color I can give. Again, second half of the year for now.

I think where you guys settled out based on our original full year guidance for the second half is probably the right level at this point. .

Helpful. And maybe just one more, if I may. You shared some color earlier on the margins from the Outcomes segment. But I was wondering if you could talk a little bit about Networks Solutions. Very robust at, I want to say, 37%.

What were the drivers there, and how sustainable are these margins through the rest of the year?.

Yes. The Networks Q1 margin was unusually rich, I would say. So that's the primary reason the margins were so high. So if you looked at our Investor Day targets, essentially Networks hit it in Q1 at 37%. So I don't think it's sustainable in the near term. I think that's still the right longer-term target for them.

And again, if you look at the Q2 guidance we provided from an earnings perspective, it's lower than Q1 on the same revenue. And that phenomenon is primarily related to our assumption that Networks margins will not be as strong in Q2 as they were in Q1. .

And our next question coming from the line Joseph Osha with Guggenheim Partners. .

I have two more strategic questions. First, I was wondering if you could maybe talk a little bit more about the opportunities you see for digitization of the water metering infrastructure. Living here in California, that seems to be something that's coming up a lot. And then I have one other question. .

Sure. The majority of water systems around the globe are generally mechanical in nature to this point. And I would say that it's -- sometimes there are manual reads. Sometimes there are walk-by or drive-by reads.

But moving that to be a digitized infrastructure where you can get 2-way communication to the meter itself clearly is a big productivity opportunity for utilities around the globe, that you wouldn't need to drive around the neighborhood.

You can get all the data from behind a pane of glass and be able to create more accurate billing for your customers. So that's one sort of basic trend.

Once you have that infrastructure in place now, because you have access to much richer sets of data, you could be looking at what's happening on an ongoing basis at regular intervals, and you could understand what's happening within your water infrastructure.

Do you have a leak in a pipe somewhere? Is the homeowner got a leak inside of the house? And you can start to add value-added services on top of that to reduce losses and create a better consumer engagement.

It is that progression all the way from just let's automate the basics all the way up to a tighter relationship with the consumer and the reduction of losses in scarce environments, that's what fuels that digitization of the water infrastructure. It's that trend which we see playing out on a global level. .

And I guess just, is this something that could begin to become material for you? Because as you point out, it's all mechanical, it's all pits in fronts of yards. But you've got really quite meaningful efforts at the municipal level to bring water usage under control.

I mean, so is this something we could wake up in a year or 18 months and discover is a much more material opportunity for you relative to the other things you're doing?.

I mean, I still think there's probably bigger growth as a percentage in the electricity space for a lot of the macro trends that we talked about earlier in this call. That doesn't take anything away from water growth. There's still growth in that area as well. So we see both growing as a percentage, but probably electricity is a little bit faster.

Our water business today is a meaningful portion of the company. We've talked about it for 3, 4 quarters running now. It's running a bit ahead of expectations, and it's still a big part of what we do. So I don't know, maybe 20%, 25% of total revenue is coming through that space. .

Okay. And then second strategic question. Looking at this Elpis deal and the many things you said about helping your utility customers have better visibility into the local distribution grid makes great sense. It's awesome. I agree with you.

One of the things that your people talk about is the potential to sort of take that next step and begin to work with utilities and homeowners on controlling behind-the-meter loads, right? So SPAN, which I'm sure you're familiar with, has done a deal with Landis and Gyr.

I'm just wondering is could we see part of your acquisition strategy in the coming year or two begin to focus not just on this grid -- local visibility for utilities, but also beginning to face off against customers behind the meter and address this other potential part of the challenge, which is load control?.

Certainly, we believe that the growth in distributed energy resources in front of and behind the meter on the side of the house is going to continue to grow dramatically. That's just going to happen. I don't see any way that it would not.

How do you control and optimize the use of all of those assets is where I think we've got a really unique and interesting value proposition.

So when you start to think about things like demand response, where we have the IntelliSOURCE platform that allows the thermostat inside someone's house to be adjusted to manage the load and shed load in a difficult situation, having hundreds of megawatts under that platform or control.

We expect that business to grow, and we think it's going to become more and more fine grain capabilities.

So helping the utilities cope with that, helping consumers understand how they are utilizing an asset or making those assets part of the larger macro solution is clearly a growth area, which that Grid Edge Intelligence platform that we've talked about is firmly targeted and well advanced in terms of adding more and more capability. .

[Operator Instructions] And our next question coming from the line of Austin Moeller with Canaccord. .

Great quarter. So just my first question here.

How much of the backlog that was not inflation indexed still needs to be shipped? And do you view that as more of a Q2 or second half expectation?.

The total backlog, it's still in the range of 70 30, meaning 70% is either new or repriced or shorter-term pricing levels. There's still 30%, a little less, that is not repriced or not protected indexed in some way. That range hasn't materially changed over the last couple of months. We're still within a few percentage points of that.

The majority of that 30% pre-priced, if you will, or not re-priced backlog flows through in roughly the next year or 2. So it's still going to trickle out over time itself, but we're continuing to eat through it overall. And it's part of the expectations that we are managing for the full year. .

Okay. And then just another question.

Does your long-term guidance that was issued during the Investor Day factor in improved lead times for chips and other components in terms of being reduced further and getting closer to pre-COVID levels and enabling higher shipment turnaround? Or are you sort of expecting the same kind of lead times that you've been seeing recently?.

Yes. We're running our business with roughly the lead times that we see today. Obviously, if they were to continue to improve, that there's opportunity there to be a bit more responsive. But our outlook doesn't expect a meaningful change for the year. We're pleased with the level of supply chain performance that we're getting today.

We are going to carry a little bit more inventory to manage anything that goes bump in the night in the year ahead. But it doesn't require a dramatic change in component lead times for us to continue to operate at the present level. .

Thank you. And I'm showing no further questions in the queue at this time. I will now turn the call back over to Mr. Tom Deitrich for any closing remarks. .

Thank you very much for joining the call today. We look forward to updating you again in a few months for Q2. .

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect..