Good day, and thank you for standing by. Welcome to the Q2 2022 Luna Innovations Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being record.

I would now like to turn the conference over to your speaker for today, Allison Woody, Director of Administration. Please go ahead..

Thank you. Good morning, and thank you for joining us today. Earlier this morning, we issued our second quarter 2022 earnings press release. In addition, we posted the Investor Relations section of our Web site a presentation and supplemental information for the quarter.

If you do not have a copy of the release or the supplemental materials, please check our Web site at lunainc.com. We will also post a replay of this call to our Web site. Some of our comments and discussions today are based on non-GAAP measures. These adjusted numbers exclude the effect of certain non-cash expenses and other items.

The adjusted results are a supplement to the GAAP financial statements. Luna believes the presentation and exclusion of these items is useful in order to focus on what we deem to be a more reliable indicator of ongoing operating performance.

Before we proceed with our presentation today, let us remind you that statements made on this conference call as well as in our public filings, releases, and Web sites, which are not historical facts, maybe forward-looking statements that involve risks and uncertainties and are subject to changes at any time, including, but not limited to, statements about our expectations regarding future operating results or the ongoing prospects of the Company.

Actual results may differ materially as a result of a variety of factors. More complete information regarding forward-looking statements, risks and uncertainties is available in the Company’s SEC filings, which can be found on the SEC Web site and our Web site.

We disclaim any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments, except as required by law.

After our prepared remarks, Scott Graeff, our President and Chief Executive Officer; along with Chief Financial Officer, Gene Nestro; and Chief Operating Officer, Brian Soller, will be available to take your questions. And at this time, I’d like to turn the call over to Scott..

Good morning, everyone. And thanks for taking the time to join our call. I'm excitedly with you today announcing another quarter of solid top line performance and progress against our operational objectives. We continue to be confident that our long term strategy is the right one and remain bullish about the opportunities in front of us.

On last quarter's call, I told you that we're making investments now to set us up well to capitalize on significant opportunities for strong and rapid growth over the mid and long term.

Part of this is an investment in operational infrastructure and the other part is capital used to acquire new technologies and capabilities to bolster Luna's own strong platforms. We continue to be excited about the technologies, products and talent we've acquired and what we've nurtured and grown internally.

And I'm encouraged by the continuing and increasing customer demand for our products and capabilities. For our second quarter 2022, a majority of Luna over delivered on the top line, that's an incredible accomplishment and we see this momentum continuing, even as the world is talking about recession.

It is a testament to both the need for Luna's products and capabilities and the work and commitment of every Luna employee. My many thanks to the whole Luna team.

With that said, we still have some work to do in our project based businesses that include optic sensing and LIOS, which came in below our expectations, primarily due to delays in several large customers taking delivery of our products.

You may remember that the nature of a project based sale and associated recognition of revenue is slightly different than the rest of our portfolio, which is largely comprised of product based sales. The project based businesses often involve traveling to customer locations to install or perform services.

So although, we may have technically sold and shipped the product and incurred associated expenses, we may still experience delays in recording the associated revenue until the customer actually takes possession of the product according to the revenue recognition rules.

One of the benefits for us in 2022 of these project based businesses is that we have good clarity into the shipments that will be made through the remainder of the year. In fact, in Q2, the book to bill in optic-sensing and LIOS were very strong with nearly $6 million more booked than build.

This puts us on solid ground as we look at the remainder of the year. As with all acquisitions, you'll learn a lot as you work through the integration process and in many cases, changes and refinements need to be made.

One of the changes we're looking to make would harmonize the process by which our project related products are sold and delivered in order to be consistent with the rest of the Luna portfolio. We are doing this to better match revenues with the related expenses. I want to be clear. We still feel very good about our recent acquisitions.

We acquired these important and growing assets at a very good price. There is no question that they filled an important gap in the existing Luna capabilities, that of distributed acoustic and temperature sensing. We look forward to being in person with these new teams more regularly.

Now that the COVID restrictions on international travel have mostly been lifted and it was great to spend a week recently with some of our newer colleagues. Brian Soller, our COO, and I just got back from the Farnborough Air Show where we met with several of our larger customers in the Aerospace segment.

We also took the opportunity to spend several days in the office with our team in offices. On this trip, we also visited LIOS Sensing, our most recent acquisition at the Cologne, Germany office, and we are excited about the potential to have these two groups coordinate activities more closely to drive both top and bottom line growth.

There are a lot of synergies to be shared. There is a great deal of value to be unlocked with the combination of assets and IP from LIOS and those of officers and the existing assets at Luna. And we want to make sure that we are deliberate in getting this right, and we will get it right.

We are incredibly optimistic about the increasing potential in these assets and excited about the future. With that, I'd like to move on to discuss highlights of the second quarter financials, and then provide an update on operational accomplishments during the second quarter.

For the second quarter of 2022, total revenues were up 19% to $26.2 million compared to the prior year's quarter. For the first half, revenues were up 13% versus the first half of 2021. Total company revenues were inline with our internal expectations. We continue to experience strong demand for our Luna products.

In fact, we realized double digit bookings growth in the second quarter 2022 versus last year. Our gross margin increased to 61% versus 57% in the prior year second quarter. We reported an operating loss of $2.5 million for Q2 2022 versus a loss of $2 million in Q2 2021.

The largest driver of the operating loss was the addition of LIOS in Q2 2022 as the revenues in that business are strongly weighted towards the latter half of the year.

In addition, I want to emphasize that had several large project based customers taking delivery of our products, we would have added several million dollars to our bottom line in the quarter.

The fact that the products are built and in many cases shipped with just a slippage of revenue to the next quarter gives me comfort in reiterating our 2022 outlook. Adjusted EBITDA was $1.2 million in Q2 2022, an increase from last year's EBITDA of $1 million.

Related to bottom line performance, there are essentially two buckets that affected year-over-year increase in the net loss line. These are, first, a tough comp against last year's second quarter as a result of roughly $1.8 million of benefit from both tax and discontinued operations that did not repeat in Q2 2022.

The second bucket is several million dollars of expense reductions we have implemented as part of our synergy savings initiative, undertaking the right size of the organization, but that has not yet been realized in the P&L. Before I move to talk about the businesses in more detail, I want to touch on our investments.

Our mission hasn't changed, to build on a capability as a company with blue chip customers to solidify Luna as a clear leader, fully focused on enabling the future with fiber.

To accomplish this, we will continue to invest capital in our businesses through this year and beyond, because we've seen abundance of opportunities for strong and rapid growth. In addition, we will continue to be prudent managers of our expense structure, while ensuring that we are the best positioned to capitalize on growth opportunities.

Now let me discuss the businesses in more detail. As a reminder, Luna focuses on two business areas, fiber optic sensing and communications testing. For the second quarter 2022, the revenue growth I just mentioned was driven by a full quarter of LIOS contribution and solid commercial sales in the legacy sensing and comms test business.

In fact, our bookings growth, once again, exceeded our revenue growth in Q2 2022. Let's dig a little deeper into sensing, which you may recall is where we used the fiber as the physical sensor to create smart materials and structures.

Revenues grew double digit versus Q2 last year, driven both by a full quarter of LIOS as well as strong demand for legacy Luna products. In fact, Luna legacy, ODiSI, HYPERION and Terahertz product lines, each contributed double digit sales growth. We also made important progress on several strategic growth areas within sensing.

Hyperion achieved a key customer win to use those products in oil and gas monitoring to monitor in real time the riser pipe that takes oil from the sea floor to the surface, greatly enhancing the safety of offshore oil extraction.

And bookings for Terahertz increased more than 100% in the first half of 2022 versus the same period last year, driven by the continued successful adoption of these products in the automotive EV space.

Relating to OptaSense, and as I mentioned earlier, the timing of customer receipt of large orders resulted in a slight decline in revenues for that business. But from an operational standpoint, OptaSense realized key product wins for critical infrastructure, and as I mentioned earlier, had a strong quarter from a focus perspective.

Now switching to communications test. Comms test revenues were flat in Q2 2022 against a particularly tough comp in Q2 2021. If you recall that last year's second quarter we mentioned it was a record quarter for comms test with nearly 80% year-on-year growth in that quarter. Given that comparison, comms test performed well this year.

We secured a large follow on multi-unit OBR 6,200 order from Lockheed Martin. Stay tuned for some more to come with Lockheed Martin. We also secured multiple strategic wins with blue chip customers in the high speed telecommunications and data communications markets.

Brian and I just attended an important three day sales conference in our Blacksburg facility. This was the first time since the pandemic began that the worldwide sales teams were able to all gather together in person. The enthusiasm and vast opportunity as reviewed by the sales teams were extremely exciting. They left the week completely pumped.

In fact, the overwhelming nature of the opportunities in front of us will cause us to be focused in order to ensure that we are capitalizing on the best year term projects, while leveraging Luna’s capabilities to the max.

The team continues to be inspired by the impacts our products have on our customers and society, whether it's making bridges and dams safer or 5G networks more reliable, or securing key government and private industry assets, Luna's products help make the world a better and safer place.

As I've said previously, we sit in rarefied air with the applications of our fiber technology nearly limitless. From a pandemic and supply chain perspective, we are still seeing impact, while effects timing of sales cycles as well as certain parts of our supply chain.

In particular persistent pandemic related supply chain delays in semiconductor availability has affected pricing and lead times. As we've mentioned previously, we've largely been able to mitigate supply chain risks for electronic parts by building in more safety stock and working closely with our supply chain partners to ensure delivery.

However, we want to call this out because it is an ongoing challenge. In summary, customer demand for Luna products remains strong. Sourcing component remains challenging. And we still have some work to do to grow profitability at a pace that is acceptable to both me and my executive team.

While Luna legacy products continue to grow according to our expectation, we need to improve profitability of our recent acquisitions. Strategically, these acquisitions were the right move and in the long term, Luna will certainly reap significant benefits.

The team is hard at work now and will be over the next couple of quarters in executing the initiatives we've already implemented in order to drive profitability. In sum, we will continue to focus on fundamental blocking and tackling as well as building for the long term.

With all these accomplishments, with six months of reporting behind us and looking at the rest of 2022 from a bottoms up perspective, we feel very comfortable delivering on our guidance of total revenues of $109 million to $115 million and adjusted EBITDA of $10 million to $12 million.

I'm incredibly grateful to the Luna team for their continued focus and work. And now I'll hand the call to Gene for more on the financial details.

Gene?.

Thank you, Scott. Let's dive right into the financials. As Scott noted, our revenues for Q2 2022 were $26.2 million compared to revenues of $22 million for Q2 2021, representing a 19% year over year increase. A full quarter of LIOS and Q2 2022 showed us the strength of that business contributing nicely to top line growth.

Within sensing, our year over year revenue growth of 36% was driven by our acquired businesses and strong performance from legacy ODiSI, HYPERION and Terahertz products, each of which contributed double digit sales growth.

Within comms test, as Scott mentioned, Q2 2022 revenue growth was essentially flat compared to a very tough comp in the prior year quarter. Gross profit was $16 million for the quarter compared to $12.6 million for the same quarter last year, representing a gross margin of 61% in Q2 2022 compared to 57% in Q2 2021.

So gross margin increased by 400 basis points in part by favorable product mix. Operating expenses were $18.4 million in Q2 2022 versus $14.6 million in Q2 2021, $2.1 million of this increase was driven by the OpEx of LIOS and the associated amortization. Now I want to take a moment to highlight something about our underlying expenses for the quarter.

If you look at the composition of our operating expenses this quarter, about half of the year-on-year increase was related to acquisitions and associated amortization. Q2 2022 was a high watermark for our OpEx. It was our first full quarter with LIOS and does not reflect the impact of the cost synergies Scott mentioned.

We expect to see the impact of these cost synergies ramp-up in the second half of the year with the full impact hitting in Q4. We are focused on identifying areas of opportunity for increased expense efficiency without sacrificing infrastructure, product quality or customer support. We are working always to create a more nimble and efficient Luna.

Moving on, we recognized an operating loss of $2.5 million in Q2 2022 compared to an operating loss of $2 million in Q2 of last year.

As Scott already mentioned, the increase in operating loss was partially due to the timing of absorbing fixed costs that are related to the project based businesses without associated revenue offset within that same period.

Net loss for Q2 2022 was $2.4 million or a loss of $0.07 per share compared to a net loss of $0.2 million or $0.01 per share for Q2 2021. Before I move on to adjusted EBITDA, I want to highlight three areas on the financial statements for clarity.

First, a tough comp versus the Q2 2021 quarter as a result of roughly $1.8 million in benefit from both tax and discontinued operations that didn't repeat in Q2 2022.

Second, we had several million dollars of expense reduction initiatives we have undertaken to rightsize the organization, the resulting benefit of which has not yet flowed through the P&L. And third, you'll find the adjusted EBITDA GAAP to non-GAAP reconciliation includes a warranty accommodation for a key customer.

You'll find this in the reconciliation schedule under the line titled other non-recurring charges. And finally, adjusted EBITDA was $1.2 million for Q2 2022 versus $1 million for Q2 2021 and adjusted EPS was a loss of $0.02 per share for Q2 2022 versus profit of $0.03 for the prior year quarter.

Again, largely impacted by discontinued operations and taxes. Let me now move on to the balance sheet. We ended the quarter with approximately four $4.9 million of cash and cash equivalents compared to $7.1 million at the end of 2021.

The decrease was largely due to the purchase of LIOS, a proactive buildup in short term inventory to minimize supply chain disruption and a planned expansion of production for Terahertz in order to maximize efficiency and output.

I am proud to highlight here that the team has never missed a customer shipment date, even through the pandemic, they have done an extraordinary job managing supply chain challenges. Our working capital was $46.4 million at June 30, 2022 compared to $49.8 million on December 31, 2021.

At the end of the second quarter 2022, we had total debt outstanding of $21.2 million. Of that amount $19.9 million is in term debt and $1.2 million was drawn on our revolver.

Investments over the past five years have all been funded by using our balance sheet through cash and bank debt, and we have access to approximately $14 million in a revolving credit facility should we need it.

Based on the first half of 2022 and what we see for the remainder of this year, I am comfortable reaffirming the guidance as outlined earlier by Scott. In addition, today, we are providing a guidance range for Q3 total company revenues of $28 million to $30 million. As we've said before, our gross margin is heavily dependent on product mix.

Therefore, we're still forecasting a full year of gross margin in the high 50%. In summary, I'll reiterate Scott's comments. We continue to focus on blocking and tackling to ensure we drive appropriate growth.

And while, we're evaluating and implementing cost initiatives to be prudent in response to current economy and markets, we also recognize we need to continue to invest for growth. We'll continue to balance those needs carefully. With that, I will turn the call back over to Scott..

Thanks, Gene. At this time, Lisa, I'd like to open the call for questions. Chief Operating Officer, Brian Soller is with Gene and me at this time, and will also be available to address these questions.

Lisa?.

First question is coming from ..

Congrats on the quarter. I was wondering if you could just provide a little color on what conditions you're seeing in the supply chain situation right now and maybe how you see that playing out going forward..

I think some of that you see in some of our -- Gene talk about our cash situation. We are actively going out and having to build up on the inventory of some of our parts to make sure that that it's not an issue. And I'll let Brian address in more detail, any kind of issues that we're seeing.

But I mean, I think we're really trying to stay on top with it….

We're still seeing shortages of supplies, some of the key electronic parts working with our vendors to get those parts in when they're scheduled to arrive often that date moves with late notice, which complicates our operation in terms of getting instruments and systems built to shift on time.

But in general, we've been able to manage around the situation and hasn't had today that material impact on the business. So we haven't seen a lot of improvement. We do a lot of work to mitigate and manage around it. And we just -- we move forward with the situation as it is.

That said, we have indications that we should see some easing of the situation by the later part of this year and into early next year. So we're certainly hoping to see that. But as of now, we're still dealing with the limitations of the supply chain..

And I assume that those inventories are going to remain elevated until we see the supply chain kind of normalize..

I think that's fair. Yes, I think that's fair..

And then one follow up. I was wondering you mentioned a last quarter. I was wondering if you could quantify kind of the impact that you've seen from that so far..

I mean, we did go out today, 10% to 15% increase that we continue to monitor based on -- but we did that in exchange from when we did the purchase of a lot of our parts and kind of married that price increase to what we were seeing on the price increase as well. So I think that still stands fine..

It was February timeframe, I think when we officially went out with our price increases, pretty consistent with what the rest of the industry's doing. That will begin to flow through the P&L more as we get a few quarters away from that.

As you could probably understand when a lot of the business was already quoted and was slowing through under the older set of prices. But we expect to see a little bit more impact into Q4 and then certainly in the next year you'll see more of a full impact of that..

Next question is coming from Alex Henderson of Needham & Company..

I wanted to go back to the project that you talked about being delayed and understand a little bit about the mechanics of the cost absorption there. It sounds like you shipped the product, it went to the vendor or to the customer, and you've already incurred a fair amount of cost.

So as we look at that project actually the metastasizing into revenues in the back half.

Does that mean that the margin on it will be somewhat higher? And when it gets delayed like that, does it just shift out in time so that if it takes multiple quarters for it to be realized that the amount of revenue is the same on a per quarter basis is just shifted out in time, or is it cluster into the back half?.

They do tend to cluster in the back half. And because of the recognition of some of those expense, you would certainly see on some of those projects a much higher gross margin.

If we're 50%, 55% in a normalized state on some of those bigger projects, we would certainly be in the 70%, 75% gross margin on some of those ones that have already recognized expense. And they are pushing out.

You're right, there were a couple deals that were out, shipped, order in, out the door, installed and we recognized the expense, but it needs -- so it needs a sign off by the customer, which as we sit here today have already happened, but they didn't happen by June 30..

Correct me if I'm wrong.

Isn't your guide for the back half a little lower margin than what you just reported?.

Well, I mean, it's all -- remember you have some larger orders that will need to be affected. You also have the second half of LIOS, a full second half of LIOS that I talked about being much heavily weighted in the second half versus the first half and they have lower margins. So as we look at those Gene talked about the product mix is important.

So we just kind of threw that out there to make sure that everyone understood as Lios becomes a larger piece of the pie that does bring our margin down a little bit..

Can you remind me, are your international sales all in dollars?.

Not all, but a lot of them are..

Can you us what percentage?.

Not off the top of my head. I would say the most I guess is what I would say….

89% of that….

So we're not ….

Going into the international markets, given the exchange rate swings that occurred.

Is there any pricing pressure that you need to absorb to make this viable for international customers?.

We've been fighting that headwind, I'd say, since 2020 when the trade situation in Asia increased kind of currency issue, but it was a tariff issue. We started taking our products from say 10% or 15% up to 20% or 25%. And now with the currency situation being what it is, we are seeing some of the same things not quite as big an impact as that.

And to date, we have not had an impact on the business in a negative way. We have to work with our partners and our customers and sometimes we have to make pricing accommodation.

But we have built-in some -- previous individual was asking about our pricing, we have built in some increases this year to take care of not only cost increases that we've had but some of this fluctuation in pricing.

So the short answer is we don't see any major impact in the business but we have to manage it kind of on a geo by geo basis, if you will..

And one last question then I'll see the floor. The mechanics of your business in terms of selling projects, I assume that you're basically insulated from macro conditions for the most part, because these are large programs, multi year programs and typically those things don't tend to move around very much based on ups and downs of economic activity.

Is that a fair characterization?.

Yes. I mean, Brian -- that's a fair characterization. I just had this conversation last week with someone. But yes, we are not susceptible due to these. We have been talking to these for quite some time in their multi year installations and things like that. So it doesn't seem to move around macro issues..

It tends to affect the timing on a quarter-to-quarter basis more than anything. But in general, looking globally at the business, no, it does not have the type of impact on us….

Does it have any impact on duration of negotiations on contracts?.

Some, yes. I mean, it can. But in in general, we haven't seen much of that..

The next question is coming from Jim Marrone..

This is Jim Marrone, Singular research. So if we could just discuss a little bit more about the pipeline, if we can and perhaps just your largest client, which I assume is still Lockheed Martin.

What are you hearing in terms of traction with regards to Lockheed Martin? I know in previous calls you've mentioned that the supply side constraints are not necessarily on year end but from the customers’ end.

So are you hearing that their supply side constraints are easing up a bit and what’s the pipeline with that client? Is there any, like -- is current geopolitical risk, does it bode well going forward as far as expanding that -- the program with Lockheed Martin and perhaps maybe just discussing other pipeline developments with other customers?.

I mean, Jim, like we talked about, we have been running about at 1.15, 1.2 book-to-bill. And so we see strong activity. I talked about specifically nearly $6 million in bookings overbuild on the OptaSense and LIOS business. And so we are seeing strong activity out there. Brian, do you have….

Yes, the pipeline remains robust and consistent with what we've seen for the last five or six quarters for sure. Book-to-bill in the quarter was again pushing that 1.2 range, so that gives you an idea of what we book versus what we build. The largest or larger customers that you were referring to, we mentioned in our prepared remarks there.

Lockheed Martin, we had a nice nearly seven figure order and delivery in Q2 with that customer and we're working now on the requirements for the next several years for that program. Yes. The geopolitical situation in the world is driving more -- potentially more volume, more urgency behind our negotiations with them.

Scott mentioned kind of stay tuned for more news on that, but that's a nice part of a growth driver for us here into this year and into next year..

I think we are careful in making sure, when you talked about pricing and I forget who we ask the question on price increase. But as we look at negotiating multi year deals two, three, five year deals with folks like Lockheed Martin, and they want to lock in price.

So we have to be careful with where we feel comfortable we can get all these parts and what kind of increase we should see where they placed in order for 100 plus a couple years ago. That price is certainly increasing when you talk about a multi year deal..

I just wanted add, I'm not one to really think that current really have material impact on businesses. But you can't discount the fact that back in the 1980s Top Gun did have a material impact on military spending, and who knows maybe the current reboot of Top Gun Maverick may do the same thing again.

Just if I may, just in regards to the revenue recognition and the revenue and expense finding differences, as well as they expect the cost savings.

Is that going to have more impact on the Q3 or the Q4 numbers?.

I think if you're going to see impact in the second half of year, and I think, you'll have more --you'll see more impact probably in full throttle here in Q4. We went into this acquisition when we acquired LIOS and we looked at making it more of a European operation combined with OptaSense. We knew there were synergy savings.

As many of you know, in Europe, it takes time to recognize some of those savings given what it takes to turn over some things. But you'll see those in part here, we saw a small part in Q2 very little and then you'll see more in Q3 and mostly in Q4.

But yes, you will start to see those and as we match the expense with the revenue that will also start to flesh out..

The next question comes from Tim Savageaux of Northland..

One question kind about the -- you have a lot of puts and takes here in terms of comps and acquisition contributions. And I don't know if you specifically called out the LIOS contribution in the quarter, but assuming it's around the kind of run rate you outlined when you bought the business.

If we look through your guidance for the year, organically, business seems to be growing and varies quarter to quarter kind of in the high teens, which is sort of organically, which is sort of consistent with what you've talked about in the past. Is that still -- and also thinking about your book to bill commentary.

Is that still a reasonable target growth rate for the company overall that type of range? And also if you could talk about specifically what the LIOS contribution was in the quarter, that would be great..

I mean, I think that still holds true. That upper teens organic growth rate still stays true, and it would've been true had we not had some of those delays. I talked about several million dollars that were sitting at a customer that we could not recognize the revenue.

So other than OptaSense, all the other parts saw that high teens organic growth rate several million dollars that were sitting at a customer that we could not recognize in the revenue. So other than OptaSense, all the other parts saw that high teens organic growth rate.

It was really the OptaSense that had some delays from the customers where we just couldn't flip over and recognize that rev specifically. LOIS does, they are participating in the contribution of where we expected them.

We saw what they did in that two week sub period in Q1 and what we had modeled them in for Q3 -- or for Q2, they did deliver on that, in fact, delivered a little bit higher than that. So what they are heavily weighted more towards the second half of the year. So where we expected them, they certainly did deliver on the top line.

But again, we went into that knowing that there were synergies that needed to be recognized and it just takes some time to you can actually fully recognize some of those synergistic savings.

Because as we picked up some valuable assets over in LIOS and OptaSense, we have to look at the entire organization to say, where is the redundancy that we can recognize those savings and we've done that to a great extent here in Q2 and recognized in the second half..

There are no more questions in queue. I would like to now turn the call back over to Scott Graeff for closing remarks..

Thank you everyone for joining us today. Please feel free to reach out to Gene, Alison, Brian, myself, with any questions. And I look forward to seeing some of you at our upcoming investor conferences in Chicago and San Francisco in the fall. Thank you for your time and interest in Luna Innovations. So now, Lisa, that conclude this earnings call..

Thank you, sir. This concludes today's conference call, thank you for participating. You all, thank you for participating..