Good day and thank you for standing by. Welcome to the MKS Instruments First Quarter 2021 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 [Operator Instruction].

I would now like to hand the conference over to speaker today David Ryzhik, Vice President of Investor relation. You may begin..

Good morning, everyone. I am David Ryzhik, Vice President of Investor Relations, and I'm joined this morning by John Lee, President and Chief Executive Officer and Seth Bagshaw, Senior Vice President and Chief Financial Officer.

Yesterday, after market closed, we released our financial results for the first quarter of 2021, which are posted to our website, mksinst.com. As a reminder, various remarks about future expectations, plans and prospects for MKS comprise forward-looking statements.

Actual results may differ materially as a result of various important factors, including those discussed in yesterday's press release and in the most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.

These statements represent the company's expectations only as of today and should not be relied upon as represented in the company's estimates or views as of any date subsequent to today, and the company disclaims any obligation to update these statements. During the call, we will be discussing various financial measures.

All of these financial measures will be non-GAAP other than revenue. Please refer to our press release for information regarding our non-GAAP financial results and a reconciliation of our GAAP and non-GAAP financial measures. Now, I'll turn the call over to John..

Thanks David. Good morning everyone, and thank you for joining us today. We delivered another record quarter with revenue of $694 million, and net earnings per diluted share of $2.56 [ph], both were above the high end of our guidance range. Our strong results were driven by robust demand across both are semiconductor and Advanced Markets.

We’re also very pleased with the margin expansion and operating leverage in the quarter leading to a greater than 60% year-over-year increase in net earnings per share. Sales to our semiconductor market strength further in the first quarter, exceeding our expectations, growing 5% sequentially and 32% year-on-year.

We saw broad-based demand across our vacuum subsystems portfolio generating record revenue in our pressure, flow and valve solutions businesses. We also delivered another exceptional quarter in our power solutions business, as well as robust sequential growth in our plasma and reactive gas business.

We continue to harness our photonics expertise across a number of semiconductor applications. And in the first quarter, we secured multiple design wins in our world-class optics initiative. We also had a meaningful win in precision motion business for advanced wafer packaging application.

You have heard us talk a lot about how our broad portfolio, unique innovation engine and operational excellence had enabled us to outperform the markets we serve. Earlier this month, VLSI, an independent market research firm reported that MKS gain more than 2% of share in the overall critical subsystems category in 2020.

In fact, I'm very proud to say that VLSI also reported that we gain almost 10% of share in the RF power category in 2020, and are now neck-and-neck with the historic market leader. We also extended our leadership in remote plasma sources by gaining more than 6% of share.

Following, we also took share in the pressure gauges and valve product categories.

This third-party validation of our performance in 2020 further solidifies our decade-long model of market share gains, and clearly demonstrates strength of our technology roadmaps, the agility of our operational capabilities, and the breath of our customer relationships. It is a privilege to lead great team that delivered this success.

In fact, as I think about the long-term opportunity in our semiconductor market, the following powerful secular trends remain intact. First, the demand of chips will continue to grow, driven by the explosion in data and the need to store, transmitted and process it. Second, it’s not just more chips, but the more leading-edge chips.

And that places additional demands on the capital equipment ecosystem to drive technology breakthroughs. And third, these breakthroughs need to occur faster, as product iterations are increasing and development cycles are shortening. All of this equates to a compelling long-term profile for capital equipment spending.

But also means that those companies that execute on innovation faster and smarter while staying operationally nimble will outperform. This has been MKS' key to success in the past few decades and will remain so moving forward.

In the near term, demand in our semiconductor market remains robust and we expect our semiconductor revenue to grow sequentially in the second quarter. Now, moving to our Advanced Markets. Revenue in the first quarter exceeded our expectations. We deliver strong sequential growth of 6% and year-over-year growth of 27%.

Our strong topline results were driven by growing demand in Advanced Electronics manufacturing, which is fueled by precision laser processing.

Within Advanced Electronics, we continue to see healthy demand for our Flexible PCB via drilling solutions, as a result of growing capacity needs, and technology transitions associated with new 5G smartphones, which carry higher Flex PCB content. In the first quarter, we secured two design wins for our high density interconnect via drilling solution.

One of which is with a large multinational PCB manufacturer. Demand for our pulse nanosecond, picosecond and femtosecond lasers continues to increase. As we are seeing growing interest across PCB, advanced packaging, solar and display applications.

We're very pleased with the momentum we are seeing in our Advanced Markets, and anticipate revenue in the second quarter to grow sequentially. Finally, I wanted to share a few thoughts regarding our prior efforts to acquire Coherent. While we believe the combined company would have offered a compelling value proposition.

We have always been disciplined acquirers and our M&A strategy will remain rooted in our commitment to shareholder value creation. In fact, we could not be more excited about our current portfolio in photonics, which we are executing well and our position to capitalize on the growing need for miniaturization and complexity.

We consider the combined revenue from our laser motion division, and the Advanced Markets component of our equipment and solutions division, best characterize how we think about photonics revenue.

This means that in the first quarter, we generated $257 million in photonics revenue, which grew 25% year-over-year, and we expect further sequential growth in the second quarter. Our photonics business with an annualized run rate of over $1 billion will remain an important area of growth and investment at MKS.

With that, I'd like to turn the call over to Seth..

Thank you, John. I will cover our first quarter 2021 results, then provide additional detail on guidance for the second quarter. Sales for the first quarter were a record $694 million, up 5% sequentially, up 30% year-over-year and above a high end of our guidance range.

Our record performance reflects another quarter of strong semiconductor demand, as well as the continued acceleration in our Advanced Markets. In the first quarter, semiconductor sales set yet another record at $412 million, up 5% sequentially and up 32% year-over-year, reflecting broad based demand for a vacuum photonics subsystems.

As John mentioned, we are very pleased to recognize the VLSI, their market share gains in 2020 in the total critical subsystems category, including significant gains in RF power supplies in remote plasma sources, as well as gains in other critical subsystems categories, such as pressure gauges and valves.

Excluding our strong performance of power solutions, the combine revenue of our other products in the semiconductor market reach another quarterly record. This strong growth and significant market share gains are a clear validation of our unique Surround the Chamber strategy.

Our longstanding successful track record as operational excellence and a deep commitment to market leading innovative solutions, all of which we expect will position us to outperform WFE by 200 basis points, as outlined a long term model we provide at our analyst day.

For the first quarter, sales for Advanced Markets also set a record at $82 million, up 6% sequentially, and up 27% year-over-year, led by continued acceleration in Advanced Electronics applications.

Demand for our market leading Flex PCB via drilling solutions accelerated further in the first quarter, and this followed particularly strong fourth quarter. Our customers continue to turn to MKS to enable leading-edge Flex PCB manufacturing applications. And this is driven by large part by 5G smartphones.

We're also seeing growing interest from wearables in 5G base station applications. Revenue from a MLCC test systems also remain healthy in the first quarter, as our customers continue to expand capacity.

Within the HDI market, we completed all shipments and installations of systems from previously announced multi-unit Geode order in December, which are all now operating in high volume manufacturing applications. Additions design win that John referenced, we see increased interest at our demo centers from other key HDI PCB manufacturers.

They are working closely with the critical technical teams to transition them to beta customers. In the first quarter, we also saw accelerate demand from our pulsed laser and Surround the Workpiece portfolio for Advanced Electronics applications, largely driven by PCB display, solar and advanced packaging applications.

As we've stated analyst day, the trends in neutralization, in complexity and semi that we foresaw decades ago are now driving growth in Advanced Markets, uniquely positioned the broad photonics portfolio across both our light, motion, and equipment solutions divisions.

In fact, as John highlighted, our photonics revenue, which is the revenue from a light and motion division, combined the Advanced Markets component of equipment solutions division is now over a $1 billion annual run rate in the first quarter.

In the Advanced Markets portion of our photonics revenue now exceed $850 million annual run rate, and grew 30% year-over-year in the first quarter. For the first quarter, the revenue split from the semiconductor and Advanced Markets is 59% and 41%, respectively.

First quarter gross margin was 46.4%, above the high end of guidance, up 70 basis points, and up 170 basis points year-over-year. This strong performance was due to higher volumes and improved product mix.

First quarter operating expenses were $143 million, up $5 million sequentially, primarily due to higher variable compensation resulting from a strong financial performance. However, remain within our guidance range reflecting continued overall cost control.

First quarter operating margin was 25.8%, up 110 basis points sequentially, and up 530 basis points year-over-year reflects a strong operating leverage in our financial model. Net interest expense for the first quarter with $6 million and our tax rate was approximately 17%.

Net earnings for the first quarter were record $143 million and a record of $2.56 per diluted share. On a year-over-year basis, our EPS increased 66%, more than two times our revenue growth rate. This strong financial leverage exceeded our long term target operating model that we announced at our analyst day.

Actually, the first quarter retained a strong balance sheet liquidity position, with cash and short-term investments of $910 million and $100 million incremental borrowing capacity under an asset based line of credit to certain borrowing base requirements. Our term loan principal balance was $831 million at the end of the first quarter.

We exited the first quarter with $70 [ph] million net cash position. In terms of working capital, day sales outstanding were 55 days in the first quarter, compared to 54 days at the end of the fourth quarter. The inventory return were 2.9 times in both the first and fourth quarter of 2020.

We remain focus on improving our cash conversion cycle and our first quarter operating cash flow was $127 million, a 69% year-over-year increase. Free cash flow for the first quarter was $100 million, a 55% year-over-year increase. Consistent with prior quarters, we had dividend payment of $11 million or $0.20 per share.

I'll now turn to our second quarter outlook. Based on current business levels, we estimate second quarter revenue of $740 million plus or minus $30 million. Based on anticipated product mix revenue levels. We estimate second quarter gross margin of 47%, plus or minus one percentage point. And operating expense is $146 million, plus or minus $4 million.

For the second quarter, net interest expense expected to be approximately $6 million. And our tax rate expected to be approximately 17%. Given these assumptions, we expect second quarter net earnings of $2.92 per diluted share, plus a minus $0.26. I'd like to now turn the call back to the operator for Q&A..

Thank you. [Operator Instructions]. We ask that you please limit yourself to one question and one follow up. Please standby while we compile the Q&A roster And our first question coming from the line of Patrick Ho with Stifel. Your line is open..

Thank you very much, and congrats on the nice quarter. John, maybe first off on the semiconductor side of things. I know you don't want to give guidance past the June quarter.

But qualitatively, can you discuss the visibility you're seeing in today's demand environment? And what type of, I guess, outlook you would have for the second half of the year, given the strong demand trends, some of your customers have already outlined? Does that change any of the planning, especially on the procurement side, given the potential expectations of a strong second half of the year?.

Hi, Patrick .Yes. Thanks for the question. I think, we certainly have read all the various industry analysts views of the second half. And I guess, we tend to agree that the second half is now marginally stronger than just three months ago. So I think we agree with that.

And of course, our revenue is a little correlated to it over the long term, but short term can be lumpy. And we're certainly taking all the necessary actions to expand capacity and pull the materials to deliver, then, as you've seen, we've done that pretty well over the last several quarters of the ramp..

Great. That's helpful. And maybe as my follow-up question on the Advanced Market side. You posted very strong results. You've talked about some of the marketplaces that are starting to pick up momentum. Can you discuss again, qualitatively, whether you've seen any synergies in terms of your light and motion, and ESI businesses.

Because you didn't mention strength in the Flex PCB, but there's also opportunities on the PCB.

And for your light and motion business, are you seeing any of the synergy start, I guess, appearing? And is that giving you the confidence for some of the growth prospects you talked about in the prepared remarks?.

In fact, certainly, we've been working to unlock all the synergies between the light and motion division and the E&S division over the last year and a half of the acquisition. And so, we already have laser design in the E&S tool. There are other areas that we're working on with respect to future tools as well.

So, I think we're getting the synergy -- developments synergies that we expected from the acquisition..

Great. Thank you very much..

Thanks, Patrick..

And our next question coming from the line of Krish Sankar with Cowen. Your line is now open..

Hi. This is Chris.

Can you hear me?.

Yes..

Great. I two questions. First one either for John or Seth. The gross margin came in much better than expected. And it looks like it's probably the upper end of your long term target models do so.

Is this 47 or high 40% [ph] the right number to think around these revenue levels? Are whether any one-off things in the quarter that actually like was a tailwind for gross margin in June?.

Yes. Seth, I'll take that question. So we've said obviously in the analyst day and other earnings calls of the 50% variable gross margin, how we look at it internally. And so the question is, what's the jumping off point. So in the first quarter, the margin was a little better we expected, a little better mix.

And then, we're kind of forecasting civil and mix in the second quarter as well. So really the variable margin in Q2, I think it's a little bit above that target model at the midpoint of guidance. But to answer your question, there's nothing unique or one-off in either quarter that is driving up the higher margins.

We've said in the past, the volume is the biggest piece of it in the operating. So team is managing very well through normal COVID headwinds. Yet we have some higher logistics costs. Those have been managed very well in Q1 and Q2. But there's nothing in the first two quarters, the guidance in Q2 or Q1 actuals that call one-off that unique..

Got it. Very helpful. And then a follow up for John. It's nice to see the Advanced Markets recovering and looks like you got getting traction HDI PCB. I'm just kind of curious.

How big is that market today? And can you also compete in the SLP side, the substrate like PCB side? Or are you more focused on HDI at this point?.

Yes, Krish. These markets are very large, and we're just entering in HDI. But substrate, like PCBs are also within the realm of our tools and certainly future tools that we have in mind. So, it's a great market. I think, it goes to our concept of miniaturization and complexity that's being now realized in advanced packaging.

So we're really happy about our position there and the momentum we started to gain in HDI..

Thanks, John..

Thanks Krish..

And our next question coming from the line of Paretosh Misra with Berenberg. Your line is now open..

Hey, good morning. Thanks, everyone.

Just on the question on your electric vehicle exposure, what are you seeing in the cutting and welding applications in that market? And do you think you have the full portfolio of products, laser products to serve those emerging opportunities?.

Yes. Paretosh. Thanks for the question. So EV laser processing, there are some pulsed laser applications. But there are a lot of fiber laser, continuous play fiber laser applications. So as you know, we participate in pulsed lasers, but not in fiber lasers with the laser.

But we certainly have a lot of exposure with the Surround the Workpiece portfolio that would support the fiber laser manufacturing process such as power meters [ph] and beam profilers..

Got it.

And so these pulsed lasers are used for both cutting and welding or only welding?.

Mostly cutting for pulsed lasers..

Got it. And then maybe as a quick follow up also on the electric vehicle.

Do you see opportunities for your power business? Or I guess, are those opportunities like differentiated and value added? Or you think those are more commoditized product?.

Are you talking about like RF power business?.

Yes, that's right..

No, I think, electric vehicles really don't have a lot of the kind of needs for our power that we participate in, which is the higher power, very precise kind of power that it needed for semiconductor etching and deposition..

Got it. Thanks, John..

Thanks, Paretosh..

Our next question coming from the line of Tom Diffley with D.A Davidson. Your line is open..

Yes, good morning, and thanks for the question. John, wondering if you're seeing any impact from the chip shortage on your electronics customers.

And how that might work through to you?.

Yes, Tom. Certainly, our customers are pulling and trying to add capacity. It's well publicized. I think chip shortages are something we're seeing like everybody else within our supply chain. And so, many of our products have PCBAs. And here they're, they're spot shortages.

I think incrementally that's gotten a little more challenging over the last several months. But I think that's what everybody's seeing. And MKS has done well so far in dealing with those kinds of shortages and getting those materials in. And we'll continue to make sure that we meet our customers’ demands..

Okay.

So that you haven't really seen chip shortages kind of throttle your customers demand for your products, because they can't get chips for other portions of their products?.

We haven't really seen it, Tom. But I would also say, we don't really have that kind of visibility in terms of a customer may be having some kind of limit to their production because of chip shortages. That'd be a little difficult for us to say. So, if it's happening, it's probably very minor. Because we're not seeing any kind of large changes..

Okay, great. I can't complaint with the results, that's for sure. All right. And then on the flex circuit drilling business, historically, it's seasonally weak. But you had a very strong quarter.

I'm wondering, was this a slugger business? Or do you think there's a new level of activity that's going to be prolonged just because the 5G rollout over the next few years? What's your view on PCB drilling?.

Yes. I think we have a long term view of PCB drilling, Flex PCB drilling. And we've talked about that drivers for that 5G phones, having more flex circuits, wearables and even moving into mobile types of devices. So that's the long term view. And as you know, it can be lumpy.

But I think the levels we're seeing now feel like it's meeting the demand rather than any kind of overbilled..

Great. Thanks for the question..

Thanks, Tom..

And our next question coming from the line of Scott Graham with Rosenblatt Securities. Your line is now open..

Yes. Hi. Good morning. Thanks for taking my question. Terrific quarter, guys. I do have a couple of questions for you around materials. This chip shortages thing has raised sort of the specter, at least for me in combining that with commodities prices being higher.

How are you handling that? Could you tell us how pricing was in the quarter? Have you announced the price increases? Have others announced price increases to you? How are you sort of handling that price cost right now?.

Yes, Scott. Certainly, we're probably not going to give you that kind of the color. But I would say, in general, Scott, if there are chip shortages, or any kind of commodity shortage, prices tend to move up just because of supply and demand. And I would say broadly, we see areas where that's happening with respect to electronic components.

But really, it's really about trying to get the electronic components, because as a percentage of our BOM, our capacitor or resistor is really not that large. It's really all the other stuff that goes around it. It's a big part of the BOM. So I think in general, there are going to be these pressures to increase prices. While we have the shortages..

Got it. Thank you. I guess the second question would be, along the lines of your balance sheet with all that dry powder. And maybe if I could just two questions there. Number one, what kind of stopped you short of continuing to move higher on your bid for Coherent? I don't blame you for the numbers came in pretty high.

But I mean was there something that you just said, okay, enough is enough? And then going forward, can you maybe take us a little bit through whatever you're seeing in your funnel? I mean obviously, Coherent was certainly much larger than you've done in the past.

Is that type of --is that size acquisition is still on the table or you're kind of maybe thinking more back to what you've done in the past on M&A, the several hundred million dollar type of sales deal?.

Yes. Scott, thanks. Yes, I think we are certainly disciplined acquirers. We had a very precise view of how we could add value at what price with Coherent and we stuck to it. Other companies obviously thought they could get more value and they went up almost $1 billion over what we should see for ourselves.

So I don't want to judge what their views of the value creation is. It certainly can be different than ours. But we have our view and we're going to stay disciplined to it. And in terms of the pipeline, we have a very broad pipeline of both Advanced Markets types of targets as well as outstanding. And also a range of sizes.

And so we'll have lots of opportunities for tuck-ins, some 100 million, some middle-sized deals and the couple hundred millions, and then a couple of these larger opportunities where we're talking about billions. So that whole range of opportunities still exists, Scott. And we're looking at all of them as well..

I just wanted to add to that too, Scott. We've grown organically the market share as we made as well. So we've grown M&A, we've also grown organically and it's been one of our key pillars for a number of years. Let's go back to the Analyst Day. We announced really seven product categories the number one or two back in 2015.

In 2020, we have 15 of those categories. So we've done the M&A, we've done the organic growth rate, we've gained market share. So lot of levers to kind of pull, if you will. So, we're very bullish on the space, very bullish on the opportunities ahead of us. And as John mentioned, we're disciplined in how to look at the acquisition pipeline..

Would you guys be disappointed if you didn't transact something this year?.

Scott, it's certainly something that may or may not happen, but I think it really depends on the opportunities that come up and we're going to stay disciplined..

Got it. Thank you, both..

Yes. Thanks, Scott..

Thanks, Scott..

Our next question coming from the line of Jim Ricchiuti from Needham & Company. Your line is now open..

Hi, good morning. Maybe just along those lines of the prior question.

I'm just wondering does the M&A focus perhaps evolve at all? Or are you looking maybe opportunistically at other market adjacencies that perhaps weren't on the radar a year or so ago?.

Yes. To answer the question, we certainly have been focused on Advanced Markets lasers photonics as we've talked about as well as Semi which is our historic market, but we've always looked at adjacencies that we have other markets like life and health sciences, defense, industrials.

And every once in a while, some company there could make a sense for us. And so, we would always consider that as a potential third leg of growth, if you will, in addition to semi, photonics, and some other market..

Got it. Thank you.

And just with respect to the Light & Motion business, yes, I'm wondering, are there any areas at this point in the business where you have not seen the recovery back to pre-pandemic levels?.

I think research is still a little -- still has a little headwind, Jim, and that is really COVID-related. I think as you see, different regions have reinstituted their COVID protocols. But we saw a pickup in the end of the year 2020, which is the normal quarter for pickup and it's kind of reverted back to a seasonal Q1, Q2.

But overall, I think there's a bit of headwind in the research market as we see it well..

And presumably, I guess the stimulus bill could help down the road in that area of the business?.

Yes. Sure, great..

Infrastructure, I'm referring to?.

Right, right..

Okay. Thank you..

Thanks, Jim..

And our next question coming from the line of Joe Quatrochi with Wells Fargo. Your line is open..

Yes. Thanks for taking the question and congrats on the results. On the Semi side, there is clearly a funnel of pretty strong demand, as you look out in the second half of this year and even starting to talk about next year.

I guess, how do we think about your manufacturing footprint or capabilities to support just the level of demand that we're currently seeing?.

Hey, Joe, it's a good question. One of the things that we pride ourselves in MKS is trying to get ahead of those kinds of increases in the market. Multiple investments were made even three years ago with some product lines that right now we have planned capacity for.

We continue to look at this modeling what just a year ago was $70 billion WFE might look like for us in terms of a factory footprint, now it's more like what's $100 billion WFE look like for us.

And when we do these models, Joe, we certainly look at burst capacity, because on average $70 billion as you know, the piece can be close to the $100 billion today and we're handling that pretty well today.

But when it gets to an average $100 billion as you can imagine, those peaks would be well over $100 billion because of the nature of where we are in the supply chain..

We also keep a fairly asset light model, Joe. So we don't really need a lot of capital per se. The buildings we have plenty of footprint around the world, low-cost country and obviously elsewhere, but we do try to look at the value in the manufacturing process and file test assembly we kind of leverage the capital.

And again, you could bring that capital on relatively quickly. And I think the key point as John mentioned is we do have the high beams on this. And we've made some investments back in 2017 to expand the pressure group quite dramatically. And that's been extremely helpful in this environment..

That's really helpful. And then, I appreciate the calling out the photonics revenue.

I guess if we go back to the Analyst Day and just think about the growth rates that you talked about, is this something that we should think about following into maybe more like the Advanced Manufacturing bucket in the kind of low double-digit CAGR growth range? Or is there something else we should think about?.

Yes, Joe. That's exactly how we look at our photonics business. Today, it's made up of the Advanced Electronics, which is probably half of Advanced Markets and the other half is life and health sciences, defense and industrials. So, over time, we expect that Advanced Electronics part of it to grow that low double digit.

And then it becomes a bigger and bigger part of our photonics revenue. So that's how we look at it..

Perfect. Thank you..

Thanks, Joe..

Thanks, Joe..

And our next question coming from the line of Mark Miller with Benchmark Company. Your line is open..

Hi. Thank you for the question. Congratulations on another strong quarter. The natural tendency of some is to worry about picking results, but we have four new major fabs -- at least four new major fabs planned for next year and beyond.

I'm just wondering when you think order flow will start to occur? And will it last through 2022 for these fabs?.

Yes, Mark. That's a great question. I think we have better minds in us to predict that. But we can certainly see long-term, Mark. We agree with you with all these new fabs being built just within the U.S. and other regions also compensating that. We think the long term, this is just going to be great for the semiconductor equipment industry.

So it will be hard for us to predict quarter-on-quarter where the peak is, for sure, but the long term is something that we're really very, very bullish about..

Are you planning to add capacity to address maybe another wave of major orders in certain? And if so, in which areas?.

Yes. No. As I said to the previous question, we are looking at that continuously and continuously adding capacity where needed. Certainly, our RF Power Supplies, we are now tied with the historic market leader. And that's been an area where we've invested for the last four, five years in terms of capacity. And where we see future capacity needs as well.

So that's one area that call out. But even in our pressure business, we sense it. I mentioned three years ago -- or four years ago, we added capacity, we continue to look at that as well, because that capacity is really helpful in this environment, but we have to look at what it would look like when WFE is 100 billion [ph]..

Thanks again. And congratulations again on another strong quarter..

I appreciate it, Mark..

[Operator Instructions]. And I'm showing no further questions at this time. I would like to turn the call back over to David Ryzhik for closing remarks..

Thank you, Olivia. Thank you, everyone, for joining us today and for your interest in MKS. Operator, you may close the call please..

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