Ray Nash - Senior Director, Finance Matthijs Glastra - CEO Robert Buckley - CFO.

Lee Jagoda - CJS Brian Drab - William Blair Chris Hillary - Roubaix Capital.

Good morning. My name is Debbie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Novanta Incorporated 2018 Third Quarter Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Ray Nash, Corporate Finance leader.

Please go ahead..

Thank you very much. Good morning and welcome to Novanta's Third Quarter 2018 Earnings Conference Call. I am Ray Nash, Corporate Finance Leader of Novanta. With me on today's call are Chief Executive Officer, Matthijs Glastra; and our Chief Financial Officer, Robert Buckley.

If you have not received a copy of our earnings press release issued today, you may obtain it from the Investor Relations section of our website at www.novanta.com. Please note, this call is being webcast live and will be archived on our website shortly after the call.

Before we begin, we need to remind everyone of the Safe Harbor for forward-looking statements that we've outlined in our earnings press release issued earlier today and also those in our SEC filings. We may make some comments today, both in our prepared remarks and in our responses to questions that may include forward-looking statements.

These involve inherent assumptions with known and unknown risks and other factors that could cause our future results to differ materially from our current expectations. Any forward-looking statements made today represent our views only as of this time.

We disclaim any obligation to update forward-looking statements in the future even if our estimates change, so you should not rely on any of these forward-looking statements as representing our views as of any time after this call. During this call, we will be referring to certain non-GAAP financial measures.

A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available as an attachment to our earnings press release.

To the extent that we use non-GAAP financial measures during this call that are not reconciled to GAAP measures in the earnings press release, we will provide reconciliations promptly on the Investor Relations section of our website after this call. I'm now pleased to introduce the Chief Executive Officer of Novanta, Matthijs Glastra..

Thank you, Ray. Good morning, everybody, and thanks for joining our call. Novanta continued its momentum and delivered a record quarter, beating both our revenue and profit guidance. Our company delivered $160.8 million in revenue, representing 10% year-over-year reported revenue growth and 8% year-over-year organic revenue growth.

Our adjusted EBITDA was $34.2 million, which is up 13% versus last year. Our adjusted earnings per share was $0.61, which was up 36% from $0.45 in the third quarter of 2017. In addition, we delivered outstanding cash flow performance with operating cash flow growing to $27.4 million in the third quarter.

So all in all, it was really a fantastic quarter from a revenue, profit and cash flow perspective. We continue to feel good about the positioning of our businesses around secular macro growth drivers.

We see a converging trend and need for motion, vision and photonics capabilities in a large variety of applications on the back of trends in industry 4.0, precision medicine and health care productivity.

Particularly, we remain excited about our position in applications such as DNA sequencing, robotic surgery, metrology, advanced material processing and precision automation and robotics. In the quarter, we did not observe slowdowns in our core markets a few well positions and applications with long-term growth dynamics.

In fact, in the quarter, we continued to see broad-based growth momentum across the company and all regions, with seven of our eight businesses growing mid-single digits or higher. We also continue to have solid order book performance, with an overall book-to-bill of 1.04, a core bookings growing 10% versus the third quarter of 2017.

We saw broad-based growth in both the medical and advanced industrial market segments and applications. Sales to China were up 25% year-to-date, representing roughly 11% of total Novanta revenue. However, we're staying alert to potential secondary demand of factors as a result of the US China trade dispute and a more uncertain investment climate.

We continue to invest heavily in our innovation pipeline to launch new products and drive market share gains. In addition, we continue to invest in our commercial engine, driving cross-selling opportunities, geographical expansion and identifying new customer and application areas to serve.

We are already seeing the fruits of our efforts on our strategic growth priorities. New product revenue year-to-date grew more than 65% year-over-year. Our vitality index, which is revenue from new products, launched in the last four years, continues to be above 20% of sales.

Our year-to-date design wins accelerated and increased by nearly 40% and, as discussed previously, our year-to-date revenue from China increased by more than 25% versus last year. All of this gives us confidence in our ability to deliver annual organic growth of 5% to 7% on average.

Finally, in the productivity side, I'm proud of the execution by the team, delivering solid contributions to our operations net of inflation. Let me take a moment to comment on the US and China trade dispute. Based on the tariffs communicated to date, there are two categories of headwinds we are seeing.

The first are tariffs imposed by United States from China purchased and imported product as part of our supply chain. The second are tariffs imposed by China on US purchased and imported products. In both cases, there remains a very fluid situation that one we plan on assuming becomes the new norm.

As we articulated in the past, we are confident to ultimately mitigate the majority of the impacts. But these actions take time, corporation from our vendors and customers and a significant effort on our part to properly and permanently address.

As we look at the remainder of 2018, our guidance for the full year already factors in the impact to our profit and our sales from the tariffs imposed. As we look out to 2019, we feel good about the many mitigation methods that are actively underway and the progress we have already made.

We do expect some timing effects with the first half of 2019 seeing up to $4 million profit impact before we can completely mitigate the headwinds. So as you can see, we're not expecting a material impact and feel we have a multitude of tools at our disposal to address this challenge.

You will hear more details on the quarter and the outlook for the year from Robert, but the strong third quarter results gave us confidence in the full year 2018 outlook and finishing the year well. Now, let me turn to our operating segments.

Our Precision Motion segment continued to be a fantastic growth engine for us with 42% year-over-year revenue growth and 36% year-over-year bookings growth.

We continue to like our position in precise and dynamic motion control functionality in multiple markets with structural growth dynamics, such as precision automation, robotics, metrology, autonomous vehicles and robotic surgery markets.

Our Zettlex acquisition is performing really well, and we are extremely pleased with the quality of the business, the team and with the progress of the integration. To date, we have discovered many cross-selling opportunities of Zettlex products and technology through our sales channels and into our high-growth motion control applications.

Within the Precision Motion segment, year-to-date, our new product revenue grew by more than 50% and our China revenue grew more than 20% versus last year as we're bringing new innovations to market and are expanding our commercial teams. Furthermore, we expanded our medical robotics position to more customers' platforms.

In the quarter, we established a new component center around motors and mechatronic solutions as we moved into a new 30,000 square foot facility in Rocklin, California. This now gives us an attractive base of operations to attract engineering talent and to better address the needs of our customers.

I'm proud of the execution of the team as they didn't miss a beat on deliveries to customers. Finally, our supply chain and operations talent in the Precision Motion segment are working overtime to meet the increasing demand, while balancing our production move and addressing the legacy supply chain challenges from last year.

Our teams have been, first and foremost, focused on meeting our customer needs, which we can see in our customer supplier ratings, the growth of the business and our innovation progress. We clearly need more time to work through the supply chain and manufacturing inefficiencies. These are not difficult challenges. The team knows what to do.

And we remain confident, we will see the improvements soon. Turning to the performance of our Photonics segment.

Two of the three business units experienced strong organic growth, and we saw solid mid- to high single-digit performance on the industrial side of the business, driven by laser-additive manufacturing, advanced material processing and micromachining.

We're pleased to see the continued growth and operations execution in our Cambridge Technology business, which, again, delivered strong organic revenue growth with broad momentum across multiple applications.

We are winning in the Cambridge Technology business due to our proprietary beam steering technology packaged with customer or application-specific solutions, enabling our customers to win with the fastest, most accurate and highest-performing solutions.

We're also very pleased with the performance of our Synrad business, which delivered solid organic growth. As we indicated before in prior calls, our Laser Quantum business is normalizing after a major product launch and it's facing some tough comps after a spectacular growth last year.

As a result, Laser Quantum revenue declined year-over-year in the quarter, and we expect to be in this position for the next few quarters. As we discussed, quarterly performance in any individual customer application can be lumpy.

In this particular case, it is related to temporary customer launch dynamics in higher throughput DNA sequencing, which is unrelated to end market growth.

Our position and commercial terms have not changed, and as a matter of fact, we couldn't be more excited and better positioned to capitalize on the long-term growth prospects of the DNA sequencing market.

As a result of the Laser Quantum dynamics, the revenue in our Photonics segment declined modestly by 1% versus last year with a book-to-bill of about 1 year-to-date. It is a testament to the strength of Novanta's diversified business model that we executed on 8% organic growth for Novanta overall despite these temporary dynamics.

New product revenue year-to-date in Photonics was robust and up more than 20% versus last year and finally, we're pleased with the productivity, operations and mix execution of the Photonics segment as was evident in their gross margin performance.

Turning to our vision segment, which includes two businesses, Minimally Invasive Surgery technologies, or MIS for short, and Detection & Analysis. The MIS group includes NDS and WOM and is focused on endoscopy and robotic surgery applications.

The Detection & Analysis group includes our JADAK business and is focused on reducing medical errors, improving workflow and patient outcomes in applications, such as Minimally Invasive Surgery, patient monitoring, life sciences and clinical lab equipment.

In the third quarter, our vision segment delivered 7% year-over-year revenue growth as we now lapped the WOM acquisition. Our JADAK business returned to growth as planned and our Minimally Invasive Surgery business turned in solid growth despite tough comps at WOM, which we have discussed in prior calls.

New product revenue year-to-date more than doubled versus last year, and the book-to-bill in our vision segment was 1.17 with solid bookings across-the-board.

Despite the tough comps in the second half of 2018 caused by a European regulatory change in 2017 and despite the fact that WOM is exiting some noncore nonmedical product lines, WOM performed much better than we expected in the quarter. While the business grew in the third quarter, we expect next quarter to be softer due to the dynamics mentioned.

We are also pleased with the continued momentum of our NDS product line. In the quarter, NDS delivered its seventh consecutive quarter of year-over-year organic growth, driven by new products such as 4K displays, wireless products and our new video image management and acquisition product, which addresses the integrated operating room market.

In addition, the business substantially improved its profitability and remains on track to be a net contributor to our revenue and profit growth in 2018. In the quarter, we announced our plans to consolidate the manufacturing operations within our MIS group into one manufacturing component center for medical equipment, based in Ludwigsstadt, Germany.

This enables us to build on the strong medical regulatory -- medical quality, regulatory and production skill and capabilities existing in Ludwigsstadt, which allows us to better serve our medical customers more efficiently and effectively on a global scale.

As a result, NDS surgical manufacturing in San Jose, California, will transfer to the WOM manufacturing facility in Ludwigsstadt, Germany. We expect to complete the transfer by the third quarter of 2019.

Finally, we're very pleased with the execution of the Detection & Analysis business, which returned back to growth as planned, driven by RFID and Machine Vision. In the quarter, we have expanded the business with an enhanced embedded Machine Vision capability, including smart cameras and imaging systems.

Along with JADAK's barcode scanning, RFID and existing Machine Vision technologies, we can now offer a wide range of the Detection & Analysis solutions to our medical OEM customers that help them improve productivity. So in wrapping up my section, we're very pleased with the organic revenue growth and profitability that we achieved in the quarter.

We're confident about our 2018 outlook as Novanta's leadership positions across diversified medical and industrial markets, combined with a disciplined approach to M&A, is providing a solid foundation for sustainable profitable growth. So with that, I will turn the call over to Robert to provide more details on our financial performance.

Robert?.

Thank you, Matthijs, and good morning, everyone. We delivered 160.8 million in revenue in the third quarter of 2018, an increase of 10% on a reported basis. Our acquisitions resulted in an increase in revenue of 3.2 million or 2.2%, and foreign currency exchange rates adversely impacted our revenue by 500,000 or 0.3%.

Consequently, organic growth was 8% year-over-year. Third quarter 2018 GAAP gross profit was 69.6 million or 43% of sales. This compares to 58.7 million or 40% of sales in the third quarter of 2017.

On a non-GAAP basis, third quarter 2018 adjusted gross profit was 72 million or 44.9% of sales compared to 65 million or 44.5% in the third quarter of 2017. While adjusted gross margins were up year-over-year, they were flat sequentially.

We continue to face adverse mix effects from the strong growth in our medical consumables product line as the gross margins for these products are significantly below the company average. Whereas the negative mix impact on our gross margins is significant, the impact on our organic growth and our EBITDA margins is, obviously, more favorable.

In addition, we continue to experience cost and portfolio challenges within Precision Motion as the business works through their inventory and continues to transition its supply chain to vendors that can scale and grow at our growth rates.

We are almost done with this transition, so we remain very optimistic that this remains a significant opportunity for gross margin expansion. Non-GAAP operating expenses in the third quarter 2018 were 42 million or 26.3% of sales versus 39 million or 26.8% of sales in the third quarter 2017.

The increase in spending was associated with the 1.5 million increase in R&D spending, focused on furthering our new product development and innovation engine and 1.6 million investment in SG&A, which was focused on our commercial engine and our productivity programs.

GAAP operating income was 21 million in the third quarter of 2018 compared to 12 million in the prior year, whereas non-GAAP operating income was 29.8 million or 18.5% of sales compared to 25.9 million or 17.7% of sales in the prior year.

Adjusted EBITDA was up 13% year-over-year to 34.2 million or 21.3% of sales in the third quarter of 2018 and this compared to 30.3 million in the prior year. Interest expense in the quarter was 2.4 million versus 2.1 million in the prior year. The weighted average interest rate of our senior credit facility was 3.5% in the third quarter of 2018.

On the tax front, our GAAP tax rate was 19.5% in the third quarter of 2018. It differed from the Canadian statutory rate of 29%, driven largely by jurisdictional mix of income as well as the changes in the US tax laws.

On a non-GAAP basis, our tax rate in the third quarter was 19.6%, which was driven by favorable jurisdictional mix of income and favorable rate impacts from the US Tax Cuts and Jobs Act.

When looking at the full year, we expect our non-GAAP tax rate to normalize at about 19% to 20% due to further jurisdictional mix changes and continued favorability from the US tax reform. On GAAP, diluted earnings per share were $0.60 in the quarter compared to diluted earnings per share of $0.00 in third quarter of 2017.

On a non-GAAP basis, adjusted earnings per share were $0.61 in the quarter, up from $0.45 in the prior year. The increase in adjusted earnings per share year-over-year was mainly driven by stronger operating results. We ended the quarter with 35.5 million weighted average shares outstanding compared to 34.8 million in the third quarter of 2017.

Our operating cash flow was 27.4 million in the quarter versus 11.8 million in the third quarter of 2017. This was driven by higher profitability and lower working capital requirements. Capital expenditures were approximately 4.4 million, up from 3.4 million in the third quarter.

This level of spend, which is higher than our historical average, was driven by previously communicated capital expenditures related to our motors and mechatronics component center in Rocklin, California.

We ended the third quarter of 2018 with gross debt of 259 million, and our leverage ratio was 2.04, defined as gross debt divided by rolling 12-month pro forma EBITDA, whereas our net debt was 147.1 million as of the end of the third quarter. Our balance sheet is a strong with ample firepower, and our acquisition pipeline is healthy.

In terms of acquisitions, we remain disciplined and focused on cash on cash returns and acceleration of our long-term growth in our key target markets. In the quarter, we acquired the remaining 24% of the outstanding shares of Laser Quantum for approximately 45.7 million.

The completion of its final step deepens our partnership with Laser Quantum team and enables us to further strengthen and grow the Laser Quantum business. The Laser Quantum founders are all remaining with the business.

One other item to note is that our Board of Directors has authorized a new $25 million share repurchase program, which we can commence once our existing repurchase program is complete. The focus of this new program is to keep our outstanding shares flat over the next two years.

We continue to see that the greatest opportunity to maximize near and long-term returns is to allocate our capital to our acquisition pipeline, which we feel very good about. Following the strong financial performance, we are raising our full year of 2018 guidance again.

We now expect GAAP revenue of approximately 610 million to 614 million, which represents approximately 17% to 18% reported growth and 6.5% to 7.5% organic growth compared to 2017. Overall non-GAAP operating expenses are expected to be around 28% of sales.

Full year depreciation expense is expected to be around 11 million and amortization expense is expected to be around 26 million. Interest expense is expected to be nearly 10 million, and we expect to see a full year non-GAAP tax rate of approximately 19% to 20%.

We now expect full year 2018 adjusted EBITDA to be in the range of 122 million to 124 million or around 20% of sales. We expect full year 2018 adjusted earnings per share to be in a range of $2.07 to $2.12. Diluted weighted average shares outstanding will be roughly 35.5 million.

Finally, we expect our year-end gross debt leverage to be around 1.7 times, setting us up nicely from an acquisition capacity perspective. Our full year guidance includes the impact of the announced US and China tariffs. As always, our guidance does not assume any significant impacts from foreign exchange rate changes.

Despite the choppy economic and trade climate, the third quarter represented the strength of our business, our business model and most importantly, our people. We're truly proud of the progress our organization has made and the strong performance they have driven this year.

We have made great stride with our customers as demonstrated in the strong organic growth, our design wins, the percent of revenue coming from new products and the feedback they've provided us.

As we look to 2019, we are confident we have the right strategy, the right business model and the right people to continue our progress and to make Novanta a great company. We look forward to delivering on our commitments to our employees, our customers and our shareholders.

This now concludes our prepared remarks, and we'll open the call up for questions..

[Operator Instructions] The first question comes from Lee Jagoda with CJS..

So starting with WOM. Looks like performance was great despite the tough comps which you pointed out.

You talked about some of the headwinds, but what are the things that are driving the strength within WOM?.

Yes. Hi. Good morning, Lee. So yes, particularly, the consumable business is very strong. So yes, that was explaining the much stronger quarter at WOM than we expected. Of course, it had some tempering effect on our gross margin percentages, as Robert explained. But overall, we couldn't be more pleased with how the WOM team executed this quarter..

Okay. And then looking at the comments on the tariffs, you called out the $4 million profit impact in the first half of '19.

Does that incorporate, not only the announced tariffs, but the potential for increased tariffs come Jan 1 or what is that in general?.

Yes, so it does. It sort of our -- like on a worst-case scenario at this point, we've been able to mitigate a lot of the impact. Tariffs are -- they are impacting us now in the back half. They will impact us at the beginning of 2019 as they step up again from 10% to somewhere closer to 25%.

So we did factor that into our mitigation plans, and we’ll work our way through that by the time we get to the second half, yes..

Okay.

So that 4 million is the unmitigated amount?.

Portion of it, that's correct. Yes, and we'll continue to work that. I mean, honestly, this is a fluid situation, and so our teams are now working as if this is a permanent new norm that we need to deal with.

And so we've really, kind of, stepped it up from an aggressiveness perspective, meeting biweekly to make sure that we're taking the right actions, making the right communications to our customers and we're moving the supply chain efforts where we need to..

Okay. And one more just, kind of, bookkeeping question. In the release, it says Laser Quantum was -- you completed the acquisition of Laser Quantum in Q3.

Did -- was the non-controlling interest the full amount this quarter or was it a partial amount?.

We completed it on the very last day or something like that, last couple of days of the quarter..

Okay, so that's the full amount?.

The accounting is all, kind of, messed up around there because of the way that put call option had to be treated and so then we had to write down the various aspects of it and write-off and there were some gains. So it's a little complicated, but it was all, kind of, done in the last -- at the end of the quarter..

Okay. If I can just sneak one more in R&D expense as a percent of sales. I missed that in your guidance..

I gave a guidance around total operating expenses. We're still ramping up R&D. So I do expect that to, kind of, get to the 9%. But I think, overall, operating expenses will be closer to 28%..

[Operator Instructions] The next question comes from Brian Drab with William Blair..

Matthijs, I think you mentioned -- couple of times you mentioned the growth in China year-to-date.

Can you give us a growth rate for China for the third quarter possibly?.

Yes. So the growth in China, in the quarter year-over-year, was a solid mid-teens. I believe it was 13%, 14% or so. And so while that's obviously below the 25% year-to-date number, we just don't see that as a slowdown, because it was actually more related to one individual business with customer timing.

So I think overall, I think, the important take away here is that all of our businesses to see very solid market environment in China..

Yes, got it.

And then, not sure if I missed this, but your guidance for the balance of the year implies what range for organic revenue growth for the fourth quarter?.

Well, it depends, anywhere between 4.5% to 5.5%. It would imply, it's probably going to be -- well, it would imply somewhere in that range..

Yes. All right. That's about what I was calculating and....

[indiscernible].

Okay. That's what I was just going to clarify. Right, that's the main headwind. Okay. And then as you look....

In Laser Quantum, right? So we highlighted those are temporary headwinds there. And comps were fine..

Right. Okay.

And then related to Laser Quantum, how good is your visibility as you look into 2019 regarding product launches that the customer is there? And I know you don't want to give any specific guidance on how Laser Quantum grows in 2019, but would you expect -- can you give -- can you make any comments just directionally or like roughly, is it second half of '19 where potentially we accelerate?.

Yes. So listen, we remained very excited about the mid and long-term prospects, our prospects with Laser Quantum in the DNA sequencing market and beyond.

So we're just fighting some temporary launch dynamics and -- which then makes it for a very strong year one of the launch from a systems perspective with one-off kind of demand in year one that doesn't necessarily reoccur in year two and then that evens itself going forward.

So therefore, if you look from a market growth perspective, yes, we couldn't be more excited about this business. Now how this exactly will play out in quarter, we're not going to get into that detail.

What we care about is our position in this market, our position in our future roadmap and this market and all point, yes, at a very, very good future for Laser Quantum and the DNA sequencing market overall..

Okay. And then just the last question. On gross margin longer term, you're sticking to the 100 basis points potential improvement in gross margin annually, I think.

And can you just talk about given the dynamics here to speaking about regarding tariffs, is that -- is there a risk to that target in 2019 or what should we expect?.

I still think that that's an opportunity and I think that we should be executing on that. If you – if we did not have the double-digit growth in our medical consumable business, we would already be seeing the 100 basis points of expansion. So it's kind of a double-edged sword. Our highest-growth business is one of our lower-margin businesses right now.

We'll work our way through that. That's the biggest headwind we, kind of, have right now, but it's, on a go forward basis, the ability to drive 100 points of margins expansion a year is something that we feel very comfortable with..

The next question comes from Chris Hillary with Roubaix Capital..

I just wanted to ask, we have a relatively new backdrop in terms of a generally cost inflationary environment.

When you think about your organic growth rate, do you think there is an opportunity for a bit more growth to come from annual pricing than you might have thought, say, two to four years ago?.

Listen, we're taking all aspects of our business into account always, which includes price. We think getting price with differentiated and innovative products is always on the table.

Of course, with some inflation as well as the trade dynamics, of course, price is an instrument we're using, because we have to pass on inflation and both trade, let's say, impact.

So I wouldn't necessarily say that there's any different in terms of running the business, but there is some specific cost elements that we have to pass on in this particular time right now. But I'll say, overall, how we run the business, price is an important element in terms of running our business..

Okay.

And then maybe just another one, is there -- are there any areas within your portfolio that you anticipate increasing your rate of spend on R&D?.

Yes. We do allocate capital across our businesses differently depending upon what their returns on invested capital profiles are. So I think it's important to think about our -- what managers of the portfolio and that capital gets allocated to maximize the returns.

And so the R&D, while it might go up to somewhat close to 9%, is not cookie cutter to cross our individual business lines.

No, we don't get into specifics of where we invest more, what business gets more dollars other than each business internally knows their role and each business internally knows how much they get allocated, and they know the allocation is based upon the return profile that they can generate..

Okay. Well, and then maybe I'll just throw out one more.

Given that there's been more anxiety about trading cost and obviously, interest rates are a little bit higher, do you sense that that's impacted the M&A opportunities much in your favor as a result?.

Not so much actually. I mean, again, we're focused on cash on cash returns there. And as a reminder, we source our deals proprietarily and exclusively mostly. And so the sourcing of these deals is done based on developing long-term trust relationships with the owner founders of those businesses.

And so if anything, yes, it's ultimately, when they're ready to sell, that's the moment that they sell. And of course, even environment gets a little bit more uncertain, that might help for these owners to be willing to sell sooner. So if anything, it actually helps, not hinders at this moment..

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Matthijs Glastra for any closing remarks..

Thank you, operator. So to summarize, the third quarter of 2018 was another solid quarter. Our focus on accelerating profitable growth and the diversity and strength of our businesses was evident in our strong financial results.

We see a converging trend and need for our motion, vision and Photonics capabilities in a large variety of applications on the back of macro trends in industry 4.0, precision medicine and health care productivity. We, therefore, continue to remain excited about the applications we play in and the positions we have.

Our growth strategy is sound, based on multiple growth drivers, organically and through M&A, and we are well on our way to execute on our 2020 strategic direction. In closing, I would like to thank our customers, our employees and our shareholders for their ongoing support.

I'm particularly thankful for the strong contribution and execution of our teams of committed Novanta employees. It's a true pleasure and honor to lead this great company. We appreciate your interest in the company and your participation in today's call.

I look forward to joining all of you in several months on our fourth quarter and full year 2018 earnings call. Thank you very much. This call is now adjourned..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..