Alan Roden - Senior Vice President of Corporate Development and Corporate Treasurer Dan Bodner - Chief Executive Officer, President, Corporate Officer and Director Douglas E. Robinson - Chief Financial Officer, Principal Accounting Officer, Vice President and Corporate Officer.

Daniel H. Ives - FBR Capital Markets & Co., Research Division Nandan Amladi - Deutsche Bank AG, Research Division Shaul Eyal - Oppenheimer & Co. Inc., Research Division Jeffrey T. Kessler - Imperial Capital, LLC Jonathan Ho - William Blair & Company L.L.C., Research Division Brian W.

Ruttenbur - CRT Capital Group LLC, Research Division Michael Anderson - Crédit Suisse AG, Research Division Matthew Swanson.

Good day, ladies and gentlemen, and welcome to the First Quarter Verint Systems Earnings Conference Call. My name is Philip, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr.

Alan Roden, Senior Vice President of Corporate Development. Please proceed, sir..

Thank you, operator. Good afternoon, and thank you for joining our conference call today. I'm here with Dan Bodner, Verint's CEO and President; and Doug Robinson, Verint's Chief Financial Officer. By now you should have seen a copy of our press release that includes selected financial information for our first quarter ended April 30, 2013.

A Form 10-Q will be filed shortly. Each of our SEC filings and earnings press releases is available under the Investor Relations link on our website and also on the SEC website.

Before starting the call, I'd like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the provisions of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended.

These forward-looking statements are based on management's current expectations and not guarantees of future performance. Actual results could differ materially from those expressed in or implied by those forward-looking statements.

The forward-looking statements are made as of the date of this call and except as required by law, Verint assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements.

For more detailed discussion of how these and other risks and uncertainties could cause Verint's actual results to differ materially from those indicated in forward-looking statements, please see our Form 10-Q for the fiscal year ended January 31, 2013, our Form 10-Q for the fiscal quarter ended April 30, 2013 when filed, and the other filings we make with the SEC.

Some of the financial information discussed today is non-GAAP. A reconciliation of the non-GAAP financial measures to GAAP measures is included in today's earnings press release, as well as in the GAAP to non-GAAP reconciliation found under the Investor Relations link on our website.

Non-GAAP financial information should not be considered in isolation or as a substitute for GAAP financial information, but is included because management believes it provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes.

The non-GAAP financial measures the company uses have limitations and may differ from those used by other companies. Now I'd like to turn the call over to Dan.

Dan?.

retail, banking and critical infrastructure. In retail, organizations are deploying our Video Intelligence Solutions to reduce shrinkage, manage liability, provide a safe environment for employees and customers and leverage video to enhance business performance. During the quarter, we received a $4 million order from a big-box retailer.

In financial services, organizations are deploying our Video Intelligence Solutions to enhance the security of their branches and facilities. During the quarter, we received a $2 million order from one of the largest U.S. banks, an existing customer, and an initial $2 million order from another U.S. bank, a new customer for Verint.

In the critical infrastructure, organizations are deploying our Video & Situation Intelligence solutions to protect facilities such as airports, seaports, transportation networks and utilities as well as in safe city initiative.

During the quarter, we received an order for a new safe city initiative in the Americas region to be deployed as part of a new public safety control center to monitor activity in certain areas of the city.

Our strategy continues to focus on the retail banking and critical infrastructure, and we believe we are well positioned in these verticals with a broad portfolio of high-value solutions. Behind the success in both the Enterprise and Security Intelligence markets is our commitment to developing innovative analytical solutions.

As previously discussed, while our legacy capture products are best-of-breed, they represent a relatively low growth rate opportunity. On the other hand, we believe our newer analytical solutions represent a higher growth rate opportunity.

We continue to invest with the goal of shifting our mix to high-value analytical solutions, which over time should lead to higher revenue growth and expanding margins. I would like to briefly mention several new offerings for the Enterprise and Security Intelligence markets which we recently launched.

Verint introduced an innovative solution to enable law enforcement customers to conduct more effective investigations by fusing audio and video data originated from multiple sources.

We launched enhancements to our unified enterprise feedback platform that enables our enterprise customers to design and deliver multichannel surveys across email, text messages and telephony channels, eliminating the need for multiple and separate survey systems.

We also announced several new business impact solutions for our enterprise customers, including a call avoidance solution, which uses Verint analytics to maximize first call resolution, help eliminate self-service failures and identify new opportunities for self-service offering.

We believe our strategy of introducing new analytical solutions that help customers make big data actionable is key to our success and competitive advantage. Turning to our guidance. We are maintaining our annual outlook for revenue growth of 6% to 7% and EPS of $2.75, plus or minus $0.05.

Our guidance assumes that revenue from EMEA will be flat or near flat this year as compared to last year. We will, of course, continue to closely monitor the environment in EMEA as we progress through the year. In Q1, we completed the acquisition of Comverse and refinanced our debt, significantly enhancing our balance sheet and strategic flexibility.

This, combined with a broad portfolio of innovative enterprise and security solutions and our strong market presence and brand, positions us well to continue to execute our growth strategies.

We're encouraged by our first quarter business activity, our strength in the Asia Pacific region and our strong cash generation and look forward to having the opportunity to accelerate our overall growth rate once the EMEA macro environment improves. Now I would like to turn it over to Doug to discuss our financial results in more detail.

Doug?.

Thanks, Dan. Good afternoon, everyone. Most of the discussion today will focus on non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available as previously mentioned.

Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions, including amortization of acquisition-related intangibles, certain other acquisition-related expenses, stock-based compensation, as well as certain other noncash or nonrecurring charges, including expenses associated with our merger with Comverse.

In addition to our typical adjustments, this quarter we are also adjusting for the one-time $9.7 million charge associated with the refinancing of our term loan. Our earnings release provides further information on these non-GAAP adjustments. I'll start my discussion today with the areas of revenue, gross margin and operating margin.

In the first quarter, we generated approximately $205 million of total revenue across our 3 segments, with $113 million in Enterprise Intelligence, $29 million in Video Intelligence and $63 million in Communications Intelligence.

This compares to approximately $200 million of total revenue in the first quarter of the prior year, with $112 million in enterprise, $29 million in video and $59 million in communications. In terms of geography, in Q1, we generated $112 million in the Americas, $41 million in EMEA and $52 million in APAC.

This compares to approximately $105 million in the Americas, $50 million in EMEA and $45 million in APAC in the first quarter of the prior year. Q1 gross margins were 66.4% compared to 70.5% in Q4 and 68.1% in Q1 of the prior year.

As we've discussed in the past, due to the product and revenue mix within or across segments, overall gross margins can fluctuate significantly from quarter to quarter. We currently expect gross margins in Q2 to be at a level close to Q1 and for the full year, we expect gross margins to be similar to last year.

During Q1, we generated $37 million of operating income compared to $61 million in Q4 and $39 million in Q1 in the prior year. Operating margins in Q1 were 17.9% compared to 26.5% in Q4 and 19.7% in Q1 in the prior year, primarily due to gross margin fluctuations.

Our Q1 EBITDA came in at $41 million or 20% of revenue, bringing our last 12 months EBITDA to $203 million. Now let's turn to other income and interest expense. In the first quarter, other expense net totaled $9.1 million, reflecting $7.4 million of interest and related expense, with the balance related to the impact of foreign exchange.

We had a $1.7 million expense associated with intercompany foreign currency translations, impacting EPS by approximately $0.04. Our Q1 cash tax rate was 11%, reflecting what we expect to pay in cash taxes for the balance of the year.

As we've previously discussed, we expect to enjoy a low cash tax rate for several years due to our NOLs and the amount of income we generate in low tax rate jurisdictions. These results drove diluted EPS of $0.44 per share. Now turning to the balance sheet.

As of April 30, 2013, we had approximately $330 million of cash in short-term and long-term investments, including restricted cash, compared to approximately $238 million of cash at the end of last year.

Our almost $100 million increase in cash was due to the refinancing of our term loan at the beginning of the quarter as well as strong cash generation. Q1 cash from operations on a GAAP basis came in at 2 -- at $26 million.

Adjusting for acquisition-related and other extraordinary expenses primarily related to the Comverse transaction, cash from operations was $37 million. We ended the quarter with total debt of $649 million and net debt of approximately $319 million.

At the end of the quarter, we had 53.3 million average fully diluted shares outstanding reflecting the shares issued in the Comverse merger. Before moving to Q&A, I'd like to discuss our guidance for the year ending January 31, 2014. As Dan noted earlier, we expect revenue to increase between 6% and 7% compared to the year ended January 31, 2013.

We are targeting operating margins similar to last year at approximately 22%. Based on recent foreign exchange rates, in Q2, we expect our quarterly interest and other expense to be at a similar level to Q1.

Assuming no significant changes in foreign exchange going forward, we would expect quarterly interest and other expense to return to approximately $7.3 million in Q3 and Q4. We expect our non-GAAP cash tax rate to be approximately 11% for the year, reflecting the amount of taxes we expect to pay this year.

Based on these assumptions and assuming approximately 53.8 million average diluted shares outstanding for the year, we expect non-GAAP EPS to be $2.75, plus or minus $0.05. In conclusion, we had a good start to the year with strong business activity, and we believe we are well positioned for continued market leadership and growth.

This concludes my prepared remarks.

So with that, operator, can we open the lines for questions?.

[Operator Instructions] And your first question comes from the line of Daniel Ives from FBR Capital Records (sic) [Markets]..

Could you just talk maybe anecdotally month-to-month what you saw in terms of customer buying behavior? I mean, did you think -- see things sort of change throughout the quarter or any sort of differences?.

Well, I think that in Q1, we had -- as we mentioned before, we had a particularly strong business activity relative to first quarter in the year, which usually, for seasonality reasons, starts low and gets better throughout the year.

But we kind of brought a lot of orders earlier in the year and actually came -- some of them, some of the large projects came in, in Q1 in February. So I think it was kind of atypical, and we drove in Q1 a lot of the business earlier, but I wouldn't say that this is a trend.

It just happened in Q1 and obviously, that helps in terms of our ability to reaffirm our guidance for the year. Despite the fact that in EMEA, when we gave guidance last quarter, we assume that EMEA would be slightly growing this year. Now our view of EMEA, it will be flat or near flat.

But despite of that relatively weakness in EMEA, we have strength in Asia Pacific to offset that, and we are able to affirm our guidance. But other than that, Daniel, I don't think I have any other meaningful trend month-to-month to report..

Okay. And then just in terms of expenses, I mean, just walk through maybe sort of your philosophy in terms of new investments throughout the year.

I mean, obviously, you guys feel good about growth, but just in terms of that out margin lever in terms of reinvesting in the business after a number of years of, you could say, underinvesting in the business.

Maybe just talk about that and your sort of view?.

Yes, so in terms of our model, we -- based on this guidance that we affirm today, we also affirmed our target for operating margins of about 22%. So that is similar to last year. And as you may recall, we mentioned in Q4 that we had planned some investments and that we -- they shifted into the year.

So during this year, we do intend to increase our headcount about 5%. So that's give or take 150 people that will be primarily in R&D and sales and support. We got some leverage in, obviously, on the G&A side as we grow the company.

And in terms of this investment, it's mostly focused on new analytical solutions that drive growth for Verint and some self coverage that we need in specific geographies and vertical markets.

And even in EMEA, despite the fact that EMEA is overall not strong obviously and we hopefully will see some recovery, but even within EMEA, there are countries that performed better than others and it's not homogeneous. So we do make investments where we see opportunities short term.

And obviously in our support services, as we sell licenses, more licenses, we also are investing in implementation services around those licenses..

Your next question comes from the line from Nandan Amladi from Deutsche Bank..

Dan, you talked about in the growth profile how the traditional contact center is a little bit slower growth business and you're focusing more of your energies on the higher value software and analytics areas.

Where is that product mix now and where do you see it going, say, 2 to 3 years from now?.

So I think we -- if we kind of broadly look at our product set as capture products, so solutions to help customers to capture data, voice, video, text, social media but more in the capture side, that's probably kind of 50% of our business; and solution that's focused on analyzing the data to uncover insights and trends and help the business to leverage data to improve business performance, to enhance security, that's the other 50%.

As we feel very strong about our capture products, they are best-of-breed. Obviously, that allows us to invest more of our R&D dollars in the new analytical solutions.

And naturally, as we introduce more analytics solution, I just mentioned earlier 3 solutions that we launched in Q1, as we launch more and more solutions to help customer leverage the captured data, we're going to shift our mix towards less capture and more analytics, and analytics are growing faster and that's overall going to accelerate our growth rate.

That's the plan. We -- right now for this year, as I look at the outlook revenue-wise, I mentioned before how we see the split between Americas, APAC and EMEA. In terms of security and enterprise, we believe this year will grow mid to high single-digit in both enterprise and security.

Within security, we have faster growth in Communication Intelligence than Video Intelligence, but still mid to high single-digit overall in security. And as we look at the year, so we expect that our enterprise revenue will increase every quarter from Q1 and if linear, you may expect roughly $10 million increase each quarter from our Q1 result.

The security revenue was lumpy. We did mention that we had some big orders in Q1 that will be recognized over several quarters. So what we see now based on these big quarters, we see the Q2 in security could be slightly down from Q1, but we do expect a strong second half as we start to recognize revenue from those orders that we landed in Q1.

So that's kind of the outlook for this year, and we're not providing specific outlook beyond the year. But we did mention that these investments we make, we are planning to accelerate overall growth over time..

Okay. And then one quick follow-up, if I might. In the distribution of the size of the orders that you discussed, it appears like some of the enterprise orders might have been smaller, but then you have 2 very large security orders.

Is that seasonality, or is there something more to it than that?.

We actually had strong business activity. We landed a number of multimillion dollar projects across all businesses. I can say that overall -- we mentioned 2 8-digit deals, which are megadeals. But in terms of 7-digit deals, we had more than 30 projects that were over $1 million.

So that's not a low number for us, and Q1 was strong in terms of both the 7-digit and the 8-digit deals. A good quarter on business activity..

Your next question comes from the line of Shaul Eyal from Verint..

With Oppenheimer, for the time being. A couple of quick questions on my end.

If I'm looking kind of at the gross margins expectations for the second quarter given Doug's commentary, should we be expecting kind of the similar level of mix between product and services as we have seen in the first quarter?.

Yes. I think we expect to see in Q2 similar gross margins to Q1 based on the mix we see currently. As we said in the past, it's fairly lumpy depending on what lands when. We are looking for the full year to be similar gross margins to last year, but Q2 probably similar to what you saw in Q1..

Yes, and in terms of products and services, we certainly longer term expect that there will be some shift from product to service, which is kind of typical in the overall software business, especially when we have large projects where revenue are being allocated to services sometimes when we have to do some product customization and things of this nature.

So we do expect our product to grow for the year, but we expect services to grow at a higher rate than product..

Got it. And then Dan or Doug, I don't know who wants to take the following questions, but given Dan's commentary with respect to the prior question, I think the prior analyst and I think you talked about a very kind of solid, strong business activity.

I know you guys don't talk about the book-to-bill or kind of backlog, but is it fair to assume and given the 8-digit deals that you find during the quarter and the 7-digit deals, that your backlog is probably running at its highest level in the company's history?.

Well, we had good deferred revenue. They're up, and we had some big deals. So we don't track the backlog. We don't think it's a meaningful number for us to base our visibility. We have -- obviously, it's one element, but we have other elements that we use to give annual guidance and give our -- and do our forecast.

But I think generally, with deferred revenue up and big orders, it's probably a good backlog level..

Got it.

And cash from operations this quarter, Doug, should we be expecting kind of similar or even kind of better levels in the second quarter?.

Yes, well, cash from ops can move around. Generally, Q4 is our strongest. Q1 tends to be somewhat strong and it's seasonal. But when we look at the full year, our outlook is -- the $2.75 kind of midpoint of the guidance would translate to about a $220 EBITDA number -- so $220 million EBITDA number.

So when you take out the interest and the taxes, about $50 million from that, you end up at about $170 million, which is a kind of a real cash number. Now from that, we have some working cap usage and some Comverse and a few other types of non-GAAP charges in there.

So we've said $130 million to $140 million would be kind of a GAAP cash from ops number we expect from us this year..

Your next question comes from the line of Jeff Kessler from Imperial Capital..

I'm wondering with the increased level of contract activity that you received in terms of at least size in the first part of the year, was gross margin affected to any extent by preparation and planning and beginning of installation of these larger contracts when -- particularly on the security side or on the communications side where you say things tend to get more lumpy?.

No. No, it wasn't, because we really did not start to recognize any meaningful revenue from those large contracts. So there was no -- no opportunity to affect the gross margin because of that. Usually, there is work that we do to win the contract....

Yes, that's what I was thinking of, yes..

Yes, but this is not gross margin. This comes from our sales and marketing expense, and you see that throughout as we participate in RFPs, sometimes pilot, that all goes to our sales and marketing line. It's not affecting gross margin..

Yes, it really had to do with a particular mix of business we pulled through in the quarter that really related to bookings from previous quarters..

All right. Great. My further -- my other questions have been answered..

Okay. So we just -- before we move on, I -- Shaul, the previous analyst, mentioned our user conference, so I just want to update everyone, I'm not sure everyone knows. This week, we are holding our enterprise user conference.

We're expecting about 1,000 people, and this is the first time for Verint that we are inviting Wall Street analysts to participate in this event where we're going to showcase our latest technology and interact with customers..

Your next question comes the line of Jonathan Ho from William Blair..

Just with regards to the impact from the encoder business, I just wanted to get a sense of how your business grew, maybe excluding the impact, sort of how the organic revenue growth was without that headwind if we assume that that's going to tail off..

The encoder situation, as we expected, stabilized. So it's now kind of under 2% of our overall revenue. Our Q1 encoder business was in line with our expectation. We do expect it to -- as we said last quarter, we expect it to decline a little bit this year but really not much, not even close to the major decline we had last year.

So that's not an issue anymore, not right now..

Got it.

And just with regard to the larger deals that you guys recognized and that -- I'm sorry, that you guys booked but will be recognized in the second half of the year, how should we think about the mix of product versus services on those larger deals? Is it typically product revenue first, or is it a pretty even mix between product and services?.

It really varies. Some of these large contracts are being recognized on a percentage of completion basis. So we have milestones, and we recognize a portion of the revenue based on achieving a milestone. It could be a mix of product and service.

And as I mentioned before, sometimes even when we deliver product, if we make some changes to the product, which is not unusual with large contract. Once we make those changes, the product doesn't -- is not considered product anymore. It's considered service. So we report it under the service line.

Obviously, it's our license, but it's not our plain vanilla software if we modified it to a certain extent and it can be recognized as service, and that's hard to predict. And only once we land the project and we start to do the detail, design and the work, that we make those accounting determination, whether it's going to be product or service.

So it's kind of hard to predict. I think we're getting better in that prediction over time. But as a general trend, I think we see that the service growth rates this year will be higher than product growth rates as services is not just labor services, but it's also other type of revenue that is being categorized as service..

Great.

And just one last one, just given some of the more tragic events that have happened recently, including in Boston, are you guys seeing an uptick in interest in more municipal-type systems or broader peace [ph] type activity just from folks that maybe in and around that situation?.

Yes. We see some increase in interest. We did report today one new safe city initiative in the Americas region. I don't think this interest has been translated to a lot of deals at this point and obviously, post event like this, the various state and local governments are reconsidering how they need to be prepared.

But I think it will take more time before I can say that this is going to be translated to actually revenue activity..

Your next question comes from the line of Brian Ruttenbur from CRT Capital..

Just one quick question about the quarter's write down in terms of cash generation. Can you address how it's going to be weighted throughout the year? Is it -- traditionally, I think it's the second half of the year.

Is that how you're looking again this year?.

Yes. Q1 and Q4 are generally our strongest cash flow generation quarters. So if you're looking at seasonality, you could look at the last couple of years by quarter and proportion like that. It shouldn't be too far from that..

Okay. In terms of cash then on the year given your guidance, you should end with cash of around $400 million.

Is that -- you're at $330 million right now?.

Yes, we're not giving particular guidance on cash because obviously, we may use the cash in a number of different ways. But if you look at what Doug mentioned before, $130 million to $140 million GAAP cash from operations and our capital needs are about, let's say, $20 million, we have north of $100 million of free cash flow.

So we, obviously, were generating a lot of cash. And in terms of where we're going to end in the year obviously depends on how we're going to use that cash..

Your next question comes the line of Michael Nemeroff from Crédit Suisse..

This is Mike Anderson on behalf of Michael. First, can you just comment on the deal environment for the Enterprise Intelligent business? It looked down a little bit more than normal sequentially from Q4 to Q1.

Just curious if RFP discussions are extending as you enter into suite discussions with customers and also, if there's any deals that may have slipped in the quarter that have already closed in Q2..

Yes. There are deals that slipped that were closed in Q2, including a deal that is more than $1 million. But I'm not sure that's kind of unique to our situation, and we're already a month into the quarter. In terms of the deal environment, I think mostly where we see the impact is EMEA.

As I mentioned before, EMEA, you look at Q1, it came very much below our expectations, and we were fortunate that Asia Pacific was strong to offset that. We don't expect EMEA the rest of the year to be as negative as Q1, but we do expect now for the year to be, again, flat to near flat.

And in the enterprise business, that means the deals take longer and deals eventually get smaller than where they start. Having said that, we have a strong pipeline in EMEA. We just need a better economic environment to be able to bring those deals. And in the Americas, I think we have a pretty steady situation in the enterprise market.

I think it's a tough spending environment. I don't think Americas is going on all cylinders, but it hasn't been that case also last year. So it's certainly not -- it's not worse than what it was. And overall in the enterprise business, we think we did pretty well in Q1, and we took a little bit market share..

Okay. That's helpful.

And then just to clarify, I think a prior comment that you said, I think you said to expect roughly a linear increase of about $10 million per quarter in Enterprise Intelligence, is that correct?.

Yes, obviously if -- I said if it's going to be linear. But obviously, hard to predict on a quarterly basis and we -- but generally, if we look at the trends that we have, we start Q1 low and last year, from Q1 to Q4, we added about $30 million and I think it will be similar this year.

So if it's going to be driven linear, it's going to be about $10 million increase from the Q1 level in each of the subsequent quarters..

That's helpful for sure. And then just one last question, a really quick one. Accounts receivable looked like it spiked more than normal in Q1. Usually, it looks like it's more of a cash collection quarter for you guys.

So I'm just wondering, was there any back-end loading into that number? Or what was going on there?.

Well, you might have noticed that we had -- accounts receivable went up. We also had very strong cash balances collected. So we had both and really, that speaks to the strong business activity we're talking about..

Yes, I think some of the orders we received drove cash from advanced payments. So overall, we increased our overall cash position by almost $100 million from last quarter. Some of it came from our refinancing but obviously, a lot of cash was generated through some good cash collections.

So yes, increased AR but obviously, that's an opportunity to generate more cash in the future..

Yes, when we look at our AR aging, we're not particularly concerned. It's fairly newer AR that's on the books. So it's really more of the level of the business activity than it is any kind of collection issue..

Your next question comes from the line of Matt Hedberg from RBC..

This is Matt Swanson calling for Matt Hedberg. I just had some questions about the government vertical. I know it's been an area of weakness for some other companies we look at. And at least from a big deal perspective, it looks like you guys had a pretty good quarter.

I was just wondering what you guys were kind of seeing for a competitive environment in those deals..

Yes, I think what's helpful to Verint is our global diversified business and not having a lot of exposure to the U.S. government business, very little to federal and also not too much to state and local. That's very helpful, and government is 25% of our business. The big data opportunity for government is big.

There is a tremendous amount of opportunity in improving the intelligence gathering and making it more efficient and effective by using big data analytics and collecting a lot of data from voice, video, text, social media and being able to analyze that. So that opportunity for government is something that drives our business.

Also, I think that because of the variety of different sources and media types, government has to update their technology in order to continue and gather intelligence. So obviously, we had a big Q1 government number with our 2 8-digit deals that came from government agencies, and we continue to be positive about government business this year..

Ladies and gentlemen, this will conclude today's question-and-answer session of today's conference, and I would now like to turn it back over to Alan Roden for closing remarks..

I'd like to thank everyone for joining us tonight, and have a great evening. Talk to you in our next call. Take care..

Ladies and gentlemen, that concludes today's conference. Thank you for your participation, and you may now disconnect. Have a great day..