Ed Merritt - Treasurer & VP, IR Lee Schram - CEO Terry Peterson - CFO & SVP.

Josh Elving - Feltl & Company Joan Tong - Sidoti & Company Tim Klasell - Northland Securities Charles Strauzer - CJS Securities.

Good day, ladies and gentlemen. Welcome to the Deluxe Corporation Second Quarter 2016 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode to reduce background noise but later we'll be holding a question-and-answer session and instructions will follow at that time.

[Operator Instructions] As a reminder, today's conference maybe recorded. I'd now like to introduce your host for today's conference Mr. Ed Merritt, Treasurer and Vice President of Investor Relations. You have the floor, sir..

Thank you Andrew, and welcome everyone to the Deluxe Corporation's second quarter 2016 earnings call. I'm Ed Merritt, Deluxe's Treasurer and Vice President of Investor Relations. Joining me on today's call are Lee Schram, our Chief Executive Officer; and Terry Peterson, our Chief Financial Officer.

At the conclusion of today's prepared remarks, Lee, Terry and I will take questions.

I'd like to remind you that comments made today regarding financial estimates, projections and management's intentions and expectations regarding the company's future performance are forward-looking in nature, as described and defined in the Private Securities Litigation Reform Act of 1995.

As such, these comments are subject to risks and uncertainties which could cause actual results to differ materially from those projected.

Additional information about various factors that could cause actual results to differ from those projected are contained in the press release that we issued this morning, as well as in the company's Form 10-K for the year ended December 31, 2015.

The financial and statistical information that will be reviewed during this call is addressed in more detail in today's press release, which is posted on our Investor Relations website at deluxe.com/investor. This information was also furnished to the SEC on the Form 8-K filed by the company this morning.

Any references to non-GAAP financial measures are reconciled to the comparable GAAP financial measures in the press release as part of our remarks during this call. Now, I'll turn the call over to Lee..

Thank you, Ed, and good morning everyone. Deluxe delivered a strong quarter and we are well positioned as we enter the second half of the year to grow revenue 5% to 6% for the year despite the continued sluggish economic environment.

We've reported revenue in the upper end of our outlook range, and adjusted earnings per share was at the top end of our outlook range. Revenues grew better than 3% over the prior year quarter driven by financial services growth of 10% and small business services growth of 2%.

Marketing solutions and other services revenues grew more than 16% over the prior year and represented about 33% of total second quarter revenue. Adjusted diluted earnings per share grew more than 6% over the prior year quarter.

We generated strong operating cash flow of $128 million for the first half of the year, and we were drawn $430 million on our credit facility at the end of the quarter.

We repurchased $15 million in common shares in the quarter, we continued our brand awareness campaign to help better position our products and services offerings and drive future revenue growth. We also advanced process improvements and delivered on our cost reduction commitment for the quarter.

In a few minutes, I will discuss work detail around our recent progress and next steps but first Terry will cover our financial performance..

Thank you, Lee. Earlier today we reported diluted earnings per share for the second quarter of $1.18 which included $0.02 per share for restructuring charges and transaction costs. Diluted EPS in the second quarter of last year also included $0.02 per share for restructuring charges and transaction costs.

Excluding restructuring charges and transaction costs, adjusted diluted EPS on $1.20 was at the top end of our previous outlook and were 6.2% higher than the $1.13 reported in the second quarter of 2015.

The increase was driven primarily by stronger operating performance in addition to a lower effective income tax rate and lower average shares outstanding. Revenue for the quarter came in at $451 million growing 3.4% over last year. The growth rate excluding the Datamyx and FISC acquisitions and in unfavorable foreign exchange rates was about 1%.

Small business services revenue of $288 million grew 2.1% versus last year despite some timing related shortfalls with rollouts of vertical marketing solutions in our major accounts part of the business.

Continuing sluggish economic environment and unfavorable foreign exchange rates which alone negatively impacted revenue growth by 0.3 percentage points in the quarter.

For some added clarity, small business services revenue at the high end of our previous outlook range was only expected to grow approximately 3% in the second quarter, primarily again due to the timing of some major account vertical marketing solutions rollouts.

In small business services we delivered growth in marketing solutions and other services and from a channel perspective our online major accounts and dealer channels grew. Financial services revenue of $124 million grew 10.2% versus the second quarter of last year.

Excluding revenue from acquisitions, financial services would have grown 0.4% in the quarter. Higher marketing solutions and other services revenue driven by Datamyx, WAUSAU and Deluxe Rewards and price increases more than offset the impact of lower check orders.

Direct Checks revenue of $38 million was down 6.6% from last year, slightly better than our expectations.

From a product revenue perspective, checks were $216 million, representing 48% of total revenue; marketing solutions and other services were $147 million, which was 33% of total revenue and forms and accessories were $88 million or 19% of total revenue.

Gross margin for the quarter was 64.5% of revenue, which was up slightly from 64.2% of revenue in 2015.

Higher delivery and material cost were more than offset by the benefits of previous price increases, improvements in manufacturing productivity and a favorable adjustment from an environment reserve that was allocated proportionately to each of the three segments.

SG&A expense increased 4.6% in the quarter and was 44.1% of revenue compared to 43.6% of revenue in the same period last year.

Benefits from our continuing cost reduction initiatives in all three segments were more than offset by increased SG&A associated with recent acquisitions and a pretax gain in 2015 related to the sale of four small business distributors.

Excluding restructuring and transaction related charges in both 2016 and 2015, adjusted operating margin for the quarter was 20.5% which was down slightly compared with the 20.8% generated in 2015. Financial services delivered in operating margins better than our expectations.

Direct checks margins were in line with our expectations and small business services margins were slightly below our expectations. Small business services adjusted operating margin was 17.3% which was slightly below the prior year rates.

Financial services adjusted operating margin of 23.8% was up one point from 2015 driven by lower incentive compensation expense, additional cost reductions and price increases.

Direct checks, adjusted operating margin up 34.3% decreased 2.9 percentage points from 2015 driven by lower order volume compared to a very strong quarter last year which was driven by a favorable mix of higher margin reorders.

Turning to the balance sheet and cash flow statements; total debt at the end of the quarter was $614 million which was down $15 million or 2.4% from $629 million at the end of 2015.

Cash provided by operating activities for the first half of the year was $128.3 million, an $18 million decrease compared to the first half of 2015 driven by higher contract acquisition payments and incentive payment related to a previous acquisition and income tax payments, partially offset by stronger earnings and lower interest payments.

Capital expenditures for the first half of the year were $22.2 million and depreciation and amortization expense was $44.7 million. We are strengthening our previous consolidated revenue outlook for the full year to the upper end and now expected to range from $1.855 billion to $1.875 billion.

We are strengthening our expectations for adjusted diluted earnings per share to $4.90 to $5.

There are several key factors that contribute to our full year outlook including - small business services revenue is expected to increase 5% to 6% as volume declines in core business products and the negative impact of foreign exchange rates are expected to be offset by growth in our online dealer and major account channels, price increases, double-digit growth in marketing solutions and other services offerings, and continued small tuck-in acquisitions.

We expect financial services revenues to increase 9% to 10% as recurring check order declines are 4% to 5% and some pricing pressure are expected to be more than offset by continued growth for marketing solutions and other services revenue including Datamyx, WAUSAU and Deluxe Rewards and some small tuck-in acquisitions.

Our direct checks revenue declined approximately 7% to 8% driven by lower check order volume stemming from secular declines in check usage.

A continued sluggish economy, full year cost and expense reductions of approximately $50 million, net of investments, increases in medical expenses, material cost and delivery rates, continued investments in revenue growth opportunities including brand awareness, marketing solutions and other services offers and enhanced internet capabilities.

And an effective tax rate of approximately 33%. We expect to continue generating strong operating cash flows ranging between $320 million and $330 million in 2016 reflecting stronger earnings and lower interest payments, partially offset by higher tax, contract acquisition and employee medical payments.

We expect full year contract acquisition payments to be approximately $20 million. 2016 capital expenditures are expected to be approximately $43 million or the same as 2015 as we continue to invest in key revenue growth initiatives and make other investments in order fulfillments and IT infrastructure.

Depreciation and amortization expense is expected to be $95 million including approximately $48 million of acquisition related amortization. For the third quarter of 2016, we expect revenue to range from $456 million to $464 million. Adjusted diluted earnings per share are expected to range from $1.17 to $1.22.

In comparison to the second quarter, we expect earnings per share to be around flat at the midpoint of our range, primarily driven by higher small business services revenue, partially offset by higher brand awareness spend.

Shifting to our capital structure we expect to maintain our balanced approach of investing organically and through small to medium sized acquisitions in order to drive our transformation. Additionally, we expect to continue paying a quarterly dividend and periodically repurchase common stock.

To the extent we generate access cash, we plan to reduce the amount outstanding against our credit facility and we may from time to time consider retiring additional outstanding debt through open market purchases, privately negotiated transactions or other means.

We believe our increasing cash flow, strong balance sheet and flexible capital structure position us well to continue advancing our transformation. I will conclude my comments with an update on our cost and expense reduction initiatives.

Overall, we had a solid quarter as we've basically delivered on our expected cost and expense reductions towards our $50 million annual commitment, net of investments.

Approximately 50% of the $50 million in expected reductions will come from sales and marketing, another 35% from fulfillment and the remaining 15% coming from our shared services organizations.

Our focus in sales and marketing for 2016 continues to be on sales channel optimization platform and tool consolidation, leveraging sales and marketing efficiencies including integration from recent acquisitions.

In fulfillment we expect to continue our lean, direct and indirect spend reductions, further consolidate our manufacturing technology platforms, drive delivery technology and process efficiencies, reduce spoilage, further enhance our strategic supplier sourcing arrangements and continue with other supply chain improvements and efficiencies.

Finally for shared services infrastructure, we expect to continue to reduce expenses primarily in IT but we are also working opportunities in finance and real estate. And now I'll turn the call back to Lee..

marketing services, including Datamyx, $51 million; rewards and loyalty, $33 million; fraud and security, $24 million; treasury management, $93 million dollars; and performance management, including bankers dashboard and strategic sourcing, $15 million.

We now expect Datamyx revenue to be approximately $38 million in 2016, down from our previous outlook of $44 million, with strong double-digit EBITDA margins, and we expect Datamyx to be about neutral per share from an EPS perspective. In Direct Checks, revenues slightly exceeded our expectations.

We continue to look for opportunities to provide accessories and other check related products and services to our consumers, as well as work on a number of initiatives to create an integrated best-in-class direct to consumer check experience.

We continue to see a ramp in revenue enhancement synergies through our call center scripting and upsell capabilities, as well as synergistic cost and expense reduction. For 2016, we expect Direct Checks' revenue to decline in the 7% to 8% range, driven by continued declines in consumer usage and a sluggish economy.

We anticipate that marketing solutions and other services revenue which is primarily fraud and security offers for this segment to be about 10% of Direct Checks' revenue.

We expect to reduce our manufacturing cost and SG&A in this segment and to continue to deliver operating margins in the low to mid 30% range, while generating strong operating cash flow.

As we exit the first half of the year on the hills of a strong performance on a continued sluggish economy, we have made tremendous progress in transforming Deluxe, but we still have many opportunities ahead of us in 2016 as we position ourselves for our 7th consecutive year of revenue growth.

Despite the sluggish economy, our financial discipline has enabled us to invest in people, technology, products, services and our brand in order to position ourselves for sustainable revenue growth while continuing to improve profitability and operating cash flow. Our technologies and sales channels are stronger.

Our digital technology services offers more mature - our infrastructure, better - and our management talent is deeper and aligned to grow revenue. We know it is critical for us to be able to grow revenue again in 2016 and improve the mix of our marketing solutions and other services revenue, and we are well positioned to make this happen.

We have developed a strong platform for long-term growth with the objective of transforming Deluxe to more of a growth services provider from primarily a check printer, thereby changing our product mix and resulting stock price multiple. Now Andrew will open the call up for questions..

[Operator Instructions] Our first question comes from the line of Josh Elving. Your line is open..

Hey, good morning..

Hi, Josh..

So can we talk a little bit about acquisition activity in the quarter? I think around $22 million.

Can you break out what or at least offer some more information on what those might have been, what segment they were in and if there's any revenue associated with them over the balance of this year?.

Yes, we said in the prepared comments, it's really in the small business services space. We did some talking acquisitions in areas that we've been focusing and highlighting, Josh, principally in the web hosting seat panel, those phases. That's where most of the activity occurred.

We also have been involved on a process that we looked at the distributors that are out in the network and whether or not it makes sense for us to buy some of those distributors back.

There really isn't any revenue enhancement opportunities there, it's really a smart process and profitability play, if there is opportunities we did some of that as well in the quarter. So that's the primary spend..

Okay. Sorry, I missed that. A lot of information you guys provided which is great. So I believe then probably some of the acquisitions are - to kind of increases small business component, 5% to 6% from 4% to 5%.

Can you talk a little bit about the organic growth rate currently? How do you describe that today, in small business?.

First of all we raised from 4% to 6% to 5% to 6%. So what we did, Josh, for small business services is we raised the bottom end up slightly, and you would think we just came off at 2% and I think for the first half we grew 4.7%.

So yes we expect to have a stronger second half of the year with the biggest strength in the fourth quarter, principally because we get into seasonality. The only kind of seasonality we have is in the fourth quarter with our retail packaging, our holiday cards and some of that other business.

So we expect the growth rate in the fourth quarter will be even bigger than the growth rate in the third quarter there. So that's how to think about it, organically - I don't know Terry if I have a number.

It would probably be in the very low single digits in the year, so I would think if we're going to grow 5% to 6% it would probably be in the 2% to 3% overall organically for the year..

All right, thank you very much..

You're welcome, Josh..

Thank you. Our next question comes from the line of Joan Tong from Sidoti & Company. Your line is open..

Good morning. I have a couple of questions here. So I guess, on the check side, so the check business segments within Financial Services. It seems like the decline rate has been stabilizing or actually coming down. The first quarter we saw that, and this quarter it seems like also the case.

So I was just wondering if, have you examined any possible reason for that?.

It surprised us again, Joan, the two quarters now and this 4% range. We are looking at every, talking to the financial institutions. We are looking at where consumers writing checks for.

We have seen, interestingly one of the things we saw from a study that we did in April is that we are seeing a little bit of strength over the prior year in the retail space. So think of consumers that write a check for some type of retail store or some type of a retail engagement.

We continue to see positive trends or not declining trends and things like checks that are written to charities and gifting, which again is a lot of where we get our check business from today. So we have done some more study work, Joan, on where we think this is going to go from here.

As we talked about in previous calls, we continue to look at statistical methods and metrics tied to things that are public markers, things like housing stock, housing starts, which generally have been pretty positive for us as well.

And so if you add all those together we're just seeing a little better strength there, and again we guided now 4% to 5% for the whole year. So we're not expecting the 4% that we saw the first half of the year kind of collectively to stay the same, we're also not expecting it to run away and get a lot worse at this point..

Okay, that's good.

And how about the e-check? You guys ruled that out a couple of quarters ago, and what's the progress there? Any new account, like it seems like the pipeline was very strong in the beginning, can you give us an update?.

Yes, the pipeline is still strong. As I mentioned in the prepared comments we set another record this quarter. We're still talking small numbers here, but we continue to get our, think of it as our, kind of our small business core customer base to be buying more e-check.

We also continue, as I mention in the prepared comments and other areas like the medical and the health area where a lot of paper check traffic is today that we don't really do any of those checks today.

Also, companies that do accounting services and outsourcing for small business that write checks and send checks, we're continuing to make progress there.

So yes, and the other thing is we continue to see more and more banks including banks where we are not the paper check provider today that their small business customers are using e-checks more and more. So we continue to be encouraged.

We've got statistics, Joan, around some of these other companies that have roll out to PayPal and the Ben Mozil [ph] word and what happened early on.

I don't have the numbers, I don't know, Ed or Terry if you have the number how many dollars of transactions that we have; either of you guys have that?.

I know - at the end of the year it was over $1 billion transaction..

Yes, so you can see we're starting to get some meaningful scale with people that are writing e-checks and the amount of dollars transacted, Joan, on those..

Okay, that's fair. And then I think as I recall some of the conversations that I have with you guys earlier, maybe in the past couple of months, there was a particular interesting initiative in the small business segment. I believe you talked about like the cross-sell integrated customer platform, it's a technology platform, it's the one-stop shop.

I think you were beta-testing that. Can you just give an update? I just want to make sure I'm saying the right thing obviously because, like there was an initiative last year and then I believe that last quarter you mentioned something similar. I'm not sure it's an extension or something newer.

Just can you elaborate a little bit more?.

Yes, clarify what we said and just try to add some additional color for you, Joan.

So we're calling this the Deluxe Marketing Suite, and if you think about all the services that we offer today, it starts with logo, design, servicing capability, web design, web hosting, e-mail marketing, search engine optimization, think of those kinds of services all falling in and being fulfilled out of that suite.

So what we're tracking right now is if somebody comes in and our primary focus has, I'd say our focus has changed a bit in a positive way to start where small businesses start with us.

So generally they're going to start when they get themselves in business and they want to brand themselves through a logo, so we've been seeing as we reported today and then last quarter nice run ups in the growth rate in logo. Once they get a logo and they get comfortable, they start putting it on multiple other things.

So I'm staring at a water bottle next to me it's got a logo on. We can put a logo on somebody's, something like that for a small business owner.

Then what they do is they generally trend to move into web design and web hosting, and we are as I mentioned in the prepared comments we're seeing small businesses now proliferate out of just logo and then now moving into the web design and the web hosting space as well.

So what we're wanting to happen is all this stuff is happening and in the third quarter, by the end of the third quarter we'll be releasing something that we're calling right time engagement or right time marketing.

And what we want to be able to do with in there is once they're in buying those various services from us we want to be able to help them as they continue to look at what other things can they do from a marketing perspective that's going to help them out.

And clearly there is more in the second half of the year ramp in small business revenue we believe is going to come from getting more help in this space as well. So yes, we remain very excited about it, we're making all our gates and dates. My developing team, hats off to all of them.

They're doing a super job with all; the point really is to think about it that way, Joan, as we continue to move this forward. So hopefully that helps..

Yes, definitely helps. Just want to get sort of an update like what's going on there. And then, okay, so finally regarding acquisitions. I know the eye-level question already being asked, but I'm just looking at small business segments. Obviously there's some volatility from one quarter to the next, but in general you're still looking for 4% to 5%.

And I love the acquisition you made in the past two years, more on the FinTech side. Do you think that we would see some sort of like maybe stepping up in the acquisition activities in the small business segment and maybe consider like making a like a little bit bigger acquisitions and all these like various small….

What I would tell you is that as we said in the prepared comments as well. We're very focused in small business in really two primary spaces.

The web services space but, the web services from where the marketing service is part of that, and then we're also looking at is there operating services things in the, either that we can partner with to help small businesses they operate themselves, their business, and in the payroll services space.

Those are the areas that we're targeting either for partnerships or acquisitions. Then in the FinTech space, as we again, we tried to be clear in the prepared remarks.

We're also still looking at and see an opportunity really in the treasury management space to do more, so think of it as an extensions from - like we did last year in December and then we love the digital, I mean we love that the data in the analytics space, and we're looking at are there other opportunities on top of that the Datamyx opportunity.

I don't know your definition of big, verses ours but I would tend to think of them right now how we come to you know work it is more programmatic you know deals that we keep you know executing..

Okay, that's fair. Thank you guys..

Thank you, your next question comes from a line of Tim Klasell from Northland Securities. Your line is open..

Yes, good morning everybody, upon the prepared remarks represent - remarks you spend a little extra on brand on marketing and sort of wonder where you're spending and where you - what type of customer you're going with that increased brand? Thank you..

In the prepared comments we talked about the small business main street makeover, so we just in the last week actually finish the work in Wabash Indiana so wonderful small town.

And we had we sent our whole team down there and we basically took it, made over about six to eight businesses, helping them improve their marketing and we also then get a bunch of seminars and web you know down low with our people in the town itself and we just got an incredible positive reaction to the work that we did, and what we're going to do is we're going to translate all that into this production in the balance of the third quarter, and it'll be a big time here in the fall we're going to go online with my team and with Robert Herjavec into this web series, we will be showing all small businesses what we did there and then engaging them and how they can improve of their marketing as they move forward, we think that this is going to create a wonderful opportunity for us to get to walk out there and known better for the capability that we have here.

And as I announced today we're doing another thing now in the fall people - it's in my hometown of Cleveland Ohio but we're going to work on a program called Cleveland hustles and I think it's out in the late August and it will go into the October timeframe, and we're going to work with will O'Brian James and his team with small businesses and the Cleveland - Ohio area and help them with marketing as well.

So think if it as people production all things that will get refined and shown and then produced then and beyond various medium including the web and it'll be all over town small business revolution. So that that's what we're trying to do we love the initial, we love the work of responses that we've seen so far been phenomenal..

Yes great and just a quick housekeeping on the check side how is the pricing holding up particularly for any of the a new banks that you sign up?.

Pricing been very stable there you know the past couple years we've rolled out our price increases around the beginning of the year and again each time we do that is a lot of work with the bank so if it's not a new event, but as we are - our couple of quarter passed that price increase that parents for holding up just up to our expectations..

Okay great, thank you very much guys..

You are welcome, Tim..

Thank you we have time for one last caller. This question is from line of Charlie's profit from Charles Strauzer from CJS Securities your lines open..

Hi good morning.

Most of the questions been answered but just a touch base on the financial services - when you look at WAUSAU securities just some color there to - how those businesses have been performing lately and also you know sales and initiatives that you had going on kind of ramp, your future and new customer sales and kind of what's your approach there?.

Yes, let me talked first even though already asked thou - words we have had that much of the content on a very strong quarter we continue to not only roll out the new initiatives that we have with the customer base that we have already, so think about the horizon in the cities of the world but we also have the ramp going on with that - with all state and were found were working I would call it additional pilot work now with other financial institutions and other big vertical companies that we expect and will turn into larger now rollouts as we as we progress over time, that kind of history of how these of work historically and I think it'll continue that way.

WAUSAU is just doing super for us I mean first of all you hear talk about this today on them periodic called out into the separate comic because we got it fully integrated in.

And the team is doing great we grew the business nicely as I said in the prepared comments it through a little bit higher, you'll notice that we raise the treasury management area in terms of that the full year revenue now, we've gotten more customers we have more opportunities and not only in the core remote deposit capture but really in the integrated receivables areas, and this is an area that we're looking at this so some of the previous questions here as nice tuck in opportunities.

Smart things that we can hold on to what we're doing, quickly get them integrated, leverage technology leverage customers, leverage capability so I feel really good about this one is delivered for us and I very bullish as we move forward Charlie..

Great, just some the marketing expenses that you highlighted a lot, have you see you know that you have been doing some of this for a while now.

Have you start to see any noticeable pick up in the process of activity or new leads activity?.

Yes, I think keep mind the first thing that we're trying to do with this thing is just get the company out there from awareness standpoint, our principal objective with all this is we got to get people to think of us as you know in in a funny that somebody at the other day comedy when I'm in a meeting and was one my talent director and she said she was on the bench she was presenting and somebody said you know who Deluxe is, and she said the person raise your hand not to check company, and it was all about marketing and what we're doing so a lot of this is to try to get the outside world understand that there's a lot more here and what we're doing, and one of the things you're going to see us do here is we will take Charlie and go from the deluxe.com.

Site to what we call content hub and show all the capability that the company has, before we just automatically try to move somebody down into trying to sell them a logo or sell them a website or whatever.

So all models of building proposition for us and all the importance of the brand and the marketing work that we're doing around that, I can tell you one thing if you put a phone call in anybody in Wabash Indiana right now they know who we are and we're going to they're another here we're going to look at are we seeing more activity and more penetration more you know site, something's coming our site more business from those zip code, so though that's the way I think about it and I hope that gives you a little help a little more color..

Thank you..

You're welcome..

Thank you. This now concludes our question-and-answer session today. So I will turn the call over to Lee Schram for closing remarks..

Yes, I just want to thank everybody up for your participation thanks to all the analysts for the questions and I want summarize the quarter three points; first we delivered another strong quarter, second marking solution the other services revenue grew 16%, and we did improve our mix again towards our goal of 34% of total company revenue this year, and on towards that 40% goal for 2018.

And we had a strong first half the year we believe this propels us towards revenue growth again2016 for the seventh consecutive year, so as I normally say we are going to roll up our sleeves and we are going to get back to work and again we a look forward to providing another positive progress for our next earnings call.

And I will turn it over to Ed for some final housekeeping..

Thanks, Lee. Before we conclude today's call, I just like to mention that Deluxe management will participate in few upcoming events in the third quarter, we can hear more about our transformation on September 13, we will be in New York at the CLA Conference, and in September 14 we will be in New York with Smith conference.

Thanks for joining us and that concludes Deluxe conference 2016 call..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day..