Greetings, and welcome to The ExOne Company Third Quarter 2019 Financial Results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Karen Howard, Investor Relations for The ExOne Company. Thank you, Ms. Howard. You may begin..
Thank you, Devon, and good afternoon, everyone. We appreciate your time today for the ExOne third quarter 2019 financial results conference call. Referring to our slide deck on Slide 2, on the line with me today are our presenters; John Hartner, our Chief Executive Officer; and Doug Zemba, our Chief Financial Officer and Treasurer.
John and Doug will be reviewing the results that were published in the press release distributed this afternoon. If you don't have that release, it's available on our website at www.exone.com. The slides that accompany our discussion today are also posted on our website. On Slide 3 is our Safe Harbor statement.
As you may be aware, we will make some forward-looking statements during this presentation and may also during the Q&A. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ from where we are today.
These risks and uncertainties and other factors are provided in the earnings release, as well as other documents filed by the company with the Securities and Exchange Commission. These documents can be found on our website or at www.sec.gov.
I also want to point out that during today's call, we will discuss some non-GAAP financial measures, which we believe are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
We have provided reconciliations of comparable GAAP to non-GAAP measures in the tables accompanying today's release. John will get us started providing a high-level overview of our third quarter results, as well as the business update. Doug will go through a detailed review of the financial results.
And then John will provide perspective on our outlook for the rest of the year, as well as a strategy update before we open up the line for questions-and-answers. And with that, it's my pleasure to turn the call over to John to begin.
John?.
Thank you, Karen. Good afternoon, everybody. Thanks for joining us for ExOne’s third quarter report. The ExOne team has never been more excited or confident in our product lineup and technological advancements, despite the more challenging market conditions.
I'll start on Slide 5 with a summary of our financial results, and then I'll update you on the progress with our technological developments. We reported $10.9 million of revenue for the third quarter, following a record second quarter and compared with a record third quarter last year.
I'm pleased with the gross profit earned on that lower level of revenue. Our cost structure is at a stable level, well-suited to drive operating leverage on the growth we anticipate from our pipeline and long-term outlook.
Our operating expenses reflect the benefit of our cost adjustments, but our soft revenue levels resulted in an adjusted EBITDA loss. The comparison with last year's quarter demonstrates the sensitivity of the top line.
We finished the third quarter with $25.8 million of backlog, that along with our pipeline supports our expectations for the rest of the year. I'll touch on that further towards the end of this presentation. Now, I'll update you on our technological progress. Please turn to Slide 6.
We have stepped up the pace on the development front, while managing our costs in an efficient and prudent manner. Never before in ExOne’s history, have we had so many significant new machines within such a timeframe. All three of these platforms were announced in the past 12 months.
On the upper left is our new Sand printer, the S-Max Pro, which extends our leadership position in Sand 3D printing. This model is an advancement of our workhorse S-Max printer, well-suited for production manufacturing of molds and cores for metal casting, tooling and other applications. We are currently shipping this new model.
On the upper right is our new production metal 3D printer, our X1 25PRO. This new platform features our recently patented Triple Advanced Compaction Technology, ACT, that delivers industry-leading quality. We will begin shipping this model during this quarter, Q4.
The photo on the bottom depicts our newest platform just announced this week, our X1 160PRO. This metal printer has been designed for the use in production and we will begin shipping it next year. I will touch on it further in the next slide. Please turn to Slide 7.
As I just mentioned, I'm excited to introduce you to our newest addition to our Metal 3D printing family, the X1 160PRO, designed for production, with considerable input from customers in the automotive, aerospace and defense industries. This is our 10th and largest metal system yet, offering 160 liters of build volume.
It's more than 2.5 times larger than what's available on the market today. The 160PRO prints with six different qualified materials, plus ceramics, which is unparalleled in the industry.
Like the mid-size X1 25PRO, it's designed with our new and patented quality feature, the Triple ACT that dispenses, spreads and compacts ultra-fine powders to deliver industry-leading density and repeatability. We're also very excited that this model was designed to incorporate state-of-the-art industry 4.0 technology.
The 160PRO leverages our partnership with Siemens for their controlled system and MindSphere cloud connectivity. So, you can see why our customers are so excited about this cutting-edge metal binder jet printer. Please turn to Slide 8.
I want to share with you a perspective on the outlook for the metal binder jet technology, resulting from a study undertaken by an independent third-party, a German 3D printing industry consultant called Ampower. This will help you better understand why we are continuing to advance our metal printing technology.
Ampower interviewed over 150 people, consisting of those in the metal additive manufacturing supply chain, as well as users. It covers system suppliers, representing about 80% of the installed base of metal additive manufacturing, and also about 10% of current users. They captured up to 15 different metal additive manufacturing technologies.
We extracted some of the results from the report they are publishing with a key finding being the expected significant market expansion of binder jet technology, which as many of you know, is the technology that ExOne pioneered.
Ampower calculated that binder jetting technology was about 10% of the metal 3D market in 2018, estimated that will expand to 31% over the next five years. And, of course, the total market is also expected to grow during that same time period.
They compared the expected expansion to the growth phase that selected laser melting experienced 10 years ago. So naturally, we're very excited about this opportunity and ExOne’s position to capture our fair share of it. I'm now going to let Doug walk through the details of our financial results.
Doug?.
Thanks, John. Good afternoon, everyone. If you could please turn to Slide 10, we'll start with revenue. Revenue was down to $10.9 million in Q3 2019, compared with our Q3 2018 record quarter.
The impact of global manufacturing conditions and in-process machine installations, which differed our revenue recognition, resulted in lower revenue than we initially expected for this quarter. Each of those in-process machine installations are on track for completion during the fourth quarter, where we expect revenues to exceed $20 million.
As shown in the charts on the right, on a trailing 12-month basis, revenue was up 2% to $61 million. Now, let's go to Slide 11. Here you can clearly see the driver of the revenue shortfall in the quarter. Our machine sales were $4 million this year, down from $9.7 million in last year's third quarter – shortfall in the quarter.
Our machine sales were $4 million this year, down from $9.7 million in last year’s third quarter. As I mentioned a moment ago, we have a broader manufacturing slowdown, which has resulted in delays and customer purchasing decisions for capital equipment.
On a trailing 12-month basis, our machine revenue was up 17% to $35.5 million, which continues to show strength in the long-term adoption of binder jetting. Now, if we can turn to Slide 12, we’ll review machine unit sales.
As a reminder, our direct machines directly print components, such as metal parts for industrial and other applications and include our event Innovent, M-Flex and X1 25PRO platforms, as well as our newly introduced X1 160PRO platform, which is expected to come online in late 2020.
Our indirect machines print tools, such as sand cores and molds and include our S-Max Pro, S-Max and S-Print platforms. Our indirect machines are our larger footprint systems, with such systems generally achieving a higher average sales value. We sold nine machines in the 2019 third quarter, compared with 15 last year.
Our 2019 third quarter machine sales included fewer and a lower proportion of our indirect machines in the third quarter of 2018. As you can see on the charts on the left, we sold four fewer indirect machines and two fewer direct machines in the 2019 third quarter, as compared with the prior year quarter.
The number of machines in the mix change and favorably impacted the machine revenue dollar decrease we saw in the last slide.
Despite a lower volume of units sold, our machine sales during the third quarter continue to represent a diverse set of global geographies and customer applications and included a mix of industrial and research and development users.
Related to our 2019 machine platform launches, the X1 25PRO direct printer introduced at RAPID this May and the S-Max Pro indirect printer introduced at GIFA this June. We expect our first deliveries and installation of these units to occur as part of our 2019 fourth quarter.
During the trailing 12 months, we sold 58 machines, a 32% increase over the prior 12-month period. You can see the increase in both direct and indirect unit sales, which grew 39% and 24% to 32 direct and 26 indirect machines in the 2019 trailing 12-month period respectively.
This increase is led by our Innovent+, our entry level direct printing platform, which we introduced to market in April 2018, as well as our market-leading S-Max for indirect applications. Now, let's turn to Slide 13.
Recurring revenue, which includes our 3D printed and other products, materials and services were $6.9 million in the third quarters of both 2019 and 2018. For the trailing 12-month period, recurring revenue was $25.5 million, down from $29.2 million in the prior year TTM period.
For the quarter, this reflects a sequential improvement over the past three quarters, driven by an increase in aftermarket sales, resulting from our increased global installed base of machines and a boost in our indirect printing services operations based on higher customer demand.
For the trailing 12-month period, the decline is primarily attributed to a lower volume of both direct and indirect printing projects and the impact of the exit from our Houston and Italy facilities, which contributed $1.6 million in the 2018 TTM period.
Again, these decreases were offset by an increase in our aftermarket sales based on our growing global installed base of machines. Turning to Slide 14, we’ll talk about gross profit and margin. Gross profit was $2.9 million, resulting in a 26.4% gross margin for the third quarter of 2019, down from a 39.6% margin for the third quarter of 2018.
The decline was primarily driven by lower revenue volume in the quarter, as our fixed overhead costs and product pricing remains stable. For the trailing 12 months, we realized gross profit of $20.8 million and a gross margin of 34.1%, up from $17.4 million and 29.3% in the prior year period.
The 2019 TTM increase was driven by a reduction in fixed costs, resulting from our 2018 global cost realignment program initiated at the end of June 2018. The improvement also benefited from lower net inventory impairment charges and facility exit costs. Please turn to Slide 15, and we'll discuss SG&A.
Comparing the third quarter of 2019 to 2018, our SG&A expenses were slightly up about $100,000 to $5.3 million. We continue to see stability in our operating expenses in general, following our 2018 global cost realignment program.
On a sequential basis, our decline in SG&A was driven by the incremental cost of the GIFA trade fair in our second quarter and certain executive compensation costs we discussed during our last teleconference. For the TTM period, our SG&A decreased by $1.2 million to $22.4 million.
The improvement was primarily driven by employee and consulting cost reductions associated with our 2018 global cost realignment program. Please turn to Slide 16, and we'll discuss our investment spending in R&D. Third quarter R&D expense remained unchanged at $2.4 million.
The 2019 TTM period reflects the benefits of our 2018 global cost realignment program, resulting in lower employee-related and consulting costs.
With our recent introduction of the X1 25PRO direct printing platform, and the S-MAX Pro indirect printing platform, as well as our announcement of the X1 160PRO direct printing platform earlier this week, we continue to show both the effectiveness of our investments in R&D spending, as well as the efficiency gain from the changes in our operating model.
Now, if you turn to Slide 17, I’ll review backlog. To remind you, our backlog includes firm orders received from our machine and recurring revenue customers and includes our firmly committed machine maintenance contracts, as well as the non-cancelable portion of our operating lease agreements.
Backlog also includes orders from our global direct and indirect printing operations and other contractual services. The $25.8 million we see at September 30, along with other opportunities on a global pipeline, support our Q4 for 2019 target of $20 million plus in revenues.
That said, there are always many variables that impact the realization of our revenue goals, including the pressure mounting on capital equipment purchasing decisions from the manufacturing climate and our ability to execute, particularly through the end of December.
Nonetheless, we remain confident in our business, given our expanding product portfolio and our leading position within the additive manufacturing space for binder jetting. Turning to Slide 18, this chart represents a waterfall of our first-half and Q3 2019 cash flows. Since I've reviewed Q1 and Q2 previously, I won't repeat that here.
Instead, I'll talk you through the Q3 section on the right. We had approximately $100,000 in cash capital expenditures for the third quarter. We anticipate approximately $500,000 of cash CapEx spending in Q4.
Working capital change has resulted in a source of cash of approximately $500,000 during the third quarter, benefiting from net cash inflows from customers, partially offset by an increase in net cash outflows, [famous to] suppliers for our inventory production and operating expenses to support our operating plan for the remainder of 2019.
We also borrowed $2 million against our credit facility to fund our operations. Our net loss net of non-cash items and other use $3.6 million of cash and we ended the third quarter with $6.1 million in total cash.
Our overall net cash outflow of approximately $5 million for the nine months ended September 30, 2019, excluding our $2 million borrowing, compares favorably with our net cash outflow of $10.2 million for the same period in 2018. If you turn to Slide 19, you'll see our total liquidity at the end of the third quarter of 2019 and year-end 2018.
At the end of the third quarter, we had $17.8 million of liquidity, compared with $22.6 million at the end of 2018. As mentioned on the previous slide, we borrowed $2 million against our related party revolving credit facility to fund working capital usage, leaving $13 million of remaining availability.
As I referenced on the last slide, which significantly cut our cash burn rate as compared to 2018 and our focus remains centered on profitable growth and operating cash flow generation for the business. As discussed, we’ve shown the ability to modify our operating model when necessary, our 2018 global cost realignment program as an example.
We remain focused on effective and efficient cost management within our business. We've also shown the ability to identify and execute on low-cost sources of liquidity to support our growth initiatives, most notably our related party revolving credit facility executed in March 2018.
We continue to believe that we have sufficient liquidity to support our near-term growth plans. That concludes my prepared comments. And now, I’ll turn it back to John..
Thanks, Doug. Please turn to Slide 21, and I'll discuss our outlook for the remainder of 2019. As indicated in our third quarter preannouncement, macroeconomic concerns have heightened customers uncertainty.
However, as is typical for us, we see the fourth quarter as our strongest quarter of the year, expecting revenue in excess of $20 million and positive adjusted EBITDA. We remain focused on effectively managing cost in cash, and we continue to prudently make strategic investments necessary to advance our leading position in binder jetting technology.
We maintain our key – keen focus on profitable growth. Please turn to Slide 22. I’ll briefly remind you of the pillars of our strategy. First, we've been expanding our customer and application focus, identifying new market opportunities, which will drive revenue growth and profits.
A good example of that is the collaboration arrangement we announced a couple of weeks ago with Global Tungsten & Powders, a global manufacturing of tungsten metal powders. Together, we are focused on 3D printing application using tungsten-based materials, commonly used for cutting tools, wear-resistant parts and high-voltage electrical applications.
Second, we are continuously expanding our technology core. As I mentioned a few moments ago, we are extremely excited about the three new machine platforms recently announced, which will fuel our future growth.
Finally, we initiated a renewed focus on recurring revenue, and I'm pleased to see a sequential increase in that recurring category, benefiting from our growing global install base, such an aftermarket revenue base will serve to minimize volatility and to drive bottom line.
This strategy is embedded in our operating plans around which all of our global ExOne team members are aligned. Please turn to Slide 23. Over the years, I know ExOne and others have talked about the 3D adoption journey.
This data on the slide was also extracted from the Ampower study and the steps are consistent with what we had experienced in sand printing and now are seeing in metal printing. The journey starts with awareness, which includes the determination of what is possible and where value can be added.
We believe that in many marketplaces are now aware of the many capabilities of binder jet technology. Next is the identification of a relevant application, which also considers optimal redesign to maximize the benefits of 3D printing in the assessment of costs.
Next is a testing process, which evaluates the resulting material properties and assesses the cost advantages. Potentially, the most time-consuming step is next, and that is qualification. This includes quality factors to ensure consistency, measurement of possible defects and the creations of the specifications for design, materials and processes.
At the end of the journey, is the consideration of the supply chain. This includes a make by decision and qualifying suppliers and the move to scale production, which incorporates multiple 3D printing machine installations. We have many customers in various stages of their journey from metal 3D printing.
As with any emerging technology, the pace of adoption will vary by customer and application. It is interesting to see Ampower’s assessment of the lead time as being one of four years, which is quite a wide range.
As more companies adopt metal 3D printing on their production floor, we are aware of the disciplined processes needed to ultimately realize the revolutionary benefits of 3D printing.
Accordingly, we need to manage our near-term expectations of the rate of growth of our industry for metal 3D printing, while retaining our confidence in the long-term market potential. Please turn to Slide 24. Well, I will close with a recent example of a metal 3D printing project.
We work closely with Altair, a global engineering software provider, to develop a lightweight structural part for a global automotive manufacturer. This existing part was redesigned in conjunction with Altair and 3D printed on one of our metal production machines using 316L stainless steel.
The results ideally demonstrate the capability of our binder jetting technology. 3D printed part is more than 45% lighter than the original part, and the weight – and weight is very important in today's automotive industry. The process to manufacturer the part has been simplified with fewer production operations required.
And the 3D printing part requires less welding to fix it to other structural parts in the vehicle, adding to the strength of the overall structure. This is one of several projects currently in process, so you can see why we are so excited about our outlook. That concludes my prepared comments. And now, let's open up the lines for questions..
Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Chris Van Horn with FBR. Please proceed with your question..
Good morning, everyone. Thanks for taking my call. Oh, good evening, excuse me..
Good afternoon, Chris..
Obviously, you've got some good visibility for the fourth quarter.
But I was wondering if you could give us any sort of sense on what your visibility is for 2020 with your new cost structure and some of the new printers that have come online? Anything directionally that you can maybe guide us to?.
Hi, Chris, this is Doug. We're certainly anticipating that we're going to get a balance and get some growth. With the product launches just hitting in the fourth quarter, really, that sets the tone for 2020. With certainly tempered expectations, given the manufacturing climate that's out there.
But at a minimum, we would expect to grow off of the 2019 end result..
Okay, got it.
And when you think about this, the X1 160PRO, you mentioned customer input, was that a variety of customers, or was it one in particular?.
Yes. Chris, this is John. So, from our standpoint, we have customers in those industries, I mentioned of automotive, defense and aerospace. Customers that we already either work with or in the process of working on evolving their processes to use binder jet printing.
Those customers had parts that were large – in some cases, larger than our current build boxes that we offer. And so that's where the size of the 160PRO comes in. And in other cases, had production, quantity and throughput demands that were larger than our 25PRO, such that it drove a higher throughput machine necessity.
So, in that regard, those are the inputs that gave us the requirements for the 160PRO..
Okay, got it. And then, with the – with – it sounds like the study that you cited that binder jetting technology is expected to grow pretty significantly.
I'm just wondering if you could maybe comment what that means from a competitive standpoint, and then maybe a little bit of how you'll be able to differentiate? I imagine, you're one of the first ones out there and then you've got a lot of track record.
But I imagine when people see these numbers, you'll see some competitors come to fruition, just any commentary there?.
Sure. Yes. That study is going to be published at Formnext which is the trade show in another two weeks or so. And not only does it talk about binder jetting taking more of the overall share of metal 3D printing, it talks about the growth of the metal platform or the metal segment of additive manufacturing, growing more than double during that period.
So, you're right, there's obviously a great opportunity and other people may be focused on this as well. We differentiate, firstly, based on our experience. So, we have done almost any material that's out there and have experience with that.
So that experience base gives us a great advantage when we're working with customers, who are going through that journey that I talked about. Secondly, we have existing machines in the marketplace. And so, we have production machines and we continue to drive our machine platform mix towards production.
Thirdly, I'd say, – I'm, as I mentioned, the Industry 4.0 and Siemens partnership on our sand printer that we introduced in June, I've been really satisfied with the customer feedback that that Industry 4.0 Siemens partnership has driven, because customers envision not one or two of these machines in a factory, they envision multiple machines.
And therefore, the – that linkage to the digital manufacturing thread is really important to them. So, those are three examples and there's more. And frankly, it depends, different industries, different customers have different elements of this. So, we feel confident in our ability to maintain a leadership position here..
Okay, thanks for all that detail. And then last for me. You've gone through a big kind of cost efficiency exercise. And I'm just wondering, do you see – it feels like you've done a lot at it. I'm just curious if you see any more, I'm sure you'll continue to try and identify.
But how do we think about the kind of the margin structure going forward?.
Sure. You're right, the 2018 program, which really, I mean, we had exhausted by the end of last year’s fiscal year in terms of taking action was a big move for us and you can see it in the overall results. We got to stay nimble.
We're certainly keeping our minds open to how to manage and – manage the costs relative to what we see in terms of external demand and market interest in the product, and other movements in the economy. So, we have to be nimble in that area.
We definitely have the experience of the 2018 program to lean on when it comes to analyzing the company's cost and considering where we might be able to pick. But I wouldn't – we don't necessarily expect a significant action like that in the near-term is just, we're going to have to be surgical in our approach..
Okay. Thank you again for the time..
Appreciate it..
Thank you. [Operator Instructions] Our next question comes from the line of Brian Kinstlinger with Alliance Global Partners. Please proceed with your question..
Hi, good evening. Thanks. On the preannouncement, it sounded like your revenue would grow for the year albeit at a slower rate than previously expected. But the $20 million suggests that they'll be a down year.
Can you talk about if anything's changed over the last few weeks since you put out that press – last press release?.
Sure, Brian. This is Doug. So, when we put the release out and really looking at the different scenarios that were available to us, we saw scenarios that resulted in a likely growth model for the full-year.
Over the last several weeks, we've seen continued stretching and order flow and in discussions with customers, and it just doesn't give us the confidence level to continue to support that as the likely outcome for the full-year..
Great.
And then on the $25 million in backlog then, are you seeing orders taken then the customer asks for that product to be delayed in shipping hold off essentially, is that what's happening?.
Yes. Some of the $25.8 includes 2020 projects. And, in fact, even since that date and when you consider what we've negotiated through October, a lot of customers are looking at early 2020 installations.
So, it's just one of the factors you have to deal with, with a couple of major holidays in the fourth quarter that to do an installation of a major piece of capital equipment that starting fresh in the New Year oftentimes becomes something that we have to face.
And so, we've had some really nice wins, but unfortunately, they're not going to be 2019 completions..
Now, are those customers required to accept those machines eventually, or could they back out?.
Well, for the most part, our terms have significant payments upfront. So, we rarely have a situation, where anyone would back out. So, that is unlikely and it's not been our experience in the past. These customers are committed.
It's just that their timelines create a – whether it's facility readiness, or other technological elements create a desire to have those machines installed in early in 2020. But as Doug said, we've had some nice wins and continue to have a strong interest in our platforms.
But the uncertainty in the overall manufacturing economy sometimes pushes capital expenditures out a little bit..
Right, sure. But in the face of these challenges, you mentioned you thought next year you get a positive, or at least grow on these numbers. And I'm guessing that not as fast as you may have thought you were going to grow previously.
But what gives you that confidence that the two new printers will be adopted and ran pretty quickly in the face of these challenges?.
I think we look at two factors. One being that you got to look at the timing of the product launches itself. Again, the 25PRO we introduced in May and the S-Max Pro really in June, and the deliveries are just coming online here in this quarter. So, for a major capital investment, companies want to see this thing run a little bit.
They don't want to come in and touch it and feel it.
And so we don't feel like we've gotten the traction this year that we're likely to get in 2020, just based on those introductions, which are compelling, the 25PRO being the fastest and the largest box size for direct metal printer for finer powders that we've had in our history, and the S-Max Pro at speeds significantly faster than the prior indirect model that we had.
But you got to look at the backdrop of what's going on in industry and see that the manufacturing environment as an offset has to temper your expectation against even that, our ability to have those products out there.
The one thing that we've been happy about is that, is it our share? When we look out at market, where we're certainly not under pressure from competition, customers that we've talked to for a long period of time, including repeats have come back to us and are talking about upsizing their installations.
So, those are all positive factors that the product is working and that there's a deeper investment that's on the horizon. It's just not going to happen in a short period of time, where you see a major pop over a short quarterly or six-month period..
Yes.
The only other thing I'd add to that is just the backdrop of the – whether it's Ampower, Roland Berger, a range of other consultants and industry analysts that very deeply know the industry are extremely bullish on binder jetting as a technology because of the advantage of costs and scale that it continues to allow customers to move from pilot production into – or prototype production into volume production.
So, that overall trend is there as well..
Great.
Lastly, can you just give in the current cost structure talk about or quantify what your adjusted EBITDA looks like on $20 million of revenue in a quarter versus a $25 million?.
Sure. I mean, at a $20 million level, we're obviously targeting positive. I know that's – it’s not going to be – we would anticipate that a $20 million or probably more like around 1 million..
And then incremental revenue had at gross margin of 40% with limited overhead, is that how we should think about it?.
Sure. On the incremental revenue, we would sort of anticipate a $0.50 drop to the bottom line. So, to 25 clip, you're talking about 2.5 incremental..
Got it. Okay. Thank you so much..
Sure..
Thank you. We have no further questions at this time. I'd like to turn the floor back over to management to closing comments..
Great. Thank you for your time today, and thanks to our team members around the world, who worked hard to drive collaboration, innovation and acceleration for the digital transformation of manufacturing. We look forward to updating you on our fourth quarter progress in March. Thank you, again, for your interest in ExOne and have a great evening..
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..