Good day, and thank you for standing by. And welcome to the Q1 2024 Comfort Systems USA Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded..

I would now like to hand the conference over to your speaker today, Julie Shaeff, Chief Accounting Officer. Please go ahead. .

Thanks, Justin. Good morning. Welcome to Comfort Systems USA's First Quarter 2024 Earnings Call. Our comments today as well as our press releases contain forward-looking statements within the meaning of the applicable securities laws regulation. .

What we will say today is based on the current plans and expectations of Comfort Systems USA. Those plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments.

You can read a detailed listing and commentary concerning our specific risk factors in our most recent Form 10-K and Form 10-Q as well as in our press release covering these earnings. .

A slide presentation has been provided as a companion to our remarks. This presentation is posted on the Investor Relations section of the company's website found at comfortsystemsusa.com. .

Joining me on the call today are Brian Lane, President and Chief Executive Officer; Trent McKenna, Chief Operating Officer; and Bill George, Chief Financial Officer. Brian will open our remarks. .

Thanks, Julie. Good morning, everyone, and thank you for joining us on the call today. 2024 is off to an outstanding start, with strong revenue, fantastic margins and continuing strong cash flow. Our dedicated teams across the country achieved superb execution, and I am deeply grateful for their hard work and commitment.

We earned $2.69 per share this quarter compared to $1.59 a year ago. .

Our revenue was $1.5 billion with same-store growth of 23%. Our mechanical business exceeded last year, while our electrical segment achieved unprecedented margin. Backlog is $5.9 billion, up both year-over-year and sequentially on a same-store basis. Construction continues to thrive amid strong ongoing demand and service is performing at high levels. .

In February, we closed 2 substantial acquisitions, Summit Industrial and J & S Mechanical and they, too, are off to a great start. Both of these companies are included in our mechanical segment. We also increased our dividend by 20% adding $0.05 to reach $0.30 per share.

This increase reflects our continuing strong cash flow and our commitment to reward our shareholders. I will discuss our business and outlook in a few minutes. But first, I will turn this call over to Bill to review our financial performance.

Bill?.

Thanks, Brian. I can't help but also express my gratitude to the people who are working every day to create these amazing results. So as Brian noted, Revenue for the first quarter of 2024 was $1.5 billion, and that is an increase of $362 million or 31% compared to last year.

Same-store revenue increased by 23% or $266 million, with the remaining $96 million increase resulting from acquisitions..

Our mechanical segment revenue increased by 29% and our electrical segment revenue increased by 37%. We did not experience as much seasonality in this first quarter as we have in the past as an increasing proportion of our work is being performed in warmer climates.

Additionally, weather in our colder climates was favorable for construction this quarter and with the strong growth in modular, more of our work is being performed under roof inside our modular plans. .

We are also facing tougher prior year comparable results for the remainder of this year. However, our best estimate is that we will achieve same-store percentage revenue increases in at least the mid-teens and more likely in the high teens for the full year.

Gross profit was $297 million for the first quarter of 2024, a $92 million improvement compared to a year ago. Our gross profit percentage improved to 19.3% this quarter compared to 17.5% for the first quarter of 2023. .

The quarterly gross profit percentage in our electrical segment improved to 22.6% this year as compared to 16.1% last year. Margins in our mechanical segment also increased in the quarter to 18.4% as compared to 17.9% in the first quarter of 2023.

Our mechanical segment includes our modular business, which operates at lower margins than our remaining business..

EBITDA improved markedly to $170 million this quarter from an already strong $90 million in the first quarter of 2023. Same-store EBITDA increased by over 70%.

Although the first quarter benefited from the favorable factors I mentioned earlier, and our underlying trends are strong, we expect that for 2024, EBITDA margins will continue to trend in the strong ranges that we have achieved over the last several quarters and we are optimistic that full year EBITDA margins in 2024 will match or exceed our high 2023 results..

Gross margin should also remain strong, but gross margin percentage may be more variable in 2024 in light of the effect of amortization and certain purchase-related adjustments. SG&A expense for the quarter was $163 million or 10.6% of revenue compared to $135 million or 11.5% of revenue in the first quarter of 2023.

On a same-store basis, SG&A spend was $19 million higher due to ongoing investments to support our higher activity levels. .

Our operating income increased by 91% from last year from $71 million in the first quarter of 2023 to $135 million for the first quarter of 2024. With improved gross profit margins, and favorable SG&A leverage, our operating income percentage increased to 8.8% this quarter from 6.0% in the prior year. .

Changes in the fair value of our earnout obligations this quarter reduced our income by $12 million, and that was caused by the variability noted earlier, and it was triggered by strong early performance at our recent acquisitions.

We always have purchase-related adjustments in the periods following an acquisition; however, they will likely be much larger over the next several quarters because of the size of the Summit and J & S acquisition and the significant contingent consideration opportunities that were included in those transactions..

Our first quarter tax rate was 21.7%. We currently estimate that the full year 2024 tax rate will likely be in the 21% to 22% range. After considering all these factors, net income for the first quarter of 2024 was $96 million or $2.69 per share. This compares to net income for the first quarter of 2023 of $57 million or $1.59 per share. .

Free cash flow for the first quarter of 2024 was $123 million. We continue to benefit from advanced payments for work that we will fund and complete in upcoming quarters. And operating cash flow continues to exceed our earnings by about $300 million on a trailing 12-month basis.

Over the coming quarters, we expect that eventually pre-bookings and equipment advances will normalize, creating some cash flow headwind. In the meantime, these collections have allowed us to invest in growth and fund acquisitions from current cash flows, while lowering interest costs..

Our total debt, as of March 31, 2024, was $90 million with no funded debt from our banks, and that was despite large cash payments for the Summit and J & S acquisitions in February. As Brian noted, we also increased our dividend. .

Before I close, I want to mention 1 additional item, which is not directly relevant to our financial results, but that I wanted to flag for awareness. Last night, at Texas jury returned a jury verdict because one of our subsidiaries relating to a 2019 safety incident. The jury verdict was over $70 million.

And that pencils out to about $48 million for us. Assuming this jury's verdict is entered by the judge, we will pursue a number of strong appeals. Even if the appeals are unsuccessful, this event is not expected to have an impact on us financially. That's all I have, Brian. .

All right. Thanks, Bill. I'm going to discuss our business and outlook. Our backlog at the end of the first quarter was a record $5.9 billion. Since last year, our backlog has increased by $1.5 billion or 33%. And about half of that increase was same-store growth, and the other half was new backlog from companies we acquired..

Our sequential backlog increased by $754 million, of which $612 million related to acquisitions. Our same-store sequential backlog increased by $142 million and pipelines remain strong. Our revenue mix continues to trend to its data centers, chip fabrication, battery plants, life science and food. .

Industrial customers accounted for 60% of total revenue in the first quarter and they are major drivers of pipeline and backlog. Technology, which is included in industrial, was 30% of our revenue, a substantial increase from 19% in the prior year.

Institutional markets, which include education, health care and government, are also strong and represent 23% of our revenue. .

The commercial sector remains reasonably active in the regions that we serve, but it is now part -- a smaller part of our business at about 17% of revenue. The majority of our service revenue is for commercial customers. So the share of our overall construction revenue from commercial has become relatively small.

Construction grew quickly and drove great results for us this quarter. .

Overall, construction accounted by 84% of our revenue with projects for new buildings representing 59% and existing building construction 25%. We include modular and new building construction. In modular, this quarter, with 16% of our revenue.

Service revenue increased this quarter, but because of the growth in construction, even with the service revenue increase service fell to 16% of total revenue. .

Service, which remains seasonal, continues to be a great source of profit and cash flow for us. Comfort Systems USA is thriving, and our team members across the country are delivering exceptional results. Thanks to their excellence and in light of the strong ongoing demand, we are optimistic that we will continue to achieve strong results in 2024. .

Safety, execution and innovation remain at the forefront of our operations. We believe that our commitment to our employees and to building legacies is the foundation of our success. Our #1 priority is to preserve and grow the best workforce in our industry.

And so as always, I want to thank -- I want to close by thanking all our 16,500 employees for their hard work and dedication. .

I will now turn it back over to Justin for questions. .

[Operator Instructions] And our first question comes from Alex Dwyer from KeyBanc Capital Markets. .

Congrats on a strong start to the year. So the EBITDA margin was very strong this quarter, and the guide for this year continues to call for similar last year.

Can you just talk about the potential for margin expansion over the rest of the year? Is it just that the comps get tougher in the back half? Or is there something in the recent performance that like isn't sustainable as we progress through this year?.

Well, this is Brian. I'll go first and then Bill can follow up. I mean we're really pleased with the margins that we have right now. If you're in that gross margin, 18% to 20% range, I think you're executing at a high level over 19% for the quarter. So I think we're going to continue to be in that range throughout the year. .

We'll have broad-based excellent performance across our operating companies. So I mean, might have a little fluctuation up or down as we go, but in general, our performance has just been excellent. .

Yes. Like as we noted in our -- in the opening comments, we're definitely anticipating expecting our EBITDA margins for the full year to stay up near last year, right? and the recent amazing results we have, and we're optimistic we can do a little better.

I will say, as you pointed out, later this year, we hit some very tough comparables, right? We had extraordinary growth and increases really progressively throughout the year and especially in the second half of the year last year.

So one of the things you're seeing is even though, last year, the first quarter seemed like an extraordinary quarter, and it was, it got so much better later in the year that we're just facing tougher comparables. .

We're extremely optimistic, but they are tough comparables, and that's why we're giving that guidance. .

And then the organic backlog growth was very strong this quarter.

Can you talk about what end markets drove that strength? And if there was any like larger modular orders in there? And do you think it's fair to assume like backlog can continue to increase sequentially through this year?.

I mean, in terms of the backlog, it's broad-based. We didn't get one surge in any particular segment. It's really reassuring to us here to see multi-sectors, particularly if you're talking about the tech sector, manufacturing, education, see at the university level strong and health care, outpatient and hospitals.

So we're seeing good balance across the board. .

And as far as what might happen in the coming quarters, I would actually surprise me at some point not to see some sequential declines, right? You can't -- especially as we get into the summer and the revenues get really big. Historically, we've always had sequential declines in the middle of the year except for lately.

So I've been -- like I said, it wouldn't surprise me, but to be fair, I haven't been surprised quarter after quarter for the last several quarters. .

The demand is unmatched. There's never been more demand for our services and our guys are turning away work. But at some point, you can only take so much work.

And so I think you'll see backlog stay at extremely high levels, but I don't think, you should say, yes, for sure, every sequential compare, will be up that's really not historically what happened. .

And then last one for me. The Summit and J & S acquisitions are off to a strong start this year.

Is there anything different about the integration of them into your business, given these are so large? And then can you talk about the appetite for more deals through the year?.

I'll just start on the integration. The outlies, one of a little bit of advantage you have in the outlies is that you get a little bit more horsepower in the back office to handle public company requirements. These are both very sophisticated companies, excellent workforce, great leadership.

So we're working pretty closely with them to make this as smooth as possible. But -- plus they got a great attitude integrate themselves, which is a huge help. So far, off to a great start. .

Yes, I couldn't agree more. We -- for us, the integration, the biggest thing we try to do in integration is keep what's great about a company and keep it going and keep it that local excellence continuing. And so that's an advantage we have since we're not trying to change things. That makes integration a little easier. .

And our next question comes from Adam Thalhimer from Thompson Davis. .

I wanted to stick on Summit and just see kind of what you're seeing so far, specifically from chip plants kind of the timing of those projects?.

They have great work going on and great prospects. They also have a big solar fab, and they have -- these guys can do very perfect to do the big hard work that the country needs right now. That's why we want -- we were so excited to buy them. But right now, it's full speed ahead. .

Yes. You know, Adam, in terms of their skill set, they're looking at a lot of opportunities in pharmaceutics, et cetera. So this feels replicable to a whole bunch of industries. .

Okay.

What kind of capacity growth potential do they have as you start getting more into markets?.

So when we buy a company, we don't push them to grow. We basically push them to do well. Well, we push them to grow their workforce to really, really put their arms around and grow their workforce, which leads to growth in almost every case. But I would not say for us, that's a growth story.

I think like almost any company we buy, they will grow over time. But for us, it's just an excellence story to keep your workforce busy. .

And then I wanted to ask about specialty contractor capacity.

Is it still -- do you think as tight now as it was kind of a year or 2 ago? And are you still booking work further out?.

Yes. Adam, for sure, it's still tight. We've been very fortunate to recruit some outstanding people on the human resource side. We're attracting some great talent, but it is still tight. But we're in a good place to work. We offer great compensation package, the opportunity to develop. We like to promote from within. .

So I think that will be a struggle for a while. But we have good work, people like working here. So I'm very optimistic about the future. .

All right. And Bill, just a quick modeling thing.

What do you have for D&A in Q2 since we only had the acquisitions for part of Q1?.

So we had 2 months of those guys. I think it's -- we put -- if you look in the footnotes, we actually have a table where we tell you exactly. Well, I'm on exactly what we think it's going to be. So just you can go get the actual numbers from one of the footnotes. .

I was being lazy. .

Yes. Well, I have been lazy too because I have to go look at it myself. It's big. Like you saw the pop, right? And that was only 2 months of those guys.

But you're only required to publish that schedule once a year, but we've published it -- we certainly publish it every quarter after we do an acquisition because those noncash charges, they're so -- they really -- it's crazy that we're -- that we reduced our earnings by that, right?.

People want to know what the asset they own is doing, but GAAP is GAAP, and so that's what we do. .

Our next question comes from Josh Chan from UBS. .

Congrats on a really good quarter.

Could you talk about the bidding environment for potential projects that even are before backlog, anything changing there? And how is pricing on those bids that you're putting together?.

Yes. So in terms of the pipeline preorder, it's still very robust, it's still broad-based. Pricing is still reasonable for sure. It's a great opportunity for us to work fo our really good customers, be very selective in the acquisition process. We don't chase revenue, chase new opportunities and the work that we're good at.

But in terms of the sectors that I hit on the floor, the operations -- the opportunities are very consistent still today. .

No letup. .

No letup. .

Okay. That's great to hear.

And then on the data center side, could you just talk about how your conversations are like with your data center customers? And any kind of update in terms of your thinking on when you might be able to expand modular capacity again?.

These are big organizations. So you're not just talking to one part of the organization, right? You're talking to the people who desperately need the capacity and who understand how to partner with us. And you're also talking to parts of the organization whose job it is to purchase things and to try to get the lowest price. .

I would say that things are as expected. And our -- what we try to do is just be a great partner for people. And if really we do our best work and get the best value for people who reciprocate that, but I don't know that anything has changed. Essentially, we -- they are in all paths to market mindset. So they love getting this stuff built modularly.

They're hiring our contractors who build it in the traditional way. I just think that the demand is so great that they're just looking for people who can help them do what they need to do, and we love to do that for people who want to partner up. .

George, I'll just add on a little bit to the opportunities.

One of our strengths is the size of Comfort and the geographic spread we have opportunity is share labor, it's really an advantage that us and a few of our colleagues of the country have, give some of these larger opportunities that we can handle both financially and from a resource basis, including when you think about our suppliers, we're a good company to do business with.

So our size right now is really helping us. .

And we use that size to be a partner to people. Not -- we don't try to use it against people. .

Right. .

Any thoughts on whether you could expand capacity at some time later this year or into next year?.

So if you're talking about modular, I would say that, that is not something that we are currently making plans around, but we are evaluating. .

Okay. All right. And then just a modeling question. So EBITDA margins usually go up from Q1 to Q2? I know, Bill, you mentioned the lack of seasonality in Q1, but I was just wondering your thoughts about whether you can see a typical sequential margin expansion into the next quarter. .

Yes. So EBITDA margins do typically go up from the first quarter to the second quarter. But first quarter have never been all-time highs by extraordinary amounts. So it's a very insecure time for us to start saying it's going to -- we're going to have sequential uptick in margins, only because of how high they are in the first quarter. .

I'm more comfortable talking about doing better this year than last year, right? But 1 quarter -- this is a quarter where our EBITDA was up 70% on a same-store basis. We need to adjust to that in our brain. .

We stick around the margins, we'll be happy folks. .

And our next question comes from Julio Romero from Sidoti & Company. .

Can you maybe talk about the margins you're seeing in construction? Are they trending upward? And are you seeing any fixed cost leverage as that modular business continues to grow?.

For sure, construction margins increased the back half of this year into this year, we -- there's a lot of multiple reasons for it, but the current [indiscernible] is good job selection with good customers.

But I got to tell you, we're executing in the field, which has always run [indiscernible] for me at very high level, really are very grateful to the folks that go out to these jobs every day and the work they're doing. So mines are up. And to me, a lot of it's about the execution that we're getting. .

Got it. Now great execution. I'm just curious if there's any kind of fixed cost leverage that you see there as that grows. .

Well, you saw our SG&A obviously dropped from 11.5% to 10.6%. I would say we are definitely making investments to accommodate our growth in every -- from all sorts of back office sales. But with revenue increasing the way it is, it certainly seems like our SG&A can't go up as fast as that.

So I don't think you'll see worse SG&A leverage over the course of the rest of this year. .

Now revenue increases. If we tell you we're going to be sort of in the mid-teens and more likely in the high teens in revenue increase, and we were in the 20s this quarter, that means it's going to average down some. So I would say maybe we don't get additional leverage.

But -- so I don't think you'd see additional leverage sequentially, but I think year-over-year, you're going to see a ton of leverage and I don't even know that's just a guess, right? And it will -- the important part is year-over-year as far as how the math comes down into what we're doing. I hope you followed that.

I think I wasn't very clear in that answer. .

No, that was a good commentary.

And what's your best guess as to when you see some of this cash flow reversal is expected?.

Well, so our history of getting that right is poor because it keeps waiting -- it keeps happening later. I'd say late this year probably at some point. There is a sense in which it did flatten because we're going to show you a slide in our investor presentation.

Last quarter, we had a slide in our investor presentation that showed that we had earned, while we had cash flow $300 million more than we had earned in 2023. You're going to see at the end of the first quarter that on a trailing 12-month basis, we will have cash flow more than we have earned by $300 million, here's the thing.

So the $300 million didn't go up, right? It didn't go down but we didn't get in our same-store businesses we did inherit some advanced cash from our acquisition, especially at Summit. .

But in our same-store businesses, we didn't get farther out. So I think before you start to give some of it back, the first thing that happens is you stop getting more of it. And there were certainly signs in the first quarter that we stopped getting more of it.

Having said that, we're earning so much money that cash flow -- a big -- when I looked at why our cash flow was still so big in the first quarter, in the past quarters, it's been a lot of earnings and advanced cash. This quarter, it was just a lot of earnings and not giving back advanced cash. .

So there is signs of that flattening out as it literally has to, right? If you -- if somebody pays you to do a bunch of welding and electrical work, sooner or later, you got to go do the welding and electrical work. And the welders and the electricians, you're going to pay them. You're going to have to pay them.

It's a fantastic problem to have, not really a problem. But it will look like a problem at some point because at some point in the future, our cash flow will be less than our earnings by the amount that it was more than our earnings. And it's a high-class problem. .

And our next question comes from Brent Thielman from D.A. Davidson. .

I'm going to ask about margins, sorry.

I guess -- you look at this quarter, I mean just take a step back, is the margin performance because you're getting paid more generally for what you do or that you have the perfect mix of projects where you get paid more or you're just that much more productive in the field?.

I would say all 3.

But the thing that we really can control on an everyday basis is how we're doing in the field and Brent you heard this from a lot of times different version of prefabrication, [indiscernible] the more work we can do sort of inside building [indiscernible] in the field, the more productive, safer, and the higher quality of the work is and we're doing more prefabrication every day.

So -- but it's a combination of all 3 for sure, but we did -- we really cannot minimize how well we are in execution on a per person basis at these job sites, including service. We're talking a lot about construction. But our service folks are doing a hell of a job as well. .

And the other thing you got to mention is electrical, like our electrical margins popped by 600 basis points this quarter. And what was amazing about that, we had something like that 1.5 years ago where we had an extraordinary gain in the quarter.

This was just a mixture of everything good that can happen to a business because they're doing a great job. And our customers really value the ability we have to go out and bring the manpower that's needed to do big jobs, and they're allowing us to really reward the people so that we can keep doing that. .

So electrical is mind blowing, really amazing quarter. And you can say, well, is that a onetime blip? And the answer is, I wouldn't bet against them. I mean they might -- it's pretty hard to stay at this percentage, but I think they're just going to they got a long runway ahead of them of doing well. .

Okay. And just looking back, I don't think you guys have ever had a year when EBITDA margins for the rest of the year were below the first quarter. And I know the company and the mix has evolved quite a bit in the last 10 years. I heard your comment kind of perfect storm of weather both sides.

But I'm just trying to unpack the reasons why we should be careful in thinking that this is tough to repeat [indiscernible].

And there's one reason that we are -- our EBITDA on a same-store basis was up 70% in the first quarter. It's pretty hard to have -- see that happen and say, "Oh yes, there's our new baseline." Right? So I understand. I -- we don't know what's going to happen, but these margins are for a first quarter. They are extraordinary.

Now do I think we've got extraordinary margins in our future? I do. But on a comparable basis, it's a tough comparable. If we were about to hit tough comparables from the prior year, then our first quarter was comparable for the ages. But we're about to make a lot of money. We'll go for it.

Yes, we'll make as much money as we can, and you can figure out what that means. .

I got an idea. Okay. I just wanted to come back to modular. I mean I think you're essentially booked in 2024.

To what degree do you still have available capacity in 2025 to fill? And are conversations starting at all for 2026?.

I would say we believe that if we had more capacity, we could sell more than we have capacity for in '25. We have more of our capacity in '25 sold than we would have thought was possible. And we don't think people are going to -- we don't think all of these factors are going to end by '26 -- by '26 along, we don't have bookings.

We don't have the floor planned for the middle of 2026. You know what I mean. Nobody is doing manpower loading schedules right now for the Winter Olympics. . .

Yes, that's a long time out. And then maybe if you could just talk about the progression with new customers and modular.

I know you don't want to talk about name specifics for obvious reasons, but how are you being able to diversify the customer base in that business?.

So things are going great with our second large customer. We like them, they like us. The product they've designed, we think, is very, very clever and going to do a great job for them. We sold as much as we would have hoped as we could sell by now. .

As far as diversifying the thing that keeps us from diversifying is that fantastic customers are willing to buy all of our capacity. Like we reserve a little bit of that capacity for a lot of long-time pharma customers who really rely on us to do certain things that any other people would have a hard time doing.

We have to do that, right, because we owe it to them. But in general, so far, those 2 customers want all we can do. And they've earned first. Really, frankly, they've earned first look and last look. They've earned first look and last look they're great partners, absolutely. .

And so as long as they're good partners, we take what the market, we do the -- the skills we have are applicable to all kinds of things, right? It's not like -- but in our market, it's always lumpy. And it's always the case that whatever the -- there's more of something in any given year.

And right now, we're sticking with guys that need what we can do, and we -- they've been great partners, and they've earned our loyalty. .

They've asked us, what do we need to do to have all of your capacity? And we said, well, this would be what you need to do, and they've done it.

And they've asked us if -- last year, they said, what do you need in order to expand your capacity? And we said, look, for to be fair to our shareholders and the risks that we take and the cost we did incur, we need these kind of commitments and they made them. And so we're keeping our commitments to them. .

Yes. Maybe just one last one, guys. I mean, I think it's obvious that the opportunities in data centers has brought a lot of attention to the company and the stock from investors. And clearly, I think it's driving a lot of growth for you.

Maybe just your perspective, is that overemphasized relative to some of the other things moving the needle for your business right now? You talk about manufacturing, industrial capacity I'd just be curious to your thoughts to that. .

Well, I mean, I think it's logical that people focus on data centers as you and I were turning a couple of weeks ago was everybody's favorite topic, but if you look at the other stuff we've got going on, just taking Annapolis, for example, how much pharmas going on -- food, there's a lot of sectors that are very busy in work that we're good at.

When you're talking about battery plants, food, pharma, hospitals, education, university work is still very strong. .

So I think we're seeing multi-sector activity. I think data center is going to get a lot of attention for a while. But those other sectors, we love them, winning a lot of work in them and the work is going well. .

And I'm showing no further questions. I would now like to turn the call back over to Brian Lane for closing remarks. .

Okay, Justin. So in closing, I really want to thank our amazing employees once again. We are really grateful for their daily efforts. We do appreciate everyone's interest on the call in our business. It's great to talk about it, and thank you. .

I'm very optimistic about 2024. We've got great customers. We've got great people and really looking forward to how the year pans out and as well we've seen most of you on the road probably here pretty soon. So thanks for that, too. And I hope everyone has a great spring. Thanks, and enjoy your weekend. Thanks, folks. .

This concludes today's conference call. Thank you for participating, and you may now disconnect..