Good day, ladies and gentlemen, and welcome to the Q1 2014 Kadant Inc. Conference Call. My name is Whitney, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. .

I would now like to turn the conference over to your host for today, Mr. Thomas O'Brien, Chief Financial Officer. Please proceed. .

Thank you, operator, and good morning, everyone, and welcome to Kadant's First Quarter 2014 Earnings Call. With me on the call today is Jon Painter, our President and Chief Executive Officer. .

Before we begin, let me read our Safe Harbor statement. Various remarks that we may make today about Kadant's future expectations, plans and prospects are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Our actual results may differ materially from these forward-looking statements as a result of various important factors, including those outlined at the beginning of our slide presentation and those discussed under the heading Risk Factors in our annual report on Form 10-K for the fiscal year ended December 28, 2013.

Our Form 10-K is on file with the SEC and is also available in the Investors section of our website at www.kadant.com under the heading SEC Filings. .

In addition, any forward-looking statements we make during this webcast represent our views only as of today.

While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change, and you should not rely on these forward-looking statements as representing our views on any date after today. .

During this webcast, we will refer to some non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles.

A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is contained in our first quarter earnings press release issued yesterday, which is available in the Investors section of our website at www.kadant.com under the heading Investor News. .

With that, I will turn the call over to Jon Painter, who will give you an update on Kadant's business and future prospects. Following Jon's remarks, I would give an overview of our financial results for the quarter, and we will then have a Q&A session.

Jon?.

Thanks, Tom. Hello, everyone. It's my pleasure to brief you on our first quarter results, as well as update you on our outlook for 2014. .

Overall, we had a great quarter with record bookings and adjusted EBITDA. I'll begin today's business review of the financial highlights of the quarter. We finished the quarter with revenue of $93 million, which was up 23% compared to the first quarter of 2013. Gross margins remains strong at 45%.

Operating income was $7.6 million, up 3% compared to Q1 of last year. More importantly, our adjusted EBITDA was a new record at $12.7 million or nearly 14% of sales, up 36% compared to Q1 of last year.

Our GAAP diluted earnings per share was $0.45 in the first quarter, including $0.02 of restructuring costs and $0.13 of expense related to acquired profit in inventory and backlog associated with the businesses we acquired last year.

Without question, the highlight of the quarter was our record bookings, which increased 27% over Q1 of last year to $115 million. .

Turning to our revenue performance. You can see that all of our product lines are up for the first quarter. The most significant contributor to our year-over-year revenue growth was our acquisitions, which contributed $19 million to Q1 revenue. Excluding acquisitions, our Q1 revenues were down slightly compared to the same period last year.

I'll discuss this in more detail when I cover our business activity in the specific regions of the world. .

As I noted, the highlight of the quarter was our record bookings. I also noted on our last call that we anticipated a significant step-up in bookings in the first half of 2014, and I can say they're coming in about as we expected. Our bookings of $115 million in Q1 were up 27% compared to Q1 of last year with acquisitions contributing $16 million.

Excluding the impact from acquisitions, our bookings were still up 9% compared to the same period last year, which was an excellent start to the year. The strong bookings performance was broadly based with all of our major product lines increasing 20% or more. It was also a solid booking quarter for both capital and spare parts.

Very strong capital bookings in our Doctoring, Cleaning & Filtration and Stock-Prep product lines in North America contributed to a 38% increase in global capital bookings in Q1 compared to Q1 of last year.

I should also note that our Wood Processing Systems product line is off to an excellent start in Q2 with nearly $7 million worth of major orders booked in April. .

Overall, I'm very encouraged, not only by our booking performance in Q2, but also by the continued activity level we are seeing in Q2. The bookings and revenue trend charts on Slide 8 shows our quarterly revenue, which is the red line; and our bookings, which are the blue bars.

Although Q1 revenue was down slightly from Q4, the record bookings in Q1 will boost revenue in the coming quarters. .

Finally, as I mentioned, bookings were up nearly 37% sequentially to a record $115 million. Our revenue for Parts and Consumables was also a record $61 million for the first quarter and made up 65% of our revenues. The companies we acquired last year had very strong Parts and Consumables business, and this has led to our record results.

Revenue was up 3% sequentially and 19% over Q1 of last year, with particularly strong performance in our Fluid-Handling product line. We also had record Parts and Consumables bookings, which were up 20% over Q1 of last year and 18% sequentially. .

I'd now like to take the next few minutes to provide a brief review of our business activities in each of the major geographic regions of the world. Let me start with North America. North America was definitely the star of Q1 with the strongest regional performance in both bookings and revenues.

Our revenues in North America were up 38% compared to the first quarter of 2013 to $54 million, and up 32% sequentially. Most of our major product lines had substantial increases in revenue. .

Overall, I can say we're seeing a very good environment for capital investment, particularly in the U.S. There are several rebuilds going on in this year, as well as conversions from newsprint to container board such as PCA's conversion of its newly acquired mill and driller Louisiana.

Bookings in North America in Q1 were $70 million, up 61% compared to the same period last year and 60% sequentially. All of our major product lines have significant increases in bookings. The addition of Carmanah, which is based in North America, it was also a major contributor to our booking performance.

I should note that Q1 included a large Stock-Prep capital order for a customer in Mexico valued at more than $11 million, that I mentioned in our Q4 call in February. .

We continue to see a very healthy level of a project activity in North America, including several large chemical pulping projects in the U.S. For the last several years, we focused on developing product offerings for virgin fiber. The fiber cost for virgin mills in the U.S.

Southeast are the lowest in the world, and this low cost advantage is driving increased capital investments, which in turn, is providing opportunity for our Chemical Pulping business. .

The market in Europe is not as strong as North America, but we are seeing growing signs of improvement. Our Q1 revenues in Europe were $20 million, up 17% over Q1 last year, but were down 24% sequentially from a relatively strong Q4. Q1 bookings of $25 million were down 9% compared to a strong Q1 of last year, but were up 27% sequentially. .

2014 is off to a good start in Europe. So far this year, we've received orders for 2 Stock-Prep systems upgrades for customers in Turkey with a combined value of more than $3 million, and an order for a dryer system section rebuild for a customer in Russia. Needless to say, we are cautious about the situation in Russia.

At this point, however, our exposure is fairly limited with only $1.7 million of our backlog from customers in Russia. .

Next, let's take a look at China. The economy in China has remained relatively weak and investments in new capacity seem to be shifting to investments in improved efficiency. While the focus on efficiency improvements can benefit from Kadant products, the sluggish economic environment has suppressed our revenue and bookings in Q1. .

Our Q1 revenues in China were $7 million, down 40% compared to Q1 of last year and down 46% sequentially. This decline in revenue was found in our all of our major product lines, but particularly, in our Stock-Prep product line.

Our bookings in China were down 22% in Q1 to $9 million compared to Q1 of last year, but up 5% sequentially due to higher capital orders in our stock -- of Stock-Prep improvement. .

I can say despite the weak market environment, we are seeing some project activity in China, including some large Stock-Prep's system projects. In fact, in April, we received an order for $3.8 million for an approach flow on OCC system for a recycle linerboard customer.

Although the pulping paper industry in China is somewhat soft, the market for oriented strand board, or OSB, which is a new product for the China market is quite promising.

Potential applications for OSB in China include crating material and container bed liners used in shipping, as well as forms for pouring concrete foundation and subflooring for construction. Since OSB is more cost effective to produce than plywood and does not require large trees, which are scarce in China, it's ideal for this market.

There were 2 strand orders in China so far this year, and I'm pleased to report that we secured both of them in April for a combined value of more than $4 million. .

These installations will provide valuable references in this growing region. .

Turning to South America in Slide 14. You can see the first quarter of 2014 was significantly stronger than the first quarter of 2013 due to the acquisition of CBTI. Revenues in South America were $7 million in Q1, up 64% compared to the same period last year, or down 31% sequentially.

Bookings in Q1 more than doubled to $6 million compared to the same period last year, although they were down 11% sequentially. .

In general, the market in South America and specifically, Brazil, has been impacted by the overall weakness of the economy. There is, however, a small but growing middle-class, it is expected to continue to drive demand for container board and tissue products in the coming years. .

Let me close my remarks with a few comments on our guidance for Q2 and the full year of 2014. Our strong bookings in Q1 and expected strong bookings in Q2 put us in a good position for 2014.

For the second quarter, we expect to generate $0.66 to $0.68 of GAAP diluted earnings per share and revenues of $104 million to $106 million, which includes $0.04 for amortization of acquired profit in inventory and backlog.

For the full year, we're maintaining our GAAP diluted earnings per share guidance of $2.60 to $2.70, but increasing our revenue guidance to $410 million to $420 million, up from our previous guidance of $405 million to $415 million. .

You might ask why, given the Q1 EPS strong bookings and the increase in revenue guidance, we're not also increasing our earnings per share guidance for the year. In short, the answer is taxes.

We're now anticipating a higher percentage of our income from higher tax jurisdictions such as the U.S., and this has led us to increase our forecasted tax rate from 32% to 34%. This increase is adversely affected our expected earnings per share by $0.11 for the year. .

I'll now pass the call over to Tom for additional details on our financial performance in Q1.

Tom?.

Well, thank you, Jon. I'll begin with an overview of our gross margin performance. Consolidated product gross margins were 45.2% in the first quarter of 2014, down 210 basis points compared to the first quarter of 2013.

The decrease in consolidated gross margins from last year's first quarter was almost entirely due to the effective amortize in the acquired in inventory, associated with acquisitions we made last year. Excluding this item, consolidated gross margins would have been 47% in the first quarter of 2014 or 30 basis points lower than last year. .

Our Papermaking Systems segment gross margins, which do not include the result of Carmanah, were 47.5%, the second highest level ever achieved in our company's history. .

Now let's turn to Slide 18, and our quarterly SG&A expenses. SG&A expenses were $32.5 million in the first quarter of 2014, up $5.5 million from last year's first quarter, and included an unfavorable foreign currency translation effect of $300,000.

Excluding the translation effect, SG&A expenses were up $5.2 million over last year's first quarter, including a $4.9 million increase associated with the SG&A and transaction expenses of acquisitions. SG&A expenses as a percentage of revenues were 34.8% in the first quarter of 2014, compared to 35.4% in last year's first quarter.

Looking forward, we expect that SG&A spending in 2014 as a percentage of revenues will be approximately 31% to 32% compared to 34% in 2013. .

Let me turn to our EPS results for the quarter. We recorded GAAP diluted earnings per share from continuing operations of $0.45 in the first quarter of 2014, compared to $0.47 in the first quarter of 2013. The first quarter of 2014 included $0.02 of restructuring expenses.

Excluding this item, adjusted diluted EPS was $0.47 in the first quarter of 2014, equal to last year's EPS results. .

As you can see on Slide #19, where we analyze the results from the first quarter of 2013 to the first quarter of 2014, the 2014 period included increases of $0.13 from the combined effects of the operating results of the acquisitions and lower acquisition transaction expenses, and $0.03 due to higher gross margin percentages.

These increases were offset by $0.06 of higher operating expenses, $0.05 from lower revenues, $0.04 from a higher effective tax rate and $0.01 from higher minority interest. The $0.13 of accretion from the acquisitions includes a dilutive effect of $0.13, associated with the amortization of acquired profit in inventory and backlog.

We expect that the remaining balances for acquired profit and inventory and backlog, representing approximately $0.04 in diluted EPS, will be recognized in the second quarter of 2014, and we have included this amount in our guidance for the second quarter. .

I'd like to make a few comments on the increase in our effective tax rate in the first quarter of 2014 and our expectations for the full-year 2014.

As Jon noted, we now expect that our effective tax rate will be approximately 34% in 2014, up from our previous estimate of 32%, partly due to a shift in the geographic distribution of earnings, that is more earnings in the U.S.

where the rate is higher and less earnings in certain of our international subsidiaries where the rates are lower than the U.S. This had the effect of decreasing diluted EPS by $0.04 in the first quarter of 2014 and $0.11 in the full year compared to the rates used in our guidance issued in February 2014.

And finally, with respect to our diluted EPS results, the translation effect on net income from foreign exchange was immaterial in the first quarter of 2014 compared to last year. .

Now let's turn to our cash flows, working capital and debt leverage starting on Slide 20.

Operating cash flows from continuing operations were $6.2 million in the first quarter of 2014 and although down 11% from last year, nonetheless, represent a solid start to the year considering that historically, the first quarter is often times the weak quarter for operating cash flows.

Free cash flow defined as cash flows from continuing operations less CapEx was $5.7 million in the first quarter of 2014, down slightly from last year's $5.8 million. .

We had several notable nonoperating uses of cash during the first quarter of 2014, but most significant of which was $2 million for a small technology acquisition in our DCF product line that we discussed in our last earnings call. We also purchased $1.9 million of our common stock, paid a dividend of $1.4 million and expended $500,000 in CapEx. .

The stock repurchases in the quarter represented 50,000 shares at an average price of $38.35 per share. During the first quarter of 2014, we returned $3.3 million of capital to our shareholders. As I just noted, $1.9 million from share repurchases and $1.4 million from dividends.

This represented approximately 65% of our net income from continuing operations in the quarter. .

Let's now look at our key working capital metrics on Slide 21. As you can see, we did have another quarter of sequential deterioration in our days and inventory measure, partly due to a delay in shipping the large system orders to a customer in China, which had the effect of increasing days in inventory by 6 days in the first quarter of 2014.

Days in inventory were 110 in the first quarter of 2014, compared to 95 days in the first quarter of 2013. Our days and receivables measure improved to 68 days in the first quarter of 2014, down from 70 days in the fourth quarter of 2013, and 72 days in the first quarter of 2013.

Our AP days measure deteriorated slightly on a sequential basis and was down 5 days compared to last year's first quarter. .

Looking at the overall working capital position.

Our cash conversion days calculated by taking days in receivables, plus days in inventory and subtracting days in accounts payable, were 132 at the end of the first quarter of 2014, up 14 days and 16 days from the fourth quarter of 2013, and the first quarter of 2013, respectively, largely due to the increase in days in inventory.

Also, working capital as a percentage of the last 12 months revenues was 15.4% in the first quarter of 2014, improving 120 basis points sequentially, but up 60 basis points compared to the first quarter of 2013. I would note that despite the build in inventory, the 15.4% performance in our overall working capital management is still quite good.

Our net cash position increased by $2.7 million in the first quarter of 2014 compared to the fourth quarter of 2013, including a use of cash of $2 million for acquisitions and the $3.3 million of dividends and stock repurchases during the first quarter.

Net cash, that is cash less debt at the end of the first quarter of 2014 was $14.3 million compared to $11.6 million in the fourth quarter of 2013, and $51.8 million in the first quarter of 2013. .

And finally, as you can see on Slide 24, our leverage ratio calculated as defined in our credit facility was 0.66 at the end of the first quarter of 2014. Under the credit facility, this ratio must be less than 3.5.

After the quarter ended, we utilized some of our overseas cash to repay approximately $19 million of debt in Canada, which was associated with the acquisition of Carmanah in November 2013. As such, I would expect to report a decline in the leverage ratio in the second quarter of 2014. .

And that concludes our review of the financials, and I will now turn the call back to the operator for our Q&A session.

Operator?.

[Operator Instructions] Our first question comes from the line of Walter Liptak. .

Well, I wanted to start by asking a little bit about the guidance for the year.

And the bookings look good, but I wonder if you can provide a little bit of color on what you think the mix of businesses in bookings with the gross margin might look like for the rest of the year?.

In terms of gross margins, well, I think we're still anticipating 45% to 40% -- 44% to 45%, which I think is what we've said last time. So no big change there. That includes about 0.5 percentage point reduction for the amortization of acquired profit in inventory, as well, which we noted that effect in the first quarter.

So no real change in our thinking in terms of gross margins. .

Yes, in terms of the mix, we'll have obviously a little more contribution from North America or the U.S. as kind of we said, relating to the tax. I don't know, but I would call out a mix in the product lines, particularly, a change. .

Okay.

Is North America, typically -- is the gross margins about the same there as other parts of the world, or is it higher?.

It really -- it depends on the capital spares mix. As you know, our spare parts understandably have a little higher gross margins. And so part of the uptick in North America was capital, in an area that is largely spare parts market, if you will. So I mean that would probably bring them down a little bit from where they are on average.

But I think Tom is right on the overall margins, they'll be about where we thought. .

Okay, great. And the trend globally is pretty clear that North America is strong.

So maybe we can start there and just talk about what kind of products booked in the quarter? And then is it possible -- or how do you think about the quarter business excluding Carmanah in terms of bookings?.

Sure. One of the -- commenting on North America. So obviously, the $11 million Stock-Prep order was a big order. That doesn't come along everyday, right? So that's a little more unusual, an order of that size. But I can't -- I was kind of pleased that we have pretty strong results in our Doctoring capital business, our Fluid-Handling business.

I think our Stock-Prep capital business even going forward has a lot of opportunities, probably more on the virgin side than recycle. So pretty broad for North America. Carmanah, because housing is heavily in North America, that's kind of their strongest market.

And the housing market is in continuing to grow, OSB mills are turning on, which gives them a spare stream where there -- or sometimes, you'll have ones that are converting to our ring, as they call it, which will be a nice large spare part plus a follow on stream of spares. So it's very, very promising on the Carmanah side, as well.

China is weaker, but as I said, I think the second quarter's got some capital in it. We had strong stuff on the housing side with those OSB mills, and we've already booked a pretty significant recycling order. .

Okay. Just to go back to North America for a second.

Can you tell us what the growth rate would have been without Carmanah in there in terms of bookings?.

It would have been very good. I don't have that off the top of my head. But I can tell you the -- with all of our businesses... .

I think if you go back to the chart that we showed in North America, I think that it was about $11 million of bookings in there for Carmanah, if I remember the number right. But you could do it from there, Walt. I don't have that right in front of me, but... .

And the overall North America was up about $28 million, so. It was still excellent. .

Yes. .

Okay, yes. Sounds like it. It sounds like it's very good. So in China, I hear you that capital -- there might be some spending in the second quarter, you've got some visibility to it. Why do you think we have this slower period during the quarter for bookings? Was it from the government related there or... .

Well, they do -- they are in a kind of an overcapacity position. So there is overall, a little bit of a downward pressure because of that. So I think that's as much as anything. And then, these capital things are kind of lumpy. Those 2 orders for the strander mills, they could have come in Q1, they just happened to come in Q2.

That said, I don't -- these stranders are a little bit unusual. So it's not like I'm expecting to get 2 a quarter for the rest in the year in China. That -- this might well be it for strander orders for China. That's a significant -- they're significant investments for the overall mill.

And what's good about them, of course, is it leads to a spare parts stream for us in China. The -- on the recycling side, we -- it was the timing of the orders seem to be falling in the second quarter and after. There's still plenty out there that could provide opportunities, some sizable systems, I would say. .

Okay. So is this market -- I guess we've seen the orders or the bookings kind of bounce around here for the last year.

Is this market, you think finally starting to turn with some of the visibility you see in the second quarter?.

I would say that we have a decent number of projects. I can't tell what the timing is or how long they'll -- whether they'll actually turn into orders. But we have a significant amount of projects in China right now. I have to say, there's a little disconnect between that and what you might read in the mag -- in the press about some oversupply.

I will say that we're mainly in container board and that's the best grade to be in, it's probably the one that's most in balance. So I think as their economy becomes more internal with people buying washing machines and houses and stuff like that, it should generate internal demand for boxes, which will be -- will lead to more capacity additions. .

Okay. Okay.

And then you mentioned the strander board sales, those 2 orders, those were related to Carmanah, is that right?.

Correct. Yes. .

Okay. So again, the integration is going pretty well and you're already starting to book some sales there.

What do you think the market potential is? And how do you get there? What kind of channel do you need?.

Well, so the -- it's a pretty new market in China. I don't -- they don't have wood houses, so it's not like it's going to be like the U.S.. But they use a lot of wood; in container boards, crating, flooring for these houses that are largely cement and the forms. I can't tell you how quick the uptick's going to be, frankly.

I would say it's too new, but I think it'll take a while. .

Are there any big channel partners that you can sell through? I don't know if you have buildings over there... .

We do have a -- we have a very significant channel partner, if you will. There's a company in Germany called Dieffenbacher, and they sell the press, which is really the heart of these OSB mills. And we're essentially partnering with them for these types of sales. So we're partnering with them in these orders in China.

And we're also partnering with them for some other orders in developing countries, if you will. .

Your next question comes from the line of Rudy Hokanson, Barrington. .

I'm going to ask the question about China a little bit differently. And I know that as soon as you made the acquisition, you started putting the sales force that you have in China and teamed them up with the acquisition.

And I was wondering, what's the strategy on the sales effort going forward in terms of building that base and working together with your traditional product lines, as well as introducing the new ones? Because you said, it's not just housing. There's a lot of different usage for the products.

And it seems that, that -- the $4 million off the -- I know it's not off the bat, but still, relatively quickly, is something that points to a reception for your product line there, the OSB. And I was just wondering, if you could maybe flesh out that strategy a bit more because China is an important part for Kadant down the road. .

Okay, sure. So just talking about our Carmanah product, if you will, the OSB in China. So I would say as overall for growth in capital, China is the most important market. And I say that only because North America is mature, it's not going to add as much capital as you might see in other parts of the world.

What we really provided in terms of sales synergy in China was not so much using our sales force to sell stranding products. We really -- it's a unique product, it's a technical sale, the Carmanah people themselves are the ones who really make that happen.

What we probably provided on the sales side is just familiarity with how businesses are done in China. We had some of our recycling and stock-prep sales guys travel with them. They are at the table kind of helping them interpret things and so forth.

The other thing we're utilizing from a selling channel point of view, as I've mentioned earlier, was our relationship with Dieffenbacher. They are the largest press manufacturer in the world. They are a great partner to have. And between -- they're good to also weigh to get ourselves in there.

The other thing I would say in China that's probably helped us in China is the fact that we're there. We're able to say, "We're going to do some manufacturing in China," we're able to say, "Hey, you're going to have a place where you can get your spare parts with infrastructure, if you will, in China." So I think it's helped them that way, as well.

Does that answer your question?.

Yes.

Now another question, in terms of the tax rate, as you pulled cash from overseas to help pay down debt, is that -- are the taxes that you would have paid to pull the cash, did they contribute also to a higher tax rate?.

Well, it's a very good question, Rudy. And the answer is they did, to some extent, yes. Because there were some withholding taxes that were not creditable, but we didn't actually take that cash and bring it back to the U.S.

Essentially, what we did is we lent it from one of our China operations to one of our subsidiaries in Canada, and then they pay down the debt. So the cash never really came back to the U.S.. So therefore, we didn't have to pay the higher tax rate in the U.S.

But there were some -- there was a little friction there with some withholding taxes that did contribute to the higher rate. The main -- I'd say the main reason for the increase in the rate again is the difference in the geographic distribution of our earnings. So we estimate this every quarter.

And we did have, as we mentioned, more income coming out of the U.S. than previously in our previous guidance. That was the main reason for the increase in the rate. But you're quite astute to pick up on that point, that was -- that did contribute, as well. .

Okay. And could you just repeat for me what you said the effective impact of the higher tax rate will be in the second quarter? I mean, for the year, you said it'll be $0.11.

What will it be in the second quarter?.

I don't think we actually gave a number for the second quarter, Rudy. So it's probably in $0.02 to $0.03 range, something like that. .

You'd also tried to talk about the different applications for OSB and talk about how the using in crate is quite different than use in housing and so forth. That's not something we get involved with. We only sell our products to the guys who make the OSB.

And then all of those different applications and having OSB penetrate those different applications from liners -- bed liners for containers or furniture, whatever, is their -- that's their business, not so much us. We don't have to get out there and talk to people who make furniture and get them to use OSB. .

Is there any market research -- is there -- might be in the U.S.

and China in terms of growth rate for demand for OSB?.

What we looked at when we're doing the acquisition is as much just projects in the pipeline that we already saw. It's -- I think it's a little tricky to say how quick that uptick's going to be in China. .

[Operator Instructions] There are no further questions in queue. .

First, we set a new record for bookings at $115 million with solid contributions from our acquisitions, as well as from our existing businesses, particularly in North America. Second, we had record revenues in bookings for Parts and Consumables business.

And finally, we set a new record for adjusted EBITDA at $12.7 million, up 36% compared to Q1 of last year. .

I look forward to updating you on our progress on our next call. Thanks very much for listening. Bye. .

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