Good morning everyone, and welcome to the STERIS Plc Third Quarter 2019 Conference Call. [Operator Instructions] Please also note today's event is being recorded. And at this time, I would like to turn the conference call over to Ms. Julie Winter. Ms. Winter, please go ahead..

Thank you, Jamie, and good morning, everyone. As usual on today's call, we have Walt Rosebrough, our President and CEO; and Mike Tokich, our Senior Vice President and CFO. I do have just a few words of caution before we open for comments from management. This webcast contains time-sensitive information that is accurate only as of today.

Any of redistribution, retransmission or rebroadcast of this call without the expressed written consent of STERIS is strictly prohibited. Some of the statements made during this review are or may be considered forward-looking statements.

Many important factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation, those risk factors described in STERIS's securities filings.

The company does not undertake to update or revise any forward-looking statements as a result of new information or future events or developments. STERIS' SEC filings are available through the company and on our website.

In addition, on today's call, non-GAAP financial measures, including adjusted earnings per diluted share, constant currency organic revenue growth, segment operating income, and free cash flow will be used.

Additional information regarding these measures, including definition, is available on today's release, including reconciliations between GAAP and non-GAAP financial measures.

Non-GAAP financial measures are presented during this call with the intent of providing greater transparency to supplemental financial information used by management and the Board of Directors in their financial analysis and operational decision-making. With those cautions, I will hand the call over to Mike..

Thank you, Julie, and good morning, everyone. It is once again my pleasure to be with you this morning to review the highlights of our third quarter performance. For the quarter, constant currency organic revenue growth was 6.9% driven by volume and 50 basis points of price.

Gross margin for the quarter increased 20 basis points to 42.7% and was impacted favorably by currency, price and the impact of divestitures somewhat offset by higher labor costs and the impact of tariffs.

EBIT margin for the quarter was 20.8% of revenue, a substantial increase from second quarter levels and 20 basis points better than the third quarter last year.

EBIT margin was negatively impacted in the quarter by 40 basis points due to higher than anticipated calendar year end employee healthcare benefits claims activity causing an increase in SG&A for the quarter. The adjusted effect of tax rate in the quarter was 18.9% somewhat lower than we had anticipated due to favorable discrete items.

Net income in the quarter grew 11% to $107.2 million and earnings increased 13% to $1.26 per diluted share benefiting from both revenue growth and a lower effective tax rate. In terms of the balance sheet, we ended December with $225 million of cash at $1.25 billion in total debt. During the third quarter, capital expenditures totaled $50.7 million.

Given our spending to-date and plans for the fourth quarter we are reducing our expectations for capital expenditures by $10 million to approximately $180 million for the full fiscal year 2019.

As a reminder during the third quarter, we announced a restructuring plan that will generate profit improvement of approximately $12 million over the next two years. In addition, we adopted a branding strategy that included phasing out of the usage of a trade name associated with certain products in the Healthcare Products segment.

These two items have resulted in a significant increase in depreciation and amortization for the quarter. Unlike the P&L, we do not adjust the balance sheet nor free cash flow for these items.

Hence, depreciation and amortization for the quarter was significantly higher at $82.7 million primarily due to $36 million have accelerated depreciation and amortization associated with both the restructuring plan and the branding strategy.

Free cash flow for the first nine months increased to $252.9 million mainly due to improvements in cash from operations. We are updating the full fiscal year 2019 free cash flow expectation to include higher working capital requirements, costs associated with our plan to redomicile to Ireland, and restructuring plan costs.

Free cash flow is now expected to be approximately $330 million for the year. With that, I will turn the call over to Walt for his remarks..

Thanks Michael, and good morning everyone. Fiscal 2019 is shaping up to be a strong year for STERIS fueled by solid demand from our customers in all four segments.

For the first three quarters we’re ahead of our expectations for revenue growth and as a result are increasing our full year constant currency organic revenue growth expectations to be approximately 6%. Each of our business segments have contributed nicely to our revenue growth so far this year.

AST and Healthcare Specialty Services are leading the way with 8% constant currency organic revenue growth year-to-date. In AST we continue to see solid underlying demand from our core medical device customers. Our Healthcare Specialty Services segment continues to exceed our revenue expectations driven primarily by strength in the United States.

Their profitability has improved as planned as we have successfully leveraged the investments made over the past year or so. Healthcare products, constant currency organic revenue has grown 7% so far this year with strength in both recurring revenues and capital equipment.

Even with the growth in capital equipment shipments, our healthcare backlog has also grown nicely and is anticipated to ship over the next few quarters. We expect a solid fourth quarter in healthcare capital shipments. And finally, Life Science constant currency organic revenue has grown 5% year-to-date with growth across the business.

Our fourth quarter last year was a strong record quarter for Life Science capital equipment shipments which we do not expect to replicate this year. Backlog has stayed relatively steady versus last year and certainly above our historic levels which gives us comfort that the underlying trends we have experienced over the last year or so will continue.

As I mentioned earlier, we now expect our overall constant currency organic revenue growth to be approximately 6% for fiscal 2019. As a result, we are confident in our ability to deliver another record year with adjusted earnings per share in the range of $4.74 to $4.84.

I will note that when we raised our outlook this range last quarter, our thinking was that the effective tax rate would come in around 20%.

With continued favorability on the tax rate in the third quarter due to favorable discrete items, we will likely have a modest upside on the effective tax rate for the fiscal year, but not certain enough or substantial enough to reguide that rate. We appreciate your taking the time to join us this morning and your continued support of STERIS.

I will turn the call over to Julie to open for Q&A..

Thank you Walt, and Mike for your comments. Jamie, we're ready to start Q&A if you've give the instructions..

[Operator Instructions] Our first question today comes from John Hsu from Raymond James. Please go ahead with your question..

Maybe you could start with the guidance, the organic revenue guidance, I think it implies a pretty decent deceleration in the fourth quarter, so what's driving that? The comp looks to be pretty consistent with the third quarter but is it just conservatism or is there any other - anything else that you can point to maybe from a segment standpoint?.

Sure, John. A couple of points that I would make, first of all, we've been talking about for a long time that we're trying to move our revenue pattern to be a little bit away from the fourth quarter. We traditionally have a very strong fourth quarter.

We like to run our factories more level loaded to the extent possible and as a result we've been trying to pull that forward.

We've had some success with that this year, and so I do expect relatively speaking as you know we've been strong the first three quarters, we may not be quite as strong relative to historic growth period last year, so that's one item.

I will mention there's one less shipping day this year than last year and that doesn't have a big effect on capital equipment but it does have some affect on the recurring revenue, and I would say you're probably correct.

We may be being a bit conservative because we do have a situation where the end of March happens to fall on a Saturday, Sunday, we don't like to run our plants of shipping on Saturdays and Sundays.

And secondly we have Brexit coming March 29 which is two days before our fiscal year and there's someone certainty about how the patterns or shipments will relate as to that. So we probably are being a bit conservative in our forecast, we're quite comfortable to 6% but we'll see how the end of the month of March turns out..

And then I guess taking a step back, your organic growth probably call it over the last 5 years or so is probably been in the 4% to 6% range. This year you're now guiding 6%, you mentioned there's actually one less shipping day. I believe there's actually another 50 basis points of Sterilmed contract that you're also hurdling.

So I guess just taking all those pieces, are you at a point where you believe you can drive consistent organic growth at the 6% range or better?.

I think it's early for us to be saying we're going to move above or kind of 4% to 6% long-term target. Clearly we're at the top end of that right now. We could possibly tip over a little bit but I think it's early to say that we're - we're looking at our next year's plan as we speak now. We'll talk more about next year and beyond at that time..

And then last one from me on cash flows, I think you're very clear that on some of the changes in cash flow from operations, higher working capital, plans to redomicile and then restructuring but specifically on the CapEx pieces, can you talk about what's driving the reduction in CapEx by $10 million versus prior guidance?.

Yes, John, it's mostly due to timing of projects. We set out a goal at the beginning of the year and we're just behind our original plans from a timing perspective. It's nothing more than that..

And sorry, just a quick follow-up to that, just obviously you've baked in some big things of investment for outsourcing projects and I believe there is an upfront CapEx cost associated with that.

So just kind of relative to your comments, Mike, is everything tracking in line as far as the $10 million in revenue that you were expecting from outsourcing for the year?.

Actually as you can see from the - that business, the Specialty Service business in healthcare in the United States, they're just having an outstanding year in growth and they're having it on both sides of the equation, the Instrument Management business is growing nicely and the Outsourcing business is growing actually slightly ahead of our expectations.

So this year we had forecast about $10 million growth. As we sit here today we've already exceeded that number and so we fully expect to - obviously we're going to meet or beat that objective. So it's going quite nicely for us..

Our next question comes from David Turkaly from JMP Securities. Please go ahead with your question..

Primarily, you got asked the question on the guidance, the $12 million, the profit improvement from the restructuring over 2 years, I was wondering if you can comment on how that should flow through the P&L? And specifically as we're looking at that gross margin line, what can we expect? Any color you might give looking forward in terms of sort of directionally it sounds like we should be moving higher but any specific comment you might want to make about how that flows through would be great?.

So, we anticipate that that $12 million will happen over the next 2 years.

About majority of it actually happened in the second year, next year in our fiscal year we anticipate that'll it be more backend loaded as we are just starting our plans and implanting our plans to close and consolidate our manufacturing facilities and do some product rationalization that will take some time.

So I would say they'd be more back half loaded next year and then the bulk of it will happen in FY 2021, the bulk of the savings..

And I guess we haven't seen - I had a question about the M&A side and I know you get asked this a lot but given the environment that we're seeing out there and sort of your plans looking ahead I guess any color, any update on how we might roll into next fiscal year, anything you see in that that might get you back on the board on the M&A side?.

We have an active funnel. Again, most of what is active is what I would call tuck-ins, things that are relatively small compared to the businesses they're tucking into. And that's actually our favorite type of acquisition, so we've had a few of those this year and we have a good pipeline going forward.

In terms of a more significant acquisition, there are things we're looking at. We have been for some time. There are two issues in concert, one is, again, there are possibilities but not all those possibilities can we take unilateral action. Many times there are private companies that have that decision to make themselves.

And secondly, as we've discussed before, right now the market is fairly high in price across the board and so we want to be careful not to overpay for something that we may purchase.

So it's a combination of those two things I think that have caused us not to have a purchase in the last little bit but you should not be surprised if we do something significant tomorrow morning and you should not be surprised if we don't do it one next year. It's just a matter of the timing..

Our next question comes from Isaac Ro from Goldman Sachs. Please go ahead with your question..

Well, just maybe want to clarify your comments on the implied outlook for fiscal fourth quarter.

It sounded like a lot of the items you talked about had to do with timing and maybe just a little bit of conservatism but I just want to clarify that you're seeing no change in spending pattern in your end markets, just want to maybe look at it from the demand side..

Isaac, you read that absolutely correctly. From the demand side in fact I would say this is all more than supply side if you will than the demand side. All of our units are experiencing solid growth from the demand side.

We anticipate continuation, day-and-half or a day less which is a point-and-half on the consumable side if everything runs to the number of days, you know that's just a calendar timing issue. The balance if anything given again the uncertainty of Brexit there is people pulling things ahead and pushing things behind to accommodate that.

And our plans are running pretty hot.

And so if a couple of orders particularly capital orders slip, the wrong two days out of the year or end of the year that can have a fairly significant effect on those growth rates in a given quarter, but in terms of pipeline we see no difference in the healthcare capital pipeline then we've talked about now for probably 18 months or so.

And on the consumable side we have seen no difference in the ordering patterns. So I would not suggest - I guess I’ll say differently I think our full year numbers are more reflective of what we have seen and are still seeing in the pipeline then what might be implied by the fourth quarter..

Okay, that’s helpful context. And just a follow up on the expense side and really kind of in two parts one on the P&L and one then on the free cash guide. I'm kind of curious on the redomiciling effort you have there.

Could you talk about whether or not those incremental costs on the free cash guidance kind of run rate into fiscal 2020 or is sort of one-time thing that sunsets once you're done with the move and if someone is that happen. And then on the OpEx side, I think you mentioned that margins were hit a little bit by benefits related items.

Could you tells us a little bit more about what that was and the extent to which that carries through into next year as well?.

Yes, certainly Isaac. In regards to the Ireland redomicile most of the expenses will be incurred this fiscal year both from a P&L standpoint which are adjusted out and a cash standpoint which we do not adjust out.

We anticipate early on that it would cost us about $5 million impact right now that estimate has been revised to about $10 million which is one of the reasons we are taking down free cash flow.

In addition to that, the healthcare claims activity that we talked about is we were little bit surprised by the level of claims activity in the fourth or in the calendar fourth quarter as we seem to be moving a lot of our employees to high deductible claims.

And once they hit their deductible as anybody would, they would take advantage of hitting that deductable and going through additional procedures if required or if needed. So we were a little bit surprised by the claims activity.

And as I mentioned that was about an impact of 40 basis points to our EBIT margin so it was pretty significant for us in our third quarter..

But Isaac I would not characterize that as a significant change when you look at it over the course of the year, I do think it's a timing adjustment.

We've been seeing that and we do this on actuarial basis so the actuaries are always a bit behind but I would not expect that to be a significant effect for the full year if you look at just over the nine months is that particularly significant I think as we go to the 12 months we will find that the same..

Our next question comes from Jason Rodgers from Great Lakes Review. Please go with your question..

Regarding your HSS segment nice operating leverage in the quarter and wonder if you could talk about that going forward and how we should think about further investments in that segments compared to what you saw this quarter?.

Yes, we've talked about that in the past and I don't feel a difference in view at this point in time. Again on the outsource reprocessing business in general it's still relatively small.

So as we make investments there will be more fluctuation on a quarter-to-quarter basis maybe even on a year-to-year basis, but over the long term we see that being kind of mid double - another way to say is mid-teens is probably the best way to say it. Mid-teens kind of return on sales type business so we don't feel differently about that.

Obviously we invested early as we said we're doing late in late last year and early this year as we said we were going to that impacted - the margins early, and they are now flowing through almost exactly as expected except they are a bit ahead on revenue so it's a little better on a dollar basis.

So, and again I think you will see some fluctuations as we move forward. If you talk specifically about the ORC business but having said that when you combine it with the instrument repair business it moderate those fluctuations a bit because that business is larger.

So in total we don't feel any differently about that then we’ve been saying now for a couple of years..

And then Walt wonder if you could just provide some thoughts on hospital spending globally if you are seeing any material change from what you said last quarter?.

Really the short answer is no significant change in the pipeline that we see – first of all are backlog as you can see is at record levels and record by a pretty significant differential. And so in terms of shipments that pretends well for the next little bit, but our pipeline also continues to stay solid.

So we’re feeling pretty good about the in healthcare we don't have quite the visibility we do in Life Science, Life Science has a longer pipeline but still beat on large projects. We see things out 18 to 24 months they may not materialize in the timeframe that we like but what we see out there in pipeline looks quite healthy to us..

And then Mike as far as the tax rate you have an estimate for the fourth quarter and maybe in yearly thoughts for fiscal 2020?.

Yes, as we have continued to say approximately 20% for the full year is going to be our effective tax rate.

We did get some favorability this quarter in particular due to some stock com deductions that we typically plan zero and we did have some compensation related to stocks and equity options that were exercise during the quarter which obviously helped us.

But we still think in the low 20s or 20% approximately is the range that we would look at for the fourth quarter and we will guide in May timeframe as we look out to next year..

And then do you have what the current debt to EBITDA is and what is the target for that?.

Yes, we are currently just under two times levered remember we took up leverage to about 2.9 times with the acquisition of synergy just over three years ago and we've been talking about working to bring that down somewhere in the low two ranges.

We really don't have a specific target per se but we feel comfortable operating at the levels that we are..

You may recall that STERIS historically was well under two for a long time, we have taken those debt levels up. I think if you look at the capital structure the optimum capital structure most of our bankers would say sit someplace between 1.5 and 2.5 and it’s fairly flat.

So we don't feel pressure at this point on a capital structure issue in terms of what our debt rates are across the capital is. So it's pretty flat between 1.5 and 2.5 and very flat between 1.6/1.7 and 2.3/2.4. So we don't feel pressure there..

Our next question comes from Chris Cooley from Stephens. Please go ahead with your question..

Just a couple from me at this point Walt would you help us a little bit with AST in the quarter that the first time we've seen 40 plus percent on margins. And you did it growing 6% off a very tough high teens comp in the prior year.

Could you just talk to us a little bit about what's driving that upside to the op margin in AST is that utilization of the capacity that you brought on here over the last 12 months. Is that a change in mix that we're starting to see just one kind of level set expectations there for the contribution margin from AST going forward.

And I've got a couple quick follow ups?.

Yes, Chris a couple of comments the underlying driver is the growth in the business and as you guys who follow medical devices know that most of the device makers are having a pretty solid quarters. And so when they do we tend to, to because I mean that's the ultimate demand of that business.

We have expanded geographically and we've expanded our capabilities and we’ve talked about that and those expansions are paying off as we bring things online.

They tend to have a negative effect on our margins because we have in great depreciation and early start up costs, but now that we have 60 some odd plants and the individual plant tends to have less of that impact. And we have seen our utilization rates out run our expectations for this year.

And so we're getting to where a lot of our plants are running fairly high. I wouldn't suggest that I mean numbers between those high 30s and low 40s. I wouldn't suggest that those are not kind of a normal run rate for that business. We do spend a lot of capital to make that money so the ROICs are attractive but not stupendous.

So, I wouldn't suggest that those are not but you will see fluctuations around that range. I wouldn't say we'll always be over 40 but I wouldn't bet my life against it either..

Understood, appreciate it, still great performance there. And I guess the only real nip, when you look at the quarter, the Life Science backlog and I realized last year we had phenomenal growth there. I think it was up 43% in the prior year quarter before being down 7% on a year-over-year basis this time and up one sequentially.

But are we starting - I'm trying to kind of get out here is what's kind of the normalized capital growth rate? Are we going to essentially go back to that mid-single digit Life Science capital growth kind of having worked through a lot of these projects from retooling enhancement that had been put off and we've seen that kind of driving growth here over the course of the last 2 years, is that - is it starting to normalize a bit there or if not why should I think that this would start to turn up on a year-over-year basis as we go into fiscal 20..

Chris, I think your comment and question is excellent and we've been saying for some time you know we don't really expect 30%, 40% growth rates in this business. When it, it jumped very strong about I guess now 2 years ago, it started headed up and those 20%, 30% kind of percent growth rates we don't anticipate staying that way.

Our bigger, I'll call it concern or thought was jeez it's going to stand up at this level or you know we're going to - this is a one time, we're going to drop down from that and we don't think so.

Even though again just like shipments are kind of lumpy in Life Science, backlog is kind of lumpy in Life Science because the order is come in the same way the shipments go out kind of in big chunks.

As it turns out as we speak today our backlog is roughly the same as it was last year which was down a bit at the end of December but in the January we're right back to - within a $1 million I don't remember of where we were last year.

So to us it looks steady state, so I don't expect a big down turn, nor do I expect a big upturn but all things being equal looks kind of a steady state..

Super. And then just lastly from me, so I make sure I picked up on this correctly. When I look at the cash flow, your original guide was 340 now 330 but kind of when you're reconciling the two, you did have an additional $5 million there in expense to redomicile to Ireland. You do have additional $5 million in headwinds you kind of called out there.

So in essence I'm looking at it if that's the $10 million with the offset of course or the reduction in the timing of CapEx.

So just trying to go back to that 340 to kind of just working my way back, that's - those are the two essential driving factors, am I correct in thinking about that way?.

Yes, there's actually three driving factors, Chris. There is the increase in the redomicile expenses by about $5 million.

There's also some restructuring costs from a cash perspective again about $5 million, and then on top of that we have additional working capital requirements mostly inventory as our backlog is high and as everybody knows not all that backlog is going to shift in Q4.

So some of that will carry over in Q1, but we have to start building that product as we've got about $10 million in increased inventory there. So that helps you reconcile and then take the $10 million of reduction and CapEx and that gets you to roughly the 340 than the 330..

So the underlying leverage there clearly not tapering, it's just those different factors offsetting each other partially….

Exactly. And as you know we do not adjust like we do on the P&L. So the restructuring in the Ireland get adjusted on the P&L but we do continue to account for those in the free cash flow and on the balance sheet..

And Chris I would I would add this, as we said, we have demand to ship more than we are now forecasting we would ship.

It's a matter of ability to match the orders, it's not can we make it, it's just if a customer calls up a week before the end of the year and says, "Hey, I need to delay this two weeks because my construction is not going as anticipated." They usually don't do it a week before but a month before.

We've already built the product and as a result if it's - particularly there are certain products that are specific to the job and so we forecasted, we put in our forecast that some of that does slide into next year which is why the revenue - same conversation we had on revenue to start with that that ends up being inventory. So that's the logic..

Our next question comes from Matthew Mishan from KeyBanc. Please go ahead with your question..

On the ORC centers, congratulation on getting that revenue in the U.S. up and running. You mentioned that there were three centers that you had contracted.

Are one, two or three of those open right now and then can you say whether or not you have more than three contracted open at some point now?.

Matt, one, two, or three of those are open right now and….

Thanks for the detail..

As I mentioned last time Matt, we're not going to talk about specific customers, we never have liked doing that early on this process when people were you know - when it was absolutely a start up, we talked about orders of magnitude the kind of numbers - and so we're going to get away from the individual contracts.

The answer to your question is, yes. We have multiple contracts up and running. Some of those are full ORC. When you would think of as a full ORC, some of those are places where we are doing the work, we're outsourcing the work, we're outsourcing it inside their facility, some of which we may only capital some of which they may only capital.

And we have a number of places where we are beginning that walk by taking a piece of their business and over time we would anticipate taking more and more. So if there's a full spectrum of outsourcing in this ORC business, some of which is - what you would think of as a traditional standalone ORC but just as we do in the U.K. In the U.K.

we have a certain customers where we do all the work in a center that's off their site and we are trucking it back and forth but we have a number of centers where we're doing the work inside their site and outsourcing the work. So it's very much like the U.K. model and it is progressing nicely across the various fronts that we can grow at.

We're not going to continue to break that down into details. All I can - what I will say is we've already achieved our yearly target so we're obviously going to go over it and we're quite comfortable in this business..

And this is a new model for the U.S.

Can you give us a sense of how the transition is gone with those customers as you moved it from their facilities or their operations to yours?.

Yes, well, like all transition some of them are little testy and some of are easy. And it is work and that's why in a number of these cases we're not trying to transition the whole thing at once both we and our customers think the idea of moving pieces is not a bad plan and then you do more and more the next thing you know you're fully across.

There are other places where their capacity is absolute, and then we have to rebuild if you will and so building the center off site as opposed to sticking it in the middle of their hospital is - it's better for them to have an offsite for any number of possible reasons and so then it's more of a transition as you would think of it.

But even then it's not like you turn the switch off in the facility and a switch on in the other facility and a 100% moves. That would be a bridge too far. So it typically is over the course of time..

And then the Walt, I know not to take every word literally and I know you mentioned you wouldn't be surprised if you were to close a significant deal tomorrow or not within the next year but just what would you consider to be a significant deal? And does that mean you're actually looking at several like significant deals in the pipeline?.

Yes, Matt, I guess I think of orders of magnitude I think that tuck-ins, things that are 10% or less the size of the business that we are putting them in if you will, I think of those as kind of tuck-ins and then if it's bigger than either for a specific business or for STERIS as a whole, those are more significant deals and we are looking at some in that order of magnitude, but we've been looking at those some of those even looking at for a long time, some of those are newer to us.

I don't see a big differential in that pipeline even over the course to last five to 10 years.

The only difference is we're getting bigger and so in some sense that shrinks - it doesn't shrink the number of deals tuck-in it opens wider the number of possible deals but it shrinks those that are greater than 10% or either the individual businesses or ours. So it’s a category switch not an overall pipeline question..

And then just last one, Mike how confident are you that you captured all the changes in tax reform in that low 20s guidance. And is the way to think about it is you have the low 20s but then on any given year depending upon where stock comes in you probably have an extra 100 basis points to cushion in that..

We could depending on the volumes of the exercises from a stock comp standpoint that definitely as we have seen this year has been more favorable than we originally anticipated. And as far as capturing what has been published at least at this point in time that is finalized under the Tax Cut Jobs Act.

I would say that we are very confident that we have captured all the pieces. Now there's proposals out there obviously we can't speak to those because those are final, but whatever is final we are very comfortable..

All right, thank you Mike..

You're welcome..

If we could get tax laws around the world to stop changing, we would be very confident with our forecast..

[Operator Instructions] And at this point I'm showing no additional questions. I like to turn the conference call back over to management for any closing remarks..

Thanks again everybody for joining us today, and all of your continued support at STERIS. We’ll talk to you again next quarter..

Ladies and gentlemen the conference call has concluded. We do thank you for joining today’s presentation. You may now disconnect your lines..