Peerless Manufacturing Co. F2Q09 (Qtr End 12/31/08) Earnings Call Transcript

Feb. 9.09 | About: PMFG, Inc. (PMFG)

Peerless Manufacturing Co. (NASDAQ:PMFG)

F2Q09 Earnings Call

February 09, 2009; 10:00 am ET

Executives

Peter Burlage - President & Chief Executive Officer

Hank Schopfer - Chief Financial Officer

Kevin McGrath - Investor Relations

Analysts

Richard Hoss - Roth Capital Partners LLC

Sunil Sibal - Natixis

Richard Ryan - Dougherty & Company

Theodor Kundtz- Needham & Co.

Brian Drab - William Blair

Paul Casali - Oppenheimer & Co.

Operator

Good morning. My name is Lacy and I’ll be your conference facilitator today. At this time, I would like to welcome everyone to PMFG Inc. second quarter fiscal year 2009 financial results conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I’d now to turn the call over to Kevin McGrath of Cameron Associates. Mr. McGrath, you may begin your conference call.

Kevin McGrath

Good morning every one and thank you for joining at PMFG conference call and webcast to discuss the company’s financial results for the second quarter fiscal year 2009 ended December 31, 2008. During this call non-GAAP financial measures will be discussed. Reconciliation’s to the most directly comparable GAAP financial measures are included in the company’s earnings release for the first quarter, which is available on the Investor Relation’s page at the company’s website at www.peerlessmfg.com.

Before I turn the call over to Peter Burlage, President and CEO of PMFG, I need to inform you that certain statements made in this conference call are forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

All statements other than statements of historical fact, made during this call are forward-looking statements. These forward-looking statements include statements that reflect the current views of PMFG’s senior management with respect to our financial performance, and future events with respect to our business and our industry in general.

Statements that include the words anticipate, preliminary, expect, believe, intend and similar statements of a future or forward-looking nature, identify forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements address matters that involve risks and uncertainties. Accordingly there are or will be important factors that could cause the company’s actual results to differ materially from those indicated in the statements.

Important information regarding factors that may affect the company’s future performance are included in the public reports that the company files with the Securities and Exchange Commission, including the information in items 1.A, Risk Factors of part one to our annual report on Form 10-K for the fiscal year ended June 30, 2008 and for our 10-Q for the period ended September 31, 2008, which we intend to file later today.

The company undertakes no obligation to publicly update or revise any forward -looking statement. The Inclusion of any statement in this conference call does not constitute an admission by the company or any person of the events or circumstances described in such statements are material.

I will now like to turn the call over to Peter Burlage, President and CEO of PMFG.

Peter Burlage

Thanks Kevin. It’s my pleasure to welcome all of you to our conference call. Joining me today is Hank Schopfer, our Chief Financial Officer. I will make a few introductory comments regarding our business activities and then Hank will provide you with our financial results for the second quarter.

We started of with fiscal year 2009 with a strong backlog; an active pipeline of opportunities in both of our business segments, and with the expectation that we would have a solid performance for the year. While we continue to expect fiscal 2009 to be a good year, we are beginning to see the impact of the slowdown of many of the economies around the world and the impacts on the markets we serve at least in the short-term.

Our second quarter results were impacted by two primary challenges. First, our environmental segment was up against a tough comparison due to the one large order flowing through our second quarter of fiscal year 2008. This did not come to us as a surprise. We knew replacing that order in time would be very difficult.

Second, we have begun to see the effect of the challenging global economic environment and restrictive credit markets that has impacted our customers. In particular, we have begun to experience a slowdown in some market segments that are processed products groups serves as customer reevaluates the demand for energy capacity.

Revenue in for the second quarter was up modestly to $39.1 million or 5.4%. This was our second full quarter of operating results that included Nitram Energy and we continue to be pleased with their contributions. Our net earnings per diluted share on a non-GAAP basis were a $0.11. Hank will provide more details on our financial results later in the call.

Environmental System segment revenues for the second quarter decreased 51% compared to the second quarter of 2008. As I had stated in previous calls both the timing of orders and the size of orders can significantly impact quarterly comparisons. This was the case for Q2, 2009 as the second quarter for fiscal year 2008 included approximately $10.5 million for one large environmental order than began in the fourth quarter of fiscal 2007. Process Products formerly referred to as Separation/Filtration group revenues for the second quarter increased 71% and benefited from the inclusion of Nitram operating results.

Backlog at the end of December was approximately $92 million down from a $107 million at the end of June 2008 and from a $102 million at the end of September 2008. While we have not experienced a cancellation of any significant orders in our backlog, there are three orders removed from our backlog because they have been put into on hold by our customers.

We continue to closely monitor our backlog and maintain close contact with our customers to meet any changing requirements to their projects. Pipeline remains active and we believe there is a lot of opportunity in the markets we serve; however, with a difficult and volatile economic conditions. Customers have become increasingly cautious. As a result, it is more difficult to determine when purchase commitments will be made.

In closing, I would note that attempting to forecast in a short-term remains difficult given the uncertain economic outlook. In the long term, we believe that we will continue to see energy demand growing particularly for natural gas creating an increasing need for our products.

Additionally, we believe that our Environmental Segment is well positioned to benefit from the growing demand of cleaner energy both here in United States and around the world. That concludes my review of our two business segments.

I would like to ask Hank to now share with you the key financial results for the second quarter of fiscal year 2009.

Hank Schopfer

Thank you, Peter. Let me take a moment to summarize our financial highlights for the second quarter of fiscal year 2009.

On April 30, 2008 the company acquired Nitram Energy and since the date of acquisition has included Nitram’s financial results including purchase accounting adjustments and the company’s results for the three and six months ended December 31, 2008.

In the first quarter of fiscal 2009, we completed the holding company reorganization in which each share of Peerless common stock was converted into two shares of PMFG common stock. All per share information including in our earnings release and in this presentation have been adjusted retroactively to give effect to the 2-for-1 conversion.

Revenues for the second quarter were $39.1 million, an increase of $2 million compared to revenues of $37.1 million for the three months ended December 31, 2007. The company recorded net earnings of $494,000 or $0.4 per diluted share for the second quarter, compared to net earnings of $3.5 million or 0.27 per diluted share for the three months ended December 31, 2007.

In the fourth quarter of fiscal year 2008, the company recorded as part of the purchase counting for the Nitram acquisition, $6.4 million and $4.8 million in fair value adjustments related to backlog and inventory acquired respectively.

During the second quarter of fiscal year 2009, the company recorded as part of cost of good sold $1.1 million of backlog amortization expense and an additional $373,000 of expense related to the fair value inventory adjustment.

On a non-GAAP basis excluding the expenses related to the fair value adjustments of Nitram’s backlog and inventory. The company would have recorded net earnings a $1.4 million or $0.11 per diluted share for the second quarter of fiscal 2009.

Calculations on non-GAAP results are shown in the tables accompanying our release. Process products form the Separation and Filtration System segments revenues for the second quarter were $29.4 million, an increase of $12.2 or 71% compared to revenues of $17.0 million for the three months ended December 31, 2007.

The segment includes $18.8 million on Nitram revenue for the three months ended December 31, 2008. The processed products operating income was $4 million, an increase of $1.2 million. Environmental System segment revenues for the second quarter were $9.7 million, a decrease of $10.2 million, compared to revenues of $19.9 million for the three months ended December 31, 2007, which includes $10.5 million from a large project that began in the fourth quarter of fiscal year 2007.

The environmental system segment operating income was $2 million, a decrease of $3.2 million compared to an operating income of $5.2 million for the three months ended December 31, 2007. At December 31, 2008, the company reported $9.4 million of cash and investments, $58 million of debt, total assets of $152 million, working capital of $44.3 million and a current ratio of 2:1.

As Peter said early, the company’s backlog was approximately $92 million at December 31, 2008, as compared to approximately $102 million at September 30, 2008, and $107 million at June 30, 2008. This concludes my remarks about the financial results.

We will now address your questions. Operator, please proceed.

Question-and-Answer Session

Operator

(Operator Instruction) Your first question comes from Rick Hoss - Roth Capital Partners.

Richard Hoss - Roth Capital Partners LLC

As far as the write-downs go, are those complete and if not what’s left?

Hank Schopfer

It’s about 300,000 left. It should be in our flow through Q3. So, it’s really substantially complete.

Richard Hoss - Roth Capital Partners LLC

Okay. And then, we’re done with it.

Peter Burlage

Yes.

Richard Hoss - Roth Capital Partners LLC

As far as SG&A, is there room for reduction given the environment?

Peter Burlage

Yes there is some room for reductions and we’re monitoring and taking action on that as said, but there is room for some reduction in that.

Richard Hoss - Roth Capital Partners LLC

Okay. The erosion of backlog, did it favor one segment over the other?

Peter Burlage

No, they are pretty equally impacted by it, as far as the erosion. Are you talking about the reduction as far as going from $103 million down to $92 million; it’s a $10 million reduction. Majority of it waved in about the same as with the revenue. About 60% of it was in process products and 40% was environmental.

Richard Hoss - Roth Capital Partners LLC

Okay, and then did you say how much dollar amount was reduced due to the removal of these projects or delayed projects?

Peter Burlage

I know we didn’t report that. It’s approximately $3.5 million in the job that were taken out of the backlog as a result of them being placed on hold.

Richard Hoss - Roth Capital Partners LLC

So that’s understood to be at a more conservative approach. If they were to resume then they’d go right back here.

Peter Burlage

Yes, and just to reiterate our policy as far what we count in backlog. We only count projects which we have a confirmed purchase order with. We do not put into our backlog, projects in which we received letters of intent that don’t have a conforming purchase order with them in the same level when we receive our hold instructions from our customers that are deemed and definite periods; we pull them out of our backlog as well.

Richard Hoss - Roth Capital Partners LLC

Okay, any update on the proposal through the remaining peaker orders, the large ones that we’ve discussed on last conference call.

Peter Burlage

I guess the only thing to report is not good news. I mean the projects that are out there currently are being held up. There isn’t an any activity going forward the immediate time and we did loose one retrofit project during the quarter; one of the big projects was the retrofit project that we were unsuccessful at winning.

Richard Hoss - Roth Capital Partners LLC

Okay and then backing out the impact of the last large order into the environmental systems when you’re looking at year-over-year comps, it looks like environmental actually was decent for the quarter year-to-year, but the weakness came in the process, the old Separation/ Filtration. Can you give any insight there?

Peter Burlage

The weakness, be in the reduced margin?

Richard Hoss - Roth Capital Partners LLC

The reduced revenue; it seems like when I’m looking at the numbers, I’m considering the impact of the large order last year when I’m looking at the environmental segment, so taking that looks like the environmental segment was largely flat.

Peter Burlage

That’s true, but that’s both in the quarter and year-to-date.

Richard Hoss-Roth Capital Partners LLC

Right, and then so looks like the weakness came in the process segment. Can you identify a better reason or a more direct reason in why the process segment was hit?

Peter Burlage

Well last year, that segment, that India, East West pipeline in there, which was about $13 million in revenue for that one project, but that contributed to I guess the process.

Richard Hoss-Roth Capital Partners LLC

Okay. I guess it makes sense. And the last question can you give additional insight into the reasoning behind the cancellation or delayed orders and the reason I ask this is that other segments of the energy portfolio that seems to be specifically oil, the delay of projects seems to be, at least the engineering construction companies and the relationship with the oil company is that the oil companies are waiting for an additional decrease in raw material cost thus improving the project economics.

Peter Burlage

I mean, we see that impacting the decision to let projects start, to have orders coming to fruition, but the cancellations or the holds here were situated with lost financing where the project lost its financing support and they put the job on hold.

Operator

Your next question comes from Sunil Sibal - Natixis.

Sunil Sibal - Natixis

A couple of things, because I just wanted to get a color on if you anticipate any positive impact on the stimulus package of the business, and if you do, then could you start to see any meaningful impact.

Peter Burlage

I guess the second part of that question is a much more difficult part to answer, the timing doesn’t. I think long term it does have an impact on the beneficial one. I think efficient energy projects and stuff like that, that will happen in the near term as a result of some of the stimulus energy projects that are being talked about, that will be the first thing. As for as the timing on that, I don’t know what to say specifically to that; I don’t expect it to happen immediately on the stimulus money being released, but certainly a couple after that, we can start seeing the indication of money being spent by whether it be government entities or municipalities looking that and are making their energy more efficient.

Sunil Sibal - Natixis

Alright. So, when you think about the energy efficiency, could you be a little bit more specific in terms of what product lines or what service lines could see a beneficial impact?

Peter Burlage

Well, the environmental side would see a benefit from energy efficiency as customers go in and look at changing out their equipments for more efficient technologies, whether that be combined cycle power or more efficient boilers; they would potentially put themselves in a situation where it be a new store type scenario and they would have to put environmental equipment or heat exchanger business benefits a lot from the efficiency.

Then in conjunction with that is the nature gas; the nature gas is the source of energy that’s being put in use. Then, our fuel gas division skids and process skids are a part of that. So the biggest benefactor from there would be environmental, process products will be secondary.

Sunil Sibal - Natixis

And I think you announced the opening of China office last quarter and the chatter we are hearing is for the system less concern, we’re already starting to see some impact of the Chinese stimulus. Anything you have seen in the Chinese market recently?

Peter Burlage

Again the Chinese manufacturing plant, we broke ground on the facility. We won’t actually start producing goods there until summer time.

Sunil Sibal - Natixis

Yes, okay.

Peter Burlage

The economy is open for us. I mean predominantly what we serve in China is the nuclear power generation market and we have not seen any slowdown in that business at all. We are having to re-bid things, because as the cost of materials is going down, we are being asked by the engineering firms to reassess our path for that purpose, but that region of the country, we are still seeing strong order opportunities with the environmental or with the nuclear projects.

Sunil Sibal - Natixis

Okay. And then with regard to the material costs and steel costs coming down, do you see any exposure to the company, especially with regard to any contracts on that. You might have preordered steel and not kind of bid that into the contracts with your customers.

Peter Burlage

No, I don’t see any exposure there. We buy the material once we receive the order. So, the price is already determined. Our opportunity is, it’s primarily up-side for us to be able to buy less than what we estimated for.

Sunil Sibal - Natixis

Okay and just a couple of housekeeping questions. I think previously you had talked about the forward 12 months avenues in the range of 1.65 to 1.7, also backlog. Considering what you are seeing in the market place with regard to customers putting orders on hold or delaying them, do you still think that’s a good number or you’re probably able to hair cut that number a little bit?

Peter Burlage

Well, probably I’d haircut a lot it. The fact that we pull those hold projects out of the backlog and put them and remove them, that sort of keeps that backlog number pretty active; pretty accurate to what’s actually being worked on and produced. What will have more of an impact on them is the make up of the projects. The environmental orders and the nuclear orders are a longer cycle time projects, compared to the process products.

So as your backlog changes to having some of those larger long term projects and it will make the cyclotron come down or the cyclotron come back down. So with the nuclear jobs, those are longer and those are usually 12 month type projects, so those would have an impact of moving it down to the lower end of that spectrum, same way it’s environmental.

Sunil Sibal - Natixis

Okay, and just a housekeeping question. What was the depreciation and amortization number in the last quarter? Hank, if you have that or otherwise I can get that offline too.

Peter Burlage

I think it was 1.4, the amortization of those two items, if that was your question.

Sunil Sibal - Natixis

No, actually I was wondering about the total DD&A for the quarter, total depreciation for the…

Peter Burlage

They’re like $1.7 million.

Sunil Sibal - Natixis

Okay and out of which $1.1 million is basically from the Nitram acquisition.

Peter Burlage

Yes. The depreciation is about $300,000 per quarter; amortization going forward is about $200,000 per quarter and then the one time stuff would be on top of that.

Operator

Your next question comes from Dick Ryan - Dougherty.

Richard Ryan - Dougherty & Company

What were your bookings for Q2?

Peter Burlage

They’re in the mid 30’s; I think 35, 37, somewhere in that range.

Richard Ryan - Dougherty & Company

Any color you can give on that; any material changes domestic, international or between the two.

Peter Burlage

No. I think part of the segment that had the biggest impact I guess was the domestic process product. They didn’t have as much of a sales activity; it’s what we expected them to be, but the balance between the international and the domestic, very similar to what we have reported here as our balance and the same way between environmental and processed products. I mean materialistically it hasn’t changed off of the ratios that are here in the second quarter.

Richard Ryan - Dougherty & Company

Okay. How would you look at the pipeline that you’re currently working on?

Peter Burlage

The problem with the pipeline is really the quality more than the quantity. The quantity seems to still be there and what we are seeing is stuff that’s staying and the quote activity that’s going on is not for near term activity. There is a lot of longer term activity that’s going on in addition to the stuff that will be placed in the next quarter. So the quotation activity is still pretty active; it’s just that there’s more future stuff in there than what we would normally see.

Richard Ryan - Dougherty & Company

Okay and then just a clarification on the backlog commentary; did you see that $92 million would work through in the 12 month period of time?

Peter Burlage

No, it won’t all be in the 12 month period of time. There’s a couple of projects in there that will be close; generally about 80% to 90%, there are just a couple of projects that are hanging out over the 12 months. So there are a couple of nuclear jobs that we have a PL for, but they are out there away, but otherwise that’s just a very small percentage of it that will hang out past the 12 month period.

Richard Ryan - Dougherty & Company

How about the nuclear opportunity outside of China, what are you seeing there?

Peter Burlage

I mean we’ve got the activity for our customers in Eastern Europe, there’s still the project that they plan to move forward, they’re still moving on it. Probably the only area that we’ve seen any real slowdown, well not really slowdown, but it’s just more political challenges, there’s the nuclear jobs for India, but those are just waiting for the political issues to be dealt with.

Richard Ryan - Dougherty & Company

Can you break out your backlog, what is related to nuclear?

Peter Burlage

I don’t have that number in front of me. No, I couldn’t give you that answer with great confidence.

Richard Ryan - Dougherty & Company

Do have cash flow in the quarter?

Hank Schopfer

Yes, we did. Cash flow for the quarter was we ended with $6.7 million with cash and actually cash and cash equivalents for the six months declined $4.7 million. We generated cash from operations, but our operating assets for the six months consumed $10 million of the cash. So from operating, net was like a negative 3.8; it’s been another 0.8 in investing activities and another 2 in financing activities.

Operator

Your next question comes from Ted Kundtz - Needham.

Theodor Kundtz- Needham & Co.

Most of my questions have been answered but Peter just net-net, it sounds like the business outlook for you guys would be kind of roughly comparable to this quarter. Would that be a best guess case here and then I was wondering what you would see could be potential up-side and where could that come from?

Hank Schopfer

As far as the business outlook it’s staying with our turns in our backlog. If you take our $92 million backlog and use the 1.6, 1.7, turns is going to get you a pretty good indication of what it looks like as far as the numbers. As far as upside, the upside comes from some larger projects potentially happening and that also is going to come from our success ratio and our market share. I mean the size of the market that we’re serving is being impacted by the economic problems that the global scene and so we are having to fight that giving a bigger share of that market that remains.

Theodor Kundtz- Needham & Co.

Is it becoming more price competitive? Is this a pricing issue that you got to get a lot more competitive on that end?

Peter Burlage

It’s always a pricing issue; we’re always going to make sure that our material costs are competitive with our competition, but as usually is in our business it is much a service factor as it is a cost factor. There is only a few areas such as a the nuclear market and some that we can have a price advantage and get a premium over our competitors, but our market is always one where we have to be pretty competitive with the people that we bid against on. We don’t get ourselves a significant premium just because of our name; it’s more because of our service.

Theodor Kundtz- Needham & Co.

Then the question was is that environment getting worse; is that getting a tougher environment than you’ve seen in the past?

Hank Schopfer

It’s slightly worse I would say; it’s not tremendous. We haven’t seen anybody doing stupid thing yet of selling that cost, we haven’t seen that type of activity yet, but it’s tightening up.

Theodor Kundtz- Needham & Co.

Could you mention any of the larger projects that we should be focused on watching for?

Peter Burlage

No, I don’t really want to mention it by name other than, you can sort of monitor the major power projects that are out there. California does a good job of posting theirs on their websites. We are about six, nine months behind those projects being announced, so if they are actively out their in the markets buying equipments then we are on them.

Theodor Kundtz- Needham & Co.

Okay and how about just on the international outlook; in terms of the potential again upside I guess, the numbers that, do you see much hope on the international front or is that market just kind of frozen with the financing issues?

Peter Burlage

No, projects that are in Europe and that are actually destined for Europe is probably the area that’s we’ve seen the most tightening on, but a lot of our work goes into the middle east and that has not tightened down as much as the North America has. In Asia it’s sort of the same scenario there. It’s slowed down a little bit, but not to the extent that we’ve seen here domestically.

Operator

(Operator Instruction) Your next question comes from Brain Drab - William Blair.

Brian Drab - William Blair

Looking at the operating expenses in the quarter, were those a little higher than you would expected. It came in a little bit higher then what we had previously talked about and could you give me idea of what u would expect going forward here in the remainder of 2009.

Peter Burlage

Yes, they were a little higher, especially in SG&A. In the sales and marketing side Brain, the conditions is bearable, the rest of it has a flavor of being fix. Same true in engineering; those are kind of more step costs, they are not quit variable with sales, but at certain levels they either step-up or step-down, but our operating SG&A expenses were up and we do expect those to come back down more in line.

Brian Drab - William Blair

Okay. So, I think previously you talked about a range somewhere in the 17%, 18% of sales range for SG&A, is that moved up do you think?

Peter Burlage

Yes, the fixed nature of that just got at north of 20% now.

Brian Drab - William Blair

Yes. Sure.

Peter Burlage

So it’s just being slightly south of 20%.

Brian Drab - William Blair

Okay. So, primarily it’s just an operating leverage issue on lower revenue, it’s not anything else that’s changed materially?

Peter Burlage

No.

Brian Drab - William Blair

Is that right?

Peter Burlage

That’s correct.

Brian Drab - William Blair

And just one last modeling question here; in terms of FX in the quarter, now that you’re more international after the acquisition, what was the revenue impact from FX in the quarter?

Peter Burlage

It was $500,000 of foreign exchange and it was only in our European operation. The rest of it goes to the equity section on our translation, but we do have some gains win. Our European operation, their functional currency as pounds, but they do some transactions in dollars and they also do some transactions in Euros. I don’t think it was a particularly made it hit currently, because their site was fairly short, so they don’t necessarily have to go out and hedge these currencies.

Operator

Your next question comes from Paul Casali - Oppenheimer & Co.

Paul Casali - Oppenheimer & Co.

Just want to make sure I understood this correctly; of the three wired peaker orders that we are looking forward to, you had mentioned Peter this morning that you lost out on one, is that the second one that we lost out on or are there still two more out there for bidding?

Peter Burlage

No, that was one. That was actually a retrofit job that I mentioned we lost out onto in the quarter. There’s still one that keeps getting pushed forward in time waiting for the decision to be made. We did lose one back right at the end of the first quarter we lost one of those peaker jobs and the other one has gone, has been put on hold and definitely they are not even moving forward on. So when I talk about three large jobs originally, one we lost; one keeps moving forward, hasn’t been awarded yet; and the other one has been cancelled all together and then recently, just this last quarter we lost a major retrofit project.

Paul Casali - Oppenheimer & Co.

Okay and are you losing those because of pricing or do you know why?

Peter Burlage

Yes, both of them required construction as part of the solution. So the ones we lost were both turnkey construction type contracts and we did lose both of them due to the construction component of it.

Hank Schopfer

So, we lost two and then the others is on hold, so there’s really -- we don’t look forward to those in your future work at all.

Peter Burlage

I mean I guess the activity is still there. I think looking at our proposal activity on peaker projects, we still got a lot of dollar value being proposed, but they are not looking at this peaker season as the project.

The same scenario we mention before, the outlook for the future is still very good, it’s just that the future has been moved out a little ways for these peaker jobs. I mean the jobs we’re bidding on are 2010 activities. There’s one that still may go this summer as far as an order being less, but the rest are out there for 2010 type order days, because therefore the peaker months, the future periods not in this coming year.

Paul Casali - Oppenheimer & Co.

Are they large orders; are they similar in size?

Peter Burlage

They are multi-unit, yes. They are two, three unit type orders.

Operator

This concludes the question-and-answer portion of today’s conference. I would now like to turn it back over to Mr. Peter Burlage for closing remarks.

Peter Burlage

Alright, I’d like to thank you for your interest in PMFG and taking the time to participate in our call today. We look forward to updating you on our third quarter call. Have a great day.

Operator

Thank you for your participation in today’s conference. This concludes your presentation. You may now disconnect. Good day everyone.

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