Sparton's CEO Discusses F4Q 2013 Results - Earnings Call Transcript

Sep. 4.13 | About: Sparton Corporation (SPA)

Sparton Corp. (NYSE:SPA)

F4Q 2013 Results Earnings Call

September 4, 2013 11:00 AM ET

Executives

Cary Wood - President and CEO

Mark Schlei - Chief Financial Officer

Analysts

Arnold Ursaner - CJS Securities

Steve Shaw - Sidoti & Company

Andrew Shapiro - Lawndale Capital Management

Ross Taylor - Somerset Capital

Tom Kerr - Singular Research

Question-and-Answer Session

Operator

Absolutely. (Operator Instructions) And our first question comes from line of Arnold Ursaner from CJS Securities. Please proceed with your question.

Arnold Ursaner - CJS Securities

Good morning and nice quarter.

Cary Wood

Thank you.

Arnold Ursaner - CJS Securities

Obviously one of the things that I think would be helpful for all your listeners is, I think a mistake we all could make is annualizing your Q4 run rate. So could you just remind us perhaps of the seasonality of the business? What may have occurred this fourth quarter that you might view is atypical revenue, stuff may have been deferred earlier in the year or even pulled forward from the upcoming year? And perhaps speak to each of your divisions in the upcoming year to help us think about how we have to look at them in fiscal ’14?

Cary Wood

Arnold thanks. And I think its wise to tamper any expectations that fourth quarter is an annualized run rate or certain influence that have been more typical than not when you look back over the last several years.

Our fourth quarter or end of year is typically strongly impacted by an increased testing schedule with the U.S. Navy and we’ll typically see a stronger DSS performance which has been more than norm than that.

So I think that’s issue one. Issue two to some degree is as we have predicted some quarters back. We saw a softening and/or pause if you will of the medical business and then once that was back into the backlog in Q, it had an extended impact because of the procurement of lead time and some of that has come back in the third quarter.

We expect that that’s coincidence continue to shift forward maybe into the first quarter and obviously, we saw some strengthening in our complex segment. So we saw growth everywhere but I think the fourth quarter was particularly affected by the strength of DSS.

Operator

And our next question comes from the line of Steve Shaw with Sidoti & Company. Please proceed with your question.

Steve Shaw - Sidoti & Company

Hey, guys. Cary do you as have an expected breakdown of segments for fiscal ’14?

Cary Wood

In what respect, Steve?

Steve Shaw - Sidoti & Company

Percent of revenues come direct from three segments?

Cary Wood

We do, but we had been reluctant to give that kind of forward guidance for sure. I think the trailing guidance that out there in other FDA environments in on revenue split has been about 50% medical. Up to this point it’s been about a third DSS Aydin Displays is will not a very large revenue piece of business, it certainly going to have its impact there.

So you might suggest that as you move forward that DSS becomes a larger percentage, DSS is probably going to have opportunities to grow on a percentage basis which obviously would mean that while medical still is a big part it might come down slightly from the 50%. But that’s the extent that we have typically given guidance is more on trailing basis, Steve.

Operator

And our next question comes from the line of Andrew Shapiro with Lawndale Capital Management. Please proceed with your question.

Andrew Shapiro - Lawndale Capital Management

Hi, Cary. The recent conference you had not yet closed on your Aydin acquisition but now that you closed on it. I am wondering if you might be able to now provide a little bit greater color and clarity as to the opportunities you see in advancing in both Aydin’s individualized performance, as well as the knowledge for carryover from Aydin that you expect might even extent beyond the DSS segment?

Cary Wood

Yeah. I think it’s a good example of what we have been now talking about for a good number of years, frankly and that it is a fit in the value added componentry piece, value stream that we’ve been talking about, adding content to and that’s what Aydin Displays represents.

It obviously serves the same end markets that we are involved with. It even goes as far as to serve programs that we are involved with [PAD] being an example of that. It fits nicely into what I would call engineered contents like what our DSS product really represents. So it’s an extension and a synergy of that capability.

But I think as we look at the investment piece aside from the fact that we think it’s been less than optimally run and managed. We think that there are opportunities and it’s been less optimally run and managed we think that there are opportunities on the forward basis to carryover the display concept into the medical device end markets. Every thesis of device work that we are involved with on the medical side has some type of a device.

And we believe that the Aydin capabilities of ruggedized displays and all that goes with that I think we believe there is an opportunity. I wouldn’t necessarily suggest that we are based in the entirety of the Aydin investment thesis on that type of growth. But I do think it is an upside opportunity.

So generally speaking it fits the strategy that’s been expressed many times before in the context of complex engineered value added componentry and we think that is a good offering in addition to the fact that it’s been suboptimally managed. It fits nicely in our capabilities and there are some extensions into the medical space.

Operator

Our next question comes from the line of Ross Taylor with Somerset Capital. Please proceed with your question.

Ross Taylor - Somerset Capital

Yeah. Great quarter and a couple of questions. First of all, during the quarter, fourth quarter, did you have any lots that were rejected by the navy?

Cary Wood

We maybe have had some scheduling issues, things that got moved and that is more of the case than not, but no specific rejects were accounted for in our fourth quarter, no.

Ross Taylor - Somerset Capital

Okay. But are -- is there or are there lots that were pushed from the fourth quarter into 2014 fiscal?

Cary Wood

Yeah. But then I would say that there are also lots that were pulled forward, so the net-net basis is…

Ross Taylor - Somerset Capital

Okay.

Cary Wood

…we are pretty much where we hope expected to be.

Operator

And our next question comes from the line of Tom Kerr with Singular Research. Please proceed with your question.

Tom Kerr - Singular Research

Hi, guys. Varying M&A market any changes in the last few months, regarding valuation, opportunity, willing sellers, competition for assets and that sort of thing, do you think you are seeing out there different?

Cary Wood

Yeah. Good morning, Tom. Look, I think now I sit on a forward look of deal traffic better than what I have seen in awhile. Now, I’d ebbs and flow in my feelings on that and that is that one quarter I feel good in the next quarter I don’t feel so good.

At face value there is a lot of opportunity and things for us to continue to looking at. I haven’t seen anything significant on the valuation side either to the good or to the bad. I think what we’ve demonstrated as of late is that acquisitions are probably going to increase becoming a standard norm of our business and as suppose to an event.

I do think that and we’ve said this before that we want to continue to focus on geographical spots that we want to find ourselves involve with in Northwest and Northeast, the Southwest, those are all things that are very much front center for us and have become priorities.

And so I am very optimistic about the deal flow. I am very pleased with how effectively we executed the last several. I think we’ve done then very patiently and prudently as we have said we would always do, but now what we are showing is an increase capability to handle more traffic when it comes to M&A.

Operator

And we have a follow up question from the line of Ross Taylor with Somerset Capital. Please proceed with your question.

Ross Taylor - Somerset Capital

Yeah. I feel like this is also like speed dating. You comment on the navy is letting out the next contract, sonobuoy contract, you can’t comment on kind of how big that contract is, how many years it run for, what you see, where you see your situation and did you see any? I believe all the paperwork had already have been end, so have you seen any competitive threats in that space?

Cary Wood

It did. It was probably a month if not two months ago that the key milestones dates have come and gone, where qualified participants would have been fully engage in that bid. Just to give you a perspective. Historically, our contracts were three-year annual renewable. They’ve now shifted to more recent bid packages to be five years, one year renewable.

And the size of the more recent contract suggests that it’s nearing a $1 billion. Now to be fair that’s a $1 billion over five years some years larger than other, potentially it hasn’t reach finality so that could always be discounted somewhere down the road before we strike a final agreement. And that number is split pretty 50-50 between Sparton and our partner USSI with ERAPSCO.

I do believe and feel very confident that we gave a very good put forward with our coding. We have been very engaged in discussion since then. I have said this in several other FDA environments that we’ve, I have said this in several other FDA environments that we’ve had a good number of conversations. We expect that this will come to an end perhaps by the end of this calendar. I think that’s probably in the aggressive side. But perhaps shortly after beginning of the new year and we will have some news to report.

I am still very bullish and optimistic about how that’s going to play out. We’ve always been careful around the quantities the DoD has projected and what our expectations are likely to be. We don’t expect that it will have much of an impact in the current fiscal year if any. But I expect that in future years it could have fairly significant impact.

So I still very optimistic about our involvement, I don’t believe that the competitive threats that could be there. We are anywhere I think a part of this bid meeting is there any technological obsolescence, I don’t. I am not concerned around that? Are there other competing folks? I don’t want to sound terribly presumptuous or arrogant but I don’t believe that there were other folks involved in the bidding process. I think that it put us in a very good position.

Ross Taylor - Somerset Capital

Okay. Good. And you’ve had a $500 million top line target basically something in the neighborhood of roughly $40 million, $50 million EBITDA target what I believe to be 2015. Are you still comfortable in your ability to achieve them.

Cary Wood

Yeah. I’m. It’s still going to take some things to follow, Randy, M&A side of things. We’ve been able to out deliver in the organic side. This year roughly 5, last year roughly 10. I have always given guidance at 3% to 5%. And more times than that we’ve been able to deliver above that threshold. That’s going to require some M&A. We don’t have a control like we want to over a lot of that but I do feel real confident with the deal traffic and quality of that deal traffic that I have seen here more recently.

I have always discounted that forward guidance by saying we won’t make a bad deal. And I’ll apologize for lending at a 4.25 run rates by the end of fiscal ‘15 with strong performance that hasn’t put the business at risk. I’m still very optimistic that number is achievable. And I think we’re -- at the spotting time, we’re over the course of the next 18 to 24 months.

M&A is going to have every bit to do with that. And we are significantly dialed up our internal bandwidth to be able to handle more, not less of that. And I suppose it would becoming a milestone event. It’d becoming a normal course of our business.

Ross Taylor - Somerset Capital

Okay. I want to commend you on what you guys done operationally but also I’m pleased to see you’re making better use of the balance sheet. Thank you very much.

Cary Wood

Thank you very much.

Operator

And we have a follow-up question from the line of Andrew Shapiro with Lawndale Capital Management. Please proceed with your question.

Andrew Shapiro - Lawndale Capital Management

The questions relate to, I guess, the overall acquisitions and the quarter’s SG&A. You highlighted that your expenses in addition to obviously Onyx’s SG&A, you had cost associated with both the Onyx and Creonix acquisitions as well as acquisition related expenses for other things you had been looking at. Can you quantify for the quarter amount of these costs if it’s quantifiable. They are large enough that they are quantifiable. Just to get a feel for what is somewhat non-recurring. I know that you are in acquisitions gaming but at least pretty aggressively for the time being. Just trying to get a feel for what those costs might be?

Mark Schlei

Hi Andrew. It’s Mark. In the quarter, we didn’t have much in the way of significant acquisition expenses. In prior quarters, we did have M&A costs related to Onyx and Creonix as well as other transactions that we didn’t close on. But in the fourth quarter, there wasn’t much there to speak off that would have given misdirection to the quarter.

Andrew Shapiro - Lawndale Capital Management

Okay. And further on the acquisitions, I think you -- I don’t know if you did disclose it before but now it’s disclosed that Creonix only cost $2.1 million on a $12 million revenue business. As you consolidate those operations down into Brooksville and this is basically an acquisition of accounts in some of the things up in the North East. In general, what should the gross margins be on that kind of Creonix acquired business, similar to what you were -- you're getting out of the rest of EMS in Brooksville, higher lower?

Mark Schlei

Well, we’ve got a lot of leg work before I -- I'm willing to give kind of a segmented difference between Creonix and its impact on Brooksville. I can’t tell you that between Creonix and its impact on Brooksville. I can’t tell you that we expect that the absorption of additional new business overhead, new opportunities that will start ramping up in our CS segment.

We’ll suggest that moving forward, we will be shifting our event guidance of gross margin from the 7 to 10 that we’ve maintained for a good number of quarters to 9% to 12%. I think we are going to see some synergies ultimately from the addition of Creonix.

The new business is ramping up and fundamental execution down there. So I think it’s fair to say that Creonix was very similar in some of the -- that type of segment pricing but we left behind all of fixed assets, any of the equipments, most of the headcount. And we feel real good about how it’s going to have its impact on our CS segment moving forward.

Andrew Shapiro - Lawndale Capital Management

Okay. I have some more questions but I will back out in the queue, come back if you get time.

Mark Schlei

Very good.

Operator

And our next question comes from the line of [Jonathan Haynes], Private Investor. Please proceed with your question.

Unidentified Analyst

Good morning. I have quick questions. The 2.1 that’s listed for Creonix on the cash flow statement, was that the total price for that?

Mark Schlei

That is the full price.

Unidentified Analyst

And have you guys made any comment. I don’t think I have seen it on kind of the revenue run rate there.

Mark Schlei

We’d given guidance that it had a $12 million revenue performance.

Unidentified Analyst

Great. I don’t think any one has asked about the utilization of the facility in Vietnam today. Could you talk about last year and what you’re looking forward to this year?

Cary Wood

You know, it’s increased. Obviously, we’ve shifted some business around. We certified it with the FDA. We’ve moved some devices on the medical segment over there. That business has started to show enhanced performance. Utilization is still probably sub 50 but far north of where it once was when it was -- it's fair to say it was in the low-to-mid 20s. So let me give you a 30% to 35% utilization percent in Vietnam but it’s performing better. And we’re excited about how that business might ramp up overtime as well.

Operator

And we have a follow-up question from the line of Arnold Ursaner with CJS Securities. Please proceed with your question.

Arnold Ursaner - CJS Securities

One of my question was the utilization. You’ve added quite a few new contracts. When you typically win one of those, how much margin impact -- negative margin impact you typically have when you are ramping up a contract?

Cary Wood

There is a bit of that. There is always a learning curve. There is a volume variance. There is going to be some material variances with performance scrap, those types of things. Every program is slightly different. So there is not a rule of thumb. And with each of our segments, they’ve got varying performances at margin and pricing.

So on the low end, the 9% margin on the high end, obviously DSS in the mid 20s. It’s really hard to nail that down. I would say that it’s fair to spec that there have been performance variances at the outset of program. But we’ve been able to manage through those over the course of the previous year, two years in ramping up new programs as it was.

I think we’re pretty good at being quickly responsive managing through issues and at being fairly transparent to investors and it’s shown in our performance. It really hasn’t been disruptive. It’s been a part of business that we manage but it is certainly not been disruptive. We had its effects on our performance.

Arnold Ursaner - CJS Securities

And at what utilization rate, you start seeing dramatically higher incremental margins?

Cary Wood

Yeah. I’m going to say on a consolidated business -- on a consolidated basis, our business is still in the 50% to 60% utilized number. There are some facilities higher, some lower. Medical for instance is probably 60%, 65%, overall utilized even with the Onyx acquisition. The CS segment is still probably 50%, maybe 60% utilized across the board with Vietnam been on the low end of that.

And then the DSS segment, when we certainly got opportunities to go to multiple shifts and we certainly got floor space there. But I would say that within the segment, it’s still a 50%, 60% utilized. So we got a lot of floor space and opportunity to better absorb the fixed assets as we move forward.

I typically try and target the 85%, 80% utilization before we start talking about what else we might want to address. I have the idea of continuous operations, multishifted, if that make sense. I think that once you start getting into the high 60s, low 70% utilization, you start seeing significant drop.

Arnold Ursaner - CJS Securities

I mean, 70%, 80%, 90% kind of incremental margin or…

Cary Wood

I think we’re probably talking in the 25% to -- I think we’re probably talking in the 25% to 40% incremental impact. I think -- and again that’s just grabbing at numbers. I don’t think it’s in the magnitude of 50% or higher. There are other things that come into play that would offset those types of ambitions but much more significant than what we’ve been seeing, that’s for sure.

Operator

And we have a follow-up question from the line of Steve Shaw with Sidoti & Company. Please proceed with your question.

Steve Shaw - Sidoti & Company

Yeah, Cary. I know Aydin’s named our primary business or only business with the transition to PA why exactly was your display looking to divest iron?

Cary Wood

Well, I think they should have release yesterday that put some color to that. I don’t want to speculate outside of that release. I think generally they were looking to pay down some of their debt. And that’s what they did? And it was a good opportunity for us, it fits nicely into -- our strategic ambitions but had some additional content and value add within the value stream. It fits nicely into the end markets we are working within, I mean it’s a good fit for us and I think it would be more visit to north and not they were able to do. I think they were more about trying to pay down debt.

Steve Shaw - Sidoti & Company

Right. And then do you have a percentage of how much of the $12 million will be going to PAs?

Cary Wood

It’s a heavy degree of content but if I sat here without having the exact numbers in front of me, I would say that a quarter to a third of their business is involved in the PA platform.

Steve Shaw - Sidoti & Company

Okay. All right, thanks a lot.

Operator

And we have a follow up question from the line of Andrew Shapiro with Lawndale Capital Management. Please proceed with your question.

Andrew Shapiro - Lawndale Capital Management

The new big RFPs, the five year billion dollar RFP from the navy for sonobuoys, is that for the whole SKU line of them, meaning the legacy ones as well as the new high altitudes ones needed for the PA platform or is this is just the PAs?

Cary Wood

It is a comprehensive contract. It will include just about every application that they look to deploy over those five years, but keep in mind those mix -- that mix can change with that one year renewable. I think that’s important to understand. They can make some shifts. But generally speaking it is about a five-year engagement with a hypothetical set of volumes across most of the SKUs.

Andrew Shapiro - Lawndale Capital Management

Okay. And that’s a billion divided by two, so $500 million, so $100 million a year and this is the navy. So, historically your U.S. navy business that would be considered within the same kind of contract concept ignoring that the U.S. might procure for [infringements], has been what? Has it been in the $15 million a year range, is this doubling, is this a 30% jump, is it more than a 50% jump?

Cary Wood

Your math is correct. And I think carrying that math forward, it would basically be a significant jump. I mean, our trailing domestic buy has been in the $40 to $50 million range. And if you take that round up to a billion dollars over five years divided in half, that would suggest that it would nearly double.

Andrew Shapiro - Lawndale Capital Management

Okay. And then with respect to your other components of DSS, now, it’s part of it but you have been doing a bunch of internal R&D over the years developing for commercial application, the hydrophone, digital compass et cetera, you had trial samples going out, a lots of potential customers.

We are now entering fiscal year 2014, where did they stand when -- what is your analysis of the benefits of what was spent, your continuing spend on R&D, I am assuming in this area, but maybe not. Can you give us a little bit more color and guidance on qualitatively on this historical and perspective R&D investment and potentially quantitative?

Cary Wood

Sure. First, your observations are correct. We were involved in a good number of R&D projects over the preceding couple of years. The dollars invested in fiscal 14, we’re at the same magnitude as fiscal year ‘13. Obviously with the increase in sales, just going to start to dilute down the percent of revenue investment.

We forward look going into our upcoming fiscal to be roughly the same in terms of dollar investment. We will make adjustments where we should. We don’t break this out but I think it’s fair to say that the progress we have made while not on the magnitude of homeruns I would suggest it is on the magnitude of basics.

We have seen a more than doubling sales in the 2 basis. We have seen a more than doubling of sales in the new compass line from fiscal year ‘12 throughout the ‘13. And we have included in our fiscal year ‘14 plans for that to happen roughly again. The follow activity is strong and as I have said before, we have to measure a bit of this progress by activity.

I am a quantitative guy and I am a performance guy but I think there is one separate barometer here given that it has a long incubation period. And that is, are we involved a with a good number of contract opportunities and perspectives new business opportunities at the magnitude we wanted to be. And I think right now it’s fair to say that it is.

So, our latest product was launched at the most recent AUB -- VSI show and it was basically a newly GPS enhanced INSO program. And I feel really comfortable that going into next year we should expect to see good momentum on a year -- where we basically doubled that from the year before.

So I have never said that this would be on a magnitude of any of other business segments. I have also viewed it as a nice enhancement, a solution cell. It is going to bring attention to that business that might sell itself in the contract services. There might be the occasional double, triple and maybe even a homerun. We were on a program for a period of time that could have a material impact on earnings, but right now I think we are comfortable with hitting singles and that’s the type of results that we have seen.

Andrew Shapiro - Lawndale Capital Management

Okay. Your medical side, whilst still below your legacy medical gross margins, which were I guess 17.2 for this quarter, your Onyx gross margin sequentially improved nicely to 49 and with an absolute drop finally in the Onyx SG&A dollars your operating margins increased nicely. My question is, are there further improvements in your Onyx plans and costs, other than simply just revenue growth and thus overhead absorption to lift your margins closer to the rest of the medical segment?

Cary Wood

Well, first, I want to put that in a proper context. There is going to be shift in cost. As we have talked about in the past there has been a step-up depreciation impact on cogs, which obviously is going to have its adverse affects on gross margin and so it’s an apples to orange comparison to our legacy business. If you compare legacy EBITDA to the current EBITDA of the Onyx acquisition, I think what you find is that they are performing at very similar levels.

Andrew Shapiro - Lawndale Capital Management

Okay.

Cary Wood

I think that -- and that’s -- and so while there are opportunities, oh, yeah. There are opportunities, there are all kinds of things that we want to continue to introduce there, I mean, deployment has certainly not hit its full stride. I think there are opportunities on the quality and on the fill rate and service levels. There is all kind of opportunities there.

But I would discount that from being some incremental step function change in its financial performance. I think that there is a growth potential there and I’m certainly pleased with the activity I have seen in the new business model and all of that has exceeded our expectations and how quickly it has materialized.

We may have a slow start with the first partial quarter that we had its ownership, but this quarter certainly played out actually higher than what was expected and our normalized basis it is very much in line with what we guided at the outset of the acquisition.

Operator

(Operator Instructions) And we have a follow-up question from [Jonathan Haynes], a private investor. Please proceed with your question.

Unidentified Analyst

Hi. Thanks again back to me. You ended the year about one-time debt-to-EBITDA then added the $15 million from I think so that it puts you probably I guess a little -- maybe a little north of [2] north of [2] looking forward to the new year, with reference to the $500 million revenue target and where you stand on that? How comfortable are you guys taking that to get to the $500 million?

Cary Wood

Well, first I want to talk a little bit about what I have often been asked and other FDA environments around our comfort with leverage and I would say that we have always said that we believe that we can enhance and grow this business vis-à-vis M&A and never really get much beyond the 3 to 3.5 times EBITDA threshold. Mark you want to go ahead and add some color on the debt side, I am not sure exactly.

Mark Schlei

Yeah. On the debt side we ended our leverage at 0.5x and our debt-to-equity I believe was only 0.12. So we are not at our one-time lever yet.

Operator

And our last -- final registered question comes from the line of Andrew Shapiro with Lawndale Capital Management. Please proceed with your question.

Andrew Shapiro - Lawndale Capital Management

Yeah. These are two follow ups on the medical side. First off, your earnings release highlight a sizable increase in revenue from your largest medical customer, I think that’s Fenwal/Fresenius. The sizable increase in revenues from your largest medical customer, I think that’s Fenwal/Fresenius. Do you view this as more of a one-time increase or has this higher level of activity by this customer kept base in their current Q1 ended which is ending this month?

Cary Wood

I am cautious about giving any guidance around Q1. I think it’s in line with our internal expectations and we certainly went into our fourth quarter which for some momentum with Fresenius and Fenwal. We have been pleased with the growth. We certainly been happy that we have been to provide them some insights as to how to improve some of that growth with operating performance and field service and field service refurbishments and those types of things.

And I think that certainly contributed to growth not just with, not Fresenius but with legacy Fenwal. And I think they have been very pleased. We are a close partner to them. But as you might expect, if you saw the cycle with Siemens and we are seeing now a very large customer that we are keeping a close eye on and certainly want to develop a nice partnership with. But we also wanted to be very careful about just how far we might find ourselves going with the sizable customer such as Fresenius.

And so there is nothing to project other than I think it is a business that we just wanted to be mindful has continued to grow nicely. But certainly don’t want to find ourselves at a level of concentration that we are uncomfortable.

Andrew Shapiro - Lawndale Capital Management

Okay. And again on the medical device side more macro, have the views of your device customers regarding the medical device excise tax or it’s now potential repeal shifted. Is this -- and do you feel this sentiment is yet reflected in your current backlog numbers?

Cary Wood

My answer is going to be somewhat speculating. I think it started to become business as usual. I don’t know that anybody has fully gotten uncomfortable with what the landscape might be with or without a device tax and how that is going to play out.

I think the end market demands have started to trump those concerns and you are starting to see some of that demand make its way back into the backlog, which I said previously extends our ability to supply -- the supply chain timetable is not insignificant.

So where guys may have pulled out orders that were pending in Q2, it is going to have its effects now on in Q3, Q4 going into Q1 for us. But I think generally speaking, I think things have started to come down and it’s more business as usual now.

Andrew Shapiro - Lawndale Capital Management

Great. Thank you.

Operator

And there are no further questions registered at this time.

Cary Wood

I would like to thank all the participants in today’s call. Again, today’s call including the question-and-answer period has been recorded and will be posted to our website under Investor Relations later today. Thank you.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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