Innovative Solutions and Support's (ISSC) CEO Geoff Hedrick on Q3 2014 Results - Earnings Call Transcript

Aug. 1.14 | About: Innovative Solutions (ISSC)

Innovative Solutions and Support, Inc. (NASDAQ:ISSC)

Q3 2014 Earnings Conference Call

July 30, 2014 10:00 ET

Executives

Geoff Hedrick - Chairman, CEO

Shahram Askarpour - President

Ron Albrecht - CFO

Analysts

David Campbell - Thompson, Davis & Company

Jeremy Hellman - Singular Research

Scott Lewis - Lewis Capital Management

David Starkey - Morgan Stanley

Operator

Good morning, and welcome to the Innovative Solutions & Support Third Quarter 2014 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation by management, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.

Now, I would like to turn the conference over to Mr. Geoff Hedrick, Chairman and CEO. Mr. Hedrick, you may begin.

Geoff Hedrick

Thank you, and good morning. This is Geoff Hedrick, Chairman and CEO of Innovative Solutions & Support. I'd like to welcome you this morning to our conference call to discuss the third quarter fiscal 2014 results, current business conditions and our outlook for the balance of the year.

Joining me today in our Exton headquarters are Shahram Askarpour, our President; and Ron Albrecht, our CFO. Before I begin, I would like Ron to read our Safe Harbor statement. Ron?

Ron Albrecht

Thank you, Geoff, and good morning, everyone. I would like to remind our listeners that certain matters discussed in the conference call today, including operational and financial results for future periods, are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially, either better or worse, than those discussed, including other risks and uncertainties reflected in our company's 10-K, which is on file with the SEC.

I'll now turn the call back to Geoff.

Geoff Hedrick

Thanks Ron. In the third quarter, we reported revenue growth of 20% and growth in earnings which approximated $500,000 or $0.03 a share making this our tenth consecutive profitable quarter. To-date revenues have increased 45% and earnings have increased 32% from a year ago, is a good result in a year that we recognize would be a transition year as we shifted resources gradually from engineering to production.

Results for the third quarter continued to reflect progress in our engineering development programs. As third quarter investment in engineering spend declined from peak in the second quarter, we have been able to advance several development programs to close to completion. This year we begun deliveries on the Eclipse 550 and KC-46A U.S. Air Force and PC-12, and the foreign C-130 full cockpit retrofit programs.

As this and other programs are completed and the related products are certified, we believe that commercial air transport, military and general aviation operators who want to capitalize on the significant price performance advantages of our resulting products.

By leveraging our core technology to develop a more comprehensive portfolio of products. We have been launching in our addressable market and creating value for our shareholders. Presently, our backlog represents approximately a year-and-a-half of our current annual revenue excluded from our backlog, our future sole-source production revenues that we expect on Eclipse, Boeing and Pilatus programs. Though we received orders for production this potential revenue is not included in our backlog.

We expect potential revenues to meet the production phases of these contracts will exceed our current backlog. In addition, to the orders for the follow-on sole-source production units under our contracts, once engineering development on the contracts currently on in hand is complete, we believe that other customers who have expressed interest in our price, performance proposition will emerge.

Third fiscal quarter has been a continuation of our fiscal 2014 focus on executing on our engineering programs to bring them to completion so that we can transition into production on existing contracts and win new related production orders.

Early in the year, we strengthened our organization to improve productivity and we believe we are able to increase production volumes significantly as these development programs transition into production. Consequently we are expecting gross margins to return to be more historical levels as production increases as a portion of our total revenue.

Now, let me turn this over to Ron for a more detailed description of our financial performance. Ron?

Ron Albrecht

Thank you, Geoff. For the quarter revenue was $10.6 million, up 20% from $8.8 million in the year ago quarter. Net income for the quarter was approximately $500,000 compared to approximately $300,000 in the year ago quarter. Earnings per share was $0.03 this quarter compared to $0.02 per share the same quarter last year. Profit in the year ago quarter was net of $0.03 per share a non-recurring charge related to a previously disclosed legal matter.

Total product revenue for the third quarter was $7.6 million, an increase of 18% from $6.4 million a year ago. Compared to the second quarter product revenue was relatively consistent with our expectation of a gradual shift to a higher proportion of production revenue several engineering development programs approached completion.

Engineering development contract revenue was $3 million for the quarter, an increase of 26% from $2.4 million in the year ago quarter. As we anticipated, engineering revenue declined sequentially from the $4.4 million peak reported in the second quarter. Including internal R&D, we invested 39% of total revenue in product development in the third quarter.

While down from the peak levels of the second quarter, I would emphasize that engineering revenue represents primarily customers' contractual reimbursements of our expenditures in support of their programs. This revenue was only marginally if at all profitable, which together with some cumulative catch up adjustments to contract placed some pressure on the gross margin in the quarter.

As Geoff mentioned we expect the long-term production phases that result from these engineering development programs would generate gross margin consistent with our historical experience.

The operating cost for the quarter were $2.5 million compared to $3.2 million for the quarter a year ago. Year ago same quarter costs included a $640,000 pre-tax non-recurring charge related to a previously disclosed legal matter.

Internally funded, research and development was approximately $640,000 this quarter compared to $559,000 in the year ago quarter.

Selling, general and administrative expense was $1.9 million in the quarter, a decline from $2 million in the year ago quarter after excluding the non-recurring charge. Selling, general and administrative expenses down sequentially from $2 million in the second quarter. The underlying level of selling, general and administrative expense has remained relatively unchanged for seven consecutive quarters notwithstanding the growth of the company's revenues.

We reported third quarter operating income approximately $660,000 compared to $286,000 a year ago. For the third quarter, we provided taxes at an effective rate of 26% slightly below the second quarter 29% rate. We expect a full year tax estimate – I'm sorry, we expect a full year tax rate to be approximately 28% excluding any potential benefit of congressional reinstatement of the R&D tax credit.

Cash used in operations was $813,000 in the third quarter largely because of timing differences between expenditures and related receipts in our engineering development contracts. These differences appear as unbilled receivables on the balance sheet and will decrease as programs reach contractual billing milestones.

At the end of the quarter, we had $14.4 million of cash on hand no debt. We expect a net use of cash from operations this year largely because of the aforementioned contractual timing differences between expenditure and billing on the engineering development programs. We believe that we have sufficient cash to fund operations for the foreseeable future.

For the nine months ended June 30, 2014 revenue increased 45% to $34.2 million from $23.5 million for the first nine months of last year. Net income for the nine months ended June 30, 2014, $2.3 million or $0.13 a share compared to $1.7 million or $0.10 a share for the first nine months of last year.

For the fiscal year ended September 2014, we expect to report both increased revenue and profit. As a result, which would represent our sixth consecutive profitable year.

I will now turn the call over to Shahram Askarpour for further comments on market conditions and operations. Shahram?

Shahram Askarpour

Thank you, Ron, and good morning everyone. As a result of our increased investment in products development this year, we have been making significant progress in completion and/or close to completion of several of our engineering development programs from products that we expect will open growth opportunities for the company.

As Geoff noted the completion of engineering developments will not only initiate the transition into the production phases of these contracts but we expect these completions to also increase potential customer interest across our military, business and commercial air transport markets for these new products.

We anticipate that potential new customers will be attracted to the price for performance attributes that these products offer.

Looking quickly at our key programs, in the third quarter we continue to receive orders and ship production units to Eclipse, one of our first engineering development programs to transition into production. During the quarter, we completed a cockpit upgrade of the Pilatus PC-12 for a U.S. government subcontractor.

Our contracted Pilatus holds for the development and sole-source production of our utility management system or UMS for the new Pilatus PC-24 business jet. Since the commencement of the original contract Pilatus has increased significantly the scope of the development effort in order to enhance the UMS product. The aircraft has received an enthusiastic market response and I will be traveling to Switzerland this evening to attend the aircraft rollout on August 1st.

We have also delivered the third chipset for aircraft integration into a foreign military C-130 full cockpit program. We believe that the completion of this program will open a sizeable new C-130 market for us because of the large number of C-130 aircraft operating throughout the world.

We continue to make progress on our Delta Airline MD-88, MD-90 upgrade program as I stated last quarter, we continue to anticipate FAA certification towards the end of this calendar year or early next year.

The first Boeing 737 Classic aircraft for NMSA has successfully completed a major portion of it's verification flight test as required for the issuance of the SCC. The certification of this flight management system was open a Boeing 737 Classic aircraft retrofit market for us.

Backlog at June 30, 2014 was roughly $72.5 million, backlog remains well in excess of year's revenue. We expect that completion of our various engineering product development contract will provide a source for new orders.

Our sole-source OEM production programs alone represent approximately $90 million of potential revenues that are not currently in back log for our subject sole-source contract under which we expect to deliver over the next decade.

In addition to the new products being developed on the customer contractual arrangements, we are nearing completion of our entirely funded Integrated Standby Unit or ISU. Again, with it's excellent functionality and attractive price for performance aspect, the IS&S ISU has brought original equipment and retrofit market potential and represent a further revenue opportunity.

Finally, I echo Geoff's sentiment regarding the improved efficiency and productivity of our organization since we implemented the number of management across this changes earlier this year. These improvements are reflected in our ability to improve cost efficient despite the pressure on both our engineering and production organizations to support hardware required for engineering development programs and to facilitate the transition from engineering development into production. Consequently, we believe that we are well-prepared to manage effectively the anticipated growth in production.

I would now like to turn the call back to Geoff.

Geoff Hedrick

Thanks Shahram. Beginning last September, we announced that we expected fiscal 2014 to be a transition year as we focus on our high level of investments in engineering product development with Eclipse, Pilatus, Delta and other customers. We expected that these investments would put pressure on our margins in our profitability. That said, we have achieved significant technical progress this year and have grown profit notwithstanding the profit pressures of high engineering investment and production transition costs.

I can see more clearly now the opportunities to these programs to facilitate the growth of our company. Our strategic focus going forward is on the next generation air traffic controls, system with cockpit navigation, communication and guidance systems.

We have wished to accomplish, we are investing in development in our own precedented rate. At the same time, we have managed to successfully balance the demands of these production product, development programs with the need to maintain a strong financial position. And we are on the path for a our sixth consecutive profitable year. We believe that our efforts will create value for our shareholders over the long-term.

Operator, you can turn over for questions.

Question-and-Answer Session

Operator

Thank you. We will now being the question-and-answer session. (Operator Instructions) And the first question comes from David Campbell with Thompson, Davis & Company.

David Campbell - Thompson, Davis & Company

Hi, good morning, everybody.

Shahram Askarpour

Good morning.

Geoff Hedrick

Good morning.

David Campbell - Thompson, Davis & Company

Thanks for having another good quarter. You had pretty good visibility into the fourth quarter by now, they are into one month of it and you have – you should have pretty good idea of deliveries for all your manufacturers and retrofit activities. Can you be a little bit more precise about where we are looking in terms of revenues in the fourth quarter should be based upon what you are saying that will be up from the third quarter. But, I haven't heard that.

Shahram Askarpour

Yes. The reason you haven't heard that David is that there is always some timing issues that come at the end of the year. It's not that clear right now.

David Campbell - Thompson, Davis & Company

Is the difficulty in the Delta deliveries, they were supposed to start it in the original plan was to then start in the June quarter but you didn't mention that in your presentation whether that is started or not?

Shahram Askarpour

Yes. Obviously that program has suffered some delays and there were some unanticipated changes that came as a result of discussions with FAA. So that delay has caused – initially we were supposed to – we were supposed to be delivering order in the third quarter. By now, it's now clear whether they will be delivering any in the fourth quarter either.

David Campbell - Thompson, Davis & Company

Looking at the stimulators, I thought you were delivering to those?

Shahram Askarpour

That's exactly what I'm talking about.

David Campbell - Thompson, Davis & Company

And so that has not begun yet?

Shahram Askarpour

No, no, for revenue, no. Obviously, we've modified one of the simulators, but that's on our dime and yes.

David Campbell - Thompson, Davis & Company

All right. Okay. Okay. And are you real convinced that – will not have any long lasting impact on the program?

Shahram Askarpour

No, it shouldn't.

David Campbell - Thompson, Davis & Company

Right, right, right. And could you be a little bit more precise as you ran about the so called ISU product, what is that?

Shahram Askarpour

So that's integrated standby unit. Essentially in most transport cockpits, you have typically four instruments, it's a standby navigation display or what we call an RDMI. There is your attitude indicator, your air speed and altimeter. These are there as a independent backup system in case your primary instruments fail. We've replaced all of those with a single instrument which has exceptional performance as well as it provides additional functionality or additional potential to put more functionality on it to increase the situational awareness. It significantly increases the reliability, lower their cost of ownership and give them a lot more capabilities in the aircraft for some of the folks that also don't want to go and spend lot of money for example for next generation upgrades in their cockpit. This gives them another platform to display some of the next-gen information as well.

David Campbell - Thompson, Davis & Company

Is this part included in the Delta contract?

Shahram Askarpour

Absolutely. We delivered that to Delta, we're delivering it to the C-130 operator that we're working on and as well as Eclipse. What we're doing, we've done a broader certification of it, it's coming to completion now that would allow us to offer it to actual original aircraft manufacturers, airplane manufacturers. So we are hoping that we will be able to market that for forward fit on some of their – some of the aircrafts that's out – that are out there.

David Campbell - Thompson, Davis & Company

Has you haven't got any contracts from OEMs yet on that product, is that correct?

Shahram Askarpour

Other than Eclipse, no.

David Campbell - Thompson, Davis & Company

That's right. Yes.

Shahram Askarpour

But, you'll be the first to know when we get one.

David Campbell - Thompson, Davis & Company

Well, it sounds like it's just a question when the FAA when you get approval from the FAA was -- you still waiting on?

Shahram Askarpour

That's not right now holding us. We were essentially participating in conversations and a lot of marketing efforts with the OEMs. At what point we would get awarded a contract, it's – I don't want to speculate on that.

David Campbell - Thompson, Davis & Company

And the backlog includes some of the delta business as well as some of the other products. Is that right?

Shahram Askarpour

That's correct. Yes.

David Campbell - Thompson, Davis & Company

Okay. I want to know too about the engineering revenues, it sounds like it should be down over in the third quarter, is that correct?

Ron Albrecht

I would expect it to be at a similar level, could be up a little bit, could be down a little bit, David.

David Campbell - Thompson, Davis & Company

Okay.

Ron Albrecht

Not a significant change one way or the other.

David Campbell - Thompson, Davis & Company

Okay. Right, right, right. And the 737 Classic that's a – that's approved by the FAA?

Shahram Askarpour

So what we did was, we actually did the first lot of the A55 flight test with FAA, it was very successful. We have one more flight test to do with them. And as soon as that's one we expect that we're going to get another TC in this existing quarter.

David Campbell - Thompson, Davis & Company

Ad my last question has to deal with the next-gen FAA program, all kinds of delays, I will imagine from the congress on that. But even so if Delta starts operating a significant numbers of aircraft with next linear equipment and providing for next gen, next gen operations. How can competitors not install a similar equipment in their older aircraft wouldn't Delta's aircraft have priority in landing over competitors will have the equipment?

Shahram Askarpour

It's hard to speculate obviously that you like to think that way, but a lot of that is tied with the FAA and what they will not do. So I don't really like to speculate on that.

David Campbell - Thompson, Davis & Company

Okay. All right.

Shahram Askarpour

I mean one of the things David, is that we essentially that our payout on these programs is been on the – been on the strength of the return on investment that they're making and not particularly tied in to any government mandates.

David Campbell - Thompson, Davis & Company

So you're phasing your marketing efforts primarily on the value of the equipment and what it does to improve the operations of the aircraft?

Shahram Askarpour

Yes. So if they get more precise navigation, it's fuel saving. If they move reduction in weight would result in fuel saving replacement of all the equipment, that's a lot of money to maintain and caused delays in the aircraft. All of that, represents the cost savings to the airlines, big cost savings to the airlines.

David Campbell - Thompson, Davis & Company

All right. Okay. Thank you very much. I'll let someone else take it.

Operator

Thank you. And the next question comes from Jeremy Hellman with Singular Research.

Jeremy Hellman - Singular Research

Hi, good morning everybody, this is Jeremy in for Louis. How are you?

Geoff Hedrick

Great, thanks.

Jeremy Hellman - Singular Research

I just want a couple of clarifications on the Delta contract, given that you're looking at what looks to be a quarter two delay in the front end? Does that – that imply that the back end that kind of deliveries will end up spilling into 2017 a little bit? And also, over the life of the contract, just wanted to clarify in terms of deliveries, do you expect that to be level quarter-to-quarter or front or backend loaded or otherwise? Thanks.

Shahram Askarpour

Probably initially there is going to be smaller number of aircrafts retrofitted. And then, there will be a ramp up. But then that initial also will include spares and all of that. So it kind of evens that as you suggested.

Jeremy Hellman - Singular Research

Okay. And then would delays on the front end, is that likely to spill at the backend or just kind of increased each quarters?

Shahram Askarpour

Probably, again that remains to be seen operationally how they're going to want to make airplanes available for retrofit. We may look at accelerating the installation, but we haven't had those discussions with the customer yet.

Jeremy Hellman - Singular Research

Okay. Thank you.

Operator

Thank you. And the next question comes Scott Lewis from Lewis Capital Management.

Scott Lewis - Lewis Capital Management

Hey, good morning.

Geoff Hedrick

Good morning.

Shahram Askarpour

Good morning.

Scott Lewis - Lewis Capital Management

I had question about the new orders, they have been running about $6 million or $7 million for the last of quarters and then they went down quite a bit this quarter to around $2 million. Can you talk about that a little bit?

Shahram Askarpour

Sure. I know we all like to get -- every time then a large order and then a steady stream of orders. I would say that it doesn't happen like that every quarter. So there is no particular reason why the orders were lower this quarter than the previous ones. But majority of it, we're hoping that as soon as we make some of the announcements for new products and we will do that once the certification is done. That would generates a large interest in our customer base. Haven't been announcing any new products for the last few quarters because we've been focused on completion of these programs.

Scott Lewis - Lewis Capital Management

Okay. And then, I'd like to ask you another question just on the Delta project. We've mentioned the FAA has requested some changes. Has Delta been requesting changes as well, in other words, is there been a big development effort on this software versus the FMS, you'd developed for clips?

Shahram Askarpour

Delta hasn't been really making a significant changes or making any new requests. This is basically more based on the 737 flight management system and not Eclipse like management system

Scott Lewis - Lewis Capital Management

Okay. And the 737 flight management system, we're just, the system you've been developing for the government or was just a system you already have?

Shahram Askarpour

So our first customer was the U.S. government customer.

Scott Lewis - Lewis Capital Management

Okay.

Shahram Askarpour

But, that has a broader market opportunities.

Scott Lewis - Lewis Capital Management

Got it. And then the last question from me is on ISU, I noticed there was some a patent lawsuit that you guys filed against mid continent. Is that delaying things at all.

Shahram Askarpour

No, no. Right now I can't comment on that much, but obviously there were some infringement in one of our patterns.

Scott Lewis - Lewis Capital Management

All right. Thanks for answering my questions.

Shahram Askarpour

Thank you.

Operator

Thank you. (Operator Instructions) And the next question comes from David Starkey with Morgan Stanley.

David Starkey - Morgan Stanley

Hi, guys. Can you tell me any clarification or whether you be able to get some of the certifications in the fourth quarter, the current quarter at all?

Shahram Askarpour

We were kind of hopeful that the 737 Flight Management System certification will be completed and we're hoping that the ISU, to pull their ISU certification will be completed this quarter as well.

David Starkey - Morgan Stanley

Okay. Would that be two of the three major programs you're working on them by the end of the quarter hopefully?

Shahram Askarpour

That's correct. Yes.

David Starkey - Morgan Stanley

Okay. Okay. And, when you said the $90 million in potential contracts, that's over 10-year period?

Shahram Askarpour

That's a conservative number.

David Starkey - Morgan Stanley

Right. So and that would not necessarily I mean that's only $10 million a year or less in business from all of these contracts? From all of these programs?

Shahram Askarpour

No, so essentially when you look at the two OEM programs or three OEM programs, then their production is not included in our backlog, it's the PC-24, you see Eclipse 550 and the KC 46. And so, what we've done is, we've put some conservative estimate of what we think deliveries the year to those customers would be over the next decade and that's what we have $90 million customers.

David Starkey - Morgan Stanley

Okay, okay. And are you actively seeking new business with the same products that Delta has ordered with other airlines?

Shahram Askarpour

We've been talking to other airlines with similar products. Again, one of the things we haven't been doing is aggressively going after doing signed contracts.

David Starkey - Morgan Stanley

And that's because of the certification delays?

Shahram Askarpour

Yes, because it's actually well you don't want to do – we don't want to take on too many of these programs until we shift some of those.

David Starkey - Morgan Stanley

Right.

Shahram Askarpour

To make sure that we've got the good brand and synergy aimed to perform on that.

David Starkey - Morgan Stanley

Okay. And your relationship with Delta is continuing to be fine now, there isn't any problems potentially just because of these delays?

Shahram Askarpour

No, obviously, nobody is ever happy when things are delayed but noting unusual.

David Starkey - Morgan Stanley

And the specific reason for it is?

Shahram Askarpour

Perhaps there was couple of things, one was that obviously there were delays in the certification of the 737 by the management which the Delta system is based on. And the second being that originally we had an agreement or thought we had an agreement with the FAA on the approach to certification. And then about six months into the program, they kind of made some tweaks to it which when we have to go revisit a lot of the paperwork that we had submitted. And I know all that always, unfortunately the business that we rent probably 80% of what we do is paperwork. And the actual meet of the job is 20% of the work.

David Starkey - Morgan Stanley

That's all in the system though now, you've done the tweaking, you're just waiting to hear from them, is that for that or…?

Shahram Askarpour

We had another meeting with them last week and we seem to be on the right track. So things should progress well from here on.

David Starkey - Morgan Stanley

Okay, great. All right. And any hope we can get for potential, you got some cash here doing another stock buyback we got down to 590 or 585 this morning on the price again. So they think the market is looking for a little clarity from you guys and a little more excitement about the future here?

Shahram Askarpour

And again, we like to ramp, I'd just keep one foot firm on the ground.

David Starkey - Morgan Stanley

I understand. Yes.

Shahram Askarpour

It will be – will be having making announcements hopefully once the certifications happen. But during the year, with regards to the – I think the approval from the Board is lower than what we – for the current stock prices.

Geoff Hedrick

Any consideration of stock buybacks would have to be discussed with the Board and so it wouldn't be prepared to make any comments on that at this point.

David Starkey - Morgan Stanley

Okay. I know in the last quarter here you had some insider buyers in this low 6 range. So I'm assuming that if that's good enough for you guys, hopefully the Board will take some action there. Okay. Anyway thank you though.

Geoff Hedrick

Okay. Thank you.

Operator

Thank you. At this time, I would like to turn the call back over to management for any closing comments.

Geoff Hedrick

That's it. Thank you very much.

Operator

Okay, thank you. This concludes today's conference. You may now disconnect your phone lines. Thank you for participating and have a nice day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!