Mercury Systems' (MRCY) CEO Mark Aslett on Q2 2016 Results - Earnings Call Transcript

| About: Mercury Systems, (MRCY)

Mercury Systems, Inc. (NASDAQ:MRCY)

Q2 2016 Earnings Conference Call

January 26, 2016 05:00 PM ET

Executives

Mark Aslett - CEO

Gerry Haines - CFO

Analysts

Michael French - Drexel Hamilton

Sheila Kahyaoglu - Jefferies

Michael Ciarmoli - KeyBanc Capital

Peter Arment - Sterne Agee

Operator

Good day everyone, and welcome to the Mercury Systems Second Quarter Fiscal 2016 Conference Call. Today’s call is being recorded.

At this time for opening remarks and introductions I’d like to turn the call over to the company’s Executive Vice President and Chief Financial Officer, Gerry Haines. Please go ahead, sir.

Gerry Haines

Thank you, operator. Good afternoon everyone, and thank you for joining us. With me today is our President and Chief Executive Officer, Mark Aslett. If you have not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at mrcy.com.

We like to remind you that remarks that we may make during this call about future expectations, trends, and plans for the company and its business constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.

You can identify these statements by use of the words may, will, could, should, would, plans, expects, anticipates, continue, estimate, project, intend, likely, forecast, probable, possible potential, assumes and other similar expressions.

These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to continued funding of defense programs, the timing of such funding, general economic and business conditions, including unforeseen weakness in the company’s markets, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in or in the U.S. government’s interpretation of federal procurement rules and regulations, market acceptance of the company’s products, shortages in components, production delays or unanticipated expenses due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions and restructurings or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, changes to export regulations, increases in tax rates, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, unanticipated costs under fixed price product, service and systems integration engagements and various other factors beyond our control.

These risks and uncertainties also include such additional risk factors as are discussed in the company’s filings with the U.S. Securities and Exchange Commission, including in our recent Annual Report on Form 10-K for the fiscal year ended June 30, 2015. The company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which such statement is made.

I would also like to mention that in additional to reporting financial results in accordance with generally accepted accounting principles, or GAAP, during our call, we will discuss several non-GAAP financial measures, specifically adjusted income from continuing operations, adjusted EBITDA, adjusted earnings per share or EPS, and free cash flow.

Adjusted income from continuing operations excludes several items from GAAP income from continuing operations. The excluded items are amortization of intangible assets, restructuring and other charges, impairment of long-lived assets, acquisition and financing costs, fair value adjustments from purchase accounting, litigation and settlement expenses, and stock-based compensation expense, as well as the tax impacted those items. This yields adjusted income for continuing operations, which is expressed on a per share basis as adjusted EPS calculated using weighted average diluted shares outstanding.

Adjusted EBITDA excludes the same items as adjusted income from continuing operations as well as depreciation, interest income and expense and income taxes. Free cash flow excludes capital expenditures from cash flows from operating activities. A reconciliation of these non-GAAP metrics to their nearest GAAP equivalents is included in the earnings press release we issued earlier this afternoon.

With that, I'll turn the call over to Mercury's President and CEO, Mark Aslett.

Mark Aslett

Thanks Gerry. Good afternoon, everyone and thanks for joining us. I'll begin today’s call with a business update. Gerry will review the financials and guidance and then we will open it up to your questions.

Mercury's business is performing well and we continue to deliver strong results in the second quarter fiscal 2016. The capabilities that we’ve developed and acquired are very much in line with need of our customers. We are pioneering a next generation defense electronics business model which aligns well with the industry conditions today and what we expect to occur in the future. We're also continuing to deliver important new program wins along with above industry average revenue and EBITDA growth.

Our total revenue for Q2 was up 6% year-over-year and near the top end of our guidance, reflecting favorable mix and improved operating leverage in the business, adjusted EBITDA for Q2 came in well above the high end of our guidance, increasing by 1.9 million or nearly 18% year-over-year on 3.3 million of incremental revenue.

GAAP profit from continuing operations increased 66% from Q2 last year and cash flow from operations was also up substantially. We're successfully leveraging our relationships with primes to drive bookings and revenue from existing programs as well as new programs and platforms. We've established strong positions for Mercury on critical production programs in the right segments of the market. These programs appear to be well-funded, are currently in or moving into production and are precisely aligned with the DoD's roles and missions.

As we expected, our fiscal 2016 booking and revenue are coming from a broader set of key programs then in the past couple of years. This is primarily due to strong demand related to Radar and EW modernization activities. Secondly we continue to see an insatiable appetite for more high performance processing on board military platforms, as well the DoD is mandating program protection security requirements for domestic and foreign military sales. These trends driving are above industry average growth.

In terms of revenue, our largest programs in defense in Q2 were SEWIP Block 2, F-35, Patriot, and Aegis. Bookings for the second quarter were up 3% year-over-year coming in the little lighter than we expected and our total book-to-bill was approximately 0.75. This was due to some temporary order delays and we expect to make up for the shortfall in Q3.

Total backlog exiting Q2 grew nearly 7% year-over-year, our 12 month forward revenue coverage remains strong positioning us well for the fiscal second half. At our recent Investor Day, we announced that Mercury was notified by Northrop Grumman that it will be part of their SEWIP Block 3 team, and in Q2, we received $11 million order. We booked the EMD portion of this order in the second quarter and expect to recognize the remainder as the [indiscernible] option firm up.

As a result of our strategy, our strategic relationships and our ability to provide multiple technologies and capabilities we've gone for a not being part of the Northrop team prior to the award to winning an important position on SEWIP Block 3 in a very short period of time. We also received large bookings in Q2 the F-35, Aegis and Reaper. In addition as we stated on our call last quarter, our customer Lockheed won the long range discrimination Radar program.

We received an initial small order associated with our program in Q2 and we expect a much larger booking in Q3. We were also awarded a $42 million IDIQ for additional budget EW systems in MDS during the quarter although our policy is not to count IDIQ wins towards our reported booking number, this still an important contract award for us. We expect to begin recording the associated booking overtime as we received individual task orders.

Wrapping up the booking revenue, international defense bookings for Q2 including foreign military sales were 10% of total bookings compared with 15% in the second quarter last year. As I just mentioned, we're seeing significant growth driving by DoD program protection security requirements. Our industry leading secure Intel server class product line positions us to capital on this opportunity set.

We also have the potential to capitalize on demand for secure server class computing application beyond the sensor. These include other mission critical computer applications where we haven't participated in the past.

The acquisition of LIT which we announced at the end of Q2 expands our security capabilities. They have developed an impressive data services and intellectual property that enable advanced security for embedded processing applications. We've been working very closely with the team at LIT for the past several years bringing [indiscernible] abilities in-house moves us another step forward in our strategy to become the industry’s most advance secure processing company.

Q2 is also new important quarter for us in the Radar and EW amortization space highlighted by the booking for SEWIP Block 3. Winning a positional Block 3 demonstration the strategic relationships and competitive advantages we paved for Mercury in RF microwave, digital and processing. Our Advanced Microelectronics Centre or AMC in New Hampshire is the centerpiece for our RF activities.

The AMC has world-class scalable RF and microwave manufacturing and subsystems integration capabilities, this differentiates us from our competitor as a provider of industry leading, pre-integrated, sensor processing subsystems. At the same time, the integrated business systems we’ve installed at the AMC have been crucial to improving the operating leverage in our business. Over the past two years, we’ve leveraged our sales strategies, Intel R&D investments and acquisitions to build the best in class portfolio products and capabilities.

We’re also targeting the right segments of the market and as a result we’re strongly positioned on a great set of franchise programs. At the same time, Mercury’s balance sheet remains pristine and our capital allocation strategy continues to focus on growing the company’s enterprise value and capabilities. We’re primarily targeting acquisition that scale in technology platform that we’ve built focusing on the key pillars of the business, RF, microwave and secure processing.

In addition, as evidenced by LIT, we also continue to look at capability load acquisitions. Our goal is to assemble critical and differentiate capabilities across the entire sensor processing chain. This will allow us to provide our customers with more complete and more affordable solutions.

We remain active as well as disciplined in our approach to M&A, focusing on opportunities for both revenue and cost synergies. We continue to develop a solid pipeline of potential deals that have the potential to be accretive in the short-term and drive long-term shareholder value.

Now to some thoughts on the industry conditions. Overall the contracting environment remains challenging with new awards still experiencing proactive delays and intense competition. However, we were pleased to see the passage of the government fiscal year 2016 defense procreations bill and the removal of the sequester. This means a return to growth in base defense spending. The fact that we now have greater clarity around the budget is positive for the industry as a whole and for Mercury.

In summary, the business delivered a strong performance in Q2 in the first half, we remain on track for another strong performance of fiscal 2016 as a whole given our strong backlog, expected bookings, broader mix of programs and the benefits of integrating our acquisitions. We believe, we’re well position to continue delivering above industry average revenue and EBITDA growth. As we said last quarter, we expect gross margins to be slightly lower in the second half due to program and product mix.

Nonetheless, we are raising our fiscal 2016 guidance with the expectation of solid revenue and adjusted EBITDA growth versus fiscal 2015.

Gerry will discuss these expectations in more detail. So with that I’d like to turn the call over to Gerry. Gerry?

Gerry Haines

Thank you Mark, and good afternoon again everyone. Before we go through the financial results, I just want to remind everyone that unless otherwise noted, I will be discussing the company’s financial results, comparisons to prior period and guidance on a continuing operations basis. However, in accordance with GAAP, Mercury Intelligence Systems is reflected in our statement of cash flows for periods prior to our sales of that business in January of 2015.

Turning to our results for Q2, Mercury delivered solid performance across the board consistent with our expectations. Total revenue increased $3.3 million or 6% from Q2 last year to $60.4 million near the top end of our guidance of $58 million to $61 million.

International revenue including foreign military sales was 21% of total revenue compared with 26% in Q2 last year. Revenue from radar and electronic warfare again accounted for 82% of total revenue the same as a year ago. Radar revenue was down 14% year-over-year while electronic warfare revenue grew 59%. Net of $1.3 million of intercompany eliminations, revenue in our largest reporting segment Mercury Commercial Electronics or MCE was $53 million, an increase of $1.2 million or 2.3% from net revenue in Q2 of last year. In our Mercury Defense Systems or MDS reporting segment, net revenue was $7.9 million, up $3.2 million or 67% from the second quarter of last year.

These segment revenues are adjusted for revenues of negative $0.5 million in Q2 of fiscal ’16 and positive $0.5 million in Q2 of fiscal ’15 that are included in our consolidated results for those quarters. This revenue difference is attributable to development programs where the revenue is recognized in both segments under contract accounting and reflects the reconciliation to our consolidated results.

Turning now to bookings, Mercury’s total bookings for the second quarter were $45.2 million yielding a book-to-bill of approximately 0.75. As Mark said, we experienced some shifts in order activity during the quarter and as a result we expect strong bookings in Q3. We ended Q2 with total backlog of $205 million which was up $13 million or 6.6% from $192 million of backlog in the year earlier, approximately $152 million or 74% of this total backlog is expected to ship within the next 12 months.

Mercury's gross margin for Q2 was a solid 47% roughly the same as Q2 of last year. Remaining at the mid-point of our target business model and in line with our guidance as we continue to benefit from favorable program and product sales mix. In addition to our solid gross margin, we continue to realize the benefits of improved operating leverage from our prior restructuring and integration efforts. Q2 operating expenses were 22.2 million compared with 23.5 million for the same period last year.

Adjusted EBITDA for the second quarter of fiscal 2016 increased 18% to $12.6 million from $10.7 million in Q2 of last year, this exceeded the high end of our guidance range of $10 million to $11.5 million and add nearly 21% of revenue was above the mid-point of our target business model.

Mercury continued to perform well on the bottom line as well in this quarter. With GAAP income from continuing operations increasing to $4.8 million or $0.14 per share from $2.9 million or $0.09 per share in the second quarter last year.

Adjusted EPS for the second quarter increased to $0.23 per share from $0.20 per share in Q2 of fiscal 2015. The results for Q2 of fiscal 2016 include the impact of discreet net tax benefit of approximately $0.5 million associated with the renewal in late December of the Federal R&D tax credit. Again these number are fully reconciled to GAAP EPS from continuing operations in our earnings press release issued earlier today.

Looking quickly at the balance sheet, Mercury ended the second quarter of fiscal 2016 with cash and cash equivalents of $81.6 million compared with $57 million a year earlier. We generated $10.6 million of free cash flow during the quarter compared with $7 million in Q2 last year. With operating cash flow of $11.9 million driven by cash earnings being partially offset by $1.3 million of capital expenditures.

In addition we used $9.8 million of cash for the acquisition of LIT in the second fiscal quarter but still increased our ending cash balance from the end of the Q1 thanks to the strong operating cash flow in the quarter. Also based on the 338-H10 tax election applicable to the LIT transaction we expect an aggregate tax benefit of approximately $4 million making the net after tax cost of the acquisition closer to $6 million. As we’ve said LIT is not expected to have a material impact on our operating results for fiscal 2016. With that said we believe that the acquisition provides critical enhancement to our capabilities in the product security domain which is an area of increasing emphasis and importance in our key markets.

I'll turn now to our financial guidance. We believe that Mercury’s growth opportunities and robust backlog, position us to continue delivering solid revenue growth in the second half of fiscal 2016. The operating leverage gained from our acquisition integration continues to serve us well coupled with our ongoing focus on the operational efficiencies, we expect to continue translating this revenue growth into strong operating and earnings performance and once again achieve our target business model for the full fiscal year.

For the third quarter of fiscal 2016, we're forecasting revenue to be in the range of $63 million to $67 million. We expect gross margin for Q3 to be approximately 45% based on the expected revenue mix for the quarter. Consistent with our comments from last quarter, we expect gross margins to remain at approximately that level for the remainder of the fiscal year again based on the anticipated mix of program activities and product sales.

Operating expenses for the third quarter are expected to be approximately $23 million to $24 million. Adjusted EPS for Q3 is expected to be in the range of $0.19 per share to $0.22 per share. This forecast assumes approximately $1.7 million of amortization of intangible assets and approximately $2.3 million of stock based compensation expense in the quarter. It also assumes an effective tax rate of approximately 36% for the quarter.

Adjusted EBITDA for the third quarter is estimated to be in the range of $11.3 million to $12.6 million representing approximately 18% to 19% of revenue at the forecasted revenue range. Looking at the full fiscal year after a solid first half and with the recently approved defense budget we remain on track to achieve our objectives while we continue investing in the business to drive future growth. We currently anticipate fiscal 2016 revenues to be up in the range of 6% to 8% year-over-year and based on our current revenue mix and associated gross margin expectations for the second half we expect adjusted EBITDA growth of approximately 9% to 13% year-over-year.

In terms of the balance sheet, we expect to continue building our cash balance through positive cash flow for the remainder of fiscal 2016, driven primarily by cash earnings and offset in part by a modest increase in capital expenditures compared with last year. Finally, Mercury's balance sheet remains pristine with zero debt.

In summary we believe that our participation on important high priority DoD programs positions us well to continue growing our booking, backlog, revenue, adjusted EBITDA and adjusted EPS. We look forward to the prospect of another year of solid revenue growth, higher operating income and stronger profitability overall in fiscal 2016.

With that we'll be happy to now take your questions. Operator, you can proceed with the Q&A.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question is from Michael French with Drexel Hamilton. Your line is open.

Michael French

The first question, you mentioned as Northrop selected you for the Block 3 SEWIP program, maybe if you can walk us through what the chain of events was because as I understand you weren't originally on their team, so why is it they turned and selected you?

Mark Aslett

Sure, so we've had a longstanding relationship with Northrop and I would characterize it's been a strategic relationship. We weren't part of that team prior to the award mainly because I think we were working extremely closely with both Lockheed and Raytheon who were competing against Northrop for the SEWIP Block 3 business. However since they were awarded the business, we've engaged or reengaged with them and we obviously know the SEWIP program well and we've got multiple sets of technologies and capabilities that are applicable for Block 3. And so I think its result of our capabilities, our relationships, our knowledge of the program that allowed us to basically win a pretty significant piece of the business on the program going forward.

Michael French

Yes, that's great, congratulations. And then just to shift gears from, you've mentioned that there were some temporary order delays during the period, can you tell us where those delays came from, was it a result of the CR or just something having to do with the program or what was the underlying cause?

Mark Aslett

I don't think it's anything that is materially in nature, it was really just some short-term timing delays in terms of getting the POs from our customers, and as I mentioned in prepared remarks, we do anticipate those booking will occur in Q3 and in fact we’re expect a very strong bookings quarter this quarter.

Michael French

And what was the magnitude of delays or in another words, what do you think the book-to-bill would have been had the delays not happened?

Mark Aslett

It's not something that we're going to talk about per se, but do expect a strong booking quarters in Q3, Mike.

Michael French

And then the last one on the taxes and I think Gerry answered this in his comments, but if the tax rate came down during the quarter was that solely a result of LIT adjustment?

Gerry Haines

No that wasn't so much LIT because we only had them for a very short span at the end of the quarter, it was really a combination of two things, one is the catchup for the tax year of ’15 where so we had a few quarters of catching up to do.

Mark Aslett

The R&D.

Gerry Haines

The R&D tax credit that was reenacted and then of course there is the particular slug of it that would have applied to the quarter and which will apply on a go forward basis and that’s what’s lowering our rate a few points.

Operator

Thank you. Our next question is from Sheila Kahyaoglu with Jefferies. Your line is open.

Sheila Kahyaoglu

I guess this is a follow-up on the order comment, it seems like you’ll recover that in the third quarter, maybe could you elaborate on your revived outlook a bit and what the expected contribution is from the LIT acquisition and how much of that is being -- is contributing to it?

Mark Aslett

So as we said, we don’t expect LIT to have a material impact on either the quarter or the year, the capabilities, that's a capabilities of LIT acquisition is obviously very small, so essentially what we're doing is observing a little more on the OpEx front which is dominated by engineering, so it's going to drive some of the R&D expense, a piece of which is money that we would likely have spent internally, but for the fact that we now on the capability through LIT. So we kind of get lost in the results, we don’t see it making a bigger contribution to the year, but we see it as a capability that we can leverage very effectively as we move forward and as we're seeing the market take shape in the future we think that is an increasing important capability and one that we’ve spend a lot of time working on, as on LIT and so it just made a lot of sense for us to acquire it.

Gerry Haines

So put in another way, it really is the increase in our guidance from 5% growth to now 6% to 8% in revenues and from 10% growth in adjusted EBITDA to now 9% to 13% is largely a result of strong performance in the first half as well as the improved government [ph] fiscal ’16 budget outlook.

Sheila Kahyaoglu

Understood, that clarified it, thank you. And then I guess, are you sort of, you do expect a big Q3, but I guess just an ongoing discussions, can you give us an idea of what the environments like or short cycle demand for your products and also maybe on the international side have you seen that move along or what kind of discussions you’re having with your [indiscernible]?

Mark Aslett

Sure. So as I said in my prepared remarks, I think we’re extremely well positioned, we are deeply entrenched in some very important production programs. What’s driving the growth is related, is really Radar and EW modernization, the fact that we’ve talked about the long-term trend of requiring more processing on-board military platforms that deal with the big data issue that is present, as well relating to the LIT acquisition.

We believe that we have a leadership position in embedded security for high performance processing for defense and intelligence applications. And with the wave of flow-downs from DoD relating to program protection security requirements, we’re exceptionally well position there and that becomes the driver of growth to not only domestic sales, but also to foreign military sales where it is our customers who are looking to explore that capabilities overseas that technology needs to be protected and so we’re kind of right in the middle of that particular trend.

So overall, we feel that we’re well positioned many of our programs I think as we’ve talked about historically have got FMS sales associated with them whether it be Aegis or Patriot or the F-35. So again we think that’s going to continue to be an important part of the business Sheila.

Operator

Thank you. Our next question is from Michael Ciarmoli with KeyBanc Capital. Your line is open.

Michael Ciarmoli

Mark just to go back maybe to SEWIP Block 3. Are you guys ready to sort of quantify the long-term probable and possible impact there?

Mark Aslett

Yes. So right now based upon our daily assumptions we believe that the Block 3 volumes to Mercury approximately 58 million to 144 million. It could change overtime, as the shift in those assumptions, the number of platforms that are going to be upgraded, the increase or decrease, but that’s our expectation right now Mike.

Michael Ciarmoli

Okay. And then obviously given the success getting back in Block 3. How should we think about AMDR? Is there going to be an opportunity for you guys to call your vote way back onto that program?

Mark Aslett

We’ll see, it’s in area that the Naval [indiscernible] is an area that we’re very focused on and we believe we’ve got a set of capability that’s broadly applicable to a number of different programs of which AMDR maybe one. It’s too early to say anything specific about that, but it certainly something that we’d like to be a part of.

Michael Ciarmoli

Got it. And then just on, you mentioned the facility in New Hampshire. Can you guys give us a sense of what the utilization is up there now, I know for quite some time you’ve been talking about customer visits a lot of positive feedback. Can you give us any sense, how that facility is performing right now from a volume standpoint?

Mark Aslett

So again talking about this specific utilization rates it’s not something that we’ve discuss other than to say that we’re still running one shift and we’ve got plenty of capacity to meet both our forward revenue projections as well as potential future M&A. The facility is performing extremely well, it’s critically important is obviously programed such as fix deposit moves into full rate production later this year as well as program such see SEWIP which you may recall, we received our first full rate production order for Block 2 last quarter. So volumes are increasing, but we’ve sold off plenty of capacity.

Michael Ciarmoli

Got it. Thanks a lot guys. I’ll turn it back in the queue.

Mark Aslett

Great. Thanks so much.

Operator

[Operator Instructions] Our next question is from Peter Arment with Sterne Agee. Your line is open.

Peter Arment

Mark, just maybe a clarification back on SEWIP Block 3. You mentioned I think it was $11 million contract. Is that just the EMD portion and how long is that last roughly?

Mark Aslett

Sure. So we actually received in $11 million order, which we recognized slightly less than half from a bookings perspective associate with the EMD phase during Q2. The other or the remainder, we’ll recognize as ALRIB orders once the options for the ALRIB firms are.

Peter Arment

Got it. And then the mentioned on the 58 million to 144 million kind of probable value. Is that just a differential between the current relationship with Northrop versus the previous expectation with Lockheed and kind of on the mix or is it just been conservative on the units?

Mark Aslett

No. It's actually I think since what we thought was going to happen with, when we were part of the Lockheed and Raytheon team, it really isn’t to do with the content per say it's more around the assumptions of the number of shifts that’s going to be upgraded with the block three capability and previously the assumption was much higher. Our latest information is the number of ships that’s going to be upgraded has gone down. Now that’s the currents assumption, it may change overtime, but that's the assumption right.

So it’s more to do with number of ships than it is to do with the content.

Peter Arment

Got it, that's helpful. And then just lastly Mark on the Naval [ph] server opportunities, some of the things that you are seeing there, what kind of conversations you are having, are you seeing any more pickup and kind of the interest there?

Mark Aslett

Yes. So I think the answer is yes. It's just going to play out over the long-term, but we've already won several applications in Naval domain for the technology that we’re provided. At our Investor Day recently, we've talked about not only being able to provide server class capability in an ATCA format, but we’re also exploring the opportunity of providing it in a two year stackable foam factor which again opens up other potential opportunities for us.

The nice thing about this opportunity is that it’s basically all leveraged R&D. We design our processing complex once then we can rely that Ag very cost effectively and very quickly into different form factors. So we think that it’s going to put us in an interesting position particularly when you tie that highest performance processing with the source of embedded security capabilities that we’re now delivering.

Peter Arment

Hey, got it, appreciated. Nice quarter guys.

Mark Aslett

Alright, thank you.

Operator

Thank you and Mr. Aslett it appears there will be no further questions. Therefore I'll turn the call back over to you for any closing remark.

Mark Aslett

Okay. Well, thank you all for listening. We look forward to speaking to you again next quarter. Good evening.

Operator

Ladies and gentlemen, that thus conclude the program and you may all disconnect. Everyone have a great evening.

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