American Reprographics Company (NYSE:ARC)
Q2 2012 Earnings Call
August 7, 2012, 5:00 p.m. ET
David Stickney - VP, Corporate Communications
Suri Suriyakumar - Chairman, President & CEO
John Toth – CFO
Dilo Wijesuriya – COO
Jorge Avalos - CAO
Andrew Steinerman – JPMorgan
Scott Schneeberger – Oppenheimer & Co.
Good afternoon, my name is Alaya, and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Second Quarter Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. (Operator Instructions)
I would like to turn the call over to our host, Mr.Stickney. Sir you may begin your conference.
Thank you, Alaya. I’d like to welcome everyone to our call today. Joining me are Suri Suriyakumar, our Chairman, President and Chief Executive Officer; Dilo Wijesuriya, our Chief Operating Officer; John Toth, our Chief Financial Officer; and Jorge Avalos, our Chief Accounting Officer.
The financial results of our second quarter were publicized earlier today in a press release. You can access the press release and the company’s other releases from the Investor Relations section of ARC’s website at www.e-arc.com. A taped replay of this call will be made available beginning about an hour after its conclusion. It will be accessible for seven days after the call. You can find the dial-in number for this replay in today’s press release. We are webcasting our call today as usual and the replay of the webcast will be available for 90 days on the company’s website.
This call will contain forward-looking statements that fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of the company, including the company’s financial outlook. Bear in mind that such statements are only predictions and actual results may differ materially as a result of risks and uncertainties that pertain to our business. These risks are highlighted in our quarterly and annual SEC filings.
The forward-looking statements contained in this call are based on information as of today, August 7, 2012 and except as required by law, the company undertakes no obligation to update or revise any of these forward-looking statements.
Finally, this call will contain references to certain non-GAAP measures. The reconciliation of these non-GAAP measures is set forth in today’s press release and in our Form 8-K filing.
At this point, I’ll turn the call over to our Chairman, President and CEO, Suri Suriyakumar. Suri?
Thank you, David and good afternoon. As we reported earlier today, in the second quarter of 2012, ARC delivered $106.2 million in revenue, a gross margin of 31.8% and $4.5 million in cash flow from operations. Adjusted earnings per-share for the quarter came in at $0.02.
Year-to-date our cash flow remains strong at nearly $17 million and as noted, [inaudible] remains undrawn.
As you seen in the past, we continue to manage our business effectively, even under very challenging market condition, enabling us to meet our financial obligations comfortably. We have also repeatedly said that we are positioned in the company for recovery. Most of this positioning has been in the form of structural changes to our work force, footprint and construction.
During the past two quarters however, we have also started to aggressively increase our investments in the business with the recovery in mind. During the second quarter, we hired more than 65 college graduates from all over the country, and get them in a intern and focus training program, and we are now in the process of deploying them in the field under the guidance of executive mentor, senior sales people, and of course, our deeply experienced sales management team.
Our business is rewarding in to a much more [inaudible] technology driven document solutions and [inaudible]. And our new recruits are coming to the business because the preconception that often accompany experience reps from all traditional market, bringing a fresh inclusion of energy and feel in to the company, will also help us change our culture, which has been structured to serve a traditional business.
This investment is an acknowledgment that our customer culture is changing to. Technology continues to exert its influence over tradition, an on-going economic pressure on the industry, continues to acts of [inaudible] the adoption of new techniques for managing construction. A positively change, while sometimes difficult, it’s a critical component of our evolution as it becomes acknowledged enabled document solution company.
In addition, through announcing our sales team, we deployed a single CR system across the entire company, completing the sales team integration that began with the consult tradition of our brand at the beginning of 2011. We now have complete visibility in to the sales activity, anywhere we operate, which allows us to direct sales operations more efficiently and effectively than ever before.
This is a major improvement over, more than 40 separate managed sales teams, we all signed the best. These investments in sales, among two, [inaudible] cost of estimated $4 million, with more than $2 million effecting our 2012 results.
With regard to generating new sales opportunities, we were very pleased to announce a major technology and marketing partnership with Hewlett-Packard at the end of the second quarter. As some of you may have seen in the press releases and advertising, we integrated our PlanWell Collegiate software in to HPs line of engineering printer, offering customers the ability to both [inaudible] their documents from the cloud, and post new documents to the cloud, directly from the device itself, with no need for a connective computer.
55 of these machines are in our busiest service centers to help promote them, sell the solution across the country. Both HP and our sales forces have been heavily incentive wise to move this solution in to the marketplace aggressively.
On another marketing front, we invested a major upgrade to our technology center in Silicon Valley, creating a more accessible and announced in Lemoyne for demonstrating our technology solutions, hosting our cloud base services, and housing our engineering staff, here in the U.S.
Along with our customer, we are encouraging our investors to join us there to explore what we have to offer.
Further, considering our position as a leading document solution providing our [inaudible] our website and our marketing collateral have been upgraded, not only to reflect our single brand, but our unique value proposition.
In recognition of our recent efforts, [inaudible] a leading information and technology advice at our company, positioned ARC in their magic quadrant, but MP is worldwide as a nitch service provider.
Finally, we may be [inaudible] investments to expand our capabilities in seven of our 13 bright creative imaging centers. These flatbed and Latex printers bring cutting edge production quality to these facilities, and will allow us to compete head-to-head with both local and regional [inaudible].
On the business front, our managed services offering continues to gain momentum. We have repeatedly [inaudible] rating, strong value to large [inaudible] eMFP by combining MPS with all site service, and technology solutions based on cloud printing.
Our success continues to grow in providing these larger companies, the compelling reason to select ARC as a single source for their document workflow. The best evidence of this success is the 7.4% year-over-year sales increase in our facilities management and managed print services line during the second quarter. Our pipeline is very healthy in global solutions.
We are also starting to experience some growth in the number of our more traditional large [inaudible] replacements. With the revenue from these placements have not made a significant impact to our numbers, we read this as a positive sign of our investment in our sales success.
Similar to last year however, macroeconomic conditions remain difficult in our traditional markets. While January and February provided optimism for the future, or for the near future, the [inaudible] month failed to deliver on the [inaudible].
At this point, we don’t expect improvement in our traditional market through the end of the year. As bullish as we are about the potential for our business in the long-term, the large economy continues to remain sluggish, and this has compelled us to adjust our forecast for the year.
Based on modern market condition, we expect to deliver fully diluted adjusted annual EPS in the range of negative $0.03 to positive $0.03, and annual cash flow from operations in the range of 35 million to $45 million.
Our actions and investments over the past quarter speak to how aggressive we remain about returning growth to the top-line of our business. While we are positioning the company to take advantage of the non-traditional recovery, we are also building new lines, business lines that are counter-[inaudible] and dependent on [inaudible] associated with our traditional business.
Both issues is necessary part of our transformation in to a true technology enabled document solutions provider. And yet doing so, while maintaining the operating cash flow required to comfortably meet our financial obligations.
At this point, I turn the call over to John for a review of our quarterly performance and then he’ll open the call to your questions. John?
Thank you, Suri. As usual I will summarize and add some more color to our financial results for the quarter, starting with revenue trends, and then working my way down the income statement to our earnings results. Finally, I will speak to our balance sheet and cash flow results.
Net revenue for the quarter was $106.2 million, a 2.6% increase over first quarter revenue but a 3.1% decrease for the quarter on a year-over-year basis. For your daily sales calulations, the second quarter of 2012 had 64 days as did the first quarter of 2012 and the second quarter of 2011.
With regards to customer mix, revenue from AEC customers accounted for 77% of our total revenue, with 23% of our revenue coming from non-AEC customers. This is largely unchanged from the trend of previous quarters, and this stability continues to provide us with the ability to dig the well deeper with existing clients, primarily in areas adjacent to our traditional project services, mainly management services and technology solutions.
As we diversify and grow the number of products and services we sell in to the AEC industry, we reduce our direct exposure to the construction project dependent revenue. With regards to sales by geographies, our year-over-year regional revenue performance for Q2 2012 was as follows. Our northern California team continues to do a strong job, and contrary to our overall trend, was up 1%.
Southern California however, revenue was down 9% as was revenue in our Northeast region. Revenue in the Pacific Northwest was down 7%, our Southern region revenue was down 8%, and our revenue from the Midwest was down 3%.
Our international operations, excluding Canada, are up 48%, largely due to another strong quarterly showing in China. With regard to revenue mix by service, we continue to trend, we continue the trend seen in the past few quarters of shipping our sale from off-customer site, traditional Reprographic services to on-customer site, facilities management and MPS. Reprographic services delivered roughly 60% of our overall revenue for Q2 versus approximately 64% in Q2 2011.
Our facilities management sales category, which again includes MPS, delivered approximately 26% of our revenue versus 23% in Q2 2011. In Equipment and Supply sales, delivered approximately 13.5% of our revenue versus 12.5% for the same quarter last year.
Digital Services delivered 9% of our total revenue for the quarter and is reported in our Reprographics line.
Moving to gross margin, our gross margin for the quarter was 31.8% which is up 100 basis points versus the first quarter of this year. This is down from our 32.6% level in Q2 2011, due to a higher mix of equipment sales, which has higher material cost than our other business line, as well as lower overall sales level.
As our [inaudible] lower because of the accelerated amortization of our trade name, which we initiated during the fourth quarter of 2010, and which was roughly 800,000 per month and ended April 30. We recorded 2.8 million in the second quarter of this year as compared to 4.7 million in the second quarter of 2011.
Moving on to net interest expense, it was 7.3 million during the second quarter compared to 7.7 in the same period of 2011. And consist primarily of accrued interest on our 10.5% high yield notes issued December 2010.
Our SG&A for the quarter was $24 million versus 27 million in the second quarter of 2011. This is indicative of our continued management of G&A expenses. However, with the increased investment in sales staff, we expect this number to grow over the balance of the year with commissions.
The result is, adjusted net income of approximately $1 million and earnings per-share of $0.02.
Moving to cash flow, our adjusted EBITDA for the quarter was $17 million, a $1 million improvement over the prior quarter. And our year-to-date adjusted EBITDA was $33 million, which was the same as it was for the same period last year, in spite of our decline in sales. Therefore, our adjusted EBITDA margin is 15.8% year-to-date, which is up over 15.3% for the same period last year, [inaudible] to our operational management.
Our cash flow from operations was 4.5 million for the quarter, versus 7.3 million for Q2 2011. As a reminder, our cash flow from operations was significantly impacted this second quarter by the 10.5 million biannual interest payment on those notes. The next payment is December of this year.
Looking at it on a year-to-date basis, our year-to-date cash flow from operations was 17 million, versus 12 million for the same period last year, and our year-to-date free cash flow was $8 million, versus only $4 million for the same period last year.
Moving to the balance sheet and related metrics, we ended the second quarter of 2012 with cash balance of $23.3 million. Days sales outstanding were 51 days in the second quarter of 2012, a decrease of 1 day compared to our Q1 performance.
And we continue our strategy of deleveraging in to more capital flexibility for the company. As such, total debt, including capital leases at the end of the second quarter of 2012, was $224 million from 246 million for the same period last year, a 9% decrease on a year-over-year basis.
And on a related note, our $50 million senior facility remains undrawn. The ratio of debt to trailing 12 month adjusted EBITDA at the end of the second quarter was 3.4, and adjusted EBITDA coverage of interest was 2.2 time.
With that as a basic overview, I wanted to continue to stress how actively and aggressively we are managing the company’s financial position, especially with regard to the investments we are making now to build our business in the face of a difficult non-residential construction market.
We continue to deleverage the company while still using our capital for targeted high-return opportunities. This is evidence by our cash and cash equivalence is up more than 6% on a year-over-year basis.
Our debt plus capital leases is down from 426 million – 446 million, excuse me, to 224 million on a year-over-year basis. And our new revolver remains untapped. In addition, we continue to manage our cash flow tightly as evidence by our year-to-date cash from operations at 17 million versus 12 million for the same period last year. And our adjusted EBITDA margin is 15.8% for the first six month of the year, versus 15.3% for the same period last year.
In spite of this active management of our cash and liquidity, we decided to adjust our guidance primarily due to macroeconomic reasons. Earlier this year, the macro focus were more consistent and more bullish than they are now. The volatility of the forecast this year, and the overall uncertainty in the economy, appears to continue to create a level of fear, that is delaying a large capital spending in the private sector.
The hesitancy that our customers are experienced with regard to new projects, in the U.S. non-residential building environment, is a trend we can’t ignore in spite of our growth in nontraditional business lines.
However, make no doubt, we remain enthusiastic about progress and investments, in business initiatives that are more under our control and less directly exposed to the non-residential construction market.
At this point I’ll turn the call back to Suri. Suri?
Thank you, John. Operator, at this time we are available to take our callers questions. Alaya, are you on the line?
(Operator Instructions). Okay, at the time, you do have a question from the line of Andrew Steinerman.
Andrew Steinerman – J.P. Morgan
Good evening, Gentlemen. I wanted to hear about your traditional competitors in reporgraphics, if you saw competing vendors going away and leaving the market. And I also wanted to hear about pricing in reporgraphics and MPS. What are the terms in the market in terms of pricing?
In terms of the traditional competition, Andrew, what we are sensing is that there is a significant amount of pain obviously because there's been a downturn. There's no doubt it has significantly affected the competition. We don’t know exactly whether they are all going away. I wouldn’t say that just yet.
I mean there has been several cases where our people have shut down or filed for chapter 11. But as you know, most of these companies are family owned companies. So they significantly downsize, but continue to operate. They don’t really go away.
But a good indication of how badly these companies are affected is how a measure of what's going on if ARA, the Advanced Reprographics Association, we used to have 1,500, 2,000, 2,500 members. And last year, it was down to 700. And this year, we did not even have 100. As such, IRG actually cancelled the annual show. And the association still remains.
We also have the Central Reprographics Association, which closed down. The Central Reprographics Association, which closed down. Only the Eastern Reprographics Association remains, continues to operate.
So the indication as to where the company is at. We can't speculate obviously because they are private companies. We don’t have specific details into their revenues or [inaudible].
With regard to competition and pricing, we are summing back on the pricing. But the true effect of what the pricing would be is when the products come back and maybe start competing. Right now from the report, there isn't enough jobs for us to be able to compare it, Andrew. So we do get jobs on and off. We do get a few bids here and there. But we haven't seen a significant drop in the pricing as such.
There is some impact in local markets or there is a small job or a big government bid. We've experienced that. It's a [inaudible] bid it. But there is no way [inaudible] that across the board, we have a significant impact in terms of pricing. That we haven't sensed that just yet.
Andrew Steinerman – J.P. Morgan
Suri, I'm sorry, but could you talk about MPS, which obviously has a much denser dynamic, the pricing there?
Yes, MPS, or course you know for that segment of the business, Andrew, we don’t compete with the other [inaudible]. We have not come across the situation where we have competed in a [inaudible] for major MPS installations. So when I say major, marketable cities, all states, all regions, a lot of global customers. We have had situations where we are competing with our [inaudible] on and off in a firm placement. But it is true MPS installation in a very large national or global customer, then we often run into either the Rocks, or HP, or Canon on the likes. The manufacturers are the ones who are more often [inaudible].
With regard to small regional customers, we run into reprographics on and off. But pricing don’t seem to be a major issue there. It's because when we do MPS installation, we largely price based on what customer is spending today and how much value or savings that we can bring to the customer.
So we don’t run into competitive bids as frequently as we would do on British work.
Andrew Steinerman – J.P. Morgan
All right, that makes sense. And John, could you just give a direction to gross margin going into the second half?
Going into the second half of the year, we expect to see similar trends to what we've seen in prior years, that Q3 is pretty comparable to Q2 on a gross margin basis. We do expect in Q4 as historically we see more equipment sales and we have holidays that gross margin declines in the fourth quarter typically.
Andrew Steinerman – J.P. Morgan
Okay, perfect, thanks for all the time today.
And your next question comes from the line of Scott Schneeberger.
Scott Schneeberger – Oppenheimer & Company
Thanks, and good afternoon guys. On the non-residential construction market, Suri, could you just talk to anything that you're seeing positively, signs of hope anywhere out there. Has it just directionally from first quarter gone up, down, sideways? And will it take? What will you need to see when you know things are getting going again? Thanks.
Scott, we will see many negatives. I don’t have any positives to report unfortunately. That's what we were trying to find out. It's bouncing along the bottom so to speak. We haven't seen upward movement in any one of those.
There's no question that several customers are talking about new products. People are enquiring about new construction projects or deals. But nothing seems to materialize. But I think there is – there's no question. This is election year. And there's market contingency issues not knowing. Uncertainty is the biggest issue here. So we don’t seem to have any positive movement in that regard. I mean we're not hearing projects coming up.
Needless to say, many of the architectural customers are talking about new projects and new activity. But most of them seems to be international. And there doesn’t seem to be a whole lot of activity here locally.
And I think it's election year. There's a lot of uncertainties. So I think if that changes, we might see a change. But as for now, there isn't a whole lot of enthusiasm about new products coming up between now and the end of the year.
Scott Schneeberger – Oppenheimer & Company
Okay, thanks on that. Could you speak of Boeing? And where that stands with regard to a few years ago? Thanks.
Obviously, the contract renewal came up. And renewing part of the contract with us because they actually decided to award that contract to someone else who they might favor. And we understand that. So we basically have part of the contract with Boeing, and that finishes at the end of the year.
And what they will do at that point and time, we don’t know. And if they ask for our assistance, we'd more than happy to help. But right now, we have about the rest of the year left on that project, which is about 50% of the revenue we had last year.
Scott Schneeberger – Oppenheimer & Company
And Suri, other sizable pieces of business, are there many out there? Or is it really just ones and twos with regard to what you're looking at? Thanks.
Say that again, Scott. I want to understand that question better. Are you saying whether there are other businesses like Boeing out there in large numbers? Is that your question?
Scott Schneeberger – Oppenheimer & Company
Right, sizable pieces of business out there to grab, or is it more smaller pieces of business and just many of them?
Okay, I got it. Absolutely, there is a lot there to be grabbed. A lot there to be grabbed especially in the management services area. That's one of our strategies to go after the top 100 ENR companies and [inaudible], most of the engineering and construction companies. That's our specialty.
In May, Scott, in that space, we stand alone. The reason why we are seeing 7% turn point, 4% growth, which we talked about in the management services, year-over-year, is simply because we are very strong in that area. That's the area also we do very well in the easy space because we not only provide management services but we also provide all spectrum services and technology solutions to wrap up the whole time and become the single source service provider. In other words, we provide one bill for all the work done in-house, and all the work done off site, and any technology related word we do, which is based on top earnings.
So in that space, we are alone. And there are no other reprographers competing. And it's difficult for coupon manufacturers to actually compete with us in that space.
And so if you take that space, Scott, we are probably are doing business with 15 of the top [inaudible] companies. There's a lot more to be gained. These are big contracts. They take a while to get there. But we are definitely making significant progress in this area.
Scott Schneeberger – Oppenheimer & Company
Excellent, Suri, thanks, and then finally, you've historically spoken that you wouldn’t restart acquisition until you could get a good look at your target showing 12 months EBITA. And as things persist to be bad, does that mean that you're probably at least a year away from becoming active again? I'd say the balance sheet is [inaudible], so still that wouldn’t be something of consideration by not early next year or am I wrong on that?
I think we are going to take the wait and see approach, Scott, because most of these companies are seriously affected by the downturn as well. We would like to understand where they are in the cycle. As you know, we are last to get in and last to get out as well. So we want to make sure that indeed we invest in [inaudible] gingerly. Gingerly as a practice, we want to make sure the [inaudible].
So even if we were to do an acquisition, I think we would be very careful as to how we look at that acquisition depending on where the cycle is in and what we are doing.
That other element which is important to understand is that the market has substantially changed. Our customer behavior has substantially changed. Our industry and what the customers are looking to us these days is really different to what used to be in the past.
So even when the projects come back, we're not sure some of our competitors would actually draw the same level of revenues that they have always drawn prior to the downturn.
So I would say we want to wait and see. And if somebody really picks up momentum and really are able to generate a lot of revenue, certainly we might be competitors. But right now, we are taking the wait and see approach.
Scott Schneeberger – Oppenheimer & Company
Okay, thanks very much.
And your next question comes from the line of Tim O’Connor.
Thank you. Hi, guys.
I wanted to dig in a little bit on cash flow, particularly – and I apologize if you already mentioned it, but the accounts payable line and then for free cash flow, CapEx looked like it was a little bit up as a percentage of revenue. Could you just talk about those two items and if you expect them to reverse in the third and fourth quarters?
John, would you like to?
Sure. So I’m not sure. I caught the question on cash flow, I’ll start with accounts payable. Accounts payable is following a fairly difficult trajectory for us on a quarterly basis. And candidly, I just wouldn’t read too much into that balance sheet number that moves from quarter to quarter or month to month based on the time of our vendor receipts. So it’s not a material move from our perspective.
And I’m sorry, could you repeat your question with regards to cash flow?
Yeah. CapEx as a percentage of revenue rose in the quarter, is that something that was a one-time thing or is it the more sustained increase?
CapEx, two things going on in the CapEx. One, as Suri mentioned in the earlier part of the call, we are investing actively in the business and we’re funding that in a number of ways. Some of that’s been – some of that investment shows up flowing through our income statement as an expense and some is CapEx for systems related. In addition, we are using our cash more aggressively versus the lease market to bring our lease costs down. Sometimes we threaten to use cash to purchase equipment to get the pricing of the lease – offered lease down and sometimes we outwardly buy the equipment to show that we’re not bluffing.
So a portion of that increase is more purchasing as opposed to leasing as we bring down our lease costs. So – and I’ve split that increment in about half. I’d attribute about half the increase purchasing as opposed to leasing and the other half is more one-time investment in the business.
Okay. And last quarter you said you were confident in the cash flow forecast for the year. Is the change in guidance related to topline or is there something else?
As you’ll notice, we adjusted out cash flow from operations guidance less than we adjusted our earnings per share. It is kind of per our discussion, it’s much more of a feature of the microenvironment and the difficult non-residential construction environment we see and that tends to go through our top line. We are making investments that impacts the earnings line and lowers the income statement, but the majority of it is due to the challenged market environment we continue to face.
Okay. And I want to dig in on the geographical differences, particularly in California. Northern California versus Southern California, they were very different in the second quarter. Is that a function of different [inaudible] or is it something else?
[Inaudible] we see a little bit more licensing in California because technology has [inaudible] are more active. So in general, we’ll always find that they are more active. In addition to that, they also have large global position customers and the large global position customers have agreements with us and there’s a lot of new management [inaudible] installations [inaudible] push that number up.
So for example, when we sign up a management services agreement with a national customer, we would start installing them state to state, so we’ll go from Southern California, then Northern California, then we might go to the south and then you might go to the east coast, depending on where these operations are. So sometimes when you sign a large customer like that, you know, a few of those installations might come [inaudible] in California and that is definitely the case. We obviously don’t divulge the name of the customer for confidentiality reasons but sometimes we are doing more than one installation in Northern California and that would have happened in Southern California. So that’s where there’s a market difference.
But in general, in Northern California, the activity relative to Southern California is higher because the fact that the technology companies and the general business environment is a little more [inaudible] in Southern California.
Okay. Thank you. Final question for me. A couple quarters ago you talked about stability in the business returning, particularly in the repro side from day to day and week to week, did you see – did you see a change in that? Are you seeing more volitility or is it simply a slightly lower level, but consistently lower?
Overall, you know, last year we thought the market was going to come back. The whole thing about this non-essential construction business is how much of the activity will come back because there’s low confidence in the market. And what has happened over a period of time is although they are [inaudible] at the middle of last year thinking that we thought by the end of the year they’ll recover and that did not happen. But then again, the early part of this year there was much more optimism about the non-residential market and things going in the right direction. There again, you know, that kind of faded off by March/April and kind of took a negative turn. We’re just not seeing enough confidence in the market for new products to take off, although there is several projects being held you know, waiting for capital or waiting for approvals. So we don’t see any life just yet on the non-residential side.
Sorry, just a quick follow up. Can you talk about the projects that are waiting for approval and where you’re seeing those and what types of projects?
You know, they’re stadiums, ballparks, hospital projects, you know, I would not obviously name all of them, but like for example, the 49ers stadium, you know, they – the drawing’s already done, the design work is done, you know, it [inaudible]. But there are several hospital projects like that. There are other stadium projects like that. So all those projects tend to get held up [inaudible], you know, all those get moved to the next stage once the market is back and the capital is available.
Okay. Thank you.
(Operator Instructions). And there are no questions at this time.
Thank you. Ladies and gentlemen, thank you very much for your attention this evening and your continued interest in ARC. Have a great evening.
This does conclude today’s conference call. You may now disconnect.
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