Civitas Solutions Inc. (NYSE:CIVI)
Q1 2017 Results Earnings Conference Call
February 09, 2017, 05:00 PM ET
Dwight Robson - Chief Public Strategy and Marketing Officer
Bruce Nardella - President and CEO
Denis Holler - CFO
A.J. Rice - UBS
Paula Torch - Avondale Partners
Kevin Fischbeck - Bank of America
Josh Raskin - Barclays
Brian Hoffman - Canaccord Genuity
Good day, and welcome to the Civitas Solutions Inc. First Quarter Earnings Call and Webcast. [Operator Instructions] Please also note that this event is being recorded.
I would now like to turn the conference over to Mr. Dwight Robson. Please go ahead.
Thank you, Andrea. Good afternoon and welcome to Civitas Solutions Inc.'s fiscal first quarter earnings conference call. I'm joined by Bruce Nardella, President and Chief Executive Officer; and Denis Holler, Chief Financial Officer.
Before we begin, if you do not already have a copy of our press release with financial statements can be found in the Investor Relations section of our website at civitas-solutions.com. Please be advised that today's discussion includes forward-looking statements including guidance, predictions, expectations, and estimates about our future financial performance, our investments, and the impact of acquisitions, rate changes, litigation, labor costs and legislative initiatives, and other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business which could affect these forward-looking statements.
The forward-looking statements are also subject to risk and uncertainties that may cause actual results to differ materially from the forward-looking statements we make today. Risks and uncertainties that could cause actual results to differ materially from these forward-looking statements are described in our Form 10-K filed with the SEC on December 14, 2016 and our Form 10-Q filed with the SEC earlier today. We are not obligating ourselves to release any updates to these forward-looking statements in light of new information or future events. As a result, we caution you against placing undue reliance on these forward-looking statements and would encourage you to review our filings with the SEC for a discussion of these factors and other risks that may affect our future results or the market price of our stock.
We will be referring to certain non-GAAP financial measures such as adjusted EBITDA, adjusted EBITDA margins, and free cash flow because we believe such measures are appropriate ways to discuss our financial results. However, please remember these are non-GAAP financial measures and should not be considered alternatives to other GAAP measures such as net income or income from operations. I refer you to our press release issued today detailing our fiscal first quarter 2017 results for comparable GAAP measures.
With that, I'll turn the call over to Bruce.
Thank you, Dwight, and thanks everyone for joining us on today's call to discuss our fiscal first quarter 2017 results. Denis is going to provide you more detail on our financial performance later in the call, but first I want to briefly comment on some of the quarters highlight and provide an update on the external operating environment.
Our first quarter growth reflects increases in volumes and rates in our I/DD, SRS and ADA service lines and includes a very strong operating performance from our SRS service line in which gross revenue increased by 9.7%. In addition, gross revenue from our newest service line Adult Day Health doubled from the year earlier period and we continued to reduce leverage.
At the same time we maintained our elevated level of new start investment and while the first quarter was quiet with regard to the closing of M&A deals, we are poised to leverage a robust M&A pipeline with significant opportunities in our ADH, I/DD and SRS service lines.
Now I want to turn away from our Company's performance for a moment to provide an update on the state fiscal environment which remains stable in nearly all of our 35 states. There's a lot of activity going on right now in state capitals across the country as governors and state legislatures begin the process of establishing new budgets for state fiscal year 2007 which begins on July 1. In doing so they're looking closely at tax collections for the first 6 to 7 months of the current fiscal year to better gauge the strength of economic conditions in their respective states.
In most of our key states, revenue collections are expected to meet or as in the case in a couple of states, exceed budgeted expectations for state fiscal year 2017. West Virginia remains a notable exception however as state officials there continue to grapple with economic conditions that are among the most difficult in the nation. The state's new governor just unveiled its fiscal 2018 budget last night and we're pleased that he prefers that the budget be balanced without any additional reductions to I/DD waiver services.
However his budget proposal also include significant tax increases that will likely encounter resistance in the legislature. At the same time, court-ordered mediation, a debt settlement class action litigation filed on behalf of individuals with intellectual and developmental disabilities is ongoing. With the next status hearing scheduled for later this month, it is difficult to predict how events will unfold in West Virginia in the coming weeks and months.
And as a result as we noted on our last call, while we view the recent legal developments positively for both individuals with disabilities and their service providers, our fiscal year '17 guidance which incorporates the annualized impact of the reductions made during fiscal year '16 does not assume any outside that could result from the litigation or any downside from new cuts that could be implemented later in the year.
There have been a few other developments worth highlighting here. For example, in Arizona with the minimum wage was recently increased after a ballot initiative was approved by voters in November, we are pleased that the state identified funds to provide a corresponding increase in provider rates for the period from January 1 through June of this year. The governor has proposed in his FY '18 budget funding to make this increase permit and we are optimistic that the legislature will approve it and perhaps provide additional rate relief to reflect a second but more modest increase in the minimum wage which will go into effect next January 1.
In Mississippi, state officials have announced their intention to discontinue all state run I/DD waiver services both residential and periodic services by March of next year. As a first step, effective April 30 of this year the state will fund but no longer directly provide periodic waiver services.
Down the road we expect that the state may take additional steps to downsize state run institution in large private intermediate care facilities. We entered as you may recall the state of Mississippi I/DD market two years ago because we anticipated the state would likely pursue policies and get privatization in the expansion of home and community based services.
We currently serve about 165 individuals in a mix of day programs in periodic and residential settings and we look forward to expanding our partnership with the state of Mississippi in the months and years to come.
Officials in Pennsylvania have announced their intention to close the Hamburg State Center and transition approximately 80 individuals with disabilities to community-based services. Of course as you may know we have a great deal of experience assisting states across the country with the closure state run facilities and we are hopeful that we will be asked to do so again with regard to the Hamburg Center.
In addition, the Pennsylvania governor included funding in his budget per provider rate increase, an expansion of home and community-based services and a reduction in the waiting list. And finally Governor Kasich of Ohio has again proposed a provider rate increase to support a wage increase of up to 6% for tenured direct care staff. Governor Kasich also did this last year as you may recall.
So, as budget deliberations unfold during the next few months we will continue to monitor them and use the opportunity to advocate for the funding that supports our mission, it underpins our program and allows us to attract and retain direct care staff in a tight labor market, a challenge that remains our most pressing concern.
In some markets, the scarcity of direct care staff has impeded our growth. In other markets while the tight labor market has not affected growth in our business, it has negatively impacted our labor costs primarily as a result of increased over time. However overall we have continued to manage our labor pretty well under the circumstances and continuing to attract and retain a dedicated staff we need to provide high quality services and grow remains a priority of our management team in human resources leadership and staff.
I have just a couple of more comments before I turn the call over to Denis Holler our Chief Financial Officer for more detailed remarks about our financial results. It's been just over two years since we entered the adjacent Adult Day Health market and in this relatively short time we have established our company as a major player in this highly fragmented $7 billion market. We remain very excited about the prospects for ADH even as we manage through some challenges associated with a fast-growing but fairly immature service line.
We continue to invest in our ADH infrastructure in our adding management talent to position the business for more high growth both organic and acquired in our existing two state platform as well as in new market. We are also in the process of re-branding our ADH business to support our goal of establishing our company as the national leader in this industry.
And finally a comment on what I expect our growth trajectory to look like during the remaining three quarters of this fiscal year. Due to a number of factors particularly the timing of the anticipated acquisitions in the ramping and maturation of many of our new start and other organic growth projects, we are expecting that our fiscal year '17 growth will be significantly backend and loaded.
In closing, I continue to believe we are very well-positioned to execute our long-term balanced growth strategy and fulfill our mission by providing high-quality, cost-effective services to a must-serve population of adults and children in need of our support. And in doing so we believe we will be successful in creating long-term value for our stockholders. As always I am grateful to our outstanding workforce and thank them for their continued hard work and dedication to our mission and the individuals we're proud to support.
At this point, I’ll turn the call over to Denis Holler our Chief Financial Officer to discuss our financial results in more detail. Denis.
Before moving to the results for the quarter, I wanted to point out some changes in our financial reporting practices. As I had indicated last quarter, effective this quarter we've changed our reporting segments to disclose I/DD and ARY separately. Our SRS reporting segment is unchanged and our adult health business which previously was combined with I/DD and ARY in our human service segment is for the time being combined with corporate because it is under the threshold for separate reporting. This change was triggered by the reorganization of our human services business effective October 1 to segregate the I/DD business and the ARY business into distinct operating groups.
Last quarter we announced a cost restructuring program that is expected to generate minimum savings of $2 million in fiscal 2017 and at least an additional 2 million of savings by the end of fiscal 2018. We also said that the one-time costs to achieve these savings were not included in our guidance because we plan to treat them as an add-back to adjusted EBITDA.
In the first quarter we kicked off the investment phase of this project and incurred approximately 1.4 million of such costs that had been added back to our adjusted EBITDA. This add-back consist of consulting fees and severance. We anticipate some level of investment to continue through the end of fiscal 2018. At this point in time, we don't have complete visibility on how these costs will trend during this fiscal year that said, we expect these costs be lower in subsequent quarters. In addition, our goal of the project is to achieve an annualized level of savings that is at least equal to the investment.
Moving to the results for the quarter, on a consolidated basis net revenue grew by 3.9% over the first quarter 2016. Thankfully this is the last quarter that the ARY divested operations will be a headwind on revenue growth. Without them, net revenue would have grown by 6.1% with about half of that coming organically.
Adjusted EBITDA increased by 3.3% or approximately 1% if you exclude the ARY closures to 37.5 million. On a consolidated basis, adjusted EBITDA margin remained close to flat as a percent of revenue at 10.4% as continued leveraging of G&A expenses were all but completely neutralized by increases in labor, health and occupancy expenses as a percent of revenue. Sales adjustments also proved to be a headwind this quarter on margin but this was due to the fact that the level of favorable adjustments from the previous quarter did not recur.
Moving to the result by segment for the first quarter, in I/DD which is our largest business line and representing approximately two-thirds of our revenue, we generated $241.2 million in gross revenue. This represented a $9.1 million increase over the prior quarter or about 3.9%. About half of this increase was organic with the rest coming from acquisitions, $1.8 million of the organic growth came from new starts initiated over the last five years.
In addition, effective rates increased by 3% with about 1% coming from volume increases. As has been the case historically, the majority of the rate increase came from a shift in our client mix towards individuals with higher acuity. Reported EBITDA was $33.3 million and grew by 1.4% over the prior quarter.
Gross revenues in our SRS segment accounted for approximately 21% of gross revenues for the quarter. SRS gross revenues increased by 9.7% over the prior year's first quarter to $75.9 million approximately two-thirds of the increase was from organic sources. This segment had robust growth in both volume and rates during the quarter with census increasing by 6% and effective rates increasing by 3.7%.
Our results included significant contributions from new starts. New start program started over the last five years added 3.8 million of the growth in the quarter. Our ARY segment contributed $36 million or approximately 10% of our total gross revenues this quarter excluding the ARY divested operations, ARY revenues increased by approximately 1% which was all due to rent.
Moving to our margin, all in this quarter our adjusted EBITDA margin as a percentage of gross revenue decreased by 10 basis points to 10.3% compared to the first quarter of the prior year. Continuing the trend from prior quarters, we lost ground on our margin from direct labor occupancy cost of healthcare expenses. However these headwinds were almost completely neutralized by the leveraging of G&A expenses across the business both in the operating groups and the corporate.
Operating losses experienced by the ARY divested states was ramping down in the prior quarter also proved to be a mitigating factor. As Bruce noted, although we continue to focus on labor-management in our I/DD and SRS service lines, we are seeing the impact of tight labor markets are resulting in negative impacts to our reported EBITDA margins of 40 and 50 basis points respectively both compared to the prior quarter.
The occupancy cost increase was almost completely attributable to the I/DD service line and is the result of lower occupancy rates in our waiver group homes and intermediate care facilities or ICFs. The deterioration in occupancy rates was most pronounced in our ICFs as many states are in the process of transitioning consumers to other service models most of which we provoke. As these clients transition occupancy is negatively affected in the short run while we work to consolidate or close facilities.
The increase in healthcare cost was expected based on the trend established in the third quarter of last year when we started to see increased enrollment and usage. Specifically we saw a much slower attrition of rate of employees dropping coverage as we move through the plan year than we during its previously. This quarter was the final one for our fiscal 2016 plan year. As we move into our 2017 plan starting January 1, we are expecting this rolling trend to continue and have reflected it in our guidance.
Moving to our free cash flows, although first quarter is historically a low free cash quarter for timing reasons including the payment of the prior year's incentive compensation, our free cash flow improved this quarter over last year by $7 million coming in at a positive $4.5 million. From a balance sheet and working capital perspective, we were status quo with continued good performance on billing operations and cash collections.
Moving to guidance for fiscal 2017, we are maintaining the guidance provided last quarter for net revenue and adjusted EBITDA. For net revenue our range is $1.48 billion to $1.52 billion and our adjusted EBITDA range is $162 million to $166 million.
And with that, I'll turn it back to Bruce.
Thanks Denis. And Andrea you can open up the line for questions.
[Operator Instructions] Our first question comes from A.J. Rice of UBS. Please go ahead.
Hello everybody, thanks. So I appreciate all the comments about what you’re seeing in labor health and occupancy costs that's been a recurring theme. I guess just stepping back in big picture make sure I understand what you're saying, is any of those trends deteriorating relative to what you putting guidance or worse than you expected or is that all that you describe is sort of what you anticipate as you formulated the outlook last quarter for this year.
Yes A.J. this is Bruce. For the most part particularly in terms of labor we had anticipated some of this deterioration just because of the trends that as you mentioned have been established. So consequently we haven't changed our guidance but there has been some impact on our margin because of - particularly because of the labor.
On some of the occupancy although that has recurred, I think we can manage through that more effectively particularly as some of these initiatives involving downsizing of the ICF facilities forces us to carry excess capacity as we're transitioning people to other programs.
Okay. And obviously I’m interested to hear more about what you're describing in Mississippi and Pennsylvania. Do you have a sense of the timing on when that might start to occur on, the deinstitutionalization of those people and what timeframe the states are looking to move them out of their state institutions?
While as I said in my remarks A.J., we ended Mississippi over two years ago anticipating this, it has been painfully slow to this point in time. The only thing I can say is that the state has moved forward and they have submitted to the CMS, the Feds a state plan amendment, a spot and they are sort of working I think in good faith with CMS staff to resolve some of these issues. This is where the proposal to have the state exit being a service provider of the Waiver based services has come from either they're trying to resolve the state plan amendment.
So I wish I had a better sense of timing other than we're encouraged that they seem to be working actively and aggressively the state and the fed to resolve this. In Pennsylvania the state has 24 months to get those 80 people out. So it will happen over the next probably 12 to 24 months.
Okay. And then just my last question on the comment around elevated level of spending for new start you said that is occurring. I think last quarter you put that amount this year about 7 million is that still the number and is the still the expectation for the amount of new starts that you're going to see, is that unchanged versus last quarter?
Yes, at this point that's what we see. Of course that's subject to change as there are new opportunities that are out there. That have to emerge, that's always an assumption on our part. But at this point time we think that's a good number.
All right. Thanks a lot.
Our next question comes from Paula Torch of Avondale Partners. Please go ahead.
Thanks, everybody. Good afternoon. I guess I'll start my first question just asking a little bit you guidance and M&A. So you talked about 2017 being more backend loaded and part of that is because of M&A. So just curious what gives you the confidence on timing there and the ability to close on what are you expecting given that you say that you have a very strong pipeline?
Paula, it's a great question. But it’s been up a long time ago trying to predict exactly when these deals are going to close. So my comments are directed at the kinds of programs as they said SRS, I/DD in adult-day health in the numbers of them I feel very, very good about. It's suffice to say I don't think would be in a position of confirming guidance at this point if we didn’t think we're going to close anything this year exactly when it's going to happen we can't get any more visibility than we feel good about the pipeline and we just going to have to push hard and trying to get these things close as quick as possible.
And I know that when you talk about pipeline in the past you continue to have conversations with various acquisition targets over the years and sometimes they're just not ready to really like over their business. So how your conversations I guess recently have they changed, Are there any changes out there sort of in the market place that you think are creating more buying opportunities for you at all or is it just sort of a steady demand that you are seeing?
Well, I think there are couple of things. The demand is very steady particularly in I/DD and adult-day health was mentioned the fragmentation there, so that just steady. And the good things is we have not seen that -- we see that all. So that's been the steady demand that has remained fairly consistent. And the other thing is as we have said in the past we are always going to be looking at larger deals. We'd like to get some larger deals done, it remains to be seen whether or not that's going to be possible. But we're out there knocking on a lot of doors, let's leave at that.
Okay. And then you talked about state's transitioning consumer so I'm just curious how long does it take for you to transition and when do you expect to see stabilization there? I mean is demand still strong for these services and is it just really the transition period that is going on as impacting occupancy?
So you're speaking of the…?
The ICF, yes, sorry I shouldn’t walk there.
These initiatives sometimes last a year or two and within individual it depends on that person's particular case or circumstances and their needs. And frankly the families comfort with making moves. That often times is the biggest variability -- biggest point of variability in terms of timing of family typically is in favor of more community-based level of care like we provide -- they say that and then actually agreeing to it and then pulling the trigger oftentimes it takes very long time. Frankly it is not all that different than when people come out of institutions.
Families become very comfortable with the level of care in certain programs, and although they want what's best for their adult children and oftentimes takes them long time to finally pull the trigger. But it's not unusual that these initiatives will focus on a year or two year period of time. And sometimes people could be identified and it could take them six to eight months before we actually get them to the point of actually moving out of an ICF. And the problem that creates is we reduce occupancy in the ICF, we have to continue to staff the people that remain and while we're trying to open new programs or fill vacancies in the community-based Waiver program.
So you are almost carrying the burden of operating cost of two programs that you're trying to balance this shifting from one level of programming to the other.
Okay. But is in terms of overall demand do you still feel that that is strong and positive and maybe you can also talk about waiting list and what that those are sort of looking like these days?
Yes, I think the demand is still there, that's right.
Okay, great. And then I was curious if you can update us please on the quarter-over-quarter analysis in West Virginia, are you still seeing the amount of reduction decreasing, and any idea again on when and if that could stabilize anytime soon, while all this is going on the quarter?
Yes we are seeing a continue to decrease, we anticipate though that that amount of decrease will slow down throughout our fiscal year here, but what we are seeing basically is the impact of now 7 quarters as you recall this began in the back half of fiscal year 2015 quarter three and quarter four happened through all four quarters of 2016 and is continue in our first quarter in 2017. So there been a lot of moving parts there. So we saw that deterioration continue in this first quarter, but we do anticipate it slowing down.
And the good thing is as I mentioned the governor has not proposed at least at this point in time some new cuts there. So we just have to absorb what has been promulgated over the last year and a half and move forward. And I still think we have a good business there, it's not going to as profitable as it was, but it's still going to be a good solid business for us.
Okay, great. Thank you.
Our next question comes from Kevin Fischbeck of Bank of America. Please go ahead.
Okay, great. Thanks. I guess the staying on rates at Arizona in your guidance originally you had about $2 million headwinds from that and there is a little bit of relief in the first six months. Has your guidance reflected that change or is that already assumed in the outlook?
Yes, we're not going to change guidance because of that at this stage, Kevin for a couple of reasons. First off early on in the fiscal year there are always puts and takes as our budget unfolds, so that's one thing and this is very early on.
The second thing is it really the only thing for certain is that it affects two of our four quarters, We're hopeful that the governor's proposal for to make it permanent on July 1 which would affect our fourth quarter is fruitful, but we just don't know that yet. So at this point because of the early on the puts and takes involved in an evolving budget in fiscal year and the fact that this is not permanent we've decided not to change our guidance relative to this at this point in time.
Okay. That makes sense. And then I guess we go back the ICF, when you do the transition I understand that during the transition it's more costly, but I guess are these phases moving in the products that are either, what's the margin profile, margin differential between the products and ICF versus what you might move them into, is it better or worse from a rate or from a margin perspective?
Fairly similar. Kevin it's a good question. But they're fairly similar at the program level.
Okay. And then I guess last question the 400,000 favorable acquisition in contingent payment, does that mean that an acquisition is coming in below expectations and you are reversing the accrual you expected?
It's the opposite right. There was a contingent payment that we paid in last quarter, the first quarter of fiscal year 2016.
Was the number I thought it was -2.9 and then it was 0.4 this year. And that was 0.4 this year with the 0.4 it seem like it was positive, but I guess what was there point for reflect?
Kevin, it's an increase to the earn-out payments because the acquisition is trending better. So we value it and then are required to take it to our P&L, we backed out in the in the adjustment to EBITDA just because we think it distort things.
Okay. All right that makes sense. I was little bit afraid that the last quarter you made some changes to the adult-day health that business…
Yes, we have some going the other way.
Okay, perfect, great. Thank you.
Our next question comes from Josh Raskin of Barclays. Please go ahead.
Hi, thanks. Just want to quick follow-up on the Pennsylvania opportunity and I guess question sort of what's lay of the land from a competitive standpoint, is that an area that you guys have current operations and are there others in there as well, or is this just a new opportunity. There is no competition yet, it just when you guys will be competing with the others now?
There will be competition there Josh, but I think we do a very great job in Pennsylvania and our people are actively talking with case managers to be at ready to help out and place as many of these people as possible. But there will be competition. Pennsylvania has a pretty well developed community based provider system of care.
Is there way Bruce to ballpark what success looks like. The 80 individuals as with their specific number you're targeting or market share, will you be satisfied with?
It's very difficult for us to target that at this point in time. I would say this, looking at the profile of the people to the level of -- to the degree that we have thus far I think we can handle these people. The question is, are we going to be able to develop living environments, and as I mentioned earlier in my comments we are going to be attract the staff to staff them. Those will be the variable frankly that every provider will be dealing with
Yes, okay. And then just the commentary around the guidance being significantly back-end loaded. We've seen some seasonality in the past as we think about that next quarter the March quarter, should we think about EBITDA being flat sequentially or what are the puts and takes on a sequential basis, so we get the next three months right?
As you know we don’t give quarterly guidance, but we obviously have that impact of the tax reset that starts with our Q2 that started the new calendar year, we always have that. And as I sit here in my office in Boston and I look at this raging blizzard blowing outside my window, we're going to have a huge impact not only here in Massachusetts, but will have a substantial impact on our ADH revenues. Probably today and tomorrow here in Massachusetts as well as in the New Jersey -- excuse me Marilyn just because of weather related issues in our ADH, we can't get our people there.
So there is some seasonality that we do see in the in the second quarter, but beyond that it's -- we don’t give any more specific guidance than that.
Okay. And then the expense savings I think the 1.375 million that you guys spent. Was that sort of -- are you guys sort of on track when you talked about getting that the 2 million of savings this year and then another two next year. Is that -- did you expect that the spend be more front-end loaded like that and just to confirm that goes through the cost of revenue line -- I'm sorry, the G&A line or the cost of revenue line?
That goes through the G&A line with respect to the consulting fees, which are about half of that amount Josh and then the rest would go to the severance and it would go to the where the individual is, so if you in a direct airline, it would go to direct air.
Okay. But the start for this year is what you are expecting - it's not a faster start.
We obviously did all the planning so the consulting fees were heavy, those are going to be a lot less as I said in my remarks we don't have perfect visibility on how this is going to play out through the year but we're expecting it is not be as large as this quarter.
Okay. All right, perfect. Thanks guys.
Our next question comes from Richard Close of Canaccord Genuity. Please go ahead.
Thanks. This is Brian Hoffman in for Richard. First question for you on West Virginia, I know that you said that fiscal '17 guidance does not incorporate any changes in West Virginia from the current litigation that's going on but once a final determination is made or the case is settled, how long from that point of that actually take to - sort of work its way to the system and result in a change of hours a service for the consumer's.
We really have no visibility on that. It's hard to say Brian at this point time and a lot of that will I think be reflected in the court's decision. So you know suffice to say it, if there is a substantial increase that is required in authorized units et cetera, the states still going to have to turn around to find a way to fund it.
So it's - the only thing I could say is it's not likely to have an immediate impact on our ability as for the state to start reimbursing for additional services just because they’re going to have to find ways to pay for it.
Got it. Okay, thank you. And then a second question on the acquisition pipeline, is that pretty evenly split among the various segments or is it - that tilted towards anyone more than the others?
I doubt it is represented very well, I would say there's a little more - we're focusing on that because we think there's more headroom there, there is a lot of fragmentation and I would say relative to the size of the revenue that we have it's perhaps a little skewed towards the ADH, but not very much so.
Great. Thank you.
This concludes the question-and-answer session. I would like to turn the conference back over to Bruce Nardella for any closing remarks.
Okay, thank you, Andrea. We appreciate everyone being on the call today and we look forward to speaking with you in May after the conclusion of our second quarter. Thanks for your participation.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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