KLX's (KLXI) CEO, Amin Khoury on Q4 2017 Results - Earnings Call Transcript

KLX Inc. (NASDAQ:KLXI) Q4 2017 Earnings Conference Call March 6, 2018 9:00 AM ET

Executives

Amin Khoury - Chief Executive Officer

Mike Senft - Vice President, Chief Financial Officer

Michael Perlman - Director of Investor Relations

Analysts

Sheila Kahyoaglu - Jefferies

Gautam Khanna - Cowen & Co.

Les Sulewski - SunTrust

Operator

Good morning, my name is Candace Scriven and I will be your conference facilitator today. At this time, I would like to welcome everyone to the KLX fourth quarter and full year 2017 earnings call. All audience lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer period. If you would like to ask a question during that time, simply press the star or asterisk key followed by the number one on your telephone keypad. Should anyone require assistance at any time during this conference, please press star then zero and an operator will assist you.

As a reminder, ladies and gentlemen, this conference is being recorded on this day, March 6, 2018. Thank you.

I would now like to introduce KLX’s Director of Investor Relations, Michael Perlman. Mr. Perlman, you may begin your conference.

Michael Perlman

Thank you, Candace. Good morning and thank you for joining us. Today we’re here to discuss our financial results for the fourth quarter and full year ended January 31, 2018. The company’s earnings news release, which was issued earlier this morning, presents our fourth quarter and full year 2017 results. If you haven’t received this, you’ll find a copy on our website. For comparison purposes, we presented our financial results adjusted to exclude the one-time non-cash charge of approximately $43 million associated with the revaluation of the company’s deferred tax assets as a result of recent tax legislation and approximately $6.2 million of one-time costs associated with the previously disclosed strategic alternatives review, the transition to the aerospace solution group’s new global distribution operations center, and the restructuring of the Eagle Ford geo-region which was energy services group’s only unprofitable region. Costs associated with the strategic review, the new facility transition and the restructuring of the Eagle Ford operations are collectively referred to as costs as defined and are detailed later in the presentation.

We will begin with remarks from Amin Khoury, Chairman and Chief Executive Officer of KLX. Also on the call this morning are Tom McCaffrey, President and Chief Operating Officer, and Mike Senft, Vice President and Chief Financial Officer.

For today’s call, we have prepared a few slides to help you follow our discussion. You can find our presentation on the Investor Relations page of the KLX website at KLX.com. In addition, copies of the slides will be posted on our website for you to refer to after the call.

Any forward-looking statements that we make are subject to risks and uncertainties, and always in our prepared remarks and in response to your questions, we will rely on the Safe Harbor exemptions of the various Securities Acts and our Safe Harbor statements in the company’s filings with the Securities and Exchange Commission.

We will address questions following our prepared remarks. At that time, the operator will provide Q&A instructions. Please limit your questions to no more than two at a time.

Now I’ll turn the call over to Amin Khoury.

Amin Khoury

Thank you, Michael, and good morning everyone. We’re pleased to report a strong increase in both consolidated revenues and operating earnings in the fourth quarter as compared to the same period in the prior year. Our aerospace solutions group, or ASG segment delivered solid revenue growth driven by a mid-single digit percentage increase in both commercial aerospace manufacturing and aftermarket revenues.

With respect to our energy services segment, or ESG, the business once again delivered strong improvements in both sales and operating performance on a quarter over quarter basis, including positive adjusted operating earnings, for the first time since the fourth quarter of 2014 and a 35% increase in adjusted EBITDA on a sequential quarterly basis, reflecting the substantial earnings leverage inherent in the business.

We have also today increased our 2018 guidance for both revenues and earnings. Our new guidance primarily reflects the recent changes in tax legislation but also includes a modest contribution from the acquisitions of two product lines which were completed immediately prior to the end of the fourth quarter. We now expect adjusted net earnings per share to be approximately $4.30 per diluted share in fiscal 2018, a 33% increase as compared to the prior year.

On today’s call, we will review the current market environment for each of our ASG and ESG segments and discuss our 2018 guidance. Let’s first review the aerospace market environment.

Global air traffic increased 7.6% in 2017, well above the 10-year average annual growth rate of 5.5%. Full year 2017 capacity rose 6.3% and load factors climbed 0.9 percentage points to a record calendar year high of 81.4%. Air traffic growth in 2017 was supported by a broad-based pick-up in global economic conditions, lower cost airfares, and strong consumer confidence.

2018 outlook calls for above-trend air traffic growth driven by a supportive global economic backdrop with particularly strong demand in the Asia Pacific, Latin American and Africa markets. Further supporting the outlook is a forecasted mid-single digit percentage increase in commercial aircraft deliveries and an increase in the aftermarket activity as a larger portion of the approximately 12,500 aircraft delivered since the beginning of 2009 begin to require mandated heavy maintenance. Moreover, the 2018 outlook is supported by an increase in military manufacturing and maintenance activity driven by increased defense spending and improved demand for new business jets due to the low level of inventory of used aircraft, higher oil and gas prices, new platform introductions, and the potential benefit from tax reform.

Shifting to the oilfield services market, the U.S. land-based active oil and gas rig count stood at 947 units as of January 26, up approximately 50% as compared to the same period in the prior year. On a sequential quarterly basis, the rig count was down slightly as exploration and production for E&P companies have been successful at boosting production in existing wells. In fact, as of the most recent quarter, North American volume output driven by advancements in new technologies and supported by stable commodity prices is now in line with Saudi Arabia and close to top producer, Russia on a barrel-per-day basis.

In 2018, U.S. land oil and gas production capital expenditures are expected to increase approximately 15% supported by commodity prices that could provide budgeting upside through the end of the year. We expect to see a continued shift from drilling activities to completions activities as E&P companies bring on-stream a substantial portion of the drilled but uncompleted wells currently behind pipe. This should bode well for KLX’s energy services business as this is the portion of the well life cycle on which KLX’s energy services business is most focused.

Let’s now turn our attention to the company’s fourth quarter performance. In the fourth quarter, ASG successfully completed the implementation of our new warehouse management system at our Phoenix, Arizona facility, which will now be rolled out to our other major worldwide stocking locations. In addition, the build-out of ASG’s new global distribution and operations center in Miami has been completed and we will begin to move administrative teams into the new facility early in the first quarter with the transfer and consolidation of inventory currently held in the three legacy facilities in Miami taking place throughout the remainder of 2018. Together, the new global distribution and operations center, which incorporates our new warehouse management automation technology, and our new warehouse management system will greatly enhance future customer service while supporting substantial productivity gains and margin improvements, as well as more efficient inventory management that is expected to improve free cash flow.

Additionally, immediately before the end of the fourth quarter, KLX acquired two new product lines. The first purchase includes high performance fasteners and precision components and assemblies dedicated to aircraft engine manufacturing. The second group of products will enable us to offer our customers technical products, systems and expertise in motion and control applications, including hydraulics, pneumatics, fluid connectors, filtration, electrical control systems, seals compressors, and engineered systems for both OEM and aftermarket applications. Total purchase price for these new product lines was approximately $65 million. The new product lines are expected to contribute up to approximately $50 million in revenues in Year 1 with double-digit percentage revenue growth thereafter and in completion of certain operational improvements and certifications and customer and supplier negotiations.

Let’s now turn to Slide 2 and discuss our fourth quarter 2017 consolidated financial results. Fourth quarter 2017 revenues increased 18.4% to $442 million, driven by an approximate 5.5% increase in ASG revenues and an approximate 116% increase in ESG revenues. Operating earnings on a GAAP basis increased 56% while adjusted operating earnings increased 69.7%. Adjusted operating earnings and adjusted operating margin were $61.1 million and 13.8%, reflecting an approximate 60 basis point increase in ASG’s adjusted operating margin and continued strong year-over-year improvement at ESG.

Adjusted net earnings and adjusted net earnings per diluted share increased 84.9% and 92.3% to $50.1 million and $1.00 per diluted share respectively. Adjusted net earnings per diluted share excludes an approximate $43 million one-time non-cash ex-charge associated with the revaluation of the company’s deferred tax assets and $6.2 million of costs as defined associated with our previously disclosed strategic review, costs related to the transition to the aerospace solution group’s new global distribution and operations center, and the restructuring of the Eagle Ford geo-region which was the energy services group’s only unprofitable region.

Let’s now turn to Slide 3 and review our ASG financial results for the fourth quarter. Our ASG segment generated revenues of $348 million, an increase of approximately 5.5% as compared to the same period in the prior year. The increase in revenues was driven by an approximate 7% increase in sales to commercial aerospace manufacturing customers partially offset by a double digit percentage decline in revenues from business jet manufacturing customers - more about that later. Aftermarket revenues increased by approximately 5.3% as compared to the same period of the prior year driven by a substantial increase in aircraft maintenance activity among MROs, repair shops and airlines. ASG’s adjusted operating earnings were $59.9 million or 17.2%, up 9.1% and approximately 60 basis points respectively. ASG adjusted EBITDA of $71.1 million was 20.4% of revenues and increased 8.5% as compared to the prior year period.

Let’s turn to Slide 4 and review fourth quarter 2017 financial results for our ESG business. As compared to the same period of the prior year, fourth quarter 2017 ESG revenues of $94.2 million increased by 116.1%. Adjusted operating earnings were $1.2 million in the quarter and improved by approximately $20 million as compared to the same period last year. Adjusted EBITDA of $12.7 million improved by $20.4 million. As compared to the third quarter of 2017, revenues increased by 5.7%, adjusted operating earnings improved by $3.1 million, which excludes the costs associated with the restructuring of the Eagle Ford geo-region. Adjusted EBITDA improved by $3.3 million or 35.1%.

Now turning to Slide 5 and reviewing our full year ended January 31, 2018 financial results. Fiscal year 2017 revenues of $1.7 billion increased 16.5% as compared with the prior year. The consolidated results reflect the $79.3 million or 5.9% increase in ASG revenues together with a $167.4 million or 109.3% increase in ESG revenue. Adjusted operating earnings were $222.5 million, an increase of 70.9% as compared to the same period of the prior year. Adjusted EBITDA of $314 million and adjusted EBITDA margin of 18% increased approximately 44.5% and approximately 350 basis points respectively. Adjusted net earnings and adjusted net earnings per diluted share were $166.4 million and $3.24 per share respectively, which excludes the charge associated with the revaluation of the company’s deferred tax assets, costs as defined, and amortization, non-cash compensation expense, and includes the tax benefit from the amortization of tax deductible goodwill.

Let’s turn to Slide 6 and discuss full year results for ASG. Our ASG segment reported revenues of $1.4 billion, an increase of approximately 5.9% as compared to the same period in the prior year. Revenues from both commercial aerospace manufacturing and aftermarket customers increased by approximately 6%. ASG adjusted operating earnings of $241.1 million increased 8.9% and adjusted operating margin increased approximately 50 basis points to 17%. ASG’s adjusted EBITDA of $286.8 million and adjusted EBITDA margin of 20.2% increased approximately 9% and approximately 60 basis points respectively.

Turning to Slide 7 and reviewing full year results for our ESG business, for the full year, ESG revenues of $320.6 million increased $167.4 million or 109% as compared to the prior year, while adjusted operating loss improved by $72.6 million or 79.6% to an $18.6 million operating loss. Adjusted EBITDA improved by $72.9 million to a positive $27.2 million.

Let’s briefly review our financial position on Slide 8. For the year ended January 31, 2018, net cash flow provided by operations was $206.6 million. The company generated free cash flow of $121.7 million or approximately 228% of net earnings and approximately 73% of adjusted net earnings. Capital expenditures were $85 million, reflecting investments related to the company’s new 550,000 square foot ASG Miami global distribution and operations center and discrete investments within the ESG business. In addition, as previously discussed, immediately prior to the end of the fourth quarter, the company invested approximately $65 million to expand ASG’s product offerings. In addition, over the past 12 month period ended January 31, 2018, the company repurchased approximately $80 million of KLXI common stock at an average price of $48.04 per share.

As of January 31, 2018, cash on hand was approximately $255 million, total long-term debt of $1.2 billion less cash resulted in net debt of approximately $945 million, and the company’s net debt to net capital ratio was approximately 29%. There were no borrowings outstanding on the company’s $750 million credit facility.

Let’s now turn to Slide 9 and review our 2018 outlook. We are today increasing our 2018 guidance for both revenues and earnings. The company expects its future after-tax earnings to be positively impacted by the recently implemented reduction in the corporate tax rate and a modest contribution in earnings from the earlier mentioned recent product line acquisitions. Furthermore, the company’s fiscal 2018 outlook excludes approximately $20 million of new facility transition costs. 2018 revenues are expected to increase approximately 15% to approximately $2 billion. Adjusted operating earnings are expected to increase approximately 32% to approximately $293 million. Adjusted EBITDA is expected to increase approximately 24% to approximately $390 million.

Adjusted net earnings is expected to increase approximately 32% to $220 million and adjusted net earnings per diluted share is expected to increase approximately 33% to approximately $4.30 per diluted share. We expect a free cash flow conversion rate of approximately 90% of adjusted net earnings, which is reasonably strong given the 15% revenue growth rate.

On a segment level, we expect ASG revenues to increase approximately 8% to approximately $1.54 billion and ESG revenues to increase approximately 44% to approximately $475 million.

With that, I’ll now turn the call back over to Michael for the Q&A portion of this morning’s call.

Michael Perlman

Thank you, Amin. I will now turn the call over to Candace for our Q&A portion of today’s call. She will provide instructions on how to ask a question. Candace?

Question-and-Answer Session

Operator

[Operator instructions]

Our first question comes from Sheila Kahyaoglu with Jefferies.

Sheila Kahyaoglu

Good morning everyone and thank you for the time. Amin, if you could just update us on the strategic initiatives at all and just your thought process behind that, but also the capital deployment that you’re doing with the two product line acquisitions, what are the thoughts on capital deployment going forward with acquisitions, share buybacks, and dividends? Thank you.

Amin Khoury

As we indicated in December when we made our public announcement, the board concluded at that time that it was in the best interests of our shareholders to conduct a thorough evaluation of strategic alternatives focused on maximizing shareholder value. At that time, we said and we still say those alternatives could include a sale of the company or a sale of a division or divisions thereof, a business combination, or continuing as a standalone entity executing on our business plan. We have not set a definitive timetable for completion of the review and we do not intend to make any further announcements until we and our board of directors have determined it’s appropriate to do so.

With respect to capital deployment, I think we can talk about our forecast for capital expenditures this year, and I think we won’t comment this morning on buyback of shares until we have further clarity on what the strategic--

Mike Senft

Sheila, it’s Mike Senft. We would expect that we would spend approximately $75 million in capex this year, and that includes both maintenance and growth capex on the ESG side as well as the usual modest expenditure of capex on the ASG side. We expect after the move is completed in 2018 to be back to a very modest run rate of capex on the ASG side going forward.

Amin Khoury

Sheila, you asked about the $65 million on the two product lines?

Sheila Kahyaoglu

Yes, exactly, just the thought process behind additional bolt-ons.

Amin Khoury

Well, immediately before the end of the quarter, we acquired two new product lines. The inventory, the acquired inventory from the first purchase includes high performance fasteners and precision components and assemblies dedicated to aircraft engine manufacturing, so that significantly runs out our capability to support engine manufacturing. We were a small player in that portion of the business and it makes us a much more significant player.

The second group of products will enable us to offer our customers a totally new range of products, technical product systems and expertise in motion and control applications, including hydraulics, pneumatics and fluid connectors, so this is a business which we had not been able to participate in. It’s a billion dollar-plus market. It’s a market which requires amount of production and assembly and technological capability and requires us to build out an area in one of our facilities. It requires us to obtain a certification, and we are required to complete negotiations with both suppliers and customers on some of the new products, which we are both buying, assembling, certifying, and then selling, so this is brand-new for KLX. It brings a level of technological capability that we really have not had heretofore.

Mike Senft

Sheila, it’s Mike. I think it’s important to note, to Amin’s point, that this again extends our product capabilities and our ability to serve our customers more effectively, so it both opens up new opportunity for direct revenue and it provides a more comprehensive solution to our customers, so it’s a very differential platform in our ability to provide the breadth of products and services that we can now provide, and I think that’s really the mindset as our market continues to evolve on the ASG side, that we have the differential capability to provide as many things as possible that our customers need so we can become turnkey, both in terms of the products and the services that we bring to them.

Sheila Kahyaoglu

Thanks for that color. I didn’t think you guys could add more SKUs, just given the broad scope you already had. One on ASG revenues of 8% growth for 2018 - how do we think about that with OE and aftermarket progressing? And then one other question as it relates to that, when we think about the new orders that you won or the new contract wins, that’s almost four points of growth for 2018. The deals are another four points, so what are you embedding, more so on the aftermarket side, I guess is the question?

Amin Khoury

Aftermarket was really positive development here in the fourth quarter. I mean, we saw it everywhere - MROs, repair shops, the airlines, and we had a 5.3% growth rate in the aftermarket, which was really great. We are--so we’ve now had two successive quarters of nice growth in the aftermarket, third and fourth quarter. I’m happy to say the first quarter thus far looks like the fourth quarter, so there is a lot of maintenance activity. I think all of the new airplanes which have been delivered over these past seven or eight years are in fact really beginning to require heavy maintenance, so I think we’ve arrived, and so we’re expecting continued solid growth in the aftermarket for the balance of the year.

Sheila Kahyaoglu

Great, thank you.

Operator

We’ll move next to Gautam Khanna with Cowen & Company.

Gautam Khanna

Yes, thanks. Good morning guys. I was wondering if you could comment first on the pricing environment in the aftermarket and on the OE side. Has there been any changes, because one of your competitors has been going through some transition, so I’m just wondering if you’re seeing any intensified price competitive emerge.

Amin Khoury

We’re not. It’s pretty much what it has been for the last several years. I think that’s reflected in our margins. Our margins are excellent and improving, and so we’re just not seeing that impact. I think the combination of the level of service that we provide, the on-time delivery that we provide, the ability to deliver products on a same-day basis - I mean, orders that get in now by 6 o’clock in the evening, we keep improving our service, they’re out the door on the same day and we’re processing 15,000 orders a day. So I think that the ability to deliver that number of orders on a daily basis, where the orders are relatively small but the customers need the products on a next-day basis, gives us some reasonably good pricing leverage in the aftermarket portion of our business, and our services is also excellent on the ad hoc side because we’ve got the inventory. So basically, our margins are holding up and continuing to improve.

Mike Senft

Gautam, it’s Mike. I would note as well that on the cost side, the early returns on our new warehouse management system, the substantial productivity improvements that have been reflected in the first facility that we’ve implemented that at, have been a real substantial incremental competitive advantage for us, I think going forward in balancing out any price pressure we might face. We’re seeing 30% productivity improvements from the warehouse management system - that’s in a forward stocking location, not in the central facility in Miami. The Miami facility is going to enjoy that plus the benefits of the three-storey tower and the various automation that we’re bringing to that facility. So we think we are moving the full franchise forward on our ability to both compete for new business and retain the profitability of that business.

Gautam Khanna

That’s helpful color, guys. Wanted to also follow up on some of the new contract wins you announced last year and even last quarter. Where are we in terms of burning through whatever customer inventory exists, and are we now at rate, at least for the $300 million of wins that you had announced about a year ago? If you could just talk about [indiscernible].

Amin Khoury

Yes, it’s come on more slowly than we had anticipated and hoped; nevertheless, we did have a 7% increase in OEM revenues in the fourth quarter. We have not seen that before. That was pretty big. It was offset to some extent by a double digit percentage decline in sales to our business jet manufacturing customers, and that was very specific where a couple of business jet manufacturers, I think were trimming inventories prior to the end of the year and basically moving some--trying to move some [indiscernible]. So I would say that we’re beginning to feel the impact of the new business. It’s not going as rapidly as we had hoped. New customer activity is less than they had originally forecasted it would be and therefore the utilization of their inventories has gone more slowly because they ramped up more slowly. Our inventory, we have not been able to utilize our inventory to the extent that we would have wanted to for those programs just yet, but we’ve begun to see a nice improvement in the fourth quarter and we’re expecting a solid improvement in 2018 over the current level of activity.

Gautam Khanna

Okay, so that’s still to come. Last one, maybe Mike, just on the guidance revision--

Amin Khoury

It’s all in the fourth quarter.

Gautam Khanna

A little bit in the fourth quarter, but it might pick up, is what you’re suggesting?

Mike Senft

Lots of upside - yes, Gautam. Go ahead.

Gautam Khanna

Okay. The guidance revision - you know, on a net basis, sales guided up $50 million, EBITDA up $5 million. I was just wondering what should we infer from the profitability of the business lines you acquired at ASG and/or what you’re seeing in ESG? I would have expected a slightly higher EBITDA contribution on that increased level of sales, so if you could square that for us.

Amin Khoury

Yes, as I--when I talked about the new product lines a moment earlier, I talked about all the work that we had to do. We will be integrating both businesses, integrating one business completely during this year and investing substantially in the other one and integrating it as well, so there’s a lot of cost associated with these new product lines which offsets a substantial portion of the profitability that we would expect in the future. We would expect double digit growth on the new product lines and substantial improvement in profitability once we get through the integration costs.

Gautam Khanna

Okay, so there’s nothing--these product lines should be comparable profitability to the overall ASG business when everything is behind you on the cost side?

Mike Senft

Yes Gautam, it’s Mike. We believe these are excellent product lines both because of the way they will add to our service capabilities for our customers and for their profit potential, but we do think that being a part of KLX adds tremendously to the opportunity set around those product lines and it just is going to take us some time to realize on that synergy.

Gautam Khanna

Got it. Last question on ESG, could you talk a little bit about what you’re seeing in rental activity? I know previously you guys have talked about having relatively pristine equipment that you weren’t going to [indiscernible] until there was adequate pricing and better utilization rates out there. What are you seeing on that side of the market, on the rental equipment side?

Amin Khoury

Well, it’s a very robust market right now. As you know, 70% of the revenues that we generate in that business are service revenue, the balance is product revenues, either sales or rental. Right now, rental activity, particularly on frac relief valves, which is patented technology, we have more demand than we have product right now, so we have to build more of the frac relief valves. The same is true of our new patented fishing equipment - we have more demand than we have product right now, so rental demand is strong for both pressure control and for fishing equipment and for wire line assets. So rental demand is very strong right now.

Mike Senft

Gautam, it’s Mike. I would also note that one of our less talked about assets has been our combinations business, and from a utilization of that rental equipment, which is what it is, is starting to move up, and we get tremendous incremental profitability leverage off of putting those units out. So certainly again, it’s a lesser talked about part of the portfolio but something from a profitability perspective that we have a very positive outlook on for 2018.

Gautam Khanna

Got it. So in the areas that Amin discussed, that’s where the capex is going at ASG, the growth cape?

Mike Senft

Yes.

Gautam Khanna

Okay. That’s all I had. Thank you very much, guys. I appreciate it.

Mike Senft

Always a pleasure, thank you.

Operator

Thank you. We’ll move now to Michael Ciarmoli with SunTrust.

Les Sulewski

Good morning, guys, this is actually Les in for Michael.

Mike Senft

Good morning.

Les Sulewski

Just a quick question on the two acquired product lines and how that affects guidance. I understand that it’s about $50 million in added revenues, which would optically just seem that guidance goes to--you know, you’re raising ASG guidance by $40 million, so I guess there’s that delta of $10 million. Is there any tapering in organic sales that you’re seeing, or is this just the timing of the one-month or two-month difference in--

Amin Khoury

No, we’re actually expecting to cull some of the products which are being sold by one of the businesses that we’ve acquired. We don’t have the exact number yet, but we’ve put about $40 million of the $50 million in our guidance on the assumption that we’ll likely cull something like $10 million over the course of the year. We don’t actually know yet.

Les Sulewski

Got it, okay. That makes sense. Can you comment a little bit on the military trends, I guess positioning with [indiscernible]?

Amin Khoury

Well, it’s pretty public knowledge that the administration has been able to achieve the vote on a substantial increase in defense spending over the next couple of years, so the outlook for the defense business, or our defense business, both manufacturing and aftermarket, is up for the first time in I don’t know how many years. So our expectation is that defense spending will be up, both OE and aftermarket spending, and we expect both of those businesses to improve this year. We expect the biz jet business to increase and pretty much everyone is forecasting about a 3 or 4% increase in unit sales, and whereas we have not had an increase in the biz jet business for seven or eight years, we are expecting an increase this year. Aftermarket demand is improving. Pretty much all of the portions of our business I would say have some wind behind us as we go forward in 2018, and obviously that’s contributing to the 15% increase in sales that we forecasted and 8% increase in ASG.

Les Sulewski

Got it. Okay, thank you.

Operator

Thank you, and at this time, I’d like to turn it back to Mr. Perlman for closing remarks.

Michael Perlman

Thank you everyone for participating on this morning’s call. We look forward to speaking to you again next quarter.

Operator

Thank you. This concludes today’s conference call. Thank you again for attending, and have a good day.