May 23, 2018
Executives
Craig Mychajluk - IR Lee Rudow - President & CEO Mike Tschiderer - CFO
Analysts
Matt Koranda - ROTH Capital Partners Dick Ryan - Dougherty & Co Christopher Hillary - Roubaix Capital
Operator
Greetings, and welcome to the Transcat, Inc. Fourth Quarter and Full Fiscal Year 2018 Financial Results Call.
At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.
[Operation Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.
Craig Mychajluk, Investor Relations for Transcat. Thank you, you may begin.
Craig Mychajluk
Yes, thank you, and good morning, everyone. We certainly appreciate your time today and your interest in Transcat.
With me here on the call, we have Transcat's President and CEO, Lee Rudow; and our CFO, Mike Tschiderer. After formal remarks, we'll open the call for questions.
If you don't have the news release that crossed the wire after markets closed yesterday, they can be found on our website at www.transcat.com. The slides that accompany today's discussion are also our website.
If you would, please refer to Slide 2. As you are aware, we may make some forward-looking statements during the formal presentation and Q&A portion of this teleconference.
Those statements apply to future events, which are subject to risks and uncertainties as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release as well as with the documents filed by the Company with the Securities and Exchange Commission.
You can find those on my website where we regularly post information about the Company as well as on the SEC's website at sec.gov. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call whether as a result of new information, future events or otherwise, except as required by law.
Please review our forward-looking statements in conjunction with these precautionary factors. I'd like to point out as well that during today's call, we'll discuss certain non-GAAP measures, which we believe will be useful in evaluating our performance.
You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations with non-GAAP to comparable GAAP measures in the tables accompanying the earnings release.
With that, I'll turn the call over to Lee to begin the discussion. Lee?
Lee Rudow
Thanks, Craig. Good morning, everyone.
As in the past, I'll start with an overview of our fourth quarter and our overall performance for the year. Mike will provide more detail -- more detailed look at the financials and I'll wrap things up with an overview of our strategy moving forward.
Certainly, we're pleased with the strong finish to fiscal 2018 and our solid performance throughout the year. The strength of our value proposition and the effective execution of our strategic plan drove record revenue in both our Service and Distribution segments.
We ended fiscal 2018 with $9 million of operating income, an increase of 14%; adjusted EBITDA of $16.3 million, an increase of 12.7%; and net income of $5.9 million, an increase of 31%. Operating margins expanded 160 basis points in the fourth quarter and 30 basis points for the full fiscal year.
Our fourth quarter consolidated revenue was $42.5 million, up 10% from the same period the prior year; and fiscal 2018 consolidated revenue was $155 million, up 8% from the prior fiscal year. We generated strong cash flow from operations that was used in part to reduce debt by $4.5 million and in parallel to launch our new operational excellence and infrastructure enhancement initiative.
As we enter fiscal 2019, we believe we are well positioned to continue to move those important longer term programs forward. Let's turn for a moment to our Service segment.
We continue to enhance our competitive position in our Service segment by increasing both our capability and capacity, particularly in highly regulated life science space. As a result, we drove significant gains in both medical device and pharmaceutical manufacturing as well as gains throughout the aerospace and general industrial manufacturing and testing market.
Our fourth quarter growth in Service revenue represented our 36th consecutive quarter of year-over-year growth, that's nine straight years. As reported and when normalized for the 53 versus 52 week period, we achieved our mid to high single-digit organic service growth target with revenue growth of 6% in Q4 and 7% for the full fiscal year.
From a productivity perspective, we continue to drive operational excellence into the organization with the development of our processes, systems and automation tools. While there was some shorter term noise in the fourth quarter that slightly impacted the service gross margin, we expect to see improvement in productivity as we get further down the road with our longer term operational excellence investments.
Importantly, you can see the inherent operating leverage in this segment as service operating margin expanded 80 basis points to 11% in the fourth quarter. Turning to Distribution, we are very pleased with our performance both in the fourth quarter and for the full fiscal 2018 year.
Our record revenue of $77.7 million during fiscal 2018 was driven by an overall strength in U.S. industrial market and strong performance throughout our diversified channel including core distribution and rentals.
Margin improvement in distribution was driven by an increased mix of higher margin rental revenue and the successful launching of our strategic pricing initiative throughout our core channel. With that, let me turn things over to Mike.
Mike Tschiderer
Thanks, Lee, and good morning everyone. Before getting into the details of our financial results in the accompanying slides, a quick reminder that fiscal year 2018 was a bit different in that it had 53 week versus 52 with the extra week falling in the fourth quarter of our fiscal year.
This happens once every five or six years depending on the calendar as our fiscal year ends on the last Saturday of March. The last time before fiscal 2018 that our reported fiscal year had 53 weeks was fiscal 2012 and it doesn't occur again until fiscal 2024.
We will talk here about normalizing for the 53rd week, but it's not possible to precisely calculate the impact on revenues and cost because of the nature of our business. Starting on Slide 4, we provide detail regarding our revenues.
We delivered record consolidated revenue of $42.5 million in the fourth quarter while full year revenue increased 8% to a record $155.1 million. When attempting to normalize for the extra week, consolidated fourth quarter revenue was up approximately 4% versus fourth quarter 2017 and full year revenue was up approximately 6% compared to the prior year, that's consolidated.
The Service segment continued to perform well with normalized all organic revenue growth of approximately 6% in the quarter and 7% for the year. Reported service revenue increases were 12.4% for the quarter and 8.9% for the full year.
This growth reflects new business from the life science space and also general industrial manufacturing. Since fiscal 2014, the Service segment has grown at a compound annual growth rate of 13%.
Gross margin for the Service segment was negatively impacted by the mix of the services that we performed during the year and some severe weather in March that impacted our Northeast facilities for a few days as well as our customers causing some delays in providing services, not a loss of business though. Our distribution segment also performed well this fiscal year with revenue up $4.9 million to a record $77.7 million.
Broad based customer demand in an extra week during the fiscal year drove that increase. Rental revenue still makes up a small percentage of the distribution segment as a whole, but as we have demonstrated diversification into this business has provide an attractive margin profile and importantly continues to differentiate us in the marketplace.
Rental revenue for fiscal 2018 grew to almost $3.6 million a year-over-year increase of 52%. Distribution gross margins for the fourth quarter expanded to 190 basis points to 22.7% and for full fiscal year was up 60 basis points to 22.5%.
Even with investments in our technology infrastructure and operational excellence initiatives. Our total annual operating expenses expressed as a percentage of revenue decreased 50 basis points to 18.3% of consolidated revenue.
As a result of our prudent cost control combined with higher sales, we saw good operating leverage in the quarter and the full year. You can see details on Slide 5.
Fourth quarter consolidated operating income increased nearly 37% and operating margin expanded 160 basis points to 8.3%. For the full year, consolidated operating income was up nearly 14% from the prior year to $9 million and our operating margin improved 30 basis points to 5.8%.
Slide 6 shows our fiscal year 2018 bottom line, which is highlighted by record net income of $5.9 million or earnings of $0.81 per diluted share. This is an increase of 31% over the prior fiscal year.
The sharp increase in net income on both an annual and quarterly basis reflects improved operating results as well as a positive impact from the U.S. tax act enacted in December 2017.
[Indiscernible] before the end of our third fiscal quarter and we recorded an old and new blended tax rate for the fourth quarter and full year fiscal 2018. The tax act favorably impacted our recorded fully diluted earnings per share by $0.06 in the fourth quarter and $0.10 per share for full fiscal 2018.
Looking ahead, our income tax rate for full fiscal year 2019 is expected to be in the range of 25% to 27%. This combined includes a full year of the lower federal rate, various U.S.
state income taxes and Canadian income taxes on our Canadian operations. Moving to Slide 7, we showed adjusted EBITDA and adjusted EBITDA margin.
Among other measures, we use adjusted EBITDA which is a non-GAAP measure to gauge the performance of our segments because we believe it is a good measure of operating performance and is used by investors and others to evaluate and compare performance of core operations from period-to-period. I encourage you to look at the provided reconciliation of adjusted EBITDA to the closest GAAP measures which for us are operating income and net income.
On a consolidated basis, quarterly adjusted EBITDA was up 26% to $5.3 million while adjusted EBITDA margin expanded 150 basis points to 12.5%. Full year, consolidated adjusted EBITDA increased almost 13% to $16.4 million with a margin that improved 50 basis points to 10.6%.
Both our margins helped drive these results. Slide 8 provides the detail regarding our balance sheet and our cash flow.
We generated cash from operations of $9.9 million of fiscal 2018 which was used to fund our growth focused investments and further reduce our debt. Fiscal 2018 capital expenditures were $5.9 million and primarily for customer driven expansion of certain service segment capabilities including expanding our mobile calibration fleet for RF and electronic gas sets for aerospace, defense and life science markets in purchases for a pool of rental assets.
We expect fiscal 2019's CapEx to be approximately $7 to $7.5 million. The majority of this incremental capital expenditures in excess of fiscal 2018 spend levels are large planned for IT, infrastructure investments to drive our operational excellence initiatives.
More than $2 million is expected to be focused on service segment capabilities and another approximately $2 million is anticipated to be spent on rental pool assets. Maintenance CapEx is anticipated to be similar to this past year at approximately $1 to $1.5 million.
At the fiscal year end, we had total debt of $22.9 million with $21.3 million available under our revolving credit facility. Our debt levels are down $4.5 million since the end of fiscal 2017 and our fiscal year end leverage ratio also decreased down to 1.4.
We calculate this leverage ratio as our total debt and a balance sheet at the period end divided by the trailing 12 months adjusted EBITDA. Other companies may calculate such a metric differently.
We continue to believe we have sufficient liquidity and dry powder for investment opportunities that meet our strategic criteria. And lastly, we expect the time we file our Form 10-K on or about we're about here.
With that, I'll turn it back to you Lee.
Lee Rudow
Okay, thanks Mike. Let me rap up by taking a few minutes to talk about our ongoing strategy that emphasized the opportunities we see for our business.
Our value proposition continues to be strong and unique and resonate in the market. The combination of our service and value added distribution business and our ability to effectively leverage their complimentary nature is a big driver for strong performance over the last couple of years and we see that continuing.
Our business development team has performed well driving mid to high single digit organic service, but we think there is a real opportunity to get even better and to take more markets share. As we've recently talked a lot about the opportunity we have on the system side is being addressed with a concentrated effort over the next couple of years to upgrade our systems and software and to drive technology as a competitive advantage.
Over time, we expect the investments to drive more productivity and efficiency. While it won't overnight, our confidence is high that we will see the anticipated mid to longer term productivity and associated margin expansion.
From an acquisition strategy perspective, the calibration services market continues to be fragmented and acquisitions both making them and driving organic growth as the acquisition is completed will be important element of our growth strategy. Our acquisition plan is supported by healthy cash flow and our demonstrated track record and expertise to effectively consolidate the service market.
Our acquisition plan is still disciplined and strategic and we believe we are the only company in our space actively acquiring with the angle of comprehensive integration. That means we drive to exercise and execute the sales and cost synergies from the acquisitions we make and we believe that's unique in the market.
As we enter fiscal 2019, the pipelines associated with both organic and inquisitive growth are very strong. I will conclude by saying that we remain confident in our direction and believe we will continue to be well positioned to capitalize on future growth opportunities.
We also expect to be able to continue to generate positive short-term results simultaneous to better positioning the Company for the longer term. So with that, operator, we can turn the call over for questions.
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Matt Koranda with ROTH Capital Partners.
Please proceed with your question.
Matt Koranda
Great quarter. Just wanted to touch on I guess the -- I think you guys mentioned in the Service segment, there was some work potentially delayed or they got pushed out due to some of the inclement weather in the Northeast.
So I just wanted to get a sense for -- do you have a sense for the magnitude of or the number in terms of revenue impact there? And then, how does that sort of flow, I mean does it just get pushed right back into the June quarter or just help us understand that a little bit more?
Lee Rudow
Matt, this is Lee. So, good question and we can't come up with an exact number.
What I can tell you is that throughout maybe two or three of our Eastern region lab, there was a day or two shut down. There were delays in pickups from customers; a lot of our customers didn't - weren’t open to send us equipment.
We think we are in the range of $200,000 to $300,000 of revenue that really ends up being timing at the end of the day. But the way that that works is of course Q4 is our strongest quarter and March is our strongest month within the quarter and everything built, and so we lose productivity in that last week and it has that kind of an impact.
We would expect to see a comeback but the way the business is -- generally put together that tends to flow through and drop right to the bottom line. So, that's what we meant by noise, some of the margins as fourth quarter kind of came to a close, but I see it as timing for the most part.
Matt Koranda
And then in terms of mix of in-house versus outsource revenue in the Service segment was that sort of what impacted margins in the quarter? I think you guys mentioned some unfavorable mix, was anything else to call out?
Lee Rudow
No, I would say that when we talk about unfavorable mix, it's kind of a combination of it could be outsourcing, I mean that plays a role, that number can go up and down throughout the year, tends to stay pretty consistent over the longer period of time. You may also, when we talk about mix we're also referring to the blend between on-site services, permit on-site services, core depot work and that can change month-to-month or quarter-to-quarter.
And then at any given period of time, you can see some basis point fluctuation due to any one of these three things or a combination of all of them.
Matt Koranda
I mean I notice the incremental operating margin though and service were pretty strong, I think they were coming pulling through basically like 25% incremental margin. Is that sort of the way to think about sort of the margin expansion opportunity as we head into fiscal '19?
Just wanted to get a sense for how you guys are thinking about the margin expansion opportunity and service?
Lee Rudow
When we talk about the margin expansion opportunity and service based upon the investments we're making for efficiency and productivity operational excellence. We're really looking more at the growth line.
I think over time, we'll see it and both the operating and the gross line. You're going to see it in the operating line when we acquire companies and we integrate these companies and our operating margin will tend to expand.
Because of course, we don't -- we actually operate these companies with the infrastructure for the most part that we have in place. I mean there is some step function adds as along the ways.
It's the gross margin where you're going to see the Company get more effective and more efficient in what we do with the automation kicks in, in some of the operational excellence. So I would say GM is what we're looking for over a longer period of time and I would anticipate that you would see that in fiscal '19 as well.
Matt Koranda
Any color on just the programs you have in place for this coming year in terms of operational excellence and what you've got in store?
Lee Rudow
Yes, so I'll just -- I can give you some color. We are working to automate some of our critical processes and by automation we mean the length of time it takes to actually do a calibration has decreased by the fact that you push a button and run through sort of a program environment versus a manual one, that's one example.
We are working on different modules as adjuncts to our current system to help us price and quote more effectively. And in the shorter period of time, we are looking -- we have customer requirements, which we called special handling.
We're working on modules to allow us to understand that special handling needs in a more appropriate timeframe and as needed, this helps us with the integration of acquisitions. This even helps us with our -- getting our core customers work through the system.
There is myriad additional programs that we're working on, we have a matrix which is what we call our engine, which really tells us what we can do and where we can do it, what our capacity is at any given time, and the flow of information through into and out of that matrix is being improved through programming. These are the types of things that we think will impact the gross margin over time.
Matt Koranda
And then just in terms of acquisitions in the pipeline, I mean, any way to characterize the size of the concerns that you would look at at this point in time? And do you feel comfortable that there is enough availability on the revolver to execute on those?
And I guess in the meantime while you look for those opportunities, I mean, are we going to just deploy that the incremental cash flow over the next couple of quarters towards paying down the revolver, is that how to think about it?
Lee Rudow
Right, so let me address the pipeline and what we think we're going to see from an acquisition perspective. I'll let Mike chime in on the revolver and our line and cash flows.
I would anticipate Matt that the type of acquisitions we’re likely to be engaged with this year are going to follow the same profile as in the recent past. So, our sweet spot continues to be any company that has anywhere from $0.5 million a year up to $5 or $6 million in revenue, that is still our sweet spot.
Now, we're more than capable of acquiring larger companies and I think, it's not unrealistic to assume that at some point something like that could happen and we're always looking for larger deals. There is regional players and national players, but you know there is not as many of them and so there is opportunities don't come about as often.
But in the meantime, the pipeline is pretty full with opportunities that fit our sweet spot as it has in the past and I would anticipate that would be the same profile and size is what you’ll see in the near future.
Mike Tschiderer
Yes, and as far as kind of the funding of it, Matt, it probably would be in the short term more of the same, we generate cash flow, we will use it for CapEx as to pay down debt. We have about 22 million availability under the revolver for acquisitions with pretty flexible terms as far as what can be used for acquisitions, and don't forget if we ever had something that was a game changer we still have a 50 million shelf out there too that is sitting there in case we wanted to look at something from the equity side versus debt side, but we think we have plenty to do what we need to do basic specialty and the kind of things that we’ll be looking at, which like Lee indicated is kind of that bread and butter of smaller [indiscernible].
Matt Koranda
Okay, very helpful guys. One more from me and then I promise I'll jump back in queue here.
But on the distribution side, my question really centers around rental opportunity and then the revenues there. So can we continue, I guess, what I'm trying to figure out is $2 million in I think CapEx plan for rental assets this year.
Is there kind of a rule of thumb for the growth that, that could potentially drive for you guys in fiscal '19? I mean is it the rule of thumb like $2 million and CapEx drives a million dollars of incremental rental revenue?
Or is there something like that shorthand would helpful I think for us?
Lee Rudow
Yes, there is kind of some rules of thumb even though we're still breaking the mould a little bit because of our rapid growth we're certainly added a steady state yet, but for if you look at the growth that we've had over the past few years and the CapEx that we've spent on that and you compare to the 2 million that we have kind of slided for rentals this year, you would expect growth probably not the 52% that we had now, it could be more of a 30% growth. So 30% on top of 3.6 is million.
So it's probably close to what you are kind of noodling around, I would say it's probably a little bit closer to $1.5 for a dollar of revenue, not two for one like you were those kind of throwing out there.
Operator
Thank you. Our next question comes from the line of Dick Ryan with Dougherty & Co.
Please proceed with your question.
Dick Ryan
So, Lee, on you commentary around share gains within the service sector. Can you give us some little more color on that?
Does that across all the revenue buckets or anything in particular within service?
Lee Rudow
Dick, it is across several buckets, so as I mentioned in the narrative, we definitely have had some significant gains and wins relative to the pharma or med devices and these are with both new companies, net new companies to us of a significant side and some growth from our existing customer base. So, we have done a real -- when I talk about the opportunity to get better on the business development side, I am talking primarily there of more of getting more of current customer base.
So we think we've got a real good system that we've deployed recently and it's showing some significant early gain. So, we like that.
So I think you will see more of that. We also have had a number of wins in the general industrial and aerospace markets.
If you recall, we anticipated what's going to happen because we make the investment in the high-end RF and electronic capabilities the prior year. And so we did see that coming and we thought our ability to compete in that space gets better and when it gets better you're going to see coming TRX get to that and we've done it pretty well.
So I think it does go across, it's more diversified. In the past we were particularly strong in life science and that's going to continue by design but we've done a nice job this year in general industrial manufacturing and in the high end electronic arenas that we invested to compete in.
Dick Ryan
Do you have a breakdown of what life sciences contributed to the Service side, I think it was like 43% last year?
Lee Rudow
It was 43% last year. I think it's going to be close to about and even actually go down 1 percentage or 2, I am not a 100% sure, may be like in some commentary, some of our growth has come from outside.
Mike Tschiderer
I think it will be pretty close. I think some of the growth is coming out of in parallel and in step.
So I would expect it to be within a point either direction of that 43% I think that we've kind of been talking about recently.
Dick Ryan
And with the new hires that occurred over the last year, were they on a productivity ramp? Has that pretty much worked its way through?
Lee Rudow
Yes, I think the new hires that predominantly came in Q1 have worked their way through to become more productive. As we talked about, Dick, it takes a couple of quarters to get these guys up and running.
But they will continue to get better over a period of a couple of years, right. So there is continual improvement with this group.
I think the challenge going forward will be the right number of technicians for the growth that we anticipate getting in a timely manner and that's always tricky but try to learn from the past and get better in the future. So I think our ability to do that well will be seen in the margin.
Dick Ryan
Okay. And on the oil and gas side, is that just a service sector impact or is it distribution unmet as well and what you are seeing with the bump in oil prices here?
Lee Rudow
Right, so it will be seen in both segments but primarily in distribution. In oil and gas we see a lot of instruments in the oil and gas market upstream, midstream, downstream.
And so that should be favorable. We also see it almost as a -- in a lagging -- with a lagging sort of impact in effect in our Service business as well.
So rising oil prices will only be good for us and that's the way we look at it. We are in -- after 2016, we are certainly in a much better position today, if there would be softness again, you always have to anticipate that but I think it is favorable going forward.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Christopher Hillary with Roubaix Capital.
Please proceed with your question.
Christopher Hillary
I just -- I wanted to ask, you mentioned in your prepared remark that you saw some opportunities for strategic pricing. Could you share some more thought you have on that?
Lee Rudow
Sure. So, that is primarily today on the distribution side of business.
And what we're able to do over the last year is create program that provided more details than we had in the past on price or the price points that we sell our distributions products on. And for example, something which remain and inventory beyond a certain time period or we were to lose a certain number of quotes at a certain price point.
We would have greater visibility than we had in the past to adjust that. And so that's really a helpful tool, that's a lot of make some moves that it helps margin in the past couple of quarters.
So actually that continuing and I also see that as a tool that overtime could be used both in our service that data and our service segment as well.
Mike Tschiderer
I think the key for that is that cold piece, because once we saw, those are the ones we know about. But the interesting piece especially is the ones that we lose and why didn't we lose those?
is it pricing? Is it a mix?
If we're able to compare that data to, if you have the quote and you have in stock, what is that mean compare to, they were able to get pricing or we're able to kind of adjust on the fly based on what we're seeing for demand rather than just looking backward at known results.
Lee Rudow
And it clearly falls into the operational excellence initiatives that we're pushing for the last year or so.
Christopher Hillary
Then you also mentioned there might be some opportunities to go from the mid-single to high-single-digit growth. Is there something in particular that would kind of drive that potential higher growth rate that you're seeing start of the year?
Lee Rudow
Are you talking about any service segment growth on the segment?
Christopher Hillary
I think so, again, it was in your prepared comments about to push up to the high-single.
Lee Rudow
Correct. So, I would go back to some of the leadership that we brought into the company in last year or so.
And the way we're approaching trying to maximize the growth from our current customer base in combination with new customers and our new capabilities. So, as we've expanded our capabilities, Christopher, over the last year or so in the high-end electronics.
We have a new senior director of business development that we hired incrementally. And the combination of our capabilities, the way we're going to market, the leveraging of our current customer base, I think it's a combination of all those things and our current pipeline at least us to believe that we have room to get better and make reach our business.
So still, we're comfortable mid to high-single-digits, but there is a range there and I see as driving towards high into that range or so we have the ability to do that.
Christopher Hillary
And then one last sort of top down question. There's been some sign just macro-wise, there could be a better environment for capital spending and investment here in the U.S.
kind of capital stock. And then obviously, there is some incremental incentives from the higher cash flows, lower tax rate and the incentive depreciation.
Any chance that you see a combination of those things specifically driving some business or does that remain sort of a big picture that doesn't quite show up on the day-to-day?
Lee Rudow
It's hard. Mike can explain thing as well.
It's hard to know for sure, but I would anticipate just using the reason and common sense that the more capital that customers have, the more that will be invested and the more as invested both in tooling and processes and increasing manufacturing, I think that bodes well for our business. I think it's going to be an impetus to growth.
The timing on that and exact numbers are hard to give our arms around, but I see there is positive.
Mike Tschiderer
Yes, it is. You have to connect a few dots, I think, so really do it, but intuitively it makes perfect sense that if there is cash available and companies are spending it, whether it be for CapEx or if they're investing in their plans or people are something, it's going to get more business to us.
I think we’ll probably see that and hopefully continued strong U.S. industrial output and sector productivity warnings.
Lee Rudow
We keep a close eye on U.S. industrial output and that tends to be an early indicator of how both our segments may do.
Operator
Thank you. There are no further questions at this time.
I’ll turn the floor back to management for any final comments.
Lee Rudow
Okay, well, we certainly appreciate everybody participating on the call today and your ongoing interest in Transcat. Feel free to reach out to us, if you have any further questions.
We’re certainly available and make ourselves available, and we’ll talk to everybody again after our first quarter results are released. Again, thanks for your time.
Take care.
Operator
Thank you. This concludes today’s teleconference.
You may disconnect your lines at this time. Thank you for your participation.