Diebold Nixdorf, Incorporated (NYSE:DBD) Q1 2024 Earnings Call Transcript

Diebold Nixdorf, Incorporated (NYSE:DBD) Q1 2024 Earnings Call Transcript May 2, 2024

Diebold Nixdorf, Incorporated isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter 2024 Diebold Nixdorf Earnings Call. All lines are put in place on mute during the presentation portion of the call with an opportunity for question-and-answer at the end. [Operator Instructions] I would now like to hand this conference call over to our host, Christopher Sikora. Please go ahead.

Christopher Sikora: Hello, everyone, and welcome to our first quarter 2024 earnings call. To accompany our prepared remarks, we have posted our slide presentation to the Investor Relations section of our website. Before we start, I will remind all participants that you will hear forward-looking statements during this call. These statements reflect the expectations and beliefs of our management team at the time of this call, but they are subject to risks that could cause actual results to differ materially from these statements. You can find additional information on these factors in the company’s periodic and annual filings with the SEC. Participants should be mindful that subsequent events may render this information to be out of date.

We will also be discussing certain non-GAAP financial measures on today’s call. As noted on Slide 3, a reconciliation between GAAP and non-GAAP measures can be found in the supplemental schedules of the presentation. With that, I’ll turn the call over to Octavio.

Octavio Marquez: Thank you, Chris, and thank you all for joining us today. Before we start the call, I just wanted to say thank you to Jim for his leadership as CFO as we undertook major actions to fortify our balance sheet and improve our financial condition. Jim has played a vital role in strengthening our company and we’re extremely grateful for all his efforts. I look forward to working with Jim in his new role. We are also looking forward to welcoming Tom Timko as our new CFO, who officially starts on May 17. Tom’s years of experience at GE and GM, along with his deep background across key financial disciplines will help us build off the foundation we have in place and further strengthen our financial and operational discipline.

Now to begin, on Slide 4, we are off to a solid start in 2024 with good progress across our operational and financial priorities for the year. The strength of our first quarter position us well to achieve our full year expectations as we build upon this quarter. First, we continue winning in the market with our leading self-service and automation technology. Product backlog remained at $1.1 billion at the end of the first quarter, which is consistent with our backlog levels at the end of 2023. We are encouraged by the demand environment, which remains stable and is supporting our product backlog, while we have also accelerated product revenue growth over the last several quarters. Additionally, we are gaining traction in the market with our managed services offering.

During the quarter, we closed a five-year managed service agreement with a Top 5 bank in Western Europe. We continue to believe that banks and retailers adopting an outsourced service model represents the next wave of service growth. Our value proposition of improving operational efficiency and reducing the total cost of operating ATMs and checkout devices is resonating well with customers. Next, we remain focused on driving innovation and reducing complexity for customers. Our recently introduced Retail Smart Vision solution automates self-checkout age-restricted items for EDEKA Jäger at the Stuttgart Airport. Leveraging artificial intelligence and computer vision technology speeds up transactions considerably and gives employees more time to service customers.

Also, we are running multiple live pilots with global retailers, leveraging our technology to address SHRINK-related issues during checkout. We anticipate that over time, our approach to addressing SHRINK at checkout can be applied to the entire retail store ecosystem. On the banking side, we continue innovating and winning with DN Series recyclers. We have recently launched a standalone weatherized DN Series recyclers unit in North America that allows banks to continue redefining the branch footprint. Our high-capacity note recycler, specifically developed for the multiple heavy cash usage markets across the globe, is helping us win new customers. In addition, we simplified our software portfolio, making it easier to deploy and update across multiple hardware environments, which is expanding our multi-vendor opportunities.

In terms of financial performance, we had another quarter of strong results as our team continued to improve our operational execution. Higher revenue and our focus on gross margin expansion combined with the benefit of strong operating expense management is following through to the bottom-line. The result is year-over-year profitability growth and better free cash flow performance. Cash and capital discipline is a focus area. The first quarter represents a positive step in better linearizing our historical seasonal cash generation. Across our operations, we are focused on working capital and asset efficiency to drive higher free cash flow. We included additional information on the topic in our earnings presentation, disclosing that trade networking capital of $379 million is 10% of trailing 12-months revenue, representing the second straight quarter of leverage improvement.

I am proud of our team as we keep building operating momentum and stay focused on delivering for our customers. Moving to Slide 5. We introduced the DN continuous improvement flywheel last quarter to help us better articulate our longer-term objectives. We are pleased to see progress in the quarter as we embark on our continuous improvement journey. It starts with the people who make Diebold Nixdorf a great company. We are investing in our people, so we can continue to create leading-edge products and deliver world-class service. We successfully onboarded Frank Baur, Executive Vice President of Operational Excellence, earlier in the quarter. We are currently filling roles with experienced lead practitioners in supply chain and service that will accelerate the flywheel of continuous improvement in operational execution.

We are strengthening our leadership bench with a clear focus on employee development. We expect our team to deliver profitable revenue growth and gross margin expansion. In the first quarter, innovation and commercial execution led to revenue growth. Improved year-over-year operating profit was driven by gross margin expansion and operating expense discipline. We are in the early stages of implementing the tools of continuous improvement and lean operations. I am encouraged by the developments we have seen so far, most notably in manufacturing. Our team in North Canton has already identified ways to decrease ATM production time by approximately 15%. This example is just the beginning of what I think is possible across our global footprint, as our teams embrace this mindset and identify future projects.

Finally, we are executing on levers to improve free cash flow conversion. We see the opportunity to meaningfully improve over the next 12 months to 24 months by driving higher profitability to margin expansion, stronger working capital and asset efficiency, lower restructuring with a strong focus on returns and lowering our debt costs. These are just a few indicators that we are on the right track and making progress on our continuous improvement journey. Turning to Slide 6, I would like to highlight recent performance trends in our region. In North America, we continue to see strong adoption of cash recycling technology. Additionally, we are seeing improved service performance, which is benefiting from our investments in internal resources and process improvement.

As our internal resources are getting more productive, we’re moving away from the higher-cost third parties used to supplement our workforce. This is resulting in higher quality service for our customers as well as better service profitability. In Latin America, we are driving strong revenue growth across both product and service. Cash usage remains strong in the region supporting demand for our DN Series cash dispensers and recyclers. Service growth is driven by our large installed base with strong recurring contract revenue streams. In Europe, the banking market remains stable with steady activity across product and service. On the retail side, we continue to grow our installed base of self-checkout units under service contract. Over the past two years, we have basically doubled our self-checkout unit shipments annually as European retailers moved quickly to adopt the solution, and the vast majority of our shipments represented new placements in the market.

As we move into 2024, we expect to continue increasing our self-checkout installed base, with more potential growth coming from North America. In Asia Pacific, Middle East and Africa, stronger cash recycling trends are developing across the region. We had higher unit shipments in APAC for both cash dispensers and cash recyclers in the first quarter. Also, we shipped an additional 1,500 cash units leveraging our India contract manufacturing facility. We are seeing solid activity levels across all our regions and we benefit from our diversified global business. With that, I will hand the call over to Jim to go into more details on our quarterly results.

A high-quality exterior shot of a business complex with several enterprise brands and retailers.

Jim Barna: Thank you, Octavio. Starting on Slide 7, with an overview of our non-GAAP results. The first quarter represents a solid start to the year as we work on linearizing our quarters. Revenue of $897 million increased 5.1% and gross margin expanded 290 basis points year-over-year, primarily due to strong product performance. Included in our product results is a $10 million benefit from a Brazil tax recovery. Normalizing for this item, our gross margin expanded 210 basis points year-over-year. Gross profit improvement was primarily driven by benefits from our supply chain logistics initiatives combined with price discipline. We are also seeing incremental benefits from the recent investments in our service infrastructure.

Operating expense was down 1.9% compared to the prior-year period as we improved our operational efficiency. Adjusted EBITDA of $103 million is up 62% compared to the prior year and adjusted EBITDA margin expanded 400 basis points to 11.5%. Looking at free cash flow, first quarter was a use of $36 million, which was favorable by $65 million year-over-year, driven by higher EBITDA and better working capital efficiency. On an unlevered basis, free cash flow was slightly positive in the first quarter, which is a meaningful achievement given our historical seasonality. Turning to Slide 8. Banking revenue of $649 million was up approximately 9% versus the prior-year period, driven by product revenue growth of almost 24%. Favorable product and geographic mix primarily drove the year-over-year improvement in product revenue.

Service revenue was up approximately 1% versus the prior year. Banking gross profit increased by $40 million year-over-year to $181 million. Gross margin was 27.8% in the quarter, which is up 410 basis points year-over-year. Significant product gross margin expansion was due to greater input cost control and the continuation of price increase realization. It also includes the benefit of the $10 million Brazil tax recovery item, I mentioned earlier. Normalizing for this item, our Banking gross margin expanded 300 basis points year-over-year. One last item to note for Banking. Service gross margin was up 190 basis points compared to 4Q ’23. This has been a focus area for the company and we expect to see continued improvement going forward. Moving to Slide 9.

Retail revenue of $248 million was down approximately 4.5% versus the prior year as strong service activity was more than offset by our decision to selectively exit lower-margin third-party hardware sales. Both self-checkout and electronic point of sale revenue was down low single digits compared to the prior-year period. Gross margin of 26.2% in the quarter is relatively flat compared to the prior year, however, gross margin is up approximately 30 basis points year-over-year excluding a one-time non-recurring benefit in the first quarter of 2023. Sequentially, first quarter gross margin is up 60 basis points driven mainly by product mix and lower product input costs. As you can see from the five quarter trends, there was some lumpiness to the retail business but overall we are encouraged with the good growth in the service business and the improving product profitability.

On Slide 10, last quarter, we introduced this information to present a more complete view of the changes in our cash position and highlight our efforts to better linearize the quarters. In the past, we had substantial quarterly volatility in our free cash flow that resulted in significant cash used through the first three quarters of the year before generating free cash flow in the fourth quarter. Now, the company is in a better position to manage free cash flow more efficiently through improved commercial and operating rigor. You can see evidence of our progress in the first quarter with free cash flow improving $65 million compared to the prior-year period. End-of-first-quarter cash and short-term investments were $407 million, which includes the impact of our $200 million debt paydown in February.

Net leverage remained at 1.6 times, which is consistent with year-end 2023. Now, I will turn the call back to Octavio.

Octavio Marquez: Thank you, Jim. On Slide 11, we are reiterating our previously communicated 2024 performance outlook. Given the strength of our first quarter results and improved operating momentum, we are well positioned to deliver on our full year expectation. We expect to profitably grow revenue, and adjusted EBITDA is expected to be in the range of $410 million to $435 million. Looking at the adjusted EBITDA quarterly cadence for the year, we now expect the first half of the year to be approximately 45% to 50% of full year adjusted EBITDA. This update reflects a stronger initial improvement from our efforts to linearize the year more. We are targeting free cash flow conversion of greater than 25% of adjusted EBITDA in 2024.

Additionally, looking beyond 2024, we are working to deliver free cash flow conversion of greater than 50% of adjusted EBITDA. We expect to achieve greater conversion by driving higher profitability through revenue growth and margin expansion, continued working capital efficiency, consistent capital expenditure outlays, lower restructuring with a strong focus on returns and lowering our debt cost. To wrap things up, on Slide 12, we have lots to be excited about at Diebold Nixdorf. Moving into 2024, there is no doubt we are now a stronger company, a more focused company, and have established our operating momentum throughout the last three quarters. We believe there are highly attractive and potentially underappreciated aspects of Diebold Nixdorf value creation story that make for a compelling investment thesis at current trading levels built around four components.

First, we have strong visibility into our business with solid banking and retail end. Our product backlog of approximately $1.1 billion provides good coverage for product revenue for the remainder of the year. Also, approximately 70% of our total higher-margin service revenue is recurring, which provides additional stability and predictability to our top-line performance. Second, we are accelerating gross margin expansion with our continuous improvement program and maintaining operating expense discipline. We know the company has opportunity reach, and as we implement these tools and actions, we will improve our overall profitability. Third, as we outlined on the call today, we have a number of levers available to us to meaningfully improve cash flow generation.

The path is clear. The teams are aligned and now we must capture these benefits. And fourth, we are in the early stages of developing a value-creating capital allocation strategy that will benefit all our stakeholders. As free cash flow conversion continues to improve, we will invest in the business and unlock additional value for our stockholders. This is the next stage of our value creation story. I look forward to sharing more details with you as we solidify our future capital allocation priorities with the Board. And with that, operator, please open the call for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] The first question comes from the line of Matt Summerville of D.A. Davidson. Your line is now open. Please go ahead.

Matt Summerville: Thanks. A couple questions. Can you maybe delve a little bit deeper into some of the specific actions you’ve taken to drive better linearity across the business and also touch on why we should view that as sustainable?

Octavio Marquez: Sure, Matt. Thank you. This is Octavio. So, if you recall, I’ve been talking about linearizing our business for multiple quarters now. So, I would say the most important step that we’ve taken is, how do we manufacture and deliver to customers more efficiently, and how do we align better to their installation schedules. This actually helps us both in manufacturing and service, as we can more accurately predict the needs of customers, our own capital needs to deliver to them. So, I will tell you that this is still working in progress. We are very pleased with the results in Q1. We are now working on how do we keep linearizing the middle half of the year. As you know, Q4 will always be the largest quarter as just the trends in the business.

But Q1 was bigger than Q1 of the prior year as a percentage. The middle quarters, we’re expecting to see that continuous improvement in linearizing, and then that de-risk significantly our Q4 as we deliver, as we will have a smaller Q4 as we deliver more linear quarters. So, every quarter you should expect to see improvement. But that’s kind of we’re feeling about it. And we do feel that with this continuous improvement and all the actions that we’re taking, these actions will be sustainable for the future.

Matt Summerville: And then, excuse me, as a follow-up, can you touch on sort of the sustainability in product gross margins, setting the $10 million benefit from Brazil aside? And similarly, I want to talk about service in the context of historically speaking, Q1 would sort of serve as the lower kind of jumping-off point for service gross margins to build throughout the year into a bigger fourth quarter. Is that still the case in terms of how we should be thinking about how service margins ramp throughout the year?

Octavio Marquez: So, let me start with product, Matt. So, we are convinced that our margins are sustainable. Clearly, there might be small variations, orders based on volume and mix, but we think that the actions that we’ve taken around our supply chain and around pricing discipline will keep our margins at this level. So, I do believe that this is a sustainable level. More importantly, one of the changes that we’re making in the company is there’s no program or one action that we’re embarking on to deliver on a particular quarter. We’re focused on this continuous improvement journey that we’re in. So, as we deliver on margins one quarter, the team is already working on what can we do to do better next quarter. So, I would say that this is the mentality that we’re working on.

We know that there will always be headwinds and opportunities, but the teams are focused on continuously improving the results that they deliver. On the service side, we’ve made significant investments in improving quality in our service, and I’m very pleased on the results that we have. Speaking to our North America customers, they all recognize the significant changes that we’ve made and how that is helping them better manage their ATM fleet. So, I’m very pleased with that. We made significant progress in Q1 as compared to Q4, and our goal is to continue making progress throughout the year. So, you should expect us to continue improving margins every quarter of the year as we move forward in our service operation.

Matt Summerville: And then just last, I’ll sneak in one more. Jim, if you could, can you kind of give us the EBITDA to free cash flow sort of walkthrough, as you guys see it for the year, in kind of a similar fashion to what you provided on Slide 10 for Q1? If you can just kind of fill in the blanks a little bit in terms of how we get to the $105 million midpoint from, what is it, $420-million-some midpoint on EBITDA?

Jim Barna: Yeah. Thanks, Matt. I would say that that largely is in line with we had talked about when we came out with guidance for the year, say for — and I think you can see what drove the first quarter favorability against the prior year, are just all the benefits that we’re starting to see from more efficient working capital management. So I’d say all the other points and bridging items that we gave at that point in time remain intact, particularly around things like taxes and restructuring efforts and those things, where we’re starting to see maybe a little bit more benefit is through the operations and more diligent and efficient working capital management. We saw with inventory here in the first quarter. We expect to continue to see that through the balance of the year, that efficiency.

And you can see from receivable metrics that there’s a little bit of opportunity there for us to go get. So, yeah, that’s really the key variable there is working capital benefits coming through.

Matt Summerville: Got it. I’ll get back in the queue. Thanks.

Operator: Thank you. The next question comes from the line of Matt Bryson of Wedbush Securities. Your line is now open. Please go ahead.

Matt Bryson: Hi. Thanks for taking my questions this morning. Congrats on the strong results and the progress in moving towards that more linear shipment profile that you’ve been targeting. I know course can fluctuate a bit, but I thought it was particularly impressive that you managed to hold backlog steady despite the better sales number. Octavio, I think you characterized the environment is stable. But again, this is better than I would have thought, given the better sales number. Was there anything unusual going on in terms of, like, large contracts that you added? Or have you seen any improvement in customer activity that would explain kind of why you’re seeing better sales, but also, again, not working through backlog anymore?

Octavio Marquez: So, thanks, Matt. Again, I think that when I walked you through the different regions, you can see that there’s still strength in the North America market as recycling continues to take hold. Latin America has always been a strong market for us. And in Europe, I think even though our retail revenue fell a little bit short this quarter from the prior year, it was a conscious decision that we made on exiting certain unprofitable third-party sales that we didn’t really contribute much to us. But I would — as I said, I characterize demand as stable. We continue winning. And I think that this is a trend that the teams are very focused on. We built a strong base with recyclers. We have good technology that customers want to adopt.

And on the retail side, we’re now very focused on — over the past two years, we’ve grown significantly in Europe. We’ve made our first inroads into the US market, and this is the year where we’re really focused on how do we accelerate our expansion into the US. So, I would tell you that those are the kind of the key drivers, but, particularly, it’s a strong focus of our teams to keep winning in the market and serving our customers.

Matt Bryson: Awesome. The gross margin improvement in the quarter was nice to see. And I know you talked about the ability to continue to improve that metric, same time, you’re keeping your EBITDA and free cash flow guidance unchanged. Were the improvements that you’re seeing or think that you can manage already envisioned when you provided your initial guide? Or can we assume that if you execute in terms of getting gross margin higher that we’ll see upside, assuming all else is unchanged?

Octavio Marquez: Yes, Matt. So, clearly, we had built some of these things into our planning. I would say, particularly, we’re seeing faster return on some of the actions that we took. Particularly, on the product side, we do see component pricing working favorably, pricing taking hold in our — across our enterprise with all our sales teams. So, some of those benefits that we were hoping would be more Q2, Q3 we were realizing before. We need to maintain those improvements throughout the year, and we’re confident that we can do that. Before we change anything, we want to make sure that we provide consistent operational execution over the coming quarters. We still need to linearize more of the quarters. As I said at the beginning, we are off to a good start.

Now we’re working on a strong Q2, a strong Q3, and taking risk off the table as we keep linearizing things. But that is the spirit. And as we do that, yeah, clearly, we will have opportunities to keep improving throughout the year.

Matt Bryson: Excellent. Thank you so much for your time, and answering my questions.

Octavio Marquez: Thank you.

Operator: We now have a follow-up question from Matt Summerville of D.A. Davidson.

Matt Summerville: Thanks. Just two quick ones maybe. Octavio, can you maybe describe the recycling adoption level you’re seeing in North America? Is it still primarily relegated to the largest kind of Tier-1 financial institutions? Are you starting to see that migrate down market into the small bank, regional bank market? In addition, if you could maybe use a baseball analogy inning-wise to describe where we’re at with recycling adoption in North America and how that will likely play out this year and heading into ’25?

Octavio Marquez: Yes, Matt, so again, as you know, the large banks have started on that journey, but I would say that we’re still in the early innings with those large banks. We’ve had significant wins in Q1 with large banks that are just starting down that journey. Remember, recycling provides better customer service, but clearly a lot of operational efficiency. So, as these larger banks start adopting this, and remember, they need to change part of their software and different things that provide other opportunities for us. As these banks mature in that journey, I think it’s still multiple years, there are large fleets to refresh. But clearly, smaller financial institutions take note of that. And remember, particularly in the U.S. market, many of these smaller financial institutions are connected to large national switches, which are all investing heavily in building recycling capabilities.

So, I would say that we’re very early in the stages of adopting recycling. We’re also seeing recycling not just at the ATM, think of our recently launched teller cash recycler, which is starting to gain traction as part of the whole cash ecosystem that you have in a branch, which is a very important part. Recycling provides benefits not just at the ATM, but at the whole branch level. So, I would say that we still have significant runway to go, but it’s a process. We need the switches to adjust to recycling. The big banks are doing it on their own. So, we see this as early stages of our process. We’re probably still in the early innings of doing this.

Matt Summerville: Got it. And then, as a follow-up, can you just put a finer point on the headwind we should expect in 2024 overall from some of that deliberate revenue exit that you guys undertook in the retail business? And can you maybe just put a little bit of finer point on exactly how that relationship would have worked in the past, just a little bit more around exactly what you exited there?

Octavio Marquez: Yeah. So, Matt, I want to say, I think the important part is we are very focused on our — we still believe SCO is a great avenue of growth. I have no doubt of that. Retailers facing some of the same challenges and want to continue investing in those technologies. And we are developing the complementary solutions as our SHRINK solution, our age verification solutions, to make the solution even more robust. In the past, as we look at a retail environment, we were selling third-party products into many of these large retailers. Think about electronic shelf labels that we would integrate, handheld scanners, different products that were part of providing a service to a customer, but we were just basically being a reseller for somebody else.

So, we’ve made the decision that it’s better to utilize our cash in different ways. I would say that this — while it’d be a revenue headwind, you can — it’ll be a profitability increase for our retail business. So that’s why we are focused on that. I think overall, the growth in SCO and electronic point of sale throughout the year will more than offset that decline in those third-party sales. So, we do see a stable retail business, but with a much better product mix.

Matt Summerville: Got it. Thank you.

Operator: We now have a follow-up question from Matt Bryson of Wedbush Securities. Your line is open. Please go ahead.

Matt Bryson: Hey, thanks for taking the follow-up. So, free cash flow with the solid operating profit and — there doesn’t seem to have been any headwinds from inventories or accounts receivable or working capital at all. So, a lot of the reason it seems cash flow was negative was — that was in another category. Jim, you mind just walking us through what exactly was — what that other category is that led to free cash flow being negative?

Jim Barna: Yeah, I would say — Matt, thanks for the question. And again, I think we talked about this at year-end with respect to how we group cash flow items. And so, I think the incremental disclosure that we’ve given in the deck breaks apart how we look at working capital. And so, what portions of current liabilities and current assets are outside of what flows through those receivables, payables, inventory deferred revenue lines. And so, the biggest driver of the other category here in the first quarter is timing on indirect tax payments. And so, if we think about the fourth quarter, we typically have timing items to the positive in terms of sources, and then that flips around in the first quarter here, where the cash goes out.

So that’s really the most significant item of that. And then, the balance is made up of other movements on accruals and prepaid timing at the beginning of the year. You can see that actually in the new table that we put into the deck towards the back. It’s a supplemental schedule, Matt. But it should be helpful in bridging some of the incremental items outside of AR inventory, AP, and deferred revenue that give rise to those movements. So, the biggest item there is indirect taxes followed by other timing on accrual payments that get paid out of accounts that are not categorized within accounts payable.

Matt Bryson: Got it. But it sounds like it’s predominantly timing items as opposed to anything structural. And so, net those are if you were able to…

Jim Barna: That’s right, Matt. That’s right.

Matt Bryson: Okay. And then I guess just one last question for me. I know that the circumstances around the debt forced you guys to give us unit estimates. It doesn’t look like you’re disclosing those anymore for ATM self-checkout point-of-sale. Are we not going to see those at all? Or will we see those in the filings? Or if we’re not going to see them, can you give us, I don’t know, some guidance around sequential or rough numbers or any help there at all? Thanks.

Jim Barna: Yes, Matt. So, I would tell you that we’re moving away from units as we’re more focused on price realization that we get and kind of volume mix across the different regions. But what I would tell you is we still see for ATM units and SCO units. Particularly in ATM, we’re entering new markets, we’re re-entering the Indian market. So, we do expect to see growth in volumes across our geography. So, I would say that, we will move away from that and be more focused on clearly the revenue mix and margin expansion of our products. That is, I think, a better metric for us to focus on. And again, as we linearize quarters, which is the most important thing to me, you will see that Q2 will be better than Q1, Q3 will be a little bit better, and then Q4 will be a more manageable and not so dependent for our yearly results.

So, I’d say that the important thing is we still see growth in units, but we’re linearizing that more across the year so that we don’t have that big spike in Q4.

Matt Bryson: Thanks for the help.

Operator: Thank you. As this concludes our Q&A session, I’d like to hand the conference call back over to Christopher Sikora for closing remarks.

Christopher Sikora: Thank you for participating in today’s earnings call. Please feel free to reach out to me, Chris Sikora in Investor Relations, if you have any questions or need additional information. Thanks again, and have a good rest of the day.

Operator: Ladies and gentlemen, thank you for joining today’s call. You may now disconnect your lines.